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Relief to Tata Sons as NCLT rejects Mistry firms’ contempt plea

The National Company Law Tribunal (NCLT) on Wednesday dismissed a contempt petition filed by two Cyrus Mistry family companies against Tata Sons and its directors, alleging violation of NCLT directives in taking steps to remove him from the board of Tata Sons.

The Bench, however, gave liberty to the Mistry family companies to file an affidavit within three days on the issue of Tata Sons holding extraordinary general meeting (EGM) on February 6.

Pronouncing the operative part of the order, a division Bench of NCLT said, “The contempt petition is dismissed.” The Bench was of the view that the action of Tata Sons did not amount to contempt of court.

In their petition, Cyrus Investments and Sterling Investment had also sought injunction against the Tata Sons barring them from “convening or holding of the EGM scheduled for February 6, 2017, or any other date or from transacting any business thereat.”

Though the contempt plea was dismissed, the Bench gave liberty to Mistry family companies to file an affidavit within three days on the issue of Tata Sons holding EGM on February 6.

Tata Sons was also asked to file a rejoinder, if any, three days thereafter.

NCLT kept this matter for hearing on January 31 and February 1 when the main petition filed earlier by the two Mistry companies against Tata Sons would be heard.

The earlier petition had challenged India company news Mistry’s removal as the chairman of Tata Sons alleging bad practices, oppression and mismanagement in the holding company.

NCLT, on December 22 last year, had refused interim relief and posted the main petition for hearing on January 31 and February 1. Today, the tribunal clubbed the issue of holding EGM of February 6 along with the hearing of the main petition.

Meanwhile, the Mistry companies filed a contempt plea with NCLT against Tata Sons alleging that the respondents “committed a breach” of an NCLT order of December 22 by giving a special notice on January 3, 2017, for removal of Mistry as a director of the board of Tata Sons, “in clear violation of the order”.

It sought punishment for Ratan Tata, other directors of Tata Sons and trustees of Sir Ratan Tata Trust and Sir Dorabjee Trust – N A Soonawala, R K Krishnakumar and R Venkatramana – under the Contempt of Court Act, which provides for simple imprisonment for a term which may extend to six months or fine of Rs 2,000 or both.

Last October, Tata Sons removed Mistry as its Chairman, nearly four years after he took over the reins of the over $100 billion salt-to-software conglomerate.

A Sundaram, counsel for Mistry’s family companies, had argued that removal of Mistry as a director of Tata Sons could have waited.

He contended that by calling an EGM to remove Mistry as a director of the company, Tata Sons and others had committed direct violation of the December 22 tribunal order and its action amounted to “wilful disobedience” of NCLT’s order in an earlier petition filed by Mistry’s family owned companies against Tata Sons.

Sundaram further argued that the move to remove Mistry was against the spirit of the NCLT order which had earlier stated that the respondents will not “initiate any action or proceedings over this subject matter pending disposal of the company petition.

The contempt petition contended that the move of Tata Sons to call an EGM on February 6 to remove Mistry as a director violates the undertaking given by its lawyers to NCLT, which heard an earlier petition filed by the investment firms on December 22.

The lawyers had assured the Tribunal that no further action would be taken in this matter until the petition was finally heard and disposed of, said the contempt petition.

Abhishek Manu Singhvi, counsel for Tata Sons, said the respondents – Tata Sons and its directors – had not committed any contempt of NCLT by calling an EGM to remove Mistry.

Singhvi had argued that Tata Sons had not given any specific undertaking to the tribunal earlier that Mistry would not be removed as director from the company. Hence, there was no contempt committed by Tata Sons and others.

The Tata Sons’ lawyer further argued that there was nothing implicit in the order of NCLT of December 22 that Mistry would not be removed.

He had said that Tata Sons had no option but to remove Mistry from the board because he violated his fiduciary duty to the shareholders by leaking confidential information, which was damaging to Tata companies.

He argued that Tata Sons was seeking Mistry’s removal as a director as he was acting in a manner detrimental to the company.

However, the NCLT dismissed the contempt petition of Mistry’s family owned companies, saying it does not amount to contempt of court.

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Rs 9.2 lakh cr remonetised till date: Urjit Patel

The Reserve Bank of India (RBI) had infused around 63% of the total banned currency notes after demonetisation, its Governor Urjit Patel told a parliamentary panel on Wednesday.

