Bimonthly Legal Tablet Volume 4, Issue 2, March 10, 2014

NOTIFICATIONS, CIRCULARS, (January – February, 2014)

RBI
A.P. (DIR Series) Circular No. 83 dated January 03, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Overseas Direct Investments – Rollover of Guarantees’

It has been decided not to treat/reckon the renewal/rollover of an existing/original guarantee, which is part of the total financial commitment of the Indian party in terms of Regulation 6 of Notification No. FEMA.120/RB-2004 dated July 7, 2004 (the ‘Notification’), as a fresh financial commitment, provided that:

  1. the existing/original guarantee was issued in terms of the then extant/prevailing FEMA guidelines;
  2. there is no change in the end use of the guarantee, i.e., the facilities availed by the JV/WOS/Step Down Subsidiary;
  3. there is no change in any of the terms and conditions, including the amount of the guarantee except the validity period;
  4. the reporting of the rolled over guarantee would be done as a fresh financial commitment in Part II of Form ODI, as hitherto; and
  5. if the Indian party is under investigation by any investigation/enforcement agency or regulatory body, the concerned agency/body shall be kept informed about the same.

In case, however, the above conditions are not met, the Indian party shall obtain prior approval of the Reserve Bank for rollover/renewal of the existing guarantee through the designated AD bank.

A.P. (DIR Series) Circular No. 84 dated January 06, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Issue of Non convertible/ redeemable bonus preference shares or debentures – Clarifications

As per Regulation (2ii) and Regulation 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time, equity shares, compulsorily and mandatorily convertible preference shares and compulsorily and mandatorily convertible debentures are treated as a part of share capital for the purpose of Foreign Direct Investment.

RBI has been receiving references from some Indian companies regarding issue of non-convertible/redeemable bonus preference shares or debentures to non-resident shareholders from the general reserve under a Scheme of Arrangement by a Court, under the provisions of the Companies Act, as applicable. So far, RBI has been granting permission for such issuances on a case-to-case basis.

On a review and with a view to rationalizing and simplifying the procedures, it has been decided that an Indian company may issue non-convertible/redeemable preference shares or debentures to non-resident shareholders, including the depositories that act as trustees for the ADR/ GDR holders, by way of distribution as bonus from its general reserves under a Scheme of Arrangement approved by a Court in India under the provisions of the Companies Act, as applicable, subject to no-objection from the Income Tax Authorities.

The above general permission to Indian companies is only for issue of non-convertible/ redeemable preference shares or debentures to non-resident shareholders by way of distribution as bonus from the general reserves. The issue of preference shares (excluding non-convertible/redeemable preference shares) and convertible debentures (excluding optionally convertible/partially convertible debentures) under the FDI scheme would continue to be subject to A.P. (DIR Series) Circular Nos.73 and 74 dated June 08, 2007 as hitherto.

A.P. (DIR Series) Circular No. 85 dated January 06, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (ECB) Policy – Liberalisation of definition of Infrastructure Sector

As per Notification No. FEMA.281/2013-RB dated July 19, 2013 published in the Gazette of India vide G.S.R. No. 627 (E) dated September 12, 2013 and the A.P. (DIR Series) Circular No. 48 dated September 18, 2013, definition of infrastructure sector for the purpose of raising ECB was expanded taking into account the Harmonised Master List of Infrastructure sub-sectors and Institutional Mechanism for its updation approved by Government of India vide Notification F.No.13/06/2009-INF dated March 27, 2012.

On a review, it has been decided that, for the purpose of ECB, ‘Maintenance, Repairs and Overhaul’ (‘MRO’) will also be treated as a part of airport infrastructure. Accordingly, MRO, as distinct from the related services which are other than infrastructure, will be considered as part of the sub-sector of Airport in the Transport Sector of Infrastructure. All other aspects of ECB policy shall remain unchanged.

A.P. (DIR Series) Circular No. 86 dated January 09, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Direct Investment- Pricing Guidelines for FDI instruments with optionality clauses

As per Regulation 5(1) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time, only equity shares or preference shares/ debentures are eligible to be issued to persons resident outside India under the Foreign Direct Investment Scheme.

On a review, it has now been decided that optionality clauses may henceforth be allowed in equity shares and compulsorily and mandatorily convertible preference shares/ debentures to be issued to a person resident outside India under the FDI Scheme.

The optionality clause will oblige the buy-back of securities from the investor at the price prevailing/ value determined at the time of exercise of the optionality so as to enable the investor to exit without any assured return. The provision of optionality clause shall be subject to the following conditions:

  1. There is a minimum lock-in period of one year or a minimum lock-in period as prescribed under FDI Regulations, whichever is higher (e.g. defence and construction development sector where the lock-in period of three years has been prescribed). The lock-in period shall be effective from the date of allotment of such shares or convertible debentures or as prescribed for defence and construction development sectors, etc. in Annex B to Schedule 1 of Notification No. FEMA 20 as amended from time to time;
  2. After the lock-in period, as applicable above, the non-resident investor exercising option/ right shall be eligible to exit without any assured return, as under:
  • In case of a listed company, the non-resident investor shall be eligible to exit at the market price prevailing at the recognised stock exchanges;
  • In case of unlisted company, the non-resident investor shall be eligible to exit from the investment in equity shares of the investee company at a price not exceeding that arrived at on the basis of Return on Equity (‘RoE’) as per the latest audited balance sheet. Any agreement permitting return linked to equity as above shall not be treated as violation of FDI policy/ FEMA Regulations.

For the above purpose, RoE shall mean Profit After Tax / Net Worth; Net Worth would include all free reserves and paid up capital.

  • Investments in Compulsorily Convertible Debentures (CCDs) and Compulsorily Convertible Preference Shares (CCPS) of an investee company may be transferred at a price worked out as per any internationally accepted pricing methodology at the time of exit duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/ agreement and shall exit at the price prevailing at the time of exit, subject to lock-in period requirement, as applicable.

All existing contracts will have to comply with the above conditions to qualify as FDI compliant.

A.P. (DIR Series) Circular No. 87 dated January 09, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Resident Bank account maintained by residents in India – Joint holder – liberalization

As per A.P. (DIR Series) Circular No.12 dated September 15, 2011, individuals resident in India were permitted to include non-resident close relative(s) (relatives as defined in Section 6 of the Companies Act, 1956) as a joint holder(s) in their resident savings bank accounts on ‘former or survivor’ basis. Such non-resident Indian close relatives are however not eligible to operate the account during the life time of the resident account holder in terms of said instructions.

RBI has received representations that for operational convenience the Non-Resident Indians (NRIs), as defined in Regulation 2(vi) of FEMA Notification No.5 dated May 3, 2000, may be permitted to operate such accounts on ‘Either or Survivor’ basis. Accordingly, on a review, it has been decided that AD banks may include an NRI close relative (relatives as defined in Section 6 of the Companies Act, 1956) in existing/ new resident bank accounts as joint holder with the resident account holder on ‘Either or Survivor’ basis subject to the following conditions:

  1. Such account will be treated as resident bank account for all purposes and all regulations applicable to a resident bank account shall be applicable.
  2. Cheques, instruments, remittances, cash, card or any other proceeds belonging to the NRI close relative shall not be eligible for credit to this account
  3. The NRI close relative shall operate such account only for and on behalf of the resident for domestic payment and not for creating any beneficial interest for himself.
  4. Where the NRI close relative becomes a joint holder with more than one resident in such account, such NRI close relative should be the close relative of all the resident bank account holders.
  5. Where due to any eventuality, the non-resident account holder becomes the survivor of such an account, it shall be categorized as Non-Resident Ordinary Rupee (NRO) account as per the extant regulations.
  6. Onus will be on the non-resident account holder to keep AD bank informed to get theaccount categorized as NRO account and all such regulations as applicable to NRO account shall be applicable.
  7. The above joint account holder facility may be extended to all types of resident accounts including savings bank account.

