LEGAL NEWS 24.11.2008

Madras HC: Only HC can decide on recruitment ban
http://www.indlawnews.com/Newsdisplay.aspx?c3682ec8-8e0c-4a26-93e4-2785c1052875
11/23/2008
Madras High Court, which is vested with the control of the subordinate judiciary, can alone decide whether there should be a ban on recruitment or more employees needed for proper functioning of subordinate courts.Setting aside an order of the Principal District Judge (PDJ), Villupuram, cancelling an appointment on compassionate basis on the ground that the government had rejected the high court’s proposal for regularising the person’s services, a Division Bench comprising Justices S J Mukhopadhaya and V Dhanapalan, said from a constitutional mandate and a Supreme Court decision, it was evident that the high court could only suggest the number of employees required for proper functioning of the subordinate judiciary. For the court’s proper functioning not only judicial officers and court rooms but also appropriate number of employees were required, the judges said.A Syed Hassan filed a writ petition stating that he was appointed as Junior Assistant by the PDJ in the Principal Sub-Court, Tindivanam, on compassionate grounds. He joined duty in March 2002.In August this year, the PDJ cancelled his appointment stating that the government had rejected the proposal for regularising his services.As per a Government Order(GO) of November 2001, there was a ban on appointment on compassionate grounds in all departments, including High Court. Hence, the appointment of the petitioner was irregular.In his counter, the PDJ said the GO initially did not speak about appointment on compassionate grounds. The letter clarifying that the ban was applicable for appointment on compassionate grounds also was received by him only in April 2002, after the appointment order had been issued.The government submitted that the ban was based on its policy and any executive order issued by it had statutory force. By a GO of February 2006, the ban order for filling vacant posts was lifted.Accordingly, the government prayed for the dismissal of the petition with liberty to the petitioner to submit a fresh application for appointment on compassionate grounds.In its verdict setting aside the PDJ’s order and directing the government to reinstate the petitioner in service with all back wages and consequential benefits, the Bench said the principles laid down in various court decisions made it clear that the executive and judiciary were independent of their control and coordination. They should be independent of their functions. Any amount of deviation in their control would cause certain hardship to each other. This could be avoided while issuing an executive order, unless it was provided in the rules framed under Article 309 of the Constitution.‘There cannot be any executive order and instructions to impose conditions regarding judicial appointments, particularly in the subordinate courts, which were the pillars of the entire judicial system,’ the bench said.UNI



SC declines to hear urgently on elevation of 3 HC Chief Justices
http://www.indlawnews.com/newsdisplay.aspx?185800ab-a05e-4b83-aec7-0a027510ba1c
11/24/2008
The Supreme Court has declined to give urgent hearing to the government for immediately clearing recommendations of the Supreme Court collegium for elevation of three High Court Chief Justices as Supreme Court judges.A bench, comprising the Chief Justice K G Balakrishnan and Justice P Sathasivam, refused to hear urgently a PIL filed by an advocate R K Kapoor, requesting the apex court to let the petition come up for hearing in normal course. There has been open confrontation between the judiciary and the government on the recommendations of the Supreme Court collegium as three senior most Chief Justices of various High Courts A P Shah, V K Gupta and Patnaik were ignored.The collegium had recommended the names of Justices A K Ganguly, R M Lodha and H L Dattu.



