Corporate Snippets on April 27
Ø India seeks IMF, WB help to deal with IIP data gaps
Ø Factories fire up in Europe to pull economy back
Ø GMR Hyderabad Airport connects to African markets with cargo services
Ø NABARD lines up term loan facility for MFIs
Ø CBIC clears Rs 10k cr GST, customs refund in 16 days
Ø India's US G-Sec holdings at record high in Feb
Ø Finance Ministry, SEBI question mutual funds on Franklin Templeton fiasco
Ø Days after deal with Facebook, RIL starts WhatApp-based online portal
Ø ICICI Pru Life's Q4 takes a hit on higher share of ULIPs, Covid-19
Ø Finance Ministry likely to present new GDP, budgetary targets by July
Ø Yes Bank scam: CBI takes DHFL promoters Wadhawan brothers into custody
Ø IT officers pitch for 40% tax on super rich, new Covid cess
Ø IRB Infra’s board approves ₹2,500-cr fund-raise plan
Ø NTPC to procure fuel cell buses, cars for Delhi, Leh
Ø Mekins Industries develops ultra violet light-based disinfectant trolley
Ø Covid-19 may punch a big hole in petro-tax tank of Centre, States
Ø Telcos may do better in Q4, but there were no gains for Bharti Infratel
Ø Transportation of employees and goods remain key challenges to restart biz: CII
Ø VIX falls 54% from high, investors may be underestimating risks
Ø 47% of Indian startups and SMEs have less than a month of cash left: Survey
Ø Foodgrain stocks hit all-time high of 73.85 mt in April
Ø Union Bank plans to lower stake in IndiaFirst Life to less than 10 per cent
Ø IBBI excludes lockdown from resolution time frame
Ø India's holding of US government securities hits record high of $177.5 billion in Feb
Ø SAARC nations unveil emergency stimulus packages to mitigate Covid19 economic fallout
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👉 The National Company Law Tribunal on Friday has issued a notice to Delhi Gymkhana Club Administration on a plea filed by Central government to take over the affairs of the club.
The case of the petitioner (Central Government) is that the working and affairs of the club are conducted in a manner which is against public interest and received various complaints against the Club administration and the same were inspected by the Central Government as provided under section 206 of the Companies Act, 2013.
The Central Government carried out investigation and found the following:-
The Members of General Committee are giving undue favour to few persons at the expense of General public.
Money has been called fraudulently by the GC (General Committee) members by inducing and alluring the new applicants (for memberships) to apply for membership at a higher membership fee (which is enhanced from time to time) when the GC itself is aware of the fact that the vacancy rate per annum is between 120 to 135 members and the company has a long waiting list from 1972 onwards. Whereas a minimal amount is being collected from permanent members and other members of the company who enjoy the benefits and privileges of the Club at a subsidized rate even without having the voting power.
The successive General Committees of the Club have twisted the objects of the company and remained in control of the Club by an unauthorized and complicated succession mechanism.
The management of the Club was carried out in violation of its articles of association and provisions of Companies Act, 2013.
Rampant discrepancies with respect to admission of members and financial and administrative irregularities in management of club.
Mismanagement of funds received by way of the registration fee from applicants, anomalies in the number of members of the company, false statement in balance sheets, etc.
The aforesaid acts of the M/s Delhi Gymkhana Club are in violation of section 5, 166 & 179 of the Companies Act, 2013. The Central Government has moved a petition before the NCLT under section 241 & 242 of the Companies Act.
👉 The Insolvency and Bankruptcy Board of India (IBBI) is making efforts to improve the governance structure of Registered Valuers’ Organisations ( RVO), the frontline organisations for the development and regulation of valuation professions.
It has now clarified that the promoter organisation of an RVO cannot appoint its own members — shareholder member in the case of a company, a trustee in case the promoter is a trust, and a professional member in case the promoter is a professional body — as independent directors in the RVO. The government had tasked the IBBI with the regulatory oversight of valuation professions.
Under the prevailing rules, the chairperson of an RVO is required to be an independent director, and a shareholder of an RVO is not allowed to be appointed as an independent director. The board of an RVO should comprise 50 per cent nominee directors and 50 per cent independent directors.
However, this was leading to situations where the promoters/shareholders of the RVO were appointing their own members as independent directors (and consequently chairperson) to retain control of the board. The IBBI has brought the latest clarification to
ensure that the letter and spirit of the rules are followed, sources said.
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Supreme Court in the case of UOI vs. U.A.E. Exchange Centre describes that Taxability of Liaison Offices under DTAAs: The activities carried on by the liaison office of the non-resident in India as permitted by the RBI, demonstrate that the liaison office must steer away from engaging in any primary business activity and in establishing business connection as such. It can carry on activities of preparatory or auxiliary nature only.
High Court of Gujarat gave an important judgment dated regarding detention, seizure and release of goods and conveyance on deposit in case of Rajkumar Maheshwari V. Union of India [2020] 114 taxmann.com 400 (GUJARAT)
Authority on Advance Rulings (AAR), Karnataka has ruled that GST is applicable on residential accommodation sublet by a tenant, a ruling that experts said could open a Pandora’s box of litigations. In a case involving about 42 single rooms having been sublet by a tenant to students for periods ranging between three months to 11 months, AAR noted that the property given out for sub-renting matched that of a hotel – rooms with attached bathrooms – “which can by no imagination be termed as residential dwelling”, or a house.