While extending this facility the AD bank should satisfy itself about the actual need for such a facility and also obtain the declaration (specified in the Circular) duly signed by the non-resident account holder.

A.P. (DIR Series) Circular No. 88 dated January 09, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses

With a view to expanding the scope of the Rupee Drawing Arrangements (RDAs), it has been decided to include additional items underPermitted Transactions under RDAs. The amended instructions under Part (B) of Annex-I to the A.P. (DIR Series) Circular No. 28 dated February 6, 2008 are as given below:

Earlier guidelines under Part (B) Permitted Transactions of Annex-I Revised guidelines under Part (B) Permitted Transactions of Annex-I
Drawing Arrangements with Exchange Houses are primarily designed to channel inward personal remittances. Under no circumstances, donations/contributions to charitable institutions should be routed through the Exchange Houses. The following is the list of permissible transactions under Drawing Arrangements with Exchange Houses.

 

1. Credit to Non-resident (External) Rupee accounts maintained by Non-resident Indians in Indian Rupees.

 

2. Payments to families of Non-resident Indians.

 

3. Payments in favour of Insurance companies, Mutual Funds and the Post Master for premia/investments.

 

4. Payments in favour of bankers for investments in shares, debentures.

 

5. Payment to Coop. Housing Societies, Govt. Housing Schemes or Estate Developers for acquisition of residential flats in India in individual names subject to compliance of regulations thereof by the Non-resident Indians.

 

6. Payments of tuition/boarding, examination fee etc. to schools, colleges and other educational institutions.

 

7. Payments to medical institutions and hospitals for medical treatment of NRIs/their dependents and nationals of Gulf Countries in India.

 

8. Payments to hotels by nationals of Gulf countries/NRIs for their stay.

 

9. Payments to travel agents for booking of passages of NRIs and their families residing in India towards their travel in India by domestic airlines/rail, etc.

 

10. Trade transactions up to Rs. 2 lakhs per transaction.

Drawing Arrangements with Exchange Houses are primarily designed to channel inward personal remittances. Under no circumstances, donations/contributions to charitable institutions should be routed through the Exchange Houses. The following is the list of permissible transactions under Drawing Arrangements with Exchange Houses.

 

1. Credit to Non-resident (External) Rupee accounts maintained by Non-resident Indians in Indian Rupees.

 

2. Payments to families of Non-resident Indians.

 

3. Payments in favour of Insurance companies, Mutual Funds and the Post Master for premia/ investments.

 

4. Payments in favour of bankers for investments in shares, debentures.

 

5. Payment to Coop. Housing Societies, Govt. Housing Schemes or Estate Developers for acquisition of residential flats in India in individual names subject to compliance of regulations thereof by the Non-resident Indians.

 

6. Payments of tuition/ boarding, examination fee etc. to schools, colleges and other educational institutions.

 

7. Payments to medical institutions and hospitals for medical treatment of NRIs/their dependents and nationals of Gulf Countries in India.

 

8. Payments to hotels by nationals of Gulf countries/NRIs for their stay.

 

9. Payments to travel agents for booking of passages of NRIs and their families residing in India towards their travel in India by domestic airlines/rail, etc.

 

10. Trade transactions up to Rs. 2 lakhs per transaction.

 

11. Payments to utility service providers in India, for services such as water supply, electricity supply, telephone (except for mobile top-ups), internet, television etc.

 

12. Tax payments in India

 

13. EMI payments in India to Banks and Non-Banking Financial Companies (NBFCs) for repayment of loans

All other instructions issued vide A.P. (DIR Series) Circular No. 28 dated February 6, 2008, as amended from time to time, will remain unchanged.

A.P. (DIR Series) Circular No. 90 dated January 09, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Provisions under section 6 (4) of Foreign Exchange Management Act, 1999 – Clarifications

In terms of Section 6(4) of Foreign Exchange Management Act, 1999 (‘FEMA, 1999’), a person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

RBI has been receiving representations with regards to nature of transactions covered under Section 6(4) of FEMA, 1999. In this regard it is clarified that Section 6(4) of FEMA, 1999 covers the following transactions:

  1. Foreign currency accounts opened and maintained by such a person when he was resident outside India;
  2. Income earned through employment or business or vocation outside India taken up or commenced while such person was resident outside India, or from investments made while such person was resident outside India, or from gift or inheritance received while such a person was resident outside India;
  3. Foreign exchange including any income arising therefrom, and conversion or replacement or accrual to the same, held outside India by a person resident in India acquired by way of inheritance from a person resident outside India
  4. A person resident in India may freely utilise all their eligible assets abroad as well as income on such assets or sale proceeds thereof received after their return to India for making any payments or to make any fresh investments abroad without approval of Reserve Bank, provided the cost of such investments and/ or any subsequent payments received therefore are met exclusively out of funds forming part of eligible assets held by them and the transaction is not in contravention to extant FEMA provisions.

A.P. (DIR Series) Circular No. 93 dated January 15, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Clarification- Establishment of Liaison Office/ Branch Office/ Project Office in India by Foreign Entities- General Permission

In terms of Regulation 4 of Notification No.FEMA.22/2000-RB dated May 3, 2000, viz., Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, as amended from time to time, no entity or person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without the prior permission of the RBI.

It is clarified that the provisions of Regulation 4 of Notification No. FEMA 22/2000-RB dated 3rd May 2000, ibid, along with their specified conditions apply for entities from Hong Kong and Macau also. Accordingly, applications from entities registered in/ resident of Hong Kong and Macau, for establishment of Liaison/ Branch/ Project Offices or any other place of business by whatever name called shall require prior approval from RBI.

A.P. (DIR Series) Circular No. 94 dated January 16, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Conversion of External Commercial Borrowing and Lumpsum Fee/Royalty into Equity

In terms of A.P. (DIR Series) Circular No. 15 dated October 1, 2004, an Indian company can issue equity shares against External Commercial Borrowings (ECB) subject to conditions mentioned therein and pricing guidelines as prescribed by the RBI from time to time regarding value of equity shares to be issued. RBI has received some references regarding how the rupee amount against which equity shares are to be issued shall be arrived at; in other words, what rate of exchange shall be applied to the amount in foreign currency borrowed or owed by the resident entity from/to the non-resident entity.

It is clarified that where the liability sought to be converted by the company is denominated in foreign currency as in case of ECB, import of capital goods, etc. it will be in order to apply the exchange rate prevailing on the date of the agreement between the parties concerned for such conversion. RBI will have no objection if the borrower company wishes to issue equity shares for a rupee amount less than that arrived at as mentioned above by a mutual agreement with the ECB lender. It may be noted that the fair value of the equity shares to be issued shall be worked out with reference to the date of conversion only.

It is further clarified that the principle of calculation of INR equivalent for a liability denominated in foreign currency as mentioned at paragraph 3 above shall apply, mutatis mutandis, to all cases where any payables/ liability by an Indian company such as, lump sum fees/royalties, etc. are permitted to be converted to equity shares or other securities to be issued to a non-resident subject to the conditions stipulated under the respective Regulations.

A.P. (DIR Series) Circular No. 100 dated February 04, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Third party payments for export/ import transactions

In terms of A. P. (DIR Series) Circular No.70 dated November 8, 2013, third party payments for export of goods & software/ import of goods have been permitted subject to conditions stated therein.

In view of the difficulties faced by exporters/ importers in meeting the condition “firm irrevocable order backed by a tripartite agreement should be in place” specified in the abovementioned Circular, it has been decided that this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments/ name of the third party being mentioned in the irrevocable order/ invoice has been produced. This shall be subject to conditions as under:

  1. AD bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice/ FIRC.
  2. AD bank should consider the FATF statements while handling such transaction.

