150 ICSI Mysore EMagazine July 2016

Rendezvous with Indias CS No.
1
Straight from the heart: a ttette with CS No. 6
Crossing the Milestones
Secretarial Auditors Duty to Report Frauds
Realm of International Corporate Governance Day-ICGD
Legal fiat to Sensitive Personal Data or Information in India
Non-Compete Clause in Employment Contract - Whether tenable in the eyes of law?
many more
eMagazine from ICSI Mysore Chapter | Edition 150 |July 2016
Page 1 of 47
[For Private Circulation Only]
CS MAMTA BINANI
PRESIDENT
Message
I am delighted to note that the Mysore Chapter of the Institute
is publishing the 150th edition of its eMagazine in July, 2016.
This e-Magazine has been an effectual platform of knowledge
sharing, intellectual discussions and academic insights.
Enormous benefits endowed by this publication have turned it
as a very well accepted manuscript in the professional
community.
It will be worth to mention that as an engine of enabling
growth in the contemporary areas of knowledge, this
eMagazine kept informing the professionals of latest sharing
amongst the professional fraternity towards achieving
professional excellence.
I extend my changes with view of expanding role, profile and
scope of services of Company Secretaries.
I am content of the fact that the intellect of this eMagazine will
keep assisting the students and members in further developing
a positive attitude and proactive approach of knowledge best
wishes for the successful publication of 150th edition of this
eMagazine.
Wish you all success, always!!
Be the wind for the flight!!
Page 2 of 47
Grand Release
of 150th Edition of the eMagazine
On 9th July 2016, grand release of 150th Edition of the eMagazine was celebrated.
CS (Dr) Shyam Agarwal, Vice President of the Institute of Company Secretaries of India released the edition.
CS Dattatri H.M., Chief Editor of the eMagazine shared the colourful journey of the eMagazine. CS Ahalada Rao V.,
Central Council member and Chairman of the Research Committee of the ICSI spoke on the occasion and lauded
the efforts of the Editorial team for the quality and outreach of the eMagazine. He also highlighted the need for
Research under the Companies Act for the professionals and their growth.
In his inspiring speech on the occasion, CS (Dr.) Shyam Agarwal, called upon the fellow professionals to imbibe
integrity in all walks of life, which is a combination of Character, Courage and Consistency. He briefed on the
popularity of the eMagazine and lauded the efforts of the team on bringing out the newsletter with enriching
content and innovativeness. He emphasized the need of research and publishing the researched topics for the
general benefit of the professionals.
CS Bhansali M.C., Chairman of the ICSI-Mysore Chapter welcomed the gathering; CS Ajay Madiah B.B., introduced
the guests and CS Pracheta M., Secretary of the ICSI-Mysore Chapter proposed the vote of thanks. The Chapter
also recognised the contribution from all editors and columnists of the eMagazine.
Page 3 of 47
Message
CS (Dr.) SHYAM AGRAWAL
VICE PRESIDENT
It is indeed a proud moment for all of us that ICSI-Mysore Chapter is
releasing 150thedition of its eMagazine in July 2016. This eMagazine,
which was started a decade back, has become well established and
conventional in the professional community.
In last one decade, it has created a platform for members to express
themselves, to share their thoughts, experiences and knowledge. Beyond
doubt, it has contributed excellence in spreading knowledge across the
profession.
I feel this eMagazine is an exclusively devoted move to provide
information and updates with a view assist the stake holders in updating
their knowledge with the contemporary challenges and opportunities of
professional worth. I am sure that this eMagazine will keep developing
better understanding of professional training, commitment and
assurance.
I congratulate Mysore Chapter of ICSI for releasing 150th edition of the
eMagazine.
From the Chairmans Desk

A top notcher in all its endeavours thats been the success saga of ICSI
Mysore Chapter through these years. Having nearly 1500 students and 60
professionals the Mysore Chapter of ICSI has evolved as a knowledge
portal in the recent years, conducting oral coaching classes to young
professional aspirants. UMANG the Annual event of the Chapter has
been a platform for students to exhibit their talents and explore their
horizons.
CS M. C. Bhansali
Chairman
Mysore Chapter
Our professional colleagues have regularly visited colleges in the Mysore

city creating awareness about the CS Profession to students.
On the professional front, our members truly believe Knowledge is
power and have been organising periodical open house sessions on
various Topics. To don all the achievements of the ICSI Mysore Chapter
was the launch of E-magazine which had its humble beginning as a
newsletter circulated among a small group in Mysore. Today it has
branched out to many of the professional friends across the nation. It is a
proud moment for the ICSI Chapter Mysore as we reach the 150th Edition
of the eMagazine creating a mile stone.
At this juncture my sincere thanks to all the members especially the
editorial team for their meticulous efforts in publishing it every month.
Page 4 of 47
Table of Contents
-: Editorial Team :-
CS Dattatri H. M.
CS Sarina C. H.
CS Omkar Gayatri
CS Abhishek Bharadwaj
CS Ajay Madaiah
CS Vijay Shyam Acharya
CS Madhur N. Agrawal
CS Phani Datta D. N.
Join
5300+ members strong
CSMysore
eParivaar
http://www.groups.google.com/group/csmysore
Messages from dignitaries6

Editorial: The Journey.11
Rendezvous with Indias CS No. 1 CS R. Narayanaswami16
Must Read Links17
Chapter Activities June 201618
Secretarial Auditors Duty to Report Frauds19
by CS (Dr.) K.R. Chandratre
Straight from the heart... A ttette with CS No. 6 CS
G.V. Aiman25
Realm of International Corporate Governance Day-ICGD27
by CS Ahalada Rao V. and CS Mahadev Tirunagari
Crossing the Milestone - An interaction with CS K. R.
Radhakrishnan29
Report on Research Symposium on the Companies Act
201330
Living Room:Buying and selling smiles31
Words worth Millions31
e-Tools for the Professionals: Power BI 32
by Mr. Amitkumar Hegde
e-Tools for the Professionals: WPS Office + PDF32
by Mr. Manjunath S. Bhat,
Web Yatra by Mr. Guruprasada Bhat33
Now its easy to receive the eMagazine

directly into your personal mail id. Click
http://goo.gl/PV9Olr and fill-in simple info.
You may send this link to your friends too!

Please write your comments and feedback
to us:
enewsletter.icsimysore@gmail.com
Disclaimer
Views and other contents expressed or
provided by the contributors are their own
and the Chapter does not accept any
responsibility.
The Chapter is not in any way responsible
for the result of any action taken on the
basis of the contents published in this
newsletter.
All rights are reserved.
Legal fiat to Sensitive Personal Data or Information in

India34
by CS Omkar Gayatri
A student foreverWords of wisdom from CS K.
Satyamurti36
Non-Compete Clause in Employment Contract Whether
tenable in the eyes of law? 38
By Mr. Sharath Mahendra Kumar
Spectrum Space: Foreign Account Tax Compliance Act
(FATCA) 41
by CS Phani Datta D.N. and CS Ashwin Bhat
Climate change: Act before its too late42
by CS Manjunath
News Room44
by CS Chakri Hegde and CS Vijayalakshmi Karur
Regulatory Updates45
by CS Abhishek Bharadwaj A.B
Page 5 of 47
Message
CS Gopalakrishna Hegde
Council Member
I salute the efforts to bring out 150 editions of e-magazine. Kudos to the Editorial
Team lead by CS Dattatri H.M., for demonstrating high degree of unwavering

commitment, dedicated efforts, uncompromising quality, innovations and
creativity at its best in bringing out the e-magazine well on time every month,
month after month for 150 months. I congratulate Mysore Chapter of ICSI for the
initiative and great support.
I admire, appreciate and applaud the efforts of "eMagazine, Mysore" sustained
for such a long period and for achieving the unique distinction!!
***
I am very happy to note that the Mysore Chapter of ICSI is releasing 150 edition
of its Magazine.
I remember Mysore is one of the pioneer Chapter, which has brought out
Magazine in eform sometime around 2003. I was very happy to get it and found
that its design and concept was very unique.
CS Makarand Lele
Council Member
I always found Mysore Magazine as a humble attempt to provide something new

to the members. Articles and other contributions were of high quality and long
shelf value.
On this occasion I congratulate the Mysore Team and wish them good luck to
continue this knowledge sharing initiative forever for the benefit of entire CS
fraternity.
***
Success is not measured by money- it is measured by true hard work, discipline
and will to win, you have proved that again.
CS Ahalada Rao V.
Council Member
I'm glad to know that the Mysore Chapter has completed 149th edition of news
letter. I feel personally, this is one of the best electronic Magazines. Mysore
Chapter has reached beyond the borders of the South and created the brand not
only for the Mysore Chapter but also for the ICSI itself.
The content, articles and the total layout of the Magazine is innovative and
awesome, in fact Mysore Chapter emagazine has shown path to many Chapters
and regional councils for their eMagazine and became pioneer and paved path
for the Go-green concept.
I wish this magazine should complete 1000 editions and more. Congratulations
for the success to the entire ICSI Mysore Chapter and keep continuing.
Page 6 of 47
MESSAGE
CS Ashish Garg
Chairman
PCS Committee, ICSI
It is indeed a proud moment to note that the Mysore Chapter of the

Institute of Company Secretaries of India is releasing the 150th edition of
its eMagazine in July 2016.
This eMagazine has been an engine of enabling growth of our profession
in contemporary world while sharing the knowledge and thoughts under
the context of ever expanding role, profile and scope of services of
Company Secretaries.
As an innovative way of spreading knowledge, it has reached to
maximum professionals all through the country and for sure it has been
very well accepted in the professional community.
The release of its 150th edition just in one decade ensures the very fact of
the overwhelming appreciation, the eMagazine received from its readers.
I am sure that the eMagazine will keep serving as a varied platform for
knowledge sharing and will definitely facilitate the members, students
and readers to be kept informed about the contemporary developments
of the proficient expertise.
I extend my best wishes for the successful release of the 150th edition of
the eMagazine.
***
At the outset let me offer my heartiest congratulations to ICSI Mysore
Chapter for publishing the 150th Edition of this eMagazine.
CS R.Ramakrishna Gupta
Secretary, SIRC of ICSI
A none too easy feat to achieve. An assignment that requires complete

devotion of those concerned coupled with a single-minded dedication for
coordination and collation of entire inputs that go to make such
worthwhile reading and make it an eagerly awaited monthly eMagazine.
What strikes one is an eye-catching layout and a fair distribution of
material kick starting from the Chairmans desk and ranging from the
academic to the practical, Guidance & Career Awareness programs, news
and happening national events, Legal Aspects and notes and an attempt to
draw young professionals into the mainstream and make them feel proud
and enthusiastic about the CS Profession they have selected.
My best wishes to ICSI Mysore Chapter. Keep the eMagazine roaring
regularly!
Page 7 of 47
Messages from the
Past Chairmen of ICSI Mysore Chapter
CS C. K. Sabareeshan
Past Chairman, ICSI Mysore Chapter
Past Chairman, CII, Mysore Zone
It is indeed a matter of great pride, pleasure and privilege for me to know
that our eMagazine has reached yet another milestone! What started as a
half page communication from the then Chairman has grown into a
comprehensive eMagazine of professional value!
No words can adequately compliment the editorial team for its
unshakeable commitment to have scaled this height of success!
My hearty congratulations and very best wishes to the entire team!
CS D.D. Bhat
Past Chairman, NIPM, Mysore Chapter
It is heartening to note that the eMagazine is reaching a major milestone
of 150th issue. I have been keenly following the growth trajectory of this
wonder child of ICSI, Mysore.
It was a small and fragile sapling planted, 150 months ago, as a one page
News Letter, edited by CS Dattatri, for sharing information among the
members of Mysore Chapter of ICSI. None the less, it was a path breaker,
as in those days, e-News Letters / Magazines were very rare.
The dedication and commitment of the Editorial Team, headed by CS H M
Dattatri, in nurturing the Magazine is commendable and exemplary. I find
the contents cover a vast range of topics and are of high quality and
standard. The contributors from across the country and across the
professions are adding value to the Magazine.
It may not be an exaggeration, if I say that the eMagazine is making the
flag of ICSI, Mysore fly high.
Wishing to see many more issues of the eMagazine, Keep it up!
Page 8 of 47
CS Anshuman A. S.
The journey of more than 12 years of the eMagazine of Mysore Chapter is
amazing. What was a single page communication to Mysore members has
become a veritable warehouse of knowledge for professionals across
India.
The eMagazine, named as eMagazine in 100th Edition, for the busy
professional, is a quick guide for updating, but for the young, it opens up a
window to showcase their talent.
The archives trace the development of the corporate world for the
researchers, but for people who have been in the thick of the activities of
the Chapter, it is a nostalgic drive down the memory lane.
The eMagazine of Mysore Chapter reaches us with a regularity which is
unbelievable. It speaks, in itself, the dedication and professionalism of the
editorial team.
On this auspicious occasion of release of 150th edition, Kudos to each
member of the team which makes the eMagazine come to my mailbox!!!
CS K. Sarina Chouta Harish
Past Chairperson, ICSI Mysore Chapter
Greetings from the Editors Desk to all our readers!
You have been an inspiration to us, at the Editorial team, to hit the 150th
milestone. It was CS H M Dattatris brainchild to start the Mysore Chapter
eMagazine The New Horizon in December 2003. It was a single editor
single page publication for over two years, and meant for the members of
the Mysore Chapter with a readership of 12.
To some of the senior members, who were not known to access e-mails
regularly, there were efforts to reach the magazine through physical
editions in the initial years until it was totally digitized. Despite the
professional commitments of the editorial members, we have barely
missed the self imposed release date of 15th each month. We hope you
have enjoyed reading, as much as we have enjoyed bringing it forth, the
articles and write ups of varied professional interests contributed by the
Authors.
Reaching out to a 35,000+ readership over the last twelve years, the
Mysore E magazine has surely stood the test of time. I must confess that
my association with this journal over the last 10 years has been a
phenomenal journey, giving me profound professional contentment and is
a contribution to my alma mater The Institute of Company Secretaries of
India.
At some point, passing the baton would be essential to maintain the
length of the race!
Page 9 of 47
CS Sunil Kumar B.G.

