RBI Releases Development Research Group (DRG) Study on "Municipal Finance in India - An Assessment"

Press Release No: 2007-2008/928, dated 14.1.08: - The Reserve Bank of India (RBI) published a Study entitled "Municipal Finance in India - An Assessment". The Study was undertaken under aegis of the Development Research Group (DRG). The Study attempts to analyse the reasons for differential performance of Urban Local Bodies (ULBs) with respect to fiscal parameters and provision of civil amenities under the Constitution (74th Amendment) Act, 1992 .
The major findings of the Study are summarised below :-
• The Study highlights mismatch between functions and finances of ULBs, which primarily explains the vertical imbalance.
• It is highlighted by the study that Out of 18 functions to be performed by the municipal bodies in India, less than half have a corresponding financing source.
• According to the Study Own taxes and user charges of the ULBs in India are grossly inadequate to meet the expenditure needs of ULBs.
• The Study highlights that backlog, current and growth needs of infrastructure in cities and towns far exceed the resources at the disposal of the ULBs.
• It is highlighted by the study that a national consensus needs to evolve on a 'municipal finance schedule' for assignment to the ULBs to match the list of functions included in the 12th Schedule of the Constitution.
• It is emphasised by the study the function-finance mapping to ensure that each function to be performed by the ULBs is backed by a corresponding financing source.

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Vitthal Sahakari Sakhar v. Assistant Provident Fund Commissioner, Special Recovery Officer, Aurangabad,....

The Petitioners seek quashing of impugned Order of attachment as well as attachment warrant and consequent panchanama issued by Respondent No. 1, on the ground that it is violative of Article 19(1)(g) of the Constitution of India as well as the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 along with other consequential reliefs. Held: The agreement concerned is an agreement of conducting the business of manufacture of sugar on rental basis for a specific period and it clearly shows that no transfer of the establishment of Gangapur Sahakari Sakhar Karkhana to petitioner Sugar factory is contemplated by virtue of the said agreement. What is affected is an agreement for conducting business to manufacture sugar by crushing sugar-cane. The agreement amounts only to a licence to the petitioners to enter on the immovable property for a specific purpose, without creating either any lease, or any other incident of transfer contemplated under Section 17B of the said Act and, therefore, it must be said that the action between the petitioners and Respondent No. 2 under the impugned agreement cannot be considered as "transfer" within the meaning of Section 17B of the said Act and, therefore, no question would arise to invoke the said provision to fasten the liability of Gangapur Sugar Factory -Respondent No. 2 in respect of payment of provident fund dues prior to the date of agreement between the parties on the petitioners. Therefore, on this point also, the impugned action of attachment of the goods belonging to the petitioners, which were already under pledge with Respondent No. 3 was, void ab initio, illegal, arbitrary and violative of Article 19(1)(g) of the Constitution of India. For the reasons stated above, in view of judges the petition succeeds as the action taken by Respondent No. 1 is illegal and against the principles of natural justice.

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Bombay High Court- Shri P.R. Nair and Ors. v. Union of India and Anr.

Petitioners are workers in Medical college mess run by Central government but are appointed by Mess Committee, which comprises of students as its members and there is no prescribed procedure for the appointment. Hence they cannot be said to be government class IV employee. The Petitioners contend that since the college is run by central government and they have served for a very long time they must be extended the benefit of permanency in service. Held: Reference of a previous Judgment has been followed by the Apex Court in which contractual, temporary employees appointed de hors the rules were held not entitled to regularisation in service even after 14 years and despite the interim Order of the High Court. In this case the Petitioners have not been appointed for any sanctioned vacant post by the Government after following the rules of the Armed Forces otherwise applicable to the Central Government employees. The Petitioners, therefore, cannot be granted any relief.

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Supreme Court- State of Himachal Pradesh v. Paras Ram and Ors.

