NEWS WRAP - JANUARY 31, 2014

• Apple, Samsung and Micromax fight to bag in BlackBerry top executives.

• Vikram Bakshi offers buying out McDonald's stake in Joint Venture.

• Natural gas prices may rise over $9 as US winter push up rates to 4-year high.

• Gulf carriers compete to cut ticket prices to channel traffic from India.

• Treat MPs as per VIP protocol: Director General of Civil Aviation (DCGA) tells private carriers.

Source: Economic Times

CCI RULES OUT ABUSE OF DOMINANT POSITION BY OMAXE

Applicable Act: Competition Act, 2002

Present information was filed by Mr. Naresh Bansal & Mr. Gagan Deep Goel (Informants) against M/s Omaxe Limited (OP, Opposite Party). The Informants have alleged that OP has violated the provisions of the Act with regard to development of a Real Estate Project.

BRIEF FACTS OF THE CASE

OP is the Real Estate Developer and was asked by the Informants to specify the location and sought allotment of plot or refund of amount paid by the Informants to get registered for plots with Interest. For the same, Informants paid certain sums to the OP. The OP confirmed the allotment of the plot bearing no. 1343 in Omaxe city project at Sonepat, Haryana. However, Informants came to know that OP cancelled its earlier allotment and re-alloted a plot bearing no. 1886 in the same project.

Later,  OP issued cancellation letter to the Informants citing default in payment as the reason. The Informants alleged that this willful cancellation is arbitrary in nature and damaged and restricted the rights of the Informant which is abuse of dominance by the OP under section 4 of the Act.

It is evident that the market for service for development of residential plots in Sonepat district of Haryana is very broad and highly competitive. The presence of other Real Estate players in Haryana made it a competitive market.

There is no information on record and available in the public domain which shows a position of strength of OP enabling it to operate independent of competitive forces prevailing in the relevant market.

ALLEGATIONS

1. Informants, who had registered for plots with OP, had alleged that the firm made a representation to the public at large regarding a real estate project without specifying the details and identity of the property.
2. Informants alleged that OP had abused its dominant market position by imposing one-sided and anti-competitive agreements on buyers of plots, among others.
3. Among others, it was also alleged that under the agreement, there was no exit route to buyers of plots in case of violation of terms on part of OP and the company would not have to face any consequences for same.

CONCLUSION

For the reasons mentioned above, there arises no competition concern under sections 3 or 4 of the Act.

DECISION

CCI has rejected the complaint that alleged OP of indulging in anti-competitive practices with respect to development of residential plots in Sonepat district of Haryana.

FOREIGN INVESTMENT IN INDIA BY SEBI REGISTERED LONG TERM INVESTORS IN GOVERNMENT DATED SECURITIES

ISSUING AUTHORITY : RESERVE BANK OF INDIA

DATE OF ISSUE : 29/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. 99

Reserve Bank of India, in consultation with the Government, has decided to enhance the existing sub-limit of $5 billion available to long term investors – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds and Foreign Central Banks - registered with SEBI for investment in Government dated securities to $10 billion.

This doubling of the investment sub-limit is within the total limit of $30 billion available for foreign investments in Government securities. The operational guidelines in this regard will be issued by SEBI.

For detailed Circular, please follow the link below:
A.P. (DIR Series) Circular No.99

NEWS WRAP - JANUARY 30, 2014

• Tatas to bag Rs. 1,000 crore Army contract to supply heavy duty trucks.

• Finance Ministry seeks easier ARC norms to check bad loans and appointment of nominee directors in ARCs (Asset Reconstruction Companies).

• Lupin recalls Quinapril tablets from US market after failing impurity specification test.

• Ajay Piramal's plan to buy 20% in Shriram Capital stagnant as shareholders fail to decide the quantum of stake.

Source: Economic Times

NEWS WRAP - JANUARY 29, 2014

• FabIndia to reinvent itself with western apparel line; targets young Indians.

• Pramod Bhasin to head DLF's rental business.

• Ranbaxy plant at Toansa under US Food and Drugs Administration (USFDA) lens.

• Mahindra Blues fest to kick off on February 15.

• Suzuki to own Gujarat plant, make vehicles only for Maruti.

• Sebi slaps Rs. 5 crore penalty on 'Sanghvi Group' entities for indulging in fictitious trading activities.

Source: Economic Times

FII POSITION LIMITS IN EXCHANGE TRADED INTEREST RATE FUTURES (IRF)

ISSUING AUTHORITY : SECURITIES AND EXCHANGE BOARD OF INDIA

DATE OF ISSUE : 20/01/2014

EFFECTIVE DATE : IMMEDIATE EFFECT

CIRCULAR NO. : CIR/MRD/DRMNP/2/2014

SEBI in consultation with RBI prescribed the framework for Stock Exchanges to launch cash settled Interest Rate Futures on 10-year G-sec.

The following position limits were prescribed for FIIs:

The gross open positions of the FII across all contracts shall not exceed 10% of the total open interest or INR 600 crores, whichever is higher.

Additional restriction:

• Total gross short (sold) position - Not to exceed its long position in the government securities and in Interest Rate Futures, at any point in time.

• Total gross long (bought) position - Not to exceed the aggregate permissible limit for investment in government securities for FIIs.