Law Commission of India submits its 214th report
http://www.indlawnews.com/NewsDisplay.aspx?CE45BF57-04CE-4A33-919C-70CEAF461F53
11/24/2008
The Law Commission of India submitted to the Government of India, its 214th Report on ‘Proposal for Reconsideration of Judges cases I, II and III – S.P. Gupta Vs UOI reported in AIR 1982 SC 149, Supreme Court Advocates on Record Association Vs UOI reported in 199(4) SCC 441 and Special Reference 1 of 1998 reported in 1998 (7) SCC 739’. The Hon’ble Chairman of the Commission, Dr. Justice AR. Lakshmanan, former Supreme Court Judge, forwarded the said Report to the Hon’ble Union Law Minister, Dr. Hans Raj Bhardwaj, today (21st November, 2008) in his Office/ at his residence.The subject of appointment of Judges of the Supreme Court and of the High Courts is contained in Articles 124 and 217 of the Constitution of India. According to Article 124, every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Courts in the States as the President may deem necessary for this purpose. In case of appointment of a Judge other than the Chief Justice, the Chief Justice of India shall always be consulted. Article 217 provides that every Judge of a High Court shall be appointed by the President by warrant under his hand and seal after consultation with the Chief Justice of India, the Governor of the State, and, in the case of appointment of a Judge other than the Chief Justice, the Chief Justice of the High Court.After the judgement in the case of Supreme Court Advocates on Record Association v UOI (1993), the Collegium system came into being in 1993. A nine-judge Bench of the Supreme Court in Supreme Court Advocates on Record Association case by majority overruled S.P. Gupta’s case which had eroded the primacy of Chief Justice of India in the appointment of Supreme Court and High Court Judges. Further, in Special Reference 1 of 1998, the Supreme Court not only strongly reinforced the concept of ‘primacy’ of the Chief Justice of India’s opinion but also increased the number of judges the Chief Justice of India must consult before providing his opinion, and laid down a detailed set of guidelines on the procedure to be followed in arriving at the Chief Justice of India, opinion to which ‘primacy’ was attached. The said procedure in effect transferred the ‘primacy’ from the Chief Justice of India to the group of Judges to be consulted. Since then controversy against the said collegium system is going on. In view of the above, the Law Commission had, suo motu, undertaken the study on the subject. The Commission examined the law on the subject, various recommendations of Parliament Standing Committees and law of foreign jurisdiction like America, Australia, Canada and Kenya where the executive is the sole authority to appoint the Judges or the executive appoints in consultation with the Chief Justice of the Country. The Commission observed that the Judges constituting the collegium are not conversant with the names and antecedents of the candidates and more often than not, appointments suffer from lack of adequate information. The Commission has recommended two alternatives. One is to seek a reconsideration of the three judgements aforesaid before the Hon’ble Supreme Court. Otherwise, a law may be passed restoring the primacy of the Chief Justice of India and the power of the executive to make the appointments.PIB




Madras HC: Publication of undelivered Judgment in journal rocks
http://www.indlawnews.com/NewsDisplay.aspx?AB13111B-1E47-45CD-B2A0-5961189C4587
11/23/2008
The publication of an undelivered judgment relating to a dispute among the Tamil Nadu Chief Minister’s family members, rocked the Madras High Court.The publication of a complete judgment, which was never pronounced in the first place has triggered alarm bells in the High Court. A shocked higher judiciary has asked a senior judge to probe the whole issue.Tamil Nadu Law Notes Journal, which is regularly publishing pronounced judgments, published a judgment of Justice M Jeyapaul in its issue dated November 10.The judge and senior counsels involved in the case were stunned to see the judgment in print, as the court had not passed any such order. In fact, the judge had permitted further arguments in the matter. Worse, the same case is being argued before another judge now.The case pertains to an ongoing cable war between the Sun TV Network Limited and the Royal Cable Vision (RCV), owned by the family of Chief Minister M Karunanidhi’s son M K Alaghiri and Maran brothers.Justice Jeyapaul, who had reserved orders on the matter, came to court with his order in a sealed cover on September 30. However, when an advocate wanted to make further arguments in the case, the judge gave permission and did not deliver the judgment. But, this undelivered judgment found its way to the law journal and was published.The possibilities range from an innocuous clerical or technical mistakes to a larger conspiracy, where one of the litigating parties had not only sneaked out an unauthorised copy of the order but also managed to get it published in the law journal, all with a motive.Some judges in the high court dictate their order using digital voice recorders, enabling their stenographers to type the orders later. ‘This is risky,’ a senior advocate said.UNI



Garware unit theft: HC appoints valuer to assess losses
http://timesofindia.indiatimes.com/Pune/Garware_unit_theft_HC_appoints_valuer_to_assess_losses/articleshow/3748642.cms
24 Nov 2008, 0251 hrs IST, TNN
PUNE: The Bombay high court has appointed a valuer and directed him to file a report on the losses incurred due to a theft at Garware Nylons Ltd's unit in Ahmednagar on or before December 16. In the state, Garware Nylons has three units at Pimpri, Ahmednagar and Charhola. The company closed down in 1996, rendering 1,200 workers jobless. Some of the workers under the guidance of Common People's Front (CPF) bid for the Ahmednagar unit's land and won by quoting the highest bid of Rs 6.01 crore. The amount has been deposited with the high court. About 210 workers had filed a complaint with the MIDC police about the theft at the Ahmednagar unit and demanded a compensation of Rs 1 crore. But the official liquidator conveyed to the high court that there was no theft and alleged that the workers had damaged the property as they were unable to pay the bid amount. A statement released by Garware Nylon worker Baburao Kisan Aher said that the high court has appointed valuer A.B. Gaikwad to assess the damage suffered due to the theft. The high court has directed him to give prior intimation to the official liquidator before starting his survey. He has also been directed to decide the value of the stolen items and prepare a report of total loss suffered. The court has directed the liquidator to deposit the amount paid by the workers in appropriate fixed deposits of the bank and disburse the compensation after the report is submitted and the compensation amount is decided.



