Legislative and Regulatory Update
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In This Issue [No.81] March 30, 2004
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Cases
Source: Westlawinternational.com
Criminal Justice: Wife's statement against spouse can't be used
The Supreme Court ruled that the Constitution guarantees a criminal defendant to confront his accusers, and that right means prosecutors can't use a wife's taped statement to police to try to undermine her husband at trial. The high court sided with a man convicted of assaulting an acquaintance he had accused of trying to rape his wife. Sylvia Crawford did not testify at Michael Crawford's trial, but prosecutors played a tape they claimed showed her story did not match his. The Crawford case began in 1999, when Crawford and his wife went to find Kenneth Lee at his apartment in Olympia, Washington. The Crawfords fled the apartment and were arrested that night. They both gave statements to police, but only Michael Crawford said he thought he had seen Lee reach for a weapon before he was stabbed. Sylvia did not testify at her husband's trial because of the law protecting spouses from testifying against one another. Prosecutors used her statement to refute his claim that the stabbing was self-defense.
Crawford v. Washington
Civil Rights: Reducing civil rights attorney fee award on basis of litigant's status as prisoner
Denying certiorari, the United States Supreme Court has let stand an en banc decision of the Seventh Circuit Court of Appeals that the Prison Litigation Reform Act (PLRA) does not violate the equal protection rights of inmate litigants by reducing the amount of attorney fees otherwise available for successful civil rights actions on basis of their status as prisoners. A plurality of the Circuit Judges of the Seventh Circuit found that the attorney fee limitations are rationally related to valid objectives and hence within the legislative power
Johnson v. Daley
Criminal Justice: Admission of prejudicial autopsy photographs during guilt phase as violative of due process in capital case
The United States Supreme Court, denying certiorari, has let stand a decision of the Texas Court of Criminal Appeals that the admission during the guilt phase of a capital murder trial of highly graphic and extremely gruesome autopsy photographs of 19-month-old murder victim was harmless error. The Texas court grounded its decision on a finding that, although the probative value of the photographs was substantially outweighed by their danger of unfair prejudice, other inculpatory evidence rendered the erroneous admission harmless under state law.
Avila v. Texas
Education: Constitutionality of restrictions on elementary student's distribution of items with religious messages
An elementary school's restrictions on a student's distribution of candy and pencils containing religious messages did not violate the student's First Amendment rights, the Third Circuit previously held in a case in which the United States Supreme Court has now denied certiorari. The school prevented the distribution of candy canes accompanied by a religious message during class holiday parties but permitted the student to give them to his classmates in the school hallway after class or at recess. The school never punished the student for his repeated attempts to skirt the holiday parties' rules, the Court of Appeals noted. The school also prevented the child from distributing pencils bearing the message "Jesus [Loves] The Little Children." The Court of Appeals stated that, with respect to the pencils, the student was not attempting to exercise a right to personal religious observance in response to a class assignment or activity. Rather, his mother's stated purpose was to promote a religious message through the channel of a benign classroom activity. In the context of its classroom holiday parties, the school's restrictions on this expression were designed to prevent proselytizing speech that, if permitted, would be at cross-purposes with its educational goal and could appear to bear the school's seal of approval, the Court of Appeals said.
Walz ex rel. Walz v. Egg Harbor Tp. Bd. of Educ.
Energy and Utilities: States may restrict public entities from providing telecommunications services
Resolving a split between two Circuit Courts of Appeal, the United States Supreme Court has held that a provision of the Telecommunications Act prohibiting state or local laws that prevent "any entity" from providing telecommunications services does not preempt state or local laws barring municipal participation in the telecommunications field. The dispute before the Court concerned a Missouri law that prohibited municipalities and municipally owned utilities from providing such services. It was held that preempting a ban on government utilities would not accomplish much if the government could not point to some law authorizing it to run a utility in the first place. And preemption would make no difference if the state regulator were left with control over funding needed for any utility operation and declined to pay for it.
