Source :PTI, Sep 8, 2010, 06.25pm IST
LONDON: Vodafone said it will offload its entire 3.2 per cent shareholding in China Mobile Ltd, a divestment that will fetch the British telecom major about 4.3 billion pounds.
Incidentally, Vodafone's announcement comes on a day when India's Bombay High Court ruled that Indian tax authorities had the right to demand taxes related to the company's 2007 acquisition of the Indian assets of Hong Kong-based Hutchison Telecom.
Regarding the China Mobile stake sale, Vodafone said in a statement that a major chunk of the proceeds from the transaction would be returned to the company's shareholders by way of a share buyback.
Going by reports, the British entity has been looking to sell its minority shareholding in many countries. Vodafone has a minority stake in its operations in Poland and France, among other countries.
The British entity will sell its 3.2 per cent stake in China Mobile, but both companies will continue with their commercial and technology cooperation. Vodafone's 3.2 per cent shareholding amounts to 642,868,587 shares.
"Vodafone expects the cash consideration to be approximately 4.3 billion pounds before tax and transaction costs," the statement noted.
According to the firm, 70 per cent of the deal proceeds would be utilised for a share buyback, while the remaining amount would be used to reduce the group's net debt.
In 2000, Vodafone had bought a 2.18 per cent stake in China Mobile and two years later, the shareholding was increased to 3.2 per cent.
"Today's transaction achieves a near doubling of Vodafone's original investment in China Mobile and combines our stated portfolio strategy with ongoing cooperation with China's leading telecommunications company," Vodafone CEO Vittorio Colao said.
"Both companies will continue this cooperation in areas such as roaming, network roadmap development, multinational customers and green technology," Vodafone added.
Thursday, September 9, 2010
Wealthy face taxing times under DTC
Source:TNN, Sep 9, 2010, 12.32am IST
MUMBAI/NEW DELHI: Do you possess wealth of over Rs 1 crore? Do you also collect art works and invest in stocks of foreign companies? Add a rare watch from your grandfather's collection and some artefacts you would have inherited as part of the family heirloom to the list. If the answer is yes, be prepared to deal with the Income Tax department sometime in the future.
The proposed Direct Taxes Code, which is expected to replace the existing Income Tax Act in 2012, has proposed to impose 1% tax on net wealth in excess of Rs 1 crore. The rate may seem harmless, but the trouble is that it has included archaeological collections, drawings, paintings, sculptures, wristwatches worth over Rs 50,000, besides cash in hand above Rs 2 lakh among other things into the list that forms wealth. In short, the high net-worth individual ( HNI) is in for some taxing times.
Under the existing law, the threshold level to kick in the wealth tax provisions is Rs 30 lakh. However, in the existing provision, items like watches, paintings and sculptures and deposits with foreign banks are not included.
According to HNIs and the experts who manage their money, these seemingly innocent additions to the list in the new tax co de bill are likely to make life difficult for them. There would be disputes over the valuations of these pieces with the IT department as there is no uniform method to value them. This could almost result in a throwback to an era when an encounter with the I-T officials used to give people sweaty palms. Sadly, it may also have an adverse impact on individuals' appetite for collecting artworks and artefacts, a trend slowly emerging in the country, with unintended victims being budding artists and tribal artisans.
"It is too early to comment, but it would be very challenging to implement," says Robin Roy, associate director, PriceWater Coopers. "It is very difficult to administer wealth tax. That is why many countries, including the USA and UK, have done away with wealth tax," says Dilip De, a businessman and art collector.
Besides, subjectivity also creeps in. "The onus of getting the valuation of the assets lies with the owner. He can't feign ignorance on the value of his assets for not paying the tax," says Amitabh Singh, tax partner, Ernst & Young. That is where the problem lies. Even if you value the article with an expert, an IT official can always challenge your claim, as there is no uniform way to calculate the value of paintings or precious artefacts.
"The move to include watches, archaeological collections, drawings, paintings, sculptureS and suchlike would actually end up harassing people. There will be disputes over revaluation of old watches, art objects and other art works. The mechanism to correctly value these things is not in place as we have very few qualified honest valuers of international repute in this country," says De. "Most people are attached to their family heirloom, but they won't be valuing it regularly. Also, there is a question about how do you value them? It is just a matter of opinion," adds Roy.
A small solace is that the first house is exempt from the wealth tax net. Considering the runaway price in real estate, it would have otherwise cast every owner of a modest 2-BHK in the suburbs into the tax net.