The Mysore Chapter has made a mark not only at a regional level but also
at the national level, full credit to the office bearers of the Chapter and the
students & their parents then and now.
In this message, I would like to recall the efforts of CS Anshuman A.S., his
untiring efforts made the Chapter reach the next level and because of his
efforts the Chapter could get its own building.
Specifically to talk about the Chapter Magazine and the CSMysore group,
the credit should go to CS Dattatri H.M. & his team. Every 15th of the
month releasing the Magazine without fail which in itself is a big
achievement, every edition has been beautifully designed and the
selection of topics and presenting in readable manner is not an easy job,
full credit to the Editorial team then and now.
I wish all success to the Editorial Team to keep up the momentum and to
reach the Chapter news letter to newer heights."
Ajay Madaiah B.B.

This is a very special occasion for having reached its 150th edition of emagazine, it is a proud moment to rejoice and celebrate! It also proves
the passion and dedication of the editorial team and constant support of
its readers across India!!
Beginning its journey in December 2003 this monthly communication of
Mysore Chapter of ICSI has been growing and improving in all
dimensions. It has evolved itself continuously in its contents, quality,
reach, topics and design month on month and from e news letter it has
reached to be called as e magazine.
This magazine has been a forum to share thoughts, knowledge and
current developments in the corporate affairs amongst students,
members and other professional.
I feel happy to be part of this team and acknowledge their effort,
enthusiasm and the commitment of the members to bring out the editions
each time within 15th of every Month. I am sure going forward it will
achieve newer heights and continue to contribute towards growth of the
profession.
Page 10 of 47
The Journey.
Dear Readers,
It is a moment of great pride, pleasure and contentment that we could
traverse a learning journey of 150 months together! We are marking this
occasion with the release of the 150th edition of the eMagazine from ICSI
Mysore Chapter. CS (Dr.) Shyam Agrawal, Vice President of the ICSI
honoured the Chapter and readers by releasing this mega edition on 09th
July 2016 in the Chapter premises at Mysore.
We have touched the lives of over 35000 professionals across the
Country, starting from a miniscule number of 12 readers!
A single page communication has metamorphosed into:
- A magazine with variety of contents of professional importance;
- Forum for sharing opinions, experiences and knowledge;
- School for learning written communication many of our friends
could shed their inhibition and bring forth their literary best;
- Inspiration for replication at other Chapters, corporate and
professional entities;
- Inspiration for conducting activities at various Chapters and other
locations;
- A Networking media
We were able to achieve all of these,
-
without cutting a single tree! Thats the power of e Communications;

by constantly ensuring ease of reading and responding
without compromising on the quality or presentation and
by ensuring ease of archiving and referring as and when required
Growing as such was a thrilling journey! An incredible journey!

Our initial efforts needed a lot of push. We should recall here the strong
support extended by CS C.K. Sabareeshan, the then Chairman of the
Mysore Chapter.
Snapshot of the history of eMagazine:
The Journey thus began with a single member eNewsletter team of CS

Dattatri H M. in December 2003, with the title 'The New Horizon'. The
first three editions had single page.
From June 2004 (7th edition), title changed to 'Newsletter'. Further
titled as 'eNewsletter' from 70th edition in Nov'2009. Renamed as
'eMagazine' from 100th edition released on 15th May 2012.
Page 11 of 47
eMagazine is reaching professionals since last 152 months, which includes two bi-monthly editions
released in Feb-Mar2007 and Feb-Mar2008.
In over last twelve and half years, eMagazine had ELEVEN editors so far, apart from support team
members, columnists and authors from all across the country & abroad who have immensely
contributed to the growth of eMagazine.
Many of the team members have owned and maintained columns for years before joining core
team as EDITORS and have continued their support thereafter, even not being on editorial team.
Table with details of Editors since Dec2003 are as below who formed a team to take the initiative
to newer heights!
CS Dattatri H.M.
Tenure
Dec2003 - Jul2016
Editions 1 to 150
CS Sarina C.H.
Tenure
Feb2006 - Jul2016
Editions 27 to 150
CS Omkar Gayatri
Tenure
Aug2007 - Jul2016
Editions 44 to 150
CS Rashmi M.R.
Tenure
Apr2009 - Jul2014
Editions 63 to 126
CS Abhishek Bharadwaj A.B.

Tenure
Jun2012 - Jul2016
Editions 101 to 150
CS Ajay Madaiah B.B.

Tenure
Jan2015 - Jul2016
Editions 132 to 150
Page 12 of 47
CS Vijay Shyam Acharya

Tenure
Jan2015 - Jul2016
Editions 132 to 150
CS Madhur N. Agrawal
Tenure
Jan2015 - Jul2016
Editions 132 to 150
CS Kasturi S.
Tenure
Feb2006 - Jan2007
Editions 27 to 38
CS Ravishankar Kandhi
Tenure
Jan2015 - Jun2015
Editions 132 to 137
CS Phani Datta D.N.

Tenure
Apr2016 Jul2016
Editions 147 to 150
Three special editions of the eMagazine with all columns and articles around one theme/subject
were released in March 2008, October 2008 and March 2009 on topic Environment, Health and
Safety respectively.
The eMagazine has inspired professionals & students with interviews covering life lessons of CS
from Mysore and other parts of India. Following are the personalities who gave us an interview
(names are with prevalent designations):
Distinguished Personalities
Edition
CS C.K. Sabareeshan, B.Sc., ACA & ACS CS & CFO, Automotive Axles Ltd, Mysuru
58 Nov2008
CS M.C. Bhansali, B.Com. & FCS, Practicing Company Secretary, Mysuru
59 Dec2008
CS Pradeep Mehta, B.Com., LLB, ACA & ACS, MD, CFO & CS, AT&S India, Nanjangud
60 Jan2009
CS D.D. Bhat, MA, LLB & FCS, GM Legal & Commercial, JK Tyres Ltd, Mysuru
61 Feb2009
CS Gopalakrishna Hegde, ACA & ACS, Director (Fin) & Secretary, Trident Powercraft
Pvt Ltd, Bengaluru
62 Mar2009
Page 13 of 47
CS Datla Hanumantha Raju, B.Com, L.L.B, PGDT, M.B.A & FCS.

President ICSI-2009
CS Amar Kakaria, Youngest CS, CA, CWA. Pune.
64 May2009
Interaction with
CS Vinayak S Khanvalkar, President, ICSI-2010 and
CS N. K. Jain, CEO & Secretary of ICSI
74 Mar2010
67-Aug2009
Star Studded Gala release of editions:
CS Preeti Malhotra, President ICSI year

2007 Releasing 48th edition of the
Newsletter
CS Anil Murarka, President ICSI year 2011

Released the Flash Bulletin of the
Newsletter
on
the
occasion
of
inauguration of the new premises for the
Mysore Chapter
CS (Dr.) Shyam Agrawal, Vice President of the ICSI year 2016 released the 150th edition of the
Newsletter
We are grateful to our professional friends for contributing their time, knowledge and expertise in the
form of articles to the eNewsletter, making it absolutely useful to the
readers.
Landmark Centenary edition of the eMagazine was released on 15th May
2012 with 25 articles on topic of high professional relevance among other
columns bundled in 57 pages!
Distinguished authors in our earlier issues include:

1.
2.
3.
4.
5.
6.
CS R. BalaKrishnan, the then Company Secretary, HITS Africa Ltd.,

Kingdom of Bahrain (70th edition, Nov2009).
Mr. Lokesh V. currently Managing Director of Innomantra
Consulting Private Limited, Bengaluru has authored many articles
on IPR from Sep'2007 to Nov'2009 for the eMagazine.
Youngest CA, CS, CWA Mr. Amar Kakaria (Limca Book of National
Records) from Pune. He not only authored series of articles but
also inspired many others to write in the eMagazine.
Mr. Amitkumar Hegde, MCA, currently with Microsoft ,USA,
coined the idea to initiate new column IT Tools and Techniques in
Oct2007 and introduced several useful software, tools &
techniques which makes the day-to-day office work easier..
Mr. B. Jagadeesh, the then Director-Corporate HR, Essilor India
Pvt. Ltd was running a column on HR issues.
Ms. Nitza Agrait Vil, Commercial Legal Lead, Microsoft
India has written series of articles on Cloud Computing as a Tool
to Enable and Enhance Compliance (Jan2016 to Mar2016
editions).
Page 14 of 47
7.
Mr. Sharath Mahendra Kumar, B.Com, MBA, LLB, MPhil, PGDMM, (ACS, LLM), Bengaluru has
already authored 32 articles on Industrial and Employment laws and count is on.
Hope you have heard the story When did you sharpen your axe recently? (Story narrated below after
the editorial)
In a fast paced life, every professional is running out of time to know more. Many a time, we do not
take the time out for sharpening our axe that is the knowledge quotient. The eMagazine provides
you support in Sharpening your axe i.e. knowledge, information and wisdom.
The Chapter has continued this initiative purely with an intellectual intent and not with a commercial
intent. It can succeed only with the active participation from you learned professionals!
The present team is now passing on the baton to CS Phani Datta D.N. to lead the editorial team. We
wish the Best in taking this to higher levels!
Lets grow together! Lets glow together!

For the Editorial Team
CS Dattatri H. M.
Chief Editor
The story mentioned in the editorial goes as follows:
Once upon a time, a very strong woodcutter asked for a job in a timber merchant and he got it. The pay
was really good and so was the work condition. For those reasons, the woodcutter was determined to
do his best.
His boss gave him an axe and showed him the area where he supposed to work.
The first day, the woodcutter brought 18 trees.
Congratulations, the boss said, Go on that way!
Very motivated by the boss words, the woodcutter tried harder the next day, but he could only bring 15
trees. The third day he tried even harder, but he could only bring 10 trees. Day after day he was bringing
less and less trees.
I must be losing my strength, the woodcutter thought. He went to the boss and apologized, saying
that he could not understand what was going on.
When was the last time you sharpened your axe? the boss asked.
Sharpen? I had no time to sharpen my axe. I have been very busy trying to cut trees
"If I had six hours to chop down a tree, I'd spend the first four hours
sharpening the axe."
Abraham Lincoln
Page 15 of 47
Rendezvous with
Indias CS No. 1
CS R. Narayanaswami, ACS, FCA, ACMA, BGL, DISA(ICAI)
rnswami44@gmail.com
Sir, you are the FIRST member of our ICSI with ACS Membership No. 1 and you have
completed CS course in 1968. Could you please share with our readers your Career
Progression?
I started my practice in early 1968 as Chartered Accountant and simultaneously qualified as a Company Secretary.
CS course and training helped me drafting and advising the clients on different procedural aspects of Company
law.
After practicing for twelve years, I went overseas on contract service for nine years and worked in various
capacities, handling numerous assignments including Finance, HR, Internal Audit, Secretarial and Taxation.
On my return, I worked as a Finance Director and Company Secretary in a deemed Public Company for 3 years in
Chennai.
Again I went on overseas contract as Group Finance Director for 8 Companies operating in different fields like
Plantation & Agriculture, Carriage & Freight forwarding, Travel, Packaging, Manufacturing, etc. I successfully
completed my assignment and returned to Chennai after three
years and assumed my role as Group Finance Director & Company
What is Success in your view and
Secretary and subsequently continued as Adviser before my
retirement recently.
what do you attribute your
Please tell us your views about how CS profession

has grown over the years.
Initially when we started our career in 1960s, opportunity for CS
was limited. However, growth of CS profession is tremendous
especially in recent years. Scope for CS in present corporate world
is admirable. Now, the opportunities for CS are plenty, that too
challenging not just in one area but in multiple facets which
demands expertise, practical knowledge and acumen.
Success to?
Success is the satisfaction we get at
the end of our life that we have
contributed something for the
upliftment of the society and the
environment within our limitations.
Truth, Honesty, Hard work and Grace
of God are the secrets of my success.
What is your advice to the new entrants in the

profession to shape their career better?
Page 16 of 47
After qualification, it is your turn to prove yourself worthy of multi-tasking and precisely updating your
knowledge and skill sets with confidence. At any stage of the career, you should not resort to any sort of
shortcuts to satisfy anyone. You should be diligent, true, honest and resourceful. Wherever and whenever
possible, as you grow, try to build a good team of professionals.
What are your thoughts on the Companies Act, 2013, governance and compliance trends
of 21st Century?
Many good changes are brought in the Companies Act, 2013 like OPC, codification of duties of directors, CSR,
reporting of fraud, rotation of auditors etc. But unfortunately, the new Act has NOT SIMPLIFIED the company
law, on the other hand, added more complexities which could have been avoided.
What are your interests?

Of course reading and visiting historical places of interest.
Who is your role model and what inspired you in him/her?