Southwestern Bell Telephone, L.P. v. Missouri Mun. League
Environmental Law: Clean Water Act requires permits for point sources that do not themselves generate pollutants
Vacating and remanding an Eleventh Circuit decision, the United States Supreme Court held that a "discharge of a pollutant," for which a National Pollutant Discharge Elimination System (NPDES) permit is required under the Clean Water Act, includes within its reach point sources that do not themselves generate pollutants. The Supreme Court further held that there were fact issues, precluding summary judgment, as to whether a certain canal and a certain wetland area in the Florida Everglades were meaningfully distinct water bodies, for purposes of determining whether the water management district that pumped polluted water from the canal into the wetland required a permit.
South Florida Water Management Dist. v. Miccosukee Tribe of Indians
Taxation: Separate assessment unnecessary to extend limitations period to collect partnership's tax debt from partners
The proper assessment of a tax against a partnership sufficed to extend the statute of limitations for collection of the tax in a judicial proceeding from the general partners who were liable for the payment of the partnership's debts, the United States Supreme Court has held, reversing a decision of the Ninth Circuit. Although the debtors were jointly and severally liable for the partnership's debts under California law, this did not make them primarily liable for the partnership's tax debt. Under California's partnership principles, a partnership and its general partners are separate entities. Thus, the debtors could not argue that imposing a tax on the partnership was equivalent to imposing a tax directly on the general partners.
U.S. v. Galletti
News
Antitrust Ruling To Be Appealed By Microsoft
Microsoft Corp. vowed to appeal a European antitrust ruling that would, for the first time, force the company to strip Windows and pay a hefty fine. The order was based on a finding that Microsoft illegally abused its dominant market position to stifle competing software makers. Different elements of the order will take effect in the next three to four months. The ruling is the biggest challenge yet to the company's longstanding practice of expanding its market presence by bundling extra programs with Windows. Microsoft faced a similar challenge in the United States antitrust case over its bundling of the Internet Explorer browser with Windows. But the company was ultimately allowed to continue the practice.
Tyson's Antitrust Liability Remains Far From Unclear
While the judge in a civil antitrust case against Tyson Foods Inc. has said he won't order the meat company to pay the $1.28 billion in damages calculated by the jury, Tyson's ultimate liability remains far from clear. The case centered on Tyson's use of contracts and alliances to gain control of cattle long before slaughter, instead of buying them on the day of slaughter, as in the past. The plaintiffs successfully argued that the contracts reduce the number of cattle sold in the open market, thus depressing prices for producers who sell that way. The class-action suit was supported by farm groups opposed to consolidation in the meat-packing industry.
Atheist In High Court Objects To 'Under God' Phrase
Atheist Michael Newdow sought to convince U.S. Supreme Court justices that schoolchildren reciting "under God" in the Pledge of Allegiance amounts to a government-imposed religious exercise which violates constitutional church-state separation. This made him win applause in the courtroom at one point, but several skeptical justices said students can be excused from the recitations or can simply not say the "under God" part. Newdow, who is an Atheist and does not believe in God said his daughter was asked to stand up and say her father was wrong. The U.S. Congress in 1954 added "under God" to the pledge in an effort to distinguish America's religious values and heritage from those of communism, which is atheistic.
New Driving Licence Rule Termed Illogical
Expatriates have complained over new rules which prevent them from applying for driving licences in any other emirate apart from the one issuing their residency visa. The Ministry of Interior has banned people from obtaining licences even from the emirate where they live and/or work if their residence visa was issued in another region. However, senior officials such as director generals or managers have been exempted from the rule. Previously, anyone could obtain a driving licence from the emirate in which they lived or worked with a letter from their employer or a copy of their rent agreement.
War On Money Laundering, UAE Stock Exchange Enters The Market
The UAE stock market has joined a campaign by banks and other institutions in the UAE to combat money laundering by introducing curbs on financial dealings. The country's top market regulator has told the two main stock exchanges in Abu Dhabi and Dubai to ensure that the cash they receive from investors and other dealers is clean money and set a ceiling on accepted cash of Dh40,000 ($10,900). The UAE began enforcing anti-laundering laws two years ago to ensure no dirty money would find its way into or out of the country. The law includes tough prison terms and heavy fines against persons and banks involved in such operations.
