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Sunday,
December 8, 2002, Chandigarh, India  
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Defaulters ready to settle dues: PNB
Securitisation Bill to check rising NPA
PTL: buyer can be loser
Used cellphones with warranty on cards |
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FAST to hold international conference
Suspension order Q: We are registered as a dealer under the provisions of the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. Our unit was issued with an exemption certificate under rule 28-A of the Haryana General Sales Tax Rules, 1975 for a period of seven years...
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Defaulters ready to settle dues: PNB Chandigarh, December 7 Mr Harwant Singh, Zonal Manager, PNB, Northern Zone, disclosed that the bank has told the defaulters either to clear the overdue payments at the earliest or be ready for the seizure of their security and assets as per the newly passed Act. He said so far the response of the defaulters was quite encouraging. Most of them had agreed to clear the payments, but in a phased manner. Total NPA of PNB in Northern Region, he said, was around Rs 423 crore in 426 branches. The top eight defaulters in the region included Altos India Ltd., Gurgaon (Rs 40 crore), Haryana Steel Alloys (Rs 18 crore), Jagdamba Food, Karnal (Rs 14 crore), Sanmati Rice Ltd., Ghanaur, (Rs 9.34 crore), Sanctuary Tubes, Bhiwani, (Rs 5.50 crore), Haryana Tube Marketing Company, Hisar, (Rs 5 crore), Euro Cotspin, Chandigarh, ( Rs 11 crore) and S.R. Forging Ltd., Chandigarh, (6.91 crore). At the national level, the bank has so far issued 1,182 notices for the recovery of its dues, and has managed to attract over 200 customers. The amount settled, say officials, is over Rs 138 crore. In some cases, the bank had already started proceeding to recover the amount by selling the assets of the borrowers. The officials of the bank said that so far the bank has adjusted three accounts amounting to Rs 8.62 lakhs and has upgraded seven accounts amounting to Rs 31. 65 lakh. In addition, the bank has partially recovered the amount worth Rs 46.72 lakh from 41 defaulting accounts. Today, in a zonal level meeting of recovery officials, Mr Harwant Singh stressed upon them to work out a strategy to recover the pending amount from the defaulters in a smooth but effective manner. |
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Securitisation Bill to check rising NPA THE Securitisation and Reconstruction of Financial Assets and Enforcement of the Security Interest Bill have been passed in both houses of Parliament with alacrity. To check the rising volume of NPA, it is a welcome step. Unfortunately, the issue of NPA has not been taken as a whole. The government has tried to balance its act by proposing Lender’s law but it is going slow on that. Much more is required to contain NPA. Although the provision of the proposed act is applicable on all defaulting borrowers but the Finance Minister took pains to emphasise on wilful default. This is the right spirit. Borrowers can become sick and defaulter in loan payment due to numerous wrong policies of the government and due to the whims and fancies of the Revenue Departments, in particular. So the NPA issue has many offshoots which need careful attention. The RBI has evolved the definition of wilful default after exhaustive study. If the borrower does not pay though he has the capacity to pay, wrong use of funds; and siphoning of funds are some of the salient features of wilful default. Within this ambit, all erring defaulters are covered. The purpose of the bill under reference is also the same. In actual practice, banks/financial institutions will cover all erring defaulters although they have become helpless due to genuine reasons beyond their control. Lender’s law can take care of the excesses of the lender. The Finance Ministry has worked out the details on the lines of the USA where it is known as “Truth in lending act”. Accordingly, lenders will be required to reveal to its customers the terms and costs of all loan plans, including the annual percentage rate and fees. Lenders are required to make public features of variable rate loans, including the highest rate the lender would charge, how it is calculated, and the resulting monthly payment, total finance charges and annual one-time service charges. Although the existing law of contract/tort can give some relief to the borrower but the procedure is so lengthy that hardly any businessperson can afford to avail oneself of it. Delay in the disbursement of the sanctioned loan or call back of a loan without genuine reasons are some of the provisions of the existing laws. Banks and financial institutions are defaulters in such cases and go unscathed. Lender’s law should be specific with sharp cutting edge on the lines of the securitisation bill. The Finance Minister has not taken note of what is going on
