Paper 5 Economic and Labour Laws - Sauda.Com OF CONTENT/CS EXE... · Concept of competition, development of competition law, overview of MRTP Act; Competition Act, 2002 - anti competitive

5.1

Paper 5 Economic and Labour Laws

Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2Bird's-Eye View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4Line Chart Showing Relative Importance of Chapters . . . . . . . . . . . . . . 5.9Table Showing Importance of Chapter on the Basis of Marks . . . . . . . . 5.10Table Showing Importance of Chapter on the Basis of Marksof Compulsory Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11Legends for the Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12

Study Material Based Contents

1. (Study I) Industries Development and Regulation . . . . . . . . . . 5.13

2. (Study II) Foreign Trade Policy and Procedures . . . . . . . . . . . 5.26

3A (Study III-VI) Monopolistic, Restrictive and Unfair Trade Practices 5.40

3B (Study III-VI) Competition Act, 2002 . . . . . . . . . . . . . . . . . . . . . . . . 5.41

3C (Study III-VI) Consumer Protection-Law and Practice . . . . . . . . . . 5.57

4. (Study VIII) Essential Commodities and Standards of Weight andMeasures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.83

5. (Study XI-X) Management of Foreign Exchange Transactions . . 5.94

6. (Study XI-XII) Pollution Control and Environmental Protection . . . . 5.134

7. (Study XIII) Management of Intellectual Property Rights . . . . . . . 5.168

8. (Study XIV) Prevention of Money Laundering . . . . . . . . . . . . . . . 5.200

9. (Study XV) Minimum Wages Act, 1948 . . . . . . . . . . . . . . . . . . . . 5.210

10. (Study XVI) Payment of Bonus Act, 1965 . . . . . . . . . . . . . . . . . . . 5.219

11. (Study XVII) Payment of Gratuity Act, 1972 . . . . . . . . . . . . . . . . . . 5.237

12. (Study XVIII) Employees’ Provident Funds and Miscellaneous . . . 5.247

13. (Study XIX) Employee’s State Insurance Act, 1948 . . . . . . . . . . . 5.257

14. (Study XX) Employee’s Compensation Act, 1923 . . . . . . . . . . . . 5.271

15. (Study XXI) Contract Labour (Regulation and Abolition) Act, 1970 5.286

16. (Study XX) Industrial Disputes Act, 1947 . . . . . . . . . . . . . . . . . . . 5.296

17. (Study XIII) Industrial Employment (Standing Orders) Act, 1946 . 5.320

18. (Study XIV) Factories Act, 1948 . . . . . . . . . . . . . . . . . . . . . . . . . . 5.335

19. The National Green Tribunal Act, 2010 . . . . . . . . . . . 5.350

20. Objective Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 5.354

Question Paper of June, 2012 . . . . . . . . . . . . . . . . . . 5.394

Question Paper of December, 2012 . . . . . . . . . . . . . 5.399

Question Paper of June, 2013 . . . . . . . . . . . . . . . . . . 5.404

Question Paper of December, 2013 . . . . . . . . . . . . . 5.410

5.2

Syllabus

Paper 5 Economic and Labour Laws (100 marks)

Objective: To provide an understanding of —(i) certain economic laws; and(ii) important labour laws which have direct relevance to the functioning of

companies.

Detailed contents:

Part -A: Economic Laws (60 marks)

1. Industries Development and RegulationObjects and definitions - an overview of current Industrial Policy; regulatorymechanism under IDRA. The Micro, Small and Medium Enterprises DevelopmentAct, 2006.

2. Foreign Trade Policy and ProceduresMain features; served from India scheme; export promotion council; vishesh krishiand gram udyog yojana; focus market scheme; duty exemption and remissionschemes; advance authorisation scheme and DFRC, DEPB, EPCG, etc; EOUs,EHTPs, STPs, BPTs and SEZs.

3. Trade, Competition and Consumer ProtectionConcept of competition, development of competition law, overview of MRTP Act;Competition Act, 2002 - anti competitive agreements, abuse of dominant position,combination, regulation of combinations, Competition Commission of India;Appearance before Commission, compliance of Competition Law.Consumer protection in India, genesis of the law; objects; rights of consumers;nature and scope of remedies; appearance before Consumer Dispute RedressalForums.

