KILLER MILK WITH

UREA & DETERGENT

By Piyush Srivastava in Lucknow

MADE IN U. P. MEANT FOR DELHI

THOUSANDS of litres of adulterated milk mixed with chemicals with deadly health effects are making their
way to Delhi every day. Standard quality tests have proved inadequate for identifying such milk.

Criminals running illegal but very profitable dairies and a host of individual milkmen extract fat ( cream) from natural milk
and then mix urea, caustic soda, detergents and formalyn — which cause irreparable damage to body organs and can
sometimes be life- threatening — before pushing the adulterated milk into the market.

Alarm bells have gone off after more than 50,000 litres of adulterated milk — a substantial part of which was headed for
the Delhi market — was seized from several districts of Uttar Pradesh in the last three days.

The raids were conducted in Agra, Moradabad, Shahjehanpur, Kanpur, Varanasi, Lucknow, Rae Bareli, Lucknow and
Lalitpur by officials of the Food and Drug Administration ( FDA).

“ This daily intake is white poison for children and adults. The adulterants cause diseases of the stomach, intestine, skin
and the kidneys. Drinking such milk over a long period could result in death,” said Ram Asre, food inspector of Agra.

There are an estimated 3.5 lakh unregistered dairies in the Capital. “ I don’t rule out the possibility that milk adulterated
with chemicals is sold in Delhi. It’s a big city and it’s nearly impossible to check samples from each and every milk
retailer,” Delhi health minister Kiran Walia said.

The illegal milk suppliers have also taken to using fake packages of well- known brands of dairy products. This was
discovered during the weekend raids. Where monitoring is not up to the mark, this becomes dangerous for the consumers.

There are indications that the quantity of adulterated milk coming into Delhi could be rising.

The raids over the weekend come after nearly 50,000 litres of adulterated milk were seized from over a dozen districts of
UP last month. Sources said that over 22,000 litres of adulterated milk was being brought into the Capital from western
Uttar Pradesh alone.

Similarly shocking figures for adulterated milk supply to Delhi are provided by officials even though the overall quantity of
synthetic milk being consumed in Delhi is hard to come by.

“ We have recovered 2,500 litres of poisonous milk from Ankur Dairy in the Dhandupura area.

This milk was meant for consumers in Delhi. The dairy owner has been arrested. Since the dairy is a year old, we believe
he has supplied more than nine lakh litres of this milk so far,” said Asre.

Much of this milk finds its way to the consumer through the numerous sweet shops. Ram Naresh Yadav, Agra’s chief food
inspector and Anil Chaurasiya, additional city magistrate of Lucknow, agreed. Chaurasiya said: “ They not only supply
spurious milk for domestic consumption but also to small sweet shops. We have conducted raids at sweet shops in the past
and recovered adulterated sweets. This exercise will continue,” he said.

The wide network of illegal dairies supplying synthetic milk is wreaking havoc on consumers.

The Indian Council of Medical Research has reported that milk adulterants have hazardous health effects. The detergent in
milk can cause food poisoning and other gastrointestinal complications.

Its high alkaline level can also damage body tissue and destroy proteins.

Other synthetic components can cause impairments, heart problems, cancer or even death.

While the immediate effect of drinking milk adulterated with urea, caustic soda and formalyn is gastroenteritis, the long-
term effects are far more serious.
“ A very small amount of urea can lead to vomiting, nausea and gastritis,” said Dr M. P Sharma, head of internal medicine
at Rockland Hospital. More serious damage can be caused by formalyn.

“ Formalyn can cause liver damage,” Dr Sharma said. While digestive symptoms are likely to manifest within an hour,
these can be delayed for up to six hours after consuming the adulterated milk.

The health impact of drinking milk adulterated with these chemicals is worse for children.

“ Soap contains caustic soda which harms the mucosa of the food pipe, especially in kids,” said Neelam Mohan, director of
paediatric gastroenterology at Medanta- The Medicity. Pregnant women are particularly vulnerable to the impact of these
chemicals, which can harm the foetus.

The chemicals worsen the condition of those with pre- existing heart or kidney problems. Urea is particularly harmful for
the kidneys, and caustic soda is a slow poison for people suffering from hypertension and heart ailments.

Caustic soda, which contains sodium, acts as slow poison for those suffering from hypertension and heart ailments.

Urea and caustic soda are very harmful to the heart and liver.

“ While the immediate impact is on the stomach, the long- term impacts can be retarded growth and even cancer,” said
nutritionist Geetika Ahluwalia. Caustic soda also deprives the body from utilizing lysine, an essential amino acid in milk,
which is required by growing babies.

Despite the stiff jail sentences that milk adulteration can attract – two days ago a fast track court in Shahjahanpur had
sentenced Ram Babu, a milk vendor, to life imprisonment – those involved rarely back down because of the huge profits
involved.

An official involved in the recent raids explained that one litre of pure milk usually sells for Rs 30. Synthetic milk is sold at
Rs 20 per litre. However, it costs the illegal dairy owners only Rs 2 to make synthetic milk using the deadly milk.

Hari Singh, chief food inspector of Shahjahanpur, said: “ It is difficult to detect adulteration by the normal lactometer
because once mixed in cream extracted milk, urea and caustic soda show the purity and fat content of the natural milk,”
he said.

