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In This Issue

[No.156]                                                                    April 30, 2006

Supreme Court

§         Management, Mettur Beardsell Ltd. Vs. Workmen of Mettur Beardsell Ltd. and Anr.

On integration of two textile industries of which one was a subsidiary, there were some workers disputes on the transfer and related problems wherein, the Supreme Court was approached for the determination of the three main issues, namely, whether there was a transfer of undertaking under Section 25FF of the Act and was it vitiated by fraud and whether the consent of the employees required in a case of transfer of undertaking under Section 25FF.

The Apex Court while determining the issues held that Section 25FF would not apply if a transfer is made in regard to a department or branch of the business run by the undertaking and there was nothing to show that transfer was made with oblique motives so as to hold the transfer to be fraudulent. The transfer which has been effected by the firm in favour of the appellant does not amount to the transfer of the ownership or management of an undertaking and so, the tribunal was right in holding that Section 25FF and the proviso to it did not apply to the present case.

§         Budhan Singh and Ors. Vs. State of Bihar

The appellants were convicted under Section 201 of the Indian Penal Code and were sentenced to undergo five years rigorous imprisonment. On appeal the High Court upholding the conviction under Section 201 reduced the sentence to two years. The Appellants are before this court assailing the propriety of the High Court judgment.

The Apex Court examining the ingredients of Section 201 framed the question as to whether the Appellants had the requisite knowledge of the commission of the offence or they had a reason to believe that an offence had been committed. The manner in which the Appellants are said to have taken part in the commission of crime, there cannot be any doubt that they had the requisite knowledge about the commission of an offence. But the Apex Court allowed the appellants claim on the ground that all the appellants were more than 70 years of age and that they have completed certain period in jail was sufficient to sub serve the ends of justice.

§         Devendra Kumar Singh Vs. Administrator, Bihar State Cooperative Marketing Union Ltd. and Anr.

The appellant, an employee of the Bihar State Cooperative Marketing Union Limited filed a writ petition before the Patna High Court to ascertain the legal right of employees to receive salary. The Division Bench of High Court directed the State of Bihar to pay salary for one year each to the employees of respondent. But the Sate disputed to pay salary to the employees of the respondents. Hence, this appeal.

The apex Court allowing the appeal held that if any cause of action arises, the concerned employees could ventilate their grievances before an appropriate forum. It was also held that if the corporation was a state, which falls within the meaning of Article 12 and was not in a position to comply with the constitutional obligations then some other appropriate ways has to be made out so as to uphold the legal right of the aggrieved persons.

High Courts

Delhi

§         M.R. Tobacco Pvt. Ltd. v. Union of India and Others

The petitioners had filed the writ petition questioning the constitutional validity of the notification dated March 31, 2000, which was issued under Section 71 of the Delhi Sales Tax Act, 1975 introducing gutkha as one of the items of the First Schedule to the Act retrospectively. The main issue involved was whether the additional excise duty payable under Additional Duties of Excise (Goods of Special Importance) Act, 1957 being in lieu of sales tax, the inclusion of gutkha in Schedule of taxable goods was unconstitutional as being contrary to the Constitution and whether subjecting the petitioners to double taxation was legally impermissible.

The High court held that the levy of additional excise duties on goods declared to be of special importance in inter-State trade on commerce did not prevent the State Legislatures from levying a sales tax on the same commodity subject to the restriction contained in the Central Act. The court further held that there was nothing in the Constitution (Eightieth Amendment) Act, 2000 according to which the levy of additional excise duties on sale of tobacco, sugar or cotton, disentitled the State Legislatures to levy a tax on sales even when it forgoes the share of revenue collected towards additional excise duties. Accordingly the petition challenging the notification failed and was dismissed.

§         V.K. Malhotra v. Chairman & Manging Director, Rural Electrification Corpn

The petitioners seeking to quash and set aside the orders dated 12th March 1998, 11th March 2003 and 27th August 2003 had filed the writ petition. The petitioner had claimed promotion to the post of Assistant Director from the date his junior, prior to his reversion, was promoted but the applications and petitions were rejected by the Competent Authority. The petitioner had voluntary opted to be transferred on reversion as Assistant and later he was promoted to Section Officer and pay was fixed on promotion. After his promotion the petitioner raised the grievance that he was required to serve a two-year stint as Section Officer for being promoted to the post of Assistant Director.

After hearing the counsel for the parties, the High Court held that the petitioner had accepted the voluntary retirement Scheme and also had received his ex-gratia payment under the scheme equivalent to 49 months pay and other benefits totaling Rs. 14,43,159 and the petitioner’s claim for pay revision and promotion could not be permitted. Accordingly, the writ petition was dismissed as having no merits.

Allahabad

§         Knight Queen Industries (P.) Ltd. v. State of U.P.

In the writ petitions that were filed by the petitioners it was contended that by virtue of notification that was issued under Section 3-A of the U.P. Trade Tax Act, 1948, the goods manufactured and marketed by them as mosquito mats/coils or refills would fall under entry titled “pesticides and insecticides” and therefore could not be subjected to tax as an unclassified item under Section 3-A (1)(c) of the Act.

