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Corporate Law Cell @ Corp

Speak
CRUX
 The week that was …

 What is the Big Brother up to?

 What the government plans to

do with 3G Auction Proceeds?

 Law Focus

The week that was….

RBI Regulations Industries take on the move?

RBI said core investment The move will crimp their

companies with assets over borrowing and also force them to
Rs. 100 Crore will be revamp their ownership structures
required to obtain
registration from it.

(Business Standard, 14th

August, 2010)

Corporate Law Cell Newsletter Volume 1 Issue 3

© Corporate Law Cell. 2010. ALL RIGHTS RESERVED
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News to watch!!! Euro Focus

Commerce and Industry Ministry is German Economy bettered its

expected to announce the expected growth rate of 1.4% with
amendments to the Foreign Trade actual growth rate of 2.2%. The
Policy (FTP 2009 – 2014) on August impressive growth rate projected by
23rd German economy has propelled the
Euro Zone growth past 1.0 % and
(Business Standard, 14th August,
ahead of US Economy which is
2010)
showing signs of flagging.

(Business Standard, 14th August,

2010)
Acquired!!!

Vedanta has almost acquired 60 % All Roads Lead to Beijing

of Cairn India for a whopping $ 9.6
Billion. The above deal is concluded
as far as negotiations among the
parties are concerned, but is pending
government’s approval.
(The Financial Express, 17th August,
2010)
If the Chinese sources are to be
believed, China has piped Japan to
become the second largest economy.
As Japan’s nominal GDP for 2nd
quarter totalled $ 1.288 trillion, less
than China’s $ 1.377 trillion.
(The Financial Express, 17th August,
2010)

Infrastructure Investments/ FDI

The Shipping Ministry is all set to
award up to 25 port projects under
PPP (Public – Private Partnership)
scheme this fiscal year.
(The Financial Express, 17th August,
2010)
The government is considering
allowing up to 100% FDI in the
class of ARC (Assets
Reconstruction Companies) to
address the capital constraints faced
by them. Currently 49 % FDI is
allowed in such companies.

(Economic Times, 18th August,

Further Reading 2010)

 What are Asset

reconstruction
companies? …

 SARFESI Act
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Top 5 Buys by Indian Co’s

Acquirer Target Co’s Deal Cost ( $ Further Reading
Billions)
 What are Mergers
Tata Steel Corus (2007) 13.6 and Acquisitions?
Vodafone Hutch Essar (2007) 10.9  What is a hostile
takeover?
Bharti Zain Africa (2010) 10.0

Vedanta Cairn India (2010) 9.6  Difference between

a merger and
Hindalco Novelis (2007) 6.0 acquisition.

What is the Big Brother up to? ...

By Urvashi Misra

Keeping in view the number of unemployed persons, at 14.6 million, and the unemployment rate, at
9.5 percent, which has more or less remained unchanged, certain measure that have been taken by
the US government to boost the economy, namely –

Manufacturing Enhancement Act of 2010 Policies

 Signed by President Obama
on August 11, 2010
 Designed to suspend tariffs
on goods that need to be
imported due to
unavailability of viable
domestic source.
 Expected to save American
Co’s over $ 298 Million in
next 3 Years.
US FED’s Fiscal Policies
 Plans to buy Treasury bonds from
the proceeds of maturing mortgage
debts.
 Cost of the Bill - $ 26 Billion
 Key to saving jobs in critical
public sector – Education,
Law Enforcement and
Emergency Services.
 $ 10 Billion in the bill to be
allocated to saving over
160,000 teaching jobs –
White House.
 $ 16 Billion in addition to the
exiting $ 26 Billion allocated
to help State make their
Medicaid payments.

 FOMC (Federal Open Market

Commission) to continue with
fiscal stimulus.

What the government plans to do with 3G Auction Proceeds?
By Shashank Mangal
What was 3G Auction?
Auctions of super fast third
generation (3G) service were being
conducted by Ministry of
Communications and Information
Technology to provide an impetus to
India’s booming cellular market.
5 ways to usefully spend Rs 68,000 Crores
(a) The Ministry of Finance as
per the recommendation of
13th Finance Commission has
decided to use the excess
money to reduce the fiscal
deficit of the government i.e.
6.6% (revised estimate) of
GDP in 2009-10 to 5.5% of
the same in 2010-11.
(c) The money can be infused in
agricultural sector to increase its
fallen growth rate to the targeted
4%. It will also control the food
inflation which is around 9%. It can
also be used for National Food
Security Mission.
Question to be asked?
Would our government of all
governments with inherent red tape,
bureaucracy and corruption actually
use this amount in welfare purpose,
or would it be a fore front to setting
up a commission to investigate the
fraud arising from misuse of govt.
funds?
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Facts about the 3G Auction
 Base price: Rs. 3,500 Cr.
 Estimates (inclusive of
BWA spectrum sale): Rs.
35,000 Cr.
 Original Proceeds of sale:
Rs.67, 719 Cr.
(b) The funds may be used towards
fuel-price subsidies
as budgetary allocation for that
subsidy is low. Keeping that thing in
mind, the government would be able
to reduce the fiscal deficit only by
Rs.10, 000 Cr. and not Rs. 25,000-
30,000 Cr.
(d) It can be used to help
Government undertakings like
railways and airways take up new
projects. While Air India which
seeks around Rs.15, 000 Cr.
(e) The divestment plans of PSUs
can be revised and procrastinated
(the targets can be lowered) which
will help the Government to
maintain a good position for future
contingencies. Moreover, the shares
will probably help it (govt.) realize
more revenue at a later stage.
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Law Focus
This week on law focus we will discuss and compare the Workmen Compensation Act, 1923 with
the amended form, The Workmen Compensation Amendment Act 2009.