HOW IT IS MADE

Synthetic milk is prepared by mixing vegetable oil, urea, detergent, caustic soda and formalyn with fat extracted from
natural milk

Formalyn is meant to preserve synthetic milk for a week

The liquid is thoroughly blended in a mixer till it looks identical to thick, rich, creamy natural milk

Its cost works out to ` 2 per litre but it is sold for ` 20 a litre

Other milk products are also made with it and the total earning works out to about ` 58 per litre

WHY IT IS TOUGH TO SPOT

At levels below 10 per cent, synthetic milk adulteration in natural milk is extremely difficult to detect

Normal lactometers are unable to differentiate between the two because extracted milk, urea, detergent and caustic soda
show the same purity and fat content as natural milk after being mixed with cream

Adulteration is being carried out even in remote rural areas

Synthetic milk is not well- defined and one test cannot detect it
Though there is no test to detect the presence of detergent, other methods can be employed to ascertain urea level or
caustic soda presence if the adulteration is 10 per cent or more

Afzal Guru file fails

to climb Raisina Hill

By Aman Sharma in New Delhi

INDIA seems in no hurry to decide the fate of 2001 Parliament attack convict Afzal Guru.

After the Delhi government sat on his mercy petition file for nearly four years, it is now the Union home ministry which has
been dilly- dallying on the plea for over two months.

The President Secretariat’s reply to a Right to Information ( RTI) application from this correspondent confirmed that the
Afzal file is yet to climb the Raisina Hill.

“ This Secretariat has not received the mercy petition file of Mohammad Afzal Guru ( from the home ministry) so far,” Faiz
Ahmad Kadwai, Central Public Information Officer of the Secretariat, replied on August 12.

The office of the Delhi Lt- Governor had sent the file to the home ministry on June 3, after getting comments from the
Delhi government.

Apparently, the opinion of the Lt- Governor as well as the Delhi government was that the mercy petition should be rejected
but the home ministry is still undecided on what it should finally suggest to the President’s Secretariat.

When contacted, a senior ministry official said just this much: “Comments from the Lt-Governor are being examined.”
According to a government source, the violence in Jammu and Kashmir since the last two months may be one of the
reasons why the ministry is going slow on a decision.

It is believed J&K chief minister Omar Abdullah had communicated to the Centre some months ago that before deciding on
Afzal’s plea, the Centre should take into consideration the view of his government as Afzal is a Kashmiri and his execution
could reignite terrorism in the Valley.

Ironically, it was the home ministry which, over the last four years, had sent as many as 16 reminders to the Delhi
government, asking it to “expedite the process of sending its recommendations on Afzal’s mercy plea file so that the
petition may be placed before the President for orders”.

The ministry’s last reminder was on April 27 — close on the heels of the death verdict given to 26/11 accused Ajmal Qasab
— and pushed the Delhi government to action.

Later, Delhi chief minister Shiela Dikshit hinted that the file was delayed at her government’s end on the insistence of
former Union home minister Shivraj Patil.

There is another view, however.

A ministry source indicated that the delay may also be attributed to the fairly strong and compassionate mercy plea by
Afzal, who contends that he neither got a proper trial nor access to a lawyer of his choice.

The petition is currently being debated on its merits at the top levels of the home ministry.

The source also pointed out that even if Afzal’s file is immediately sent to President Pratibha Patil, it won’t be possible for
her to decide promptly on his fate.

The reason: The mercy pleas of the three assassins ( Santhan, Murugan and Arivu) of former PM Rajiv Gandhi are pending
with the President’s office since 2005.

In its RTI reply, the President’s Secretariat said 22 mercy petitions were pending with it. Four of these had been received
by the Secretariat from the home ministry after reconsideration while two were still pending with the ministry for
reconsideration.
The Secretariat had first sent Afzal’s file for the government’s opinion in October 2006.

aman.sharma@mailtoday.in

YEARS OF PLAYING PASSING THE PARCEL

December 13, 2001: Parliament attacked. Afzal Guru is arrested later in the month

August 2005: Supreme Court upholds death sentence for Afzal

October 2006: He files a mercy plea with the President’s Secretariat, which sends the file to the home ministry which
forwards it to the Delhi government for its opinion

November 2006 to April 2010: The ministry sends 16 reminders to the Delhi government, asking it to expeditiously decide
on the recommendations on the petition and return the file

June 3, 2010: Delhi’s Lt- Governor finally sends the Afzal file back to the home ministry with final suggestions of the Delhi
government, saying that the plea be rejected

August 12, 2010: The President’s Secretariat responds to an RTI application, saying it has still not received the file from
the ministry

UP seizes deadly cocktail

peddled in Delhi as milk

Continued from page 1

in the Capital. “ I don’t rule out the possibility that milk adulterated with chemicals is sold in Delhi. It’s a big city and it’s
nearly impossible to check samples from each and every milk retailer,” Delhi health minister Kiran Walia said.

The illegal milk suppliers have also taken to using fake packages of well- known brands of dairy products. This was
discovered during the weekend raids. Where monitoring is not up to the mark, this becomes dangerous for the consumers.

There are indications that the quantity of adulterated milk coming into Delhi could be rising.

The raids over the weekend come after nearly 50,000 litres of adulterated milk were seized from over a dozen districts of
UP last month. Sources said that over 22,000 litres of adulterated milk was being brought into the Capital from western
Uttar Pradesh alone.

Similarly shocking figures for adulterated milk supply to Delhi are provided by officials even though the overall quantity of
synthetic milk being consumed in Delhi is hard to come by.

“ We have recovered 2,500 litres of poisonous milk from Ankur Dairy in the Dhandupura area.

This milk was meant for consumers in Delhi. The dairy owner has been arrested. Since the dairy is a year old, we believe
he has supplied more than nine lakh litres of this milk so far,” said Asre.

Much of this milk finds its way to the consumer through the numerous sweet shops. Ram Naresh Yadav, Agra’s chief food
inspector and Anil Chaurasiya, additional city magistrate of Lucknow, agreed. Chaurasiya said: “ They not only supply
spurious milk for domestic consumption but also to small sweet shops. We have conducted raids at sweet shops in the past
and recovered adulterated sweets. This exercise will continue,” he said.

