Page 15 - BANKING FINANCE November 2015 ONLINE
P. 15
LEGAL UPDATE
LEGAL
CASES
FM's speech no aid to in- Better bankruptcy laws will attract right kind of
terpret rule
investors
The speech of the finance minister
in Parliament is India should have better bankruptcy pecially in the turnaround space would
no guide to the laws for the banks to manage the bal- enter India if there is more clarity on
interpretation looning non-performing asset
of the terms of (NPA) problem, said Bryan regulations around bank-
a notification. Marsal, co-founder and co- ruptcy.
Its terms must CEO of the turnaround firm
be interpreted Alvarez & Marsal. For some time the Reserve
on the basis of the plain meaning of Bank of India (RBI) has been
the words used, the Supreme Court "If you modify the bankruptcy trying to form stronger regu-
stated while dismissing four appeals law you would attract a differ- lations to keep NPAs under
of the Commissioner of Central Ex- ent type of investor (coming to India). control. In order to help the
cise against Indian Petrochemicals Not just the guy who is bottom fishing banks in recovering bad loans,
Corporation Ltd and Indian Oil Cor- but somebody who can take a risk," the RBI, in June this year, issued new
poration. said Marsal, who took over the role of norms for strategic debt restructuring
Lehman Brothers' CEO after the bank that say that loan agreement should
The oil companies had claimed that filed for bankruptcy in 2008. have an inbuilt clause giving banks the
some of its products like propylene right to acquire 51% stake in the com-
and raffinate were eligible for 8 per He said the Indian regulators were on pany if the promoter fails to meet the
cent duty instead of 16 per cent the right track and more investors, es- milestone set by banks while restruc-
according to a 1983 notification. turing the loan.
The revenue authorities rejected
their claims and classified the prod- Milk allowance part of wages for ESI
ucts in the higher duty category.
The Calcutta High Court ruled that al- neration paid for work done during
The excise appellate tribunal ac- lowance for milk paid holidays is also not wages.
cepted the classification claimed by paid to workers in a
the oil companies and allowed them factory is part of the The corporation maintained that milk
the concessional rate. The authori- wages for purposes allowance and payment for working on
ties appealed to the Supreme Court of the Employees paid holidays were not part of the
without success. wages. The company disputed it and
State Insurance Act. However, if such submitted that it was a plain and
allowance is given due to the special simple allowance, styled as 'milk allow-
nature of the work like those working ance'. It argued that the extra paid on
around a furnace who need glucose paid holidays was not overtime. It was
and salt, it would be included in the component of the wages.
wages. The court also held that remu-
BANKING FINANCE | NOVEMBER | 2015 | 15
Copyright@ The Insurance Times. 09883398055 / 09883380339
