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In This Issue

[No.60]                                                                            August 30, 2003

International
SEBI
CBDT
CBEC Excise Tariff
CBEC Excise non Tariff
CBEC Customs Tariff
CBEC Customs non Tariff
Service Tax
RBI
DGFT
Department of Commerce
Department of Revenue
Ministry of Health

Department of Legal Affairs

Press Information Bureau
Supreme Court

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International Legal News

Cases

Source: Westlawinternational.com

  • Books and Publishing: Rescission was a possible remedy if publisher rejected manuscript in bad faith.

Under New York law, rescission was a possible remedy if a publisher breached an agreement with an author by rejecting the author's work in bad faith, notwithstanding the author's initial failure to offer to return the unrecouped portion of his advance. Such a rejection could serve to undermine the entire purpose of the agreement, which was to produce the author's works for publication.

Helprin v. Harcourt, Inc.

  • Entertainment: Compiler of video clips was not likely to succeed on fair use defense as to infringement of movies.

A video clip compiler, which sold clip compilations to video retailers, was not likely to succeed on its fair use defense to a claim of copyright infringement asserted by the holder of copyrights in motion pictures from which the compiler created clips to be displayed on the retailers' websites and the compiler's own website. The owner was entitled to a preliminary injunction against this use. Although the clip previews copied a relatively small amount of the original full-length films and did not go to the "heart" of the movies, the compiler's use was commercial in nature, and the clips would likely serve as substitutes for the owner's own derivative works. Moreover, the clips lacked any significant transformative quality, and the copyrighted works contained mainly creative expression.

Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc.

  • Criminal Justice: "Convicted in any court" does not include convictions entered in foreign courts.

The "convicted in any court" element of the statute which prohibits the possession of a firearm by a person convicted of a crime punishable by imprisonment for a term exceeding one year did not include convictions entered in foreign courts. Thus, a defendant's prior conviction in Canada could not serve as a predicate offense under the statute.

U.S. v. Gayle

  • Piercing Corporate Veil: Ownership interest is not prerequisite to liability on alter ego claim.

A Georgia bankruptcy judge has allowed a creditors' committee to pursue alter ego claims against the telecommunications company that maintained the wireless, personal communications network of which Chapter 11 debtors were part, in an attempt to hold the company liable for the debtors' obligations. The court concluded that, under Delaware law, an ownership interest in the subservient corporation is not a prerequisite to liability on an alter ego claim.

In re iPCS, Inc.

  • Defects: Tractor design was not defective despite lack of seat belt.

Under Oklahoma law, a tractor from which the driver was thrown during an accident did not have a defective design due to the lack of a seat belt. There was no showing that the lack of a seat belt constituted a risk beyond the contemplation of the ordinary consumer. The court rejected evidence regarding the risks of rollover, and the alleged need for a rollover protection system including both a rollover bar and a seat belt, since the accident did not involve a rollover.

Ahrens v. Ford Motor Co.

News

  • Webcaster Alliance, alliance of online music broadcasters have filed a suit in U.S. District Court for the Northern District of California, against the Recording Industry Association of America and other labels for maintaining monopoly over their music. It is alleged in the suit that negotiations for fixing royalty rates for broadcasting songs over the Internet violates the federal antitrust laws and seeks an injunction to prevent the major labels from enforcing their intellectual property rights and collecting royalty payments.

  • In an effort to comply with The US Supreme Court's ruling, the University of Michigan has unveiled a new undergraduate admissions policy giving highest priority to academic achievements. In its ruling given in June the Supreme Court had struck down the University's race conscious point system giving weight age to minority applicants than to academic excellence. The new admission policy does not ignore race, it remains a factor but does not quantify it and no points are used. Academic achievement -- including grades, test scores and high school curriculum -- are given the highest priority.

  • Leonardo da Vinci's "Madonna of the Yarnwinder" was stolen from a castle in Scotland by thieves posing as tourists on Thursday. A Six-figure reward for the return of the valuable painting has been offered by Tyler & Co, insurer of the painting. This painting is the Scottish version of Madonna seated against a backdrop of hills and a serene sea. Christ sits on her lap holding a wooden winder, used to wrap yarn, which is shaped like a crucifix. According to the art critics the painting is likely to fetch 25 million pounds if sold.

