DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM

______________________________________________________________________________
SEMESTER VIII Mid – Semester Examinations, February-March – 2023 (Elective-V)
Investment Law (08-5)

Instructions:
1. Answer all the THREE questions
2. Answer to question No.1 and No.2 is compulsory
3. Any over writing in answering question number one will be treated as invalidate answer
4. Answer any one in question No.3
5. Do not write anything on the question paper. It will be treated as malpractice.
Total Marks - 25
Time: 1½ Hour

1. Choose the correct answer from the following MCQ’s 10x1/2 = 5marks

i) The earliest Stock Exchange was set up in _____ and it was involved in buying and selling of
shares for Dutch East Company.
a. Amesterdam.
b. Lisbon
c. Amodora
d. Porto

ii) The wake of _______ scam in 1992 there was a passing need for another Stoke Exchange large
enough to compete with BSE and bring transparency to the Stock Market.
a. Harshad Mehatha
b. ABG Shipyard Bank Scam
c. Satyam Scam
d. Sahara Scam

iii) OFCD full form is _________

a. Officially Fully Commercial Debentures.
b. Optionally Fully Convertible Debentures.
c. Operational Fully Comfortable Debentures.
d. Obsessive Fully Compulsive Debentures.

iv) In _________ case the Supreme Court observed that the company violated the provisions of
Sec 67 (3) Companies Act 1956 as they had issued Securities to more than statutory limit.
a. Raghuveer Acharya V Central Bureau of Investigation 2013MLJ(465)
b. Sahara India Real Estate Corp Ltd &Ors V SEBI & Others 2012 SC 517S
c. Swatanter Kumar V The Indian Express Ltd & Others 2014 DEL 76
d. Vijay Singhal & Others V Govt of NCT & Others 2013 DEL 1491

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v) A long term Security yielding a fixed rate of interest, issued by a company and Secured
against asset is called as _________
a. Debenture
b. Share Capital
c. Scripts
d. Charge

vi) In _______ case regulating authority ordered an investigation and to the prima facie
conclusion that the appellant was not in accordance with the standards of integrity, fairness
and professionalism expected of a fund manager.
a. Jai Shankar Agrahari & Others V UIO & Others 2020 ALL 81
b. Mohak Chind Gupta & Others V UIO & Others 2018 DEL 1571
c. MS Sweta Vijay Kumar V The State of Bihar 2011 PAT 7394
d. Samir C. Arora V SEBI 2004 SEBI 69

vii) In _______ case the appellant contend that they were not insider under the PIT regulations and
were not in the possession of UPSI while selling / pledging the shares of that company.
a. B. Jhansi Rani V Securities and Exchange Board of India 2017 SEBI 219
b. SRSR Holding Private Ltd V SEBI 2017 SEBI 220
c. Rama Raju V SEBI 2017 SEBI 224
d. Chinthalapati Holdings PVT Ltd V SEBI 2017 SEBI 211

viii) Sec ______ gives SEBI has the power to issue direction to protect the interest of investors and
to promote the development of and regulate the Securities Market.
a. 11b of SEBI Act 1992
b. 12A of SEBI Act 1992
c. 10b of SEBI Act 1992
d. 9A of SEBI Act 1992

ix) _________ is the real owners of the company.

a. Debt Shareholders
b. Derivative Shareholders
c. Preference Shareholders
d. Equity Shareholders

x) In _______ case the Supreme Court of India observed that Sec 195 of the Income Tax Act
1961 only applies to residents and can’t have extraterritorial residents.
a. Cadila Healthcare Ltd V Assistant Commissioner of Income Tax 2017 ITATND 1813
b. UIO & Others V CDR Ravindra Desai 2018 SC 249
c. Paras Pharmaceuticals Ltd V Rambaxy Laboratories Ltd 2008 Guj 73
d. Vodafone International Holdings BV V Union of India 2012 SC 64

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2. HEL is situated in India and its business of telecommunications was carried out entirely in
India with relevant licences and regulatory clearances granted under Indian Laws. There has
been a transfer of controlling interest in HEL from one non resident to another non resident.
The business of HEL is based on property located within India. The gains received by HTIL
through the transfer of the CGP share, the value of which was determined on the basis of the
enterprise value of HEL being property situated in India and other valuable rights transferred
by way of agreement are chargeable to tax in India. The gains are deemed to arise once the
subject matter of the transaction constitutes a capital asset and its location is in India. Section
2(14) defines the expression capital asset in wide terms to mean property of any kind held by
assesse. This will include rights and interests which are capable of being owned and
transferred. The definition of the word transfer in Section 2(47) is wide enough to comprehend
any method of transfer. The entire enterprise value attributed to HEL was only on account of
the fruits of the investment made by HTIL in India, goodwill/brand value generated by HTIL
for the Hutch Brand in India, the telecom licences granted in India, customer base in India and
the prospect of future development and expansion of business in India. Further, all obligations
cast upon the parties as per the transaction documents, were performed in India including FIPB
approval, Option Agreements, Term Sheet Agreements, Shareholder Agreements, Framework
agreements with TII and Omega, Divestment of petitioners interest in Bharti Airtel Ltd.,
Settlement agreement with Essar Trade Mark License. Further, the Non-compete condition was
enforceable only in India and the Loan/Debt agreement/assignment to the Petitioner, was in
respect of funds utilized in Indian business. Thus, the income from the transaction accrues or
arises in India and is chargeable to tax under the first limb of Section 5(2) (b) of the Income
Tax Act 1961. The words accrue or arise indicate some origin or source of income and have to
be determined on the cumulative effect of the facts in each case. They have a definite
correlation to a place where such income is derived and what must be considered is the
originating source of the gains, profits or income. The entire income which is derived by HTIL
had its source in India and arose or accrued in India. The transaction in the present case,
involves a transfer of a bundle of interests in various entities and it would be simplistic to
assume that what was transferred was only a share of a Company in Cayman Islands and that
all the other rights were incidental to the transfer.

a) What are the legal implications in this case?

b) Do you agree that Indian revenue authorities had the jurisdiction to tax on offshore
transaction of transfer of shares between two non-resident companies whereby the
controlling interest of an Indian resident company is acquired by virtue of this transaction?

10Marks

3. Answer any One of the following: 10Marks

I. Critically examine the case Vediocon International ltd V SEBI & Others 2002 SAT 14 CLC
1000

II. Explain the Historical background of Securities and Investment law.

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