Writ not maintainable against SEBI interim order; Rejects 'forum conveniens' contention
P&H HC dismisses writ petition against SEBI interim order that restricted petitioner ('director of defaulter NBFC) from operating in any of his securities, rejects 'forum conveniens' principle; Petitioner contended that he was wholly dependent on his income from his shareholdings, such order would grievously prejudice him, and stated that since he resided within this Court's jurisdiction, it would have power to entertain the writ; HC held that principle of forum conveniens "ought not to be understood as convenience of the parties at all times and that cannot be again spoken from the context of personal tragedies obtaining to the petitioner"; Also observes that since SEBI order was not a final order and did not really adjudicate on parties' rights, there was no scope for intervention through writ petition; Further observes that in presence of statutory appeal remedy before SAT u/s 15T of SEBI Act too, the writ was untenable:Punjab & Haryana HC
The ruling was delivered by Justice K. Kannan.
Senior Advocate Sanjeev Sharma alongwith Advocate Shekhar Verma argued on behalf of the petitioner.
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LSI Team
SEBI releases formats for disclosures under Insider Trading Regulations, permits electronic record maintenance
SEBI releases formats for disclosures under Insider Trading Regulations, 2015, states that such records may be maintained in physical / electronic mode; With reference to the Code of Fair Disclosure & Code of Conduct, SEBI states that companies shall ensure that both are published on its official website; Companies to further ensure that formulated Code of Conduct is confirmed to the stock exchanges immediately, and listed company should deal with only such market intermediary who is required to handle UPSI and has formulated Code of Conduct; Advises Stock Exchanges to put in place adequate systems and issue the necessary guidelines, make necessary amendments to the relevant bye-laws / rules / regulations: SEBI
LSI Note:
Proper opportunity notice to FERA violator must; Quashes Magistrate's 'mechanical' summons order
HC quashes Additional Chief Metropolitan Magistrate's ('ACMM') summoning order & complaint against petitioner filed by Enforcement Directorate ('ED') for FERA violations, as against natural justice principles; Observes that ED filed complaint with ACMM before expiry of period of opportunity given to petitioner as envisaged u/s 61(2) of FERA, and ACMM took cognizance of offence without satisfying himself that proper opportunity was given; Thus, holds that the "complaint was filed and initiated in a haste manner before the ACMM.." and "the Trial Court in utter ignorance of the right given to the petitioner under Section 61 (2) …issued process against the petitioner"; Rules that it is statutory duty of Magistrate to have satisfied himself at the first instance that Section 61 was followed before taking cognizance of offence, thus holds that summons issued on the basis of above complaint as 'mechanical', 'bad in law' and against principles of natural justice; Also observes that the address on opportunity notice given to petitioner was not where petitioner was residing at that time, despite the fact that ED had knowledge of the same, holds that even Rule 3 of FERA Rules (which prescribes the mode and manner of service of notices) was not complied with:Delhi HC
The ruling was delivered by Justice Manmohan Singh.
Advocates Manoj Singh, Abhay Singh and Manu Dev Sharma argued on behalf of petitioner while respondent was represented by Advocate Vineet Malhotra.
SEBI issues interpretive letter, approves Cipla-promoters voting right proposal as 'single unit'
SEBI issues interpretative letter under Informal Guidance Scheme, 2003 relating to proposed voluntary / consensual family understanding, which amounts to inter-se share transfer among Cipla Limited's promoters & promoter group under Takeover Regulations; SEBI states that proposed agreement provides for promoters & promoter group acting jointly as 'single unit' for exercising voting rights under direction & supervision of Mr. YK Hamied, resulting in he being the single largest holder of voting rights in Cipla Limited; Notes that such transaction would lead to acquisition of voting rights in excess of prescribed threshold, which triggers open-offer obligation, however SEBI exempts from compliance of the Takeover Regulations: SEBI
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SEBI issues interpretive letter, allows Standard Chartered to provide offshore investment advisory services
SEBI issues interpretative letter under Informal Guidance Scheme, 2003 in connection with Investment Advisers Regulations, opines that Standard Chartered Bank can advise on regulated offshore securities and investment products, which are in nature of marketable securities issued by 'body corporate' or 'corporation'; Clarifies that the interpretive letter does not express SEBI's decision and does not affect the applicability of any / SEBI Regulations / Guidelines / Circulars etc.: SEBI
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SEBI penalizes promoters for 'repetitive' non-disclosures under Takeover Code & Insider Trading Regulations