  • Miranda plaintiff, Daniel Escobedo was found guilty of murder of Ki Hwan Kim, a Korean shopkeeper by the jury and was awarded 40 years in prison. National attention was, for the first time drawn to Escobedo in 1964, when the US Supreme Court overturned his conviction for murder of his brother-in-law stating that his constitutional rights had been violated by the police, by denying his requests for a lawyer. This ruling was extended to the famous case of Miranda v. Arizona and led to the requirement that police advise those under arrest of their rights, including the right to remain silent, which later came to be known as the Miranda warning.

  • September 23 has been schedule as a tentative date for hearing in Georgia crematory case. Ray Brent Marsh, facility's operator was charged with burial service fraud, making false statements, abuse of a dead body and theft, after investigators discovered hundred of bodies in February 2002 stashed away at crematory property, including some stuffed in burial vaults.

SEBI

Secondary Market Division

  • Mode of Payment and Delivery

Circular No.SEBI/MRD/SE/Cir-33/2003/27/08 Dated 27.08.2003 : With reference to SEBI circular No.SMD/SED/CIR/93/23321 and letter No. SMD-1/23341 dated November 18, 1993 regarding regulation of transactions between clients and brokers, it has been clarified that all payments shall be received / made by the brokers from / to the clients strictly by account payee crossed cheques / demand drafts or by way of direct credit into the bank account through EFT, or any other mode allowed by RBI. The brokers shall accept cheques drawn only by the clients and also issue cheques in favour of the clients only, for their transactions. However, in exceptional circumstances the broker or sub-broker may receive the amount in cash, to the extent not in violation of the Income Tax requirement as may be in force from time to time.

  • Pro Account Trading Terminal

Circular No.SEBI/MRD/SE/Cir-32/2003/27/08 Dated 27.08.2003 : It has been observed that certain members are putting large number of orders on pro-account from various locations rather than using "pro-account" at the terminals located at the corporate office from where the owner / directors normally function. To check such a misuse, stock exchanges have been directed to ensure the following:-

1. Facility of placing orders on "pro-account" through trading terminals shall be extended only at one location of the members as specified / required by the members

2. Trading terminals located at places other than the above location shall have a facility to place orders only for and on behalf of a client by entering client code details as required / specified by the Exchange / SEBI.

3. In case any member requires the facility of using "pro-account" through trading terminals from more than one location, such member shall be required to submit an undertaking to the stock exchange stating the reason for using the "pro-account" at multiple locations and the stock exchange may, on case to case basis after due diligence, consider extending the facility of allowing use of "pro-account" from more than one location.

  • Corporate Governance in listed Companies-Clause 49 of the Listing Agreement Circular

Circular No.SEBI/MRD/SE/31/2003/26/08 Dated 26.08.2003 : Clause 40 of the Listing agreement has been substituted with a new one. This master circular contains the revised clause 49 as well as other circulars issued by SEBI on the subject, suitably modified. The companies are required to comply with the provisions of revised clause 49, on or before March 31, 2004. The companies shall continue to comply with all the provisions of clause 49 (issued vide circulars dated, 21st February, 2000, 12th September 2000, 16th March 2001 and 31st December 2001) as well as other circulars dated, 9th March 2000 and 22nd January, 2001, till the revised clause 49 of the Listing Agreement is complied with or March 31st 2004, whichever is earlier.

Regulations

  • Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003

Notification No. SO 954(E) Dated 21.08.2003 : SEBI has issued the Central Listing Authority Regulations, 2003, constituting the Central Listing authority. The regulations would have the effect of repealing The Securities and Exchange Board of India (Central Listing Authority) Regulations, 2003 notified by the Board vide S.O. No. 171(E) dated 13th February, 2003.

  • Securities and Exchange Board of India (OMBUDSMAN) Regulations, 2003

Notification No. SO 953(E) Dated 21.08.2003 : The Board has made the Securities and Exchange Board of India (OMBUDSMAN) Regulations, 2003 to provide for the establishment of the office of Ombudsman to redress the grievance of the investors in securities and for matters connected therewith or incidental thereto.

