Legislative and Regulatory Update

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In This Issue

[No.185]

February 20, 2007
Supreme Court
High Courts
Ministry of Information and Broadcasting
RBI
SEBI
International Cases & News

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Supreme Court

  • Sita Devi Vs. Bihar State Housing Board and Ors

The respondent is a Corporation constituted under the Bihar State Housing Board Act. Appellant filed an application for allotment of a flat constructed by the respondent-Board under the 'Self Financing Scheme' and deposited first the advance amount and then the entire balance amount as per stipulations. However, the flats were not constructed within the stipulated period. They were not constructed within a reasonable period even thereafter. Hence, respondent filed an application for refund of the amount. The respondent-Board purported to have cancelled the allotment made in favour of the appellant. Appellant then filed a writ petition before the High Court challenging action of respondent-Board as entire amount due to her was not paid to her by respondent Board. During pendency of said writ petition, a cheque for advance amount paid by appellant for allotment purpose was allegedly issued by respondent Board. However, said cheque did not reach appellant and as fact of issuance of cheque was disclosed only in the counter affidavit, the cheque was revalidated on the request of the appellant. Admittedly, 20% of the amount deposited by the appellant was deducted. Learned Judge under a misconception that the prayer of the appellant in the said writ petition was confined to interest on 20% of the amount which had been withdrawn by the respondent-Board, made a direction that the respondent pay interest at the rate of 6% from the date of the application made by the appellant seeking refund. Division Bench of the High Court in an intra Court appeal preferred by the appellant, however, refused to interfere with the said order. Hence, present appeal. Held, when the appellant had asked for refund of the said amount, the respondent-Board could have done so. It could have refused to accede to the said prayer and could have cancelled the allotment. It did not do so immediately. That part of the action on the part of respondent-Board has been found to be unjustified. Therefore, keeping in view the facts and circumstances of this case, we are of the opinion that at this stage the respondent-Board cannot take recourse to the terms and conditions of allotment or of Clause (3) of Sub-rule 36 of the Bihar State Housing Board (Management and Disposal of Housing Estates) Regulation, 1983 in the instant case. Appeal is allowed.

  • N. Suriyakala Vs. A. Mohandoss and Ors.

The marital relationship of Appellant and respondent became strained  and culminated in filling of a petition by the Appellant-husband before the First Additional Family Court for a declaration that his marriage with appellant was null and void. But thereafter he withdrew the said petition stating that he wishes to resume marital life and that petition was dismissed by the Family Court. Thereafter, a criminal case was instituted by appellant-wife against respondent-husband and his family members under Sections 498A and 406 IPC read with Section 4 of the Dowry Prohibition Act and on appeal, the High Court quashed the criminal case. Hence, present Special Leave Petition invoking Article 136 of Constitution. Held, Article 136 of the Constitution is not a regular forum of appeal at all. It is a residual provision which enables the Supreme Court to interfere with the judgment or order of any court or tribunal in India in its discretion. In the present case we are of the opinion that this is not fit case to be entertained in exercise of our discretion under Article 136. The appellant filed the criminal case under Section 498A etc. not only against her husband but also against her husband's father, mother, brother, sister, etc. In exercise of our discretionary jurisdiction under Article 136, we are not inclined to interfere with the impugned Judgment of the High Court quashing the criminal case filed by the appellant. 

High Courts

Madras

  • Dr. Biju Paul Vs. Tamil Nadu Medical Council, Chennai, Tamil Nadu Dr. M.G.R. Medical University, Chennai and Christian Medical College, Thorapadi, Vellore

Petitioner was sponsored for M.B.B.S. course in Third Respondent College by a private mission hospital. Petitioner being a sponsored candidate, had signed “service obligation” or an agreement under which petitioner had undertaken to serve in a Hospital of the sponsoring body or any other Institution approved by it for a period of not less than two years following his M.B.B.S graduation. Accordingly, after completion of his M.B.B.S, petitioner was deputed to work in the sponsor’s hospital. Thereafter, before completion of period stipulated in the agreement, petitioner was terminated by said hospital authorities. Allegedly, Third respondent then refused to issue necessary certificates to petitioner. Hence, present petition. Held, on a perusal of records placed before this Court and on an analysis of rival contentions made on behalf of either parties and based on decisions cited, it is seen that there is no statutory obligation or a duty cast on respondents to issue certificates as required by petitioner. Petitioner, having not fulfilled service obligations under agreement and bond entered into between himself and Third Respondent, cannot seek for a remedy as prayed for, invoking writ jurisdiction of this Court. Petition is dismissed.