For detailed Circular, please follow the link below:
CIR/MRD/DRMNP/2/2014

NEWS WRAP - JANUARY 27, 2014

• Vodafone draws up plan to take on Bharti Airtel, Reliance Jio Infocomm.

• Oil Ministry seeks Cabinet nod for open licensing policy with Nelp.

• Air India set to offer Wi-fi on its aircrafts.

• Hinduja group plans big expansion in Africa in automotive, technology and energy sectors.

• Google, Samsung announce global patent licensing agreement.

• Google to buy artificial intelligence company DeepMind.

• Tata Motors MD Karl Slym passes away; Ravi Kant may be interim head.

Source: Economic Times

FABER-CASTELL AKTIENGESELLSCHAFT (INFORMANT) VS. M/S A. W. FABER CASTELL (INDIA) PVT. LTD. & ORS (DEFENDANT)

Applicable Act: The Companies Act, 1956 (The Act)

ALLEGATIONS

The Informant filed a complaint to the Company Law Board (CLB) under Section 397 and 398 of the Companies Act, 1956 accusing Defendants of misappropriation and diversion of funds and mismanagement, Defendant 1 being the Indian arm of the Informant and Defendant 2 being the Managing Director of Defendant 1 company.

BRIEF OF FACTS 

The Informant is a German company holding 90% stake in the Defendant 1 company and the balance 10% rests with Defendant 2 being the Managing Director. The Informant was keen to buy the balance stake from Defendant 2.
A shareholder or board member can file a lawsuit under the above sections of the Act for "mismanagement" and "oppression" by the other board members.
Earlier, in August 2011, the Registrar of Companies, Mumbai pulled up against the Defendants for violation of Section 297 which pertains to contracts in which the Director is interested. The defendant entered into such contracts without the prior approval of the Board of Directors and the Central Government required for entering into such contracts.

CONCLUSION

Keeping in view the above facts, the interim prayers were disposed of in the following manner:

1. Defendant 2 has decided to exit out from Defendant 1 company upon receiving a fair valuation of his shares held in the company.
2. Defendant 1 may take such steps as required to hold meeting for approving the Accounts of the company after due notice to Defendant 2 who is directed to remain present and participate in such meeting. He may put on record in writing his protest with the remark "without prejudice to his rights and contentions."
3. The presence of Defendant 2 is must to constitute the quorum for the meeting as required in the AOA and in his absence, the resolution(s) if any, passed may amount as invalid resolution. If he still chooses to remain absent, the meeting may be held and concluded in his absence by the other directors of the Defendant 1 company.
4. The right of Defendant 2 to challenge the truthfulness and accuracy of the accounts and make appropriate submission before the Valuer or such other Forum as he deems fit is kept reserved.
5. Defendant 2 is given the right to express his apprehensions and file objections in the course of the deliberations to be held in the meeting(s).
6. The minutes of meeting(s) shall be circulated not later than 3 days from the date of holding of such meeting(s) and Defendant 2 will be at liberty to file an appropriate application seeking relief(s) in the instant petition if he feels aggrieved.
7. Defendant 2, in the capacity of MD will not take any decisions relating to appointment and termination, transfer, promotion etc. of any employee.
8. The application of the Informant to change the signatories for various bank accounts of Defendant 1 company and determining the mode of operation of such bank accounts, is hereby rejected.

DECISION

With regards to Section 397 and 398 of the Act, the CLB gave its verdict prohibiting Defendant 2 to participate in the competing business.

NEWS WRAP - JANUARY 24, 2014

• IL & FS Transportation Networks will develop multi-level car parking in Gujarat for Rs. 350 crore.

• Prakash Steelage plans to invest Rs. 70 crore to set up industrial park in Gujarat.

• Indian-American professor Rakesh Khurana appointed Dean of Harvard College.

• Amul airs its first social media advertisement on YouTube.

• India retains 4th spot in steel production in the world in 2013.

Source: Economic Times

HB STOCKHOLDING LTD. (INFORMANT) VS. DCM SHRIRAM INDUSTRIES LTD. & ORS (DEFENDANT)

Applicable Act: The Companies Act, 1956 (The Act)

ALLEGATIONS

The informant alleged the defendant of an act of oppression under Section 397 and 398 of the Act with respect to the issue of preferential allotment of convertible warrants at Rs. 90 to other person against its offer of Rs. 120.

BRIEF OF FACTS

The securities market regulator, SEBI and the Securities Appellate Tribunal (SAT) refused to intervene in the above matter since the said allotment was made with the voting of majority shareholders. SEBI held that it would intervene only when the interests of the shareholders, in any manner are adversely affected because of the act of the company and since the shareholders had voted in majority, SEBI would have no adverse remarks on the mode adopted by the company for mobilising capital for the working needs. Both the authorities were of the view that an action could lie before the Company Law Board (CLB) on the grounds of oppression.
The informant preferred an appeal to the Supreme Court against the order of (SAT).

CONCLUSION

Even though SEBI and SAT had approved the allotment and declined to interfere with the matter, the same lacked honesty and integrity and amounted to an act of oppression. The jurisdictions under which SEBI / SAT and CLB operate are distinct and not overlapping.

DECISION

The application was dismissed and it was held that a petition lied before the CLB for an act of oppression under Section 397 and 398 of the Act.