Kochadaiiyan Runs Into Tax Trouble

Express News Service

 08th Oct 2014 06:05 AM

CHENNAI: The Egmore Economic Offences Court on Tuesday directed the Triplicane police to conduct preliminary inquiry for any cognizable offence and file a case, if any, against the producers of Kochadaiiyan  in connection with the alleged illegal collection of entertainment tax by the makers of the movie.

Petitioner K J Saravanan, an advocate, stated in his petition that he watched the movie in Chennai on August 12, for which the ticket cost Rs 120, inclusive of entertainment tax. But later he had come to know that the movie had been exempted from entertainment tax by the Commercial Taxes Department, as the name of the movie was in Tamil. The producers of the movie had cheated the general public by collecting entertainment tax and made illegal gain, he charged in the petition.

Saravanan contended that the Commercial Taxes Department, which is the regulatory authority in tax collection, had failed to prevent the illegal tax collection by the producers. He had filed a complaint with the Director General of Police in this regard through registered post, but no action was taken so far, he added.

Judge S Sivasubramanian observed that the court had found prima facie grounds to proceed against the accused in accordance with law and that the court was inclined to forward the complaint to the Inspector of Police, Triplicane, for necessary action.

The judge further directed the Triplicane Inspector to conduct a preliminary inquiry to ascertain whether the information revealed any cognizable offence based on the complaint by the petitioner, and register a case if any and file a final report to the court.

Auditors’ query forces BOI to declare Gupta Coal loans as NPA

TOI 1 Oct 2014
Nagpur: The city-based Gupta Group is turning out to be another vexed loan case for the banks. While lenders are yet to finalize a corporate debt restructuring (CDR) proposal for two group companies, Gupta Coal India Limited (GCIL), which has the biggest loan of over 2,000 crore, has been declared a non-performing asset (NPA) by Bank of India (BOI) for its share of the debt.

BOI is the leader of a consortium of over half a dozen lending agencies with exposure in GCIL. However, the account was only classified as NPA after BOI auditors raised an objection. BOI's individual loan to GCIL stands at over 550 crore.

GCIL is a coal trading company also engaged in imports. Most of the other consortium banks continue to keep it as a standard asset, saying that the payment has been regular. Sources in BOI say it was in June that the account was finally classified as NPA. Though the bank tried its best to treat it as a standard asset, the auditors did not agree.

Now, with the auditors having raised objections, there is little chance of considering a CDR proposal for this company, which was in the offing to tide over this financial crisis faced by the Gupta Group.

The Gupta group is headed by Padmesh Gupta, a prominent businessman from the city. TOI had sent him a text message seeking his comments, but it remained unanswered.

A large part of the GCIL loan is a cash credit limit, apart from letters of credit (L/C) and bank guarantee. The latter make up non-fund-based loans, which are to the tune of Rs490 crore, say sources. It has been learnt that the auditors had questioned the method on the basis of which the limits were sanctioned. Insiders say the company's credit limit should not have gone beyond 220 crore but the total outstanding ended up crossing over 550 crore.

One of the main features of the loan package was that the non-fund-based loans were convertible into fund-based. With a letter of credit, the company can purchase goods from the vendor with the bank directly paying the vendor. However, the bank's dues have to be cleared within 90 days. If there is a provision to change non-fund-based loans like L/C to fund-based, on non-payment after 90 days, the cash credit limit can be extended proportionately. After this, funds are drawn from
the limit to pay back the dues on L/C.

So, it becomes a part of the larger loan, which does not become NPA so long as the interest is served.

This facility is generally provided when the borrower has a longer realization cycle. But it can also be a convenient method to avoid an account from becoming NPA. If the defaulted amount on L/C becomes part of the larger loan, only interest has to be paid to keep the account as standard, said a chartered accountant engaged in project finance.

A senior officer in BOI who is monitoring the case admitted that the account was classified as NPA following the audit objection. There was an issue related to the limits that were calculated. "The bank has gone by the laid down norms, though it was not correct as per the auditors," the officer said, not wishing to be named. However, another top official in this bank said there are certain instances of diversion of funds too.

Was Jayalalithaa let down by her team of lawyers?