'UPA slapping MCOCA based on faith of accused'
http://timesofindia.indiatimes.com/India/UPA_slapping_MCOCA_based_on_faith_of_accused_/articleshow/3748552.cms
24 Nov 2008, 0319 hrs IST, TNN
NEW DELHI: With terror, state of the economy and Hindutva being the main election planks for Opposition BJP in the ongoing series of assembly polls, the party on Sunday kept up its attack on the Congress-led UPA on these raging issues. Attacking the Centre over invoking MCOCA against Malegaon blast accused, BJP alleged that the UPA government was discriminating on religious lines in using the stringent anti-terror law. "BJP would like to ask the government about the progress made in the September serial blasts in Delhi, which led to the Batla House encounter. Why is the government keeping silent on the issue. And why has MCOCA, which was made applicable to Delhi in 2002, not been imposed on the blast accused," senior BJP leader Arun Jaitley asked while addressing reporters here. Alluding to slapping of charges under MCOCA on Malegaon blast accused Sadhvi Pragya Singh, Lt Col Shrikant Purohit and others, Jaitley said this proved that MCOCA was being used after ascertaining the religion of the accused. "It seems imposition of MCOCA does not depend on the nature of the case but on the religion of the accused," he said. The BJP leader claimed there were several examples in which MCOCA had been used by Delhi Police in less heinous crimes. "What were the reasons that the government prevented Delhi Police from using MCOCA against the serial blasts accused," Jaitley asked. On the economic crisis, Jaitley said recession had reached the country's doorsteps and accused UPA of not taking sufficient measures to prevent its effects. "As far as the country's economy is concerned, recession is at our doorsteps. The government has not reacted to the situation and has failed in taking adequate measures to counter its effects," Jaitely said. Recalling steps taken by the A B Vajpayee regime when faced with a similar liquidity crunch in 2003, he said the government had then "initiated many programmes including the Pradhan Manti Gram Sadak Yojana and National Highways Project which injected liquidity into the market and helped the economy recover". "The priority should have been to pump more money into the market. It is sad that Prime Minister Manmohan Singh, though an economist, has failed to understand the situation," Jaitley said.



Sister Abhaya case: CBI searches Archbishop's house
http://timesofindia.indiatimes.com/India/Sister_Abhaya_case_CBI_searches_Archbishops_house/articleshow/3748266.cms
23 Nov 2008, 1955 hrs IST, TNN
THIRUVANANTHAPURAM: Continuing its investigations into the Sister Abhaya murder case, the CBI on Sunday searched an Archbishop's house in Kottayam district and questioned more witnesses. A special CBI team searched the official residence of the Archbishop of the Knanaya Catholic sect and seized some papers from the room of the prime accused, Father Thomas M Kottur, who is also the Chancellor of the Kottayam diocese. Despite the arrest of three accused -- two priests and a nun -- the agency is grappling with shortage of evidence. Much of the evidence collected during the initial years like the nun's veil, clothes, slippers, diary and photographs of the body showing injury marks were hastily destroyed by the local police, which had ruled it as a case of suicide. The agency believes this was part of a conspiracy to seal the case for ever. The team also questioned Achamma, the servant of the St Pious X convent hostel where sister Abhaya was allegedly killed and former assistant sub-inspector V V Augustine who was present when her body was brought up from the convent well. Sleuths had noted incongruities in Augustine's statements on the recovery of the body. The agency is also likely to question retired IPS officer K T Micheal, who headed the crime branch team that probed the case following initial investigations by the local police. Forced on the back foot after allegations that it had tried to influence the probe, the Church on Sunday said it was the first to demand a probe into the murder. A pastoral letter read in Knanaya churches after the Sunday mass urged the laity to treat those arrested as innocent unless proved otherwise.






