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Employees’ State Insurance Act, 1948 : details you must know

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This article is written by Neelabh Keshav Sinha, a first-year student from Symbiosis Law School, Noida who is pursuing BBA LLB. The article provides an overview of the Employees’ State Insurance Act and its different provisions, along with a few landmark judgments.

Introduction 

The Employees’ State Insurance Act incorporates a number of sections, these sections provide for medical benefits and insurance for any employees working under factories registered under the ESI Corporation. This is an exciting prospect from both an employee’s and a legal perspective as the beginning of a formal social security program in India.

This article will explain the highlight sections of the Act, as well as elaborate landmark cases that prove the authenticity of the scheme, and how it worked for the benefit of its employees at times of need.

Application and scope of the Act

The Employees’ State Insurance Act, 1948 (ESI), enables the financial backing and support to the working class in times of medical distress such as:

  • Sickness.
  • Maternity Leave.
  • Disorders(mental or physical).
  • Disability.
  • Death.

It is a self-financed initiative, which serves as a type of social security scheme, to prevent the working class from any financial problems arising out of the above medical issues.

Constitutionality of the Act

The ESI Act serves as a constitutional instrument because of its practice of providing insurance and medical insurance. While the ESI Act is mostly executed through the ESI Corporation, the Central Government takes control of most of the proceedings.

This control by the Central Government largely contributes to the constitutionality of the Act, because Insurance, be it public or private, is listed in the Seventh Schedule of the Indian Constitution as a Union List subject i.e. it can only be legislated by the Central Government.

Corporation, Standing Committee & Medical Council

Establishment of Employees’ State Insurance Corporation

The ESI Act exercises its function through the Employees’ State Insurance Corporation, established via Section 3, a body created to maintain social security. It was established on 24 February, 1952. The corporation is supposed to grant relief to the employees in case of medical emergencies.

Constitution of Corporation

The composition of the ESIC is defined in Section 4, and it is as follows:

  • The Director-General.
  • Chairman, appointed by the Central Government.
  • Vice-Chairman appointed by the Central Government.
  • Not more than 5 persons nominated by the Central Government.
  • 1 person to represent each state.
  • 1 person representing the Union Territories.
  • 10 persons representing employers.
  • 10 persons representing employees.
  • 2 persons representing the medical profession.
  • 3 members of parliament (2: Lok Sabha and 1: Rajya Sabha).

Term of office of members of the Corporation

Via Section 5, the following members are appointed for up to a 4 year period:

  • Director-General.
  • Chairman.
  • Vice-Chairman.
  • The 5 people nominated by Central Government.
  • The members representing each state.
  • The members representing each Union Territory.

Eligibility for re-appointment or re-election

An outgoing member of ESIC, the Standing Committee of ESIC, or the Medical Benefit Council is automatically eligible for re-appointment or re-election into office as the case may be, at the pleasure of the appointing Central Government.

Authentication of orders, decisions, etc.

The signature of the Director-General of ESIC is the only necessary requirement to authenticate an outgoing order or a decision, there is no other way to authenticate or enforce an order.

The Director-General can also temporarily delegate his authority to any other officer. In this case, the signature of the authorised officer will also suffice to authenticate an order.

Constitution of Standing Committee

The composition of the Standing Committee of ESIC is as follows:

  • A chairman appointed by Central Government.
  • 3 members within the corporation representing 3 state governments.
  • 3 members within the corporation representing employers.
  • 3 members within the corporation representing employees.
  • 1 member within the corporation representing the medical profession.
  • One MP belonging to the corporation.
  • The Director-General.

Terms of office of members of Standing Committee

The following members are appointed for a two year period: 

  • The Chairman.
  • The 3 members representing the states.

Medical Benefit Council

The Medical Benefit Council is an advisory body on matters related to the administration of medical benefits under the ESI scheme. It consists of:

  • The Director-General of ESIC as Chairman.
  • The Director-General of Health Services as co-Chairman.
  • The Medical Commissioner of ESIC.
  • One member for each state appointed by State Government.
  • Three members representing employers.
  • Three members representing employees.
  • Three members including one woman representing the medical profession.

Tenure of the members of the Medical Benefit council

The following members of the Medical Benefit Council are appointed for a period of 4 years, these are:

  • The Director-General of ESIC as Chairman.
  • The Director-General of Health Services as co-Chairman.
  • The Medical Commissioner of ESIC.
  • One member for each state appointed by State Government.
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Resignation of membership

The resignation of a member of the Corporation is complete when a notice for the same, in writing, is delivered to the Central Government, and his seat shall fall vacant upon acceptance of his resignation.

Cessation of Membership

A member of the ESIC shall cease to be a member of his respective body (Corporation, Standing Committee or Medical Council) upon failing to attend three consecutive meetings. However, the same member can be restored by the concerned body via the rules made by the Central Government.

If in the opinion of the Central Government, any employer, employee or medical representative fails to represent their qualification, they shall cease to be members of ESIC.

Disqualification

A person can be disqualified as a member of ESIC if:

  • If he is declared to be of unsound mind by a qualified court.
  • If he is an undischarged insolvent.
  • If at any time, he has been convicted of an offence regarding moral turpitude.

Filling of vacancies

Any vacancy in the office of ESIC shall be filled by appointment or election, as the case may be.

A member of ESIC can only hold the ex-member’s spot in the respective committee, if the original holder of that position was found to be eligible for the same. Otherwise, the position is void.

Fees and allowances

The fees which are payable to the members of the ESIC for their services can be payable at any time, at the discretion of the Central Government. There is no definitive schedule.

Principal Officers

The Principal Officers referred to under this Section are the Director-General and/or Financial Commissioner, to act as the CEO for ESIC.

They serve as whole-time officers and are not permitted to undertake any work outside of office jurisdiction without the sanction of the Central Government.

The time period for the appointment of any principal officer may not exceed 5 years.

The operation of their fees, disqualification, and cessation of seats operate in the same manner as that of their subordinates.

Staff

ESIC has the jurisdiction to employ staff of officers as may be necessary for the optimum running of the corporation, however, according to the prerequisites in Section 17, the sanction for creating any staff position has to be acquired from the Central Government. Their salary shall be prescribed by the Central government within a particular range, which cannot be exceeded.

The scale of pay will be determined on the basis of their educational qualifications, method of recruitment, duties, and responsibilities, etc.

Powers of the Standing Committee

The Standing Committee, with its powers defined in Section 18, shall administer the affairs of the Corporation and may exercise any of the powers and perform any of the functions of the Corporation, while authorised and under the jurisdiction of the corporation.

The Standing Committee shall submit for the consideration and decision of the Corporation all such cases and matters as may be specified in the regulations made in this behalf.

The Standing Committee also, in its discretion, may submit any other case or matter for the decision of the Corporation.

Corporation’s Power to promote measures for the health  of insured persons

ESIC, in its jurisdiction, may take initiatives that promote health and welfare amongst its employees, while also promoting rehabilitation and re-employment for past employees who were injured or disabled in the course of employment.

The funding and expenditure for such initiatives is at the discretion of the Central Government.

Meetings

ESIC, its Standing Committee, and its Medical Council shall meet periodically to observe rules and procedures in regard to the efficient functioning of the corporation. Such observations can be specified as per the regulations in regard to the meeting.

Supersession of the Corporation and Standing Committee

The supersession of the Corporation and the Standing Committee occurs when there is a persistent failure to perform the duties prescribed to both parties. In such a case, the Central Government, via a notification in the Official Gazette, can take the place of the corporation, or with the consultation of the corporation, can take the place of the Standing Committee.

The supersession of the corporation will take place by rendering all of the seats of the corporation, previously occupied by the members, as vacant.

In the case of the Standing Committee, a new one shall be constituted immediately as per Section 8 of the ESI Act.

Duties of the Medical Benefit Council

The Medical Council’s functions are as follows:

  • Advise the other two ESIC bodies on matters relating to the implementation that would be beneficial in the medical field. It acquires certification for the grant of medical benefits.
  • Investigate against complaints lodged against medical practitioners with relevance to the medical relief offered.

Duties of Director General and the Financial Commissioner

The duties of the Director-General and Financial Commissioner are prescribed by the ESI Act itself in accordance with the Central Government. These tasks may concern various arenas from management to miscellaneous tasks.

Validity of the act of the Corporation

No act of any ESIC body shall be termed as invalid with respect to their own rules and regulations. Invalidity cannot be claimed on the eligibility or ineligibility of a particular member of that office.

Regional Boards, Local Committees, Regional and Local Medical Benefit Council

The Corporation may appoint Regional Boards, Local Committees and Regional and Local Medical Benefit Councils in such areas and in such manner, and delegate to them powers and functions.

Finance and Audit

Employees’ State Insurance Fund

The Employees’ State Insurance Fund is the primary monetary source for the ESIC to perform its functions. All contributions paid under this Act and all other money received on behalf of the Corporation shall be paid into this fund to be held and administered by the Corporation.

These could be in the form of grants, donations or gifts by the government.

Expenses of the fund

The ESI Fund is responsible for maintaining the expenses of ESIC, which are as follows:

  • Payment of benefits and provision of medical treatment and attendance to insured persons and their families, if required.
  • Payment of fees and allowances to members of the Corporation, the Standing Committee and the Medical Benefit Council, the Regional Boards, Local Committees and Regional and Local Medical Benefit Councils.
  • Payment of salaries, leave and joining time allowances, travelling and compensatory allowances, gratuities and compassionate allowances, pensions, etc.
  • Establishment and maintenance of hospitals, dispensaries, and other institutions and the provision of medical and other ancillary services for the benefit of insured persons and their families, if required.
  • Payment of contributions to any State Government, local authority or any private body or individual, towards the cost of medical treatment and attendance provided to insured persons and their families, if required.

Administrative expenses

Administrative expenses are termed so, those expenses which cover the costs of administration of ESIC, prescribed by the Central Government.

Holding of Property

ESIC is subject to conditions prescribed by the Central Government, in terms of acquiring, hold, sell or transfer any property, movable or immovable, vested in or acquired by it, so as to fulfill the purposes of the corporation. The ESIC also has the ability to invest in property as and when required, under the jurisdiction of the Central government. It can also delegate property for the benefit of its staff.

Vesting of the property in the Corporation

Any and all property acquired by ESIC, before its establishment, will be brought into the accounting books of the corporation.

Budget Estimates

Every year, ESIC frames and projects a potential budget showcasing how much expenditure it proposes to incur, and how it will discharge its liabilities during the following year. This is then submitted to the Central Government for approval.

Accounts

The Corporation shall maintain correct accounts of its income and expenditure in such form and in such manner as may be prescribed by the Central Government.

Audit

The Corporation prepares accounts regularly which are audited annually by the comptroller and Auditor-General of India, and any audit which leads to an expenditure will be payable to the above parties.

Any person appointed by the Comptroller and Auditor-General to act on their behalf will temporarily have the same powers as the above parties and are authorised to demand the production of books, accounts, connected vouchers, and other documents and papers. They shall also be authorised to inspect any offices of ESIC at any time.

The accounts of the Corporation, before being forwarded to the Central Government, have to be verified by the Comptroller and Auditor-General, or any of their representatives. After verification, the accounts can be forwarded to the Central Government along with any comments on the report, given by the above parties.

Annual report

The Corporation shall submit an annual report of its work and activities to the Central Government.

Budget etc. to be placed before Parliament

The annual report, the audited accounts of the Corporation along with the report of the Comptroller and Auditor-General of India, and the comments of the Corporation on such report under section 34 and the budget, as finally adopted by the Corporation, shall be placed before the Parliament.

Valuation of assets and liabilities

The Corporation shall, at intervals of three years, have a valuation of its assets and liabilities made by a valuer appointed with the approval of the Central Government: Provided that it shall be open to the Central Government to direct a valuation to be made at such other times as it may consider necessary.

Contributions

All employees to be insured

All employees employed in the factories which meet ESIC prescribed rules (under Section 2) are insured for all the benefits offered by it.

Contribution

  • The contribution is a determinable amount of money payable by both the employer and the employee, as per the situation, to the corporation.
  • The rates, while usually prescribed by the government, are not set in stone, and are subject to change. Rates defined by the government are mostly set as the unit standard for the contribution payable by the employer.
  • In the case of the employee’s contribution, the wage period in relation to the respective employee shall be held as a unit to determine the compensation payable, and are normally due on the last day of the wage period.
  • Failure to pay contributions by the employer will make him liable to pay an interest rate of 12%.

Principal employer to pay contribution in the first instance

  • The primary employer has to collectively pay the contribution, both his own and that of his employees, regardless of whether they are directly employed under him or are working through an immediate employer.
  • If a directly employed employee fails to pay his contributions, then the employer can recover that contribution only by deducting the wages of said employee.
  • The employer bears all the transfer costs of the payment to the Corporation.

Recovery of contribution from the immediate employer

In the case of an employee who is indirectly employed under the principal employer, via an immediate employer, the principal employer shall be entitled to recover the payment made on behalf of an indirect employee, from the immediate employer, as a debt payable to him.
The immediate employer also has to prepare a list of all the employees under him and submit the same to the principal employer, before paying his dues.

General provisions as to payment of contribution

In case an employee’s wage falls below the prescribed wage range prescribed by the Central Government, the employee shall not be liable for his contribution and it shall not be payable.

Method of payment of contributions

The manner for payments which the Act provides regulations for, has been elaborated in the following conditions:

  • The nature and time of contribution being paid.
  • Payment which involves the usage of stamps or other adhesives fixed upon the books of accounts, or any other documents.
  • The evidence of the contributions, which reaches the Corporation, is to be dated.
  • The different entries in the books of accounts along with the details of the insured persons.
  • The replacement of documents which have been lost, destroyed or defaced.

Employers to furnish returns and maintain registers in certain cases

According to the provisions given as per the ESI Act, the principal and immediate employers are to submit all the investment profits, as well as any and all details relating to their employees in any factory under their jurisdiction. In case of failure to submit a return, that the corporation had reasonable cause to believe, should have been submitted, the corporation can require the employers to present all the details.

Social Security Officers and their functions

ESIC has the power to appoint persons as Social Security Officers. Their functions are mostly to serve a role in inspecting the function of the corporation.

  • If required, he can acquire any information from any employer as he sees fit.
  • He can enter any corporation at any time and can get all the accounts, books and other employment documents presented to him without any due notice. This can include information like wages, expenses, etc.
  • He can inspect and look into any matter regarding the employers and employees as and when required under the jurisdiction of the court.
  • He can make copies or take extracts from any register or account back as per his discretion.

Determination of Contribution in certain cases

A Social Security offer is restricted from exercising his functions and discharging his duties, if the accounting statements of the factory/establishment are not submitted, or not maintained in accordance with Section 44 of the ESI Act. As such, the Corporation may, with the available information, determine the contribution(defined under Section 39) amount payable to employees. However, this procedure will not take place until after the person in charge has been given a reasonable opportunity to be heard regarding the absence of such records.

Appellate Authority

In the scenario specified in Section 45A, once the employer in charge is heard, and he is not satisfied with the verdict given by the corporation, he may prefer an appeal to an appellate authority as may be provided by regulation, within sixty days of the date of the verdict. He must also pay a sum of 25% of his calculated contribution, in order to file the appeal. In case he is successful, the corporation will also refund the contribution paid by him.

Recovery of contributions

Any and all contributions which are payable under the provisions of ESI Act, can be recovered, termed as ‘arrears of land revenue’.

Issue of certificate to the Recovery Officer

In lieu of Section 45B, where the contribution is to be recovered, an authorised officer of the corporation issues a certificate bearing his signature and the amount to be recovered, to a Recovery Officer, who then proceeds to recover the amount specified from the factory where the default took place. He does this via:

  • Attachment or sale of the property of the factory, or the employer, as per the situation.
  • The arrest of the employer and getting him detained in prison.
  • Appointing a receiver for the management of the property acquired, be it from the factory or the employer.

Recovery Officer to whom the certificate is to be forwarded

For the contribution certificate to be forwarded to the Recovery Officer, the factory employer must be under the jurisdiction of the Officer in the following ways:

  • The location where the employer carries on his business and where the factory is located.
  • The location where the employer resides or he has any personal property situated within the Officer’s jurisdiction.
  • The inability to recover the amount solely through the sale of property alone.

The inability to recover the amount solely through the sale of property alone

The analysis of the recovery amount, as per the certificate issued to the Recovery Officer, operates on his word only. The factory or any authority related to it cannot question the Officer on the correctness of the mount, and no objection shall be entertained. However, with a prior intimation, an arithmetical mistake can be corrected by an authorised officer, along with any orders about withdrawal or cancellation of a certificate.

Stay of proceedings under certificate and amendment or withdrawal thereof

It is at the discretion of the Recovery Officer, within the boundaries of the ESI Act, to halt legal proceedings if the time he has allocated for the recovery of an amount, has expired.
The Recovery Officer is also entitled to receive constant updates about the status of payment of any due amount.
If, as a result of an appeal, the amount due is decreased, then the Recovery Officer temporarily halts the recovery of the now decreased amount.

Other modes of recovery

Some of the other modes of recovery are elaborated within Section 45G. These are rarer modes of recovery, due to the primary modes of recovery often being preferred:

  • The defaulting employer may be required to pay a sum which was deducted from the arrears after the sale of the property.
  • There might not be any penalty issued but the defaulting employer would be required to pay the entire outstanding amount directly to the Director-General of the Corporation.
  • Any joint shareholders who held money with the defaulting employer might be forced to give up their shares to the Corporation until they are equal to the defaulting employer’s shares, as compensation.

Application of certain provisions of the Income-tax Act

The arrears of the amount of contributors, which are to be sold to cover the remaining costs, can be affected by decisions from the Assessing Tax Officer or Tax Recovery Officer. They can make changes which shall apply to all the interests and damages.

Benefits

Section 46 of the ESI Act grants benefits to employees as social security in case of injury, which can be availed during the course of employment. There are 6 types of benefits that can be availed: 

  • Medical benefit.
  • Sickness benefit.
  • Maternity benefit.
  • Dependants’ benefits.
  • Disablement benefits.
  • Other benefits.

Medical Benefits

These benefits are guaranteed to the employee as soon as he/she is hired, with the benefits extending to their family members as well.

This benefit covers the payment of all treatment expenses in lieu of medical issues faced by the employee

Sickness Benefits

The employees covered by the ESI Act can avail periodical payments in case of sickness as per Section 46(1)(a), as long as the medical condition is verified by the appointed medical practitioner.

The compensation is approximately 70% of their wages, with the upper limit for availing compensation being 91 days in a year.

In a period of 6 months of employment, the employee must have been working for a minimum of 78 days, else the benefit cannot be claimed.

Maternity Benefits

As per Section 46(1)(b) of the ESI Act, an insured woman can claim periodical payments in case of occurrence of any of the following situations:

  • confinement (labour leading to birth or birth after 26 weeks)
  • miscarriage
  • sickness arising out of pregnancy
  • premature birth of child

The benefit is payable for three months, with an extension of one month, if required. The minimum work duration must be 70 days in the year preceding the year of pregnancy. 

Dependants’ Benefits

Section 46(1)(d) prescribes periodical payments(often made monthly) to the dependants/family members of the person who dies during the course of employment, with the cause of death being an employment injury or an occupational hazard. Compensation is generally 90% of the employee’s wages.

Disablement Benefits

In case an employee suffers an injury during the course of employment which results in their disablement. The nature of the disablement may be temporary or permanent. Unlike the other benefits, there is no minimum work contribution required to avail the disablement benefit, although eligibility for the same will be determined by the Medical Board.

This determination also affects the amount of compensation granted, if any, with the general percentage of wages granted being around 90%.

Other Benefits

‘Other benefits’ refer to the miscellaneous benefits apart from the five major benefits that can be availed by the employees. These are as follows:

  • Funeral Expenses: Compensation of Rs. 10,000 is granted to the eldest surviving member of an employee’s family to perform his last rites.
  • Vocational Rehabilitation: The benefit is payable to disabled employees undergoing rehabilitation.
  • Old age medical care: This benefit is available for retired employees, or those who eft employment after suffering an injury, with general compensation being Rs. 120 p/m.

Scheme for other beneficiaries

Scope of Section 53 and 61 

Section 53 of the ESI Act acts as a deterrent for employees, in order to prevent them or their families from claiming benefits provided under the scope of Workmens’ Protection Act, so long as they are still insured under the reliefs offered by the ESI Act.

Section 61 acts like an extension to Section 53, in the sense that while Section 53 only bars employees from receiving compensation under the Workmens’ Compensation Act, Section 61 bars employees from receiving compensation from any other enactment so long as they are still insured under the ESI Act.

Power to frame scheme

The Central Government holds the power to frame schemes for other beneficiaries and their family members, mostly for providing medical facilities in ESI hospitals. However, this must be within the framework of the ESI Act and must be notified in the Official Gazette.

Scheme for other beneficiaries

Schemes implemented for beneficiaries may cover for a number of matters such as:

  • The time and nature of the usage of medical facilities.
  • The presentation of particulars and details about the beneficiary and his family as per the needs of the Corporation.
  • Miscellaneous matters which may be necessary to fully implement the scheme.

Power to amend schemes

Via a notification in the Official Gazette, the Central Government may add to, amend, introduce variations, or rescind the scheme.

Adjudication of Disputes and Claims

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Constitution of Employees’ Insurance Court

Via a notification in the Official Gazette, an Employees’ Insurance Court will be constituted by the State Government, with a set amount of judges as per the decision of the State Government.

The same court may be appointed for two or more local areas, or two courts or more courts may be appointed for the same local area.

Power of Employees’ Insurance Court

The Employees’ Insurance Court will function with the same powers as that of a Civil Court, in which, to enforce the provisions of the ESI Act, it can enforce witness attendance, compel document and material evidence to be presented, it can administer an oath and can record evidence.

All expenses incurred before a proceeding are subject to the discretion and liability of the court itself.

Reference to High Court

An Employees’ Insurance Court, according to Section 81 may submit any question of law for the decision of the High Court and if it does so, the answer to the question shall hold precedence before any judgment.

Appeal 

Section 82 defines that no appeal can be laid down as against an order from the Employees’ Insurance Court. However, appeals from the High Court can stand if they involve a substantial question of law.

Penalties

Punishments

Sections 84, 85, and 85A cover all the punishments for default listed within the ESI Act.

  • False Statement: Any person caught increasing the payment or benefit to avoid payment by himself is known to make a false statement. Punishable with up to six months and/or with fine not greater than Rs. 2000. Insured persons convicted of this will not be entitled to cash benefits.
  • Failure to pay contribution: Persons failing to pay the contribution, unlawfully deducts wages or benefits, unfairly punishes an employee, obstructs inspector’s duties, etc. can be punishable for up to three years, no less than one year with a fine up to Rs. 10000.
  • Subsequent Punishment: If a person is found committing the same offence twice, he shall be punished with imprisonment for a term extending up to two years with a fine of Rs. 5000 for each subsequent offence.

Power to recover damages

If an employer fails to pay the contributions due in any aspect, whether it be from his side or his employee’s side, the Corporation can recover the deficit from him by way of penalty.
However, this recovery of contribution will not take place until after the person in charge has been given a reasonable opportunity to be heard regarding the failure to pay the contribution.

Power of Court to make orders

Along with the power of the court to recover damages, it also has provisions to enforce judicial orders. If the defaulting employer fails to meet the time conditions for payments that have been stated by the Court, the employer will be deemed to have committed another offence, which can be punishable with imprisonment and/or fines.

Prosecution

Section 86 dictates that any sort of prosecution cannot take place under the provisions of ESI Act unless it has previously obtained the sanction of the Insurance Commissioner or any other authorised authority such as the Director-General of the Corporation. No court lower than a First Class Magistrate can try an offence under the ESI Act, and no Court will take cognizance of any offence reported under this Act.

Offences by companies

Taking inference from the concept of business entity, where every company is its own individual i.e. it is a separate legal entity of its own and can sue or be sued in a court of law accordingly.

As such, when an offence is said to have been committed by a company, all of its managerial employees, who were responsible for the company at the time, will be tried along with the company, deemed to be guilty of the same offence. They are liable for punishment accordingly.

Miscellaneous

Exemptions

Sections 87, 88, 90, 91 and 91A list the criteria under which certain exceptions to benefits can be made under ISA. Via a notification in the Official Gazette, the appropriate government(appropriate here meaning the government exercising more authority, in a closer proximity), can exempt the following from the benefits of the ESI Act(if they were enjoying those same benefits before):

  • Factory/establishment or a class of factories/establishments.
  • Persons or classes of persons.
  • Factories or establishments belonging to the Government or any local authority.
  • Any of the above from a particular provision of the Act.
  • Any of the above to be exempted prospectively for a specified time period.

Misuse of benefits

In case of any misuse of benefits by the insured persons, the Central Government can, at its discretion, publish a notice in the Official Gazette that disentitles such persons from their benefits that they have under ESI Act.

Delegation of powers

The bodies of ESIC possess authority that they can delegate to authorised personnel, at their discretion. These authorised personnel can exercise the powers given to them by their specific ESIC bodies, but only for a temporary period.

Medical care for the families of insured persons 

Medical care is guaranteed for family members of the insured person, covered at the cost of the Corporation if the funds at the time permit the coverage.

Judicial Precedences

Mr. A. Tehan V/S M/S. Associated Electrical Agencies & Anr.

In this case, the plaintiff was under the employment of defendant 1 for carrying out television repairs. On July 17, 1987, he was injured during the course of employment while repairing a television set, when a component burst and he suffered injuries on his face.

After claiming relief from the ESIC Corporation under Section 46 of the Act, he then filed an appeal asking for compensation under the Workmens’ Compensation Act, which required an amount paid by the defendant. 

This was challenged by the defendant in the Bombay High Court via an appeal, which contested their payment of the compensation, and called into usage Sections 38 and 46 of the ESI Act, which lay the foundation for the insurance offered by the Act. (Section 38 guaranteeing that every worker is insured and Section 46 defining the relief available to workers).

This was further verified by the High Court, whose Division Bench further stated that the worker’s appeal for the amount to be paid by the plaintiff could not be upheld. Instead, he would receive appropriate relief, to be determined by the ESIC.

Western India Plywood Ltd V/S Shri. P. Ashokan

In this case, the defendant, P. Ashokan, was appealing to claim damages from the appellant, his employer, ‘Western India Plywood Ltd.’ as compensation for an injury which he had suffered during the course of employment. However, the defendant had already claimed compensation from ESIC for his injuries as he was insured under the ESI Act.

The appeal was filed in lieu of the existence of Articles 53 and 61, the former restricting compensation to be availed from the Workers’ Compensation Act, and the latter restricted compensation being availed from any law or action other than the ESI Act. This bar would only hold if the employee who had suffered the injury had received adequate compensation for the same.

The Full Bench assigned to this judgment then attempted to define what could constitute as ‘adequate compensation’ if an injury had been suffered, for which the reliefs received by the ESIC under Sections 38 and 46 of the ESI Act were eligible as ‘adequate compensation’.

The final judgment laid down by the bench was to both, restrict the employee from getting double relief as compensation from his employer, and to define the objective of Section 53, which was then laid down as not only a bar to guarantee only the required amount of relief for an injury by ESIC, but also to save the employer from facing more than one claim in relation to the same accident, i.e. an indirect form of double jeopardy, in which he may have to compensate twice for the same injury.

Kerala CBSE School Management vs State Of Kerala

This is one of the premier landmark judgments in relation to the ESI Act as the basis of this case is the determination of whether a particular institution can be covered under the ESI Act or not.

The matter originally under contention was the release of a new notification by the Kerala State Government in the Official Gazette, which extended the scope of the ESI Act, i.e. which organisations could fall under it, was extended to schools and other educational institutions. The matter was then decided through the interpretation of the statute in Section 1 of the ESI Act.

It was held that educational institutions, while not being commercial in nature, nor having the functions of a traditional factory, was not completely excluded from the statute itself, and could still be applied as an instrument under the ESI Act.

The deciding contention was when the final responsibility towards educational institutions was discussed. Since the Central Government had a priority to control and manage most educational institutions, the notification which extended the provision of the ESI Act to schools was held valid.

Conclusion

For a working-class employee in India, the ESI Act is an essential utility that works in their favour, while also being beneficial for sectors outside that of the working class.

The ESI Act is unique in the fact that it works in advantageous ways for both employees and employers. While employees are insured under the act and get financial aid in case of an injury, the employers are also protected from being jeopardized twice in lieu of paying compensation to the employees.

The Employees’ State Insurance Act, apart from medical benefits provided to employees, also controls many more indirect aspects of efficiently managing the Corporation established by the Act, be it its sales proceedings, account management or separation of powers amongst its various officers.

References


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.

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IPR issues in Cyber Space and International Regimes relating to IPRs

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This article is written by Shambhavi Tripathi, a 3rd-year student of LL.B. in Panjab University, Chandigarh. The article discusses copyright, trademark and other IPR issues in Cyber Space and International Regimes related to the same.

Introduction

With the advancement and popularity of e-commerce and e-business, it has become important for companies and organizations to protect their intellectual property rights online. These days cyber crimes are not only limited to committing fraud and identity thefts but extend to copyrights and trademarks infringement as well. There are various kinds of IPR related cyber crimes that are committed in order to make money or to draw traffic to their sites. IPR related cyber space issues can be of various kinds:

Copyright issues in cyber space

  1. Linking: “Linking” allows a website user to visit another website on the Internet without leaving that particular website. By clicking on a word or image in one web page, the user can view another Web page somewhere else in the world, or on the same server as the original page. Linking may damage the rights or interests of the owner of the page that is linked to in two ways:
  • linked-to sites can lose income as their revenues are often tied to the number of viewers who visit their home page, and;
  • it may create the impression in the minds of users that the two linked sites endorse each other or are somehow linked to each other.

For example, A makes a homepage for his website, and on the homepage he places some advertisements, from which he can make some money and it contains links to various subordinate pages. Then, B creates his website, which contains links to A’s subordinate pages. This is called deep linking. Because of this, the website visitors to B’s site will be able to gain access to A’s material, without even visiting or seeing A’s advertisements.  

Copyright infringement occurs when one site contains links to copyrighted materials contained in another site against the wishes and knowledge of the copyright owner. Though the person who provides the link may not be making copies themselves, some courts have found the link provider to be partially responsible for copyright infringement.

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In Shetland Times, Ltd. v. Jonathan Wills and Another, the Shetland News’s “deep link” to embedded pages of the Shetland Times’s web site, through the use of Times’ web site’s news headlines, was held to be an act of copyright infringement under British law and an injunction was issued for the same.

  1. Inlining: “Inlining” is the process of displaying a graphic file on one website that originates at another. In inlining, a web site user at a certain site can, without leaving that site, view a particular video featured on some other site. 
  2. Framing: “Framing” is the process of allowing a user to view the contents of one website while it is framed by information from another site. Framing may trigger a dispute under copyright and trademark law, because a framed site alters the appearance of the content and creates the impression that its owner endorses or is associated with the framer.

Trademark issues in cyber space 

A domain name dispute is a conflict that arises when more than one individual believe they have the right to register a specific domain name. A “domain name dispute” arises when a domain name similar to a registered trademark is registered by another individual or organization who is not the owner of registered trademark. All domain name registrars must follow the ICANN‘s Uniform Domain-Name Dispute-Resolution Policy (UDRP).

  • Cyber squatting: Cyber squatting is a kind of Domain name dispute. It includes registering, selling or using a domain name with the intent of profiting from the goodwill of someone else’s trademark. 

Yahoo! Inc v. Akash Arora & Anr (1999 IIAD Delhi 229) the defendants were using “yahooindia.com” for providing internet services. The petitioner here was the owner of the trademark “Yahoo!” and had registered its domain name with different countries like “yahoo.in” for India. Hence, the domain name “yahooindia.com” could be mistaken as an extension of “Yahoo!”. The Court treated the matter as passing off and granted an injunction restraining the defendant from using the domain name “yahooindia.com”.

  • Mate-tags: Meta tagging is a technique in which a word is inserted in the keywords field of the site in order to increase the chances of a search engine returning the site, even though the site may have nothing to do with the word which was inserted. Trademark infringement occurs when companies include in their own websites meta tags containing the names or descriptions of other companies.  For example, Coca Cola used the keyword “Pepsi” in its meta tags, now the web surfers who used search engines in order to obtain information about Pepsi would be directed to Coca Cola’s web site due to these meta tags.

As happened in the case Oppedahl & Larson v. Advanced Concepts (D. Colo. Feb. 6, 1998), the law firm of Oppedahl & Larson, owner of the domain name <patents.com>, filed a trademark infringement action against three companies and the corresponding ISPs after discovering that the companies inserted the words “Oppedahl” and “Larson” in the keywords field of their web pages in order to draw traffic to their sites.

International legal regimes relating to IPRs

  1. Berne Convention: The Berne Convention, 1886, deals with the protection of works and the rights of their authors. It provides creators (authors, musicians, poets, painters etc.) with the ways to control how their works are used, by whom the works are used, and terms of such usage. It contains a number of provisions determining the minimum protection that is to be granted and certain special provisions available to developing countries that want to use them. It is based on three basic principles and the three basic principles are the following:
  1. Principle of National Treatment- Works originating in one of the Contracting States must be given the same protection in each of the Contracting States as the protection latter grants to the works of its own nationals. “Work originating” means works of the author who is a national of that particular State or works first published in that State.
  2. Principle of Automatic Protection- Protection must not be conditional upon compliance with the formalities. 
  3. Principle of Independence of Protection- Protection is independent of the existence of protection in the country of origin of the work. 
  1. Rome Convention: The Rome Convention, 1961 secures protection in performances for performers (actors, singers, musicians, dancers and those who perform literary or artistic works), in phonograms for producers of phonograms and broadcasts for broadcasting organizations.
  2. WIPO Copyright Treaty: The WIPO Copyright Treaty reemphasizes that copyright protection extends only to expressions and not to underlying ideas, procedures or related methods of operation or mathematical concept. It provides that the relevant provisions of the Berne Convention related to reproduction and the exceptions apply in the digital environment and the use of works in digital form. Article 4 of the treaty guarantees the protection of computer programs as literary works in all modes and forms of expression. Article 5 of the treaty recognizes that all forms of compilations of data or other material, by reason of the selection or arrangement of their contents constitute intellectual creations and thereby are protected. WIPO Copyright Treaty addresses three specific rights namely:
  • Right of distribution: The right of distribution confers on the authors an exclusive right of authorizing the making available to the public of the original and copies of their works. 
  • Right of rental: The treaty specifically recognizes the exclusive right of authors of certain types of works in authorizing the commercial rental of their works to the public. 
  • Right of communication to the public: The treaty provides the authors with an exclusive right of authorizing any communication to the public subject to relevant provisions of the Berne Convention. 

Article 10 provides the signatory countries the freedom to impose other limitations or exceptions to the authors’ rights granted under the treaty. Further, the treaty requires signatory countries to provide legal remedies against circumventing of technological measures imposed by authors in order to exercise their rights and to restrict unauthorized use or acts not permitted by law.

  • WIPO Performance and Phonograms Treaty: WIPO Performances and Phonograms Treaty, 1996 (WIPO PPT) is a relatively comprehensive regime in comparison with the WIPO Copyright Treaty. The WIPO PPT imposes a ‘National Treatment’ obligation on the signatory countries to guarantee exclusive rights specifically recognized under the treaty, including the right to equitable remuneration. 

The treaty deals with a range of rights of performers including moral and economic rights and the related rights of reproduction, distribution, rental etc. The treaty also addresses a range of rights related to producers of phonograms. This treaty also deals with the right to remuneration for broadcasting and communication to the public, obligations related to technological measures and rights management. 

  • UDRP: The Uniform Domain Name Dispute Resolution Policy (the UDRP Policy) sets out the legal framework for the resolution of disputes between a domain name registrant and a third party over the abusive registration and use of an Internet domain name in the generic top- level domains (gTLDs) (e.g.,. biz,. com,. info,. net,. org), and country code top- level domains (ccTLDs) that have adopted the UDRP Policy voluntarily. 

According to Paragraph 4(a) of the UDRP Policy, the UDRP Administrative Procedure is only available for disputes related to abusive registration of a domain name. For a domain name registration to be abusive, certain conditions are needed to be fulfilled. The conditions are:

  • The domain name registered by the domain name registrant is identical or confusingly similar to a trademark or service mark in which the complainant (the person or entity bringing the complaint) has rights; and
  • the domain name registrant has no rights or legitimate interests in respect of the domain name in question; and
  • the registered domain name is being used in bad faith.

OECD Convention on Data Protection: In 1980, in an effort to create a comprehensive data protection system throughout Europe, the Organisation for Economic Co-operation and Development (OECD) issued its “Recommendations of the Council Concerning Guidelines Governing the Protection of Privacy and Trans-Border Flows of Personal Data”. This laid down seven principles governing the OECD’s recommendations for the protection of personal data. However, the OECD Guidelines were non-binding and data privacy laws still vary across Europe. The seven principles were:

  1. Notice: Notice to be given to the data subject when their data is being collected;
  2. Purpose: Collected data should not be used for any other purposes other than already mentioned and informed;
  3. Consent: Collected data should not be disclosed without the consent of data subjects;
  4. Security: Collected data should be protected from any kind of abuses;
  5. Disclosure: Data subjects should be informed as to who is collecting their data;
  6. Access: Data subjects should be allowed to have access to their data and make corrections to it; and
  7. Accountability: Data collectors should be held accountable for not following these principles. 

Conclusion

Cyber space is becoming a hub for intellectual property rights infringement of various e-businesses. Certain practices by web site operators have resulted in violation of intellectual property rights or other entitlements of other websites operators. Hence, it has become important that people are aware of the illegal usage of their websites and pages. With the advancement of Cyber space, copyright and trademarks are not limited to the conventional intellectual property but has extended to intellectual property over the internet. There are various guidelines provided by international conventions and treaties to protect IPRs online which are helping e-commerce and e-businesses to expand without any harm to them.

References


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

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Employees Compensation Act, 1923 : Amazing facts to know about it

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This article is written by Madhuri Pilania, a first-year student pursuing BBA.LLB from Symbiosis Law School, Noida. This article deals with the Employees Compensation Act, 1923.

Introduction

Every employee needs a secured job and wants to get compensation for the expenses he has incurred. This is a requirement that needs to be fulfilled by the company whether it is small scale or large scale. After all, a company’s success depends on its employees. Therefore, the protection of employees’ and their safety is a top priority of a company. This article is all about how much compensation is given, under what conditions, who is entitled to claim compensation and a lot more.

Main features of the Act 

The “Employees Compensation Act, 1923” is an Act to provide payment in the form of compensation by the employers to the employees for any injuries they have suffered during an accident. Earlier this Act was known as the Workmen Compensation Act, 1923. When the employer is not liable to pay compensation-

  1. If the injury does not end in the entire or partial disablement of the employee for a period exceeding three days.
  2. If the injury, not leading in death or permanent total disablement, is caused by an accident which is directly attributable to: 
  • The employee having at the time of the accident is under the influence of drink or drugs; 
  • The willful disobedience of the employee to an order if the rule is expressly given or expressly framed, for the purpose of securing the safety of employees; or
  • The willful removal or disregard by the employee of any safety guard or other device which has been provided for the purpose of securing the safety of employees.

Principles Governing Compensation

Who will be receiving the compensation on behalf of the deceased?

  • A widow or a minor who is a legitimate son or unmarried daughter or a widowed mother is entitled to compensation;
  • If the family of the deceased is wholly dependant on the earnings of the employee at the time of his death or a son or daughter who has attained the age of eighteen years;
  • A widower;
  • A parent other than a widowed mother; 
  • A minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate or adopted if married and a minor or if widowed and a minor; 
  • A minor brother or an unmarried sister or a widowed sister if a minor; 
  • A widowed daughter-in-law;
  • A minor child of a predeceased son;
  • A minor child of a predeceased daughter where no parent of the child is alive, or; 
  • A paternal grandparent if no parent of the employee is alive.

Nature of Liability

Imagine what will happen if an employee who is working putting in great benefits gets to know that he/she will not be getting any benefits. After all, people tend to do something to get something in return. When the principle of vicarious liability is applied, the employer is liable to pay compensation irrespective of his/her negligence. Employer anticipates it as damages payable to the employees but it is actually a relief for them. An Employer becomes liable when employees have sustained injuries by any accident or unavoidable situations during the course of employment. The question arises: Will an employee who is a part-time worker would still be entitled to the benefits of the Act? Yes, the employer will still get the benefits of the Act.

Who may get the compensation? To what extent the employers are liable?

To be eligible for the Employees’ Compensation Act’s benefits there are some requirements which need to be fulfilled:

  1. You must be an employee of the Company or Organisation.
  2. You must have been injured at the workplace or the job was as such that you have been injured.

Doctrine of added peril

When an employee performs something which is not required in his duty, and which involves extra danger, the employer cannot be held liable to pay compensation for the injuries caused. In the case of Devidayal Ralyaram v/s Secretary of State. It was ruled that the doctrine of added peril was used as defense and the employer was not liable for the compensation.

Adjudication of Compensation

The adjudication is done by the commissioner in calculation of the amount of compensation. The quantum of compensation is calculated from the date of the accident.

Self-inflicted Injury

If a worker inflicts an injury to himself or herself it is a self-inflicted injury. The injury may be intentional or accidental but the employer is not liable for such injuries. There are some types of jobs that have a high risk for self-inflicted injuries which include-

  • Law enforcement
  • Medical employees
  • Farmers
  • Teachers
  • Salespeople

Contributory negligence

Employees owe a duty to their employers to carry out their work with reasonable care so as to avoid accidents and injury. Employers are vicariously liable for the negligence of their employees but are entitled to claim a contribution or indemnity from their negligent employee in appropriate circumstances. So if there is negligence on the part of both employee and the employer then the employer will be liable to pay compensation to the extent of his own negligence, not of the employee. Hence, the compensation amount may reduce as the employer will not be liable for the negligence of the employee.

Employees’ Compensation

Section 3: Employer’s liability for Compensation

Employer’s liability in case of occupational diseases

There are certain occupations which expose employees to particular diseases that are inherent-

  • Infra-red radiations;
  • Skin diseases due to chemical or leather processing units;
  • Hearing impairment caused by noise;
  • Lung cancer caused by asbestos dust and Diseases due to effect of extreme climatic conditions.

Example- Miners are at a risk of developing a disease called silicosis. Sometimes miners also develop lung diseases due to exposure to dust. The people who work in agricultural lands, develop diseases through spraying of pesticides. These pesticides are toxic in nature and are health hazards to many farmers.

There are thousands of workplaces where occupation itself is dangerous in nature.

Provided that the employer shall not be liable:

(a) if any injury does not result in the total or partial disablement of the employee for a period exceeding three days; 

(b) if any injury does not result in death or permanent total disablement caused by an accident which is directly attributable to- 

  • if the employee is under the influence of drink or drugs at that time, 
  • the willful disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of employees, 
  • the wilful removal by the employee of any safety guard or other devices which he knew to have been provided for the purpose of securing the safety of employees.

Part A of Schedule III

If an employee contracts any disease that is mentioned in occupational diseases or the employee is employed for a continuous period of six months (this does not include the service period) and not less than that, the employer shall not be liable to pay the compensation as the disease will be deemed to be injury and it shall be considered as out of course of employment.

Part B of Schedule III

  1. Diseases caused by phosphorus or the toxic substance present, all include exposure to risk concerned.
  2. Diseases caused by mercury or toxic substances found exposure to the risk concerned.
  3. Diseases caused by benzene or the toxic substances found which pose risk to the concerned.
  4. Diseases caused by nitro and amino toxic substances of benzene involve risk to the concerned.

These diseases are considered occupational diseases, and they are deemed to be out of the course of employment and therefore the employer will not be liable to pay the compensation.

Part C of Schedule III

If an employee contracts a disease that is mentioned as an occupational disease which is specific to that employment, during a continuous period that is less than the period mentioned under this part of Schedule 3 is known as occupational diseases. It will be deemed that the disease has arisen out of and in the course of the employment, the contracting of such disease will be deemed to be an injury by accident within the meaning of this Section: 

Pneumoconiosis is a disease caused by sclerogenic mineral dust (silicosis, anthracosilicosis, asbestosis) and silico-tuberculosis if silicosis is an essential factor in causing the resultant incapacity or death, such diseases are considered as occupational diseases.

For instance, an office of KLM Consultant was located in a new place. The new place had large areas, and a new wallpaper was also placed, the area painted, and a new carpet was also laid. Employees worked in cubicles. However, within a month of shifting, one of the employees, Rahul Sharma complained of skin allergy. At the new workplace, there were no windows in the cubicle where Rahul had shifted. A photocopy machine was near to his cubicle. Since his shifting, he started complaining of unpleasant odors, a feeling of excessive tiredness and irritation in eyes, nose, and throat.

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Also, some paint boxes were kept at the office which was still not removed even after his complaining. He also complained about the increasing noise and distraction there. The rashes which started a week ago with itching and redness now turned more grievous and had spread from the initial location of the hand to surfaces of the wrists. Due to his allergic condition, Rahul had to visit a doctor who advised him to avoid going out. As Rahul had to incur expenses on visiting the doctor and medicines, he approached his employer for compensation. 

The company had bought a workplace compensation insurance policy from the insurance company. The Company KLM Consultant considered it as an occupational disease and approached the employee’s compensation insurance company to recover its legal liability and hence pay the compensation to Rahul.

After checking all the documents submitted by Rahul, the insurer considered it as an occupational disease and agreed to settle the claim. The insurer covered medical expenses incurred by Rahul on his treatment. 

Section 3(3)

The Central Government or the State Government gives a notification in the Official Gazette which species the diseases which will be deemed to be occupational diseases under the provisions of sub-section(2) and in the case of notification by the state government, these diseases are declared by the Act.

Section 3(4)

No compensation will be payable to an employee unless the disease is directly attributable to a specific injury that arises out of or in the course of employment.

Employment

Underemployment, an employee is one who works under the employer and has to work as per the terms of the company or the employer. 

Personal injury

A personal injury can be compensated only in some circumstances. Injury sustained by the employee must be a physical injury. Example- If a person is discriminated on the basis of:

  • Age
  • Sex
  • Sexual Orientation
  • Transsexual person
  • If a person is having a disability
  • Religion and belief
  • Colour, Nationality 
  • Pregnancy and Maternity leave
  • Marriage or Civil Partnership

In the case of Richmond Adult Community College v McDougall (2008), M has suffered injuries mentally, psychological disorders as he was offered a job as a database assistant in a college. But when it learned about the medical history and the psychological disability M was suffering from, the college withdrew the offer. M brought a disability discrimination claim from the college. The tribunal accepted that m was suffering from mental impairment but she was not disabled within the meaning of Section 1 of the Disability Discrimination Act, 1995.

Case Law- G.S.R.T.C. v. Ashok Kumar Keshavlal Parekh

Accident 

The Act provides that compensation is provided to employees and their dependants only if the injuries from the accident includes occupational diseases. The accident must occur in the course of employment the Act also applies to railway servants and persons employed in any such capacity as specified in Schedule 2 of the Employees Compensation Act. The people employed in factories, mines, plantations, vehicles, construction works, and certain other hazardous occupations come under Schedule 2.

A fatal accident is one where there is death or a high risk of loss of life of the employee. In the case of a fatal accident, the employee might die or suffer severe disablements and injuries. On the other hand, non-fatal accidents are those accidents that do not have a high probability of death. In the case of non-fatal accidents, the employee or the workman might suffer disabilities or any type of personal injury.

Both fatal and non-fatal accidents are covered by the Employees Compensation Policy, provided such accidents result in the mentioned contingencies in the act. Fatal accidents are taken as those which result in death, or permanent total disablement, permanent partial disablement or fatal injuries. If any of these contingencies occur, the employees’ compensation policy would pay the claim faced by the company. In the case of non-fatal accidents though, the covered contingencies might not occur. The employee or worker might not face any type of disablement or injury from such accidents. If the employee or workman suffers from a type of disablement and the disablement does not last for more than 3 days, the claim would not be paid. As a result, in several employees’ compensation policies, non-fatal accidents are usually not covered unless they cause a disablement which lasts for more than 3 days. 

In Lister v Romford Ice and Cold Storage Company Limited, House of Lords upheld the decision of the Court of Appeal that an employee owed a duty in contract to his employer to take reasonable care in the use of a vehicle at work. In the event that the employer was liable to pay damages arising from the employee’s negligence, the employer could bring a claim to recover that loss from his employee.

Arising out of and in the course of employment

Three factors determine whether the act is arising out of or in the course of employment:

  • When the injury occurred, the employee must have been engaged in the business of the employer. Also, he must not be doing something for his personal benefit. The accident must occur where the employer was performing his duties.
  • The injuries occurred because of the risk incidental to the duties of the work or services or if the nature or condition of employment is inherent.