4. Essential Commodities and Standards of Weights and MeasuresObjects; powers of Central Government, seizure and confiscation of essentialcommodities; summary trial; Standards of Weights and Measures Act, 1976.

5. Management of Foreign Exchange TransactionsObjectives and definitions under FEMA. Current account transactions, Capitalaccount transactions, foreign direct investment in India and abroad, acquisition andtransfer of immovable property; Establishment in India of branch, office etc; Exportof goods and services; Realisation and repatriation of foreign exchange, authorisedperson, penalties and enforcement.Foreign contributions and hospitality; Exemptions, powers of Central Government,adjudication and appeal; offences and penalties.

5.3

6. Pollution Control and Environmental ProtectionConcept of sustainable development, Government policy regarding environment,law relating to Prevention and Control of Air Pollution and Water pollution,Environment (Protection) Law; Appearance before Environment Tribunal/Authority.

7. Management of Intellectual Property RightsConcept and development of intellectual property law in India. Law and procedurerelating to patents, trade marks and copyrights; Overview of laws relating to otherrelated intellectual property rights.Intellectual Property Appellate Board

8. Prevention of Money LaunderingGenesis, concept and definitions, various transactions, etc. obligations of banksand financial institutions, RBI Guidelines on KYC.

Part - B: Labour Laws (40 marks)

9. Minimum Wages Act, 1948Object and scope; Minimum Wages Act, Advisory Board, Central Advisory Board;Authority and claims, compliances, offences and penalties.

10. Payment of Bonus Act, 1965Object, application and major provisions; Exemption; compliances, offences andpenalties.

11. Payment of Gratuity Act, 1972Application and major provisions; Controlling Authority and the Appellate Authority,obligations and rights of employers and employees and compliances.

12. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952Application and major provisions; Exemption and compliances.

13. Employees’ State Insurance Act, 1948Application and major provisions; Employees’ State Insurance, Employees’ StateInsurance Corporation, Employees’ Insurance Court; Exemptions and compliances.

14. Employee’s Compensation Act, 1923Object, scope and major provisions including proceedings before theCommissioner, appeals, compliances, penalties, special provisions.

15. Contract Labour (Regulation and Abolition) Act, 1970Application, scope and major provisions including Advisory boards, registration ofestablishments, appointment of licensing officer; Welfare and health; compliances;penalties and procedure and inspectors.

16. Industrial Disputes Act, 1947Concept, objective, and significance, Authorities; procedure and powers; unfairlabour practices, penalties.

17. Industrial Employment (Standing Orders) Act, 1946Object, scope and major provisions of the Act and compliances.

18. Factories Act, 1948Object, scope and major provisions; Authorities, compliances and penalties.

5.4

Bird's-Eye View

Paper 5

Economic and Labour Laws

Question Paper Based Contents of Last Five Examination

Years Q. No. Chapter Page

No.No. Name

2011Dec.

1. (i)(iii)(v)

(vi)(vii)

2.3.(a)(ii)

(iii)(iv)(b)

4. (a)(b)(c)

5. (a)(b)(c)

6. (i)(ii)(iii)(iv)(v)(vi)

7. (a)(i)(ii)(iii)(iv)(b)(c)

8. (i)

3C74

76

20175

205

3C8666

111318141617161615

9202012

Consumer Protection-Law and PracticeManagement of Intellectual Property RightsEssential Commodities and Standards of Weight andMeasuresManagement of Intellectual Property RightsPollution Control and Environmental ProtectionObjective QuestionsIndustries Development and RegulationManagement of Intellectual Property RightsManagement of Foreign Exchange TransactionsObjective QuestionsManagement of Foreign Exchange TransactionsConsumer Protection-Law and PracticePrevention of Money Laundering Pollution Control and Environmental Protection " " " " " "Payment of Gratuity Act, 1972Employee’s State Insurance Act, 1948Factories Act, 1948Employee’s Compensation Act, 1923Industrial Disputes Act, 1947Industrial Employment (Standing Orders) Act, 1946Industrial Disputes Act, 1947 " " Contract Labour Act, 1970Minimum Wages Act, 1948Objective Questions " " Employee’s Provident Funds Miscellaneous ProvisionsAct, 1952

