DELHI HC SETS ASIDE ORDER SUMMONING UNITECH OFFICERS FOR FAILING TO RE-PAY DEPOSIT OF 603 CRORE
The Delhi High court has quashed the summon issued to five officers of Unitech Ltd in connection with Unitech’s failure to re-pay deposits of Rs. 603 crore taken from 56,436 investors. The order was pronounced by a Single Judge Bench of Justice RK Gauba in a batch of pleas challenging the validity of the summoning order passed by the Additional Sessions Judge in the complaint filed by the Registrar of Companies (ROC) with respect to Unitech’s failure to pay the said deposits. As per Section 74(1) of the Companies Act 2013, Unitech was obliged to repay the said deposits within the period prescribed. The Act also provides for enlargement of time for discharge of liability to pay by making an application before National Company Law Tribunal under Section 74(2). Any default in payment of the requisite amounts within the statutorily prescribed period or within the extension allowed by the Tribunal attracts penal clause contained in Section 74(3). Upon receiving an application under Section 74(2), the Tribunal on March 11, 2016 permitted the enlargement of time for compliance with the statutory provisions by Unitech. After this, several other extensions were also awarded to the company. However, no payments were made by it. Finally, on July 4, 2016, the tribunal found no good reason to grant any further enlargement of time for compliance and dismissed Unitech’s petition for extension. It also suggested to the ROC take appropriate action against the company under Section 74(3). Subsequently, the ROC filed a criminal complaint before the Court of Sessions. After considering the facts set out in the complaint, the Additional Sessions Court took cognizance on September 20, 2016 and summoned Unitech and five of its officers as accused and answer the charge for the offence under Section 74(3). Meanwhile, Unitech also challenged the order of the Tribunal dismissing its plea for enlargement of time before the National Company Law Appellate Tribunal under Section 421 of the Companies Act, 2013. The Appellate Tribunal on September 20, 2016, while entertaining the appeal, directed that no coercive steps shall be taken against Unitech and its officers pursuant to the order the Tribunal. Later, on October 26, 2016, the Appellate Tribunal also stayed the Tribunal’s request to the ROC to take action under Section 74(3). In light of this development, Unitech and its Officers challenged the summoning order before the High Court. Before the High Court, the counsel appearing for ROC highlighted that Unitech’s appeal was ultimately dismissed in January 2017, hence, the summon order could not be challenged Unitech on the other hand maintained that since the period of compliance with the requirement of Section 74(1) stood extended till December 31, 2016 by the NCLAT, there was no occasion for invoking the penal provisions of Section 74(3). Observing that the gravamen of the charge on which the prosecution under Section 74(3) is the Company’s failure to abide by its liability under Section 74(1) or within the extended period, the Court held that the time extended by the tribunal has to be construed along with modifications ordered in appeal by the appellate tribunal. Since the order of the tribunal does not attain finality inasmuch as there is a remedy of appeal available there against, the provision contained in Section 74(2), in so far as it refers to the time allowed by the tribunal will have to be construed as the time allowed by the tribunal alongwith modification in such regard if ordered in appeal by the appellate tribunal. In the present case, since the Appellate Tribunal had entertained the appeal against the Tribunal’s order and also extended the deadline till December 31, 2016, even before the Court took cognizance of the criminal complaint, the Court held that the criminal complaint was rendered premature or infructuous. By virtue of the subsequent order of the appellate tribunal, bottom had gone out of the case of the respondent in the aforementioned criminal complaint case, continuation whereof would undoubtedly be an abuse of the process of the court. The Court thus vacated and set aside the summoning orders passed by the Trial Court against Unitech and its Officers. It has, however, clarified that the ROC is not inhibited from initiating a criminal action in accordance with law in light of subsequent facts. It thus decreed, Nothing in this order however, shall inhibit the respondent/ROC from initiating a criminal action in accordance with law in light of subsequent facts. This observation, of course, is without prejudice to the right of the petitioners and others to raise such defences as may be available to them in law.
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CIRCULAR IMPOSING STAMP DUTY ON MERGERS AND AMALGAMATIONS IN TAMIL NADU CHALLENGED, MADRAS HC ISSUES NOTICE
The Madurai Bench of the Madras High Court has issued notice in a petition challenging a circular issued last year by the Inspector General of Registration, Tamil Nadu, to impose stamp duty on mergers and amalgamations in the state. The petitioner-company had sought to merge two of its sister concerns, Harihar Dwellings Private Limited and Wellshine Investments and Financial Services Limited to streamline its business. To this end, it had also sought the sanction of the National Company Law Tribunal (NCLT) in 2018. While this representation seeking approval for amalgamation was pending before the NCLT, Chennai, the Inspector General of Registration in Tamil Nadu issued a circular in November 2018, stating that a scheme for mergers and amalgamations between companies falls under the definition of conveyance under the Stamp Act. Therefore, the circular informed that mergers and amalgamations would henceforth be subject to stamp duty However, the petitioner company points out that neither the Stamp Act, 1899, nor any State amendment applicable in Tamil Nadu provides for including the transfer of properties of Companies under a scheme of amalgamation under the definition of the term conveyance. As far as the Indian Stamp Act, 1899 is concerned, the petitioner notes, Upon a bare reading of the provision [defining the term, conveyance], it is clearly seen that there is no mention of an order passed by the High Court or National Company Law Tribunal, sanctioning a scheme of amalgamation of companies order falling under the ambit of conveyance On the other hand, there is no state amendment implemented in Tamil Nadu which has brought in mergers and amalgamations within the scope of the term conveyance to make it subject to stamp duty, Though the Tamil Nadu Stamp Act, 2013 was enacted by the State legislature, it has not received the assent of the President and hence, as on date, there is no law or statutory backing for imposition of stamp duty on schemes of amalgamation approved either by the High Court or the National Company Law Tribunal under the Companies Act, 1956, which has been superseded by the Companies Act of 2013. Therefore, the petition contends, Thus, it is submitted that for the purposes of levying Stamp Duty in Tamil Nadu, a Court order sanctioning a scheme of merger or amalgamation does not fall under the definition of Conveyance as it is the legislative intent to not include it. The petitioner further argues that the circular in question could also be faulted for wrongly relying on the Supreme Court judgment in Hindustan Lever & Anr vs State of Maharashtra & Anr. This case dealt with the Constitutional validity of a state amendment to the Bombay Stamp Act, 1958. In that case, the Court only looked into whether the state legislature could levy a stamp duty on mergers and amalgamations. However, in the absence of any such state amendment in Tamil Nadu, the petitioner contends that mergers and amalgamations cannot be made subject to stamp duty by the Inspector General of Registration. As noted in the petition, stamp duty is a form of indirect taxation. Therefore, it would also fall afoul of Artice 256 of the Constitution which lays down that taxes cannot be levied except by the authority of law. Additionally, the petitioner also points out that the circular does not take into account mergers and amalgamation between subsidiary companies. Reference in this regard is made to the Delhi High Court judgment in Sandy Estates Ltd. vs. Landbase India Ltd., which laid down that, No stamp duty would be leviable in any case to the transfer of assets between the transferor and the transferee companies when the transferor company is a 100 per cent subsidiary of the transferee company which is the parent company. The absence of any prescribed method of valuation and the lack of rules for computation of stamp duty leviable for mergers and amalgamation is another ground raised to contend that the circular inquisition is absurd and vague. In view of these submissions, the petitioner company has argued. If the circular is implemented it would cause serious financial detriment to companies that are contemplating the initiation of mergers and amalgamations in the future and it would also act as a detriment to effective corporate restructuring. It has, therefore, prayed that the High Court quash the circular as unconstitutional. The case has been posted to be taken up next on February 11.
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INSOLVENCY RESOLUTION PLAN SHOULD BE SHARED WITH ERSTWHILE BOARD OF DIRECTORS OF CORPORATE DEBTOR, SUPREME COURT
The Supreme Court has held that members of the erstwhile/ suspended Board of Directors of a Corporate Debtor, must be given copies of Insolvency Resolution Plan that may be discussed at meetings of the Committee of Creditors (CoC). The judgment was rendered by a Bench of Justices Rohinton Nariman and Navin Sinha in an appeal filed against a decision of the National Company Law Appellate Tribunal (NCLAT) rejecting prayer to provide all relevant documents including the insolvency resolution plans to members of the suspended Board of Directors of the corporate debtor. The appellant was a member of the suspended Board of Directors of the Corporate Debtor, Ruchi Soya Industries Limited. He was given notice and permission to attend the first meeting of the Committee of Creditors (CoC) but was denied participation in the subsequent meetings. He filed an application in the National Company Law Tribunal (NCLT) challenging this. The NCLT passed an order granting liberty to the appellant to attend CoC meetings but not to insist upon being provided information considered confidential either by the resolution professional or the committee of creditors. Against this order, the appellant filed an appeal before the NCLAT which recognized the appellant’s right to attend and participate in CoC meetings, but denied the appellant’s prayer to access certain documents, most particularly, the resolution plans. This led to the appeal in Supreme Court. Shyam Divan and advocate Arvind Kumar Gupta contended that under Section 24(3), the resolution professional has to give notice of each meeting of the committee of creditors to the members of the suspended Board of Directors. Further, under Regulation 24 of the Regulation framed under the Insolvency and Bankruptcy Code (IBC), the notice of these meetings shall not only contain an agenda of the meetings but shall also contain copies of all documents relevant to the matters to be discussed and issues to be voted upon at the meeting. This necessarily means that access to the resolution plans and other relevant documents under consideration at these meetings must be supplied together with the notice of the meeting to members of suspended Board of Directors. Abhishek Manu Singhvi and advocate Raunak Dhillon, appearing on behalf of the resolution professional, relied strongly on Section 30(3) of the Code and Regulation 39(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) which made it clear that resolution plans were only to be given to the committee of creditors for its consideration. They further argued that the terms committee and participant are differently defined under the Regulations and that participants are expressly excluded by Regulation 39. They also argued, that if any of the Regulations go beyond the provisions of the Code, they must be struck down as ultra vires, as under Section 30(3) of the Code, the resolution professional is required to present resolution plans only to the committee of creditors. Respondents also placed heavy reliance on Notes on Clauses to Section 24 which according to them made it clear that the erstwhile members of the Board of Directors are participants in these meetings only so that the committee of creditors and the resolution professional may seek information from them. The Court proceeded to trace the statutory scheme laid down by the Code and held that though the erstwhile Board of Directors are not members of the committee of creditors, yet, they have a right to participate in each and every meeting held by the committee of creditors, and also have a right to discuss along with members of the committee of creditors all resolution plans that are presented at such meetings under Section 25(2)(i). In this regard, the Court also referred to the position of the Operational Creditor in the CoC. It cannot be denied that operational creditors, who may participate in such meetings but have no right to vote, are vitally interested in such resolution plans, and must be furnished copies of such plans beforehand if they are to participate effectively in the meeting of the committee of creditors. This is for the reason that under Section 30(2)(b), repayment of their debts is an important part of the resolution