Legislative and Regulatory Update

 

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In This Issue

[No.55]                                                                            July 10, 2003

International
SEBI
Department of Company Affairs
CBDT
CBEC Excise Tariff
CBEC Customs Tariff
RBI
DGFT
Department of Commerce
Department of Health
Ministry of Personnel Public Grievances and Pension
Press Information Bureau
Supreme Court

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International Legal News

Cases

Source: Westlawinternational.com

  • Intellectual Property: Right to derivative works from computer program - Certiorari Denied.

Denying certiorari, the United States Supreme Court has let stand a Seventh Circuit decision that the owner of a copyright in an original computer program retained the exclusive right to derivative works from the original program, even though the licensee asserted that the owner had given it the right to prepare a derivative work. The parties agreed pursuant to contract that, upon "completion of the project, ALL source code [would] be given back" to the owner, the Court of Appeals reasoned. Further, obtaining copyright protection in the derivative work was beyond the scope of the permissible uses authorized by the parties' letter agreement.

The licensee presented three questions in its petition for writ of certiorari: First, "[w]hether the copyright in a lawfully created derivative work can initially vest in the owner of the preexisting work rather than the statutory author of the derivative work absent a signed writing memorializing a transfer of ownership?" Second, "[w]here an author has authority to create a derivative work, whether it is a separate infringing 'use' of the preexisting material for the author of the derivative work to register the copyright for that work in the author's name?" And third, "[w]hether an ambiguous unsigned writing referring to ownership of computer 'code' embodying a work may be interpreted to trump the statutory ownership of the copyright for such work?"

Liu v. Price Waterhouse LLP

  • Torts: Parents cannot recover consortium damages for nonfatal injuries to child

Addressing an issue of first impression, the Supreme Court of Texas declined to extend a claim for loss of consortium to parents of children who have been seriously injured. While the court had previously recognized that a child was entitled to seek damages from loss of consortium when a parent suffers a serious, permanent, and disabling injury, no reciprocal right existed with respect to parents because the child was the party to the relationship who needed special protection. In the present case, parents of a newborn child who suffered serious neurological injuries as the alleged result of medical malpractice could not recover for loss of filial consortium.

Roberts v. Williamson

  • Criminal Justice: Statute requiring designated felons to submit DNA sample for state's DNA databank did not violate Ex Post Facto Clause.

A state statute requiring designated felons convicted prior to, and under sentence on, date of enactment, to submit a DNA sample for the state's DNA databank was not an after-the-fact imposition of additional punishment for those felonies, in violation of the Ex Post Facto Clause of the Federal Constitution. Requiring a felon to submit a DNA sample was not punishment, as the overall intent of the databank law was to aid in investigation, not to punish. The DNA information index was to be used in future investigations, not as punishment for past crimes. Records could not be released except to law enforcement agencies and district attorneys' offices for law enforcement identification purposes and for criminal defense purposes.

Kellogg v. Travis

  • Monopolies: Preliminary injunction in Microsoft antitrust case was not supported by sufficient threat of harm.

The Fourth Circuit has overturned a mandatory preliminary injunction granted in favor of Sun Microsystems in its monopolization action against Microsoft. The District Court had ordered Microsoft to distribute Sun's middleware software with every copy of Microsoft's operating system and web browser. The Court of Appeals ruled that the future harm arising from the risk that the middleware market would soon "tip" in favor of Microsoft's middleware and the present harm to Sun's right to compete in a market undistorted by Microsoft's past antitrust violations were insufficient to support such an injunction. The future harm of market tipping was too speculative, and the present harm of market distortion was defined at too general a level to support relief in a market the District Court never defined.

In re Microsoft Corporation Antitrust Litigation

News

  • Intel has announced that it is working with Alvarion, a maker of broadband wireless equipment, to develop wireless products based on the emerging 802.16a, also known as WiMax, standard. WiMax, or Worldwide Interoperability for Microwave Access, is considered as a broadband wireless access alternative to cable, digital subscriber line (DSL) and other methods for reaching customers. The push for WiMax comes from high-speed networking companies, who want to expand into areas such as rural districts or sparsely populated areas, where it's not economically feasible to build DSL or cable networks.

  • U.S. Court of Appeals for the D.C. Circuit unanimously agreed with a trial judge's 2001 ruling that the 15 so-called "comfort women" cannot bring their class action in U.S. courts. Fifteen Asian women who were victims of rape, torture and sexual slavery at the hands of Japanese soldiers during World War II had filed a suit against Japan in 2001.The court held the courts of United States are not authorised to hear the case.The court concluded that the U.S. government does not recognize a "commercial activity" exception to sovereign immunity for any acts committed before 1952. Thus, Japan, as a foreign country, is immune from suit for its activities before and during World War II. Besides 1951 treaty between the United States and Japan establishes that all disputes over Japan's conduct during World War II must be resolved through diplomacy, not in the courts.