The DTC provision is particularly harsh on foreign citizens, including the person of Indian origin, says Singh. If you have worked abroad, created some assets there and moving back to India, you will have to pay wealth tax on your foreign assets if you have taken Indian resident status. In such a situation, you will have to pay 1% tax on your deposits in foreign banks and on the value of other assets in foreign countries.
MUMBAI/NEW DELHI: Do you possess wealth of over Rs 1 crore? Do you also collect art works and invest in stocks of foreign companies? Add a rare watch from your grandfather's collection and some artefacts you would have inherited as part of the family heirloom to the list. If the answer is yes, be prepared to deal with the Income Tax department sometime in the future.
The proposed Direct Taxes Code, which is expected to replace the existing Income Tax Act in 2012, has proposed to impose 1% tax on net wealth in excess of Rs 1 crore. The rate may seem harmless, but the trouble is that it has included archaeological collections, drawings, paintings, sculptures, wristwatches worth over Rs 50,000, besides cash in hand above Rs 2 lakh among other things into the list that forms wealth. In short, the high net-worth individual ( HNI) is in for some taxing times.
Under the existing law, the threshold level to kick in the wealth tax provisions is Rs 30 lakh. However, in the existing provision, items like watches, paintings and sculptures and deposits with foreign banks are not included.
According to HNIs and the experts who manage their money, these seemingly innocent additions to the list in the new tax co de bill are likely to make life difficult for them. There would be disputes over the valuations of these pieces with the IT department as there is no uniform method to value them. This could almost result in a throwback to an era when an encounter with the I-T officials used to give people sweaty palms. Sadly, it may also have an adverse impact on individuals' appetite for collecting artworks and artefacts, a trend slowly emerging in the country, with unintended victims being budding artists and tribal artisans.
"It is too early to comment, but it would be very challenging to implement," says Robin Roy, associate director, PriceWater Coopers. "It is very difficult to administer wealth tax. That is why many countries, including the USA and UK, have done away with wealth tax," says Dilip De, a businessman and art collector.
Besides, subjectivity also creeps in. "The onus of getting the valuation of the assets lies with the owner. He can't feign ignorance on the value of his assets for not paying the tax," says Amitabh Singh, tax partner, Ernst & Young. That is where the problem lies. Even if you value the article with an expert, an IT official can always challenge your claim, as there is no uniform way to calculate the value of paintings or precious artefacts.
"The move to include watches, archaeological collections, drawings, paintings, sculptureS and suchlike would actually end up harassing people. There will be disputes over revaluation of old watches, art objects and other art works. The mechanism to correctly value these things is not in place as we have very few qualified honest valuers of international repute in this country," says De. "Most people are attached to their family heirloom, but they won't be valuing it regularly. Also, there is a question about how do you value them? It is just a matter of opinion," adds Roy.
A small solace is that the first house is exempt from the wealth tax net. Considering the runaway price in real estate, it would have otherwise cast every owner of a modest 2-BHK in the suburbs into the tax net.
The DTC provision is particularly harsh on foreign citizens, including the person of Indian origin, says Singh. If you have worked abroad, created some assets there and moving back to India, you will have to pay wealth tax on your foreign assets if you have taken Indian resident status. In such a situation, you will have to pay 1% tax on your deposits in foreign banks and on the value of other assets in foreign countries.
Obama to end tax breaks for firms creating jobs abroad
Source :IANS, Sep 9, 2010, 10.15am IST
WASHINGTON: Accusing opposition Republicans of pushing bankrupt economic policies and putting politics ahead of national welfare, President Barack Obama has vowed to end Bush era tax cuts encouraging companies to "create jobs and profits in other countries".
"I think if we're going to give tax breaks to companies, they should go to companies that create jobs in America - not that create jobs overseas," he said on a mid-term campaign in the perennial swing state of Ohio Wednesday.
"That's one difference between the Republican vision and the Democratic vision. That's what this election is all about," he said vowing to stand by his plan to allow the Bush tax cuts to expire for people making over $250,000, while extending the cuts for those making less.
Obama also pushed a new $350 billion plan to lift the sagging economy, including $200 billion in tax cuts for businesses to purchase new equipment and write off 100 percent of new investments through the end of 2011.
The president also highlighted a $50 billion proposal for infrastructure investment, as well as $100 billion to permanently extend tax credits to businesses for research and development.
