SPN LEGAL Missivespnlegal.com/Missive/Missive_April_2017.pdf · 2017. 5. 22. · operating in IFSC....

Edition – APRIL, 2017

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SPN LEGAL Missive Edition – APRIL, 2017


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TABLE OF CONTENTS

Section Description Page

Number

I. COMPANY LAW

3

II. EXCHANGE CONTROL LAWS 4

III. LABOUR LAWS

5

IV. SECURITIES EXCHANGE BOARD OF INDIA (SEBI) LAWS 6

V. MISCELLANEOUS 7

VI. CASE LAWS:

i. KEY MATTERS ADJUDICATED BY THE HON’BLE

SUPREME COURT

ii. KEY MATTERS ADJUDICATED BY THE HON’BLE HIGH

COURTS

7

9


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COMPANY LAW

COMPANIES (COMPROMISES,

ARRANGEMENTS &

AMALGAMATIONS) AMENDMENT

RULES, 2017

[Notification dated 13th April, 2017]

Rule 25A has been inserted which

deals with merger or amalgamation of

a foreign company with a company

and vice versa

Now a foreign company incorporated

outside India may merge with an

Indian company and vice versa, after

obtaining the prior approval of

Reserve Bank of India (“the RBI”) and

after complying with the provisions of

section 230 to 232 of the Companies

Act, 2013 and these rules.

In case where an Indian company

merges with a foreign company, the

foreign company must be

incorporated in any of the following

jurisdictions:

a) Whose securities market

regulator is a signatory to

International Organisation of

Securities Commission’s

Multilateral Memorandum of

Understanding (Appendix A

Signatories) or a signatory to

bilateral Memorandum of

Understanding with SEBI; or

b) Whose central bank is a

member of Bank for

international Settlements (BIS);

and

c) A jurisdiction, which is not

identified in the public

statement of Financial Action

Task Force (FATF) as:

i) a jurisdiction having a

strategic Anti-Money

Laundering or Combating

the Financing of Terrorism

deficiencies to which counter

measures apply; or

ii) a jurisdiction that has not

made sufficient progress in

addressing the deficiencies

or has not committed to an

action plan developed with

the Financial Action Task

Force to address the

deficiencies.

The valuation for the purpose of

merger of an Indian company with a

foreign company is required to be

conducted by valuers who are the

members of a recognized professional

body in the jurisdiction of the

transferee company and such

valuation needs to be in accordance

with internationally accepted

principles on accounting and

valuation. After the valuation is done,

a declaration to the effect as stated

above is required to be attached with

the application made to RBI for

obtaining the approval.

The company which is to be merged is

required to file an application to the

Tribunal after obtaining approval of

the RBI under the provisions of Section

230 to 232 of the Companies Act, 2013

and these rules.

COMPANIES (COMPROMISES,

ARRANGEMENTS &

AMALGAMATIONS) AMENDMENT

RULES, 2017

[Notification dated 13th April, 2017]


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The provisions of Section 234 of the

Companies Act, 2013 which deals with

merger or amalgamation with foreign

companies has been notified on April

13, 2017.

EXCHANGE CONTROL LAWS

SECURITIZATION AND

RECONSTRUCTION OF FINANCIAL

ASSETS AND ENFORCEMENT OF

SECURITY INTEREST ACT, 2002

[Notification Dated April 28, 2017]

Vide Notification No. RBI/2016-17/295,

dated April 28, 2017, Securitisation and

Reconstruction of Financial Assets and

Enforcement of Security Interest Act,

2002 (SARFESI) has been amended.

The amendments are as follows:

Section 3 (1) (b) of the SARFESI

provides for the Requirement of

Net Owned Fund (NOF) for

Asset Reconstruction

Companies. The said clause has

been substituted by Section 5 of

the Enforcement of Security

Interest and Recovery of Debts

Laws & Misc. Provisions

(Amendment) Act, 2016 which

now provides that no Asset

Reconstruction Company (“the

ARC”) shall commence or carry

on the business of securitisation

or asset reconstruction without

having Net Owned Fund

(“NOF”) of not less than Rupees

two crore or such other higher

amount as the Reserve Bank

may, by notification, specify.

Section 3 (3) (f) of the SARFESI

lays down one of the conditions

for registration of a securitisation

company or reconstruction

company to commence or

carry on the business of

securitisation or asset

reconstruction which provides

that a sponsor, is not a holding

company of the securitisation

company or reconstruction

company, as the case may be,

or, does not otherwise hold any

controlling interest in such

securitisation company or

reconstruction company. The

said condition has been

amended which now provides

that a sponsor of an asset

reconstruction company is a fit

and proper person in

accordance with the criteria

specified by the Reserve Bank

for such persons.

