| Units of big firms likely to lose PF tax benefits |
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New Delhi, 20 February Employees of some of the big private firms, educational institutes, public sector undertakings ( PSUs) and multinational companies operating in the country might not be able to avail tax benefits through private provident fund beginning April 1 this year. Documents accessed by Business Standard show the subsidiaries and branches of firms such as Reliance Industries Limited, Larsen & Toubro, Nokia India, Airports Authority of India, Institute of Rural Management Anand feature in the list of 150 firms — prepared by the Employees' Provident Fund Organisation ( EPFO) —whose private provident fund trusts will not get tax exemption. These companies have failed to get exemption certificates from the EPFO's governing body, after the interim Budget, presented by Finance Minister P Chidambaram, did not make amendments to the Finance Act. In 2006, the finance minister made it mandatory for private PF trusts, floated by various companies, to seek exemption certificate from labour ministry to avail tax benefits but that was for a year. The deadline was extended each year and the latest one was March 31, 2013, and in the interim Budget, the finance ministry did not extend it. There are 3,221 firms under the EPFO till date. " We are reviewing the position of the firms and the clearance of as many as 150 such trusts are pending," K K Jalan, Central PF commissioner, told Business Standard. For this, he said a sub- committee was created to fasten the process of giving clearances to such trusts. "In the first week of March, we will be holding the central board meeting in which we may clear another 60 trusts," said Jalan. Around 54 pending cases were cleared by the body in the meetings held in January and February this year, said Jalan. A top official in EPFO said these trusts had to follow 31 conditions and if a firm failed to comply with even one, clearance was not given. "We didn't ask the finance ministry for an extension last year as well. Even these firms, it seems, are not interested to get themselves cleared," said one of the top officials, on conditions of anonymity. The list includes PSUs like Bharat Aluminium Company Limited and media houses like Forbes India. Educational institutes like Welham Girls, multinational companies such as Larsen and Turbo, corporate houses like Tata Housing Development Company also figure in the list. COMPANIES WHICH MAY NOT GET PRIVATE PROVIDENT FUND BENEFITS Government agencies Units/ subsidiaries involved Housing and Urban Development Corporation Delhi Indian Trade Promotion Organisation Delhi Food Corporation of India Delhi Private firms Reliance Industries Limited Nagpur Tata Housing Development Corporation Limited Bandra Dabur India Jaipur Ashok Leyland Ltd Nagpur Multi- nationals Nokia India Gurgaon L& T Gulf Pvt Ltd Thane Heinz India Ltd Agra Public Sector Undertakings ( PSUs) Bharat Aluminium Company Limited ( BALCO) Raipur Airports Authority of India Delhi Educational institutes Woodstock School Dehradun Welhams Girls School Dehradun GD Birla Centre for Education Park Street, Kolkata Media houses Forbes India Bandra Ambuja Publications ( Amar Ujala) Agra Source: Employees' Provident Fund Organisation ( EPFO) These companies have failed to get exemption certificates from the EPFO's governing body |
| PwC forensic audit finds diverse violations by MCX |
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New Delhi, 20 February The unregulated National Spot Exchange Ltd ( NSEL) was not the only entity in the Financial Technologies ( FTIL) group ridden with irregularities. A forensic audit by PricewaterhouseCoopers has reported several alleged violations from the books of fully regulated Multi Commodity Exchange ( MCX). The findings have triggered a multiagency probe into the affairs of the exchange and could embroil the bourse in further legal proceedings. A report, given recently to the Forward Markets Commission ( FMC), mentions several irregularities in the functioning, including huge payments without the backing of proper vouchers and related- party transactions. It has raised issues about untenable agreements with technology partners and related parties, such as FTIL. FMC has asked MCX for its comments. "The interim report by the forensic auditor indicates violations of the Companies Act and Sebi ( Securities and Exchange Board of India guidelines). The report has been shared with Sebi and MCA ( Union ministry of corporate affairs), which will probe these violations," said an official familiar with the matter. The Union finance ministry has got a copy. In response to an email seeking comments on the report, an FTIL spokesperson said, " We are not privy to such reports. MCX is a listed entity and has always been run by a board, with a majority of independent and regulator- nominated members. Since the query is pertaining to MCX, they would be in a better position to respond." The exchange is under a new management, headed by Manoj Vaish. it is said to be studying the report and is expected to give its comments to FMC in the next 15 days. MCX declined to comment. The findings largely pertain to a period before the ₹ 5,600crore NSEL payment crisis broke out. At the time, MCX was run by a board which included FT group promoter Jignesh Shah, former MCX Stock Exchange chief Joseph Massey and Shreekant Javalgekar. The trio was later declared not fit and proper to run the exchange, as they had also served on the board of NSEL. FMC seeks explanation; Sebi, MCA, FinMin also likely to get into action |
| SC summons Subrata Roy, other directors |