47175

89175138377

19180103379111

69205143143143240261340276302324305305292214379380

253

5.5

(ii)(iii)(iv)(v)(vi)(vii)

131817111018

Employee’s State Insurance Act, 1948Factories Act, 1948Industrial Employment (Standing Orders) Act, 1946Payment of Gratuity Act, 1972Payment of Bonus Act, 1965Factories Act, 1948

265345328243230345

2012June

1. (i)(ii)(iv)(v)(vi)

(vii)2.3. (a)(i)

(ii)

(iii)(iv)(b)

4. (a)(b)(c)

5. (a)(b)(c)

6. (i)(ii)(iii)

(iv)(v)

7. (a)(i)(ii)(iii)(b)(c)

8. (i)(ii)

3C6674

520

54

3C7

205

3C6767

141112

13171613

920201617

Consumer Protection-Law and PracticePollution Control and Environmental Protection " " "Management of Intellectual Property RightsEssential Commodities and Standards of Weight andMeasuresManagement of Foreign Exchange TransactionsObjective QuestionsManagement of Foreign Exchange TransactionsEssential Commodities and Standards of Weight andMeasuresConsumer Protection-Law and PracticeManagement of Intellectual Property RightsObjective QuestionsManagement of Foreign Exchange TransactionsConsumer Protection-Law and PracticePollution Control and Environmental ProtectionManagement of Intellectual Property RightsPollution Control and Environmental ProtectionManagement of Intellectual Property RightsEmployee’s Compensation Act, 1923Payment of Gratuity Act, 1972Employee’s Provident Funds Miscellaneous ProvisionsAct, 1952Employee’s State Insurance Act, 1948Industrial Employment (Standing Orders) Act, 1946Industrial Disputes Act, 1947Employee’s State Insurance Act, 1948Minimum Wages Act, 1948Objective Questions " "Industrial Disputes Act, 1947Industrial Employment (Standing Orders) Act, 1946

63138138175

89100381103

9065

180382113

69144183146183276240

251261324306263214382383309328

5.6

(iii)(iv)(v)(vi)

(vii)

11181312

16

Payment of Gratuity Act, 1972Factories Act, 1948Employee’s State Insurance Act, 1948Employee’s Provident Funds Miscellaneous ProvisionsAct, 1952Industrial Disputes Act, 1947

243345265

254309

2012Dec.

1. (i)(ii)(iii)(iv)

(v)(vi)(vii)

2.3. (a)(i)

(ii)(iii)(iv)

(b)4. (a)

(b)(c)

5. (a)(b)(c)

6. (i)(ii)(iii)(iv)(v)

7. (a)(i)(ii)(iii)(b)(c)

8. (i)

3B3B3C

4

757

203C

774

205

3C4

675

1315181610161117202016

Competition Act, 2002" "Consumer Protection-Law and PracticeEssential Commodities and Standards of Weight andMeasuresManagement of Intellectual Property RightsManagement of Foreign Exchange TransactionsManagement of Intellectual Property RightsObjective QuestionsConsumer Protection-Law and PracticeManagement of Intellectual Property Rights" " " "Essential Commodities and Standards of Weight andMeasuresObjective QuestionsManagement of Foreign Exchange TransactionsConsumer Protection-Law and PracticeEssential Commodities and Standards of Weight andMeasuresPollution Control and Environmental ProtectionManagement of Intellectual Property RightsManagement of Foreign Exchange TransactionsEmployee’s State Insurance Act, 1948Contract Labour Act, 1970Factories Act, 1948Industrial Disputes Act, 1947Payment of Bonus Act, 1965Industrial Disputes Act, 1947Payment of Gratuity Act, 1972Industrial Employment (Standing Orders) Act, 1946Objective Questions" "Industrial Disputes Act, 1947

474763

89175101175384

65181181

91385106

70

92145184107261291340302228306241327386386309

5.7

(ii)(iii)(iv)(v)(vi)(vii)

161314161416

" "Employee’s State Insurance Act, 1948Employee’s Compensation Act, 1923Industrial Disputes Act, 1947Employee’s Compensation Act, 1923Industrial Disputes Act, 1947

310266280310280310

2013

June

1. (i)

(ii)

(iii)

(iv)

(vi)

(vii)

2.