Further, with a view to liberalising the procedure, the limit of USD 100,000 eligible for third party payment for import of goods, stands withdrawn. All other terms and conditions mentioned in the A. P. (DIR Series) Circular No. 70 dated November 8, 2013 remain unchanged.

A.P. (DIR Series) Circular No. 102 dated February 11, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Direct Investment – Reporting under FDI Scheme: Amendments in form FC-GPR’

In terms of para 9(1)A of Schedule I to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000 (hereinafter referred to as ‘Notification No. FEMA 20’), as amended from time to time, Indian companies are required to report the details of the amount of consideration received for issuing shares and convertible debentures under the Foreign Direct Investment (‘FDI’) scheme to the Regional Office of the Reserve Bank in whose jurisdiction the Registered Office of the company operates, within 30 days of receipt of the amount of consideration. Further, in terms of para 9(1)B of Schedule ibid, the companies are required to report the details of the issue of shares/ convertible debentures in form FC-GPR, to the Regional Office concerned, within 30 days of issue of shares/ convertible debentures.

In order to further capture the granular details of FDI as regards Brownfield/ Greenfield investments and the date of incorporation of Investee Company, Form FC-GPR has been revised. Accordingly, the details of FDI should, henceforth, be reported in the revised Form FC-GPR, enclosed in the Circular No. 102 dated February 11, 2014.

A.P. (DIR Series) Circular No. 105 dated February 17, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘External Commercial Borrowings (ECB) – Reporting arrangements

The Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000, as amended from time to time, and A.P. (DIR Series) Circular No.60 dated January 31, 2004 relate to, inter-alia, reporting arrangements for ECB.

In order to capture details of the financial hedges contracted by corporates, of their foreign currency exposure relating to ECB and their foreign currency earnings and expenditure, the format of ECB-2 Return has been modified (Part-E) and the same has been given in the Annex to this Circular No. 105. The reporting in the modified ECB-2 Return will be applicable from the return of the month April 2014 onwards.

There is no change in the reporting procedure and corporates raising ECB continue to submit ECB-2 Return on a monthly basis duly certified by the designated AD Category-I bank so as to reach Department of Statistics and Information Management (‘DSIM’) of the Reserve Bank within seven (7) working days from the close of month to which it relates.

A.P. (DIR Series) Circular No. 106 dated February 18, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Facilities to NRIs/PIOs and Foreign Nationals – Liberalisation – Reporting Requirement

In terms of A.P. (DIR Series) Circular No. 12 dated November 16, 2006, the lock-in period of 10 years for remittance of sale proceeds of immovable property was dispensed with and AD Category-I banks could allow remittances out of balances in NRO accounts including sale proceeds of immovable property provided the amount does not exceed USD one million per financial year (April-March). In terms of the circular ibid, AD Category-I banks were required to furnish on a quarterly basis, to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (NRFAD), Reserve Bank of India, Central Office, Mumbai-400001 within 10 days of the reporting quarter, a statement on the number of applicants and total amount remitted, as per proforma annexed to it.

With a view to having access to more real time data, it has been decided to collect this information on a monthly basis. Accordingly, AD Category-I banks may furnish on a monthly basis, a statement on the number of applicants and total amount remitted, as per the prescribed proforma, to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (NRFAD), Reserve Bank of India, Central Office, Mumbai-400001 within 7 days of the end of the reporting month. The data may be sent preferably by e-mail as per the proforma.

It may be noted that the proforma has been revised to also include ‘Transfers from NRO to NRE account’.

A.P. (DIR Series) Circular No. 107 dated February 20, 2014 issued by the Reserve Bank of India, Foreign Exchange Department regarding ‘Foreign Direct Investment (FDI) into a Small Scale Industrial Undertakings (SSI) / Micro & Small Enterprises (MSE) and in Industrial Undertaking manufacturing items reserved for SSI/MSE

In terms of Schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified by the Reserve Bank vide Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time, an Indian company which is a small scale industrial unit and which is not engaged in any activity or in manufacture of items included in Annex A, may issue shares or convertible debentures to a person resident outside India, to the extent of 24% of its paid -up capital provided that such company may issue shares in excess of 24% of its capital if:

  1. it has given up its small scale status,
  2. it is not engaged or does not propose to engage in manufacture of items reserved for small scale sector, and
  3. it complies with the ceilings specified in Annex B to Schedule I of the Notification.

With the promulgation of the Micro, Small and Medium Enterprises Development (‘MSMED’) Act, 2006, the extant policy for FDI in Small Scale Industrial unit and in a company which has de-registered its small scale industry status and is not engaged or does not propose to engage in manufacture of items reserved for small scale sector, has since been reviewed and it has been decided that;

  1. a company which is reckoned as Micro and Small Enterprises (‘MSE’) (earlier Small Scale Industries) in terms of MSMED Act, 2006 and not engaged in any activity/sector mentioned in Annex A to schedule 1 to the Notification, ibid, may issue shares or convertible debentures to a person resident outside India, subject to the limits prescribed in Annex B to schedule 1, in accordance with the entry routes specified therein and the provision of Foreign Direct Investment Policy, as notified by the Ministry of Commerce & Industry, Government of India, from time to time.
  2. any Industrial undertaking, with or without FDI, which is not an MSE, having an industrial license under the provisions of the Industries (Development & Regulation) Act, 1951 for manufacturing items reserved for manufacture in the MSE sector may issue shares in excess of 24% of its paid up capital with prior approval of the Foreign Investment Promotion Board of the Government of India.

Further, in terms of the provisions of MSMED Act, (i) in the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, a micro enterprise means where the investment in plant and machinery does not exceed twenty five lakh rupees; a small enterprise means where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees; (ii) in the case of the enterprises engaged in providing or rendering services, a micro enterprise means where the investment in equipment does not exceed ten lakh rupees; a small enterprise means where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees.

DIPP

Press Note No. 1 (2014 Series) dated January 08, 2014 issued by the Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce & Industry regarding ‘Review of the existing policy on Foreign Direct Investment in the Pharmaceutical Sector’

Paragraph 6.2.18 of ‘Circular 1 of 2013-Consolidated FDI Policy’, effective from April 05, 2013, relating to the Foreign Direct Investment Policy in the pharmaceuticals sector is as under:

Department of Industrial Policy & Promotion

6.2.18 Pharmaceuticals
6.2.18.1 Greenfield 100% Automatic
6.2.18.2 Brownfield 100% Government
Note: Government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval.

The Government of India has reviewed the position in this regard and decided that the existing policy would continue with the condition that ‘non-compete’ clause would not be allowed except in special circumstances with the approval of the Foreign Investment Promotion Board. This decision shall take immediate effect.

Press Note No. 2 (2014 Series) dated February 04, 2014 issued by the Department of Industrial Policy & Promotion, Government of India, Ministry of Commerce & Industry regarding ‘Policy on foreign investment in the Insurance Sector-amendment of paragraph 6.2.17.7 of ‘Circular 1 of 2013-Consolidated FDI Policy’’

Present Position:

As per paragraph 6.2.17.7 of the ‘Consolidated FDI Policy, effective from 5 April, 2013’, FDI, up to 26%, under the automatic route, is permitted in the insurance sector subject to the following conditions:

  1. FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route.
  2. This will be subject to the condition that Companies bringing in FDI shall obtainnecessary license from the Insurance Regulatory & Development Authority for undertaking insurance activities.

