Business standard news update 1-12-2012

FII limit in domestic debt raised by $ 10 bn

BS REPORTER New Delhi, 30 November To attract long- term investments into the debt market and to narrow the current account deficit, the finance ministry today raised the foreign institutional investor ( FII) limits in government securities and corporate bonds by $ 5 billion (₹ 27,600 crore) each. The additional $ 10 billion would raise the total FII investment limit allowed in a year in domestic debt to $ 75 billion (₹ 4.14 lakh crore). The high- level committee on external commercial borrowing, headed by economic affairs secretary Arvind Mayaram, took the decision, to encourage long- term foreign funds into the Indian debt market. According to ministry officials, the $ 5- billion window in government securities would be without any stipulated residual maturity. It would be open to pension funds, central banks and sovereign wealth funds. The other $ 5- billion segment would be open for corporate bonds. This overall limit of $ 75 billion in domestic debt is distributed through a host of categories across government, corporate and infrastructure debt. The guidelines in this regard would be notified in a week to 10 days by the Reserve Bank of India. Move to attract long- term investments into the debt market

IPO market set to buzz in December

SAMIE MODAK Mumbai, 30 November The primary market for equities is promising to end with a bang in an otherwise dull 2012. Four companies, including Bharti Infratel and CARE Ratings, are set to raise close to ₹ 5,700 crore through initial public offerings ( IPOs) over the next couple of weeks, as issuers seek to cash in on the cheerful investor sentiment in the stock markets. The ₹ 4,500- crore IPO of Bharti, which will open on December 11, would be the largest issue since Coal India’s ₹ 15,000- crore share sale in October 2010. The amount proposed to be raised by Bharti, which has priced its issue in the range of ₹ 210- 240 apiece, is almost four times the money raised through IPOs in 2012. CARE Ratings and PC Jeweller, also planning IPOs in the next couple of weeks, aim to raise ₹ 1,000 crore. Bankers to the issues, however, are a tad worried if the market has the appetite to absorb these issues, especially as Rural Electrification Corporation ( REC) and NMDC are also aiming to raise almost ₹ 11,000 crore in the same period. Seven IPOs ( barring issues by small and medium enterprises) have raised ₹ 1,500 crore in 2012. To add to this, REC would launch a ₹ 4,500- crore tax- free bond issue during the first week of December, and state- owned NMDC is planning a ₹ 6,500- crore offer for sale in the second week of December. The flurry of primary market activity has raised some doubts as to all the six issues sailing through comfortably. “At this late stage in the year, getting deals over the line can prove to be tricky,” said Tarun Kataria, chief executive officer, Religare Capital Markets. “FIIs ( foreign institutional investors) tend to wind down and DIIs ( domestic institutional investors) have little new AUMs ( assets under management). In an environment like this, valuations need to be compelling.” What is making issuers and bankers confident of pushing through the issues is that foreign institutional inflows have not slowed. “ Given that FIIs have invested over $ 19 billion into the market this year, absorbing $ 1 billion won’t be difficult. All IPOs this year have made money for investors,” said V Jayasankar, head of equity capital markets, Kotak Investment Banking, a banker to Bharti’s IPO. Echoing Jayasankar, S Subramaniam, managing director of Axis Capital, another banker to the Bharti issue, said, “ There have been years in the mid- 90s when the market has seen new issuances of 10 per cent of market capitalisation, that too without much participation by FIIs.” Brokers said FIIs and local investors are unlikely to shun the issues just because it is the year- end. “ There is appetite to absorb all these issues, but the key is pricing and quality,” said Nirmal Jain, chairman, IIFL. Bharti Infratel’s ₹ 4,500- crore share sale to be the largest since Coal India’s in 2010 GOING PUBLIC Four issues will hit the market in the first two weeks of December Approx Launch issue size Issue date (₹ cr) price (₹) Bharti Infratel Dec 11 4,534 210- 240 CARE Ratings Dec 07 540 700- 750 PC Jeweller Dec 10 585 130 Veto Switchgears Dec 03 25 48- 50 Source: Banks and companies ₹ 5,684 crore Approximate issue size MARKETS, P6 >Bharti Infratel IPO opens on Dec 10 > Nuclear Power Corp to be listed