The High Court held that though the goods sold by the petitioners were used as household articles they were nevertheless household “insecticide”. The chemicals that were used by the petitioners for manufacturing the goods were treated as “insecticides” and under the Insecticides Act, 1968 a certificate had been issued by the Ministry of Agriculture. The court held that in absence of a specific entry relating to mosquito repellant/mosquito destroyer and as there was an entry mentioning “insecticides”, it would be ordinarily understood that the product of the petitioners fell under the category of “insecticides”. Accordingly, it was held that the products manufactured by the petitioners were admittedly “insecticides”.

Ministry of Finance

CBEC Excise Non-Tariff

§         The CENVAT Credit (Third Amendment) Rules, 2006

Notification No.:08/2006-NT Dated 19.04.2006. Vide this notification the Central Government has amended the CENVAT Credit Rules, 2004. The same shall come into force on the date of their publication in the Official Gazette. Vide this notification in the CENVAT Credit Rules, 2004, in rule 2, in clause (p), the ‘Explanation’ shall be omitted.

§         The CENVAT Credit (Fifth Amendment) Rules, 2006

Notification No.: 10/2006–N.T Dated 25.04.2006. Vide this notification the Central Government has amended the CENVAT Credit Rules, 2004. The same shall come into force on the 1st day of May, 2006. Vide this notification in the CENVAT Credit Rules, 2004, in rule 9, in sub-rule (1), in clause (e), for the words, brackets and figures “sub-clauses (iii), (iv) and (v)”, the words, brackets and figures “sub-clauses (iii), (iv), (v) and (vii)” shall be substituted.

Service Tax

§         The Service Tax Registration of Special Category of Persons (Amendment) Rules, 2006

Notification No: 18/2006 Dated 25.04.2006. The same shall come into force on the 1st day of May, 2006. Vide this notification in the Service Tax (Registration of Special Category of Persons) Rules, 2005, in rule 3, in sub-rule (3), for the words, brackets and figures “sub-rules (2) to (7)”, the words, brackets and figures “sub-rules (2) to (8)” shall be substituted.

RBI

DBOD

§         Exemption from Applicability of Section 20 of the Banking Regulation Act, 1949- Issue of Credit Cards to Directors of Banks

Circular No.: DBOD.No.Leg.BC.81/09.11.013/2005-06 Dated 20.04.2006. Vide this Circular it has been decided that for the purpose of section 20 of the Banking Regulation Act, 1949, the term 'loan or advance' shall not include a credit limit granted under credit card facility provided by the bank to its Directors to the extent the credit limit so granted is determined by the bank by applying the same criteria as applied by it in the normal conduct of the credit card business.

SEBI

Regulations

§         Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2006

Notification No: SO560(E) Dated 18.04.2006. Vide this notification the Board has amended the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992. The same shall come into force on the date of their publication in the Official Gazette. Vide this notification in the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, regulation 19 shall be omitted.

International Legal Cases and News

Cases

Criminal Law

§         Salinas v. United States

The petition for leave to proceed in forma pauperis was granted by the United States Court of Appeals. The judgment was vacated and the case was remanded to the Fifth Circuit for further consideration as, the Fifth Circuit erred in treating petitioner's prior conviction for simple possession as a "controlled substance offence" under United States Sentencing Commission, Guidelines, since that term required elements other than simple possession.

§         US v. Lizardo

Defendant Meraldo Lizardo, a deputy sheriff in the Essex County Sheriff's department in Massachusetts, filed an appeal against his conviction and sentence under 21 U.S.C. § 846 for conspiring to distribute cocaine and under 21 U.S.C. § 843(b) for unlawful use of a communication facility on the following grounds: 1) insufficiency of evidence; 2) wrong interpretation of Evidence; 3) a Willful Blindness of jury while issuing instructions; 4) prosecutorial misconduct; 6) illegal use of wiretap evidence; and 5) sentencing errors. Court of appeal rejected the appeal and affirmed the conviction and sentence of the defendant.

Labor & Employment Law

§         Serv. Employees Int'l Union v. Municipality of Mt. Lebanon

Court of appeals reversed the judgment of the District Court and remanded the case for further proceedings while holding that the ordinance issued by the Municipality of Mt. Lebanon which required door-to-door canvassers who planned to “hand pamphlets or other written material” to residents or discuss with them “issues of public or religious interest” to first register themselves with the police department, to be violative of the first and Fourteenth Amendments’ which guarantee that no State shall abridge the freedom of speech.

News

§         US journalist released from prison by a Presidential Decree in Afghanistan

A US journalist Edward Caraballo who was undergoing imprisonment in Afghanistan on the charges of running a private jail and torturing eight Afghan men, was released on Sunday by a presidential decree. Caraballo had entered Afghanistan on a freelance terrorist hunt and was arrested in July 2004 when he and his companions were found holding eight Afghan citizens.

§         Pepsi fined for negligence in packing

Consumer Disputes Redressal Forum of India had ordered soft drinks manufacturer Pepsi to pay Rs. 20,000/- in damages to the Complainant who found a condom in a sealed bottle and to deposit fine of Rs. 1,00,000/- in the Consumer Legal Aid Fund.

§         Extension of emergency laws in Egypt

The Egyptian parliament had extended the emergency laws of the country, which would have expired in June for two more years to allow the government more time in drafting anti-terrorism legislation.

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