Bimonthly Legal Tablet : Volume 2 Issue 5

Bimonthly Legal Tablet

Volume 2, Issue 5, September 05, 2012



Law & Policy
Notifications, Circulars (July – August,


Leg al P ronouncemen t s
: Property law
: Income Tax Act 1961
: The Trade Marks Act 1999
: Competition Law


Business News

Law & Policy

Notifications, Circulars (July – August, 2012)

General Circular No. 24/2012 dated August 09, 2012 bearing F.No. 14/33/2012‐CL. VII, issued by the Government of India, Ministry of Corporate Affairs regarding applicability of Service Tax on commission payable to Non‐Whole Time Directors of a company under Section 309(4) of the
Companies Act, 1956

The Non‐Whole Time Directors are not presently covered under the exempted list and
accordingly, sitting fee/ commission payable to them by the company is liable to Service Tax. It has now been decided that any increase in the remuneration of such Non‐Whole Time Directors of a company solely on account of payment of Service Tax on commission payable to them by the company shall not require approval of the Central Government under Section 309 and Section 310 of the Companies Act, 1956, even if it exceeds the limit 1% or 3% of the profit [under Section 309(4)] of the company, as the case may be, in the financial year 2012‐2013.

Securities and Exchange Board of India Circular CIR/CFD/DIL/6/2012
dated July 13, 2012 regarding amendment to the Equity Listing
Agreement – Platform for E‐Voting by Shareholders of Listed Entities

In order to enable wider participation of shareholders in important
proposals, Securities and Exchange Board of India has decided to
mandate listed companies to enable e‐voting facility also to their
shareholders, in respect of those businesses which are transacted
through postal ballot by the listed companies. To begin with, this
requirement has been made applicable to top 500 listed entities at
BSE and NSE, chosen based on their market capitalization computed
as on date of the said Circular. Accordingly, the equity listing
agreement has been amended and a new Clause 35B has been
inserted therein. The amendment shall be applicable for the
shareholders’ meetings, for which notices are issued on or after
October 01, 2012.

Press Note No. 3 (2012 Series) issued by the Government of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion (FC‐I Section)

The Government of India has decided to permit a citizen of Pakistan
or an entity incorporated in Pakistan to make investments in India,
under the Government route, in sectors/activities other than defence,
space and atomic energy. Accordingly, paragraph 3.1.1 of Circular 1 of
2012 – Consolidated FDI Policy, effective from 10.04.2012, has been

Press Note No. 2 (2012 Series) issued by the Government of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion (FC‐I Section)
The Government of India has reviewed the policy relating to calculation of downstream investments by a banking company incorporated in India, which is owned and/or controlled by non‐ residents/ a non‐resident entity/ non‐resident entities. A new ‘Note’ below paragraph is inserted in the Consolidated FDI Policy

with effect from April 10, 2012, which stated that the downstream investments made by a banking company, as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949, incorporated in India, which is owned and/or controlled by non‐residents/ a non‐resident
entity/non‐resident entities, under ‘Corporate Debt Restructuring’ (‘CDR’), or other loan restructuring mechanism, or in trading books, or for acquisition of shares due to defaults in loans, shall not count towards indirect foreign investment. However, their ‘strategic
downstream investment’ shall count towards indirect foreign investment. For this purpose, ‘strategic downstream investments’ would mean investment by these banking companies in their subsidiaries, joint ventures and associates.

General Circular No. 14/2012 dated June 21, 2012, F.No.
17/187/2011 CL.V, Government of India, Ministry of Corporate Affairs, CL V Section

Vide General Circular No. 14/2012, the Ministry of Corporate Affairs has decided to impose fees at the rates specified therein on certain e‐ forms filed with the ROC, RD, or MCA (HQ) under MCA‐21, where atpresent no fee is prescribed. The said Circular came into effect on July
22, 2012. Pursuant to the said Circular, fee has been imposed on certain e‐forms namely, Form 1 of Investor Education Protection Fund Rule, Form 23B, Form 24A, Form 36, Form 61, Form 62 and Form 65.

Legal Pronouncements

Sabhia Mohammed Yusuf Abdul Hamid Mulla (D) by L.Rs. and Ors. Vs Special Land Acquisition Officer and Ors. (MANU/SC/0509/2012)

The Supreme Court held that Land Acquisition Collector is required to keep in mind the following factors:
1. Existing geographical situation of the land
2. Existing use of the land.
3. Already available advantages like proximity to National or State
High Way or road and/or developed area.
4. Market value of other land situated in the same
locality/village/area or adjacent or very near the acquired land.
The Court also laid emphasis while quoting A.P. Housing Board V. K. Manohar Reddy that the percentage of deduction (development cost factor) will be applied fully where the acquired land has no
development But where the acquired land can be considered to be partly developed (say for example, having good road access or having the amenity of electricity, water, etc.) then the development cost (that is, percentage of deduction) will be modulated with reference to the extent of development of the acquired land as on the date of