The Legend Shri. N.A. Palkhivala whose expertise was not only in Law but in other fields as well. More than this,
he was a HUMANITARIAN with high principles in life and a great PHILANTHROPIST.
Must Read Links

12 Ways to Improve Work Life Balance Beginning Today
http://www.forbes.com/sites/davidkwilliams/2016/07/06/12-ways-to-improve-work-life-balance-beginning-today/#d3adb5c38eda
Too busy to exercise or even to go on a holiday? Work-life balance a

struggle? Re-boot!
https://www.linkedin.com/pulse/too-busy-exercise-even-go-holiday-work-life-balance-struggle-kumar?trk=hp-feed-article-title-like
25 Years of Learning and Laughing with Warren Buffett by Bill Gates

https://www.linkedin.com/pulse/25-years-learning-laughing-warren-buffett-bill-gates?trk=hp-feed-article-title-like
Benefits of reading...
"I find television very educating. Every time somebody turns on the set, I go into the other room and read a
book." - Groucho Marx
https://www.linkedin.com/pulse/all-great-readers-leaders-vivek-nath?trk=hp-feed-article-title-like
Page 17 of 47
Chapter Activities June 2016

PCS DAY
CELEBRATIONS
The Chapter organised PCS Day on
15th June 2016 between 4.00 pm to
7.00 pm at the Chapter premises.
Members and students participated in
the celebrations.
The Chairman of the Chapter CS
Bhansali M.C. welcomed the members
and highlighted the importance of a Company Secretary in the present corporate environment and the role of
Practising Company Secretary. The Secretary of the Chapter CS Pracheta M. made a presentation on the
Practising Company Secretary shared by the Institute. Later, CS Pracheta M. moderated the open house session
on the Companies Amendment Bill, 2016. Each clause of the bill was discussed in detail. The members and
students participated in the discussion actively. The celebrations were concluded by cutting of the cake,
followed by high tea.
FIRST BATCH OF 3 DAYS E-GOVERNANCE PROGRAM

ICSI-Mysore Chapter has conducted first batch of 3 Days eGovernance Program on 18 th May, 2016 to 20th May,
2016 at Chapter premises. The 3 Days program was conducted by various faculties with related experience in
eGovernance field. The 3 days eGovernance was attended by 10 students.
FIRST BATCH OF 5 DAYS SKILL DEVELOPMENT PROGRAM

ICSI-Mysore Chapter has conducted first batch of 5 Days Skill Development Program from 27th June, 2016 to 01st
July, 2016 at Chapter premises, which was conducted by faculties with related experience in the field. The
Program was attended by 10 students.
YOGA DAY CELEBRATIONS
On 19th June 2016, ICSI-Mysore Chapter jointly with Jain Milan Palace City arranged a preliminary session for the
Yoga Day in Chapter Premises. Ms. Ratna Rao and her colleagues from Patanjali Yoga Samithi demonstrated the
International Day Common yoga protocol to the Chapter Members which are to be performed on the
International Yoga Day. The trainer urged the participants to love their own body and keep on practising yoga to
keep oneself in good health and maintain a stress free living.
Page 18 of 47
Special Article
Secretarial Auditors Duty to
Report Frauds
CS (Dr.) K.R. Chandratre, M.Com, LLB, FCS, Ph.D.,
Practicing Company Secretary, Pune.

krchandratre@gmail.com
Statutory provision
Section 143(12) of the Companies Act 2013 ('the Act') casts a new duty on secretarial auditor (besides financial and
cost auditor). Section 143(12), as amended by the Companies (Amendment) Act 2015, reads as follows:
(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the
performance of his duties as auditor, has reason to believe that an offence of fraud involving such amount or
amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the
auditor shall report the matter to the Central Government within such time and in such manner as may be
prescribed.
Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to
the audit committee constituted under section 177 or to the Board in other cases within such time and in such
manner as may be prescribed:
Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit
committee or the Board but not reported to the Central Government, shall disclose the details about such frauds
in the Board's report in such manner as may be prescribed.
According to s. 143(13), No duty to which an auditor of a company may be subject to shall be regarded as having
been contravened by reason of his reporting the matter referred to in subsection (12) if it is done in good faith.
To put it in plain language, what subsection (13) seeks to provide is that there will no contravention of the
auditors duty towards the company if he reports a fraud in terms of s. 143. This provision seeks to protect the
auditor from a possible breach of duty due to reporting of a fraud under this section. .
Subsection (15) makes an auditor, cost auditor or secretarial auditor for the punishment of fine of a minimum of
one lakh rupees and a maximum of twenty-five lakh rupees, for non-compliance of subsection (12).
Page 19 of 47
Reporting of fraud not to be part of Secretarial

Audit Report
It should be noted that the reporting of fraud required under s. 143 is not to be
part of the Secretarial Audit Report in the form MR-3 since there is no such
requirement and we cannot read it in the statutory provision. However, the
secretarial auditor must report in the Secretarial Audit Report a noncompliance with any provision of the Companies Act if the fraud committed
results into such non-compliance.
Conditions to be satisfied
According to subsection (12) of s. 143, if the auditor has suspects, in the course of the performance of his duties as
auditor, and forms a belief based on a reason, he must report it in the manner set out in subsection (12) and
prescribed under rules made by the Central Government. The reporting of a fraud to the Central Government is
required if it involves an amount in excess of the prescribed amount. A fraud of an amount less than the
prescribed amount has to be reported to the audit committee of the company.
The following conditions must be fulfilled to attract subsection (2) requiring the auditor to report the matter to
the Central Government within the time and in the prescribed manner:
a fraud has been committed by any officer or employee of the company;

the fraud involves the prescribed amount;
there was a reason for the auditor to believe that a fraud had been committed in the company;
such belief occurred to the auditor in the course of the performance of his duties;
If the fraud involves a lesser amount than the prescribed amount, the auditor must report it to the audit
committee constituted under s. 177 of the Act or to the Board in other cases within the prescribed time and in the
prescribed manner.If the auditor has reported a fraud under this sub-section to the audit committee or the Board
but not reported to the Central Government, it must disclose the details about such fraud in the Board's Report in
such manner as may be prescribed.
Punishment for failure to report

Not reporting a fraud when required to be reported is a separate offence punishable under s. 143(15) for which an
auditor (or cost or secretarial auditor) not reporting it would be liable, if the conditions specified in s. 143(12) are
satisfied. In this case as well, conviction of the auditor on a prosecution under s. 439 by a criminal court after a
trial will be a must and a mere failure to report by the auditor would not suffice to make the auditor liable for
punishment under s. 143(15). When the auditor is prosecuted for failure to report, in the trial, the burden of proof
will be on the prosecution to prove that there had occurred a fraud and yet the auditor failed to report it.
Punishment for fraud

A fraud requiring reporting under subsection (12) would be an offence so far as the persons committing a fraud
are concerned (officers and employees of a company), because, if proved, it is punishable on conviction in
criminal proceedings under s. 447 of the Act, according to which any person who is found to be guilty of fraud,
shall be punishable with imprisonment for a term which shall not be less than six months but which may extend
to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but
which may extend to three times the amount involved in the fraud.
To punish a person under s. 447, prosecution under s. 439 and conviction by a criminal court after a trial will be a
must and a mere reporting by the auditor would not suffice. In other words, reporting by the auditor under s.
143(12) would not make an officer or employee liable for punishment under s. 447 and it will require a criminal trial
Page 20 of 47
on a compliant under s. 447 by a person authorised under s. 439(2). Under s. 439, a court can take cognizance of
any offence under this Act which is alleged to have been committed by any company or any officer thereof, only
on the complaint in writing filed in a criminal court by the Registrar, a shareholder of the company, or a person
authorised by the Central Government in that behalf. It is a well settled principle that a fraud must be alleged and
proved.
In the context of valuation of shares for a scheme of amalgamation, it was held that If the share exchange ratio in
a scheme of amalgamation of companies has been fixed by an experienced and reputed firm of chartered
accountants, in the absence of any charge of fraud against them the court will accept such valuation and ratio of
exchange. A mere allegation of fraud is not enough, it must be a proper charge of fraud with full particulars. Only
if the court finds that the scheme is fraudulent or unreasonable, the court would proceed not to sanction the
scheme. The onus lies heavily on those who oppose the sanction of the Scheme to show that the scheme is
unfair, unreasonable or fraudulent. Kusum Products Ltd. In re (1999) 98 Comp Cas 10: (2000) 36 CLA 29 (Cal).
Which frauds require reporting?

The words in the company by its officers or employees indicate that a fraud to be reported must have taken
place in the company and it must have been committed by an officer or employee of the company. While section
2(59) of the Act provides an inclusive definition of the term officer, the term employee is not defined in the
Act and hence must be taken in its ordinary sense, namely a person in the employment of the company.
Section 2(60) of the Act gives the definition of "officer who is in default" and seeks to bring in its fold in respect
of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to
the issue or transfer. This, by implication and inference, brings registrar and share transfer agent within the
ambit of the inclusive definition of officer. Accordingly, a fraud committed by the registrar and registrar and
share transfer agent of the company is its officer of the company and hence a fraud committed by registrar and
share transfer agent within the purview of section 143(12).
Reason to believe
One of the essential conditions for the applicability of s. 143(12) is that the auditor has reason to believe that an
offence of fraud involving the prescribed amount is being or has been committed in the company by its officer or
employee. A person is said to have reason to believe a thing if he has sufficient cause to believe that thing.
Section 26, IPC explains the meaning of the words "reason to believe" thus. "Reason to believe". A person is said
to have 'reason to believe' a thing, if he has sufficient cause to believe that thing but not otherwise".
The expression 'reason to believe' has been interpreted by the Supreme Court to mean that even though
formation of opinion may be subjective but it must be based on material on the record. It cannot be arbitrary,
capricious or whimsical. [N. Nagendra Rao and Co. v. State of A.P. AIR 1994 SC 2663]
The expression "reason to believe" does not mean a purely subjective satisfaction. The belief must be held in
good faith: it cannot be merely a pretence. The reasons for the belief must be have a rational connection or
relevant bearing to the formation of the belief and are n extraneous or irrelevant. [S. Narayanappa v.
Commissioner of Income-tax, Bangalore AIR 1967 SC 523]
Shah, J. as a member of the Constitution Bench in Calcutta Discount Co. v. I. T.O., AIR 1961 SC 372 observed that,
the expression "reason to believe postulates belief and the existence of reasons for that belief. The belief must
be held in good faith: it cannot be merely a pretence. The expression does not mean a purely subjective
satisfaction of the Income Tax Officer: the form of decision as to the existence of reasons and the belief is not in
the mind of the Income Tax Officer. If it be asserted that the Income Tax Officer had reason to believe that
income had been under-assessed by reason of failure to disclose fully and truly the facts material for assessment,
the existence of the belief and the reasons for the belief, but not the sufficiency of the reasons, will be justifiable.
The expression therefore predicates that the Income tax Officer holds the belief induced by the existence of
reasons for holding such belief. It contemplates existence of reasons on which the belief is founded, and not
merely a belief in the existence of reasons inducing the belief; in other words, the Income Tax Officer must on
Page 21 of 47
information at his disposal believe that income has been under-assessed by reason of failure fully and truly to
disclose all material facts necessary for assessment. Such a belief may not be based on mere suspicion: it must be
founded upon information.
Definition of fraud
While an auditor is under the statutory obligation to report an offence of fraud under s. 143, the section does not
define the expression offence of fraud or the term fraud, nor is there a definition in s. 2 of the Act. Section 447
defines fraud as follows:
"fraud" in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any
fact or abuse of position committed by any person or any other person with the connivance in any manner, with
intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or
its creditors or any other person, whether or not there is any wrongful gain or wrongful loss.
This definition has not, however, been made applicable for the purposes of s. 143. Two principles of interpretation
are notable in this regard: (1) An expression not defined in the statute cannot be imported from an earlier
statute.1 It is always dangerous to seek to construe one statute by reference to the words of another.2 (2) When
the Legislature uses the same word in different parts of a statute, the presumption is that that word has been
used in the same sense, unless displaced by the context.3
It was held the by the Supreme Court that when the Legislature uses the same word in different parts of a
statute, the presumption is that that word has been used in the same sense, unless displaced by the context.4 In
that case, the Supreme Court was dealing with the word relative used but not defined in s. 304B of the IPC. The
Supreme Court referred to its interpretation in another decision of the Supreme Court in relation to s. 498A of the
IPC which also uses but does n define the word relative.
In Jarnail Singh v Bakshi Singh [1960] 30 Comp Cas 192 (Punj), with respect to the definition of private company in
section 2(1)(13) of the Indian Companies Act 1913, which provided, inter alia, that where two or more persons
hold one or more shares in a company jointly they shall for the purposes of this definition be treated as a single
member." The court held: In the proviso the words "for the purposes of this definition" are significant. All that
they convey is that two or more persons holding one or more shares jointly in a private company shall be treated
as a single member not for all purposes but "for the purposes of the definition" only. The court pointed out that
the proviso makes it clear that two or more persons holding shares in a company jointly are not to be considered
as a single member for all purposes.
It should be noted that the definition of fraud given in s 447 is limited to that section only, since the Explanation
appended to s. 447 section specifically states in that it is For the purposes of this section. Therefore, that
definition does not seem to be relevant for the purpose of s. 143. This is open to interpretational debate and
judicial scrutiny. Therefore, the principle, that where an Act does not define a word used in the Act, the legislature
must be taken to have used that word in its ordinary, dictionary meaning,5 should apply.
General meaning of fraud

The ordinary meaning of fraud is any deception, trickery, or humbug; the crime of
deceiving somebody in order to get money or things illegally; intentional perversion of
truth in order to induce another to part with something of value or to surrender a legal
right; an act of deceiving or misrepresenting; wrongful or criminal deception intended to
result in financial or personal gain; dishonestly making a false (untrue or misleading)
representation with a view to gain or with intent to cause loss.
1
Union of India v R.C. Jain AIR 1981 SC 951: 1981 (2) SCC 308: 1981(2) SCR 854: 1981 (1) Scale 320: 1981 (19) DLT 305
Nippon Yusen Kaisha v Ramjiben Serowgee AIR 1938 OC 152.
3
State of Punjab v GurmitSingh 2014 AIR SCW 3800.
2
State of Punjab v GurmitSingh 2014 AIR SCW 3800.