  • A U.S. District Judge dismissed an antitrust suit brought by Sharman Networks, distributor of the Kazaa software for sharing songs, movies and other files online against major recording labels and movie studios. Sharman Networks had made antitrust claims in January as part of its defense of a copyright infringement suit filed by the entertainment firms. Federal Judge held that Sharman would not be entitled to damages because it distributes file-sharing software and not online entertainment.

  • Filmmaker Spike Lee and Viacom have reached a settlement on renaming cable network TNN, as Spike T.V. Lee had sued the studio, claiming that people would mistake Spike TV for his network and that he did not want to be associated with the channel. In his statement Lee said "I no longer believe that Viacom deliberately intended to trade on my name when naming Spike TV."

  • Nike Inc., the world's No. 1 athletic footwear company has agreed to buy rival Converse Inc. maker of the legendary Chuck Taylor All Star sneaker, for about $305 million, adding a brand with nearly 100 years of history. The transaction would allow Nike to sell Converse shoes everywhere except in Japan. The sale will be completed pending an antitrust review

  • United Parcel Service of America is tackling computer spam with a federal suit that seeks more than $1 million in damages from unnamed spammers. Accusing spammers of using UPS' domain name and its employee and customer lists to market sexual products, lawyers for UPS have secured an emergency order allowing them to subpoena computer data from Internet servers to track down and identify the offenders.

  • Offshore outsourcing by large global corporations has lifted India's second largest software exporter Infosys Technologies profits by 28%.The Nasdaq-listed company reported net profits of 2.8bn rupees (£28m; $46m) during the three months to June 30.

  • Microsoft is the first major software firm to replace share options scheme with a program that will allow employees to earn actual Microsoft shares. The "Stock Award" program will begin in September and is the result of a more than year long review of compensation at Microsoft. The new scheme would help Microsoft to attract and retain the best employees.

SEBI

Primary Market Division

  • Amendment to SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 

Circular No. PMD/MBD/ESOP/2/2003/30/06 Dated 30.06.2003 : Due to various Developments in the market since 1999 and various representations/ clarifications sought by the companies, SEBI set up a Committee under the Chairmanship of Prof. J. R. Varma to review the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Board, after considering the recommendations of the Committee and the public comments, has approved certain modifications to be incorporated in Guidelines. 

Secondary Market Division

  • Guidelines for Fair Practices/ Code of Conduct for Public Representative and SEBI Nominee Directors

Circular No. SMD/SEAD/Cir-29 /2003/03/07 Dated 03.07.2003 : It has been decided that the Rules or Articles of Association, as the case may be, of the stock exchanges shall provide for Guidelines for Fair Practices/ Code of Conduct for Public Representatives and SEBI Nominee Directors in order to ensure that the affairs of the stock exchanges are conducted on healthy lines with the highest standards of professional conduct, business ethics and morality to inspire and sustain the confidence of the investing public. Accordingly, the Exchanges have been directed to make necessary amendments to the Rules or Articles of Association for the implementation of the above decision. 

Regulations

  • Securities and Exchange Board of India (Debenture Trustees) (Amendment) Regulations, 2003 

Notification No. SO763(E) Dated 04.07.2003 : (i) In regulation 2, clause (ee) giving the defintion of "net worth", has been inserted.

(ii) Regulation 2A relating to Power of the Board to issue clarification, Regulation 6 and Regulation 7A relating to Capital Adequacy Requirement, have been inserted.

(iii) Regulation 13A has been substituted.

(v) Regulation 15 and 17A have been amended and Schedule IV has been substituted.

Department of Company Affairs

  • Punjab Agro Newsprint Limited and the Punjab Agro Industries Corporation Limited (Amalgamation) Order, 2003 

Order No. SO737(E) Dated 27.06.2003 : Central Government has made the Punjab Agro Newsprint Limited and the Punjab Agro Industries Corporation Limited (Amalgamation) Order, 2003 to provide for the amalgamation of the said two companies.