Columbia Sportswear Company Vs Director of Income Tax, Bangalore (MANU/SC/0613/2012)

The Apex Court has held that AAR (Authority of Advance Rulings), an authority under the Income Tax Act is a tribunal within the meaning of the expression in Articles 136 and 227 of the Indian Constitution and that the ruling of an AAR can be challenged before a High Court by filing a writ petition under Articles 226/227 of the Constitution. Further, that an SLP challenging a ruling of an AAR will be considered for admission in the Supreme Court only if it involves a question of principle of great importance or a similar question is already pending before the

Supreme Court.
Dropti Devi & Anr. Vs Union of India & Ors. (MANU/SC/0506/2012)The Supreme Court held that the relevance of provision for preventative detention of the anti‐social elements indulging in smuggling and violation and manipulation of foreign exchange in Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) continues even after repeal of FERA. The court further held that an act may not be declared as an offence under law but still for such an act, which is an illegal activity, the law can provide for preventive detention if such act is prejudicial to the state security.

Costa And Company Pvt Ltd vs Uoi And Ors (MANU/DE/3613/2012)The question before the Hon’ble Court was whether the Intellectual Property Appellate Board, under The Trade Marks Act, 1999 has any statutory power or jurisdiction to transfer to itself the rectification
application pending before the Registrar?

The Hon’ble court held that the absence of a specific provision under The Trade Marks Act, 1999 vesting supervisory jurisdiction in the Intellectual Property Appellate Board over the functioning of the Registrar, and the absence of a provision vesting the jurisdiction in the
Appellate Board to transfer pending cases before the Registrar to itself, or from one Registrar to another, shows that the Parliament was desirous of maintaining sufficient autonomy in the working of the office of the Registrar.

Godfrey Phillips India Ltd Vs Dharampal Satyapal Ltd. & Anr (MANU/DE/3015/2012)

The Hon’ble Court held that in an action for infringement, the
plaintiff must, no doubt, make out that use of the defendant’s mark is likely to deceive, but where the similarity between the plaintiff’s and the defendant’s mark is so close either visually, phonetically or otherwise and the court reaches the conclusion that there is an imitation, no further evidence is required to establish that the plaintiff’s rights are violated. Expressed in another way, if the essential features of the trade mark of the plaintiff have been adopted by the defendant, the fact that the get‐up, packing and other writing or marks on the goods or on the packets in which he offers his goods for sale show marked differences, or indicate clearly a trade origin different from that of the registered proprietor of the mark would be immaterial; whereas in the case of passing off, the defendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from those of the plaintiff.


Lt. Col. (Retd) Dr. Mohinder Kumar Yadav vs Universal Buildwell Pvt. Ltd. & Ors. in r/o Case no. 26/2012

The Competition Commission of India held that in order to attract provisions of the section 3 and/or section 4 of the Competition Act, 2002 the relevant market needs to be defined in clear and
unequivocal terms which include identifying relevant product market
and the relevant geographical market. The Commission stated that it
is difficult to accept that a shop in single storied commercial complex
is non‐substitutable or non‐interchangeable with shops in multi ‐
storied commercial complex. A unique selling feature does not make a product non‐substitutable or non‐interchangeable but it is the
utility and function of the product which decides the substitutability of a product.

Business News

July 2, 2012 ‐ 1. The Finance Ministry and SEBI are likely to recastregulations to allow listed companies to use ‘call and put options’ in mergers & acquisitions barely a year after the stock market watchdog rejected the use of this derivative instrument in two deals, including one between Cairn Plc and Vedanta.

2. The Reserve Bank has introduced an internet based platform for trading in secondary market of government securities for gilt account holders.

July 4, 2012 – 1. Prime Minister Manmohan Singh has dismissed reports of any plan to bring under the service tax ambit foreign remittances by overseas Indians

2. GSM operators Bharti Airtel, Vodafone and Idea Cellular said they will continue to offer third‐generation services on a pan‐India basis as the dispute over 3G roaming pacts heads to the Supreme Court, after a two‐member bench of the telecom disputes tribunal delivered a split verdict on a petition challenging the government’s order banning such agreements.

3. Google’s new unified privacy policy unveiled in March is the ‘mother of all policies’ replacing 60 separate policies of its individual products, including Gmail, Google+ and You Tube. The company now considers an individual as a single user across all its products except Google Books, Chrome and Wallet.
4. The telecom department (DoT) has released the initial set of rules for the upcoming spectrum auctions, even as the government looks set to miss the Supreme Court appointed deadline of finishing the saleprocess by August‐end.