within the banking system. Banks are charging exorbitant rates from some and exceptionally low from others. The RBI took notice of this trend and advised banks to reduce their spread. PLR lost its meaning when some borrowers are lent much above this and others much below this. RBI’s directive has been taken by the banks very casually. This matter has been referred to the Finance Ministry and the Ministry of Small-Scale Industry by some borrowers. But the matter is being skirted. The Finance Minister’s worry on such a scenario should match that on NPA. Within the definition of wilful default, the RBI has also mentioned about the borrowing units which form part of the family units. Banks should not harm genuine units of the family. What is happening in actual practice? Banks are trying to make healthy units of a family sick by restricting finance and suffocating them. Is this in the national interest? The Revenue Departments of the state and Central governments can make or mar any running industry. An uncalled for penalty and tax liability imposed due to the whim of an individual can make any running unit sick. The courts later find such decisions quite irrational but after the harm having been done. This is a very serious problem for the business community. The Finance Minister should evolve a separate code for the Revenue Departments so that the erring officials can be punished on the lines defaulting borrowers are punished under the Securitisation Bill. Many a time the government itself makes policies which on the face are detrimental to the healthy units. Nepal treaty is one glaring example. In the light of the prevailing environs in the country, it is advisable to contain the provisions of the proposed Securitisation Act to wilful defaulters and genuine defaulters should be kept out of its ambit. |
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PTL: buyer can be loser New Delhi, December 7 According to informed sources, it is a bit surprising that why the government is pressing ahead for the disinvestment process in PTL instead of selling other loss-making units in which it has stake, including Punjab Alkalies and Chemicals, Punjab Chemicals and Pharmaceuticals and Punjab National Fertilisers and Chemicals. The government has appointed KPMG as the adviser on PTL. The PSIDC, which is the main investor in PTL, is itself running in losses. The total liabilities of the PSIDC work out to be Rs 660 crore whereas the total value of its standard assets are Rs 79 crore, thereby leaving a gap of Rs 581 crore. With the slump in the tractor industry, PTL was also not untouched by this. It has not done well during the second quarter of September, 2002, as its net sales dropped 44.3 per cent at Rs 133 crore. According to experts, the availability of credit is the most crucial factor that impacts tractor business in India. Ninety per cent tractors are financed by banks at the concessional rates. What is surprising, according to sources, is the extremely fragmented shareholding in PTL which will make it an expensive affair for any buyer who opts for a takeover. The UTI, the second largest investor after the PSIDC with an 18 per cent stake, is keen to bundle its equity with the PSIDC, as not doing so will impact its shares negatively. Therefore, if the PSIDC agrees to bundle its shares with the UTI, the buyer will have to pick up a 41.4 per cent stake. And then it will have to make a 20 per cent open offer. So, a 61 per cent stake in PTL may become necessary which means a huge financial burden for any company, the sources suggest. |
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Used cellphones with warranty on cards New Delhi, December 7 “We are working on a scheme where manufacturers can provide used cellular handsets to customers, which will not only ensure quality but also a warranty”, said Mr Pankaj Mohindroo, President, Indian Cellular Association (ICA) . He said the manufacturers are interacting with retailers and dealers in this regard. “We will check if the used handsets are of good quality and we are also planning that customer gets warranty on these handsets, he said. This will ensure good quality handset and a fair price to both parties. In turn, it will discourage the grey market where one cannot be sure of the product one buys, said Mr Mohnindroo. The grey market currently holds more than 75 per cent of the total market for cellular handsets. According to estimates by the association, of the total market for handsets which is around Rs 1,980 crore, the legal sales of handsets account for merely Rs 495 crore. The smuggled handsets are then sold to customers without any customer service or warranty and many of these sets have non-genuine batteries and even fake or substandard accessories. The association estimates the number of subscribers in the country to go up to 445 lakh by 2006 against the current 40 lakh. This number by 2006 can