The wide network of illegal dairies supplying synthetic milk is wreaking havoc on consumers.

The Indian Council of Medical Research has reported that milk adulterants have hazardous health effects. The detergent in
milk can cause food poisoning and other gastrointestinal complications.

Its high alkaline level can also damage body tissue and destroy proteins.
Other synthetic components can cause impairments, heart problems, cancer or even death.

While the immediate effect of drinking milk adulterated with urea, caustic soda and formalyn is gastroenteritis, the long-
term effects are far more serious.

“ A very small amount of urea can lead to vomiting, nausea and gastritis,” said Dr M. P Sharma, head of internal medicine
at Rockland Hospital. More serious damage can be caused by formalyn.

“ Formalyn can cause liver damage,” Dr Sharma said. While digestive symptoms are likely to manifest within an hour,
these can be delayed for up to six hours after consuming the adulterated milk.

The health impact of drinking milk adulterated with these chemicals is worse for children.

“ Soap contains caustic soda which harms the mucosa of the food pipe, especially in kids,” said Neelam Mohan, director of
paediatric gastroenterology at Medanta- The Medicity. Pregnant women are particularly vulnerable to the impact of these
chemicals, which can harm the foetus.

The chemicals worsen the condition of those with pre- existing heart or kidney problems. Urea is particularly harmful for
the kidneys, and caustic soda is a slow poison for people suffering from hypertension and heart ailments.

Caustic soda, which contains sodium, acts as slow poison for those suffering from hypertension and heart ailments.

Urea and caustic soda are very harmful to the heart and liver.

“ While the immediate impact is on the stomach, the long- term impacts can be retarded growth and even cancer,” said
nutritionist Geetika Ahluwalia. Caustic soda also deprives the body from utilizing lysine, an essential amino acid in milk,
which is required by growing babies.

Despite the stiff jail sentences that milk adulteration can attract – two days ago a fast track court in Shahjahanpur had
sentenced Ram Babu, a milk vendor, to life imprisonment – those involved rarely back down because of the huge profits
involved.

An official involved in the recent raids explained that one litre of pure milk usually sells for Rs 30. Synthetic milk is sold at
Rs 20 per litre. However, it costs the illegal dairy owners only Rs 2 to make synthetic milk using the deadly milk.

Hari Singh, chief food inspector of Shahjahanpur, said: “ It is difficult to detect adulteration by the normal lactometer
because once mixed in cream extracted milk, urea and caustic soda show the purity and fat content of the natural milk,”
he said.

HOW IT IS MADE

Synthetic milk is prepared by mixing vegetable oil, urea, detergent, caustic soda and formalyn with fat extracted from
natural milk

Formalyn is meant to preserve synthetic milk for a week

The liquid is thoroughly blended in a mixer till it looks identical to thick, rich, creamy natural milk

Its cost works out to ` 2 per litre but it is sold for ` 20 a litre

Other milk products are also made with it and the total earning works out to about ` 58 per litre

WHY IT IS TOUGH TO SPOT

At levels below 10 per cent, synthetic milk adulteration in natural milk is extremely difficult to detect

Normal lactometers are unable to differentiate between the two because extracted milk, urea, detergent and caustic soda
show the same purity and fat content as natural milk after being mixed with cream
Adulteration is being carried out even in remote rural areas

Synthetic milk is not well- defined and one test cannot detect it

Though there is no test to detect the presence of detergent, other methods can be employed to ascertain urea level or
caustic soda presence if the adulteration is 10 per cent or more

RTI as Right to Conceal

ITS MANY achievements — and failures — notwithstanding, the Right to Information Act which came
into effect during the early days of UPAI was truly a feather in the government’s cap. Yet, take a
closer look now and you will see that just five years after the landmark legislation was enacted, the RTI is more a whimper
and less the bang that the government promised.

The rot begins at the top. The provisions of the RTI Act are diluted or blatantly ignored to ensure that the political class
doesn’t come under the scanner. The readiness of the government to reveal the assets of ministers seems to be inversely
proportional to the public curiosity to know the same.

Here are the rules. The Code of Conduct for ministers says that a person, before taking office as a minister, shall “ disclose
to the Prime Minister or the chief minister ( as the case may be) details of the assets and liabilities and business interests,
of himself and members of his family”. Similar rules exist for MPs of both Houses. While contesting polls, candidates have
to declare their assets before the Election Commission, the details of which are then made available on the commission’s
website. Later, MPs file declarations to the presiding officers of the two Houses. These, too, can be accessed via the RTI
route.

But when it comes to ministers, the goalposts are shifted. I am told that most ministers regularly comply with the prime
minister’s directive to file annual declarations, but for reasons unknown, the PMO doesn’t place these in Parliament.

Two weeks ago, as a result of an RTI query, the Lok Sabha secretariat wrote to the PMO to say that since ministers’
declarations are made directly to Prime Minister, “ it is felt that the instant reference is not required to be placed before
the Hon’ble Speaker, Lok Sabha”. A similar letter went to the PMO from the Rajya Sabha. Shorn of ‘ bureaucrat- ese’, what
this means is that the presiding officers of the two houses are not privy to information about ministerial assets. It’s easy to
guess why someone wants to hide something.

The question is: Who? Ask Wajahat Habibullah, who as the Central Information Commissioner is the custodian of RTI. He
put the ball into Parliament’s court. There are more RTI applications on the subject of ministerial wealth than anything
else, but RTI activists — the media, lawyers and public — spirited citizens are constantly being stonewalled by the PMO
and the Cabinet Secretariat, both of which maintain that details of ministerial wealth are personal matters and therefore
cannot be divulged. So much for transparency in government.