 FP Staff  Oct 8, 2014 14:57 IST

With the Karnataka High Court rejecting former Tamil Nadu CM J Jayalalithaa's bail petition, her legal counsel, including senior advocate Ram Jethmalani, has come in for criticism by several legal experts for their handling of her bail plea.

This report in the Times of India quotes a senior legal expert as saying that the legal team of Jayalalithaa acted like 'novices', questioning the counsels move to approach the court registrar after a judge had earlier adjourned Jayalalithaa's bail petition.

And with the Karnataka High Court rejecting Jayalalithaa's bail plea on Tuesday, the counsel's decision to seek bail for all four accused at the same time also evoked criticism from senior lawyers, who, asquoted by the Times of India, were of the opinion that if Jaya had sought bail alone, there were more chances of her being granted bail and the three other accused could have benefited later by citing her example.

Another senior legal officer had this to say:

Their decision to seek bail for all four, including the relatively young and healthy V N Sudhakaran, simultaneously defies logic," a veteran prosecutor of a central law enforcement agency told TOI. "If a case involves more than one accused, it is not uncommon practice among lawyers to move the case of the fittest among all for bail first," he said. "In this case, they ought to have first bailed out Jayalalithaa, who had age, health and societal status on her side."

While Jethmalani as well as counsels for Sasikala and Sudhakaran questioned the trial court's verdict convicting them in the case, stating that the order was incorrect as 'the very basis of its evaluation of assets was flawed', HC Justice AV Chandrashekhara appeared to be in no mood to grant Jayalalithaa bail, observing that corruption amounted to a violation of human rights and led to economic imbalance.

His decision to deny bail could well be based on a series of recent Supreme Court orders that have shown no leniency towards cases of corruption among government officials.

Among those cases that the verdict could have been based on was a recent May judgement,  relating to a case involving BJP leader Subramanian Swamy and CBI Director, Ranjit Sinha, when a Constitution bench led by then Chief Justice of India RM Lodha declared that 'corruption is an enemy of the nation', as this report in The Hindu states.

The verdict, though, could not have been worse for supporters of AIADMK chief J Jayalalithaa, who have been protesting across the state of Tamil Nadu.

On Tuesday afternoon, when Jayalalithaa's bail plea came up for hearing at the Karnataka HC, supporters gathered at the party office in Chennai as well as at areas around the High Court, where section 144 has been imposed. At a little before 4 pm, when media channels reported that Jayalalithaa had been granted conditional bail, firecrackers were lit and wailing supporters were seen erupting in joy. But their happiness was short lived. Within the next half hour, while the HC judge completed reading out his verdict, it was known that Jayalalithaa was denied bail and would continue to remain in prison.

Soon, angry supporters resorted to violence, attacking businesses and vehicles owned by residents of the neighbouring state.

This article in the The Indian Express reports how journalists in the courtroom began informing their newsrooms about the verdict, even before it was read out.

"As the judge began dictating his order — noting at first the SPP’s stand — many of those present in the court were typing the message “bail granted” on their phones or passing on similar messages to others standing outside the hall. In the 10 minutes that the judge was dictating his orders, news spread that Jayalalithaa had been granted conditional bail. Many of the supporters broke into a jig outside the court premises."

Jayalalithaa's counsel is now likely to move the Supreme Court as early as Wednesday, challenging the High Court's decision to deny the former CM bail. But this decision has also come in for criticism with senior advocates comparing it to the likes of printing a cinema poster.

NPA s :Blame It On Lazy Lending and on the discarding of the Prakash Tandon Committee norm of maximum permissible bank finance -

 B W Rajeev Dubey30 Sep, 2014 19:58 IST


If I were to pin all of this down to one reason, 

it’s the discarding of the Prakash Tandon Committee norm

 of maximum permissible bank finance 

There is one lot in the Indian banking industry that believes we have an impregnable banking system: that its robustness helped us escape unscathed when the developed world’s banking system collapsed in 2008; that despite the growing levels of non-performing assets (NPA) on the books of most Indian banks, they are not half as vulnerable as they are made out to be.