increase to 534 lakh if the government rationalises the tax structure, said he. The manufactures, meanwhile, are also trying to rope in finance companies so as to make new handsets available on
finance. The ICA is also working on providing insurance on new handsets. “The idea is to encourage the legal cellular handset market and make these phone affordable ”. |
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FAST to hold international conference POST September 11, 2001 nasty incidents, the confidence of the United States and the rest of the world stands shaken, if not shattered. The worst affected twin industries, aviation and tourism, continue to languish despite aggressive strategies of some dedicated and zealous officials. During these 15 months, it has been a nerve-wrecking experience for travelling public. When the ray of hope rises for air traffic to
stabilise, it is given a shock treatment by some panicky affluent nations. They issue hasty and meaningless advisories to their prospective air
travellers, who get demoralised. Aware of the disturbing situation, which continue to affect two vital industries, the Foundation for Aviation and Sustainable Tourism (FAST) will organise a two-day international conference to discuss strategies in changing business environment. The conference, fifth in number, is entitled as ‘Aviation and Tourism’. Spread over four sessions on December 11 and 12 at Ashoka Hotel, experts from India and foreign countries will have ample opportunities to thrash out ways and means to help these twin industries regain their status and stature. A series of topics has been listed. Important among them are new large aircraft vs sonic cruiser, concept of low fare/no frill airlines, aviation management, privatisation of airports, civil aviation security, eco-friendly and community-based tourism and new challenges in travel. Dr S.S.
Sidhu, President of FAST and a renowned authority in the world of aviation, is optimistic that the international conference will bear fruits. “Many eminent aviation and tourism officials have consented to participate in the discussion”, said Dr
Sidhu, adding: “easy and simple strategies will be evolved for speedy action”. The Deputy Prime Minister
L.K. Advani will deliver the inaugural address, while Minister for Civil Aviation Shahnawaz Hussain will preside over the function. Mr Mathew Samuel, Senior Vice-President of Singapore Airlines, Dr Dale Doreen, Director of International Aviation and Dr Kiran
Rao, Senior Vice-President of Airbus Industries are among foreign experts to express their views and observations. The conference is a truly global in concept and character. Its reach and range are vast for both domestic and international travel. The participants can reap harvest of fruits from this conference, which will be immensely useful for Indian delegates.
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by Praful R. Desai
Suspension order Q: When the suspension to subject to enquiry whether interference by the Court at the stage of suspension, called for? Ans: Before the Madras H.C. in Raja Thirchelvi (TMT) v M.P.A. Col-Op. Bank (2002 III-LLJ.140), this point was agitated. The petitioner in this case was working as sales woman by order dated 27.8.80 and she was promoted to the post of secretary of the respondent bank from 1.1.97. During this time while she was so placed, the bank put her under suspension on 6.11.01 on the grounds that the petitioner has not recovered the loans; there had been irregularities in grant of jewel loans; deposits of 52 lakh in Nanganallur Co.Op. Housing Society etc. After the said suspension order, bank issued charge memo dated 5.2.02. She sent a representation and request for revocation of the said order on 15.11.01, but the bank had not taken any action till date. Hence this writ petition. The only point raised in a legal manner testifying the validity of the order is questioning the jurisdiction of the special officer who passed the suspension order. Time and again, this court decided against stating that under the Byelaws and different G.Os, the special officer are empowered in exercising their jurisdiction either to place under suspension or to remove from out of office on enquiry and therefore, the question raised on the part of the petitioner does not hold. Further more such suspensions could be easily resorted to since the underlying factor is that suspension is not a punishment nor could it jeopardise the genuine interests of the delinquent in any manner which is only subject to the outcome of the enquiry. Hence, the H.C. held that this court is of the view that interference of this court sought to be made into the impugned order at this stage of the case is quite uncalled for. The writ was dismissed accordingly. |