Reference Case law: N.A. Chauhan v. N.K. Shah

Notional extension of Employer’s Premises

When there is a causal connection between the accident and the place where the employee is working, compensation is payable for the disability or death of the person according to the Employees Compensation Act. This is the Doctrine of Notional Extension of the workplace. The theory of this doctrine was executed in some cases:

Moondra & Co. V/s Mst. Bhawani

There was a truck driver who was told by his employer to drive a petrol tanker. The driver found a leak in the tank and sought permission from the employer to look for the source of the leakage. While searching he lit a matchstick and the tank caught fire. The driver received burn injuries and died. It was held by the court that the family members of the deceased would be entitled to compensation since the accident took place at the workplace and in the course of employment.

Willful disobedience of orders or safety devices, etc. 

If the employee disobeys the order expressly given or denies to obey any rules. The rules are made for the safety of the workmen but if they disobey the accident might happen. 

The accident can take place if the employee willfully disregards the safety guards or any other device.If the employee knew that he has been provided safety for the purpose of securing employees and still disregards it is said to be done wilfully.

Compensation under Agreement 

A compensation agreement ensures that an individual will get paid for the services he or she has provided to a company as an employee. A compensation agreement ensures that an individual will get paid for the services he or she provides to a company as an employee.

The question of compensation and negligence of employee

The question of compensation and negligence of employees is explained above in contributory negligence. When there is negligence on the part of the employer and employee, the employer is liable to pay compensation only to the extent of his negligence. He will not be liable to pay the full amount of compensation. So in the case of negligence of the employee, he will get only a part of compensation.

Alternative Remedy under Section 3(5)

Any right to compensation cannot be conferred by an employee in respect of injuries,if he has instituted a suit for damages in a civil court, in respect of any injury against any employer. No suit for damages shall be maintainable by an employee in any court of law.

Liability of Insurance Company

If any claim is due to the insurance company, the company cannot escape liability arising out of claim simply because notice was not issued to the company. For instance, if a notice is issued to the owner of the vehicle it is sufficient to get insurance from the company. In the case of Ram Karan v. Vijayanand the petition was filed by Ram Karan under section 482 of the code of criminal procedure because he had been illegally deprived of the benefits of the premature release. It was a violation of Articles 14, 19 and 21 of the Constitution of India. It was held that he was entitled to be released as per the rules.

Liability of Insurance Company or owner of vehicle 

The question is whether the insurance coverage is available to the insured employer-owners? The owner of motor vehicles, in relation to their liabilities under the Employment Compensation Act on account of motor accident injuries caused to their employees would include additional statutory liability foisted on the insured employers under Section 40 of the Compensation Act.

Section 4: Amount of compensation

Where death results from the injury-

In case the employee dies, an amount equal to fifty percent of the monthly wages multiplied by a factor as per given in the Schedule 4 of the act or rupees eighty thousand is given whichever is more.

Where permanent total disablement results from the injury-

In case the employee has total disablement the amount given is sixty percent or rupees ninety thousand whichever is more. 

Where permanent partial disablement results from injury-

In the case of permanent partial disablement, the compensation provided is equal to disability as sixty percent or rupees ninety thousand.

Liability of Insurer

The liability of the insurer is determined on the basis of the wages of the employee. The amount of wages is covered under the insurance policy. The company will be liable to indemnify only that portion of the amount which is under wages.

Causal connection between disease and occupation

The amount of compensation is paid when the insurer certifies that the injury is the result of an occupational disease.

Application of law of pleadings

An application for pleadings can be filed by the employee under the amount of compensation when he/she thinks that the amount that is decided is not appropriate with respect to the injury incurred.

Section 4-A: Compensation to be paid when due and penalty for default

  • When the employer does not accept liability for compensation to the extent claimed, he shall be bound to make a payment may be provisional and such payment shall be deposited to the employee or the commissioner. 
  • The commissioner can direct the employer to pay interest in addition to the amount at the rate of twelve percent per annum. The rate of interest can also increase which may be specified by the Central Government.

Section 5: Method of calculating Wages

The basis for the calculation of compensation is the monthly wage system. It means the amount of wages deemed to be payable for a month. A case dealing with the method of calculating wages was Zubeda Bano v. Maharashtra Road Transport Corporation, 1990.

Batta does not amount to wages for computing compensation. It is paid to workman per day to cover special expenses incurred by him due to the nature of his work. Another case was New ‘India Assurance Co. Ltd., Hyderabad v. Kotam Appa Rao, 1995.

When the employer has been giving service to the employer during a continuous period of not less than twelve months preceding the accident, and when the employer is liable to pay compensation, the employee will be liable one-twelfth of the total wages. The employer is required to pay the compensation which is due for payment to employees in the last twelve months of that period.

Section 6: Review

  1. Any half monthly payment can be reviewed by the commissioner under this act if there is an agreement between the parties or if there is an order given by the commissioner. A certificate of a qualified medical practitioner will be accompanied that there is a change in the condition of the employee subject to the rules and regulations under the Act.
  2. Any half monthly payment may be reviewed, can be continued, increased, decreased or ended under the act or if the accident is found which resulted in permanent disablement. Such an employee may get less amount because he had already received by way of half monthly payments.

Section 7: Communication of Payments

Commutation of half- monthly payments- Any right to receive half- monthly payment agreement between the parties is commutation of payments. If the parties do not agree and the payment continues for not less than six months then on the application of either party, the Commissioner will redeem the payment of a lump sum amount which was agreed by the parties.

Section 8: Distribution of Compensation

Rights of heirs of dependents

  1. Compensation will not be provided to the employee whose injury has resulted in death and lump sum payment will also be not provided who is under a legal disability. The compensation may be deposited to the commissioner and a direct payment will not be allowed by the employer to the employee.
  2. In the case of a deceased employee, an employer can make payment to any dependant advances. The compensation will amount to equal to three months’ wages of the employee and the amount shall not exceed the compensation payable to the dependant. If the amount exceeds, it may be deducted by the commissioner from the compensation and repaid to the employer.
  3. An amount not less than ten rupees which is payable may be deposited with the commissioner on behalf of that person.
  4. The receipt of the commissioner will be sufficient discharge of the amount if any compensation is deposited with him.
  5. When any compensation is deposited with the commissioner and he is payable to any person, he may if the person to whom the compensation is to be payable is not a woman or a person with a legal disability then he may pay the money to the person who is entitled to get the compensation.
  6. When any lump sum amount is deposited with the commissioner and he is payable to a woman or a person who is legally disabled, such amount can be invested for the benefit of any other woman or a person with a disability. The commissioner may direct the amount in such cases.

Section 9: Compensation not to be assigned, attached or charged

Compensation not to be assigned, attached or charged, save as provided by this Act, no lump sum or half- monthly payment payable under this Act shall in any way be capable of being assigned or charged or be liable to attachment or pass to any person other than the workman by operation of law, nor shall any claim be set off against the same.

Section 10: Notice and claims of the accident

A claim for compensation cannot be entertained by a commissioner unless the notice of the accident is given in a certain manner.

Condonation of delay 

It means that if the employee has delayed in claiming for the compensation it is said to be condoned. 

Section 10A: Power to acquire statements from employers regarding fatal accidents 

When a commissioner receives information about the death of an employee, because of an accident that is arising out of or in the course of employment, he can send a registered post or a notice to the employer of the employee, to submit a notice within thirty days of service. The statement or notice shall be in a prescribed form mentioning the circumstances under which the death took place. Also stating that whether the employer is liable or not to deposit compensation on the death of the employee.

Section 10B: Reports of fatal accidents and serious bodily injuries 

A notice is required to be given to any authority when any law is in force for the time being, if any accident occurs on the premises of the employer which results in the death of employee or serious bodily injury the person on behalf of employer is required to give a notice within seven days of the death. This person shall send a report to the commissioner giving details of the death or serious bodily injury. It will be done only when it is provided by the state government that instead of sending the report to the commissioner it is sent to another authority to whom a notice can be given. “Serious bodily injury” means injury to a limb or permanent loss of sight or hearing or fracture of limbs or the insured person is absent from work for more than twenty days.

Section 11: Medical Examination

When an employee brings to the notice that he has met with an accident, before the expiry of three days he will be examined free of charge by a qualified medical practitioner.

If the employee refuses to submit himself or herself for examination or in any way obstructs the same, his right to compensation shall be suspended.

If the employer voluntarily leaves without having been examined in the place where he is employed, his right to compensation shall be suspended until he returns and offers himself for examination.

The incorporation of words “assessment of loss of earning capacity by the qualified medical practitioner” in Section 4(1)(c)(ii) has some purpose and it is not a case of ambiguity.

If there’s no provision that the Commissioner to see the compensation and he ignores the medical practitioner’s report, there is no question of avoiding it by Commissioner.

unless he desires a second report from the Medical Board; New Asian nation Assurance Co. Ltd. v. Sreedharan, 1995.

Section 12: Contracting

Trade or business of the principal

When a person(principal) is in the course of some business or trade, with any other person(contractor) for the execution of any work, the principal will be liable to pay the amount to the employee who has been employed in the business. The principal is liable because compensation has to be claimed from the principal and the amount of wages will be calculated by the employer.

When the principal will be liable to pay he will be indemnified by the contractor or any other person from whom the employee can claim compensation. The agreement between the principal and the contractor about the right amount and indemnity will be settled by the commissioner.

On, in or about the premises

If the accident occurred at a different place that is either on the premises of the workplace or any other place, the employee will not be able to recover compensation from the employer. Other than this no other constraint is there and employees can recover compensation from the contractor instead of principal. 

Section 13: Remedies of employer against a stranger

When an employee recovers compensation as he suffered any injury and creates a legal liability of some other person other than the person by whom the compensation was paid, the other person will be entitled to be indemnified by the person who is liable to pay damages.

Section 14: Insolvency of employer

  1. When an employer enters into a contract with any insurer in respect of any liability to an employee, and if the employer becomes insolvent or makes a composition or scheme or arrangement with his creditors in this event the company is insolvent. The employee can recover the amount of compensation if the company is winding up and it is the case of insolvency.
  2. If in any case in the case of insolvency,the contract of the employer with the insurer is void or voidable due to any reason such as non compliance on the part of the employer, if the contract is not void or voidable the insurer may be entitled to prove in the proceeding or at the time of liquidation for the amount to be paid to the employee.
  3. In case the liability of the insurer to the employee is less than the liability of the employer to the employee, the employee may prove for the balance amount of the compensation in the insolvency proceedings or at the time of liquidation.
  4. When the compensation is a half monthly payment, the amount due for the said purpose will be taken in a lump sum amount. The amount payable will be half monthly payment, if it be could be redeemable it will be proof.
  5. The insolvency of the employer shall not be applied where a company has wound up voluntarily merely for purposes of reconstruction of the company or amalgamation with another company.

Section 14-A: Compensation to be first charge on assets transferred by Employer

When an employer transfers his assets or property before any amount is due to him in respect of any compensation, and the liability accrued is now before the date in law it is the first charge on that part of the assets or property so transferred as it consists of immovable property.

Section 15: Special provisions relating to Masters and Seamen

When the person injured in the aircraft is the master of the ship and he is the employer, but the accident happened and commenced on the ship, it is not necessary for the seaman to give any notice of the accident for compensation for the injuries suffered.

In such cases the death of the seaman or the master, the claim for compensation may be made within one year without the notice after the news of death is received by the claimant. Also if the ship is deemed to have been lost, within eighteen months of the date on which the ship was or is deemed to have been lost.

Section 15-A: Special provisions relating to captains and other members of the crew of aircrafts

If the captain of the aircraft is serving and he is the employer but an accident occurs, any crew member or the captain it is not necessary for any crew member to give notice of the accident.

In such cases the death of the seaman or the master, the claim for compensation may be made within one year without the notice after the news of death is received by the claimant.Also if the ship is deemed to have been lost, within eighteen months of the date on which the ship was or is deemed to have been lost.

When an injured captain or any other crew member of the aircraft or the ship is discharged from any depositions or testimony of a witness is taken by a judge or magistrate the central government or any state government may enforce any proceedings on the basis that the evidence is admissible:

  • if the deposition or testimony of witness is authenticated by the signature of the Judge, Magistrate, or consular officer before it is made.
  • if the person who is accused or he/she is the defendant is having the opportunity by himself or his agent to cross-examine the witness.
  • if the deposition or the testimony of the witness is or was made in the course of a criminal proceeding and the proceeding was made in the presence of the person who is accused. 

Section 15-B: Special provisions relating to employees abroad of companies and motor vehicles

The special provision related to employees abroad and motor vehicles will be applied to the persons or employees who are recruited by the companies registered in India and under the Motor Vehicles Act, 1998.

  • The notice of the accident and the compensation claimed may be served on the agent of the company. Or the notice may be served on the local agent or the owner of the motor vehicle in the country of the accident.
  • In case the employee dies, the provisions made in this section 15-B shall apply. The claim for compensation may be made within one year after the news of the death of the claimant has been received. 
  • Therefore, in case of any compensation claimed, the commissioner shall entertain the claim. Although as provided in the section is not much preferred in due time.

Section 16: Returns as to Compensation

The state government can direct any person who is employing an employee at a specified class, specified time and authority that is specified in the notification of official gazette. The state government may also direct to specify the number of injuries in respect of compensation and the amount that has been paid by the employer during the previous year as compensation.

Section 17: Contracting out

If an employee has made a contract or agreement before or after the commencement of the act, and if he voluntary ceases the right to compensation from the employer it shall be considered null and void. The employee cannot seek compensation for any personal injury arising out of or in the course of employment and the liability will be reduced of any person who is entitled to pay compensation under this Act.

Section 18-A: Penalties

Penalties Arise when whoever-

  • Fails in maintaining a book that is required to maintain under sub Section 3 of Section 10.
  • The person fails to make a report that is needed to send under section 10B.
  • Fails to inform the employee of his rights to claim compensation needed under Section 17A. He or she will be punished with fine which is not less than fifty thousand rupees that can be extended to one lakh rupees.
  • No prosecution can take place under this section.

Commissioners

Section 19: Reference to Commissioner

The question arises about the liability of any person under the act, who will pay the compensation. A question arises about the person who is injured or not or how much amount is to be given or the duration of the compensation. Also about the extent of the disability the person who is suffering and will get compensation. All such issues are to be resolved by the commissioner. 

Jurisdiction of Civil Court

The Jurisdiction of the civil court does not have the authority to settle, decide or deal with questions that are not required to be dealt with under the act if it dealt by the commissioner.

Section 20: Appointment of Commissioner

Commissioner means a commissioner for employee compensation appointed under Section 20. The state government or the central government may appoint any person to be commissioner for workmen’s or employees’ compensation act in some specified areas. Every commissioner is identified as a public servant in the Indian Penal Code.

  1. If the state government appoints more than one commissioner for any area, a specific order may regulate the business.
  2. Any commissioner may choose a person or more persons who possess knowledge and assist him in holding the inquiry.

Section 21: Venue of proceedings and transfer

The provisions under the act will be subject to the commissioner as well if there is a matter related to rules and regulations. The rules made under the act before the commissioner for the area where-

  • The accident happened that resulted in the injury.
  • If the employee dies and if the dependent claims compensation it will reside.
  • Employer’s office is registered.

No matter should be processed before a commissioner other than the commissioner who has jurisdiction in the area where the accident happened. It shall not happen without giving notice in the manner prescribed.

If the employee is the mater of the ship or seaman or a captain or crew member of the aircraft or employee in a motor vehicle, meets with an accident outside India, then such matter shall be done by the commissioner.

Section 22: Form of Application

No other application for any matter of the commissioner for dependants should be made for compensation. Until and unless some question arises between the parties there is no settlement as per agreement.

Liability of insurer 

The insurance company and the insurer are the same and it provides the insurance policies to the employer. The employer takes the insurance for the employee for the risks associated with their work. So when there is an accident and injury occurs the employer claims the insurance for the employee. In this case, the employer is the insured.

Defective application 

An application to a commissioner can be made and it will be accompanied by a fee as prescribed. If the applicant is illiterate or because of any other reason is not able to furnish information in written form then the application shall be in the direction of the commissioner.

Section 22-A 

The power of commissioner is required to further deposit in the cases which talks about fatal accidents-

When any amount is deposited by an employer as compensation payable in respect of an employee whose injuries resulted in his death, and the commissioner thinks that amount or sum was not sufficient, he may state a notice in writing giving reasons, he may call upon the employer to show why he could not make a further deposit within such time as stated in the notice.

If the employer fails to satisfy the Commissioner, the Commissioner may make an award determining the total amount to be paid, and requires the employer to deposit the deficient amount.

Section 23: Powers and Procedure of Commissioners

He has the power to award compensation more than what is claimed by the employee if the facts warrant the award. A case dealing with the commissioner was Karnataka State Road Transport Corporation v. B.T. Somashekaraiah, 1994.

Section 24: Appearance of Parties

A person may appear or become a witness for the purpose of examination, an application or act is required to be made by a person to a commission. It may be done on behalf of a legal practitioner or an official of the insurance company or registered trade union or an inspector appointed under Section 8 of the Factories Act, 1948, or any other officer which is specified by the state government with the permission of the commissioner or a person who is authorised to do so.

Section 25: Method of Recording Evidence

The commissioner makes a brief written message(memorandum) of the evidence of every witness as the examination process proceeds. The memorandum should be in written form and duly signed by the commissioner. The form so signed by the commissioner must be in his own handwriting and it will be a part of the record.

Section 25A: Time limit for disposal of cases relating to compensation

The Commissioner can dispose of the matter relating to compensation under this Act within a period of three months from the date of reference and intimate the decision in respect thereof within the said period to the employee.

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Section 26: Cost

All costs, incidental to any proceedings before a Commissioner, shall, subject to rules made under this Act, be in the discretion of the Commissioner.

Section 27: Power to submit cases

A commissioner can submit a Question related to law so that the High Court can decide the compliance with the standards or rules if the High Court wants to do so.

Section 28: Registration of agreements

A memorandum should be sent by the employer to the commissioner when a lump sum amount is payable as compensation due by the agreement either half monthly payment or payment being payable to a woman or a person with a legal disability. The memorandum must be genuine and should be registered in the prescribed manner.

However, a memorandum cannot be recorded before seven days after the communication has taken place between the commissioner and the concerned parties.

Section 29: Effect of failure to register agreement

The employer will be liable to pay the full amount of compensation if the registration of the agreement of memorandum is not sent to the commissioner as required under the section. The employer will pay the compensation as he is liable to pay under the provisions of the Act (Section 4). Until the commissioner directs to deduct more than half of the amount to be paid to the employee as compensation.

Section 30: Appeals

An appeal may lie to the High Court by following the orders of the commissioner.

  • A lump sum amount as compensation is awarded as an order, and redemption of half the monthly payment is away.
  • An order may refuse to allow gain of a half monthly compensation.
  • Distribution of compensation by order among the family members of the deceased, or disallowing of any claim of a person.

Substantial Question of Law

If there is difficulty in applying the facts to the law it will not amount to a substantial question of law. Reference case- Asmath Bedi(dead) v. Marimuthu.

The period of limitation under section 30 is sixty days if a person makes an appeal. An appeal lies against the order of commissioner who will compensate only when a substantial question of law. The scope in section 30 of the Act for appealing against the order that is passed by the commissioner is very limited. An appeal shall not lie against any order unless a substantial question of law.

Can courts intervene on question of fact? 

Yes, the courts can intervene on the question of fact. This was done in the case of Mangala Ben vs Dilip Motwani. It was first held that there is no substantial question of law. In the opinion of the Court, the finding of the Commissioner does not prove that the deceased was in the employment of the owner. The learned Commissioner further held that the claimant did not produce any evidence to prove that the deceased was employed for the purposes Dilip Motwani’s trade or business. He observed that in the absence of such evidence, the deceased cannot be held to be an employee. In the opinion of the court, the Commissioner committed error of law in holding that the burden lay on the claimant to prove that the deceased was employed for the purposes of the respondent’s trade or business. The appellate court has no jurisdiction to entertain an appeal unless the same involves a substantial question of law, Nisan Springs (Pvt) Ltd v. Om Jain, 1990.

When does an appeal lies?

An appeal lies when there is a judgment passed by the court but the employee or his dependants are not satisfied and then they appeal.

Effect of death of claimant 

If the injury of the employee results in his death, the employer shall give compensation in addition to the compensation that is deposited with the commissioner. A sum of five thousand rupees and not less than that will be given to the eldest surviving dependant of the employee. 

Third proviso to Section 30(1)

Provided further that no appeal by an employer under clause (a) shall lie unless the memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against.

Review, Revision, Remand, and Writ

If an employee is not satisfied with the decision of the court regarding the compensation, he can appeal for review by the court. Review can be made only after the decree is passed by the court or an order is made. If there is an error in the decision by the court appeal can be made for revision which can be done only by the High Court. An employee can writ if he has been wrongly remanded. Remand means In custody of the court.

Appeal not accompanied with certificate by the Commissioner under Proviso (3)

If the appeal is not accompanied by a certificate by the commissioner that is payable and deposited with him then no appeal by the employer under clause (a) shall lie against the law. The period of limitation under the section for the appeal will be sixty days.

Condonation of delay 

If the appeal by the employee is delayed it is known as condonation of delay. An appeal is filed when the employee is not satisfied by the decision of the court and want to appeal again for the decision. So when the employee gets delayed in appealing the suit it will be condoned.

Section 30-A: Withholding of certain payments pending decisions of appeal

The commissioner may withhold the payment of any amount which is deposited with him when an employer appeals under section 30 and it is directed by the High Court.

Section 31: Recovery

The commissioner can recover any amount payable by any person as arrears of land revenue. The commissioner will be deemed to be a public officer if there is an agreement for the payment of the compensation under the meaning of section 5 of the Revenue Act, 1890.

Rules

Section 32: Power of the State Government to make rules

The state government has the power to make rules and regulations for the purpose of this act. These rules provide all the matters without prejudice namely:

  • The state government prescribes certain intervals where an application may be made under Section 6 is subject to conditions when not accompanied by a medical certificate by a qualified practitioner.
  • The state government prescribes some intervals where an employee is required to submit himself to undergo certain medical examination of section 11.
  • The state government prescribes a procedure that needs to be followed by the commissioners. It is required when there is disposal of cases under the act and by the parties.
  • The state government regulates the transfer of matters. It also regulates cases from one commissioner to another and also transfer of money in some cases.

Section 34: Publication of rules

The power to make rules in Section 32 will be subject to the conditions of the rules which are made after previous publication. Rules so published in the Official Gazette will have an effect in the Act.

Section 35: Rules to give effect to arrangements with other countries for the transfer of money paid as compensation

The Central Government may make rules for transfer money to any foreign country which is deposited with a commissioner under the act by a notification. A person who resides in a foreign country or is about to reside may be awarded the money deposited under the law relating to employees. The amount related to fatal accidents shall not be transferred without the consent of the employer under the commissioner.

Section 36: Rules made by the Central Government to be laid before Parliament 

Every rule made under the act by the Central government is laid before each house of parliament while it is in session for thirty days. It may be done in one session or in two sessions before the expiry of the session. The houses may make any modifications in the rule or the houses may agree that the rule should not be made.

Conclusion 

The Act is basically made for the employees so that when they incur expenses for the injury suffered during an accident, they can get compensation from the employers. The basic rule of Vicarious liability applies in the act. The employer is the master and the employee is the servant. The employee gets compensation only when the injury takes place in the course of employment and in the workplace.

References

  1. H.L. Kumar, labor and Industrial law 
  2. Indiankanoon.org 
  3. Labour.Gov.in
  4. Bare Act

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Dividends, Audit and Accounts under the Companies Act, 2013

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This article has been written by Avni Sharma, a 2nd year student intern from National Law University Odisha. The article talks about Dividends, Audit and Accounts and the legal provisions pertaining to the same.

Every company in the market requires maintenance of Dividends, Audits, and Accounts as these form the basis of the financial planning of the company. This article talks about the foundational concepts given under the Companies Act, 2013 (the Act). Dividends are provided under Section 2(35) of the Act and Audits are mentioned under Section 224 of the Act.

In this article, we will have a look at meanings, legal aspects, and case laws in relation to Dividends, Audits and Accounts.

Dividends

The word ‘Dividend’ finds its origin in the Latin term “dividendum” which means ‘to divide’. When a company borrows money from the shareholders, it naturally shares its profits. This share of profit is known as a dividend. Notably, dividends do not form a part of the rights of shareholders but only when the dividends are declared by the company, the right to claim the dividends arise. 

Dividend fund

We will now move forward to understand other terms related to dividends. Dividend fund is the amount of cash which is to be distributed as dividends. In some places, it also refers to the maximum amount of cash which may be paid out as dividends.

In Lubbock v. British Bank of South America, it was held that all the receipts of the company, other than those related to the issue of shares to its shareholders will be combined positively in the calculation of the total amount of dividend fund.

Statutory provisions

The statutory provisions are mentioned in the Companies Act, 2013. The Act has always been dynamic in nature and has been amended whenever the lawmakers felt a need to set the norms according to the present requirements. The major amendment came in 2013 when the Companies Act, 1956 was repealed and was replaced with a new Act known as the Companies Act, 2013. The new Act contains standards according to modern times and its requirements.

The following table represents all the imperative legal provisions in relation to dividends:

Sec. of the Companies Act, 2013

Matters Dealt with

Section 51

The section states about payment of dividend in proportion with the amount of each share. 

Section 91 

The companies have the authority to close its register of Members, Debenture holder or any other security holders.

Section 123

(a) The section states the announcement and the declaration of dividends.

 

(b)(5) The dividend shall only be paid to the person himself, or his or her bank, or his or her order.

Section 124

The section states the account to be maintained for Unpaid Dividend.

Section 126

The section lays emphasis on the rights of shareholders to dividend, bonus shares, etc.

Section 127

The section explains the punishment in case of non-payment of dividend.

Separate bank account for dividend

We will have a look at the conditions and requirements for the payment of dividends. The requirements include:

  1. Compliance with Sections 73 and 74 of the Companies Act, 2013.
  2. Grant of a Proportional Dividend.
  3. Deposition of Dividend in a separate Bank Account. 
  4. Payment of the money only to the shareholders.
  5. The mode of payment must be in cash only. 
  6. Unpaid dividend account.

Amongst all these requirements, one of the most important is to have a separate bank account for payment of dividends. The companies need to maintain a separate bank account with a scheduled bank. The dividend must be deposited in the same account within a period of five days from announcing such dividends. A separate bank account is also opened for Unpaid dividends so that any such unpaid dividend is deposited in that separate account. This is according to the provision mentioned under Section 124 of the Act.

Now that we know the requirements of the payment of dividends, let us have a look at the conditions which need to be fulfilled in order to declare dividends. 

Depreciation

There are certain requirements that need to be fulfilled before the declaration of dividends.

  • Depreciation: Schedule II of the Companies Act, 2013 specifies the provision for depreciation on all depreciable assets. The depreciation on all such assets must be provided before declaring the dividends. 
  • Transfer to reserves: The company may add any amount of profits which was agreed to be provided in the documents of the company. It is only after this transfer to reserves, that declaration of dividends must be made.
  • Fee reserves: Any company must not pay dividends out of any reserves except fee reserve.
  • Set off previous year losses and depreciation: The companies must not provide dividends before setting off the loss from the previous year or depreciation that was not provided in that year.

Reserve Fund

According to the Companies Act, 1956, a compulsory amount needs to be transferred to reserves if the dividend declared exceeds 10 percent of the total profit. The table below represents the percentage of profits that need to be compulsorily transferred to the reserves.

Percentage transferred to dividends

Percentage that needs to be transferred to reserves

10%-12%

2.5%

12%-15%

5%

15%-20%

7.5%

Above 20%

10%

Compulsory reserves

These compulsory reserves got repealed in the Companies Act, 2013. According to the new Act, there is no mandatory requirement of putting any percentage of profits to reserves. The discretion rests with the company whether it wants to transfer anything to the reserve funds or not.

Unpaid dividend account

Section 124 of the Companies Act, 2013 specifies the treatment of unpaid dividends.

The definition refers to this account as an ‘Unpaid Dividend Account’. Any amount which was declared but is still unpaid shall be transferred to this account within 37 days of the declaration. The company shall make a list containing all necessary details of the persons who have not been paid the dividends. The persons who are entitled can claim their money from the company. If such a payment is not claimed within seven years, then the company can transfer the money to the Investor Education and Protection Fund, established under Sub-Section (1) of Section 125.

In India Awake for Transparency v. Union of India, the court verbatim said that,

“Thus, the shareholder continues to retain the title but loses agency. The company concerned is relieved of the responsibility of holding the shares or reflecting it in its list of shareholders.” When it was asked about the transfer of the amount to fund after seven years.

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Payment to registered holders

The payment shall be made only to the registered shareholders as per Section 123(5) of the Companies Act, 2013. The amount is payable in cash through cheque only. The payment may also be made to the shareholder’s order or banker after due authorization.

Effect of declaration

Effect on stockholder’s equity:

The stockholder’s equity can be calculated by subtracting Company’s liabilities from its assets. The type of Dividend issued determines the effect on stockholder’s equity. The value of dividends is deducted from its retained earnings.

Effect on cash:

The balance sheet has an effect where the cash is reduced after the declaration of dividend payments. So, the effect of the declaration comes on both cash and shareholder’s equity.

Interim dividend

When we wish to look at the legal aspect of the definition, we need to refer Companies Act, 2013. Section 2(35) of the Companies Act 2013, mentions the definition as ‘including interim dividend’. Interim dividend, as mentioned in the definition refers to those dividends which are declared between two annual general meetings. It is also essential for the companies to make a substantial amount of profit in order to declare interim dividends.

For example, declaration of an interim dividend of Rs. 0.005 per share on Feb 20th, but since interim dividends are paid out before the end of the fiscal year, the financial statements that accompany interim dividends are unaudited.

Payment of interest

Section 127 of the Act states that if there is a default in the payment of dividends, the company if such act has been done in full knowledge, is liable to pay such amount at 18 percent per annum until the default payment is made. This interest is paid on the amount which is unpaid and such an amount is known as ‘Dividend in Arrears’.

Investor Education and Protection Fund

Section 125 of the Act, mentions about the Investor Education and Protection Fund (IEP), where money gets transferred on certain occasions which are mentioned below:

  1. Money from the Central government for the purposes of this fund.
  2. Donations received on account of this fund.
  3. Amount of Unpaid Dividend Account under Section 124(5) of the Act.
  4. The amount lying in the IEP fund established under Section 205C of the Companies Act, 1956.
  5. Income from investments made under the fund.
  6. Income received under Section 38(4) of the Act.
  7. The matured debentures with companies.
  8. Any other prescribed amount.

The money of the fund can be utilized for the promotion of investor’s education, awareness, and protection. It can also be used for other purposes such as repayment of unpaid dividends, matured deposits, etc.

Capitalization of profits

Capitalization of profits refers to the transformation of retained earnings to the capital stock. It does not have any effect on shareholder’s equity because it is a mere transfer from one account to another account. It refers to the simple process of utilization of profits as the capital of the company.

Bonus shares

Bonus shares are those accumulated shares of the company which are given out additionally, without any extra costs on the basis of the number of shares held in the company. For instance, if Investor A holds 200 shares of a company and a company declares 4:1 bonus, that is for everyone one share, he gets 4 shares for free. That is a total of 800 shares for free and his total holding will increase to 1000 shares.

Accounts

We have talked about the dividends of a company, at length. We shall now talk about the accounts of the company. When we want to know more about the legal aspect of Accounts of a company, we have to refer to the Act. Section 128 of the Act states that every company must maintain true, and fair financial statements. The accounts must be at a place in India that can be easily accessed within seven days if there was a notice provided. The accounts may as well be placed in an electronic mode. If there is a branch outside India, the company shall keep the records in the registered office and a summarised copy of all returns must be sent periodically to the registered office if the company is registered under the Act.

When it comes to conducting any investigation, all the employees must cooperate in providing any required part of the accounts. It is specified that accounts of at least preceding eight years must be preserved in good order.

There are several important sections from the Companies Act that must be taken into account when we talk about the accounts of any company. The table below will represent all the other relevant provisions:

Section of the Companies Act, 2013

Matters dealt with

Section 129

Financial Statements of the Company

  • It should follow Schedule III of the Act.
  • It must comply with the norms in Section 133.
  • It must not display any deviation.

Section 130

Presenting the accounts on a court or a tribunal’s order. 

Section 131

Revising the financial statements in case of discrepancy. 

Section 132

Constitution of a National Financial Regulating Authority.

Section 133

The Central Government shall be making standards for the Company’s accounting standards.

Section 135

The company’s Corporate Social Responsibility is contained in the section.

Directors’ Responsibility Statement

Directors are responsible for the Company’s accounts and its accuracy. The directors release a statement known as the director’s responsibility statement, which assures on the account of the Companies Act, 2013 that the directors have taken due care in the preparation of the documents. The documents produced are true and fair, nothing is forged and everything which has been recorded contains due proof. The statement contains:

  1. The financial statements, which are prepared in accordance with the financial reporting framework provided by the law, gives a true and fair view of the financial position and profit or loss of the Company and the undertakings included in the consolidation are taken as a whole;
  2. The Strategic Report, covered in the Statutory Information, will generally include a fair representation of the development and performance of the business and the standing of the Company and the undertakings included in the consolidation will be taken as a whole, together with a description of the principal risks and uncertainties that they face; and
  3. The Annual Report and Accounts, which are taken as complete, will be fair, balanced and understandable and they will provide the necessary information for shareholders to calculate the Company’s performance, business model and strategy.

Preservation of books of account

The Act requires companies to preserve the statutory registers which contain the records of the Company’s accounts. These registers are required to be produced before the Registrar of Companies (ROC) within a limited period of time. The provided table below shall provide all the necessary books, which are required to be produced before the Registrar of Companies.

Sr no.

Necessary Document

The function of the necessary document

1.

Register of Companies

It contains all necessary basic details such as the Name, PAN CARD number, address, payment due dates, etc. 

2.

Register of Members of the Company

This contains several important lists such as,

  • The list for members separately.
  • The list for debenture holders.
  • The list for other security holders.

3.

Register for Key personnel Management

The list contains all necessary details about the director and the key managerial staff.

4.

Register of charges

Register of charges contains details of all the charges which were registered with assets and properties. The register must be updated at all times because of the tax importance that this register holds.

5.

Register of renewed and duplicate share certificates 

This register, as the name suggests, keeps a record of all renewed and duplicate share certificates.

6.

Register for employee stock options

Employees are provided a chance to invest in the company’s shares, this is known as Employee Stock Options. This register contains details of such shares.

Accounts to comply with accounting standards

The accounting standards are written policies and documents that provide standards for the recognition, measurement, treatment, presentation, and disclosures of accounting transactions in the financial statements. These help with comparing the financial accounts of this year with the previous years. The comparison helps in tracking the growth of the company.

The accounts of a company must comply with accounting standards once set because separate accounting standards have different norms, which are difficult to track. So, the companies are required to follow one set of accounting standards which will be easier for the law to authenticate and verify.

National Advisory Committee on Accounting Standards (NACAS)

NACAS was set up by the Companies (Amendment) Act, 1999. After the enactment, section 210A of the Companies Act, 1956 established this authority which would check that the companies are following the set accounting standards by the Central Government. However, with the introduction of the Act of 2013, a modified version of NACAS was introduced, known as the National financial regulatory authority. NFRA has two objectives:

  1. Formulating policies and standards for the companies.
  2. Regulatory nature, by way of which, it would help in the improvement of the quality of services provided by the companies.

Further, NFRA has the power to investigate in case of knowledge of any mishandling of accounts, which was not included in the NACAS. In fact, NFRA has all the powers of a civil court vested in the Civil Procedure Code, 1908. NFRA may also impose penalties if the offense is proved.

The intention of the legislature in forming the NFRA was to increase the powers vested in the NACAS so that, the implementation of the regulations may happen smoothly.

Right of inspection

Section 171 of the Act gives the members of the company, the right to information regarding the accounts of the company. It must be open for perusal at the time of the Annual General Meeting. These books should also be available for perusal in all business hours. In case, the company denies access to the books to any of the members, the ROC may have the books issued to the concerned person within a period of thirty days from such request.

Financial Statements

Section 129 of the Act provides for the maintenance of the financial statements. Section 2(40) must include a balance sheet, profit and loss account/income and expenditure account, cash flow statement, statement of changes in equity. Schedule III includes detailed requirements of the financial statements.

Audit

Audit is an examination of the books and accounts of the company. The examination also includes statutory records, and vouchers of an organization to ascertain the fairness of the financial statements, as well as non-financial disclosures, in order to present a true and fair view of the concern. There are two main types of audits: external audits, internal audits.

  1. External Audits: External Audits are performed by Certified Public Accounting firms, in order to perform an external check.
  2. Internal Audit: This is to make improvements in the company. 

Let us now have a look at the auditor, who performs these audits.

Appointment of auditors

Section 139 of the Companies Act, 2013 states the appointment of an Auditor. In the first annual general meeting, the company shall appoint a person as to its auditor. In each annual general meeting, there must be ratification by the members. 

  1. Written consent of the auditor to such appointment
  2. Certificate that

(a) The auditor is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder;

(b) The proposed appointment is as per the term provided under the Act;

(c) The proposed appointment is within the limits laid down by or under the authority of the Act;

(d) The list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.

After the appointment, the auditor must have a meeting with the ROC within 15 days of appointment. These rules must comply with ADT-1.

Remuneration of auditor

Section 142 of the Act states that the remuneration of the auditor will be decided in the same way that the auditor was appointed. Remuneration includes expenses incurred in the process connected with the audit or any expenses that the company had facilitated with. It does not include any remuneration related to any service other than related to the audit itself. Schedule III of the Act also mentioned that the payment made to the auditors must be disclosed.

Removal

The auditor appointed may be removed from his office before the expiry of his term only by way previous approval of CG and a special resolution of the company to be passed in a general meeting within 60 days of receipt of approval of CG. However, it must be noted that the auditor is given a fair chance to represent himself or herself. The auditor must provide a statement to the ROC within a period of thirty days from the date of removal. The auditor may be punished with a fine between 50,000-5,00,000 in case of non-compliance.

Qualifications

An auditor must comply with the norms of the Companies Act, 2013.

  1. Individual: Only if is a CA holding certificate of Practice as per Section 2(17) of the Companies Act, 2013.
  2. Audit Firm/LLP: Majority of partners who are CA are practicing in India, appointed in Firm name. Only the partners who are CA’s are authorized to act as auditors and sign.

Powers and duties of auditors

The powers can also be described as the rights of the auditor. The rights are listed below:

  1. The auditor may inspect the books of accounts of the company.
  2. The auditor may ask for any clarifications.
  3. The auditor must get the invitation to attend the general meeting.
  4. The auditor has the power to make any statements in the meeting.
  5. The auditor must be indemnified for the expenses and losses incurred.
  6. The auditor has the power to visit any branches of the company.

With a lot of power comes a lot of responsibility. The auditor has the below-mentioned duties:

  1. They must make special inquiries and investigations in order to ascertain the truth.
  2. The report made by the auditor must be made available to the shareholders.
  3. If there are any answers in negative, they must state the reason for doing so.
  4. The matters related to the Central Government must be included in the Report.
  5. The audit report must be signed by him.
  6. The auditor must give a report upon the prospectus.
  7. The statutory report must be signed by him.
  8. They must declare the company solvent.
  9. They must assist in all the investigations.
  10. They must assist the Advocate General.

Default in disclosing fraud

The auditors also have a duty to report fraud (if any). If the auditor defaults in disclosing fraud committed by the companies, the auditor must face heavy penalties in view of the same. The penalties depend upon the size of the fraud, not disclosed.

Special audit

A special audit is defined as an audit that is carried out in a specific area of organizational activity. These are helpful when we wish to present the analytics of a specific department of work. For instance, Cost Audits are specifically done in order to check the cost of the products supplied. 

Power of Registrar to call for special information

In order to facilitate investigations, the ROC has the power to call for documents containing information regarding the accounts of the company. The power is also eligible for random scrutiny checks on the companies. Section 234 of the Companies Act, 1956 mentioned the power to call for information but the present Act does not definitively mention the power. 

This power helps the ROCs to check on the companies. The companies are also aware of this fact and therefore, they refrain from making any fraudulent representation in the documents.

Seizure of documents by Registrar

The registrar has the power to seize any documents that he might feel may have discrepancies within them. Section 234A of the Companies Act, 1956 mentioned this power. But, the present Act of 2013, does not contain such a provision.

Audit of cost accounts

The products go through various cost centers before getting actually made into a finished product. The accounting starts from the raw material stages itself. This helps with understanding the standard cost of the product. These financial accounts come under the ambit of cost accounting and the audit of cost accounts is known as Cost Audit.

The cost audit is performed to undertake the verification of the cost accounts of the company. The auditing is performed in order to check whether the cost accounting plan has been adhered to. Frauds can be prevented to a large extent if the cost audits are performed in a prescribed manner.

Cost audits have various advantages to the management as well as auditors. By cost audits, wastage in the material can be checked, inefficiencies in the production can be calculated in terms of money and can be accounted for, errors in costing techniques can be checked. The advantages of cost audits are very facilitative for the management as well as the auditors.

Conclusion

Dividends, accounts, and audits are the three most important parts of the company. This article presented a legal perspective on these aspects of a company. The repeal of the Companies Act, 1956 shows the progressive thought process of Indian Legal standards. After the New Act brought in 2013, the laws have transformed into the requirements of current global challenges as well. We look forward to the accurate implementation of these laws so that India can become one of the best financially regulated countries.

References

Basil S. Yamey, Aspects of the Law Relating to Company Dividends.


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Piracy: Definition, Laws, and Prevention

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This article is written by Neelabh Keshav Sinha, a first-year student from Symbiosis Law School, Noida who is pursuing BBA LLB. The article provides an overview of the piracy, what constitutes piracy, the laws preventing it and so on.

 

Introduction

A person’s possession, be it his work or belongings, is his ultimate brainchild, and the last thing he wants to happen to it is for it to be stolen and misappropriated by someone else.

Piracy has differed in meaning over the course of time, and the perspective and opinion on piracy changes with the generation it is referenced in. However, what remains uniform is the fact that piracy was, is, and probably will remain an unlawful act, regardless of the context in which it is interpreted. 

This article will go over the definition of piracy, how it evolved over time, the legal consequences of piracy, how to prevent it, and services that use pirating methods.

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Definition of piracy

In medieval presets, the term piracy was often used for the act of raiding or looting, which involved the ship-borne looters, who then attacked dwellers of another ship or a coastal area, with the primary purpose being to loot them of their belongings, such as cargo or other valuables.

However, in today’s world piracy is a more relevant and commonly used term, which constitutes theft on copyrighted and trademarked grounds i.e. unlawfully stealing and infringing someone else’s work and produce it as one’s own.

Piracy in the digital realm can be compared to physical theft and piracy, because when a person illegally distributes a digital file on the internet or locally for free, he prevents the profit from the purchase of that item from going to the creator, creating an economic impact comparable to when actual pirates looted cargo.

Types of piracy

Piracy, when elaborated in terms of software, can be classified into 5 types, those being –

  • Counterfeiting: It is the illegal acquisition, duplication, and distribution of any copyrighted material, which directly imitates the copyrighted product. The nature of the distribution of the said product may be a sale, or not. The most common way of distributing such pirated works is through compact discs.
  • Internet Piracy: Internet piracy is the act of downloading a file from the internet, or by procuring an online software through a compact disc. Methods of conducting internet piracy are websites offering free downloads of software, auctions selling illegally obtained software or P2P servers which transfer programs.
  • End-User Piracy: This form of piracy involves the user illegally reproducing software which he isn’t authorized to do. An example would be a user using one license to the software and installing it on multiple systems, or upgrading an already pirated software.
  • Client-Server Overuse: In a computer network, when the number of clients exceeded the number prescribed in the server license, then it is termed as overuse piracy.
  • Hard-Disk Loading: This occurs when a business sells new computers with illegal copies of software loaded onto the hard disks to make the purchase of the machines more attractive.

Piracy in movies

The act of illegally acquiring, copying, reproducing and then distributing film media, without having any legal right or license to do so, is considered movie piracy. The most common occurrence of this is the distribution of these movies on websites. Traffic for these sites tends to spike whenever a new blockbuster movie releases as a pirated version will very likely be hosting these movies in a downloadable format on their servers.

Piracy in software

Software piracy describes the act of illegally acquiring, copying, reproducing, and distributing software without a license to do so. Software piracy has become much more rampant in this generation of technology, as most software has converted into a one-user license i.e. it can only be redeemed once by one user for his use alone. Distributing this software, such as sharing with a friend, or via the internet, is illegal.

Online Piracy

Online piracy is still a new arena in the world of piracy as compared to its offline older brother, and it has only grown more intricate with advancements in technology. Any piece of digital content, be it movies, music or games, are now accessible online through the BitTorrent client service, which strings together several pieces of the data from a swarm of users, then downloads and compiles them onto the user’s computer. It’s simple, efficient, widely used, and difficult to crack down on.

Pirating movies

Movie piracy has become a more controlled art in recent times, from shaky recordings on camcorders to dedicated sites, apps, and add-ons to physical hardware, piracy has grown more subtle yet more dangerous as a practice. In the UK, over a third of people who are above the age of 16 pirate movies.

The method of pirating movies and uploading them online has also grown more intricate and difficult to track. Pirates often make use of BitTorrent to upload their files and store them online. The data travels to the user who requests the file is supplied with the file through the contribution of a huge group of seeders i.e. pirates who upload the files in bits and pieces. However, with the recent crackdown on online piracy, and links for pirated files being shut down, pirates save files offline, and these same games and movies are then sold via optical discs at grey markets.

Law for piracy

Surprising as it may be, there is no definitive international law that governs piracy as a whole, at least for the digital equivalent of piracy. Under international law, the statute of piracy only covers ‘physical’ piracy, i.e. the actual looting and plundering of goods and valuables via ship-borne thieves.

Copyright

Copyright is one tool to prevent the intellectual property of a person from being pirated. It is the legal right granted to a creator of any intellectual property to be able to reproduce and redistribute his work, at his discretion. Although back then, and even today, copyright doesn’t exactly prevent piracy, it does protect the legal interests of the party negatively affected and prescribe legal consequences for the perpetrator, in the event that copyright infringement(piracy) does occur.

Copyright holders routinely invoke legal and technological measures to prevent and penalize copyright infringement.

Filming a movie

An act of piracy that involves recording a movie or a video, especially without prior authority from the creator or purchased license to do so. The most notable method of movie piracy is known as camcorder piracy, in which a camcorder or a small recording device is often snuck into a theatre, and the entire movie, recorded onto the camcorder, is distributed online via the internet, either on pirated sites for free or sold on gray markets.

Websites to pirate movies

Websites that host pirated content are one of the most popular sources to acquire pirated content, as most of these sites offer the content for free, which sees them experience a lot of network traffic due to their popularity, and the sheer number of users accessing their domains to get their hands on the latest pirated songs, games or movies.

While several governments have encouraged ISPs(internet service providers) to block these sites by default on their services, these sites are still regularly visited through the use of VPNs(Virtual Private Networks). Some of the most popular sites to pirate movies are –

  • The ‘YTS’ domains
  • The Pirate Bay
  • Torrentz2 

Law of copyright in India

To handle copyright and copyright infringement related disputes, the Indian Constitution has the Copyright Act, 1957, which acts as the main statute for all copyright-related laws in India.  Under section 13 of the Act, copyright protection is conferred on literary works, dramatic works, musical works, artistic works, cinematograph films, and sound recordings. 

The Copyright Act, 1957 handles protection of copyrighted material via classification of the same into two categories of rights, those being –

  • Economic Rights: The scope of this Act falls under originally conceptualized work including literary works, dramatic works, musical works, artistic works, cinematograph films, and sound recordings. The owners of these intellectual properties and works are given exclusive rights which they can exercise when it comes to the reproduction and distribution of these works, and to have a share in the profit of any sales of the product made by a licensed third-party. 
  • Moral Rights: Section 57 of the Act splits moral rights into two basic rights, right of paternity and right of integrity. The former enables the original creator of the intellectual property to be able to claim ownership of it and prevent any others from claiming ownership. The latter enables the creator to restrict any and all ‘distortion, mutilation or other alterations of his work, or any other action in relation to said work’ which may damage his reputation.

Piracy in India

India is one of the few countries that has multiple dominant box office film industries, in Bollywood, Hollywood, and Tollywood. As such, piracy is a much more dominant force considering there is a lot more material to pirate which the local audience would be interested in. Internet users often use VPNs to visit torrent sites which host songs, games, movies and the like. Local vendors at technological hubs often carry compact discs with pirated movies and games, which are sold at cheap prices. Modding video game hardware to play pirated discs is also a booming industry in India.

Pirating movies in India

Considering the viewership of cinema in India with the three major cinema industries, the traffic of sites that host pirated content is also considerably higher in the country. While the above-mentioned torrent sites, which are the most used across the world, are relatively popular in India, people often tend to visit piracy sites that host Bollywood or Tollywood content exclusively. Some of these sites are – 

  • Filmywap
  • Todaypk
  • Bolly4u
  • Tamilrockers

Punishment for piracy

Illegal downloading of movies

The Union of India recently issued an amendment to the Cinematograph Act, 1952, in order to clearly define the punishment which can be faced by pirates who, without the written authorisation of the copyright owner, use any recording device to make or transmit a copy of a film. It is not necessary for the film to be fully recorded, or even distributed via the internet. If the perpetrator attempts to record the movie while inside the theatre, he is guilty under the act.

