SAOL's reported violation of Sec 591; Companies Act, 1956

Certain sections of Media have reported that SAOL has violated Sec 591 of The Companies Act, 1956. This is not the time for us to panic rather to understand the following facts about this section and implication of its violation by any company of foreign origin:




Companies Act 1956-Part XI, Companies incorporated outside India (Section 591-608 ) 591 Application of sections 592 to 602 to foreign companies.




Sections 592 to 602, both inclusive, shall apply to all foreign companies, that is to say, companies falling under the following two classes, namely:-




a). companies incorporated outside India which, after the commencement of this Act, establishes a place of business within India; and


b). companies incorporated outside India which have, before the commencement of this Act, established a place of business within India and continue to have an established place of business within India at the commencement of this Act.


To Read Section 592 to 597 and again from Section 599 to 602 please click here. These are various sections which are included in Sec 591.




Our major focus is on Section 598 and Section 599 which deals with penalty for violation.


598 Penalties.
If any foreign company fails to comply with any of the foregoing provisions of this Part, the company, and every officer or agent of the company who is in default, shall be punishable with fine which may extend to ten thousand rupees, and in the case of a continuing offence, with an additional fine which may extend to one thousand rupees for every day during which the default continues.




599 Company's failure to comply with Part not to affect Its liability under contracts, etc.
Any failure by a foreign company to comply with any of the foregoing provisions of this Part shall not affect the validity of any contract, dealing or transaction entered into by the company or its liability to be sued in respect thereof; but the company shall not be entitled to bring any suit, claim any set off, make any counter-claim or institute any legal proceeding in respect of any such contract, dealing or transaction, until it has complied with the provisions of this Part.




NOTE: After going through sec 598 and sec 599 it is understandable clearly that there is nothing to be worried about as far as the Permanent Establishment(PE) of SAOL is concerned for which the Company is putting an unprecedented fight. We are not sure whether the Company has violated this section or not, but even if any foreign Company violates this section, the penalty is only in terms of fine (sec 598) and other contract related (covered by sec 599). If we see the penalties in relation with the PE of Speak Asia, it seems that it is not going to be hampered. So let us not draw any conclusion and wait for the final nod from Govt. Of India.