3. (a)(i)

(iii)

(iv)

(b)

4. (c)

5. (a)

(b)

6. (i)

(ii)

(iii)

(iv)

(v)

7. (a)(i)

(ii)

(iii)

(b)

(c)

8. (i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

3C

3B

6

7

3B

6

20

3C

3B

7

20

3B

7

3C

18

13

15

17

16

14

13

18

20

20

12

13

17

16

16

18

16

Consumer Protection-Law and Practice

Competition Act, 2002

Pollution Control and Environmental Protection

Management of Intellectual Property Rights


Pollution Control and Environmental Protection

Objective Questions




Objective Questions




Factories Act, 1948

Employee’s State Insurance Act, 1948

Contract Labour Act, 1970

Industrial Employment (Standing Orders) Act, 1946

Industrial Disputes Act, 1947

Employee’s Compensation Act, 1923


Factories Act, 1948

Objective Questions

" "

Employee’s Provident Funds Miscellaneous Provisions

Act, 1952


Industrial Employment (Standing Orders) Act, 1946


" "

Factories Act, 1948


63

48

138

176

48

138

387

66

49

181

389

50

185

70

341

262

291

325

303

277

263

343

390

390

254

266

329

311

311

346

311

5.8

2013Dec.

1. (i)(ii)(iii)(iv)(v)(vi)

(vii)2.3. (a)(i)

(ii)(iii)(iv)(b)

4. (a)(b)

(c)5. (a)

(b)(c)

6. (i)(ii)(iii)(iv)

(v)7. (a)(i)

(ii)(iii)(b)(c)

8. (i)(ii)(iii)(iv)(v)(vi)(vii)

817

3C3B

4

620

1567

2054

76

196

16181312

15151610202016171810161510

Prevention of Money Laundering Industries Development and RegulationManagement of Intellectual Property RightsConsumer Protection-Law and PracticeCompetition Act, 2002Essential Commodities and Standards of Weight andMeasuresPollution Control and Environmental ProtectionObjective QuestionsIndustries Development and RegulationManagement of Foreign Exchange TransactionsPollution Control and Environmental ProtectionManagement of Intellectual Property RightsObjective QuestionsManagement of Foreign Exchange TransactionsEssential Commodities and Standards of Weight andMeasuresManagement of Intellectual Property RightsPollution Control and Environmental ProtectionThe National Green Tribunal Act, 2010Pollution Control and Environmental ProtectionIndustrial Disputes Act, 1947Factories Act, 1948Employee’s State Insurance Act, 1948Employee’s Provident Funds Miscellaneous Provisions Act, 1952Contract Labour Act, 1970" " Industrial Disputes Act, 1947Payment of Bonus Act, 1965Objective Questions" " Industrial Disputes Act, 1947Industrial Employment (Standing Orders) Act, 1946Factories Act, 1948Payment of Bonus Act, 1965Industrial Disputes Act, 1947Contract Labour Act, 1970Payment of Bonus Act, 1965

20317

1766448

90139391

20103139181392114

92184145351145303341262

252292292307229392393312329346230312293231

5.9

Line Chart Page

5.10

Table Showing Importance of Chapter on the Basis of Marks

Chap.

No.

Years

Chapter Name

09

June

09

Dec.

10

June

10

Dec.

11

June

11

Dec.

12

June

12

Dec.

13

June

13

Dec.Total Ave.

1. Industries Development and Regulation 8 3 5 8 24 2.4

2. Foreign Trade Policy and Procedures 14 3 3 20 2.0

3A. Monopolistic, Restrictive and Unfair...