plan qua them on which they must comment. So the first important thing to notice is that even though persons such as operational creditors have no right to vote but are only participants in meetings of the committee of creditors, they certainly have a right to be given a copy of the resolution plans before such meetings are held so that they may effectively comment on the same to safeguard their interest, the Court held. The Court stated that a closer look at the Notes on Clause 24 makes it clear that the third sentence of the Notes on Clause 24 is itself problematic and it is difficult to understand the same. First and foremost, it speaks of the resolution professional seeking information. The resolution professional does not seek information at a meeting of the committee of creditors, which is what Section 24 is all about. The resolution professional only seeks information from the erstwhile Board of Directors under Section 29 before preparing an information memorandum, which then includes the financial position of the corporate debtor and information relating to disputes by or against the corporate debtor etc. All this has nothing to do with Section 24 of the Code which deals with meetings of the committee of creditors. Secondly, the resolution professional does not prepare a resolution plan as is mentioned in the Notes on Clause 24; he only prepares an information memorandum which is to be given to the resolution applicants who then submit their resolution plans under Section 30 of the Code. The committee of creditors, in turn, gets information so that they can assess the financial position of the corporate debtor from various sources before they meet. It is, therefore, difficult to understand the Notes on Clause 24. The Court also noted that Regulations also make it clear that members of erstwhile BoD are vitally interested in resolution plans as they affect them. A resolution plan which has been approved or rejected by an order of the Adjudicating Authority, has to be sent to participants which would include members of the erstwhile Board of Directors – vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan. The Court further noted that every participant is entitled to a notice of every meeting of the committee of creditors. Such notice of meeting must contain an agenda of the meeting, together with the copies of all documents relevant for matters to be discussed and the issues to be voted upon at the meeting by way of Regulation 21(3)(iii). Resolution plans are matters to be discussed at such meetings, and the erstwhile Board of Directors are participants who will discuss these issues. The expression documents is a wide expression which would certainly include resolution plans, the Court ruled. Based on the above, the Court held that the arguments of the respondents that committee and participant are used differently and that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. Combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of documents that have to be furnished along with the notice of such meetings. As a result of the aforesaid discussion, the arguments of the respondents that committee and participant are used differently, which would lead to the result that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. The Court, therefore, allowed the appeal and set aside the NCLAT judgment
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TRI-COUNTY’S ?67 CR RESOLUTION PLAN FOR BSR GETS NCLT NOD
The National Company Law Tribunal (NCLT) has approved the resolution plan submitted by the US-based Tri-County Premier Hearing Services Inc. to acquire debt-ridden Bhilai Scan and Research Pvt. Ltd (BSR) Diagnostics Ltd. On 22 January, a Mumbai bench of NCLT presided over by justices V.P. Singh and Ravikumar Duraiswami approved the American company’s ?67-crore resolution plan for the Chhattisgarh-based diagnostics chain. The resolution plan provides that within 30 business days of the effective date, the company shall appoint a monitoring agency constituting of two representatives of the secured financial creditors, one of resolution applicant (successful bidder) and one of resolution professional (RP) to monitor and supervise the implementation of the resolution plan, the order said. The monitoring agency must have representatives each from Axis Bank, State Bank of India and the RP. The committee of creditors (CoC), which includes State Bank of India and Axis Bank, had approved the resolution plan with 99% voting in favour. The lenders agreed to a 58% haircut while approving the plan on 5 November. The RP received expressions of interest (EoI) from six entities, of which three filed their resolution plans. However, the CoC approved only one resolution plan of Tri-County Premier Hearing Services Inc.
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EMAAR TO APPEAL AGAINST NCLT ORDER TO INITIATE BANKRUPTCY PROCEEDINGS
Realty firm Emaar MGF Land will appeal against an NCLT order to start insolvency proceedings against the company after two homebuyers filed a petition over huge delay in delivery of their housing units, sources said. The appeal will be filed before the National Company Law Appellate Tribunal (NCLAT), they added. In January 2018, the National Company Law Tribunal (NCLT) approved the proposed demerger scheme of Emaar MGF Land, paving the way for two JV partners to go separate ways. The demerger process got completed in July last year. Admitting the pleas of the two homebuyers of Emaar MGF Land, a two-member bench headed by NCLT President Justice M M Kumar appointed Manoj Kumar Anand as the interim resolution professional (IRP) of the company and directed him to make a public announcement about the bankruptcy proceedings.
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NCLT REJECTS INSOLVENCY APPLICATION FILED BY CORPORATE DEBTOR SUPPRESSING LIQUIDATION ORDER WITH RS 10 LAKH COSTS
In a seemingly unprecedented order, the National Company Law Tribunal, Mumbai bench rejected an application filed by a corporate debtor under Section 10 of the Insolvency and Bankruptcy Code(IBC) with Rs.10 lakhs costs, on finding that it was filed suppressing winding up order passed against it by the High Court. The suppression was detected almost at the fag end of the Corporate Insolvency Resolution Process(CIRP), when a resolution plan approved by the Committee of Creditors was submitted before the NCLT for its approval. At this stage, one of the several financial creditors of the applicant informed the bench that the Bombay High Court had passed a liquidation order against the company on January 25, 2017. The application filed by Amar Remedies Ltd for initiating insolvency process against itself did not make any mention of the winding up order. The application filed by Amar Remedies Ltd for initiating insolvency process against itself did not make any mention of the winding up order. On being asked to explain this suppression, the applicant said that one of its creditors had filed a winding up application in the High Court in 2013, which was admitted on August 27, 2014. Later, the company sought reference to Board for Industrial and Financial Reconstruction(BIFR) under Sick Industrial Companies Act(SICA). On this application getting rejected, it filed appeal before the Appellate Authority for Industrial and Financial Reconstruction(AAIFR). Noting the pendency of proceedings in AAIFR, the High Court adjourned the liquidated proceedings sine die, by order passed on November 15, 2016. The corporate debtor said that the appeal in AAIFR abated when SICA wasrepealed following the enactment of IBC. Therefore, in terms of Section 6 of SICA, the application was filed in NCLT, submitted the applicant. The NCLT however noted that the Bombay High Court had in the meanwhile, taking notice of the abatement of appeal in AAIFR, passed liquidation order against the company on January 25, 2017. Without revealing that, Amar Remedies filed the application under Sec.10 IBC on May 29, 2017. The Tribunal observed that issue was not whether the corporate debtor was eligible to file Section 10 application, but whether it was bound to reveal the fact of liquidation order "Here point in issue is not the right of the corporate applicant for initiation of CIRP. But we are only examining whether the application U/S 10 of the IB Code 2016 is filed after the suppression of material facts known to be material", said the bench of V P Singh(Judicial Member) and Ravikumar Duraiswamy. In this regard, the Tribunal referred to Section 11(d) IBC, which barred an applicant against whom a liquidation order has been passed from initiating CIRP. Reference was made to the January 22 decision of SC in Forech India Ltd vs Edelweiss Asset Reconstruction Co.Ltd, where it was observed that Sec.11(d) barred a corporate debtor from filing application under IBC if liquidation order has been passed against it. The Tribunal hence observed in the order passed on January 29 as follows: It is clear that after liquidation order passed in a winding-up petition against the corporate debtor then it is barred from filing a petition under section 10 of the Code. Here the corporate debtor has not only suppressed the material fact that the winding up petition has not only been filed and admitted, but liquidation order has also been passed against the corporate applicant/corporate debtor liquidator has been directed to expedite liquidation proceedings expeditiously. The corporate applicant suppressed this material fact, knowing it to be material, and filed the petition under section 10 and in contravention of Rule 10 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The defence of the applicant that the fact of liquidation order was not material as the statutory Form 6 did not ask for such information was rejected by the Tribunal. It found that the applicant's conduct amounted to offence under Section 77(a) of IBC, which deals with filing application with suppression of material facts and directed Registrar of Companies Mumbai to lodge prosecution. The application was rejected with costs of Rs.10 lakhs, which was directed to be deposited in the Prime Minister's Relief Fund.
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RTIL GETS A NEW BIDDER AS CFM ARC EXITS THE RACE
A new investor has evinced interest in joining the fray to bid for debt-ridden RTIL — formerly Reid & Taylor (India) Ltd — while one withdrew from the resolution process. On Thursday, New Delhi-based Indian Gas informed the National Company Law Tribunal’s Mumbai bench of its decision to bid for the beleaguered company, while Gujarat-based CFM Asset Reconstruction (CFM ARC) withdrew from the race. Stating that it has a networth of Rs. 1,500 crore, Indian Gas staked a claim in the entire resolution process. Permitting the New Delhi company to bid for Reid & Taylor, the tribunal asked it to pay a non-refundable amount of Rs. 2 crore by February 5 and prove its net worth by that date. The matter comes up for hearing at NCLT on February 5. The judges Bhaskar Pantulu Mohan and V Nallasenapathy also directed the new bidder to appear before the National Company Law Appellate Tribunal (NCLAT) tomorrow and explain its bonafides and interest. India Gas was permitted to take part in the resolution process following the exit of CFM ARC. The tribunal also ordered that the deposit amount of Rs. 2 crore be refunded to CFM ARC.
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NCLT ALLOWS GOVT TO ADD USHA ANATHASUBRAMANIAN, 18 OTHERS AS ACCUSED IN PNB SCAM
The National Company Law Tribunal Thursday allowed a government plea to add 19 more respondents including the sacked head of Allahabad Bank Usha Anathasubramanian, in the Rs 14,000-crore Nirav Modi and Mehul Choksi scam that hit the state-run lender PNB last year. The new names in the list of the accused that the government wants to add include a former executive directors of Punjab National Bank K Brahmaji Rao and Sanjiv Saran; general manager Nehal Ahad; and Bishubrata Mishra, who was the internal chief auditor at the Brady House branch of PNB, where the scam took place, among others. The ministry also wants to add some more officials of the bank and companies owned by Nirav Modi and Mehul Choksi as respondents. Both Modi and Choksi are absconding and refused to come back to the country to face trial. The NCLT bench headed by VP Singh and Ravikumar Duraisamy also restrained these 19 people from alienating their assets until further orders.
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DIRECTORS OF 2 REAL ESTATE FIRMS ARRESTED
Directors of two private real estate firms were arrested on Thursday for non-payment of nearly Rs 4 crore of labour cess dues and those towards the Real Estate Regulatory Authority (RERA), the Gautam Buddh Nagar administration said. The directors of IVR Prime IT Sez firm and PME Power Solution India were arrested in the afternoon by revenue officials in Dadri and Sadar tehsils of the district, the administration said. "Recovery certificate (RC) was issued against IVR Prime IT Sez firm by RERA for recovery of outstanding dues worth Rs 3.04 crore. Based on the RC, the action was taken, and the firm's director was arrested after it failed to remit the dues," Anjani Kamar Singh said. Read This - Farmers to get Rs 6,000/yr in 3 installments under Centre funded scheme: FM The revenue officials arrested director of PME Power Solution India for not paying Rs 80.25 lakh in labour cess, SDM Sadar Rajpal Singh said. According to the procedure, the firms were served notices about 15 days ago, asking them to clear their dues or face action, the officials said. "The action is part of a special drive initiated by district magistrate B N Singh to recover all pending dues," Singh said.
