Legislative and Regulatory Update
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In This Issue [No.32] Nov 20, 2002
SEBI DCA CBEC Excise Tariff CBEC Excise NT CBEC Customs Tariff CBEC Customs NT Department of Economics Affairs RBI DGFT Department of Commerce Department of Industrial Policy PIB
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Secondary Market Division
Renewal of Recognitions to Cochin Stock Exchange Limited
Notification No. SO1177(E) Dated 06.11.2002 : SEBI has granted, renewal of recognition to Cochin Stock Exchange Limited under Section 4 of the Act for a further period of one year, commencing on the 8th day of November 2002 and ending on the 7th day of November 2003 in respect of contracts in securities, subject to the conditions specified.
Mutual Funds Division
Investment in Foreign Securities
Circular No. MFD/CIR/18/21826/2002 Dated 07.11.2002 : It is clarified that Clause 4 of Seventh Schedule of the SEBI (Mutual Funds) Regulations 1996 which restricts investments in mutual fund units upto 5% of net assets and prohibits charging of fees, shall not be applicable to investments in mutual funds in foreign countries made in accordance with guidelines as per Circular No. MFD/CIR/17/419/02 dated March 30, 2002.
Amendment to Schedule VI of Companies Act,1956
Notification No. G.S.R. 762 Dated 13.11.2002 : In Schedule VI, in Form of Balance Sheet, under heading "Liabilities", in Sub-heading "Current Liabilities and Provisions", for brackets, figure and words "(5) Unclaimed Dividends", the following have been substituted, namely :-
"(5) Investor Education and Protection Fund shall be credited by the following amounts namely :-
(a) Unpaid dividend;
(b) Unpaid application money received by the companies for allotment of securities and due for refund;
(c) Unpaid Matured Deposits;
(d) Unpaid Matured Debentures;
(e) Interest accrued on (a) to (d) above."
Amendment In Schedule-V Of Companies Act,1956
Notification No. G.S.R. 751 Dated 02.11.2002 : In Schedule V relating to “Annual Return”, in Part II, for clause (c) and the entries relating thereto, the following have been substituted, namely:-
“(c) the whole of amounts envisaged in clauses (a) to (e) of Sub-section (2) of Section 205C of the Companies Act, 1956 remaining unpaid or unclaimed for a period of seven years from the date they become payable by a company have been credited to the Investor Education and Protection Fund :”.
Classification of Di-calcium phosphate
Circular No. 66/674/2002 Dated 15.11.2002 : In view of the Apex Court decisions against the Department's 37B order No. 47/1/97-CX dated 3.3.1997 which inter alia clarifies that the Di-Calcium Phosphate (IS:5740-1969) should be classified under sub-heading 2835.00 of the Central Excise Tariff, the instructions contained in 37B order dated 3.3.1997 would no longer be valid in their entirety. These instructions may, therefore, be treated as withdrawn
Exemption to the Goods specified cleared from Jammu and Kashmir
Notification No. 57/2002 Dated 14.11.2002 : The Central Government, has exempted the goods specified in the Schedule appended to the notification, other than goods specified in Annexure appended hereto, and cleared from a unit located in the State of Jammu and Kashmir, from so much of the duty of excise leviable thereon under any of the said Acts as is equivalent to the amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002.
Exemptions to the goods Cleared from locations Specified
Notification No. 56/2002 Dated 14.11.2002 : The Central Government has exempted the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, other than goods specified and cleared from a unit located in the Industrial Growth Centre, Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate, or Scheme Area, as specified, from so much of the duty of excise or additional duty of excise, as the case may be, leviable thereon as is equivalent to the amount of duty paid by the manufacturer of goods, other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002.
Amendment in Notification No.6/2002 Dated 01.03.2002
Notification No. 55/2002 Dated 07.11.2002 : In the Table, S. No. 47A relating to Life saving drugs or medicines has been inserted.
CENVAT Credit Amendment Rules, 2002
Notification No. 39/2002 NT Dated 14.11.2002 : In the CENVAT Credit Rules, 2002, rule 10 relating to Special dispensation in respect of inputs manufactured in factories located in specified areas of North East region, Kutch district of Gujarat and State of Jammu and Kashmir has been substituted.