The punishment for this is generally imprisonment, a fine, or both. This punishment can also extend to those who download said pirated movies.

Charges for piracy

Since the crime of piracy is not limited to only the movie industry, the punishment specified above isn’t the only one dealt to pirates. It varies with the industry in which they are committing an act of piracy. The most notable forms of punishment are covered in the provisions of the Copyright Act, 1957 and Information Technology Act, 2000. The punishments specified are as follows-

  • Copyright Act: If a person uses a pirated computer program, or a program that has been manufactured or acquired through copyright infringement, on any computer device, he shall be liable for imprisonment no less than 7 days, extending up to 3 years, and a fine no less than Rs. 50 thousand, which may be extended up to Rs. 3 lakh.
  • IT Act: If a person gains access to a computer, a network of computers, or computer systems, then proceeds to view, copy and extract the data present on the computer, either through digital means or through a removable storage medium(pen drive or hard disk), without prior authorization from the owner of the computer, he is liable to pay damages as compensation which can go up to a sum of Rs. 1 crore. Any person who downloads said stolen data will also be liable for the same amount.

Prevention of piracy

While the legal consequences associated serve to act as an effective deterrent against piracy, they are not nearly enough to act as a solid preventive measure, considering actual prosecutions against digital pirates are few and far in between. This is because most intellectual property owners tend to just get a cease-and-desist(termination) order against sites which host pirated content, which are just orders to take down the download links for the content.

Therefore, there are, while loosely-defined, some effective ways to prevent piracy, i.e. deter users themselves from seeking out and downloading pirated content. These are as follows –

  • Price Regulation: By offering digital goods and services at a lower, realistic price, producers can hope to at least lessen the number of users pirating their content by a wide margin. It won’t stop piracy completely but reducing the incentive for people to make use of pirated content will certainly prevent piracy to a large extent.
  • Barriers to Entry: This is a mode of prevention that rests more within the jurisdiction of the government. Most governments instruct and encourage ISPs to restrict entry into sites which host pirated content, mostly by blocking the sites on their servers. Directly barring users from accessing these sites helps reduce the pirate users by a large amount, as most don’t have the technical know-how i.e. how to use VPNs which is required to circumvent the sites being blocked.
  • User Confrontation: A lot of TV and streaming services often use a combination of both the above-listed methods, but with some real-time interaction with the users. Pirate users often get real-time messages which notify them that the producer is aware of them using pirated content. Game developers often use this to troll pirate gamers in hilarious, game-breaking ways.
  • Cooperation between industries: The above-listed methods to prevent piracy, while working great on their own, often fail and fizzle out when there is one bad link in the chain. That one bad link can be a producer who is lenient with his content being pirated or doesn’t know about the extent of piracy. That is why, all of the above methods, if executed systematically and efficiently by all relevant producers at once, can be one of the biggest deterrents to pirates.

Camcorder Piracy

Camcorder piracy refers to the method of piracy used in pirating movies. This involves the pirate recording the entirety of the movie while in the theatre using a camcorder. These movies are generally referred to as ‘Cam print’ movies. Keep in mind, camcorder piracy is not limited solely to the use of camcorders. Any device capable of recording video qualifies under camcorder piracy.

Despite the quality of these pirated movies being very poor, with constant shaking, foreign audio, and low video pixels, these movies are downloaded in large quantities, largely due to the timing of their upload, which is usually a couple of days after the release of the movie. A lot of these movies are often repacked into optical drives for sale in black markets via local vendors.

Need to prevent camcorder piracy

While not as prevalent of a force as it was in the early 2000s, camcorder piracy is still a huge threat in the cinema industry, especially in the Indian box office. Since Bollywood and Tollywood often come out with lower-grade, cheap entertainment movies to make a quick buck out of the middle to lower classes, these movies are quick to be pirated via camcorder recording and are spread wide over the internet.

This causes major damage to the movie industry considering the more the movie is pirated, the lesser net earnings are made by the box office. A lot of studios never even get back their original investment in the production of the movie. If the loss through piracy is bad enough, it can lead to a loss of jobs due to low earnings, and the black market sales of such pirated products can also help sponsor organised crime. Therefore it can have a hugely adverse impact on the economy in general.

The legality of recording movies in the theatre

As per the amended Cinematograph Act, 1952, the recording of movies in the theatre by any recording device, in order to produce a pirated ‘cam print’ of the movie, is illegal and punishable by law. The act of recording by itself is punishable in law, the rest of the process to successfully pirate the movie is irrelevant in deciding the guilt of the pirate.

Pirates who record movies via camcorder can face legal consequences, the provisions for which are described under the Act. The punishment for the same is imprisonment for up to 3 years and a fine payable up to Rs. 10 lakh.

How does piracy affect the film industry?

When talking about one of the biggest blows that piracy has dealt to the film industry, the most notable attack is one carried out right before the release of the star-studded action film, ‘The Expendables 3’. According to this Forbes article, the movie was acquired illegally by pirates and the entire thing was leaked online for download. Statistics estimate the viewership of the pirated movie to be close to 70 million viewers.

This sets a dangerous precedent for the economic success of these movies, especially today when movies can be downloaded and streamed on almost every device out there, be it phones, tablets, laptops, desktops or even video game consoles. This leads to a larger viewership of pirated content. More views equal more deduction from the profit margin of the producers of the movie.

And this reduced profit margin does not mean less income for the producers only, it also affects the other employees working in the entertainment industry. This includes composers, set designers, electricians

Losses incurred by the film industry because of piracy

The losses which the studios incur as a result of piracy are no small amount. The losses climb up to 7-8 digits, wherein losses are measured in the millions. The large amount of people accessing pirated content is also a contributory factor in these losses.

Taking the above case regarding ‘The Expendables 3’ as an example, it has been estimated that the movie lost about $100 million in revenue due to the pirated leak of the movie before release, and the views during the release of the film.

India’s box office, as of August 2018, is worth almost $21 billion. However, in terms of piracy, it is also a leading juggernaut. It is ranked among the top five countries with the maximum P2P(connection type for torrent downloads) downloads. Through this, it has lost around $2.8 billion of its annual revenue.

Reporting piracy: how to go about it

Reporting acts of piracy is perhaps one of the most overlooked techniques which helps in preventing piracy. While few, there are associations that exist to counteract piracy and shut it down. However, they need surveillance and vigilance from their users in order to do so. Some of these associations which offer online piracy reporting services are –

  • Software and Industry Information Association: This domain serves as an extension of the SIIA, a regulatory authority based in Washington, DC that extends its services across the globe. These strive to deal with acts of computer and software piracy at an organisational level.
  • Recording Industry Association of America: The RIIA deals exclusively in cases of music theft and piracy in the United States to protect artists from losing revenue through illegal music distribution and sales.
  • Copyright Alliance: The Copyright Alliance is a unique organisation in terms of its function, as, instead of directly attempting to put a stop to any rights of copyright infringement, it notifies the producers of the content themselves, so that they may take appropriate action as they see fit.

Aside from these organisations, there is a lot more that you can do at a local level. Other than condemning piracy yourself and refusing to take part in it, you can also act as a deterrent for movie piracy, by reporting any and all suspicious activity, which may be camcorder recording, to the nearest security official.

How do movie pirates make their money?

Movie pirates can be categorised into two types – ethical and unethical, which is ironic considering their main bread and butter is unethical by itself, but there is more to that story.

Ethical pirates mostly upload and make their pirated content available just for the sake of spreading entertainment and making content available early, and for free. Most of them do not have profit as a primary objective and earn revenue only to pay for their website’s server costs and to keep it running. This is mostly done through ads that pay per click, and since most pirated content sites involve a lot of clicking by a lot of users, they generate a lot of money.

Moving on to the unethical pirates. These pirates do not have user entertainment and convenience as their agenda. They actually operate in cooperation with cybercriminals who set up malware on the website’s body. This malware actually steals user data, and the pirate who hosts the site gets paid a hefty sum.

Pirates also earn money through streaming i.e. they stream their pirated content on specialised ‘Kodi boxes’, the sales of which earn them money.

BitTorrent: How does it work?

BitTorrent, at its core, is a communication protocol, much like HTTP or IP. It serves as a mini-client that hosts a P2P connection. These connections are then used to host and distribute data and electronic files.

The functioning of BitTorrent is completely based on the P2P connection system. In BitTorrent’s case, the two peers are the ‘leechers’ and the ‘seeders’, and the combination of both in the BitTorrent system is known as a ‘swarm’. Inside this swarm, there is no central server. All the data circulated is amongst the leeches and the seeders. Once a user enters the swarm, it is connected simultaneously to all the computers inside the network, depending on what file it wants to download. The client then starts downloading bits and pieces of the same file from different ‘seeder’ computers, which are then simultaneously compiled into one file locally on the leecher’s system.

This entire process is monitored through tracker files present within torrents. These trackers, while not influencing the downloads themselves, allow the client service to keep reconnaissance on which files are being downloaded and through what system.

Is piracy a felony?

To determine if an act of piracy is a felony or not, we must establish the structural difference between what crime and felony are. While crime is a generic definition of what is an illegal activity that harms others, a felony is an extension of the definition of crime.

A felony is determinable only through the seriousness of the original crime. A felony can be anything that warrants a punishment of more than one year’s imprisonment or the death penalty.

Any crime which warrants a lesser punishment is classified as a misdemeanor.

Therefore, if we analyze the punishments doled out in cases of piracy, the punishments can be extended up to 3 years along with a monumental fine in India. The length of the punishment given alone is enough to classify piracy as a felony.

What are the effects of leaking a movie through the censor board?

Earlier, movies to be submitted to the Censor Board for review were submitted on a DVD format. This made them a relatively easy target for pirates, and a lot of movies were leaked online, even before official release. The pirated prints of these movies often had a watermark that said ‘For Censor’, making it evident that these were pirated through the DVD copies of movies submitted to the Censor Board for review.

The Censor Board eventually did take action, and changed the format of submission from standard DVDs to an encrypted file format, commonly known as DCP-KDM format.

DCP is the encrypted format in which the movie is submitted to the Censor Board, either on a hard disk or USB Pendrive, which is then run off of the theatre’s main central server. The KDM part of the file contains a serial key which is then used to decrypt the movie for viewing.

Rules, Acts and Laws excluding Copyright Act

Information Technology Act

While the Copyright Act acts as a general supervisor to monitor acts of piracy and punish the perpetrators accordingly, the Information Technology Act’s scope of piracy only extends to the unauthorized use of computers or a network of computers. Any data then copied or reproduced from that system onto an external storage device counts as an act of piracy.

The punishment for piracy, when governed under the Information Technology Act, is direct payment of damages, which may amount to compensation up to Rs. 1 crore.

The determination of how much the pirate will have to compensate  is quantified through these factors –

  • The amount of gain or unfair advantage, wherever quantifiable, made as the result of the default 
  • The amount of loss caused to any person as a result of the default 
  • The repetitive nature of the default.

Internet Service Providers, however, are exempted from the provisions of this Act, if they can prove that they had no existing knowledge of the act of piracy committed.

Trademark Act

A trademark is the primary identification mark of intellectual property and is represented by the universal symbol (TM or ®), used by a particular organisation, which signifies that the intellectual property is unique and under their sole ownership. Trademarks can either be registered or unregistered, although being registered offers many more legal remedies.

The owner of a registered trademark can file a suit to protect the intellectual property registered under it from any infringement or unauthorized use of the trademark. They can file an action of infringement which is a statutory relief, which can either be an injunction to prevent unauthorized use of the trademark or enable the claim of damages by the injured party.

In the case of an unregistered trademark, the owner can file a suit under the action of passing off for the same remedies as an action of infringement, except the benefits are limited to only the geographical area in which the owner operates.

Conclusion

The menace of piracy, despite having faced many obstacles to try and curb it, is still going strong as a practice and has a farther reach than ever. More devices are optimised to use pirated content, and in hydra-like fashion, for every site taken down, two more take its place.

This isn’t to say that piracy is immortal. More governments are becoming more vigilant in regard to how big threat to piracy is. The current situation is very volatile, as there is no way to tell if piracy will grow weaker with the increasing crackdown on it, or will remain omnipotent.

As a producer, one can only enforce the methods available to them. They can’t stop it, but the most they can do is try to reduce the harm done to them as much as possible.

References

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Case Disposed: What all you need to know?

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This article is written by Madhuri Pilania, a first-year student pursuing BBA.LLB. from Symbiosis Law School, Noida. This is an exhaustive article dealing with the topic Case Disposed and the nature of disposed cases.

Introduction

Case disposed is easily understandable as the case dismissed but there is a difference between these two terms. You may see it as a simple term that case has ended and hence disposed but actually, it contains more than that like the nature of case disposed, the time limit for case disposal, case disposed under CPC and CrPc and terms like these. 

Case disposed

When a case enters into a criminal court it will remain pending until it is disposed of and removed from the docket of the court. 

Case disposed meaning

A case disposed means the case is completed in the terminology of court proceedings. A civil or criminal case is said to be disposed when all the issues or changes in the case it has been disposed of. It is done on the actual date of dismissal. 

The common reasons for case disposal include a dismissal, a guilty plea, or a finding of guilty or not guilty at trial by either a judge or jury. 

The Supreme Court has passed an order in Hussain v. Union of India that suggested various steps that High Courts should take to dispose of criminal cases, particularly bail petitions, in a speedy manner. This is the latest case in which the Supreme court of India starting from the Hussainara khatoon case recognized speedy trial as a fundamental right under Article 21.

Most of the orders, including the latest one, stipulated guidelines for High Courts and subordinate courts or lower courts on disposing of criminal cases, including bail petitions and treatment of cases involving undertrial prisoners. These orders further mandate High Courts to frame rules lower courts to implement the principles declared by the Supreme Court.

Case disposed meaning in Hindi

The term case disposed means “Mamla Niptaya’ in Hindi. To dispose is “pravad” in Hindi. 

Can a disposed case reopen? 

Yes, a disposed case may be reopened if a party to a case is not satisfied. In case there is a mistake or unintentional surprise a relief can be granted that will effectively reopen the case for further proceedings. Also if new evidence is discovered which can alter the judgement then a case may be reopened. For example, in the case of CBI vs Shrikant Jain and others, disposal of old cases were discussed. 

Time limit for disposal of case

“Justice delayed is justice denied” if the person does not seek justice. Disposal of a case is not the only requirement but a balance between the disposal and non-delivery of a case shall be recommended. We cannot expect justice in all cases in just five to six months. 

There is no time limit for the disposal of cases. The higher courts regularly give directions to the lower courts like district courts to dispose of the pending cases. The government is making efforts to speed up the disposal of cases and setting fast track courts so that cases of senior citizen cases, cheque bounce, and village court cases can justice as early as possible. 

Why there is a delay in the disposal of cases? 

Increase in litigation cases, which means people nowadays drag their point of grievances in the court of law that can be solved outside the scope of the court instead. The legal framework in India is such that the number of judges is not appropriate. As the number of judges required and the number of judges we have are different. 

Overabundance in India is a problem but the delay cannot be expected in criminal cases with respect to civil cases. The scenario of criminal cases on the basis of disposal is advent. 

Disposed pending case status

A pending case is the one that has begun but not yet completed. The process of completion and adjustment is pending. A pending lawsuit is from the starting itself till the issuance of final judgement by the court. 

According to a survey, there are 1.44 crore pending cases under trial in criminal cases. Considering the landmark case of Bhopal gas leak disaster, there was a significant number of people who suffered injuries. Twenty years have passed but still, there is negligence in measuring up the harm caused to those people. 

Similarly, there was a massacre of Dalits at Tsundat in 1991 in Andhra Pradesh. Thirteen years have passed to that incident still the families of the victims are waiting for justice for those who died. 

Case disposed under CPC

Once the last order is passed by the court, the case is said to be disposed of, in the case of both parties. Such order comprises of more than one order, this is known as final order. 

Sometimes the court disposes the suit in the first hearing under order XV(fifteen) of the civil procedure court. Some of the grounds on which the court may dispose the suit are:

  • The court may dispose the suit if the issue raised is not important by both the parties in the first hearing. 
  • If there is more than one respondent or defendant and none of them are issues which means if they are nor associated with the documented case, the court may dispose of the suit either in favor or against the defendant. For every defendant, the suit will proceed differently. 
  • The court may pass a judgement, without going any further if any of the party fails to produce evidence. 
  • If the plaintiff is found irrelevant party then the court may either arrange cancellation or probably dismiss the suit. 

Judgement (Order XX CPC) – Judgement is an official conclusion about rights and liabilities of the court and It is based on the issues raised. 

Decree (Order XX, Rule 6 CPC)- A decree can hold more than judgement and it is drawn within fifteen days from the date on which the judgement is announced. Types of decrees:

  • Decree for recovery of immovable property.
  • Recovery of money.
  • Decree for movable property.
  • Decree for possession.
  • Decree for specific performance of contract of sale and many more.

Case disposed under CrPC

The case disposed under CrPc talks about the disposal of a case when an application is given for plea bargaining. Under Section 265B verification is done of the application and after a further procedure, the case is disposed.

The Criminal Procedure Code states that the court needs to issue a satisfactory disposition for the parties involved under Section 265C

Under this section, the courts are required to issue a notice to the general prosecutor, parties and the investigation public officer. This is required because the case established is on a police report. 

Under Section 265D the court is required to dispose the case as said in this case. In V.Subramanian vs. the State, the plea bargaining was not made as per the procedure mentioned under the chapter XXI- A (Twenty-one) and the plea of guilty was made even before the presentation of section legalizing plea bargaining. Therefore, the plea of guilty made by the defendants was against Article 21 of the Indian Constitution and consequently, the respondents are at freedom to pull back the said request of liable and look for preliminary of the case.

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Case disposed v case dismissed 

The term disposed is a wider term then dismissed. If a case is dismissed, the court closes the matter without taking a decision. On the other hand, disposition means that matter or the case has been decided by the court on the basis of merits or a judgement or order passed. The judgement is passed after studying all the facts and evidence related to the case after hearing both the parties in the case of disposal. 

The term disposing is used in a much wider sense as compared to dismissed. When it comes to dismissal, the court passes the judgement even without hearing the plea if any of these factors are there:

  • If an improper complaint or charge has been filed.
  • Lack of satisfaction for an arrest.
  • Lack of evidence.
  • The witness is not available.

Case disposed by judge

When a case is disposed of it means it is finished and has been removed from the docket of the court. Disposed by judge basically means that the case is closed by the judge. 

Nature of disposal 

When a case is disposed, all the proceedings are completed and the decision by the judge has been made. It does not matter whether the case is a civil case or criminal, the disposal of a case can take place only after the completion of all the issues and charges that are involved in the case. If there are multiple charges, the case can be disposed of on the date when the final issue is settled. Also the decision of the court matters in the disposal of a case. 

  • Contested otherwise

When there are issues that are not related to the facts or findings of the case, the case is opposed. This type of disposition is said to be contested otherwise. For example- A different jurisdiction.

  • Contested judgement

In this type of judgement, the pleadings are disputed and so the judgements are based on merits of facts. Hence, this is known as disposing of the case when pleadings are disputed. 

  • Contested dismissed

The parties here dispute the facts and findings of the case and they are not able to prove it by a piece of strong evidence. When either of the party gets absent repeatedly on  the date of hearing it leads to the dismissal( it means the act of rejecting something or rejection) and disposing of the case. 

  • Contested compromise

In contested compromise, the suit filed is compromised due to a keen contest. Since there is no decision lest related to the issues, the case is disposed. 

  • Uncontested otherwise

The case is disposed by relying on the details and facts as there is no one to oppose the facts and hence the court gives the judgement. 

Dismissal of Civil cases

A person can file a lawsuit and he or she may want to withdraw the case. A defendant can also move for a dismissal. A defendant can seek a remedy in the form of dismissal if the lawsuit is filled in the wrong part or where there is no legal basis to may claim. 

“Res Judicata” refers that the matter involved has already been decided by the court in a previous case and hence, it cannot be heard again in the succeeding case. In the case of res judicata, the matter cannot be raised again, either in the same court or in a different court. The court can dismiss the whole case before the final hearing.

In the case of Satyadhyan Ghosal v. Smt. Deorajin Debi, principle of Res Judicata was invoked in the proceedings of the case and the provision related to decisions.

Disposed as dismissed in limine

The word “Limine” means “at the start”. If an appeal is dismissed in limine, no fresh appeal can be filed on the same cause of action. It will imply that it is prima facie and the appeal is devoid of any merit. 

Case disposed contested allowed

When the person has contested as a respondent or defendant in a case and the maintenance allowance order has been passed against the person it is known as case disposed contested allowed. 

Case disposed uncontested transferred

In a court of law, uncontested means “not disputed” or the issues that are agreed upon by both parties. Uncontested transferred means that the case is not yet starred but is transferred to some other court or place. When the responding party does not defend the lawsuit actively or properly it is referred to as case uncontested. In such a case, parties can file the papers without hiring an attorney as it becomes faster and less expensive. 

For example in uncontested divorces, the parties are in agreement on all matters, and the court serves to approve their divorce agreement. In some states, expedited procedures exist for uncontested divorce, sometimes referred to as dissolution.

Case disposed divorce

A divorce begins with a divorce petition or divorced papers. It is a contract between the two parties who have to follow once it is signed by the judge as it becomes a law that needs to be followed. On of the spouse who wants divorce writes and serves it to the other spouse. The spouse gets the paper and signs them which means he or she has agreed. Until the final divorce decree is signed, the case is said to be active. Since the case is active, the court is waiting to finalize it. When the divorce decree has been signed by the judge the divorce case is said to be disposed and therefore it is closed. The procedure of the divorce case disposal depends on in which the case has been filed and the length of time between an active case and a disposed case. 

In some instances, the case is disposed can be used by the court to mean that the case has been dismissed. If the person wants to know the status of his or her case, one can know by calling the lawyer or divorce attorney. With technological advancements, one can check the status online and know is the case active or disposed. The term “disposed” in a divorce case is basically that the case is finalized and closed. However, in some rare cases disposal can also be interpreted as dismissed. 

Case disposed with disposition

Disposed is a generic legal term which means that the case or proceeding is completed. Disposition is used in reference to the way in which the case was resolved. A civil case is considered as disposed only when all issues in the case have been disposed, and on the actual date of dismissal or judgment on the last issue disposed. Disposition is the final determination of a case or issue when it is used in relation to a property. 

Disposed case traffic ticket

A traffic ticket is a notice issued by law enforcement to a motorist or any other road user, that indicates the user has violated traffic laws. For example, if a ticketing officer or if the cop fails to show up, the judge may choose to dismiss the case. Also if the evidence is not sufficient the judge may dispose of the case. 

A violation of the traffic rules can usually be disposed of by payment of a civil penalty or an election to attend a defensive driving school course. A court appearance is not required, except in cases where the violation involves an accident with serious bodily injury or fatality to another. 

Conclusion

So the case disposed of means that the case is completed and a final judgement is made. But it does not mean that the case has been quashed. People can apply for a copy of the final judgement or decree to find out about the case without delay if the matter is of a sensitive nature. Disposed case can be reopened if the party wants or if some mistake was found in the decision.


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Statute Interpretation : Overview and Analysis

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This article is written by Pearl Narang, a student of BBA LL.B at Chandigarh University, Mohali. In this article, she has discussed rules of interpretation of statutes. 

Introduction

The legislature makes laws with a specific intent in mind. The responsibility of deciphering that intent lies with the judiciary. This process of getting to know the intent behind the law is known as statute interpretation. 

Interpretation

According to its dictionary meaning, interpretation is an act of explaining the meaning of a thing. In legal context, interpretation means the act of interpreting and deciphering the intent behind a statute. The term ‘interpretation’ has its roots in the Latin word ‘interpretari’ which means to explain, or to translate. The main aim of interpreting a statute is to determine the intention behind the law.

The government is made up of three branches,

  1. The Legislature, 
  2. The Executive, and
  3. The Judiciary.

These three branches perform different functions. The legislature makes the laws, the executive implements the laws that are made and the judiciary interprets the laws and makes them operational. 

When is interpretation done?

Interpretation is done only when, 

  1. The language of the provision is ambiguous.
  2. It is not clear what the law is made for. 
  3. When a provision has two or more meanings.
  4. When two or more views are possible about the provision. 
  5. The meaning of the provision defeats the purpose of the statute.

Need of Interpretation

Drafting a law is a complex task, the legislature has to keep in mind thousands of scenarios so that the legislation drafted is complete in itself. In an ideal world, the meaning of the statute would be clear and direct. In the real world that we live in, most of the times the law drafted is complicated and vague.

Seaford Court Estates Ltd. v. Asher

In this case, the need for interpretation of statutes was highlighted. It was stated that when a defect appears in a statute, the judge cannot simply wash his hands off the responsibility and blame the legislature, he should interpret the statute by finding the intent behind it. The judge should not only focus on the language of the statute but also on the social considerations that made the parliament draft a particular statute. 

Interpretation is needed because, 

  1. The complicated process of drafting laws leads to a variety of gaps and ambiguity in the statute.
  2. The words, phrases, terms used in the statute can have varying meanings due to the multifaceted nature of the language.
  3. A law is never drafted by a single person but rather by a group of people, this leads to incoherence in the language.
  4. Some statues use technical language because of their complicated subject matter. 
  5. The applicability of law changes with new developments. 

Kinds of Interpretations

There are various kinds of interpretations. These are, 

Literal Interpretation: It is also known as grammatical interpretation. While doing this kind of interpretation, the judges are not in any way allowed to add or modify the letter of the law. They should strictly follow the language and directly translate its meaning.

Lalita Kumari v. Government of Uttar Pradesh

In this case, the judges dealt with the interpretation of Section 154 of the Criminal Procedure Code. The judges used literal interpretation for interpreting the section and stated that the word “shall” used in the provision makes it mandatory and no other meaning will be given to the word. The other expression that the court gave meaning to was “information”. The court stated that the police officer has to record information even if he considers it to be unreasonable. 

Functional Interpretation: In this kind of interpretation, the judges deviate from the literal meaning and look elsewhere to decipher the intent behind the law. Functional interpretation is done in four cases,

  • When the statute is inconsistent.
  • When the statue is incomplete.
  • When the language of the statute is ambiguous.
  • When there is a logical flaw in the letter of the law.

Rules of Interpretation of Statutes

Since the judiciary has been entrusted with the responsibility of interpreting the law to administer justice. It is very important that the interpretation is made according to some rules so that the decisions delivered by the judges are just and bring some coherence to the operational aspects of the law.

The rules of interpretation of statutes are divided into two categories. 

  1. Primary Rules
  2. Secondary Rules

Primary Rules – These are the main rules of interpretation of statutes. These include:

  1. Rule of Strict Interpretation
  2. Rule of Liberal Interpretation 
  3. Literal Rule 
  4. Rule of Reasonable Construction
  5. Golden Rule
  6. Mischief Rule
  7. Rule of Harmonious Construction 
  8. Ejusdem Generis
  9. Beneficial Construction
  10. Purposive Construction

Secondary Rules – Rules other than primary rules are secondary rules. These include:

  1. Expressio Unius Est Exclusio Alterius
  2. Contemporanea Expositio Est Optima Et Fortissima in Lege
  3. Noscitur a Sociis

Rule of Strict Interpretation 

The rule of strict construction is used for interpreting criminal legislation. According to this rule, the interpretation which is most favorable to the defendant would be applicable. 

Rule of Liberal Interpretation

The rule of liberal construction states that a law must be interpreted in the context of the document and in accordance with the intent of the author. 

Literal Rule

In this rule, the court has to consider what the lawmakers are trying to say not what they might mean. It can only be applied if the words of the statute are clear and unambiguous and the language is plain.

Meaning

In this rule, the literal meaning of the words is considered. It is considered that the legislature chose every word deliberately and intended that very word to be legally binding, no other words can be added or used. No modifications can be made while interpreting the statute. It was stated in Nand Prakash Vohra v. State of H.P. if there is nothing to modify and the meaning of the statute is clear then ordinary meaning should be assigned to the words of the statute. 

Case Laws 

Case Law 1: Fisher v Bell

Facts: A shopkeeper was offering to sell offensive weapons. This offer for sale was an offense under the Offensive Weapons Act 1959. 

Decision: The court said that an offer for sale must be interpreted according to its ordinary meaning and the display of the weapon on the shop does not mean offer and is only an invitation to treat. 

Case Law 2: Municipal board v. State Transport Authority Rajasthan

Facts: 

  1. That, the Bus Stand was moved from its location. 
  2. That, an application could be made within 30 days from the date of the order according to section 64A of the Motor Vehicles Act. 
  3. The application was moved after 30 days. 

Defense: The argument was that an application could be made after 30 days from the knowledge of the order. 

Decision and its Basis: The decision given by the Supreme Court stated that the literal meaning of the word should be considered i. e. the application should have been made within 30 days of the order. The court rejected the application. 

Case Law 3: Tata Consultancy Services v. State of A.P

Issue: In this case related to tax, the question before the court was whether computer software can be taxed as goods. 

Judgment: The court stated in the judgment that literal construction should be applied only if there is any ambiguity or inconsistency in the statute otherwise the plain meaning is sufficient. 

Advantages and Disadvantages of the Rule

Advantages:

  1. The court cannot apply its own bias. 
  2. The rule provides consistency in interpretation. 

Disadvantages:

  1. It creates loopholes in the law. 
  2. It might lead to an absurd result. 
  3. The rule can result in injustice. 

Criticism

This rule assumes that words used in law have a fixed meaning. Words, in fact, are imprecise and their meaning can change over time. 

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Rule of Reasonable Construction 

Legal Maxim: Ut Res Magis Valeat Quam Pareat which means it is better to give effect to a thing than to declare it void. 

Every law is drafted with a purpose in mind, but if the literal meaning of the law defeats the purpose of the statute, the law should be understood keeping in mind the intention with which it was drafted. The judges should give that interpretation to the law which gives effect to the intention of the legislature. 

In Tirath Singh v. Bachittar Singh, the court stated that if the language of the statute leads to absurdity or injustice then a construction may be put upon it which modifies the meaning of the words used in the statute. 

Golden Rule

This rule states that if the normal meaning of the word given in a statute gives an absurd result then the judges are allowed to deviate from that meaning.

Meaning 

This rule gives the words used in a statute their ordinary meaning. But if that ordinary meaning ends up giving an absurd result which is not according to the intent of the legislature then the judge can give the word a meaning which makes the statute rational. This is done so that the statute can remedy the weakness that it was made to cure. There are two cases,

  1. If the word is a homograph i.e. it has two meanings, then the meaning which is suitable will be given. 
  2. If the word has only one meaning, then the judge can give a completely different meaning. 

Advantages and Disadvantages of the Rule

Advantages:

  1. It helps to give a rational result. 
  2. It helps in closing any loophole. 
  3. It brings common sense to the law. 

Disadvantages:

  1. Judges have power only in case there is ambiguity. 
  2. Judges cannot add or modify a statute. 

Case Laws

Case Law 1: Grey v. Pearson

In this case, the court stated that usually the literal and normal meaning of the word should be used but if the normal meaning gives an absurd result, then that meaning should be avoided. A different meaning should be given to the word so that the inconvenience can be avoided.

Case Law 2: Adler vs. George

Facts: The defendant, in this case, was charged under the Official Secrets Act, 1920.

The defendant was charged with obstructing a member of the armed forces in the execution of his duty. It was an offense to obstruct a member of the armed forces ‘in the vicinity’ of a prohibited place.

Defense: The defendant argued that he was on the place and not in the vicinity of the place.

Decision: The defendant was found guilty.

Basis for the Decision: The court interpreted the phrase “in the vicinity” to mean on or near the place. On this basis, the defendant was convicted.

Criticism

The idea of absurdity is unclear. It is very difficult to ascertain what would be an absurd result?

Mischief Rule 

It is a principle used for interpreting a statute which states that the court should first examine the intention of the legislature. In this, the judges first find the defect in the statute and then apply the remedy for fixing the defect.

Heydon’s Case 

Heydon’s case is considered a landmark case because it laid down the mischief rule of interpretation of statutes.

Facts: 

  1. That, Ottery college, a religious college gave tenancy in a manor to a man named Ware and his son.
  2. That, the tenancy was given in accordance with the copyhold. A copyhold was a form of landholding in which the land was said to be held according to the will of the lord and customs of the manor.
  3. That, the copyhold given to the Wares was part of a parcel.
  4. That, the parcel was then leased to a man named Heydon.
  5. That, less than a year later, the college was dissolved along with all other religious colleges because of a law that parliament enacted.
  6. That, the law parliament enacted had a provision which kept in force the lease that was granted more than a year before the enactment of the Act. 

Decision: As a result of the provision, the lease granted to the Wares was held valid but the lease granted to Heydon was held to be void.

Basis for Judgement: While making the decision, the court laid down the mischief rule. It was stated in this case that the statute should be constructed by seeking the true intent of the makers of the Act.

The judges stated that four considerations should be kept in mind while interpreting statutes:

  1. The common law that existed before the Act.
  2. The flaw for which common law did not provide.
  3. What remedy did the parliament came up with to resolve & cure the distress of the commonwealth Act?
  4. What was the true reason for the remedy?

Advantages and Disadvantages of the Rule

Advantages:

  1. It focuses on the parliament’s intention behind making the law.
  2. It allows judges to apply their minds.
  3. It allows judges to consider the social and technological changes.
  4. It allows for parliamentary sovereignty.
  5. It helps avoid unjust results.

Disadvantages:

  1. It is difficult to decipher the parliament’s intention.
  2. It is considered as an outdated rule of interpretation.
  3. It makes the law uncertain.
  4. It is said to be undemocratic as it gives too much power to the judiciary which is an unelected branch of the government.

Case Laws

Case Law 1: Smith v. Hughes

In this case, the court examined the mischief behind the concerned Act.

Facts:

  1. That, the defendant was a prostitute living at No. 39 Curzon Street.
  2. That, the defendant used the premises for prostitution.
  3. That, on a certain day, the defendant enticed men passing the street.
  4. That, she solicited the men from her balcony.

Judgment: The decision was made in favor of the plaintiff.

Basis for Judgement: The judges examined the mischief the Street Offences Act aimed to provide a remedy for. It was stated that since the Act was made with the intent of cleaning up the streets, it did not matter if the prostitute solicited men from the street or the balcony. Their decision was based on this ground alone. 

If in this case, if the judges have used the literal meaning of the Act, then it would have been considered that the defendant has not committed an offense. 

Case Law 2: Elliot v Grey

Facts:

  1. That, the defendant’s car was parked on the road.
  2. That, the car was jacked and its battery was removed.
  3. That, the defendant was charged under the Road Traffic Act 1930 because of using an uninsured people on the road.

Arguments: The defendant argued in court that he was not “using” the car as it was parked and not being driven.

Decision: The court did not rule in favor of the defendant.

Basis for the Decision: The court applied the mischief rule and held that the Act under which the defendant was charged was enacted to ensure that people were compensated in case of an incident and the car was being used as it presented a hazard and hence insurance would be required in case of an incident.

Case Law 3: Bengal Immunity Co. v. State of Bihar

In this case, the court interpreted Article 286 of the Constitution of India.

Facts: The theory of territorial nexus led to chaos. On the basis of the theory, provincial legislatures was arbitrarily exercising its taxing powers. 

Judgment: The judge in the case while interpreting the article stated that the Article 286 was made to avoid the mischief of multiple taxation and to preserve the free flow of trade. 

Harmonious Construction

This rule is used when there are two statutes or parts of a statute have a conflict. The interpretation which is consistent with all the provisions and also is in accordance with the intent of the legislature will be adopted. A construction which leads to repugnancy should not be used and the statute should be read as a whole.

Features

  1. The goal should be to make the law whole and consistent.

  2. Two or more statutes can be harmonized by this rule.

  3. The provision of one statute cannot defeat the use of the other statute.

  4. A construction which reduces one part of the statute to nothing is not considered as harmonious.

Case Laws

Case Law 1: Raj Krushna Bose vs Binod Kanungo 

The court stated in this case that whenever possible, two conflicting provisions should be constructed in a way that they harmonize.

Case Law 2: T.M.A. Pai Foundation v. State of Karnataka

The Supreme Court interpreted Articles 29 and 30. The court stated that while interpreting provisions the goal is to achieve full cooperation between laws. The court also stated that:

  1. The laws cannot be read in isolation.
  2. The rule cannot be used if it renders one of the laws redundant.

Case Law 3: CIT v. Hindustan Bulk Carriers

The court stated the following rules for harmonious construction:

Rule 1- The courts should avoid a conflict between provisions. The provisions should be interpreted to create harmony. 

Rule 2-The provision of one section cannot be used to defect the provision of the other section. When it is impossible to reconcile the differences between the provisions then they should be constructed in such a way that effect is given to both the provisions.

Rule 3-The courts must keep in mind that if the construction makes the other statute meaningless or dead then it is not harmonious.

Ejusdem Generis 

This phrase literally translates to “of the same kind and of the same species”. According to this rule, when a specific word is used in the Act and a general word is used afterward, then the general word will be construed in reference to the specific word.

Case Law: Jage Ram v. State of Haryana

To apply this rule, the following conditions must exist:

  1. The statute mentions a number of things one by one by using specific words,
  2. The number of things mentioned should constitute a class,
  3. There are other things in the class that exists, 
  4. A general term is used for the things mentioned, 
  5. There is a distinct genus that comprises of more than one species.

Beneficial Construction 

There are some laws which are specifically made for the benefit of some section of people. Some of these are:

  1. Consumer Protection Act
  2. The Industrial Disputes Act
  3. The Juvenile Justice Act
  4. Factories Act
  5. And other socio-economic legislations 

The rule of beneficial construction states that when there are two meanings of the law and one meaning gives the benefit and other takes it away. The meaning which grants the benefit should be adopted.

Case Laws

Case Law 1: Hindustan Lever Ltd v Ashok Vishnu Kate

The court stated that when a law is enacted for social welfare. The construction which extends the intended benefit to the people should be made.

Case Law 2: Noor Saba Khatoon v. Mohammad Quasim

The Supreme Court held in this case that the provision for maintenance under 125 of Civil Procedure Code and maintenance of children under 2 years are independent of each other and no legislation which is passed subsequent to it can affect the provisions.

Purposive Construction 

This rule interprets law keeping in mind the intent for which it was enacted. In this kind of interpretation, external aids such as commentaries, parliamentary debates, etc. are used. The mischief rule is the foundation for this type of construction. 

Secondary Rules

In addition to the above-stated rules, there are also other rules for interpreting statutes. These other rules are expressed in legal maxims. These are, 

Expressio Unius Est Exclusio Alterius

Expressio Unius Est Exclusio Alterius is a legal maxim which literally translates to the ‘explicit mention of one thing is the exclusion of another’. When a thing is explicitly mentioned in a provision of an Act, then all other things are not considered. 

Contemporanea Expositio Est Optima Et Fortissima in Lege

This rule of construction states that the best explanation of the law would be to read it as it would have been read at the time that it was passed. This rule also considers the surrounding circumstances under which the Act was passed. 

Noscitur a Sociis

The meaning of the word is known from its association. It is a rule of construction which states that the meaning of an unambiguous word or phrase should be considered on the basis of the context in which it was used. 

Aids in Interpretation 

In addition to the rules, interpretation can be made by using aids. There are two kinds of aids for interpreting a statute. These are,

  1. Internal Aids
  2. External Aids

Internal Aids

Internal aids are aids which are first referred to for interpreting a statute. These are present in the statute itself and include:

  1. Preamble of the Act: It has been decided that while preamble may not be a part of the Act. It can be referred to know the mischief for which the Act was enacted. The Supreme Court in Kavalappara Kottarathil Kochuni v. the State Of Madras And Others stated that if an ambiguity arises in the construction of a statute, then the preamble can be referred. 
  2. Title of the Act: The title tells about the purpose of the Act in a concise way and often precedes the preamble of the Act. 
  3. Heading of the Chapter of the Act: An Act is divided into chapters, these chapters deal with different things. What kind of things the chapter deals with can be known by reading the heading of the specific chapter? 
  4. Marginal Notes in the Act: Supreme Court in Sarabjit Rick Singh vs Union Of India stated that reference to marginal notes would be permissible only when the main provision is supposed to be interpreted differently.
  5. The Punctuations in the Provisions of the Act: The punctuations play a very important role in the construction of the provision. 
  6. The Illustrations that supplements the provisions under the Act: Illustrations are valuable as long as they indicate the intent of the legislature. 
  7. Explanations provided of the provision of the Act: Explanations of provisions help in determining what the provision means.
  8. Definitions provided in the Act: Every Act has an interpretation clause which contains important definitions. These definitions may be inclusive or exhaustive. This clause is very important for interpreting various words in a statute. 

External Aids

External aids are used when internal aids are not sufficient to know the meaning of the statute. External aids include, 

  1. Statement of Objects and Reasons of the Bill: When a Bill is passed, its statement of objects and reasons describe the intent of the legislature. 
  2. The Commentaries on the Law by various Authors: Commentaries by various authors are very useful in interpreting a statute. 
  3. Dictionaries: In literal construction, the dictionary meaning of the words is referred to. 
  4. The Circumstances Surrounding the Enactment of the Act: In Commissioner of Income Tax vs. Sodra Devi, the court stated that it was not necessary to refer to any external aid if the language of the statute is clear and unambiguous. 
  5. Reference to Reports of Committee: The reference to reports of Select Committee or Law Commission or any report of any other committee on the basis of which the Act was enacted can be made to interpret the statute. 
  6. Reference to other Statutes: Sometimes other statutes are referred for interpreting a statute.
  7. Parliamentary Debates: Before a Bill is passed it is debated in the parliament. The debates can be referred to know the intent behind a particular provision of the Act. 
  8. History of the Act: The history of the Act along with the surrounding circumstances are helpful in determining the meaning of the provisions of the Act. 
  9. Foreign Decisions: Decisions given by foreign courts can also be used to interpret the law provided that the country has the same system of jurisprudence as ours. The surrounding circumstances in which the Act was enacted and the Indian conditions to which the law applies are considered.
  10. Political, Social and Economic Developments: Developments that affect the very structure of society also help in interpreting a statute.

Conclusion

Thus, the interpretation of statutes is an important process. Moreover, it is essential that the interpretation is done according to the various rules prescribed. The rules should be followed to ensure that judges do not arbitrability exercise the responsibility that they are entrusted with. 

References

  1. https://www.lawctopus.com/academike/mischief-rule-statutory-interpretation/
  2. http://www.studylecturenotes.com/social-sciences/law/155-interpretation-law
  3. http://lawtimesjournal.in/contemporanea-expositio-est-optima-et-fortissima-in-lege/
  4. https://india.lawi.asia/contemporanea-expositio-est-optima-et-fortissima-in-lege/

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Offences Against the State: All you need to know about it

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This article is written by Shriya Sehgal, a first-year student pursuing BBA.LLB. from Symbiosis Law School, Noida. This is an exhaustive article dealing with the ‘offences against the State’ as prescribed under the Indian Penal Code. 

Introduction

The Indian Penal Code, 1860 deals with offences against the State under Chapter VI (Section 121 to Section 130). The purpose of these codes is to ensure the safety of the State as a whole. The existence of the State can be safeguarded by giving severe punishments in case of offences against the State such as life imprisonment or the death penalty. Offences against the State as well as the government to disturb the public tranquillity, public order and national integration.

Waging War

Waging war means an attempt to fulfil any purpose of public nature by the means of violence. Such a war occurs when several people rise and assemble against the State in order to attain any object of public nature by force and violence. In order to constitute an offence against the State, the purpose and intention are taken into consideration and not the murder or the force. 

Difference between Waging war and Rioting

BASIS

WAGING WAR

RIOTING

MEANING

Where the rising is for general purpose, affecting the whole community and directly strikes at the government department then it is waging war against the state.

Where the rising is primarily to accomplish some private purpose, affecting only those who are engaged in it without questioning the government authority then it is a riot irrespective of how numerous or outrageous it is. [1]

PURPOSE

It is against the Government of India.

It is against the public tranquillity.

SERIOUS OFFENCE

It is a more serious offence as compared to rioting.

It is a less serious offence as compared to waging war.

NUMBER OF PERSONS

The number of persons in waging war is not specific as it has not been mentioned anywhere.

The number of persons in rioting must be five or more.

MENTION IN THE CODE

It is mentioned and explained under Section 121 to 123 of the Indian Penal Code, 1860.

It is mentioned and explained under Section 146 to 148 of the Indian Penal Code, 1860.

PUNISHMENT

Serious punishment is given in such a case, that is, life imprisonment, or the death penalty, and fine.

Comparatively, less serious punishment is given, that is, imprisonment for two years, or fine, or both. 

Waging War against the Government of India

Section 121 to Section 123 of the Code deals with waging war against the Government of India. Here, the phrase ‘Government of India’ is used in a much wider sense, that is, to imply the Indian State which derives the right and power of authority from the will and consent of its people. In other words, this expression signifies that although the State derives the power of authority from Public International Laws, however, such authority is vested by the people of the territory and is exercised by the representative government. 

Under Section 121, the following are considered as essentials of the offences as they need to be proved in order to constitute an offence for waging war against the Government of India:

The accused must have:

  • Waged war; or
  • Attempted to wage war; or
  • Abetted the waging of war.

Such a war must be against the State.

The punishment under this Section includes either life imprisonment or the death penalty. A fine can also be imposed in certain cases.

Whoever

The word ‘whoever’ is used in a broader sense and is not only limited to the people who owe loyalty to the established Government. Even the Supreme Court of India is unable to justify if the foreign nationals who enter into the territory of India for the purpose of disrupting the functioning of the Government and destabilising the society should be held guilty or not.

For instance, in the case of Mumbai Terror Attack, the first and the primary offence committed by the appellant and other conspirators was the offence of waging war against the Government of India. The attack was by foreign nationals and aimed at Indians and India. The purpose of this attack was to accelerate communal tensions, affect the financial situation of the country and most importantly to demand India to surrender Kashmir. Therefore, under Section 121, 121A and 122 of the Code, the appellant was rightly held guilty for waging war against the Government of India.

Waging War

The phrase ‘waging war’ must be understood in the general sense and can only mean waging war in the manner usual in war. It doesn’t include overt acts like collection of men, arms and ammunition. Also, in the international sense, the inter-country war involving military operations between two or more countries is not included under this type of war.

Under, Section 121 it has been made clear that ‘war’ is not conventional warfare between countries, however, joining or organising an insurrection against the Government of India is a form of war. Waging war is a way to accomplish any purpose of public nature by violence.

Intention

In the case of waging war intention and purpose are considered to be the most important factors to be examined behind such aggression against the Government. In such a war, murder and force are irrelevant.

Sedition and Abetting War 

Both the offences are cognizable, non-compoundable and non-bailable. Theses offences can be tried in a Court of Session.

Section 124A of IPC deals with sedition. This offence means that the intention is to bring hatred or contempt or excite disaffection (including disloyalty and a feeling of enmity) against the Government of India.

Abetting the war is a special type of offence. The main purpose of such instigation should be necessarily waging of war.

For instance, in Najot Sandhu’s case, the appellant was a part of the criminal conspiracy and was deemed to have abetted the offence. He took an active part in a series of steps taken for the purpose of the conspiracy. Therefore, the judgement given by the High Court was upheld and the appellant was convicted under Section 121 of IPC.

In a case under Section 121 of IPC if the charge doesn’t set out the speeches to be seditious, then this doesn’t spoil or affect the proceedings. Thus, it can be concluded that there is a difference between sedition and abetting war.

Conspiracy to Wage War 

Section 121A was added to IPC in 1870. It states that it is not necessary for any act or illegal omission to take place explicitly in order to constitute a conspiracy.

This section deals with two types of conspiracies:

  1. Conspiring to commit an offence punishable under Section 121 of the Code, within or without India.
  2. Conspiring to overawe, that is, intimidated by means of criminal force or a mere show of criminal force against the Government.

The punishment under this Section includes imprisonment for ten years or life imprisonment along with a fine. Such punishment can be given by the Central Government as well as the State Government.

Preparation to Wage War

Section 122 of the IPC deals with the preparation of war. There is a difference between an attempt and preparation for committing the offence. The essentials of this Section are:

  • Collection of men, arms and ammunition.
  • There must be an intention to wage war or make preparations to wage war for such collection.
  • The accused must participate in such collection.
  • The war must be waged against the Government of India.

The punishment under this Section is either life imprisonment or imprisonment for ten years along with a fine.

For instance, if print material along with other things are found in the room of the accused, then they are neither considered objectionable nor infuriating. Thus the accused cannot be convicted under this Section.

Concealment of Design to Wage War

Section 123 of the IPC deals with the concealment of design to wage war. The essentials of this Section are:

  • There must be an existence of a design which is prepared to wage war against the Government of India.
  • The concealment should be done with the intention of facilitating the war against the Government of India.
  • The person should be knowing about the concealment of the design.

The punishment under this Section is imprisonment of up to ten years along with a fine.

