Legal News & Views

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...

In the year 2007, pursuant to the order of  the  Company  Judge,  High Court of Orissa, in  Companies  Act  Case  No.  25  of  2005,  the  Official Liquidator, made an advertisement for sale of movable and immovable  assets and properties of the Factory Unit of M/s Konark Paper & Industries  Limited  which was in liquidation on “as is where is and whatever there is” basis. The sale was confirmed in favour of respondent No.1  –  M/s  Raghunath Paper Mills Pvt. Ltd., being the highest bidder, and the possession  of  the Unit was handed over on  28.03.2008.   Since  there  was  no  power  supply, respondent No.1 made an application to the Chief  Executive  Officer, North Eastern Electricity Supply  Company  of  Orissa  Limited  (in  short  “  the NESCO”) ...

The assessee trust was set up with the object of “worship of Lord Shiva, Hanumanji, Goddess Durga and maintaining of temple” and “to celebrate festivals like Shivratri, Hanuman Jayanti, Ganesh Uttasav, Makar Sankranti”. It applied for a certificate under section 80G. S. 80G (5) provides that the trust should be established for a “charitable purpose”. Explanation 3 to s. 80G provides that “charitable purpose” does not include a purpose which is of a “religious nature”. S. 80G(5)(iii) also stipulates that the trust should not be expressed to be for the benefit of any particular religious community or caste. The CIT rejected the application on the ground that the assessee was set up for “religious” purposes. On appeal by the assessee to the Tribunal, HELD reversing the CIT: The objects of the assessee is not for advancement, support or propagation of a particular religion. Worshipping Lord Shiva, Hanumanji, Goddess Durga and maintaining the temple is not advancement, support or prop...

In a very interesting and well written judgement the Income Tax Appellate Tribunal held that the same expense can be deducted under two heads of taxation as they are different. The assessee borrowed funds for purchasing a house. The interest paid on the said loan was claimed as a deduction u/s 24(b). When the house was sold, the interest paid on the said loan was treated as “cost of acquisition” and claimed as a deduction u/s 48 in computing the capital gains. The AO held that as the interest had been allowed as a deduction u/s 24(b), it could not allowed again in computing capital gains. The CIT(A) allowed the claim. On appeal by the department to the Tribunal, HELD dismissing the appeal: Deduction u/s 24(b) and computation of capital gains u/s 48 are altogether covered by different heads of income i.e., income from ‘house property’ and ‘capital gains’. Neither of them excludes the other. A deduction u/s 24(b) is claimed when the assessee computes income from ‘house property’,...

For the 20 banks that have declared their September quarter earnings, bad loans rose sharply in the past three months. Collective gross non-performing assets (NPAs) for this set of banks rose by Rs.7,219 crore, or 14.3%. The run rate of bad loan accumulation was sharper than in the June quarter, when gross bad debts rose by Rs.3,340 crore, or 7%. The main culprits, as has been the case in the past several quarters, were state-owned banks. Punjab National Bank saw its bad loans rise by Rs.4,035 crore, or 40%, in the past three months. Bank of Baroda saw bad loans increase by one-tenth in the September quarter and Indian Overseas Bank’s rose by one-fifth. But these were the outliers. Even if the numbers of these three offenders are excluded, bad loans for the remaining 17 banks rose by Rs.1,737 crore in the September quarter, more than the Rs.728 crore slip seen in thee months ended June. As the Reserve Bank of India data shows, the gross NPAs of the Indian banking system (as a ...

State-run banks and foreign banks were hit by bad loans as their non-performing assets rose, says the Reserve Bank. Led by state-run banks and foreign lenders, "the asset quality of the banking system deteriorated significantly in FY12 after a period of sustained improvement," says RBI report on 'Trend and Progress of Banking in 2011-12' released over the weekend. Non-performing assets of public sector banks rose to Rs. 1,11,664 crore in 2012 from Rs. 52,807 crore in 2003, data from the Reserve Bank of India showed. The non-performing assets (NPAs) of country's bank SBI and its associates in 2012 (as of March 31) were at Rs. 45,695 crore from Rs. 16,958 crore in 2003, while that of nationalized banks' were at Rs. 65,969 crore versus Rs. 35,849 crore. Though the report states that there is no systemic risk to the banking system as the fundamentals are robust, the Reserve Bank says the banking system is weaker because of rising bad loans as gro...