Amendment to Notification No.14/2002 Dated 08.03.2002
Notification No. 38/2002 NT Dated 14.11.2002 : In Table III in Sl. No. 22 and 23 and the entries relating thereto, for Commissioner of Central Excise (Appeals), Delhi - III the Commissioner of Central Excise is specified to be Delhi-III Panchkula, Rohtak and for Commissioner of Central Excise (Appeals), Delhi – IV the Commissioner of Central Excise is specified to be Delhi – IV.
Anti-Dumping Duty
Notification No. 128/2002 Dated 15.11.2002 and No. 124/2002 Dated 11.11.2002 : Anti-Dumping Duty has been imposed on Thermal Sensitive Paper and D (-) Para Hydroxy Phenyl Glycine Methyl Potassium Dane.
Fraudulent exports by M/s. Sandeep Exports & Others to avail higher duty drawback and DFRC benefit
Circular No. 76/2002 Dated 13.11.2002 : Customs Officers have been informed that CC, ICD, Tughlakabad has reported cases of attempted fraudulent export of hand tools and HSS Hacksaw cutters by M/s. Sandeep Exports and others against DFRC-cum-Drawback shipping bills where the exporters attempted to avail higher drawback and DFRC benefits by mis-declaring the weight and value of the export goods for availing excess drawback and DFRC benefits. The names of the exporters involved are M/s. Sandeep Exports, 1612 Model Town, Kapurthala, Punjab Mansi Exports, RAG Exports, IG Exports, Gitika Enterprises, Ambay Trading and Classic Group of Industries.
Amendment in Notification Nos. 26/2000-Customs and 60/2000-Customs.
Notification No. 126/2002 Dated 12.11.2002 : In Notification No. 26/2000, Condition 2 relating to applicability of the exemption in respect of articles of apparel and clothing accessories specified in List 3 of the Table, has been substituted. In the Notification No. 60/2000, condition (3) has been substituted, whereby it is specified that the imports shall be made only through the ports of Mumbai, Kolkata, Cochin and Visakhapatnam.
Implementation of the Circulars and instructions issued by the Central Board of Excise & Customs.
Circular No. 75/2002 Dated 12.11.2002 : All Chief Commissioners of Customs & Central Excise and Commissioners have been informed that it is expected that thorough study of the circulars/instructions issued by the Board should be made and thereafter, clear-cut Public Notices/standing Orders be issued. Further, the situation in the field be regularly and closely monitored by the Administrative Heads to obviate any harassment to the trade.
Deduction of Air Freight element from f.o.b. value.
Circular No. 74/2002 Dated 08.11.2002 : It is clarified that if the buyer and the seller have contracted the goods on f.o.b. basis and the same is reflected in the contract and the LC, it is immaterial that the exporter has shipped the goods by sea or by air. If the freight is on collect basis and the exporter is paying more as air freight due to the exigency of the situation without affecting the f.o.b., it would not be justified to re-work the drawback amount by deducting the freight element from the contracted f.o.b. value.
Eligibility of reusable packing containers for duty free import under notification No.104/94
Circular No. 73/2002 Dated 07.11.2002 : It is clarified that any type of reusable packaging containers such as cases, boxes, cartons, trays, etc., made up of metals or plastics may be cleared duty free under notification No.104/94-Cus., read with Board's Circular No.69/2002-Cus., dated 25.10.2002, subject to fulfillment of conditions stipulated therein. However, the importer may be asked to declare particulars such as dimension, shape, weight, colour of the containers. The importer may also be asked to get the consignment photographed, if required, at the time of examination at his expense and get it attested from the Customs and the consignment may be examined at random for the above and other particulars as per the normal procedure.
Amendment to Notification No.227 dated 29.11.1980
Notification No. 70/2002-NT Dated 15.11.2002 : In the notification, the proviso relating to non applicability of the prohibitions in respect of maps of Geological Survey of India (GSI) on scale of 1:2,50,000 and larger (non-digitized) of unrestricted areas only if certain conditions are satisfied, has been inserted.