Revised Position:

Paragraph 6.2.17.7 of the ‘Consolidated FDI Policy, effective from 5 April, 2013’, is replaced by the following:

S. No Sector/Activity % of FDI Cap/ Equity Entry Route
6.2.17.7 Insurance
6.2.17.7.1 (i)      Insurance Company

(ii)    Insurance Brokers

(iii)   Third Party Administrators

(iv)  Surveyors and Loss Assessors

 

26% (FDI+FII+NRI)

 

Automatic
6.2.17.7.2 Other conditions
(1)    FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route.

 

(2)    This will be subject to the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority for undertaking insurance activities.

 

(3)    The provisions of paragraphs 6.2.17.2.2(4)(i) (c) & (e), relating to ‘Banking- Private Sector’, shall be applicable in respect of bank promoted insurance companies.

 

(4)    Indian Insurance Company is defined as a Company;

(a)          which is formed and registered under the Companies Act, 1956;

(b)         in which the aggregate holdings of equity shares by a foreign company either by itself or through its subsidiary companies or its nominees, do not exceed 26% paid-up equity capital of such Indian insurance company;

(c)          whose sole purpose is to carry on life insurance business or general insurance business or re-insurance business.

 

(5)    As per IRDA (Insurance Brokers) Regulations 2002, “insurance broker” means a person for the time-being licensed by the Authority under regulation 11, who for remuneration arranges insurance contracts with insurance companies and/or reinsurance companies on behalf of his clients.

 

(6)    As per IRDA (TPA – Health services) Regulations, 2001, “TPA” means a Third Party Administrator who, for the time being, is licensed by the Authority, and is engaged, for a fee or remuneration, by whatever name called as may be specified in the agreement with an insurance company, for the provision of health services.

 

(7)    Surveyors and Loss Assessors will be governed by the IRDA Insurance Surveyors and Loss Assessors (Licencing, Professional Requirements and Code of Conduct) Regulations, 2000.

SEZ

Office Memorandum No. 1/10/2010-EOU dated January 02, 2014, issued by the Government of India, Department of Commerce regarding ‘Recommendations of the Committee on Review and Revamp of EOU Scheme’

Special Economic Zone

A Committee was constituted by the Government to review and revamp of Export Oriented Unit (‘EOU’) Scheme with a mandate to suggest suitable steps to make the scheme more vibrant and attractive for investors, develop a synergy between the EOU scheme and SEZ scheme to make them complimentary to each other and aligning the EOUs to make them more globally competitive. Based on consultations with line ministries, the following measures are taken to implement the accepted recommendations:

  1. Validity of the period of Letter of Permission (‘LOP’) issued to EOU
  • LOP issued to an EOU will have an initial validity for a period of 2 years to enable the Unit to construct the plant and install machinery.
  • The next extension of 1 year may be given by the DC for valid reasons to be recorded in writing.
  • Subsequent extension of 1 year may be given by the UAC subject to condition that 2/3rd of activities including construction, relating to the setting up of the Unit are complete and a Chartered Engineer’s certificate to this effect is submitted by the Unit.
  • Subsequent extension, if necessary, will be granted by the Board of Approval.

ii. Aligning duration of goods and services in EOU with the term of LOP – At present, capital goods are required to be installed or otherwise used by the EOU, within a fixed period from the date of import or procurement thereof and other goods are to be used in connection with the production or packaging of goods within a period of 3 years. In case of failure to use within above stated period, extension is required. It has now been decided that the period of usage of goods should be co-terminus with the period of LOP.

iii. Setting up warehousing facilities outside EOU premises and outside the jurisdiction of DC – EOUs which intend to have their warehouses near to the port of export to reduce the lead time for delivery of goods overseas and to address unpredictability of supply orders will not be permitted to set up such warehouses subject to the provisions related to export warehousing as given in notification no. 46/2001-Central Excise(N.T.) dated 26.06.2001 and the CBEC Circular No. 581/18/2001-CX dated 29.06.2001 as amended.

iv. Sharing of facilities among EOU/STP/EHTP/SEZ Unit – In order to allow optimal utilization of infrastructure facilities it has been decided that sharing of facilities among EOUs may be considered by the UAC on case-to-case basis and the recommendations be sent to the BoA for final approval. While accepting such proposals, the NFE obligations of the Units shall not be altered. However, sharing of facilities between EOUs and SEZs Units should not be permitted.

v.  Inter Unit transfer (‘IUT’) of goods and services

  • In order to facilitate a group of EOUs which sources inputs centrally to obtain bulk discount, reduce cost of transportation and other logistics cost and to maintain effective supply chain, IUT of goods and services will be permitted on a case to case basis by the UAC.
  • The procedure for IUT of finished goods will be clarified by CBEC in order to bring uniformity in the practices and procedure adopted by various field offices.

vi. Self-warehousing and self-certification of goods imported/ procured by EOUs – The scheme of self-warehousing and self-certification was introduced vide Circular No. 19/2007- Cus. dated 03.05.2007 dispensing with the requirement for physical verification of imported/ indigenously, procured duty-free goods before issuing re-warehousing certificate by the proper officer in respect of Units set up under EOU/ EHTP/STP/BTP scheme having physical export turnover of INR 15 Crore and above in the preceding financial year and having a clean track record. In order to extend self-warehousing and self-certification facility to more Units, it has been decided to reduce the limit of physical turnover from INR 15 Crore to INR 10 Crore.

vii. Rationalization of reports/ returns to be filed by EOUs – It has been decided that a single common report/ return may be devised which may serve the purpose for DoC as well as DoR. A joint group of DoC and DoR including Director General of Systems, CBEC will be formed to devise a proforma exhaustively capturing all the data and figures relating to export, import, DTA sale, deemed export sale, IUT, sale of goods as such, destruction, payment of duty etc. and devise simplified records to be maintained by EOUs.

viii.Extension of time for submitting shipping bill for export made under self-sealing/ self-certification – It has been decided to increase the mandatory requirement to submit Shipping Bill within 24 hrs to 48 hrs as it is sometimes difficult to reach jurisdictional Central Excise office within 24 hrs from the port of export.

MCA

General Circular No. 2/2014 dated February 11, 2014, issued by the Government of India, Ministry of Corporate Affairs regarding ‘Use of word ‘National’ in the names of Companies or Limited Liability Partnerships (LLPS)’

Ministry of Corporate Affairs

It is being intimated that no company should be allowed to be registered with the word ‘National’ as part of its title unless it is a government company and the Central/ State government(s) has a stake in it. This should be stringently enforced by all ROCs while registering companies. Similarly, the word ‘Bank’ may be allowed in the name of an entity only when such entity produces a ‘No Objection Certificate’ from the RBI in this regard. By the same analogy the word ‘Stock Exchange’ or ‘Exchange’ should be allowed in name of a company only where ‘No Objection Certificate’ from SEBI in this regard is produced by the Promoters.

General Circular No. 03/2014 dated February 14, 2014, issued by the Government of India, Ministry of Corporate Affairs regarding ‘Clarification with regard to Section 185 of the Companies Act, 2013’

In order to maintain harmony with regard to applicability of Section 372A of the Companies Act, 1956 till the same is repealed and Section 185 of the Companies Act, 2013 is notified, it is hereby clarified that any guarantee given or security provided by a holding company in respect of loans made by a bank or financial institution to its subsidiary company, exemption as provided in clause (d) of sub-section (8) of Section 372A of the Companies Act, 1956 shall be applicable till Section 186 of the Companies Act, 2013 is notified. This clarification will, however, be applicable to cases where loans so obtained are exclusively utilized by the subsidiary for its principal business activities.