For instance, in the Parliament attack case, the accused had information of conspiracy along with a plan of terrorists. Thus his illegal omission made him liable under Section 123 of the IPC.

Waging War against Power

War Against Asiatic Power

Section 125 deals with ‘Waging war against any Asiatic Power in alliance with the Government of India. This Section contempts the waging of war against any Asiatic power. Here, the accused should have waged war against the State or attempted to wage war, or abetted the waging of war. The essentials of this Section are:

  • There must be an Asiatic State along with an international influence.
  • Such a State should be other than India.
  • Such a State should be in alliance with or at pace with the Government of India.

The punishment under this Section is life imprisonment or imprisonment for seven years along with a fine in some cases; or fine.

Depredation in Friendly Countries

Section 126 deals with ‘Depredation on territories of Power at peace with the Government of India’. Depredation refers to an act of attacking. The essentials of this Section are:

  • The accused should have committed or prepared to commit depredation.
  • The act must be done on the territories of any power which is in alliance with or at peace with the Government of India.

Punishment under this Section is imprisonment for a term of seven years along with a fine. Any property used for the purpose of committing such offence or acquired as a result of this offence can also be forfeited.

NOTE: Section 126 is wider than Section 125, as the latter deals with the waging of war against Asiatic Power in alliance with the Government of India whereas the former Section applies to a Power which may or may not be Asiatic. 

Receiving Property Taken by War or Depredation

Section 127 deals with the ‘Receiving property taken by war or depredation as mentioned in Section 125 and 126’. The essentials of this Section are:

  • The accused must have received any property.
  • The accused must have been received the property by waging war with a Power at peace with the Government of India or by committing depredation on its territories.

Punishment under this Section is imprisonment for a term of seven years along with a fine. Also, the property must be forfeited.

Assault on High Officials

Section 124 of the IPC deals with the assault on high officials, that is, the President, Governor, etc. Such assault should be done with the intention of inducing or compelling the high officials to exercise or refrain from exercising their lawful powers. The ingredients of this Section are:

  • The accused should have assaulted the President or the Governor of any State; or
  • The accused should have wrongfully restrained the President or the Governor; or
  • The accused attempted to assault or wrongfully restrain the President or the Governor; or
  • The accused attempts to instigate or influence the President or the Governor with force or show of force with an intention to compel them from exercising or refraining from exercising their powers.

Escape of a State Prisoner 

Section 128, 129 and 130 deals with the various aspects of the escape of a state prisoner.

The expression ‘State prisoner’ refers to a person whose imprisonment is necessary to preserve the security of India from internal disturbances as well as foreign hostility.

Section 128 of the IPC deals with ‘public servants voluntarily allowing prisoners of State or war to escape’. The ingredients of this Section are:

  • The accused should be a public servant; or
  • The confined person should be a prisoner of State or war; or
  • Such prisoner should be in the custody of the accused person; or
  • The accused servant should have allowed such a prisoner to escape voluntarily.

NOTE: This Section doesn’t apply in the case of the prisoner escapes during the transit.

The offence under this Section is an aggravated form of an offence under Section 225-A. In both cases, the public servant is punished if he voluntarily allows the prisoner to escape, however, under Section 225-A a prisoner may be an ordinary criminal.

Punishment under this Section is either life imprisonment or punishment for a term of ten years along with a fine.

Section 129 of the IPC deals with ‘public servant negligently causing the prisoner of State or war to escape’. The ingredients of this Section are:

  • The accused should be a public servant, necessarily at the time of committing the offence.
  • Such a prisoner should be in the custody of the accused person.
  • Such a prisoner should be rescued or escaped.
  • Such an escape or rescue should be due to the negligence of the accused.

The offence under this Section is an aggravated form of an offence under Section 223. In both cases, the public servant is punished if he negligently causes the prisoner to escape, however, under Section 223 prisoner may be an ordinary criminal.

Punishment under this Section is simple imprisonment of up to three years along with a fine.

Section 130 of the IPC deals with the ‘any person who aids or assists the escape of, rescuing, or harbouring of a prisoner of State or the war to escape’. This Section is more extensive as compared to Section 128 and 129. The ingredients of this Section are:

  • The accused knowingly aids or attempts to aid, rescue, harbour or conceal such prisoner.
  • Such a prisoner should be in lawful custody.
  • The act or omission should be done intentionally or knowingly.

Punishment under this Section is life imprisonment or imprisonment up to ten years, and a fine.

Sedition 

Section 124A deals with sedition. Under this Section, any person who by:

  • Words, written or spoken; or
  • Signs; or
  • Visible representations; or
  • Otherwise; 

Brings or even attempts to bring hatred or excites disaffection (including the feeling of enmity and disloyalty) towards the Government of India, is punishable with:

  • Life imprisonment along with a fine in certain cases; or
  • Imprisonment for up to three years along with a fine in certain cases; or
  • Fine. 

Essential Ingredients of Section 124A

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Words, Sign, Visible Representation or Otherwise

Sedition can be made in various ways- by words, written or spoken, by signs, or by visible representation. Seditious deeds include music, publications, performances (films and puppets), sculptures, photographs, cartoons, paintings and any other method.

Under sedition, it is immaterial whether the seditious articles are being used by the actual authors or not. The editor, publisher or printer is equally liable as the author in such a case. Thus, whoever wrote or used it for the purpose of exciting disaffection is guilty of sedition. In case, the accused pleads that he did not authorise the article, then the burden of proof lies with the accused. Moreover, if the accused is unaware of the contents of the published article or paper then he is not guilty under this Section as the intention is absent. 

Sedition doesn’t necessarily consist of written or spoken words but can also be of other kinds such as signs and by visual representation. For instance, it can be evidenced by a woodcut or engraving of any kind.

Brings or Attempts to Bring into Hatred or Contempt

The expression ‘brings or attempts to bring into hatred or contempt’ attempts to not interfere or interfere less with the freedom of speech.

For instance, the writers in the public press are not allowed to write or get indulged in improper or dishonest motives. A writer when publishes an article with a calm, unsentimental and dispassionate view, and discusses his little feelings that may or may not cause a man to think, are not considered to be seditious. However, if the article goes beyond and contains improper, corrupt and dishonest motive, then such an article is considered to be seditious.

Excite Disaffection

The term ‘disaffection’ includes disloyalty and all other feelings of enmity. In order to amount to sedition, an act of disaffection must be excited among the people. In other words, the feeling of disaffection must be stirred among the people of the State.

As per this Section, the disaffection can be excited in several ways, such as:

  • Poem,
  • Allegory,
  • Historical or philosophical discussion,
  • Drama, etc.

In order to amount to sedition, the publication is necessary. The publication can be of any kind and manner, including posts.

Government Established by Law

This expression refers to the existing political system which includes the ruling authority and its representatives. In other words, it refers to the people who are authorised by law to administer the Executive Government in any part of India. It includes the State Government as well as the Central Government. 

An offence to come under this section must be directed toward the Government of India.

The following situations do not fall under the umbrella of sedition:

  • Speech urging strike against businessmen or mill owners and not Government.
  • Discouraging recruiting.
  • Pursuing people to not pay land revenue.

Thus, sedition means attacks on the established Government or the Sovereign. An attack on the justice administration does not fall under the ambit of Section 124A.

Expressing Disapprobation – Explanations 2 and 3

The phrase ‘expressing disapprobation’ simply refers to expressing disapproval. A man can be liked by someone, however, such liking doesn’t necessarily amount to approval of that man’s sentiments or actions. Explanation 2 and 3 give a plethora of options for people to make comments expressing disapprobation of the measures of the Government. It is done in order to obtain their alteration by lawful means or other Government actions. All this can be done without exciting hatred or exciting disapprobation of the Government.

Explanation 2 and 3 have a limited scope and are strictly defined. Thus, the objective of these explanations is to protect bonafide criticism of public measures as well as their institutions, in order to improve. It is the right of the free press in a free country to accelerate changes in policy by criticising such measures. Nowadays, the freedom given to media is much more when compared to earlier years or pre-independence. 

For instance, an article in the newspaper is not seditious when it attacks a proposed bill or the policy of the ministry, however, an attack on the ministry would amount to sedition. 

Constitutional Validity of Section 124A 

The provisions of this Section are not considered to be unconstitutional as being violative of the fundamental right of freedom of speech and expression under Article 19(1)(a) of the Indian Constitution.

Ram Nandan v. State of U.P. was the first case in which the constitutional validity of sedition was questioned. The Allahabad High Court held that the Section imposed a restriction on freedom of speech and was not considered to be in the interest of the general public. Therefore, this Section was considered as ultra vires to the constitution. However, it was overruled in the case of Kedar Nath Das v. State of Bihar. In this case, it was held that this Section would only limit the acts involving an intention to create a disturbance of law and order or enticement of violence. Thus, the Supreme Court held this Section intra vires.

Proposals for Reform 

India is the largest democracy in the world and the right to freedom of speech and expression is an essential element of a democracy. A mere expression or thought about the government policy doesn’t amount to sedition. Therefore, many proposals for reform have been made throughout the years.

Many proposals were made by the Law Commission in this regard:

  • In 1968, that is, in 39th Law Commission Report, the idea of repealing this Section was rejected.
  • In 1971, that is, in 42nd Law Commission Report, the scope of the Section was suggested to be expanded and include the Constitution, the legislature, the judiciary and the Government established by law.
  • In August 2018, the Law Commission of India published a consultation paper suggesting to repeal Section 124A of the Indian Penal Code that deals with sedition.
  • Recently the Law Commission of India has suggested in a consultation paper to invoke Section 124A to criminalise only those acts which are committed with the intention to disrupt public order or to overthrow the Government with violence and other illegal means.

Thus, it is unlikely that the Section would be scrapped sooner or later. However, the Section should not be misused. 

Conclusion

Offences against the State play a crucial role in regulating and maintaining public order. The people of the State have a right to criticise the policies of the Government, however, they should not misuse their liberty to cause harm to the people around them or the Government. Waging war against India and against power is a punishable offence. The law also protects the high officials, such as the President, the Governor of every State etc. in case of assault against them. Most importantly, sedition is considered to be one of the most dangerous cognizable offences against the State. Thus, it can be concluded that the State needs to restrict the freedom of the people of the country for the betterment of the State.

References


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Exordium to the Era of Contract Labour (Regulation and Abolition) Act, 1970

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This article is penned by Dipsa Prasanth, a second year BA-LLB student of the  Army Institute of Law, Mohali. Through this article the author has critically anatomized the Contract Labour(Regulation and Abolition) Act, 1970.

Introduction

With the accelerating world taking its momentum, the work and labour culture of the world has also changed its trajectory. The new-fangled era of liberalization and globalization has attracted foreign investments in India thereby making the corporates uncertain about the workforce, due to the global market fluctuations. This phenomenon had led to the hiring and deployment of labour on a contract basis.

On the onset of economic torrents due to the upswing in liberalising policies, the employers are now looking for a more versatile model in their tie-in with the employees. This is done by the appointment of labour on a temporary or contractual basis, thus making them contract labourers.From, the men who serve food to us in canteens to the security services, contractual labour has become a very popular form of dependence.

Contract Labour (Regulation and  Abolition) Act, 1970

The contract labourers are recurrently susceptible to exploitation by the contractors who act as the link between the workers and the real employer. With lesser wages and poor working conditions, the workers are pushed to an over a barrel situation, with nearly no regulations. Though the government had brought out legislation timely, their feeble implementation has made it fall flat time and again. These woeful states of affairs persuaded to the formulation of the contract labour (regulation and abolition) Act, 1970 which was a giant leap by the government in the sphere of contractual labourers.

This Act is aimed at imparting justice to the rights of the contractual labourers and to fortify the welfare of them. It has various guidelines regarding protection, rights and basic amenities prescribed for the welfare of contract labourers.

Objective  and Applicability

This Act mainly deals with resolving the problems woven around contract labourers, protecting them from exploitation and securing their rights. Adding on to this it aims at abolishing contact labourers from perineal works and works where permanent labourers can be deployed.

On the factor of applicability, it applies to any establishment with a strength of twenty workmen or more or had twenty workmen or more on any day in the preceding twelve months. They apply the same on contractors as well.

Advisory Board

To enhance the enactment of the Act and to guide the government on important provisions concerning the same subject matter, an advisory board has been set up. This body acts as a consultative wing to the central and state governments. Further, these advisory boards are of two:

  1. Central advisory board
  2. State advisory board

Central Advisory Board

For the ease of administration and to perform the functions designated through this Act, the government at the center shall constitute a board called the Central advisory contract labour board. This would act as an advisory board to the government of India in matters relating to the above stated Act.

The composition of the Central advisory board includes, a chairman, chief labour commissioner and members from specified areas. There shall be a minimum of eleven and a maximum of seventeen members on the board, they collectively advise the central government on major steps related to the subject matter.

State Advisory Board

Similar to the board which is formed to assist the central government, the state advisory contract labour board is constituted to advise and aid in the administration of the state government.

The state advisory board will consist of a chairman, a chief labour commissioner in his absence any member nominated by the state government and members maximum of eleven and a minimum of nine.

These boards are vested with the power to constitute committees, the central and the state boards are conferred with the rights to shape committees for various matters concerning this Act. The committee constituted should meet at due time and relevant place, and must be paid an amount as the fee for attending these meetings. Government officials are exceptions to this provision of getting fee as cited above as it becomes part of their delegated duty.

Registration Of Establishment Employing Contract Labour

According to the provisions revealed under this Act every establishment employing contract labour shall be duly registered and shall have a registering officer to preside and administrate the whole mechanisms linked to this Act.

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Appointment of Registering Officer

To keep a check on the core aspects of this Act the government on a notification in the official gazette can appoint a person to the post of registering officer who will be a gazetted officer of the government of India. Also, the limits and the power of the registering officer are mentioned discreetly.

Registration of Certain Establishments

The main employer of an establishment to which this Act concerns shall within the period mentioned by the government in the official gazette make an application to the registering officer for registration.

The registering officer if found the application to be fulfilling all the requisites, can register the establishment and provide the principal employer with a certificate of registration.

Revocation of Registration

There is a provision of revoking a registration if found malaise. The registering officer if found, through any means that the registration was made with the wrong intention or has done by misrepresentation has the complete right to revoke the registration provided. This can be done after giving the principal employer a fair chance of hearing and with approval from the government at the center.

Effect of Non-registration

The principal employer of an establishment covered under this Act shall register the establishment as per this Act. And in the case of revocation under section 8, the contract labour should be employed back after the commencement of the prescribed date or after the revocation date as the case may be.

Prohibition of Employment Of Contract Labour

The government with the consultation of the concerned board under this Act has the right to prohibit employment of contract labour with a notification through the official gazette.

Before the publication of the notification, the government shall look into the benefit provided and the working conditions of the contract labour. Another relevant factors involved are the nature of work that it is perennial or not, can the work be done by employing considerable no. of the permanent workman, whether the work is done ordinarily and the necessity of that work being done for the establishment.

Licensing Of Contractors

Every contractor who acts as a link between the contract labour and the principal employer shall have a license to continue with the same. These are explained as follows:

Appointment of Licensing Officer

The Appointment of a licensing officer goes in the same format as that of the registering officer. The government on a notification in the official gazette can appoint a person to the post of registering officer who will be a gazetted officer of the government of India. Also, the limits and the power of the registering officer are mentioned discreetly.

Licensing of Contractors

The government through a notification in the official gazette within a prescribed time can give license to a contractor. Further, he/she can only work within the preview of the provisions issued in the license. The provisions can vary from time period to wages given etc.

The license of a contractor will come into force from the date specified by the government in the official gazette and the contractor can perform or carry out contract labour only and strictly in the way prescribed in the license issued. The license constitutes of the working conditions, wages to be paid etc.

Grant of Licenses

The application made for license under Sec. 12 should include all the required information from place of the establishment to the work which has to be done the contract labourers. And if the licensing officer finds all this information to be valid then he can issue the license to the contractor. The license issued will be for a limited period of time on whose expiration an application for renewal has to be filled.

Revocation, Suspension, and Amendment of Licenses

If at a later stage, the licensing officer finds himself or through any other source that the license was obtained through misrepresentation or fraud then he has the right to revoke or suspend the license.

Adding on to this if the contractor deviated from the guidelines or conditions prescribed to be followed mandatory then again, the licensing officer has the right to revoke or suspend the license after giving the contractor a fair hearing to prove his part.

Appeal

If any person is aggrieved by the decision of the registering or licensing officer then he/she can go forward with the option of appealing with an appellant officer within thirty days of the communication of the previous order. The appellant officer has complete discretion to consider appeals filed after the expiry of the above- prescribed date if he is satisfied with the appeal made.

Welfare and Health Of Contract Labour

Welfare and health are binary vital aspects of one’s life and also for the progress of the human race thus taking at most care in this showground becomes very imperative. This Act has taken this aspect with great gravity and had put forth various provisions in this pitch. These include facilities like;

Canteen

Restroom

First aid facilities

Canteens: Every establishment which is covered under this Act should have a canteen. In establishments with a hundred or more contract labours then there must be a provision of one or more canteens. There must be a check without prejudice on the quality of food served, the rate in which it is served, etc.

Restrooms:

Other facilities shall have adequate drinking water facilities, washing facilities, a sufficient number of urinals and latrines, etc.

First Aid Facilities:

It is the duty of the contractor to provide at every place where contract labour is deployed with first aid facilities. This should be available and equipped at working hours as well.

Liability Of Principal  Employer

There are certain liabilities which is embedded over the principal employer, failing to which he would be held liable to bear the penalties. 

The contractor is liable to provide the contract employee with the prescribed amenities of canteen, restrooms, and other facilities, etc within the prescribed time. If the contractor fails to provide the above mentioned, then the principal employer would be held liable. And the amount required by the principal employer for performing the above-mentioned amenities can be incurred by him from the contractor.

Responsibility Of Payment Of Wages

It becomes the responsibility of the contractor to provide the contract labourers with their prescribed salary. The principal employer should send one of his trustees to be present at the time when the contractor distributes the salary amongst the contract labourers.

If the contractor fails to pay the prescribed salary to the workers, then the liability of payment would shift to the principal employer to pay the contract labourers their wages. The principal employer can alter incur this from the contractor.

Penalties And Procedures

A person or contractor who violates the provisions given under this Act can be punished with imprisonment for up to three months and a fine of five hundred rupees or both.

Any person who contravenes with the provisions given in this Act shall be punished with imprisonment of three months and a fine of thousand rupees or both.

If the company contravenes or commits any wrongful deeds that goes against the Act, then every person in charge or responsible of the company would be held guilty.

If there is no complaint given in writing or any previous sanction then no court can take cognizance of any offense given under this Act. The presidency magistrate or a magistrate of the first class only has the right to try such cases.

The complaint must be filed within three months of the date of the commission of the offense had come to notice of the inspector, only then can a court try these offenses. This can be extended maximum to a period of six months.

Miscellaneous 

The government has the jurisdiction to appoint an inspector to guard the provisions of the Act and shall define his/her limit to use power.

The contract labour and principle employers are supposed to maintain all the records related to registration and licensing and of the work performed by the contract labours. All the restrictions which are mentioned in this Act can be discharged in special cases. Adding on to this, the government has the right to move difficulties regarding provisions of the Act, make rules about it and give new directions.

Conclusion

On a concluding note, this Act is a giant leap in the pitch of contract labours. Their urge for protection of their rights and welfare measures which was unheard of for ages was met with and satisfied by this Act. There are various provisions in this Act that upholds the status and secures the welfare of the contractual labourers which had to an extent put an end to the exploitation they had to face these years. This Act provided the contractual labourers with a voice that also has a medium to be heard now as an outcome of this Act and put their grievances across. Granting the labourers a right to be human and live like a human i.e. with dignity, this Act has come a long way from the prehistoric age of barbarism and suppression.


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Abetment: important pointers you must know about

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This article is written by Hema Modi, a second year student of Pravin Gandhi College of Law, Mumbai. It provides an in depth knowledge and critical evaluation of abetment in the Indian Penal Code covered under Section 107 to 120, along with landmark judgements in relation to it.

Introduction

To understand ‘Abetment’, we must first understand the meaning of the term “abet”. The literal meaning of the term ‘abet’ is ‘to encourage or assist someone to do something wrong, especially in committing a crime’.

Section 107 of Indian Penal Code defines abetment as: 

“A person is said to abet the doing of a thing, who: 

  1. Instigates any person to do that thing,
  2. Engages with one or more other person or persons in any conspiracy for the doing of that thing,
  3. Intentionally aids, by any act or illegal omission, the doing of that thing.

Explanation: if any person provokes, allures, persuade, threatens, conspires, commands or intentionally helps any person in doing an illegal act or those acts which are recognised as crime is said to abet that person.”

In the case of Kartar Singh v. State of Punjab, the Supreme Court has defined the meaning of the word ‘abet’ in its judgement.

Parties to a Crime

The parties to a crime are the defendants or accused culprits who have committed the crime. In law, different roles are played by different people in the commission of a crime. They are:

  1. Principal offender – the main perpetrator of an offence.
  2. Joint principals – the persons sharing the same actus reus, i.e., action to commit a crime.
  3. Innocent agent – the person who is unknowingly involved by the principal.
  4. Secondary parties – the person who acts as accessories or accomplishers to the crime.

In abetment, the person who had mens rea, but was not involved in actus reus is punishable. The offence of abetment depends upon the intention of the person who abets, and not upon the act which is actually done by the person whom he abets.

Law Relating to Abetment

Chapter V of the Indian Penal Code provides for the law which governs the liability of all those people who are considered to be the abettor in the commission of an offence.

Abetment and Abettor

The abettor, as defined under Section 108 of IPC, is the person who abets in the: 

  1. Commission of an offence.
  2. Commission of such an offence if done by a person not suffering from any mental or physical incapacity.

However, under this section, an abettor can escape from liability if there is an express withdrawal or revocation of the task given by him. Moreover, a person cannot be charged on the ground of having given evidence in support of any charge or crime.

In order to charge any person under abetment, it is not necessary that the act has to be committed. Even if the act is incomplete or interrupted, the offence of abetment is said to be committed.

Moreover, the offence of abetment depends upon the intention of the person and not upon the knowledge or intention of the person whom he has employed to act for him. 

Abetment of an act of abetment is also an offence under this section and hence is punishable. For example: if A abets B to abet Asst. Surgeon to make a false report of an autopsy. For this act, both A and B shall be held liable for abetment not depending upon the success of such an act.

Principle and Scope of the Provision

There are lots of crimes provided by the Indian Penal Code which are illegal and punishable in India. Some of the offences attract joint liability of two or more people and in some cases, there are persons who may not be directly involved in committing the offence but through other means like instigation, assistance and cooperation enable others to commit a crime. These persons are said to facilitate the offence. However, they are not free under the law. They are liable and guilty of facilitating the crime or an offence in the same manner as the person who committed that offence.

Chapter V of the Indian Penal Code covers the different ways in which such assistance or abetment can be provided so as to make those persons liable under criminal law. 

The definition of abetment as provided is general in nature as it contains the abetment of a ‘thing’ which consists of commission or non-commission of an offence also.

Important Element: Mens Rea

For proceeding against a person for the offence of abetment, the proving element of mens rea lies to the prosecution i.e., if the prosecution has to prove the intentions of the person to charge him/her for abetment. Negligence, carelessness or facilitation cannot punish the guilty as per this provision. The abettor has to ‘intentionally’ aid in the commission of the crime.

The mere proof that the crime charged could not have been committed without the involvement or the interposition of the abettor is not enough to charge the accused abettor. 

The main ingredients of abetment i.e., instigation or intentionally aiding any person to commit an illegal act, engaging with someone with the intention to do any illegal act must be proved for accusing any person.

This shows that mens rea i.e., intention to commit an act is an important element than actus reus to accuse the guilty.

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Abetment by Instigation

‘Instigation’ means to suggest or stimulate a person to do act by means of language, made directly or indirectly, in the form of express solicitation or encouragement or mere gesture indicating beating, etc. The fact of the case helps us to decide the element of instigation. However, a word uttered in a fit of anger or emotion, not intending the further consequences to follow, is not an ‘instigation’.

The element of intention plays an important role in determining whether a person is guilty or not. He must have intentionally done something which amounted to instigation for another to do an illegal act.

Advice per se does not necessarily amount to instigation. Advice amounts to instigation only if it was meant to actively suggest or stimulate the commission of an offence. 

A mere acquiescence or permission does not amount to be guilty of abetment by instigation. It implies the knowledge of the criminality of an act i.e., the abettor must have full knowledge of the act of which he is instigating. The words which were spoken and amounted to permission will depend on the position of the speaker and the occasion on which they are spoken to charge that person for abetment by instigation.

Also, mere presence on the scene as a silent passive spectator does not amount to abetment.

The only condition required to be fulfilled to prove any person to be guilty under this section is by the relevance to the thing that was done and not to the thing that was likely to have been done by the person.

Abetment by instigation is of two types. They are:

  1. Direct instigation – an act which is done on the direct command and active simulation of another person. 
  2. Instigation by letter – an act committed by instigation through posts or letters. The offence of instigation completes as soon as the addressee i.e., the person who is being abetted comes to know of such a thing.

Sanju v. State of M.P (2002) 

This case is one of the landmark cases of Abetment to suicide.

FACTS: there was a fight between the husband and wife. In the heated arguments, the husband told the wife to “go and die”. After two days, the wife committed suicide and there was a dying declaration of the deceased. 

JUDGEMENT: mere pronouncing of the phrase “go and die” does not amount to abetment in any form. The element of mens rea has to be present necessarily. Moreover, the suicide was committed two days after the quarrel and hence this shows that the suicide was not the direct result of the fight. Hence, this shows that the husband cannot be held liable for the suicide of his wife under the section of abetment.

Instigation in Dowry Death Cases

A person can be held liable under abetment for the cases of dowry death. According to the report of Indian National CrimeRecords Bureau, in every 90 minutes, there is a death of a woman due to dowry related matters. There are the following ways in which a person can be held liable for abetment.

  1. CASE 1: husband/any relative can be held liable as an abettor for instigating his wife to commit suicide.
  2. CASE 2: The relative of the husband/any person can be held liable for instigating her husband to kill her.

Case 1: Husband/any relative can be held liable as an abettor for instigating his wife to commit suicide

There are cases where the husband/any relatives either directly or indirectly i.e., either by expressed languages or by gestures for dowry or other related matter which instigates the woman to commit suicide.

Illustration 1: There was a woman named Sumana and her husband. Sumana’s husband was not able to repay his loan for a long time. In frustration, he brought poison and said: “consumed it and die”. In that emotional mood, Sumana consumed it and died. It was held that the husband was liable to commit an offence under this section of abetment.

Illustration 2: There was a woman who had a mother-in-law. She used to instigate her through her gestures (not by expressed words), to commit suicide for the dowry which was not up to her demand. Due to repeated cruel actions, the woman suffered mentally which led her to commit suicide. Here, mother-in-law is liable to abetment by instigation.

A similar situation arose in the case of Protima Dutta v. State of West Bengal, where any such gestures or conduct by her mother-in-law led to committing of suicide by the woman.

CASE 2: The relative of the husband/any person can be held liable for instigating her husband/any person to commit any offence against her

Another case where the relative of the husband or any person like the girlfriend, etc. can be held liable to be an abettor for instigating that husband to kill her wife. It happens when there is jealousy, selfishness, etc. 

Illustration: There was a husband who was living separately with another woman leaving his wife at her in laws place from where she was not allowed to go anywhere outside the house. Upon the instigation both by his girlfriend for second marriage and by his parents for the dowry money, he murdered his wife. Here, both his girlfriend and the family members of him were held liable under the abetment section for instigation.

Abetment by Conspiracy

Conspiracy consists of a combination and agreement by persons, to do some illegal act or effect a legal purpose by illegal means.  For constituting an act of abetment by conspiracy, there must be two or more people involved in the conspiracy and an illegal act must take place in pursuance of that conspiracy. It is not necessary that the one who conspires be engaged in the action to be carried out. It is sufficient if he/she engages in the conspiracy and have a common object to do that thing and the act committed is considered to be the action of all. 

NOTE: Abetment to conspiracy under the clause of Section 107 differs from conspiracy under Section 120A of Indian Penal Code. For an offence under this section, a mere combination of persons or agreement is not enough; an act or illegal omission must take place in pursuance of the conspiracy. On the other hand, under Section 120A, a mere agreement is enough if the agreement is to commit an offence.

Noor Mohammad Momin v. State of Maharashtra AIR 1971 SC 885

In this appealed case, Noor Mohammad Mohim is accused under section 109 of the Indian Penal Code for abetting other three accused for committing the murder of Mohd Nahya for the passage and the right to tap water. The question before the court was the accused i,e, Noor Mohammad Mohim shall not be liable under Section 109 of IPC. 

In this landmark case, the Supreme Court of India held that the ambit of Section 120A i.e., criminal conspiracy is wider than the section under abetment. It covers wider amplitude of illegal commission or omission of an act. Moreover, it was also held that the presence of abettor-accused is not always necessary for abetment by conspiracy in this case.

Abetment by Intentional Aiding

The third clause under Section 107 is abetment by intentional aiding to do an illegal act or omission of a legal act. In this, the abettor generally facilitates or helps in committing the crime. There is an intention to aid the offender and some act should be done in order to assist him/her.

The element of knowledge plays an important role in abetment by intentional aiding. Mere assistance to the offender without the knowledge of facilitation of committing crime is not abetment.

For better understanding, a person may be invited casually and for a friendly purpose, and if he unintentionally helps his aide to facilitate the commission of crime, it cannot be said that the person has abetted the murder or the crime. 

Here, ‘intentionally aids’ means the ‘active complicity’ in the commission of the act which is the most important ingredient of the abetment by intentional aiding.

Abetment in marriage

The clause ‘Intentionally Aids’ has a wide interpretation which covers the cruelty done to a married woman in committing suicide or other crime. 

In the case of Deena Lal v. State of Rajasthan, a procession followed widow to the funeral pyre of her husband to help her in committing sati. Since sati is abolished and its practise is punishable, the police party tried to stop her from committing that. But the procession barricaded them to restrain them from rescuing her. The people in the procession was held liable for abetting.

Abetment by Illegal Omission

‘Illegal omission’ is used in the definition of ‘abetment’ under Section 107. The clause 3 i.e., abetment by intentional aiding envisages an illegal omission like what has been done by the accused was not to be done by him under the law. For instance, a man cannot be held liable for abetment to suicide if he did not try to stop her wife from committing suicide when she threatened him about that. This is because not stopping her from doing the act is not an illegal omission. On the other hand, if a driver allowed a child to drive knowing that the child did not know driving, therefore will result in an accident and hence an illegal omission took place.

However, mere negligence does not lead to abetment. For example, an officer handed over the keys of the office to the security rather than the manager which was contrary to the rules of the office and the security was charged for stealing from the office. Here, the officer cannot be charged with the offence of abetment for illegal omission because he was not aware of the rules and his intention was not present for committing the offence.

Facilitating the Commission of a Crime

A person is said to be abetting when he/she facilitates another person by way of assistance or supply of materials or something else. For an example, a constable dragged a married girl who was of 19 years of age and her husband from their house and raped her. Another constable who kept watch on her husband outside the room shall be held for abetment because he facilitated the head constable to commit an offence of rape by restraining her husband from rescuing her. This was held in the case of Ram Kumar v. State of Himachal Pradesh.

Effect of Acquittal of Person Committing the Offence on Abettor

A special and exceptional case to the abetment by intentional aid is the acquittal of a person who was abetted for committing an offence which leads to the acquittal of an abettor. In simple words, this means that since in abetment by ‘intentional aid’, the most important ingredients to constitute such an offence are the intention to commit that offence and the further act in consequence of that intention. Therefore, if the principal offender(one who has committed the offence or crime) has been acquitted for the alleged crime, then the abettor cannot be held liable under Section 107 for abetment because if the perpetrator commits no crime, then the person who aids, apparently cannot be punished for that.

This principle was laid in the case of Jamuna Singh v. State of Bihar. In this case, the person who allegedly set the hut on fire was acquitted because of the non establishment of substantive evidence. Consequently, the Supreme court held that no person can ever be convicted for the abetment if the person allegedly responsible for the offence committed has been acquitted because the measure of guilt of abettors depends upon the nature of the act committed and the manner in which it was executed. 

When Substantive Offence is not Established

When the substantive offence is not established and the principal offender is acquitted, then the abettor cannot be held guilty. In simple words, when the substantive charge fails, the charge of abetment also fails. The liability of an abettor is coextensive with the principal offender. If there is abetment by instigation or abetment by conspiracy, then even though the act was committed or not, the abettor will be liable for abetment. But only in the case of abetment by intentional aid, if the act is not completed by the principal offender, the abettor cannot be held liable.

Scope and Ingredients of Section 108

Abetment of Illegal Omission is an Offence

According to explanation 1 of Section 108, the abetment of the illegal omission of an act may amount to an offence although the abettor may not himself be bound to do that act.

For example, if a public servant is guilty of an illegal omission of duty made punishable by the code, and a private person instigates him, then he abets the offence of which such public servant is guilty, though the abettor could not himself have been guilty of that offence.

Abetted Act Need not be Committed: Effect of Abetment is Immaterial

To constitute the offence of abetment, it is not necessary that the act abetted must be committed. The offence of abetment is complete notwithstanding that the person fails in doing the act or there is some interruption in the commission of that act. The offence of abetment by instigation depends upon the intention of the person who abets and not upon the act which is actually done by that person.

Person Abetted Need not be Capable of Committing an Offence

It is not necessary that the person abetted should be capable according to law of committing an offence, or that he should have the same guilty intention or knowledge as that of an abettor. 

Illustration: A with the guilty intention, abet a child or a lunatic who is incapable under law to commit an offence. Here, even though the act committed or not, will be held liable for abetment.

Abetment of an Abetment is an Offence

The abetment of an abetment of an offence is no more and not less than the abetment of that particular offence and hence it is also punishable. According to this clause, a person may make himself an abettor by the intervention of a third person, without any direct communication between himself and the person employed to do that thing. For example, A telephoned B and asked for two boys for immoral purposes. No particular boys were named or indicated. It was held that A was inciting B to help him or facilitate him with boys to do an illegal act. Hence both A and B will be liable here.

Abettor Need not Concert in Abetment by Conspiracy In the conspiracy 

It is not necessary for the commission of the offence of abetment by conspiracy that the abettor should concert or accord the offence with the person who commits it. It is sufficient if he engages in the conspiracy in pursuance of which the offence is committed.

A person who has been convicted of an offence as a principal offender cannot be punished for abetting it under this.

Liability of an Abettor

Section 111 of the Indian Penal Code provides for the liability of an abettor. According to this section, an abettor is liable for the acts done in the same manner and to the same extent as the principal offender shall be. The only exception is when the act done is the probable consequence of the abetment and was committed under the influence of the instigation, conspiracy or intentional aid.

The probable consequence of an act is one which is likely or which can be reasonably expected to follow from such abetment. Moreover, the proof of the probable consequence is very essential. If what abettor had said is not proven, then the abettor cannot be held guilty for the act done.

However, suppose A instigates B to resist by force a distress made by a public servant. B, in its consequence of resisting voluntarily causing grievous hurt to the public servant. Then, here A and B will be liable for punishment of both offences if A knew it was likely to be followed by B.

Further, if an act is done upon abetment which is different from the one abetted and the effect of that act is different, then the abettor will be held liable for that act in the same manner and to the same extent because the intention remains the same and the abettor was well aware of the probability of that act.

Effect of Acquittal of principal offender on abettor

It is not necessary that in every case, the principal offender is put up at the same trial and must be convicted of the offence charged before the abettor can be convicted of the abetment of that offence. Generally, it is true that there can be no conviction for abetment until the act has been committed. However, this proposition is not universal and absolute. There may be a case where the proof is insufficient for the conviction of the offender but sufficient for the conviction of abettor. Here, the court may acquit the offender on the basis of benefit of doubt and convict the abettor on the relevant evidence and the fact.

Overview of the Provisions of Sections 109 to 120, Indian Penal Code 1860 

Scope of Section 109

Section 109 lays down that if IPC has not separately provided for the punishment of abetment as such, then it is punishable with the punishment provided for the original offence. Since law does not provide any specific form or gesture to be followed for instigation, therefore the question whether there is instigation or not is to be decided upon by the facts of the case. For the second clause of abetment, there must be some act or illegal omission in pursuance to that conspiracy and under the scope of section 109, the act which comes under criminal conspiracy, makes the person guilty under section 120B and for cases other than criminal conspiracy, a person is charged with abetment which is generally proved offence. For the intention to aid, the act which is done shall be taken into consideration and accordingly punishment will be given to the offender as well as an abettor.

Distinction between Sections 34, 109 and 120B, Indian Penal Code 1860

According to Section 34 of the IPC, when a criminal act is done by several persons in furtherance of common intention of all, each of such person is liable for the act in the same way as if it were done by him alone.

According to Section 109 which provides for the punishment for the offence for which there is no express provision made and the act is in consequence of the abetment by conspiracy.

Section 120B of IPC provides for the criminal conspiracy consisting of two or more persons having the intention to commit the act which is illegal in nature.

There is a thin line of difference between the conspiracy as defined under Section 120 and common intention as defined under Section 34 of the IPC. Under Section 120, bare engagement and association to break the law is enough for the liability even though the act has been committed or not but under the Section 34, the commission of a criminal act in furtherance of common intention of all the offenders is necessary. This shows that the amplitude of substantive offence is wider in the case of criminal conspiracy than the abetment or incitement.

Moreover, Section 109 can also be attracted here, which says that for abetment by conspiracy, some act or illegal omission must take place to make a person guilty under this section.

However, when Section 120 and 109 are read together, it makes us clear that when the act abetted is committed in consequence of the abetment, the accused shall be punished with the punishment provided for the offence abetted.

For better understanding, if an accused is found guilty and convicted for the offence of murder, then the only punishment is imprisonment for life or death. So when it is read with Section 34 and sentenced to imprisonment for life, then there is no need to record the punishment under Section 120.

In a case of Sayed Mohd. V. State, the accused was charged under both Section 34 and Section 120, but on appeal, it was held that Section 120B, being, wider than Section 34, so if charges are framed under 120B, then charges under Section 34 becomes redundant.

Whether Different Sentence to Principal Offender and Abettor is Justified

A person who has been convicted of an offence as principal offender, cannot be punished for abetting it. This is because the one who has been abetted may be under the influence of the abettor or may be incapable because of the age, mental illness or incapacity and therefore if he/she commits that offence, the law cannot recognise them. Moreover, since the two most important element of commission of crime is mens rea and actus reus. Since the person abetted has no mens rea, he cannot be equally liable or guilty for the offence he/she has committed.

On the other hand, an abettor is one who is of sound mind and has requisite mens rea for the commission of that act. From his/her act of abetment, it can be concluded that he intentionally wanted that act to be committed, without directly getting involved in it. Although the second element i.e., actus reus is not fulfilled in such cases, yet they should be punished severely because abetment by instigation, conspiracy or intentional aid is the act which is done by the abettor which makes him guilty under criminal law. 

Moreover, a person who commits the actus reus of murder with malice aforethought, or who with the appropriate mens rea aids or assists another to do so, may have the defence of diminishing responsibility which might reduce his liability. But the principal who does an act of offence under provocation would be entitled to a heavier verdict than someone who aids or abets him without provocation.

Principle Underlying Section 110 and Scope of the Provision

Section 110 of IPC under Abetment deals with the punishment for abetment if the person abetted does an act which has different intention from that of an abettor. It provides that though the person abetted commits the offence with different intention or knowledge, yet the abettor will be punished with the punishment for the offence abetted. This shows that the liability of the person abetted is not affected by this section.

Moreover, this section is usually read with clause 3 of Section 108 which says that the incapability of the person under the law is no excuse for the abettor. It is not necessary that the person abetted should have the same guilty intention of that of an abettor.

The principle underlying this section is very clear that the abettor cannot escape the liability of punishment even though there is a different intention of the person abetted while doing that act.

Scope and Applicability of Principle of Probable Consequence

The Principle of Probable Consequence has been contemplated under Section 111 of Indian Penal Code which is the main part of this section. According to this section, when an act is abetted and a different act is done, the abettor is liable for the act done in the same manner and to the same extent as if he had directly abetted it. The only condition required here is the probable consequence of the abetment.

A probable consequence is one which is likely or reasonably expected to follow from such an act. The concept of probable consequence arises when the act abetted is different from the actus reus. In this case, the abettor will not be liable for the act he abetted but shall be liable for the act which has been committed by the principal offender knowing the probable consequence of his abetment. 

The proof of probable consequence is very important. For instance, an act abetted was of thrashing and the act committed was of stabbing, then since the act of stabbing is different from the act of thrashing, therefore, the proof must show that the act of stabbing was under the influence of the instigation, and there was a probable consequence of abetment by instigation to commit the act of thrashing.

Principle Underlying Section 112

Section 112 is an extension of Section 111 of Indian Penal Code. According to Section 111, if the act committed is different from the act abetted but it is a probable consequence of abetment and is done under the influence of instigation or aid or pursuance of an abettor, the abettor is liable or guilty to be punished in the same manner as the act done. 

Further Section 112 explains that if the act abetted is done along with another act which is the probable consequence of abetment, then the abettor is liable to be punished for each of the offences.

The principle underlying both the sections is that every man is presumed to have the intention of the natural consequences of his/her own act and hence should be punishable for the act.

Principle Underlying Section 113

According to Section 113, if the effect caused by the act abetted is different from the effect intended by the abettor. But if the effect caused was known to the abettor, the abettor is liable for the effect caused, provided that he/she knew that the act abetted was likely to cause that effect.

The only difference between Section 111 and Section 113 is that in Section 111, the act abetted was different from the act committed and in Section 113, the act abetted was same as the act committed but its effect was different.

Scope of Section 114

Section 114 deals with the case, where there has been a crime of abetment and the actual commission of the crime in the presence of abettor. Under this section, it becomes necessary for the prosecution to prove abetment and the presence of the abettor at the time the act abetted was committed. However, the mere presence of a person will not render him liable for the offence committed. He must be sufficiently near to give assistance, and there must be a participation in the act. Here, the abetment has to be complete although the abettor’s presence at that place. 

This section, in English Law, is called as ‘principals in the second degree’. For instance, a blow is struck by A, in the presence of, and order of, B, here, both are principals and liable for the offence.

Active abetment at the time of committing the offence is covered by Section 109, and Section 114 is intended for an abetment prior to the actual commission of the crime any time before the first steps have been taken to commit it.

Quantum of Punishment: Distinction between Sections 115 and 116, Indian Penal Code 1860

Section 115 provides for the punishment of abetment for the offence which is punishable with death or imprisonment for life:

OFFENCE UNDER Section 115  

PUNISHMENT

Offence not committed in consequence of abetment

7 years + fine

Offence committed in consequence of abetment

14 years + fine

Section 116 provides for the punishment of abetment for the offence which is punishable with imprisonment for life:

OFFENCE UNDER Section 116

PUNISHMENT

Offence is not committed in consequence of abetment

One-fourth of offence/ fine/ both

Offence is committed by public servant

Half of offence/ fine/ both

Comparison of Provisions in Sections 115 and 116

The provision of Section 115 punishes the abetment of certain offences which are either not committed at all, or not committed in consequence of abetment, or only in part committed. It is applied only when the abetment is not punishable under any provision.

Whereas Section 116 provides for the abetment of an offence punishable with imprisonment because there is no provision relating to abetment of an offence punishable with fine only. An essential ingredient of an offence under Section 116 is that there should be no express provision in the Penal Code to punish such abetment.

Punishment for Concealing Designs or Plans to Commit Offences 

Penalties Provided in Sections 118, 119 and 120, Indian Penal Code 1860

According to Section 118, any person who intentionally facilitates or has sufficient knowledge that he/she will thereby facilitate the commission of an offence shall be punished with death or imprisonment for life. This section also covers that if any person voluntarily conceals by any act or omission or by any other hiding tool, the nature or the process by which the act will be committed, then he/she shall be liable under this section. If the act which is concealed, if committed shall be punished with imprisonment for seven years or fine and if the act if, not committed, shall be punished for three years or fine.

According to Section 119 lays emphasis on the guilty of a public servant for committing abetment. If a public servant intentionally facilitates or has sufficient knowledge that he/she will thereby facilitate the commission of an offence, which is his duty to prevent, shall be liable under this section. If the act is committed, then the public servant shall be punished with one half of the longest term of such imprisonment or with fine or both. If the act is not committed, then the public servant shall be punished with one-fourth of the longest term of such imprisonment or with fine or both.

According to Section 120, if  any person who intentionally facilitates or has sufficient knowledge that he/she will thereby facilitate the commission of an offence which has punishment of imprisonment and he/she voluntarily conceals or makes false representation, then if the act is committed, shall be liable for one fourth of the longest term of punishment or fine or both and if the offence is not committed, then he/she shall be liable for one-eighth of the longest term of punishment or with fine or with both.

Conclusion

Abetment as a provision has been sufficient both from the view of the offence as well as the penalty for the offenders of abetment. However, with the development of technology and looking at the current scenario, the legislation of India has tried to bring the required changes in this provision. Through the Information Technology (Amendment) Act, 2008, the section has been amended so as to give a wider meaning to the act and omission by the use of encryption or any electronic method. 

Therefore, we can say that abetment as an offence is a just and fair law which enhances the principles of natural justice in the legal system.


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Cheating: a criminal offence under the Indian Penal Code

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This article is written by Shristi Suman, a second-year student of Symbiosis Law School, Hyderabad. In this article, the scope, ingredients, and different aspects related to the offence of cheating under IPC have been discussed.

Introduction 

Cheating is considered as a criminal offence under the Indian Penal Code. It is done in order to gain profit or an advantage from another person by using some deceitful means. The person who deceives another knows for the fact that it would place the other person in an unfair situation. Cheating as an offence can be made punishable under Section 420 of the IPC.

Scope of Section 415

Cheating is defined under Section 415 of the Indian Penal Code as whoever fraudulently or dishonestly deceives a person in order to induce that person to deliver a property to any person or to consent to retain any property. If a person intentionally induces a person to do or omit to do any act which he would not have done if he was not deceived to do so and the act has caused harm to that person in body, mind, reputation or property, then the person who fraudulently, dishonestly or intentionally induced the other person is said to cheat. Any dishonest concealment of facts which can deceive a person to do an act which he would not have done otherwise is also cheating within the meaning of this section.

Essential Ingredients of Cheating

The Section requires:

  • deception of any person.
  • fraudulently or dishonestly inducing that person to deliver any property to any person or to consent that any person shall retain any property; or
  • intentionally inducing a person to do or omit to do anything which he would not do or omit if he were not so deceived, and the act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

Important Ingredients of Deception and Inducement

Deception 

One of the important ingredients which constitute the offence of cheating is deception. Deception can be done to induce the other person to either deliver or retain the property or to commit an act or omission. Deceiving means to make a person believe what is false to be true or to make a person disbelieve what is true to be false by using words or by conduct.

In the case of K R Kumaran vs State of Kerala, a person who was admitted in the hospital was checked by the doctor and the doctor knew that the person was in a condition that he won’t be able to survive. The doctor conspired with other accused to issue a life insurance policy for the person was going to die and in order to do so, he certified to be fit and healthy. This was done by accused in order to get the amount from the insurance company after the patient dies. The court held the accused liable for the offence of cheating and deceiving the insurance company in order to earn benefits. The accused was held guilty of cheating under IPC.

Wilful Representation and Cheating 

In deception, a fraudulent representation or willful misrepresentation of a fact is made directly or indirectly with an intent to commit the offence of cheating. In order to prove the offence, it is not only important to prove that a false representation was made by the accused but also that the accused had the knowledge that the representation was false and wilfully made it in order to deceive the prosecutor. If the accused knowingly makes a representation which is false then the accused can be held liable for the offence of cheating under IPC.

Cheating and Misappropriation

Cheating and misappropriation are closely related. In cheating, the act of misrepresentation starts from the beginning of the act, whereas, in case of misappropriation it is not important that the offence of cheating will start from the beginning. The accused may obtain a property in good faith and then further misappropriate it in order to sell it for an advantage. It may be done against the will or without the consent of the owner. 

It is seen that misappropriation is generally done by a person who is a relative, friend or a known person. The offence of misappropriation is defined under Section 403 of the IPC. It deals only with immovable properties and not with body, mind, reputation, or immovable property.

Deception and Cheating in Connection with False Promise of Marriage

In the case of Deception and cheating with a false promise of marriage, there can be no action for a breach of a promise under IPC unless there is a contract made by parties to marry each other. There are no specific requirements regarding the formation of the contract. It need not necessarily be in writing and there isn’t a particular set of words which needs to be used for the contract of marriage. A promise by one person to marry another will not be a binding promise unless and until that other person also reciprocates and promises to marry the first person. Mutual promises to marry between two parties may be implied from the conduct of the parties. A declaration of intention to marry another person made to a third person will not constitute a proper promise and an offer to marry unless his proposal is communicated to that person whom he intends to marry. It is not necessary that the mutual promises between the parties to be concurrent, it should be made within a reasonable time after the offer is made by a party to another. An action for breach of promise to marry may be taken under deception and cheating.