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BANK OF INDIA, MAHARASHTRA TO COME OFF CENTRAL BANK WATCHLIST -SOURCE
Bank of India and Bank of Maharashtra will be dropped from the Reserve Bank of India's prompt corrective action plan (PCA) for state-owned banks with high levels of bad debt and inadequate capital, a source told Reuters on Thursday. The move follows improvements in their asset quality and capital ratios and a ruling by the RBI on Thursday, said the source. The RBI's board for financial supervision chaired by new governor Shaktikanta Das took the decision at its meeting on Thursday after reviewing the latest quarterly performance of all 11 banks on the PCA list, the source said. A third lender may also be removed from the list pending the outcome of a technical clarification from the bank, the source added. There are 21 listed state-run banks in India that provide about two-third of the total loans. With nearly half of them under a PCA plan and the rest cautious due to a record $150 billion in bad debt, the government has been keen the curbs be relaxed to boost their ability to lend. Bank of India's net non-performing assets fell to 5.87 percent in the October-December quarter from 7.64 percent in July-September. Its capital adequacy ratio improved to 12.47 percent from 10.93 percent. Bank of Maharashtra's net non-performing assets fell to 5.91 percent from 10.61 percent while its capital adequacy improved to 11.05 percent from 9.87 percent.
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SUPREME COURT DIRECTS SAHARA CHIEF SUBRATA ROY TO APPEAR BEFORE IT ON FEBRUARY 28
The Supreme Court Thursday directed Sahara group chief Subrata Roy to appear before it on February 28 for failing to deposit Rs 25,700 crore in the SEBI-Sahara case for returning investors' money. The apex court said six months were given to Sahara by its last order to arrange the amount but what has transpired during the period has not inspired the confidence of the court. A bench headed by Chief Justice Ranjan Gogoi noted that the group has deposited only Rs 15,000 crore. The bench, also comprising Justices A K Sikri and S K Kaul, declined to give any further chance to Roy and other directors to comply with its previous orders It said it had decided to proceed with the matter so that the law takes its own course and directed Roy and other directors to appear before it personally on next date of hearing. Roy, who has spent almost two years in jail, has been on parole since May 6, 2017. The parole was granted the first time to enable him attend the funeral of his mother. It has been extended since then. Besides Roy, two other directors -- Ravi Shankar Dubey and Ashok Roy Choudhary -- were arrested for failure of the group's two companies -- Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL) -- to comply with the court's August 31, 2012 order to return over Rs 24,000 crore to their investors
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EXPECT LOAN GROWTH OF 20-25% AHEAD, SAYS INDIABULLS HOUSING FINANCE
Indiabulls Housing Finance Ltd posted strong margins in the third quarter as asset quality was stable. Loan growth however tapered off. Gagan Banga, said the company expects loan book growth between 20 percent and 25 percent next year, with a profit after tax estimated to grow by 17 percent to 19 percent. In the aftermath of the IL&FS led liquidity crisis, the company had to focus more on the ALM etc and I think the best thing that has happened to the company after about 40 quarters of steady growth is that within three months, we were able to successfully migrate and very significantly improve the ALM, he added. Banga said that, We may have taken some small developers to National Company Law Tribunal (NCLT) in terms of a significant exposure going bad etc, we have seen a fair amount of recovery happening. He further mentioned that, The cases that we are trying to pursue in NCLT with the developers - there was some talk in the middle and I had checked around October that we have filed some new cases in NCLT and what we have realised was that those were not fresh cases, those were dates, which were appearing for old cases.
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ESSEL PROMOTERS TO MAKE GOOD SHORTFALL IN COLLATERAL FOR YES BANK LOAN
Essel group promoters plan to make good any shortfall in the collateral for a loan they have taken from YES Bank. The lender, which has an exposure of Rs 3,300 crore to the promoter entities of Essel group, has asked promoters to increase the collateral given to the bank so that it can ring-fence its exposure to the group, said sources. Sources said that the bank claimed the current collateral is not adequate according to Reserve Bank of India guidelines, due to the sharp fall in the share price of Dish TV in the last one year. Yes Bank was holding collateral in the form Dish TV shares owned by Essel group’s promoters. Dish TV on Tuesday said its promoter stake had fallen to 59.1 per cent from 60.83 per cent after pledged shares were invoked on Friday, the day its stock price slipped 33 per cent on reports of an alleged link between the group and a firm, which is being probed by government agencies. Dish TV also said no further pledges had been given to lenders and that there was no default in terms of repayment of loans to them. Payments are being made regularly to lenders and it will be maintained, Goel said. In an open letter last week, Essel group chairman Subhash Chandra had sought more time from the banks and institutions (mainly mutual funds) to repay their loans. Chandra also said the Dish TV and Videocon d2h merger was an error which resulted in a big loss of fortune for both him and his brother, Jawahar.
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SEBI DIRECTS 16 ENTITIES TO DISGORGE RS 3-CR UNLAWFUL GAINS IN POLYTEX INDIA CASE
Sebi on Thursday directed 16 entities to disgorge over Rs 3 crore of 'unlawful gains' made by them while dealing in the scrips of Polytex India Ltd. In its ruling, Securities and Exchange Board of India (Sebi) has ordered the entities to disgorge the amount, along with an interest of 12 per cent per annum Besides, four individuals have been barred from the securities markets for seven years while one person has been banned for five years. However, the regulator has not put any restriction on the remaining 11 entities as they have already undergone debarment for a period of more than 5 years. These directions come after Sebi found that these entities have violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms. Sebi noted, artificial volume was created by certain connected entities through large scale trading among themselves, without real change in ownership of shares traded among them, for the purpose of increasing volume of trading or influencing the price. Further, Sebi noted that the entities had made profit in the scrip of Polytex and loss in the scrip of Gemstone. The noticees cannot be allowed to set off the losses suffered in one scrip with any other scrip as the same will amount to adjustment of illegal gains against losses suffered while perpetrating the manipulation in one scrip. Accordingly, Sebi has concluded that all the 16 entities have violated provisions related to PFUTP norms and directed these entities to jointly and severally, disgorge an amount of Rs 3.05 crore along with interest calculated at the rate of 12 per cent per annum from December 17, 2012 onwards, till the date of payment.
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HOMEBUYERS TAKE PENDING CASES TO RERA IN FIRST FACE-TO-FACE MEET
The Greater Noida bench of Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) met a group of 56 homebuyers representing 10 different associations at Noida Authority’s Sector 6 office on Thursday, in its first face-to-face interaction with residents since its formation. From September 4, the panel will start hearing cases in Greater Noida four times a week — Monday, Tuesday, Thursday and Friday. A separate bench will, however, operate out of Lucknow on Wednesday. In Thursday’s meeting, the full bench of UP-Rera was present, including its full-time chairman Rajive Kumar. As many as 32 issues were raised by homebuyers at the meeting, according to the panel members. Individual cases will be heard in court, but we focused on the generic issues before the bench starts operating from Greater Noida, a senior member of the panel told. The Rera panel will be in discussion with Credai (Confederation of Real Estate Developers Association of India) on Friday, followed by discussions with Noida, Greater Noida and authorities in the coming days before hearing the cases from September.
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SEBI DIRECTS 16 ENTITIES TO DISGORGE RS 3-CR UNLAWFUL GAINS IN POLYTEX INDIA CASE
Markets watchdog Sebi on Thursday directed 16 entities to disgorge over Rs 3 crore of 'unlawful gains' made by them while dealing in the scrips of Polytex India Ltd. In its ruling, Securities and Exchange Board of India (Sebi) has ordered the entities to disgorge the amount, along with an interest of 12 per cent per annum
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SEBI BARS MAITREYA PLOTTERS, 2 DIRECTORS FOR 4 YEARS OVER PRIMA-FACIE IN LAND DEAL
Sebi Thursday banned Maitreya Plotters and Structures and two directors from the markets for at least four years and asked them to refund Rs 1,775 crore to investors in three months The directors are Madhusudan Satpalkar and Janardan Arvind Parulekar, as per Sebi order. Besides, the regulator noted that several proceedings have been initiated against the company by different entities and Nasik district court has allowed for the constitution of a committee for payment of the money to the investors. The Sebi in the year 2013 had prima-facie found the schemes for booking or purchase of plot launched by the firm from 2009 to 2013 were deemed to be collective investment scheme (CIS).
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NSE, SGX MAY SIGN OFFSHORE TRADING PACT
The National Stock Exchange (NSE) and the Singapore Exchange may soon call a truce in their longrunning tussle over offshore equity derivatives trading. India’s largest stock exchange is expected to sign an agreement with SGX that will allow all of NSE’s Indiarelated products offered on SGX including Nifty futures to be executed through the NSE International Exchange. The latter is a subsidiary of NSE located in the International Financial Services Centre (IFSC) at the Gujarat International Finance Tec-City (Gift City) in Gandhinagar, said two people aware of the development. NSE and SGX have submitted a joint proposal to the Securities and Exchange Board of India (Sebi) seeking permission to allow such an arrangement, said the people cited above. “After extensive negotiations, both the exchanges have arrived at a mutually acceptable arrangement. However, there are no regulatory precedents in India for such framework,” said one of them. “Sebi is expected to reach out to its counterpart MAS (Monetary Authority of Singapore) in the next few days to finalise the matter.” The NSE International Exchange will not have any direct dealings with the actual investors. This will also give SGX investors access to other products listed in Gift City that are otherwise not available on SGX. All IFSC Gift trades are exempt from several levies, including capital gains tax, securities transaction tax and stamp duty as an incentive to make it a global hub.
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IRDAI ASKS INSURERS TO PROVIDE FOR IL&FS EXPOSURE, WANTS MIS-SELLING CURBED
Insurance Regulatory and Development Authority (IRDAI) has asked the insurance companies to make provision for their exposure to the beleaguered IL&FS group. They have to make provisions for it as those exposures cannot be written off Shubash Chandra Khuntia said. Moreover, the IRDAI Chairman had earlier cautioned the insurance companies on the risks associated in investing in low-rated debt instruments. Khuntia also expressed the concern over of the regulator over commissions the insurance companies pay to the motor insurance service provider (MISP) as they are higher than what has been stipulated by the insurance regulator. Whenever it is coming to our notice, we are taking action. We have also done some focused inspection of some MISPs, we are watching the market very carefully for some violations, Khuntia said. Khuntia also touched upon the mis-selling aspect of the insurance business and asked the industry players to devote more time for underwriting their products and selling it in a fair manner. He also asked the insurers to speed up the claim settlement process. As the non-life space is highly under-penetrated in India, the chairman expressed hope in the fact that cyber security insurance will be a big opportunity for general insurers to capitalise on in the future.