business standard updates 30-11-2012

Lok Sabha approves changes in money laundering rule

BS REPORTER & PTI New Delhi, 29 November The Lok Sabha today approved the Prevention of Money Laundering ( Amendment) Bill, 2011, enlarging the definition of money laundering offences and making provisions for much larger penalty, commensurate with the proportion of the committed offence. The Bill sought to remove the existing limit of ₹ 5 lakh as fine under the Act. Finance Minister PChidambaram moved the Bill for consideration, which includes activities such as cheating, concealment, acquisition and use of proceeds of crime as criminal activities for the purpose of money laundering. Chidambaram said while moving the Bill that all the 18 recommendations of Parliament’s standing committee had been accepted by the government. The finance minister, replying to the issues raised by the members, later said the changes in law would give signal to the international community about India’s commitment to deal with offences having wide international ramifications. The Bill was later approved by voice vote. “Parliament has improved upon the law in 2005, after bringing it in 2002, and then again in 2009 and once again in 2012,” said Chidambaram. The amendment Bill was introduced in the Lok Sabha in December 2011 by then finance minister Pranab Mukherjee and was subsequently referred to the standing committee on finance. Responding to members’ queries on black money, Chidambaram said, “ We are taking action. Every single piece of information ( received from France and other countries) is being investigated and more action would be taken.” He added that prosecution of 37 cases under the money laundering laws have been launched, but no one has either been convicted nor acquitted. The amendments also seek to introduce the concept of ‘corresponding law’ to link the provisions of Indian law with that of foreign countries. Chidambaram also clarified that black money and money laundering are two different things. “ We need to have aseparate discussion on black money,” he said. The finance minister also said that government was initiating steps to fill vacancies in the enforcement directorate (ED) to strengthen it to deal with cases of black money. The government plans to induct 1,319 additional officers in the ED to increase the strength to 2,064. Bill enlarges definition of offence, removes fine limit of ₹ 5 lakh Finance Minister PChidambaram

