| lick: Article continued from…Years of wait
| | Years of wait before... | |
Negotiations between the two sides, which had agreed on some contentious issues after years of discussions, again appeared going off track last month with collapse of talks at the Shillong meet.
Among GST's greatest opponents have been the states ruled by the Bharatiya Janata Party (BJP) — Madhya Pradesh and Gujarat, in particular. If BJP and its allies come to power after the coming general elections, there could, however, be a turning of tables for GST. The reform may get a new lease of life, with these states softening their stance. But, then, a more vocal opposition from the Congress- ruled states cannot be ruled out. The indirect tax reform, too, cannot be implemented before 2016, say officials. That is because a Constitution Amendment Bill, to give the Centre the power to tax goods beyond the factory gate and empower states to collect service tax, will have to be passed with a two- thirds majority in Parliament — a difficult proposition if the ruling party or alliance does not have good numbers in both Houses. And, that's not all: Once Parliament has cleared the Bill, it will have to be ratified by legislatures of at least half the states. After that, the GST Bill have to be tabled in Parliament and states' respective Assemblies. The whole process is likely to take at least a year after a new government is in place. And, the wait will get even longer if a consensus continues to elude states and the Centre. | | | Complex options for Diageo | | DEV CHATTERJEE Mumbai, 22 December British firm Diageo Plc, whose stake in United Spirits ( USL) is now reduced to below 20 per cent, following the Karnataka High Courts judgment on Friday, has the option to again raise its holding via creeping acquisition. Or, to launch yet another open offer for USL shareholders, say lawyers. "The company should first appeal against the HC order in the Supreme Court. And, technically, the creeping acquisition route is open to them, which allows a promoter to raise stake by five per cent annually," said R S Loona, managing partner of Alliance Corporate Lawyers. " But Diageo has to take a call on whether this makes business sense." Creeping acquisition will be costlier, as the USL share price had shot up 85 per cent to ₹ 2,670 a share as on Friday, compared to the ₹ 1,440 a share it paid last year while acquiring from Vijay Mallya. The option is to launch another open offer, based on the current market price, and negotiate with institutional investors to sell their shares. Diageo's first open offer, in April this year, failed to generate any interest among USL shareholders, as the market price was far above the offer price. The HC on Friday ruled as void the sale of 6.9 per cent stake in USL by Vijay Mallya's United Breweries Holdings ( UBHL) to Diageo. The court overturned an order, passed in March by a single judge in the company court, allowing UBHL to sell a significant part of its stake in USL to Diageo. UBHL was guarantor to Kingfisher Airlines' loans, along with Mallya; hence, lenders to the airline took UBHL and Mallya to court to get their loans back. With this order, Diageos stake is now down from the earlier 26.4 per cent in USL ( see chart). UBHL, as part of the agreement between UB Group and Diageo, signed in November 2012, sold 6.9 per cent of its 14.16 per cent holdings in USL for ₹ 1,460 crore, only to have the bankers and lessors to Kingfisher sue it, since the USL shares were pledged. The airline owes close to ₹ 7,000 crore and has defaulted on payments. For Diageo, now caught in litigation between Mallya and Indian banks, the low stake in USL is a great cause of worry. With just 19 per cent stake as compared to its initial plans to buy 53.4 per cent, the litigation ahead can be a long and winding road. The British company said on Friday that it wanted to file a plea in the Supreme Court, along with UBHL. Another option for Diageo is to buy out Srei Infrastructure's 4.9 million shares in USL, worth ₹ 1,300 crore as of Friday. Srei had acquired these shares along with Kingfisher loans worth ₹ 430 crore from ICICI Bank last year. As the public sector banks have a second lien on these shares, whatever extra over ₹ 430 crore is raised by Srei will go to the former. NDEAL IN FOCUSN DEAL IN DOLDRUMS |9 November - UBHL and USL announce an agreement to sell 27.4% stake in USL to Diageo Plc at ₹ 1,440 a share |24 March - Company court allows UBHL to sell its shares in USL. The permission was granted in lieu of a deposit of ₹ 250 crore made with the court to take care of the winding- up petitions |10 April - Open offer triggered for additional 26% as Diageo aims for 53.4% of USL |26 April - Open offer closes with than 1% being tendered in |4 July - Diageo announces completion of stake purchase from UBHL, USL with 25.02 % as two banks refuse to part with 2.38% encumbered shares |26 November - Diageo picks up additional 1.4 % from the market, taking total stake to 26.4% |20 December- Karnataka High Court annuls United Spirits stake sale to Diageo; Mallya & Diageo say theywill go to Supreme Court | | | | | Big or small, all culprits same before Sebi: Sinha | |
PRESS TRUST OF INDIA
Mumbai, 22 December In its crackdown against market manipulations and other violations, the Securities and Exchange Board of India (Sebi) goes by facts of the case and the culprits being a big corporate house or a little- known individual become irrelevant, says its chief, U K Sinha. "The message and mantra for Sebi is that we go by the facts of the case, irrespective of whether you are big or small. We have to apply same principle and be fast, that is our approach," he said. The Sebi chairman was replying to a question on different sets of criticism often faced by the regulator with regard to its actions against big players. At times, Sebi has been accused of easily letting off big players, while many large corporate houses have also complained that the capital markets watchdog gets harsher with them to send across a stronger message. When asked what gets more importance between big players and big violations while dealing with manipulations and other violations, Sebi chief said: " I am happy you have given both the examples. We do receive complaints from both the sides. However, I think both sides are overplayed and the fact lies somewhere in between." Explaining further, he said earlier there was a perception that big people can get away by the consent settlement mechanism. | | BRIEF CASEN [1] M J ANTONY | |
CAG no arbiter of policies, says Supreme Court