The Purpose of the Act

As the name suggests the act had

been legislated with the view / intent
of providing monetary help to
certain classes of workmen by their
employers by way of compensation
for injury or accident.

Comparative table of some of the provision of the old and the new act

Sr. No Provision of the Workmen Compensation Act, 1923 Amended Act of 2009

1 The word ―Workmen‖ is used in the Act The word ―Workmen‖ is to be

substituted by the word
―Employee‖ in the long title,
preamble, and other places
where the word workman or
workmen is used

2 The 1923 Act does not define of who is an ―Employee‖ The Amended act has added
clause dd after clause d to
section 2, sub – section 1.

This new clause dd defines an

―Employee‖.

3 Section 4, Clause 1, Sub – Clause (a) ― Where the The Compensation has been
death results from an injury‖ Then, the employer has to increased from Rs 80,000 to
pay a sum of Rs. 80,000 to the workmen Rs 1, 20, 000.

Section 4, Clause 1, Sub – Clause (b) ―Where The Compensation under same
permanent total disablement results from injury‖ Then, head has been raised from Rs
an amount of Rs 90,000 is payable by the way of 90,000 to Rs 1, 40, 000
compensation by the employer to the workmen

It Provides for addition that

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―after clause (b), the following

proviso shall be inserted
namely‖ that central
government may from time to
time by notification enhance
the amount of compensation
mentioned in cl’s (a) and (b).

4 As per Section 20, Sub – Section (1) – The State The Amended Act provides for
Government may, by notification in the Official that appointment of only those
Gazette appoint any person to be a Commissioner for members who have been a
Workmen’s Compensation for such area as may be member of a State Judicial
specified. Service for a period of not less
than five years or is or has
been for not less than five
years an advocate or a pleader
or is or has been a Gazetted
Officer for not less than five
years having educational
qualifications and experience
in personnel management,
human resource development
and industrial relations.

5 There is no provision which deals with ―Time limit for The Amended Act provides for
disposal of cases relating to compensation‖ in the old the same by Insertion of a new
act. section 25A after After section
25 of the principal Act,
namely:—
Time limit for disposal of cases
relating to compensation –
The Commissioner shall
dispose of the matter relating
to compensation under this Act
within a period of three
months from the date of
reference and intimate the
decision in respect thereof
within the said period to the
employee.‖
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Comments

Let us begin with the Pro’s of this amended act. Firstly, the insertion of Section 25A for speedy
disposal of cases by setting a time limit is laudable, especially in country like ours where there is
heavy stagnation of cases. Secondly, by amending Section 4 (1) (a) & (b) the compensation now
available to workmen has increased significantly.

Now the Con’s, this particular act has complicated the existing setup. Firstly and most
importantly it has replaced/substituted the word ―Employee‖ for the prior existing ―Workmen‖
thereby changing the entire context. If one scrutinises the newly added Clause dd to Section 4, it
becomes unclear as to who is an ―Employee‖. The vague and stretched definition can be
interpreted without any strict construction and hence, defeats any progress that has been made
elsewhere in the act.

Further Reading Questions to be raised?

For Expert Opinion and Insight  Do Indian Legislators act in

Please Refer to the below given
links
1. www.taxguru.in/.../workmen’
s-compensation-amendment-
act-2009.html
2. http://www.prsindia.org/uplo
ads/media/workmen/The%20
Workmens%20Compensation
%20Amendment%20Bill%20
2009.pdf
Conceptualised and Edited by –
Team Information Panel of
Corporate Law Cell.
For further queries and
contributions, please write to us
at ilsccell.ip@gmail.com
haste while drafting and
passing legislation?
 In the Present case when the
entire context of the act has
been changed from
―Workmen‖ to ―Employee‖
why is the amended version
still retained as Workmen
Compensation Amendment
Act, 2009?
 Compare similar provision of
US, UK, Russia and China
 Compare the working
standards offered to employee
in western countries and erst
–while communist countries.