Section 3 (6) provides that every


reconstruction company, shall

obtain prior approval of the

Reserve Bank for any substantial

change in its management or

change of location of its

registered office or change in its

name. This clause has been

amended to widen the scope

which now provides that every


reconstruction company, shall

obtain prior approval of the

Reserve Bank for any substantial

change in its management

including appointment of any

director on the board of

directors of the asset

reconstruction company or

managing director or chief

executive officer thereof or


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change of location of its

registered office or change in its

name.

GUIDELINES ON COMPLIANCE WITH

ACCOUNTING STANDARD (AS) 11

[THE EFFECTS OF CHANGES IN

FOREIGN EXCHANGE RATES] BY

BANKS

[Notification Dated April 18, 2017]

Vide Notification No. RBI/2016-17/281

dated April 18, 2017 certain

clarifications have been made in

regards to the calculation for Foreign

Currency Translation Reserve (FCTR). It

has been observed that banks have

been recognizing gains in profit & loss

account from Foreign Currency

Translation Reserve (FCTR) on

repatriation of accumulated profits /

retained earnings from overseas

branch (es) by treating the same as

partial disposal under AS 11.

The matter has been examined taking

into consideration inter alia, the views

of the Institute of Chartered

Accountants of India. It is clarified that

the repatriation of accumulated profits

shall not be considered as disposal or

partial disposal of interest in non-

integral foreign operations as per AS

11 The Effects of Changes in Foreign

Exchange Rates. Accordingly, banks

shall not recognize in the profit and

loss account the proportionate

exchange gains or losses held in the

foreign currency translation reserve on

repatriation of profits from overseas

operations.

LABOUR LAWS

INTEREST RATE ON THE EMPLOYEES

PROVIDENT FUND DEPOSIT

[Letter dated April 27, 2017]

Vide Letter dated April 27, 2017, issued

by the Employees Provident Fund

Organization (EPFO) the Government

has approved a reduced interest rate

of 8.65% on Employee Provident Fund

deposits for 2016 – 17 from the current

rate at 8.8%. The Employees Provident

Fund Organization has issued

instructions to credit interest of 8.65%

into the accounts of its subscribers.

WITHDRAWAL FROM EMPLOYEES

PROVIDENT FUND FOR MEDICAL

PURPOSES

[Notification dated April 25, 2017]

Vide Notification No. G.S.R.404(E)

dated April 25th, 2017 withdrawal from

Employees Provident Fund for medical

purposes has been made easier. A

EPFO subscriber no longer needs to

submit any certificates or documents

and instead can seek withdrawal by

just using a composite form along with

a self- declaration. This submission of a

composite claim form signed by the

EPF subscriber will be construed as self

– certification for partial withdrawals

according to EPFO.

GUJARAT SHOPS AND

ESTABLISHMENT ACT, 1948

Vide Notification No.

GHR/2017/51/GSE/19/2016/324393/M.3

the Government of Gujarat amended

the Schedule II of the Gujarat Shops

and Establishment Act, 1948 (“Act”) for

the purpose of giving exemptions to all

shops registered under the Act

covered under section 10 (opening


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hours of shop), 11 (closing hours of

shop), 18 (Holidays in a week in shops

and commercial establishment) & 33

(opening and closing hours for young

person and women), for a period of 2

(two) years from the date of

notification. After entry 200, the

following entry no. 201 has been

inserted which provides:

1. Every employee shall be given

one day holiday in a week

without making any deductions

from his/her wages on account

thereof and list of the time –

table of such holidays for a

month shall be placed on the

notice board in advance.

2. Employer, employing twenty or

more employees, shall pay the

wages only through cheque or

by depositing the same in bank.

3. No employee shall be required

to work for more than 9 hours in

a day or 48 hours in a week.

Beyond 9 hours in a day or 48

hours in a week work shall be

considered overtime work and

employee shall be entitled to

overtime wages.

4. The shop shall not remain open

after 11:00 P.M. any day

5. Unless obtaining prior written

consent and providing

transportation facility from

shop/ establishment to the

doorstep of their residence,

female employees shall not be

subjected to work after 7:00

P.M. Female employees shall

not be made to work after 9:00

P.M.

6. Employee’s contribution

towards EPF and ESI scheme

shall be deducted from his

wages as per the provisions of

EPF or ESIC act.

7. Employee’s shall be given

National and festival holidays

with wages.

8. In case of violation of any

provision of the Gujarat Shops

and Establishment Act – 1948,

exemption shall be cancelled

after giving notice to the

shop/establishment.

