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CS NEWS C o n n e c t i n g

S t a t u t e s

2017

http://www.jsundharesan.com/

J SUNDHARESAN & ASSOCIATES CS NEWS – JUNE 2017

“Governance, the buck starts here”

2

CS NEWS – INSIDE THIS EDITION

Topics Page No.

Maternity Benefit Amendment Act, 2017 3-4

Heads Up on events that led to Heads Turn in May 2017 5-12

Corporate Development Judicial – ➢ Berger Paints India LTD v. C.I.T., Delhi-V [SC]

➢ Gopal and Sons (HUF) v. CIT Kolkata [(2017) 3 SCC 574]

➢ Luxmi Tea Company LTD v. Pradip Kumar Sarkar [SC]

13-15

From the Government –

➢ Companies (Audit and Auditors) Amendment Rules, 2017

➢ Amendments to schedule III of the Companies Act, 2013

➢ Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2017

16-18

Save our Earth –

➢ Plastic from banana peels

19

Updates –

➢ MCA Updates

➢ SEBI Updates

20

BOARD ANATOMY – book authored by J. Sundharesan is now available at amazon.in



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MATERNITY BENEFIT AMENDMENT ACT, 2017

Parliament has received the assent of the President on March 27, 2017 for the Maternity Benefit

Amendment Act, 2017.

INTRODUCTION:

The Maternity Benefit Act, 1961 regulates the employment of women in factories, mines, the

circus industry, plantations and shops or establishments employing ten or more persons, for

certain periods before and after child-birth and provides for maternity and other benefits.

HIGHLIGHTS OF THE ACT

1. This act protects the employment of women during the period of pregnancy and entitles

them to full paid absence from work.

2. As per section 5 of this act, women working in the organized sector will now be entitled

to paid maternity leave of maximum 26 weeks, out of which maximum 8 weeks

preceding the date of delivery is allowed.

3. For a woman who has two or more children, the maternity leave will be 12 weeks with

full wages, out of which 6 weeks preceding the date of delivery allowed.

4. It is mandatory for employers in establishments with 50 employees, to provide crèche

facilities.

5. The mother will be allowed four visits to the crèche in a day. This will include her interval

for rest.

6. It also allows employers to permit woman to work from home, if it is possible to do so.

7. It also recognizes that women who adopt or use a surrogate to bear a child also need

time to bond with the child in the initial months, the Act also extends a 12 weeks’

maternity leave to adapting and commissioning mothers.

8. For commissioning mother the period of maternity leave will be calculated from the date

the child is handed over to the commissioning or adoptive mother.

9. Every factory/ shop/ office with 10 or more employees to inform a woman, at the time of

her appointment, of the maternity benefits available to her in writing and electronically.



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KEY ISSUES AND ANALYSIS

1. Several expert bodies like the World Health Organization have recommended that 24

weeks of maternity leave is required to protect maternal and child health. However, since

the costs of this leave are to be borne by the employer, it may have an adverse impact

on job opportunities for women.

2. Various countries have implemented different funding models in relation to maternity

benefits. In some countries, the employer bears the cost, while in some others it is paid

by the government.

3. While women will be provided with 26 weeks of maternity leave for two children, the

period of leave for a third child will be 12 weeks. This could affect the growth and

development of the third born child.

4. There are several labour laws that provide maternity benefits to women in different

sectors. These laws differ in their coverage, benefits and financing of such benefits.

CONCLUSION

1. The amendments have received mixed feedback from different sectors and industries.

2. The additional benefits offered are not restricted to just a longer duration of maternity

leave.

3. The new Act is Gender neutral which allows even a male employee to take his child to a

crèche, if it is far away from the mother’s workplace.

4. However, there has also been pushback from micro, small and medium enterprises

given that the increase in the duration of paid maternity leave will result in an increase in

cost.

5. Another common concern is the difficulties involved in providing a crèche facility close to

the establishment – both in terms of cost and infrastructure.



