[No.223]

Supreme Court

• Raghunath Anant Govilkar v. State of Maharashtra and Ors.

The allegation against the appellant was that while working with Maharashtra Housing and Area Development Authority (MHADA), the appellant allotted premises to various persons under his signature, issued rent receipts so that the persons could claim that they were in possession of the tenements, though in fact, the tenements were vacant and were not in possession of MHADA. The appellant was in Government service till 31.8.1989. The complaint was filed on 17.7.1989. Before the Trial Court, the appellant filed an application for discharge in terms of Section 228 of the Code of Criminal Procedure, 1973 primarily on the ground that sanction was necessary for his prosecution and that proceedings could not have been initiated after his retirement. The Trial Court dismissed the said application. On appeal, the High Court dismissed the petition affirming the view taken by the Trial Court and held that sanction under Section 197 not necessary as Appellant had already retired from service. Hence, the present appeal. Held that the protection given under Section 197 Cr.P.C. is to protect responsible public servants against the institution of possibly vexatious criminal proceedings for offences alleged to have been committed by them while they are acting or adequate protection to public servants to ensure that they are not prosecuted for anything done by them, in the discharge of their official duties without reasonable cause, and if sanction is granted, to confer on the Government, if it chooses to exercise it, complete control of the prosecution. This protection has certain limits and is available only when the alleged act done by the public servant is reasonably connected with the discharge of his official duty and is not merely a cloak for doing the objectionable act. If in doing his official duty, he acted in excess of his duty, but there is a reasonable connection between the act and the performance of the official duty, the excess will not be a sufficient ground to deprive the public servant from the protection. One safe and sure test in this regard would be to consider if the omission or neglect on the part of the public servant to commit the act complained of could have made him answerable for a charge of dereliction of his official duty, if the answer to this question is in the affirmative, it may be said that such act was committed by the public servant while acting in the discharge of his official duty and there was every connection with the act complained of and the official duty of the public servant. This aspect makes it clear that the concept of Section 197 Cr.P.C. does not get immediately attracted on institution of the complaint case. The correct legal position, therefore, is that an accused facing prosecution for offences under the old Act or new Act cannot claim any immunity on the ground of want of sanction, if he ceased to be a public servant on the date when the court took cognizance of the said offences. But the position is different in cases where Section 197 of the Code has application. Though, we have held that view of the High Court about the need for sanction in the case of retired Government servant was erroneous, in view of the finding that the charged offences are not relatable to any official duty, the appeal fails and deserves to be dismissed which we direct.

• Padinjarekara Agencies Limited vs. State of Kerala

Assessee, M/s Padinjarekara Agencies Ltd., engaged in production of sale of centrifuged latex. The Assessee's unit is registered as a SSI Unit. Assessee herein claimed benefit of exemption provided in Government Notification SRO No. 1003/91 which was subsequently replaced by Government Notification SRO No. 1727/93. Assessing Authority did not allow benefit of exemption to Assessee. On appeal, Appellate Authority allowed the benefit, but later on denied benefit holding that field latex is not rubber product therefore Assessee was not entitled to exemption vide Notification SRO No.1727/93. Hence, present appeal. Held, exigibility to tax is a concept which is different from concept of exemption/concession. The rules of interpretation which apply to classification of items in a taxing statute can differ in appropriate cases from the terms and conditions of exemption Notification. Every Exemption Notification has to be read on its own terms. One cannot confuse the terms used in the Notification by comparing the language of the Notification with the language of the taxing statute. In this case, the words and expressions used in the Notification(s) have to be looked into. This point has been missed by the High Court in its impugned Judgment. This is on the principle that such Circular does not bind the Assessee, if the Assessee demonstrates that it fulfils the conditions mentioned in the Exemption Notification. Assessee was not bound by the Orders/directions issued by the Commissioner to the AO, therefore, on the scope and effect of each of the above exemption Notifications, the matter needs to be remitted to the AO for fresh decision in accordance with law. If the Assessee satisfies the terms and conditions mentioned in the Exemption Notification, the Assessee would be entitled to the benefit thereunder notwithstanding the circular issued by the Board/Commissioner. Appeal allowed.