GoI’s decision to block the automatic route for approving foreign direct investments (FDI) from China has surprised many, and not just Chinese investors. But the decision was probably arrived at after much deliberation, and is meant to be used as a diplomatic lever in dealing with Beijing.
Karnataka based company has moved Supreme Court challenging the Constitutional validity of two Government orders which directed employers to retain their employees and pay full wages throughout the duration of the ongoing nationwide lockdown.
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👉 While hearing an urgent petition during the extended lockdown period moved by the NBCC, the National Company Law Appellate Tribunal ('NCLAT') declined to stay the implementation of the modified resolution plan and directed the state - run NBCC to acquire the debt ridden Jaypee Infratech and complete over 20,000 pending flats, but said the direction was subject to its final order.
Justice Bansi Lal Bhat, acting Chairperson and Justice Anant Bijay Singh, Member (Judicial) also directed Jaypee Infratech's Interim Resolution Professional Anuj Jain ('IRP') to constitute an interim monitoring committee comprising of representatives from NBCC and its three main lenders, namely - IDBI Bank Ltd., the lead lender of the consortium, IIFCL and LIC for the 'Successful implementation of Resolution Plan'.
The honourable bench held:
"Meanwhile, till further orders, the approved 'Resolution Plan' may be implemented subject to outcome of this Appeal. The Interim Resolution Professional may constitute 'Interim Monitoring Committee' comprising of the 'Successful Resolution Applicant', i.e., the Appellant and the three major Institutional Financial Creditors, who were Members of the 'Committee of Creditors' as named above."
During the proceedings, counsel for IRP stated that he intended to file an appeal with regard to some observations made in paragraph 103 of the impugned order.
NCLAT issued notices to ICICI Bank Ltd., the dissenting creditor who is entitled to cash payment pursuant to the modification; IDBI Bank and IRP directing them to file their replies and rejoinders, if any.
The matter is listed for 'admission after notice' on May 15th.
NBCC had filed an appeal against the order of NCLT challenging the modification to its bid for Jaypee Infratech. NCLT had approved NBCC's offer on March 3 but had allowed the objections by the dissenting creditors ICICI Bank and Yamuna Expressway Industrial Development Authority and directed payment to unclaimed fixed deposit holders. NBCC contended that NCLT had exceeded its jurisdiction in making such modifications by ordering direction to pay ICICI Bank an amount equivalent to what it would have received in the event of liquidation, along with interest, in 12 installments.
👉 The insolvency regulator has issued notifications to exclude the lockdown period following the Covid-19 outbreak from the time frames governing corporate insolvency resolution or liquidation processes.
Introducing a special provision in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the regulator said: “…the period of lockdown imposed by the central government in the wake of Covid-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process.” A similar amendment to the regulations for liquidations under the insolvency and bankruptcy code was also notified.
The insolvency and bankruptcy code (IBC) stipulates that the resolution process of a stressed company will have to be completed in a maximum of 270 days.
Accordingly, various processes are to be completed within specified time frames. The amendment to the resolution regulation would come into force retrospectively from March 29, while that to the liquidation regulation would take effect from April 17. The Insolvency and Bankruptcy Board Of India (IBBI) has clarified that given the lockdown, the notifications couldn’t be printed in the official gazette on time. However, the regulator had already posted the decisions on its official website well on time, specifying the date from which these amendments would take effect, with a note that these will also be printed in the government’s gazette.
So, the apparent retrospective nature of the latest notifications doesn’t harm stakeholders’ interests.
Commenting on the move, Daizy Chawla, senior partner at Singh & Associates, said: “This was the need of the hour, as due to the lockdown many procedures which are to be done as per the timelines provided under the corporate person regulations as well liquidation process could not be performed and the adjudicating authority (NCLT) would otherwise be flooded with applications for excluding such period or extension of timelines where the period prescribed under the code has already expired.”
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👉🏻Govt declares banking industry as a public utility service for six months till October 21
(Govt has declared banking industry as a public utility service for six months till October 21 under the provisions of the Industrial Disputes Act)
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https://bit.ly/3cDB5Mu
👉🏻RBI allows banks to issue electronic cards for overdraft accounts
(RBI permitted banks to issue electronic cards to persons having overdraft accounts that are only in the nature of personal loan without any specific end-use restrictions)
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https://bit.ly/3cDAJFE
👉🏻Companies Fresh Start Scheme | LLP Settlement Scheme
(Companies Fresh Start Scheme 2020 and LLP Settlement Scheme 2020 discussed by Adv.(CA) Arun Saxena)
👇🏻 👇🏻 👇🏻
https://bit.ly/2y0yxcD
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Basir Ahmed Sisodiya vs. ITO (Supreme Court) S. 68 Bogus Purchases: Though the assessee failed to prove the genuineness of the purchases during the assessment proceedings, he filed affidavits and statements of the dealers in penalty proceedings. That evidence fully supports the claim of the assessee. The CIT (A) accepted the explanation of the assessee and recorded a clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by the assessee. Consequently, the quantum addition will also have to be deleted.