5

HEADS UP ON EVENTS THAT LED TO HEADS TURN IN MAY 2017

ED, CBI go after country’s second-largest wilful defaulter, Winsome group's Jatin Mehta

After almost a year, Indian authorities have turned their glare on Jatin Mehta, a man who has

proved to be far more elusive and low profile than Vijay Mallya. The Enforcement Directorate is

learnt to have asked Dubai to expedite its response to India’s letters rogatory (LR) relating to

Mehta’s Winsome Group — the country’s second-largest wilful defaulter after Mallya’s

Kingfisher Airlines. Winsome Diamonds and Jewellery, a listed company, and group firm

Forever owe Rs 6,800 crore to 15 banks in India. India had sent LR to the United Arab Emirates

around the middle of last year. The UAE, which is yet to respond to the request, had a few

months ago shared some information with India’s Financial Intelligence Unit (FIU), which

handles inputs on suspect financial transactions. “The information received by FIU was more on

an informal basis. It was not very significant. We would like Dubai to officially respond to LR.

Due to the nature of Winsome transactions and lenders’ allegations, we need Dubai’s

cooperation to make any progress. It won’t be easy as Jatin Mehta has taken citizenship of St

Kitts, which has no extradition treaty with India,” a person familiar with the development told

ET. Agencies such as ED and CBI need help from the UAE to verify Winsome’s explanation for

its inability to repay Indian banks.

Winsome, which first defaulted in the summer of 2013, said it was unable to repay following

$1billion derivative losses suffered by its UAE clients. Here’s the sequence of transactions:

Winsome had imported gold on the back of standby letters of credit (SBLC) given by Indian

banks in favour of international bullion banks which supplied the gold. Winsome and Forever

used the gold to make jewellery that was exported to 13 clients in Dubai. The arrangement was

that Winsome and Forever would pay back the banks once they received payments from Dubai

buyers — who, according to Winsome, could never pay up due to losses suffered in over-the

counter derivative bets. The global bullion banks invoked the SBLCs — just as any bank would

encash guarantees in the event of a default — when Winsome was unable to pay. Banks

extended the facility as per an RBI-approved scheme that was introduced to promote jewellery

export. The facility, which gave 270 days’ credit to borrowers, was discontinued after the

Winsome fiasco. Indian banks took the hit because the terms of SBLC said that if Winsome

failed to pay the bullion banks, the lenders would step in to pay for the gold import.



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Winsome informed stock exchanges in India that courts in the UAE have been moved to recover

funds from the 13 Dubai companies led by one Haytham Ali Salman Abu Obidah, a Jordanian

national. But lenders led by Standard Chartered Bank and Punjab National Bank never bought

the Winsome story. PNB has the highest exposure and had filed the first FIR with Central

Bureau of Investigation in early 2014. To verify Winsome’s claim, ED and CBI will have to find

answers to the following questions:

1. What are the true identities of the 13 clients of Winsome Group?

2. Who are the counter-parties with whom these 13 entities had entered into currency derivative

contracts? Did these counter-parties have any links with Mehta and his family members or

associates? (Since the derivatives were OTC and were not traded on exchanges, the names of

counterparties remain unknown.)

3. A $1-billion derivative loss would mean a notional bet of around $10 billion. Did these

counter-parties have the financial wherewithal to fork out appropriate margins to back the

derivative positions? Did anyone give a personal guarantee?

4. $1.2 billion worth jewellery was exported to the 13 entities. Since the derivative loss was $1

billion, why was $200 million not paid to Winsome or Forever? Indian agencies will never get

clues to any of these questions without active cooperation of Dubai. But even if the UAE

extends a helping hand, banks have dim hopes of salvaging money.

Unlike Mallya, a chunk of whose assets has been attached by Indian agencies, Winsome and

Mehta have few assets that banks can take over to recover the unpaid amount. Mehta appears

to be beyond the reach of Indian investigators. Some of the properties belonging to the Mehta

family are in the name of Jatin Mehta’s mother while Mehta’s personal guarantee given to banks

was based on a financial statement of net worth that was just a fraction of the total bank

outstanding. “Jatinbhai has been away from India for some years. He could not come to Mumbai

despite an urgent requirement in the family,” said a source. “It’s already late. Some months ago,

the Central Vigilance Commission had enquired about the matter with banks. It has been

relatively keen to see that a proper forensic audit be done to have proof of malfeasance that can

stand judicial scrutiny here and abroad. But not all banks agree,” said the person.