 

But there is another lot that is convinced about the impending crisis in Indian banking — thanks to the slowdown-induced industrial sickness across sectors such as power, aviation and steel. For 10 years, banks were competing with each other to lend. Corporates over-reached in raising debt. Lending norms were given the short shrift; and now, years of lazy lending have landed Indian banks in one of their biggest crises ever. Nearly Rs 4,30,000 crore worth of bad loans have already been referred to the corporate debt restructuring (CDR) cell as of June 30 this year.

 

For larger banks such as State Bank of India, gross NPAs as on 31 March 2014 stood at Rs 61,605 crore. Naysayers point out that it’s less than 5 per cent of the loan book. Point taken, but it’s still a little over $10 billion! That’s something worth worrying about even for the largest banks in the world.

 

Kolkata-based United Bank of India has a smaller book but its gross NPAs at the end of the last fiscal were at an alarming 10.47 per cent. At least 23 of India’s 27 state-run banks have NPAs higher than 3 per cent — the level at which banking regulator Reserve Bank of India would have cracked the whip earlier.

 

If I were to pin all of this down to one reason, it’s the discarding of the Prakash Tandon Committee norm of maximum permissible bank finance — not less than 25 per cent of working capital should be equity or quasi equity. The norm implied a maximum debt:equity ratio of 3:1. It was dumped in the mid-90s. But again, it would be unfair to blame the absence of this clause for the current crisis. Clearly, processes within banks that were geared towards a restrictive regime didn’t catch up with the reforms. Rampant corruption among disbursing authorities made it worse.

 

BW’s avid bank watcher, senior associate editor Raghu Mohan, has put together this story in his inimitable style.

On another front, having delivered two damp squibs on the foreign investment front (PM Narendra Modi’s Japan visit and Chinese President Xi Jinping’s India visit), Modi heads out for the US. But even before he embarks on the journey, he is already on the back foot. First, having fought the elections on an ‘anti-FDI in retail’ plank, he is unable to accede to a key US demand to open up FDI in retail and e-tail. Second, rival Congress has managed to stall the Insurance Amendment Bill which he hoped to carry as a trophy to the US. Third, the civil nuclear liability law continues to be to the dislike of major US and international firms.

 

There are slim hopes of any business breakthrough with US President Barack Obama, who is already being called a lame-duck President despite two years of his term remaining. Senior editor Joe Mathew examines, in an interview, why American pharma continues to be inimical to Indian drug firms’ interests.

 

(This story was published in BW | Businessworld Issue Dated 20-10-2014)

Disproportionate assets case: How it all began

BL 27sep !4

It was a complaint by Subramanian Swamy in a court here in 1996 that led to a probe against Tamil Nadu Chief Minister J.Jayalalithaa in what later came to be known as the “disproportionate assets case” in which she was convicted by a Bangalore court today.

On June 14, 1996, Subramanian Swamy, then Janata Party leader, filed a complaint before the Principal Sessions Judge here alleging that Jayalalithaa had assets disproportionate to her known sources of income. Swamy was then the President of the Janata Party, which has since merged with the BJP.

The court directed the Directorate of Vigilance and Anti-Corruption wing to investigate the complaint.

Subsequently, an FIR was registered by the police on September 18, 1996 and a probe was conducted, which also included search and seizure procedures at multiple locations, including Hyderabad. A charge sheet was filed and witnesses examined.

The witnesses who were recalled in court after the AIADMK returned to power in 2001, invited the censure of the Supreme Court later.

It was alleged that the value of Jayalalithaa’s assets increased to ₹66.65 crore when she demitted office in 1996 after a five-year stint.

Before assuming office as Chief Minister on July 1, 1991, the value of her assets was ₹2.01 crore, it was alleged.

Jayalalithaa had then declared that she was drawing only ₹1 as salary.

While Jayalalithaa was the first accused in the case, her aide Sasikala, her erstwhile foster son V N Sudhakaran and J Ilavarasi, a relative of Sasikala, are the other accused.

The case, in its 18-year journey, has seen many petitions filed by the accused involving questions, including that of law, procedures and relief in several courts such as the trial court, the High Courts of Madras and Karnataka, and the Supreme Court.

The case was transferred to Bangalore in 2003 by the Supreme Court on a petition filed by DMK leader K Anbazhagan in which Swamy, impleaded himself in his capacity as the original complainant. Swamy also supported the transfer of cases out of Tamil Nadu for a fair trial.