Republicans are trying to ride a wave of "fear and anger all the way to Election Day", Obama said. The election is about "fear versus hope (and) the past versus the future. It's still a choice between sliding backward and moving forward. That's what this election is about. That's the choice you'll face in November."
Obama spoke longingly of a proud Republican tradition of producing "serious leaders for serious times". Current Republican leaders, he said, are more interested in "playing games and scoring points".
Giving examples of different Democratic and Republican approaches, Obama said: "One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries."
"I want to change that," he said amidst applause. "We see a future where we invest in American innovation and American ingenuity."
"Because I don't want to see new solar panels or electric cars or advanced batteries manufactured in Europe or Asia. I want to see them made right here in the US of A by American workers," he said.
WASHINGTON: Accusing opposition Republicans of pushing bankrupt economic policies and putting politics ahead of national welfare, President Barack Obama has vowed to end Bush era tax cuts encouraging companies to "create jobs and profits in other countries".
"I think if we're going to give tax breaks to companies, they should go to companies that create jobs in America - not that create jobs overseas," he said on a mid-term campaign in the perennial swing state of Ohio Wednesday.
"That's one difference between the Republican vision and the Democratic vision. That's what this election is all about," he said vowing to stand by his plan to allow the Bush tax cuts to expire for people making over $250,000, while extending the cuts for those making less.
Obama also pushed a new $350 billion plan to lift the sagging economy, including $200 billion in tax cuts for businesses to purchase new equipment and write off 100 percent of new investments through the end of 2011.
The president also highlighted a $50 billion proposal for infrastructure investment, as well as $100 billion to permanently extend tax credits to businesses for research and development.
Republicans are trying to ride a wave of "fear and anger all the way to Election Day", Obama said. The election is about "fear versus hope (and) the past versus the future. It's still a choice between sliding backward and moving forward. That's what this election is about. That's the choice you'll face in November."
Obama spoke longingly of a proud Republican tradition of producing "serious leaders for serious times". Current Republican leaders, he said, are more interested in "playing games and scoring points".
Giving examples of different Democratic and Republican approaches, Obama said: "One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries."
"I want to change that," he said amidst applause. "We see a future where we invest in American innovation and American ingenuity."
"Because I don't want to see new solar panels or electric cars or advanced batteries manufactured in Europe or Asia. I want to see them made right here in the US of A by American workers," he said.
HC verdict may force Vodafone to pay $2.6bn tax
Source :Swati Deshpande, TNN, Sep 9, 2010, 12.23am IST
MUMBAI: In a landmark verdict that could cost Vodafone International $2.6 billion (over Rs 12,000 crore) in tax and perhaps worry foreign investors, the Bombay high court on Wednesday dismissed a petition filed by the global telecom giant against the Indian income tax department's power to impose a capital gains tax on its $11 billion-plus acquisition in 2007 of a controlling 67% stake in Hutchison Essar Ltd (HEL).
The significance of the case lies in the fact that this is the first time an Indian court has ruled on whether Indian tax authorites have jurisdiction over a transaction between two overseas corporate entities concerning a business venture in India. The court held that that the deal should be subject to Indian capital gains tax because the operating assets of HEL were in India. It did not accept the argument that the transaction took place overseas between British-born Vodafone and the Hutchison group of Hong Kong-based multibillionaire Li Ka-shing, and hence was outside the purview of Indian tax laws. Vodafone, by buying out Hutchison's 67% share, gained control of HEL, which it has since renamed Vodafone Essar. The remaining 33% rest with the Ruias of Essar Group.
An HC bench of Justices D Y Chandrachud and J P Devadhar said that "the Indian tax authorities acted within their jurisdiction" when they initiated proceedings against Vodafone.
If the judgment stands, it'll represent an enormous windfall for the Indian exchequer -- Rs 12,000 crore is more than the Union government's power budget. It is expected to have ramifications for India's budget calculations, said economic analysts. All foreign direct investments coming into India must now factor in the fact that they will have to deduct and pay tax in India.
In a precedent-setting case -- one that has attracted the attention of transnational and Indian corporations alike -- tax authorities in Mumbai had asked Vodafone three years ago to show cause why it failed to deduct tax at source during its offshore 2007 deal. Vodafone had argued that it was under the belief that it was not liable to pay such tax.
The court observed that at the heart of the matter, the transfer of one share at $11.01 billion also involved the transfer of rights and entitlements of local Indian partners and hence the "transaction required complex contractual arrangement in India". This, the court ruled, was sufficient to establish a nexus with Indian tax jurisdiction.