CBDT
  • Notifications under Income Tax Act, 1961

Notification No. 157/2003 Dated 25.06.2003, No. 158/2003 and No. 159/2003 Dated 27.06.2003, No. 161/2003 to 163/2003 Dated 03.07.2003, No. 164/2003 and No. 165/2003 Dated 04.07.2003 : 

Shri Dwarkadhishji Mandir, Dwarka, Jamnagar Notified U/S 10(23C)(v) 

8.5% Tax Free SLR Power Bonds specified U/S 10(15)(i) 

Centre for Science & Environment, New Delhi approved U/S 35(1)(iii) 

Adhiparasakthi Charitable, Medical, Educational and Cultural Trust, Tamil Nadu notified U/S 10(23C)(iv) 

Jesuit Madurai Province, Tamil Nadu notified U/S 10(23C)(iv) 

Grocery Markets and Shops Board, Mumbai notified U/S 10(23C)(iv)

Flexibonds-12th series (2001-02) issued by Industrial Development Bank of India, Mumbai specified U/S 80L(1)(ii) 

Flexibonds-13th series (2001-02) issued by Industrial Development Bank of India, Mumbai specified U/S 80L(1)(ii) 

CBEC Excise Tariff

  • Refund of excise duty paid on petrol, diesel and fuel oil in respect of official vehicles belonging to the Diplomatic Missions in India - regarding 

Circular No. 42/725/2003-CX Dated 03.07.2003 : With reference to CX.III section instruction issued vide F. No. 8/64/56-CX.III dated 14.2.57 regarding refund of excise duty on petrol used by diplomatic mission, Board has received representation from British High Commission requesting the department to extend the scope of the exemption and include diesel also. Accordingly, Board has decided to revise the instruction issued earlier in this regard and henceforth refund of excise duty would be extended to the duty paid on all the hydrocarbon oil (i.e. petrol, diesel and fuel oil) and will not be restricted to only petrol refunds. 

  • Valuation of goods

Circular No. 41/725/2003-CX Dated 30.06.2003 : It has been clarified that since the assessable value shall take the entire intrinsic value of the article sought to be assessed, irrespective of the fact that manufacturer or processor of the article does not pay for the cost of some of its components, the value of caps fitted with the tubes should be included while determining assessable value of the tubes.

  • Amendment to Notification No. 6/2002 Dated 01.03.2002

Notification No. 57/2003 Dated 27.06.2003 : In the said notification, in the Table, against S.No. 35,in column (3), for the words "Natural Gas", the words and brackets "Natural Gas (other than Compressed Natural Gas) ", have been substituted.

CBEC Customs Tariff

  • Amendments to Notification No. 23/2002 Dated 01.03.2002 

Notification No. 100/2003 Dated 03.07.2003 : In the said notification, in the Table, after S. No. 37 and the entries relating thereto, S. No. 37A has been inserted.

  • Anti-Dumping duty 

Notification No. 99/2003 and No. 98/2003 Dated 01.07.2003 : Anti Dumping Duty has been imposed on Fused Magnesia originating in or exported from the People's Republic of China and vitrified and porcelain tiles other than vitrified industrial tiles originating in, or exported from, the People's Republic of China and UAE.

RBI

  • Exim Bank's Line of Credit of US $ 5 Million to Hatton National Bank Ltd. (HNB), Sri Lanka 

Circular No. A.P. (DIR Series) Circular No.1 Dated 02.07.2003 : Export-Import Bank of India (Exim Bank) has concluded an agreement with Hatton National Bank Ltd. (HNB), Sri Lanka on February 12, 2003, making available to the latter, a line of credit (LOC) upto an aggregate sum of US $ 5 Million (U.S. Dollar five million only). The credit has become effective from May 20, 2003 and is available for financing export from India of capital goods, plant and machinery, industrial manufactures, consumer durables and other items which are eligible for being exported under the Exim Policy of the Government of India and related services to buyers in the borrower’s country, i.e. Sri Lanka.

  • Trading of Government of India Securities on Stock Exchanges 

Notification No. DBS.FID No.C-1/ 01.02.00 / 2003- 04 Dated 01.07.2003 : With a view to encouraging a wider participation of all classes of investors in the secondary market for government securities, the trading in Government of India dated securities at the stock exchanges through a nation-wide, anonymous, order-driven, screen-based system has been introduced with effect from January 16, 2003. The GOI securities can be traded on the automated systems of the National Stock Exchange (NSE); The Stock Exchange, Mumbai (BSE) and the Over The Counter Exchange of India (OTCEI). This Scheme is in addition to the present Negotiated Dealing System (NDS) of the RBI, which would continue to be in operation as hitherto.

DGFT
  • Amendment in the Handbook of Procedures (Vol. I) 

Public Notice No. 15/2002-07 Dated 08.07.2003 : Director General of Foreign Trade has made amendments/deletions/corrections and additions in the Handbook of Procedures, Vol.2, 2002-2007, as amended.