Inducement

When one person uses deceitful practices to convince the other person to agree on anything which is harmful to that person, it is known as Inducement. It generally occurs when two parties enter into a contract and a party uses fraudulent inducement to gain advantage on the other party. The fraudulent inducement can be done when a person persuades another by giving false information about a thing to be beneficial for that person but in reality, it is not. Fraudulent inducement differs from fraud as inducement needs a person to convince the other person for the object which he wants to achieve and the latter needs the person to commit a deceitful conduct by himself for the object which he wants to achieve.

Effect of Absence of Dishonest Inducement

The offence of cheating does not necessarily need the person who is being deceived is induced to do any act which could cause harm to him. In case there is an absence of dishonest inducement, it is enough to constitute the offence of cheating that the person deceived is induced to an act which is likely to cause harm to him.

Critical Aspects Relating to the Offence of Cheating

Dishonest Intention Should be Present at the Time of Making the Promise

Deception and dishonest intention are important elements to constitute the offence of cheating under IPC. The presence of dishonest intention is important to hold a person guilty of the offence. The fact that dishonest intention was present at the time of making the promise is to be proved in order to hold the accused guilty for the offence of cheating. Dishonest intention at the time of making the promise cannot be inferred by subsequent non-fulfilment of promise.

Absence of Intention to Honour the Promise at the Time of False Representation

The offence of cheating has an element of fraudulent or dishonest intention from the very beginning. When a party makes a false representation to another party in order to gain some profit, the intention to honour the promise at the time of false representation is presumed to be absent. 

Dishonesty is Causing Either Wrongful Gain or Wrongful Loss

Acting dishonestly is defined under Section 24 of IPC as doing an act or omitting to do any act which causes a wrongful gain to one person or a wrongful loss of a property to a particular person. The act done in order to gain a property wrongfully or cause a loss to another person wrongfully is said to be done dishonestly.

False Pretence to be Inferred From Circumstances

False statements and representations made with fraudulent intent in order to gain a profit by cheating are known as a false pretence. It is not necessary that every pretence will be a false one, it has to be inferred from the circumstances. For instance, a person may have induced the credit or delivery of property but still, it might not be sufficient as it can be a false pretence and the credit or delivery would not have been given or delivered. A false pretence can be used where the party wants to come in a contract with the other party. There should be an intention to cheat, deceive or commit fraud on the part of a person. Intention to commit cheating plays an important part. False pretence must be inferred from the circumstances of the case.

Mens Rea as Essential Ingredients of the Offence of Cheating

Mens rea refers to the mental state or intention of a person in committing a crime. It is a mental state of the accused which is taken into consideration while deciding the liability for a crime. Mens rea has to be proved as it an essential ingredient for the offence of cheating. It has to be proved that the accused deliberately committed the offence of cheating with a prearranged plan. If mens rea for the offence is proved then the accused can be held liable for the offence of cheating under IPC.

On the Issue of Damages Caused or Likely to be Caused

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Damage to Body, Mind, Reputation or Property Caused or Likely to be Caused

Cheating is done by a person to another by making him believe something to be true which actually is not. Cheating affects a person’s body, reputation or property of which the person may be in possession or ownership of. Cheating can be done by a person who is in a fiduciary relationship, it affects the mind of the person who has been cheated. Cheating can be done by a person by misrepresenting the facts or by using false evidence in order to deceive the other party. The person who is deceived believes the representations made by the party deceiving to be true and then it further miserably affects the person both mentally and physically. Cheating can result in stress, tension, and affect a person’s mental health miserably. It can even result in trust issues and make it difficult for the person who has been cheated on to trust another person again. After being cheated on a person can experience low self-esteem and loss in monetary form by loss of the property.

When no Damage Caused to Complainant

In case when no damages are caused to the complainant by the act of cheating, still the accused according to Section 420 of the IPC will be liable for the offence of cheating as it does create an apprehension in the mind of an individual when he is cheated on by a person. The intention and objective of the person cheating are also taken into consideration and if it is found that the accused had a malafide intention to cheat on the person then the accused will be held guilty for the offence of cheating under Section 420 of the IPC. 

The intention of the accused is important and has to be taken into consideration while deciding the guilt of the accused. Generally, the complaint is filed under Section 420 of IPC when a person suffers from a defect in the services or product which is consumed by him from the cheater, or in case the individual is charged with more price than the MRP for a product or a service, or when a person suffers from losses and damages from unfair trade practices etc. but in case if the person cheated on does not suffer from a monetary loss or damage, the accused can still be held liable for cheating under Section 420 of the IPC.

When no Benefit Accrued to Accused but Loss to Complainant 

Since cheating is both a civil as well as criminal wrong and if there is no benefit enjoyed by the other party and loss have been inferred to the party who is been cheated, then, in that case, the complainant company can sue the accused for cheating.

In the case of Sebastian vs R. Jawaharaj, it was held that the accused was liable for cheating and forgery under section 420 and 465 of IPC respectively as he cheated on the complainant by providing faulty services to him but still no benefit was enjoyed by the accused after providing faulty services but because of it the complainant suffered from losses.

Even if the accused does not earn a profit or enjoys a benefit but the complainant suffers a loss then the complainant can bring an action for cheating under IPC.

Sustaining Loss, not a Criterion for Establishing the Offence of Cheating

Under sec 420 of IPC, only a person who is not a consumer of the said cheated goods or did not purchase the services or goods for commercial and selling purpose or is not entitled to enjoy the benefits from the goods or services is not entitled to sue the accused for cheating under IPC. A consumer or a person entitled to benefit from the goods or services can sue the accused for the offence of cheating irrelative of the fact whether any loss was suffered by him or not. Even if the complainant does not sustain a loss, he can still bring a lawsuit under IPC for cheating.

Civil Liability versus Criminal Liability

The intention of the accused is an important aspect to constitute the offence of cheating. It is often seen that in issues relating to commercial transactions, it becomes difficult to separate the offence in terms of civil and criminal liability. The main difference between a criminal cause of action and a civil one is that of intention. If the accused does an act knowingly and intentionally in order to induce the other person then the accused can be held liable for criminal liability. In case the accused does an act after the dispute arose and not pre-planned his act deliberately then he will be liable for civil liability.

In the case of Nageshwar Prasad Sinha V Narayan Singh, the respondent entered into an agreement with the accused. A part of the payment was given in exchange for the possession which was delivered to accused. The accused then failed to make the full payment for the delivery of possession as it was agreed upon by him. The respondent also didn’t complete the legal formalities in relation to the delivery of possession as he did not receive full payment for it. The accused filed a civil suit for specific performance against the respondent. The respondent filed a criminal complaint against accused under Section 420 of the IPC. The court held that the liability of the accused was of civil nature and not a criminal one as the accused made a part of the payment for delivery of possession and it cannot be proved that his intention was to cheat from the very beginning.

The difference between civil and criminal liability can be ascertained by the intention of the accused. The intention of the accused at the time of inducement should be taken into consideration to decide whether the liability of the accused will a civil or criminal liability. Mere breach of contract cannot be considered to be cheating under Section 420 of IPC unless it is proved that dishonest intention was present from the very beginning of the transaction.

Vexatious Criminal Proceeding in Civil Dispute: Imposition of Costs

Vexatious litigation is an action which is brought by a party to harass another party. It is a lawsuit which is solely brought to harass or burden the other party by filing a meritless suit. Vexatious proceedings are considered as an abuse of judicial procedures. The accused is charged with costs in order to compensate the other party for the harassment which was caused by vexatious proceedings.

The provision for imposition of costs on the accused on the vexatious criminal proceeding in a civil dispute is included under Section 35A of the Civil Procedure Code. If the court is satisfied that the criminal proceeding is brought by the accused by a vexatious motive then the court can impose compensatory costs under this section on the accused for the harassment which the respondent suffered because of the proceeding. 

This section applies to suits which are brought with the vexatious motive and to the appeals or revisions. The maximum cost which can be imposed by the court under this Section is Rs 3000 and no appeal lies against an order by the court for compensatory costs.

Punishment for Cheating 

Cheating and Dishonestly Inducing Delivery of Property 

According Sec 420 of IPC when a person cheats and thereby dishonestly induces the other person who is deceived to deliver any property to any other person or makes, alters or destroys the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. Sec 420 of IPC is an aggravated form of cheating.

Simple cheating is punishable under Section 417 of IPC. Section 417 of IPC states that whoever is held liable for the offence of cheating shall be punished with imprisonment for a term which may extend to one year or with fine, or with both fine and imprisonment.

In case where there is delivery or destruction of any property or alteration or destruction of any valuable security from the act of the person who is deceiving, the offence is punishable under Section 420 of the IPC.

Under Section 420 of IPC, it is necessary to prove that the complainant was acting on a representation which was a false representation and the accused had a dishonest intention for it.

In the case of Ishwarlal Girdharilal vs the State of Maharashtra, it was observed by the Court that the word ‘property’ mentioned under Section 420 of IPC does not necessarily include only those properties which have money or market value. It also includes those properties which do not have a monetary value. In case a property does not have a monetary value for the person who is in possession of it but after being cheated by another person it becomes a property of some monetary value for the person who gets possession of it by cheating then it can be considered as an offence of cheating under Section 420 of the IPC and the property will be considered as a property under Section 420 of the IPC. 

In the case of Abhayanand Mishra v. State of Bihar, the appellant was a candidate who applied for M.A. examination to Patna University for permission to appear in the M.A. examination in English as a private candidate. He represented himself to be a graduate who has already obtained his B.A. degree and wants to pursue his M.A. degree from the University. Later, just before the commencement of his entrance examination, it was discovered that the certificates presented by the candidate for his M.A. entrance was forged and he did not actually obtain his B.A. degree. The court held the candidate guilty of making a false statement about him being a graduate as he did not obtain his B.A degree. He made an application and deceived the University and hence, was guilty of attempting to cheat under Section 420 of IPC as read with Section 511 of the IPC.

Cheating by Personation

Under Section 416 of IPC, cheating by personation is explained as if a person cheats on someone by pretending to be a particular person, or if a person knowingly substitutes a particular person for another, or represents a person to be some other person then he is said to cheat by personation. The person substituting a person for another should have knowledge that such other person is a different person from the person he is representing. The offence of cheating by personation is committed when the person who is personated is a real person and not an imaginary person.

In the case of Sushil Kumar Datta vs State, the accused personated himself as a scheduled caste candidate and appeared for the examination of Indian Administrative Service. He was appointed in that cadre because of his false representation of being a scheduled caste. It was held by the court that he was guilty of the offence of cheating by personation under Section 416 of IPC as he did not belong to scheduled caste and falsely represented himself as scheduled caste and hence, his conviction for cheating was held to be justified under the said section. 

Cheating Out of Fiduciary Relation

A fiduciary relationship is any relationship which exists between two parties where they share utmost good faith and confidence for a transaction. Section 418 of IPC applies to the cases of cheating wherein there was a fiduciary relationship between the parties. Cheating out of the fiduciary relationship can be done by guardians, trustees, agents, solicitors, manager of a Hindu Family, managers or directors of a company or a bank in fraud to the shareholders etc. Section 418 of IPC deals with the cases in which trust exists between the parties and there is an abuse of the trust by cheating. Section 418 punishes those parties in the case of cheating who owed a special responsibility towards the other party. The parties are punished for misusing and breaching the trust which existed between them.

It is the liability of parties who are in a fiduciary relationship to protect the interest of the parties and not to misuse the trust which exists between them. It is the responsibility of the party to protect the interest of the other party and if he fails to protect it and breaches the trust by cheating, he can be held liable for the offence of cheating under Section 418 of the IPC. The person who makes a statement in a fiduciary relationship knowing that it is a false statement with dishonest intention then the person will be liable for the offence of cheating.

Intention plays an important part in the offence if there isn’t an intention to cheat then it cannot be established as an offence under cheating. The offence is a non-cognizable offence and is bailable and triable by a Magistrate.

In the case of S. Shankarmani v. Nibar Ranjan Parida, a lawsuit was filed for cheating by a landlord against the bank. The bank wanted to take the landlord’s house on hire and for that, the landlord furnished his house. He incurred a huge expense in furnishing the house but the bank because of some reasons which were under its control could not take the house on rent. The bank did not intend to cheat or deceive the landlord. It was held by the court that the bank was not liable for cheating under Section 418 as the intention which plays an important part in the offence was not present.

Conclusion

Cheating is an offence under IPC in which a person induces the other by deceiving the person to do any act or to omit to do an act. The intention of the accused plays an important part and is taken into consideration while deciding his liability. The two main elements that have to be considered in order to constitute the offence is deception and inducement. The intention to cheat on part of the accused at the time of making a false representation is needed to be proved. It must be shown that a promise was made by the accused and he failed to keep the promise and further, no effort was put in by him in order to keep the promise.


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Statutes relating to Working Hours, Conditions of Service and Employment

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This article is written by Hema Modi, a second year student of Pravin Gandhi College of Law, Mumbai. It provides an in-depth knowledge and critical evaluation of different Labour Laws. Different laws are enacted  to improve the condition of services for the employees and the way to provide safety and welfare measures and other factors relating to employment.

Matters related to employment in India are primarily governed by the Constitution of India. Some specific laws are framed from time-to-time by the Central and the State Government which are necessary from the point of view of society and its citizens. Since the Constitution of India came into force, the Indian legislation has taken major steps to improve the conditions of service of its workers or labourers working under different sections of the society.

This article will help readers to know what steps should be taken by the employers or companies to ensure the safety and welfare of its employees and other statutes relevant to it.

Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988

Aims and Objects

The Act was enacted to provide an exemption of employees with respect to establishments employing a small number of persons from furnishing returns and maintaining registers under certain labour laws. The main objective is to relieve the small companies from following tedious and cumbersome paperwork that is required under various labour laws which reduces the complexity under various laws. 

Some Relevant Definitions

Scheduled Act

Scheduled Acts are those acts which are specified in the First Schedule and has been enforced with the commencement of this Act.

Following are the acts which are included in the Scheduled Acts:

  1. The Payment of Wages Act, 1936
  2. The Weekly Holidays Act, 1942
  3. The Minimum Wages Act, 1948
  4. The Factories Act, 1948
  5. The Plantations Labour Act, 1951
  6. The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
  7. The Motor Transport Workers Act, 1961 
  8. The Payment of Bonus Act, 1965 
  9. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
  10. The Contract Labour (Regulation and Abolition) Act, 1970 
  11. The Sales Promotion Employees (Conditions of Service) Act, 1976
  12. The Equal Remuneration Act, 1976
  13. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 
  14. The Dock Workers (Safety, Health and Welfare) Act, 1986
  15. The Child Labour (Prohibition and Regulation) Act, 1986
  16. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

Small Establishments

Small establishments are those establishments in which ten to forty persons are or were employed on any day of the preceding twelve months.

Very Small Establishments

Very small establishments are those establishments in which not more than nine persons are or were employed on any day of the preceding twelve months.

Exemption from returns and registers required under certain labour laws

With the commencement of this Act, it is not necessary for an employer who has small establishments or very small establishments to submit returns or to maintain registers required to be submitted under the Scheduled Act.

Although, the employer has to provide the following information:

  • A core Return in Form A within reasonable time.
  • Small establishment shall register in Form B, Form C and Form D.
  • A very small establishment shall register in Form E.

Further, provided that, every employer shall continue to:

  1. Provide wage slip in the Form as prescribed in Minimum Wages (Central) Rules, 1950 made under the provisions of the Minimum Wages Act, 1948. 
  2. File returns relating to the accidents according to the provisions of the Factories Act, 1948 and Plantations Labour Act, 1951.

Savings

By the commencement of this Act, the following will not be affected:

  • Any previous provision of the Scheduled Acts which was in effect, its validity, invalidity or consequence.
  • Any right, privilege or obligation acquired under any of the Acts mentioned in the First Schedule of this Act.
  • Any penalties or punishments inflicted under Scheduled Acts.
  • Any investigation or legal proceeding in accordance with the provision of Scheduled Acts.

Penalty

If an employer fails to comply with the provisions of this Act, he/she shall be guilty and will be penalised in the following manner:

  • If it is the first case of conviction of an employer, he/she shall liable for a fine up to Rs. 5000.
  • If it is a subsequent case of an employer, he/she shall be liable for imprisonment which may vary from one month to six months or fine which may vary from Rs. 10,000 to Rs. 25,000 or both.

Amendment of certain labour laws

The Scheduled Act relating to Labour Law is in effect from the date of commencement of this Act i.e., from the day of enforcement of this Act, other laws are also in effect. 

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Power to amend Form

The power to amend Form rests with the Central Government if it thinks it to be fit. The Government shall issue notification through Official Gazette and it should be consequently passed by both the Houses. 

It should be presented before both the Houses as soon as the notification is issued or within seven days of its re-assembly. The Parliament shall pass a resolution for such notification within 15 days of the presentation and if any modifications or amendments are required, it shall have effect from thereon.

Power to remove difficulties

If there comes out any difficulty in the working or giving effect to the provisions of this Act, then the Central Government, by order, shall take necessary steps to remove that difficulty, but the order of the government should be within 2 years of getting assent from the President.

Building and Other Construction Workers (Regulation of Employment and Conditions of  Service) Act, 1996

The main aim of this Act is to regulate Employment and Conditions of Service of building and other construction workers by ensuring their health, safety and other welfare measures concerned with them.

Applicability of the Act

This Act applies to every establishment which has or had employed ten or more than ten workers working in building or construction areas.

Registration of Establishments

Appointment of Registering Officers

The appropriate Government shall appoint such persons which it thinks to be perfect or fit to be the registering officers. The government by order or notification in the Official Gazette shall prescribe the limits and the powers within which such officers shall act.

Process for Registration

  • Every employer shall register its establishment within 60 days of the commencement of this Act. In other cases, it is mandatory for every employer to register their establishment within 60 days of the applicability of this Act. However, if the registering officer is satisfied that due to sufficient reason, there was a delay in registration, then he/she shall register after the expiry period also.
  • After the registration, the registering officers shall issue a certificate of registration to the registered establishment.
  • In future, if any changes or modifications are made in the ownership or management of the establishment, then the same shall be conveyed to the registering officer within 30 days of its change.

Revocation of Registration

The registration of an establishment can be revoked by the Registering officers in the following cases:

  1. If registration is obtained by misrepresentation or false information.
  2. If provisions of this Act are not complied with.
  3. If the registration has become useless or is not effective.

Registration of Building Workers

Who is a beneficiary?

Section 12 of this Act defines Beneficiary. According to this Section, any person who is more than 18 years but less than 60 years of age and has been engaged in building or other construction works for not less than 90 days of the year is a beneficiary.

Process for Registration

  • An application has to be submitted to the officer authorised by the Board in the prescribed format.
  • If the officer of the Board is satisfied with the documents provided and the rules provided, then he/she shall register the name of building worker as the beneficiary under this Act.
  • If the application for registration is rejected, an opportunity must be given to the applicant to prove his point.
  • In the case of dispute, the aggrieved party within 30 days of the judgment go for an appeal to the Secretary of the Board. If the Secretary is satisfied with the reason provided for the delay in the appeal process, then he/she shall entertain it. 
  • An identity card will be provided by the Officer to the beneficiary and such beneficiaries shall produce the same card whenever asked by an officer of the Government.
  • A register has to be maintained by the employer containing names and the duration of employment of a person as a beneficiary.

Hours of Work, Welfare Measures and Other Conditions of Service of Building Workers

Chapter VI of this Act provides for the hours of work, welfare measures and other conditions of service of building workers.

Fixing of normal working hours

The government shall fix a number of working hours in a day, including one or more specified intervals. It shall also specify a day of rest in a 7 days a week and also provide for the remuneration of that day which shall not be less than the overtime rate.

The above provision applies only if:

  1. The person is engaged in an emergency or any other urgent work which could not have been foreseen.
  2. The person is engaged in a preparatory or complementary work.
  3. The person is engaged in any technical work which has to be completed before the day completes.
  4. The person is engaged in a work which has to be carried out only during the natural calamity.

Welfare Measures

  1. Every employer shall provide for the clean drinking water at any building or construction ares located at suitable points which is convenient for all persons working there.
  2. Every employer shall provide for sufficient latrine and urinal accommodation at any building or construction work in progress at suitable points which is convenient for all persons working there.
  3. Every employer shall provide temporary accommodation free of charge within the area or nearby areas for the persons working there.
  4. First aid facilities should be provided by every employer
  5. If in any establishment there are more than 50 female workers, then the employer shall provide a separate room for the children of less than 6 years of age of such female workers.

Safety and Health Measures

Some of the safety and health measures which every employer shall provide under Section 40 of this Act are:

  1. A safe means of access to and the safety of the working place. 
  2. Precautions for the demolition of any part or the entire part of the building or any structure associated with that building.
  3. Preventing risk from the handling of explosives or any such products.
  4. Providing adequate and suitable lighting in every workplace.
  5. Precautions in case of fire.
  6. Limits of weight to be lifted by the workers.
  7. Safe transport of workers from the workplace to their residence and vice versa.
  8. Provision and maintenance of medical facilities to the workers.
  9. Safety in operating or working with electrical machinery or live wires, etc.
  10. Precautions to be taken for providing pollution free air, water, etc.

Relation with the provisions of the Employees’ Compensation Act

Employees Compensation Act was passed in 1923 which was to provide compensation to the workmen and other dependants in case of accidents leading to death or injury to them in the course of employment.

This Act was enacted when there was grave or serious injury caused to the employee either due to negligence of the employer or during the course of employment.

Section 3 of the Employees’ Compensation Act provides for the employers’ liability for compensation. Further, Section of the same Act provides for the calculation of compensation to be paid based on the amount of injury or loss or damage caused. The Act also prescribes for the penalty to the employers if there is a delay or default in payment of compensation. 

However, there are no stringent rules laid down by Building and Other Construction Workers (Regulation of Employment and Conditions of  Service) Act, 1996 to ensure the safety and good conditions of service to the employees. Only guidelines are laid down in this Act which may or may not be followed if the executive is not very strict.

Further, in Section 44 and Section 45 of the same Act, there are laws which have to be followed by employers in order to pay compensation and wages. Evidently, it is mentioned that if an employer fails to pay compensation to the building worker, for which he is liable, in case of death or accident, is entitled to pay the entire amount of compensation according to the provisions of Employees’ Compensation Act, 1923.

This shows that there exists a certain relationship between this Act with the Employees’ Compensation Act.

Penalty

An employer is liable to the employees’ if he/she fails to act within the provision of this Act and is not able to provide safety measures and good conditions of service to its employees.

After due enquiry and legal proceeding, if the authority is not satisfied with the reasons provided, then he/she shall pass such orders:

  1. For the first contravention, the employer shall be punished with imprisonment of three months or with fine up to Rs. 2000 or  both. With each subsequent contravention, an additional fine of Rs. 1000 shall be charged.
  2. If the offender is repeatedly doing or committing the same offence despite penalty imposed under Sub-Section 1, then he/she shall be imprisoned for 6 months or a fine of Rs 2000 or both shall be imposed.
  3. In case, if the offence is committed by a company, then every person who at the time of the commission of offence was in charge of or responsible for the business of the company shall be held liable for punishment until and unless they prove that the offence committed was not in their knowledge or they were not part of that act.

Building and Other Construction Workers Welfare Cess Act, 1996

The main objective of this Act is to provide for the levy and collection of cess on the cost of construction incurred by the employers.

Levy and Collection of Cess

  • The levied and collected cess for the purpose of the construction workers shall not exceed 2% and shall not be less than 1%. The cess levied shall be collected by the local authority or any other authorised person in the manner and mode as prescribed.
  • The collected cess has to be paid to the Board after deducting the cost of collection which shall not exceed 1% of the amount collected.
  • Every employer has to submit the returns to the officer as prescribed.
  • If any person fails to furnish the required returns, then the officer or the authority shall give notice to such person to furnish within the specified time.
  • In case of delay of payment of the cess, the employers are liable to pay interest of 2% for every month or every part of the month.

Penalty

If any person furnishes a return which may be false or incorrect, then he/she shall be punished with imprisonment of six months or fine of Rs. 1,000 or both.

If any person intentionally or wilfully evades the payment of cess, then he/she shall be punished with imprisonment of six months or fine or both.

In case, if the offence is committed by a company, then every person who at the time of the commission of offence was in charge of or responsible for the business of business shall be held liable for punishment until and unless they prove that the offence committed was not in their knowledge or they were not part of that act.

Power to make rules

The central Government is responsible for carrying out the provisions of this Act. Following rules shall be made by the government:

  • The manner and the time in which cess can be collected.
  • Fees levied for an appealing case.
  • Authority to which appeal may be filed and the time within which the appeal can be filed.
  • Authority to impose a penalty.
  • Powers exercised by the authority or the Officers.
  • Documents required while filing returns, the authority to which such returns shall be furnished and the manner and time of furnishing such returns.

Conclusion

India is a country where the labour force is in large quantity. These labourers are used in different industries and different workplaces. Usually, employers exploit them by making them work overtime. They don’t provide them with sufficient safety measures and health care facilities. Due to this, the productivity of labourers gets reduced and their working potential is also decreased. To increase their productivity and boost their potential, the government in order to promote social welfare tries to enact such laws in favour of workmen, so that they can work efficiently. The only requirement is to execute such beneficiary laws effectively so that labourers can enforce their rights bestowed to them by the government.


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Keshvananda Bharati v State of Kerala, (1973)

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This article is written by Shristi Suman, a second-year student of Symbiosis Law School, Hyderabad. In this article, the landmark judgment of the case Keshvananda Bharti has been discussed.

 

Introduction

Keshvananda Bharati is a landmark case and the decision taken by the Supreme Court outlined the basic structure doctrine of the Constitution. The decision which was given by the bench in Keshavananda Bharati’s case was very unique and thoughtful. The judgment was of 700 pages which included a solution for both Parliament’s right to amend laws and citizen’s right to protect their Fundamental Rights. 

The Bench came up with Doctrine of Basic Structure in order to protect the interests of both citizens of India and the Parliament. The Bench through this solution solved the questions which were left unanswered in Golaknath’s case. This case overruled the decision given in the case of Golaknath v State of Punjab case by putting a restriction on the Parliament’s right to amend the Constitution. The Doctrine of Basic Structure was introduced to ensure that the amendments do not take away the rights of the citizens which were guaranteed to them by the Fundamental Rights.

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Identification of Parties

Petitioner: Kesavananda Bharati & Others

Respondent: State of Kerala 

Bench: S.M. Sikri, K.S. Hegde, A.K. Mukherjea, J.M. Shelat, A.N. Grover, P. Jaganmohan Reddy, H.R. Khanna, A.N. Ray, K.K. Mathew, M.H. Beg, S.N. Dwivedi, & Y.V. Chandrachud.

Summary of Facts

Keshvananda Bharati was the chief of Edneer Mutt which is a religious sect in Kasaragod district of Kerala. Keshvananda Bharti had certain pieces of land in the sect which were owned by him in his name. The state government of Kerala introduced the Land Reforms Amendment Act, 1969. According to the act, the government was entitled to acquire some of the sect’s land of which Keshvananda Bharti was the chief. 

On 21st March 1970, Keshvananda Bharti moved to Supreme Court under Section 32 of the Indian Constitution for enforcement of his rights which guaranteed under Article 25 (Right to practice and propagate religion), Article 26 (Right to manage religious affairs), Article 14 (Right to equality), Article 19(1)(f) (freedom to acquire property), Article 31 (Compulsory Acquisition of Property). When the petition was still under consideration by the court, the Kerala Government another act i.e. Kerala Land Reforms (Amendment) Act, 1971.

After the landmark case of Golaknath v. State of Punjab, the Parliament passed a series of Amendments in order to overrule the judgment of the Golaknath case. In 1971, the 24th Amendment was passed, In 1972, 25th and 29th Amendment were passed subsequently. The following amendments were made after Golaknath’s case which was challenged in the present case are:

24th Amendment

  • In the case of Golaknath, it was laid down in the judgment that every Amendment which is made under Article 368, will be taken as an exception under Article 13. Therefore, in order to neutralize this effect, the Parliament through an Amendment in Article 13 of the Constitution annexed clause 4 so that no Amendment can have an effect under Article 13.
  • The Parliament in order to remove any kind of ambiguity added clause 3 to Article 368 which reads as follows, “Nothing in article 13 shall apply to any amendment made under this article.”
  • In the case of Golaknath, the majority decided that Article 368 earlier contained the provision in which the procedure of Amendment was given and not the power so, in order to include the word power in the Article, Article 368 was amended and the word power was added in the Marginal Note.
  • The Parliament tried to draw a distinction between the procedure in an amendment and an ordinary law through an amendment in Article 368(2). Earlier the President could exercise his power to refuse or withhold a bill for the amendment. After the 24th Amendment, the President did not have a choice to refuse or withhold a bill. This was done by the Parliament in order to protect the amendment from the exception that is mentioned under Article 13 of the Indian Constitution.

25th Amendment

  • Through this Amendment, the Parliament wanted to make it clear that they are not bound to adequately compensate the landlords in case their property is taken by the State Government and in order to do so the word ‘compensation’ was replaced with the word amount under Article 31(2) of the Constitution.
  • The link between Article 19(1)(f) and Article 31(2) was removed.
  • Under Article 31(c) of the Constitution, a new provision was added in order to remove all difficulties and to fulfill the objectives laid down under Article 39(b) and 39(c), it was decided that Articles 14, 19 & 31 will not be applied to any law. In order to make Article 39(b) and 39(c) effective, the court was immunized from intervening in any law made by the Parliament.

29th Amendment

The 29th Amendment was passed in the year 1972. It inserted the Kerala Land Reforms Act into the 9th Schedule. It meant that the matters related to the Kerala Land Reforms Act will be outside the scope of the judiciary to try. All the amendments which were made by the Central Government in some or other way protected the amendments made by State Government from being tried in the court of law. Provisions of the Kerala Land Reforms Act along with 24th 25th and 29th Amendments were challenged in the court of law.

Issues before the Court

  • Whether the 24th Constitutional (Amendment), Act 1971 is Constitutionally valid or not?
  • Whether the 25th Constitutional (Amendment), Act 1972 is Constitutionally valid or not?
  • The extent to which the Parliament can exercise its power to amend the Constitution.

Contentions by Parties on issues

Petitioner’s contentions

It was contended by the petitioner that the Parliament cannot amend the Constitution in a way they want to as they have a limited power to do so. The Parliament cannot exercise its power to amend the constitution by changing its basic structure as the same was propounded by Justice Mudhokar in the case of Sajjan Singh v State of Rajasthan. The petitioner pleaded for the protection of his property under Article 19(1)(f) of the Indian Constitution. 

It was argued by him that the 24th and 25th Constitutional Amendments violated the Fundamental Right which was provided under Article 19(1)(f) of the Indian Constitution. Fundamental Rights are rights available to citizens of India to ensure freedom and if any Constitutional amendment takes away such right then the freedom which is ensured under the Constitution to its citizens will be deemed to be taken away from them.

Respondent’s contentions

The respondent was the State. The State contended that Supremacy of Parliament is the basic principle of the Indian Legal System and so the Parliament has the power to amend the Constitution unlimitedly. State also contended that in order to fulfill its socio-economic obligations which have been guaranteed to the citizens of India under the Preamble, it is important that the Parliament exercises its power to amend the constitution without any limitations.

Judgment

It was held by the apex court by a majority of 7:6 that Parliament can amend any provision of the Constitution to fulfill its socio-economic obligations guaranteed to the citizens under the Preamble subject to the condition that such amendment won’t change the basic structure of the Indian Constitution.

The majority decision was delivered by S.M. Sikri CJI, K.S. Hegde, B.K. Mukherjea, J.M. Shelat, A.N. Grover, P. Jagmohan Reddy JJ. & Khanna J. Whereas, the minority opinions were written by A.N. Ray, D.G. Palekar, K.K. Mathew, M.H. Beg, S.N. Dwivedi & Y.V. Chandrachudjj. The minority bench wrote different opinions but was still reluctant to give unfettered authority to the Parliament. The landmark case was decided on 24th April 1973.

The court upheld the 24th Constitutional Amendment entirely but the 1st and 2nd part of the 25th Constitutional Amendment Act was found to be intra vires and ultra vires respectively. It was observed by the court in relation to the powers of the Parliament to amend the Constitution that it was a question that was left unanswered in the case of Golaknath.

The answer to the question was found in the present case and it was deduced by the court that the Parliament has the power to amend the Constitution to the extent that such amendment does not change the basic structure of the Indian Constitution. It was laid down by the court that the Doctrine of Basic Structure is to be followed by the Parliament while amending the provisions of the Constitution.

The Doctrine of Basic Structure

According to the doctrine, the Parliament has an unlimited power to amend the Constitution subject to the sole condition that such amendments must not change the basic structure of the Constitution. The Parliament should not in any manner interfere with the basic features of the Constitution without which our Constitution will be left spiritless and lose its very essence. The basic structure of the Constitution was not mentioned by the bench and was left to the interpretation of the courts. The Courts need to see and interpret if a particular amendment violates the basic structure of our Indian Constitution or not. 

The court found that as contended by the respondents actually there is a difference between ordinary law and an amendment. Keshvananda Bharti’s case to some extent overruled Golaknath’s case. The court, in this case, answered the question which was left unanswered in Golaknath’s case in relation to the power of Parliament to amend provisions of the Constitution. 

The court found that the word ‘amend’ which was included in Article 368 does not refer to amendments that can change the basic structure of the constitution. If Parliament wants to amend a particular provision of the Constitution then such amendment would need to go through the test of basic structure.

It was also decided that since the Parliament has an unlimited power to amend the Constitution subject to the basic structure then Parliament can also amend Fundamental Rights as far as they are not included in the basic structure of the Constitution. 24th Amendment was upheld by the Bench whereas the 25th Amendment’s 2nd part was struck down. The 25th Amendment’s validation was subjected to two conditions:

  • The court agreed that the word amount and compensation is not equivalent to each other but still the amount which is provided by the Government to the landlords should not be unreasonable. The amount need not be equal to the market value but should be reasonable and closely related to the present market value.
  • The 1st part of the 25th Amendment was upheld but it was subject to the provision that the prohibition of judiciary’s reach will be struck down.

Critical Analysis of the Judgement

The majority of the Bench wanted to preserve the Indian Constitution by protecting the basic features of the Constitution. The judgment was given after analyzing the various aspects and was based on sound reasoning. The Bench feared that if the Parliament would be provided with unlimited power to amend our Indian Constitution then the power will be misused and would be changed by the Government according to its own will and preferences. The basic features and the very spirit of the Constitution can be altered by the Government if they have unlimited powers to make amendments. There was a need for a doctrine to preserve the rights of both Parliament and citizens, therefore, the Bench came up with a midway to protect both of their rights through the doctrine of Basic Structure.

Even before our Indian Constitution came into force, approximately 30 amendments were already made to it. After the commencement of the Indian Constitution in 1951, around 150 amendments have been passed, whereas, in the United States, only 27 amendments have been passed in 230 years. Despite the huge number of amendments, the spirit, and ideas of the framers of the Indian Constitution have remained intact. Indian Constitution did not lose its identity and spirit because of the decision taken by the Bench in this case.

The landmark case of Keshavananda Bharti provided stability to the Constitution. Though the petitioner lost his case partially, yet the judgment that was given by the Bench, in this case, worked out to be a savior of Indian democracy and saved the Constitution from losing its spirit. 


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 Industrial Law, Industrial Disputes and Industrial Relations: ID Act, 1947 

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This article is written by Kartikeya Kaul, a first-year student pursuing B.A.LLB. from Symbiosis Law School, Noida. This is an exhaustive article dealing with the Industrial Law, Industrial Disputes and Industrial Relations: The Industrial Disputes Act, 1947.

 

Introduction

Industrial disputes Act, 1947 is the Act that regulates the labour laws as it concerns all the workmen or all the people employed on the Indian mainland. It came into force on 1 April 1947.

The capitalists or the employer and the workers always had a difference of opinion and thus, it leads to lots of conflicts among and within both of these groups. So, these issues brought to the attention of the government and so they decided to pass this act. This act was formed with the main objective of bringing peace and harmony in industrial disputes between parties and solving their issues in a peaceful manner. 

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Scope and Object 

This is an Act made for the examination and settlement of industrial disputes, and for different purposes too. This Act centres around any industry carried on by or under the authority of the Central Government, or by a railway organization or concerning any such controlled industry as might be indicated for this benefit by the Central Government. 

Main features of the Act 

This Act furnishes us with specific guidelines and guidelines in regards to the works committee for both the businesses and all the workmen to advance measures for good working relations and comprehension among the workmen and the businesses later on, and to end that, it additionally vows to resolve any material difference in views of opinion in regard to such issues.

Definition of Industrial Dispute 

Industrial dispute implies any distinction of conclusion, contest, injury between the business and the representatives, or between the labourers and bosses, or between the labourers or workers itself which is all concerned with the work or non-business terms or terms of business dependent on the terms of state of work of any person.

Workman

The expression “workman” signifies any individual (counting a student or apprentice) who works in an industry who needs to do any manual, skilled/unskilled, incompetent, specialized, operational, administrative, supervisory and so forth work for contract or reward, regardless of whether the terms of business are communicated or inferred, and for motivations behind any procedure under this Act in connection to an industrial dispute, incorporates any person who has been expelled, released or saved regarding, or as an outcome of the case, or who’s rejection, release or conservation has prompted that dispute, however, does exclude any such individual- 

  • who is dependent upon the Air Force Act 1950, or the Army Act 1950, or the Navy Act 1957;
  • who is employed in the police administration or as an official or other representative of a jail;
  • who is employed primarily in an administrative or managerial limit.

An individual, being underemployment in a supervisory limit draws compensation surpassing Rs. 10000 for every month or activities, either by the idea of the obligations to the workplace or by reason of forces vested in him, works fundamentally of an administrative sort. 

Lay-off 

Layoff or “Cutback” signifies the refusal or lack of power to refuse, disappointment or failure of a business by virtue of lack of coal, power or crude material etc. or the aggregation of stocks or the breakdown of apparatus to offer work to a workman whose name is on the muster rolls of his industrial foundation and who has not been retrenched. 

Closure 

This implies the shutting down of a part of an establishment or an entire place of employment.

Authorities under the Act 

Section 3: Works board of trustees 

If there should be an occurrence in any industrial foundation wherein one hundred or more workers are employed in a day or in the previous year, the concerned government may be a general or an exceptional offer require the business to do in the endorsed way, a works advisory group comprising of delegates of representatives and workers occupied with the foundation so that the quantity of agents of workers on the Committee will not be not exactly the quantity of agents of the business. The delegates of the workers will be picked in the recommended way from among the workers occupied with the foundation and in counsel with their worker’s guild, assuming any, enrolled under the Indian Trade Unions Act. 

It is the obligation of the works advisory group to advance proportions of verifying and saving great and serene relations between the businesses and the workers and the end that, to finalise upon the issues of their normal intrigue or attempt to make any material contrast out of perspectives in such issues. 

Section 4: Conciliation Officer

The fitting government may, by seeing in the authority, name such people as it believes fit to be conciliation officials, delegated of the obligation of intervening and advancing the settlement of industrial audits. 

An appeasement official might be designated for a predetermined zone or for explicit industries in a predefined region or for at least one explicit industries and either for all time or for a constrained period. 

Section 5: Boards of Conciliation

  1. The reasonable Government may as event emerges by notice in the Official Gazette speak to a Board of Conciliation for advancing the settlement of an industrial contest. 
  2. A Board will incorporate an administrator and 2 or 4 unique individuals, as the Government thinks fit. 
  3. The administrator will be an independent individual and along these lines, different individuals will be people delegated in equivalent numbers to speak to the party to the case and any individual selected to speak to a gathering will be designated on the proposal of that party: 
  • Given that, if any gathering neglects to make a suggestion as previously mentioned inside the endorsed time, the fitting Government will select such people if it thinks they’re fit to speak to that party. 
  1. A Board, having the recommended majority, may act despite the nonattendance of the administrator or any of its individuals or any opening in its number: 
  • Given that if the appropriate Government tells the Board that the administrations of the executive or of some other part have been stopped to be accessible, the Board will not Act till a substitute director or part, by and large, has been designated. 

Section 6: Courts of Inquiry 

  • The proper Government may as an event emerges,  by notice in the official journal comprise a court of value for enquiring into some other issue seeming, by all accounts, to be associated with or applicable to an industrial contest.                                                           
  • A court may comprise of one free individual or number of such autonomous people as suitable Government may think fit and where a court comprises of at least two individuals, one of them will be named as the executive chairman. 
  • A court, having the endorsed majority, may dispute the nonappearance of the executive chairman or any of its individuals or any kind of vacancy in its number. 

Section 7: Labor Court 

  • The proper Government may, by warning in the official journal, add to at least one industrial councils for the settling of industrial disputes and identifying with any issue, regardless of whether indicated in the subsequent calendar or the 3rd schedule. 
  • A court should comprise of just a single individual designated by the appropriate government. 
  • An individual will not be equipped for arrangement as the directing official of a council except if he is, or has been a judge of the high court or has been a vice president labour commissioner (central) or joint chief of the state work office, having a degree in law. 

Anand Bazar Patrika v Their Employees 

This case was between the Anand Bazar Patrika Pvt. Ltd, the appellant and between the workers, the respondent. This issue was about a person, Gupta, who’s retirement was against the service conditions of the company. The court also held the decision against the appellant that Gupta was a workman on the day of his retirement and thus, the award was given against the appellant. 

Awaz Prakashan Private Ltd. v Pramod Kumar Pujari 

In the case Awaz Prakashan Private ltd. vs Pramod Kumar Pujari, the appellant was running a printing press and was publishing newspapers by the name of ‘Awaz’. So, as per the words of the appellant, he said that he closed the publication and stopped the printing of the newspaper and thus he retrenched the workman from services as of 1st July 1989. The responded contended that his retrenchment was not complying with the provisions in the Industrial disputes Act, 1947. 

Section 7-A: Tribunals 

The reasonable government may, by warning in the official newspaper, establish at least one industrial courts for the mediation of industrial disputes identifying with any issue, regardless of whether indicated in the subsequent calendar or the third schedule. A council will comprise of one individual just to be selected by the corporate Government. 

An individual will not be equipped for arrangement as the managing official of a Tribunal except if: 

 

  • He/she has been a judge of high court or has been one. 
  • a vice president work official (focal) or joint magistrate of the state work office, having a degree in law. 

Minerva Mills Ltd. Bangalore v Their Workmen 

Two disputes of the Minerva Mills Ltd, Bangalore between the management and the workers and two disputes of Mysore spinning and manufacturing co. limited, also between the management and the workers were referred to the said industrial tribunal 10 (1) c of the Act for adjudication, several other disputes were also referred to the tribunal. Till 15th June 1952, it was seen that only 5 out of 22 disputes were referred to it when the period of one year expired. In the four disputes which are concerned, the tribunal had only framed the issues and not Actually proceeded to record any evidence.

Lipton Ltd. case 

Lipton limited case. The appellant company was incorporated in the United Kingdom, with most of its stores from London, of groceries and tea, which included 10% of its business there. Its operations in India were carried out by a branch with its head office in Calcutta, and the business there consisted mainly of the sale of ‘packaged tea’  throughout all of India. The Delhi office of its Indian branch controlled the workmen of Punjab, Delhi, Rajasthan and Uttar Pradesh but had no connection with the other side of the business.

Jurisdiction 

The appropriate government may appoint to assessors to the case and may give its decision in the court as they may seem fit. 

Delay in filing appeal 

If there are delays in filing appeal the case of a person may become weaker. 

Appeal

Appeal can be made to Labour court, district court, tribunal or national tribunal.

Section 7-B: National councils 

The government at the centre may, by warning in the official gazette comprise at least one national industrial Tribunal for the settling of industrial disputes which, in the assessment of the government at the centre, including inquiries of national significance or are of such a nature, that industrial foundations arranged in more than one state are probably going to be keen on, or influenced by, such disputes. 

  • A national council will comprise of just a single individual that will be named by the government at the centre. 
  • An individual will not be equipped for arrangement as the directing official of a national council, except if he is or has been a judge of the High Court. 
  • The government at the centre may, if it thinks so fit select two people as assessors to encourage national council in the procedure before it. 

Section 7-C: Disqualifications for the managing workplaces of work courts, tribunals and national tribunals.

No individual will be designated to, or proceed in the workplace of the managing official of a work Court, council or national court if – 

  • He isn’t an autonomous individual. 
  • He hasn’t achieved the age of 65 years. 

Reference of Industrial Dispute

Where the proper government is of the conclusion that any industrial question exists or is caught, it might whenever by request recorded as a hard copy- 

  • Allude the contest to a board for advancing settlement thereof. 
  • Allude any issue having all the earmarks of being associated with or pertinent to the question to a court for enquiry.
  • Allude the contest or any matter seeming, by all accounts, to be associated with, or pertinent to the question, in the event that it identifies with any issue indicated in the subsequent schedule, to a work Court for mediation.
  • Allude to the question or any issue seeming, by all accounts, to be associated with, or pertinent to, the contest whether it identifies with any issue determined in the subsequent timetable or the third calendar, to a council for arbitration. 

Constitutional legitimacy of Section 10 

Where any industrial question in connection to which the government at the centre isn’t fit, the government alludes to national court at that point despite anything contained in this Act in reference to Sections 15, 17, 19, 33A, 33B, 36A to the reasonable government in connection with such contest will be understood as a source of perspective to the central government yet, spare as previously mentioned and as generally explicitly given in this Act, any reference in some other arrangement of this Act to the suitable government in connection to that case will mean a reference to the state government. 

Section 10-A: Voluntary references to disputes to discretion 

There any industrial case exists or is captured and the business and the workman consent to allude the question to mediation, they may whenever before the contest. It has been alluded to under Section 10 to a work Court or council or national court by a composed understanding, allude to the question to discretion and the differential to be such an individual or people (counting the managing officials of a work Court or council or national council) as a judge as might be determined in the assertion understanding.

Section 11: Procedure, Powers and Duties of Authorities  

Notice to enter premises 

An appeasement official or an individual from the board, may with the end goal of investigation into any current or captured industrial dispute, in the wake of giving sensible notice, enter the premises involved by any foundation to which the question relates. 

Production of documents before Tribunals 

An appeasement official may implement the participation of any individual with the end goal of assessment of such individual or call for and review any archive which he has ground for considering to be important to the industrial question.

Cost

The council, national council or work courts, all things considered, will have full capacity to decide by who and whom and to what degree and subject to what conditions, assuming any, such expenses must be paid, and to give every single essential bearing for the reasons previously mentioned and such expenses may, on application made to the fitting government by the individual entitled, can be recovered by that legislature in a similar way as an arrear of land income. 

Granting of adjournments

A bench of judges in the national tribunal, courts, labour courts, tribunals will grant the adjournment notice to the respective parties.

Powers of the Tribunal

Each board, court, work court, council and the national council have the power will have similar forces vested in a common court under common court of procedure, 1908, when attempting to document a suit, in regard of the accompanying issues specifically 

  • Authorizing the participation of an individual and inspecting him on vow 
  • Convincing the creation of reports and material objects 
  • Giving commissions for the assessment of witness 

In regard of such different issues as might be endorsed; and each request or examination by a board, court, work court, council or national court, will be esteemed to be a legal proceeding inside the Sections 193 and 228 of the Indian penal code (45 and 1860).

Fixation of wage structure

He who draws compensation and works of supervisory limit, he draws compensation surpassing 1600 for each month or Activities, either commonly of obligations connected to him by the workplace or by the power vested in him, works basically of an administrative sort. 

Retirement age on account of industrial workers

Retirement of the workman on arriving at the time of superannuation if the contract between the business and the worker comprises of a stipulation for that sake. 

Incentive Payment Scheme

Incentives are given to those who are wrongfully terminated of the services.

Jurisdiction to decide the dispute in respect of closure of factory

Courts can also resolve disputes in the cases of closure of factory based on all of the right facts as regardless of the closure of the factory as an individual or a party’s right must be served. 

Power of the Tribunal to interfere with the Action taken by the management 

Tribunal can also interfere with anything wrong done by the management only under court supervision. 

Award of Industrial Tribunal 

The award of the tribunal should only be in writing and only be signed by the presiding officer. 

Power of Labour Court 

The labour court may by the notification given in the official gazette, shall decide industrial disputes by adjudication according to the second schedule. 

Finding of fact by Labour Court

A labour court can also find the facts by formal investigation. 

Power of High Court to issue a writ against decisions of the Tribunal

High court can also issue a writ against decisions of the tribunal if an official appeal is made. 

Special leave under Article 136 of the Constitution against the decision of the Industrial Tribunal

Special leave petition means any person who wants to be heard in the case of any tribunal/national tribunal verdict. 

Section 11-A: Powers of Labor Courts, Tribunals and National Tribunals to give appointment alleviation if there should arise an occurrence of release or expulsion of workers 

Intensity of work courts, councils and national courts to give fitting help on account of release of workers. Where an industrial case identifying with release and expulsion of a workman in labor court, council, court or national council and on account of settling procedures, the court, the court or the national council, by and large, in the event that they imagine that the release or rejection of the workman was treacherous, it might, by its reward, put aside request of remuneration or do a legitimate restoration of the workman on such terms and conditions. 