Union of India v Delhi Cloth & General Mills Ltd AIR 1963 SC 791; South Bihar Sugar Mills Ltd v Union of India AIR
1968 SC 922.
5
Page 22 of 47
A fraud is intentional deception resulting in injury to another. Fraud usually consists of a misrepresentation,
concealment or nondisclosure of a material fact, or at least misleading conduct, devices or contrivance. [Barrons
Dictionary of Legal Terms]
Section 2(26) of the IPC states that a person is said to a thing fraudulently if he does that with intent to defraud
but not otherwise.
Section 17 of the India Contract Act 1872 defines "Fraud" as : "Fraud" means and includes any of the following acts
committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party
thereto of his agent, or to induce him to enter into the contract:(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation.-Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not
fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person
keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
Fraud is a misrepresentation made recklessly without belief in its truth to induce another person to act. It is a tort
arising from a knowing misrepresentation, concealment of material fact, or reckless misrepresentation made to
induce another to act to his or her detriment.
The Black's Legal Dictionary defines "fraud" as an intentional perversion of truth for the purpose of inducing
another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false
representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by
concealment of that which should have been disclosed, which deceives and is intended to deceive another so
that he shall act upon it to his legal injury.
It is an act or omission to act or concealment by which one person obtains an advantage against conscience over
another or which equity or public policy forbids as being prejudicial to another. -Webster's Third New
International Dictionary, page 904.
In S. P. Changalvaraya Naidu v. Jagannath AIR 1994 SC 853;[1994] 1 SCC 1, the Supreme Court explained fraud as
follows: A fraud is an act of deliberate deception with the design of securing something by taking unfair
advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an
advantage.
"Fraud" means an intention to deceive; whether it is from any expectation of advantage to the party himself or
from the ill-will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury
to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether
movable or immovable or of money and it will include any harm whatever caused to any person in body, mind,
reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the
deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a
benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied.
[Dr. Vimla v. Delhi Administration [1963] 33 Comp Cas 279; and Indian Bank v. Satyam Fibres (India) Pvt. Ltd. [1998]
92 Comp Cas 149; [1996] 5 SCC 550].
Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite
determinative stand as a response to the conduct of the former either by words or letter. It is also well-settled
that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim
relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by
wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes
representations, which he knows to be false, and injury ensues therefrom although the motive from which the
representations proceeded may not have been bad. An act of fraud on the court is always viewed seriously. A
collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the
Page 23 of 47
transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not
amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be
perpetuated or saved by the application of any equitable doctrine including res judicata. [Ram Chandra Singh v.
Savitri Devi [2003] 8 SCC 319; Commissioner of Customs (Preventive) v. Aafloat Textiles (I) P. Ltd. AIR 2009 SC
(Supp) 2320]
Applicability of s. 143 to secretarial auditor

Subsection (14) of s. 143 states that the provisions of this section shall mutatis mutandis apply to (a) the cost
accountant in practice conducting cost audit under section 148; or (b) the company secretary in practice
conducting secretarial audit under section 204.
The Latin expression mutatis mutandis means with necessary changes or the necessary changes having been
made; in the same manner with appropriate changes for the context; (used when comparing two or more cases
or situations) making necessary alterations while not affecting the main point at issue.
This provision is not easy to apply in the case of secretarial audit, inasmuch as s. 143 has been specifically designed
in relation to financial audit and secretarial audit is not identical with financial audit in most respects and hence it
is absurd to say that the provisions of section 143 would mutatis mutandis apply to secretarial audit.
Nonetheless, as subsection (12) mandates, if a secretarial auditor of a company in the course of the performance
of his duties as secretarial auditor, has reason to believe that an offence of fraud involving such amount or
amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the
auditor shall report the matter in the manner specified in by the Central Government by way of rules.
However, this requirement has little applicability in the case of secretarial audit. As noted before, the reporting
requirement under subsection (12) cannot apply unless the conditions specified in that subsection are satisfied
and one of the essential conditions is that the fraud involves the prescribed amount. Subsection (12) expressly
states: fraud involving such amount or amounts as may be prescribed. In other words, no reporting of fraud by the
secretarial auditor is necessary, unless a fraud committed by an officer or employee involves a sum of money and
it can be measured in monetary terms.
For example, if a director is paid any remuneration (say sitting fees) without attending a board meeting, it would
be necessary to report this as an instance of fraud involving prescribed amount. But, on the contrary, if a
company has filed any form or return with the Registrar of Companies in accordance with any provision of the
Act, it is impossible to say that it is a fraud involving any sum of money.
Prescribed amounts and manner of reporting

The Ministry of Corporate Affairs, by its Notification G.S.R. 972(E) dated 14 December 2015, amended rule 13 of
the Companies (Audit and Auditors) Rules, 2014. Analysis of the rule is presented below:
(1) Under sub-rule (1), a fraud must be reported to the Central Government if it involves or is expected to involve
individually an amount of rupees one crore or above.
(2) The reporting will be done in the manner stated in sub-rule (2)
(3) Under sub-rule (3), a fraud must be reported to the Audit Committee/Board if it involves any amount being
less than one crore rupees and it must be reported immediately but not later than two days of the auditor
acquiring knowledge of the fraud and the reporting must be done in the manner stated in sub-rule (3).
(4) In the case of fraud involving less than one crore rupees, the details of the fraud and reported to the Audit
Committee or the Board under sub-rule (3), must be disclosed in the Boards Report for the financial year in which
the fraud was reported.
(5) The provisions of rule 13 shall apply, mutatis mutandis, to the cost auditor appointed under s. 148 and to the
secretarial auditor appointed under s. 204.
Page 24 of 47
Straight
from the heart...
A ttette with CS No. 6
CS G.V. Aiman, B.Com, LLB, CS(London), ACS

Advocate, High Court, Mumbai
gvaiman@hotmail.com
Sir, you are the 6th member of our ICSI with CS Membership No. 6. Our readers would
love to hear about your journey as a student of CS and other courses.
Prior to 1969, I had passed the examination of Company Secretaryship (CS) conducted by the Corporation of
Secretaries, London (now ICSA) securing highest marks in the World for Accounts paper with International Prize
in Accounts award. Post which I have completed CS in India in the year 1969 with Inter & Final having three
subjects each for me. At that time there was no provision of any tuition or classes or teachings and we had to
study on our own with the recommended books by the examining Authorities.
After completing CS examination, I underwent in total 6 months training, out of which 5-1/2 months in Tata
Group of companies and half a month in ROC, Maharashtra, Mumbai. Training curriculum, among other things,
included handling the share dealings in Bombay Stock Exchange of the entire Tata Group of Companies.
In the meantime, I persued Bachelors degree in Commerce from the Karnataka University, Dharwad. In the year
1974, I also passed LL.B. examination from the Bombay University.
How the ICSI has evolved over the years?

The matters relating to CS was originally handled by the Department of Company Affairs in the Ministry of Law,
Justice and Company Affairs. Even our examinations were conducted by it with examiners being staff of the
ROC. Subsequently, CS was handled by the Company Law Board when it was formed. Thereafter, the Institute
was formed as a Company under Sec. 25 of the Companies Act, 1956 as a non-profit making Company. Even in
that Company (Institute) my Membership No. was 22 as I had become member of the Institute at very early
stage.
In the year 1980, pursuant to an Act of the Parliament, i.e. the Company Secretaries Act, 1980, the ICSI was
formed, thereby, the profession of Company Secretary got a statutory recognition.
Page 25 of 47
CS as a profession has been gaining momentum lately Do you think there has been a
metamorphosis?
Till about 1960 there was no profession of Company Secretaries in India. Sometime in 1960 the Institute of the
Corporation of Company Secretaries and the Chartered Institute of Company Secretaries, both of London,
started holding their examinations in India. Subsequently, CS in India was also started and ICSI evolved over 20
years as mentioned earlier. During that time there was no much scope for practicing as a Company Secretary, as
such.
With statutory recognition of CS in 1980, the profession of Company Secretaries developed and became a fullfledged Profession. With earlier amendment to the Companies Act, 1956 recognizing the profession of Company
Secretaries had cemented the growth of profession of Secretaries. Significance of this profession has increased
manifold in 21st century with amplified focus of corporates on Governance.
Sir, we would like to hear about your Career Progression?

When I qualified CS in 1969 which was a pre-industrial evolution era in India, there was very limited scope for
practicing as Company Secretary. It was rather employment as Company Secretary in the Company, without any
statutory recognition or requirement. Hence, I took Sanad for practicing as an Advocate in the year 1974 from
the Bar Council of Maharashtra, after passing LL.B. from Bombay University.
Since then, continued advocacy and currently practicing as an Advocate in High Court of Mumbai and Notary,
Greater Mumbai. I am privileged to represent the ICSI, New Delhi and the Mumbai Chapter as an Advocate
before Mumbai High Court and other Courts in Mumbai.
We would like you to say some Words of Wisdom for the benefit of our younger readers
Of course to start with students should concentrate in their studies, keeping the examination in mind. The
answers should be supported with case laws, wherever possible. These days the Institute provides study
materials, conducts classes or lectures and the students shall take benefit of the same, in addition to reading
various articles in the Journal of the Institute and many more available in web sources.
During training and initial days of career, ponder more in understanding the practical facets and applying
theoretical knowledge in resolving them. Theory and practice makes us perfect. CS with adequate concentration
and hard work coupled with little bit of external support can develop the career and come up. Of course, there is
no substitute for hard work.
Have you had a role model and did you ever draw any inspiration from the role model?
Unfortunately no one, it is not necessary to have one. If one has someone, it may help in concentrating and
studying him/her, so that a few pitfalls may be
avoided.
Please explain Success in your words

and what do you attribute your success
to!
Success means achieving what one had
aimed. I had limited resources when I started
my career. I am fairly successful in the
Profession with comfortable life for myself
and my family. I am completely honest in the
profession. Honesty is the secret of my
success.
Page 26 of 47
Special Article
Realm of International
Corporate Governance Day
CS Mahadev Tirunagari
Chairman, ICSI-Hyderabad Chapter
CS Ahalada Rao V.
Central Council Member
Synopsis
Now a days the corporate governance has become a mockery of some statutory requirement and gradually
losing its charm and unable to achieve its objectives and hence there are so many scams and frauds happening
everywhere in the world.
To emancipate from those restrictive hurdles, a day has to be observed as an International day for Corporate
Governance. This article places emphasis on what can be achieved from International Corporate Governance Day
ICGD and what are the benefits for the entire corporate world in India and also the entire Globe.
The restrictive approach of Corporate Governance being observed so far:
With very noble aspirations the rules and regulations relating to corporate governance were formulated. The
main ingredients of Corporate Governance are Transparency, Sustainability, Accountability, Independence and
various Disclosures. From the day the Cadbury committee first preluded about corporate governance in its
report till the present day, several deliberations happened everywhere and various norms were prescribed. Few
are in the mode of Comply or explain and few are in the form of mandatory compliances commanded by
statutory authorities and few are pure voluntary actions.
After observing various scams and frauds happening not only in India but across the globe, a moot question
arises whether the existing corporate governance norms are really meeting their objectives and are delivering
the fruits which they are supposed to deliver. Certainly the evolution of corporate governance has reached a
stage and certain level of basic principles are adhered to by and large, by the listed companies. But is that
sufficient and can we say that, the corporate world is at its best and really aiding the society and environment in
which it is operating? The answer may be a big NO.
Page 27 of 47
Corporate Governance is an ethical attribute which should come from within:

The basic tenet for bringing corporate governance into existence is to bring an ethical flavour among the
corporates while performing their obligations. By and large the attribute of ethics should come from within, and
one cannot demonstrate and impose upon the other to behave in an ethical manner.
Quite contrary to this basic tenet, all the existing corporate governance norms are in the form of imposing by
way of statutory obligation on the companies and the kind of transformation expected out of this imposing is
not at all comparable to the level of what an internal ethical attribute can bring.
Initially, to lay emphasis and make the corporate world tune to the requirements of this corporate governance
the approach adopted so far is justifiable to certain extent and. Then onlywe can see the real transformation.
The initial push in making governance a practice amongst the Corporates has been fairly achieved. Time has now
come to make corporate governance the DNA of the corporate world.
Corporate Governance is required only for listed entities:
This is another plot where again the corporate governance had its restrictive hurdle. Is ethical behavior
applicable only for few and the rest can go scot free! Applying the corporate governance norms only to listed
entities and leaving all the other business forms itself is a big mistake.
May be the initial approach for making the corporate governance norms applicable only to listed entities because
of their size and operations level could be justifiable. But the recent scenario is witnessing rise in unscrupulous
transactions in unlisted entities and other forms of businesses. Therefore the need of the hour demands to bring
more ethical ways of dealing in the operations of even the unlisted and other form of businesses like Firms,
societies, Trusts etc.,
Applicability of Corporate Governance only to corporate vis--vis Common Man
Everyone understands that the corporate governance is only a subject relating to companies. But it is to be
understood that the actual beneficiary is the common man. And the common man is totally eluded from this
kind of subject.
Let us see this scenario in an illustrative mode. A company is supposed to prepare its financial statements and
disclose the relevant items like profit etc., after following all the corporate governance norms like approval from
audit committee etc. Tax is to be paid on such disclosed profit to the Government. Government would then
initiate all kinds of welfare activities for the benefit of common man out of the taxes collected from the
companies apart from others. Can the common man then be far from the purview of corporate governance? If
the answer to this question is not known, then an awareness is to be created about the positives of
implementing the corporate governance.
International Corporate Governance Day
To emphasize and cater to the above requirements there is a necessity to propose a day as International
Corporate Governance Day- ICGD. The reason for having a day as ICGD is, it can provide an option to review the
past activities done for evolution of corporate governance and lay a path for the future course of action. This
day would also provide an option to share various scenarios being faced in different countries both positive and
negative so that the positive things can be implemented in other parts of the world and if any negative things
happened, then the entire world can try to find out a solution for such incidents.
Conclusion: Let us applaud the efforts of organisations across the world in bringing it into its current form.
However, we cannot rest on past laurels. More work needs to be done in this direction There is a need to
overhaul the approach of corporate governance from a restrictive nature to more liberated norms covering the
aspects of bringing self-regulation, applicability to all kinds of business entities, bringing awareness among the
common public about importance of corporate governance in their lives.
This is possible by observing a day as an International Corporate Governance Day.
Page 28 of 47
Crossing
the Milestones
-
An interaction with CS K. R. Radhakrishnan
CS K.R. Radhakrishnan, B.Com (Hons), FCS