PNP 1 WPL1365-14.7.sxw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGNAL CIVIL JURISDICTION
WRIT PETITION (LODG.) NO.1365 OF 2011
Speak Asia Online Pte Limited and others ..Petitioners.
versus
Reserve Bank of India ..Respondent.
.....
Mr. Iqbal Chagla, Senior Advocate with Mr. Janak Dwarkadas, Senior
Advocate with Mr. Zal Andhyarujina, Ms. Jyoti Singh and Ms. Shruti
Sardesai i/b Phoenix Legal for the Petitioners.
Mr. Shyam Mehta with Mr. Mihir Mody and Ms. Ludnn Crasto i/b
M/s. K. Ashar & Co. for the Respondent.
......
CORAM : DR.D.Y.CHANDRACHUD &
ANOOP V. MOHTA, JJ.
14 July 2011.
P.C. :
1. In these proceedings the Petitioners question the legality of a
circular issued on 23 May 2011 by the Reserve Bank of India to the
chairpersons of scheduled commercial banks. The circular begins
with a factual background of certain circumstances which were
brought to the notice of the bank in relation to the activities of multi
level marketing companies, some of them based in Singapore which
were operating in India through agents who purported to conduct
online surveys. The circular sets out that the typical modus operandi
is to ask prospective customers to deposit an amount in a designated
PNP 2 WPL1365-14.7.sxw
account to gain access to a portal and password and download a
survey form. For every form filled in and uploaded a certain payment
is made and those who have filled in surveys have to multiply the
users to get back their deposits. The Reserve Bank has drawn focus
on the fact that the agents are opening accounts with various banks
and have collected large sums of money which proceeds are
aggregated into a central pooling account and remitted overseas as
subscription charges. On this basis, the Reserve Bank has formed an
opinion (a prima facie opinion as counsel for the Reserve Bank
submits) that such schemes are akin to money circulation schemes in
respect of which authorised dealers should not allow remittances to
the operators of such schemes. The bank has also taken the view
that money circulation schemes are banned under the Prize Chits and
Money Circulation Schemes (Banning) Act, 1978. On this basis the
following directions were issued to the scheduled banks :
In view of the above, we advise that banks “ should be more
careful in opening and operating accounts for such schemes
specifically the type of business and inherent risk associated
with such activity. Further, we advise that bank/s will be held
responsible for losses incurred by customers by way of deposits
in / remittances from such accounts if they are found to be in
violation of regulations, KYC/ AML and/or other regulatory /
statutory requirements. Banks are advised to be extra careful
and may also improve their existing KYC/ AML drill and
transaction sanctity to examine the business practices of
prospective customers so as to ensure that no unauthorized/
illegal activity is being carried out. Existing accounts may be
reviewed to ascertain and ensure that these are not related to
unauthorized / prohibited / illegal schemes. Further, adherence
to requirements under FEMA 1999, other applicable statutory/
regulatory requirements and KYC/AML compliance in the
strictest form needs to be ensured. Failure to adhere to the
regulatory restrictions will invite supervisory action.”
PNP 3 WPL1365-14.7.sxw
2. Counsel appearing on behalf of the Petitioners submitted that if
the bank were to furnish an opportunity of being heard to the
Petitioners, they would have been in a position to dispute the
correctness of the facts on the basis of which action has been taken
by issuing the circular in question. On the other hand, it has been
submitted on behalf of the Reserve Bank that the directions are
relatable to powers vested in the bank under Section 35 A of the
Banking Regulation Act, 1949 and Section 11(1) of the Foreign
Exchange Management Act 1999. Moreover, it has been submitted
that at present investigations are being conducted by the Directorate
of Enforcement, the Registrar of Companies and by the law enforcing
authorities in several states in respects of the activities of the
Petitioners. The Reserve Bank, it has been submitted, had formed a
prima facie view which is reflected in paragraph 2 of the impugned
circular and has by its directions ensured that pending the
completion of the investigation remittances do not proceed outside
the country.
3. Section 35A of the Banking Regulation Act 1949 empowers the
Reserve Bank to issue directions in the public interest, and in the
interest of banking policy to prevent the affairs of any banking
company being conducted in a manner detrimental to the interests of
the depositors; or in a manner prejudicial to the interests of the
banking company; or to secure the proper management of the
banking company. Under sub section (2) the Reserve Bank is
empowered on a representation made to it or on its motion to
modify or cancel any direction issued under sub section (1). Section
11 of the Foreign Exchange Management Act 1999 empowers the
PNP 4 WPL1365-14.7.sxw
Reserve Bank of India for the purpose of securing compliance with
the provisions of the Act and of any rules, regulations, notifications or
directions, to give to authorised persons any direction in regard to
the making of payment or the doing or desisting from doing any act
relating to foreign exchange or foreign security. Under Section
10(4), an authorized person is required in all his dealings in foreign
exchange to comply with such general or special directions or orders
as the Reserve Bank may issue from time to time.
4. These powers have been vested in the Reserve Bank as the
custodian of public interest in order to ensure that the operation of
the banking system does not result in detriment to interest of the
public and to secure proper regulation, in accordance with law. The
powers of the Reserve Bank have been cast in broad terms and
cannot be constricted. As expert body the Bank is entitled to issue
such directions as it has in the present case. The Bank is
legitimately entitled to protect the integrity of the financial set up
pending an investigation. Neither an investigation nor the directions
issued by the Reserve Bank to facilitate it should be obstructed or
curtailed. The Bank has in our view acted within its statutory power
to caution against remittances abroad in the case at hand.
The Reserve Bank may in certain situations be required to act with
urgency such as where it seeks to prevent a remittance flowing
abroad from out of the country. Obviously in such cases, there could
be no requirement of a predecisional
hearing since the grant of such
hearing may well defeat the object underlying the conferment of
power on the Reserve Bank of India.
PNP 5 WPL1365-14.7.sxw
5. The Court has been informed by counsel for the Reserve Bank
of India that the Bank has formed a prima facie opinion based on
the facts which have come to its notice. Moreover, counsel appearing
on behalf of Reserve Bank of India has stated that there was no
direction by the Reserve Bank to freeze the bank accounts of the
Petitioners and it would appear from the averments contained in
paragraph 7(xi) of the Petition that a debit freeze was placed by the
respective banks on account of the investigations which were
conducted by the service tax and income tax department.
6. Be that as it may, we are of the view that the interference of
this Court is not warranted. However, in the interests of fairness an
opportunity should be granted to the Petitioners to submit a
representation to the Reserve Bank. Sub section (2) of Section 35A of
the Banking Regulation Act, 1949 does in fact contemplate the making
of such a representation. From the record before the Court it would
appear that the Petitioners had sought an appointment by a letter
dated 17 May 2011 and pursuant to the request made to the bank a
communication was addressed to the Petitioners on 16 June 2011
seeking a disclosure of information. The Petitioners responded on 20
June 2011, but the matter appears to have rested there. We
accordingly dispose of this Petition by permitting the Petitioners to
place a representation on the record of the Chief General Manager of
the Reserve Bank of India who had issued the circular dated 23 May
2011. In the event that such a representation is made, we would
expect the Reserve Bank of India to take a decision in accordance
with law. The Reserve Bank of India may furnish an opportunity to
the Petitioners to explain the contents of the representation in a
PNP 6 WPL1365-14.7.sxw
meeting which may be convened for that purpose.
The Petition is accordingly disposed of.
(Dr. D.Y. Chandrachud, J.)
(Anoop V. Mohta J.)