SECURITIES EXCHANGE

BOARD OF INDIA (SEBI)

LAWS

INTERNATIONAL FINANCIAL

SERVICES CENTERS BANKING UNITS

(IBUS) ACTING AS TRADING MEMBER

OR PROFESSIONAL CLEARING

MEMBER ON STOCK

EXCHANGES/CLEARING

CORPORATIONS IN IFSC



SEBI/HO/MRD/DSA/CIR/P/2017/34

dated April 27, 2017, clarifications

have been made under SEBI

(International Financial Services

Centers) Guidelines, 2015

(“Guidelines”). Clause 8 of the

Guidelines provides that any

recognized entity or entities desirous of

operating in IFSC as an intermediary,

may form a company to provide such

financial services relating to securities

market, as permitted by the Board it is

clarified that an IFSC Banking Unit (IBU)

set up in IFSC shall be permitted to act

as a Trading Member of an exchange

or a Professional Clearing Member of

a clearing corporation in IFSC,


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without forming a separate company,

subject to the conditions stated by RBI

from time to time.

INCLUSION OF “DERVIATIVES ON

EQUITY SHARES”- IFSC



SEBI/HO/MRD/DRMNP/CIR/P/2017/31,

dated April 13, 2017, Securities and

Exchange Board of India (International

Financial Services Centers) Guidelines,

2015 (Guidelines) has been amended.

Clause 7 of the Guidelines specifies

the types of securities in which dealing

may be permitted by stock exchange

operating in IFSC. Based on the

recommendations of the Risk

Management Review Committee of

SEBI, the said clause has been

amended to include “Derivatives on

equity shares” of a company

incorporated in India as permissible

security subject to the prior approval

of SEBI.

MISCELLANEOUS

REVISION IN SERVICE CHARGES WITH

EFFECT FROM 1/4/2017

The State Bank of India, will now start

charging penalty on non-

maintenance of minimum balance in

accounts. The minimum balance for

metro cities is Rs 5,000. Minimum

balance in urban, semi-urban and

rural areas will be Rs 3,000, Rs 2,000

and Rs 1,000, respectively.

Savings account holders are allowed

to deposit cash in their accounts three

times a month free of charge and a

charge of Rs 50 plus service charge

would be levied on every transaction

beyond that.

Withdrawal of cash from ATMs will

attract a charge of up to Rs 20 if the

number of transactions exceeds three

from different bank's ATM in a month

and Rs 10 for more than five

withdrawals from SBI ATMs.

However, SBI will not levy any charge

on withdrawals from its own ATMs if the

balance exceeds Rs 25,000. In case of

other banks' ATM there will be no

charge if the balance exceeds Rs 1

lakh.

CASE LAWS

KEY MATTER ADJUDICATED BY THE

HON’BLE SUPREME COURT

The Supreme Court upheld the death

penalty for the Nirbhaya convicts.

MUKESH & OTHERS vs STATE FOR NCT OF

DELHI & OTHERS

Hon’ble Judges: Justices Dipak Misra, R

Banumathi and Ashok Bhushan

Decided on May 5, 2017

This appeal is directed against the

judgement of the Delhi High Court

where the death penalty for the

Respondent had been confirmed by

the Court. The Respondent were

accused under the provisions Section

365/376(2)(g)/377/307/395/397/302/39

6/412/201/120/ 34 IPC.


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Brief Facts:

Four adult men including Respondent

and a juvenile lured a 23-year-old

trainee physiotherapist and her male

friend onto a bus in Delhi, where they

repeatedly raped the woman and

beat both with a metal bar before

dumping them. Both were taken to a

nearby hospital where, on the basis of

the statement of the victim, the Delhi

Police immediately started

investigation. All of them were caught

soon. The Delhi Police subsequently

filed a charge-sheet on January 3rd,

2013 and the case was committed to

the Sessions Court. The Trial Court

judge, after going through the

statements of over 84 witnesses,

imposed death penalty upon the

Accused while also recommending

due compensation to be given to the

victim’s family. The High Court of Delhi

also confirmed the conviction of the

accused and sentenced four adults to

death and the fifth, who was a juvenile

was sent to a reformation home. One

of the accused committed suicide

during the trial. On August 31, 2013,

the juvenile was convicted and

sentenced to three years in a

reformation home. He was released in

December 2015. Another appeal was

now filed before the Apex Court

against the Death Penalty.

Issue:

Whether the Delhi High Court was

justified in granting death penalty to

the Accused.

Observations of the Court:

The incident of gang-rape on the night

of 16.12.2012 in the capital sparked

public protest not only in Delhi but

nation-wide. We live in a civilized

society where law and order is

supreme and the citizens enjoy

inviolable fundamental human rights.

