Nation
Karnataka government to move SC against Jayalalithaa's acquittal
In a setback to Tamil Nadu Chief Minister J. Jayalalithaa, the Karnataka government on Monday decided to challenge in the Supreme Court her acquittal by the state high court in the illegal wealth case.
 
"The chief minister (Siddaramaiah) has directed me to file an appeal in the Supreme Court, challenging Jayalalithaa's acquittal by the high court," Law Minister T.B. Jayachandra told reporters here after a cabinet meeting.
 
Earlier, the cabinet accepted the advice of state special public prosecutor (SPP) B.V. Acharya and state Advocate General Ravivarma Kumar to appeal against the high court verdict acquitting Jayalalithaa.
 
The 67-year-old AIADMK chief took oath as chief minister for the fifth time in Chennai on May 24 after the single judge bench of Justice C.R. Kumaraswamy upheld her appeal, quashed all charges against her and set aside her conviction and four-year sentence a trial court here handed down to her on September 27, 2014.
 
Acharya, a former state advocate general, will be the state government's Special Public Prosecutor (SPP) to argue the case in the apex court.
 
Though the ruling Congress's legal cell last month advised the government against appealing to the Supreme Court, as Karnataka was not an aggrieved party to the 19-year-old case, the cabinet endorsed the opinion of its law officials on merit after the apex court ruled that the state was the sole prosecuting agency, following the transfer of the case to the state on November 19, 2003, from a Chennai trial court.
 
"A three-judge bench of the Supreme Court on April 27 directed the state government to appoint an SPP in the long-drawn case as Karnataka was the prosecuting agency on transfer of the case to a Bengaluru trial court," Jayachandra said.
 
The bench, headed by Justice Dipak Misra, remarked that once the case was shifted to Karnataka, the state has no choice but to step into the shoes as a prosecutor.
 
The court also observed that Karnataka must understand its responsibilities and ensure smooth and fair prosecution as it "has an obligation to do so".
 
Clarifying that the decision has nothing to do with inter-state issues, Jaychandra said the cabinet decision was based on merits and the government's moral responsibility to honour the top court's observations and abide by its ruling in the case.
 
The two southern riparian states are locked in a legal battle over the sharing of the Cauvery river water for irrigation and hydel power generation and to supply drinking water from Karnataka's Yettinahole stream near Kanakapura to Bengaluru rural, Kolar and Chikkaballapur.
 
The Karnataka High Court, holding the value of Jayalalithaa's disproportionate assets at Rs.2.82 crore, instead of Rs.53.6 crore computed by the trial court, held the amount "not enough" to convict Jayalalithaa on corruption charges.
 
Justice Kumaraswamy also acquitted Jayalalithaa's three co-convicts, sentenced to four years jail and fined Rs.10 crore each for allegedly amassing wealth disproportionate to their source of income during her first term as chief minister from 1991-96.
 
The co-convicts are Sasikala Natarajan, her nephew V.N. Sudhakaran and her aunt J. Ellavarsi. Sudhakaran is also the disowned foster son of Jayalalithaa.
 
Acharya, however, claimed that there were glaring arithmetical errors in the voluminous high court judgment, especially with respect details of assets, loan raised and income earned.
 
"I expected the high court to conform to the trial court judgment, which had convicted Jayalalithaa," Acharya told IANS hours after the verdict.
 
He also contended that Justice Kumaraswamy did not give an opportunity to put forth oral arguments, which was prejudicial to the prosecution.
 
"The court gave me just a day to make submission, which was insufficient. I feel it (the case) should go to the Supreme Court," Acharya had maintained.

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Goa's ex-minister, on the run, finally surrenders
Convicted former Goa minister and legislator Francisco Pacheco, who was on the run for nearly two months, finally surrendered before a trial court in Goa on Monday.
 
Before surrendering to the Judicial Magistrate First Class in Margao, 35 km from Panaji, Pacheco - the former minister for archives and archaeology - said he was pursuing legal options in Delhi and that he was not missing.
 
"I was in Delhi. I was not missing," he said.
 
Pacheco, whose conviction in a 2006 assault case was upheld by the Supreme Court last month, was untraceable since April 9, according to police.
 
A special police team was set up to serve him the arrest warrant, even as the prosecution had initiated judicial proceedings to proclaim the politician as an "absconder".
 
Goa Police had already announced a reward of Rs.25,000 for any information on him leading to his arrest.
 
Pacheco is the supremo of the Goa Vikas Party, a coalition partner in the ruling BJP-led government and has two members in the legislative assembly, including Pacheco himself.
 
Pacheco has a history of criminal cases against him ranging from extortion, assault, bigamy, money laundering and human trafficking and loan default.
 
A court in Goa had also issued a warrant to search the 10, Akbar Road official residence of Defence Minister Manohar Parrikar for Pacheco, but the order was suspended after the state government appealed against it.
 