  • Duty free import of natural rubber 

Circular No. 10(RE-2003)/2002-2007 Dated 03.07.2003 : Vide ALC Circular Nos. 8/98-99 dated 20.2.99, 1/2001-2002 dated 23.8.2001, 2/2001-02 dated 3.9.2001 and Public Notice No 13/2002-2007 dated 20.5.2002, all Licensing Authorities were advised not to issue any duty free licence including DFRC, Advance Licence for deemed exports, Advance Intermediate Licence and Annual Advance Licence for import of natural rubber. Some exporters moved various High Courts against the decision of the Government not to allow duty free import of natural rubber against Advance Licences. In Civil Writ Petition No.808 of 2002 in the case of M/s. Narendra Udeshi V/s. Union of India, the Hon'ble High Court of Bombay vide its judgement dated 1st October, 2002 quashed and set-aside the ALC Circulars including Circular dated 3rd September, 2001 and Public Notice dated 20th May, 2002. The SLP filed before the Hon'ble Supreme Court against the judgement of the Bombay High Court has also been dismissed.

  • Imports of approved & unapproved drugs under the Advance Licensing Scheme – Exemption from Registration procedure 

Circular No. 9(RE-2003)/2002-2007 Dated 30.06.2003 : Representations have been received from various Drug Manufacturers Associations requesting for exemption from registration requirements of the Drugs & Cosmetics Act for imports under the Advance Licensing Scheme. The requests have been considered and It has been decided that import of approved & unapproved drugs under the Advance Licensing Scheme will not be subjected to the Registration procedure and the imports will be permitted subject to certain conditions. 

  • Amendment in the Handbook of Procedures (Vol. I) 

Public Notice No. 14/2002-07 Dated 25.06.2003 : Director General of Foreign Trade has made amendment in the Handbook of Procedures, Paragraph 2.9.5. 

  • Amendments in the ITC (HS) Classifications of Export and Import Items, 2002-2007 

Notification No. 13(RE-2003)/2002-2007 Dated 20.06.2003 : The following note has been added at the end of Appendix III to Schedule 1 (IMPORTS) of ITC(HS) Classifications of Export and Import Items,

"Note: Consequent upon rescission of the DIPP order(s) dated 24.04.89 and 24.02.93 issued under the Provisions of the Essential Commodities Act, 1995, the items listed at sl.no. 69 –76 above in the appendix shall stand deleted." 

  • Review of the DEPB rates submission of fresh data- reg. 

Circular No. 8(RE-2003)/2002-2007 Dated 20.06.2003 : It has been decided to review the DEPB rates in case of all products where the DEPB rates are 15% or more. The Trade and Industry have been requested to submit the representative data through the Export Promotion councils concerned on the FOB value of exports and CIF value of inputs used in the export products as per SION in the format specified, within 45 days.

Department of Commerce

  • Anti Dumping Investigations

Notification No. 14/3/2002-DGAD Dated 02.07.2003, No. 14/5/2003-DGAD Dated 01.07.2003, No. 14/52/2002-DGAD Dated 26.06.2003 and Notification No. 14/23/2002-DGAD Dated 24.06.2003 : The following notifications have been issued regarding Anti Dumping Investigations.

Final Findings on Anti Dumping Investigations Concerning Imports of Induction Hardened Forged Steel Rolls from Russia, Ukraine and Korea RP

Initiation of Anti-Dumping Investigation Concerning Import of Acrylic Fibre from Belarus into India 

Preliminary Findings on Anti-Dumping Investigations Concerning Imports of Methylene Chloride Originating in or Exported from Korea RP

Final Findings on Anti-Dumping Investigation Concerning Imports of D (-) Para Hydroxy Phenyl Glycine Methyl Potassium Dane Salt (PHPG Dane Salt Originating in or Exported from the China PR and Singapore.

Department of Health

  • Appointment of Authorities for Union Territories U/S 17(3)(a) and 17(3)(1) of Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994 

Notification No. SO764(E) Dated 04.07.2003 : Central Government has appointed Appropriate Authorities for the Union Territories for the purposes of the above Act.

Ministry of Personnel, Public Grievances and Pension
  • Amendment to Notification No. GSR86(E) Dated 26.02.1993

Notification No. GSR517(E) Dated 27.06.2003 : In the Rules for Civil Services Examination, 2003 published vide Notification No. 13018/5/2002-AIS(I) dated the 7th December, 2002, Rules 16 and 17 have been substituted.

