Legal Snippets

• In a move to expedite the process of resolving the debt issues burdening the creditors including banks and financial institutions, Finance Minister Arun Jaitley introduced the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016 in the Lok Sabha.

• A nominee chosen by a deceased member of a cooperative society shall be given possession of the property and shares, but others who have claims of inheritance under succession law can pursue their claims to the property concerned. The Supreme Court ruled so in the judgment of Indrani Wahi v. Registrar of Cooperative Society case.

• The Bombay High Court has ruled that a company and its directors can be prosecuted for issuing a cheque which gets dishonoured by a bank even if the company is facing winding up proceedings under the Companies Act, 1956. It is not necessary to get the assent of the company judge to prosecute the accused persons under section 138 of the Negotiable Instruments Act which deals with bounced cheques as a criminal offence.

• The Supreme Court has declared that the right to freedom of expression is not an absolute one, upholding the constitutional validity of penal provisions in the law on defamation and rejecting appeals filed by politicians across the spectrum including Rahul Gandhi, Subramanian Swamy and Arvind Kejriwal.

• A borrower can file an appeal against the Debt Recovery Tribunal before the appellate tribunal only if he deposits 50 per cent of the due amount or 50 per cent ordered by the DRT, whichever is less. That is the rule under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

• Private universities can claim income-tax exemption only on two conditions: firstly an educational institution or a university must be solely for the purpose of education and without any profit motive. Secondly, it must be wholly or substantially financed by the government. Both conditions must be satisfied under section 10(23c)(iiiab) of the Income Tax Act before exemption can be granted, the Supreme Court ruled in the case, Visvesvaraya Technological University v. CIT.

• If a complaint of cheque bounce is filed after the period of limitation, the magistrate must give reasons for condoning the delay; he cannot order prosecution as a matter of course, the Supreme Court stated while quashing the judgment of the Kerala High Court in the case, KS Joseph v. Philips Carbon Black Ltd.

• The Supreme Court has ruled that a manager in multi-state cooperative society is a ‘public servant’ and could be tried for offences under the Prevention of Corruption Act. The trial court and the Madhya Pradesh High Court held that the National Cooperative Consumers Federation of India Ltd., Jabalpur was not a state entity and therefore, its Assistant Manager is not a public servant coming within the scope of the anti-corrpution law.