TIOL-DDT 2829
21 04 2016
Thursday

MESSER Griesham GmbH, a German Company ("MGG") entered into a Share Purchase and Cooperation Agreement with the shareholders of an Indian company called Goyal Gases Ltd. ("GGL") on 12.5.1995. By virtue of the said agreement, MGG purchased 30% of equity shares of GGL. Subsequently, MGG increased its shareholding in GGL to 49%.

In a company known as BOMBAY OXYGEN CORPORATION LIMITED (‘BOCL') majority shares were collectively held by a group of persons known as RUIAS (they belong to one family). On 23.6.1997, MGG entered into another Share Purchase Agreement with RUIAS. By the said agreement MGG agreed (i) to purchase 45001 shares of BOCL from RUIAS, and (ii) also to acquire another 30000 shares of BOCL from the open market which would make MGG the majority shareholder of BOCL (creating a controlling interest).

Messer Holdings Ltd (‘MHL') is a company incorporated in British Virgin Islands on 20.01.2000 by MGG and another company known as Morgan Trade and Commerce which is a 100% owned subsidiary of GGL. The authorised share capital of MHL is 10,000,000 DM (currency of Federal Republic of Germany) divided into 10,000,000 shares. It has two Directors, one representing MGG and the other Morgan Trade and Commerce. Interesting feature of MHL is that the shares of this company are bearer shares. It is an admitted case of all the parties that the law of British Virgin Islands permits it.

(A bearer share is an equity security that is wholly owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner of the stock, nor does it track transfers of ownership. The company disperses dividends to bearer shares when a physical coupon is presented to the firm.)

This is not a Panama story - I am simply reporting a Supreme Court judgement pronounced on Tuesday.

These inter-corporate dealings invariably led into litigation culminating in the Supreme Court, but the Supreme Court was not really impressed with this kind of litigation and imposed cost on all the three litigants at Rs. 25 lakhs on each of them. The Supreme Court observed,

A great deal of effort was made both by RUIAS and MGG to convince the court that in view of the protracted litigation between the parties this court should examine all the questions of rights, title and interest in these shares between the various parties as if this were the court of first instance trying these various suits.

The examination of various questions raised by the petitioners in these SLPs, in our opinion, is wholly uncalled for in the abovementioned factual background.

The net effect of all the litigation is this. For the last 18 years, the litigation is going on. Considerable judicial time of this country is spent on this litigation. The conduct of none of the parties to this litigation is wholesome. The instant SLPs arise out of various interlocutory proceedings. Arguments were advanced on either side for a period of about 18 working days as if this Court were a Court of Original Jurisdiction trying the various above-mentioned suits. The fact remains that in none of the suits even issues have been framed so far. The learned counsel appearing for the parties very vehemently urged that there should be a finality to the litigation and therefore this Court should examine every question of fact and law thrown up by the enormous litigation. We believe that it is only the parties who are to be blamed for the state of affairs. This case, in our view, is a classic example of the abuse of the judicial process by unscrupulous litigants with money power, all in the name of legal rights by resorting to half truths, misleading representations and suppression of facts. Each and every party is guilty of one or the other of the above-mentioned misconducts. It can be demonstrated (by a more elaborate explanation but we believe the facts narrated so far would be sufficient to indicate) but we do not wish to waste any more time in these matters.

This case should also serve as proof of the abuse of the discretionary Jurisdiction of this Court under Article 136 by the rich and powerful in the name of a ‘fight for justice' at each and every interlocutory step of a suit. Enormous amount of judicial time of this Court and two High Courts was spent on this litigation. Most of it is avoidable and could have been well spent on more deserving cases.

We therefore, deem it appropriate to impose exemplary costs quantified at Rs.25,00,000.00 (Rupees Twenty Five Lakhs only) to be paid by each of the three parties i.e. GGL, MGG and RUIAS. The said amount is to be paid to National Legal Services Authority as compensation for the loss of judicial time of this country and the same may be utilized by the National Legal Services Authority to fund poor litigants to pursue their claims before this Court in deserving cases .

Please see (2016-TIOL-44-SC-MISC)

DGFT Clarification on Benefit of MEIS on exports of Tamarind Kernel Powder 

IT has come to the notice of the DGFT that some exporters are classifying the item "Tamarind Kernel Powder" under ITC(HS) Code 11063010 and claiming MEIS benefit.

