The crisis in Ukraine may give India an opportunity to export more wheat, provided we ship out more, as our central pool stood at 24.2 million tonnes, twice more than the buffer and strategic needs
Despite the US and European threats and entreaties, Russia went ahead supporting the referendum, which overwhelmingly approved Crimea to become a member state of Russia. In effect, this peninsula was part of Ukraine and is now under Russian control.
Indian trade with Commonwealth of Independent States (CIS) has been growing in the last few years and in 2012-13, the total trade between India and Ukraine amounted to $3.18 billion. While Ukraine exports edible oils, petroleum products and fertilisers, Indian exports cover a number of products, of which pharmaceuticals supplies alone have grown, in recent years, to $154 million. After Russia, it is Ukraine, the second largest trading partner for India, in the CIS group. Indian trade with CIS amounted to $11.58 billion
Apart from natural gas, which Ukraine is estimated to have large reserves, it is also a serious Wheat supplier in the international market, often in competition with Indian bids.
In the case of wheat supplies from India, many times we have lost international contracts due to better offers from Ukraine. With the current crisis on hand, it is just possible, that Ukraine may refrain from offering its wheat. Traders in this grain have been looking at France, as a nearby alternative. It is believed that due to Crimea's move to join Russia, the spring grain to be sown this year in Crimea could be delayed, and, in any case, it is unlikely to be available for export via Ukraine. It is reported that the grain output in Crimea is 1.2% of Ukraine's overall harvest in 2013.
Ukraine expects to export 10 million tonnes of wheat, between July 2013 and June 2014, but, already, in January, they have been able to ship out 7 million tonnes, to avoid the crisis that was looming large at that time.
As of now, Indian wheat tenders, floated by both MMTC and PEC have received prices in the range of $282 as against the indicated "floor price" of $260 per tonne. A total of 150,000 tonnes are on offer, with 80,000 tonnes ex- Kakinada port (MMTC received bids at $281.05), while 70,000 tonnes ex-Kandla port (PEC received bids at $ 282.10) from some 17 bidders.
It would be in our national interest to probe the possibilities of "accepting" more than one or two bids, even if by negotiation, to ship out more wheat from the country, as our central pool stood at 24.2 million tonnes, twice more than the buffer and strategic needs. At all costs exports we must, and exceed the target of five million tonnes from both private and public stocks, bearing in mind that there are weather issues in the US, affecting their crop and the political crisis in Ukraine is not yet over.
Nature has played against India too, in the form of hailstorm in Madhya Pradesh, which is reported to have shrunk the estimated crop size by two million tonnes, according the state government. Yet, the current overflowing stocks in the FCI godowns have to be cleared soon and make way for the new arrivals, when harvests take place in the next few weeks.
At the moment, India is a helpless spectator in this crisis and we need to watch the situation carefully. Russia may even face the prospect of economic sanctions from the West, though, the thought of reaction from gas supplies, which account for 20% of its export revenues may result in both sides exercising great caution not to take the wrong step in this matter.
As is usual, India may have to tow the line of the UN resolutions, if any, on this issue!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
Class actions aim to minimise litigation by reducing multiplicity of suits, however, the ambiguous provisions leave no option for commoners other than to look up to the courts for clarity and interpretation. This is the concluding part of a three part series
The provision for class action suit in the new Companies Act, 2013 was brought in to provide stakeholders an edge in retrenching their rights. The provisions were introduced to bring together stakeholders with common interest on a shared platform so as to lower costs of litigation and boost the efficiency of the legal adjudication.
Upon perusal of the sections pertaining to class action as contained under the Act, one finds that the provisions are neither purely “class actions” as prevalent in US nor purely “derivative” as prevalent in UK. The interpretations of the sections overlap with remedies already available under section 241 of the Act and also intersect and are opposed to provisions provided under common law. The language of the section at numerous places lacks clarity, for which one would have to depend upon the courts to finally come up with right and just interpretations.
It is highly ironical that one hand, the section completely banishes jurisdiction of civil courts to try class action and on the other, one will have to resort to the wisdom of the courts to finally get a clarity regarding interpretation of the section. On one hand class actions aim to minimise litigation by reducing multiplicity of suits, while on the other the ambiguous provisions leave no option for commoners than to look up to the courts for clarity of such provisions.