CBI to reopen investigations into Nanded blasts
http://timesofindia.indiatimes.com/India/CBI_to_reopen_investigations_into_Nanded_blasts/articleshow/3748192.cms
23 Nov 2008, 1919 hrs IST, PTI
MUMBAI: With fresh leads emerging out of Malegaon blast case, the CBI may soon reopen investigations into the 2006 Nanded blast, which is being seen as a main indicator of saffron group emerging as a major terror network. While officially the CBI had adopted a taciturn policy on the issue, sources in the agency said it would reopen the case as some leads had emerged during the investigations into the September 29 Malegaon blast in which 11 people, including Lt Col Shrikant Purohit, have been arrested. CBI's role had come into question from the probe conducted by central security agencies and Maharashtra's ATS, the agency appeared to have not taken due cognisance of deposition of one of the accused arrested in the case. The accused, whose voice had to be restored after operating his vocal chord which was damaged in the blast, had told investigators that Naresh Rajkondwar, a Bajrang Dal activist, had allegedly planned three blasts outside mosques that shook Jalna and Parbani in Maharashtra in 2003 and 2004. Several rounds of meetings took place between the CBI officials and central security agencies where sleuths probing the Malegaon blasts pointed out some of the alleged loopholes in the investigations carried out by the CBI. The Nanded bomb blast took place in the intervening night of April 4 and 5, 2006 at the residence of Laxman Rajkondwar, allegedly a RSS worker. Rajkondwar's son Naresh and Himanshu Panse, who was VHP activist, were killed while assembling the bomb. CBI had chargesheeted ten people in the case. But sources said it has not been able to trace back the leads provided by some of the accused who claimed to have admitted, before investigators, their role in the earlier blasts. Recoveries made from Rajkondwar's house included Muslim skull caps, fake beards and a plan showing that the target was to hit a mosque at Aurangabad, nearly 200 km from Nanded. The CBI would now be focussing more on recovery of over a ton of explosives used in manufacturing of fire crackers and its links with the previous blasts. Sources said that one of the accused had told the investigators that he was sent to Pune by Naresh on his train ticket on the day when crude explosive material was thrown outside a mosque in Jalna in 2004, a move aimed at creating an alibi for Naresh and to show that he was not in town when the blast took place. The CBI was also asked by central security agencies as to why the call details of Naresh were not investigated properly, the sources said and claimed that one such call had been traced to an important functionary of a saffron outfit in Ayodhya. The CBI would also try and probe the links of 10 arrests in the Malegaon blast case including Lt Colonel Srikant Purohit, with the Nanded case. The agency had investigated the Nanded blast and filed a chargesheet on March 15, 2008 against 10 people which included Sanjay Chowdhury, Yogesh Deshpande, Maruti Wagah, Gunniraj Thakur and Mahesh Pandey, allegedly associated with Bajrang Dal besides the two who were killed.



Haryana SHO abuses woman MP, takes away her car key
http://timesofindia.indiatimes.com/India/Haryana_SHO_abuses_woman_MP_takes_away_her_car_key/articleshow/3746288.cms
23 Nov 2008, 0335 hrs IST, Ajay Sura , TNN
CHANDIGARH: Giving another crude display of highhandedness from an already notorious Haryana police, an SHO from Panchkula not only hurled the choicest abuses at a sitting Lok Sabha MP when her car hit his, but also snatched away her vehicle key and left her stranded and almost on the verge of tears in the middle of the busy Haryana-Delhi highway. "It was the most horrifying experience of my life," Paramjit Kaur Gulshan, the Akali MP from Bathinda, told TOI on Saturday. "If a policeman behaves this way with a lady MP, knowing fully well that she is member of Parliament, I can well imagine the state of affairs in our police force." Still simmering after the Thursday incident, she said she will make it a point to place the matter before the privilege committee of Parliament and would apprise the Speaker about it. Sources said SHO Baljeet Singh, now suspended, accosted Paramjit Kaur when the car she was travelling in, an official vehicle at that, brushed against his jeep somewhere in Karnal. It happened, she says, after the vehicle in front of her braked suddenly and triggered a small mishap that saw no one injured. According to eye witnesses-accounts, an angry Baljeet came out of his personal car and started abusing her not minding the red beacon atop her vehicle and the MP's sticker.




Put On Notice
http://timesofindia.indiatimes.com/Editorial/EDIT_Put_On_Notice/articleshow/3747840.cms
24 Nov 2008, 0029 hrs IST
It was a case of justice delayed but not denied. The Delhi high court has asked the legal heirs of a man, who refused to vacate his official accommodation for over two decades, to pay a fine of Rs 15 lakh. The court imposed the penalty after calculating 24 years of rent plus litigation costs.
The court was also critical of the tendency of litigants to keep filing appeals or revision petitions, saying that a case that dragged on for 20 or 30 years would make the "wrongdoer the real gainer". In another ruling, the Delhi high court has reaffirmed a landlord's right to his property, saying a tenant "cannot dictate terms". The high court judgments are a welcome shift towards recognising the rights of landlords after years of pro-tenant rulings. During the past few decades, the courts have usually made it difficult for landlords to evict tenants from non-residential or commercial properties. But this has been gradually changing.
This year, the Supreme Court passed at least three rulings where landlords were allowed to reclaim properties rented out to offices or shops. This has had the effect of partially striking down the provision of the Delhi Rent Control Act, 1958 which discriminates against landlords of commercial premises. The Delhi Rent Control Act, which is tilted in favour of tenants, is a good example of how laws discriminate against property owners. There are similar Acts in other parts of the country. Though a new rent Act was passed in Delhi in 1995, it hasn't been notified because of stiff opposition from traders and tenants, several of whom have been paying a pittance as rent.
In most cities, particularly Mumbai and Delhi, there is an acute shortage of office and commercial space. This has led to skyrocketing rents and property prices. One of the reasons for this is the refusal of long-time tenants to vacate prime property in the heart of metro cities.
This has also meant that these properties, some of them going back to colonial times, have gone to seed with landlords having little interest in investing in upkeep and maintenance. Then there is the bizarre, but all too common, phenomenon of landlords paying tenants to vacate properties. The recent court rulings will go some way in correcting the aberration caused by properties being kept out of the market. They will also ensure the sanctity of private property, which is essential for a democracy. Though tenants might feel hard done by, they must realise they have to pay market rates. In the end this will increase the amount of housing available on the market and thus benefit tenants as well.