Public Provident Fund (Second Amendment) Scheme, 2002
Notification No. GSR768(E) Dated 15.11.2002 : (i) In paragraph 3, in sub-paragraphs (1) and (2), for “Rs. 100” and “Rs. 60.000/-” the letters and figures “Rs. 500/-” and “Rs. 70,000/-” have been substituted,
(ii) In paragraph 7, in sub-paragraph (2),for “Rs. 10” and “Rs. 100/-”, the letters and figures “Rs. 50/-” and “Rs. 500/-” have been substituted,
(iii) In Forms-A, in para (iv), for “Rs. 60,000/-” the letters and figures “Rs. 70,000/-” have been substituted.
Order of Moratorium in Respect of Nedungadi Bank Ltd
Notification No. SO1162(E) Dated 02.11.2002 : The Central Government, after considering an application made by the Reserve Bank of India has made an Order of Moratorium in respect of the Nedungadi Bank Ltd., for the period from the close of business on the 2nd day of November, 2002 upto and inclusive of the 1st day of February, 2003 and has stayed the commencement or continuance of all actions and proceedings against that banking company during the period of moratorium, subject to specified conditions.
Change in Location of Delhi Debts Recovery Tribunal No.3
Notification No. GSR736(E) Dated 30.10.2002 : Place at which the Tribunal will function from is specified to be 2nd Floor, Sanskriti Bhavan, Desh Bandhu Gupta Marg. Jhandewalan, New Delhi-110055.
Increase in release of foreign exchange for private visits abroad
Cicular No. A.P. (DIR Series) Circular No.51 Dated 18.11.2002 : In terms of Item No.2 of Schedule III to the Government of India's Notification No.G.S.R.381(E) dated May 3, 2000, Authorised Persons (APs) are required to obtain prior permission of the Reserve Bank to release foreign exchange exceeding US$ 5,000 or its equivalent to resident individuals in one calendar year, for one or more private visits to any country (except Nepal and Bhutan). As a measure of further liberalization, the above limit has been enhanced to US$ 10,000 or its equivalent.
Forward Cover for Foreign Institutional Investors
Circular No. A.P. (DIR Series) Circular No.50 Dated 16.11.2002 : In terms of paragraph 1(b) of Schedule II to the Notification No.FEMA.25/RB-2000 dated May 3, 2000, a registered Foreign Institutional Investor (FII) has been permitted to enter into a forward contract with rupee as one of the currencies with an authorised dealer in India, provided that the value of the hedge does not exceed 15 per cent of the market value of the equity as at the close of business on 31st March 1999, converted at the rate of US $ 1= Rs. 42.43 plus the increase in the market value/inflows thereafter. With a view to further liberalise and simplify the facility, it has been decided to permit the FIIs to hedge the market value of their entire investment in equity as on a particular date without any reference to a cut-off date.
Foreign Exchange Management Act, 1999 –Advance Remittances for Imports
Cicular No. A.P. (DIR Series) Circular No.49 Dated 16.11.2002 : In terms of A.P.(DIR Series) Circular No.9 dated August 24, 2000, authorised dealers had been permitted to make advance remittances for import of goods. Sub-para (c) of the said paragraph requires a bank guarantee if the amount of advance remittance exceeds USD 25,000 or its equivalent. With a view to simplifying and liberalising the procedure for import, it has been decided to raise the limit of USD 25,000 to USD 100,000 or its equivalent.
Investment in Overseas Market
Cicular No. A.P. (DIR Series) Circular No.48 Dated 16.11.2002 : With a view to accord further flexibility in funds management to banks in India it has been decided that banks may now invest upto 50 per cent (as against the existing ceiling of 25 per cent) of their unimpaired Tier 1 capital or USD 25 million (as against the existing ceiling of USD 10 million) whichever is higher in overseas money market instruments and/ or debt instruments.
Exim Bank's Line of Credit of US$ 10 Million to Eastern and Southern African Trade andDevelopment Bank (PTA Bank)
Circular No. AP (DIR Series) Circular No 47 Dated 12.11.2002 : Export Import Bank of India (Exim Bank) has concluded an agreement with Eastern and Southern African Trade and Development Bank (PTA Bank) on August 2, 2002, making available to the latter, a line of credit upto an aggregate sum of US$ 10 million (U.S.Dollar Ten Million only).