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MERGER DELAYS IMPACT BUSINESS DECISIONS AT GOVERNMENT INSURANCE FIRMS
According to rough estimates, in the officers grade alone close to 600-900 posts remain vacant over the last one year. At the clerical and subordinate level, the staff shortage is around 12000, say sources in the companies. The impact is already telling about the financial performance of the companies. Also, at least two companies, National Insurance and United India Insurance, significantly lost their market share. While National lost the market share from 10.78 per cent in December 2017 to 8.63 per cent in December 2018, United India Insurance lost it from 11.02 per cent to 9.27 per cent over the time frame. The three insurance companies have posted high losses in Q2 of FY19, as their premium growth came down and provisions rose. Multiple reasons accounted for the losses, including manpower crunch and lack of clarity of merger. Lack of clarity over merger was a reason that the premium came down. Also, the shortage of manpower was a reason that the business suffered. Further, the companies had to make huge provisions over third party motor losses, said a senior official at the public sector general insurance sector. According to a senior official at a private sector general insurance firm, while higher provisioning norms apply both private and public sector firms, the private sector firms have been more prudent in selecting the category mix. For United India Insurance, loss (before tax, as after tax figures not available) in Q2 of FY19 was Rs 868 crore (against a loss of Rs 36 crore before tax in the corresponding period). For National Insurance the loss was Rs 707 crore in Q2 of FY (against a profit of Rs 90 crore in Q2 of FY18). For Oriental India Insurance, the loss was Rs 240 crore in Q2 of FY 19(against a profit of Rs 200 crore in the same period in FY18). As on 31st March 2016, the total staff strength of the four general insurance companies was about 64130, with United India Insurance at 16345, Oriental Insurance at 13923, National Insurance at 15079 and New India Assurance at 18783, according to data available with the Union finance ministry.
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STATE LEVEL BANKERS' COMMITTEE IN TN ASKS BANKS TO MAXIMISE CREDIT FLOW TO MSMES
In tune with the RBI's policy, the State Level Bankers' Committee in Tamil Nadu Thursday urged bankers to streamline credit flow to the micro, small and medium enterprises (MSMEs), saying the sector needed more attention SLBC Chairman R Subramania Kumar, in a statement, said there was huge scope for expanding credit to the sector since a large number of MSME units were present in the state. The SLBC is an inter-institutional forum at state-level ensuring co-ordination between government and banks on matters pertaining to banking development and city-headquartered Indian Overseas Bank is the Convenor Bank of the committee in Tamil Nadu. Kumar said, Bankers have to make a realistic assessment of the credit requirement and provide adequate credit on time by making use of automated portals so that the MSMEs need not look outside the Banking system for additional finance The processing time should be reduced, sanctions to be conveyed quickly and time norms as prescribed by RBI should be complied with. This would save the MSME units from getting trapped in high-interest credit cycle Kumar said. The SLBC also urged bankers to extend restructuring facilities to all the eligible MSME units, besides advising the banking industry to assess the issues faced by the sector. Reserve Bank of India had provided special training to nearly 11,000 officers at various commercial banks on lending to micro, small and medium enterprises. This training has been provided to officers working at nearly 3,000 bank branches covering all districts in the country through more than 2,000 special workshops in the last three years.
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BSE TO LAUNCH APP FOR DIRECT ACCESS TO RETAIL INVESTORS IN G-SECS, T-BILLS AUCTION
The Bombay Stock Exchange (BSE) will launch a mobile app on Friday to help retail investors participate directly in the auction of government securities and treasury bills conducted by the Reserve Bank of India (RBI). The app would enable investors to directly participate in the auction without the involvement of a registered trading member of the BSE, the exchange said. The exchange will also enable trading of treasury bills (T-bills) in the capital market segment from Friday. The trading of T-bills in secondary markets will provide an exit route for investors who have been holding securities in the demat format. Last month, the BSE had launched BSE-Direct, an online bidding platform for retail investors, to participate in non-competitive bidding of government securities (G-secs) and T-bills. The platform offers a user-friendly interface, allows 24x7 bidding and enables collection of bids from investors.
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NSE OPENS DELIVERY CENTRES FOR COMMODITIES IN 3 MORE CITIES
Leading stock exchange NSE on Thursday said it has opened additional delivery centres for commodity derivatives in three more cities of Mumbai, Chennai and Delhi. The centres will facilitate pan-India delivery mechanism, the National Stock Exchange of India (NSE) said in a release.
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YES BANK APPOINTS AJAI KUMAR AS INTERIM CEO
Yes Bank Ltd on Thursday named Ajai Kumar as interim chief executive effective February 1, until Ravneet Gill takes charge. Rana Kapoor stepped down as CEO on January 31 after the bank's founder completed his truncated term, the lender said in a statement. Yes Bank hired Gill, the head of Deutsche Bank India, as its new chief executive last week after the Reserve Bank of India (RBI) demanded that Kapoor be replaced.
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NOIDA: 2 BUILDERS HELD FOR NOT PAYING LABOUR CESS, RERA DUES
Directors of two private real estate firms were arrested on Thursday for non-payment of nearly Rs 4 crore of labour cess dues and those towards the Real Estate Regulatory Authority (RERA), the Gautam Buddh Nagar administration said. The directors of IVR Prime IT Sez firm and PME Power Solution India were arrested in the afternoon by revenue officials in Dadri and Sadar tehsils of the district, the administration said. Recovery certificate (RC) was issued against IVR Prime IT Sez firm by RERA for recovery of outstanding dues worth Rs 3.04 crore. Based on the RC, action was taken and the firm's director was arrested after it failed to remit the dues, Dadri Sub-Divisional Magistrate (SDM) Anjani Kamar Singh said. Director of PME Power Solution India was arrested by the revenue officials for not paying Rs 80.25 lakh in labour cess, SDM Sadar Rajpal Singh said. According to officials, when RCs are issued against pending dues to any group or entity, it is given a 15-day notice to clear the dues. Action is initiated only after 15 days.
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ICICI BANK LOAN CASE: HOW INVESTIGATIVE ‘ADVENTURISM’ HURTS EASE OF DOING BUSINESS
The investigating agency should avoid investigative ‘adventurism’ and centralise only on professional investigation, Arun Jaitley had said. The Minister’s damnation makes it loud and clear, not only to the CBI but also to the other agencies of the government, that such an ‘intent’ is ruinous for the ease of doing business something that the Modi government underlines among its successes. Amongst all the parameters, businesses cannot exist and flourish in a state of constant apprehension and dread of the capriciousness of the arms of law and regulatory agencies. This discourages investment and entrepreneurship, which has the cascading effect of low growth and poor job creation. While investigative ‘adventurism’ ravages reputations and incurs financial costs, professional investigation targets real accused, Arun Jaitley further pointed out. Businesses cannot exist and flourish in a state of constant apprehension and dread of the capriciousness of the arms of law and regulatory agencies. This discourages investment and entrepreneurship, which has the cascading effect of low growth and poor job creation, he said. Davar further said that on account of several amendments to the Companies Act, rising compliances, the work of independent directors has become so burdensome that several professionals decline board appointments resulting in a vacuum at the top of most company’s leadership. It’s time the government restrains the arbitrariness and lets the businesses concentrate on business, he said. Best to put in Arun Jaitley’s words: My advice to our investigators – Follow the advice of Arjun in the Mahabharat – Just concentrate on the bulls eye.
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TATA GROUP TO PROVIDE FREE HIGH-SPEED WIFI ON 4,000 RAIL STATIONS
Piyush Goyal-led Railway Ministry has now roped in the Tata Group in a bid to provide free high-speed WiFi facility at more than 4,000 railway stations across the country. According to an IE report, to carry out proof of concept (PoC) of the WiFi project, under which Indian Railways station users will be able to enjoy high-speed internet for free, Tata Trusts had been given eight railway stations between Bengaluru and Mysore, as part of the understanding, before the project is rolled out across the country. Interestingly, at eight stations across the railway network, the PoC process has been a success, the report said. The project will be carried out by Tata Trusts as part of its Corporate Social Responsibility (CSR). Therefore, Indian Railways will not have to shell out anything for this. Railway Minister Piyush Goyal took personal initiative in discussions with Tata Group’s top management to get the company on board. For the Railway Board, this initiative is one of the main priorities as this will be the largest CSR initiative ever on Indian Railways However, to get the project implemented, the Tatas have tied up with a separate agency, the report said. According to the report, nearly 2,000 out of the 8,000-odd railway stations have been left out of the proposed WiFi project since they are halt stations, which do not receive significant footfall. The internet giant, Google has already wired up more than 400 bigger railway stations across the country to take the current figure to 712 railway stations. Also, the PowerGrid Corporation is providing WiFi to 100 railway stations as part of its CSR initiative. The national transporter’s own telecom PSU RailTel has also covered a number of railway stations to implement free Wifi facility.
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FACEBOOK, TWITTER REMOVE ACCOUNTS LINKED TO IRAN, RUSSIA, VENEZUELA
Facebook Inc. and Twitter Inc. have been sharing notes on fake accounts tied to Iran that have been trying to manipulate political thought around the world, leading to another wave of takedowns by the social-media sites. Facebook said it removed 783 pages, groups and accounts linked to Iran that were attempting to manipulate political discussions about current events, like the Israel-Palestine conflict and the wars in Syria and Yemen. The company said Thursday that the accounts and page administrators typically represented themselves as locals in at least 26 countries, including Iraq, Israel, Afghanistan and the US, but posted messages that repeated the content of Iranian state media. The removals built on activity the companies found last year, with some outside help from security firm FireEye. The industry collaboration has been central to the success of these operations, Facebook said. In September, Twitter disclosed it had suspended 770 accounts potentially based in Iran for violating its policies. Since then, the company has suspended 2,617 additional malicious accounts it believes had origins in Iran, which tweeted 24,000 times about the 2018 US midterm elections. The content included 262 pages, 356 accounts and 3 groups on Facebook, and 162 accounts on Instagram. The groups spent less than $30,000 in Facebook advertising, but 2 million Facebook users followed at least one of their pages. Twitter said it continues to see activity on the service related to the Russian Internet Research Agency, the troll farm that spread divisive information during the 2016 US presidential election. It found 418 additional accounts that appeared to originate in Russia and posted 73,398 tweets related to the midterm elections, with hashtags like #MAGA and #ReleasetheMemo. Twitter said it also suspended 764 accounts in Venezuela before election day and notified law enforcement of the activity.
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INDIA LEADS DAILY USERS GROWTH FOR FACEBOOK IN DECEMBER QUARTER
Facebook saw its base of daily users growing 9 per cent to 1.52 billion in the December quarter, led by growth in markets like India, Indonesia and the Philippines, the social networking giant has said. The daily active users (DAUs) represented about 66 per cent of the 2.32 billion monthly active users (MAUs) in the December 2018 quarter, David Wehner said. He added that MAUs -- users who have used Facebook within the month -- grew by 191 million or 9 per cent compared to last year.