3B. Competition Act, 2002 3 3 3 13 3 6 16 3 50 5.0

3C. Consumer Protection-Law and Practice 8 5 10 8 8 5 13 13 13 3 86 8.6

4. Essential Commodities and Standards.. 5 5 8 5 3 3 8 13 8 58 5.8

5. Management of Foreign Exchange.. 10 5 5 23 5 10 13 13 10 94 9.4

6. Pollution Control and Environmental .. 5 11 13 8 13 18 16 5 6 18 113 11.3

7. Management of Intellectual Property ... 13 15 21 11 18 11 18 21 13 13 154 15.4

8. Prevention of Money Laundering 11 5 8 5 5 3 37 3.7

9. Minimum Wages Act, 1948 5 5 8 5 5 5 5 38 3.8

10. Payment of Bonus Act, 1965 5 4 4 9 4 5 13 44 4.4

11. Payment of Gratuity Act, 1972 14 4 9 9 9 9 5 59 5.9

12. Employee’s Provident Fund Miscellaneo.. 4 5 4 4 4 9 4 5 39 3.9

13. Employees’ State Insurance Act, 1948 13 5 14 5 5 9 14 9 14 5 93 9.3

14. Employee’s Compensation Act, 1923 8 9 9 14 5 5 8 5 63 6.3

15. Contract Labour Act, 1970 5 9 5 5 5 14 43 4.3

16. Industrial Disputes Act, 1947 23 13 10 18 18 15 13 26 17 18 171 17.1

17. Industrial Employment (Standing Orders) 10 5 9 14 9 9 5 9 4 74 7.4

18. Factories Act, 1948 14 9 9 5 14 13 4 5 14 9 96 9.6

19. The National Green Tribunal Act, 2010 5 5 0.5

20. Objective Questions 30 30 30 30 30 30 30 33 30 30 303 30.3

5.11

Table Showing Importance of Chapter on the Basis of Marks of Compulsory Questions

Chap.

No.

Years

Chapter Name

09

June

09

Dec.

10

June

10

Dec.

11

June

11

Dec.

12

June

12

Dec.

13

June

13

Dec.Total Ave.

1. Industries Development and Regulation 3 3 3 9 0.9

2. Foreign Trade Policy and Procedures 9 3 3 15 1.5

3A. Monopolistic, Restrictive and Unfair...

3B. Competition Act, 2002 3 3 3 3 3 6 6 3 30 3.0

3C. Consumer Protection-Law and Practice 3 3 3 3 3 3 18 1.8

4. Essential Commodities and Standards.. 3 3 3 3 3 3 18 1.8

5. Management of Foreign Exchange.. 3 3 3 3 12 1.2

6. Pollution Control and Environmental .. 6 3 3 3 3 6 6 3 33 3.3

7. Management of Intellectual Property ... 3 6 6 3 6 3 6 3 3 39 3.9

8. Prevention of Money Laundering 6 3 3 12 1.2

9. Minimum Wages Act, 1948

10. Payment of Bonus Act, 1965

11. Payment of Gratuity Act, 1972

12. Employee’s Provident Fund Miscellaneo..

13. Employees’ State Insurance Act, 1948

14. Employee’s Compensation Act, 1923

15. Contract Labour Act, 1970

16. Industrial Disputes Act, 1947

17. Industrial Employment (Standing Orders)

18. Factories Act, 1948

19. The National Green Tribunal Act, 2010

20. Objective Questions

5.12

Legends for the GraphsS

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5.13

Star Rating

On the basis of Maximum marks from a chapter Nil

On the basis of Questions included every year from a chapter jj

On the basis of Compulsory questions from a chapter jj

1 Industries Development

and Regulation

This Chapter Includes: Objects and definitions - an overview of current IndustrialPolicy; Regulatory Mechanism under IDRA. The Micro, Small and MediumEnterprises Development Act, 2006.

Marks of Short Notes, Distinguish Between, Descriptive & Practical Questions

5.14 ( Solved ScannerSolved ScannerSolved ScannerSolved Scanner CS Executive Programme M-II Paper - 5

CS Executive Programme (Module II)

OBJECTIVE QUESTIONS

2010 - June [2] State, with reasons in brief, whether the following statements arecorrect or incorrect.