Notification dated February 27, 2014 issued by the Government of India, Ministry of Corporate Affairs relating to amendments of Schedule VII of Companies Act, 2013

In exercise of the powers conferred by Section 467(1) of the Companies Act, 2013, the Central Government makes the following amendments to Schedule VII of the said Act:

  1. eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;
  2. promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
  3. promoting gender equality, empowering women, setting up of homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
  4. ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water;
  5. protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
  6. measures for the benefit of armed forces veterans, war widows and their dependents;
  7. vii.          training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;
  8. viii.         contribution to the Prime Minister’s Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Schedules Tribes, other backward classes, minorities and women;
  9. Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
  10. rural development projects.

This notification shall come into force with effect from April 01, 2014.

Notification dated February 27, 2014 issued by the Government of India, Ministry of Corporate Affairs relating to effective date of provisions of Section 135 and Schedule VII of the Companies Act, 2013

In exercise of the powers conferred by Section 1(3) of the Companies Act, 2013, the Central Government appoints April 01, 2014 as the date on which the provisions of Section 135 and Schedule VII of the said Act shall come into force.

IMPORTANT BILLS PASSED DURING THE EXTENDED WINTER SESSION OF THE PARLIAMENT OF INDIA

The extended winter session of the Parliament commenced on February 5, 2014 and ended on February 21, 2014. During the extended winter session the following important Bills were passed amongst others.

https://www.prsindia.org/

The Narcotic Drugs and Psychotropic Substances (Amendment) Bill, 2011

The Narcotic Drugs and Psychotropic Substances (Amendment) Bill, 2011 amends the Narcotic Drugs and Psychotropic Substances Act, 1985.

The Bill strengthens the existing Act with provisions for tracing and seizing illegally acquired properties used for drug trafficking so that it becomes more difficult for drug traffickers to carry out their illicit activities. It amends various definitions in the Act and provisions related to sale, purchase, consumption of poppy straw, penalties for offences. The Bill simplifies the regulations for procuring and possessing narcotic drugs when used for medicinal purposes. The amendments prescribe the forms and conditions of licence or permits for the manufacture, possession, transport, import inter-State, export inter-State, sale, purchase, consumption or use of essential narcotic drugs.

The Whistle Blowers Protection Bill, 2011

The Bill seeks to protect whistleblowers, i.e. persons making a public interest disclosure related to an act of corruption, misuse of power, or criminal offence by a public servant.Any public servant or any other person including a non-governmental organization may make such a disclosure to the Central or State Vigilance Commission. Every complaint has to include the identity of the complainant. The Vigilance Commission shall not disclose the identity of the complainant except to the head of the department if he deems it necessary.  The Bill penalises any person who has disclosed the identity of the complainant. The Bill prescribes penalties for knowingly making false complaints. The Bill has a limited definition of disclosure and does not define victimisation. 

The Street Vendors (Protection of Livelihood and Regulation of Street Vendors) Bill, 2012

The Bill aims to protect the livelihood rights of street vendors as well as regulate street vending through demarcation of vending zones, conditions for and restrictions on street vending.Any person intending to undertake street vending needs to register with the Town Vending Committee (TVC).  He may then apply for a vending certificate that will be issued based on various criteria.   The state government shall frame a scheme for street vendors.  The local authority shall, in consultation with the planning authority, frame a street vending plan once every five years.The TVC comprises of the municipal commissioner, representatives of street vendors, local authority, planning authority, local police, resident welfare association and other traders associations.  This Bill shall not apply to Railways land, premises and trains. The Bill does not specify principles to be followed by governments in issuing vending certificates, allocating vending zones and the number of vendors per zone.  The Bill does not require the stakeholders to be consulted in the formulation of the street vending plan.  The central law will have overriding effect on state laws that are inconsistent with the Bill. 

The Andhra Pradesh Re-organisation Bill, 2014

The Andhra Pradesh Reorganisation Bill, 2014 was introduced in Lok Sabha on February 13, 2014 by the Minister for Home Affairs, Mr.Sushil Kumar Shinde. The Bill provides for the reorganisation of the state of Andhra Pradesh.  It carves out a separate state called Telangana comprising 10 districts of the existing state of Andhra Pradesh.The newly formed state of Telangana will comprise of the following districts of Andhra Pradesh: Adilabad, Karminagar, Medak, Nizamabad, Warangal, Rangareddi, Nalgonda, Mahbubnagar, Khammam and Hyderabad. Andhra Pradesh and Telangana will have a common capital, Hyderabad, for 10 years.  After this period, Hyderabad shall be the capital of Telangana only.  The central government will constitute an expert committee to recommend a new capital for Andhra Pradesh within 45 days of this Bill’s enactment.The Governor of the existing state of Andhra Pradesh shall be the common Governor for both states for a period determined by the President.  As part of the administration of the common capital area of Hyderabad, he shall be responsible for (i) security of life, liberty and property, (ii) law and order, (iii) internal security, (iv) security of vital installations, and (v) management and allocation of government buildings. After the bifurcation, Andhra Pradesh will have 11 seats in Rajya Sabha, and Telangana will have 7.  In Lok Sabha, Andhra Pradesh will have 25 seats and Telangana will have 17 seats. The High Court at Hyderabad shall be the common High Court for the successor states for a period of time.  Following this, it shall become the High Court for the state of Telangana, and Andhra Pradesh shall get a new High Court.   The resources allocated by the 13th Finance Commission to the existing state of Andhra Pradesh will be apportioned between the two successor states on the basis of population ratio and other parameters.  The centre may make grants to the successor state of Andhra Pradesh.

The Reserve Bank of India

SUPREME COURT OF INDIA CASES:

Ishwar Chandra Jayaswal v Union of India &Ors. 2014(1)SCALE155

The Hon’ble SupremeCourt has held that the punishments meted out should be in proportion to the offence committed. It was held that deprivation of retiral benefits in addition to the loss of service was entirely incommensurate with the charge of having taken small sums of money for issuance of ‘Fit certificate’.

Kichha Sugar Company Limited Th. Gen. Mang. vTaraiChini Mill Majdoor Union, Uttarkhand. 2014(1)SCALE106

TheHon’ble Supreme Court has held that any extra emoluments to workmen, in the form of overtime or leave encashment or special incentive or work will not be counted as basic wages for the purpose of calculating Hill Development Allowance.

Km. Hema Mishra v State of U.P. and Others. 2014(1)SCALE342

The Hon’ble Supreme Court has held that pre-arrest bail is neither a statutory nor a right guaranteed under Article 14, Article 19 or Article 21 of the Constitution of India. It was clarified that the power granted under Article 226 has to be exercised sparingly in those cases where it is absolutely warranted and justified.

M/s StanzenToyotetsu India Pvt. Ltd. vGirish v &Ors. 2014(1)SCALE506

The Hon’ble SupremeCourt has opined that there is no legal bar to the holding of the disciplinary proceedings and the criminal trial simultaneously. It was opined that stay of disciplinary proceedings may be an advisable course in cases where the criminal charge against the employee is grave and continuance of the disciplinary proceedings is likely to prejudice their defence before the Criminal Court.

Hanumanagouda v United India Insurance Co. Ltd. &Ors. Etc. MANU/SC/0060/2014

The Hon’ble Supreme Court while deciding on the question of whether the insurance policy was wide enough to cover the deceased who was accompanying the goods in transit for the purpose of delivery, held that deceased would be covered by the expression “persons employed in connection with operation of motor vehicle” The operation of the aforesaid clause was held to be wrongly restricted and limited only to persons employed in connection with loading/unloading of the motor vehicle.

Sasi Enterprises v Assistant Commissioner of Income Tax. MANU/SC/0072/2014

The Hon’ble Supreme Court has held that the court in a prosecution of offence, like Section 276CC of The Income Tax Act, 1961 has to presume the existence of mens rea and it is for the accused to prove the contrary and that too beyond reasonable doubt.