GAAR has not been put on hold, says MoS finance BS REPORTER New Delhi, 29 November The finance ministry today said the General Anti- Avoidance Rules (GAAR) had not been deferred. “ GAAR provisions have not been put on hold,” Minister of State for Finance S SPalanimanickam told the Rajya Sabha in a written reply. Asked whether the decision not to defer GAAR had been taken, finance ministry officials said the Parthasarathi Shome committee’s recommendations in this regard were being discussed. Earlier, citing administrative grounds, the Shome panel had recommended GAAR be deferred for three years. “ GAAR is an extremely advanced instrument of tax administration— one for deterrence, rather than revenue generation. For this, intensive training of tax officers, who would specialise in the finer aspects of international taxation, is needed,” the committee had said. Finance Act, 2012, had said GAAR provisions would be effective April 1, 2014, and would be applied from assessment year 2014- 15. The Shome panel had recommended GAAR be made effective from assessment year 2017- 18. Officials said the government wasn’t likely to accept the Shome panel recommendations in toto. It is learnt Finance Minister P Chidambaram has proposed ayear’s deferment. A decision on the matter would be taken by Prime Minister Manmohan Singh. It is expected the finance ministry would soon announce the final GAAR guidelines, specifying under what circumstances the rules would be invoked. Most recommendations of the Shome panel are likely to be accepted. FDI in retail: Govt, Opposition break logjam in Parliament BS REPORTER, New Delhi, 29 November In what could be termed a giveandtake understanding, the government and the Opposition parties today broke the four- day logjam in Parliament. The ruling United Progressive Alliance ( UPA) agreed for discussion with voting on foreign direct investment ( FDI) in the retail sector in both Houses, while the principal Opposition party, the Bharatiya Janata Party ( BJP), assured no disruption of normal business. While the discussion in the Lok Sabha has been slated for December 4 and 5, the timing of the debate in the Rajya Sabha will be fixed after consultations with various political parties. As soon as the House convened, Lok Sabha Speaker Meira Kumar allowed the discussion in the Lok Sabha under Rule 184. Confusion, however, prevailed over the debate in the Rajya Sabha and the Upper House was adjourned till noon. The matter was resolved after the government agreed to a similar debate in the Rajya Sabha, clearing the decks for a trial of strength over FDI in retail in Parliament next week. This will be the first such trial of strength in the 15th Lok Sabha. The decision led to an end of the stalemate in Parliament on the issue, which had paralysed proceedings for four days with both the left- and the right- wing parties making acommon cause. After the truce, Finance Minister PChidambaram moved the Bill to amend the Prevention of MoneyLaundering Act, 2002, for consideration and passing in the Lok Sabha. The legislative business of the House also included Home Minster Sushilkumar Shinde to move the Bill to amend the Unlawful Activities ( Prevention) Act, 1967, and minister of state in the Prime Minister’s office, VNarayanasamy, to move the Bill to prevent corruption relating to bribery of foreign public officials of public international organisations for consideration. The government is also likely to try and get important Bills, including the Companies Act Amendment Bill, and the pension and insurance Bills, cleared in the current session. Earlier, following an all- party meeting and discussions with UPA leaders, the government signalled its readiness for a debate after Parliamentary Affairs Minister Kamal Nath held consultations with Opposition leaders Sushma Swaraj and Arun Jaitley yesterday. Although the government appears to be in a comfortable situation in the Lok Sabha, the Samajwadi Party ( SP)’ s indications that it will vote against FDI in retail in the Rajya Sabha has made the exercise interesting in the Upper House. The government does not have a majority in the Rajya Sabha. The UPA and its allies have a strength of 94 members in the 244- member Upper House. The 10 nominated members might vote with the government. The Bahujan Samaj Party ( BSP) has 15 MPs and the SP, nine. Among the seven independents, three or four might support the government. The BSP, which extends outside support to the UPA, has 15 members and it has said it will disclose its stand on the issue on the floor of the House. In the Lok Sabha, however, the government is in a comfortable position. Both the SP and the BSP are giving support to the government and key ally Dravida Munnettra Kazhagam has also decided to go with it to keep communal forces at bay. The UPA enjoys the support of about 265 MPs in the Lok Sabha, which has a total strength of 545. With the support of the SP ( 22) and BSP ( 21), the backing for the ruling coalition goes beyond 300, against the 273 required. The Trinamool Congress, with 19 MPs, has also expressed its reservations on the Oppositions demand for voting on the issue. UPA government to move ahead with key Bills this session; begins with money laundering amendment legislation Trinamool Congress members stage a dharna at Parliament House in New Delhi on Thursday PHOTO: PTI Retail investors can shop for ₹ 10 lakh in REC bond issue NSUNDARESHA SUBRAMANIAN