As if that weren’t bad enough, here is more proof to show that the RTI is as good as dead.

Incredible as it may seem, the W. Habibullah R. PRASAD government has no idea of the number of people who enjoy the
perks and comforts of ministerial office while not being ministers in the government. You’d think the CabSec will know, but
ask and you will be told to knock on the doors of the Ministry of Home Affairs. India Today magazine filed an RTI in July
2009 seeking to know the number of such people and details of offices they held and their perks.

The CabSec forwarded the application to the ministry of home affairs ( MHA). The MHA in turn sent us a reply saying that “
the status of Union cabinet minister on a person, is processed by individual administrative ministries/ departments for
approval of the Prime Minister directly. A centralised list is not maintained by this ministry. You may approach the
individual ministries and departments in respect of organisations under their administrative control.” Earlier this year, we
tried our luck again. Once again, the Cab- Sec forwarded the application to MHA. Last month, the home ministry informed
us: “... the status of union cabinet minister on a person, is processed by individual administrative ministries/ departments
for approval of the Prime Minister directly. A centralised list is not maintained by this ministry.” A year later, nothing
changed, not even a comma. Well placed sources tell me that there are as many people enjoying ministerial perks as there
are ministers in the Union council, which at last count was over 75. All of them are allotted bungalows in Lutyens Delhi,
driven around town in official cars with a red beacon light and entitled to official staff of nine, whose salaries are paid by
the government.

Considering that each MP costs the country nearly ` 40 lakh a year, the cost of these ministers- without- ministries can be
imagined. That’s perhaps why the government exercises the Right to Conceal.

V- P plan can make ittough for ministers

I HAD in these columns earlier written about some pathbreaking changes that Rajya Sabha chairman Hamid Ansari and the
Lok Sabha speaker, Meira Kumar were planning for the two Houses of Parliament. The changes centred on the question
hour with which the day’s business begins and were two pronged: making MPs take parliamentary duties seriously and
making ministers more responsive to questions from the members.

Last Monday, when the General Purposes Committee of the Rajya Sabha met, Ansari presented a proposal which many
ministers may not welcome.

This involves the random selection of 10 questions from the 20 that are listed for the day for ministers to reply.

Ministers will answer in the order their names crop up in the lottery. Ansari felt this is the best way to make ministers
attend the sessions. Some months ago, Ansari had raised ministerial hackles when he ordered that all starred questions be
answered even if the MP who raised the question was absent. His new suggestion will make it virtually impossible for
ministers to play truant.

Another proposal, more radical, involves shifting question hour from its current 11 am start to 3 pm. Of late, question hour
has degenerated into 60 minutes of acrimony that often descends into chaos. The changes in rules of parliamentary
procedure were aimed at giving the government a chance to conduct serious business during the earlier part of the day.

But the plans have come a cropper as the BJP is not in favour of it. “ Parampara ko thodna nahin chahiye ”, one of the
leaders is supposed to have said. It’s a spurious argument. Some years ago, the BJP backed the government when the
presentation of the annual budget was shifted from 5 pm to noon. Its opposition to the shifting of question hour only
means one thing: The party has no intention to surrender its right to disrupt Parliament.

Reduce the case load by all

means but don’t dump it

by Rajeev Dhavan

THE SUPREME Court is in a state of crisis in terms of the quality and quantity of its work as well as its
relationship with the people.

Faced with this crisis the preferred solution of some of its judges is: Load shedding. This means getting rid of as many
cases as it can as quickly as possible.

This has baffled many lawyers as well as litigants and the media— sometimes with dismay.

This approach is flawed.

Ever since its inception, the Supreme Court has courted arrears. In 1950 itself, 1,215 cases were filed, 525 disposed of
leaving arrears of 690 for the next year. Every court carries over arrears. But the Supreme Court has a problem of
cumulative arrears. In 1970, the carryover from the previous year was 7,535 to institutions of 7,476. In 1990, the
carryover was 1,06,027 and institutions 22,265. From 2001, onwards there were huge institutions peaking at 70,352 in
2003. This trend has been repeated in 2009 — over 50,000; but exact figures are not available for this year.

The comfortable disposal per year used to be 7,000 regular cases; and could be 10,000 with an expanded court of 30
judges. We know that a quick disposal load shedding was done disposing of rent cases in the early nineties— mostly
against the tenant.

Concern

The basic concern in the corridors ( no less of clients) is that some courts, and in particular one court, has taken the view
that in regular appeals, matters should be decided within minutes— even seconds.

Often the lawyer from one side is simply told to sit down because the judge ( who may well be reading the file properly in
court for the first time) feels that he has found the answer. Neither lawyers nor litigants believe that this kind of justice
can be dispensed with. In that court, 30 regular appeals are decided every day— totally 100 a week in a procedure that is
dramatic, intimidating and violates due process.

‘ Load shedding’ provokes broomstick justice.

If any high court or lower court did this, the Supreme Court would have rebuked and reversed them.

Our Supreme Court judges are the most hardworking in the world. They already handle a volume of work which no appeal
court handles. So far, the court has mostly abjured load- shedding justice. There is no point asserting that in the American
Supreme Court each side is allowed 30 minutes each. That system is different; and each judge has addressed the file with
his clerks many times. Our judges depend on the bar for research and argument.

Some matters are complex and require time. The Supreme Court lays down the law. Each sentence has to be treated as
law ( Constitution, article 141). It is the final court. The procedure to rectify the Supreme Court’s mistakes is fragile. Few
judges will admit their mistake.

Load- shedding judges say they are answerable to the public not lawyers who are interested only in fees. The only way in
which the judges can serve the public is by delivering justice; and being seen to deliver justice. Supreme Court lawyers are
an uneven lot and may over- argue a point or two. This may call for some discipline.