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The Delhi High court has quashed the summon issued to five officers of Unitech Ltd in connection with Unitech’s failure to re-pay deposits of Rs. 603 crore taken from 56,436 investors. The order was pronounced by a Single Judge Bench of Justice RK Gauba in a batch of pleas challenging the validity of the summoning order passed by the Additional Sessions Judge in the complaint filed by the Registrar of Companies (ROC) with respect to Unitech’s failure to pay the said deposits. As per Section 74(1) of the Companies Act 2013, Unitech was obliged to repay the said deposits within the period prescribed. The Act also provides for enlargement of time for discharge of liability to pay by making an application before National Company Law Tribunal under Section 74(2). Any default in payment of the requisite amounts within the statutorily prescribed period or within the extension allowed by the Tribunal attracts penal clause contained in Section 74(3). Upon receiving an application under Section 74(2), the Tribunal on March 11, 2016 permitted the enlargement of time for compliance with the statutory provisions by Unitech. After this, several other extensions were also awarded to the company. However, no payments were made by it. Finally, on July 4, 2016, the tribunal found no good reason to grant any further enlargement of time for compliance and dismissed Unitech’s petition for extension. It also suggested to the ROC take appropriate action against the company under Section 74(3). Subsequently, the ROC filed a criminal complaint before the Court of Sessions. After considering the facts set out in the complaint, the Additional Sessions Court took cognizance on September 20, 2016 and summoned Unitech and five of its officers as accused and answer the charge for the offence under Section 74(3). Meanwhile, Unitech also challenged the order of the Tribunal dismissing its plea for enlargement of time before the National Company Law Appellate Tribunal under Section 421 of the Companies Act, 2013. The Appellate Tribunal on September 20, 2016, while entertaining the appeal, directed that no coercive steps shall be taken against Unitech and its officers pursuant to the order the Tribunal. Later, on October 26, 2016, the Appellate Tribunal also stayed the Tribunal’s request to the ROC to take action under Section 74(3). In light of this development, Unitech and its Officers challenged the summoning order before the High Court. Before the High Court, the counsel appearing for ROC highlighted that Unitech’s appeal was ultimately dismissed in January 2017, hence, the summon order could not be challenged Unitech on the other hand maintained that since the period of compliance with the requirement of Section 74(1) stood extended till December 31, 2016 by the NCLAT, there was no occasion for invoking the penal provisions of Section 74(3). Observing that the gravamen of the charge on which the prosecution under Section 74(3) is the Company’s failure to abide by its liability under Section 74(1) or within the extended period, the Court held that the time extended by the tribunal has to be construed along with modifications ordered in appeal by the appellate tribunal. Since the order of the tribunal does not attain finality inasmuch as there is a remedy of appeal available there against, the provision contained in Section 74(2), in so far as it refers to the time allowed by the tribunal will have to be construed as the time allowed by the tribunal alongwith modification in such regard if ordered in appeal by the appellate tribunal. In the present case, since the Appellate Tribunal had entertained the appeal against the Tribunal’s order and also extended the deadline till December 31, 2016, even before the Court took cognizance of the criminal complaint, the Court held that the criminal complaint was rendered premature or infructuous. By virtue of the subsequent order of the appellate tribunal, bottom had gone out of the case of the respondent in the aforementioned criminal complaint case, continuation whereof would undoubtedly be an abuse of the process of the court. The Court thus vacated and set aside the summoning orders passed by the Trial Court against Unitech and its Officers. It has, however, clarified that the ROC is not inhibited from initiating a criminal action in accordance with law in light of subsequent facts. It thus decreed, Nothing in this order however, shall inhibit the respondent/ROC from initiating a criminal action in accordance with law in light of subsequent facts. This observation, of course, is without prejudice to the right of the petitioners and others to raise such defences as may be available to them in law.
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CIRCULAR IMPOSING STAMP DUTY ON MERGERS AND AMALGAMATIONS IN TAMIL NADU CHALLENGED, MADRAS HC ISSUES NOTICE
The Madurai Bench of the Madras High Court has issued notice in a petition challenging a circular issued last year by the Inspector General of Registration, Tamil Nadu, to impose stamp duty on mergers and amalgamations in the state. The petitioner-company had sought to merge two of its sister concerns, Harihar Dwellings Private Limited and Wellshine Investments and Financial Services Limited to streamline its business. To this end, it had also sought the sanction of the National Company Law Tribunal (NCLT) in 2018. While this representation seeking approval for amalgamation was pending before the NCLT, Chennai, the Inspector General of Registration in Tamil Nadu issued a circular in November 2018, stating that a scheme for mergers and amalgamations between companies falls under the definition of conveyance under the Stamp Act. Therefore, the circular informed that mergers and amalgamations would henceforth be subject to stamp duty However, the petitioner company points out that neither the Stamp Act, 1899, nor any State amendment applicable in Tamil Nadu provides for including the transfer of properties of Companies under a scheme of amalgamation under the definition of the term conveyance. As far as the Indian Stamp Act, 1899 is concerned, the petitioner notes, Upon a bare reading of the provision [defining the term, conveyance], it is clearly seen that there is no mention of an order passed by the High Court or National Company Law Tribunal, sanctioning a scheme of amalgamation of companies order falling under the ambit of conveyance On the other hand, there is no state amendment implemented in Tamil Nadu which has brought in mergers and amalgamations within the scope of the term conveyance to make it subject to stamp duty, Though the Tamil Nadu Stamp Act, 2013 was enacted by the State legislature, it has not received the assent of the President and hence, as on date, there is no law or statutory backing for imposition of stamp duty on schemes of amalgamation approved either by the High Court or the National Company Law Tribunal under the Companies Act, 1956, which has been superseded by the Companies Act of 2013. Therefore, the petition contends, Thus, it is submitted that for the purposes of levying Stamp Duty in Tamil Nadu, a Court order sanctioning a scheme of merger or amalgamation does not fall under the definition of Conveyance as it is the legislative intent to not include it. The petitioner further argues that the circular in question could also be faulted for wrongly relying on the Supreme Court judgment in Hindustan Lever & Anr vs State of Maharashtra & Anr. This case dealt with the Constitutional validity of a state amendment to the Bombay Stamp Act, 1958. In that case, the Court only looked into whether the state legislature could levy a stamp duty on mergers and amalgamations. However, in the absence of any such state amendment in Tamil Nadu, the petitioner contends that mergers and amalgamations cannot be made subject to stamp duty by the Inspector General of Registration. As noted in the petition, stamp duty is a form of indirect taxation. Therefore, it would also fall afoul of Artice 256 of the Constitution which lays down that taxes cannot be levied except by the authority of law. Additionally, the petitioner also points out that the circular does not take into account mergers and amalgamation between subsidiary companies. Reference in this regard is made to the Delhi High Court judgment in Sandy Estates Ltd. vs. Landbase India Ltd., which laid down that, No stamp duty would be leviable in any case to the transfer of assets between the transferor and the transferee companies when the transferor company is a 100 per cent subsidiary of the transferee company which is the parent company. The absence of any prescribed method of valuation and the lack of rules for computation of stamp duty leviable for mergers and amalgamation is another ground raised to contend that the circular inquisition is absurd and vague. In view of these submissions, the petitioner company has argued. If the circular is implemented it would cause serious financial detriment to companies that are contemplating the initiation of mergers and amalgamations in the future and it would also act as a detriment to effective corporate restructuring. It has, therefore, prayed that the High Court quash the circular as unconstitutional. The case has been posted to be taken up next on February 11.
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INSOLVENCY RESOLUTION PLAN SHOULD BE SHARED WITH ERSTWHILE BOARD OF DIRECTORS OF CORPORATE DEBTOR, SUPREME COURT
The Supreme Court has held that members of the erstwhile/ suspended Board of Directors of a Corporate Debtor, must be given copies of Insolvency Resolution Plan that may be discussed at meetings of the Committee of Creditors (CoC). The judgment was rendered by a Bench of Justices Rohinton Nariman and Navin Sinha in an appeal filed against a decision of the National Company Law Appellate Tribunal (NCLAT) rejecting prayer to provide all relevant documents including the insolvency resolution plans to members of the suspended Board of Directors of the corporate debtor. The appellant was a member of the suspended Board of Directors of the Corporate Debtor, Ruchi Soya Industries Limited. He was given notice and permission to attend the first meeting of the Committee of Creditors (CoC) but was denied participation in the subsequent meetings. He filed an application in the National Company Law Tribunal (NCLT) challenging this. The NCLT passed an order granting liberty to the appellant to attend CoC meetings but not to insist upon being provided information considered confidential either by the resolution professional or the committee of creditors. Against this order, the appellant filed an appeal before the NCLAT which recognized the appellant’s right to attend and participate in CoC meetings, but denied the appellant’s prayer to access certain documents, most particularly, the resolution plans. This led to the appeal in Supreme Court. Shyam Divan and advocate Arvind Kumar Gupta contended that under Section 24(3), the resolution professional has to give notice of each meeting of the committee of creditors to the members of the suspended Board of Directors. Further, under Regulation 24 of the Regulation framed under the Insolvency and Bankruptcy Code (IBC), the notice of these meetings shall not only contain an agenda of the meetings but shall also contain copies of all documents relevant to the matters to be discussed and issues to be voted upon at the meeting. This necessarily means that access to the resolution plans and other relevant documents under consideration at these meetings must be supplied together with the notice of the meeting to members of suspended Board of Directors. Abhishek Manu Singhvi and advocate Raunak Dhillon, appearing on behalf of the resolution professional, relied strongly on Section 30(3) of the Code and Regulation 39(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) which made it clear that resolution plans were only to be given to the committee of creditors for its consideration. They further argued that the terms committee and participant are differently defined under the Regulations and that participants are expressly excluded by Regulation 39. They also argued, that if any of the Regulations go beyond the provisions of the Code, they must be struck down as ultra vires, as under Section 30(3) of the Code, the resolution professional is required to present resolution plans only to the committee of creditors. Respondents also placed heavy reliance on Notes on Clauses to Section 24 which according to them made it clear that the erstwhile members of the Board of Directors are participants in these meetings only so that the committee of creditors and the resolution professional may seek information from them. The Court proceeded to trace the statutory scheme laid down by the Code and held that though the erstwhile Board of Directors are not members of the committee of creditors, yet, they have a right to participate in each and every meeting held by the committee of creditors, and also have a right to discuss along with members of the committee of creditors all resolution plans that are presented at such meetings under Section 25(2)(i). In this regard, the Court also referred to the position of the Operational Creditor in the CoC. It cannot be denied that operational creditors, who may participate in such meetings but have no right to vote, are vitally interested in such resolution plans, and must be furnished copies of such plans beforehand if they are to participate effectively in the meeting of the committee of creditors. This is for the reason that under Section 30(2)(b), repayment of their debts is an important part of the resolution plan qua them on which