October 10th, 2012

ALB20121010

Abhyaas Law Bulletin

For the quintessential CLAT aspirant
The Scoop Of The Month The Editors Column

Center clears FDI in multibrand retail

Dear Student, Welcome to the October edition of the Abhyaas Law Bulletin. The Union Government finally dared to take the reform decisions it kept pending for a while even in the wake of allies like the TMC withdrawing support. The Center opened gates for FDI in multibrand retail, civil aviation, insurance and pension sectors. The government also took some tough decisions by increasing the price of diesel by Rs 5 and limiting subsidized LPG quota to only 6 cylinders for year. These developments will give fresh ammunition to the opposition specially in the upcoming state elections.

Unmindful of the political crisis it is faced with, threatening the survival of the Central Government, the Manmohan Singh government, on September 20th, went ahead and notified 51 per cent foreign direct investment (FDI) in multibrand retail, 100 per cent FDI in single-brand retail and 49 per cent FDI each in the civil aviation and power sectors, putting an end to speculation about a possible roll back of its decisions.
STATES FREE TO DECIDE The notification about 51 per cent FDI in multibrand retail, which operationalises the September 14 Cabinet decision, comes with the enabling clause asserting that State governments/Union Territories (UTs) would be free to take their own decisions in regard to implementation of the policy. A minimum of $100 million will be required to be invested by the foreign investor. The notification also released a list of 10 States and UTs which have given their go-ahead for allowing 51 per cent FDI in multi-brand retail. All the applications would be processed by the Department of Industrial Policy and Promotion (DIPP) to determine whether the proposed investment satisfies the notified guidelines, before being considered by the Foreign Investment Promotion Board (FIPB) for approval. Retail trading, in any form, by means of e-commerce, (contd)

The Supreme Court made it clear that auction is not the only route to allocate natural resources and said that the 2G judgment was limited to spectrum. The SC in a surprise judgement held that the information commissions are performing quasi judicial functions and hence they have to be headed by people from a judicial background. The judgment has evoked mixed reactions from the civil society. The SC laid down a constitutional principle under which aggrieved parties could seek postponement of publication of hearings while refusing to frame guidelines across the board for reporting sub judice matters .
Happy Reading !

(Rakesh Dubudu)
Index: Page 2: National Page 3: International Page 4: Spotlight

The Law Bulletin

www.abhyaas.in

Page 1

October 10th, 2012 National: would not be permissible, for companies with FDI, engaged in multi-brand retail trading, the notification states. Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana, Manipur, Jammu and Kashmir and the Union Territory of Daman and Diu and Dadra and Nagar Haveli have agreed to allow FDI in multi-brand retail. The notification will pave way for global retail chains such as Carrefour, Tesco and Walmart to file their formal applications with the government to allow them to open shop in India. MINIMUM INVESTMENT The FDI in multi-brand retail notification states the foreign investor should make a minimum investment of $100 million, 50 per cent of which should be invested in back-end infrastructure. This investment refers to the value at the time of installation, without providing for depreciation. Also, 30 per cent of the products must be procured from small scale industries which have a total investment in plant and machinery not exceeding $1 million. It further states that fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded. The foreign retail chains will be required to comply with self-certification. They have to keep all records, and the government will have the first right to procure agricultural produce. As for the back-end investment, it states that investments made towards processing, manufacturing, distribution, design improvement, quality-control, cold chain, warehouses and packaging, will constitute backend. Retail chains will be allowed only in cities with a population of more than 10 lakh as per 2011 Census. There are 51 cities with a population of more than one million, based on 2011 Census. As for the 100 per cent FDI in single-brand retail, the notification states it would include products sold under the same brand name internationally; product retailing will cover only those products that are branded during manufacturing and the foreign investor should be the owner of the brand. SALES OUTLETS In States/ UTs not having cities with population of more than 10 lakh as per 2011 Census, retail sales outlets may be set up in the cities of their choice, preferably the largest city. Information Commissions should be manned by judicial people: SC The Supreme Court on 13th September held that the Central Information Commission and state information commissions are forums performing quasi-judicial functions and thus these should be manned by people with judicial background. The court said that one of the two members hearing a plea challenging the denial of information has to be from judicial background. The apex court bench of Justice A.K. Patnaik and Justice Swatanter Kumar also suggested to parliament to either rework or amend the provisions of the Right to Information Act, 2005, dealing with the criteria and appointment of the central and state level commission members. Pronouncing the judgment, Justice Swatanter Kumar said the appointment of the judicial members of the CIC would be done in consultation with the Chief Justice of India, and similarly for the state information commissions in consultation with the chief justices of the respective high courts. The court said lawyers with 20 years of experience could also be considered for appointment to central and state level commissions. The apex court order came on a public interest litigation (PIL) seeking quashing of Clause five of Section 12 and Clauses 5 and six of Section 15 of the RTI Act, prescribing qualifications for the people who are eligible for appointment to central and state information commissions. Many parties claim they dont come under RTI Act; CPI responds positively

In an interesting development amid the talk of transparency in public life by the political class, all political parties, except the Communist Party of India (CPI), refused to declare their largest donors and the manner of donations in public, claiming they are not a public authority and thereby do not come under the Right to Information Act 2005. This was how they responded when the Association for Democratic Reforms (ADR), a nonprofit organization, asked the BJP, the Congress (INC), the NCP, the BSP, the CPI and the CPI(M) under the RTI Act about their largest donors, matter of donations and their addresses.