HC raps CBI, expresses dissatisfaction
http://keralaonline.com/news/hc-raps-cbi-expresses-dissatisfaction_10404.html
Kochi, Monday, November 24, 2008: The Kerala High Court today observed that the CBI did not comply with legal formalities while filing remand report of the two priests and a nun arrested in the 16-year-old Sister Abhaya murder case saying “the rights of the accused should be protected”. “On going through the order of the Chief Judicial Magistrate it appears that the CBI did not produce the extract of case diaries along with remand report,” Justice R Basant said when a petition by Father Jose Puthrukayil, one of the accused in the case, seeking to quash the order of 14-day CBI custody came up before him. The court said the rights of the accused should be protected and observed that the effective investigation in the case was prompted by judiciary. “CBI has no license to conduct investigation as they please,” the court held. Justice Basant said the investigating agency should have “applied its mind” before submitting its remand report.
The Court directed that the CBI should produce evidences in a sealed envelope to Magistrate Court on 26th. The Court added that, the CBI should move a detail affidavit in Court later. Meanwhile, in the affidavit moved by CBI, it claimed that the accused have been arrested based on strong evidences. The circumstantial evidences and statements given by the witness prove the involvement of those accused in the case and justified the need for CBI custody of the accused. The court directed CBI to give their explanation regarding the queries raised by the court on non-compliance of legal provisions in submitting the remand report.




Controversy over Justice R.M. Lodha's Appointment as Supreme Court Judge
http://biharwatch.blogspot.com/2008/11/controversy-over-justice-rm-lodhas.html
Sunday, November 23, 2008
Patna High Court Chief Justice R.M. Lodha's Appointment to the Supreme Court is being contested by the Union Law Ministry Union Government's decision to suggest a rethink on the move by Chief Justice of India (CJI)to propose the names of A K Ganguly, Chief Justice of Madras High Court, R M Lodha, Chief Justice of Patna High Court, and H L Dattu, Chief Justice of Kerala High Court, for elevation to the apex court has created a stalemate.An advocate has moved the Supreme Court for a declaration that the President is bound to issue warrants of appointments to the three judges, recommended by the collegium headed by Chief Justice of India (CJI) K.G. Balakrishnan.In his writ petition, R. K. Kapoor said that as per the various apex court judgments the recommendations of the judiciary on appointment of judges were binding on the executive. If the executive sat on the matter or delayed the appointment, the apex court could issue appropriate directions for performance of those functions in the public interest.“If there is a deadlock between the judiciary and the executive on the issue of appointment of judges to the apex court, as a result of which the vacancies continue [and] arrears of cases go on piling up, the deadlock has to be broken by the judiciary itself by issuing appropriate directions.”ControversyThe petitioner said he was concerned at the controversy over the elevation of the Chief Justices of the Kerala, Madras and Patna High Courts, H.L. Dattu, A K Ganguli and R.M. Lodha, to the Supreme Court, with the government sending back the files to the CJI and the collegium reiterating its earlier recommendations.The petitioner cited the apex court ruling in the SC Advocates on Record Association vs. UOI case, in which a nine-member Constitution Bench accorded primacy to the collegium in judicial appointments saying “The opinion of the CJI, forwarded in the manner prescribed, shall be primal. No appointment can be made by the President under Articles 124(2) and 217(1) unless it is in conformity with the opinion of the CJI.”On the government claim that seniority of some High Court Chief Justices was overlooked, the petitioner quoted the Constitution Bench’s observation: “The appointment to the Supreme Court shall be by ‘selection on merit.’ Inter se seniority amongst judges in their respective High Courts has to be kept in view while considering the judges for elevation to the Supreme Court.”Kapoor said: “In view of the several judicial pronouncements, the Centre cannot withhold the files containing the collegium’s proposal on elevation of the three High Court Chief Justices.” Justice Lodha had assumed office of Chief Justice, Patna High Court on 13th of May 2008.The Supreme Court on November 21 declined to give an urgent hearing to a petition seeking direction to the government to go by the advice of a panel headed by the CJI on the issue of appointment of apex court judges. When the petition was mentioned, a Bench headed by Chief Justice K G Balakrishnan, showed its disinterest in hearing the matter on an urgent basis. The Bench also questioned the advocate for his submission that the government was sitting on the file cleared by the collegium, a panel of five judges, for the elevation of three Chief Justices of High Courts to the apex court."Who is sitting over the file," the Bench wanted to know from the advocate who filed the petition.Realising that the court was not inclined to hear the matter, advocate R K Kapoor who has filed the petition said he will wait for the matter to be heard in the routine course on January 5, 2009.The petition filed by the advocate has contended that the President was bound to go by the advice of the CJI-headed collegium on appointment of apex court judges. Quoting the Constitution and judicial pronouncements, the advocate has maintained that the Supreme Court's collegium, a panel of judges headed by the CJI, has the final say on elevation of High Court chief justices' elevation to the top court and not the PMO or any other executive authority.The government had sent back the file on the elevation proposal to the collegium for a rethink on the ground that three other senior HC Chief Justices — A P Shah (Delhi High Court), A K Patnaik (Madhya Pradesh) and V K Gupta (Uttarkhand) — had been overlooked in the process.
Posted by Gopal Krishna