Singer Bobby Brown Ordered Jailed By Judge
A family court judge ordered R&B singer Bobby Brown, husband of singer Whitney Houston, jailed for 90 days or until he pays $63,500 in child support he owes to the mother of two children he fathered. Judge Paula Carey issued the ruling after Brown, testified that he was unable to pay support he owes for children, now 12 and 14, that he fathered with Kim Ward, of Stoughton. Brown, 35, also is charged with misdemeanor battery after he allegedly hit Houston, leaving her with a bruised cheek and a cut lip. He is scheduled to appear May 5 in a Fulton County, Ga., court on that charge. Brown left R&B group New Edition in the late 1980s for a solo career. His hits include "My Prerogative" and "Every Little Step," but became more famous for his numerous brushes with the law and his turbulent marriage with Houston.
Confusing Custody Battle Over Twin Girls Between Former Same-Sex Couple
Against the backdrop of the nation's cultural wars over same-sex marriages, one former same-sex couple is caught up in a fierce legal tug-of-war over rights to their twin girls. Kim, says she and her partner split up five years after they had twin girls together. A fertility clinic provided Kim and her former partner with sperm and Kim provided the eggs. Her former partner provided the womb, and that's why a judge ruled she is entitled to sole custody. When they split, the designated birth mother moved to Massachusetts with the girls. Kim went to court to obtain shared custody, but her attempt was unsuccessful. Kim, whose uterus could not support a pregnancy, says she never attempted to legally adopt the twins before she and her former partner split because she never assumed it would become an issue, considering the girls came from her own eggs. A decision is the case is expected in the next week.
Court Weighs Giving Name To Police
The justices heard arguments in a first-of-its kind case that asks whether people can be punished for refusing to identify themselves. The court took up the appeal of a Nevada cattle rancher who was arrested after he told a deputy that he had done nothing wrong and didn't have to reveal his name or show an ID during an encounter on a rural road four years ago. Larry "Dudley" Hiibel, 59, was prosecuted, based on his silence, and finds himself at the center of a major privacy rights battle. The case will clarify police powers in the post-September 11 era, determining if officials can demand to see identification whenever they deem it necessary.
Secondary Market Department
Margin Trading and Securities Lending and Borrowing
Circular No. SEBI/MRD/SE/SU/Cir-15/04 Dated 19.03.2004 : It has been decided to allow the member-brokers to provide margin trading facility to their clients, in the cash segment. The securities in Group 1 would be eligible for margin trading facility. The securities having mean impact cost of less than or equal to 1 and having traded on atleast 80% (+/-5%) of the days for the previous eighteen months, have been categorized as Group 1. An eligibility criterion has also been set to provide margin trading facility to clients. Accordingly, only corporate brokers with a "net worth" of at least Rs.3.00 crore would be eligible to offer margin trading facility to their clients. These brokers are also mandated to submit to the stock exchange a half-yearly certificate, as on 31st March and 30th September of each year, from an auditor confirming the net worth as specified in this behalf and such a certificate shall be submitted not later than 30th April and 31st October of the year.
Clarification Regarding SEBI (Central Database of Market Participants) Regulations, 2003
Circular No. MAPIN/Cir-14/2004 Dated 18.03.2004 : It has been clarified that payment towards the application fee for obtaining the Unique Identification Number can be made in the form of consolidated demand draft in favour of SEBI, along with a list of particulars of the persons on behalf of whom the applications and the payments are made. This would be deemed to be in compliance with Regulation 12 of the SEBI (Central Database of Market Participants) Regulations, 2003. It has also been clarified that dependent minor children of the natural persons mentioned in sub-clauses (i) to (vii) of regulation 4(1)(b) of the captioned Regulations need not obtain unique identification numbers or make applications in respect of the same.