  • Vasanthi Nelson Vs. Antony Nelson Alias A.B.H. Nelson, Represented by Power of Attorney Jerry Rodriques

Plaintiff-respondent husband, a British national, bought suit property under Benami name of his Defendant-petitioner wife, as at the relevant time of buying suit property, provision of FEMA that foreign nationals could not acquire immovable property in India without prior permission of RBI, was in force. Plaintiff provided for maintenance of suit property to defendant and agricultural activities were undertaken in said suit property. Thereafter, plaintiff husband left for England. Upon his return from England, plaintiff was prevented from entering suit premises by defendant wife. Thereafter, plaintiff-husband filed application for appointment of receiver to take possession of suit property as allegedly defendant had committed acts of waste of suit property and was trying to alienate suit property. Trial Court allowed said. Hence, present suit. Held, from summation of facts, it is clear that disputed property is not in name of a foreigner, but only in name of an Indian citizen. Apart from that, the enactment which prohibits foreigner holding or transferring property in India is not in force when suit was filed. Even time limit prescribed for taking cognizance of offence under provisions of FERA, by Sub-clause (3) to Section 49 of FEMA, which repealed FERA, has expired at time of filing suit in this case. Hence, contention with reference to FERA and FEMA against plaintiff cannot be sustainable. Petition is dismissed

Delhi

  • AIA Engineering Ltd Vs. Controller of Patents and Anr

Petitioner filed review application to recall order of respondent No. 1 allowing amendments to original specifications of patent granted in favour of respondent No. 2. Said application was rejected without an opportunity of hearing being afforded to petitioner. Meanwhile, a civil suit was filed by respondent no. 2 against petitioner alleging infringement of patent. Petitioner then filed a revocation petition challenging validity of patent on ground that order allowing amendment of patent was granted to respondent No. 2 without hearing petitioner. Thereafter, patent granted was nullified and letter patent issued was withdrawn. Respondent no. 2 then filed a writ petition and learned Single Judge found that order dismissing first review application was passed without affording an opportunity of being heard to petitioner and directed Assistant Controller to decide application of petitioner after granting parties an opportunity of being heard. Assistant Controller heard parties and rejected review application of petitioner on ground that validity of amendments allowed should be determined by High Court in view of proviso to Section 57 (1) of Patents Act, 1970 by which Assistant Controller is prohibited from passing any order allowing or refusing any amendments when a suit for infringement of patent or proceeding before High Court for revocation of patent is pending. Petitioners challenged said order of Assistant Controller on ground that Section 78 which deals with power of Controller to correct clerical errors is distinct from the powers to be exercised under Section 57 of the said Act. Section 78 of the said Act only confers power to correct any clerical error in any patent or any specifications or other documents. Section 57 of the said Act refers to the amendment of an application made by a patentee. The Assistant Controller had exercised his powers purportedly under Section 78 of the said Act and thus the proviso to Section 57 of the said Act would have no application. Hence, present proceedings. Held, It is trite to say that while purporting to exercise powers under Section 78 of said Act, there cannot be any amendment of application as in that eventuality procedure of Section 57 r/w Section 59 of said Act must be followed. There appears to be also absence of any power of Controller to make any amendment suo motu. Therefore, impugned order cannot be sustained as it suffers from a patent error and improper exercise of jurisdiction by Assistant Controller and is liable to be set aside. Petition is allowed.