Respondents faced trial for alleged commission of offences punishable under Sections 436, 447, 427, 147 and 506 of the Indian Penal Code, 1860. The High Court found that there was some delay in lodging the FIR and though large number of people were claimed to have gathered at the spot, the witnesses could not have seen the accused persons. The High Court also found that there was some dispute between the parties and, therefore, the prosecution version was suspect. Accordingly, the accused persons were acquitted. The Appellant-State filed an application for grant of leave. High Court disposed of the application vide one line order "Dismissed", without assigning any reason for the same. Hence, the present appeal. Held: The manner in which appeal against acquittal has been dealt with by the High Court leaves much to be desired. Reasons introduce clarity in an Order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge.

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Supreme Court- Mathania Fabrics v. Commissioner of Central Excise, Jaipur

The appellants were engaged in the processing of cotton fabrics falling under Chapter 52. They claimed to be undertaking the processes of bleaching, mercerising, dyeing, printing, washing, drying and finishing before the fabrics were packed and cleared. Held, in any event it was submitted that when the position in law was not clear and the authorities had to issue clarification, Section 11A of Act cannot be invoked. Tribunal after referring to the definition of manufacture under Section 2(f) of the Act held, that the use of power in the operation of stirrer and electric motor for lifting water and caustic soda would amount to manufacture with the aid of power. Therefore, factually the stand that there was no use of power is unsustainable. Coming to the period of limitation the five years period has to be reckoned backward from 8th February 1989 when the show cause notice was issued. The Commissioner shall work out the liability and the penalty amount has to be equivalent to the amount of tax demand.

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International Legal Cases and News

• Avron J. Arave, Worden v. Maxwell Hoffman
  Maxwell Hoffman, the respondent was convicted of first-degree murder and sentenced to death. He had requested from the federal for habeas relief on the grounds that his counsel had been ineffective during both pre-trial plea-bargaining and the sentencing phase of his trial. So the court on finding the counsel ineffective on his client's trial told State of Idaho to resentence him. Then the convicted during the plea-bargaining requested to withdraw his claim of ineffective assistance of counsel and cancel his appeal so that he may proceed with the resentencing ordered by the District Court. The State therefore agrees that the instant motion to vacate and dismiss with prejudice moots Hoffman's claim of ineffective assistance of counsel during plea negotiations and asks that the motion of respondents be granted because his claim for ineffective assistance of counsel during pre-trial plea-bargaining is moot. The case was remanded to the United States Court of Appeals for the Ninth Circuit with directions that it instructs the United States District Court for the District of Idaho to dismiss the relevant claim with prejudice.
  
• CSX Transport Action, INC .v Georgia State Board of Equalization Et al.
  For tax purposes country board evaluates the commercial and industrial property under Georgia law, but public utilities such as petitioner railroad (CSX) are initially valued by the State. In 2001 the state Georgia used a different method for valuation to determine that the market value of CSX's in-state real property had increased 47 percent, resulting in a significantly higher ad valorem tax levy. CSX filed suit that state was barred to asses rail transportation property at a value that has a higher ratio to the property's true market value. CSX's property was taxed at a ratio of assessed-to-market value considerably more than 5 percent greater than the same ratio for the other in-state property. District Court declared that the Georgia had not discriminated against CSX because the State had used widely accepted valuation methods to arrive at its 2002 estimate of true market value. Held that the state act allows a railroad to attempt to show that state methods for determining the value of railroad property result in a discriminatory determination of true market value.

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RBI's CAB's E-Portal for ICT Based Financial Inclusion Launched

Press Release No : 2007-2008/829 Dated 20.12.2007: Reserve Bank of India has formally launched an e-portal on information and communication technology (ICT) enabled financial inclusion efforts of banks. The e-portal is envisaged to be a platform for sharing of knowledge and experience of banks to harness the power of information and communication technology (ICT) for reaching out to the unbanked population and, therefore, may have the potential to aid in leapfrogging the extension of formal financial services to the hitherto unserved population.

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