DGFT extends Import Validity period and Export Obligation period in Advance Authorizations / DFIA [Read Circular] Read more at: https://www.taxscan.in/dgft-extends-import-validity-period-and-export-obligation-period-in-advance-authorizations-dfia/55725/
GST rates should be suspended/reduced on critical items, including surgical masks, disposable gloves, ventilators, hand sanitisers, etc. Hospital services are exempt from output GST. However, hospitals routinely incur several input taxes, including huge GST outlay on capital procurement of equipment, and recurring GST on medical devices/ items/drugs and services such as rent/marketing/R&D. As ITC facility is not available for exempt-supply, these credit costs are built into the price.
RBI got lukewarm response from banks for availing three-year liquidity at the maiden auction on Thursday under the Targeted Long-Term Repo Operations (TLTRO) 2.0. The auction proceeds are specifically meant for deployment in the debt papers of small- and mid-size non-banking finance companies (NBFCs) and microfinance institutions (MFIs). As against the notified amount of ?25,000 crore, the RBI received 14 bids aggregating Rs.12,850 crore.
Union Cabinet has cleared a proposal from the Corporate Affairs Ministry to give companies relief from insolvency for the next six months via amendment to Insolvency and Bankruptcy Code (IBC), 2016. This was cleared on April 22 and has been moved as a one-time measure.
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👉 Amid lockdown, a fresh power tussle between former and present bureaucrats started in the national capital on Friday as the National Company Law Tribunal (NCLT) agreed to hear a petition moved by the Ministry of Corporate Affairs (MCA) alleging “fraudulent and rampant mismanagement of affairs” at Delhi Gymkhana Club.
The MCA had, earlier this week, petitioned the NCLT to suspend the general committee of the club with immediate effect, and replace it with a central government-appointed administrator. The Ministry had, in its plea, also said that the club should be barred from accepting new members and a new 15-member government-appointed committee should manage the club.
The new panel would also undertake a “restructuring” so that the club “functions as per the terms of its memorandum and articles of association”, the MCA had said in its petition, a copy of which The Indian Express has seen.
The club’s 16-member governing body, headed by retired Lieutenant General D R Soni, has been given time till May 8 to respond to charges levelled by the MCA. The senior counsel appearing for the club, meanwhile, told the tribunal that they would not accept any applications for new membership until May 13, when the case is scheduled to be next heard by the NCLT.
The entire issue, sources close to the matter said, is “an ego battle” between members of the club and those seeking to be members. “A registrar general of the Ministry of Corporate Affairs was denied membership because he refused to pay the additional amount that was demanded by the club to keep him on the waiting list. He has got this petition filed,” senior advocate Vikas Singh, appearing for Delhi Gymkhana club, said, without naming the bureaucrat.
👉 The National Company Law Tribunal ('NCLT'), established under the Companies Act, 2013, has emerged as the forum of choice for the purpose of 'recovery' of debt from corporate debtors under the Insolvency and Bankruptcy Code, 2016 ('IBC'), even though it was not established with the intent to enforce and effect recovery of debts. As much as everyone, including the learned members of the NCLT, often insist to the contrary, the stark reality is that the NCLT has become indeed, a forum to arm-twist corporate debtors to effect recovery of monies by confronting them with the fear of facing corporate death in the form of insolvency resolution or liquidation.
Statistics don't lie. Therefore, to decipher whether the NCLT really emerged as a forum of choice to effect such recoveries, we must see the recovery rate which has emerged? To confine our analysis for the present, we may take the case of only financial debt (i.e. bad loans), recoverable by banks. As per the data for Financial Year 2018-2019 released by the Reserve Bank of India, scheduled Commercial banks in India recovered a staggering amount of Rs. 70,819 Crores out of claims of Rs. 1,66,600 Crores under the IBC mechanism (which translated to an impressive recovery percentage of 42.5%). To put this figure in perspective, a measly recovery of Rs. 41,876 Crores out of claims of Rs. 2,89,073 Crores (translating to a paltry recovery percentage of only 14.5%) was effected under the SARFAESI Act. These numbers infact justify the newly discovered proclivity of banks to advert to the IBC mechanism to make good their bad loans.
Under the IBC regime, a financial creditor need to satisfy only the bare requirement, which is best captured in the words of Rohinton F. Nariman, J., in Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, it reads :
"28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor — it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1)….. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. …... The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be."
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👉🏻SEBI slaps Rs 30 lakh fine on six entities for fraudulent trade
(SEBI has imposed a total penalty of Rs 30 lakhs on six individuals for indulging in fraudulent trading)
👇🏻 👇🏻 👇🏻
https://bit.ly/2KB3Z3K
👉🏻IBBI excludes lockdown from resolution time frame
(IBBI has issued notifications to exclude the lockdown period following the Covid-19 outbreak from the time frames governing CIRP or liquidation processes)
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https://bit.ly/3aDAfOf
Thanks for reading