7

Other lenders in the consortium are Bank of Maharashtra, Canara Bank, Central Bank, Exim

Bank, Oriental Bank, State Bank of Hyderabad, Union Bank, Axis Bank, Vijaya Bank, Bank of

India, IDBI Bank, Syndicate Bank and State Bank of Mauritius (which recently cut a settlement

deal with the Winsome Group).

France fines Facebook $166,000 for 'unfairly tracking' personal data of 33 mn users

France's independent privacy watchdog fined Facebook on Tuesday for breaching French

privacy laws by tracking and using the personal data of 33 million users, as well as non-users

who browse the internet. The National Commission on Informatics and Liberties imposed

sanctions of 150,000 euros ($166,000) on the social networking company for failing to comply

with French data protection laws after a formal warning last year. The commission said in a

statement that Facebook Inc. and Facebook Ireland carry out a "massive compilation of

personal data" for targeted advertising "without a legal base." It says users have no means of

objecting. The watchdog has accused Facebook of collecting data about account holders'

"political or religious opinions," "sexual orientation" and other personal characteristics without

informing them. In response to the announcement, Facebook said in a statement it has taken

steps in recent years to address privacy concerns and "simplified our policies further to help

people understand how we use information to make Facebook better."

The company said its actions included setting up a team dedicated to protecting confidentiality

and providing users with tools to safeguard their information. It insisted that "putting people in

control of their privacy is at the heart of everything we do." The statement did not address

payment of the fine. "We take note of the decision ... with which we respectfully disagree," the

company said, adding that it remained "open" to continue working with the French privacy

watchdog.

EU fines Facebook $120 million over 'misleading' WhatsApp info

The European Commission on Thursday fined US social media giant Facebook 110 million

euros ($120 million) for providing incorrect and misleading information on its takeover of

WhatsApp, imposing its biggest penalty for such a breach. "Today's decision sends a clear

signal to companies that they must comply with all aspects of EU merger rules, including the

obligation to provide correct information," EU Competition Commissioner Margrethe Vestager

said in a statement. "The Commission must be able to take decisions about mergers' effects on

competition in full knowledge of accurate facts," Vestager said.



8

Facebook said in response that it cooperated with the Commission. "We've acted in good faith

since our very first interactions with the Commission and we've sought to provide accurate

information at every turn," a Facebook spokesperson said. "The errors we made in our 2014

filings were not intentional and the Commission has confirmed that they did not impact the

outcome of the merger review. Today's announcement brings this matter to a close." EU

regulators cleared the then $19 billion Facebook acquisition of WhatsApp in late 2014, finding

no reason to believe it would dampen competition in the burgeoning social media sector. In its

statement Thursday, the Commission recalled that the merger rules require companies to

provide regulators with the accurate information essential to any review.

It noted that when Facebook notified the Commission of the acquisition in 2014, the company

had said it would "be unable to establish reliable automated matching between Facebook users'

accounts and WhatsApp users' accounts". "However, in August 2016, WhatsApp announced

updates to its terms of service and privacy policy, including the possibility of linking WhatsApp

users' phone numbers with Facebook users' identities," it said. After launching a probe last year,

the Commission "found that, contrary to Facebook's statements in the 2014 merger review

process, the technical possibility of automatically matching Facebook and WhatsApp users'

identities already existed in 2014, and that Facebook staff were aware of such a possibility." The

Commission said Thursday's decision and the fine would have no impact on its October 2014

clearance of the deal. Commission spokesman Ricardo Cardoso said the fine was less than it

could have been because Facebook cooperated. Cardoso added it was nonetheless "the

highest fine we have ever imposed for a procedure infringement in a merger case" and would

serve as a deterrent to others.

