Legislative and Regulatory Update

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In This Issue

[No.178]

December 10, 2006
Supreme Court
High Courts
PIB
RBI
International Cases & News

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Supreme Court

  • Bar Council of India Vs. Board of Mang. Dayanand Coll. of law and Ors.

Respondent No. 5 was appointed as Principal of Law College even though he did not possess a qualification in law. Bar Council of India on inspection withdrew its recognition to said Law College on ground that appointment of Principal was against provisions of Advocates Act and Bar Council of India Rules. Thereafter, respondent No. 5 was transferred to another college. Respondent No. 5 then filed writ petitions challenging his transfer wherein High Court held that as per Uttar Pradesh State Universities Act, 1973 such an appointment could be made notwithstanding anything contained in Advocates Act, 1961 or in the Rules framed by the Bar Council of India. High Court proceeded on basis that there was a conflict between two enactments, namely, University Act and Advocates Act and in terms of Article 254(2) of Constitution of India, since University Act was a later enactment it would prevail over Advocates Act. Therefore, since appointment to post of a Principal of a College affiliated to a University was governed by University Act, appointment of respondent No. 5 as Principal of Law College was liable to be upheld. High Court also held that Bar Council of India did not have any control regarding legal education and therefore Bar Council of India could not make any prescription regarding legal education or about those who are to teach law, or who are to be Principal of a College of Law. Therefore, order transferring respondent No. 5 was consequently set aside. Hence, present appeal. Held, while adhering to its process of selection of a Principal, it behoves State to ensure that appointment it makes is also consistent with Advocates Act and rules framed by Bar Council of India. Further, held pith and substance of Advocates Act falls under Entries 77 and 78 of List I of Seventh Schedule, and therefore, it is not necessary to postulate a conflict of legislation in this case.

  • Indian Oil Corporation Ltd Vs. State of Assam and Ors

Appellant Company is a registered dealer under Assam General Sales Tax Act, 1993. It purchased petroleum products from “BRPL” on payment of sales tax as per Assam General Sales Tax Act, 1993 and sold it to customers. Pursuant to a Central Government Resolution, appellant company had to sell its products at prices fixed by Central Government which included surcharge to be collected from buyers and deposited to 'Oil Pool Account'. Senior Superindent of Taxes issued show cause notice on appellant company stating that it was liable to pay tax on sale of products purchased from BRPL. Revenue held that since "sale price" of appellant company is more than 40% of purchase price, as per Explanation to Section 8(1)(a) of Assam General Sales Tax Act, 1993 read with Rule 12 of Assam General Sales Tax Rules, 1993, second sale by appellant company was to be treated as first sale and therefore appellant company was liable to pay tax on whole second sale price. Appellant challenged aforesaid notice in a writ petition before High Court on ground that on purchase of goods from BRPL it had paid sales tax and as such sales tax would be leviable only on difference of price between purchase price and sale price; otherwise, it would amount to double taxation, and as difference amount accounted to less than 40% it was not liable to pay sales tax on whole amount of sale price. Learned Single Judge dismissed petition holding that amount of 'surcharge' collected by appellant company even though passed on to 'Oil Pool Account' had to be included in "sale price" as defined under Sub-section (34) of Section 2 of Act. On appeal, Division Bench of High Court dismissed writ appeal and held that 'surcharge' collected by appellant on behalf of Central Government and contributed to 'Oil Pool Account' was not statutory collection but was collected under executive instructions and cannot be excluded while calculating "sale price". It was held that sale by appellant company was to be treated as first sale within meaning of Section 8(1)(a) of Act read with Rule 12 of Rules since resale price exceeded 40% of purchase price. Hence, present appeal. Held, according to scheme of Act, sales tax would be leviable only on difference of resale price and purchase price since under Sub-section (1) of Section 8 of Act, tax is levied at first point sale. Therefore, directing appellant company to pay sales tax on entire amount resold would amount to double taxation.