New Delhi, 29 November Retail investors can buy bonds of up to ₹ 10 lakh in Rural Electrification Corporation’s ( REC) proposed tax- free bond issue of ₹ 5,000 crore. This is five times the limit allowed in typical initial public offerings, and the most retail investors can apply in any public issue. Last financial year, in an REC tax- free bond issue, initially, it had allowed retail investment of up to only ₹ 1 lakh. “At least 75 per cent of the aggregate amount of bonds shall be raised through public issue. And, 40 per cent of such public issues shall be earmarked for retail investors,” said the draft prospectus. Bankers said these steps were part of the government’s efforts to encourage retail participation in the product. Taxfree bonds were introduced in Budget 2011- 12, through which it allowed state- run infrastructure companies to raise long- term debt of up to ₹ 30,000 crore. After the success of these bonds last financial year, Budget 2012- 13 provided for the issuance of tax- free bonds of ₹ 60,000 crore. The REC bond issue, expected to open early December, is the first public issue this financial year. In a draft offer document filed with the Securities and Exchange Board of India last week, the company said to incentivise sellers, brokerage of up to 75 basis points would be paid on retail applications. So, for a single retail application of ₹ 10 lakh, the broker would collect ₹ 7,500. The offer document described retail individual investors ( category IV) as “investors applying for an amount aggregating up to and including ₹ 10 lakh across all series in each tranche issue — resident Indian individuals and Hindu undivided families through a karta.” Investors applying for more than ₹ 10 lakh of bonds can bid under the high net worth individuals segment ( category III), in which the incentive for sellers is capped at 15 basis points. Though the coupon rates of these instruments are yet to be announced, experts expect the rates to be about 7.6 per cent for retail investors, while for other classes, the coupon rate would be 50 basis points lower. According to the offer document, the ceiling coupon rate for AA rated issuers would be 50 basis points lower than the reference government security rate for retail individual investors and 100 basis points lower than the reference government security rate for other categories of investors such as qualified institutional buyers, corporate buyers and high net worth individuals.” Arun Kejriwal, managing director, Kejriwal Research and Investment Services, said, “The move to increase the limit for retail investors would bring a number of high net worth individuals to the retail category and avail of the high coupon rate. To make optimum use of the retail quota, high net worth individuals can also apply for their relatives and family members.” AK Capital, Enam Securities, Kotak Mahindra, SBI Capital and ICICI Securities are the lead managers for the issue. TERMS OF REC TAX- FREE BONDS ISSUE Size: ₹ 5,000 crore Public issue portion: ₹ 3,750 crore Earmarked for retail investors: 40per cent of public issue Tranches: One or more Retail investment limit: ₹ 10 lakh Govt receives ₹ 44 cr in 3 years as unpaid dividend by firms PRESS TRUST OF INDIA New Delhi, 29 November The government today said it had received about ₹ 44 crore from companies holding up unpaid and unclaimed dividends, among others, in the last three years. Of the total, ₹ 20.90 crore has been transfered by companies to the government in the last financial year ( 2011- 12), ₹ 12.18 crore in 2010- 11 and ₹ 10.79 crore in 2009- 10, Corporate Affairs Minister Sachin Pilot said. Sebi exempts CARE Ratings from IPO grading process SAMIE MODAK Mumbai, 29 November The Securities and Exchange Board of India ( Sebi) has exempted rating agency Credit Analysis and Research ( CARE Ratings) from the mandatory grading process before its initial public offering ( IPO), set to hit the market next week. Earlier, the company had approached Sebi, seeking exemption from the mandatory procedure, saying this would have resulted in a rival rating agency gaining access to its books and insider information. “While assigning the IPO grading, the grading agency evaluates the issuer company’s business operations. This would imply sharing its business information with a competitor,” said D R Dogra, managing director and chief executive, CARE Ratings. Dogra said the company had made all the relevant disclosures pertaining to its business operations, financials and risk factors in its offer document to ensure investors took informed investment decisions. An email sent to Sebi seeking comments on the matter didn’t elicit any response. According to Sebi regulations, companies have to secure grading for its offering from at least one credit rating agency registered with the regulator. In May 2007, to increase transparency and disclosures, Sebi had made IPO grading compulsory. Grading is aimed at helping investors assess the fundamentals of an IPO in relation to its peers. An investment banker involved with the CARE Ratings issue said the rationale behind asking for an exemption wasn’t hiding information from investors. The company didn’t want rivals to know its business strategies, he added. According to people in the know, CARE had suggested its issue be graded, based on information available in the public domain. However, most agencies were unwilling to grade the issue in this manner.