A quick guide to India GST rates in 2017

The GST Council, the apex decision-making body for the new tax, has fixed the tax framework

under the Goods and Services Tax (GST) which is to be rolled out this July 1. Tax rates have

been finalised for 1,211 items with a majority of items being kept under the 18 per cent

slab. Here's a complete list of GST rate card.

Nil rate (0%): No tax will be imposed on items like fresh meat, fish chicken, eggs, milk, butter

milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi.

Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom etc.



9

5%: Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables,

coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will

attract tax of 5 percent.

12%: Frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat,

sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring

books, picture books, umbrella, sewing machine, and cellphones will be under 12 per cent tax

slab.

18%: Most items are under this tax slab which include flavoured refined sugar, pasta,

cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant

food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed

circuits, camera, speakers and monitors.

28%: Chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with

chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair

shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing

machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers,

automobiles, motorcycles, aircraft for personal use, and yachts will attract 28 per cent tax - the

highest under GST system.

Times Now files criminal case for stealing against Arnab Goswami of Republic TV

Bennett, Coleman & Co Ltd (BCCL) on Tuesday lodged a complaint against Arnab Goswami,

the founder of recently launched English news channel Republic TV, and journalist Prema

Sridevi for infringing its copyright. According to sources, BCCL has filed a complaint with the

Azad Maidan Police Station in Mumbai under sections 378, with sections 379, 403, 405, with

sections 406, 409, 411, 414 and 418 of the Indian Penal Code, besides Section 66-B, 72 and

72-A of the IT Act, 2000. The complaint alleges commission of offences of theft, criminal breach

of trust, misappropriation of property and infringement of IPR of BCCL by using the same on

Republic TV on multiple occasions on May 6 and May 8, 2017. Goswami, who was earlier

serving as editor-in-chief of Times Networks’ flagship English news channel Times Now,

launched his own news channel Republic TV on May 6.



10

On the first day of its launch, the new channel carried what it termed as an ‘expose’ on Lalu

Prasad in which audio tapes containing phone conversations between the former chief minister

of Bihar and Shahabuddin, allegedly while the latter was in prison, were played out.

Shahabuddin, a former MP, is currently behind bars. Another story was aired on Republic TV on

May 8, in which audio tapes of phone conversations between Sridevi (former news reporter of

Times Now) and the late Sunanda

Pushkar (wife of Congress leader Shashi Tharoor) and their house help Narayan was

broadcast. Both these stories displayed material — in the form of audio tapes of phone

conversations — that was procured and accessed while both Goswami and Sridevi were in the

employment of Times Now, according to the complaint. An internal inquiry by BCCL has

established that these tapes were procured and in possession of Goswami and Sridevi while

they were in the service of BCCL. BCCL confirmed filing a criminal complaint against Goswami

and Sridevi. BCCL’s complaint points out that both Goswami and Sridevi have admitted and

claimed on-air that the audio conversation in the Sunanda Pushkar case aired on May 8, were

in their possession for the last two years when they were in their previous organisation i.e.

Times Now. The complaint alleges that Goswami and Sridevi have wilfully, deliberately and with

knowledge converted for their benefit and used the aforesaid intellectual property of Times Now

and thereby dishonestly misappropriated the said intellectual property, thereby committing the

offence of criminal misappropriation of property punishable under section 403 of IPC and

several other provisions under applicable laws. BCCL, which owns and operates various

television channels under Times Network, is also the publisher of The Economic Times. Its

English news channel Times Now, launched on January 31, 2006, is the market leader in its

segment.

Zomato hacked: Security breach results in 17 million user data stolen

Zomato has suffered a security breach with over 17 million user records stolen from the food-

tech company's database. The stolen information has email addresses and hashed passwords

of customers. According to Hackeread.com, a user by the name of "nclay" claimed to have

hacked Zomato and was willing to sell data pertaining to 17 million registered users on a

popular Dark Web marketplace. This included emails and password hashes of registered

Zomato users with the price set for the whole package at $1,001.43 (BTC 0.5587) - BTC here

stands for Bitcoins. Hackeread adds the vendor also published data and evidence to prove it

was genuine.