Aveek Sarkar &Anr v State of West Bengal &Ors., MANU/SC/0081/2014

The Hon’bleSupreme Court has held that while judging as to whether a particular photograph, an article or book is obscene, regard must be had to the contemporary mores and national standards and not the standard of a group of susceptible or sensitive persons. The Court applied the ‘Community Standard Test’ to determine what is“obscenity” and held that “A picture of a nude/semi-nude woman, as such, cannot per se be called obscene unless it has the tendency to arouse feeling or revealing an overt sexual desire. The picture should be suggestive of adepraved mind and designed to excite sexual passion in persons who are likely to see it, which will depend on the particular posture and the background in which the nude/semi-nude woman is depicted. Only those sex-related materials which have a tendency of “exciting lustful thoughts” can be held to be obscene, but the obscenity has to be judged from the point of view of an average person, by applying contemporary community standards.”

Chennai Metropolitan Water Supply and Sewerage Board and others v T.T. MuraliBabuMANU/SC/0090/2014

The Hon’bleSupreme Courthas observed that “It cannot be stated as an absolute proposition in law that whenever there is a long unauthorized absence, it is obligatory on the part of the disciplinary authority to record a finding that the said absence is willful even if the employee fails to show the compelling circumstances to remain absent….Thus, the unauthorized absence by an employee, as a misconduct, cannot be put into a straight-jacket formula for imposition of punishment. It will depend upon many a factor as has been laid down in State of Punjab v. Dr. P.L. Singla (2008) 8 SCC 469.”

Voltas Limited Versus Rolta India Limited MANU/SC/0099/2014

The Hon’ble Supreme Court has held that a counter claim is barred by law of limitation if it has not been raised within the statutory period. It further held that if a respondent against whom a claim has been made satisfies the twin test, namely, he had made a claim against the claimant and sought arbitration by serving a notice to the claimant, only then the counter claim is within limitation.

Nand Kumar v State of Bihar &Ors. MANU/SC/0148/2014

The Hon’ble Supreme Court has held that the status and rights of daily wagers of a Government concern are not equivalent to that of a Government servant and his claim to permanency has to be adjudged differently. The regularisation/absorption is not a matter of course. It would depend uponthe facts of the case following the rules and regulations.

Ramesh Chandra Ambalal Joshi v State of Gujarat MANU/SC/0108/2014,

The Hon’ble Supreme Court  has held that  while calculating the period of six months the day on which cheque was drawn has to be excluded and last day of presentation has to be included for the purpose of calculating commencement or termination of time.

Pasupuleti Siva Ramakrishna Rao v State of Andhra Pradesh and Ors. MANU/SC/0125/2014,

The Hon’ble Supreme Court while interpreting section 452 IPC has held that it is not the requirement of Section 452 IPC that for a trespass to be an offence the house must be a private place and not an office.  The law protects any house from trespass, vide Section 448 IPC and further protects persons within the house from being assaulted or even put in fear of hurt or wrongful restraint within their own house.

COMPETITION COMMISSION OF INDIA’S ORDERS

M/s N K Naturals Foods Pvt. Ltd. v M/s Akshaya Private Limited (Case No. 67/2013)

The Competition Commission of India has held that Agreements under section 3 are held anti-competitive only if they create market distortions by causing an appreciable adverse effect on    competition either `through concerted action of horizontally placed enterprises or through agreement between or among vertically placed enterprises including tie-in arrangement, exclusive supply agreement, exclusive distribution agreement, refusal to deal & resale price maintenance.

Re: Alleged Cartelization by steel producers, MANU/CO/0006/2014

The Competition Commission of India has held that while considering the remote possibility of getting direct evidence in the case of a cartel in many cases, the existence of an anti-competitive practice or agreement can also be inferred from the conduct of the colluding parties which may include a number of coincidences and indicia which, taken together, may, in the absence of any other plausible explanation, constitute evidence of the existence of an agreement. Thus, in case of agreements as listed in section 3(3) of the Act, once it is established that such an agreement exists, it will be presumed that the agreement has an appreciable adverse effect on competition; the onus to rebut this presumption would lie upon the opposite party.

Ferozepur v Chemists & Druggists Association, Ferozepur&Ors., MANU/CO/0016/2014

The Competition Commission of India  held that Article 17 of the Memorandum of Association of Punjab Chemist Association(PCA), is violative of the provisions of section 3(3)(b) read with section 3(1) of the  Competition Act, 2002 as it limits/ controls the supply/ provision of goods/ services in the markets. Accordingly, the Commission directed the PCA to cease and desist from insisting upon No Objection Certificate / Letter Of Credit before appointment of a stockist by the companies and to delete Article 17 from its memorandum forthwith.

1st Jan, 2014

  • The Right to Fair Compensation and Transparency in Rehabilitation and Resettlement Act, 2013, which aims to provide fair compensation, rehabilitation and resettlement to farmers whose land is acquired, came into force from Wednesday. The rules governing the Act will be finalized by February 15, 2014 having been notified in the gazette for formal public consultations.
  • The Ministry of Corporate Affairs in India has notified the National Company Law Appellate Tribunal (Salaries, Allowances and other terms and conditions of service of the Chairperson and other Members) Rules, 2014 as per the powers conferred by the new Companies Act 2013.

5th Jan, 2014

  • A petition has been filed in the Supreme Court of India for dismissal of Centre’s plea seeking review of its judgement on making gay sex an offence in the country.

6th Jan, 2014

  • In a landmark verdict, Delhi High Court ruled that the Comptroller and Auditor General (CAG), has the powers to investigate the financial records of private telecom companies.
  • The Reserve Bank of India has allowed Indian companies to issue non-convertible or redeemable preference shares or debentures to non-resident shareholders from their reserves as bonus.

7th Jan, 2014

  • The Supreme Court of India has directed the Centre to appoint a national regulator to oversee the implementation of forest policy and to take up comprehensive environmental impact assessment (EIA) of projects.

8th Jan, 2014

  • The Supreme Court of India has ruled that every criminal case ending with the acquittal of the accused will have to be examined by State Government to ascertain whether there were any lapses by the police and the prosecution or if the accused was deliberately framed.
  • The Supreme Court of India has held that a corrupt public servant acquiring properties in the name of relatives cannot escape criminal prosecution by claiming that he/she is not its legal owner.
  • The Delhi High Court has permitted an audit of private telecom firms by the national auditor to check whether they had underpaid licence fee to the government, a ruling that can have a bearing on other sectors such as power and oil as well. A bench of Justices Pradeep Nandrajog and V Kameswar Rao said the Comptroller and Auditor General has the power to audit all the revenue receipts of the government.
  • The Indian government plans to offer exploration blocks for bidding after a long delay, with a new revenue sharing model that will end the controversial system in which companies first recover their costs before the state gets revenue. The Oil Ministry will profile at least 56 oil and gas blocks, which will be offered in the 10th round of bidding next week at the Petrotech conference.
  • The Supreme Court of India has directed the government to set up within three months a national environment regulator with the power to appraise and clear projects. The regulator would be created under Section 3(3) of the Environment (Protection) Act, 1986, for appraising projects, enforcing environmental conditions and to impose penalties on polluters.

9th Jan, 2014

  • The Punjab & Haryana High Court has given approval  to setup the first ever court in the State to deal exclusively with the matters relating to Non-Resident Indians to ensure speedy and hassle-free disposal of their cases.