The court did not stay its judgment on Wednesday. But while allowing the proceedings to now continue before the tax authorities, it said that a final decision cannot be taken for eight weeks. This will give Vodafone a window to appeal against the HC ruling; the company said it would appeal to the Supreme Court against the high court ruling.
The entire case of Vodafone, as argued by its counsel Harish Salve but not accepted by the court, was that the share of CGP Investments (Holdings) Ltd -- which was incorporated by Hutchison in the Cayman Islands, a tax haven in the Caribbeans -- was a capital asset situated outside India and that the transaction was hence outside the purview of Indian tax authorities.
The 200-page judgment penned by Justice Chandrachud dismissed the argument of Vodafone that it was "merely a sale of one share of a foreign company from one non-resident company to another". The court noted that through this transaction, Vodafone International acquired control over CGP and companies under its control, including ultimately Hutchison Essar Ltd.
The court pointed to the "complete fallacy" of the main argument of Vodafone that "rights and entitlements that flow out of the holding of a share cannot be dissected from ownership of the share". And thus accepted the Indian government's stand submitted by additional solicitor general Mohan Parasaran that the objective of acquiring one share was basically to aquire total control of the Indian telecom company. Significantly, the court held that "the rights and entitlements constitute in themselves capital assets...to mean property of any kind held by the assessee".
After referring to Indian and international taxation laws at length and also on the need for Indian courts to have a "conservative aproach" while interpreting fiscal laws and policies, the HC concluded, "The transaction in question had a significant nexus with India. The essence of the transaction was a change in the controlling interest of HEL which constituted a source of income in India... In these circumstances, the proceedings initiated by the income tax authorities in India cannot be held to lack jurisdicton."
The court said it was now up to the tax authorities to decide how to apportion the income that has accrued to Hutchison as a result of the "nexus within the Indian tax jurisdiction".
Highlights:
* All foreign direct investment coming into India must now factor into their planning that they have to deduct and pay tax to India.
HC says: Vodafone International by the diverse agreemenst that it entered into has a nexus with Indian tax jurisdiction. In these circumstances the proceedings initiated by the income tax authorities cannot be held to lack jurisdiction.
February 11, 2007: Vodafone International Holdings a Dutch company through a transaction overseas acquired control over Hutchison Essar Ltd (HEL) one of India's largest cellular service provider
September 19, 2007: Indian Income Tax authorities (international taxation) issued show cause notice to Vodafone International for failing to deduct tax at source over the HEL transaction
December 3, 2008: The Bombay high court ruled that Indian tax athorities has the jurisdiction to assess withholding tax on the Hutchison-Vodafone transaction,
January 23, 2009: Supreme court directed the Indian tax authorities to determine the jurisdictional challenge raised as a premiliminary issue by Vodafone.
October 30, 2009: Income Tax office issues show cause notice to Vodafone again
May 31,2010: Assistant director of Income Tax( Inl taxation), Mumbai hold it has jurisdiction to proceed against Vodafone for capital gains tax under section 195 of the Income Tax Act.
June 2010: Vodafone is back in high court again.
September 8, 2010: Bombay high court upholds Indian tax authority's jurisdiction to tax the Vodafone-Hutchison deal.
Quotes:
Vodafone spokesperson: Legal advice received indicates that Vodafones contention that the transfer of shareholding of CGP was a valid transaction (not a sham structure) and therefore not liable to be taxed in India has been upheld. However, the judgment holds that certain other contractual rights with the Indian parties were also a part of the transaction and this has nexus with India. The judgment indicates this gives jurisdiction to the tax office to levy a tax on that part of the transaction. Vodafone is seeking legal advice to challenge this part of the judgment.
Vodafone remains confident that there is no tax to pay on the transaction.
MUMBAI: In a landmark verdict that could cost Vodafone International $2.6 billion (over Rs 12,000 crore) in tax and perhaps worry foreign investors, the Bombay high court on Wednesday dismissed a petition filed by the global telecom giant against the Indian income tax department's power to impose a capital gains tax on its $11 billion-plus acquisition in 2007 of a controlling 67% stake in Hutchison Essar Ltd (HEL).
The significance of the case lies in the fact that this is the first time an Indian court has ruled on whether Indian tax authorites have jurisdiction over a transaction between two overseas corporate entities concerning a business venture in India. The court held that that the deal should be subject to Indian capital gains tax because the operating assets of HEL were in India. It did not accept the argument that the transaction took place overseas between British-born Vodafone and the Hutchison group of Hong Kong-based multibillionaire Li Ka-shing, and hence was outside the purview of Indian tax laws. Vodafone, by buying out Hutchison's 67% share, gained control of HEL, which it has since renamed Vodafone Essar. The remaining 33% rest with the Ruias of Essar Group.