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by A.K. Sachdeva Q: We are registered as a dealer under the provisions of the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. Our unit was issued with an exemption certificate under rule 28-A of the Haryana General Sales Tax Rules, 1975 for a period of seven years. Due to some unavoidable circumstances, we could not fully avail of the benefit of tax exemption as the unit went out of production even before expiry of the period of the exemption certificate. The Deputy Excise and Taxation Commissioner now issues a notice calling upon us to explain as to why the exemption certificate be not cancelled and that why the benefit of tax exemption availed be not recovered back. The closure of the unit was neither deliberate nor intentional. Kindly advise as to whether the action proposed by the Deputy Excise and Taxation Commissioner is legally valid? — Ambika Prasad Gupta, Hisar Ans: As per sub-rule (9) of rule 28-A of the Haryana General Sales Tax Rules, 1975, closure of the business by the unit during the period of exemption constitutes one of the valid grounds for cancellation of an exemption or entitlement certificate. It is totally immaterial whether such closure flows out of the circumstances within or beyond the control of the management. Once it is found that the unit has closed down its business during the currency of the exemption or the entitlement certificate, as the case may be, cancellation thereof becomes inevitable in terms of the said sub-rule. It is only for the year during which the unit has committed the given default that the sales tax authorities can demand back the benefit of tax exemption. A Division Bench of the Punjab and Haryana High Court in what came to be known as the case of A.S. Fuels Pvt. Ltd v. Sate of Haryana (2001) 17 Punjab and Haryana Taxes 131, interpreting the provisions of sub-rule (9) of rule 28-A of the Haryana General Sales Tax Rules, 1975 in similar context, held “The only meaning that can be attributed to the language of the sub-rule is that a cancellation of an exemption/ entitlement certificate can relate only to the year in respect of which the said certificate is still to expire and it is only the benefit of tax exemption availed of by a dealer for the year alone shall become payable in lump sum. Q: Kindly let us know if the benefit of set-off against payment of first stage tax on petroleum products that are used for the production of finished items continues to be available to the registered dealers under the provisions of Section 15-A of the Haryana General Sales Tax Act, 1973? — S.K. Sharma, Rewari Ans: As per the amendments recently carried out in Section 15-A of the Haryana General Sales Tax Act, 1973, the facility of set-off commonly known as tax adjustment or rebate of tax paid on petroleum based fuels from the tax leviable on the manufactured goods stands taken away from November 01, 2002. Therefore, the registered dealers buying and consuming the petroleum based fuels except natural gas and compressed natural gas in the process of manufacturing will not be statutorily entitled to claim the benefit of tax adjustment. Q: Under what circumstances the sales tax authorities can detain the goods under the Haryana General Sales Tax Act, 1973. Do they possess any power to seize the goods under transport for what they usually describe “goods detained for verification”? Kindly advise. — Rakesh Kumar Diwedi, Karnal Ans: The jurisdiction of the taxing authorities in the matter related to detention of the goods is well defined under sub-section (5) of section 37 of the Haryana General Sales Tax Act, 1973. This sub-section lays down that a checking officer can detain the goods under transport if the goods are not covered by the statutorily prescribed proper and genuine documents such as bill of sale, goods receipt and a transit challan, as the case may be, or that the person carrying the goods is attempting to evade the payment of tax due under the Act. It is not open to the tax authorities exercising the powers of roadside checking to seize the goods just for they want to verify the genuineness of the documents. Detention of the goods can take place only if the checking officer comes to a conclusion on an objective consideration that the person concerned has transported the goods with an intention to evade the tax due under the Act. |
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Neem-coated urea GE Plastics Oswal Woollen Oriental Bank |
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