10th Jan, 2014

  • The German Court dismissed patent infringement complaint by Nokia against Taiwan’s HTC in relation to technology that allows users to accept calls while downloading software updates.
  • The Supreme Court of India has clarified that Section 319 of Criminal Procedure Code empowers the trial court to proceed against a person, in case evidence crops up during the proceedings, even if he has not been named in the FIR or charge sheet.
  • SEBI has notified SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014, to provide guiding factors for dealing with the settlement process, while serious offences such as insider trading are excluded from the scope of the settlement.
  • The US court has indicted Senior Indian diplomat DevyaniKhobragade for visa fraud and making false statements and held that charges against her will remain and she will have to face trial, if she returns to the US without diplomatic immunity.
  • In a landmark judgment, the Orissa High Court has held that the right, title and interest over the land belonging to the deity vests with the deity and its property cannot be sold by the sevayat’s of the deity.

11th Jan, 2014

  • Trident Group would become the first corporate in India to use Aadhaar Payment Bridge (APB) for disbursal of salaries to its employees.

12th Jan, 2014

  • The Coal Ministry of India has sought suggestions from the stakeholders on the draft bid document pertaining to coal mines to be auctioned in order to ensure greater transparency.
  • The Reserve Bank of India will consider reducing the number of free ATM withdrawals, as recommended by the Indian Banks Association, in an effort to cut down on cash transactions in the economy.

13th Jan, 2014

  • Tightening norms for issue of participatory notes (P-Notes) by overseas investors, Sebi has barred “unregulated” foreign funds from dealing in offshore derivative instruments even if their investment managers are appropriately regulated by their concerned regulators. The guidelines, which are part of the newly notified Foreign Portfolio Investor (FPI) Regulations, have come into force with immediate effect.
  • Competition Appellate Tribunal will issue notice to CCI on its order slapping Rs 1,773 crore penalty on state-owned Coal India ltd on charges of anti-competitive practices. Hearing an appeal filed by CIL, the tribunal said that status quo should be maintained until further orders regarding CCI’s direction to modify fuel supply agreements and to cease and desist from unfair practices.
  • Competition Commission of India has closed the case of alleged unfair trade practices against steel producers, including SAIL, RINL and Tata Steel, following insufficient evidence of cartelisation in hiking prices.
  • The Ministry of Home Affairs has given its green signal to the proposal of allowing Foreign Direct Investment (FDI) in Railways, where foreign investors will be allowed to hold stake in special-purpose vehicles meant for PPP in construction projects.
  • The Bombay High Court has ruled that deserting one’s spouse without a valid reason amounts to cruelty and a ground for divorce.
  • The Delhi High Court while referring to the provision of section 216 of Code of Criminal Procedure has held that lower courts have “comprehensive” power to alter or add charges in a criminal case at any stage of trial prior to the pronouncement of judgment.
  • The Supreme Court of India in response to a special leave petition has ruled that a bank employee can claim pension and encashment of leave even when removed from service.
  • The Supreme Court of India has said that an eligible candidate has a fundamental right to be considered for promotion against the available vacancy and promoted if adjudged suitable.
  • The U.S. Court of Appeals ruled that Apple did not infringe Google-owned Motorola Mobility’s patent in the development of its popular iPhone.

14th Jan, 2014

  • The Supreme Court of India has directed the Centre to place the Justice Shah Commission’s report on illegal mining in Orissa and Jharkhand before January 27, 2014.
  • Delhi High Court while disallowing a plea of a Philippines-based institute has held that ‘Pranic Healing’ is not a trademark as it is an ancient technique of Yoga.

16th Jan, 2014

  • The Ministry of Finance in India has  clarified that companies selling goods at a loss will no longer be asked to pay excise duty at the normal or undiscounted price (production cost plus profit) if these sales are not aimed at market penetration.
  • California Appellate Court unanimously upheld the involuntary manslaughter conviction of Michael Jackson’s doctor, Conrad Murray determining there was substantial evidence of his guilt presented at trial.
  • Allahabad High Court in India has ruled that development authorities of cities in Uttar Pradesh could not demand bank guarantee from developers as a means to ensure that they installed rain water harvesting systems in residential colonies.

21st Jan, 2014

The Supreme Court of India has held that death sentence of a condemned prisoner can be commuted to life imprisonment on the ground of delay on the part of the government in deciding the mercy plea. The apex court also ruled that a death convict suffering from mental insanity and schizophrenia cannot be hanged.

23rd Jan, 2014

  • The Reserve Bank of India (RBI) with an aim to curb black money and fake currencies in the country, has decided to withdraw all currency notes issued prior to 2005, including Rs. 500 and Rs. 1,000 denominations.
  • The Supreme Court of India has ruled that the Government can be justified to deprive a person from his property if he cannot explain the legitimate source of funds to acquire it.
  • The Supreme Court of India has made it mandatory for the investigating agency to seek viscera examination from forensic science laboratories (FSL) in deaths due to poisoning before completing the probe.
  • The Mumbai High Court has ruled that the employees have no right to demand overtime work, which is necessitated by exigencies and added that the employer has a right to withdraw the overtime work unilaterally and such action on his part does not amount to change requiring notice under Bombay Industrial Relations Act.

24th Jan, 2014

  • As per the Central Board of Direct Taxes, in India, the procedure for PAN allotment will undergo a change w.e.f. 03.02.2014, where every PAN applicant will have to submit self-attested copies of Proof of Identity, Proof of Address and Date of Birth documents with original documents, for verification at Facilitation Centre.
  • The Punjab and Haryana High Court have directed the Haryana Govt. not to issue any change of land use (CLU) licence to developers to build colonies in Gurgaon and the NCR till the State Government get approval for its sub-regional plan from the National Capital Region Planning Board (NCRPB).
  • Corporate Affairs Ministry of India has asked its regional directors to seek the views of Income Tax Department before presenting the government stand to courts in cases related to amalgamation or arrangements of companies. The ministry has said that the directors should also check if feedback from other sectoral regulators is required in certain cases.

27th Jan, 2014

  • The Supreme Court of India has said that Indian courts have the jurisdiction to restrain foreign arbitration cases from going ahead. It has however permitted a dispute over the Board of Control for Cricket in India’s media rights between World Sport Group (Mauritius) and MSM Satellite (Singapore) to be decided by the Singapore-based International Chamber of Commerce (ICC).

 28th Jan, 2014

  • The Supreme Court of India has stayed a ministry of environment and forests notification permitting mining in forest areas for two years without clearances under the Forest Conservation Act and Environment Protection Act.The February 1, 2013 notification had told states that mining activities in forest areas should be stopped if the lease holder failed to obtain clearances under FCA and EPA within two years of commencing mining operations.

29th Jan, 2014

  • The Supreme Court of India has ruled that if a person who has renounced family to serve a religious organisation or sect dies in an accident, other members of the sect/organisation shall be entitled to compensation.

30th Jan, 2014

  • The Supreme Court of India has  reserved its verdict on the pleas seeking fresh interpretation of the term ‘juvenile’ in the statute and leaving it to the criminal court, instead of Juvenile Justice Board, to determine the juvenility of an offender in heinous crimes.
  • The Delhi High Court has sought the Centre’s response on whether guidelines can be framed directing corporates to donate a portion of their profits towards social welfare, including healthcare of needy and terminally-ill patients, under the Companies Act 2013.
  • The Punjab and Haryana High Court have directed the Punjab and Haryana Governments to ensure that no liquor vends are operated on national and State highways passing through the States, by framing a new excise policy.

2nd Feb, 2014

  • The Corporate Affairs Ministry of India is implementing a “user-friendly” data dissemination policy that includes making basic statistics on Indian corporate sector accessible to the general public.

3rd Feb, 2014

  • The Madras High Court has held that receiving family pension for military service would not be a bar for receiving second pension from another Government department.
  • India’s patents and trademarks office has issued guidelines on the working of the Madrid Protocol, a new system, which works on a single registration fee to be paid in India. It will help firms and brand owners save huge expenditure incurred in filing separate international trademark applications.