Group Company Secretary, GE South Asia, Gurgaon
radhakrishnan.k@ge.com
Sir, could you please share with our readers your Career Progression?
Its been a mixed but memorable journey. As soon as I got my membership, the Company with whom I was
employed had embarked on a public issue of a convertible debt instrument. Thats when I was moved to
Secretarial function way back in 1988 to assist the Company Secretary. I moved from Kolkata to Mumbai. This
Company was taken over by another Group in 1989. I was moved again from Mumbai to Delhi. This movement
gave me the chance to function independently. While the company was not performing, there were
opportunities in areas other than Secretarial which paved way for a toe hold in the activities of larger companies
in the Group. In 2006, I got the opportunity to join GE in the commercial finance business vertical to manage the
CS function for 4 legal entities out of which one was listed in the stock exchange. In 2009, I was moved to the
corporate function to manage some of GEs industrial businesses where the CS support to various legal entities
was provided through a Centre of Expertise, which blossomed into Centre of Excellence. At present this model is
extended to GE businesses across and is christened as Legal Shared Services. From South Asia stand point we
support a bouquet of about 80+ entities.
GE stands for a world-class compliance culture. How is the Compliance team contributing to this motto
for the listed, unlisted and private companies in GE India & South Asia?
GEs compliance culture is one of the best in the world. Thanks to GEs continuous investment in training and
reviews, compliance is etched in the core of every GE employee. Besides the periodical review by the board of
directors of the various compliances, there are additional reviews by the Compliance Review Boards. Also every
legal entitys regulatory excellence is a blend of compliance to regulatory fulfillment and GEs Spirit and Letter
compliances. So compliance comes naturally to all functions that aids in seamless fulfillment.
Your thoughts on the Companies Act, 2013 and governance trends of 21st Century!
In my view they are complementary. The CA 2013 has tried to address the regulatory need and balance it with the
need for better governance. The CA 2013 is by and large a regulatory law and not a prohibitory one. Except
probably one Section which prohibits, the rest deals with approvals at different levels and seeks openness and
transparencies in action. There could be an argument that the deep level of openness is hindering some classes
of companies, but then this is being addressed in tranches.
In your view, how has the CS profession grown over the years?
Certainly it has grown many folds over the years. I now observe that the appointment of company secretaries is
more need based than compliance to law. With corporates operating in global environment, good governance
practice is wily nily mandated. CS is one of the best placed professions that add value to good governance.
Page 29 of 47
What the new entrants to the profession should concentrate more on to shape their career better?
The new entrants need to expand their horizon and be upto date in terms of whats happening around and how
they can blend book knowledge with practices.
What are your interests?

I am an avid follower of Cricket and Football (Soccer). I still play competitive cricket and represent GE in local
tournaments.
Who is your role model and what inspired you in him/her?

My role model is a person who was the Director of Finance in one of my earlier employments. I imbibed from him
clear thinking ability, patience and to be a good human being.
How would you define Success and what would you attribute your success to?
In my view Success is when you achieve what you wanted to achieve. Have a long term plan and break it into
smaller milestones. So that every milestone crossed gives a sense of success and each success motivates to cross
the next milestone.
Chapter Activities July 2016
Research Symposium on the Companies Act 2013

The ICSI-Mysore Chapter in association with the ICSI-CCGRT organised a 2 days research symposium on the Companies Act, on 8 th and 9th
July, 2016 under the theme- Decoding the unsolved mysteries of the Indian Companies Act. The symposium was attended by around 65
delegates from many cities of Southern India.
The event was inaugurated on 8th July, 2016 by the Dr. Muthukumar N., President and Whole-time Director of Automotive Axles Limited
and Chairman of CII, Mysore. He emphasised the need for research in this time of ever changing regulatory framework. He also called
upon the Company Secretaries to concentrate on adding value to the organisations they serve, either as employee or consultant. CS
Ramakrishna Gupta, Secretary of SIRC, ICSI and CS Amit Gupta, Management Committee member of NIRC and Member of Research
Committee highlighted the need for the research and also briefed the structure of the programme. CS Bhansali M.C., Chairman of the ICSIMysore Chapter welcomed the gathering the CS Pracheta M., Secretary of the ICSI-Mysore Chapter proposed the vote of thanks.
The participants of the research symposium were
divided into groups and each group was assigned
with a Chapter under the Companies Act, 2013. The
groups were expected to deliberate on the critical
aspects and also improvise the Research material.
The next part of the programme was inter-group
deliberations where each group presented their
views on the critical issues identified by them. This
was a brain storming session and was able to open
up the debate on such issues. Overall, this
symposium helped the participants to develop their
interpretational skills and provide a thorough insight
into the Companies Act.
CS Amit Gupta, Lucknow; CS Anshul Jain, Mumbai;
CS Chidambaram S., Hyderabad; CS Karthik V.,
Bengaluru; CS Ramakrishna Gupta, Hyderabad; CS
Venkataramana S., Hyderabad; CS Thirupal Gorige,
Bengaluru were the Mentors for the participants,
who were successful in igniting the minds of the
participants by their queries on the various chapters
of the Companies Act.
On 9th July 2016, the symposium concluded with the Release of the 150th edition of the eMagazine, followed by the Valedictory session
chaired by CS (Dr.) Shyam Agarwal. In his inspiring speech on the occasion, Dr. Shyam Agarwal, called upon the fellow professionals to
imbibe integrity in all walks of life, which is a combination of Character, Courage and Consistency. He requested the members to continue
their research activities. CS Bhansali M.C., Chairman of the ICSI-Mysore Chapter welcomed the gathering; CS Ajay Madiah B.B., introduced
the guests and CS Pracheta M., Secretary of the ICSI-Mysore Chapter proposed the vote of thanks.
Page 30 of 47
Living Room
Buying and selling smiles

A man often bought oranges from an
old lady.
After they were weighed, paid for and
put in his bag, he would always pick
one from his bag, peel it, put a
segment in his mouth, complain it's
sour and pass on the orange to the
seller.
The old lady would put one segment
in her mouth and retort, "why, it's
sweet," but by then he was gone with
his bag.
His wife, always with him, asked, "the oranges are always sweet, then why this drama
every time?"
He smiled, "the old mother sells sweet oranges but never eats them herself. This way I
get her to eat one, without losing her money. That's all."
The vegetable seller next to the old lady saw this every day. She chided, "every time this
man fusses over your oranges, and I see that you always weigh a few extra for him.
Why?"
The old lady smiled, "I know he does this to feed me an orange, only, he thinks I don't
understand. I never weigh extra. His love tilts the scale slightly every time."
Life's joys are in these sweet little gestures of love and respect for our fellow beings.
O God, Grant us always the ability to show such amazing kindness and Gestures
Words worth Millions

A gift is pure when it is given from the heart to
the right person at the right time and at the right
place, and when we expect nothing in return
Perform all work carefully, guided by
compassion.
We behold what we are, and we are what we
behold.
- Bhagavadgeeta
Page 31 of 47
e-Tools for the Professionals

Mr. Amitkumar Hegde, MCA
Software Engineer, Microsoft, Redmond, WA, USA.
amits.hegde@gmail.com
Power BI
PowerBI (BI stands for Business Intelligence) is an

awesome tool to get insight into data which
otherwise may not have been possible. Initially it was
released as an add on to MS Excel, now available
as a separate tool and also as a web application at http://powerbi.com
PowerBI transforms data into rich interconnected visualizations. Visualizations are interactive and lets
user to slice and dice data making it easy to understand various patterns and trends. For example, if
there is a stacked column chart representing sales per interval per category and another pie
chart representing quarterly total sales and another line chart showing sales by region, clicking on a
section of stacked column chart will reorganize all three charts to show the sales for the category per
quarter per region. This would have taken some effort to do it on excel or some other tool, but powerbi
makes it very easy. Creating rich dashboards which help derive meaningful conclusions quickly is one of
the primary use-case of PowerBI. It also lets asking questions about the data such as "orders from
<city> greater than <x amount> in last <days>" to quickly get answers.
PowerBI supports various data sources, as simple as csv or spreadsheet to traditional database to big
data. It works with static and real-time data alike to support ad-hoc report generation or a real-time
dashboard displaying details on some time window. Get ideas on how PowerBI adds value to various
business sectors: https://powerbi.microsoft.com/en-us/departments/
Download Desktop version from: https://powerbi.microsoft.com/en-us/get-started/
WPS Office + PDF

An Android/IOS application
Friends, happy to share with you this month a very useful
application for our Smart Phones and Tabs, i.e., WPS Office +
PDF, an Android/IOS based office suite application, which allows
user to create, view, edit, modify office documents.
Mr. Manjunath S. Bhat,

M.Com, LLB
CS Professional Student, Bengaluru
msbhat321@gmail.com
This application is fully compatible with MS Office, Google docs and Adobe PDF. Major advantage of
the application is that it supports Miracast and by this, user can do presentations using wireless
supports like WIFI. The Encryption feature of the application keeps our data secured and safe while
sharing the documents through wireless communication.
Page 32 of 47
Specification: Price- Free | Required Android- 4.0 and up

Latest version 9.7.3
Download Link:
https://play.google.com/store/apps/details?id=cn.wps.moffice_eng&hl=en
Web Yatra
Mr. Guruprasada Bhat B.B.A, CS (Professional)
Lead Consultant, N. R. Desai & Associates, Bangalore
guruprasadbhatcs@gmail.com
A fundamental investment concept is the trade-off between risk and return. This concept is based on
two realities i.e., investments and performance of investment. For the purpose of reducing risk
individuals or corporates need to assess risk first. Calculating the probability of occurrence of risk
means ascertaining the likelihood of actual happening of the risk and its magnitude.
Dear Professional colleagues, while spending time on google, I was amazed to see a wonderful website
relating to the risk assessment worldwide, i.e., http://coface.com/. Coface is an agency which offers
adapted risk prevention, monitoring and protection services to companies of all sizes, nationalities and
in all sectors.
Among other tabs available on the site, I specifically draw your attention to News and Publications
and Economic Studies. News informs us of interesting articles on contemporary economic
developments and Publications helps to download periodical Panorama with analysis of country/sector
risks. Economic Studies contains COUNTRY RISKS ASSESSMENT of 160 countries, and SECTOR RISKS
ASSESSMENT includes assessment of 12 sectors, from six geographical regions, assessed every quarter.
These assessments are based on expertise of Coface and financial data published by over 6,000 listed
companies. Both the reports are available freely.
India is rated as A4 in Country risk assessment and B in Business Climate. We can check rating of all
other countries and equate which is safe for business. Criteria and rating can be evaluated as below:
Country Risk Assessment: Drawn up on the basis of macroeconomic, financial and political data. This
is an invaluable tool, giving an indication of a countrys potential influence on businesses financial
commitments.
Business Climate: Evaluating the business environment involves measuring the quality of a countrys
private sector governance in other words businesses financial transparency and the effectiveness
of the courts in settling debts.
Rating: Rating by Coface uses a seven-level ranking, in ascending order of risk, these are: A1, A2, A3,
A4, B, C and D.
Most of the reports/information are available for free. If we need specific assessment for our business, we can
subscribe to the particular service offered by Coface by paying the agreed charges. I found that Coface is the
best site for analysing the risk before investing in any geography and sector. By logging on to http://coface.com/,
we could save precious time and get expert risk evaluation report at the click of a button.
Page 33 of 47
Special Article
Legal fiat to
Sensitive Personal Data or

Information in India
CS Omkar Gayatri,
B.Com, LLB, ACS, PGDHRM, DISM
Sr. Manager - Legal & Compliance Officer,

Carl Zeiss India, Bengaluru
omkargayatri@gmail.com
Privacy and Data protection law in India is evolving off late, and has progressed
meaningfully in 21st century. UK and US have explicit and well set laws exclusively
for data protection and privacy of citizens since decades, one such comprehensive law
is the need of the hour in India. This article scans the development of privacy and
data protection law in India with specific emphasis on regulatory norms to handle
Sensitive Personal Data or Information [SPDI].
The evolution of privacy and data protection law in India can be analyzed in three phases:
Phase I - Article 21: Right to Life includes Right to Privacy:

Until the year 2000, in the absence of a separate law, judiciary has balanced and safeguarded the privacy rights in
India under Article 21 of the Constitution i.e., Right to Life and Personal Liberty. As early as in 1963, the Supreme
Court of India in Kharak Singh vs The State of U.P., has evaluated that though Constitution contained no explicit
guarantee of a right to privacy, it read the right to personal liberty expansively to include a right to dignity.
Justice Subba Rao, in a minority judgment in this case, held that the right to personal liberty is not only a right to
be free from restrictions placed on movements, but also free from encroachments in private life. In the last
resort, a person's house, where he lives with his family, is his 'castle' it is his rampart against encroachment on
his personal liberty. Observations of Justice Subba Rao in Kharak Singh case was a firm foundation laid to cover
right to privacy under Article 21 in subsequent cases.
Sprouting of right to privacy has confronted major setback when the Apex Court in Govind vs. State of Madhya
Pradesh observed that Too broad a definition of privacy will raise serious questions about the propriety of
judicial reliance on a right that is not explicit in the Constitution. The right to privacy will, therefore, necessarily,
have to go through a process of case by case development..It could not be that under these freedoms the
Constitution-makers intended to protect mere personal sensitiveness."
Since right to privacy is not specifically defined in the Constitution, elucidation in rulings found insufficient to
provide satisfactory protection to the data and privacy. By the end of 20 th century, with increased usage and
storage of personal data in cyber domain, an effort was made in the Information Technology Act, 2000 [the IT
Act] to protect privacy rights for data in e Devices.
Page 34 of 47
Phase II - The IT Act:

The IT Act 2000 as amended by 2008 provided stringent penal consequences for theft or damage of data in a
computer system/electronic devices. Section 43A of the IT Act provides that if a body corporate handling any
SPDI in its computer resource is negligent in implementing reasonable security practices and procedures shall be
liable to pay damages to the person affected. Section 72A of the IT Act provides imprisonment for a term which
up to three years or fine up to rupees five lakh or both for disclosure of personal information in breach of lawful
contract or without consent of the information provider. The IT Act by 2009 placed the right track to take privacy
and data protection in India to the next level.
Phase III - The IT (Reasonable security practices & procedures and SPDI) Rules, 2011 [the Rules]:
Ministry of Communications and IT has notified the Rules on 13th April 2011 under Section 43A of the IT Act
prescribing reasonable security practices & procedures and SPDI. Further, the Ministry has clarified that the
Rules are not applicable to BPOs in India while receiving SPDI from entities within or outside India. The Rules
broadly cover following vital features of privacy when received from natural persons:
Meaning of SPDI [Rule 3]:

SPDI of a person means such personal information which consists of information relating to:
a)
b)
c)
d)
e)
f)
g)
h)
password
financial information like Bank A/c or credit card or debit card
physical, physiological and mental health condition
sexual orientation
medical records and history
Biometric information
any of above info provided to body corporate for providing service
any of above info received by body corporate for processing under lawful contract
Obligations of body corporate or person collecting/handling SPDI:

a. Publish in website a comprehensive Privacy Policy' for handling personal information [Rule 4]
b. Obtain consent in writing via letter/Fax/email from provider for the purpose of usage [Rule 5(1)]
c. DO NOT collect SPDI unless it is for lawful purpose relating to activity of body corporate and is necessary for
that purpose [Rule 5(2)]
d. Apprise SPDI provider that: (i) information is being collected; (ii) Purpose of collection; (iii) intended
recipients; (iv) Name & address of agency collecting as well as retaining SPDI [Rule 5(3)]
e. DO NOT retain SPDI for longer than duration required for the purpose [Rule 5(4)]
f. Permit SPDI provider to review and correct info provided earlier if found inaccurate [Rule 5(6)]
g. Allow SPDI provider to withdraw the consent given earlier [Rule 5(7)]
h. Keep SPDI secure at all times [Rule 5(8)]
i. Publish name & contact of Grievance Officer who shall address the concern within 1 month [Rule 5(9)]
Key elements of Privacy Policy of body corporate [Rule 4]:

a.
b.
c.
d.
e.
Clear statements of its practices and policies

Type of SPDI being collected as per Rule 3
Purpose and Usage of SPDI
Disclosure of SPDI to third party only if part of contract or necessary to comply with legal mandate
Reasonable security practices and procedures adopted by the body corporate
Reasonable Security Practices and Procedures by body corporate [Rule 8]:
Continued in page 37
Page 35 of 47
A student forever
Words of wisdom from CS K. Satyamurti
CS K. Satyamurti, M.Com, FCWA, ACS, CIMA(UK), ACCA(UK)

Company Secretary & Sr. Manager (Retd), Hindustan Paper
Corporation Ltd., Belagula
ksmurtikrishnaswamy@yahoo.com
Sir, could you please share with our readers your Career Progression?
Let me chart out the journey - after passing ICWA inter (9 papers) in the first attempt, I got appointed as Cost
Assistant in IDPL, (Indian Drugs & Pharmaceuticals 1967, Chennai. After passing ICWA Final in 1970, promotions
happened consistently and I had the opportunity of working at Calcutta, Hyderabad and was controlling finance
of marketing divisions of Chennai, Bangalore and Cochin. In 1984, I joined Andhra Pradesh Paper Mills, at
Rajahmundry as Class I Officer, in-charge of Costing Department. In the year 1985, I became a Member of ICSI. In
the year 1987 I joined Hindustan Paper Mills Ltd., Belagula, Mandya Distribution as Manager (Internal Audit)
getting promoted as Sr. Manager (Finance). In 1990, I was transferred to Assam (Nawgang) Factory of HPC. I was
appointed as the Company Secretary the same year, while continuing to be the Internal Auditor.
Post retirement, in the year 1997 went to Muscat (Oman) to join my son. During my stay there I qualified both in
CIMA. (UK) & ACCA. (UK). But I have not opted to become Associate member of those two Institutes.
For about 6 years I taught Costing, Finance, Auditing, Statistics, and Management at NICE Institute, Muscat and
addressed at seminars organized by the Institute for Corporate Managers. I Returned to India in the year 2014.
2. How CS profession has grown over the years?

The CS profession has grown tremendously with increased demand for Company Secretaries and with good pay
and perks.
3. What do you think the new entrants to the profession concentrate more to shape
their career better?
A bright future awaits the new entrants. The new entrants must be thorough with the subjects they learn. A
mere pass alone will not suffice. The students must bear in mind that a Company Secretary occupies a senior
position in an organisation. Of all the various officers in a company, the only recognised officer as per Law is the
Company Secretary under most statutes. Moreover, as the Company Secretary has to work directly, under the
M.D/CEO of the company, he should be well-versed with the Company Law, possess managerial qualities,
boldness in conducting Board meetings, have polite behaviour, good manners etc.
Page 36 of 47
4. What are your thoughts on the Companies Act, 2013, governance and compliance
trends of 21st Century?
According to me, the Indian Companies Act 2013 has provided much better Control towards governance and a
clear direction towards compliance trends
5. What are your interests?

My interests are in teaching deserving candidates, who have the passion to succeed in life as a professional. I
continue to teach even now. One of my very notable students in Mysore is Ms. Sarina, FCS, ACMA. I am glad
that she succeeded in CS and CMA courses under my mentorship.
6. Who is your role model and what inspired you in him/her?

My role model was my mother who is no more now. She had tremendous will power to face the toughest life
situations patiently and to succeed ultimately. Her strength of character has profoundly influenced me and has
been a guiding force in my life.
7. What is Success and what is the secret of your success?

According to me 'success' means to overcome 'failure'. Not getting success is an indication of that there is some
slackness or gap somewhere in one's efforts. Therefore one should overcome that Slackness / gap, if he/she
wants to get success in his/ her goal. Secondly, though one can't completely overcome 'failure', it is necessary
that one should not be afraid of failure(s), but there must be a proper planning and continuous review of the
efforts taken so far till success is achieved.
Legal fiat to Sensitive Personal Data or Information in India

Continued from page 35
Reasonable Security Practices and Procedures by body corporate [Rule 8]:
A body corporate is said to meet the Reasonable Security Practices and Procedures if it has implemented
security standards and has comprehensive documented information security programmes that
commensurate with the sensitivity of the information being protected.
The International Standard IS/ISO/IEC 27001 on IT-Security Techniques-IS Management System is one such
standard which body corporates may implement to adhere to reasonable security practices.
If members of any industry association are self-regulating by following its code of best practices, such code
shall be approved by the Central Government.
A body corporate is deemed to have complied with reasonable security practices if the standard or code is
certified / audited on a regular basis through independent auditor approved by the Government. The audit
shall be carried at least once in a year or when there is a significant upgradation.
Right to privacy is not an absolute right, has reasonable restrictions to it. Among powers under other laws, the
Government can interfere with data under Section 69 of the IT Act if satisfied that it is necessary and expedient
in the interest of sovereignty of India, defense and security of the State, friendly relations with foreign countries,
public order or for preventing agitation of any cognizable offence.
With raging controversy over snooping in India, it is high time that government promulgates much awaited
Personal Data Protection Bill, a proposed explicit and exclusive legislation to protect right to privacy in India,
unfortunately still in queue since 2006! Once specific law is enacted, it is implementation and jurisprudence of
law which would extend material benefits to the society and would help moving forward on par with global
benchmark.
Page 37 of 47
I&E Law Caf 32

Column on Industrial & Employment laws
Mr. Sharath Mahendra Kumar

B.Com, MBA, LLB, MPhil, PGDMM, (ACS, LLM)
Bengaluru
sharathm_kumar@yahoo.com
Non-Compete Clause in
Employment Contract
Whether tenable in the eyes of law?
Very often we come across situations that at the time of separation from the services of the employment that an
employee is asked by his employer to sign an undertaking not to join its competitors or not to disclose or divulge
any technical information or information which may have substantive adverse impact on the Company by its
disclosure to any third party. The first thing which comes to our mind is that:
A.
B.
C.
D.
Whether an employer can ask an employee to sign such undertaking?

If yes, under what circumstances such undertaking is valid?
If no, what are the reasons for the same?
What is the legal status of such clauses as on date under any of the applicable legislations?
This article is an attempt to throw some light by making critical observations of various provisions of applicable
laws and its tenability in the court of law.
Non-Compete Clauses:
Competition is the WORD which no Organization or Individual can dare to ignore in the present disruptive
business world. An Organization or an Individual will be competitive only when it / he has edge over its
competitors / peers. Such edge on the part of Organization could be in terms of having innovative technology /
processes, product / services that distinguishes itself from its competitors which is precisely known as
Intellectual Property Rights and in case of Individual, the expertise which makes him to stand class apart from
his peers which in precise terms is known as Ability to Create Value to an Organization by whatever name
called. In either of the cases, both Organization and an Individual have to protect itself / himself from being
infringed of their respective competitiveness. Organizations tend to protect competitiveness by imposing NonCompete Clauses on employees at the time of making offer of employment and same clause contained in
Employment Contract, enforceable both during the subsistence of employment as well as after its cessation.
What is a Non-Compete Clause in relation to an Employment Contract?
A Non-Compete clause in relation to an employment contract is one of the terms of employment contract in
which an employee abstains from competing with his employer during the subsistence of employment or after
its cessation.
Such abstinence may take the form of not to carry out any similar business which the employer is presently
carrying on or disclose any material information about its business to any third party without its consent or not
to join its competitors after cessation of services, etc.
Page 38 of 47
Are these Non-Compete Clauses tenable?

A contract of employment should be an agreement enforceable by law. It should meet the essential
requirements of a valid contract specified under Section 10 of Indian Contract Act, 1872. As such, any covenant
which restricts an individual from exercising his legal right for excelling in his individual capacity will be void to
such extent. This means, an individual cannot be restrained from enjoying the freedom of trade and commerce.
Every man should have an unfettered liberty to exercise his powers and capacities for the benefit of his own and
the community.
What does the provision of Indian Contract Act, 1872 provide for in relation to restraint on trade or
employment?
Section 27 of the Indian Contract Act states that every agreement by which any one is restrained from exercising
a lawful profession, trade or business of any kind, is to that extend void and unenforceable.
What section 27 provides is that the agreement is totally not void but only that part which imposes restraint on
exercising a lawful profession, trade or business of any kind is void to that extent only.
Section 27 has not recognized any difference between total restraint and partial restraint of trade. Whether the
restraint is general or partial, unqualified or qualified is not a matter, if the agreement is in the nature of restraint
of trade, it is void to that extent.
Are there any exceptions to Agreement in Restraint of Trade?
There are certain exceptions to Section 27 which recognizes the restraint on trade. They are:
A. Exception created by Statutes
i. Sale of Goodwill
ii. An agreement under Indian Partnership Act, 1932
B. Exception created by judicial interpretations of Section 27
i. Trade Combinations
ii. Exclusive Dealing Agreements
iii. Restraints upon Employees - Trade secrets, names of customer, all such things are objective knowledge
and these may not be given away by a servant. They are his masters properties. A servant may therefore
be restrained from taking part in any business in direct competition with that of his employer.
When the exceptions are tenable?
If the restraint can be enforced on an employee, then the question is when such restriction can be imposed
upon?
Restraint on employee in the form of non-compete clause can be imposed only during the subsistence of the
contract of employment and not beyond that. It means, when an employee is still in the service of the employer,
the doctrine of restraint of trade prevails but not after his cessation from the services of the employer.
Negative covenant post the cessation of employment which is usually termed as Garden Leave wherein an
employee is offered compensation from his employer for not joining its competitors and to remain idle for
certain period is found to be hit by the provision of section 27 of the Indian Contract Act, 1872 and therefore not
tenable in the eyes of law. In similar lines, any undertaking taken by the employer from his employee to be
operative post the cessation of service in the form of non-disclosure agreement, non-solicitation agreement or
non-compete agreement are not tenable in the eyes of law.
Some notable case laws related to Employees Non-Compete Clauses:
1.
The principle of agreement in restraint of trade and commerce unless affecting the interest of State is not
confined to restraints of trade in the ordinary sense of the word TRADE, but includes restraints on the
right of being employed. (Nirnjan Shankar Golikari Vs. Century Spg. And Mfg.Co.Ltd., AIR 1967 SC 1098)
Page 39 of 47
2.
Negative terms of the contract i.e. preventing / restraining an employee from not working with the
competitor during the continuance of employment is not void to such extent but would be considered as
void post cessation of employment whether voluntarily by the employee or by dispensation of services by
the employer. (Superintendence Co. of India Pvt.Ltd Vs. Krishan Murgai, AIR 1980 SC1717)
3. Whether restraint is general/specific or totally /partially qualified / unqualified, if it was extending beyond the
term of services it is void. (Madub Chunder Vs. Rajcoomar Doss, (1874) 14 Beng LR 76 at pp.85-86)
4. Employee covenants in agreement should be carefully scrutinized, because there is inequality of bargaining
power between the parties; and, more often than not, no bargaining power, especially in cases where the
employee was presented with a standard format form of contract that he had to either accept or reject.
(Superintendence Co. of India Pvt.Ltd Vs. Krishan Murgai, AIR 1980 SC1717)
5.
Former employer seeking to enforce an agreement to restrain the employee from adopting and using any of
the processes invented by the former employer in a subsequent employment is void. Reason being an
employee cannot be restrained from using knowledge which he gained during the course of his previous
employment forever. (M/s. Sociedade de Fomento Indl. Ltd Vs. Ravindranath Subraya Kamath, AIR, 1995, Bom 158)
6. Negative stipulation contained in a Franchise Agreement restraining the franchisee from dealing with
competing goods was to facilitate the distribution of goods of the franchiser and could not be regarded as
restraint on right to trade. (Gujrat Bottling Company Ltd. Vs. Coca Cola Company, AIR 1995 SC 2372)
7. Unclear, obscure, unreasonable and uncertain confidential negative covenants are unenforceable.
(Polaris Software Lab Ltd., Vs. Suren Khiwadkar, 2004 I LLJ 323 : 2003 (3) Mah.L.J. 557 (Mad. HC)
8. Negative covenant between Master and Servant is viewed strictly by the Courts.
(Niranjan Shankar Golikari Vs. Spinning & Manufacturing Co. Ltd., 1967 I LLJ 740 (S.C. 2J)
From the above discussion and judicial pronouncements, it is quite evident that;
1.
An employer can impose a negative covenant i.e. non-compete clause but only during the subsistence of the
employment and not beyond the term of employment.
2. A negative covenant beyond the terms of the contract of employment will be considered as void even if it is
reasonable, as in India it is the statutory provision which is considered to decide whether such restriction is
valid or void and not on the basis of its reasonableness as it is the case in England i.e., under English Law.
3. As on date, in India, the status of law on Non-Compete Clauses or Negative Covenants relating to
employment contract cannot be enforced after the cessation of employment contract.
4. Reasoning as on date for not accommodating the negative covenant post-employment contract is by virtue
of section 27 of the Indian Contract Act, 1872 which states every individual has right to freedom of trade and
commerce guaranteed under Indian Constitution & legislature, and a mutual contract cannot take away
individuals fundamental freedom of trade and commerce.
In a nutshell, any agreement by an employer with his employee restraining exercise of such employees right to
excel in his profession, trade or commerce post-employment contract is void to such extent. Such terms may
only be an attempt on the part of the employer to create some sort of physiological impact in the minds of the
employee but cannot withstand the test of law, as on date, in India. However, there are certain amendments
proposed to accommodate such negative covenants provisions in the Indian Contract Act, 1872, but it is yet to be
incorporated.
In the meanwhile, any compensation received by the employee for abstaining himself from any actions which
may affect his former employers competitiveness, is treated as income from business and profession and
accordingly taxable under the Income Tax Act, 1961. But this premise cannot justify the Non-Compete Clause
imposed by the employer subsequent to cessation of employment.
Page 40 of 47
Compilation:
CS Phani Datta D.N.
Spectrum Space
Practicing Company Secretary,