They had maintained that the trial would not be conducted in a free and fair manner if it was done in Tamil Nadu.

Transferring the case to Karnataka, an apex court bench, comprising Justice S N Variava and Justice H K Sema in its judgement on November 18, 2003 observed: “It does appear that the new public prosecutor (appointed by the AIADMK Government) is hand-in-glove with the accused, thereby, creating a reasonable apprehension of likelihood of failure of justice in the minds of the public at large. There is strong indication that the process of justice is being subverted. Free and fair trial is sine qua non of Article 21 of the Constitution.”

Jayalalithaa fails to get immediate relief again

 

BANGALORE,OCT 1:  

Jailed AIADMK supremo Jayalalithaa will have to stay in prison for at least six more days as the vacation bench of the Karnataka High Court today posted for October 7 hearing on her pleas for suspension of the sentence and immediate bail in the disproportionate assets case.

As Jayalalithaa sought immediate relief, the court yesterday first posted the hearing for October 6 but hours later listed the matter for today after her counsel pleaded for urgent hearing.

When the matter came up before the vacation bench judge Justice Rathnakala, Jayalalithaa’s counsel Ram Jethmalani pleaded for suspending the sentence pending appeal under Section 389 of the Criminal Procedure Code and for her release on bail.

Section 389 states that pending any appeal by a convicted person, the Appellate Court may order that the execution of the sentence or order appealed against be suspended. Also, if the person is in confinement, that he or she be released on bail, or on own bond.

(This article was published on October 1, 2014 In BL)

ரூ.100 கோடி அபராதம் உச்ச நீதிமன்ற தீர்ப்புகளுக்கு எதிரானது: சென்னை உயர் நீதிமன்ற வழக்கறிஞர்கள் சங்கம் கருத்து

தி இந்து:புதன், அக்டோபர் 1, 2014

தமிழக முன்னாள் முதல்வர் ஜெயலலிதாவுக்கு ரூ.100 கோடி அபராதம் விதித்து பெங்களூர் சிறப்பு நீதிமன்றம் பிறப்பித்த தீர்ப்பு உச்ச நீதிமன்ற தீர்ப்புகளுக்கு எதிரானது என்று சென்னை உயர் நீதிமன்ற வழக்கறிஞர்கள் சங்கம் கூறியுள்ளது.

அந்த சங்கத்தின் செயற்குழுக் கூட்டம் சென்னையில் நேற்று நடை பெற்றது. சங்கத்தின் தலைவர் ஆர்.சி.பால் கனகராஜ் தலைமை யில் நடந்த கூட்டத்தில், “ஜெயலலிதா அனுமதி தந்தால் சிறையில் இருக்கும் அவர் ஜாமினில் விடுதலை ஆவதற்கு சட்ட ரீதியான உதவிகளை சங்கம் மேற்கொள்வது” என்று தீர்மானம் நிறைவேற் றப்பட்டது.

மேலும், “நீதிமன்ற தீர்ப்புகள் நீதித்துறையின் கண்ணியத் தையும், மாண்பையும் போற்றும் விதத்தில்தான் இருக்க வேண்டும். மாறாக ரூ.100 கோடி அபராதம் விதிப்பதன் மூலம், ஒருவர் ஜாமினில் கூட வெளிவர முடியா மல் செய்வது உச்ச நீதிமன்றத்தின் தீர்ப்புகளுக்கு எதிரானது.

காவேரி பிரச்சினையை மனதில் வைத்துக் கொண்டு பழிவாங்கும் வகையில் கர்நாடக அதிகாரிகள் செயல்படுவதாகவும், சிறையில் இருக்கும் ஜெயலலிதாவுக்கு அடிப்படை வசதிகளை செய்து தர மறுப்பதாகவும் தகவல்கள் கிடைக்கின்றன. அதிகாரிகளின் அத்தகைய நடவடிக்கைகளை வழக்கறிஞர்கள் சங்கம் வன்மையாகக் கண்டிக்கிறது” உள்ளிட்ட தீர்மானங்கள் நிறைவேற்றப்பட்டன.