According to sources, the RBI governor, who briefed the parliamentary standing committee on finance on demonetisation, said the central bank had infused new currency notes worth around Rs 9.2 lakh crore into the system.

Currency notes worth around Rs 14.5 lakh crore were withdrawn when the Centre announced demonetisation on November 8, 2016.

Most members in the finance committee, including former Prime Minister Manmohan Singh and panel chairman M Veerappa Moily, spoke in favour of protecting the autonomy of the RBI as an institution but said that accountability from its governor must be sought as the note ban had impacted a large of number of people.

Though the members found Patel’s explanation lucid, they were miffed that he did not answer queries like how much money had been deposited in banks after demonetisation or by when the cash supply situation would ease across the country.

“Patel came across as a professional in his brief… but we had a lot of issues to raise,” said an Opposition member.

The finance committee meeting was significant as key finance ministry officials, including Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia and Financial Services Secretary Anjuli Chib Duggal also briefed the panel on monetary policy, including the note ban.

Representatives of the Indian Banks’ Association also briefed the panel.

As members sought to know if the government forced the RBI to suggest the note ban, both Das and Patel replied that the government had been discussing the issue with the central bank since early 2016.

However, while Das said such consultations started in May, Patel said discussions were initiated in January.

When a member asked why a joint secretary of the finance ministry had been deployed at the RBI to monitor the currency situation after demonetisation, Patel had no reply.

Sources said both the briefings were inconclusive and would resume after the first half of the Budget session of Parliament ended on February 9.

According to sources, the Opposition members asked a lot of questions related to the suffering of the people, the economy, job losses and the over 100 deaths attributed to the note ban.

In response to queries related to the preparedness of the banking system to deal with the impact of the note ban, RBI Deputy Governor S S Mundra said all the automated teller machines (around 200,000) were functional now.

Congress member Digvijaya Singh wanted a timeline on lifting of cash withdrawal limits.

“Patel could not answer how much money India business news had come back into the system and by when banks’ operations would be normal. RBI officials were defensive on demonetisation,” another Opposition lawmaker said.

How Manmohan Singh came to Patel’s rescue

Former Prime Minister Mamnohan Singh, also a former RBI governor, saved incumbent central bank chief Urjit Patel from a tricky query from an Opposition member. Sources said when a member asked Patel if there would be chaos if the government removed the current cash withdrawal limits, Singh said the RBI chief need not take that query. Sources said Singh is a reputed economist and respects other professionals. The former PM also noted that autonomy of the RBI as an institution must be protected. While the Centre recently increased cash withdrawal limits from Rs 4,500 to Rs 10,000 per day from the ATMs, the limits on pulling out money from the banks still remains. Congress has been asking for removal of these caps.

Parliament panel meet: Focal points

* RBI Governor Urjit Patel told a parliamentary panel the central bank has injected 63% of the total banned currency notes since Nov 8 demonetisation

* RBI has infused new currency notes of around Rs 9.2 lakh crore into the system

* Rs 14.5 lakh crore withdrawn from the system due to note ban

* Most panel members favoured protection of RBI’s autonomy

* Economic Affairs Secretary Shaktikanta Das, Financial Services Secretary Anjuly Chib Duggal also briefed the panel, besides representatives of the Indian Banks’ Association

* Both Das and Patel said the government had been discussing note ban with RBI since early-2016

* Officials would again brief the panel after Feb 9

* Opposition members asked questions related to dent in economy, job losses and the over 100 deaths attributed to note ban

* RBI Deputy Governor S S Mundra said all ATMs (around 200,000) are functional till date

Manmohan Singh saves Urjit Patel from grilling by House Panel

Reserve Bank Governor Urjit Patel on Wednesday would not have escaped possible grilling by a parliamentary committee over the demonetisation issue, had former Prime Minister Manmohan Singh not intervened.

Patel, who along with other RBI and finance ministry officials appeared before the Parliamentary Standing Committee on Finance, had to face some tough questions by members, Indian economy news sources in the committee said.

He could not reply to questions on when normalcy would return to the banking system and the quantum of demonetised currency deposited during the 50-day window.

Before the grilling could intensify, Singh, who had made a forceful speech against demonetisation in the Rajya Sabha calling it a “monumental failure and organised loot”, intervened to say that the central bank and the Governor’s position as an institution should be respected.