CBDT
  • Corrigendum to Notification No. S.O. 879(E) Dated 31.07.2003

Notification No. 201/2003 Dated 18.08.2003 : After the Annexure to Form No. 27E and below the expression "Name and designation of person responsible for collecting tax at source............................", it should be read as

"(B) Form Nos. 27EB, 27EC and 27ED shall be omitted.".

  • Notifications u/s 10(23C)(iv)

Notification No. 200/2003 and No. 199/2003 Dated 13.08.2003 : Goods transport Labour Board, Mumbai and Railway Goods Clearing & Forwarding Establishment Labour Board, Mumbai, have been notified u/s 10(23C)(iv)

CBEC Excise Tariff
  • Availment of CENVAT/ Modvat credit when common inputs are used for both dutiable and exempted goods

Circular No. 739/55/2003-CX Dated 28.08.2003 : In Board's circulars No. 591/28/2001-CX dated 16.10.2001 and No. 654/45/2002-CX dated 19.8.2002, it was mentioned that if a manufacturer does not fulfill the requirements of either sub-rule(2) [i.e. maintaining separate accounts] or sub-rule (3) [i.e. paying 8% of the price of the exempted goods other than the exceptions specified in clause(a)] of rule 6 of CENVAT Credit Rules,2002 , then in terms of sub-rule (1), the assessee shall not be allowed credit on such quantity of inputs which is used in the manufacture of exempted goods. Board has observed that though the issue of option to the manufacturer for payment of 8% of the price of the exempted goods or reversal of actual credit has been clarified by its circular dated 19th August 2002, the matter is not free from doubt. Accordingly, Board has decided to further examine the matter relating to recovery of 8% of the amount under sub-rule (3) of rule 6 for appropriate action and the decision taken shall be communicated in due course.

  • Exemption to Specified Excisable Goods subject to certain conditions

Notification No.69/2003 Dated 25.08.2003 : Certain Excisable Goods have been exempted from excise duty as specified subject to conditions.

  • Extension Of Stay By CEGAT / CESTAT Beyond 180 Days

Circular No. 738/54/2003-CX Dated 19.08.2003 : The question whether the Tribunal has powers to grant extension of stay beyond 180 days after insertion of Section 35C(2A) in the Central Excise Act, 1944 w.e.f. 11.05.2002, vide the Finance Act 2002, came up for consideration before the Tribunal in the case of M/s. Kumar Cotton Mills Pvt. Ltd. SLP against the said judgment has been filed by the Department in the Supreme Court and in some more cases also, where the Tribunal had granted extension of stay orders, SLPs have been filed in the Supreme Court.

On re-examination of the matter, Board is of the view that this is a general issue, which may be arising in a large number of cases, as stay application are normally filed by the parties in almost all cases, with their appeals. Moreover, the orders granting extension of stay are only interim orders and no revenue can really be said to be involved in such cases. Since the issue has already been raised before the Hon'ble Supreme Court by filing some SLPs, Board is of the view that more SLPs on this issue need not be filed in the Supreme Court. Since basically a question of law is involved it would be appropriate to file a Reference Application before the jurisdictional High Courts under Section 35H in respect of orders passed by the Tribunal before 01.07.2003 and Appeals before the jurisdictional High Courts under Section 35G in respect of orders passed by the Tribunal on or after 01.07.2003.

  • Levy of excise duty on readymade garments on the basis of Retail Sale Price (RSP)

Circular No. 737/53/2003-CX Dated 19.08.2003 : It has been brought to the notice of Board that some officers in the field are insisting that all types of garments (even those cleared in bulk or in unpacked condition) should be affixed with RSP and should be valued in terms of the retail sale price. In this respect Board has clarified that only when pre-packed commodities are sold in retail packages, the provisions of Standards of Weights & Measures Act and rules regarding declaration of the retail sale price (and consequently valuation of the goods based on such RSP) arises and that many a times garments are cleared in bulk where the manufacturer neither packs the same nor declares the retail sale price therein. Such garments are ultimately displayed in the retailer's outlets, which may or may not attach a price tag thereto. Some times the dealer/retailer packs, re-packs, labels or re-labels the goods, which may result in such goods fall within the purview of Standards of Weights and Measures (Packaged Commodity) Rules. However, in such cases central excise valuation is not important, as such activities undertaken on duty paid goods are fully exempt vide notification No. 38/2003-CE dated 30.04.2003. Thus, it is clear that in such cases, the manufacturer of the garments is under no legal obligations to declare the retail sale price while clearing the garments from his factory in bulk and in unpacked condition.