11

Hashing turns an original password into an incoherent set of characters, bringing down the

possibility of it being easily converted back to plain text. Furthermore, passwords of Zomato's

120 million users are reportedly salted as well, whereby characters are added at random before

the password hashed, rendering it unintelligible even if the hash is translated. Although in theory

the password may still be safe, Zomato is encouraging its users to change that password if used

for any other services. Amid the news of the leak, no payment information or credit card data

has been stolen, the company said in a note released to the press. 'In our security investigation,

we have found no evidence of unauthorized access to financial information,' it states. 'Payment

related information on Zomato is stored separately from this (stolen) data in a highly secure PCI

Data Security Standard (DSS) compliant vault,' it further added. Despite assurances that

increased levels of precautions were made to safeguard users' data, the company, as a

preventive measure, has reset the passwords for all affected users and logged them out of its

app and website. 'Since we have reset the passwords, affected users' Zomato account as well

as credit card information is secure, so there is nothing to worry about there.' In the blogpost,

Zomato has attributed human error as the cause of the security breach where an employee’s

development account got compromised. 'Our team is actively scanning all possible breach

vectors and closing any gaps in our environment,' the blog stated. Over the next couple of

weeks, the company will reportedly work towards plugging further security gaps - if any - in its

systems. This will include adding a layer of authorisation for internal teams having access to

such data to avoid the possibility of any human breach.

Fear of boardroom battles sees cos seeking exotic cover

As corporate boardrooms find themselves facing newer complex challenges and more

internecine battles, many companies are pre-emptively looking to buy exotic insurance policies

to cover a variety of risks. For instance, insurers say that traditional bare-bones Directors and

Officers (D&O) insurance covers would be insufficient to cover a boardroom battle like the

recent one between Ratan Tata and former Tata Group Chairman Cyrus Mistry. While the

traditional policy structure may cover the management’s liabilities arising from allegations by a

whistleblower or cases of alleged discrimination against employees, it doesn’t cover instances

of directors facing off against each other, said a senior industry executive. Anup Dhingra, Senior

VP, Marsh India Insurance Brokers Pvt Ltd, an insurance advisor and broker with over 1,600

corporate clients in the D&O space, explains this in more detail.



12

“When boardroom battles happen or when a senior executive falls out of favour with the board,

most insurance policies don’t have an adequate response mechanism. Insurers have to burn

the candle at both ends (to defend both parties). “We’ve seen a 15-20 per cent increase in

queries in just the January to March quarter from company boards on how insurance can better

deal with such situations,” Dhingra added. “We’re also seeing independent directors worry about

the adequacy of the cover available to them.”

Start-ups not immune

Sasikumar Adidamu, Chief Technical Officer, Bajaj Allianz General Insurance, said that in the

last two to three years, the insurer has seen increased queries from start-ups but the conversion

rate is still poor. “D&O policies aren’t just for huge, high-profile public companies. Start-ups are

not exempt from legal troubles. They are likely to make novice mistakes such as: making

unrealistic promises to investors, breach of fiduciary duty and HR mistakes, which can have

huge legal ramifications,” he said. “(Despite this) Currently, insurance is purchased only by

those start-ups that deal with overseas clients in the US or UK to comply with their contractual

requirements,” added Adidamu. Professional investors in start-ups, from venture capital and

private equity firms, are also making sure they cover their board nominees from risks of

mismanagement by insisting on adequate D&O policies before they put their money in. Mukesh

Kumar, Executive Director, HDFC ERGO General Insurance Company, agreed that the rise in

litigation and widening exposure of corporates has broadened the scope of D&O insurance

policies. “The cost of a D&O policy can be as little as $400-500 for every $1 million of coverage

and can go up to $10,000 for listed companies or companies that report losses,” he added. “But

the costs of an adverse media reporting to a company in case of a challenging situation is an

untested price point. Given this, it still makes sense for corporates to transfer the risks — not

just of management liability but also of cyber-crime risks, tax liabilities, fraud — from their own

balance sheet to that of the insurer.”