But they are not known for prolix wastage of the court’s time whilst contributing to quality justice. Load- shed justice is no
antidote.

Many problems confront Supreme Court litigation. At times, the Supreme Court was regarded as a court for bourgeoisie
causes. The dominant litigation profiled for the court concerned land and the regulatory state. Trade unions and
bureaucrats pooled together to fight their causes.

The Supreme Court has a declared sensitivity to this criticism of class justice ( Namboodripad’s case ( 1970)). Lawyers
contribute to this class profile. Today lawyers charge exorbitant fees which are beyond the reach of the common man.

M. C. Setalvad, India’s first Attorney General, refused a big increase in fees when prompted by juniors who were charging
more. Today, we lawyers charge too much.

True, lawyers are daily wagers— but, what a wage! This trend has increased since the liberalisation of the economy in
1991; but the trend was excited by a few lawyers after the Emergency.

PIL

How do the public access the courts? First, there is no credible legal aid system.

The Supreme Court’s legal aid cell does not attract the best lawyers. Most, but not all those who do legal aid cases, are
young counsels trying their luck for experience and exposure. Second, free market lawyers are beyond the reach of the
poor.

The Supreme Court is outside the reach of the real poor. It is another matter that the Supreme Court’s decisions have not
always been pro- poor.

After the Emergency ( 1975- 77) the Supreme Court’s reputation had all but gone because of its failure to provide justice
to detenus ( Jabalpur case ( 1976)).

What restored the confidence of the people was public interest law ( PIL). The Supreme Court reached out to the people on
bonded labour, exploitation, environment, gender, tribals and so on. This movement was supported by cause lawyering.
New rules were invented to enable justice: the access or locus rule to approach the court even by a letter, investigative
commissions to facts, post- decision monitoring and wide- ranging orders.

It was the court at its brilliant best even with some misuse of the PIL. The court stooped but did not wholly conquer. In
conflicts between the poor and the powerful, the latter prevailed in the name of development as exemplified by various
cases ( Balco, Narmada, environment matters, pollution, pavement dwellers).

Now, the court seems to partly take the view that PIL is a mistake— an ungroomed error. It exists sometimes effulgently
( as in the forest cases) and is otherwise in retreat.

In 2008 there were 24,666 letter petitions.

Few surfaced in court. To that extent, one part of PIL has become a useless formality— a hopeless misadventure. PIL
through normal method is totally ‘ pickand- choose’ with awkward results. If the new load- shedding justice is supposed to
serve the people, it simply does not.

Solution

What is the answer? The first is the solution of Chief Justice S. H. Kapadia that the Supreme Court’s own working needs to
be fine- tuned without blaming its good, overworked staff. The Chief Justice stayed in Delhi this summer identifying
problems.

We may not agree with the Chief Justice’s views on PIL or his unorthodox proposals to raise revenue for the court, but this
effort is commendable. The second is that the government remains the biggest litigant.

It should be made to pay costs if it fails. The vetting of cases by government is poor. The Attorney General’s office should
be redesigned to vet cases. Third, corporates should be made to pay costs but not the salaried or poor. Fourth, legal aid in
the court should be looked at responsibly.

My fifth suggestion is structural. Create a Court of Appeal for civil and criminal matters within the Supreme Court and all
public law matters should go to the Supreme Court’s special bench with nine judges sitting together. At present, the 14
benches of the Supreme Court sometimes seem like 14 Supreme Courts.

But people’s justice is ill served by hastily decided cases through quick load shedding. Who can tell the Supreme Court
this, if some judges do not listen?

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Need for an integrated policy on land acquisition

THE agitations in Zikarpur ( Uttar Pradesh), Sompeta ( Andhra Pradesh), Mahuva ( Gujarat), and Kalinganagar ( Orissa)
much like Nandigram and Singur are manifestations of the deep faultlines that exist in the country on the issue of land
acquisition.

The farmers are not some modern Luddites opposing the process of industrialisation.

Rather, their agitation represents anger against the state at having seized their lands for a pittance, and failed to provide
them alternative sources of livelihood.

The frequency and the intensity of such agitations should serve as a wake up call for the government to come up with a
comprehensive land acquisition policy. Amendments to the draconian Land Acquisition Act of 1894 — which was enacted to
serve the interests of a colonial power — have been long overdue.

Sadly, in the case of Uttar Pradesh, the Mayawati government has acquired the farmers’ land at a paltry price and is now
selling it for nearly twice the rate to developers, making a fat profit in the process.

Equally shocking is the fact that the acquired land has been given to real estate developers even though the Land
Acquisition Act states that it should be used for “ public purposes”. The powers given to the state are so that it ensures fair
prices and compensation to the people and not in order to pocket a cut.

The reforms in the land acquisition law should make effective provisions for fair compensation.
The compensation should be such that it makes up not just for the current market rate of the land but also the future
benefits that the owner would otherwise have derived.

This could involve a deferred mode of payment staggered over a few years.

In fact, there is need to look into the issue of “ compensation” in a more comprehensive way.

Land acquisition needs to be integrated into a policy that can shift our poor, illiterate farmers from the uneconomical bits
of land they farm to newer, more remunerative occupations.

This process has always been historically difficult.

But there is no reason why our politicians and bureaucrats can’t learn from the experience of other nations, and other
periods of history, to work out an efficacious and humane policy which will, in exchange for the land, educate and train the
poor farmers and their kin and put them on sustainable employment tracks, be it in industry, agro- industry or services.