they must comment. So the first important thing to notice is that even though persons such as operational creditors have no right to vote but are only participants in meetings of the committee of creditors, they certainly have a right to be given a copy of the resolution plans before such meetings are held so that they may effectively comment on the same to safeguard their interest, the Court held. The Court stated that a closer look at the Notes on Clause 24 makes it clear that the third sentence of the Notes on Clause 24 is itself problematic and it is difficult to understand the same. First and foremost, it speaks of the resolution professional seeking information. The resolution professional does not seek information at a meeting of the committee of creditors, which is what Section 24 is all about. The resolution professional only seeks information from the erstwhile Board of Directors under Section 29 before preparing an information memorandum, which then includes the financial position of the corporate debtor and information relating to disputes by or against the corporate debtor etc. All this has nothing to do with Section 24 of the Code which deals with meetings of the committee of creditors. Secondly, the resolution professional does not prepare a resolution plan as is mentioned in the Notes on Clause 24; he only prepares an information memorandum which is to be given to the resolution applicants who then submit their resolution plans under Section 30 of the Code. The committee of creditors, in turn, gets information so that they can assess the financial position of the corporate debtor from various sources before they meet. It is, therefore, difficult to understand the Notes on Clause 24. The Court also noted that Regulations also make it clear that members of erstwhile BoD are vitally interested in resolution plans as they affect them. A resolution plan which has been approved or rejected by an order of the Adjudicating Authority, has to be sent to participants which would include members of the erstwhile Board of Directors – vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan. The Court further noted that every participant is entitled to a notice of every meeting of the committee of creditors. Such notice of meeting must contain an agenda of the meeting, together with the copies of all documents relevant for matters to be discussed and the issues to be voted upon at the meeting by way of Regulation 21(3)(iii). Resolution plans are matters to be discussed at such meetings, and the erstwhile Board of Directors are participants who will discuss these issues. The expression documents is a wide expression which would certainly include resolution plans, the Court ruled. Based on the above, the Court held that the arguments of the respondents that committee and participant are used differently and that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. Combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of documents that have to be furnished along with the notice of such meetings. As a result of the aforesaid discussion, the arguments of the respondents that committee and participant are used differently, which would lead to the result that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. The Court, therefore, allowed the appeal and set aside the NCLAT judgment
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TRI-COUNTY’S ?67 CR RESOLUTION PLAN FOR BSR GETS NCLT NOD
The National Company Law Tribunal (NCLT) has approved the resolution plan submitted by the US-based Tri-County Premier Hearing Services Inc. to acquire debt-ridden Bhilai Scan and Research Pvt. Ltd (BSR) Diagnostics Ltd. On 22 January, a Mumbai bench of NCLT presided over by justices V.P. Singh and Ravikumar Duraiswami approved the American company’s ?67-crore resolution plan for the Chhattisgarh-based diagnostics chain. The resolution plan provides that within 30 business days of the effective date, the company shall appoint a monitoring agency constituting of two representatives of the secured financial creditors, one of resolution applicant (successful bidder) and one of resolution professional (RP) to monitor and supervise the implementation of the resolution plan, the order said. The monitoring agency must have representatives each from Axis Bank, State Bank of India and the RP. The committee of creditors (CoC), which includes State Bank of India and Axis Bank, had approved the resolution plan with 99% voting in favour. The lenders agreed to a 58% haircut while approving the plan on 5 November. The RP received expressions of interest (EoI) from six entities, of which three filed their resolution plans. However, the CoC approved only one resolution plan of Tri-County Premier Hearing Services Inc.
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EMAAR TO APPEAL AGAINST NCLT ORDER TO INITIATE BANKRUPTCY PROCEEDINGS
Realty firm Emaar MGF Land will appeal against an NCLT order to start insolvency proceedings against the company after two homebuyers filed a petition over huge delay in delivery of their housing units, sources said. The appeal will be filed before the National Company Law Appellate Tribunal (NCLAT), they added. In January 2018, the National Company Law Tribunal (NCLT) approved the proposed demerger scheme of Emaar MGF Land, paving the way for two JV partners to go separate ways. The demerger process got completed in July last year. Admitting the pleas of the two homebuyers of Emaar MGF Land, a two-member bench headed by NCLT President Justice M M Kumar appointed Manoj Kumar Anand as the interim resolution professional (IRP) of the company and directed him to make a public announcement about the bankruptcy proceedings.
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NCLT REJECTS INSOLVENCY APPLICATION FILED BY CORPORATE DEBTOR SUPPRESSING LIQUIDATION ORDER WITH RS 10 LAKH COSTS
In a seemingly unprecedented order, the National Company Law Tribunal, Mumbai bench rejected an application filed by a corporate debtor under Section 10 of the Insolvency and Bankruptcy Code(IBC) with Rs.10 lakhs costs, on finding that it was filed suppressing winding up order passed against it by the High Court. The suppression was detected almost at the fag end of the Corporate Insolvency Resolution Process(CIRP), when a resolution plan approved by the Committee of Creditors was submitted before the NCLT for its approval. At this stage, one of the several financial creditors of the applicant informed the bench that the Bombay High Court had passed a liquidation order against the company on January 25, 2017. The application filed by Amar Remedies Ltd for initiating insolvency process against itself did not make any mention of the winding up order. The application filed by Amar Remedies Ltd for initiating insolvency process against itself did not make any mention of the winding up order. On being asked to explain this suppression, the applicant said that one of its creditors had filed a winding up application in the High Court in 2013, which was admitted on August 27, 2014. Later, the company sought reference to Board for Industrial and Financial Reconstruction(BIFR) under Sick Industrial Companies Act(SICA). On this application getting rejected, it filed appeal before the Appellate Authority for Industrial and Financial Reconstruction(AAIFR). Noting the pendency of proceedings in AAIFR, the High Court adjourned the liquidated proceedings sine die, by order passed on November 15, 2016. The corporate debtor said that the appeal in AAIFR abated when SICA wasrepealed following the enactment of IBC. Therefore, in terms of Section 6 of SICA, the application was filed in NCLT, submitted the applicant. The NCLT however noted that the Bombay High Court had in the meanwhile, taking notice of the abatement of appeal in AAIFR, passed liquidation order against the company on January 25, 2017. Without revealing that, Amar Remedies filed the application under Sec.10 IBC on May 29, 2017. The Tribunal observed that issue was not whether the corporate debtor was eligible to file Section 10 application, but whether it was bound to reveal the fact of liquidation order "Here point in issue is not the right of the corporate applicant for initiation of CIRP. But we are only examining whether the application U/S 10 of the IB Code 2016 is filed after the suppression of material facts known to be material", said the bench of V P Singh(Judicial Member) and Ravikumar Duraiswamy. In this regard, the Tribunal referred to Section 11(d) IBC, which barred an applicant against whom a liquidation order has been passed from initiating CIRP. Reference was made to the January 22 decision of SC in Forech India Ltd vs Edelweiss Asset Reconstruction Co.Ltd, where it was observed that Sec.11(d) barred a corporate debtor from filing application under IBC if liquidation order has been passed against it. The Tribunal hence observed in the order passed on January 29 as follows: It is clear that after liquidation order passed in a winding-up petition against the corporate debtor then it is barred from filing a petition under section 10 of the Code. Here the corporate debtor has not only suppressed the material fact that the winding up petition has not only been filed and admitted, but liquidation order has also been passed against the corporate applicant/corporate debtor liquidator has been directed to expedite liquidation proceedings expeditiously. The corporate applicant suppressed this material fact, knowing it to be material, and filed the petition under section 10 and in contravention of Rule 10 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The defence of the applicant that the fact of liquidation order was not material as the statutory Form 6 did not ask for such information was rejected by the Tribunal. It found that the applicant's conduct amounted to offence under Section 77(a) of IBC, which deals with filing application with suppression of material facts and directed Registrar of Companies Mumbai to lodge prosecution. The application was rejected with costs of Rs.10 lakhs, which was directed to be deposited in the Prime Minister's Relief Fund.
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RTIL GETS A NEW BIDDER AS CFM ARC EXITS THE RACE
A new investor has evinced interest in joining the fray to bid for debt-ridden RTIL — formerly Reid & Taylor (India) Ltd — while one withdrew from the resolution process. On Thursday, New Delhi-based Indian Gas informed the National Company Law Tribunal’s Mumbai bench of its decision to bid for the beleaguered company, while Gujarat-based CFM Asset Reconstruction (CFM ARC) withdrew from the race. Stating that it has a networth of Rs. 1,500 crore, Indian Gas staked a claim in the entire resolution process. Permitting the New Delhi company to bid for Reid & Taylor, the tribunal asked it to pay a non-refundable amount of Rs. 2 crore by February 5 and prove its net worth by that date. The matter comes up for hearing at NCLT on February 5. The judges Bhaskar Pantulu Mohan and V Nallasenapathy also directed the new bidder to appear before the National Company Law Appellate Tribunal (NCLAT) tomorrow and explain its bonafides and interest. India Gas was permitted to take part in the resolution process following the exit of CFM ARC. The tribunal also ordered that the deposit amount of Rs. 2 crore be refunded to CFM ARC.
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NCLT ALLOWS GOVT TO ADD USHA ANATHASUBRAMANIAN, 18 OTHERS AS ACCUSED IN PNB SCAM
The National Company Law Tribunal Thursday allowed a government plea to add 19 more respondents including the sacked head of Allahabad Bank Usha Anathasubramanian, in the Rs 14,000-crore Nirav Modi and Mehul Choksi scam that hit the state-run lender PNB last year. The new names in the list of the accused that the government wants to add include a former executive directors of Punjab National Bank K Brahmaji Rao and Sanjiv Saran; general manager Nehal Ahad; and Bishubrata Mishra, who was the internal chief auditor at the Brady House branch of PNB, where the scam took place, among others. The ministry also wants to add some more officials of the bank and companies owned by Nirav Modi and Mehul Choksi as respondents. Both Modi and Choksi are absconding and refused to come back to the country to face trial. The NCLT bench headed by VP Singh and Ravikumar Duraisamy also restrained these 19 people from alienating their assets until further orders.
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DIRECTORS OF 2 REAL ESTATE FIRMS ARRESTED
Directors of two private real estate firms were arrested on Thursday for non-payment of nearly Rs 4 crore of labour cess dues and those towards the Real Estate Regulatory Authority (RERA), the Gautam Buddh Nagar administration said. The directors of IVR Prime IT Sez firm and PME Power Solution India were arrested in the afternoon by revenue officials in Dadri and Sadar tehsils of the district, the administration said. "Recovery certificate (RC) was issued against IVR Prime IT Sez firm by RERA for recovery of outstanding dues worth Rs 3.04 crore. Based on the RC, the action was taken, and the firm's director was arrested after it failed to remit the dues," Anjani Kamar Singh said. Read This - Farmers to get Rs 6,000/yr in 3 installments under Centre funded scheme: FM The revenue officials arrested director of PME Power Solution India for not paying Rs 80.25 lakh in labour cess, SDM Sadar Rajpal Singh said. According to the procedure, the firms were served notices about 15 days ago, asking them to clear their dues or face action, the officials said. "The action is part of a special drive initiated by district magistrate B N Singh to recover all pending dues," Singh said.