High Courts

Bombay

• Ashok Organic Industries Ltd., Mumbai vs. Asset Reconstruction Company (India) Limited (ARCIL)

Petitioner company made reference to BIFR under the provisions of SICA. During pendency Petitioner company filed a petition under Section 391 and 394 of Companies Act before Company Court. Relief sought was that scheme of arrangement arrived at between company and its shareholders and creditors be sanctioned. One of the secured creditors filed objections to scheme and also maintainability of petition. Learned referral judge held Company Court and BIFR do not have concurrent jurisdiction and held that till the company remains a sick company and till a winding up Order is passed by the Company Court provisions of SICA will prevail over the Companies Act. But there were precedents holding that Companies Act will prevail over SICA. Hence, the present reference to this larger bench. Whether an Industrial Company which has made a reference under SICA can during the pendency of such reference, apply to this Court for sanctioning a scheme of arrangement or compromise with its creditors and shareholders. Held, since the SICA is a complete and exhaustive code and in case of any inconsistency, such inconsistency may be resolved by applying the well-settled principle that the special and later act prevails over the general and prior act. Hence, the special and later act (the SICA, 1985) will override the general and earlier Act (Sections 391-394 of the Companies Act, 1956). Further held, that by virtue of overriding non-obstante clause contained in Section 32 of SICA, provisions of SICA, 1985 are paramount in the case of sick industrial companies and will have overriding effect over all other laws including the provisions of Companies Act, 1956 which allows schemes of any kind to be presented in respect of sick industrial companies. Once the Industrial Company makes a reference under Section 15 of the SICA, it is the B.I.F.R. that retains complete control over assets of a sick industrial company until a winding up Order is actually passed by the High Court on the basis of a referral by the B.I.F.R. under Section 20(2) of the SICA, 1985. Power of B.I.F.R. prevails over the provisions of Companies Act, 1956 and continues even whilst the Company Court is considering the matter of winding up of the company under Section 20(2). Hence, Company Court would have no jurisdiction for sanctioning the scheme of arrangement of compromise with its creditors and shareholders and neither will it have jurisdiction to take cognizance of such an application during the pendency of the reference before B.I.F.R. Petition dismissed. Reference answered accordingly.

• Shri Gangadhar Pandhari Harde vs. Uttam and Bhaskar

Self acquired property of grandfather of Plaintiff and Defendant No. 2 was said to have relinquished by him in favour of Plaintiff and Defendant No. 2. Father of the Plaintiff consented to such transfer. Later on certain part of the property was given to the father for his maintenance with the understanding that they would revert back to Plaintiff and Defendant No. 2 after his death. However, father of the Plaintiff effected a partition deed and transferred one field to Defendants No. 1 and 2 and gifted the other field to Defendant No. 1. Hence, a civil suit was filed by Plaintiff seeking decree of declaration that partition deed and gift deed are void. Trial Court dismissed the suit on the finding that there was a partition in the year 1962 and Plaintiff's father had became the full owner of the property and he had every right to dispose of the said property. Appellate Court also confirmed the findings. Hence, the second appeal. Suit filed by mother of the Plaintiff in which he also was a party was also dismissed. Whether the oral transfers could be given effect to as the law requires a transfer to be effected in writing or by registration under Section 9 of the Transfer of property Act. Held, if the suit property was self-acquired property and not the joint family property it could not be relinquished/ surrendered without registered instrument. A co-parcener or a sharer in joint family property can surrender his share orally at the time of partition. Oral relinquishment of share in a joint family property is valid. In the present case, since the oral relinquishment was of a self acquired property, it was invalid and the grandfather of the Plaintiff continued to be the owner and no title under the alleged surrender ever vested in the Plaintiff or Defendant No. 2. On the death of the owner the property devolved on the father of the Plaintiff and acquired the status of joint family property. Partition deed effected of the said property is hence valid and conclusive as to the shares allotted to everyone including the Plaintiff. Further, the suit filed against the said partition was also dismissed and hence the present suit filed by Plaintiff is barred by the principle of res-judicata. No error committed by Courts below. Appeal dismissed..