SEBI's Adjudicating Officer ('AO') imposes penalty of Rs. 35 lakhs on promoter group ('noticees') of Austral Coke and Projects Ltd. for non-disclosure of change in shareholding under Takeover Code (at 15 instances) & Insider Trading Regulations (2 instances), for the violation being 'repetitive' nature; SEBI AO observes that Noticees' share holding was 65.29%, and majority stake was off-loaded during Nov. 2009 to Jan. 2010, for which Noticees failed to disclose under Reg. 7(1A) of Takeover Code, also observes that one of Noticee's shareholdings (22.78% shares) was pledged with SICOM which was invoked, and Noticee failed to make disclosure under Insider Trading Regulations; Interprets Reg. 7(1A) of Takeover Regulations, states that provisions are triggered, on satisfaction of two conditions (i) if acquirer has acquired shares / voting rights either under Reg. 11(1) or second provisions to Reg. 11(2) & (ii) such purchase / sale aggregates 2% or more of target company's share capital; SEBI refers stock exchanges website, observes that Noticees had acquired shares only after Oct. 2008 (before amendment in Takeover Regulations), accordingly concludes that acquisition of shares falls under second proviso to Reg. 11(2) and ultimately falls under Reg. 7(1A) of the Takeover Regulations; With reference to pledge invocation by SICOM, SEBI rejects Noticee's contention that invocation was made without informing Noticee, holds that "pledge is invoked when conditions of agreement entering into pledge are violated by pledgor" and that the Noticee at the time of offering shares was fully aware of the outcome of violation the agreement; Gives concluding remarks that by non-disclosures of such information, Noticee has deprived investors of important information at relevant time, states that India's entire securities market stands on disclosure based regime, where 'accurate' & 'timely' disclosures are fundamental in maintaining securities market's integrity:SEBI
SEBI bars 178-entities for share-price manipulation, tax fraud & deceptive preferential allotment
SEBI passes ad interim ex -parte in order, restrains Pine Animation Limited ('Pine') and 177 other entities from accessing securities market for engaging in fraudulent, unfair and manipulative transactions and shaking the investor confidence; Analyses the sequence of events, states that entire modus-operandi of preferential share allotment, share price manipulation, stock-split announcement and providing exit to connected entities "is a scheme devised to make 'ill-gotten gains'"; Also observes that modus-operandi of artificially pumping share-price and then dumping it, demonstrates mala fide intentions of Pine Group, states that mechanism is used for deceiving authorities by laundering black-money, making tax-free profits and converting its unaccounted income into accounted one; Peruses Pine's bank statement, observes that preferential allotment proceeds were immediately transferred to various entities and not retained for executing its plan as envisaged in special resolution/ explanatory statement, accordingly SEBI terms 'preferential allotment' as tool for implementation of dubious plan, device and artifice of exit providers, preferential allottees & promoter-related entities:SEBI
SAT orders SEBI for expediting investigation in Factorial's involvement in L&T-Finance's 'insider trading'
SAT orders SEBI to complete investigation within 2-months, wherein SEBI by its interim order held Factorial Master Fund (a Cayman Island-based hedge fund, 'Fund'), prima-facie guilty of insider trading in L&T Finance Holdings' scrip and restrained it from accessing Indian securities market; SAT notes SEBI's submissions that it sought assistance from U.S. Securities & Exchange Commission in the matter; States that on completion of investigation, if SEBI deems it fit to proceed further, then show cause notice ('SCN') shall be issued and order shall be passed after giving an opportunity of hearing; Orders that if SEBI fails to issue SCN to the Fund or fails to pass an order within prescribed time, the restrain-order passed shall come to an end and the Fund would be entitled to access Indian securities market:SAT
Cheque dishonouring notice serving on 'company', not directors; Overrules Madras/Bombay HC ratios
Supreme Court sets-aside HC order, holds that where the company has issued cheque and the same is dishonoured for insufficiency of funds, then the notice u/s 138 of Negotiable Instrument Act, 1881 ought to be issued in company's name and not in name of all directors; Peruses Sec. 138, observes that notice is required to be given to 'drawer' of cheque for giving an opportunity of making payment and escaping penal consequences, holds that no other person is contemplated for issuing notice; SC notes that if the requirement that individual notices todirectors must additionally be given is read with Sec. 138, "it will not only be against the plain meaning and construction of the provision but will make the remedy under Section 138 wholly cumbersome"; Rejects respondent's contention that notice to every director must be served, holds that directors who are in charge of affairs / responsible for affairs of co. would be aware of receipt of notice received by the company u/s 138; Also overrules Madras HC ruling in B. Raman & Ors. Vs. M/s. Shasun Chemicals and Drugs Ltd, wherein it was held that statutory notice u/s 138 of NI Act was required to be issued to every Director; Relies on SC rulings in Kanai Lal Sur v. Paramnidhi Sadhukhan, Nasiruddin and others v. Sita Ram Agarwal, Nathi Devi v. Radha Devi Gupta:SC
The order was passed by Justice Pinaki Chandra Ghose & Justice Uday Umesh Lalit.
Advocates Ajit Anekar, Satyajit A. Desai, Indu Sharma represented the Appellants and Advocates Shree Prakash Sinha, Ashok Bhatia and Shekhar Kumar represented the Respondents.