स्पीक एशिया: सुप्रीम कोर्ट जाने की तैयारी में प्रबंधन

तमाम तरह की शिकायतों और याचिकाओं का सामना कर रहे स्पीक एशिया प्रबंधन का धैर्य अब टूटने लगा है। शायद अब वह चाहता है कि जो भी जल्द ही हो जाए और इसीलिए सुप्रीम कोर्ट का दरवाजा खटखटाने पर विचार कर रहा है।

स्पीक एशिया के खिलाफ चल रहीं तमाम जाचों के मामले में प्रबंधन लगातार अपने पेनलिस्टों को यह बताता रहा कि अगले कुछ हफ्तों में सबकुछ ठीक हो जाएगा, लेकिन सबकुछ ठीक होता दिखाई नहीं दे रहा। सरकार की जांच प्रक्रियाएं लगातार लम्बी होती चली जा रहीं हैं, जिसके कारण प्रबंधन द्वारा किए गए तमाम वादे भी पूरे नहीं हो पा रहे हैं और अब प्रबंधन कोई नई तारीख देने की स्थिति में भी नहीं है। 

अपनी पूंजी लगा चुके स्पीक एशिया के पेनलिस्टों लगातार दबाव बना रहे हैं कि कारोबार फिर से वैसा ही शुरू करो जैसा कि पहले था। हम प्रोडक्ट खरीदने के मूड में नहीं है। सर्वे कराओ और पैसा भेजो। जल्दी करो, हम इंतजार नहीं कर सकते। यह सबकुछ अपनी जगह वाजिव भी है क्योंकि कंपनी प्रबंधन को क्या बर्दाश्त करना पड़ रहा है इससे पनलिस्ट एक सीमा तक ही सुन सकता है, लेकिन अपनी इनकम को ब्लॉक करके साथ निभाने के लिए वह तैयार नहीं है। हालांकि उनके पास कोई आप्शन भी नहीं है, लेकिन गुस्सा बढ़ता जा रहा है और यह गुस्सा लोगोंं को उनके पैसे दिलवाए या न दिलवाए, हंगामा जरूर करवा सकता है। 

प्रबंधन इस बात को बहुत अच्छी तरह से जानता है और वह किसी भी कीमत पर अपने पेनलिस्टों की नाराजगी मोल लेने के मूड में नहीं है। सूत्र बताते हैं क प्रबंधन अंतिम फैसले के लिए सुप्रीम कोर्ट का दरवाजा खटखटाने की योजना पर विचार कर रहा है। अपने वकीलों एवं सलहाकारों से बात की जा रही है। वे चाहते हैं कि बहुत जल्द ही निर्णय हो जाए ताकि परेशानियां दूर हो सकें। 

प्रबंधन की सबसे बड़ी परेशानी यह भी है कि खाते सीज हो जाने के कारण उनका अपना वेतन भी अब नहीं निकल पा रहा है। खर्चा बढ़ गया है, इनकम बंद हो गई है और अपना पैसा भी अपने काम नहीं आ रहा है। देखते हैं आगे क्या होता है। 