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BANK OF INDIA, MAHARASHTRA TO COME OFF CENTRAL BANK WATCHLIST -SOURCE
Bank of India and Bank of Maharashtra will be dropped from the Reserve Bank of India's prompt corrective action plan (PCA) for state-owned banks with high levels of bad debt and inadequate capital, a source told Reuters on Thursday. The move follows improvements in their asset quality and capital ratios and a ruling by the RBI on Thursday, said the source. The RBI's board for financial supervision chaired by new governor Shaktikanta Das took the decision at its meeting on Thursday after reviewing the latest quarterly performance of all 11 banks on the PCA list, the source said. A third lender may also be removed from the list pending the outcome of a technical clarification from the bank, the source added. There are 21 listed state-run banks in India that provide about two-third of the total loans. With nearly half of them under a PCA plan and the rest cautious due to a record $150 billion in bad debt, the government has been keen the curbs be relaxed to boost their ability to lend. Bank of India's net non-performing assets fell to 5.87 percent in the October-December quarter from 7.64 percent in July-September. Its capital adequacy ratio improved to 12.47 percent from 10.93 percent. Bank of Maharashtra's net non-performing assets fell to 5.91 percent from 10.61 percent while its capital adequacy improved to 11.05 percent from 9.87 percent.
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SUPREME COURT DIRECTS SAHARA CHIEF SUBRATA ROY TO APPEAR BEFORE IT ON FEBRUARY 28
The Supreme Court Thursday directed Sahara group chief Subrata Roy to appear before it on February 28 for failing to deposit Rs 25,700 crore in the SEBI-Sahara case for returning investors' money. The apex court said six months were given to Sahara by its last order to arrange the amount but what has transpired during the period has not inspired the confidence of the court. A bench headed by Chief Justice Ranjan Gogoi noted that the group has deposited only Rs 15,000 crore. The bench, also comprising Justices A K Sikri and S K Kaul, declined to give any further chance to Roy and other directors to comply with its previous orders It said it had decided to proceed with the matter so that the law takes its own course and directed Roy and other directors to appear before it personally on next date of hearing. Roy, who has spent almost two years in jail, has been on parole since May 6, 2017. The parole was granted the first time to enable him attend the funeral of his mother. It has been extended since then. Besides Roy, two other directors -- Ravi Shankar Dubey and Ashok Roy Choudhary -- were arrested for failure of the group's two companies -- Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL) -- to comply with the court's August 31, 2012 order to return over Rs 24,000 crore to their investors
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EXPECT LOAN GROWTH OF 20-25% AHEAD, SAYS INDIABULLS HOUSING FINANCE
Indiabulls Housing Finance Ltd posted strong margins in the third quarter as asset quality was stable. Loan growth however tapered off. Gagan Banga, said the company expects loan book growth between 20 percent and 25 percent next year, with a profit after tax estimated to grow by 17 percent to 19 percent. In the aftermath of the IL&FS led liquidity crisis, the company had to focus more on the ALM etc and I think the best thing that has happened to the company after about 40 quarters of steady growth is that within three months, we were able to successfully migrate and very significantly improve the ALM, he added. Banga said that, We may have taken some small developers to National Company Law Tribunal (NCLT) in terms of a significant exposure going bad etc, we have seen a fair amount of recovery happening. He further mentioned that, The cases that we are trying to pursue in NCLT with the developers - there was some talk in the middle and I had checked around October that we have filed some new cases in NCLT and what we have realised was that those were not fresh cases, those were dates, which were appearing for old cases.
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ESSEL PROMOTERS TO MAKE GOOD SHORTFALL IN COLLATERAL FOR YES BANK LOAN
Essel group promoters plan to make good any shortfall in the collateral for a loan they have taken from YES Bank. The lender, which has an exposure of Rs 3,300 crore to the promoter entities of Essel group, has asked promoters to increase the collateral given to the bank so that it can ring-fence its exposure to the group, said sources. Sources said that the bank claimed the current collateral is not adequate according to Reserve Bank of India guidelines, due to the sharp fall in the share price of Dish TV in the last one year. Yes Bank was holding collateral in the form Dish TV shares owned by Essel group’s promoters. Dish TV on Tuesday said its promoter stake had fallen to 59.1 per cent from 60.83 per cent after pledged shares were invoked on Friday, the day its stock price slipped 33 per cent on reports of an alleged link between the group and a firm, which is being probed by government agencies. Dish TV also said no further pledges had been given to lenders and that there was no default in terms of repayment of loans to them. Payments are being made regularly to lenders and it will be maintained, Goel said. In an open letter last week, Essel group chairman Subhash Chandra had sought more time from the banks and institutions (mainly mutual funds) to repay their loans. Chandra also said the Dish TV and Videocon d2h merger was an error which resulted in a big loss of fortune for both him and his brother, Jawahar.
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SEBI DIRECTS 16 ENTITIES TO DISGORGE RS 3-CR UNLAWFUL GAINS IN POLYTEX INDIA CASE
Sebi on Thursday directed 16 entities to disgorge over Rs 3 crore of 'unlawful gains' made by them while dealing in the scrips of Polytex India Ltd. In its ruling, Securities and Exchange Board of India (Sebi) has ordered the entities to disgorge the amount, along with an interest of 12 per cent per annum Besides, four individuals have been barred from the securities markets for seven years while one person has been banned for five years. However, the regulator has not put any restriction on the remaining 11 entities as they have already undergone debarment for a period of more than 5 years. These directions come after Sebi found that these entities have violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms. Sebi noted, artificial volume was created by certain connected entities through large scale trading among themselves, without real change in ownership of shares traded among them, for the purpose of increasing volume of trading or influencing the price. Further, Sebi noted that the entities had made profit in the scrip of Polytex and loss in the scrip of Gemstone. The noticees cannot be allowed to set off the losses suffered in one scrip with any other scrip as the same will amount to adjustment of illegal gains against losses suffered while perpetrating the manipulation in one scrip. Accordingly, Sebi has concluded that all the 16 entities have violated provisions related to PFUTP norms and directed these entities to jointly and severally, disgorge an amount of Rs 3.05 crore along with interest calculated at the rate of 12 per cent per annum from December 17, 2012 onwards, till the date of payment.
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HOMEBUYERS TAKE PENDING CASES TO RERA IN FIRST FACE-TO-FACE MEET
The Greater Noida bench of Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) met a group of 56 homebuyers representing 10 different associations at Noida Authority’s Sector 6 office on Thursday, in its first face-to-face interaction with residents since its formation. From September 4, the panel will start hearing cases in Greater Noida four times a week — Monday, Tuesday, Thursday and Friday. A separate bench will, however, operate out of Lucknow on Wednesday. In Thursday’s meeting, the full bench of UP-Rera was present, including its full-time chairman Rajive Kumar. As many as 32 issues were raised by homebuyers at the meeting, according to the panel members. Individual cases will be heard in court, but we focused on the generic issues before the bench starts operating from Greater Noida, a senior member of the panel told. The Rera panel will be in discussion with Credai (Confederation of Real Estate Developers Association of India) on Friday, followed by discussions with Noida, Greater Noida and authorities in the coming days before hearing the cases from September.
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SEBI DIRECTS 16 ENTITIES TO DISGORGE RS 3-CR UNLAWFUL GAINS IN POLYTEX INDIA CASE
Markets watchdog Sebi on Thursday directed 16 entities to disgorge over Rs 3 crore of 'unlawful gains' made by them while dealing in the scrips of Polytex India Ltd. In its ruling, Securities and Exchange Board of India (Sebi) has ordered the entities to disgorge the amount, along with an interest of 12 per cent per annum
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SEBI BARS MAITREYA PLOTTERS, 2 DIRECTORS FOR 4 YEARS OVER PRIMA-FACIE IN LAND DEAL
Sebi Thursday banned Maitreya Plotters and Structures and two directors from the markets for at least four years and asked them to refund Rs 1,775 crore to investors in three months The directors are Madhusudan Satpalkar and Janardan Arvind Parulekar, as per Sebi order. Besides, the regulator noted that several proceedings have been initiated against the company by different entities and Nasik district court has allowed for the constitution of a committee for payment of the money to the investors. The Sebi in the year 2013 had prima-facie found the schemes for booking or purchase of plot launched by the firm from 2009 to 2013 were deemed to be collective investment scheme (CIS).
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NSE, SGX MAY SIGN OFFSHORE TRADING PACT
The National Stock Exchange (NSE) and the Singapore Exchange may soon call a truce in their longrunning tussle over offshore equity derivatives trading. India’s largest stock exchange is expected to sign an agreement with SGX that will allow all of NSE’s Indiarelated products offered on SGX including Nifty futures to be executed through the NSE International Exchange. The latter is a subsidiary of NSE located in the International Financial Services Centre (IFSC) at the Gujarat International Finance Tec-City (Gift City) in Gandhinagar, said two people aware of the development. NSE and SGX have submitted a joint proposal to the Securities and Exchange Board of India (Sebi) seeking permission to allow such an arrangement, said the people cited above. “After extensive negotiations, both the exchanges have arrived at a mutually acceptable arrangement. However, there are no regulatory precedents in India for such framework,” said one of them. “Sebi is expected to reach out to its counterpart MAS (Monetary Authority of Singapore) in the next few days to finalise the matter.” The NSE International Exchange will not have any direct dealings with the actual investors. This will also give SGX investors access to other products listed in Gift City that are otherwise not available on SGX. All IFSC Gift trades are exempt from several levies, including capital gains tax, securities transaction tax and stamp duty as an incentive to make it a global hub.
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IRDAI ASKS INSURERS TO PROVIDE FOR IL&FS EXPOSURE, WANTS MIS-SELLING CURBED
Insurance Regulatory and Development Authority (IRDAI) has asked the insurance companies to make provision for their exposure to the beleaguered IL&FS group. They have to make provisions for it as those exposures cannot be written off Shubash Chandra Khuntia said. Moreover, the IRDAI Chairman had earlier cautioned the insurance companies on the risks associated in investing in low-rated debt instruments. Khuntia also expressed the concern over of the regulator over commissions the insurance companies pay to the motor insurance service provider (MISP) as they are higher than what has been stipulated by the insurance regulator. Whenever it is coming to our notice, we are taking action. We have also done some focused inspection of some MISPs, we are watching the market very carefully for some violations, Khuntia said. Khuntia also touched upon the mis-selling aspect of the insurance business and asked the industry players to devote more time for underwriting their products and selling it in a fair manner. He also asked the insurers to speed up the claim settlement process. As the non-life space is highly under-penetrated in India, the chairman expressed hope in the fact that cyber security insurance will be a big opportunity for general insurers to capitalise on in the future.