Section 12: Duties of Conciliation Officers 

Conciliation Proceedings and settlement 

The conciliation official will to achieve a settlement in the case, immediately, research the question and all issues influencing the benefits and the correct settlement thereof and may do every single such thing on the off chance that he considers as qualified for the reason to carry the gatherings to a reasonable and agreeable settlement. 

Power of Government to make a reference 

In the event that, on the thought of the report is alluded to, the suitable government is fulfilled that there is a case for reference to a board, so it might make the reference. At the point when the concerned government doesn’t make any reference, it will record it and convey it to the concerned gatherings in this way. 

Submission of report by Conciliation Officer 

The report ought to be submitted within 14 days inside the beginning of the assuagement procedures or inside a shorter period as may be fixed by the proper government. 

Section 13: Duties of Boards 

Where a case has been alluded to a Board under this Act, it will be the obligation of the board to attempt to achieve a settlement and for this the board will, and doing this immediately, examining every one of the issues of the question influencing the benefits and the settlement thereof and may do every such thing fit to instigate the gatherings to go to a reasonable and legitimate settlement of the dispute.

Section 14: Duties of Courts 

A court will ask into the issues alluded to it and report it subsequently in the administration usually inside a six months time span from the initiation of its request. 

Section 15: Duties of Labor Courts, Tribunals and National Tribunals 

At the point when an industrial contest has alluded to a working court, council or national court for mediation, it should hold its procedures quickly and will, inside the predetermined period broaden and should present the honour to the fitting government.

Parties to make available all relevant papers for the proper decision of a dispute

All the parties have to provide the relevant papers for proof, as then only it will give proper decision of the dispute. 

Jurisdiction and Powers of Tribunal and Court

At the point when an industrial contest has alluded to a working court, council or national court for mediation, it should hold its procedures quickly and will, inside the predetermined period broaden and should present the honour to the fitting government.

Modification of pleadings

Pleadings can be modified as and when required. 

Discharge or Dismissal of a workman

When the issue has been reported to the court, labour court, tribunal, national tribunal regarding the unfair discharge or dismissal of the workman, the court or the tribunal can award the reinstatement of the workman into the establishment.   

Limitation on power to make award

The powers of the courts can give an award to the parties who deserve the award if anything wrong has been done with them.

Power of High Court to interfere with the award

If the party tries to file a complaint in the high court, the award can be given to the party whoever the judge feels worthy and they will be obliged to perform it. 

Power of Tribunal to grant interim relief

When an issue or dispute regarding the industrial dispute has been referred to the labour court, tribunal, national tribunal for referring, and after proper referring done by the respective courthouse, it could provide an award to the party if it’s satisfied that discharge or dismissal was not justified. Also, if it thinks fit, it may also provide relief to the workman and also the award of lesser punishment.

Section 16: Form of report and award

The report of a board or court will be recorded as a hard copy and will be marked by every one of the individuals from the board or court, all things considered: gave that nothing in this Section will be regarded to stop any individual from the board or court from recording any moment of the contradiction from a report or from any suggestions made in that. 

Section 17: Publication of report and award

Each report of a board or court together with any moment of difference recorded therewith, every mediation grant and each grant of a work court, council or national council will be distributed in a manner by which the suitable government thinks fit, inside a time of 30 days from the day of its receipt by the proper government. 

Section 17-A: Commencement of award – Enforceability of award

An honour (counting the assertion grant) will get enforceable on the expiry of the 30 days from the date of its distribution under Section 17 given that: 

  •  if the reasonable Government is conclusion, regardless of any place the honour has been given by a Labor Court or council with respect to an industrial question to which it is a party; or 
  •  if the Central Government is of opinion, regardless of any place the reward has been given by a National court, that it’ll be inexpedient on open grounds contacting national economy or social equity to offer impact without limit or any piece of the reward, the appropriate Government, or in light of the fact that the case could likewise be, the Central Government could, by notice in the Official Gazette, pronounce that the reward will not be enforceable upon the termination of the previously mentioned time of thirty days. 

Production of award

Where any announcement has been made concerning a reward, the appropriate Government or the Central Government could, inside ninety days from the date of production of the honor in Section 17, make a request dismissing or altering the honor, and will, on the primary possible possibility, lay the honor related to a copy of the request previously 

the get together of the State, if the request has been made by a state government, or before Parliament, if the request has been made by the Central Government. 

Section 17-B: Payment of full wages of workman pending procedures in higher Courts 

Where regardless, a working court, council or a national council by its reward, coordinates the  restoration of any workman and the business inclines toward any procedures against such grant in a high court or a preeminent court, full wages last drawn by him, comprehensive of any support stipend acceptable to him under any standard if the workman had not been utilized in any foundation during such period and an oath by such workman had been recorded with that impact in such Court.

Provided that where it is demonstrated to the satisfaction of the High Court or the Supreme Court that such workman had been utilized and had been getting satisfactory compensation during any such period or part thereof, the Court will arrange that no wages will be payable under this Section for such period or part, as the case may be.

Section 18: Persons on whom settlements and grants are authoritative 

People bound by settlement 

A settlement landed at by understanding between the business and the labourer generally than in course assuagement continuing will tie on the parties to the understanding. 

Reasonableness of settlement 

A discretion award has become enforceable will tie on the parties who alluded the question to assertion. 

Intensity of the Tribunal to include other vital and legitimate parties 

All the pertinent parties to the industrial question and the various parties are likewise added who are significant to the case and on the off chance that they don’t have an appropriate case, they won’t be recorded. 

Obligation of beneficiaries and successors and so forth 

At the point when the party in the above case is a business, his beneficiaries, successors or allocates in regard of the establishment to which the question relates. 

Restricting the nature of award 

The intervention award will be enforceable and will tie on those parties to the understanding whose case was alluded to assertion. 

Persons employed on the date of dispute and persons who subsequently become employed

All people making out of labourers who were utilized in the establishment at the very latest the day of the case are altogether alluded to. 

Section 19: Period of Activity of settlements and awards 

Time of Activity of awards 

A settlement will come into activity on such date as is settled upon by the parties to the question, and if no date is settled upon, on the date on which the update of the settlement is marked by the parties to the contest. 

Audit of Activity of award 

An award will, subject to the arrangements of this Section, stay inactivity for a time of one year from the date on which the award gets enforceable, given the reasonable government may diminish the said period. 

Res Judicata and Section 19(6) 

An award will be inactivity for 1 year from the date on which the award gets enforceable, subject to the arrangements of this Section. Be that as it may, despite the activity time frame, the award will be proceeding to tie for more than 2 months from the date the individual party has pulled out of their goal to end the award.

End of the award 

No notice given by the above Section will have an impact except if it is given by the party speaking to most of people bound by the settlement or award or all things considered.

Section 20: Commencement and finish of procedures 

Conciliation Proceedings 

An appeasement continuing must be started on the date of which a notice of strike or lockout has been given to the placation official or on the date of the request alluding the question to the board, all things considered.

Conclusion of Conciliation procedures 

A Conciliation Proceeding is said to be finished up when: 

  • When is settlement is landed at, when a reminder of the settlement is marked by parties to the question. 
  • At the point when no settlement is landed at, when the report of the placation official is gotten to the suitable government or when the report of the board is distributed under Section 17
  • At the point when a reference is made in the court, work court, tribunal or national tribunal under Section 10 during the pendency of the appeasement gatherings. 

Discretion and settling procedures 

Procedures before a referee under Section 10A or under the watchful eye of a working court, tribunal or national tribunal will be regarded to have started on the date of the reference of the case for discretion or mediation. 

Section 21: Certain issues to be kept private 

They will not be remembered for any report or award under this demonstration any data got by a conciliation official over the span of request as to a worker’s organization or as an individual business which isn’t accessible generally than through the proof given under the steady gaze of such official, board, court. 

 

Strikes and Lock-outs 

Section 22: Prohibition of Strikes and lock-outs 

Denial of Strike

No utilized individual can go to a strike in open utility in rupture of agreement without giving the business the earlier notice of the strike. 

Notice of Strike 

  • Notice of strike must be allowed inside about a month and a half, after gave, inside a half year before striking. 
  • Which means of the expressions “inside about a month and a half before striking” and “inside fourteen days of giving such notice”
  • An individual can’t go on a strike inside a half year of the past strike or inside 14 days of going on such a strike.

During the pendency of conciliation procedures

Before a conciliation official and seven days after the finishing of such proceeding.

Denial of lock-out 

Without giving them notice of the lockout or as hereinafter gave, inside about a month and a half of lockout or inside 14 days of giving such notice or any expiry of the lockout in any such notice previously mentioned or during the pendency of any placation procedures previously and appeasement official and seven days after the appeasement of such procedures.

Section 23: General preclusion of strikes and lock-outs 

In breach of contract 

No worker will go into a strike in rupture of agreement and no labourer will proclaim a lockout- 

  • During the pendency of mollification procedures before aboard and 7 days after the finish of such procedures. 
  • During the pendency of procedures before a tribunal, national tribunal or a working court and two months after the finish of such procedures. 
  • During the pendency of assertion procedures before a mediator and two months after the finishing of such procedures. 

Comparison between Section 22 and 23 

Matters secured by the Settlement 

Section 22 discussions about how the workers can’t go to a strike dependent on the earlier notification given to the business inside the organization, etc while Section 23 discussions about the general forbiddance in which we cannot go for a strike on the off chance that we have an earlier case pending. 

Section 24: Illegal strikes and lock-outs 

Discipline for unlawful strikes 

Any worker who does an illicit hit it culpable with detainment, up to a term for one month or a fine of which might be up to Rs. 50 or both. 

Section 25: Prohibition of money related guide to unlawful strikes and lock-outs 

No individual will purposely exhaust or apply any cash in the immediate facilitation of help of any illicit strike or a lockout. 

Lay-off and Retrenchment 

Section 25-A: Application of Sections 25-C to 25-E 

  • To industrial establishments in which under fifty labourers on a normal for every working day have been utilized in the previous schedule month. 
  • To industrial establishments which are of a regular character wherein work is performed just discontinuously. 

Section 25-A(2) 

On the off chance that the inquiry emerges if the industrial establishment is of regular character or in which work is performed just irregularly, the choice of the fitting government is then last. 

Section 25-B: Definition of continuous service

(1) a working man will be aforementioned to be in persistent help for a period in case he’s, for that period, in continuous assistance, just as administration which might be hindered on record of ailment or approved leave or a mishap or a strike that isn’t unlawful, or a lock-out or a stop of work that isn’t a direct result of any deficiency with respect to the worker; 

(2) any place a working man isn’t in nonstop assistance inside the that methods for statement (1) for a time of 1 year or half a year, he will be esteemed to be inconsistent help under a business – 

(a) for a time of 1 year, if the working man, during a time of twelve schedule months going before the date regarding which estimation is to be made, has, in reality, worked under the business for at the very least – 

  • one hundred and ninety days on account of a working man utilized subterranean in a mine; and 
  • two hundred and forty days, in some other case; 

(b) for a time period of half a year, if the working man, during a time of six schedule months going before the date regarding which count is to be made, has all things considered work under the business for at least – 

  • ninety-five days, on account of a working man, utilized subterranean in a mine 
  • 120 days, in the other case. 

Clarification-  For the reasons for condition (2), the number of days on which a worker has really worked under a business will remember the days for which: 

(i) he has been laid-off under an understanding or as reasonable by standing requests made under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under this Act or under the other law relevant to the business establishment; 

(ii) he has been inert with full wages, earned in the earlier years; 

(iii) he has been missing a result of brief impedance caused incidentally emerging out of and inside the course of his work; and 

(iv) on account of a female, she has been on maternity leave; in this manner, notwithstanding, that the general time of such maternity leave doesn’t surpass twelve weeks. 

Section 25-C: Right of workers laid-off for pay 

Lay-off remuneration 

Right of workers laid-off for pay.- Whenever a working man (other than a badli worker or easygoing worker) whose name is borne on the summon moves of an industrial establishment and who has finished at least one year of persistent assistance under a business is laid-off, regardless of whether endlessly or irregularly, he will be paid by the business for all days all through that he’s along these lines laid-off, besides such week by week occasions as could intercede, remuneration that will be up to 50% of brimming with the basic wages and dearness stipend that may have been because of him had he not been subsequently laid-off: giving if all through any time of a year, a representative is in this manner laid-off for more than forty-five days, no such pay will be expected in regard of any time of the lay-off once the end of the initial forty-five days, if there’s a consent with that impact between the worker and in this manner the business: Provided further that it will be legal for the business regardless falling among the previous precondition to conserve the working man as per the arrangements contained in Section 25F whenever once the expiry of the initial forty-five days of the lay-off and when he does as such, any remuneration paid to the workman for having been laid-off during the first year could likewise be set out against the payment due for conservation. 

Badli Workman 

“Badli workman” signifies a workman who is utilized in an industrial establishment in the spot of another workman whose name is borne on the muster rolls of the establishment, yet will stop to be viewed in that capacity for the motivations behind this Section, on the off chance that he has finished one year of persistent assistance in the establishment. 

Section 25-D: Duty of a business to keep up muster rolls of workmen 

Obligation of the business is to make muster rolls of their workmen. Despite that workmen in any industrial establishment have been laid off, it will be the obligation of the business to keep up the reasons for the part a muster roll and to accommodate the creation of passages in that by workmen who may introduce themselves for work at the establishment at the delegated time during typical working hours. 

Section 25-E: Workmen not qualified for pay in specific cases 

Any elective business 

On the off chance that he will not acknowledge any elective work in a similar establishment from which he has been laid-off, the creation of passages in that by workmen who may introduce themselves for work at the establishment at the designated time during typical working hours. 

Industrial establishment 

In the event that he doesn’t speak to himself at the establishment at the delegated time during typical working hours, at any rate, one time a day. 

Section 25-F: Conditions point of reference to conservation of workmen 

No workman utilized in any industry who has been in persistent assistance for at least one year under a business will be saved by that business until-

Degree of Tribunal’s Jurisdiction 

The workman has been given one month’s see in writing demonstrating the purposes behind conservation and the time of notice has terminated, or the workman has been paid in lieu of such notice, compensation for the time of the notice. 

 

Right of boss to redesign his business 

In India, courts have given the privilege to individuals to rearrange their business, given that they don’t do this with the ulterior goal of deceiving representatives. 

Terms within probation 

In the occasion, the business isn’t happy with the presentation of the representative during probation, the business is allowed to fire the administrations of the worker before the probation time frame subject to the notice time frame, assuming any, recommended in the representative’s letter of organization approach. 

Work for 240 days in a schedule year 

Each worker who has worked for 240 days in a schedule year in a production line, is permitted to leave for a couple of days with the wages. 

Conservation Compensation and Gratuity 

According to tip Act worker who has finished ceaseless, 5 years administration is qualified to get tip @ 15 days compensation for per finished year of administration. In the event of death of a representative while in administration, there is no arrangement to pay Retrenchment Compensation to the lawful beneficiaries of them perished. 

Restoration of a saved workman 

The courts don’t structure reestablishment in instances of illicit end or conservation. Sometimes, courts request payment in lieu of the conservation, though now and again conservation is requested with a full or a portion of back wages or network administration. 

Clubbing of administrations 

The administrations are generally clubbed together for the reason. 

Status of Service 

Status in the administration will be dictated by the date of request of arrangement to the administration. 

Restoration with full back wages of a conserved workman 

Ever industrial workman argues under the steady gaze of the official courtroom that after the end of his administration, he couldn’t locate some other productive business. On this declaration itself, the weight of evidence shifts upon the business/the board to demonstrate that the workman has been in beneficial work during the period he had been rendered jobless. Without evidence of beneficial work of the workman, the workman gets qualified for back wages if the end has been seen as awful in law.

In any case, in the very idea of things there can’t be a restraint equation for awarding alleviation of back wages. It would rely upon the carefulness of the Tribunal. Full back wages would be typical standard and the party questioning it must set up the conditions requiring takeoff. 

In Hissar Central Co-usable Bank Ltd. versus Kali Ram, 2004(1) LLJ 232 SC, the Supreme Court clarified the foundation for deciding award of back wages if there should be an occurrence of restoration. It has been kept that instalment of down wages would rely upon, other than productive business or non-work of worker, factors, for example, nature of charge, degree of association and making misfortune manager. 

State claims 

The state’s claims can play a major role in the decision of retrenchment of the workmen. 

Reinstatement with notional incrementations

If the national tribunal, tribunal, national courts find that the dismissal or discharge of the workman was unjust, then the courts can order the reinstatement of the workman and that too with nominal increments if it feels like.

Fresh Plea 

A fresh plea may also be filed in the court for the purpose of retrenchment.

Distinction between Section 25-F and 25-FFF 

Section 25 F discusses Conditions to point of reference to conservation of workmen. No workman utilized in any industry who has been in nonstop help for at least one year under a business will be saved by that business and Section 25 FFF discusses remuneration to workmen if there should be an occurrence of shutting down of undertakings. 

Section 25-FF: Compensation to workmen if there should be an occurrence of move of undertakings 

Where the proprietorship or the executives of an undertaking is moved, regardless of whether by understanding or by Activity of law, from the business in connection to that undertaking to another business, each workman who has been in constant assistance for at least one year in that undertaking preceding such move will be qualified for notice and pay as per the arrangements of Section 25F, as though the workman had been saved: Provided that nothing in this Section will apply to a workman regardless where there has been a difference in managers by reason of the exchange, if-

  • the administration of the workman has not been hindered by such move; 
  • the terms and states of administration material to the workman after such move are not at all less ideal to the workman than those relevant to him preceding the exchange; and 
  • the new manager is, under the details of such a move or something else, lawfully subject to pay to the workman, in case of his conservation, remuneration on the premise that his administration has been nonstop and has not been hindered by the exchange. 

Section 25-FFF: Compensation to workmen if there should arise an occurrence of shutting down of undertakings 

Pay to workmen just if there should arise an occurrence of shutting down of undertakings.- 

Where an undertaking is shut down in any capacity whatsoever, each workman who has been in nonstop assistance for at least one year in that undertaking preceding such conclusion will, subject to the arrangements of sub-Section (2), be qualified for notice and pay as per the arrangements of Section 25F, as though the workman had been saved: as long as any place the endeavour is shut down by virtue of inescapable conditions outside the ability to control of the business, the remuneration to be paid to the workman under (b) of Section 25F will not surpass his normal compensation cash for 3 months. A defence- An undertaking which is shut somewhere near reason only of-

  • money related challenges (counting budgetary misfortunes); or 
  • amassing of undisposed of stocks; or 
  • the finish of the time of the rent or permit conceded to it; or 
  • for a situation any place the venture is occupied with mining Activities, fatigue of the minerals in the region in which such tasks are continued; will not be considered to be shut down because of inescapable conditions outside the ability to control of the business. 

Conclusion Compensation and Ex gratia instalment 

Where an undertaking is shut down in any way, shape or form, each workman who has been in ceaseless assistance for at least one year in that undertaking preceding such conclusion will, subject to the arrangements of sub-section (2), be qualified for notice and remuneration as per the arrangements of Section 25F. 

Legality of Section 25-FFF 

Section 25 – FFF of the Industrial disputes Act, 1947 talks is sacred as it secures the interests of the workmen by giving remuneration to the workmen after the conclusion of the establishment. 

Section 25-G: Procedure for Retrenchment 

Where any workman in an industrial establishment, who is a resident of India, is to be saved and he has a place with a specific classification of workmen in that establishment, without any understanding between the business and the workman for this benefit, the business will commonly conserve the workman who was the last individual to be utilized in that classification, except if for motivations to be recorded the business saves some other workman. 

Alleviation in the event of unjustified conservation 

End of a worker dependent on illicit alleviation will give that representative the help of restoration.

Industrial establishment 

Every one of these methods are followed in an industrial establishment wherein the individuals are utilized and pursue these guidelines as needs be. 

Locale of the High Court

Conservation has more to it than only end of work by a business. There are a large group of lawful arrangements which oversee the act of conservation. 

“the end by the business of the administration of a workman under any conditions, generally than as a discipline dispensed by method for disciplinary activity, yet does exclude- 

(a) deliberate retirement of the workman, or 

(b) retirement of the workman on arriving at the time of superannuating if the agreement of work between the business and the workman concerned contains a stipulation for that sake; or 

(b) end of the administration of the workman because of the non-evacuation of the agreement of work between the business and the workman concerned on its expiry or of such agreement being ended under a stipulation for that sake contained in that; or 

(c) end of the administration of a workman on the ground of proceeded with sick wellbeing. 

Section 25-H: Re-work of conserved workmen 

Where any workmen are saved and utilized takes into his utilize any people, he will, in any way be recommended, give an open door 2 to the conserved workmen who are residents of India to offer themselves for re-business and such saved workman] who offer themselves for re-work will have inclination over different people. 

Section 25-J: Effect of Laws conflicting with this Chapter 

(1) The arrangements of this Chapter will have an impact despite anything conflicting therewith contained in some other law including standing requests made under the Industrial Employment (Standing Orders) Act, provided that where under the arrangements of some other Act or rules, requests or notices gave thereunder or compelled or under any award, agreement of administration or something else, a working individual is qualified for focal points in regard of any issue that are more ideal to him than those which he would be entitled under this Act, the working individual will, in any case, be qualified for a ton of positive advantages in regard of that issue, despite that he gets benefits in regard of different issues under this Act.

(2) For the expulsion of questions, it is therefore proclaimed that nothing contained in this Chapter will be esteemed to influence the arrangements of some other law for the time being compelling in any State to the extent that that law accommodates the settlement of industrial disputes, anyway the rights and liabilities of businesses and workmen in so far as they identify with lay-off and conservation will be resolved as per the arrangements of this Chapter. 

Exceptional arrangements identifying with Lay-off, Retrenchment and Closure in Certain Establishments 

Section 25-K: Application of Chapter V-B 

  1. The arrangements of this Section apply to an industrial establishment (not being an establishment of regular character or work being performed irregularly) in which not more than one hundred workmen were utilized on a normal for each working day for as long as a year. 
  2. On the off chance that an inquiry emerges whether an industrial establishment is of an occasional character or whether work is performed in that just discontinuously, the choice of the proper Government consequently will be conclusive. 

Section 25-M: Prohibition of lay-off 

  • No workman (other than a badli workman or an easygoing workman) whose name is borne on the muster rolls of an industrial establishment to which this Chapter applies will be laid-off by his manager aside from the one with the earlier consent of the fitting Government or such authority as could likewise be determined by that Government by notice inside the 
  • Official Gazette (hereinafter in this Section referenced as the predetermined position), acquired on an application made for this sake, except if such lay-off is because of deficiency of intensity or to regular catastrophe, and on account of a mine, such lay-off is expected additionally to fire, flood, overabundance of inflammable gas or explosion.
  • An application for authorization under sub-Section (1) will be made by the business in the endorsed way expressing unmistakably the purposes behind the expected lay-off and a duplicate of such application will be served simultaneously on the workmen associated with the recommended way. 
  • Any place the working individual (other than badli workmen or easygoing workmen) of an industrial foundation, being mine, have been laid-off under sub-Section (1) for reasons of fire, flood or abundance of inflammable gas or blast, the business, in connection with such establishment, will, inside a time of thirty days from the date of the beginning of such lay-off, apply, inside the recommended way, to the suitable Government or the predetermined expert for consent to proceed with the lay-off. 
  • Where an application for authorization under sub-Section (1) or sub-Section (3) has been made, the proper Government or the predefined authority, in the wake of making such enquiry as it might suspect fit and once giving a sensible possibility of being heard to the business, the workmen concerned and the people inspired by such lay-off, may, having respect to the validity and sufficiency of the explanations behind such lay-off, the interests of the workmen and each option important elements, by request and for motivations to be recorded in writing, allow or decline to give such consent and a reproduction of such request will be conveyed to the business and furthermore the workmen. 
  • Where an application for authorization under sub-Section (1) or sub-Section (3) has been made and the proper Government or the predefined authority doesn’t convey the request giving or declining to give consent to the business inside a time of sixty days from the date on which such application is made, the authorization applied for will be esteemed to have been allowed on the termination of a similar time of sixty days. 
  • A request for the appropriate Government or the ideal authority allowing or declining to concede authorization will, subject to the arrangements of sub-Section (7), be conclusive and official on every one of the parties in question and will remain viable for one year from the date of such request. 
  • The reasonable Government or the ideal authority could, either all alone movement or on the application made by the business or any workman, audit its request giving or declining to concede authorization under sub-Section (4) or allude the issue or, all things considered, cause it to allude to a Tribunal for arbitration: Provided that where a reference has been made to a tribunal under this subSection, it will pass an award inside a time of thirty days from the date of such reference. 
  • Where no application for authorization under sub-Section (1) is made, or where no application for consent under sub-Section (3) is made inside the period determined in that, or where the authorization for any lay-off has been can’t, such lay-off will be considered to be illicit from the date on which the workmen had been laid-off and the workmen will be qualified for any or all advantages under any law for the time being compelling as though they’d not been laid-off. 
  • Even so, something contained inside the former arrangements of this Section, the suitable Government may, on the off chance that it is fulfilled that inferable from such uncommon conditions as mishap in the establishment or on the other hand the demise of the business or structure, it is essential so to do, by request, direct that the arrangements of sub-Section (1), or, all things considered, sub-Section (3) will not matter in connection to such an establishment for such period as may be determined in the request. 
  • The arrangements of Section 25C (other than the second stipulation thereto) will apply to instances of lay-off referenced in the Section.

Clarification –

For the reasons for this Section, a workman will not be esteemed to be laid-off by a business if such manager offers any elective work (which in the assessment of the business doesn’t require any exceptional ability or past mastery and might be finished by the workman) inside a similar establishment from which he has been laid-off or in some other organization having a place with a similar boss, arrange in a similar town or town, or arrange inside such good ways from the establishment to which he has a place that the exchange won’t include undue hardship to the working individual having respect to the realities and conditions of his case, given that the wages which would typically have been paid to the working individual are offered for the decision arrangement conjointly.

Section 25-N: Conditions point of reference to conservation of workmen

Conditions point of reference to the conservation of workmen- 

No workman utilized in any industrial business, who has been in persistent help for at least one year, under a business will be saved by that business until: 

  • The workman has been given three months see in writing demonstrating the purposes behind conservation and the time of notice has lapsed, or the workman has been paid in lieu of such notice, compensation for the time of notice; 
  • The earlier consent of the proper government or such authority as might be determined by that government by notice in authentic paper has been gotten on an application made for this sake. 

Section 25-O: Procedure for bringing down an undertaking

  • A business who expects to shut down his undertaking of an industrial establishment will, in the endorsed way apply for earlier consent at any rate 90 days before the date on which the planned conclusion is to get powerful, to the suitable government, expressing obviously the aim of conclusion and the purposes behind the proposed conclusion of the undertaking and will likewise be served all the while on the workmen of the establishment in a recommended way. (nothing in this subsection applies to undertaking taking every necessary step of building streets, channels, dams, bridges, structures and other development work. 
  • An application for the consent of conclusion of the undertaking is given to the suitable government by the business, the government makes legitimate enquiry and the sensible opportunity to be heard by the business, representatives/workmen and every one of the people keen on the conclusion may, the sensibility and legitimacy of their point is viewed as remembering the interests of the overall population is remembered in addition to all other important variables, the award or refusal is given to the business dependent on the entirety of this by the proper government. 
  • At the point when an application has been submitted to the proper government inside 90 days, and the suitable government doesn’t give the letter of award or refusal inside 60 days, it is regarded to be allowed after the termination of 60 days. 
  • The last request of the government allowing or denying of the conclusion of the undertaking is conclusive and will tie the entirety of the parties and it will stay in power for a whole year. 
  • The gave government may likewise survey the award or refusal offer, in view of its own movement or an application, put together by the workman or allude to a tribunal or mediation. 
  • At the point when the use of conclusion had not been made by the business inside the period determined, at that point the authorization would be rejected by the fitting government and on the off chance that despite everything they go on with the conclusion, at that point the conclusion would be viewed as illicit, however, all the workmen will be given all advantages under the law until further notice in power as though the undertaking hadn’t shut. 
  • Despite anything contained in the previous arrangements of this Section, the suitable government may, on the off chance that it is fulfilled that inferable from such uncommon conditions as mishap in the undertaking or passing of the business or the like it is essential so to do, the arrangements of this Section will not matter in connection to such undertaking for such period as might be determined in the request. 

Retention in service

Where an undertaking is allowed to be shut down or where authorization for conclusion is esteemed to be in all actuality, each workman who is utilized in that undertaking preceding the date of use for consent under this Section, will be qualified for get remuneration which will be equal to fifteen days’ normal compensation for each completed year of constant service or any part thereof more than a half year. 

Legality of old Section 25-O 

The alterations made in Section 25-O by the Orissa Ordinance 3 of 1983, Section 3 (w.e.f. 21-2-1983) identify with Section 25-O before its substitution by the Central Act 46 of 1982, Section 14 (w.e.f. 21-8-1984).

Defendability of corrected Section 25-O 

A business who expects to shut down his undertaking of an industrial establishment will, in the recommended way apply for earlier consent at any rate 90 days before the date on which the proposed conclusion is to get viable, to the proper government, expressing unmistakably the aim of conclusion and the purposes behind the planned conclusion of the undertaking and will likewise be served all the while on the workmen of the establishment in an endorsed way. (nothing in this subsection applies to undertaking taking the necessary steps of building streets, waterways, dams, bridges, structures and other development work. 

Section 25-P: Special Provision as to controlling of undertaking shut down before initiation of the Industrial Disputes (Amendment) Act, 1976

Unique arrangements as to restarting the undertaking shut down before the industrial disputes (revision) Act, 1976. On the off chance that the suitable government knows about any undertaking of an industrial establishment to which this Section applies and is shut down before the beginning of industrial disputes (change) Act 1976- 

  • That such undertaking was shut down dependent on unavoidable conditions outside the ability to control the business. 
  • That there are potential outcomes of restarting the undertaking 
  • It is important for the recovery of the workmen utilized in such an undertaking before its conclusion or for the upkeep of provisions and services fundamental to the life of the network to restart the undertaking or both. 
  • The restarting of the undertaking won’t bring about hardship to the business and workmen, in any connection to the undertaking, it might, in the wake of allowing a chance to manager and workmen, direct, by request distributed in the official periodical, that the undertaking will be restarted inside such time as might be indicated in the request. 

Section 25-Q: Penalty for lay-off and retrenchment 

Any business who contradicts any arrangements of Section 25M and Section 25N will be rebuffed with detainment for a term of a half year or would be charged a fine of Rs. 5000 or both. 

Section 25-R: Penalty for conclusion 

  1. Any business who shuts down an undertaking without following the arrangements of the above Sections will be culpable with detainment for a term which may reach out to a half year or a fine which might be of 5000 rupees or both. 
  2. Any business who negates, a request declining to allow consent to shut down an undertaking under the above Sections will be culpable with detainment for a term which may broaden up to 1 year or a fine which may expand up to 5000 rupees, or with both, and where the contradiction is proceeding with one, with a further fine which may expand up to 2000 rupees for consistently during which the repudiation proceeds after the removal. 

Unfair Labor Practices 

Unreasonable work practices are those practices which are finished by the businesses, representatives or the workmen which are unscrupulous or unlawful in nature and they could likewise be deserving of law. Such activities ought to be kept away from by the businesses, representatives and workmen no matter what. 

Section 25-T: Prohibition of out of line work practices 

No business or a workman or a trade union, regardless of whether enlisted under trade unions Act 1926 or not, will not submit any uncalled for work practice. 

Section 25-U: Penalty for submitting unreasonable work practices 

Unfair Labor Practices 

Unreasonable work practices are those practices which are finished by the businesses, representatives or the workmen which are untrustworthy or unlawful in nature and they could likewise be deserving of law. Such activities ought to be stayed away from by the businesses, representatives and workmen no matter what. 

Out of line work practices with respect to managers and trade unions of businesses; 

With respect to businesses and trade union of managers-

(1) To meddle with, control, or pressure, workmen in the activity of their entitlement to arrange, structure, join or help a trade union or to take part in deliberate activities for the motivations behind aggregate bartering or other common guide or security, in other words.- 

  • Compromising the workmen with release or expulsion, on the off chance that they join a trade union; 
  • Compromising a lockout or conclusion if a trade union is sorted out. 
  • Conceding compensation to increment workmen at significant times of trade union association, with the end goal of undermining the endeavours of the trade union at associations. 

(2) To overwhelm, meddle with or contribute support, budgetary or something else, to any trade union, in other words, 

  •  A business taking an Active enthusiasm for sorting out a trade union of his workmen. 
  •  A business demonstrating incompletely or giving support to one of a few trade unions endeavouring to compose his workmen or to his individuals, where such a trade is certifiably not a perceived trade union. 

(3) To set up business supported trade unions of workmen. 

(4) To energize or dishearten enrollment in any trade union by suppressing any workman, in other words,

  • releasing or rebuffing a workman since he asked other workmen to join or organize a trade union; 
  • releasing or expelling a workman for participating in any strike (not being a strike which is esteemed to be an illicit strike under this Act; 
  • Changing the position rating or workmen due to trade union activities; 
  • Declining to advance workmen of higher posts because of their trade union activities; 
  • Giving outlandish advancements to certain workmen with the end goal of making conflict among other workmen, or to undermine the quality of their trade union; 
  • Releasing office-bearers or Active individuals from the trade union by virtue of their trade union activities.

(5) To release or expel workmen- 

  • By method for exploitation 
  • Not in accordance with some basic honesty, however in the colourable of businesses rights. 
  • By erroneously ensnaring a workman on a criminal case on bogus proof or on composed prove. For plainly bogus reasons.
  • On false or exaggerated charges of nonattendance without leave 
  • In absolute negligence of the standards of national equity in the direction of household enquiry or with undue flurry. 
  • For the wrongdoing of a minor specialized character, without having any respect to the idea of the incomplete unfortunate behaviour or the past record or service of the workman, along these lines prompting a disappropriate discipline. 

(6) To cancel crafted by a standard nature being finished by workmen, and to give such work to contractors as a proportion of breaking a strike. 

(7) To move a workman mala fide starting with one spot then onto the next, under the pretence of following administration strategy. 

(8) to demand individual workmen, who are on an individual strike to sign a decent direct bond, as a precondition to enable them to continue working. 

(9) to demonstrate preference to a labourer or indicating them somewhat to one lot of workers paying little heed to the legitimacy. 

(10) To utilize workmen as “badlis”, casuals or alternates and to proceed with them in that capacity for a considerable length of time, with the object of denying them of the status and benefits of the changeless workmen. 

(11) To release or oppress any working man for recording charges or affirming against a business in any request or proceeding concerning any industrial question. 

(12) to enrol a workman during a strike which isn’t an illicit strike. 

(13) Failure to actualize award, settlement or understanding. 

(14) To enjoy acts of power or brutality. 

(15) To decline to deal altogether in accordance with some basic honesty with the perceived trade unions. 

(16) Proposing or proceeding with a lock-out esteemed to be illicit under this Act. 

Unfair work practices with respect to workmen and trade unions of workmen 

  • To prompt or actively bolster or impel any strike to be considered illicit under this Act. 
  • To pressure workmen justified to self-association or to join a trade union or to avoid joining any trade union, in other words
  • for a trade union or its individuals to picketing in such a way that non-striking workmen are physically suspended from entering the work environments; 
  • to enjoy Acts of power or brutality or to hold out dangers of terrorizing regarding a negative mark against non-striking workmen or against administrative staff.

(3) For a perceived union to decline to deal by and large in compliance with common decency with the business. 

(4) To enjoy coercive activities against the confirmation of a bartering agent. 

(5) To arrange, energize or induce such types of coercive actions as willful, “go-moderate”, hunching down on the work premises subsequent to working hours or “gherao” of any of the individuals from the administrative or other staff. 

(6) To organize showings at the habitation of the businesses or the administrative staff individuals. 

(7) To instigate or enjoy obstinate harm to boss’ property associated with the industry. 

(8) To enjoy Acts of power or savagery or to hold out the dangers of terrorizing against any workman so as to keep him from going to work.

Penalties

Section 26: Penalty for illicit strikes and lock-outs 

  • Any workman who proceeds, starts, or Acts generally in encouragement of a strike which is unlawful under this Act, will be culpable with detainment for a term which may reach out to as long as a half year or a fine which may stretch out up to 60 rupees, or with both.
  • Any business who starts, proceeds or Acts in encouragement of a lock-out which is illegal under this Act will be culpable with detainment for a term which may reach out to multi-month, or a fine which may stretch out to 1000 rupees or with both.

Section 27: Penalty for affectation, and so on

Any individual who actuates or affects others to partake in, or generally acts in assistance of a strike or lockout, which is unlawful under this Act, will be culpable with detainment of a term which may stretch out to a half year, or a fine which may reach out to 1000 rupees or both. 

Section 28: Penalty for giving money related guide to unlawful strikes and lock-outs

Any individual who exhausts or applies cash in direct facilitation or backing of any unlawful strikeout lockout will be culpable with detainment for a term which may reach out to half a year, or a fine which may stretch out to 1000 rupees or both. 

Section 29: Penalty for break of settlement or award 

Any individual who submits a break of a term of any settlement or award, which is authoritative on him under this Act, will be culpable with detainment for a term which may reach out to a half year, or with fine, or with both, and where the rupture is proceeding with one, with a further fine which may stretch out to 200 rupees for consistently during which the break proceeds after the conviction for the first] and the Court attempting the offence.

Section 30: Penalty for unveiling secret data

Punishment for unveiling secret data.- Any individual who wilfully uncovers any such data as is alluded to in Section 21 in negation of the arrangements of that Section will, on protest made by or in the interest of the trade union or individual business influenced, be culpable with detainment for a term which may reach out to a half year, or with fine which may stretch out to one thousand rupees, or with both. 

Section 30-A: Penalty for conclusion without taking note 

Any business who shuts down any undertaking without consenting to the arrangements of the above Section will be culpable with detainment for a term which may reach out to half a year, or a fine which may stretch out to 5000 rupees or both. 

Section 31: Penalty for different offences 

(1) Any business who contradicts the arrangements of Section 33 will be culpable with detainment for a term which may stretch out to a half year, or with fine which can be one thousand rupees, or with both. 

(2) Whoever repudiates any of the arrangements of this Act or any standard made under that will, if the same punishment is somewhere else given by or under this Act for such contradiction, be culpable with fine which may stretch out to 100 rupees. 

Miscellaneous

Section 32: Offense by organizations and so on 

Offence by organizations, and so on.- Where an individual submitting an offence under this Act is an organization, or other body corporate, or a relationship of people (regardless of whether fused or not), each chief, administrator, secretary, operator or other official or individual worried about the administration thereof will, except if he demonstrates that the offence was submitted without his insight or assent, be considered to be liable of such offence.

Section 33: Conditions of service, etc.to stay unaltered 

During the pendency of any such continuing in regard of an industrial question, the business may, as per the standing requests material to a workman worried in such case or, where there are no such standing requests, as per the particulars of the contract, regardless of whether express or suggested, among him and the workman- 

  • adjust, concerning any issue not associated with the question, the states of service pertinent to that workman preceding the initiation of such continuing; or 
  • for any unfortunate behavior not associated with the contest, or release or rebuff, regardless of whether by rejection or something else, that workman: Provided that no such workman will be released or expelled, except if he has been paid wages for one month and an application has been made by the business to the authority before which the procedure is pending for endorsement of the action taken by the business. 

During the pendency of 

During the pendency of any such continuing in regard of an industrial case, the business may, as per the standing requests appropriate to a workman, worried in such question or where there are no such standing offers, as per the terms of the contract, regardless of whether express or suggested, among him and the workman- 

  • Modify, concerning any issue associated with the contest, the states of service pertinent to that workman before the initiation of such continuing 
  • For any wrongdoing not associated with the question, or release or rebuff, regardless of whether by rejection or something else, that workman: gave that no workman will be released or expelled, except if he has been paid wages for one month and an application is made to the business by the authority before which the procedure is pending for endorsement of the action taken by the business. 

Protected workman

Despite anything contained in the above sub-section, no business will, during the pendency of any such continuing in regard to an industrial case, make any move against any ensured workman worried in such question 

  • By changing, to the preference of such ensured workman, the states of service relevant to him preceding the beginning of such procedures. 
  • By releasing or rebuffing, regardless of whether by rejection or something else, such secured workman, spare with the express authorization in writing of the authority before which the proceeding is pending. Like, with the end goal of this sub-section, a “secured workman”, in connection to an establishment, implies a workman who, being an individual from the official or other office carrier of an enlisted trade union associated with the establishment, is perceived all things considered as per rules made for his benefit. 

Dismissal for misconduct

For any unfortunate behaviour associated with the case, release or rebuff, regardless of whether by expulsion or something else, any workmen engaged with such question, spare with the express authorization in writing of the authority before which the proceeding is pending.

Also, for any expulsion not associated with the question, release or rebuff, regardless of whether by rejection or something else, that workman: Provided that no such workman will be released or expelled, except if he has been paid wages for one month and an application has been made by the business to the authority before which the procedure is pending for endorsement of the action taken by the business. 

Adjustment in states of service 

Adjust, in respect to the issue not associated with the case, the states of service relevant to that workman preceding the beginning of such continuing. By modifying the bias of such ensured workman, the states of service relevant to him preceding the initiation of such procedures. 

Suspension of workmen before acquiring consent 

For any offence associated with the question, release or rebuff whether, by expulsion or something else, any workmen worried in such contest, spare with the express consent in writing of the authority before which the proceeding is pending. 

Jurisdiction of Tribunal under Section 33 

Prima facie case 

Kanan Devan Hills Produce Co. v. Industrial Tribunal, Ernakulam 

Fair inquiry

A fair inquiry should be set up without any unfair means or practices. 

Domestic enquiry-

Section 33(1)(b) 

For any unfortunate behaviour associated with the case, release or rebuff whether by expulsion or something else, any workmen worried in such question, spare with the express authorization in writing of the authority before which the proceeding is pending. 

Jurisdiction of the Tribunal to allow endorsement under Section 33(2) 

During such pendency of any such continuing in any such industrial question, the business may, as per the standing requests material to a workman in such case or where there are no such standing requests, as per the provisions of the contract, regardless of whether express or suggested, among him and the workman-

  1. Modify, as to any issue not associated with the question, the states of service appropriate to that workman preceding the initiation of such continuing. 
  2. For any wrongdoing not associated with the contest, or release or rebuff, regardless of whether by expulsion or something else, that workman: gave that no workman will be released or expelled, except if he has been paid wages for one month and an application has been made by the business to the authority before which the procedure is pending will be pending for endorsement of the Action taken by the business. 

Regularisation of daily wages 

The wages have to be regularised irrespective of the pendency of proceedings only if the worker hasn’t done something wrong. 

Jurisdiction under Section 33 after the publication of award

In accordance with the provisions of this Act, the award may be given to the party as per the appropriate provisions of the government.

Permission or approval no bar to reference under Section 10

(refer to above Section 10)

Application for approval of the Action taken

When an application is given to a conciliation officer, they should give the approval of the Action taken within three months of giving the application. 

Section 33-A: Special provision for adjudication as to whether the conditions of service etc. changed during the pendency of proceedings

During the pendency of proceedings

When an employer fails to comply with the provisions of Section 33 before the conciliation office, any employee aggrieved by such contravention may make a complaint. 

Adjudication under Section 33-A

The conciliation officer should take into account in initiating in, and promoting the settlement of, such industrial dispute 

Award under Section 33-A

The arbitrator, labour court, tribunal, national tribunal will look into the matters after the receipt of such complaint, will look into it for adjudication and will submit its award to the appropriate government for adjudication and the provisions of this Act shall be applied accordingly. 

Section 33-B: Power to move certain procedures 

The fitting government may, by request in writing and the reasons expressed in that, pull back any procedure under this Act, pending under the watchful eye of a working court, tribunal and national tribunal. 

Section 33-B: Recovery of money due from an employer 

Recovery certificate 

If the suitable government is satisfied by the money that is due, it shall issue a certificate of that amount to the collector in which they would issue a certificate of that amount based on the land revenue. (Section 33-C)

Who can make an application

When a workman has his money due under a settlement or an award from an employer, he can send a representative without prejudice authorised in writing on his behalf, or also in the case of death of the worker, make an application to the suitable government so that the employer pays his dues. 

Jurisdiction of the Labour Court under sub-Section (2) 

Without prejudice, any tribunal or national tribunal under the appropriate government may transfer the proceedings to the labour courts specified for the disposal of such government by providing notice in the official gazette. 

Money or benefit capable of being computed in terms of money

For the purposes of considering money as a benefit, the labour court may consider all the evidence available and then shall determine the award after submitting a report to the labour court.

Limitation period for making application

An application has to be made within 3 months. 

Application under sub-Section (2) 

An application can be made to the suitable government for the recovery of money that is due.

Labour Court as specified by the appropriate Government

A matter can be brought up to the labour court and be passed on to them by the appropriate government. 

Section 34: Cognizance of offences 

  1. No court will take the insight into any offence culpable under this Act or of the abetment of any such offence, save money on objection made by or under the authority of the suitable government. 
  2. No court substandard compared to that of the metropolitan officer or a legal justice of the five star will attempt any offence culpable under this Act. 

Section 35: Protection of people 

  1. No individual declining to partake or keep on participating in any strike or lockout which is illicit under this will, by reason of such refusal or by reason of any action taken by him under this Section, be dependent upon ejection from any trade union or society, or to any fine or punishment, or hardship of any privilege or any advantage to which he or his legitimate delegates would somehow or another be entitled, or be at risk to be put in any regard, either straightforwardly or in a roundabout way, under any incapacity or at any detriment as contrasted and different individuals from the union or society, anything despite what might be expected in the guidelines of a trade union or society in any case. 
  2. Nothing in the standards of a general public or a trade union requiring the settlement of disputes in any way will apply to any procedure for authorizing any privilege or exclusion verified by this Section, and in such continuing the common court may, in lieu of requesting an individual who has been ousted from enrollment of a trade union or society to be reestablished to participation request that he be paid out of the assets of the trade union or society such entirety by method for remuneration or harms as the Court might suspect just. 

Section 36: Representation of parties 

  1. A workman who is a party to a contest will be qualified for being spoken to in any proceeding under this Act by- 
  • Any individual from the office or the workplace conveyor of an enrolled trade union of which he is a part. 
  • Any individual from the official or other office carrier of an organization of trade unions to which the trade union alluded to in the above provision is partnered. 
  • Where the labourer isn’t an individual from any trade union, by any individual from the official or any office conveyor of any trade associated with, or by some other workman utilized in, the industry wherein the specialist is utilized and approved in such a way as might be endorsed. 

 

  1. A business who is a party to the case will be qualified to be spoken to in any proceeding under this Act by – 
  • An official of a relationship of bosses of which he is a part. 
  • Any individual from the official or other office bearer] of a league of trade unions to which the trade union alluded to in the above provision is partnered; 
  • Where the labourer isn’t an individual from any trade union, by any individual from the official or other office carrier of any trade union associated with, or by some other workman utilized in, the industry wherein the specialist is utilized and approved in such way as might be endorsed. 

Section 36-A: Power to expel challenges 

  1. In the event that, in the assessment of the suitable any trouble or uncertainty emerges with regards to the elucidation of any award or settlement, it might allude to address to such work court, tribunal or national tribunal as it might suspect fit. 
  2. The work court, tribunal or national tribunal will to which the inquiry is alluded will, in the wake of giving the parties a chance of being heard, choose such question and its choice will be conclusive and official on the entirety of the parties. 

Section 36-B: Power to exclude 

Where the fitting government is fulfilled in connection to any industrial establishment or undertaking or any class of industrial establishment or undertakings carried on by a branch of that government that sufficient arrangements exist for the examination and settlement of industrial disputes in regard to workmen utilized in such establishment or undertaking or class of establishments or undertakings, it might, by notice in the official periodical, excluded, restrictive or genuinely such establishment or undertaking or class of establishment or undertakings from all or any arrangements of the Act.

Section 37: Protection of action taken under the Act 

No suit, arraignment or other lawful continuing will lie against any individual which is done in compliance with common decency or expected to be done incompatibility of this Act or any standards made thereunder. 

