| Govt asks Sebi to relax FPO norms | ||||
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Mumbai, 17 August The government has asked market regulator Securities and Exchange Board of India (Sebi) to allow relaxations in rules for follow- on public offerings (FPOs), two people with knowledge of the development have said. For the 2014- 15 disinvestment programme, the Centre intends to give more weight to the FPO route than the offer- for- sale ( OFS) route, to ensure better participation from retail investors. Both FPO and OFS routes are used by listed companies for secondary share sales by promoters. The OFS route is cost- and timeeffective, while FPOs are costlier and consume more time, forcing many promoters to opt for the former. Most disinvestments done in the past two financial years have been done through the OFS route. However, the government has received market feedback suggesting retail investors are more likely to participate in issues made through the FPO route, given an advantage on factors like pricing and allocation. OFS issues only have a floor price, while FPOs give a price band within which investors could bid. The latter offers them more certainty on pricing. The FPO route requires a fixed minimum allocation to retail investors; that is, every investor will receive a certain minimum allocation of shares, if available. OFS issues do not have any such certainty. "Most disinvestments done through the OFS route have seen little retail participation. The new government wants retail investors to come back to the market. The FPO route is one way of meeting this objective. However, it will only be feasible if Sebi makes some relaxations. We have already initiated a dialogue with Sebi on this," said a senior finance ministry official. For the current financial year, the government has set an ambitious target of raising around ₹ 58,000 crore through disinvestment. Of this, ₹ 43,000 crore is expected to come from sale of shares in public- sector undertakings. Meanwhile, the market regulator is said to have started a dialogue with market participants for possible changes to the FPO framework. In a significant step, Sebi was considering doing away with the requirement to file offer documents in FPOs, said sources in the know. The regulator is also mulling automatic approvals and fewer disclosures. Experts believe there is a scope to ease the FPO norms, as it is used by companies that are already listed and have to make adequate disclosures anyway. "FPO is a secondary offering by an already listed entity, so there is a case for reducing the disclosure requirements and also filing a prospectus," said Prime Database Chairman Prithvi Haldea. Sebi's primary market advisory committee has been tasked with recommending new measures after market consultations. The market regulator has made relaxations to the FPO framework in the past as well. Turn to Page 16 > Move aimed at boosting retail investor participation in disinvestment 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15 40,000 22,144 13,894 23,957 15,819 ? 40,000 30,000 40,000 43,425
Target Actual Disinvestment (~ cr) OFF TARGET The odds are against the government achieving its disinvestment target this year as well. A look at stake sale in the past few years Source: Department of disinvestment | ||||
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| BRIEF CASEN [1] M J ANTONY |
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The Supreme Court has been sorting out several issues regarding bounced cheques recently. Last fortnight, it reconsidered its earlier conflicting decisions and ruled finally that complaints should be filed before the magistrate where the cheque was dishonoured. In April, it had issued a series of directions on the trial of cheque bouncing cases under the Negotiable Instruments Act, which has snowballed to more than 400,000 all over the country. In yet another judgment last week, it took the rare step of exercising its extraordinary power under Article 142 of the Constitution to set aside the order of the Delhi High Court in a cheque bounce case. The high court had also exercised its special discretionary powers under the Criminal Procedure Code to quash the criminal trial for stopping payment of ₹ 60 crore. The reason given by the high court was that the complaint was filed beyond the time limit set by the Act. In this case, Pawan Kumar vs Maninder Singh, when the cheques bounced, the payee wrote a letter to the drawer in his handwriting about the dishonour. When there was no response, he got a lawyer to issue notice. The criminal complaint was filed beyond the time limit if the date of the handwritten letter was taken into account. The high court quashed the complaint on that account. However, if the date of the lawyer's notice was considered, the complaint was within time. The Supreme Court appointed a senior counsel to help sort out the issue and stated in its judgment that the issue should be decided by the trial court and not by the high court. While allowing the complaint to be revived before the magistrate, the Supreme Court said that its order using extraordinary constitutional power was meant " to meet the ends of justice" and it should not be treated as a precedent. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SC corrects earlier ruling on arbitration The Supreme Court has overruled its own earlier view in an arbitration case and asserted that the central Limitation Act would apply if the state laws do not make special rules of its own on timebarred applications. The Madhya Pradesh Arbitration Act did not bar condonation of delay in case an application is filed beyond the prescribed time limit. Therefore, the high court had the power to extend the time limit as provided in the central law. In this case, State of MP vs Ansuman Shukla, the high court had ruled that it could not allow time- barred applications. It based the decision on the 2004 Supreme Court judgment in the case of Agarwal Construction Company. Setting aside the high court ruling, the Supreme Court stated that its earlier decision was wrong and therefore the high court cannot bar the application on the ground of delay. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Professors' help sought in patent dispute The Delhi High Court has referred to a panel of three professors disputes over patent for two telecom technologies used by rival companies in the judgment, Vringo Infrastructure Inc vs Indiamart Intermesh Ltd. The dispute was over " a method and a device for making a handover decision in a mobile communication system". Vringo alleged that the rival was infringing its patent in India and in several other countries leading to litigation in many jurisdictions. According to it, the patent originally belonging to Nokia Corporation was assigned to them by a Confidential Patent Purchase Agreement in 2012. The rival company denied any infringement and stated that it was using a different technology. In view of this, the court decided to appoint a three- member panel consisting of professors, headed by one from Delhi IIT. According to Patent Rules, a panel can be appointed when intricate scientific questions are involved in a dispute. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> NHAI appeal in contract rowdismissed The Delhi High Court has dismissed the appeal of National Highways Authority of India against the arbitral award of ₹ 1,369.57 lakh in its dispute with Sricon Infrastructure. While undertaking works contract on National Highway 8 (Haryana- Rajasthan), several disputes arose between the parties. One of the main complaints of the contracting company was that the condition of the road in certain stretches was extremely distressed and different from that envisaged in the specifications of work as per contract agreement. It requested the engineer to look into this but despite several exchange of letters, it did not get relief. These and other factors were considered by the arbitral tribunal while giving its award. While dismissing the appeal, the high court stated that it was not sitting as a court of appeal and is not expected to re- appreciate the entire evidence and reassess the case of the parties. The award passed by an arbitrator cannot be set aside on the ground that it was erroneous or another view was possible, the judgment said. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Single member cannot pass verdict The Calcutta High Court has stated that amember of a consumer commission sitting alone cannot pass a judgment in a dispute. In this case, New India Assurance Co vs Bhagwandas Vyapar Udyog Ltd, the insurance company challenged the order of the West Bengal State Consumer Commission on the ground that a single member passed the order, and it was against Section 14 of the Consumer Protection Act which provides that every proceeding should be conducted with at least two members sitting together. Agreeing with this contention, the high court pointed out that two office orders of the commission had constituted division benches and therefore, no single member can pass orders. The order passed in this case was set aside. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Courtwill not decide tender dispute The Bombay High Court last week dismissed the petition of GVK Emergency Management Institute challenging the award of contract to BVG India Ltd by the Maharashtra government. The contract was for developing and operating the Maharashtra Emergency Medical Services, including provisions for 937 ambulances under the rural health mission. The high court stated that it would not interfere in disputes over tenders called by the state unless public interest was compromised or there was mala fide in the deal. There was no such vitiating factor in this case and the project has already started; so there was no reason for judicial interference. "The modern trend points to judicial restraint," said the judgment, " particularly as this court does not sit as acourt of appeal. A certain measure of freedom of play in joints to the executive is required to be allowed." A weekly selection of key court orders |
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