Ministry of Information and Broadcasting
  • Prohibiting transmission/re-transmission of Satellite TV Channel Namely "AXN" upto 15.3.2007

Order No: SO49(E) Dated 17.01.2007: The Ministry of Information and Broadcasting notifies the prohibition of transmission or re-transmission of the channel “AXN” in the country upto 15.3.2007 on ground that the said channel is reportedly telecasting programmes that are against good taste and decency and are likely to adversely affect public morality. Therefore, in exercise of the powers conferred by Sub-section (2) of Section 20 of the Cable Television Networks (Regulation) Act, 1995 (No. 7 of 1995), as amended from time to time, Central Government prohibits transmission/re-transmission of said satellite TV channel with immediate effect and upto 15-3-2007 through Cable Television Networks and any other platform throughout the country.

RBI

Press Release

  • Conversion of Nationalised banks Recapitalisation Bond

Press Release No. : 2006-2007/1114 Dated 15.02.2007: The RBI vide the above press release notifies that the Government of India have announced the issue of "8.20 per cent Government Stock 2022" for an aggregate amount of Rs. 1,632.33 crore (nominal), "8.24 per cent Government Stock 2027" for an aggregate amount of Rs.4,388.55 crore (nominal) and "8.28 per cent Government Stock 2032" for an aggregate amount of Rs. 2,687.11 crore (nominal) to 19 nationalized banks on February 15, 2007. The Government Stocks are issued in lieu of outstanding amount of "10 per cent Nationalised Banks' Recapitalisation Bonds, 2006" aggregating to Rs. 4818.78 crore (nominal) and "10 percent Nationalised Banks' (non-transferable) Special Security, 2006 aggregating to Rs.3889.21 crore (nominal) held by these nationalized banks. The Government Stocks are issued at par and will be transferable and eligible for ready forward transactions (Repo). The said stocks will be reckoned as an eligible investment for the purpose of Statutory Liquidity Ratio (SLR).

  • Reserve Bank cancels the Licence of The Adarsh Mahila Co-operative Bank Ltd, Mehsana, Gujarat

Press Release No. : 2006-2007/1110 Dated 15.02.2007: The RBI notifies that in view of the fact that the Adarsh Mahila Co-operative Bank Ltd., Mehsana, Gujarat, had ceased to be solvent, the Reserve Bank of India, on February 15, 2007 delivered the Order cancelling its licence to the bank. The Registrar of Co-operative Societies, Gujarat has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. Upon liquidation every depositor is entitled to repayment of his deposits up to a monetary ceiling of Rs. 1,00,000/- from the Deposit Insurance and Credit Guarantee Corporation (DICGC). Consequent to the cancellation of its licence, vide Speaking Order dated February 09, 2007, the Adarsh Mahila Co-operative Bank Ltd., Mehsana is prohibited from carrying on 'banking business' as defined in Section 5(b) of the Banking Regulation Act, 1949 (AACS) including acceptance and repayment of deposits.

SEBI

Secondary Market Division

  • Establishment of Connectivity with both NSDL and CDSL - Companies eligible for shifting from Trade for Trade Segment (TFTS) to Rolling Segment

Circular No. : MRD/DoP/Cir-2/07 Dated 13.02.2007: Vide the above circular, SEBI notifies that in matter of companies that have established connectivity with both the depositories on or before 31.12.2006, the stock exchanges may consider shifting the trading in these securities to rolling settlement subject to the condition that at least 50% of non-promoter holdings as per clause 35 of Listing Agreement are in dematerialized mode before shifting the trading in the securities of the company from TFTS to Rolling settlement. For this purpose, the listed companies shall obtain a certificate from its Registrar and Transfer Agent (RTA) and submit the same to the stock exchange/s. However, if an issuer-company does not have a separate RTA, it may obtain a certificate in this regard from a practicing company Secretary/Chartered Accountant and submit the same to the stock exchange/s.