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Facts: The appellant is a Limited Company engaged in the business of manufacture and sale of

various kinds of paints. A notice was issued by the A.O. to the appellant under which called

upon the appellant to explain as to on what basis the appellant had claimed in the return a

deduction under the head “preliminary expenses” amounting to Rs.7,03,306/- being 2.5% of the

“capital employed in the business of the company” under Section 35D of the Act.

The appellant replied to the notice by contending that it had issued shares on a premium which,

according to them, was a part of the capital employed in their business. The appellant,

therefore, contended that it was on this basis, it claimed the said deduction and was, therefore,

entitled to claim the same under Section 35D of the Act.

The A.O. was of the view that the expression “capital employed in the business of the company”

did not include the “premium amount” received by the appellant on share capital and

accordingly calculated the allowable deduction under Section 35D of the Act by disallowing the

share premium.

On appeal, the Commissioner of Income Tax (appeals) allowed the deduction claimed by the

appellant of the entire amount under Section 35D of the Act.

CASE LAW Berger Paints India Ltd v. C.I.T., Delhi-V [SC]

DECIDED ON March 28, 2017

LEGISLATION Income Tax Act, 1961 – Section 35D

BRIEF FACTS

Deduction based on capital employed in business- assesse included

share premium in the figure of capital employed- AO disallowed the

inclusion of share premium- whether correct-Held, Yes.

Corporate Development Judicial



14

The Tribunal allowed the appeals of the Revenue and reversed the view taken by the

Commissioner of Income Tax (Appeals). It is against these orders, the appellant filed two

separate appeals before the High Court, which by impugned judgment/orders, dismissed the

appeals and affirmed the orders of the Tribunal. Felt aggrieved, the Appellant has filed these

appeals before the Supreme Court.

Decision: Appeals dismissed

Facts: The assesse herein had filed the return declaring his total income at Rs. 1,62,745/-. The

Assessing Officer (for short, ‘AO’) carried out the assessment whereby the net income of the

assesse was calculated at Rs. 1,30,31,280/-. Obviously, number of additions were made which

contributed to the enhancement of income to the aforesaid figure, in contrast with the paltry

income declared by the assesse. Here, we are concerned only with one addition which was

made on account of deemed dividend within the meaning of Section 2(22) (e) of the Income Tax

Act, 1961 (hereinafter referred to as the ‘Act’). Suffice it to state that other additions were

deleted by the Income Tax Appellate Tribunal (ITAT) and the position affirmed by the High

Court, but the Revenue has not challenged those deletions. Insofar as addition under Section

2(22) (e) of the Act is concerned, a sum of Rs. 1,20,10,988/- was added on this account.

The assesse is a Hindu Undivided Family (HUF). During the previous year to the Assessment

Year, the assesse had received certain advances from one M/s. G.S. Fertilizers (P) Ltd.

(hereinafter referred to as the ‘Company’). The assesse was holding 37.12% of the total

shareholding of the Company. From this fact, the AO concluded that the assesse was both the

registered shareholder of the Company and also the beneficial owner of shares, as it was

holding more than 10% of voting power. On this basis, after noticing that the audited accounts of

the Company was showing a balance of Rs. 1,20,10,988/- as “Reserve & Surplus” as on 31st

March, 2006, this amount was included in the income of the assesse as deemed dividend. In

CASE LAW Gopal and Sons (HUF) v. CIT Kolkata [(2017) 3 SCC 574]

DECIDED ON January 4, 2017

LEGISLATION Income Tax Act, 1961 – Section 2(22)

BRIEF FACTS

Deemed dividend- HUF shareholder of a company with 37% shareholding

- company paid loan to HUF- whether the loan is deemed dividend in the

hands of the assesse-Held, Yes.



15

the appeal filed by the assesse, the aforesaid addition was affirmed by the Commissioner of

Income Tax (Appeals). However, ITAT had allowed the appeal and set aside this addition.

However, the High Court set aside the order of the ITAT and upheld the addition made by the

AO. Hence this appeal before the Supreme Court.