Press Information Bureau
  • Revised data on Foreign Direct Investment 

Dated 30.06.2003 : In an effort to bring the reporting system of FDI data in India into alignment with international best practices, the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, in consultation with RBI, had constituted a committee in May 2002 comprising officials from RBI and DIPP to study this issue. The Committee studied the relevant conceptual and methodological issues and identified the data gaps involved in order to make necessary recommendations for strengthening the collection, compilation and reporting of FDI data. The Committee submitted its Report in October 2002 recommending that the FDI statistics should include, besides equity capital, ‘reinvested earnings’ (retained earnings of FDI companies) and ‘other direct capital’ (inter-corporate debt transactions between related entities) in accordance with the international best practices. 

  • Exchange of Tariff Concessions by China and India under the Bangkok Agreement 

Dated 30.06.2003 : The Bangkok Agreement, signed in 1975, refers to an initiative under the Economic and Social Commission for Asia and the Pacific (ESCAP) for trade expansion through exchange of tariff concessions among developing country members of the ESCAP region. This Agreement was ratified by 5 countries and is operational between 4 countries viz., Bangladesh, India, Korea and Sri Lanka (Lao PDR has not yet issued the customs notification). China also offered to join the Agreement in 1993.

As part of China's accession procedure, China has given an offer list of 182 items (corresponding to 217 tariff lines) to India as per the international Trade Classification Harmonised System (ITC-HS), covering items on which they will provide tariff concessions. The concessions offered include tariff preferences on several products being exported by India now. These products include chemicals, leather, textiles and diamonds. In effect, India - after exchange of concessions with China - will be eligible for concessions on 722 items, which cover around 25 to 30% of our total exports to China in value terms.

Supreme Court
  • Union of India (UOI) Vs. Prakash P. Hinduja and Anr.

A contract was entered between Government of India and M/s. AB Bofors for supply of 400 FH 77-B gun systems along with vehicles, ammunition and other accessories. The Government of India made a formal request to Government of Sweden for an investigation on allegations that Bofors had managed to obtain the contract from Government of India after payment of large amounts as bribe. The CBI registered a case and proceeded to investigate the matter. Thereafter CBI submitted charge sheet in the Court of Special Judge, Delhi. The learned Special Judge took cognizance of the offence on 4.11.1999 was registered in his Court.

On 15.4.2002 accused Prakash Hinduja moved an application before the Special Judge praying for revocation of the cognizance taken, to revoke the process issued and to dismiss the charge sheets. The application was moved on the ground that the cases were never reported to CVC and the CVC has neither reviewed the cases nor had considered them fit for continuance of the prosecution and as such there was a non-compliance of the directions issued by this Court in the case of Vineet Narain. The learned Special Judge, rejected the application. Thereafter, Prakash Hinduja filed a petition under Section 482 Cr.P.C. in Delhi High Court praying for the reliefs, petition was allowed and the cognizance taken by the learned Special Judge and all consequential proceedings were quashed.

Appeals were preferred by Union of India through Central Bureau of Investigation (for short "CBI") and Central Vigilance Commission (for short "CVC") by special appeal against the judgment and order of Delhi High Court,Supreme court held that the entire emphasis in the judgment is that as no one is above the law, the persons holding high offices are not able to escape either on account of inertia or inaction of the CBI to investigate the commission of offence or on account of incomplete or improper investigation or faulty prosecution in Court. A duty has been cast on the CVC to review the progress of all cases moved by the CBI for sanction of prosecution, specially those in which sanction has been delayed or refused. The judgment nowhere says that the CBI will have to take concurrence or sanction from the CVC before filing charge sheet in Court. No right of any kind has been conferred upon the alleged offender or the accused to approach the CVC or to challenge the action of CBI in submission of charge-sheet in Court on the ground of some purported irregularity in making a report to the CVC regarding progress of investigation.

The view taken by the High Court that as the CBI submitted the charge-sheet without reporting and taking approval or consent from the CVC, the same was illegal and no cognizance could be taken thereon is, therefore, wholly erroneous.The direction issued never meant to create or confer some kind of additional rights in favour of the accused as held by the High Court. The accused has absolutely no right to approach the CVC for taking any steps to stop the CBI from either proceeding against him or from launching prosecution against him by filing a charge sheet.

It is further stated that CVC has no role in filing of the charge sheets and the conduct of cases as pleaded by the accused and the directions of the Supreme Court in Vineet Narain only require the CVC to function in a supervisory character. Investigation of cases, filing of charge sheets and then prosecution of such cases are essentially for the CBI, the duty of the CVC being to ensure that the CBI discharges its duties without any interference and without undue favour to any person- Appeal allowed.