Phani Datta & Associates, Mysuru
phanidatta.dn@gmail.com
CS Ashwin Bhat
Asst. Manager - Compliance
ASA & Associates LLP, Bengaluru
Learners Corner
ashwinbhat28@gmail.com
Foreign Account Tax Compliance Act (FATCA)

What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is a United States federal law passed in 2010. FATCA is a broad,
complex set of rules designed to increase tax compliance by Americans with financial assets held outside the
United States. The main intention of this law is to curb the evasion of tax by US tax payers who have
unaccounted overseas Financial Accounts/Assets.
Implementation US law on FIs abroad:

FATCA requires all Foreign Financial Institutions (FFI) to submit reportable Financial Accounts details of US
Persons. Enforcement of FATCA on FFI by requiring US financial institutions to withhold 30% of the payments
made to FFIs who do not agree to identify and report information on US Persons. Seeing this implication, many
FFIs across the world have registered with US Internal Revenue Service (IRS) under FATCA. On the other hand,
countries have come forward and signed Inter Governmental Agreement (IGA) with the US to implement FATCA
in exchange of information.
FATCA & India:

Government of India (GoI) has signed IGA with the US on 9 July 2015, accordingly FIs in India are required to
report tax information about US Persons to GoI which will, in turn, transmit that information to the US IRS. Most
importantly, the US IRS will provide similar information about Indian citizens having any accounts or assets in the
US to GoI. Due date of Reporting for calendar year 2014 was fixed as August 31, 2015 and for every subsequent
calendar year by 31 May. While FATCA creates complicity on Banks & Financial Institutions in India, helps GOI and
US to find tax evaders and save national interest!
Common Reporting Standard (CRS):

CRS, developed in response to the G20 request and approved by the OECD Council on July 15, 2014, calls on
signatories to obtain information from their FIs and automatically exchange that information with other
jurisdictions on an annual basis. Idea of CRS is based on US FATCA and is called global version of FATCA.
GOI has, on June 3, 2015, joined the Multilateral Competent Authority Agreement (MCAA) with other G20 &
OECD countries for implementation of CRS on Automatic Exchange of Information (AEOI) for exchanging
information as required. The CRS requires Banks/FIs of the source jurisdiction to collect and report information
to their tax authorities, information on account holders resident in other countries annually. India will start
exchanging of information in 2017.
Exception from Reporting under FATCA & CRS

The Accounts as mentioned in the below table are not required to report:
Please see the table in Page 43

Page 41 of 47
Natural Concerns
CS Manjunath ACS, M.Com, MFAM
Practicing Company Secretary, Mysuru
manjuacs87@gmail.com
Climate change:
Act before its too late

Changes in climatic conditions are natural and unavoidable, but the current changes in climate cannot be
considered as ordinary and acceptable because of its range of degree of change are enormous in nature. Hence,
this article mainly focuses on how climate is getting changed and its impact on survival of mankind. Firstly, let us
try to know what climate change actually means. Climate change may be defined as a vital and long-lasting
change in weather conditions over the periods ranging from decades to millions of years.
Why should we be worried about climatic changes?

Our food system, our economies, our cities and our communities and a host of other things are influenced by
climatic changes. Surprisingly, the average temperature on Earth has increased by more than half a degree
Celsius over the past 100
years, which cumulatively
resulted as huge degree of
change
in
climatic
conditions.
The 1980s and 1990s were
the warmest decades on
record, the average global
temperature is expected to
rise by 1.4C to 6.4C and if
that is the case, the mankind
survival may become impossible in many parts of the world.
CAUSES OF CLIMATE CHANGES

Climate changes are mainly caused by different types of gases and materials in our atmosphere; including huge
amounts of carbon dioxide and methane, resulted by human activities such as extracting and burning fossil fuels
and clearing forests etc. These gases release heat to the atmosphere and finally increase the temperature of the
climate.
Deforestation amounts to increase in greenhouse gases in the atmosphere and increased speed and severity of
global warming. The quickest solution to deforestation would be to simply stop cutting down trees for any of the
purpose.
Adverse Affects Of Climate Changes

Increase in the overall temperature of the earth affects the climate of many parts of the world in different ways.
Rise in temperature and changes in climate will cause - Increase in Droughts and floods, Scarcity of food items,
Increase in Heat waves, Wildlife will be at risk, Melting ice caps, Increased sea levels, Severe storms etc.
Page 42 of 47
Apart from above, Climate changes will also

impact adversely on Agriculture, Wildlife and
Economy as a whole which may finally make
the survival of mankind very difficult.
What we can do?

Around the world, many of the communities
were already struggling to handle the
impacts of climate
change. Moreover, everyone will be affected
by changes in climate in one or the other
way. Hence, everyones actions and
voluntary support can only make a
difference.
Many Scientists have estimated that by
2050, we all must reduce worldwide
emissions to at least half of their 1990 levels
in order to keep away from the harmful
impacts of climate change and its a vital
challenge and it requires an equally urgent
response. To control the adverse impacts of
climate change, we mainly need to reduce
the amount of greenhouse gases we put
into the atmosphere and in particular, we
need to reduce the amount of carbon. Further, following are the other remedies to control of the adverse impact
of climate change:
1. Increasing less polluting energy generation industries.
2. Adopting new agricultural methods
3. Control of deforestation
4. Carbon sequestration, etc.
Changes in climate are restructuring human development and progress. How we all responsibly
respond to climate change will determine the future of mankind
Foreign Account Tax Compliance Act (FATCA)

Continued from Page 41
The Accounts as mentioned in the below table are not required to report:
Classification
Pre existing
Individual
accounts
Pre existing
Entity
accounts
New
Individual
Accounts
New Entity
Accounts
FATCA
CRS
- Account Bal (30th June 2014)< $ 50,000
- cash value insurance/ annuity
- Account is cash value insurance contract and
contract, prevented from sale to an
account bal (30th June, 2014) < $ 250,000
Indian resident
- Account Bal (30th June 2014 or subsequent - Account Bal (31st Dec 2015 or
calendar year)< $ 250,000
subsequent calendar year)< $
250,000
- a depository account with account balance
- No Threshold limit available. All new
< $50,000 at the end of any calendar
accounts should be reported
- a cash value insurance contract with account
balance < $50,000 at the end of any calendar
- No Threshold limit available. All new - No Threshold limit available. All new
Page 43 of 47
News Room
CS Chakri Hegde
chakri.hegde@gmail.com
CS Vijayalakshmi Karur
vijukarur@gmail.com
News express
In the wake of slapped duties of up to 450 percent on the steel products from China, threatens WTO case
over US
Ukraine to raise issue in WTO of Limited Goods Transit by Russia
US-FDA has approved the medicine Absorb, the first fully absorbable stent, to treat coronary artery disease.
Absorb has been available in India over the last three-and-a-half years.
India set to take up the Bilateral Investment Treaty as a negotiating tool to get the US to sign the long
awaited Totalisation Agreement and Visa issue
US-based NGO, Compassion International working for child rights, put on GOI watch list
CREDAI alleges cement price cartelisation again, plans to move to CCI
Government is investigating dumping of non-woven fabric from 5 nations to protect domestic industry from
cheap imports
SEBI set to allow e-commerce firms to sell mutual funds
Labour Ministry to bring amendment to Maternity Benefits Act by increasing duration of maternity leave
from 12 weeks to 26 weeks
Model Shops and Establishment Act for India

Cabinet clears Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016.
This model law allows cinema halls, restaurants, shops, banks and other such workplaces to be open 24X7. The
Bill will now be sent to States/UTs to enable them to modify their individual Acts, if they so desire either by
adopting the said Bill as it is or after modifying its provisions as per their requirements. You will find key
highlights and synopsis of the Bill at http://pib.nic.in/newsite/PrintRelease.aspx?relid=146627
WTOs assessment of Chinas trade policies and practices

WTO held its sixth review of Chinas trade policies and practices in Geneva from June 20 to 22. The world trade
monitoring bodys conclusive message was that the basic national conditions of China as a big developing
country have not changed and will not be fundamentally changed despite its economic development
achievements.
Competition Commission rejects complaint against Wiley India

CCI has rejected allegations that Wiley India abused its dominant position by imposing unfair terms and
conditions with regard to the subscription services on its agents.
Cygni Energy Is First Firm To Benefit From Start-Up India

Hyderabad-based Cygni Energy has won the distinction of being the first company to avail of the benefits offered
by the government under Start-up India Action Plan. The renewable energy company founded a year ago will
now file for patent under the fast-track mode meant for startups.
Farmers to get short-term loan at 7% interest rate in FY17

Under the interest subvention scheme approved by the Cabinet on Tuesday, farmers will get loans of up to Rs 3
lakh for a period of one year at an interest rate of 7 per cent. The Cabinet also approved an additional subvention
of 3 per cent for those farmers who pay loans on time.
Page 44 of 47
Compiled by:
Regulatory Updates
CUSTOMS & FTP
Notifications/Circulars/News
The Central Government has specified the requirement for
obtaining security in the form of Bank Guarantee from
importers for the purpose of transit of goods within the
bonded area as well as storage of sensitive and non-sensitive
goods in the bonded warehouse on the basis of period of
storage. No. 21/2016-Customs, dated 31 May, 2016
The Central Government has introduced the procedure for
filing of ex-bond Bill of Entry (BoE) through Indian Custom EDI
System post that the bond officer shall verify, and permit the
clearance of goods from the warehouse for home
consumption. No. 22/2016-Customs, dated 31 May, 2016
The Central Government has clarified that the importer shall
be required to pay interest for storage of goods beyond the
specified period at the time of ex-bonding of goods from the
warehouse.No. 23/2016-Customs, dated 1 June, 2016
The Central Government has clarified that the importer will
be required to furnish a solvency certificate from a scheduled
bank with value equivalent to the duty involved on the goods
proposed to be stored in private bonded warehouse. However,
EOUs/ EHTP/ STPI units, Central Government, State
Government or a Union territory administration or their
undertakings are not required to file such certificate.
No. 24/2016-Customs, dated 2 June, 2016
The Central Government has extended the levy of antidumping duty on imports of Polytetrafluoroethylene, falling
under CTH 3904 61 00 of Chapter 39 of CTA, originating in or
exported from Russia, for a period of five years from 6June,
2016. - No. 23/2016-Customs (ADD), dated 6 June, 2016
The Central Government has extended the levy of antidumping duty on import of Pentaerythritol, falling under
Chapter 29 of CTA, originating in or exported from the
Peoples Republic of China, up to 13 June, 2017.
No. 26/2016-Customs (ADD), dated 13 June, 2016
Case Law
The Calcutta High Court held that Hollow Fiber Dialyzer and
Blood Tubing Line were classifiable under Customs Tariff
Heading (CTH) 9018 90 31 pertaining to renal dialysis
equipment (artificial kidney, kidney machine and dialyzer)
instead of CTH 8421 29 00 pertaining to filtering or purifying
machinery and apparatus for gases. It held that when a
specific entry was available for classification, goods could not
be classified under a general entry.
Sanwar Agarwal v.CC (2016 (336) ELT 42)
The Supreme Court held that spectacle lenses were
classifiable as finished spectacle lenses under CTH 9001 40
90 and 9001 50 00 and not as semi-finished spectacle lenses
under CTH 9001 90 90 merely because the spectacle lenses
were finished post customisation as per the customers
prescription.- Essilor India Pvt Ltdv.CC (2016-TIOL-87-SC-CUS)
The Chennai Tribunal held that if Maximum Retail Price (MRP)
declared in one BoE was accepted, then MRP of same goods
imported in another BoE at the same time could not be
rejected, unless there was cogent evidence of undervaluation.
Simla Trading Corporation v.CC (2016 (335) ELT 481)
CS Abhishek Bharadwaj A.B.