He should not be made to respond to odd questions, Singh, who himself was RBI Governor once, is believed to have told the Committee.

The former Prime Minister is understood to have told Patel that he need not answer a question put by one of the members relating to non-removal of cash withdrawal restrictions.

Top 5 biggest life insurance myths

There are several misconceptions about life insurance. It is a popular notion that older or married individuals with kids should invest in one, or that the insurance only offers post-death benefit. Here we debunk some of the biggest life insurance myths…

Life insurance policy is critical to any financial planning. Yet it is never prioritized and is often considered complicated to decode. But it is always a good idea to invest in life insurance,Life Insurance more so sooner than later. Especially, since not having one when you need it can be devastating.

While there are quite a few common myths about life insurance, here is a list of the five biggest ones.

Myth 1: Single, without dependents. I don’t need coverage

At the risk of sounding morbid, singles too need enough coverage to cover the costs of personal debts and medical bills. If uninsured, they could leave unpaid expenses for families to deal with. Even if single people are not saddled with such dire situations, it is a good way to leave a legacy to some cause. Also, many policies allow insurers to purchase additional coverage in the future. For example, HDFC Life offers Life Stage Protection – under Life option where the insurer can increase the insurance cover on certain key milestones of life like marriage, child birth without fresh medical test. So, the policy can be continued with changes if and when he or she decides to have a family.

Many employers too provide employees with life insurance. And even if it does seem like enough, what happens when one loses or leaves the job? Many insurance companies offer to convert optional insurance to an individual policy, but it may turn out to be more expensive than purchasing a policy in the long run. It is rather prudent to consider employer-provided insurance as a bonus.

Myth 2: Too young to think about coverage

There is no such thing as too young for life insurance. If you earn a salary, you might as well have insurance. Several independent studies and the Insurance Regulatory and Development Authority of India (IRDAI) observe that the insurance sector is a colossal and growing at a speedy rate. However, although the awareness about life insurance is increasing, the Indian youth is still misinformed about the cost.

Speaking in terms of smart finance, life insurance is financially more economical when opted for at a young age. The price of the policy is based on the age and health of the person being insured. Typically, premiums are less expensive when one is younger and healthier. When say a healthy 25-year old opts for a term policy the premium charges would be a fraction of what he/she would need to invest at later stages of life. Also, there is always a risk of developing a medical condition later on, which can make a policy much more expensive.

Myth 3: Only men need life insurance

While many families are prompt in getting a life insurance policy for the male breadwinner, coverage for the working woman is rarely factored into the financial planning. Most don’t even bother to insure the homemaker as they don’t have financial earnings. What if something were to happen to the lady of the house? Besides the emotional repercussions, the harried head of the family may need to get help to take care of the kids. And that, even in a developing nation like India, can cost a lot of money. Besides, this coverage will also give the father a chance to take time off and help the family adjust to their loss.

Myth 4: Insurance is of no use unless you die

It is critical to understand the type of life insurance that one needs to integrate in the financial plan. Term insurance is a life insurance product offered by an insurance company that offers financial coverage to the policyholder for a specific time period. Endowment plans, unit linked insurance plans (ULIPs), money back and more also cover life for limited term and post that if you survive the term – the plans provide returns unlike a term plan.

One can start by buying a term insurance, since it’s easier on the pocket and later on add other insurance products to the financial portfolio at various instances as and when required. However, the main reason for purchasing insurance is to provide financial protection for your loved ones in your absence; so it shouldn’t be evaluated for returns. Also, it’s crucial to know that insurance policies are tax free.

Myth 5: Better to invest the money rather than lock it up in life insurance of any kind

Everyone, irrespective of their financial standing, needs life coverage. Solely depending on investments is not wise. It could mean that in case of an untimely death, the investor would leave very little provision for dependents. That would hit the family finances really hard after the depletion of assets.

It is important to think of life insurance as a way out to help in continuing life as usual when something unusual happens, and not as an instrument where money would be locked in for a long period.

Amidst its several offerings, HDFC life offers Additional Protection against Critical Illness where the policyholder is offered a lump sum payout on diagnosis of specified critical illnesses. Under Additional Income Benefit, the company also offers monthly income for 10 years on total permanent disability due to accident.

Illness can befall anyone without any notice, so better to be prepared than ignorant. It’s therefore best to opt to invest in a life insurance policy sooner rather than later.