Facts: The respondent made an application under section 155 of the Companies Act, 1956

(“the Act”) for rectification of the share register of the appellant company by inserting his name

therein as a registered shareholder of certain shares transferred in his favour. These shares

were fully paid up and the company had no lien over them. According to the respondent,

notwithstanding the shares being duly lodged with the Company along with the transfer deeds

and requisite fees for registration being paid the Board of Directors of the Company disapproved

of the registration of the said shares. This disapproval led the respondent to make the

application under section 155 of the Act for rectification of the share register. The application

aforesaid was contested by the Company on various grounds. Overruling the objections raised

by the Company a learned single judge allowed the application. Aggrieved, the Company

preferred the appeal aforesaid before a Division Bench of the High Court which has been

dismissed by the judgment appealed against.


CASE LAW Luxmi Tea Company LTD v. Pradip Kumar Sarkar [SC]

DECIDED ON November 7, 1989

LEGISLATION Companies Act, 1956-Section 111 & 155

BRIEF FACTS share transfer and rectification of members’ register- whether directors have

inherent powers to refuse transfer of shares- Held, No.



16

Companies (Audit and Auditors) Amendment Rules, 2017

[Issued by the Ministry of Corporate Affairs vide F. No. 1/33/2013-CL-V-(Vol. I)] dated

30.03.2017. Published in Gazette of India, Extraordinary, Part-II, Section (3) Subsection(i) vide

Notification No. G.S.R. 307(E), dated 30.03.2017]

In exercise of powers conferred by section 143 read with sub-sections (1) and (2) of section 469

of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following

rules further to amend the Companies (Audit and Auditors) Rules, 2014, namely: —

1. (1) These rules may be called the Companies (Audit and Auditors) Amendment Rules, 2017.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Audit and Auditors) Rules, 2014, in rule 11, after clause (c), the following

clause shall be inserted, namely: —

“(d) whether the company had provided requisite disclosures in its financial statements as to

holdings as well as dealings in Specified Bank Notes during the period from 8th November

2016 to 30th December 2016 and if so, whether these are in accordance with the books of

accounts maintained by the company.”

Amendments to Schedule III of the Companies Act, 2013

[Issued by the Ministry of Corporate Affairs vide [F. No. 17/62/2015-CL-V (Vol. I)) dated

30.03.2017. Published in Gazette of India, Extraordinary, Part-II, Section (3) Sub-section(i) vide

Notification No. G.S.R. 308(E) dated 30.03.2017]

1. In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act,

2013 (18 of 2013), the Central Government hereby makes the following further amendments

to Schedule III of the said Act with effect from the date of publication of this notification in the

Official Gazette, namely: -

2. In the Companies Act, 2013 (hereinafter referred to as the principal Act), in Schedule III, in

Division I, in Part I under the heading “General instructions for preparation of Balance Sheet” in

paragraph 6, after clause ‘W’, the following clause shall be inserted namely: -

From the Government



17

“X. Every company shall disclose the details of Specified Bank Notes (SBN) held and

transacted during the period from 8th November 2016 to 30th December 2016.

Explanation: For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the

same meaning provided in the notification of the Government of India, in the Ministry of Finance,

Department of Economic Affairs number S.O. 3407(E), dated the 8th November 2016.”.

3. In the principal Act, in Schedule III, in Division II, in Part I under the heading “General

instructions for preparation of Balance Sheet” in paragraph 6, after clause ‘J’, the following

clause shall be inserted namely: -

“K. Every company shall disclose the details of Specified Bank Notes (SBN) held and

transacted during the period 08/11/2016 to 30/12/2016

Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2017

[Issued by the Ministry of Corporate Affairs vide F. No. 1/28/2013-CL. V dated 12.4.2017. To be

published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i)]

In Exercise of the powers conferred by sub-sections (1), (2) and (4) of section 248 read with

section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes

the following rules to amend the Companies (Removal of Names of Companies from the

Register of Companies) Rules, 2016, namely: -

1. (1) These rules may be called the Companies (Removal of Names of Companies from the

Register of Companies) Amendment Rules, 2017.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Removal of Names of Companies from the Register of Companies) Rules,

2016 (hereinafter referred to as the principal rules), in rule 7, in sub-rule (1), after the proviso,

the following proviso shall be inserted, namely: -

‘’Provided further that the publication of notice under clause (iii) of this sub-rule, in respect of

cases falling under sub-section (1) of section 248 shall be in Form No. STK 5A.’’