Mutual Funds Division
Uniform Cut-off Timings for Applicability of Net Asset Value (NAV) of Mutual Fund Scheme(s)/Plan(s)
Circular No. SEBI/ IMD/CIR No. 8/5611/ 2004 Dated 19.03.2004 : On coming across reports about late trading' in Mutual Funds, in some countries where undue advantage was taken by a few investors due to different cut-off timings for applying NAVs both for subscriptions and redemptions, to the disadvantage of other investors, SEBI has issued guidelines in this behalf. The guidelines have been made applicable to all the schemes/plans of Mutual Funds whether existing or new.
Investment in Foreign Securities by Mutual Funds
Circular No. SEBI/ IMD/CIR No. 7/5573/ 04 Dated 19.03.2004 : It has been decided to permit each mutual fund to invest in foreign securities up to 10% of their net assets as on January 31 of each relevant year (instead of the present reference date of January 31, 2003). e.g. the reference date upto January 30, 2005 shall be January 31, 2004.
Foreign Institutional Investors
FII investment in Debt Securities
Circular No. IMD/CUST/14/2004 Dated 19.03.2004 : Government has clarified that the FII investment limit allocated every year under their relevant guidelines is a cumulative limit and since limit has not been finalized for 2003-04, the existing cap of US$ 1 billion for investment by 100% debt FIIs in debt securities and investment under the 70:30 route in dated Government securities and treasury bills for the year 2002-03 will continue. This has been brought with immediate effect.
Claim of Refund Directly Without Challenging Assessment as in Original Assessment Orders
Circular No. 24/2004 Dated 18.03.2004 : In the matter of claiming of refund directly without challenging assessment as done in the Bill of Entry by assessing officer, the Board after considering the tribunal decision in the cases of M/s Super Cassette Industries vs Commissioner Customs (reported in 2003(58) RLT F9), M/s Motilal Dulichand vs Commissioner Customs, New Delhi (reported in 2003(157) ELT A 265) and M/s HCL Perot Systems Ltd vs Commissioner Customs, New Delhi (decision dated 6.10.2003 in CA D.No.13751/2003) reached to the conclusion. Accordingly, it has been clarified that a refund claim is not maintainable, when the assessee did not challenge the assessment order which became final.
Testing of Imported Textile/ Textile Articles for its Composition and Hazardous Dyes
Circular No. 23/2004 Dated 15.03.2004 : It has been decided that in all of the cases, where samples are required to be sent for testing hazardous dyes to Textiles Committee laboratory under the Ministry of Commerce, the testing for composition, i.e, texturised/non-texturised, should also be done at Textiles Committee laboratory to avoid duplication of work. However, where no test for azo-dyes are required as per the DGFT Notification No.29/(RE-2004)/2002-2007, dated 28.1.2004 , the test for composition, i.e, texturised/non-texturised, shall be carried out at the CRCL in-house testing laboratory.
Prohibition on Import of Hazardous Wastes
Notification No. 35/2004-N.T. Dated 19.03.2004 : The Central Government, for the purpose of the protection of human, animal, plant life and health, has prohibited hazardous wastes as specified in Schedule-8 of the Hazardous Wastes (Management and Handling) Rules, 1989, issued under the Environment (Protection) Act, 1986 (29 of 1986), from import thereof into India and from export thereof out of India.
Appointment of Commissioner of Customs to Adjudicate the Matter Specified
Notification No. 33/2004-N.T. Dated 17.03.2004 : The Board has appointed the Commissioner of Customs, Bangalore, to act as the Commissioner of Customs ( Sea Port), Chennai and Commissioner of Customs (Air Port), Chennai for the purpose of adjudicating the matters relating to Show Cause Notices pertaining to M/s Sansri Trading Corporation, No 110/10, Pantharapalya, behind VRI Press, Nayandahalli , Mysore Road, Bangalore issued vide DRI F. No. S/IV/21/03 (A), DRI F. No. S/IV/21/03 (B) and DRI F. No. S/IV/21/03 (C), all dated the 3rd November,2003, by the Additional Director General, Directorate of Revenue Intelligence, Bangalore.