The Comptroller and Auditor General of India ( CAG) is not entitled to question the merits of the policy objectives of a government venture, the Supreme Court stated while dismissing an appeal against the judgment of the Gujarat High Court. The state government had international financial services city at Ahmedabad. CAG had made certain remarks about policy deficiencies in land allotment. On that basis a public interest petition was filed in the high court. It dismissed the petition. An appeal was filed in the Supreme Court. It dismissed the appeal case, Pathan Mohammed vs State, observing that " CAG is a key figure in the system of parliamentary control of finance and is empowered to delve into the economy, efficiency and effectiveness with which the departmental authorities or other bodies had used their resources in discharging their functions. CAG is also the final audit authority and is a part of the machinery through which the legislature enforces the regulatory and economy in the administration of public finance. But we cannot lose sight of the fact that it is the government which administers and runs the state, which is accountable to the people. State's welfare, progress, requirements and needs of the people are better answered by the state, also as to how the resources are to be utilised for achieving various objectives. If every decision taken by the state is tested by a microscopic and a suspicious eye, the administration will come to stand still and the decision- makers will lose all their initiative and enthusiasm." >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Cement firms' pleas for large bench The Supreme Court last week referred a bunch of four appeals moved by cement companies from Tamil Nadu to a larger bench as they raised substantial questions of law. One of the issues was, what is the true nature of royalty/ dead rent payable to minerals produced/ mined/ extracted from mines. A related question is what is the true legal character of the expression royalty under the Mines and Minerals ( Development and Regulation) Act, and whether it is a tax or a consideration for a contract of mining lease? The problem arose when Dalmia Cement Ltd and three other firms challenged the demand of the collector to remit royalty and the dead rent at the rates prescribed under the MMDR Act. The Madras High Court dismissed their petitions, leading to the appeals. The Supreme The Court criticised the cement companies for their "wholly bald and vague assertions" and the government for "callous, imprecise counter". As a general observation, the court lamented that " in the adjudication of writ petitions, unfortunately a system of paying minimum attention, ( to employ a mild expression of disapproval) has developed over aperiod of time." In view of this situation, the court asked the companies and the state to file details in a clear manner. These appeals will be heard along with another batch of cases involving the Mineral Area Development Authority and Steel Authority of India Ltd, which was pending since 1999. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Guarantor's role in debt recovery The Supreme Court has dismissed the appeal of the chairman and a director of acompany who stood as guarantors for afirm that turned sick, stating that their liability will remain despite the firm being declared sick and the executives could not claim protection under Section 22 of the Sick Industrial Companies Act. In this case, Inderjeet Arya vs ICICI Bank Ltd, the bank instituted recovery proceedings against Rajat Pharmacem Ltd in the Debt Recovery Tribunal in Delhi. The guarantors were made parties. They appealed to the high court invoking the protection purportedly given in the Act and when they lost they moved the Supreme Court. The apex court stated that they were not protected from recovery proceedings filed by the bank. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Dismissal of ' overworked' employees The Supreme Court has dismissed the appeal of Sundaram Industries Ltd against the judgment of the Madras High Court in a dispute involving dismissal of workers. A section of the workers were told to do additional work and they were not paid for it. Several of them therefore refused to do the extra work. They were dismissed. The employees' union took up the matter before the labour tribunal on a reference under the Industrial Disputes Act. The tribunal held that though the allegations against the workers were proved, dismissal was " shockingly disproportionate" to the misconduct of the workers. The Madras High Court upheld the view. The company appealed to the Supreme Court. While dismissing the appeal, the court observed: " Refusal to carry out the instructions requiring workmen to do additional work beyond the shift hours clearly tantamounts to changing the conditions of service which was impermissible without complying with the legal requirements." The court also stated the tribunal was wrong to hold that the charges against the workers were proved. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Highest bidder has no vested right Even if a bidder had quoted the highest price, the tender process can be discharged due to technical or administrative reasons, the Supreme Court stated in the appeal case, Maa Binda Express Carrier vs North- east Frontier Railway. The tender was for a three- year lease on the parcel van of Kamrup Express. When it was cancelled, the bidder who stood a high chance moved the Gauhati High Court which dismissed the petition. The appeal was also dismissed by the Supreme Court. It observed that the tender process suffered from serious deficiencies. However, it could not be described as a mala fide action. The reserve price was so low according to the market conditions that it would have resulted in heavy loss to the railway. The court reiterated that it would not interfere in commercial transactions unless there was gross unreasonableness in the process. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SC clears air on common areas or community centres. It overruled the Punjab and Haryana High Court which had held that the apartment owners are entitled to undivided interest in common areas and facilities under Section 6 of the Haryana Apartment Ownership Act. The colonisers have the ownership and the flat owners have only a right to use. According to the judgment, nursery schools, shops and community centre could not be treated as common areas. "They are parts of planning for a larger area. It is not meant for the exclusive use of the flat owners. The position would have been different had these been integral parts of the facilities, in the sense that these facilities are essential for the enjoyment of the flats." A weekly selection of key court orders | | | | |
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