  • Commissioner of Central Excise, Chandigarh V. Khanna Industries and Ors

Respondents-assessee, manufactures of Brass Sanitary Bathroom fittings falling under Sub-heading 8481.80 and 8481.99 of Schedule to Central Excise Tariff Act, 1985, were availing exemption available to small scale industries under Notification No.175/86-CE. Proceedings were started against respondents for demand of duty, as respondents had affixed brand name "ARK" in stylised script on their products which was brand name of another company engaged in trading of "brass sanitary fittings called M/s. Arkson Pvt. Ltd. Collector, Central Excise, denied exemption holding that respondents were affixing specified goods with brand name of another person and therefore, respondents were not eligible for grant of exemption. Additional Commissioner, confirmed demand of duty and imposed penalty on respondents holding that M/s. Arkson Pvt. Ltd. was not eligible for benefit of Notification No.l75/86-CE since it was not holding any L-4 licence and that it was M/s. Arkson Engg. Co, a proprietary concern of M/s. Arkson Pvt, Ltd, which manufactures C.I. castings who were exempted from payment of duty. Additional Commissioner further concluded that aggregate sale figure of M/s. Arkson Pvt. Ltd. was more than Rs. 2 crores during 1990-91 and 1991-92 and accordingly benefit of Notification was also not available to it. Respondents questioned correctness of said decision before Commissioner (Appeals) who set aside adjudication orders. Revenue preferred appeals before CEGAT which also endorsed view of Commissioner (Appeals). Hence, present appeal. Held, benefit of small scale exemption under Notification No.175/86-CE, as amended, is not available to specified goods if they are affixed with brand name or trade name of a trader who is not a manufacturer.

High Courts

Karnataka

  • Hotel Leelaventure Limited Vs. Appejay Oxford Bookstores Pvt. Ltd

Petitioner and respondent entered into a license agreement as per which a part of the suit premises owned by the petitioner was taken over for use by the respondent for a specified period. Subsequently, after the completion of period stated in license agreement, petitioner addressed a letter calling upon the respondent to vacate the suit premises. When the respondents did not comply with the said demand, petitioner sent a notice to respondents invoking the Arbitration Clause of the Agreement and suggested the name of an Arbitrator to resolve the dispute. Respondent, instead of agreeing to the Arbitrator suggested by the petitioner or suggesting any other name, filed a petition under Section 11 of the Act before the Calcutta High Court for appointment of an Arbitrator. Subsequently, the petitioner filed the present petition for appointment of an arbitrator. Held, in view of clear language employed by Parliament in Section 11(11) of Act when once a request is made for appointment of an Arbitrator to different High Courts, it is the High Court to which such a request is made earlier in point of time which alone will have jurisdiction and the other Court will have no jurisdiction to entertain such a request, as long as the earlier petition for appointment of Arbitrator is pending in another Court. Therefore, as respondents have approached Calcutta High Court for same relief earlier in point of time and this petition having filed subsequent thereto, this petition is not maintainable.

  • G.M. Venkatappa Vs. Anjanappa & Gopalappa

Deceased father of petitioner had filed a suit in respect of suit premises and had been granted an injunction in favor of same. Upon death of first defendant, first respondent claimed to have inherited said property as legal representative of deceased first defendant. Thereafter, petitioner filed an execution petition praying to arrest and detain respondents in civil prison and also to give a direction to Police to enforce permanent injunction. When matter came up for consideration before Trial Court, Trial Court placed reliance on judgment of Apex Court in Yashpal Singh v. VIII Addl. District Jude and Ors wherein, it was held that execution petition can be filed as against party who was a party to suit and when party having obtained a decree, that party can alone file an execution petition and obtain a decree for injunction. Trial Court then dismissed execution petition without reference to law laid down by subsequent judgment of Apex Court in Muthukaruppa Pillai v. Ganesan. Hence present revision petition. Held, after careful reading of well settled principle laid down by Apex Court in case of Muthukaruppa Pillai v. Ganesan, that if remedy of injunction granted by decree is in respect of any heritable and partible right, it does not get extinguished with death of a party thereto, but it ensures to the benefit of legal heirs of decree-holder, as also such a decree could be executed against successor-in-interest of deceased judgment-debtor as well. Therefore, in light of ratio laid down by Supreme Court in case of Muthukarupa Pillai v. Ganesan including judgment of Division Bench of this Court in case of Ramachandra v. Laxmana Rao, impugned order passed by trial Court cannot be sustainable and is liable to be set-aside. Civil Revision petition is allowed.

  • Sri R. Narayanaswamy Reddy Vs. Sri R. Lakshminarayana Reddy & Ors

Appellant and his brothers were parties to a compromise agreement entered through a compromise petition before Apex Court in an earlier civil appeal relating to dispute over suit schedule property. As per the compromise agreement, partition of suit schedule property was done and appellant got his share of property in suit schedule property. Thereafter, a survey report revealed that said suit schedule property ‘S.No. 29/2A’ compromised of more land and therefore appellant filed present suit seeking his share in excess land. Trial Court, however, rejected contention of appellant and held that as per provisions of Order XXIII Rule 3(a) of CPC a compromise decree can be challenged by party to it by filing proceedings in that very case alone and it is not open for the party to file a suit. Hence, present appeal. Held, remedy for seeking necessary clarification lies in the very court where the compromise petition was filed and decree was passed in terms of it, and it is not open to the appellant to question the same before the trial court.