Also, the Act is also silent upon how the class litigation shall be funded. In US, all class actions lawyers work on contingency model i.e.; they retain a portion of the settlement amount and charge no fees upfront. In absence of provisions with respect to funding, actioners would have to succumb to the prevailing costs of suit filing and adjudication expenses. Moreover, this does not provide an incentive to the lawyers to take up class action cases and fight them.
The intention behind introducing the class action provision was indeed a noble one expected to benefit the stakeholders by empowering them additionally to proceed against the company with minimal costs of litigation. But sadly, the idea forthwith loses its nobility when one peruses the provisions only to find them unclear, ambiguous, vague and hazy. In absence of discreet clarity what comes across is a fuzzy and lax remedy in place of a robust and concrete provision. Further, lack of clarity could lead to widespread abuse of legal procedure. For example, class actions can become a means for plaintiffs' lawyers to make a lot of money on issues of dubious merit.
It is also important to ask here whether there is really any social and legal value in class action lawsuits. In small claims class actions, there would be little value of supporting litigation in which individual class members have trivial interests. The individual claimants, because they have so little at stake, would not exercise any control over the litigation or would elect to opt out of the class and pursue individual claims. In these kinds of litigation, it is ultimately the plaintiffs' lawyer who is in total control and has the largest interest in the suit’s outcome, even if the suits result in minimal payouts to the class members. The legislation and court rules should have given more power to the courts to examine class action applications. Courts should carefully review the applications and deny class status to small claims cases with little social value in the adjudicating the claims.
What are the Reliefs?
Section 245(1) of the Companies Act, 2013 sets out the kinds of relief that the Tribunal can grant in a Class Action:
• Restrain the company from committing an act, which is ultra vires the Articles or Memorandum of the company.
• Restrain the company from committing breach of any provision of the company‘s Memorandum or Articles.
• Declare a resolution altering the Memorandum or Articles of the company as void if the resolution was passed by suppression of material facts or obtained by mis-statement to the members or depositors, and thus restrain the company and its directors from acting on such resolution;
• Restrain the company from doing an act which is contrary to the provisions of the Act or any other law for the time being in force;
• Restrain the company from taking action contrary to any resolution passed by the members;
• Claim damages or compensation or demand any other suitable action or remedy that the Tribunal may deem fit.
Consequences of Class Action Suits
An order passed by the Tribunal shall be binding on the company, its members, depositors, auditors, advisors, consultants, experts and other persons associated with the company. Any failure of company to comply with the order shall be liable to a fine of Rs5 lakh extendable up to Rs25 lakh and every officer in default shall be punishable with an imprisonment of three years and with fine of Rs25,000 extendable up to Rs1 lakh.
Consequences of Frivolous Action
Section 245(10) states that where any application filed before the Tribunal is found to be frivolous or vexatious, it shall, for reasons to be recorded in writing, reject the application and make an order that the applicant shall pay to the opposite party such cost, not exceeding Rs1 lakh, as may be specified in the order. Given that a minimum of 100 members can join together to file a class action, this comes down to a maximum cost of Rs1,000 each member. The cost would be much less if more members join. Such minimal amount may not be enough to deter frivolous litigation.
Can a plaintiff opt out of a Class Action?
In the US, courts have held that the principle of “Due Process” requires that absent class members be given adequate notice, adequate representation, and adequate opportunity to opt out, before they can be bound by a final judgment in the suit. (Phillips Petroleum Co. v. Shutts)
Under Companies Act 2013, there is no provision for opting out.
Effect on Subsequent Litigation
What is the effect of class actions on subsequent litigation? The general rule of res judicata requires that each and every cause of action should be litigated only once. To require the same case to be litigated more than once on the merits is a waste of the court’s time, without offering any assurance to either side that the outcome in the second trial is any better than that in the first. So, the legal system has to make sure that one trial is done well, after which the parties and their privies are bound. For example, if the trustee has lost the suit against the third party, then his beneficiary should be bound by that initial litigation, for otherwise the beneficiary has the incentive to hang back at the outset and then intervene, if and only if the trustee loses the first suit. No legal system should encourage the proliferation of suits by several persons who have partial interests in the same basic claim.