Ministry of Economic Affairs

• Issue of Foreign Currency Exchangeable Bond Scheme, 2008

Notification No.GSR89(E) Dated 15.02.2008 : The Central Government has issued  Foreign Currency Exchangeable Bond Scheme, 2008 scheme for facilitating issue of Foreign Currency Exchangeable Bonds by Indian Companies. Eligibility Conditions and subscription of Foreign Currency Exchangeable Bonds laid down under scheme are:

a. The Company Issuing Foreign Currency Exchangeable Bonds shall be part of the promoter group of the Offered Company and shall hold the equity share/s being offered at the time of issuance of Foreign Currency Exchangeable Bond.

b. The Company to whom bonds Offered shall be a listed company which is engaged in a sector eligible to receive Foreign Direct Investment and eligible to issue or avail of Foreign Currency Convertible Bond or External Commercial Borrowings.

c. A company which has been restrained from accessing the securities market by the Securities and Exchange Board of India, including Indian Company, which is not eligible to raise funds from the Indian securities market, including shall not be eligible to issue Foreign Currency Exchangeable Bond.

d. The company subscribed to the Foreign Currency Exchangeable Bond shall comply with the Foreign Direct Investment policy and adhere to the sectoral caps at the time of issuance of Foreign Currency Exchangeable Bond. Prior approval of Foreign Investment Promotion Board, wherever required under the Foreign Direct Investment policy, should be obtained. Entities prohibited to buy, sell or deal in securities by Securities and Exchange Board of India will not be eligible to subscribe to Foreign Currency Exchangeable Bond.

According, to the scheme Prior approval of the Reserve Bank of India shall be required for issuance of Foreign Currency Exchangeable Bond and Foreign Currency Exchangeable Bond may be denominated in any freely convertible foreign currency.

Issuing Company are required to comply requirement provided with in scheme as mandatory requirements, which are as follow:

a. Company issuing bond shall comply with the provisions of the Companies Act,1956 and obtain necessary approvals of its Board of Directors and shareholders if applicable. The Company Offered shall also obtain the approval of its Board of Directors in favour of the Foreign Currency Exchangeable Bond proposal of the issuing company.

b. Company issuing bond shall comply with all the applicable provisions of the Securities and Exchange Board of India Act, Rules, Regulations or Guidelines with respect to disclosures of their shareholding in the Offered Company, If they intent to offer shares of the offered company under Foreign Currency Exchangeable Bond.

c. Company issuing bond shall not transfer, mortgage or offer as collateral or trade in the offered shares under Foreign Currency Exchangeable Bond from the date of issuance of the Foreign Currency Exchangeable Bond till the date of exchange or redemption. Further, the Issuing Company shall keep the offered shares under Foreign Currency Exchangeable Bond free from all encumbrances from the date of issuance of the Foreign Currency Exchangeable Bond till the date of exchange or redemption.

Scheme elaborately deals with the provisions relating to End-use requirements , Pricing and Maturity and Taxation on Exchangeable Bonds.

RBI

DBOD

• Prudential Norms for Issuance of Letters of Comfort by Banks Regarding their Subsidiaries

Circular No. : DBOD No. BP. BC.65 / 21.04.009/ 2007-08 Dated : 04.03.2008 : Letters of Comfort (LoCs) have been issued by the banks in India to meet the requirements of the overseas regulators while seeking their approval for establishing subsidiaries / opening branches in their countries as also to support certain activities of their subsidiaries in India. LoCs are intended to reassure the overseas and domestic regulators that the parent bank would support its foreign / domestic subsidiaries in case they face any financial problems in future. Such LoCs could bring about an element of contingent liability on the part of the issuing banks which, at present, is not adequately captured under the extant regulatory dispensation.

Reserve Bank of India has recently in view of the possible liabilities / obligations that may have to be met by the issuing banks in future decided to lay down the following prudential norms in this regard:

1. Prior approval by the Board of Directors of the bank will be required for every issuances of petition allowed LoC. Bank are required to lay down a well defined policy for issuance of LoCs, including the indicative cumulative ceilings up to which LoCs could be issued by the banks for various purposes. Such The policy must, inter alia, provide that the banks will obtain and keep on record a legal opinion in regard to the legally binding nature of the LoC issued.

2. The bank are required to make an assessment of the financial impact that is likely to arise from the LoCs issued by it and outstanding, in case it is called upon to support its subsidiary in India or abroad as per the obligations assumed under the LoCs issued.

3. LoC shall be treated, for all prudential regulatory purposes, on the same footing as a financial guarantee issued by the bank, if that is assessed to be a contingent liability of the bank by a rating agency / internal or external auditors/ internal inspectors or the RBI inspection team.

4. The banks are require to disclose full particulars of all the LoCs issued by them during the year, including their assessed financial impact, as also their assessed cumulative financial obligations under the LoCs issued by them in the past and outstanding, in its published financial statements, as part of the 'Notes to Accounts'.