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New Delhi, 20 February The Supreme Court on Thursday summoned Sahara group promoter Subrata Roy to appear before it on the coming Wednesday, on the hearing regarding repayment of about ₹ 24,000 crore of dues to sundry investors. The direction came after Roy's counsel objected to the court's suggestion that the Securities and Exchange Board of India ( Sebi) sell properties under the title deeds presented by the group in response to earlier directions, and realise the dues in question. Sebi has accused Roy and his group firms of contempt of court, saying they'd hidden facts and not implemented earlier directions. In a severe observation indicating what could follow, judge KS Radhakrishnan, " We will direct all contemnors to be present. From here, they will have to go to some other place." Two group companies, Sahara India Real Estate Corporation ( SIRECL) and Sahara Housing Invest Corporation ( SHICL) are contesting the contempt proceedings initiated by Sebi, with regard to an August 2012 order by the apex court. The SC had directed the companies to repay ₹ 24,029 crore, collected in breach of law, it had decided, to Sebi. The capital markets regulator was to, in turn, send it on to the individual depositors concerned. However, Sebi said, Sahara paid only ₹ 5,120 crore; it has been claiming that the remaining amount had been refunded directly to the investors. Ashok Roy Choudhary, Ravi Shankar Dubey and Vandana Bhargava, directors of the two companies in question, have also been summoned. Earlier, the bench of judges comprising Radhakrishnan and JS Khehar rejected arguments by SIRECL counsel Ram Jethmalani that the refunds were made in cash through 4,700- odd branches of the group's nodal partnership firm, Sahara India. Khehar noted these arguments of premature refunds have been rejected by the apex court on three occasions in the past. He said, " It (such arguments) should not be advanced again. But that is what you are assisted to say. You will say what you are assisted to say." Khehar added the group had not been following the orders and it was for Sebi to sell the properties and realise the amount. " Whatever we ask them (Sahara), they won't do it. We don't trust them to do it. We will allow you ( Sebi) to sell. If there are encumbrances, then initiate criminal proceedings," he said. Sebi counsel Arvind Datar pointed to several discrepancies noticed in the documents given by Sahara. He said it would be difficult for Sebi as a regulator to enter into selling of these huge numbers of properties, scattered across the country. "They say these properties are worth over ₹ 20,000 crore. Let them sell and deposit the amount with Sebi," he argued. To this, Radhakrishnan said, " They still won't do it. If you want the money, then you have to take steps." For full report, visit www. business- standard. com SAHARA REPAYMENT CASE Sahara group promoter Subrata Roy |
| >YOUR MONEY |
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The lure of higher returns--- more than 200- 300 basis points-- between company and bank fixed deposits can make investors aggressive on these. For instance, HDFC Bank is offering 8.75 per cent for fixed deposits across tenures of nine months- three years, while ICICI Bank is offering 7.75- nine per cent for one- five years. On the other hand, United Spirits offers 11.5 per cent for ayear, a difference of about 275 basis points. If a company defaults, you might be left in the lurch. A case in point is the recent default on deposit payments by a couple of Yash Birla Group companies--- deposits of ₹ 214 crore haven't been paid to about 8,000 investors. Here, the redressal mechanism isn't very clear. Ramesh Vaidyanathan, managing partner at Advaya Legal, says, "Investors can file complaints under the Maharashtra Protection of Interests of Depositors Act. This Act allows arrest and attachment of properties to protect depositors/ investors." Company deposits can be governed by different authorities —collective investment schemes were regulated by the Securities and Exchange Board of India till January (these powers ceased to exist after January); deposit schemes of manufacturing companies are regulated by the Ministry of Corporate Affairs (MCA) and schemes of non- banking financial companies ( NBFCs) are overseen by the Reserve Bank of India. "Addressing your grievance to MCA, along with the Registrar of Companies, is the best option. In case of listed companies, Sebi can also be addressed in the complaint," suggests Vaidyanathan. Sajid Mohammed, partner, PDS Associates, says there is no method to ensure the deposit amount is returned. All a depositor can do is put pressure on the company to pay. Company deposits are unsecured instruments and, therefore, in case the company defaults, these depositors are last in the scheme of payments. Despite this, one has various options to raise the matter with authorities. A complaint can be filed with the MCA online; one can keep a track of these complaints. You can file a complaint with the Company Law Board, or file a civil suit. The RBI Act, 1934, empowers the CLB to order the repayment of deposits accepted by an NBFC. For this, one has to submit Form 4 in duplicate, along with a photocopy of the deposit receipt issued by the company and a demand draft of ₹ 50 at any of the CLB benches in New Delhi, Kolkata, Mumbai and Chennai. An offence related to acceptance of deposits is a cognisable offence under the Code of Criminal Procedure, 1973. For such grievances, you can also approach the consumer court under Section 12 of the Consumer Protection Act. Remember to include relevant papers that substantiate your claim. Depositors can also file a suit under Section 245 ( not notified yet) of the Companies Act, 2013, before the National Company Law Tribunal. It is important to opt for deposits of companies that have good ratings — while HDFC and ICICI Home Finance have good ratings, United Spirits' deposit scheme is considered risky. NEHA PANDEY DEORAS Recovery options for retail investors are few; all they can do is put pressure on the firm through legal channels Dealing with company deposit frauds Company deposits can be governed by different authorities —CIS were regulated by Sebi, deposit schemes of manufacturing firms by corporate affairs ministry and schemes of NBFCs are overseen by RBI |
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