CBEC Exice non Tariff
  • Sitapura Special Economic Zone at Jaipur, specified as Special Economic Zone

Notification No. 64/2003 NT Dated 26.08.2003 : Central Government has specified Sitapura Special Economic Zone at Jaipur, in the State of Rajasthan, as a special economic zone.

  • Indore Special Economic Zone at Indore, specified as Special Economic Zone

Notification No. 63/2003 NT Dated 26.08.2003 : Central Government has specified Indore Special Economic Zone at Indore, in the State of Madhya Pradesh, as a special economic zone.

CBEC Customs Tariff

  • Customs Claims against vehicles temporarily imported into India by tourists under Carnets-de-passage

Circular No. 77/2003 Dated 28.08.2003 : In order to solve the genuine difficulties faced by foreign tourists, field formations have been directed that passengers availing of the Carnet facilities for their motor vehicles, may be treated with proper respect and courtesy and customs clearance should be effected expeditiously. It is also reiterated that demand notices issued in cases of motor vehicles not figuring in the export records of the Indian Customs, may not be confirmed in a routine manner. In fact, in some cases, vehicles had already exited from the country, however, the information regarding the same had not been passed on to the Customs formation through which the vehicles had entered. In this way, for lack of proper communication between Customs formations, the Carnet holders have to face serious inconvenience. In view of this, henceforth, in cases of demand notices being issued, the FIAA should also be served with a copy of the said notice and efforts may be made to elicit their response before the demand is confirmed.

  • Imposition of Anti Dumping Duty

Notification No.133/2003 Dated 26.08.2003 and No.132/2003 Dated 25.08.2003 : Anti Dumping Duty has been imposed on import of Sun and/or Dust Control Polyester Film and Lead Acid batteries

  • Revised norms for execution of Bond and Bank Guarantee under Advance License and EPCG Schemes 

Circular No.74/2003 Dated 21.08.2003 : In terms of Para 3.1 (c) and (d) of the DOR Circular No.48/2003-Cus. dated 6.6.2003, manufacturer exporters registered with Central Excise who have achieved exports of Rs.1 crore or more during the preceding financial year have been allowed BG exemption. MOC/DGFT and Trade have represented that as a result of the revised norms notified in Circular No.48/2003, manufacturer exporters in the small scale sector and other similar manufacturers having export performance of less than Rs.1 crore or who are paying central excise duty of less than Rs.1 crore will not be able to avail BG exemption and such manufacturers will have to file 100% BG to avail benefit of Advance License/EPCG Schemes which would substantially increase their transaction cost.

The issue has been re-examined in consultation with MOC/DGFT and it has been decided that other manufacturer exporters who are not covered under Para 3.1(c) and (d) or who are not status holders { Para 3.1(a)} shall also be eligible for 25% BG concession.

CBEC Customs Non Tariff
  • Special Economic Zones (Customs Procedures) (Amendment) Regulations, 2003

Notification No. 65/2003-N.T. Dated 14.08.2003 : In regulation 1, in sub-regulation (3), for the figures, letters and words 15th day of August, 2003 , the figures, letters and words 15th day of October, 2003 have been substituted.

  • Special Economic Zones(Amendment) Rules, 2003

Notification No. 64/2003-N.T. Dated 14.08.2003 : In rule 1, in sub-rule (2), for the figures, letters and words 15th day of August, 2003 , the figures, letters and words 15th day of October, 2003 have been substituted

Service Tax
  • Miscellaneous issues relating to the services on which service tax has been imposed with effect from 1-7-2003

Circular No. 62/11/2003 Dated 21.08.2003 : Clarifications on the following issues have been given by the department

1. Commissioning or installation

2. Scope of IT service under Business Auxiliary Service

3. Maintenance or repair service

4. Foreign exchange broking

5. Service rendered free of charge

  • Exemptions from Service Tax

Notification No.18/2003 to No. 20/2003 Dated 21.08.2003 : The following services have been exempted from service tax