Section 38: Power to make rules 

  • The fitting government may, subject to the state of past distribution, make rules to offer production to this Act. 
  • In preference and without bias to the sweeping statement of the previous power, such rules may accommodate all or any of the accompanying issues, to be specific – 
    • The forces and systems of conciliation officials and sheets, courts, labour courts, tribunals, national tribunals including rules as to bringing of witnesses, the generation of archives pertinent to the topic of a request or examination, the number of individuals important to frame a majority and the way of accommodation of reports and awards. 
    • The type of assertion understanding, the way where it might be marked by the parties, the way wherein it might be marked by the parties, the way wherein a notice might be given under sub Section 3A and 10A, the intensity of the referee named in the discretion understanding and the methodology pursued by him. 
    • The arrangement of assessors in procedures under this Act. 
    • The constitution of complaint settlement experts in settlement 9C in Section 38, the way where industrial disputes might allude to such experts for settlement, the system to be trailed by such experts in the procedures in connection with disputes alluded to them and that period inside which such procedures will be finished. 
    • The constitution and the elements of and documenting of the opportunities in works advisory groups, and the system to be trailed by such councils in the release of their obligations. 
    • The recompenses allowable to individuals from courts and sheets and managing official of work courts, tribunals and national tribunals and to assessors and witnesses. 
    • The minstrel establishment which might be dispensed to a court, board, work court, tribunal or national tribunal and the pay rates and stipends payable to individuals from such establishments. 
    • The way where the individual by and to whom notice of strike and lockout might be given and the way in which such notification will be imparted. 
    • The conditions to which parties could be relevant to be spoken to by legitimate practitioners in procedures under this Act under the steady gaze of a court, work court, tribunal or national tribunal. 
    • Some other issue which is to be or might be endorsed. 
  • Rules made under this Section will give that a repudiation will thereof be culpable with a fine not exceeding fifty rupees. 
  • All guidelines made under this Section will, at the earliest opportunity after they’re made, be laid before the state lawmaking body or, where the proper government is the government at the centre, before the two places of parliament. 
  • Each standard made by the government at the centre will be laid, when might be after it is made, before each place of parliament while it is in session for an all-out time of thirty days which might be undermined in one session or in at least two progressive sessions, and if, before the expiry of the session promptly following the session or the progressive sessions aforementioned, the two houses concur in making any adjustment in the standard, or the two houses concur that the standard ought not be made, the standard will from thereon have impact just in the changed frame or be of no impact, by and large; along these lines, nonetheless, that any such alteration or revocation will be without preference to the legitimacy of anything recently done under the standard. 

Section 39: Delegation of forces 

The fitting government may, by notice in the official periodical, direct that any power exercisable under this Act or rules made thereunder will, in connection to such issues and subject to such conditions, assuming any, as might be indicated toward the path, be exercisable moreover 

  1. Where the fitting government is the government at the centre, by such official or authority subordinate to the government at the centre or by the state government or by such official or authority subordinate to the state government, as might be indicated in the warning. 
  2. Where the fitting government is a state government, by such official or authority subordinate to the state government as might be indicated in the warning. 

Section 40: Power to correct Schedules 

  • The proper government may, on the off chance that it is of assessment that it is practical or vital out in the open enthusiasm to do as such, by warning in the official newspaper, add to the main calendar any industry, and on such notice being given, the primary timetable will be considered to be corrected as needs be. 
  • The government at the centre may, by warning of its official journal, add to or modify or alter the subsequent calendar or the third timetable and on any such notice being given, the subsequent calendar or the third timetable, by and large, will be done to be revised in like manner. 
  • Each such notice will, at the earliest opportunity after it is given, be laid before the assembly of the state, if the notice has been given by a state government, or before the parliament, if the notice has been given by the government at the centre. 

Conclusion 

Thus, this was the Industrial Disputes Act which was passed by the government of India in 1947. This Act ensures peace and harmony among all the industrial establishments, and if any conflict arises, the provisions in the Industrial Disputes Act helps in solving the issue in a systematic manner in which all the parties are satisfied and every decision made is fair and just.

References


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Minority Protection under Company  Law

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This article is written by Kartikeya Kaul, a first-year student pursuing a BA.LLB. from Symbiosis Law School, Noida. This is an exhaustive article dealing with the Minority Protection under Company Law.

 

Introduction 

Historically, we have seen the majority shareholders in the company have the absolute right and power in the operations and the working of a company. This may also lead to abuse of power by the majority and the minority shareholders suffer because of this. This often leads to mismanagement of the company and oppression of the minority.

Despite the provisions laid out in the Companies Act 1956, the minorities didn’t have enough time and resources, so they found themselves incapable of exercising their rights. So, this leads to the formation of Companies Act 2013, in which the interests of minority shareholders were taken into consideration and they were protected.

So, if in case, the minority has been treated unfairly in the company, the freedom to approach an appropriate body should be established in the course of law in order to protect the interests of the minority shareholders.

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The rule in Foss v Harbottle

A Rule of Corporations law: shareholders do not have a separate course of action for anything wrong which may be inflicted by a corporation.

Acts Ultra Vires

The doctrine of ultra vires is a fundamental rule in company law. It states that the affairs of the company has to be in accordance with the clauses in the memorandum of association and cannot contravene its provisions.

Fraud on minority

Fraud on minority refers to the unjust exercise of voting powers done by the majority shareholders of the company. It is based on the evidence of failure to cast votes that would benefit the company as a whole. As the majority of the company commits a fraud on the minority, a resolution is passed which makes the voting voidable.

Acts requiring a special majority

This happens in Section 114 of the Companies Act 2013, where a resolution becomes a special resolution when the intention to propose a resolution as a special resolution has been duly specified in the notice calling, the notice calling or other resolution given by the members. Also, if a notice under this act is duly given and whether the votes are cast in favour of the resolution, whether by show of hands/electronically/ballot paper or in any form of a poll, as the case may be, by members who vote in person or proxy or by ballot post, are needed to be three times the number of votes, if any, cast against the resolution of members so entitled to voting.

Wrongdoers in control

It has been seen that where the wrongdoers control the company and thus prevent it from bringing into action, the courts will allow shareholders to do so, on the company’s behalf in order to obtain redress by way of a derivative action. By liberalising and adapting an extensive reading into the scope of the wrongdoer control test, this decision provides useful judicial clarification on the rights and the remedies present in a true deadlock situation.

Individual membership rights

There are certain rights of members of a company which they can enjoy in their individual capacity. These rights are contractually based and cannot be taken away except with the written consent of the concerned member. The individual rights of a member arise in part in the form of a contract between the company and a member who is known to be a member of the company, and in part from the general law. Under the contract of his membership, some individual/personal rights are- 

  • He is entitled to have his name and shareholdings entered in the registrar of members and to stop unauthorised additions or alterations to entry, to vote at meetings of members. 
  • To receive dividends which have been duly declared or which have become due under the article.
  • The execute pre-emption rights over other members shares which are conferred by the articles. 
  • To have his capital returned in the proper order of priority in the closing of a company or a mere reduction of the capital that is authorised.
  • Under the general law, he is restrained from such acts which are ultra wires. 
  • He should have a reasonable opportunity to speak at the meeting of members. 
  • To move amendments to resolutions at such meetings to transfer his shares.
  • The supreme court in the case of LIC v. Escorts Ltd., the rights of the shareholders was recognised in the court to elect directors, to participate in the management, to enjoy the profit, to hare on winding up etc.

Prevention of Oppression and Mismanagement

Prevention of oppression

Section 397(1) of the Companies Act provides that any member of a company who complains that the affairs of the company are being conducted in a manner prejudicial to the public interest or it is oppressive to any member or members may apply to the tribunal for order thus to protect his or her statutory rights.  

Section 397(2) of the Companies Act states that the tribunal may grant relief in Section 397 if it is of the opinion that-

  • If the company’s affairs are handled in a manner prejudicial to the public interest or in a manner oppressive to any member or members. 
  • To wind up the company that would be unfair to its member or members, but that otherwise, the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound. 

The tribunal with the view of all the matters that were complained to them, may then afterwards give their final decision as they may deem fit.

Who can Apply?

Section 397 of the Companies Act states the members of an organization shall have the right to use under Section 397 or 398 of the Companies Act. According to Section 399 wherever the company is with the share capital, the application should be signed by a minimum of a hundred members of the company or by a tenth of the total range of its members, whichever is a smaller amount, or by any member, or members holding a tenth of the issued share capital of the company.

Where the company is without share capital, the application needs to be signed by a fifth of the entire range of its members. A single member cannot gift a petition under Section 397 of the Companies Act. The personal representative of a deceased member whose name is once more on the register of members is entitled to petition under Section 397 and 398 of the Companies Act.

Under Section 399(4) of the Companies Act, the Central Government if the circumstances exist authorizes any member or members of the corporate to apply to the court and also the demand cited above, may be waived. The consent of the requisite number of members is needed at the time of filing the application and if a number of the members withdraw their consent, it will in no way build any impact within the application. The other members may very well continue with the proceedings.

Meaning of oppression

Oppression is the exercise of authority or power during a heavy, cruel, or unjust manner. It may also be outlined as associate act or instance of oppressing the state of being oppressed, and the feeling of being heavily burdened, mentally or physically, by troubles, adverse conditions, and anxiety.

The Supreme Court in Daleant Carrington Investment (P) Ltd. v. P.K. Prathapan, held that increase of the share capital of a company for the sole purpose of gaining control of the company, where the majority shareholder is reduced to a minority, would amount to oppression. The director holds a fiduciary position and will not issue shares on his own. In such cases, the oppressor wouldn’t be given a chance to buy put the oppressed.

Prevention of Mismanagement 

The present Companies Act 2013 provides the meaning of the term “mismanagement”. When the affairs of the company are conducted in a manner to be prejudicial to the interests of the company or its members against the public interest, it amounts to mismanagement.

Power of Central Government to appoint directors 

The power to appoint a director of a company when his position is vacant falls under Section 167(3) of the company Act, where the promoters of the company, or their absence, the government at the centre shall hold the power of the appointment of the required number of directors to hold the office until the directors are appointed by the company in a general meeting. 

Although the standard operating procedure does not mention anything about where the central government shall call for such a general meeting to get the required number of directors appointed, it states that the shareholders can appoint the minimum number of directors.

Power to prevent change in board 

Here, we are referring to Section 409 company law – Power of Company Law Board to avoid change in the Board of directors prone to influence company preferentially or prejudicially: 

  1. Where a complaint is made to the Company Law Board by the overseeing director or some other director or the administrator, of a company so that because of a change which has occurred or is probably going to happen in the ownership of shares held in the company, an adjustment in the Board of directors is probably going to happen which (whenever permitted) would influence preferentially the issues of the company, the Company Law Board may, whenever fulfilled, after such request as it might deem fit to make that, it is simply and legitimate so to do, by request, direct that no resolution passed or that might be passed or no move made or that might be produced to results an adjustment in the Board of directors after the date of the grievance will have impact except if affirmed by the Company Law Board; and any such request will have impact despite anything unexpectedly contained in some other arrangement of this Act or in the notice or articles of the company, or in any concurrence with, or any goals cruised all in all gathering by, or by the Board of directors of, the company. 
  2. The Company Law Board will have control when any such protest is gotten by it, to make a between time request with the impact set out in subsection (1), preceding making or finishing the request previously mentioned. 
  3. Nothing contained in sub-section (1) and (2) will apply to a privately owned business, except if it is an auxiliary of an open company.

Investigations

The Companies Act 1956 provides for investigation of companies under Sections 235 – 250A of this act. The central government may appoint investigators to focus on issues regarding public interest or on the basis of a special resolution, or on the request of courts/tribunals or from members of the company having a specific amount of shares, as specified.

Power of Investigation 

On members’ application

When an investigation has been ordered with the request of an applicant, the central government will recover the expenses of the investigation from the applicant itself.

On the report given by Registrar 

The registrar may also have the power to call for documents, records as required under the law. If from some random scrutiny, sufficient grounds arise warranting investigation of the company, the same may be considered by the central government.

Power of Inspectors

The Central government may select any official of government, any private expert or gathering/firm of experts as an inspector for examination. It ought to anyway be guaranteed that there is no irreconcilable situation. The Inspector/Investigator or his accomplices ought not have any material association with the corporate entity or its holding or auxiliary elements.

The present arrangements identifying with forces of the inspector, duties of directors, officials or different people throughout the investigation, discipline for non-creation of records and furnishing of bogus data and other related issues might be held. The Act may accommodate appropriate punishment for wrecking or ravaging company’s records by its director or officials. The arrangements of examination ought to likewise be stretched out to remote organizations which are doing business in India.

Investigation of ownership of the company 

The law should lay down the liability for compliance for management/owners controlling the interests of the companies, combined with a system of oversight through random scrutiny of the filing of documents by the companies.

Investigation of ownership of shares

The central government may also hire investigators and may investigate the company having a requisite number of shares as may be specified.

Restrictions upon transfer of shares and debentures 

Section 250, the imposition of restrictions upon shares and debentures and prohibition of transfer of shares or debentures in certain cases.

  1. Wherever it seems to the company Law Board, whether or not on a reference made to it by the Central Government in reference to any investigation under Section 247 or on a complaint filed by any person in this behalf, that there’s a sensible reason to seek out the relevant facts regarding any shares (whether issued or to be issued) and therefore the Company Law Board is of the opinion that such facts can’t be identified unless the restrictions laid out in sub-section (2) are imposed, the company Law Board could, by order, direct that the shares shall be subject to the restrictions obligatory by subsection (2) for such period not exceeding 3 years as could also be laid out in the order.
  2. So long as any shares are directed to be subject to the restrictions imposed by this sub-section –
  • Any transfer of these shares shall be void;
  • Wherever those shares are to be issued, they shall not be issued; and any issue thereof or any transfer of the right to be issued thereupon, shall be void;
  • No right shall be exercisable in respect of these shares;
  • No additional shares shall be issued in right of these shares or in pursuance of any supply created to the holder therefrom, and any issue of such shares or any transfer of the right to be issued thereupon shall be void; and
  • Except during a liquidation, no payment shall be made from any sums due from the company on those shares, whether or not in respect of dividend, capital or otherwise.

Wherever a transfer of shares in a company has taken place and as a result therefrom a change within the composition of the Board of administrators of the company is probably going to take place and therefore the Company Law Board, is of the opinion that any such amendment would be prejudicial to the general public interest, it may, by order, direct that –

  • the voting rights in respect of these shares shall not be exercisable for such period not exceeding 3 years as could also be laid out in the order;
  • no resolution passed or action taken to impact an amendment within the composition of the Board of Directors before the date of the order shall have an impact unless confirmed by the Company Law Board.
  1. Wherever the corporate Law Board has reasonable grounds to believe that a transfer of shares in a company is probably going to require place whereby an amendment within the composition of the Board of directors of the corporate is probably going to require place and therefore the Company Law Board is of the opinion that any such change would be harmful to the general public interest, the company Law Board could, by order, direct that any transfer of shares within the company throughout such amount not exceeding 3 years as could also be laid out in the order, shall be void.
  2. The company Law Board could, by order at any time, vary or repeal any order created by it under sub-section (1) or sub-section (3) or sub-section (4).
  3. Any order created by the Company Law Board under sub-section (5) shall be served on the company among fourteen days of the creation of the order.
  4. Someone who:
    • Exercises or purports to exercise any right to get rid of any shares or of any right to be issued with any such shares when to his knowledge, he’s not entitled to try and do therefore by reason of any of the aforementioned restrictions applicable to the case under sub-section (2).
    • Votes in respect of any shares whether or not as holder or proxy, or appoints a proxy to vote in respect thereof, once to his knowledge he’s not entitled to try and do this, by reason of any of the aforementioned restrictions applicable to the case under sub-section (2) or by reason of any order created under sub-section (3).
    • Transfers any shares in dispute of any order created under sub-section (4).
    • Being the holder of any shares in respect of that an order in sub-section (2) or sub-section (3) has been created, fails to provide notice of the very fact of their being subject to any such order to someone whom he doesn’t know to be aware of that fact however whom he is aware of to be otherwise entitled to take respect of these shares, whether or not as holder or as a proxy, shall be punishable with imprisonment for a term which can reach six months, or with fine which can reach fifty thousand rupees, or with both.

Wherever shares in any company are issued in dispute of such of the restrictions as could also be applicable to the case in sub-section (2), the company, and each officer of the corporate who is in default, shall be punishable with fine which can reach fifty thousand rupees. A prosecution shall not be instituted under this section except by, or with the consent of the Central Government. This section shall apply in regard to debentures because it applies in reference to shares.

Administrative and Quasi-judicial Controls

Administrative and quasi-judicial controls imply that the company may have such controls over the member’s shareholdings.

National Company Law Tribunal and Appellate Tribunal

National company law tribunal is a quasi-judicial body that relates to issues regarding Indian companies.

Advisory Committee 

An advisory committee is also set up by the government of India, giving its advice regarding the problems faced based on company law.

Power of Securities and Exchange Board of India

Securities and Exchange Board of India (SEBI) is a statutory administrative body entrusted with the responsibility to direct the Indian capital markets. It screens and directs the protections to advertise and ensures the premiums of the financial specialists by authorizing certain standards and guidelines.

Conclusion 

Hence, we can say that Company Law is one of the most important laws in the country as it helps in protecting the interest of people, especially minority shareholders. Now, after the amendment of the company act, we can see that minorities can no longer be exploited against and are fully protected under this Act. 

References


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Payments & Deductions of Wages under Payment of Wages Act, 1936

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This article is written by Pranjal Rathore studying in Maharashtra National Law University, Aurangabad pursuing B.A.LL.B.(Hons.). The author has explained and covered some major intricacies of Payment of Wages Act, 1936.

 

Introduction 

With the development of ventures in India, issues identifying with payment of wages to people employed in the industry took a bad turn. The mechanical units were revolt making, payment of wages to their workers at ordinary interims and wages were not uniform. The mechanical workers had to raise their heads against their misuse. In 1926, the Government of India kept in touch with nearby governments to find out the position with respect to the delays which happened in the payment of wages to the people employed in Industry. 

The material so gathered was put before the Royal Commission on Labor which was designated in 1929. On the report of the Commission, the Government of India rethought the subject and in February 1933 the Payment of Wages Bill, 1933, was presented in the Legislative Assembly and coursed for the purpose of extracting opinions.

In 1935 the Payment of Wages Bill, in light of indistinguishable standards from the prior Bill of 1933 yet altogether overhauled(restored) was presented in the Legislative Assembly on 15th February 1935. The Bill was referred to the Select Committee. The Select Committee displayed its report on 2nd September 1935. Consolidating the proposals of the Select Board of trustees, the Payment of Wages Bill, 1935 was again presented in the Legislative Assembly.

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Objects and Application of this Act

This Act manages the payment of wages to specific classes of people employed in industry and its significance can’t be under-evaluated. The Act ensures payment of wages on schedule and with no reasonings aside from those approved under the Act. The Act accommodates the obligation regarding payment of wages, fixation of the pay period, time and method of payment of wages, an obligation to look for the endorsement or approval of the Government for the acts and consent for which fines might be imposed by him and furthermore fixing of the fines. 

The Act doesn’t have any significant bearing to people whose payment or wage is Rs. 24,000/ – or more every month. The Act additionally gives such that a worker can’t contract out of any privilege or right is given or conferred to him under the Act. 

According to Section 1(4) of this act, It applies primarily to the installment of wages to people utilized or employed in any production line or to people employed (generally than in a factory) upon any railway by a rail route organization or either legitimately or through a sub-temporary worker which can also be a subcontractor, by which an individual is satisfying an agreement with a rail route organization and people utilized in a modern or other foundation which are indicated in sub-clause (a) to (g) of clause (ii) of section 2. 

Payment of Wages and Deductions from Wages

Responsibility for payment of wages

Responsibilities for payment of ages are mentioned in Section 3 of the Payment of Wages Act, 1936. Every employer is liable for the payment of all wages to every one of the workers that he utilizes or employes for his work. In some other cases, if the employer names an individual, or on the off chance that there is an individual capable of the business or is designated, at that point, such an individual is liable for the payment of wages. 

Notwithstanding anything contained in sub-section (1), the business is capable to make the payment of all wages which the Act expects him to make. Actually, if the temporary worker or the individual that the employer assigns to make the payment neglects to do as such, at that point the duty lies with the employer. Each employer will be answerable for the payment to people utilized by him of all wages required to be paid. 

  • On account of the industrial facility, the administrator of that manufacturing plant will be obligated to pay the wages to workers utilized by him. 
  • On account of mechanical or different foundations, the duty of supervision will be subject to the payment of wages to workers utilized or employed by him. 
  • On account of railroads, an individual named by the rail line organization for determined territory will be at risk for the payment of wages to the workers. 
  • On account of a contractual worker, an individual assigned by such a temporary worker who is straightforwardly under his charge will be at risk for the payment of the wage to the representatives. On the off chance that he neglects to pay wages to representatives, individuals who employed the workers will be at risk for the payment of wages.

Fixation of wage period

Each individual who is liable for the payment of wages under section 3 will fix periods in regard to which such wages will be payable. No wage period will surpass one month. That implies pay can be paid on day by day, week by week, fortnightly (for at regular intervals) and month to month as it were. Payment of wage period for payment of wages to representatives by manager ought not to surpass 30 days, for example, one month.

In any case, compensation can’t be paid quarterly, half-yearly or once in a year.

Time of payment of wages

Each individual employed upon or in: 

Any railway, production line or modern or different foundations upon or in which the complete number of employed people is short of what one thousand, must get his wages before the expiry of the seventh day from the most recent day of the pay time frame for which the wages are payable. Some other railway, industrial or mechanical or different foundations, must get his wage before the expiry of the tenth day from the most recent day of the compensation time frame for which the wages are payable. 

  •  If the employer ends the work of an individual, at that point he should guarantee that the fired employee gets his wages before the expiry of the second working day from the date of the end of employment. 
  • The Appropriate Government can exclude to such a degree and furthermore subject to such conditions in the request the individual liable for the payment of wages to utilize or employ people. 
  • The business or the individual answerable for paying wages must guarantee that the wages are paid on a working day.

Wages to be paid in current coins or currency notes

The employer or the individual answerable for making the payment of wages must pay in money coins or cash notes or in both. Further, he can’t pay in kind. Additionally, the employer can pay the wages by means of a cheque or a direct deposit to the bank of the representative subsequent after taking a composed approval from him. Provided that the appropriate Government may, by notification in the Official Gazette, specify the industrial or other establishments, the employer of which shall pay to every worker employed in such industrial or other establishments, the wages only by giving a cheque or by crediting the payment in his bank account.

Deduction which may be made from wages 

At the time of payment of the salary to personnel, the business enterprises should make deductions in step with this act simplest. The employer should no longer make deductions as he likes. Every quantity paid by the employee to his enterprise is referred to as deductions.

The following are not referred to as the deduction:-

  • Stoppage of the increment of worker
  • Stoppage of the promotion of the worker
  • Stoppage of the inducement lack of overall performance by using employee
  • The demotion of the worker
  • Suspension of the worker

The above-stated movements taken via the company have to have top and sufficient reason.

Deductions which are acceptable according to this act

Fines

Fine ought to be forced by the employer on worker with the endorsement of the state government or recommended authority. The employer ought to observe the guidelines referenced underneath for and before forcing of fine on the worker.

  • Notice leading body of fines on workers ought to be shown in the work premises and it ought to contain exercises that ought not to be made by the representative.
  • Fine ought not to be forced on the worker until he gives the clarification and causes for the demonstration or omission he made.
  • The aggregate sum of fine ought not to surpass 3% of his pay. 
  • Fine ought not to be forced on any representative who is younger than 15 years. 
  • Fine ought to be forced for one time just on the pay of the employee for the demonstration or exclusion he made. 
  • Fines ought not to be recovered in the method for portions or payments from the representative. 
  • Fine ought to be recuperated or recovered within 60 days from the date on which fine was forced. 
  • Fine ought to be forced on the day act of exclusion made by the worker or the employee. 
  • All fines gathered from the worker ought to be credited to basic reserve and use to help the employees.
  • All fines and all acknowledge thereof will be recorded in a register to be kept by the individual answerable for the payment of wages under section 3 in such structure as might be prescribed, and all such acknowledge will be applied uniquely to such purposes useful to the people employed in the factory or foundation as are affirmed by the recommended authority.
  • No fines forced on any employee or worker should be recuperated from him after the expiry of 90days from the day on which the fines were forced.

Deductions for absence from duty

Deductions can be made by the employer for the nonattendance from duty by the employee for one day or for any period. The sum deducted for nonappearance from the duty ought not to surpass a total which bears a similar relationship to the pay payable in regard to the pay time frame as this time of nonattendance does to such wage-period. (For example:-: if the compensation of a worker is 6000/ – every month and he was missing for obligation for one month. Finding from the compensation for nonattendance of obligation ought not to surpass 6000/-) 

Employees present for the work spot and will not work without an appropriate explanation will be regarded to be missing from duty. On the off chance that at least 10 people together missing for the duty with no notification and without sensible reason, the employer can make 8 days of wages as a deduction from their pay.

Deductions for damages or loss 

The employer should offer a chance to the employee to clarify the explanation and cause for the harm occurred and deductions made by an employer from the worker compensation ought not to surpass the worth or measure of harm made by the employee.[Sec 10 (2)] All such findings and all acknowledge thereof will be recorded in a register to be kept by the individual answerable for the payment of wages under area 3 in such structure as might be endorsed.

Deductions for services rendered 

House-convenience courtesy or administration gave by the employer ought to be acknowledged or accepted by the worker, than just the employer can make a deduction from the wage or salary of the employee. Deduction ought not to surpass a sum equal to the estimation of the house-settlement pleasantry or administration provided.

Deductions for recovery of advances

If there should be an occurrence of the advance paid to the workers by the employer before business started, such advance ought to be recuperated or recovered by the employer from the principal payment of the wages/pay to the employee. In any case, the employer ought not to recuperate or recover the advances given for the voyaging cost for the worker.

Payment
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Deductions for recovery of loans

Conclusions for the recuperation of advances conceded for house-building or different purposes will be dependent upon any guidelines made by the State Government directing the degree to which such advances might be allowed and the pace of intrigue payable subsequently.

Deductions for payment to co-operative societies and insurance schemes

Reasonings for payments to co-operative societies or deductions for payments to insurance schemes kept up by the Indian Post Office or with worker acknowledgement deductions made for payment of any premium on his extra security strategy to the Life Insurance Corporation will be dependent upon such conditions as the State Government may force. 

Maintenance of registers and records [Section 13A] 

Each employer ought to keep up such registers and records giving such points of interest of people employed by him, the work performed by them, the wages paid to them, the deductions made from their wages, the receipts given by them and such different specifics and in such structure as might be recommended. 

Each register and record required to be kept up and safeguarded for a time of three years after the date of the last entry made in that. It implies for each exchange made inside employer and worker ought to have 3 years of record.

Authorities Under the Act

The state government may appoint an authority for the purpose of this act. Every authority shall be deemed to be a public servant within the meaning of the Indian Penal Code, 1860 [Section 14(5)]. 

Inspector

The state government may designate a monitor for the purpose of this act. Each Inspector will be regarded to be a community worker or public servant inside the importance of the Indian Penal Code, 1860 [Section 14(5)]. 

(a)Rights of Inspector 

The inspector of this act is having powers referenced below: 

  • Inspector can make inquiries and assess whether the employers are appropriately complying with the guidelines referenced under this act. 
  • Inspector with such help, assuming any, as he thinks fit, enter, investigate and search any premises of any railway, production line or mechanical or other foundation at any sensible time to do the objects of this Act. 
  • Inspector can manage the payment of wages to people employed upon any railway or in any factory or mechanical or other foundation. 
  • Seize or make duplicates of such registers or archives or bits thereof as he may consider significant in regard to an offence under this Act.

(b)Facilities to be afforded by Inspector

Each employer will bear the cost of an Inspector every sensible office for making any entry, review, supervision, assessment or request under this Act. 

Authority to hear the claim

To hear and choose all cases emerging out of findings from the wages, or deferral in payment of the wages, of people utilized or paid, including all issues, accidental to such claims, there will be an official referenced beneath delegated by the fitting government. 

  •  any Commissioner for Workmen’s Compensation; or 
  •  any official of the Central Government practising capacities as – 
  •  Regional Labor Commissioner; or 
  • Assistant Labor Commissioner with at any rate two years’ understanding; or 
  • any official of the State Government not underneath the position of Assistant Labor Commissioner within any event two years’ understanding; or 
  • a directing official of any Labor Court or Industrial Tribunal, comprised under the Industrial Disputes Act, 1947 (14 of 1947) or under any comparing law identifying with the examination and settlement of mechanical debates in power in the State; or 
  •  some other official with experience as a Judge of a Civil Court or a Judicial Magistrate, as the power to hear and choose for any predefined territory all cases emerging out of conclusions from the wages, or deferral in installment of the wages, of people utilized or paid around there, including all issues accidental to such cases. 
  • Suitable Government thinks about it essential so to do, it might select more than one expert for any predefined zone and may, by general or exceptional request, accommodate the conveyance or portion of work to be performed by them under this Act. 

Single application in respect of claims from the unpaid group 

The above-mentioned title is mentioned in the section of this act. There is no need for numerous applications if there are numerous workers whose wages have not been paid. Such all workers can make one application to the expert for payment of wages as indicated by this act. 

Appeal

The provision of appeal is mentioned in section 17 of this act. In the accompanying circumstances the parties who at any point disappointed can appeal to the district court: 

  • On the off chance that the application was rejected by the above authorities 
  • Employer forced with remuneration surpassing or exceeding 300/- rupees by the authorities. 
  • On the off chance that the sum surpassing 25/ – rupees retained by the employer to the single unpaid worker. 50/- if there should be an occurrence of numerous unpaid workers.

Power of authorities appointed under Section 15

Taking proof and of implementing the attendance of witnesses and compelling the creation of reports.

Conditional attachment of property of the employer or another person responsible for payment of wages

Where whenever after an application has been made under sub-section (2) of section 15 the authority or where whenever after an intrigue or appeal has been filed under section 17 by an employed individual or any legitimate professional or any authority of an enlisted worker’s organization approved recorded as a hard copy to follow up for his sake or any Inspector under this Act or some other individual allowed by the power to make an application under sub-section (2) of Section 15.

The Court alluded to in that segment is fulfilled that the business or another individual answerable for the payment of wages under section 3 is probably going to sidestep payment of any sum that might be coordinated to be paid under section 15 or section 17 the authority or the court as the case might be with the exception of in situations where the authority or court is of conclusion that the parts of the bargains be crushed by the postponement.

In the wake of giving the employer or other individual a chance of being heard may coordinate the connection of such an extensive amount the property of the employer or another individual liable for the payment of wages as is in the assessment of the authority or court adequate to fulfil the sum which might be payable under the heading. The arrangements of the Code of Civil Procedure 1908 (5 of 1908) identifying with connection before judgment under that Code will so far as might be applied to any request for connection under sub-section (1).

Miscellaneous 

Penalty for offences under the Act

(a)Purposes behind punishment:-

  • Delay in payment of wages 
  • Unreasonable deductions 
  • Overabundance reasoning for nonappearance of obligation 
  • Overabundance reasoning for harm or misfortune to business 
  • Overabundance reasoning for house-settlement courtesy or administration 

(b)Punishable with fine which will not be under 1000/- rupees yet which may stretch out to 7500/ – rupees 

  • On the off chance that Wage period surpass one month 
  •  Failure  in payment of wages on a working day 
  • Wages not paid in type of current coin or money notes or in both 
  • Inability to keep up the record for gathered fines from employees 
  • Ill-advised utilization of fine gathered from employees 
  • Failure of the worker to show notice containing such edited compositions of this Act and of the rules made

(c)Punishable with fine which may stretch 3000/ – rupees 

  • Whoever blocks an Inspector in the release of his obligations under this Act 
  • Whoever adamantly will not deliver on the interest of an Inspector any register or other records. 
  • Whoever won’t or wilfully fails to bear the cost of an Inspector any sensible office for making any entry, review, assessment, supervision, or request approved by or under this Act 

(d)Punishable with fine which will not be under 1000/ – rupees however which may stretch out to 7500/ – rupees 

  • Whoever repeats a similar offence submitted previously. 
  • Detainment for a term which will not be short of what one month yet which may reach out to a half year and fine which will not be under 3750/- rupees yet which may broaden 20500/ – rupees.

Procedure in the trial of offences

  • No Court will take discernment of an objection against any individual for an offence under subsection (1) of section 20, except if an application in regard of the realities establishing the offence has been displayed under section 15 and has been allowed entirely or to a limited extent and the authority engaged under the last section of the investigative Court conceding such application has authorized the creation of the grievance. 
  •  Before authorizing the creation of a protest against any individual for an offence under subsection(1) of section 20, the power enabled under section 15 or the Appellate Court, all things considered, will give such individual a chance of demonstrating cause against the allowing of such approval, and the assent will not be conceded if such individual fulfils the position or Court that his default was expected to— 
  •  a bona fide error or bona fide dispute with regards to the sum payable to the employed individual, or  the event of a crisis, or the presence of remarkable conditions, with the end goal that the individual answerable for the payment of wages was not able, however practising sensible persistence, to make brief payment, or   the failure of the employed individual to apply for or acknowledge payment. 
  •  No Court lobby take awareness of a repudiation of section 4 or section 6 or of negation of any standard made under section 26 aside from on an objection made by or with the assent of an Inspector under this Act. 
  • In forcing any fine for an offence under subsection (1) of section 20 the Court will think about the measure of any payments previously granted against the charged in any procedures taken under section 15. 

Bar of suits 

 No Court will engage any suit for the recovery of wages or of any deduction from compensation to the extent that the entirety so guaranteed-

  • structures the subject of an application under section 15 which has been displayed by the offended party and which is pending before the power selected under that section or of intrigue under section 17; or 
  • has shaped the subject of a course under section 15 for the offended party; or 
  • has been decreed, in any proceeding under section 15, not to be owed to the offended party; or 
  • could have been recovered by an application under section 15. 

Contracting out 

Any agreement or understanding regardless of whether made previously or after the beginning of this Act, whereby an employed individual gives up any privilege given by this Act will be invalid and void to the extent that it implies to deny him of such right. 

Display by notice of abstract of the Act 

The individual liable for the payment of wages to people employed in a plant will cause to be shown in such processing plant a notification containing such abstracts of this Act and of the standards made thereunder in English and in the language of most of the people employed in the industrial facility, as might be recommended. 

Delegation of powers

The suitable Government may, by warning in the Official Gazette, direct that any power exercisable by it tinder this Act will, in connection to such issues and subject to such conditions, assuming any, as might be indicated toward the path, be additionally exercisable –

(a) where the suitable Government is the Central Government, by such official or authority subordinate to the Central Government or by the State Government or by such official or authority subordinate to the State Government, as might be indicated in the notice; 

(b) where the suitable Government is a State Government, by such official or authority subordinate to the State Government as might be determined in the notification.

Payment of undisbursed wages in cases of death of the employed person

-Paid by the employer to the individual assigned by the worker. 

-Wage stored by the employer with the recommended authority, the business will be released of his liability to pay those wages. 

-Where no such designation has been made or where for any reason such sums can’t be paid to the individual so selected, be saved with the endorsed position who will manage the sums so kept in such a way as might be recommended.

Rule-making power

Specifically and without bias to the simplification of the previous power, rules made under sub-section (2) may-

(a) require the upkeep of such records, registers, returns and notification as are essential for the authorization of the Act and recommend the structure thereof; 

(b) require the display in an obvious spot on-premises where work is carried on of notification determining paces of wages payable to people utilized on such premises; 

(c) accommodate the regular inspection of weights, measures and weighing machines utilized by employers in checking the wages of people employed by them; 

(d) recommend the way of pulling out of the days on which wages will be paid; 

(e) recommend the position capable to favour under sub-section (1) of section 8  and deductions in regard to which fines might be forced; 

(f) recommend the methodology for the inconvenience of fines under section 8 and for the creation of the deductions to in section 10; 

(g) recommend the conditions subject to which deductions might be made under the proviso to sub-section(2) of section 9; 

(h) recommend the power equipped to support the reasons on which the returns of fines will be consumed; 

(i) prescribe the degree to which advances might be made and the portions by which they might be recovered concerning clause (b) of section 12; 

(j) direct the scale of costs which might be permitted in procedures under this Act; 

(k) prescribe the amount of court-charges payable in regard to any procedures under this Act; and 

(l) prescribe the modified works to be contained in the notification required by section 25. 

(4) In making any rule under this section, the State Government may give that a contradiction of the rule will be punishable with fine which may reach out to 200 rupees. 

(5) All guidelines made under this section will be dependent upon the state of previous publication, and the date to be determined under clause (3) of section 23 of the General Clauses Act, 1897, will not be under a quarter of a year from the date on which the draft of the proposed principles was distributed.

Conclusion 

The Code endeavours to bind together the meaning of ‘wages’, which is a stage towards giving better clarity. Nonetheless, the arrangement of independent definitions for ’employee’ and ‘worker’ and their use inside the Code leaves space for confusion. Further, the Code looks to change the ‘Inspector Raj’ perception in connection to the Government’s guideline of work by presenting monitors cum-facilitators rather than simply examiners. 

The Code has made a crucial change regarding offences and punishments. Significant justification and proportionality, with a purpose to help instead of hampering the lead of business, is clear from the reformatory arrangements. 

The Code energizes innovation selection in issues, for example, method of payment of wages, assessment strategies, which are planned for accomplishing its digitalisation objectives in administration. The Code is a good-intentioned bit of enactment which means to adjust the interests of the employer and the worker. In spite of the fact that the Code contains significant sections of the revoked enactments, it makes a not too bad attempt to replace theirs out of date provisions. 

The provisions of the Code move trust in the business network and further clearness can be acknowledged once the subordinate enactments and rules under the Code are set up. It would likewise be interesting to measure how different codes identifying with government disability, mechanical wellbeing and welfare, and modern relations will associate with the Code of Wages once they are passed.


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Computation of Profits & Bonus under Payment of Bonus Act, 1965

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This article is written by Nishtha Pandey (batch 2023), student of Dr Ram Manohar Lohiya National Law University, Lucknow. In this article various sections of The Payment of Bonus Act, 1965 are explained.

 

Introduction

Payment of Bonus Act, 1965 is a statutory liability on the part of the employers of the establishment to pay to the labour, in accordance with the capital available for the peaceful functioning of the establishment. The purpose of the Act was to enable the employees to have a say in the profits of the company and to earn a little more than the minimum wage according to their performance in the organisation.

This Act is applicable throughout India on the factory workers and the persons employed in railways or is in contract with railways. It also includes skilled or unskilled workers, whether under the express or implied terms of the contract. 

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Establishment to include department, undertakings, and branches

The term “establishment” in this Act is of great importance. It could be divided into Public and Private establishments. However, if these establishments function as different departments or branches then those departments and branches would be treated as a single establishment, but in case, different accounts are prepared for these branches and departments, then they would be treated as different departments or branches for the sake of computation of profit for that particular accounting year.

Computation of Gross profit

Gross profit is calculated for an accounting year

(i) Banking Company– in accordance with the first schedule.

(ii) In other cases– according to the manner prescribed in the second schedule.

Computation of available surplus

The available surplus is calculated taking into account the gross profit after making adjustments of depreciation, development allowance, direct taxes of the current accounting year and all the sums specified under Schedule 3 of the Act. This gross profit has to be added to the direct taxes in respect of the gross profit for the preceding year, deducting from it the direct taxes which has been adjusted to the gross profits that are reduced to the amount of bonus, for the immediately preceding year.

Sum deductible from gross profits

The following sums need to be deducted from the gross profit:

  • Any amount by way of development rebate, investment allowance or the development allowance, which is deductible from the income according to the income tax.
  • Any direct tax which the employer has to pay with respect to his income, profits, and gains during that year.
  • Any other sums which are specified by the employer.
  • Any amount of depreciation according to the Income Tax Act, 1961 or Agricultural Income Tax law.

Calculation of direct tax payable by the employer

The direct taxes are calculated as per the present year’s income of the employer. In case the employer is an individual or part of the Hindu Undivided Family, then the income which will be considered for the taxes will be treated as the only income of the employer. 

Moreover, if the employer is a religious institute or charitable trust, not barred by Section 32 of the Act and if its income is partially or fully non-taxable then the income which is non-taxable would be treated as the income from an institution in which the public is substantially interested.

However the income would not include any loss of the previous year which is carried forward to this year under any existing law or the depreciation that need to be accounted to the depreciation allowance or any exemption under Section 84 of the Income Tax Act or any deduction under Section 101(1) of the Income Tax Act, 1961.

Eligibility for bonus

Under the present enactment, every employee is entitled to get a bonus only if he has worked for a minimum period of 30 days. 

The minimum bonus which the employee would get in an accounting year would be 8.33% of the salary or wages of the employee or ₹ 100 whichever is more. In cases where the age of the employee is less than 15 years at the beginning of the accounting year, this provision would have the same effect except in the place of ₹ 100 it would be ₹ 60.

The maximum bonus which an employee could get in an accounting year is equal to 20% of the salary or wages of the employee in the given accounting year. The employer is bound to pay the maximum bonus when the allocable bonus has exceeded the minimum bonus of that accounting year.

The employee would be disqualified for a bonus if he has been terminated from employment on account of fraud or theft, misappropriation or sabotage of the establishment’s property or has displayed violent or unruly behaviour in the premises of the establishment.

Calculation of bonus with respect to certain employees

Where the salary of the employee exceed ₹ 7000 per mensem or minimum wages applicable for such employment as fixed by the government, whichever is higher, such employee would be entitled for bonus under Section 10 or Section 11 of the Act as if the salary or wages is ₹ 7000 per mensem or minimum wages applicable for such employment as fixed by the government whichever is higher.

Proportionate reduction in bonus

If an employee has not worked for any day in the accounting year, his minimum bonus which is ₹ 100 (or ₹60) or his salary or wages subject to 8.33%, whichever is higher would be reduced proportionately.

Computation of the number of working days

The computation of the working day is an important criterion for the calculation of the bonus. The employee would be considered working even on the days when he is on leave but is paid salary or wages or he is on a maternity leave with salary or wages, or he met with an accident while in undertaking the employment or he has been laid off under an agreement or as permitted under the Industrial Employment Act, 1946 or Industrial Disputes Act, 1947 or any legal provision which is applicable on the establishment at the given time.

Set on and set off of allocable surplus

The allocable income which is left even after paying the maximum bonus at the rate of 20% on the salary or wages, would be carried forward to the next year to compensate in case there is any shortage in that year. This is called set on.

However, the set off is the complete opposite of set on in which the profit falls short to pay even the minimum bonus at the rate of 8.33%. Then, in this case, the set on of the previous year would be used to pay the bonuses of the given accounting year.

In calculating the bonus, the amount of set on and set off from the previous accounting year shall be first taken into consideration. This allocable income would be distributed to the employees in proportion to their salary or wages in a given accounting year.

Special provisions with respect to certain establishments

In the first five accounting years, after the establishment has started selling and manufacturing goods or rendering services, it has to pay bonuses only in case of profits. 

However, in the sixth, seventh and eighth accounting year, after the establishment has started selling and manufacturing goods or rendering services, the bonus shall be paid, taking into account the set on or set off. 

In the case of the sixth year, the allocable surplus of the fifth and the sixth year would be taking into account and in the case of the seventh year, the allocable surplus of the sixth and the seventh year is taken into consideration. 

Adjustments of customary or interim bonus against bonus payable under the Act

If the employer has paid any puja bonus or any other customary bonus or has paid the bonus before the date on which the bonus becomes payable, then, in that case, the employer has the right to deduct the amount of bonus from the actual bonus payable, and the employee shall get the remaining amount.

Deduction of certain amounts from bonus payable under the Act

If the employee is found to be guilty of misconduct due to which the establishment has to bear losses then such an establishment has the right to deduct the amount of loss from the bonus that has to be paid to the employee in that accounting year and shall be paid the balance if any.

The time limit for payment of bonus

Under the provisions of this Act, the employees must be awarded the bonus within 8 months from the closure of the accounting year. However, in cases of disputes (under the purview of the Industrial Dispute Act), the bonus has to be paid within 1 month from the time when the settlement becomes effective. 

Application of Act to establishments in the public sector

If any public establishment manufactures or sells any product or renders any services and the income from them is less than 20% of the gross income of such public establishment then the provisions of this Act shall apply to it in the same manner as if it is a private establishment. However, except for the above case, the provisions of this Act would not be applicable to the employees working in the public establishment.

Recovery of bonus due to an employer

In case of any amount of the bonus which is due from an employer, the employee can or any of his assignees or in case of his death his heirs, have the right to make an application to the government and if it is satisfied with the veracity of the application then it shall issue a certificate to the collector who shall proceed to recover the amount in the like manner as if it were an arrear of land revenue. 

However, such an application must be within one year after the payment has become due, if the application is made after the expiry one year and the government is satisfied with the reasons for doing so, then that application could be entertained.

Reference of disputes under the Act

In case of any dispute between the employee and the employer, that shall be treated as an industrial dispute within the meaning of Industrial Dispute Act or any other Act which is dedicated to the investigation and settlement of the disputes of like nature. Such law shall be applied as expressed.

Presumption about the accuracy of balance sheet and profit and loss account of corporations and companies

The disputes falling under the purview of the Industrial Dispute Act or any other law dedicated to the investigation and settlement of the disputes of like nature would be referred to an arbitrator or a tribunal in accordance with the above-mentioned laws. If the balance sheet or the profit and loss account of the corporations or the companies are audited by the Auditor General of India or any other auditor who is empowered to do so under the Companies Act, then there is no need to file an affidavit to prove its accuracy.

However, if the tribunal or the arbitrator is certain about the inaccuracy of the balance sheet or the profit and loss account then it can take any steps that it deems necessary to find out the accuracy of the balance sheet and the profit and loss accounts.

The trade unions or the employees, being a party to the dispute, can file an application to the authority for any clarification in the balance sheet or the profit and loss statement. The authority, after satisfying itself about the need for such clarifications, would further direct the company and corporation to tender the required clarification to the other party.

Audited accounts of banking companies not to be questioned

In case of the dispute (as per Section 22 of the Act), where one of the party is a banking company and it has rendered its account, to the authority which is duly audited, the trade union or the employee which is the other party has no authority to question the accuracy of the accounts. However, it can ask for information to verify the amount of bonus.

The trade union or the employee cannot ask for any information which the banking company is not obliged to give as per the banking regulations Act.

Audit of accounts of employers, not being corporations or companies

In case of a dispute between an employee and the other party not being a corporation or company and if it has tendered an account which is duly audited by an auditor empowered to do so under the Companies Act, 2013 then Section 23 of the Act would be applicable.

If however the accounts are not audited and the said authority thinks that it is necessary to have an audited account for making a decision, then it can direct the employer to get the accounts audited by the specified time.

If the employer fails to get the accounts audited then, in that case, the authority itself can get the accounts audited by the auditor and the authority is also entitled to levy punishments in accordance with Section 28  of this Act. The expenses incurred by the authority, in this case, shall be recoverable from the employer and if the employer does not pay the expenses then it would be recovered as per Section 21 of the Act. 

Maintenance of registers, records, etc

Every employer is responsible to maintain records and register in the manner as it is prescribed in the provisions of this Act.

Inspectors

The government by way of notification in the official gazette may appoint a person to be an inspector under the provision of this Act. 

The inspector can enter any premises at a reasonable time and ask for an examination of the accounts. The employer is legally bound to furnish the information asked by the inspector.

Penalty

If any person contravenes a provision of this Act or fails to comply with any of the directions made under this Act, it would be punishable for imprisonment which shall extend up to 6 months or fine up to ₹ 1000 or both.

Offences by companies

If any offence is committed under the provisions of this Act and the offence is committed by the company, then everyone who is in charge of the company or responsible for the affairs of this company would be liable and could be proceeded against. However, if the offence has been committed while taking all due diligence or the offence so committed was beyond the knowledge of the person, then such person shall not be punishable under this Act. 

However, if the offence so committed was in the knowledge of the director, manager, secretary or officer of the company then such person shall be liable and can be punished accordingly.

Cognizance of offences

No court shall take cognisance of the offence committed under this Act except there is a complaint by or under the authority of the government or by an officer of the government not below the rank of the regional labour commissioner or labour commissioner in the central and the state government respectively. Moreover, the court under which such complaints would be filed shall not below the court of presidency magistrate or magistrate of the first class.

Protection of action taken under the Act

The government and the government officers are protected from any suit or any other legal proceedings against them for their actions done in good faith in pursuance of the provision of the given Act.

Special provisions with respect to payment of bonus linked with production or productivity

Under the given Act, the procedure for the computation of the bonus has been delineated, however, in certain circumstances, the payment of the bonus is linked with the productivity and production of the given employee. Such an arrangement will take place when there is any settlement or agreement between the employer and the employee in this regard.

Act not to apply to certain classes of employees

  • Life Insurance Corporation,
  • The Indian Red Cross Society or any other institution of a like nature,
  • Universities and other educational institutions,
  • Institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit,
  • Employees employed through contractors on building operations,
  • Employees employed by the Reserve Bank of India,
  • The Industrial Finance Corporation of India,
  • Financial Corporations,
  • the National Bank for Agriculture and Rural Development,
  • the Unit Trust of India,
  • the Industrial Development Bank of India,
  • Employees of inland water transport establishment passing through another country. 

Employees and employers not to be precluded from entering into agreements for grant of bonus under a different formula

It is provided that the employee and the employers can indulge in any agreement or settlement, for the purpose of bonus, with a different formula. If any law or rule which renders such agreement or settlement to be null and void, that law or rule would be inconsistent to that effect.

Effect of laws and agreement inconsistent with the Act

With regards to the Section 31A of the Act, the provisions of this Act shall apply even if there is an inconsistency with any other law in force at that time or with respect to any agreement or settlement.