The middle- class revolution

THERE is cause for both cheer and concern in a seminal new research report published by the Asian Development Bank.
Cheer in the fact that the report’s findings show Asia’s growing population of middle- class consumers is inexorably shifting
the balance of economic power away from the west to the east. The middleclass revolution, first predicted by investment
banking firm Goldman Sachs in its famous BRICS report more than a decade ago, has finally happened. The concern lies in
the challenges posed by this explosive growth in consumption expenditure, as well as the wide disparities in income and
consumption which still persist in these new engines of global growth.

Govt adds more twist to nuclear Bill drama

By Mail Today Bureau in New Delhi

ANGERED by yet another lastminute change in the Nuclear Civil Liability Bill by the UPA government,
both the Left and the BJP on Sunday asserted they will not support it.

After months of negotiation between the UPA crisis managers and the two main Opposition parties, an agreement of sorts
had been reached late last week and the Bill was expected to come up in the Lok Sabha on Wednesday.

The government had agreed that the foreign suppliers of raw materials for nuclear plants will be held liable for damages, if
there were any manufacturing or latent defects in the material or service in the nuclear plants.

However, after barely 48 hours of this informal agreement, the Centre has done a U-turn and reworded clause 17(b) of the
Bill to include the words “done with the intent to cause nuclear damage”.

This means the suppliers will be held responsible for any defect or accident, only if it is proved that they had actually
intended to cause the damage.

BJP spokesperson Nirmala Sitharaman said: “We are very clear that the scope of clause 17(b) cannot be diluted. If this
amendment cleared by the cabinet dilutes it, then we will stand up and oppose it.”

All the four Left parties have been clear that any dilution in clause 17(b) or any loopholes by which the suppliers can get
out of paying damages in the event of an accident, will face stiff opposition. The newly reworded clause has evoked
condemnation from all the Left parties, which have appealed to political parties in the country to oppose the clause in the
national interest.

The Left, in a statement, pointed out that the new wording “ makes any liability on the part of the suppliers for supplying
defective or substandard equipment or material, contingent upon proof that it was the ‘ consequence of an act done with
the intent to cause nuclear damage’”. “ With this amendment, it will become impossible to ascribe liability to the supplier,”
the statement added.

The UPA government has been consistently trying to tweak this particular clause, which is the only one in the Bill that
deals directly with any liability on the part of foreign suppliers of nuclear parts and materials. The Opposition, particularly
the Left, has been insistent on the wording as India is likely to purchase nuclear reactors from the US to generate 10,000
MW. The Left has also expressed its displeasure over another amendment made by the cabinet — this time to clause 7( 1).
This amendment implies that there will be private nuclear installations in the future — something also opposed by the BJP.
It also means that if there is any accident the Centre will be responsible, not the private operator.

The third- party SCAM

By Babar Zaidi

The Association of Mutual Funds in India woke up last week to change arule that allowed
amutual fund broker to cheat aretired couple of `82.8 lakh

WHEN the Association of Mutual Funds in India ( AMFI) disallowed third- party cheques to be used for investing in mutual
funds, it came as cold comfort for Kulbhushan Kumar Suri and his wife Vinod. The retired couple were cheated of their life
savings by a broker who used a mix of subterfuge, forgery and loopholes in mutual fund rules to defraud the couple of `
82.8 lakh.

Till June this year, the Suris were leading a retired life everyone dreams of. They alternated between a comfortable villa in
leafy Rishikesh and their Delhi residence. Their children were married and well- settled. They had no financial worries
because their investments were in safe hands. But the idyllic calm of this golden sunset was shattered in April this year
when Suri applied for redemption of some mutual funds. The retired civil engineer felt the ground beneath him slip when
he was told by three mutual funds that there was no account of the ` 82.8 lakh he had invested over the past three years.

A shocked Suri showed the receipts that Subodh Kumar, the relationship executive of a brokerage firm, had given him.
These turned out to be fake — colour prints taken on an inkjet printer. Kumar allegedly managed to defraud the couple of
` 82.8 lakh invested in various schemes of three mutual funds. These were LIC Mutual Fund ( ` 44.8 lakh), Tata Mutual
Fund ( ` 28 lakh) and Fortis Mutual Fund ( ` 10 lakh). “ We have been cheated of our life savings,” says Vinod. Their fault
— they were too trusting and didn’t notice the telltale signs such as inkjet smudges on fake receipts. They also didn’t
question why the receipts were being delivered to them by the broker.

The modus operandi was simple.

Kumar allegedly took cheques from the Suris to invest in mutual funds, but used them to do so in his own name by filling
up new application forms.

This was possible because cheques or bank drafts for investments in mutual funds are made out in the name of the
scheme and can be used by anyone.

Kumar would apparently withdraw the investments a week or so later and pocket the redemption proceeds. Helping Kumar
in his devious plan was a Securities and Exchange Board of India ( Sebi) rule that allows third- party cheques for
investments in funds.

It has been almost a decade since the Suris began investing through a Delhi- based brokerage firm, H. L. Kapoor
Investment & Financial Consultants.

All went well till May 2008, when Kumar was assigned to them. As a relationship manager, he had access to the Suris’
portfolio and knew exactly when they had investible surplus. Whenever their deposits or bonds matured, he would
approach them with a proposal to invest in a fund. He also had their bank details, which he carefully mentioned in the fake
receipts.

Curiously, Sebi disallowed the use of third- party cheques for stock investments two years ago.

This move was meant to prevent benami investments and money laundering. However, there is no such restriction on
mutual fund investments. “ It is an anomaly that third- party investments are banned in one segment of the capital market
and allowed in another,” says Gajendra Nagpal, chief executive officer ( CEO) of Unicon Financial Intermediaries.

Suri is livid that no checks are conducted by mutual funds while accepting the investments.

“ This is a mockery of the knowyour- customer ( KYC) drive launched by Sebi,” he says.