An HC bench of Justices D Y Chandrachud and J P Devadhar said that "the Indian tax authorities acted within their jurisdiction" when they initiated proceedings against Vodafone.
If the judgment stands, it'll represent an enormous windfall for the Indian exchequer -- Rs 12,000 crore is more than the Union government's power budget. It is expected to have ramifications for India's budget calculations, said economic analysts. All foreign direct investments coming into India must now factor in the fact that they will have to deduct and pay tax in India.
In a precedent-setting case -- one that has attracted the attention of transnational and Indian corporations alike -- tax authorities in Mumbai had asked Vodafone three years ago to show cause why it failed to deduct tax at source during its offshore 2007 deal. Vodafone had argued that it was under the belief that it was not liable to pay such tax.
The court observed that at the heart of the matter, the transfer of one share at $11.01 billion also involved the transfer of rights and entitlements of local Indian partners and hence the "transaction required complex contractual arrangement in India". This, the court ruled, was sufficient to establish a nexus with Indian tax jurisdiction.
The court did not stay its judgment on Wednesday. But while allowing the proceedings to now continue before the tax authorities, it said that a final decision cannot be taken for eight weeks. This will give Vodafone a window to appeal against the HC ruling; the company said it would appeal to the Supreme Court against the high court ruling.
The entire case of Vodafone, as argued by its counsel Harish Salve but not accepted by the court, was that the share of CGP Investments (Holdings) Ltd -- which was incorporated by Hutchison in the Cayman Islands, a tax haven in the Caribbeans -- was a capital asset situated outside India and that the transaction was hence outside the purview of Indian tax authorities.
The 200-page judgment penned by Justice Chandrachud dismissed the argument of Vodafone that it was "merely a sale of one share of a foreign company from one non-resident company to another". The court noted that through this transaction, Vodafone International acquired control over CGP and companies under its control, including ultimately Hutchison Essar Ltd.
The court pointed to the "complete fallacy" of the main argument of Vodafone that "rights and entitlements that flow out of the holding of a share cannot be dissected from ownership of the share". And thus accepted the Indian government's stand submitted by additional solicitor general Mohan Parasaran that the objective of acquiring one share was basically to aquire total control of the Indian telecom company. Significantly, the court held that "the rights and entitlements constitute in themselves capital assets...to mean property of any kind held by the assessee".
After referring to Indian and international taxation laws at length and also on the need for Indian courts to have a "conservative aproach" while interpreting fiscal laws and policies, the HC concluded, "The transaction in question had a significant nexus with India. The essence of the transaction was a change in the controlling interest of HEL which constituted a source of income in India... In these circumstances, the proceedings initiated by the income tax authorities in India cannot be held to lack jurisdicton."
The court said it was now up to the tax authorities to decide how to apportion the income that has accrued to Hutchison as a result of the "nexus within the Indian tax jurisdiction".
Highlights:
* All foreign direct investment coming into India must now factor into their planning that they have to deduct and pay tax to India.
HC says: Vodafone International by the diverse agreemenst that it entered into has a nexus with Indian tax jurisdiction. In these circumstances the proceedings initiated by the income tax authorities cannot be held to lack jurisdiction.
February 11, 2007: Vodafone International Holdings a Dutch company through a transaction overseas acquired control over Hutchison Essar Ltd (HEL) one of India's largest cellular service provider
September 19, 2007: Indian Income Tax authorities (international taxation) issued show cause notice to Vodafone International for failing to deduct tax at source over the HEL transaction
December 3, 2008: The Bombay high court ruled that Indian tax athorities has the jurisdiction to assess withholding tax on the Hutchison-Vodafone transaction,
January 23, 2009: Supreme court directed the Indian tax authorities to determine the jurisdictional challenge raised as a premiliminary issue by Vodafone.
October 30, 2009: Income Tax office issues show cause notice to Vodafone again
May 31,2010: Assistant director of Income Tax( Inl taxation), Mumbai hold it has jurisdiction to proceed against Vodafone for capital gains tax under section 195 of the Income Tax Act.
June 2010: Vodafone is back in high court again.
September 8, 2010: Bombay high court upholds Indian tax authority's jurisdiction to tax the Vodafone-Hutchison deal.