Kirit Dahyabhai Patel V A C I T Gujarat High Court
PFA
S. 2711(1)(c): Immunity against penalty under Expl 5 is available even in return is not filed provided a statement is made during the search, explaining the manner of deriving the income and due tax & interest thereon is paid
In order to get the benefit of immunity under clause(2) of explanation5 to Section 271(1)(c) of the Income Tax Act, it is not necessary to file the return before the due date provided that the assessee had made a statement, during the search and explained the manner in which the surrendered amount was derived, and paid tax as well as interest on the surrendered amount
Jupitter Corporation Services Limited V D C I T ITAT Ahmedabad
PFA
S. 255(4): Even if Third Member's verdict is shown to be "unsustainable in law and in complete disregard to binding judicial precedents", Division Bench has no choice but to give effect to it
At the time of giving effect to the majority view under section 255(4), it cannot normally be open to the Tribunal to go beyond the exercise of giving effect to the majority views, howsoever mechanical it may seem. In the case of dissenting situations on the division bench, the process of judicial adjudication is complete when the third member, nominated by Hon'ble President, resolves the impasse by expressing his views and thus enabling a majority view on the point or points of difference. What then remains for the division bench is simply identifying the majority view and dispose of the appeal on the basis of the majority views. In the course of this exercise, it is not open to the division bench to revisit the adjudication process and start examining the legal issues
Centre reviewing FDI in e-commerce; Micromax files for patents; DIPP plans single-form for all clearances
Centre reviewing FDI in e-commerce; Micromax files for patents; DIPP plans single-form for all clearances
Pierces corporate veil, allows Sec. 397 petition; Director running competing business unacceptable
CLB in a Sec 397/398 petition filed by shareholder of respondent co., sets aside transfer of respondent co.'s shares to promoter co., being oppressive as done without knowledge and consent of the petitioner; Rejects respondents' 'untenable' contention that petitioner had no locus standi to contest the share transfer, as he was not a shareholder of promoter co., holds that since petitioner was shareholder of respondent co., CLB was entitled to pierce corporate veil if any act prejudicial to the co. was done; Also observes surreptitious incorporation of another co., with similar name as that of respondent co to divert its business by deceiving customers was an act of 'gross oppression', holds that a director is not supposed to run any competitive business as the company carries out; Further holds non-finalization of account, non-filing of annual returns, resulting in various litigations against company and its directors including petitioner as 'mismanagement'; However, refuses to absolve petitioner from role as guarantor of respondent co in respect of loans, holds that such "rights and liability shall be governed in terms of the deed of Guarantee executed by him":Mumbai CLB
The Order was passed by Shri Ashok Kumar Tripathi, Member (Judicial), CLB.
Advocate A.Z. Mookhtiar appeared on behalf of Petitioner while respondents were represented by PCS Ajay Kumar.
DIPP issues Consolidated FDI Policy
DIPP issues Consolidated FDI Policy effective from May 12, 2015
Click here to read more.
ICSI clarifies applicability of Secretarial Standards & its reporting in Secretarial Audit Report
Institute of Company Secretaries of India ('ICSI') clarifies applicability of Secretarial Standards; States that Secretarial Standards (SS-1 & SS-2) shall apply to Board Meetings and General Meetings, in respect of which Notices of the meetings are issued on or after July 1, 2015; Secretarial Audit Report for FY 2014-15 need not report specific non-compliances/observations/audit qualification, reservation or adverse remarks in respect of compliance with SS-1 & SS-2 (as effective date of applicability is from July 1, 2015); Clarifies that other Secretarial Standards issued by ICSI in line with provisions of Companies Act, 1956 are under revision to align with the provisions of the CompaniesAct, 2013 and accordingly, such other Secretarial Standards are not applicable presently: ICSI
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RBI issues amended Master Circular on Direct Investment in JV/WoS Abroad
RBI issues Master Circular on Direct Investment by Residents in Joint Venture / Wholly Owned Subsidiary Abroad (Amended up to May 6, 2015)
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'Income-Tax notice' a pre-condition for lifting corporate veil of public company's director
High Court sets aside Assessing Officer's Order calling upon Director (Assessee) u/s 179 of Income Tax Act, 1961 to pay outstanding dues of public limited company; Accepts director's contention that Assessing Officer's order was silent on the aspect of lifting corporate veil to treat the company as a private limited company as contemplated in Sec 179, however, states "it cannot be said that lifting of the corporate veil is impermissible if the facts are so demonstrated and the competent officer is satisfied for such purpose"; Further, observes that the director is required to be put in notice by formulation of the tentative ground as to why corporate veil should not be invoked and if justifiable ground proved, competent authority may form an opinion whether to lift veil or not; Accordingly, directs competent authority to formulate ground, issue notice for treating company as private limited and thereafter to take steps if any in accordance with Sec 179:Gujarat HC
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