DGFT clarifies that the correct ITC(HC) Code of "Tamarind Kernel Powder" is 13023290 on which MEIS benefit is not available.

Therefore, DGFT advises all RAs not to grant MEIS benefit on "Tamarind Kernel Powder". In case, any RA has granted MEIS benefit on Tamarind Kernel Powder, such cases should be reviewed and recoveries be made.

DGFT Trade Notice No. 02/2016., Dated: April 19, 2016

Babus at work - no compassion can be shown to a person who has no will to work

IN a recent judgement, the Delhi High Court upheld the dismissal of a truant employee.

The lady employee was appointed as a Lower Division Clerk (LDC) on temporary basis on 08th September, 1992. In 2002 her services were terminated under Rule 5(1) of the Central Civil Services (Temporary Service) Rules, 1965; the main reason could be her frequent absence from duty. The employee approached the High Court of Delhi.

The High Court observed,

A perusal of the record reveals that the petitioner was not performing her duties with due diligence and she was found guilty of taking unauthorized leaves. The petitioner has failed to show that the leaves that were taken by her were sanctioned by the respondents. Thus, it is clear that the petitioner has decided at her own will when to take leave and when to report for duty. It has emerged from the record that the petitioner not once but repeatedly was guilty of taking leaves without sanction and in a situation like the present case the termination order cannot be called as stigmatic. 

The petitioner remained absent continuously from duty w.e.f 05.12.2002 (sic) to 11.04.2002 and 01.07.2002 to 11.09.2002 and thereafter from 16.09.2002 to 14.12.2002. Prior to December, 2000 the petitioner had been absenting herself from duty despite the fact that her leave was not sanctioned. The application of the petitioner for earned leave for the period 16.07.2000 to 31.10.2000 was rejected by the authorities. Earlier also, leave for the period 16.07.2000 to 31.07.2000 was rejected. She remained absent virtually for the whole year. Thereafter, also she had remained unauthorisedly absent for considerable period, therefore, by no stretch of imagination, it can be said that petitioner had performed her duties to the entire satisfaction of the respondents.

It is pertinent to mention here that even after issuance of repeated Memos, the petitioner neither report back to duty nor submitted any satisfactory explanation for her absence, which shows that she was absolutely incorrigible and did not mend her ways despite repeated warnings. In these circumstances, any employer would have taken the same action because it was absolutely clear that the petitioner was not interested in her job. If the petitioner has been terminated, she is to blame herself.

Further, no compassion can be shown to a person who has no will to work and no respect for the directions/ warnings issued by authorities. It is absolutely clear that sufficient opportunity was given to the petitioner but she showed no improvement. It seems she was absenting at her own whims and fancies without bothering for the consequences.

Trading Bloc to India - Nirmala Sithraman denies news report

THE ‘Hindu' newspaper had reported on Tuesday:

India has been told to either agree to eliminate tariffs on most products quickly or leave the talks on the proposed Free Trade Agreement (FTA), being negotiated by the Regional Comprehensive Economic Partnership, the trading bloc comprising 16 Asia-Pacific countries.

Sources in two ministries told The Hindu that the other RCEP members have issued this ultimatum being irked by what they perceive as New Delhi's "obstructionist, defensive and half-hearted approach" that is "delaying" the conclusion of the talks. They said the apprehensions were voiced at the last round of negotiations in February in Brunei, adding that the 12th round of RCEP talks slated for April 23-29 at Perth in Australia could be a "turning point" in the negotiations with India.

Union Minister Nirmala Sitharaman tweeted:

Sorry, @the_hindu this is baseless! Trading bloc to India: Cut tariffs or exit FTA talks - The Hindu.

The RCEP negotiations are happening in detail. India participating in the next round beginning 24 April '16 at Sydney, Australia.

We've made our offers for goods & services. Are being discussed. "India has been told...to leave the talks...?" Shocked to say the least!

CBI Arrests Service Tax Superintendent

CBI arrested a Service Tax Superintendent in Delhi while accepting a bribe of Rs. 1,50,000 out of the demanded bribe of Rs.2,50,000. The bribe was demanded for not raising a demand on an assessee. Service Tax has become very lucrative for the departmental officers and lakhs of rupees are being transferred as bribes. Unsuspecting assessees are virtually cheated with threats of arrest, prosecution, Show Cause Notice and money is extorted.

Every Service Tax office is a sitting duck for the CBI to shoot.

Until Tomorrow with more DDT

Have a nice day.

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