Frivolous election petitions should be dismissed: Supreme Court http://www.zeenews.com/Nation/2008-11-23/485760news.html
New Delhi, Nov 23: The Supreme Court has held that elected candidates cannot be unseated by courts on the basis of frivolous petitions filed by defeated candidates who accuse the winner of adopting unfair electoral practices. Before unseating a candidate, the standard of proof and evidence should be sufficiently strong enough as required in criminal cases, the apex court said. "In a democratic country, the will of the people is paramount and the election of elected candidate should not be lightly interfered with.” "At the same time, it is also the bounden duty and obligation of the court to ensure that purity of election process is fully safeguarded and maintained," a bench of Justices Dalveer Bhandari and H S Bedi observed in a judgement. The apex court passed the ruling while dismissing the appeal filed by Baldev Singh Mann, a Shiromani Akali Dal candidate who lost the 2002 Assembly Election from the Dirba (Punjab) Assembly Constituency to Independent candidate Surjit Singh Dhiman. Mann challenged the election of Dhiman on the ground that the latter had indulged in corrupt practices by roping in two gazetted officials Gurbachan Singh Bacchi and B S Shergil. It was the allegation of Mann that Dhiman had solicited votes from various persons including the two officers thus influencing the other voters. However, the Punjab and Haryana High Court dismissed his petition following which he appealed in the apex court. Dismissing the appeal, the apex court said the high court had rightly observed that "Casting a vote or asking for it does not amount to obtaining any assistance. When a candidate meets a voter and asks him to vote, the voter may say 'yes' or 'no' or 'may be'. In any event such conversation between a candidate and the voter would not amount to the voter giving assistance to the candidate."The bench further said that a persistent candidate or his agent may request the voters for vote and the voter may say "yes" simply to escape the candidate's persistence. This would not amount to corrupt practice at all. There must be some positive and explicit proof on the part of voters belonging to categories mentioned, the court said. "In the impugned judgment (high court), it is aptly observed that a candidate who loses by such a slight margin finds it hard to accept defeat.” "Therefore, the candidate who has narrowly lost would ordinarily make all efforts and gather all kind of material against the elected candidate and level all kinds of allegations of corrupt practices whether substantiated or not.” In the instant case, this is what seems to have happened, the apex court said. The apex court said the law is now well-settled that charge of a corrupt practice in an election petition should be proved almost like the criminal charge. "The standard of proof is high and the burden of proof is on the election petitioner. Mere preponderance of probabilities are not enough, as may be the case in a civil dispute." Bureau Report