Saving

The provisions of this Act would not be applicable to the Coal Mines, Provident Fund and Bonus Schemes Act, 1948.

Power of exemption

If the central government finds it necessary in the public interest to prevent the application of a certain provision of this Act in certain establishment or class of establishment then it may, through the notification in the official gazette, specify the time for which the application of those provisions would be ceased for that particular establishment or class of establishment

Power to make rules

The central government has the power to make rules with regard to the provisions of this Act. The government can make rules with respect to the accounting year, maintenance of records and registers, working of the inspectors under this actor any other matter which may be prescribed. The new rule shall be presented before each house of the parliament while it is in the session and if both the house have agreed that the rule shall be applicable or shall be applied will have the same effect accordingly. However, any modification or annulment made shall not be contrary to the rule previously made.

Application of certain laws not barred

Certain enactments like the Industrial Dispute Act, 1947 or any other statutory provision dedicated to the investigation and settlement of the dispute in the distribution of the be applicable in such cases. The applicability of the given legislation does not in any way bar the relevancy of other statutes.

Conclusion

The Payment of Bonus Act, 1965 seeks to legally regularise the practice of paying bonus by different establishment. It offers an objective way to calculate the bonus based on profit and productivity. It enables the employees to earn over and above their minimum wages or salary. This Act provides different procedures for different establishments like banking companies, public organisations and also for the establishments which are not a company or a corporation. Apart from the procedure, this Act also defines a robust redressal mechanism. 

References


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Golaknath, I.C v State of Punjab (1967) : Overview and Analysis

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This case summary is written by Gurkaran Babrah, a first year law student at Symbiosis Law School, Noida.

Introduction

Golaknath v State of Punjab is one of the landmark cases in the Indian legal history. A number of questions were raised in this case. But the most important issue was whether the parliament has the power to amend the fundamental rights enshrined under Part III of the Constitution of India or not. The petitioners contended that the parliament has no power to amend the fundamental rights whereas the respondents contended that the constitution-makers never wanted our constitution as rigid and Non-flexible one. The court held that the parliament cannot amend the fundamental rights. This ruling overturned in Kesavananda Bharati vs Union of India 1973. In this, the court held that the parliament can amend the constitution including fundamental rights but the parliament cannot change the basic structure of the constitution.

Identification of Parties (including `the name of the judges)

PETITIONER: I.C GOLAKNATH & ORS

RESPONDENT: STATE OF PUNJAB 

DATE OF JUDGEMENT: 27/02/1967

BENCH: RAO, K. SUBBA (CJ), WANCHOO K.N, HIDAYATULLAH. M, SHAH J.C, SIKRI S.M, BACHAWAT R.S, RAMASWAMI V, SHELAT, J.M, BHARGAVA, VASHISHTH, MITTER, G.K, VAIDYALINGAM C.A.

Summary of Facts

The family of Henry and William golaknath were in possession of over 500 acres of farmland in Jalandhar, Punjab. Under the Punjab security and Land Tenures Act, the government held that the brothers could keep only thirty acres each, a few acres would go to tenants and the rest was declared surplus. This was challenged by the family of golaknath in the courts. Further, this case was referred to the Supreme court in 1965. The family filed a petition under Article 32 challenging the 1953 Punjab Act on the grounds that it denied them their constitutional rights to acquire and hold property and practice any profession (Article 19 (f) and (g) and to equality before the protection of the law (Article 14). They sought to have the seventeenth amendment – which had placed the Punjab Act in ninth schedule – declared ultra vires (beyond the powers). Golaknath. I.C v State of Punjab is one of the landmark cases in the Indian history. With its ruling, in this case, the court developed jurisprudence around what is known as the doctrine of basic structure. The court in 1967 ruled that the Parliament can not curtail any of the fundamental rights enshrined under the constitution of India. 

Issues before the Court 

The issue which came before the court was whether the parliament has the absolute power and the power to amend the fundamental rights enshrined under the constitution or not?

Contention of the parties 

Petitioner’s arguments

  • The petitioner argued that the constitution of India was drafted by the constituent assembly and it is of permanent nature. No one can change or can try to bring change in the constitution of India.
  • They argued that the word “amendment” in question only implies a change in accordance with the basic structure but not altogether a new idea.
  • Further, the petitioner contended that the fundamental rights enshrined under part III of the constitution cannot be taken away by the parliament. They are the essential and integral part of the constitution without which constitution is like a body without a soul.
  • The petitioner also argued that Article 368 of our constitution only defines the procedure for amending the constitution. It does not give the power to the parliament to amend the constitution.
  • The last thing on which the petitioner argued before the court was that Article 13(3)(a) in its definition of “law” covers all types of law i.e. statutory and constitutional etc. And by virtue of Article 13(2), which says that the state cannot make any law which takes away the rights mentioned under Part 3, any constitutional amendment which takes away the Fundamental rights will be unconstitutional and invalid.

Respondent’s arguments 

  • The respondent contended before the court that constitutional amendment is a result of the exercise of its sovereign power. This exercise of sovereign power is different from the legislative power which parliament exercises to make the laws.
  • Our constitution makers never wanted our constitution to be rigid in its nature. They always wanted that our constitution to be flexible in its nature.
  • The object of the amendment is to change the laws of the country as it deems fit for the society. They argued that if there won’t be any provision for amendment then, it would make constitution a rigid and non-flexible one.
  • They further argued that there is no such thing of basic structure and non-basic structure.
  • All the provisions are equal and of equal importance. There is no hierarchy in the constitutional provisions. 

Judgement (Ratio and Obiter)

In this case, at that time the supreme court had the largest bench ever. The ratio of the judgment was 6:5, majority was favouring the petitioners. The CJI at that time and with other justices (J.C. Shah, S.M. Sikri, J.M. Shelat, C.A. Vaidiyalingam) wrote the majority opinion. Justice Hidayatullah agreed with CJI Subba Rao and therefore he wrote a separate opinion. Whereas Justices K.N. Wanchoo, Vishistha Bhargava and G.K Mitter they all wrote single minority opinion and justices R.S. Bachawat & V. Ramaswami wrote separate minority opinions.

The majority opinion of golakh Nath shows scepticism in their minds about the then course of parliament. Since 1950 the parliament has used article 368 and have passed a number of legislations that had in one or other way have violated the fundamental rights under part III of the constitution. The majority had doubts that if Sajjan Singh remained the law of the land, a time can come when all fundamental rights adopted by our constituent assembly will be changed through amendments. Keeping in view the problem of fundamental rights and fearing that there can be a transfer of Democratic India into totalitarian India. Therefore, the majority overruled Sajjan Singh & Shankari Prasad. 

The majority said that the parliament has no right to amend the fundamental rights. These are fundamental rights are kept beyond the reach of parliamentary legislation. Therefore, to save the democracy from an autocratic actions of the parliament the majority held that parliament cannot amend the fundamental rights enshrined under Part III of the Constitution of India The majority said that fundamental rights are the same as natural rights. These rights are important for the growth and development of a human being.

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Critical Analysis of the Judgement

Fundamental rights are considered to be necessary for the development of human personality. These rights are the rights which helps a man to figure out his/her own life in a manner he/she wants. Our constitution has given us the fundamental rights which also includes the rights of minorities and other backward communities. According to the Constitution, Parliament and the state legislatures in India have the power to make laws within their respective jurisdictions. But, this power is not absolute in nature. The Constitution rests with the judiciary and the power to adjudicate upon the constitutional validity of all laws also rests with the judiciary. 

If a law made by Parliament or the state legislatures violates any provision of the Constitution, the Supreme Court has the power to declare such a law invalid, unconstitutional or ultra vires. This check notwithstanding, the founding fathers wanted the Constitution to be an adaptable document rather than a rigid framework for governance. They wanted it to be a flexible document which can adjust or adapt itself according to the changing situations. 

Parliament was invested with the power to amend the Constitution. Article 368 of the Constitution gives the impression that Parliament’s amending powers are absolute and encompass all parts of the document. But the Supreme Court has acted as a brake to the legislative enthusiasm of Parliament ever since independence. With the intention of preserving the original ideals envisioned by the constitution-makers, the apex court pronounced that Parliament could not twist, damage or alter the basic features of the Constitution under the pretext of amending it. The phrase ‘basic structure’ itself cannot be found in the Constitution. The Supreme Court recognised this concept for the first time in the historic Kesavananda Bharati case in 1973

The basic structure of the constitution consists of:

  • Supremacy of the constitution;
  • Secular character of the constitution; 
  • Demarcation of power among the legislature, executive, and judiciary; 
  • Integrity and unity of the nation;
  • Democratic and republican form of government; and
  • Sovereignty of the nation.

These are the elements of the basic structure of the constitution. The parliament has the right to amend anything but it can not amend or change any of the fundamental elements of the basic structure. Majority believed that the parliament was drawing power of amendment from article 368 whereas this article only provides the producer of an amendment. The majority said that the power to amend an article of the constitution is under article 248. The miniority’s opinion was that if the decision comes in favour of the majority then the constitution will become rigid. And if the parliament will not have the power of amending the constitution then the constitution would become static. In accordance with the minority opinion the procedure of Article 368 very much correspond to the legislative process but it is different from ordinary legislation.

The judgement provided the prospective overruling of the law. The decision to overrule the earlier judgements was an important, smart and reasonable move by the judiciary of the country. This doctrine of prospective ruling said that effects of the law will only be applicable on future dates or future judgements. Past decisions will not be get affected by it. There was a reason why the majority chose the doctrine of prospective ruling. 

These reasons were:

They wanted to avoid multiple litigations which could have followed after this judgment. 

The majority also chose this to save the nation from the chaos of retrospective action. 

They also wanted to reduce the negative effect of this judgement which could have led to invalidating the previous constitutional amendments. 

This was in order to minimize the negative impact of the judgment invalidating the earlier constitutional amendments.

Another reason why the majority went for prospective overruling was that since the decision, in this case, was that the parliament has no right to amend the fundamental rights, therefore, every previous amendment will be invalid and unconstitutional. 

Conclusion

The Golakh v state of Punjab was one of the important cases in India history. The judgement of this case came at a very crucial time. It came when the democracy was suffering from the start of what later became the “darkest decade” of India. This judgment helped to stop the parliament from showing its autocracy. The majority bench was afraid of deterioration of the soul of the constitution. This judgement forbade the parliament from causing any damage to the fundamental rights of the citizens by implementing a law which had the effect of suppressing the autocracy of the parliament. 

The judgment was focused on protecting the fundamental provisions which are equal to fundamental or natural rights of mankind and no government can take it. Golaknath is a kind of victory of “rule of law” because it made it clear that even the lawmakers are not above the law. This case reinforced the faith of the citizens that the law is supreme, not the one who makes it(Parliament), neither who implements (Executive) it and nor the one who interprets it (Judiciary).

But there‘s nothing perfect in this world. The same goes with this judgment. The judgement of Golaknath is not a perfect judgement. One of the biggest flaws was that the judgement granted rigidity to the constitution. The court said if there has to be an amendment then it has to be through a constituent assembly. Secondly, the court only protected the fundamental rights from the absolute power of the parliament but it could have protected all the fundamental features of the constitution. They did not use the opportunity in a way they could have used. Due to these kind of problems in the judgement it was overruled to some extent in another landmark judgment in the case of Kesavananda Bharati v Union of India 1973. To read more about Kesavananda Bharati v Union of India 1973 refer to the link given below.

References


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Prospectus and promoters: A guide

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This article is written by Mehar Verma, currently pursuing BBA.LLB from Jindal Global Law School (3rd year). The author in this article talks about the meaning and importance of prospectus and promoters under the Companies Act, 2013.

Introduction

Whether you are starting a new company, raising money through issuing of shares or buying shares of any company, you are required to have the necessary knowledge about the prospectus and promoters of a company. To get a better understanding of the role of the prospectus, let’s assume there is a company ABC Ltd. which is issuing its share in the market. Before issuing the shares to the public, the company will be required to file a registration statement, disclosing all the material information about the company. Part of such registration statement is a prospectus. It is based on the prospectus of a company that an investor decides whether or not to become a shareholder of that company.

As a prospectus decides the fate of the company and shareholders, concealment of any material facts or untrue statement would attract civil or criminal liability towards the company. Considering the same example, if ABC in its prospectus states that it received a profit of INR 5,00,000 in the last financial year, which in turn induced Mr. X to invest. However at a later stage, Mr. X found out that the statement was untrue and in reality, ABC ltd had incurred a profit of only INR 4,00,000 only, then ABC ltd will be liable.

Promoters also play a crucial role in the working and incorporation of a company. They select the managing body of the corporation, prepare all the necessary legal and formal documents, find first directors and advertise the prospectus.

What is a prospectus under Company Law

A prospectus is a formal document given out by a company, when such a company wants to sell its securities or bonds to the public, containing all the necessary details about the sale, including the company’s financial position, the number of shares offered, types of securities being offered, etc. Section 2(70) of the Companies Act, 2013 defines prospectus as any document described or issued as prospectus and includes RHP or shelf hearing prospectus referred to in Section 31 or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate.

A prospectus shall be issued by or on behalf of a company only when it has been delivered to the registrar for registration. A prospectus is to be issued to the public within 90 days from the date of delivery to the registrar and no shall prospectus shall be valid if it is issued after the expiration of such period.

Section 23 of the Companies Act, 2013 provides that a public company may issue securities to the public through a prospectus.

Application forms

Section 33 of the Companies Act, 2013 states that no application for the purchase of any securities can be issued unless such form is accompanied by a suitable prospectus. 

This rule has two exceptions:

  1. When an application is issued to invite a person to enter into an underwriting agreement concerning such securities
  2. When an application is issued about securities that are not offered to the public.

Public issue

Any public company can issue securities to the public by complying with the provisions mentioned in Part I of Chapter III of the Companies Act, 2013. A public issue can be either in the form of the initial public offer (IPO) or follow on public offering (FPO). With an IPO, an unlisted public company can either make a fresh issue of securities or offer its existing securities for sale for the first time to the public while an FPO allows an already listed company to make a fresh issue of securities to the public. Both IPO and FPO are governed by SEBI, and the corresponding laws and regulations.

Contents of prospectus

As per Section 26 of the Companies Act, 2013, and Rule 3 of Companies (prospectus and allotment of securities) Rules, 2014 a prospectus must be signed and dated and have the following details:

  1. Name and address of the registered office of the company, company secretary, Chief Financial Officer, auditors, legal advisers, bankers, trustees, if any, underwriters and such other person as may be prescribed,
  2. Dates of the opening and closing of the issue,
  3. A statement by the Board of Directors of separate bank account,
  4. Details about underwriting of the issue,
  5. Consent of the directors, auditors, banker to the issue, expert’s opinion, if any, and of any other person as may be prescribed,
  6. The authority of the issue and the details of the resolution passed thereafter,
  7. Procedure and time schedule for allotment and issue of securities,
  8. Capital structure of the company in the prescribed manner,
  9. Main objects of the public offer, terms of the present issue and such other particulars as may be prescribed,
  10. Main objects and present business of the company and its location, schedule of implementation of the project,
  11. Particulars relating to:
  • Management perception of risk factors specific to the projects,
  • Gestation period of the project,
  • Extent of progress made in the project,
  • Deadlines for completion of the project and,
  • Any litigation or legal action pending or taken by a Government Department of a statutory body during the last past five years immediately preceding the year of the issue of prospectus against the promoter of the company,
  1. Minimum subscription, amount payable by way of premium, issues of shares otherwise than on cash,
  2. Details of directors including their appointments and remuneration, and such particulars of the nature and extent of their interests in the company as may be prescribed, and
  3. Disclosures in such manner as may be prescribed about sources of promoter’s contribution.

If any prospectus is issued without the mention of any of the above-mentioned content, then the company and every person who is a party to the issue of prospectus shall be punishable with imprisonment for a term which may extend to 3 years or with a fine not less than INR 50,000 which may extend to INR 3 lakhs, or with both.

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Procedure for changing the terms of the prospectus

Any change or variation in the terms and objects of the prospectus shall be done only passing of a special resolution through postal ballot and the notice of such resolution should have the following details:

  1. Particulars of the terms of the contract to be varied,
  2. Particulars of the proposed variation,
  3. Reasons or justification for such variation,
  4. Effect of the proposed variation in the financial statement or position of the company,
  5. Major risk factors pertaining to the new objects.

Secondly, an advertisement of the notice for getting the resolution passed for varying the terms shall be published in PAS-1 form simultaneously with dispatch of postal ballot notices to shareholders.

Deemed prospectus

When a company offers any security to the public for sale, including shares and debentures, then any document through which such sale is made shall be deemed to be a prospectus under Section 25 of the Company Act, 2013.

A deemed prospectus shall be subject to the same liabilities and obligation as a prospectus defined under Section 2(70) of the Act. In Iridium India Telecom ltd vs Motorola Incorporated & ors, it was held that as the nature of the document was that of a deemed prospectus while issuing it, the promoter was required to make a true and full disclosure of all the relevant facts.

Shelf prospectus

According to Section 31 of the Companies Act, 2013 a shelf prospectus is a document issued by the securities and exchange board of India specified companies that issue securities more than once over a period of time without issuing further prospectus. Financial institutions like banks, insurance companies tend to engage in fundraising activities at a very frequent rate, to reduce the process of registering the prospectus again and again the concept of shelf prospectus was introduced, thus when a self prospectus is issued then the issuer is not required to issue a separate prospectus of any kind for each offering. The shelf prospectus must include the validity period of the prospectus which shall not exceed one year. This period commences from the opening date of the first offer.

If in between from the time when the shelf prospectus was issued and when the fundraising was required, the company experiences any significant or any material change, which is required to be informed to the investor, then the same should be done through information memorandum.

Information memorandum

As per Section 31(2) of the Company Act, 2013 a company filing a shelf prospectus shall be required to file an information memorandum. Information memorandum contains all the relevant changes that have taken place in the company, including the financial changes, from the time of the first offer of a security or previous offer of securities. Before issuing the subsequent offer of securities under the shelf prospectus, the information memorandum is to be filed with the registrar within 3 months as given under Rule 4CCA of section 60A(3) of the Companies (Central Government’s) General Rules and Forms, 1956.

Where a company or any other person receives application along with advance payments for the subscription of security before the changes were made in the information memorandum, then such changes must be communicated to the applicant. If the applicant thereafter, wishes to withdraw their application, the company shall return all the money received within 15 days.

Remedies for misrepresentation in a prospectus

An investor determines the financial position, liabilities and the current market position of a company through its prospectus, thus to ensure the interest of the investor, no material facts should be misrepresented or concealed. However reasonable puffing up of prospectus does not attract any liability. For instance, an advertisement claiming that their product will make your teeth whiter than white, then it would not amount to misrepresentation, as no reasonable person would believe such an advertisement. A statement is said to be misrepresented if it satisfies the following:

  1. Untrue statement,
  2. Intends to produce the wrong statement,
  3. Conceals material facts,
  4. Omits material facts.

An investor, investing based on the misrepresented prospectus has a right to claim damages or rescind the contract.

Damages for deceit

A victim of a misleading statement is entitled to receive damages if they have suffered monetary loss as a direct consequence of the misleading prospectus. Section 447 of the Companies Act provides that any person or company that is found to be guilty of fraud or deceit shall be liable to fine. The amount of fine shall not be less than the amount involved in fraud but may exceed till three times the fraud amount involved. If it is a case of contributory negligence or if the victim contributed towards its loss in any manner, then the court can reduce the damages to be awarded accordingly.

Rescission for misrepresentation

If there is a misrepresentation of a material fact or an omission of such fact in the prospectus, the contract can be rescinded or cancelled by the aggrieved party. While rescinding the contract, the parties can not rescind a part of the contract, the whole of the agreement is to be rescinded. However, the right to rescind is lost in the following circumstances:

By affirmation

The shareholder loses his right to rescind if he had the full knowledge of the misrepresentation made in the prospectus and yet upheld the contract. When the shareholder does any of the following, knowingly that the prospectus was misrepresented, he loses his right to rescind:

  1. Attempts to sell his shares,
  2. Executes a transfer,
  3. Pays call money,
  4. Receives dividend,
  5. Attends and votes at the general meeting.

By unreasonable delay

Unreasonable delay or lapse of time can be another reason for bar to rescission. A shareholder, if he wants to cancel his contract, must do it within a reasonable time, he does not have unlimited time to rescind the contract. If a prompt decision is not taken up by the shareholder, he cannot be relieved from his obligation to pay for his shares. 

By commencement of winding up

Once the company has started the process of winding up, the shareholders can’t claim damages or rescindment of contract on the ground of misrepresentation in the prospectus. In Shiromani Sugar Mills Ltd v Debi Prasad, the court held that the right of rescission is lost on commencement of the winding up of the company and as the shareholder had not taken any active steps to avoid the contract during the working of the company neither they gave any indication of their intention to avoid the contract at any time, he has no right to rescind. But where a shareholder has started active proceedings to be relieved of his shares, the passage of winding up during pendency would not prevent his relief.

When statement deemed to be untrue

Any prospectus issued in contravention of Section 26 of the Companies Act is deemed to be untrue. The company would be punishable with a fine ranging between INR 50,000 and INR 3,00,00 and all the people who are a party to the issue of such prospectus may be liable to imprisonment for a term not exceeding three years.

Criminal liability

Section 34 of the Companies Act, 2013 imposes criminal liability on every person authorised to issue a prospectus for excluding or including any material facts which are likely to mislead the shareholders or investors. In DLF ltd v SEBI, the court declared that the defendants were to be held liable as there was concealment of material facts in their prospectus. As this was done to mislead and induce the investors to buy the shares of DLF, it is to be considered fraud. A person shall not be held liable if he proves the omission was immaterial or that he had reasonable grounds to believe that the statement issued was true. In Derry vs Peek, the court did not find the defendants liable as the statement made by them in the prospectus was made by them in the honest belief that it was true.

Acceptance of deposits under Company law 

Deposits include the money received against subscription to any securities including the share application money. Section 73 of the Company Act, 2013 provides that after the commencement of this Act no deposit shall be invited, accepted or renewed from the public in contravention to the provisions provided in this Act.

Who is a promoter under Company law?

Section 2(69) of the Companies Act, 2013 provides that promoter means a person who has been named as such in the prospectus or is identified by the company, has control over the affairs of the company, directly or indirectly and in accordance with whose advice, directions or instructions the Board of Director of the company is accustomed to act. Thus a promoter is a person who discovers the business opportunity and takes the required steps in the formation of a company. He is the one who undertakes the task of reaching the stage of incorporating the company. The status of the promoter is generally terminated when the board of directors has been formed and they start governing the company. They handover the control of the company to its directors, essentially post incorporation of the company, it is post this step that the promoter’s fiduciary and common law duties cease, and he is subject to more extensive duties in dealing with the company.

Duties and liabilities of a promoter

A promoter gives the practical shape to the idea of a company and renders a very useful service in the formation of a company. A promoter may be an individual, firm or company that originates the scheme, prepares executes and registers memorandum of association and articles of association. He finds the first directors of the company and enters into preliminary contracts. In Kelner v Baxter, the court held that contracts entered by promoters on behalf of the company cannot be ratified after the formation of the company, as the company was not in existence when the contracts were executed.

The promoters are in a fiduciary relationship with the company and they should not be making in any secret profit at the expense of the company. For instance, buying property at a lower price and then selling it to the company at a higher rate after incorporation of the company.

Normally promoters become directors of the company after incorporation of the company. However, whether or not a promoter becomes director, he is still fiduciary liable to the company with respect to the pre-incorporation contracts entered into and profits incurred.

In Erlanger v New Somrero Phosphate Co, the court laid down that if a promoter does not disclose his interest in the contract with the company, it is a breach of duty of the promoter and the contract can be rescinded by the company and the amount to be repaid to the company with interest. In Leeds and Hanley theatres of Varieties ltd damages were awarded for breach of promoter’s duty whereas in Cape Brenton co. it was held that if a promoter had acquired property before he became a promoter and if the company has affirmed the contract then no remedy is available for breach of promoters’ fiduciary duties.

Conclusion

Every public company issuing shares either through an IPO or FPO has to file a prospectus which a formal document containing all the material statements about a company required by the investors before acquiring shares in the company. All prospectus, including shelf prospectus and deemed prospectus, must be true to the knowledge of the company and all those responsible for issuing of the prospectus, as any omission or concealment of material facts, attract liability. In circumstances of fraud and misrepresentation, the aggravated party has the right to damages, compensation and to rescind the contract.

As the promoter plays a significant role in the incorporation of the company and other legal formalities, he has a fiduciary relationship with the company and can be held liable for breach of his duties.

References

    1. The Companies Act, 2013
    2. Iridium India Telecom ltd vs Motorola Incorporated & ors, 2004 (1) BOM 479
  • Shiromani Sugar Mills Ltd v Debi Prasad, AIR 1950 All 508
  • DLF ltd v SEBI, (SAT Order in Appeal No. 331 of 2014)
  • Derry v Peek, (1889) LR 14 AC 337
  • Erlanger v New Somrero Phosphate Co, (1878) 3 App Cas 1218
  • Leeds and Hanley theatres of Varieties ltd, (1902) 2 ch 809 

 


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Trade Unions Act, 1926

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This article is written by Shivangi Tiwari, a second-year student pursuing B.A. LL.B. from Hidayatullah National Law University, Raipur. This is an exhaustive article dealing with Trade Union Act, 1926. 

Introduction

Before the emergence of industrialization on a massive scale, there were personal contracts between the workers and employers. Therefore, no requirement for the evolution of any machinery governing the relationship between workers and employers arose until then. But after the establishment of modern factory system this relationship lost its significance due to large scale industrialization which enticed employers to reduce the cost of production in order to withstand the cut-throat competition in the market and maximize their profit by using technologically more sophisticated means of production which in turn resulted in the rise of a new class of workers who were completely dependant on the wages for their survival which changed the existing employer and employee relationship in which the employees were exploited by their employers. The conflict of interest between workers and employers and the distress of workers resulted in the growth of various trade unions.

A trade union is an organized group of workers who strive to help the workers in the issues relating to the fairness of pay, good working environment, hours of work and other benefits that they should be entitled to instead of their labour. They act as a link between the management and workers. In spite of being newly originated institutions, they have turned into a powerful force because of their direct influence on the social and economic lives of the workers. To control and manage the working of these trade unions different legislations regulating the same required. In India Trade Unions Act of 1926 is a principal Act for controlling and managing the working of trade unions. The present article aims at explaining and bringing forth various aspects of the Act.

History of Trade Unionism in India

In India trade unions have developed into an important platform for putting up the demands of the workers. They have also turned into one of the most influential pressure groups, which is an aggregate seeking to influence the government in framing legislation in favour of workers without aspiring to become part of the government. As an organized institution, trade unionism took its concrete shape after the end of World War 1. The trade unions in India are essentially the product of modern large scale industrialization and did not grow out of any existing institutions in society. The need for an organized trade union was first realized in 1875 by various philanthropists and social workers like Shri Sorabji Shapaji Bengali and Shri N.M. Lokhandey whose constant efforts resulted in the formation of trade unions like The Printers Union of Calcutta (1905), the Bombay Postal Union (1907). 

The setting up of textile and mill industries at the beginning of the 19th century in the presidency towns of Bombay, Madras, and Calcutta gave impetus to the formation of industrial workforce association in India. The Bombay Mill-Hands Association, founded by N.M. Lokhande in 1890 is the first labour association of India. The following years saw the rise and growth of several other labour associations and unions in India like the Madras Labour Union which is the first properly registered trade-union founded by B.P. Wadia in the year 1918, in the year 1920 the country saw the growth of the Ahmedabad Textile Labourer’s Association in Gujarat which turned into a union under the guidance of Mahatma Gandhi and is considered to be one of the strongest unions in the country of that time because of the unique method of arbitration and conciliation it had devised to settle the grievances of the workers with the employers. Since the union followed the ideals of truth and nonviolence laid down by Mahatma Gandhi it was able to secure justice to the workers in a peaceful manner without harming the harmony in the society. In the same year, the first trade union federation All India Trade Union Congress (AITUC) saw the light of the day, it was formed after the observations made by the International Labour Organization which highlighted the influence of politics on trade unions and associations and how the same is detrimental for any economy to prosper.

The importance of the formation of an organized trade union was realized by nationalist leaders like Mahatma Gandhi who to improve the employer and worker relationship gave the concept of trusteeship which envisaged the cooperation of the workers and employers. According to the concept, the people who are financially sound should hold the property not only to make such use of the property which will be beneficial for themselves but should make such use the property which is for the welfare of the workers who are financially not well placed in the society and each worker should think of himself as being a trustee of other workers and strive to safeguard the interest of the other workers.

Many commissions also emphasized the formation of trade unions in India for eg. The Royal Commission on labour or Whitley commission on labour which was set up in the year 1929-30 recommended that the problems created by modern industrialization in India are similar to the problems it created elsewhere in the world and the only solution left is the formation of strong trade unions to alleviate the labours from their miserable condition and exploitation.

Development of Trade Union Law in India

Labour legislation in India has a key impact on the development of industrial relations. The establishment of social justice has been the principle of all the labour legislation in India. The establishment of the International Labour Organization to uplift the condition of labour all over the world gave further impetus to the need for well-framed labour legislation in the country. Several other internal factors like the Swaraj movement of 1921-24, the royal commission on labour also paved the way for various labour laws and also encouraged the framers of the constitution to incorporate such laws in the constitution which will benefit the labourers. Under the constitution, labour is the subject of the concurrent list and both centre and state can make laws related to the subject. The different legislation on labour in the country are as follows:

  • Apprentices Act, 1961: The object of the Act was the promotion of new manpower at skills and improvement and refinement of old skills through practical and theoretical training.
  • Contract Labour (Regulation and Abolition) Act, 1970: The object of the Act was the regulation of employment of contract labour along with its abolition in certain circumstances.
  • Employees’ provident funds and misc. Provision Act, 1952: The Act regulated the payment of wages to the employees and also guaranteed them social security.
  • Factories Act, 1948: The Act aimed at ensuring the health of the workers who were engaged in certain specified employments.
  • Minimum wages Act, 1948: The Act aimed at fixing minimum rates of wages in certain employments.
  • Trade Union Act, 1926: The Act provided for registration of trade unions and defined the laws relating to registered trade unions.

Indian Trade Union (Amendment) Act, 1947

The labours, especially the ones who work in the unorganized sectors lack the capacity to bargain and this becomes a major reason for their exploitation. The Right of collective bargaining is provided only to those trade unions which are registered but in India, there are legislations regarding the recognition of trade unions but there is no single legislation on registration of trade unions. Realizing the need of having central legislation for registration of trade unions, the parliament passed the Indian Trade Union (Amendment) Act in the year 1947. The said Act sought to introduce Chapter III-A into the Trade Union Act, 1926, which enumerated the conditions required for mandatory recognition of any trade union. however, this Act was never brought to force Therefore, the mandatory recognition of trade unions is not present under any law in force in India.

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Registration of Trade Unions

The Trade Union Act of 1926 was passed in the year 1926 but it came into effect in the year 1927. The Act contains the provisions related to registration, regulation, benefits, and protection for trade unions. Section 3 to Section 14 of Chapter 2 of the Act deals with the registration of trade unions in the territory of India.

Section 3: Appointment of Registrars

Section 3 of the Act empowers the appropriate government to appoint a person as the registrar of a trade union. The appropriate government can also appoint as many additional and deputy registrars in a trade union as it deems fit for carrying on the purposes of the Act.

Section 4: Mode of Registration

Section 4 of the Act provides for the mode of registration of the trade union. According to the Section, any seven or more than seven members of a trade union may by application apply for the registration of the trade union subject to the following two conditions:

  • At Least 7 members should be employed in the establishment on the date of the making of the application.
  • At Least 10% or a hundred members whichever is less, are employed in the establishment should be a part of it on the date of making the application.

Section 6: Provisions to be contained in the rules of a Trade Union

Section 6 of the Act enlists the provisions which should be contained in the rules of trade union and it provides that no trade union shall be recognized unless it has established an executive committee in accordance with the provisions of the Act and its rules specify the following matters namely:

  • Name of the trade union;
  • The object of the establishment of the trade union;
  • Purposes for which the funds with the union shall be directed;
  • A list specifying the members of the union shall be maintained. The list shall be inspected by office bearers and members of the trade union;
  • The inclusion of ordinary members who shall be the ones actually engaged or employed in an industry with which the trade union is connected;
  • The conditions which entitle the members for any benefit assured by the rules and also the conditions under which any fine or forfeiture may be imposed on the members;
  • The procedure by which the rules can be amended, varied or rescinded;
  • The manner within which the members of the manager and also the alternative workplace bearers of the labour union shall be elective  and removed;
  • The safe custody of the funds of the labour union, an annual audit, in such manner, as may be prescribed, of the accounts thereof, and adequate facilities for the inspection of the account books by the workplace bearers and members of the labour union, and;
  • The manner within which the labour union could also be dissolved.

Section 7: Power to call for further particulars and require alteration of the name

Section 7 of the Act furnishes upon the registrar power to call for information in order to satisfy himself that any application made by the trade union is in compliance with the Section 5 and 6 of the Act. in matters where the discrepancy is found the registrar reserves the right to reject the application unless such information is provided by the union.

This Section also confers power to the registrar to direct the trade union to alter its name or change the name if the registrar finds the name of such union to be identical to the name of any other trade union or if it finds its name to so nearly resemble the name of any existing trade union which may be likely to deceive the public or members of either of the trade union.

Section 8: Registration

According to Section 8 of the Act, if the registrar has fully satisfied himself that a union has complied with all the necessary provisions of the Act, he may register such union by recording all its particulars in a manner specified by the Act. 

Section 9: Certificate of Registration

According to Section 9 of the Act, the registrar shall issue a registration certificate to any trade union which has been registered under the provision of Section 8 of the Act and such certificate shall act as conclusive proof of registration of the trade union.

Section 9A: Minimum requirement related to the membership of a Trade Union

Section 9A of the Act lays down the minimum number of members required to be present in any union which has been duly registered, the Sections mandates that a trade union which has been registered must at all times should continue to have not less than 10% or one hundred of the workmen, whichever is less, subject to a minimum of seven, engaged or utilized in an institution or trade with that it’s connected, as its members.

Section 10: Cancellation of Registration

The registrar, according to Section 10 of the Act has the power to withdraw or cancel the registration certificate of any union in any of the following conditions:

  • On an application made by the trade union seeking to be verified in such manner as may be prescribed;
  • If the registrar is satisfied with the fact that the trade union has obtained the certificate by means of fraud or deceit;
  • If the trade union has ceased to exist;
  • If the trade union has wilfully and after submitting a notice to the Registrar, has contravened any provision of the Act or has been continuing with any rule which is in contravention with the provisions of the Act;
  • If any union has rescinded any rule provided under Section 6 of the Act.

Section 11: Appeals

According to Section 11 of the Act, any union which is aggrieved by a refusal to register or withdrawal of registration made by the registrar can file an appeal:

  • In any High Court, if the head office of the trade union is located in any of the presidency towns;
  • In any labour court or industrial tribunal, if the trade union is located in such a place over which the labour court or the trade union has jurisdiction;
  • If the head office of the trade union is situated in any other location, an appeal can be filed in any court which is not inferior to the Court of an additional or assistant choose of a principal Civil Court of original jurisdiction.

Section 12: Registered office

Section 12 of the Act lays down that all communications and notices to any trade union must be addressed to its registered office. If a trade union changes the address of its registered office, it must inform the same to the registrar within the period of fourteen days in writing and the registrar shall record the changed address in the register mentioned under Section 8 of the Act.

Section 13: Incorporation of Registered Trade Union

Section 13 of the Act states that every trade union which is registered according to the provisions of the Act, shall:

  • Be corporate by the name under which it is registered.  
  • have perpetual succession and a common seal.
  • Power to contract and hold and acquire any movable and immovable property.
  • By the said name can sue and be sued.

Rights and Liabilities of Registered Trade Unions

Section 15 to Section 28 elucidates the rights which a registered trade union has and also the liabilities which can be imposed against it.

Section 15: Objects on which general funds may be spent

Section 15 of the Act lays down the activities only on which a registered trade union can spend its funds. These activities include:

  • Salaries to be given to the office-bearers.
  • The cost incurred for the administration of the trade union.
  • Compensation to the workers due to any loss arising out of any trade dispute.
  • Expenses incurred in the welfare activities of the workers.
  • Benefits conferred to the workers in case of unemployment, disability, or death.
  • The cost incurred in bringing or defending any legal suit.
  • Publishing materials with the aim of spreading awareness amongst the workers.
  • Education of the workers or their dependents.
  • Making provisions for medical treatment of the workers.
  • Taking insurance policies for the welfare of the workers.

The Section also provides that the reason of non-contribution to the said fund and also a contribution to the fund can not be made as a criterion for admission into the union.

Section 16: Constitution of a Separate Fund for Political purposes

Section 16 provides that a trade union, in order to promote the civic and political interests of its members can constitute a separate fund from the contributions made separately for the said purposes. No member of the union can be compelled to contribute to the fund. 

Section 17: Criminal conspiracy in Trade Disputes

Section 17 of the Act states that no member of a trade union can be held liable for criminal conspiracy mentioned under subSection 2 of Section 120B regarding any agreement made between the members of the union in order to promote lawful interests of the trade union.

Section 18: Immunity from civil suits in certain cases

Section 18 of the Act immunes the members of trade union from civil or tortious liabilities arising out of any act done in furtherance or contemplation of any trade disputes. 

For example. in general, a person is subject to tortious liability for inducing any person to breach a contract. But, the trade unions and its members are immune from such liabilities provided such inducement is in contemplation or furtherance of any trade disputes. Further, the inducement should be awful and should not involve any aspect of any violence, threat or any other illegal activity.

Section 19: Enforceability of agreement

According to Section 25, any agreement in restraint of trade is void. But under Section 19 of the Trade Unions Act, 1926 any agreement between the members of a registered trade union in restraint of trade activities is neither void nor voidable. However such right is available only with the registered trade unions as the unregistered trade unions have to follow the general contract law.

Section 20: Right to inspect the books of Trade Union

According to Section 20 of the Act, the account books and the list of the members of any registered trade union can be subjected to inspection by the members of the trade union at such times as may be provided under the rules of the trade union.

Section 21: Rights of minors to membership of Trade Union

Section 21 provides that a person who is above 15 years of age can be  a member of any trade union and if he becomes a member he can enjoy all the rights conferred upon the members of the trade union subject to the conditions laid down by the trade union of which he wants to be a part of.

Section 21-A: Disqualifications of office-bearers of Trade Union

Section 21A of the Act lays down the conditions the fulfilment of which disqualifies a person from being a member of the trade union. The conditions laid down in the Act are as follows:

  • If the member has not attained the age of majority
  • If he has been convicted by any of the courts in India for moral turpitude and has been sentenced to imprisonment unless a period of five years has elapsed since his release. 

Section 22: Proportion of office-bearers to be connected with the industry

Section 22 of the Act mandates that not less than half of the members of the trade union should be employed in the industry or work with which the trade union is connected. For example trade union is made for the welfare of the agricultural labourers then, as per this Section half of the members of such a trade union should be employed in agricultural activities. 

Section 23: Change of name

Section 23 states that any registered union is free to change its name provided it does so with the consent of not less than 2/3rd of its members and subject to the fulfilment of the conditions laid down in Section 25 of the Act.

Section 24: Amalgamation of Trade Unions

Section 24 lays down that two or more trade unions can join together and form one trade union with or without dissolution or division of the fund. Such amalgamation can take place only when voting by half of the members of each trade union has been effectuated and that sixty per cent of the casted votes should be in favour of the proposal.

Section 25: Notice of change of name or amalgamation

Section 25 of the Act provides that: 

  • A notice in writing of every change of name and of every amalgamation which is duly signed by the Secretary and by seven members of the Trade Union changing its name, and, in the case of an amalgamation, by the Secretary and by seven members of each and every Trade Union which is a party thereto, should be sent to the Registrar.
  • If the Registrar feels that the proposed name is identical with the name of any other existing Trade Union or, it so nearly resembles such name as it is likely to deceive the public or the members of either Trade Union, the Registrar may refuse to register the change of name.
  • If the Registrar of the State in which the head office of the amalgamated Trade Union is situated is satisfied that the provisions of this Act have complied with the amalgamation shall be given effect from the date of such registration.

Section 27: Dissolution

Section 27 of the Act talks about the dissolution of a firm as follows:

  • If a registered trade union has been dissolved, a notice of such dissolution which must be signed by seven members and by the Secretary of the Trade Union should be served to the registrar within 14 days of such dissolution and if the registrar is satisfied that the dissolution has been effected in accordance with the rules laid down by the trade union may register the dissolution.
  • Where a union has been dissolved but its rules do not lay down the way in which the fund is to be distributed after its dissolution, the registrar may distribute the funds in any prescribed manner.

Section 28 : Returns

Section 28 provides that each trade union should send the returns to the registrar annually on or before such a day as may be prescribed by the registrar. The return includes:

  • General statement 
  • Audit report
  • All the receipts and expenditure incurred by the trade union
  • Assets and liabilities of the firm on the 31st day of December

Sub-Section 2 of the Section provides that along with the general statement a copy of the rules of the trade union corrected up to the date of dispatch thereof and a statement indicating all the changes made by the union in the year to which the statement is referred to be sent to the registrar.

Whenever any registered trade union alters its rules, such alterations should be conveyed to the registrar in a period of not less than 15 days from making such alterations.

Regulations

Section 29 to Section 30 of Chapter 4 of the Act lays down the regulations which shall be imposed on the trade union.

Section 29: Power to make regulations

Section 29 of the Act confers the right on the appropriate government to make provisions in order to ensure that the provisions of the Act are fairly executed. Such regulations may provide for any or all of the matters, which are as follows:

  • The manner in which a trade union or its rules shall be registered;
  • The manner in which the registration of a trade union has to be transferred which has changed its head office;
  • The manner of appointment and qualification of the person who shall audit the accounts of the registered trade union; 
  • Circumstances under which the documents kept by the registrar shall be allowed to be inspected and also the fees that shall be levied in lieu of the inspection so made.

Section 30: Publication of Regulations

Section 30 states that:

  • The power of making regulations conferred to the government is subject to the condition that such regulation has been made after the previous publication.; 
  • The date from which the regulation shall be given effect shall be specified in accordance with clause (3) of Section 23 of the General Clauses Act, 1897, and the date should not be less than three months from the date on which the draft of the proposed regulations was published for general information;
  • The regulations which are made must be specified in the official gazette of India and it shall have the effect of an enacted law.

Penalties and Procedure

Section 31 to Section 33 of the Trade Union Act lays down the penalties and the procedure of its application upon a trade union which is subject to such penalty.

Section 31: Failure to submit returns

Section 31 states that:

  • If any trade union was required to send any notice, statement or any document to the registrar under the Act and if the rule did not prescribe a particular person in the union to provide such information then in case of default each member of the executive shall be imposed with the fine extendible to five rupees. In case of continuing default, the fine may be extended to five rupees a week.
  • If any person willfully makes or causes to be made any false entry or omission in the general statement required under Section 28 of the Act shall be punishable with fine extendible to 500 rupees.

Section 32: Supplying false information regarding Trade Unions

Article 32 states, the following:

  • Any person who in order to deceive a member of any trade union or any other person who purports to be the part of the trade union, 
  • Gives a copy of the document with the pretext of it containing the rules of a trade union. 
  • Which he knows or has reason to believe that it is not a correct copy of such rules and alteration and,
  • Any person with the like intent give the copy of any document purporting it to be a copy of the rules of a registered trade union which in reality is an unregistered union,
  • Shall be imposed with fine which may extend to two hundred rupees.

Section 33 : Cognizance of offences

Section 33 contains the provisions with respect to the cognizance of offence. It says that no court which is inferior to presidency magistrate or magistrate of the first class shall try an offence under the Act. courts can take cognizance of the offences under the Act only in the following cases:

  • When the complaint has been made with the previous sanction of the registrar
  • When a person has been accused under Section 32 of the Act, he shall be tried within six months of the commission of the alleged offence.

Collective Bargaining and Trade Disputes

When an organized body negotiates with the employer and fixes the terms of employment by means of bargaining is known as Collective Bargaining. The essential element of Collective Bargaining is that it is between interested parties and not from outside parties.

International labour organization in its manual in the year 1960 defined the meaning of collective bargaining as:

“Negotiations about working conditions and terms of employment between an employer, a group of employees or one or more employers organization on the other, with a view to reaching an agreement.” the terms of agreement are used to ascertain the rights and obligations by which each party is bound towards one another during the course of employment.

Section 8 of the Industrial Relations Act 1990 define trade dispute, according to the Act, industrial dispute refers to any dispute which arises between the employers and the workers and it is usually in connection with any one of the following:

  • employment or non-employment, 
  • the terms or conditions of the employment,
  • Something which affects the employment of any person.

Essential conditions for collective bargaining

  • Favourable political and social climate: all the collective bargaining which took place in the past bears the testimony to the fact that favourable political and social climate is the prerequisite of collective bargaining. The reason for the same is quite obvious as almost all the trade unions in India subscribe to one or the other political view and therefore, trade unions usually favour the employees not on the basis of the merit of the issues they raise but on the basis of their political considerations.
  • Trade union: in any democratic country like India which recognizes the right to speech as a fundamental right, the right to form a trade union is a direct consequence of it and so all the employers should recognize the trade unions and its representative.
  • Problem-solving attitude: it means that both the parties while negotiating a bringing up their relative concerns should adopt a problem-solving attitude and should aim at amicably solving the problem without trying to put the opposite party into a loss.
  • Continuous dialogue: the dialogue between the employer and the workers may sometimes end up without any fruitful negotiation or there may arise a bargaining impasse, in such a case the free flow of dialogue between the employer and employee should not be stopped and sometimes keeping aside the bone of contention helps bring up a better solution.

Purposes of collective bargaining

  • To provide an opportunity for the workers to voice their complaints and grievances regarding the working conditions.
  • To pave the way for the employer and workers to reach an amicable solution peacefully without having any ill will towards one another.
  • To sort out all the disputes and conflicts between the employer and worker.
  • To prevent any dispute which is likely to take place in the future by mutually agreeing on the contract.
  • To foster a peaceful and stable relationship between the workers and the organization.

Position in India

In India, collective bargaining remained limited in its application and has been restricted by different labour legislations in India. Different labour laws made different provisions with respect to the working conditions of the workers. Some of the labour legislation in India are as follows:

  • The Factories Act, 1948 made provisions for the betterment of the workers in respect of their health, safety, welfare and other aspects while the workers are employed in factory work. However, all the provisions of the Act were not applicable in all the factories, for example, the provision for restroom will be applicable only if there are 150 or more workers. 
  • Employees Provident and Miscellaneous Provisions Act, Maternity Benefit Act and Payment of Gratuity Act.
  • Industrial Disputes Act, 1947, lays down the procedures by which the settlement of industrial disputes has to be done. Its procedural aspects are applicable to all enterprises for the settlement of industrial disputes.

On a closer view of the labour laws in India indicate that mostly the workers who are employed in the organized sectors of the economy are protected under the various labour legislations. According to the Fifth Economic Census of 1999, it was revealed that more than 97 per cent of the enterprises employ less than ten workers, and most of these employ less than five workers. This clearly shows that labour laws apply to less than 3 per cent of enterprises.

Further, the acceleration of in formalization of the workforce with the onset of liberalization has changed the formal sector also in terms of shifting the jobs from formal to the informal sector and along with it in formalization of jobs. Today, in the formal sector, a number of formal workers are about 33.7 million and informal workers about 28.9 million (2004-05). Increase in the employment (in whatever amount) in the formal sector has largely been informal in nature. Which in turn has been reflected on the trade bargaining?

Agreements for collective bargaining

In India, Following types of agreements are prevalent for collective bargaining:

  • Bipartite agreement: These agreements usually result into voluntary negotiations between the employer and employees and are usually binding per se.
  • Settlements: Settlements usually arise out of the conciliation process and they are usually tripartite in nature as they involve three parties which are employer, employee and conciliation officer.
  • Consent awards: When the parties reach an agreement while the dispute between them is pending before the adjudicatory body. Such agreements are incorporated in authority’s award and are binding on the parties under the dispute.

Conclusion 

Trade Union Act of 1926 is welfare legislation that has been enacted to protect the workers in the organized and unorganized sector from inhuman treatment and protection of their human rights. As such the legislation contains the provisions for registration, regulation, benefits, and protection for trade unions. Thereby, benefitting the workers. 

Trade unions are important organs for the democratic development of any country as it puts up the needs and demands of the workers by collective bargaining. Collective bargaining is an important aspect of the employer-employee relationship. However, collective bargaining is not provided to all the trade unions but is only provided to those trade unions which are recognized. Therefore, the demand for mandatory recognition of trade union which has not been provided under the Trade Union Act 1926 has been raised time and again by the workers. Today, the growth of media has resulted in the empowerment of trade unions and they have turned into influential pressure groups not only in industrial sectors but also in agricultural and other allied sectors.

References


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