business standard updates 1-11-2012

Bank HTM cap may be cut

BS REPORTER Mumbai, 31 October The Reserve Bank of India (RBI) is considering a cut in the held-to-maturity (HTM) ceiling for banks. Anand Sinha, the deputy governor of the RBI, said in a conference call with researchers and analysts on Tuesday that the RBI is looking into a recommendation from a central bank committee to cut the HTM ceiling. “It is a fact that HTM is on the higher side. We will be looking at it in the context of cutting down of HTM to improve market liquidity,” said Sinha. He, however, did not specify a timeframe as to when the central bank would cut the ceiling. Under HTM, banks hold gilts until its date of maturity. The limit is currently at 25 per cent, but it has traditionally been aligned with banks’ statutory liquidity ratio (SLR). The SLR is the portion of minimum investments in gilts and other approved securities that banks are supposed to maintain. It was cut by 1 per cent to 23 per cent in July and implemented in August.

FinMin forpartial okay to Shome panel’s retro taxsuggestions

VRISHTI BENIWAL New Delhi, 31 October The finance ministry might dilute the Budget’s income tax provisions with regard to retrospective taxation and General Anti Avoidance Rules (GAAR) but is not likely to tow the line of the Parthasarathi Shome panel. The panel gave its final report today on retrospective taxation, recommending foreign companies going for mergers &acquisitions in India should pay tax only prospectively. The Central Board of Direct Taxes (CBDT) is of the view there could be some practical difficulties in fully accepting the Shome recommendations on both retrospective taxation and GAAR. It is trying to find a middle path so that investors’ concerns are addressed without compromising significantly on the tax revenue to the government in a difficult year. A decision will be taken by Finance Minister P Chidambaram. “Some of the recommendations of the Shome panel are not doable. Retrospective amendments are not something new. Maybe some of the current provisions of the Income Tax Act are too harsh and we will try to address those issues,” said a finance ministry official who didn’t want to be identified. Officials said the CBDT might look at scrapping the validation clause and change some definitions in the I-T Act or GAAR to remove any unintended consequences. However, if indirect transfers are taxed only prospectively, it faced the challenge of giving refunds to all those companies which had already paid tax. The ministry was expecting ~35,000 crore to ~40,000 crore by way of retrospective tax on indirect transfer of Indian assets by non-residents. If the validation clause is removed, a large part of this will not come to it. Vodafone, which had the Supreme Court ruling in its favour, might not have to fear a tax notice demanding ~8,000 crore on its 2007 deal with Hutchison. The Shome panel had said if there was retrospective levy, the tax should be collected from the seller and the interest and penalty waived. This will also save Vodafone but the tax department might face many administrative and legal challenges in collecting tax from Hutchison, the seller in this case. This is so because Hutchison does not have operations in India now. THE HURDLES CBDT is of the view there could be some practical difficulties in fully accepting the recommendations on both retrospective taxation and GAAR CBDT might look at scrapping the validation clause and change some definitions in the I-T Act or GAAR to remove any unintended consequences For GAAR, the panel recommended postponing it by three years to April 2016, but the I-T dept says this is too long and the deferral could be for one to two year The panel headed by Parthasarathi Shome ( pictured )gave its final report on Wednesday

‘Will encourage FDI in MSME’

BS REPORTER Mumbai, 31 October The new minister for micro, small and medium enterprises (MSME), K H Muniyappa, today said foreign direct investment (FDI) into the sector would be encouraged. He, however, clarified it would not be at the cost of domestic players in the sector. Speaking to Business Standard, Muniyappa said: “I am in favour of FDI in the MSME sector, which contributes 40 per cent to India’s exports. FDI, in general, is essential for the country. The Opposition is opposing it just for the sake of it.” A ministry official who accompanied the minister during his maiden visit here said a comprehensive plan on the issue was yet to be prepared. “FDI and investments from the private sector can be possible in the sector in the marketing segment, which is currently weak. Further, it can be considered in the Khadi Reform Development Programme, in which 51 per cent would come from the private sector. The private sector can have a joint venture in marketing with FDI partners,” the official said.