Refund of purchase consideration on account of non-allotmentof flats/plots/cancellation of bookings/deals in respect of immovable property purchased by NRIs/PIOs in India
Circular No. AP (DIR Series) Circular No 46 Dated 12.11.2002 : With a view to allow credit to NRE/FCNR account of refund of purchase consideration by seller on account of cancellation of bookings/deals for purchase of residential, commercial property, Reserve Bank has issued Notification No. FEMA 64/2002-RB dated June 29, 2002 amending the Notification No. FEMA 5/2000-RB dated May 3, 2000. Accordingly, it will be in order for authorised dealers to allow Non-Resident Indians/Persons of Indian Origin to credit refund of application/earnest money/purchase consideration made by the housing building agencies/seller on account of non-allotment of flat/plot/cancellation of bookings/deals for purchase of residential, commercial property, together with interest, if any, to NRE/FCNR account, provided, certain conditions are satisfied.
Repatriation of refund of funds received for purchase of shares
Circular No. AP (DIR Series) Circular No 45 Dated 12.11.2002 : It has now been decided to delegate the authority to authorised dealers to allow repatriation of surplus funds/refund of remittance received for purchase of shares to a person resident outside India in the following cases:
Refund of funds received towards allotment of shares under Regulation 5 (1) of the Reserve Bank Notification No. FEMA20/ 2000-RB dated May 3, 2000.
Remittance of surplus funds received for purchase of shares offered on rights basis.
Remittance on account of surplus funds received for purchase of shares or on account of cancellation of trade, under Two-way fungibility of ADRs/GDRs.
Commodity Hedging by Entities in the Special Economic Zones
Circular No. AP (DIR Series) Circular No 44 Dated 12.11.2002 : It has been decided to grant general permission to entities in the Special Economic Zones (SEZs) for undertaking hedging transactions in the international commodity exchanges/markets to hedge their commodity price risk on import/export, provided, such transactions are undertaken on "stand-alone" basis.
Memorandum of Instructions to Authorised Money Changers (AMCs)
Circular No. AP (DIR Series) Circular No 43 Dated 12.11.2002 : The Reserve Bank has now brought out the Memorandum of Instructions to Authorised Money Changers (AMCs) i.e. Full Fledged Money Changers and Restricted Money Changers, containing procedural instructions issued to authorised money changers, for adherence while undertaking money changing transactions.
Investment in Overseas Markets
Circular No. AP (DIR Series) Circular No 42 Dated 12.11.2002 : In view of Paragraph 2 of AP(DIR Series) Circular No.38 dated November 2, 2002 on Investment in Overseas Markets, it has been advised that credit ratings of securities for investment of undeployed FCNR(B) funds may be amended to read as AA(-) by Standard and Poor/FITCH IBCA as against AA mentioned therein.
Issue of Corporate Guarantee in lieu of Bid Bond Guarantee
Circular No. AP (DIR Series) Circular No 41 Dated 08.11.2002 : Reserve Bank has issued Notification No.FEMA.56/2002-RB dated March 18, 2002 amending Notification No.FEMA.8/2000-RB dated May 3, 2000, allowing exporters, desiring to submit bids for execution of projects abroad including service contract to issue Corporate Guarantee in lieu of Bid Bond Guarantee subject to the condition that the amount of such guarantee shall not exceed 5% of the contract value.
Setting up of Offshore Banking Units (OBUs) in Special Economic Zones(SEZs)
Notification No. DBOD.IBS.BC. 42/23.13.004/2002-03 Dated 12.11.2002 : The Union Commerce Minister in the EXIM Policy 2002-07 speech had announced that for the first time, Offshore Banking Units (OBUs) would be permitted to be set up in SEZs for which a scheme has been formulated.
Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fifth Amendment) Regulations, 2002
Notification No. FEMA74/2002-RB Dated 01.11.2002 : In the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, Regulation 5 A relating to Opening, holding and maintaining a Resident Foreign Currency (Domestic) Account, has been inserted.