Overseas Foreign Currency Borrowings by Authorised Dealers - Rationalisation and Monitoring
Circular No. A.P.(DIR Series) Circular No. 81 Dated 24.03.2004 : It has been decided to rationalise the existing facilities for overseas borrowings and introduce a monitoring and reporting system for all ADs. Accordingly, the facilities available under paragraph Nos.C.5(i) and (ii) of the Master Circular on Risk Management and Inter-Bank Dealings dated July 1, 2003 will now be replaced by a single facility in terms of which all categories of overseas foreign currency borrowings including existing ECBs and overdrafts in Nostro accounts not adjusted within five days, shall not exceed 25 per cent of their unimpaired Tier-I capital as at the close of the previous quarter, or USD 10 million (or its equivalent), whichever is higher. Any fresh borrowing above this limit shall only be with the prior approval of the Reserve Bank of India. Applications for fresh ECBs will be made as per the ECB policy vide A.P.(DIR Series) Circular No.60 dated January 31, 2004. The following transactions would continue to be outside the limit of 25 per cent of unimpaired Tier-I Capital or USD 10 million (or its equivalent), whichever is higher :
i. Overseas borrowings by ADs for the purposes of financing export credit subject to the conditions prescribed in IECD Master Circular dated July 1, 2003 on Export Credit in Foreign Currency.
ii. Subordinated debt placed by head offices of foreign banks with their branches in India as Tier-II capital.
Liberalised Remittance Scheme of USD 25,000 for Resident Individuals- Investor Protection - Disclosure Requirements
Circular No. A.P.(DIR Series) Circular No. 80 Dated 18.03.2004 : Through A.P. DIR (Series) Circular No. 64 dated February 4, 2004, RBI had announced a Scheme of permitting resident individuals to make remittance for an amount not exceeding USD 25,000 per calendar year. This facility is available for making remittance up to USD 25,000 per calendar year for any current or capital account transaction or a combination of both. Now it has been observed that several advertisements/ news items have appeared soliciting foreign currency funds/deposits at certain interest rates to be placed at overseas centers or on behalf of overseas mutual funds. These advertisements do not contain appropriate disclosures to guide potential depositors. It has therefore been decided in public interest, that all banks, both Indian and foreign, including those not having an operational presence in India, should seek prior approval from RBI for the schemes being marketed by them in India to residents either for soliciting foreign currency deposits for their foreign/overseas branches or for acting as agents for overseas mutual funds or any other foreign financial services company. The applications in this regard may be addressed to the Chief General Manager-in-Charge, Department of Banking Operations and Development, Reserve Bank of India, Central Office, Centre-1, World Trade Center , Cuffe Parade, Mumbai -400005. However, the above instructions do not restrict the freedom of resident individual from investing in permissible capital account transactions under the Scheme.
Liquidity Adjustment Facility - Revised Scheme
Notification No. IDMD.OMO No. 04 /03.75.00/2003-04 Dated 25.03.2004 : It has been decided to revise the existing LAF Scheme. The revised Scheme will come into effect from March 29, 2004. The revised Scheme will be operationalised through (i) 7-day fixed rate repo conducted daily and (ii) overnight fixed rate reverse repo conducted daily, on weekdays. However, in order to achieve smooth transition to the revised Scheme, the existing overnight variable rate repo auction facility with the existing features would also be available to eligible market participants upto April 2, 2004. Subsequently, the overnight repo auction will be discontinued and only the 7-day repo auction will be available. Further, in order to enable market participants to meet their prior commitments based on their existing operations, the 14-day repo, conducted on a fortnightly interval, would also continue with the existing features. The 14-day repo will, however, be phased out in due course. Under the revised Scheme, Reserve Bank will continue to have the discretion to conduct overnight repo or longer term repo auctions at fixed rate or at variable rates depending on market conditions and other relevant factors.