Taxable Services Provided by Commissioning and Installation Agency Other than a Commercial Concern, Exempted

Taxable Services Provided by in relation to Commissioning or Installation by a Commissioning and Installation Agency u/s 66 of the said Act, Exempted

Taxable Services Provided by Any Person for the Maintenance or Repair of Computers, Computer Systems or Computer Peripherals, Exempted

RBI

  • Export of Goods and Services

Circular No. A.P.(DIR Series) Circular No.12 Dated 20.08.2003 : In terms of A.P.(DIR Series) Circular No.12 dated August 28, 2002, the facility for realisation and repatriation of full value of goods/software exported to the countries included in the list annexed to the above circular was extended for a period of one year from September 1, 2002. On a review, it has been decided to extend the above facility for a further period of one year with effect from September 1, 2003 to August 31, 2004, subject to review, for export of goods/software to the countries included in the list annexed.

  • Indo-Suriname Credit Agreement dated March 17, 2003, for USD 10 Million

Circular No.A.P.(DIR Series) Circular No.11 Dated 20.08.2003 : The Government of India have extended a line of credit of an amount of USD 10 million (US Dollar Ten Million only) to the Government of Suriname under a credit agreement entered into between the two Governments on March 17, 2003. The credit will be available to the Government of Suriname, for importing from India capital goods of Indian manufacture including original spare parts and accessories purchased along with the capital goods and included in the original contract as also consultancy services and project exports including services as mentioned in the Annexure.

  • Issue of shares to NRIs/OCBs on rights basis

Circular No. A.P.(DIR Series) Circular No.10 Dated 20.08.2003 : With a view to extending to non-resident shareholders the facility to subscribe to additional equity or preference shares or convertible debentures over and above their entitlement on rights basis, on par with the resident shareholders, Reserve Bank has issued Notification No.FEMA.76/2002-RB dated 12th November 2002  amending Regulation No.6 of Notification No.FEMA.20/2000-RB dated 3rd May 2000. Accordingly, the existing non-resident shareholders may apply for issue of additional equity shares or preference shares or convertible debentures over and above their rights entitlements and the investee company may allot the same subject to the condition that the overall issue of shares to non-residents in the total paid-up capital of the company does not exceed the sectoral cap.

  • Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances

Notification No. DBOD No.BP.BC.15 /21.04.048/2003-2004 Dated 22.08.2003 : The Master Circular No. DBOD. BP. BC. 1/ 21.04.048/ 2002- 2003 dated 4 July 2002 consolidating instructions/ guidelines issued to banks till 30 June 2002 on matters relating to prudential norms on income recognition, asset classification and provisioning pertaining to advances, has been suitably updated by incorporating instructions issued up to 30 June 2003

  • Exemption to Securitisation or Reconstruction Companies from RBI Act

Notification No. DNBS.3/CGM (OPA)-2003 Dated 28.08.2003 : The Reserve Bank of India, has declared that the provisions of Sections 45-IA, 45-IB and 45-IC of the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to a non-banking financial company which is a securitisation company or reconstruction company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

  • Guidelines for issue of Commercial Paper (CP) Defaults in Commercial Paper market

Notification No. IECD No. /08.15.01/2003-04 Dated 19.08.2003 : It has been decided to put in place in Reserve Bank of India a mechanism to monitor defaults in redemption of Commercial Paper. Banks which act as Issuing and Paying Agents (IPAs) have therefore been advised to report full particulars of defaults in repayment of CPs to this Department, immediately on occurrence, in the format specified.

  • New Policy on the working of Local Area Banks

RPCD Dated 26.08.2003 : As no comprehensive review of the LAB scheme had been made since the issuance of guidelines in 1996, a Review Group with outside experts was appointed by RBI in July 2002 to study and make recommendations on the LAB Scheme. The Review Group has submitted its Report on 1st October 2002. Accordingly, there was a change in the policy in following respects,

(i) Licensing of new Local area banks

(ii) Capital base

(iii) Capital adequacy

(iv) Regulatory arrangements

  • RBI ROs to permit Share Transfer from Residents to Non-residents

Press Release No. 2003-2004/250 Dated 22.08.2003 : With a view to reducing procedural delays, the Reserve Bank of India has delegated the work of granting permission for transfer of shares of Indian companies by way of sale by residents in favour of non-residents to its regional offices. Applications/requests seeking such permission may now be submitted to that regional office of the Reserve Bank under whose jurisdiction the company whose shares have to be transferred from resident to non-resident is located.