Hypothetical tax not an income accruing in India
http://www.business-standard.com/india/news/hypothetical-tax-notincome-accruing-in-india/00/11/341131/
BS Reporter / New Delhi November 24, 2008, 0:09 IST
In a recent judgment involving a foreign national, the Mumbai Income Tax Tribunal has held that hypothetical tax paid by an employer on behalf of the taxpayer is not an income accruing in India and can be claimed as a deduction by the employee from the gross salary.
The assessee, Roy Marshall, was an employee of British Airways. In the computation of total income in the tax return, the assessee deducted hypothetical tax withheld by his employer from gross salary. According to the contract agreement, the company had to bear additional tax burden arising out of his services in India and the assessee would bear only that part of the tax which he would have required to pay in his home country.
During the year, the assessee’s salary income was Rs 77 lakh and the company reimbursed Rs 35 lakh towards tax liability. Total income of the assessee thus became Rs 1.12 crore and with the maximum marginal rate of 44.8 per cent, the total tax liability came to Rs 50 lakh. The company had paid Rs 35 lakh, so the balance tax liability of Rs 15 lakh was borne by the assessee.
Though the taxpayer had paid his total tax dues in India, the income-tax assessing officer held that the hypothetical tax (Rs 35 lakh) should also form a part of the salary income. This became a bone of contention as the assessee may take a hit in his home country. According to the provisions of the Double Taxation Avoidance Agreement, the person may have taken a credit of Rs 15 lakh Indian taxes paid on an income of Rs 77 lakh in his home country tax return. However, if he would have to show that his salary income was Rs 1.12 crore in India, there could have been additional tax burden on him in his home country.
The tribunal relied on the judgment on a similar case of Jaydev H Raja, wherein it was held that the hypothetical tax does not form a part of the salary income taxable in India and the appellant was justified in reducing the same from his taxable salary.
It was held by the tribunal that income arising in India in the hands of the taxpayer is the actual salary plus the incremental tax liability arising on account of the Indian assignment. The amount of hypothetical tax withheld from the salary of the taxpayer is not an income accruing to him in India.
The ruling further held that as long as tax is paid on the income accruing in India, it is not relevant if the taxpayer takes credit of Indian taxes in his home country tax return.
Accordingly, the tribunal held that no deduction was actually claimed by the assessee on account of hypo tax as otherwise misconceived by the revenue authorities and deleted the addition made on this count.



Expectations from the auditor and the Companies Bill 2008
http://www.business-standard.com/india/news/expectations-fromauditorthe-companies-bill-2008/19/01/341142/
ACCOUNTANCY
Rahul Roy / New Delhi November 24, 2008, 0:13 IST
The Companies Bill 2008, now pending with Parliament has initiated certain significant steps towards accountability, transparency and rationalisation of measures relating to audit and accounts. Some significant measures have been addressed by the Companies Bill 2008. It’s heartening to see that some of these are broadly in line with similar international requirements.
The Bill has notified a list of services as prohibited services that an auditor of a company can never provide. Further, the provision of prohibited services or deficiency in conducting the audit would expose an auditor to a hefty penalty and knowing or wilful contravention can additionally attract imprisonment for one year. Such a conviction would additionally require the auditor to refund all remuneration received by him to the company and become liable to make good the loss arising out of his incorrect / misleading report to any other affected person.
I believe this clause itself in the near future would perhaps lead to a great shake up within the profession. In addition, for listed companies, a framework for internal control is required to be mandated by the board and an audit certification of such internal control is separately required. By definition, every annual financial statement must be accompanied by a report of the Committee on Directors’ Remuneration. Thus, payment to directors would come under focus.
The Bill envisages that a Chartered Accountant (CA) audit firm may also have partners, who will not themselves be CAs. This seems in line with the ICAI movement towards enabling multi-disciplinary partnerships. In a very welcome move, the government has dropped Schedule VI from the Bill and consolidation of accounts has been mandated.
These have been long awaited reform. Family-owned / closely-held businesses with complicated structuring, may find living in a regime of mandatory consolidation quite challenging. While this has been a significant initiative by the Ministry of Company Affairs, there are certain matters of detail and certain prima facie lapses in drafting of the Bill. To cite an example, contrary to international norms and existing Indian law, an auditor can now hold securities, up to prescribed levels, in the company he would audit. This appears to be a step backwards. There was a lot of disquiet on the existing law prohibiting the auditors’ indebtedness in excess of Rs 1000. Inexplicably, instead of relaxing this guideline, the threshold has been removed and any indebtedness at all has been prohibited. This would make it practically very difficult for firms to be appointed auditors of telecom, electricity and other utility companies, since normal monthly consumer bills would render an auditor ineligible. However, on a contrary note, the Bill states that an auditor can provide a guarantee or security for indebtedness of a third party and even have a business relationship with his audit clients up to prescribed limits.
The Bill requires the auditor to report whether financial statements comply with ‘auditing standards’. This is a clear error since financial statements are drawn up as per ‘accounting standards’ and have nothing to do with auditing standards. There is a responsibility cast by the Bill on the auditor to provide in his report, “any qualification or adverse remark relating to the maintenance of accounts and any other matters connected therewith”.
Now, the last bit of this clause is too openly worded specially for a situation where a wrong auditors’ report would lead to severe penal consequences. Continuing a previous drafting error, the Bill requires the auditors to report “the observations or comments of the Auditors, which have any adverse effect on the functioning of the Company”. It is extremely unlikely that observations of Auditors will have an adverse effect on the functioning of the Company! Perhaps, the intention is to report upon those observations of Auditors, which pertain to matters having adverse effect on the Company.
It is high time this particular mistake is rectified before the Bill is enacted as Law. The Bill stops short of making the bold requirement that audit reports should not be qualified and for any proposed qualification, the management should go back and recast their accounts.
There are various disclosure requirements and provisions in the Bill which makes an auditors’ task very onerous. The basic tone throughout the Bill is one of investor friendliness and protection and the Audit profession has been called upon to assume far greater responsibilities, the downside being far greater consequences for failure. It is important to iron out the obvious minor flaws so that the broader vision laid down can be realised. I do hope the profession in our country would also prove equal to the task.
The author is director, Ernst & Young India Pvt Ltd. The views expressed herein are personal and do not necessarily represent the views of Ernst & Young Global or any of its member firms