4th Feb, 2014

  • The Central Consumer Protection Council (CCPC), in India under the chairmanship of minister K V Thomas, has decided to set up a sub-committee to suggest strategies to ensure that celebrities endorsing products are also made liable for misleading advertisements.

5th Feb, 2014

  • The Madras High Court has held that High Courts have jurisdiction to entertain appeals against the orders of the National Green Tribunal (NGT).
  •  The Department of Telecom in India has stated that the District Consumer Forums are competent to deal with the disputes between individual telecom consumers and telecom service providers.

6th Feb, 2014

  • The Indian government has cleared two initiatives: visa on arrival and electronic travel authorization for all countries barring Pakistan, Sudan, Afghanistan, Iran, Iraq, Nigeria, Sri Lanka and Somalia.
  • The Indian Government has allowed Foreign Institutional Investors (FII) and non-resident Indians (NRIs) to invest in the insurance sector, within the overall 26 per cent cap on foreign direct investment (FDI).

7th Feb, 2014

  • Madras High Court has made it clear that an information relating to the commission of a cognizable offence has to be made first to the officer in charge of the police station concerned.

11th Feb, 2014

  • IBM India has been asked to prove that revenue to the tune of Rs 6,000 crore during 2007-08 was from export of software under a special incentive scheme. The order by the Income Tax Appellate Tribunal, the first of its kind, has implications for the entire industry which has claimed tax rebates under the Software Technology Parks of India (STPI) scheme.
  • The Central Government of India has approved two additional attempts to all categories of candidates with effect from Civil Services Examination 2014, with consequential age relaxation of maximum age for all categories of candidates, if required.

17th Feb, 2014

  • Justices Rajesh Kumar Agarwal and NuthalapatiVenkataRamanahave assumed charge as Supreme Court judges, taking the apex court’s strength to 31 including Chief Justice P Sathasivam.

19th Feb, 2014

  • According to the Banking Codes and Standards Board of India’s (BCSBI) revised code of commitment to customers that came into force from January, banks will have to take a lot more responsibility for any “unauthorised” transactions.
  • The Supreme Court of India has clarified that a 2006 change in the law to allow a person from any religion to adopt was only optional for Muslims. Muslims could if they wanted adopt children under the 2006 juvenile justice act they could do so, but it was not binding on them.

20th Feb, 2014

  • The committee set up to deal with instances of sexual harassment within Supreme Court of India’s  precincts, has decided that aggrieved women as defined under Gender Sensitisation and Sexual Harassment of Women at the SC (Prevention, Prohibition &Redressal) Regulations, 2013 can send their complaints by post or e-mail.
  • The Supreme Court of India has restrained the Tamil Nadu Government from releasing the convicts in the Rajiv Gandhi assassination case, citing procedural lapses by the State.
  • The Indian government has cleared a proposal for setting up the much- awaited Equal Opportunities Commission (EOC), a statutory body to check discrimination of minority communities in jobs and education.
  • The Indian government is proposing relaxation of norms for foreign investment in construction.

21st Feb, 2014

  • The Income Tax Appellate Tribunal (ITAT) in India has held that salary credited by the overseas company to the employee’s NRE bank account in India, will not trigger tax incidence in India.
  • Competition Commission of India has imposed penalty of Rs.3.81 crore on Dr. L.H.Hiranandani Hospital, Mumbai under the Competition Act for abusing its dominant position, as it did not allow the stem cell of the child to be collected by any other service provider except M/s Cryobank with whom it had an exclusive agreement.
  • The Bombay High Court, while hearing the death sentence confirmation petition stated that it will have to consider the convicts mental status at the time of the incident and not whether he was undergoing treatment for insanity.

22nd Feb, 2014

  • Vodafone Plc has served a notice to the Indian government seeking international arbitration over their multi-billion dollar tax dispute, before the finance ministry moved a Cabinet note for withdrawing its conciliation offer to the UK based telecom operator.

24th Feb, 2014

  • The Delhi High Court has termed as “serious” the use of internet services provided by offshore firms by government officials in communicating on sensitive issues and asked the Centre to come up with the e-mail policy.
  •  The Supreme Court of India has referred the issue of legalizing euthanasia in the country to a five- judge Constitution bench, saying there has been “inconsistent” opinion in its previous verdicts on withdrawing medical support to terminally ill patients.
  • According to a notification issued by the Reserve Bank of India, all entities regulated by the Reserve Bank of India should report their secondary market over-the-counter trades in corporate bonds and securitised debt instruments within 15 minutes of the trade on any of the stock exchanges.
  • The Supreme Court of India has directed trial courts to determine before pronouncing sentence whether a person convicted of murder or other heinous crimes could be reformed or rehabilitated.
  • The Bombay High Court has ruled that a trial court can use powers under the Criminal Procedure Code to initiate criminal proceedings against a person who may not have been booked by police in a case.The Bombay High Court ruled that only a wife without sufficient source of permanent income can claim maintenance from her husband.

25th Feb, 2014

  • The Supreme Court of India while allowing a petition, sought direction to Election Commission to enable soldiers, who cast their votes through postal ballot or proxy, to exercise their franchise at the place of their posting.
  • The Indian government has decided not to prosecute Italian marines accused of killing Indian fishermen under tough anti-piracy law.

26th Feb, 2014

  • The Department of Telecommunications in India has cautioned against outsourcing manpower for setting up the National Cyber Coordination Centre, saying that involving the private sector in the ‘sensitive installation’ poses the risk of data breach. DoT has also sought to be made part of the multi-agency committee monitoring the project, as it is an ‘important stakeholder’.
  • The Supreme Court of India has ruled that members of parliament (MPs) and members of legislative assemblies (MLAs) can avail privileges only for functioning freely inside the House.
  •  As per section 48 and Rules 42 & 19 of Delhi VAT Act & Rules, Delhi VAT Dealers are required to have a principal place of business in Delhi and intimate any change in its address to the Commissioner within 30 days of such change and are also required to maintain and retain prescribed records for 7 years.
  • Supreme Court of India has ruled that only Indian courts have final say in arbitration proceedings & added that “venue” of an arbitration, which is merely geographical location chosen based on convenience of both parties, is not same as the “seat” of arbitration, which decides the appropriate jurisdiction.
  • The Supreme Court of India has observed while reserving its verdict on petition against Shariat courts, that courts cannot interfere with fat was or religious decrees issued by Muslim clerics.

27th Feb, 2014

  • The Supreme Court of India reiterating its view that daily wage workers or those employed on contract have no legal right to be absorbed in service, has stated that unless they are working against a sanctioned post, temporary employees cannot demand regularisation of their services.

28th Feb, 2014

  • The Indian l Government has amended Schedule VII, in exercise of powers conferred by sub-section (1) of section 467 of the Companies Act, 2013, which comes into effect from 1st April, 2014.
  • The Madras High Court in a landmark ruling, has held that persons acquitted from criminal cases or suppressing information about their past can be disqualified from joining the Police Department.
  • The Kerala High Court has ruled that habeas corpus petition cannot be entertained in the case of missing persons and clarified that writ of habeas corpus is issued only for producing a detainee and to release him if the detention is illegal.
  • The Delhi High Court has issued an interim injunction restraining two coaching centres from calling one of their aptitude test as BRAHMOS, for dishonestly using the name and violating the trademark, of missile manufacturer BrahMos Aerospace Private Ltd (BAPL).

Doc ID: 10MAR2014-40  E: contact@alayalegal.com; T: +91 11 41674458; FAX: +91 11-26146998 ©Copyright Protected. Privileged & Confidential for private circulation only.For information purposes only. This paper is not to be construed as ‘legal advice‘. The Author(s) and the Firm disclaim any and all liability in respect of the present circulation.

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