3. In the principal rules, after the Form STK-5, the Form STK-5A shall be inserted.



18

In the matter of striking off names of companies under section 248 (1) of the Companies Act,

2013, of the companies as per details below: -

1. Notice is hereby given that the Registrar of Companies has a reasonable cause to believe

that, the companies whose names are listed on the _____________ (provide web link of the

page on Ministry’s website where the name is listed). -

(i) have not commenced business within one year of their incorporation; OR

(ii) have not been carrying on any business or operation for a period of two immediately

preceding financial years and have not made any application within such period for

obtaining the status of dormant company under section 455 of the Companies Act, 2013.

[Strike off whichever is not applicable]

And, therefore, proposes to remove / strike off the names of the above-mentioned companies

from the register of companies and dissolve them unless a cause is shown to the contrary,

within thirty days from the date of such notice.

2. Any person objecting to the proposed removal / striking off name of the companies from

the register of companies may send his objection to the office address mentioned here above

within thirty days from the date of publication of this notice.



19

Elif Beligin, 16 years old from Istanbul, won the 2013 Science in Action Award for its beautiful

idea: the young girl has developed a chemical process for turning banana peels into a resistant

bio plastic, hoping to help reduce dependence on oil. Once again, the ideas for improving the

planet turning our gaze to sustainable solutions are proposed by the youngest. Elif paused to

reflect on the fat that the fruit is naturally wrapped in a wrapper, that provides all the protection it

needs, characterized by its flexibility and strength.

The student explained on the official website of the competition: “My project is about using

banana peels for the production of bio plastics in place of traditional petroleum-based plastic”.

Plastic contains petroleum and these cause environmental pollution, substituting this material

with an eco-friendly product from banana peels, we cannot do anything but good to our planet.

Let us assume that these inventions, if used daily by everyone, they would help reducing fuel

consumption a pollution. It is not easy to change their habits, but we believe that we can try to

take care of our planet as well as it takes care of us.

We are waiting for new ecological inventions, and why not, your new green inventions!

Source: http://ecobnb.com/blog/2014/02/10-green-inventions-incredible/

SAVE OUR ENVIRONMENT

PLASTIC FROM BANANA PEELS



20

MCA UPDATES

• MCA is actively considering Aadhaar Integration for availing various MCA21 related

services. As a preparatory step, all individual stakeholders viz. DIN

holders/Directors/Key Managerial Personnel/Professionals of the Institute of Company

Secretaries of India-Institute of Chartered Accountants of India-Institute of Cost

Accountants of India (whether in employment or in practice) are requested to obtain

Aadhaar as early as possible for integrating their details with MCA21 and also ensure

that the information in Aadhaar is in harmony with PAN. When implemented, all MCA21

services shall be available based on Aadhaar based authentication ONLY. The date of

Aadhaar integration with MCA21 would be announced shortly. Stakeholders are

requested to plan accordingly on PRIORITY so as to avoid future inconvenience.

• Stakeholders are advised to ensure that Form 3 (Information with regard to Limited

Liability Partnership agreement and changes, if any, made therein) has been

mandatorily filed for initial agreement before filing of Form 8 (Statement of Account &

Solvency) and Form 11 (Annual Return of Limited Liability Partnership (LLP).

SEBI UPDATES

• Online Registration Mechanism for Securities Market Intermediaries.

• Instant Access Facility and Use of e-wallet for investment in Mutual Funds.

UPDATES

Disclaimer: Views and other contents expressed or provided by the contributors are their own and the firm does not accept

any responsibility. The firm is not in any way responsible for the result of any action taken on the basis of the contents

published in this newsletter. All rights are reserved. For Private circulation, only. © 2017 J Sundharesan

cs news - j sundharesanjsundharesan.com/pdf/2017/cs news_june 2017.pdf · june 2017 “ governance,...

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