• खबर स्पीक एशिया से जुड़े सूत्रों के आधार पर

source:- http://www.thebhaskar.com/2011/07/blog-post_3506.html

pop-up 17-07-11

An Important message for SpeakAsians "Delay is the deadliest form of Denial" Them They never say an outright NO. It is always a MAYBE, or let us consider in DUE COURSE. Yet, undeniably they have delayed and deferred our ability to continue business as usual. They have delayed our payments to you, they have delayed our clearance of the products that are to come to you. They have put a spoke into our working by harassing our staff , distributors and panelists and have indulged in an unjust, unfair and malicious rumor campaign that has seriously dented our public image. They have effectively halted the operations of our company. Who are they? They are a product of misguided thinking, unbridled envy, and a desire to destroy what they cannot build. They do what they do with a clear understanding that their victory lies in imposing impossible delays, so that the enthusiasm, the dedication and the morale of our team suffers. They are a set of people with deadly intent. They seek nothing less than the destruction and permanent stoppage of our business. They are the opportunity deniers. They are supported, cheered on and encouraged by certain vested interests like our competitors, some corrupt politicians and unscrupulous NGOs who have jumped into the fray to take advantage of our vulnerability. Remember : The hunter is always the bravest when the hunted is at its weakest. This concerted campaign has resulted in several Government agencies deciding to investigate and probe into the affairs of our Company as an honest arbitrator for settling the issue once and for all. The delays through which they sought to deny earning opportunity to SpeakAsians We are not in a position to make any payments into India as all payments sent by us to panelists and suppliers have not been credited to them. As a result payments to TVC, our importer for mobile phones used to meet our rewards obligations have been returned many times. Delay and denial. Accounts of distributors are frozen and cannot be used for making any payments. Block and deny. 28500 Television sets ordered by us as rewards and for sale to the panelists are lying at Mumbai port and we cannot make custom duty payment. Delay and denial. We are under constant threat due to frivolous complaints lodged by certain interested parties in some locations. Harassment and Denial Our Company has been brought to a situation where we are not able to move even one inch. Hobble and Denial Delays that are becoming deadly denials for our business We are not allowed to pay salaries and other expenses to officials and employees of our Company. Delay, deny and demoralize. We do not even have freedom to move freely due to the constant threat of arrest on account of certain frivolous complaints. Harassment and Denial Our application for starting Permanent Establishment (PE) in India has been submitted to the RBI through Bank. We are awaiting the fate of this application. With this being approved we will be in a position to offer an "Exit Option". The Exit option : Panelists will have a choice to get payment of reward points by TT from SpeakAsia Singapore account or migrate with their reward points to India centric website and continue business with terms applicable for Indian business . Waiting … Us We are sure that during their probe these agencies have realized that our Company is working strictly within the laws of the land in both letter and spirit and has been diligently complying with every law. However, in this highly charged environment and constant pressures of various quarters most of these agencies would have found it difficult to give a "clean chit" in writing. We were left with no option but to approach the judiciary and present the facts for a clear decision. We have got some moral vindication (for instance) the High Court of Hyderabad restrained harassment or arrest of any official or employee of our Company against a complaint made by an NGO (Criminal Petition 5626/2011) . The High Court in Mumbai directed the Reserve Bank of India to give us a hearing to understand our business model "expeditiously" (Writ Petition (L) No. 1365/ 2011 - SAOL & Ors. vs. Reserve Bank of India).  However our operations are still far from being normal and the delays continue.  So, what are we doing amidst this siege like condition- how are we responding?  In the "Them v/s Us" situation the following is what we are doing to right the wrongs, and re-establish as quickly as possible our commercial relationships with our team members, distributors, and panelists. We have managed to deliver Cars and over 60000 products earned by you as rewards despite this difficult time. Several new products are being added and will be made available on the website. You can then use your reward points and save on the purchase price of these products or earn commission by making a sale of these and cashing in your reward points. To ensure this we are taking various legal actions so that we get permission for making payments to you and pay to various suppliers and vendors for rewards and products for website. We expect results and relief from these actions in the coming weeks. We are moving the highest Court of the land to put an end to the constant harassment of our distributors and panelists by several authorities and to open their bank accounts.  We will not give up. In this fight what will help us is your continued belief in the rightness of our business, your dedication, a little patience and the ability to sift between facts and accusations, between reality and innuendo, between news and rumor.    We Shall Overcome. We shall emerge vindicated, We shall become victorious.  Because no one can deny people an opportunity to earn an Honest Living. We will deny the ultimate victory to the delayers

Payout Update about SAOL

1. Website will be fully functional by 20 July.

2. Products will be uploaded at regular interval of time.

3. Payouts will get started by last week of july.

4. Might be Those who joined lately will be given preference first for payouts.

5. Lavish office established in goregaon,mumbai.

6. Clerance from Govt soon and PE under process.

7. Tie Up has been done with Mobile service provider (India based)and Insurance Company(Canada base).

8. Massive Advertisement campagin will be start from 20 july.

9. Business Restart meeting to be held on 17 july.10.Bank account to be opened by 25 july.11.By 1st week of August ,the scenario of speakasia will be same as it was in April 2011..

All speakasian eagerly waiting for the payouts and hopefully very soon we all start our business with glory...