In the US, there is a bar on subsequent suits and it will be interesting to see whether the same principle will be applied by NCLT as well.
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Pricing a product at Rs99, Rs199, Rs299, or Rs1,999 is called psychological pricing, in marketing. Some telemarketing companies have now started the sale of spiritual products. These are being sold by a company called GTM networks. They have prominent ads on specific news channels. Common in all these advertisements is:
(a) All of them have out-of-work and long-forgotten actors/actresses as brand ambassadors (have-beens, like Manoj Kumar, Jackie Shroff and Govinda, are also not spared).
(b) The products are herbal and ayurvedic made from raw materials sourced from forests in Nepal and Bhutan (which you and I have no access to).
(c) Invariably, the price of most of these products hovers around Rs2,999.
So, if you buy ayurvedic massage oil, or a Hanuman Chalisa yantra, the price is always Rs2,999. Yes, there is also a money-back policy; you can return the product, if you are not satisfied.
The advertising claims of these marketers are ludicrous. Buy a Kubera yantra and you will have gold coins falling from your roof! Apply herbal oil on your knees and your knee-pain will vanish in 10 days. Consume a powder, touted to be an aphrodisiac, and you will be blessed with a child in the next nine months. Keep a Sankat Mochan yantra in your room and MNCs will come knocking at your door with plum job offers. Apply a unique herbal powder to your plants and you can soon have an orchard full of fruits like mangoes, guavas, apples, grapes and chikoos.
Are you suffering from constipation? Please partake of this petsaaf shuddhi karan herbal powder priced only at Rs2,999 and there is no need to visit any doctor —but regular visits to the toilet are guaranteed! Not getting enough sleep? Buy anidramoksha churan—a powder that drives away fatigue and insomnia. After consuming this powder in milk for 12 days, from the 13th day onwards, you can be assured of peaceful sleep. Yes, there is also a free offer. If you buy this churan for Rs2,999 (you guessed it right!), you get a free booklet on “Healthy living in modern world”. Even without taking the powder, reading this book will guarantee you peaceful sleep. This is a bonus.
This industry also needs to be commended for innovative and breakthrough thinking. Have you lost a precious object? Have you lost something that you desperately need? Buy the yantra called Vyastu Wapasi yantra. Keeping this yantra near your entrance will ensure recovery of the lost product in seven days. Price of the yantra? Rs2,999. There is also a discount if you buy two yantras—buy two, get one free. You can actually keep this yantra everywhere including the bathroom.
Then there is the Vastu Shakti yantra. This yantra is a metal plate on which Sage Valmiki’s inscriptions are carved; the same Sage Valmiki who wrote the Ramayana! Vastu Shakti yantra is priced only at Rs2,999 and can be kept anywhere and everywhere. It will absorb all the negative energy in your home and also burn a big hole in your pocket.
Honestly, one wonders how many gullible consumers have fallen prey to such unsubstantiated claims. Who is the mastermind behind all these products and claims? It is perplexing.
Valliyoor Satya, Bengaluru, by email
MISTAKES CAN OCCUR
To err is human. Mistakes do, or can, occur when returns are filed by taxpayers (or while filling up data by data-entry operators). No one ever admits to having made mistakes. In fact, many aggressively defend whatever action/stand they have taken. The I-T (income-tax) department puts the onus on rectifying the mistake on the assessee. Without undertaking to accept the information as per the certificate from TRACES, one cannot even access the Form 26AS.
Can the I-T department not ameliorate the tension and hassles faced by assesees, particularly senior citizens, in filing of I-T returns and also in getting the assessments completed? The I-T department should also make it simpler to rectify mistakes (for which they are not responsible).
I have faced this problem every year and I am sure many others too would have faced similar difficulties. If there is a difference between Form 26AS and the return is filed, can the I-T department not ask both the parties concerned to provide proof and fine heavily the one responsible for the mistake? This may make the tax deductee more cautious or more responsive to making corrections, wherever necessary.