International Legal Cases and News

Cases

  • Cheryl Pike Barlow Vs. Keri Lynne Jones

Plaintiff, biological mother, filed suit to restrict visitation rights of defendant who was her former gay partner to visit her 5-year-old daughter. The child was formerly brought up together by both the plaintiff and defendant till plaintiff split with the defendant claiming that she as no longer gay. Trial Court granted visitation rights to defendant relying on common law doctrine “in loco parentis” as per which a parent although they have no blood or legal ties to a child. Hence, present appeal to Utah Supreme Court. Held, doctrine of in loco parentis, as recognized by the courts of this state, does not independently grant standing to seek visitation after the in loco parentis relationship has ended. Although this court recognized the right of stepparents to seek visitation in Gribble v. Gribble, 583 P.2d 64 (Utah 1978), standing in that case arose out of an interpretation of statutory law granting such rights, not from an independent common law source. We decline to extend the common law doctrine of in loco parentis to create standing where it does not arise out of statute. We accordingly overturn the trial court's grant of visitation rights and hold that the common law doctrine of in loco parentis does not independently grant standing to seek visitation against the wishes of a fit legal parent.

  • State Vs. F

The defendant in the case, a Libyan national identified as "F", was arrested and charged with violating Terrorism Act 2000 Section 58 (1)(b) for possessing documents useful in furtherance of terrorism. Defendant was granted asylum in United Kingdom after his family was allegedly murdered by or on behalf of the regime of Col. Muammar Gadafi. Defendant denied knowingly possessing the documents and argued that even if he did possess them, it would not be in violation of the law if the knowledge was used against Gadafi's tyrannical regime. England and Wales Court of Appeals(Criminal Division) held that self-styled "freedom fighters" were not exempt from prosecution under Britain's anti-terrorist laws. There is no exemption from criminal liability for terrorist activities which are motivated or said to be morally justified by the alleged nobility of the terrorist cause.

News

  • Merck agrees to $2.3B settlement of tax dispute with IRS

The Internal Revenue Service (IRS) and drug manufacturer Merck Pharmaceuticals reached a $2.3 billion agreement that will settle all outstanding tax disputes from 1993 to 2006. According to an IRS statement, the settlement, one of the largest in recent history, resolves federal taxes, interest after deductions, and penalties on many issues, including three arising out of Merck's transactions in minority equity interest financing. The settlement of the tax disputes with the IRS marks just one closed item in the company's potential liabilities. Merck has yet to settle a $1.76 billion dispute over tax returns between 1998 and 2004 with the Canada Revenue Agency. Merck also awaits the resolution of multiple suits concerning the painkiller Vioxx . Most recently, a jury in California was unable to reach a decision concerning Merck's liability, and an Alabama jury found Merck not liable for the heart attack suffered by a plaintiff seeking over $5 million in damages.

  • Ex-Enron executives sentenced to probation for electricity market manipulation

A federal court in California sentenced two former Enron executives to probation for their roles in Enron's manipulation of electricity supplies during the 2000-01 West Coast energy crisis. Timothy Belden, former head of Enron's West Coast power trading was sentenced to two years of probation for deliberately submitting false data to California electricity operators to drive up Enron's profits. He had pleaded guilty. Another former Enron employee, Jeffrey Richter, was also sentenced to two years probation on same charges.

  • Montana Senate judiciary panel backs bill to abolish death penalty

The judiciary committee of the Montana Senate endorsed a bill that would abolish the death penalty. Similar legislation has been introduced in the past three Montana Senate legislative sessions without success. Montana has executed three prisoners since the national death penalty was reinstated and currently has two prisoners on death row. The death penalty has been recently challenged in several states over concerns about cruelty and procedure. The New Mexico House of Representatives passed a bill to repeal the death penalty this week and earlier this month, Tennessee Governor issued an executive order directing the Tennessee Commissioner of Corrections to review the manner in which death sentences are carried out and granted temporary reprieves to four inmates on death row. The New Jersey Death Penalty Commission had also earlier recommended abolishing the death penalty

  • Civil antitrust case settled by Samsung for $90 million

Thirty-eight US states and Samsung Electronics agreed to a $90 million settlement, pending court approval, to resolve allegations that Samsung fixed prices and engaged in other anticompetitive activities in the market for DRAM memory chips for computers. The settlement terms require the company to refrain from conduct that could substantially lessen competition and to cooperate with the states in prosecuting co-conspirators. The civil suits against Samsung and other DRAM manufacturers came after the US Justice Department filed criminal charges against many DRAM manufacturers, alleging an illegal conspiracy to drive up chip prices.