But when the incident of gang-rape

like the present one surfaces, it causes

ripples in the conscience of society

and serious doubts are raised as to

whether we really live in a civilized

society and whether both men and

women feel the same sense of liberty

and freedom which they should have

felt in the ordinary course of a civilized

society, driven by rule of law. Certainly,

whenever such grave violations of

human dignity come to fore, an

unknown sense of insecurity and

helplessness grabs the entire society,

women in particular, and the only

succor people look for, is the State to

take command of the situation and

remedy it effectively.

Despite the progress made by women

in education and in various fields and

changes brought in ideas of women’s

rights, respect for women is on the

decline and crimes against women

are on the increase. Offences against

women are not a women’s issue alone

but, human rights issue. Increased rate

of crime against women is an area of

concern for the law-makers and it

points out an emergent need to study

in depth the root of the problem and

remedy the same through a strict law

and order regime. There are a number

of legislations and numerous penal

provisions to punish the offenders of

violence against women. However, it

becomes important to ensure that

gender justice does not remain only on

paper.


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We have a responsibility to set good

values and guidance for posterity. In

the words of great scholar, Swami

Vivekananda, “the best thermometer

to the progress of a nation is its

treatment of its women.” Crime

against women not only affects

women’s self esteem and dignity but

also degrades the pace of societal

development. I hope that this

gruesome incident in the capital and

death of this young woman will be an

eye-opener for a mass movement “to

end violence against women” and

“respect for women and her dignity”

and sensitizing public at large on

gender justice. Every individual,

irrespective of his/her gender must be

willing to assume the responsibility in

fight for gender justice and also

awaken public opinion on gender

justice. Public at large, in particular

men, are to be sensitized on gender

justice. The battle for gender justice

can be won only with strict

implementation of legislative

provisions, sensitization of public,

taking other pro-active steps at all

levels for combating violence against

women and ensuring widespread

attitudinal changes and

comprehensive change in the existing

mind set. We hope that this incident

will pave the way for the same.

Held:

The present case clearly comes within

the category of ‘rarest of rare case’

where the question of any other

punishment is ‘unquestionably

foreclosed’. If at all there is a case

warranting award of death sentence, it

is the present case. If the dreadfulness

displayed by the accused in

committing the gang-rape, unnatural

sex, insertion of iron rod in the private

parts of the victim does not fall in the

‘rarest of rare category’, then one

may wonder what else would fall in

that category. On these reasoning

recorded by the Apex Court, the

Hon’ble bench concured with the

majority in affirming the death

sentence awarded to the accused

persons.

KEY MATTER ADJUDICATED BY THE

HON’BLE HIGH COURT

The Delhi High Court held that merely

because the proprietor of trade mark

have not felt the need to take action

against someone for using his trade

name, as according to him, such use does

not affect his business.

SUNIL MITTAL VS DARZI ON CALL

Hon’ble Judge: Justices Rajiv Sahai

Endlaw

Decided on April 19, 2017

Brief Facts:

Sunil Mittal and Darzi (India) LLP, the

plaintiffs, who provide the services of

tailoring and draping as well as

relating to the trade and business of

selling and marketing of all kinds of

clothing and wearing apparels, textile

clothes, readymade garments,

claiming to be registered proprietor of

the label mark ‘DARZI’, had sought for

injunction restraining the defendant

from using the word ‘DARZI’ or any

other word, mark, label identical with

or deceptively similar to the word /

mark ‘DARZI’.

Observations of the Court:


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It was observed by the Hon’ble Court

that it is not expected of a proprietor

of a trademark to, instead of carrying

on business under the trademark,

make litigation a business by

continuously being on the prowl for

every use of that trademark,

howsoever, insignificant and

inconsequential may be, and to take

legal proceedings to prevent such use.

A proprietor of a trademark is not

expected to take legal proceedings if

it remains unaffected by use of the

same trademark by others.

Held:

Allowing the applications filed by

plaintiffs, the Hon’ble Delhi High Court

said the plaintiffs have a prima facie

case and balance of convenience in

their favour. A customer of a tailor,

once lost, is unlikely to come back,

said the Court holding that plaintiff will

suffer irreparable injury from continued

use by the defendant of the mark. The

plaintiff under order XXXIX Rule 1 & 2

succeeds.


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Contact us:

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Tel.: +91 11 4980 0000 Dir.: +91 11 4980 0011 Fax: +91 11 4980 0029

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SPN LEGAL Missivespnlegal.com/Missive/Missive_April_2017.pdf · 2017. 5. 22. · operating in IFSC....

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