July 5,2012 ‐ “Reserve Bank of India shall not grant any permission to foreign law firms to open liaison offices in India under section 29 of the Foreign Exchange Regulation Act,1973,” the Supreme Court said in an interim order issued by a bench comprising Justice RM Lodha and Justice AR Dave.

It also clarified that under section 29 of the Advocates Act, 1961, the term ‘practice’ covers consultation, legal drafting and all other non‐ litigious matters, besides litigious matters.

July 6, 2012 ‐ In a bid to revitalise the primary issue segment, capital market regulator SEBI will soon announce guidelines to sell shares through electronic Initial Public Offers ( e‐IPOs )

July 11, 2012 – Government today said it will modify the provision in Companies Bill regarding two per cent CSR spending to ensure that corporates earmark funds for such activities, but will not make it

July 17, 2012 – The government is considering an amendment in the Companies Act to support a recent notification by the Indian capital markets regulator Sebi that proposes to penalise companies saddled with adverse auditor remarks. 

July 24, 2012 – The Supreme Court has directed that there shall be no tourism activity in any of the core zones of tiger reserves across the country.

A bench of justices Swatanter Kumar and Ibrahim Kalifulla also warned of contempt proceedings and imposition of exemplary costs on states which failed to notify the buffer zones in their respective tiger reserves.

July 27, 2012 – The Food Safety and Standards Authority of India, o FSSAI, has extended the time period given to so‐called food business operators to comply with tough Food Safety and Standards Act toFebruary 5, 2013, from August 4, 2012, due to protests.

July 30, 2012 – Firms providing insurance cover, phone or car for personal use to its staff as part of compensation package will have to pay service tax on the benefit extended.

Independent directors would also be liable to service tax on the
remuneration paid to them, according to changes proposed by the finance ministry in the new negative list‐based service tax regime.

Companies could pass on this burden to the employee, reducing his take home salary

July 31, 2012 – The Reserve Bank on Tuesday eased norms by allowing corporates and exporters to keep their entire forex earnings in the respective foreign currency for a limited period

August 3, 2012 -The Reserve Bank Of India has said that registerednon‐banking financial companies (NBFCs) intending to convert to non‐ banking financial company‐micro finance institutions (NBFC‐MFI) will have to maintain net owned funds at 30 million rupees ($537,200)by March 31, 2013 and 50 million rupees by end‐March 2014.

If they fail to have adequate funds, their lending to the microfinance sector will be restricted to 10 percent of total assets.

August 4, 2012 ‐ Market regulator SEBI today indicated listed
companies would not be provided additional time to comply with minimum public shareholding norms, whose deadline is expiring in August next year.

August 10, 2012 ‐ 1.The U.S. government has finalized its settlement with Facebook to resolve charges that the social network exposed details about users’ lives without getting the required legal consent.
Facebook Inc. didn’t admit wrongdoing, but agreed to submit to government audits of its privacy practices every other year for the next two decades. The company committed to getting explicit approval from users a process known as “opting in” before changing the types of content it makes public.

2. The DoT will come up with the guidelines on telecom M&As and spectrum‐sharing by end of October.

August 11, 2012 ‐ The Environment and Forest Ministry has asked the Telecommunications Department not to allow installation of new mobile towers within a one‐km radius of the existing ones. In an advisory issued on the basis of the recommendation of an expert committee on the issue, the Ministry has directed that the new towers should be constructed with utmost care and precautions ‘so as not to obstruct flight path of birds, and also not to increase the combined radiation from all towers in the area’ 

August 12, 2012 ‐ The Supreme Court has ordered that all
environmental cases pending before high courts and future litigation be moved to the National Green Tribunal.

August 13, 2012 – 1.India will soon notify the rules for advance pricing arrangement (APA) that signal a shift away from aggressive tax approach that resulted in transfer pricing adjustments as high as over Rs. 1 lakh crore in the last two financial years.

2. As part of its larger effort of pushing land reforms and making
legislations related to land records, sale and transfer up‐to date the government considering amending the Registration Act, 1908 Changes include making it compulsory to register leases for a period of less than a year, mandatory registration of power of attorney transfers,
registration of property in the state where it is located and allowing inspection of registered documents.

August 14, 2012 ‐ 1 The government will soon come out with newnorms to revive Special Economic Zones (SEZs), which have lost sheen after the imposition of certain levies and the proposal to take away tax incentives.

2. India is investigating whether online search engine giant Google has
adopted anti‐competitive and discriminatory practices in India, where its services are used by over 100 million users. The investigation by Competition Commission of India is based on complaints that the California‐based firm is abusing its position as a market leader in the Indian online search space.

August 15, 2012 ‐ India is all set to clamp down on excessive radiation emanating from cellphone handsets and towers. According to the new radiation norms coming into effect from September 1, the radiofrequency (RF) exposure limits are to be lowered to 1/10th of the existing level.