Press Information Bureau

  • Reservation of Seats for the Students Belong to the SC, ST and OBCS in the Central Educational Institutions

PIB dated 07.12.2006: The Union Cabinet gave its approval for amendments to the Central Educational institutions (Reservation in Admission) Bill, 2006 introduced in Lok Sabha on 25.8.2006. The said Bill was referred to the Parliamentary Standing Committee on Human Resource Development for examination and report and Committee has since then presented it to Rajya Sabha. The amendment Bill would be introduced in the Lok Sabha with certain consequential changes on the basis of the recommendations of the Parliamentary Standing Committee to the extent acceptable to the Government.

  • Signing of MOU Between USA and India for Developing an Aviation Cooperation Programme

PIB dated 07.12.2006: A Memorandum of Understanding (MoU) between USA and India for development an Aviation Cooperation Programme (ACP) has been given approval by Union Cabinet. Said MoU would be a specific co-operation programme in Civil Aviation Regime for seeking assistance under the umbrella of co-operation framework agreement signed between the Department of Economic Affairs (DEA) and United States Trade and Development Agency (USTDA) on 9th November, 2005. The Aviation Programme is aimed to promote increased safety, operational efficiency and system capacity in the Indian aviation sector; to facilitate and coordinate aviation industry training and technical ties between the US and India and to strengthen overall US-India aviation cooperation.

  • Voting rights to Non Resident Indians

PIB dated 29.11.2006: The Government had introduced the Representation of the People (Amendment) Bill, 2006 in Rajya Sabha in February 2006, with a view to enable citizens of India, who are living abroad for employment, education or otherwise outside India, to get their names enrolled in the electoral rolls and cast their votes, when they are in their constituency at the time of polls. The said Bill was referred to the Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice for examination and has presented its Report to Rajya Sabha and Lok Sabha. Report is currently being examined in the Legislative Department, Ministry of Law and Justice.

RBI

DNBS

  • Distribution of Mutual Fund products by NBFCs

Circular No. : DNBS (PD) CC No.84/03.10.27/2006-07 Dated 04.12.2006: In order to strengthen the Non-Banking Financial Companies (NBFCs) sector by allowing diversification in their area of business, RBI has decided to allow NBFCs, selectively, to market and distribute mutual fund products as agents of mutual funds, with prior approval of Reserve Bank, for an initial period of two years and a review thereafter. To apply for same, NBFCs should fulfill minimum requirements like they should have a minimum net owned fund of Rs.100 crore; Company should have made net profit as per last two years audited balance sheet; Percentage of net NPAs to net advances of NBFC as per last audited balance sheet should not be more than 3%; and Non-deposit-taking NBFCs (NBFCs-ND) should have CRAR of 10% and deposit-taking NBFCs (NBFCs-D) should have CRAR of 12% or 15%, as applicable to the company. The permission is liable to be withdrawn with a notice period of 3 months in the event of any undesirable / unhealthy operations coming to the notice of the Reserve Bank.

International Legal Cases and News

Cases

  • Ex parte Edward Michael Young Vs. El Paso County

Appellant was arrested for murder and was released on bond. He was not indicted for murder even after three years and it was only thereafter that he was convicted and sentenced to prison. Appellant was therefore entitled to have his murder prosecution dismissed with prejudice under Article 28.061. However, appellant’s counsel did not raise Article 28.061 claim during his murder prosecution. Appellant claimed several years later, in a state habeas corpus application, that trial counsel was constitutionally ineffective for not raising Article 28.061 claim. Trial Court held that trial counsel performed deficiently by not raising Article 28.061 claim but nevertheless, denied habeas corpus relief on ground that as per Supreme Court's decision in Lockhart v. Fretwell, this was not legitimate prejudice because, when appellant filed his state habeas corpus application, Legislature had amended Article 28.061 and dismissal of a prosecution with prejudice for noncompliance with Article 32.01 was no longer required. On appeal, Fifth Circuit Court of Appeals agreed and granted applicant federal habeas corpus relief from his state murder conviction. After appellant obtained federal habeas corpus relief, State obtained another indictment charging appellant with the same murder as the one charged in the earlier indictment. Appellant therefore, filed a pretrial state writ of habeas corpus asserting that the state murder prosecution should be dismissed with prejudice under the version of Article 28.061. The trial court, however, denied relief based on a finding that the enforcement provision in new version of Article 28.061 violates the separation of powers provision of the Texas Constitution. Court of Appeals decided that this version of Article 28.061 is constitutional and ordered the lower court to "dismiss the indictment. Hence, present appeal. Held, enforcement provision in the version of Article 28.061 applicable to this case violates the separation of powers provision of the Texas Constitution because it seriously disrupts a prosecutor's ability to perform his duties, it does not effectuate a superior constitutional interest, and it was not contractually submitted to by the prosecution. Therefore, judgment of the Court of Appeals is reversed.