DGFT
  • Amendments In The ITC(HS) Classifications

Notification No. 19(RE-2003)/2002-2007 Dated 18.08.03 : Central Government has made amendments in the ITC(HS) Classification of Export and Import Items 2002-2007 as further amended vide Notification No. 3 dated 31.03.2003.

Department of Commerce

  • The following notifications have been issued regarding Anti Dumping Investigations

Notification No. 14/14/2003-DGAD Dated 22.08.2003 : Initiation of Anti-Dumping investigations Concerning Imports of PVC Paste Resin Originating In or Exported from Korea RP, Saudia Arabia and European Union

Notification No. 14/8/2003-DGAD Dated 22.08.2003 : Initiation of Anti-Dumping investigations Concerning Imports of Propylene Glycol Originating In or Exported from USA, Singapore, Korea RP and European Union

Notification No. 17/1/2001-DGAD Dated 14.08.2003 : Anti-Dumping investigations Concerning Imports of Methylene Chloride Originating In or Exported from European Union, South Africa and Singapore

Notification No. 14/16/2002-DGAD Dated 08.08.2003 : Anti-Dumping Investigation Concerning Imports of Plastic Opthalmic Lenses from People's Republic of China and Chinese Taipei

Department of Revenue

  • Appointment of Specified Persons as Officers of Enforcement

Notification No. SO964(E) Dated 25.08.2003 : Specified Ofiicers have been appointed as Officers of Enforcement.

Ministry of Health
  • Prevention of Food Adulteration 2nd (Amendment) Rules, 2003

Notification No. GSR656(E) Dated 13.08.2003 : Central Government has made the Prevention of Food Adulteration 2nd (Amendment) Rules, 2003 to further amend the Prevention of Food Adulteration Rules, 1955 to be effective from 13.08.2003.

Department of Legal Affairs
  • Registration of Electors (Amendment) Rules, 2003

Notification No. SO934(E) Dated 18.08.2003 : (1) after sub-rule 3 of rule 13, the following sub-rule has been inserted, namely:-

"(4) Every application for transposition of an entry from one part to another part of the roll shall be in Form 8A.";

(2) in sub-rule (1) of rule 26, for the figures, letters and word "6, 8, 8 A and 8B", the figures, letters and word "6, 7, 8, 8A and 8B" have been substituted;

(3) Forms 6, 7, 8 and 8A, have been be substituted.

Press Information Bureau
  • Revised Guidelines For Uplinking of News And Current Affairs TV Channels From India

Dated 28.08.2003 : The Government has revised the eligibility criteria in the guidelines for uplinking of news and current affairs TV channels from India. Other provisions in the guidelines issued on 26th March 2003 remain unchanged.

Supreme Court
  • Guruvayur Devaswom Managing Commit. and Anr. Vs. C.K. Rajan and Ors.

The State of Kerala having regard to importance of the Guruvayur Devaswom temple enacted the Guruvayur Devaswom Act, 1978 (Act 14 of 1978). The management of the temple is carried out in terms of the provisions of the said Act. A letter was addressed to one of the Hon'ble Judges of the High Court of Kerala wherein it was brought to the notice of Hon'ble Judge that serious irregularity; corrupt practices, mal-administration and mismanagement is prevailing in the administration of the temple. The said letter was treated as an original petition under Article 226 of the Constitution of India.

Apex Court held that whenever injustice is meted out to a large number of people, the Court will not hesitate in stepping in Articles 14 and 21 of the Constitution of India as well as the International Conventions on Human Rights provide for reasonable and fair trial. Apex Court further held that the common rule of locus standi can be relaxed so as to enable the Court to look into the grievances complained on behalf of the poor, depraved, illiterate and the disabled who cannot vindicate the legal wrong or legal injury caused to them for any violation of any constitutional or legal right. However, the dispute between two warring groups purely in the realm of private law would not be allowed to be agitated as Public Interest Litigation. It is trite, where a segment of public is not interested in the cause, Public Interest Litigation would not ordinarily be entertained.