It will also become mandatory for the specific absorption level (SAR) — the rate at which RF energy is absorbed by the body — to be embossed and displayed on the mobile handset by the manufacturer. SAR level for mobile handsets will also be restricted to 1.6 watt/kg, averaged over a mass of 1 gram of human tissue. Mobile handsets manufactured and sold in India or imported will now be checked for SAR limit compliance. The government is also making amendments in the Indian Telegraph Act, 1885 to ensure mobile handsets satisfying radiation standards will be permitted for import/ manufacture or sale in India.

August 17, 2012 ‐ The Cabinet Committee on Infrastructure has approved the Model Engineering, Procurement and Construction (EPC) Agreement Document for construction of 2‐lane National Highways Works, an official statement said.
All the National Highways works which are not done on PPP (public‐ private partnership) mode would be undertaken primarily through the EPC mode, the statement said
A meeting of the Union Cabinet chaired by Prime Minister cleared the Street Vendors (Protection of Livelihood and Regulation of Street
Vending) Bill.
The Ministry of Housing and Urban Poverty Alleviation is likely to
introduce the bill in the ongoing Monsoon session of Parliament.


August 20, 2012 ‐ India’s highest court will hear final arguments
starting this week in a landmark case over drug patents that could change the rules for the country’s healthcare sector and potentially curb its global role as a supplier of cut‐price generic medicines.The Supreme Court hearing pits Swiss drugmaker Novartis AG against India’s patent office, which has refused to grant a patent on the company’s cancer drug Glivec on the grounds that it is not a new medicine but an amended version of a known compound.

August 21, 2012 ‐ According to the Manufacturers Association of Indian IT (MAIT), Companies are finding disposal of e‐Waste, or IT waste, cumbersome because of the multiple authorisations that are required from different State Pollution Control Boards (SPCBs).
The apex industry body representing the IT hardware, communication, training and R&D industries wants a single authorisation in place of the multiple authorisations that are currently required under the e‐waste disposal guidelines that came into effect in May 2012.

August 22, 2012 ‐ Mobile companies in India have said that they will continue to comply with the new tower emission norms which are expected to come into effect from September 1, 2012. According to the Cellular Operators Association of India’s Director General, the telecom industry has voluntarily undertaken proactive measures and has undergone a massive transition in its network infrastructure which has been redesigned significantly to meet the prescribed norms.

August 23, 2012 ‐ India has eased overseas borrowing rules to allow easier access to cheap dollar funds to housing finance companies such as HDFC, small industry financier SIDBI and permitted non‐residententities to provide rating enhancement facility to Indian borrowers. The government has allowed foreign entities to provide credit enhancement to rupee bonds of Indian companies, which will improve 

their appeal to investors. The facility will now be available to
manufacturing sector as well to help them raise funds to
revive investment plans stuck because of high interest costs.

August 24, 2012 ‐ The government plans to introduce a law to regulate sectoral regulators, such as TRAI and CERC, that will empower it to
merge regulatory agencies and issue instructions to them on a wide
range of issues, possibly undermining the independence of these
statutory bodies
Capital market regulator SEBI has barred employee welfare schemes and trusts of listed entities from purchasing their own shares from the secondary market, fearing stock manipulation.

August 25, 2012 – 1.Apple has won more than $1 billion in a massive victory Friday over South Korean giant Samsung, in one of the biggest patent cases in decades ‐‐ a verdict that could have huge market
2. South Korea’s Samsung Electronics has said that it will contest a US court ruling that it must pay rival technology giant Apple damages of more than $1 billion for patent violations.
3. The Supreme Court on Friday said it would consider the
government’s plea of extending the spectrum auction deadline on the condition that the telecom secretary gives an undertaking that the court’s judgement will be implemented. 

August 27, 2012 ‐ The Supreme Court has extended the deadline to complete the airwaves auction to January 11, 2013 and permitted companies whose permits had quashed to operate until January 18, 2013, after the government had sought more time to complete the sale process.

August 28, 2012 – 1. In a ruling that has potentially far reaching implications for employees living in company‐leased accommodation, the Delhi high Court has ruled that money spent on repairs and renovations of such residences is not a taxable perk.
The verdict, delivered on August 17, comes 18 years after the income‐ tax department (I‐T) issued a notice on Scott R Bayman, who was then the president and CEO of GE’s India unit, for not including the value of taxable perks in his income for the financial year 1993‐94.
The ruling, if unchallenged in the Supreme Court, implies those living
in company‐provided accommodation will not have to pay tax on
expenses incurred by their employers on repair and renovation of their houses.
2. Indian telecoms regulator TRAI has amended rules to penalise companies if they failed to meet quality of service standards for mobile and wired telephones.
TRAI will implement ‘financial disincentives’ of Rs 50,000 per parameter for not meeting quality norms. The penalty would rise to Rs 1 lakh on consecutive defaults.


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