Telecom Regulatory Authority of India

Press Release

• TRAI Releases Consultation Paper on "Restructuring of Cable TV Services"

Press Release No.:23/2008 Dated  04.03.2008 : Telecom Regulatory Authority of India has issued a consultation paper on "Restructuring of Cable TV Services". The cable TV transmission in the country is predominantly analogue and limited to provisioning of TV Channels only. But with the spread of convergence it is also possible to provide telecom services like broadband and Internet telephony through cable TV networks.

A suitable regulatory framework to enable the orderly growth of the sector is call for the hour. The provisions for registration, information system for monitoring of cable TV industry, customer grievance redressal and quality of service etc require immediate attention. In view of new technologies available today there is a scope for growth in the cable TV sector. A supportive regulatory environment will facilitate the constructive growth.

In order to tackle all these issues, TRAI has come out with consultation paper regarding Restructuring of Cable TV Services which will initiate meaningful consideration. It provides for regulatory framework to take care of technological advancement and Transparency in registration process of cable TV operator, adequate monitoring to ensure better cable TV services.

Cases

• John D. Cerqueira v. American airlines, inc.

An airline passenger, John Cerqueira, filed suit with the Massachusetts Commission Against Discrimination asserting that his removal from a flight violated his rights under 42 U.S.C. § 1981 to be free of race discrimination in contracting. He recovered compensatory damages and punitive damages against American Airlines (American), which refused to transport Cerqueira on flight and to rebook him on another flight. His discrimination claim was made against the statutory permission granted to airlines, in 49 U.S.C. § 44902(b), to refuse to transport a passenger "the carrier decides is, or might be, inimical to safety." On appeal, it was held that the statute is an affirmative grant of permission to the air carrier. Congress specifically authorized permissive refusals by air carriers; Congress did not say § 44902 was merely creating a defense. In cases involving removal from flights under § 44902, it is the decision by pilot in charge who refuses passage which stands as decision of air carrier. There is absolutely no evidence that either the Captain himself or the SOC manager had discriminatory animus, let alone that their decisions to refuse to transport a passenger, which were made under time pressure, were based on any discriminatory animus. District Court failed to instruct the jury on statutory permission to air carriers to remove passengers under § 44902(b); it also gave instructions inconsistent with that statute and which were otherwise in error. We thus vacate the jury verdict in favor of the plaintiff. The district court also erroneously invoked another doctrine from employment law, which has no applicability on the facts here. For the reasons given, this Court reverse and remand to district court with instructions to vacate the judgment and fees award in favor of plaintiff and enter judgment for defendant.

• Mr. Fortnum v. Ms. Fortnum.

An order was passed by a Judge that Mr Fortnum should have no contact with his son. The father filed an appeal against that order. There have been a number of procedural hearings in respect of the appeal. Appeal was listed for hearing when however, it did not proceed and the some orders were made. Thereafter, the father filed an application for an "extension of time to prepare transcript requirements. Full Court directed that the father's application be dealt with by way of written submissions in accordance with the timetable set out. Submissions have been received from the mother and the independent children's lawyer. No submissions have been received from the father. The Court held that the father's application should be dismissed and the appeal set for hearing because of various reasons like the absence of submissions by the father, medical evidence is outdated and not necessarily linked to the father's present state of health and lengthy delays that have already occurred in the prosecution of this appeal and for various other reasons.

News

• Letters received by US lawmakers on Times Square bomb attack.

The New York City military recruiting station in Manhattan was hit by a small bomb on 5th March 2008, according to the reports. Many letters was received through mails along with photograph of the station by several lawmakers but the letter did not contain any specific threats against the lawmakers or the site. The information was given by the US capital-based Politico website. The Federal Bureau of Investigation (FBI) and Capitol Police were investigating the matter, along with federal postal service officials. A precautionary effort is being taken to ensure if no other letters are received elsewhere for other places. Only a man on a bicycle at a police officer has thrown a "small incendiary device" and no injuries were reported.

• Kidnapped Australian tourist rescued in China.

With the efficiency increasing of China police, they rescued 10 kidnapped Australian tourists at city of Xi'an in China. The motive behind the kidnapping was unknown till now. The tourists were not harmed and returned back on 5th March 2008. The Australian embassy's public affairs counselor said nine hostages were released early in the incident, but that Chinese police had to intervene to rescue a 48-year-old woman from New South Wales. The crime has been increasing in China recently, which was known to be safest place for tourist.