Quotes:
Vodafone spokesperson: Legal advice received indicates that Vodafones contention that the transfer of shareholding of CGP was a valid transaction (not a sham structure) and therefore not liable to be taxed in India has been upheld. However, the judgment holds that certain other contractual rights with the Indian parties were also a part of the transaction and this has nexus with India. The judgment indicates this gives jurisdiction to the tax office to levy a tax on that part of the transaction. Vodafone is seeking legal advice to challenge this part of the judgment.
Vodafone remains confident that there is no tax to pay on the transaction.
3 lakh bounced cheque cases pending in Mumbai
SOURCE :Hetal Vyas, TNN, Sep 9, 2010, 01.53am IST
MUMBAI: Alarmed by the high pendency of bounced cheque cases in Maharashtra, the Bombay high court on Wednesday set up a three-member panel to suggest ways for speedy disposal of such cases.
A total of 7.12 lakh bounced cheque cases are pending across the state. Of these, 3.17 lakh are pending in various metropolitan courts in Mumbai alone.
The committee— comprising director of prosecution, registrar (legal), and chief metropolitan magistrate of Mumbai—has been asked to study the reasons for the high pendency and submit its report within four weeks.
A division bench of Justice B H Marlapalle and Justice Amjad Sayed, while hearing a public interest litigation by the Nashik District Industrial & Mercantile Co-op Bank Ltd, has asked the state government to set up 15 special courts to deal with bounced cheque cases. The judges were quick to add that creation of new posts alone cannot solve the problem. "Till the time the state sets up 15 new courts, the committee constituted by us will look into the problems and offer helpful suggestions," observed the judges.
Talking about poor infrastructure in the metropolis, Justice Marlapalle remarked, "Where is the place to accommodate more judges in Mumbai? The real problem is the lack of time-bound disposal of cases."
Representing the state, advocate- general Ravi Kadam and advocate Anand Patil told the court that the government has taken a serious view of the situation and is working on various solutions. "We increased the court fees for filing complaints under Section 138 of the Negotiable Instruments Act (which deals with dishonoured cheques) but that did not help. As all major financial institutions are based out of Mumbai, most of the cases are filed in city courts," Kadam said.
Suryakant Shinde, solicitor-cum-joint secretary (law and judiciary department), in his affidavit stated that a huge number of cases under Section 138 of the Negotiable Instruments Act are instituted afresh each year. "This is why there's such a high pendency," Shinde stated in his affidavit. "It is pertinent to note that the courts dealing with cases of dishonoured cheques are effectively disposing of a big chunk every year."
MUMBAI: Alarmed by the high pendency of bounced cheque cases in Maharashtra, the Bombay high court on Wednesday set up a three-member panel to suggest ways for speedy disposal of such cases.
A total of 7.12 lakh bounced cheque cases are pending across the state. Of these, 3.17 lakh are pending in various metropolitan courts in Mumbai alone.
The committee— comprising director of prosecution, registrar (legal), and chief metropolitan magistrate of Mumbai—has been asked to study the reasons for the high pendency and submit its report within four weeks.
A division bench of Justice B H Marlapalle and Justice Amjad Sayed, while hearing a public interest litigation by the Nashik District Industrial & Mercantile Co-op Bank Ltd, has asked the state government to set up 15 special courts to deal with bounced cheque cases. The judges were quick to add that creation of new posts alone cannot solve the problem. "Till the time the state sets up 15 new courts, the committee constituted by us will look into the problems and offer helpful suggestions," observed the judges.
Talking about poor infrastructure in the metropolis, Justice Marlapalle remarked, "Where is the place to accommodate more judges in Mumbai? The real problem is the lack of time-bound disposal of cases."
Representing the state, advocate- general Ravi Kadam and advocate Anand Patil told the court that the government has taken a serious view of the situation and is working on various solutions. "We increased the court fees for filing complaints under Section 138 of the Negotiable Instruments Act (which deals with dishonoured cheques) but that did not help. As all major financial institutions are based out of Mumbai, most of the cases are filed in city courts," Kadam said.
Suryakant Shinde, solicitor-cum-joint secretary (law and judiciary department), in his affidavit stated that a huge number of cases under Section 138 of the Negotiable Instruments Act are instituted afresh each year. "This is why there's such a high pendency," Shinde stated in his affidavit. "It is pertinent to note that the courts dealing with cases of dishonoured cheques are effectively disposing of a big chunk every year."
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