Arbitration between company and director is allowed: SC
http://www.business-standard.com/india/news/arbitration-between-companydirector-is-allowed-sc/19/01/341140/
LEGAL DIGEST
BS Reporter / New Delhi November 24, 2008, 0:17 IST
There could be arbitration of disputes between a company and its director who also functions as an employee, according to the Supreme Court. In this case, Comed Chemicals Ltd vs CN Ramchand, the director also held a British passport. Therefore, the dispute became ‘international commercial arbitration’. Comed appointed Ramchand to float a new company, Comed Biotech.
But there were lapses in his work, according to the parent company. Following disputes between it and Ramchand, the company invoked the arbitration clause. Ramchand argued that he was an employee and the relationship was that of master and servant, and therefore there was no commercial dispute involved. The Supreme Court rejected this contention and said that as he was a director involved in policy making, the contract was not merely one of employment. Consultancy agreements are commercial. He performed functions inextricably linked with services which could be undertaken by a businessman or company and it involved ‘commerce’. Therefore, the Supreme Court appointed a sole arbitrator.
SC dismisses arbitration petition of Sarku Engineering Services
In another decision by the Supreme Court last week, the Supreme Court dismissed the arbitration petition of Standard Corrosion Controls Ltd, seeking the appointment of an arbitrator in its dispute with Sarku Engineering Services of Malaysia. The parties had agreed that any dispute between them shall be settled as far as possible by mutual consultation and consent, failing which by arbitration to be held at Mumbai, applying the Arbitration Rules of the International Chamber of Commerce (ICC).
The Supreme Court stated that in view of the agreement, despite the provisions of the Arbitration and Conciliation Act, the Indian company should apply to the Secretariat of the ICC, and it could not approach the Supreme Court for appointment of an arbitrator. The arbitration will be held at Mumbai, but the entire procedure of appointment of the arbitrator has to be in accordance with the Arbitration Rules of the ICC.
New India Assurance loses appeal The Supreme Court has dismissed the appeals of New India Assurance Company and directed it to pay over Rs 1 crore for the losses suffered by Krishna Food & Baking Industry in terrorist attacks in Kashmir. Terrorists killed the son of the managing director and looted the factory leaving no choice for the firm to move from Srinagar to Delhi. However, the insurance company was willing to pay only Rs 30,000 as damages and alleged that the stocks were pilfered. When the dispute reached the National Consumer Commission, it did not believe the insurer’s story and ordered compensation. The insurance company appealed to the Supreme Court which upheld the commission’s finding and granted a higher compensation towards building, plant, machinery, electricity fittings, raw materials and stocks.
I-T department can question HC judgment years later: SC
If the income tax department fails to appeal against judgments against it by high courts on a certain legal question for several years, is it barred from raising the question later? No, said the Supreme Court in Commissioner of Income Tax vs J.K. Charitable Trust. Appeals were not filed perhaps because the amounts were small or the effect was neutral. That would not preclude the department from filing appeal in appropriate cases, the judgment said.
Rule requiring new owner of premises to clear electricity arrears valid
The Supreme Court ruled in Paschimanchal Vidyut Vitran Nigam vs DVS Steels & Alloys that a rule requiring the new owner of the premises to clear electricity arrears of the former was valid. The distribution company in this case, successor to UP Electricity Board, insisted on the company to pay the arrears of the former owner before getting the connection. The firm moved the Allahabad High Court which ruled in its favour.
The distributing company appealed to the Supreme Court. It said: “A stipulation by the distributor that the dues in regard to the electricity supplied to the premises should be cleared before supply is restored or a new connection is given to a premises, cannot be termed as unreasonable or arbitrary. In the absence of such a stipulation, an unscrupulous consumer may commit defaults with impunity.”