Rupee Export Credit Interest Rates
Notification No. IECD No. 10 /04.02.01/2002-03 Dated 07.11.2002 : In pursuance of the policy of deregulation of interest rates on export credit, with effect from May 1, 2003, the interest rates on second slab, i.e. 181 to 270 days for pre-shipment credit and 91 to 180 days for post-shipment credit are made free, and are to be decided by the banks subject to the approval of their Boards.
Reliance on Call/Notice Money Market : Prudential Norm
Circular No. MPD.BC.225/07.01.279/2002-03 Dated 14.11.2002 : Representations have been received regarding the treatment of Reciprocal Line Facilities in call/notice money transactions. In this context, in order to provide greater flexibility in liquidity management by banks, it is clarified that rupee resources drawn under Reciprocal Line Facility by a foreign bank in India is initially exempted for one year from the prudential limits specified for call/notice money transactions.
Guidelines for relief measures by banks in areas affected by drought
Notification No. RPCD.NO.PLFS.BC./ 46 / 05.04.02(DROUGHT)/2002-2003 Dated 15.11.2002 : The guidelines include relief measure for Kharif 2002-03, which may be extended by commercial banks to the farmers affected by drought, in the districts notified by the State Governments.
(1) There should be no recovery of any amount either by way of principal or interest during the current financial year in respect of Kharif crop loan.
(2) The principal amount of crop loan should be converted into term loan and will be recovered over a period of minimum five years in the case of small and marginal farmers and four years in the case of other farmers. (as against three years stipulated in the existing guidelines).
(3) Interest due in the current financial year on crop loan should also be deferred and no interest should be charged on the deferred interest.
Proposed Amalgamation of the Nedungadi Bank Ltd. with Punjab National Bank: Information for the Public
Press Release No. 518/2002-03 Dated 15.11.2002 : In view of the press reports regarding the movement of share prices of Nedungadi Bank Ltd., the Reserve Bank of India has invited public attention to a clause (clause 7(1) of Chapter IV) in the draft scheme of amalgamation of Nedungadi Bank Ltd. with Punjab National Bank which prescribes that the entire amount of the paid up capital and reserves of the Nedungadi Bank Ltd. would be treated as provision for bad and doubtful debts and depreciation and other assets of the bank.
RBI announces further relaxations in Exchange Control
Press Release No. 515/2002-03 Dated 15.11.2002 : As a measure of further liberalisation and simplification of procedure, it has been decided to permit FIIs to hedge their entire exposure in India in equities as at a particular point of time without any reference to the cut off date. The condition that the forward contracts once cancelled shall not be rebooked will however continue.
Investment by NRIs/PIOs Under PIS
Press Release No. 513/2002-03 Dated 15.11.2002 : The Reserve Bank of India on November 15, 2002 has notified that no further purchases without the prior approval of the Reserve Bank should be made of equity shares of Softrek Technology Exports Ltd. on behalf of non-resident Indians(NRIs) and persons of Indian origin (PIOs).
Procedural Simplification and Liberalisation for Advance Remittance for Imports
Press Release No. 512/2002-03 Dated 15.11.2002 : In keeping with its policy of liberalisation and with an objective of simplifying and liberalising the procedure for import, permitted under Import-Export Policy, the Reserve Bank has decided that importers will now be able to make advance remittance upto USD 1,00,000 (One hundred thousand only) without any prior approval from the Reserve Bank.
RBI releases Report on Trend and Progress of Banking in India - 2001-02
Press Release No. 508/2002-03 Dated 15.11.2002 : The Reserve Bank of India today released its Report on Trend and Progress of Banking in India 2001-02. The Report gives a detailed account of the performance of commercial banks, co-operative banks, financial institutions and non-banking financial companies (NBFCs).
Government not to borrow through scheduled auction
Press Release No. 507/2002-03 Dated 14.11.2002 : In view of comfortable liquidity position of the Central Government, it has decided not to raise borrowing through the scheduled auction for November 18-23, 2002.
Acceptance of Income Tax and other Direct Taxes
Press Release No. 491/2002-03 Dated 11.11.2002 : For the convenience of Income Tax Assessees, arrangements have been made for receipt of Advance Income Tax at about 820 computerised branches of all the Public Sector Banks and HDFC Bank in Mumbai and Navi Mumbai. The designated branches are authorized by the Income Tax Department to accept payment of Income Tax dues.