Centre wants sickPSUs outfrom free floatnorm

SAMIE MODAK Mumbai, 31 October The government plans to seek an exemption for sick public sector undertakings (PSUs) from compliance with the mandatory public shareholding requirements. The finance ministry is likely to ask the equity markets regulator Securities and Exchange Board of India (Sebi) to give exemptions to companies such as HMT, Scooters India and Andrew Yule, which have either undergone or are currently undergoing rehabilitation with the Board for Industrial and Financial Reconstruction (BIFR). A senior official with the Department of Disinvestment (DoD) told Business Standard it would be difficult for PSUs that were sick or under BIFR purview to comply with the public shareholding norm. He added action had already been initiated to bring down government holding to the required level in the remaining companies. A final list of companies for which exemption is to be sought from Sebi could not be obtained from the DoD. In the Companies Act, an industrial unit is declared sick if accumulated losses equal its entire net worth or exceed half its average net worth during the preceding four years. The other condition is a company failing to repay debt in three consecutive quarters after demand is made in writing for such repayments. Sick companies undergo a rehabilitation package with BIFR. However, the legal process of finalising the package and implementing it is long-drawn and companies take up to a decade to come out of it. According to the Securities Contracts (Regulation) Rules amendment, all listed companies should have a minimum public holding of 25 per cent by June 2013. PSUs have till August 2013 to comply with this norm, and the minimum threshold for them is just 10 per cent. Currently, there are about adozen PSUs with government holding of more than 90 per cent and the value of stake dilution for these companies would be about ~10,000 crore in all. Earlier this month, at a public function, Sebi chairman U K Sinha had said the government had assured it that PSUs will be complaint with the free-float requirement before the deadline. He had even said the finance ministry was on board with it for not extending next years deadline for achieving the 25 per cent public shareholding requirement. Some companies such as Neyveli Lignite, Hindustan Copper and Minerals and Metals Trading Corporation, where the government will have to bring down its shareholding below 90 per cent, are already part of this years disinvestment programme, the target for which is set at ~30,000 crore. By the latest data on shareholding, there are about 125 private companies with promoter holding of more than 75 per cent. These companies will have to offload shares worth a little over ~19,000 crore in all to meet the mandatory public shareholding requirement. To ask Sebi to exclude firms referred to or seeking BIFR protection BIG STAKES Currently, governmenthas over 90% holding in 13 PSUs Govt holding Mkt cap Stake to be (in %) (~ cr) offloaded (~ cr) MMTC 99.33 71,270 6,649 Hindustan Copper 99.59 23,149 2,220 Neyveli Lignite 93.56 13,730 489 National Fertilizers 97.64 3,745 286 HMT 98.88 3,205 285 FACT 98.56 1,783 153 ITDC 92.11 4,051 85 RCF 92.50 2,968 74 State Bank of Mysore 92.33 2,329 54 Andrew Yule 93.30 638 21 ITI 92.98 672 20 STC 91.02 1,343 14 Scooters India 95.38 110 6 Source: BS Research Bureau

Equity trading on MCX-SX to start on Nov 18

DILIP KUMAR JHA Mumbai, 31 October Newly recognised equity trading platform, MCX-Stock Exchange (MCX-SX), is set to kickstart trading in around 1,000 companies’ shares on November 18 — the Diwali day. The company’s board is scheduled to meet on Friday to take a final call on starting equity trading on this day. “We are ready to flag off. But the board, which is to meet on November 2, has to take a final decision,” said MCX-SX Vice-Chairman Jignesh Shah. MCX-SX, which had started its membership drive on September 5 after getting Securities Exchange Board of India’s (Sebi’s) approval to deal in equity, futures and options, interest rate derivatives and wholesale debt market, on October 22, announced it had received over 700 applications for new memberships. In addition to the regular ‘Composite Member Category’, the exchange had announced the introduction of two new categories —professionally qualified members and rural entrepreneurship members. These categories were launched for greater financial inclusion and to harness the potential of domestic savings through various financial instruments proposed to be provided by the exchange. MCX-SX MD & CEO Joseph Massey termed the response overwhelming. It is a historic verdict of the public that demonstrates its faith in our ability for 360degree development of financial markets across equity, debt, SME, currency and other segments. “With an all-round subscription from FIIs handling global brokerage houses, securities firms promoted by financial institutions and banks, companies, retail and institutional brokers, professionals and rural entrepreneurs, we are confident to fulfil the government and regulator vision of true capital formation and employment generation,” he said. The exchange has already started the process of getting members registered with Sebi which involves completing all documentation of members, scrutiny by the exchange and forwarding the application to Sebi for registration. After Sebi registers a member, it provides a registration certificate and a unique registration number. MCX-SX will also begin connectivity enablement of members with the exchange before subsequently going live. Board to take a final call on Friday Jignesh Shah, Vice-Chairman, MCX-SX