Pacheco faces six months of simple imprisonment for assaulting a state power department junior engineer in his cabin in 2006.

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Tough Companies Act creating a shift towards LLP?
Due to a heavier regulatory burden and complexity in filing issues, many existing companies are shifting to the LLP model. Besides taxation benefits, for LLPs, there are barely one or two periodic filing every year compared with loads of paperwork for companies
 
It has almost been more than a year since the 58-year old Companies Act, 1956 (Act 1956) has been repealed and replaced by the Companies Act 2013 (Act 2013). While the law makers had intended to gift a modular law to the Indian economy, the stringent provisions imposed a setback to the implementation of the same. Post implementation dozens of amendments, circulars, notifications were issued by the Ministry to mend loopholes in the provisions of the Act 2013. 
 
Amidst all this, the repercussions of regulatory bottlenecks are clearly visible in the drop in incorporation of companies and a steep rally in the incorporation of limited liability partnerships (LLPs) in India. The increase in the compliance burden has to a great extent curbed the incorporation of companies in India. Seemingly, it is not human any more to err, looking at the rigorous myriad penal provisions inserted in Act 2013. Not only has the Act 2013 disheartened the market participants from floating new companies, it has also has influenced a trend of de-corporatisation in the country. 
 
The Act 2013 has shaken the way businesses were carried in India. It is quite evident that owing to the enhanced corporate governance norms, heavy dose of regulatory burden, complexity in filing issues existing companies are shifting to the LLP model. The count is on, as per the statistics given above, and it is high time that the lawmakers start giving relaxation to at least the small and private companies from the overburdened regulatory compliances.
 
The chart below shows the trend of incorporation of new companies and LLPs during January 2013 to March 2015:
 
(Source: Data Compilation by research team of Vinod Kothari & Company using data from MCA)
 
Understanding the shift in trend
A registered company, whether private or public, are bound to comply with statutory requirements including maintenance of registers, meetings, several filings requirements and disclosure requirements coupled with rigorous penal provisions including high fee penalties and imprisonment up to seven years in some cases. 
 
LLPs pose characteristics of limited liability as well as flexibility of partnership. LLPs are not compliance laden and also have added taxation benefits vis-à-vis companies. 
 
The LLP Act contains enabling provisions pursuant to which a firm (set up under Indian Partnership Act 1932), private company or unlisted public company (incorporated under Companies Act) can convert themselves into LLPs. The conversion process is easy and provides more flexibility as compared to the complex set of regulations under the Act 2013.
 
It is apparent that the LLP model has a fewer restrictions, disclosure requirements and compliances as compared to the applicable provisions under the Act 2013. Though there are some tax uncertainties under section 47(xiiib) (e) of the Income Tax Act 1961, particularly in case of those companies, which have turnover in excess of Rs60 lakhs. However, the applicability of capital gains at the time of conversion of a company into an LLP is an arguable point as the case is of conversion of one type of an entity into another, and not a case of transfer of any assets or liabilities. Among other tax incentives, LLPs are not liable to dividend distribution tax on the distribution of profits. 
 
Besides taxation benefits, LLPs also enjoys an edge over the companies when it comes to compliance requirements; there are barely one or two periodic filings in a year as compared to the several declarations and filings to be done by the companies. Further, LLPs accommodate the benefit of flexibility in reduction of capital and at the same time enjoys the benefit of limited liability. Most importantly, the Act 2013 has imposed several restrictions with respect to financial transactions with the directors or their related entities as provisions, with respect of the transactions with the related parties of the company, which again do not apply to LLPs.
 
In spite of several incentives and ease in regulatory aspects, it has been spotted that the count in LLPs are still less. While stringency of the Act 2013 has triggered a rush in incorporation of LLPs, few limitations including seeking of no objection certificate (NOC) from the sectoral regulator before undertaking financial transactions, restriction on entities other than individuals and companies to be members of an LLP, still remains to be a downside of the LLP model. 
 
(Shruti Agarwal works at Financial Training Division of Vinod Kothari & Co)
 

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COMMENTS

vswami

2 years ago

OFFHAND
That plainly explains as to why in the aftermath of the new corporate law coming into being, LLP has become a preferred vehicle /chosen form of entity to carry on business / profession. May be so from the viewpoint of those venturing into carrying on business or profession,. Nonetheless, if were to be viewed at the flip side, the reported change in strategy / its consequences, desirable or otherwise, have to be necessarily looked into, and given an anxious consideration, also from the angle of those having dealings with a LLP. For knowing more, recommend to look into the related independent critical study of the topic as shared through published articles, comments and personal Blogs @ swamilook 2015.

Instances: Here >
(2005)128 Comp.Cas 1 and (2006) 65 SCL 42 and

Here >http://vswaminathan-swamilook.blogspot.i...

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