As everybody knows, insider trading is the easiest way to make big bucks in the stock market. Here are some of the celebrated cases of alleged insider trading worldwide:- 1) Mathew Martoma: The hedge fund manager is charged with trading on inside information from a doctor who was working on a joint-drug trial with Elan Corp. and Wyeth on the development of an Alzheimer’s drug. Based on the information, Mr. Martoma led his firm CR Intrinsic and an affiliated investment adviser to liquidate their positions in both companies and to take short positions, according to prosecutors and SEC attorneys. All told, the hedge funds allegedly made profits and avoided losses of more than $276 million, according to U.S. officials. Mr. Martoma’s attorneys said in a statement, “Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain.” 2) Raj Rajaratnam: His remarkable journey from S...

Perhaps SEBI has taken its original mandate of protecting individual investors to a ridiculous extent. A fantastic situation has come up wherein the Securities Appellate Tribunal (SAT) while acknowledging that even if a crime has been committed, nothing can be done as the law has no provision to prosecute individuals. The fact of the case was that an employee of an FII who was its portfolio manager apparently used to inform his cousins before executing trades on behalf of the FII. The cousins then used to buy the stocks before the FII's transaction and similarly sell before the FII came to sell. This practice is known as 'Front running' and is blatantly illegal as someone is using confidential information for personal gains. Using this method these clever crooks apparently made profit of crores of rupees. The transaction volume etc. being high, came under SEBI scanner who tracked them down and imposed heavy penalties  The matter on appeal thus landed bef...

Who is responsible for a stolen cheque and the amount which the original customer whose cheque was duly deposited but he did not get? As all nationalized banks are working under the control of the Reserve Bank of India (RBI) they are expected to follow rules and regulations codified by the same regulatory authority. But if something unforeseen incident happens and if there is no co-ordination or understanding of co-operation between the banks, they are susceptible to legal confrontation. This has happened in case of a stolen cheque which was deposited in one bank and was en-cashed by the person who stole it by producing it in the bank which had issued the cheque. A bank’s customer received a cheque which was deposited by him in the bank in which he has the account. But after the cheque was deposited it was stolen from that bank. The person who stole the cheque went to the bank on which the cheque was drawn and en-cashed it and disappeared after getting t...

Smart activists are asking the right questions to regulators to get interesting answers Recently, the central information commission (CIC), the apex body under the Right to Information (RTI) Act, 2005 directed Securities and Exchange Board of India (Sebi) to reveal certain details related to Reliance Industries, the largest listed firm. Arun Kumar Agarwal, a Bangalore-based lawyer has asked for the names of these twelve entities that short sold Reliance Petroleum shares in the derivatives segment before RIL sold 4.1% in the cash market and booked revenues of over Rs 4,000 crore. RIL is not alone. Activists like Agarwal have been using RTI effectively to bring out critical details about big business. The RTI Act extends to the whole of India except the State of Jammu and Kashmir. Under the Act, all bodies, which are constituted under the “Constitution or under any law or under any Government notification or all bodies, including NGOs, which are owned, controlle...

The scam perpetrated by multi-level marketing (MLM) firm Stock Guru India (SGI)  is one more wake up call, for it exposes innumerable holes in our system of checks and balances. - such as it is. Consider this: The Ulhas-Raksha couple used about five identities, managed to get documents such as PAN cards and driving licences in each name, opened 94 accounts in 20 different banks with 13 different names, bought 12 properties and also owned 12 luxury vehicles, according to media reports. All these ideally should have gone through elaborate checks by so called regulators. Or are they only for the commoners? At least, so it seems. Otherwise, how could Ulhas Prabhakar Khaire and Raksha J Urs manage to skirt all the rules and get multiple PAN cards, driving licences and passports? Other numbers related to the scam are also mindboggling—only in Delhi about 14,000 complaints against the company and more than 2 lakh investors duped with amount ballooning to Rs. 1000 crore....

The Securities and Exchange Board of India (“SEBI”) has notified the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) on 21 May, 2012, thus bringing various funds investing in Indian securities under a unified regulatory umbrella. Earlier SEBI had introduced a concept paper to explain the regulation and the rational behind the same. Portions of the concept paper is quoted below:-  WHY COMPREHENSIVE REGULATION FOR PRIVATE POOLS OF CAPITAL/ALTERNATIVE INVESTMENT FUNDS IS REQUIRED? 1. SEBI (Venture Capital Funds) Regulations were framed by SEBI in 1996 to encourage funding of entrepreneurs’ early‐stage companies. However, it has been found  over the years that VCFs are being used as a vehicle for many other funds such as: (i) Private Equity (PE) (ii) PIPE (Private Investment in Public Equity) (iii) Real Estate These funds were using the VCF route while not adhering to or being responsible for helping start-ups or early stage c...