Amendment in the import policy
Notification No. 18/2002-07 Dated 14.11.2002 : Amendments have been made in the ITC(HS) Classifications of Export and Import Items, 2002-2007 whereby a new import licensing note has been inserted.
Handbook of Procedures
Public Notice No. 48/2002-2007 Dated 14.11.2002 : Amendments have been made in the Handbook of Procedures whereby Details are to be Supplied for AL Applications where SION is not fixed.
Amendment in Policy for import of Barley-Other than seed Quality
Circular No. 13/2002-2007 Dated 14.11.2002 : The policy for import of “Barley other than seed quality” as classified under the entry no. 10030090 in the ITC (HS) Classification of Export and Import Items, 2002-2007 is shown as “STE through FCI only” which now in view of Notification No.2 dated 31st March’2000, should be read as “free”.
Anti-Dumping Investigation Concerning Imports of Vitamin C from USA and Canada--Preliminary Findings
Notification No. 14/25/2002-DGAD Dated 01.11.2002 : Preliminary Findings regarding Anti-Dumping Investigation Concerning Imports of Vitamin C from USA and Canada have been published.
Department of Industrial Policy
Notification No. SO1169(E) to No. SO1178(E) Dated 06.11.2002 : Exemption has been granted to Oil India Ltd., Dibrugarh, ONGC Ltd., Mumbai, ONGC Ltd., Dehradun, Oil India Ltd., Dehradun , Niko Resources Limited Baroda, Reliance Industries Ltd., Mumbai and GeoEnpro Petroleum Limited, New Delhi, under Rule 31 of Explosives Rules, 1983.
Committee on Civil Case Management Formula invites Suggestions
Dated 18.11.2002 : The five-Member Committee appointed by the Supreme Court of India, headed by the Chairman, Law Commission of India Shri Justice M. Jagannadha Rao, which was constituted on October 30, 2002, to work out modalities for implementation and Case Management Formula on Civil Procedure Code amendments effected in 1999 and 2002, following its judgments of October 25, 2002 in Salem Advocates Bar Association, Tamil Nadu Vs. Union of India having upheld the legal and constitutional validity of these amendments, has invited suggestions from Bar Council of India and all State Bar Councils and Bar Associations in the country within four weeks to enable the Committee to submit a report to the Supreme Court in four months.
Amendment in Court Fees Act
Dated 15.11.2002 : The Government has planned to set up a Committee under the Chairmanship of the Registrar General of the Supreme Court of India to suggest a revised court fees structure. The fee payable in High Courts and lower courts is regulated under the provisions of the Court Fees Act, 1870.
WIPO grants recognition to IMT Chandigarh as International Depository Authority for Microorganims
Dated 14.11.2002 : The World Intellectual Property Organisation has granted global recognition to the Microbial Type Culture Collection Centre at the Institute of Microbial Technology, Chandigarh as an International Depository Authority for the deposition of microorganisms. The recognition has been granted under the Budapest Treaty to which India submitted the instrument of accession in September last.
Sixteenth Law Commission Forwards Eight Reports
Dated 12.11.2002 : The Sixteenth Law Commission of India, headed by Shri Justice M. Jagannadha Rao, has forwarded eight reports to the Government, so far. These reports are: 175th report on the Foreigners (Amendment) Bill, 2000, 176th report on the Arbitration and Conciliation (Amendment) Bill, 2001, 177th report on Law Relating to Arrest, 178th report on Recommendations for Amending Various Enactments, both Civil and Criminal, 179th Report on Public Interest Disclosure and Protection of Informers, 180th report on Article 20 (3) of the Constitution of India and Right to Silence, 181st report on Amendment to Section 106 of the Transfer of Property Act and 182nd report on Amendment of Section 6 of the Land Acquisition Act, 1894.
Nationwide network for provision of free and competent legal services
Dated 11.11.2002 : In terms of the amendments effected in the Legal Services Authorities Act, 1987, in 1994 and 2002, a nationwide network for providing free and competent legal services to the weaker sections has been set up.
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