An order by the Securities Appellate Tribunal (SAT) in August last year has again stirred the hornet’s nest with respect to the powers of the regulatory bodies, and the resolution of areas of overlap. S. Kumars Nationwide, is a company listed on the Bombay Stock Exchange (BSE), and engaged in the business of buying selling, manufacturing and marketing of textile products. In a bid to repay loans...
The RTI and Income Tax Returns
The recent decision of the Central Information Commission in the Escorts case, has led to many raised eyebrows. In sum, the CIC held in Mr. Rakesh Gupta v. Public Information Officers (Decision No. CIC/LS/A/2009/000647/SG/5887, available here), that the information submitted to the Income Tax Department by a company cannot be personal information, and even personal information submitted by the...
Derivative Actions – Part I
The issue of shareholders making claims on behalf of a corporation has been a bone of contention ever since the decision in Foss v. Harbottle. However, in recent times, two particular aspects of this controversial area of corporate jurisprudence have received significant attention. These are the issues of multiple derivative claims, and the statutory requirements laid down for a derivative claim...
The SEBI-NSDL Controversy
The recent decision of the SEBI to set aside as ultra vires two orders passed by a Special Committee set up by it has led to a huge furore in commercial and legal circles. The origin of the controversy was the appointment of CB Bhave as the Chairperson of the SEBI at a time when SEBI was investigating the propriety of the actions of the National Securities Depositary Limited (“NSDL”), in relation...
‘Principal place of business’ – Oral Arguments in Hertz v. Friend
An earlier post had discussed the issue in Hertz v. Friend, which calls upon the United States Supreme Court to determine what is the ‘principal place of business’ of a corporation having operations in more than one State. The Court heard the matter on 10th November, and the transcript is available here. Unfortunately, while it makes interesting read, the potential the case seemed to have for a...
Yet Another Controversy over Section 14A
Earlier posts here had discussed the decision of a Special Bench of the Bombay ITAT in Daga Capital and the possible inequities that could result from its interpretation of section 14A. The most significant one was that expenditure could be disallowed even if no nexus was established between the expenditure and tax-free investment income. To quote from an earlier post explaining the inequity...
United States Supreme Court considers a corporation’s ‘principal place of business’
An important question, with significant implications for contemporary corporate law theory will be heard by the United States Supreme Court on November 10. The matter in question is Hertz Corp. V. Friend (08-1107), which poses the question of which State can be considered to be a corporation’s ‘principal place of business’. The issue has arisen against the backdrop of a class action against the...
A Reiteration of Separate Legal Entity
A recent decision of the Punjab and Haryana High Court in CIT v. Panchratan Hotels has re-emphasised the notion of separate legal entity, albeit in the context of the law of taxation. Here, the assessee was Panchratan Hotels, and had declared losses for the said assessment year. On 31.7.1992, the shareholders of the company had changed, through a transfer of 100% shareholding from the original...
Supreme Court Reaffirms Dharmendra Textiles
Earlier posts here have considered the issue of whether the penalty under section 271(1)(c) of the Income Tax Act, 1961 is a criminal, quasi-criminal or civil liability, which in turn has implications on whether mens rea is needed for awarding penalty under the section. The Supreme Court had held in Dilip Shroff that mens rea is needed for the non-disclosure of penalty to result in penalty, but...
FDI Guidelines to Apply to LLPs
Several posts here have discussed the introduction of the concept of Limited Liability Partnerships (“LLPs”) in India, and its treatment under the Indian legal regime. In another interesting development, the Government is now planning to bring LLPs into the scope of the FDI regime, in order the streamline the establishment of cross-border LLPs. LLPs are structurally more similar to corporate...
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