  • Luis F. Padilla Vs. Alberto R. Gonzales and Deborah Achim

The Board of Immigration Appeals (“BIA”) ordered appellant to be removed to his native Mexico because he committed two crimes of moral turpitude. Appellant, petitioned for review of BIA’s removal order. Trial Court dismissed same. But before Federal Immigration Authorities got to remove him, appellant persuaded an Illinois Court to vacate the two convictions that was the basis for his removal. Thereafter, rather than asking BIA to reopen his case in light of his vacated convictions, appellant petitioned a Federal District Court for a writ of habeas corpus and requested that the district court to order the Department of Homeland Security to terminate removal proceedings against him in light of two convictions getting vacated. District court; however, denied appellant’s habeas petition. Hence, present appeal. Held, we construe appellant’s habeas appeal as a petition for review and conclude that we lack jurisdiction to consider its merits because appellant did not exhaust his administrative remedies. Petition is therefore dismissed.

  • Volodymyr Pavlyk, Natalia Pavlyk, and Iryna Pavlyk Vs. Alberto R. Gonzales

Petitioners, a former Ukrainian prosecutor and his family, were overstaying their visa in United States. They were subsequently detained and notified that they were subject to removal from the country. Petitioners, therefore, petitioned for asylum, withholding of removal and relief under the Convention against Torture on ground that they were persecuted in their home country because of petitioner’s involvement in investigation of murder of a leader in an organized criminal group as a prosecutor. Immigration Judge denied application on ground that petitioner failed to demonstrate that he was being persecuted because of his political opinion. On appeal, Board of Immigration appeals affirmed decision of Immigration Judge. Hence, present petition for review. Held, since petitioners had not filed applications for asylum within one year of entry into United States as per 8 U.S.C. § 1158(a)(2)(B) there is untimeliness of application. Therefore, we lack jurisdiction over asylum claims and dismiss petition for review.

News

  • Death Penalty Moratorium extended by Russian Parliament

The Russian State has extended a national moratorium on death penalty until 2010 by postponing until then the establishment of jury trials in Chechnya, the only territory in Russia that still uses three-judge panels in criminal hearings. The Russian Constitutional Court had ruled in 1999 that death penalty cannot be enforced against those who have not been convicted and sentenced by a jury. The moratorium was originally set to expire at the end of 2006, pursuant to a 1996 law that prohibited death sentences for a ten-year period. It is predicted that the new measure will become law, easily, passing approval by Federation Council and Russian President. The Russian death penalty has drawn repeated criticism from the Council of Europe which has pressured Russia to abolish it completely. In 1997, Russia signed a Protocol to the European Convention on Human Rights agreeing to abolish the death penalty, but pressure from conservatives at home prevented its ratification.

  • Nationwide Smoking Ban scraped in Germany on Constitutional Grounds

The Federal Government of Germany has scrapped a proposed nationwide ban on smoking in restaurants amidst concern that it would impermissibly intrude on police powers guaranteed to the states in the wake of landmark federalism reforms approved by the government. The government will instead ban smoking in federal buildings. Advocates of the ban put forward arguments that the ban addresses health issues over which the federal government retains jurisdiction. Under the new constitutional reforms, Germany's 16 states have the power to regulate restaurants and businesses.

  • Anti-pretexting Legislation passed in Senate in wake of HP Scandal

The US Senate passed a bill that would make obtaining phone records through fraud or lying, a criminal act. People found guilty of so-called "pretexting" would face fines and imprisonment for up to 10 years. Punishment may be doubled if the violation involves more than $100,000 or more than 50 victims. Passage of the bill was propelled by the recent Hewlett-Packard scandal in which company executives were charged with using deception to obtain phone records of board members suspected of leaking corporate information.

  • Hariri Court Approval by cabinet rejected by Lebanon President

Lebanese President formally rejected Lebanese cabinet's latest endorsement of a plan to establish a UN-supported International Tribunal to try suspects accused of assassinating former Lebanese Prime Minister Rafik Hariri. The President’s office called on the cabinet to take up the proposal again as there is a legitimate and constitutional government. The President had labeled the cabinet's vote on the measure as null and void soon after it was made. He also rejected an earlier cabinet approval of the tribunal as "unconstitutional" after all the cabinet's Shiite lawmakers resigned before the vote. The Hariri Tribunal measure requires the support of the President as well as the Lebanese Parliament before it is deemed formally accepted.