Business standard legal diges 15-10-2012

LEGAL DIGEST

>Arbitration plea notpiecemeal: SC The Supreme Court last week ruled that an arbitration petition cannot be dealt with piecemeal by a high court, and it should be considered in its entirety. In this case, Hindustan Copper Ltd vs Monarch Gold Mining Ltd, one judge of the Calcutta high court ruled that disputes have arisen for arbitration. He then referred the issues to the Chief Justice for appointment of an arbitrator. The chief justice then designated another judge to nominate the arbitrator. The high court had followed this method adopted in an earlier case. This procedure was challenged by Hindustan Copper in the Supreme Court. It held that the procedure followed by the high court was “legally impermissible”. The function of the chief justice or his designate is judicial and they should deal with it in its entirety by one of them and “not by both making it a two-tier procedure”. The high court precedent which was followed by it in this case was overruled on this legal issue. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Agri-markets gettaxrelief The Supreme Court has held that contributions made to the market committee fund by members of the agricultural produce marketing committees in Uttar Pradesh are not taxable as they are for charitable purposes under the Income Tax Act. The marketing committees which advance credit facilities to farmers as also for development works in the area have to defray the expenses out of the fund. These are statutory duties for the welfare of the members. Therefore, these activities come within the definition of charitable purposes within the meaning of Section 11(1)(a) of the Income Tax Act, the Supreme Court held while dismissing a large batch of appeals moved by the Commissioner of Income Tax. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> What’s in a name? A wrong title of the ministry created complications for the central government in pursuing its review petition. In this case, Union of India vs Sandur Manganese & Iron Ores Ltd, the notice was sent to the “Ministry of Coal and Mines”, which does not exist. The court registry meant Ministry of Coal, but due to the mistake it was not served on the right party. The Attorney General pointed out that the government did not receive notice. Agreeing with him, the court said that “pronouncing a judgment which adversely affect the interest of the party who was not given a chance to represent his case is unacceptable.” >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Acquittal no relief forSBI manager Even if a criminal court acquits a bank employee accused of serious fraud, the disciplinary proceedings against him can be conducted and action can be taken against him on the same set of facts, the Supreme Court held in the case, Avinash Bhosale vs Union of India. A senior manager of State Bank of India was accused of fraudulent transactions to the tune of Rs 12 crore. The criminal court acquitted him for want of evidence. But that cannot be a ground for rejecting the finding of the disciplinary authority of the bank. The conduct of the criminal trial was in the hands of the prosecuting agency. Having registered the First Information Report, the bank had little or no role to play, apart from rendering assistance to the prosecuting agencies. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> SCappoints judge as arbitrator The Supreme Court has appointed Justice Arvind Savant, former Chief Justice of the Kerala High Court, as arbitrator in the dispute between Fugro Survey Ltd and Ramunia International Services Ltd. The two firms had entered into a survey contract whereby Fugro agreed to perform various surveys. After completion of the main part of the work, when it demanded payment, there was no response. Though an arbitrator was proposed by Fugro, there was no acceptance. Therefore, an arbitration petition was moved first in the Bombay high court and later in the Supreme Court. The court noted that Ramunia had not appeared before it. Despite that, it appointed the arbitrator. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> United Breweries writdismissed A division bench of the Bombay high court has dismissed a petition of United Breweries Ltd challenging the higher levy charged by the Maharashtra Industrial Development Corporation on liquor industries for consumption of water for commercial use. The corporation had appointed National Environment Engineering Institute (NEERI) to study the use of water by liquor industries. The report stated that these industries did not part with their data and therefore it was handicapped. However, it found that 65 per cent of the water supplied was for commercial purpose. The corporation then raised the levy by five times. This was challenged by United Breweries, which had not paid the rate since 2001. The company also opposed the appointment of NEERI as without authority. It argued that the employees of the corporation should have done the task. The high court rejected the contention and said that it was an independent expert body and the corporation was right in appointing it and accepting its recommendations. If the company wants to appeal to the Supreme Court, it has to pay 50 per cent of the demand within two weeks. MJ ANTONY