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MERGER DELAYS IMPACT BUSINESS DECISIONS AT GOVERNMENT INSURANCE FIRMS
According to rough estimates, in the officers grade alone close to 600-900 posts remain vacant over the last one year. At the clerical and subordinate level, the staff shortage is around 12000, say sources in the companies. The impact is already telling about the financial performance of the companies. Also, at least two companies, National Insurance and United India Insurance, significantly lost their market share. While National lost the market share from 10.78 per cent in December 2017 to 8.63 per cent in December 2018, United India Insurance lost it from 11.02 per cent to 9.27 per cent over the time frame. The three insurance companies have posted high losses in Q2 of FY19, as their premium growth came down and provisions rose. Multiple reasons accounted for the losses, including manpower crunch and lack of clarity of merger. Lack of clarity over merger was a reason that the premium came down. Also, the shortage of manpower was a reason that the business suffered. Further, the companies had to make huge provisions over third party motor losses, said a senior official at the public sector general insurance sector. According to a senior official at a private sector general insurance firm, while higher provisioning norms apply both private and public sector firms, the private sector firms have been more prudent in selecting the category mix. For United India Insurance, loss (before tax, as after tax figures not available) in Q2 of FY19 was Rs 868 crore (against a loss of Rs 36 crore before tax in the corresponding period). For National Insurance the loss was Rs 707 crore in Q2 of FY (against a profit of Rs 90 crore in Q2 of FY18). For Oriental India Insurance, the loss was Rs 240 crore in Q2 of FY 19(against a profit of Rs 200 crore in the same period in FY18). As on 31st March 2016, the total staff strength of the four general insurance companies was about 64130, with United India Insurance at 16345, Oriental Insurance at 13923, National Insurance at 15079 and New India Assurance at 18783, according to data available with the Union finance ministry.
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STATE LEVEL BANKERS' COMMITTEE IN TN ASKS BANKS TO MAXIMISE CREDIT FLOW TO MSMES
In tune with the RBI's policy, the State Level Bankers' Committee in Tamil Nadu Thursday urged bankers to streamline credit flow to the micro, small and medium enterprises (MSMEs), saying the sector needed more attention SLBC Chairman R Subramania Kumar, in a statement, said there was huge scope for expanding credit to the sector since a large number of MSME units were present in the state. The SLBC is an inter-institutional forum at state-level ensuring co-ordination between government and banks on matters pertaining to banking development and city-headquartered Indian Overseas Bank is the Convenor Bank of the committee in Tamil Nadu. Kumar said, Bankers have to make a realistic assessment of the credit requirement and provide adequate credit on time by making use of automated portals so that the MSMEs need not look outside the Banking system for additional finance The processing time should be reduced, sanctions to be conveyed quickly and time norms as prescribed by RBI should be complied with. This would save the MSME units from getting trapped in high-interest credit cycle Kumar said. The SLBC also urged bankers to extend restructuring facilities to all the eligible MSME units, besides advising the banking industry to assess the issues faced by the sector. Reserve Bank of India had provided special training to nearly 11,000 officers at various commercial banks on lending to micro, small and medium enterprises. This training has been provided to officers working at nearly 3,000 bank branches covering all districts in the country through more than 2,000 special workshops in the last three years.
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BSE TO LAUNCH APP FOR DIRECT ACCESS TO RETAIL INVESTORS IN G-SECS, T-BILLS AUCTION
The Bombay Stock Exchange (BSE) will launch a mobile app on Friday to help retail investors participate directly in the auction of government securities and treasury bills conducted by the Reserve Bank of India (RBI). The app would enable investors to directly participate in the auction without the involvement of a registered trading member of the BSE, the exchange said. The exchange will also enable trading of treasury bills (T-bills) in the capital market segment from Friday. The trading of T-bills in secondary markets will provide an exit route for investors who have been holding securities in the demat format. Last month, the BSE had launched BSE-Direct, an online bidding platform for retail investors, to participate in non-competitive bidding of government securities (G-secs) and T-bills. The platform offers a user-friendly interface, allows 24x7 bidding and enables collection of bids from investors.
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NSE OPENS DELIVERY CENTRES FOR COMMODITIES IN 3 MORE CITIES
Leading stock exchange NSE on Thursday said it has opened additional delivery centres for commodity derivatives in three more cities of Mumbai, Chennai and Delhi. The centres will facilitate pan-India delivery mechanism, the National Stock Exchange of India (NSE) said in a release.
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YES BANK APPOINTS AJAI KUMAR AS INTERIM CEO
Yes Bank Ltd on Thursday named Ajai Kumar as interim chief executive effective February 1, until Ravneet Gill takes charge. Rana Kapoor stepped down as CEO on January 31 after the bank's founder completed his truncated term, the lender said in a statement. Yes Bank hired Gill, the head of Deutsche Bank India, as its new chief executive last week after the Reserve Bank of India (RBI) demanded that Kapoor be replaced.
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NOIDA: 2 BUILDERS HELD FOR NOT PAYING LABOUR CESS, RERA DUES
Directors of two private real estate firms were arrested on Thursday for non-payment of nearly Rs 4 crore of labour cess dues and those towards the Real Estate Regulatory Authority (RERA), the Gautam Buddh Nagar administration said. The directors of IVR Prime IT Sez firm and PME Power Solution India were arrested in the afternoon by revenue officials in Dadri and Sadar tehsils of the district, the administration said. Recovery certificate (RC) was issued against IVR Prime IT Sez firm by RERA for recovery of outstanding dues worth Rs 3.04 crore. Based on the RC, action was taken and the firm's director was arrested after it failed to remit the dues, Dadri Sub-Divisional Magistrate (SDM) Anjani Kamar Singh said. Director of PME Power Solution India was arrested by the revenue officials for not paying Rs 80.25 lakh in labour cess, SDM Sadar Rajpal Singh said. According to officials, when RCs are issued against pending dues to any group or entity, it is given a 15-day notice to clear the dues. Action is initiated only after 15 days.
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ICICI BANK LOAN CASE: HOW INVESTIGATIVE ‘ADVENTURISM’ HURTS EASE OF DOING BUSINESS
The investigating agency should avoid investigative ‘adventurism’ and centralise only on professional investigation, Arun Jaitley had said. The Minister’s damnation makes it loud and clear, not only to the CBI but also to the other agencies of the government, that such an ‘intent’ is ruinous for the ease of doing business something that the Modi government underlines among its successes. Amongst all the parameters, businesses cannot exist and flourish in a state of constant apprehension and dread of the capriciousness of the arms of law and regulatory agencies. This discourages investment and entrepreneurship, which has the cascading effect of low growth and poor job creation. While investigative ‘adventurism’ ravages reputations and incurs financial costs, professional investigation targets real accused, Arun Jaitley further pointed out. Businesses cannot exist and flourish in a state of constant apprehension and dread of the capriciousness of the arms of law and regulatory agencies. This discourages investment and entrepreneurship, which has the cascading effect of low growth and poor job creation, he said. Davar further said that on account of several amendments to the Companies Act, rising compliances, the work of independent directors has become so burdensome that several professionals decline board appointments resulting in a vacuum at the top of most company’s leadership. It’s time the government restrains the arbitrariness and lets the businesses concentrate on business, he said. Best to put in Arun Jaitley’s words: My advice to our investigators – Follow the advice of Arjun in the Mahabharat – Just concentrate on the bulls eye.
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TATA GROUP TO PROVIDE FREE HIGH-SPEED WIFI ON 4,000 RAIL STATIONS
Piyush Goyal-led Railway Ministry has now roped in the Tata Group in a bid to provide free high-speed WiFi facility at more than 4,000 railway stations across the country. According to an IE report, to carry out proof of concept (PoC) of the WiFi project, under which Indian Railways station users will be able to enjoy high-speed internet for free, Tata Trusts had been given eight railway stations between Bengaluru and Mysore, as part of the understanding, before the project is rolled out across the country. Interestingly, at eight stations across the railway network, the PoC process has been a success, the report said. The project will be carried out by Tata Trusts as part of its Corporate Social Responsibility (CSR). Therefore, Indian Railways will not have to shell out anything for this. Railway Minister Piyush Goyal took personal initiative in discussions with Tata Group’s top management to get the company on board. For the Railway Board, this initiative is one of the main priorities as this will be the largest CSR initiative ever on Indian Railways However, to get the project implemented, the Tatas have tied up with a separate agency, the report said. According to the report, nearly 2,000 out of the 8,000-odd railway stations have been left out of the proposed WiFi project since they are halt stations, which do not receive significant footfall. The internet giant, Google has already wired up more than 400 bigger railway stations across the country to take the current figure to 712 railway stations. Also, the PowerGrid Corporation is providing WiFi to 100 railway stations as part of its CSR initiative. The national transporter’s own telecom PSU RailTel has also covered a number of railway stations to implement free Wifi facility.
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FACEBOOK, TWITTER REMOVE ACCOUNTS LINKED TO IRAN, RUSSIA, VENEZUELA
Facebook Inc. and Twitter Inc. have been sharing notes on fake accounts tied to Iran that have been trying to manipulate political thought around the world, leading to another wave of takedowns by the social-media sites. Facebook said it removed 783 pages, groups and accounts linked to Iran that were attempting to manipulate political discussions about current events, like the Israel-Palestine conflict and the wars in Syria and Yemen. The company said Thursday that the accounts and page administrators typically represented themselves as locals in at least 26 countries, including Iraq, Israel, Afghanistan and the US, but posted messages that repeated the content of Iranian state media. The removals built on activity the companies found last year, with some outside help from security firm FireEye. The industry collaboration has been central to the success of these operations, Facebook said. In September, Twitter disclosed it had suspended 770 accounts potentially based in Iran for violating its policies. Since then, the company has suspended 2,617 additional malicious accounts it believes had origins in Iran, which tweeted 24,000 times about the 2018 US midterm elections. The content included 262 pages, 356 accounts and 3 groups on Facebook, and 162 accounts on Instagram. The groups spent less than $30,000 in Facebook advertising, but 2 million Facebook users followed at least one of their pages. Twitter said it continues to see activity on the service related to the Russian Internet Research Agency, the troll farm that spread divisive information during the 2016 US presidential election. It found 418 additional accounts that appeared to originate in Russia and posted 73,398 tweets related to the midterm elections, with hashtags like #MAGA and #ReleasetheMemo. Twitter said it also suspended 764 accounts in Venezuela before election day and notified law enforcement of the activity.
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INDIA LEADS DAILY USERS GROWTH FOR FACEBOOK IN DECEMBER QUARTER
Facebook saw its base of daily users growing 9 per cent to 1.52 billion in the December quarter, led by growth in markets like India, Indonesia and the Philippines, the social networking giant has said. The daily active users (DAUs) represented about 66 per cent of the 2.32 billion monthly active users (MAUs) in the December 2018 quarter, David Wehner said. He added that MAUs -- users who have used Facebook within the month -- grew by 191 million or 9 per cent compared to last year.
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