Indeed, if the watchdog is so particular about checking the identity of every mutual fund investor to prevent
pseudoinvestments and money laundering, it should also ask fund houses to stop accepting thirdparty cheques. Sebi is,
however, not considering any change in the rule. E- mails sent by MONEY TODAY to Sebi officials were not answered.
On their part, the mutual funds seem to have washed their hands off the incident. “ The investments and the subsequent
redemptions were perfectly legitimate transactions and, hence, we processed the same,” stated Fortis Mutual Fund in a
letter to Suri in June. All three fund houses claim that they are “ looking into the matter”. However, no criminal complaint
has been filed against Kumar by any of the three mutual funds for fraudulent use of their sta tionery. This shows how keen
they are to pursue the case.

AMFI, too, did not respond to an e- mail from M ONEY T ODAY . Clearly, the scam has been aided by the rule that allows
third- party cheques. “ Banning third- party cheques would help prevent such frauds, but we also need to ascertain the
possible adverse impact on investors,” says Virendra Jain, investor rights activist and founder of the Midas Touch
Investors’ Association.

Distributors fear that a ban will further constrict the flow of investments in mutual funds.

The industry has seen a net outflow of ` 8,000 crore in equity funds and has lost over 6,00,000 folios since the ban on
entry loads in August 2009.

However, experts feel this is needed in the larger interest of investors. “ A ban on third- party cheques may make it
difficult for a handful of investors, but it will prevent such frauds and should be enforced,” says Dhirendra Kumar, CEO of
Value Research.

He is right. Suris may not be the only victims of such fraud or Kumar the only perpetrator.

When was the last time you checked whether your SIP cheque has been correctly credited and recorded in your mutual
fund statement? Would you notice if the friendly broker took out one of the 24 post- dated cheques you gave him for
investing in a mutual fund? Apart from mutual funds, a host of financial transaction allows one to use third- party cheques.
One can argue that third- party payments should be allowed for urgent transactions, such as bill payments and EMIs,
because the borrower may be facing an emergency. But investing in a mutual fund doesn’t have to be an urgent affair.

“ Banning third- party cheques will also curtail misuse of the facility to transfer wealth or hold pseudo investments,” says
Rajesh Krishnamoorthy, managing director of iFast Financial Advisers, an online distributor of funds.

AMFI has now changed the rules and asked fund houses not to accept third- party payments after November 15. In a best
practice guidelines circular issued to AMCs last week, AMFI said that third- party payments would only be accepted in case
of payment by “ parents/ grandparents/ related persons on behalf of a minor for a value not exceeding ` 50,000 ( each
regular purchase or per SIP installment); payment by employer on behalf of employee under systematic investment plans
( SIP) through payroll deductions and custodian on behalf of an foreign institutional investor ( FII) or a client.”

Meanwhile, the Suris are in a quandary. The police have registered a case against Kumar, who is absconding. Their only
hope is that he has not blown away their savings and that they will be able to salvage some of it in their sunset years.

THE THIRD- PARTY PITFALLS

YOU CAN AVOID

Here are the financial transactions that allow third- party cheques and the ones that are
open to fraud.

INSURANCE

The cheque is in the name of the insurance firm & does not specify the policy or investor.

Some insurers insist that the policyholder write his name & policy No. on the back of the cheque. The chances of fraud are
lower since buying a new insurance plan is a long- drawn process, there is a lock- in period of 3- 5 years.

MUTUAL FUNDS

As the case of Kulbhushan and Vinod Suri illustrates, this is a fecund ground for frauds.

Cheques are usually made out in the names of the individual scheme but there is no certain way to ensure that they will be
used for investments in the issuers’ name.

BILL PAYMENTS
Your credit card payments are perfectly safe because the cheque specifies the credit card account. It is the same for
telephone bills made out to specific accounts. But in some cases, the cheques are issued in the name of the service
provider or the utility.

LOAN REPAYMENTS

Banks and other lenders generally don’t object if a borrower decides to repay the loan with a cheque from a third party.

However, this also means your EMI or the prepayment cheque could be misused if it falls in the wrong hands.

FIXED DEPOSITS

In this case too, the cheque may be misused because it does not specify in whose name the investment is being done.

However, cheques for contributions to the public provident fund specify the account number and, therefore, cannot be
misused.

WHO IS MOST VULNERABLE?

Here are afew circumstances in which individuals are likely to be targeted by scamsters. Find out if you are in
any risk.

PEER PRESSURE: If everybody around you is putting money in something, not following suit seems like an opportunity
slipping away. The comfort of moving with the crowd lulls your analytical ability, making you overlook the fine print.

PRECARIOUS FINANCES: If you are not doing too well financially, you would be willing to take brazen risks in a
desperate bid to catch up with the Jains. That’s why low- income earners are the biggest customers of lottery tickets.

SUDDEN NEEDS: A sudden need for cash can also result in financial distress, forcing people to take hasty decisions they
may repent at leisure.

LURE OF GAINS: The lure of scoring big is so overwhelming that investors often overlook all the negatives.

The human mind is more sensitive to the amount of potential gain than the probability of earning it.

This is why the Nigerian scam has so many people trying to help overthrown dictators.

SENIOR CITIZENS: As families turn nuclear and children move out, scamsters find it easy to target elderly people and
their hard earned money.

A trickster will try to gain confidence by showing sympathy and kindness.

BEREAVEMENT: The death of a loved one can numb the mind and prevent a person from taking rational decisions. This is
another time when a gesture of sympathy will make a person start trusting even perfect strangers.

States mull taxes on caller tunes & MMS

By Sanjay Singh in New Delhi caller

Ringtones &other ops on mobile to get costlier

BE READY to pay more for caller tunes, ringtones, content downloads like wallpapers, screensavers and other value- added
services ( VAS) on your mobile handsets as some states, including Delhi and Maharashtra, are exploring the possibility of
imposing entertainment tax for these features.