Venu Nallur, by email
REPLIES FROM SHCIL
The Letter to the Editor titled “Delay in making payment by SHCIL” by RM Ramanathan, Chennai, in Moneylife (20 February 2014) got two replies from SHCIL: one from Rohini Henriques and the other from Karpagam S. Both are reproduced below. — Editor
Rohini Henriques, DP-customer care wrote:
Our concerned Branch has spoken to the client,
Mr Ramanathan. He confirms that he has received the cheque and it has long since been cleared. We trust you will treat this matter as resolved.
Karpagam S, area manager, Chennai wrote:
We, at SHCIL are always committed to maintaining the highest service standards. In this instance, the delay was due to a technical reason. We had already apologised to the client for the delay in refund of credit balances. Due care has been taken to avoid such stray instances in future.
HORRENDOUS SHOPPING EXPERIENCE
With Facebook raking in billions by promoting fashion houses and retail outlets selling goods on the worldwide web, here is one more story of a shopping experience gone awry.
Based on a ‘Suggested Post’ featuring Yepme Shopping, I gave it a go. During the Google Online Shopping Festival, on 14 December 2013, I bought two products under order reference
# 4499050 on www.yepme.com. The payment was made via a nationalised bank’s netbanking payment gateway.
When the product was not delivered by 23 December 2013, I called up their customer-care staff who notified me that the payment had not gone through. They asked me to check with my bank and ask them to refund the money instead. I produced my bank statement which stated otherwise and forwarded it to the Yepme’s customer-care team to highlight the fact that the money had been transferred to the ‘emvantage payment gateway’ and the onus of refund was on Yepme. Well, that was just the beginning of the awful experience I was to undergo.
After about 20-odd phone calls to their customer-care team, and a dozen e-mail exchanges, the refund has not been processed till date. Each time I call them (customer care), I am assured that the refund would be processed within the next three days which, so far, have not arrived as per their calendar. Though it is a matter of a few hundred rupees, I think it goes a long way in showcasing how small businesses, like Yepme, are lacking in customer-care.
Even after notifying their customer-care team—that I would complain against them using the customer appellate forum—they are hardly moved into action. It is high time their services are reviewed. I thought of bringing this to the attention of your readers, to prevent others from being duped by such business houses. Hope this opens the eyes of the Yepme management.
Munish Sharma, by email
BRING TRANSPARENCY IN SPENDING!
This is with regard to “Has the scope of CSR been too narrowly defined?” Any initiative to bring transparency in spending from CSR (corporate social responsibility) funds and to curb use of black money for fighting elections should be welcomed. Even the long list of ‘eligible’ activities that can be funded with CSR allocations has not satisfied the corporates which crave for more flexibility.
In the matter of social responsibility and avoidance of unethical practices in election expenditure, there are bound to be constraints for any regulatory approach to succeed. The final ‘judge’ will be the society and the aam aadmi who exercises his right to vote. The media and the educated population should play their role in creating awareness about the guidelines among the masses, who, in turn, should press for self-regulation by corporates and politicians.
A GREAT REVELATION!
This is with regard to “Why healthcare costs are shooting up?—Part I” by Prof BM Hegde. A great revelation! Governments do not budget adequately for safe drinking water and good drainage and sewerage systems but go after budgeting for expenditure on health administration. If the former two are taken care of, the budgets of all families—rural and urban—will go into more and good food and better health. But doctors, consultants, educationists and executives in governments and insurance companies survive on poor systems and lack of basic amenities. Coming to Harvardians, after all, they (do not exclude IIMA) are hired intellectuals. When I told somebody that there is intellectual prostitution, he asked me ‘why do we want to insult prostitutes?’ I feel he is right.
Yerram Raju Behara
‘REMEMBER MR SESHAN?’
This is with regard to “What Really Happened at United Bank of India?” by Sucheta Dalal. Sure, PSU banks are in a bad shape, thanks to political interference. I want to pose two questions: (a) What is the need to re-capitalise these losing banks again and again? Instead, it would be better to let them die a natural death. (b) Why is Dr Raghuram Rajan not taking stronger measures to rein in errant banks and their chairmen? Remember Mr Seshan? As election commissioner, he cleaned up the whole system, the benefits of which are evident even now. Why can’t Mr Rajan also be a crusader in the same way?