The Law Bulletin

www.abhyaas.in

Page 2

October 10th, 2012 Auction not sole route for allocation of natural resources: Supreme Court Auction, despite being a more preferable method of alienation/allotment, cannot be held to be a Constitutional requirement or limitation for alienation of all natural resources, said the Supreme Court on September 27th in its advisory opinion on 2G Presidential Reference matter. A five-judge Constitution Bench, including Chief Justice S.H. Kapadia and Justices D.K. Jain, Dipak Misra and Ranjan Gogoi, held that every method other than auction cannot be struck down as ultra vires the Constitutional mandate. Justice J.S. Khehar, in his concurring opinion, gave additional reasons on two issues. The Bench answered five of the eight questions and declined to answer the other three (relating to 2G spectrum) following the submission made by AttorneyGeneral G.E. Vahanvati that the government had accepted the court directions in the judgment. Writing the opinion for the Bench, Justice Jain said: Auction as a mode cannot be conferred the status of a Constitutional principle. Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and [will] maximize revenue may be arbitrary and may face the wrath of Article 14 [equality before law]. The methodology of disposal of natural resources is clearly an economic policy. It entails intricate economic choices and the court lacks the necessary expertise to make them. It cannot, and shall not, be the endeavour of this court to evaluate the efficacy of auction vis--vis other methods. The court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a Constitutional mandate. Service tax on AC and first class rail fares from October 1st Service tax will be levied on high-end passenger classes, freight and auxiliary services rendered at railway stations from October 1.

International
Chavez re-elected as Venezuelan president, defeating Capriles Venezuelan President Hugo Chavez vowed to press forward with his socialist reforms after winning another six-year term at the helm of the oil-rich South American country. "Today a new cycle of the Bolivarian government begins," he told a crowd of cheering supporters after election results were announced. "I promise to be a better president every day." Chavez won more than 54% of the vote to defeat Henrique Capriles Radonski in a closely watched election. It was the fourth presidential election victory for Chavez, who has been in office since 1999. Bill Gates remains the richest in U.S. : Forbes Microsoft co-founder Bill Gates has retained his position as the richest person in America for the 19th year in a row this year, according to Forbes annual ranking of the nations 400 super rich people who have a combined net worth of $1.7 trillion. With a net worth of $66 billion, Gates not only remained the richest person in America but is also the planets most generous person, thanks to his philanthropic endeavours in developing nations, including India, Forbes said. Gates net worth rose $7 billion since last August on the back of Microsoft shares, which climbed 20 per cent and on gains from investments in private equity, bonds and stocks, it said.

Business
Infosys acquires Swiss firm Lodestone for Rs.1,925 crore
Infosys announced the acquisition of Zurich-based Lodestone Holding AG, a leading management consultancy firm, for 330 million Swiss francs ($345 million or Rs.1,925 crore), which is expected to strengthen the companys consulting capabilities. The Swiss company will bring in more than 200 clients from across several industry segments, including manufacturing, automotive and life sciences, to Infosys existing pool of over 700 clients.

The Law Bulletin

www.abhyaas.in

Page 3

October 10th, 2012

This month in pictures:

Altamas Kabir was sworn in as the new CJI.

Shailesh Gupta has been elected the new Chairman of the Audit Bureau of Circulations (ABC).

Aung San Suu Kyi received the US Congress highest civilian honour.

Former National Security Advisor Brajesh Mishra Passed away.

Cartoonist Aseem Trivedi who was arrested on sedition charges was released on bail.

Reebok Indias dismissed MD, D. Subhinder Singh, was for his alleged involvement in a Rs.870crore fraud in the company.

Spotlight: NLU, Jodhpur

National Law University, Jodhpur is an autonomous law university. The Institute offers under-graduate and post-graduate courses in various streams of law. The degrees offered at the under-graduate level are - B.B.A,LL.B. (Hons), B.A.,LL.B. (Hons) B.Sc.,LL.B. (Hons). All of these are ten semester courses and open only for students on fully residential basis. Since 2008, the admission to these courses is through the nation-wide Common Law Admission Test, the first of which took place in2008. Established in 2001, National Law University boasts of being the first institution of its kind in the country where study of law is coupled with other disciplines such as Science, Management Science and Policy Sciences. It introduced for the first time the degree of B.B.A., LL.B. (Hons) (i.e. Management and Law) in the country. The intake capacity of all the three undergraduate degree programmes B.B.A., LL.B. (Hons), B.Sc.(Technology), LL.B. (Hons), B.A., LL.B. (Hons), put together is 100 students. The National Law University, Jodhpur was set up in November 1999 (by the passing of the National Law University Act,1999 by the State Legislature of Rajasthan) under the leadership of Dr. N.L. Mitra. We dont wish to print this journal, save paper, avoid printing.

Feel free to write to: lawprep@abhyaas.in

The Law Bulletin

www.abhyaas.in

Page 4