Partner, AAA & Co, Bengaluru
csabhishekbharadwaj@gmail.com
The Kolkata Tribunal held that, for determination of export

duty, it was not permissible to consider the Free on Board
price of export goods as cum-duty price.
CC v.Sesa Goa Ltd (2016 (335) ELT 745)
The Mumbai Tribunal held that royalty for transfer of
technical information and know-how for production of goods
could not be included in the value of imported raw material if
there was no restriction in the import agreement to purchase
raw material necessarily from a related overseas supplier.
Schenectady Herdillia Ltd v.CC (2016 (335) ELT 525)
The Mumbai Tribunal held that if the benefit under any
notification had not been passed to an importer due to
malfunctioning of the EDI system, then refund of such excess
duty paid by the importer could not be denied merely for the
reason that the assessment of BoE was not challenged by the
importer.-Steel Authority of India v.CC (2016 (336) ELT 95)
The Supreme Court held that no customs duty was payable in
case the importer received the goods in a completely
unsuitable or damaged form, which could not be put to any
further use. - CC v.Bakelite Hylam Ltd (2016 (335) ELT 673)
The Chennai Tribunal held that the departmental authority
could not raise a new ground before the Tribunal that had not
been placed before adjudicating authorities or lower
appellate authorities.
CC v. Kwang Sung Brake India Pvt Ltd (2016 (335) ELT 520)
The Delhi High Court held that the authorities could not
continue to retain seized goods without issuing a SCN within
the statutory time-limit, particularly when the importer had
already deposited the custom duty leviable thereon.
Sai Incorporation v.PR Commissioner of Customs (Import)
(2016-TIOL-1118-HC-DEL-CUS)
The Mumbai Tribunal held that the duty paid on import of
goods that were re-exported after being found unsuitable for
use should be refunded by re-crediting the duty in Duty
Entitlement Pass Book (DEPB) Scheme, even if import and
export were from different ports.
J K Industries v.CC(2016-TIOL-1360-MUM)
The Mumbai Tribunal held that in case the importer was a
100% EOU, there was no need to interfere with the Special
Valuation Branch Order accepting value of imported goods
even when there was a payment of technical assistance fee,
since there was no impact on customs duty payment due to
increase in valuation.
CC v.ASB International Pvt. Ltd. (2016-TIOL-1392-MUM)
The Chennai Tribunal held that conversion of free shipping
bills into drawback shipping bills was allowed, even after
three months from the date of export, subject to verification
of documentary evidence, since there was no time prescribed
for amendment under Section 149 of Customs Act.
Global Calcium Pvt Ltd v. CC(2016-TIOL-1290-MUM)
The Ahmedabad Tribunal held that if the excise duty had been
discharged on the finished product on clearances made by an
EOU to Domestic Tariff Area in excess of the permissible limit,
Page 45 of 47
the customs duty could not be levied on the imported raw

material used in the manufacture by EOU.
CCE v.Cupro Recyline Pvt Ltd. (2016 (335) ELT 753)
The Supreme Court of India held that the benefits of DEPB
scheme were available from the date of notification and not
from the date of Circular issued by Central Board of Excise &
Customs since the latter was only administrative in nature.
Shell Exports (Kandla) v. UoI (2016 (336) ELT 10 (S.C.))
Ministry of Corporate Affairs

Notifications/Circulars/News
MCA issues Companies (Acceptance of Deposits) Amendment

Rules, 2016: On 29th June 2016 MCA has amended and
expanded the list of exempted Deposits under the Companies
(Acceptance of Deposit) Rules, 2014, gist of key changes are
as below:
Amendment in the existing Rule 2(1)(c):
Under existing sub-clause (ix), compulsory convertible

bonds or debentures convertible within a period of five
years are included in exempt Deposits. Now,
compulsorily convertible bonds or debentures convertible
within a period of ten years are included in exempt
Deposits.
Under sub-clause (xi), any non-interest bearing amount
received or held in trust. The word or has been replaced
with and to clarify that any non-interest bearing amount
held in trust is exempt from the ambit of Deposit.
Amendment in the existing Rule 3 specifying limits for
acceptance of deposits from members:
In sub rule (3), limits for accepting or renewing any

deposit from members of a public company has been
increased from 25% of the aggregate of the paid-up
share capital and free reserves of the company to 35%.
For private companies, a separate limit has been
prescribed for acceptance of deposits from its members
Private companies may accept from its members, deposits
not exceeding 100% of the aggregate of the paid up share
capital, free reserves and securities premium account.
For public companies, securities premium account is not
available in calculating such limits.
Further, the company has to file details of monies so
accepted from members to the Registrar in the manner as
may be prescribed.
Amendment in the existing Rule 4:
Advertisement inviting deposits has to be posted on the

website of the company.
Advertisement in Form DTP-1 now contains a Disclaimer
paragraph.
Amendment in the existing Rule 5
An exemption has been granted from obtaining deposit

insurance till March 31, 2017, or till the availability of a
deposit insurance product, whichever is earlier.
New Rule 16A Disclosure in Notes to the Financial
Statement
In case of private companies - money received from the

Directors and their relatives.
In case of other companies - money received from the

Director.
Companies (Acceptance of Deposits) Amendment Rules, 2016
No.1/8/2013-CL-V dated 29th June 2016
Companies (Appointment and Remuneration of Managerial

Personnel) Amendment Rules, 2016 Amended
On 30th June 2016, MCA has issued captioned amendment
largely containing following two changes:
eform MR 1 is not required to be filed for appointment of
CEO, CS & CFO.
Limit on disclosure requirements in Board's report relating
to employees remuneration is revised as follows:
Disclosures in Board's report by a Listed Company

relating to comparision of remuneration of Directors
and KMP to company's performance have been
substantially reduced
Board Report to state the name of top 10 employees

in terms of remuneration drawn and
Board Report to provide details of employees whose

salary is Rs 1 Crore 02 lakh p.a. / Rs 8.5 lacs p.m.
(instead of employees whose salary is Rs 60 lakhs p.a.
/ Rs 5 lakhs p.m.).
No. 1/5/2013 CL-V dated 30th June 2016
Appointment of Auditors
In the Companies Act, 2013, in section 139, in sub-section (2),
for the third proviso, the following proviso shall be
substituted, namely:"Provided also that every company, existing on or before the
commencement of this Act which is required to comply with
the provisions of this sub-section, shall comply with
requirements of this sub-section within a period which shall
not be later than the date of the first annual general meeting
of the company held, within the period specified under subsection (1) of section 96, after three years from the date of
commencement of this Act.".
Appointment of auditors - Companies (Removal of
Difficulties) Third Order, 2016 No. 1/33/2013-CL-V dated
30th June 2016
CENVAT
Case Law
The Mumbai Tribunal held that the process of cutting/ slitting

of cold rolled or hot rolled coils/ plates of various lengths,
widths and thicknesses into coils of specific widths and cutting
them into sheets after de-coiling amounted to manufacture.
Jindal StainlessSteelway Ltd. v.CCE (2016 (335) ELT 57)
The Ahmedabad Tribunal held that Dew Drop Process
undertakenfor enhancing the attributes and attractiveness of
fabric did not amount to manufacture.
Shivam Textiles v.CCE (2016 (335) ELT 66)
The Delhi Tribunal held that CENVAT creditwas admissible on
a reconstructed bill of entry attested by Customs authority
when the original copy was lost.
Balkrishna Industries Ltd v.CCE (2016 (335) ELT 559)
The Delhi/ Mumbai Tribunal held that a demand of 5% of the
sale price was not applicable in cases where the exempted
product emerged as an unavoidable waste or by-product
during the course of manufacture of the dutiable product.
N.S. Ispat Pvt. Ltd. v.CCE (2016 (335) ELT 540) & A R
Sulphonates Pvt Ltd vCCE (2016-TIOL-835-CESTAT-MUM)
The Ahmedabad Tribunal held that Rule 16 of the Central
Excise Rules did not require maintenance of any separate
records for availing credit on returned goods, and that credit
could not be denied when the assessee had recorded the
receipt of returned goods in RG-1 register.
CCE&ST v.V.V.F Ltd (2016 (335) ELT 485)
Page 46 of 47
The Delhi Tribunal held that loss of a certain quantity of coal

due to removal of ash content, mud and fines during the coal
washing process would be considered as arising during the
course of manufacture of final product and that CENVAT
credit was admissible on such process loss.
Real Ispat and Power Ltd v. CCE (2016-TIOL-805-CESTAT-DEL)
The Kolkata Tribunal held that CENVAT credit was admissible
on items, namely, rails, sleepers, joints, crossings, etc. used
inside the factory in the railway network for transportation of
raw materials, semi-finished, finished goods and also in the
overhead cranes.
Tata Steel Ltd v.CCE (2016-TIOL-881-CESTAT-KOL)
The Allahabad Tribunal held that CENVAT credit was
admissible on services received at retail outlets from where
the excisable goods were sold after clearance from the
factory. - Sports and Leisure Apparel Ltd v.CCCE&ST (2016TIOL-887-CESTAT-ALL)
Electrical energy was neither an excisable goods nor an
exempted goods, hence demand for amount of 10% of the sale
price of electricity was not sustainable in law.- Bajaj
Hindustan Ltd v.CCE (2016-TIOL-902-CESTAT-ALL)
Supplementary invoice was issued only for the value and duty
difference in respect of the goods that had already been
supplied to the appellant. Therefore, it was not correct to say
that no goods were supplied under the supplementary invoice,
and credit was admissible on such supplementary invoice.
Bunty Foods India v.CCE (2016-TIOL-915-CESTAT-MUM)
The Supreme Court held that extended period of limitation
could not be invoked when the assessee entertained a bona
fide belief of non-excisability of products and there were
contrary judgements of the Tribunal on said products.
CCE v.Kolety Gum Industries (2016 (335) ELT 581)
The Delhi Tribunal held that provision of unjust enrichment
was not attracted when the discount amount had been passed
to the customer through credit note duly certified by a
Chartered Accountant, and the refund arising from the
finalisation of assessment was shown as claim receivable
under the head Loans & Advance in the books of account.
Saint GobainGyproc India Ltd v.CCE (2016 (335) ELT 120)
In the revision petition filed before the Department of
Revenue the Government of India held that non preparation of
ARE-1 could not be treated as minor or technical procedural
lapse for the purpose of availing the benefit of duty free
clearance of export goods.-N.V.R. Forgings (2016(335)ELT794)
GST (VAT, Sales Tax and Entry Tax)

Case Laws
The Maharashtra Sales Tax Tribunal held that Transferable

Development Rights received towards construction of
buildings and tenements were liable to VAT. The Tribunal
observed that under the Maharashtra VAT Act, a sale covered
not just the sale of goods for cash or deferred payment, but
also for other valuable consideration. Therefore, the
assessing authority should compute the value of goods
involved in the execution of works contract for levy of VAT.
M/s. Sumer Corporation v.the State of Maharashtra [TS-244Tribunal-2016-VAT]
Service Tax
Notifications/Circulars
Services provided by a senior advocate by way of legal
services to a person other than a business entity and to a
business entity with a turnover up to INR 1,000,000 in the

preceding financial year have been exempted.
No. 32/2016-Service Tax dated 6 June, 2016
Representational services provided by a senior advocate
before any court, tribunal or authority have been brought
under reverse charge mechanism.
No. 33-34/2016-Service Tax dated 6 June, 2016
KKC has been exempted in cases where the invoice for the
service was issued on or before 31 May, 2016, if the provision
of service was completed on or before 31 May, 2016.
Service tax on transport of goods by vessel from outside India
up to a customs station in India has been exempted where
invoice was issued on or before 31 May, 2016, if import
manifest or import report required to be delivered under
Customs Act has been delivered on or before 31 May, 2016,
and service provider or recipient produces Customs-certified
copy of such import manifest or import report.
CBEC has issued clarifications on scheme of partial payment of
refund claims of accumulated CENVAT credit by service
providers as follows:
Statutory auditor for issue of certificate refers to an

auditor who prepares the financial statements under the
Companies Act, 2013, and it cannot be issued by a Cost
and Management Accountant or a Company Secretary.
The certificate of the statutory auditor/ Chartered

Accountant has to be provided in the format prescribed.
General disclaimers will result in rejection of the
certificate. As long as the four points to be certified as
per circular no. 187 are present, the certificate should
not be rejected on grounds of disclaimers that have to be
provided owing to the guidance notes issued by the
Institute of Chartered Accountants of India.
No. 195/05/2016-Service Tax dated 15 June, 2016
Case Laws
The Delhi High Court held that no service tax could be levied
on sale of under-construction property in the absence of any
provision under the law or under any rules to determine the
value of taxable services in composite contracts involving sale
of land. The Court held that grant of abatement by
notification could not overcome the lack of statutory
provisions to ascertain the value of taxable services.
Suresh Kumar Bansal v.Union of India and ors. (TS-231-HC2016(DEL)-ST)
The Delhi High Court held that rule 5A(2) of the service tax
rules, which authorised the service tax authorities to seek
production of documents, was ultra vires the Finance Act,
1994 (that governs levy of service tax) and struck it down. The
Court also held that verification as mentioned in Finance Act,
1994 could not be construed as audit of accounts of assessee.
Mega Cabs Pvt. Ltd. v.Union of India and Ors. (2016-TIOL1061-HC-DEL-ST)
The Hyderabad Tribunal held that there was no requirement
to reverse common CENVAT credits, when services were
provided in the State of Jammu and Kashmir as well as in rest
of the country.- Ramboll IMIsoft Pvt. Ltd. v.CC, CE&ST (2016TIOL-1536-CESTAT-HYD)
The Mumbai Tribunal held that once the authorities had
audited the records of the assessee and no objection was
taken in the audit, the demand raised by invoking the
extended period was unsustainable. - Sanjay Automobile
Engineering Pvt. Ltd. v.CCEx (2016-TIOL-1314-CESTAT-MUM)
Page 47 of 47

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It is indeed a proud moment to note that the Mysore Chapter of the

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