Standing Liquidity Facilities for Banks for Export Credit and Primary Dealers (PDs): Rationalisation
Circular No. MPD. BC.246/07.01.279/ 2003-04 Dated 25.03.2004 : In order to rationalise the existing structure of liquidity support from the Reserve Bank, it has been decided that, as recommended by the Internal Group on Liquidity Adjustment Facility (LAF) and suggested by market participants, the entire amount of support under the Standing Liquidity Facilities would be made available at a single rate. Accordingly, it has been decided to merge the normal facility and back-stop facility into a single facility to be made available at a single rate, viz., at the reverse repo rate with effect from March 29, 2004. Currently, the Bank Rate is at 6.0 per cent and the reverse repo rate is at 6.5 per cent. In the light of the revised LAF Scheme, the reverse repo rate stands reduced to 6.0 per cent with effect from March 29, 2004. This would result in a reduction of part of cost of funds for banks and PDs.
Submission of Progress Report Under Government Sponsored Schemes - Change in Periodicity of Returns Under SGSY, SJSRY And SLRS
Notification No. RPCD.SP.BC.No. 72 /09.01.01/2003-04 Dated 25.03.2004 : It has been decided that the progress under the Government sponsored schemes will be monitored by RBI on a monthly basis instead on quaterly basis as earlier.. As such, banks are advised to furnish us the data under SGSY, SJSRY and SLRS on monthly basis (so as to reach RBI by end of the next month to which data is related). This change in periodicity will be effective from the month of April 2004 onwards. The format for submission of data remains the same.
Prime Minister's Rozgar Yojana - Cut-off Date for Lapsing of Sanctions and Completion of Disbursement for Programme year 2003-04
Notification No. RPCD.No PLNFS.BC.71/09.04.01/2003-04 Dated 18.03.2004 : The cut off date for lapsing of sanctions and completion of disbursement for the programme year 2003-2004 under the PMRY has been extended to 30.09.2004.
Issue Of 5 Per Cent Oil Companies Government Of India Special Bonds, 2009
Issue Of 5 Per Cent Oil Companies Government Of India Special Bonds, 2009
Press Release No. 2003-2004/1114 Dated 23.03.2004 : Government of India have announced the issue of '5 per cent Oil Companies' Government of India Special Bonds, 2009 for liquidating outstanding claims of Oil companies aggregating to Rs. 348.63 crore against Oil Pool Account. The Special Bonds will be issued at par to Oil and Natural Gas Corporation Limited (ONGC) for 257.60 crore and Oil India Limited (OIL) for Rs. 91.03 crore on March 23, 2004. The Special Bonds will be transferable and eligible for market ready forward transactions (Repo). The bonds, however, will not be an eligible underlying security for ready forward transactions (Repo/Reverse Repo) with the Reserve Bank of India.
New Executive Director Appointed in RBI
Press Release No. 2003-2004/1102 Dated 19.03.2004 : Shri P. V. Subba Rao has taken over as Executive Director of the RBI. He will look after Industrial & Export Credit Department, Inspection Department and Secretary's Department. Prior to this, Shri Subba Rao was head of Department of Banking Supervision.
100% Bank Guarantee Condition for Importability of Cars, Microbuses etc. Under 5 % EPCG Scheme
Circular No. 30 (RE-2004)/2002-2007 Dated 22.03.2004 : Policy Circular No. 33 dated 15th November, 2000 specified the 100 % Bank Guarantee conditions for importability of cars, microbuses etc. by travel agents, tour operators, tourist transport operators under 5 % EPCG Scheme. Now the Public Notice 53 dated 27-2-2004 allowing Bank Guarantee/LUT facility, subject to certain conditions, has been notified, therefore, the aforesaid policy circular stands withdrawn from immediate effect. Bank Guarantee/LUT conditions would be endorsed on the licence or the condition sheet attached to it, as the case may be, as per Public Notice No. 53 dated 27.2.2004.
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