However, states are eagerly awaiting the Delhi High Court verdict, expected by early next month, on directto- home
( DTH) service providers contesting the government’s decision to charge ` 20 for each DTH connection as entertainment
tax and have filed writ petitions in the Delhi High Court.
“ If the court’s verdict goes in our favour, we will definitely look into the issue ( imposing entertainment tax of mobile
VAS). It is the right of the government to impose taxes on value- added related mobile features, which falls in the
entertainment category,” a top Delhi government official with the entertainment taxation department told M AIL T ODAY . “
There is a content of entertainment for the VAS availed and so it would attract taxes.

These tunes and services basically are for entertaining the caller, hence these should be taxed. Imposing of taxes on
mobile VAS has become necessary because of major technological innovations taking place,” he added.

Mobile VAS are premium services offered by cellular operators and service providers and include non- voice services.
Currently the government charges service taxes for all voice and VAS services.

The Delhi government had amended the Delhi Entertainment and Betting Tax Act bringing DTH users in the tax net. “ This
will also be applicable for mobile related value- added services like ringtones, caller tunes and other content downloads,”
the official confirmed.

Recently, the Maharashtra government had said that an entertainment tax of 25 per cent may be levied on caller ring-
back tones in the state. A proposal to this effect has been sent to the state’s finance department for approval.
Subsequently, it would be presented before the state cabinet for final nod.

A top official in the department of telecommunications ( DoT) confirmed that some states have already approached it to
know the technicality of how they could charge entertainment taxes on mobile VAS. Mobile VAS and applications, which fall
under the ambit of entertainment taxes, include MMS ( multimedia messages), mobile radio, USSD ( interactive menu-
based services), CRBT ( caller ring- back tone), video streaming and mobile advertisements, besides participation in polls
and contests and location based services.

Other features where taxes would be applicable include instant messaging, infotainment services ( news, weather reports,
songs, recipes), content downloads ( wallpapers, screen savers, games, ringtones), mCommerce ( financial transactions)
and other downloadable mobile applications.

The telecom lobbies namely Cellular Operators Association of India ( COAI) and Association of Unified Telecom Service
Providers of India ( Auspi) are currently preparing to contest the issue if states go ahead with charging entertainment
taxes on mobile VAS. The mobile VAS industry is betting big on the launch of 3G and mobile broadband services, which are
expected to be rolled out from September this year.

According to OnMobile chairman and chief executive officer ( CEO), Arvind Rao, the mobile VAS industry expects a
turnover of ` 1 lakh crore by 2020, up from ` 15,000 crore currently.

At present, about nine to 12 per cent of a telecom operator’s revenues come from VAS. It is estimated that the Indian VAS
market, including messaging, mobile Internet, social networking and mobile payments, stood at ` 16,650 crore in 2009. It
is expected to cross ` 21,940 crore this year. Rao said VAS would be a larger industry than advertising or media.

No clear judgment on
‘ donation’ in schools

By Rosy Kumar

ADMISSION to a good public school, no matter at what cost, is the desire of every parent. This
involves costs like high — and sometimes unbearable — tuition fee, sports fee and library fee, among
others. Then there are invisible costs like development charges, building charges, advertisement in the school magazine
for which the parents are compelled to contribute. It is another thing that such heavy charges are not termed as ‘
donations’. Every admission also involves a security deposit. Once upon a time it used to be a few hundred rupees. But
now it runs into several thousands and varies from school to school.

Security deposits are generally taken in business dealings as a security against risks, such as timely payment for goods
supplied. Even in such transactions a reasonable interest is given to the depositor. There is no such risk in the case of
schools because all fees are taken on quarterly basis much in advance. Though named ‘ refundable security deposit’, the
schools pay no interest on these hefty amounts. Instead, the schools use these amounts for the period the students study
in the institution.

In 1987, the ( Monopololies and Restrictive Trade Practice) MRTP Commission noticed this undesirable practice and
initiated a Restrictive Trade Practices Enquiry ( No. 1626 of 1987) against Apeejay School, Panchsheel Park, New Delhi.
The Commission found that the respondent school was engaged in imparting education to students on payment of fees. It
was also taking refundable security deposit of ` 500 from every student on which no interest was paid to the parents. After
an elaborate enquiry, the MRTP Commission passed an order on April 24, 1991, holding that “ nonpayment of interest on
the refundable security is prima facie objectionable and is a IT’S A COMMON PRACTICE: Following the SC verdict, schools
have reverted to their earlier practice of taking security deposits and paying no interest on their return.

By Rosy Kumar restrictive trade practice within the meaning of Section 2( o)( ii) of the MRTP Act, in as much as it brings
about manipulation of prices so as to impose on the consumers unjustified costs”. It held the practice as prejudicial to
public interest and passed a “ cease and desist” order directing the school to pay interest on all the refundable security
deposits at the prevalent bank rate when those are refunded.

Against this order of the MRTP Commission, Apeejay School filed an appeal in the same year. After ten long years, the
Supreme Court on October 9, 2001 delivered its judgment on the appeal. The apex court reversed the order of the MRTP
Commission. However, the reason given by the Supreme Court in its judgment seems a bit peculiar. It has observed that
based on the material available on record, it is the case of the appellant ( school) that this is a practice adopted by almost
all public schools and is in no manner a restrictive trade practice. Hence, the Commission could not have come to a
conclusion so as to attract the provision of Section 2( o)( ii) or Section 37( 1) of the Act.

The consumers of the services of the educational institutions are back to square one. The Supreme Court judgment is
binding on all and the resultant effect ther