(v) While calculating the value of plant and machinery for the purposes of smallscale/ancillary industrial undertaking, the following shall be included—(a) the cost of installation of plant and machinery;(b) the cost of research and development equipment and pollution control

equipments;(c) the cost of fire fighting equipments; and (d) the charges paid for technical know-how for erection of plant and machinery.

(1 mark)Answer:Incorrect : While calculating the value of plant and machinery for the purposes of smallscale/ancillary industrial undertaking the cost of installation of plant and machinery; thecost of research and development equipment and pollution control equipment; cost offire fighting equipments and charges paid for technical know-how for erection of plantand machinery are excluded.

2010 - June [3] (b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figures(s):

(ii) Environmental clearance is not required from the Central Government, ifinvestment is less than for any item reserved for the small scalesector. (1 mark)

Answer:Environmental clearance is not required from the Central Government, if investment is

less than ` 1 crore for any item reserved for the small scale sector.

2010 - Dec [2] State, with reasons in brief, whether the following statements are trueor false.

(i) Small scale units are free from locational restrictions.(iii) The manufacture of items reserved for the small scale sector can also be taken

up by non-small scale units. (3 marks each)

Answer:

(i) True.Y Small scale units are free from locational restrictions.Y Industrial undertakings other than small scale units need to abide certain

locational restrictions.

[Chapter #### 1] Industries Development and Regulation (((( 5.15

Y For example, such units need to be located at least 25 kilometers awayfrom Standard Urban Area in case the population of the city is greater than1 million.

Y However SSI are outside the scope of such restriction(iii) True.

Y SSI is defined under the Micro, Small and Medium Enterprises Act, 2006and provides for the reservation of items exclusively for the small scalesector

Y A review of such items is done periodically by the Government in order topromote competitiveness

Y Presently around 20 items are reserved for manufacture in small scalesector

Y The manufacture of items reserved for small scale sector can also betaken up by non-small scale units.

Y However the non-small scale units can do only after applying for industriallicence.

Y Also they need to undertake an export obligation Y Undertakings operating under 100% EOUs, EPZ and SEZ need not to

comply with the licence requirement.


(i) Registration of an undertaking belonging to the First Schedule of the Industries(Development and Regulation) Act, 1951 is not necessary in certain cases.

(3 marks)

Answer:

True: Registration of an undertaking belonging to the first Schedule of the Industries(Development and Regulation) Act, 1951 is not necessary in case the followingconditions are satisfied :-C Undertaking is a small scale industrial undertakingC It is exempted from the licensing or registration under the ActC Undertaking is not covered within the definition of the term factory under the Act.

2013 - June [3] (b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s):

(iii) No court inferior to that of a ______ shall try any offence punishable under theIndustries (Development and Regulation) Act, 1951. (1 mark)

Answer :presidency magistrate or a magistrate of first class


SHORT NOTES

2008 - Dec [1]{C} With reference to the relevant legal enactments, write short noteson the following:

(i) Delayed payments to micro and macro enterprises (3 marks)(vii) COB licence. (3 marks)

Answer:

(i) Y As per Section 15 of the Micro, Small and Medium Enterprises DevelopmentAct, 2006 where any supplier, supplies any goods or services to any buyer,the latter shall be liable to make payment on or before the date so agreed.

Y Also, it is stipulated that the period should not exceed 45 days from date ofacceptance or from that of deemed acceptance.

Y Where, date of acceptance means:-) date of actual delivery of goods) date of rendering of services) date of objection, in case buyer makes so within 15 days.

Y As per the provisions of section 16, where the buyer fails to make paymentto the supplier, he shall be liable to pay interest monthly compounded atthree times of bank rate so notified by the RBI.

(vii) Carry on Business (or COB in short) licence is required in case:! Small scale exceeds its prescribed limit of investment in plant and

machinery, provided -) expansion took place due to natural growth and) such unit continues to manufacture small scale reserved items.! If Exemption granted to industrial undertaking from obtaining industrial

licence is withdrawn, then also COB licence is required.) Application in this respect has to be made to Secretariat of Industrial

Assistance (SIA) under the Department of Industrial Policy and Promotion,Government of India.

) Application has to be made in prescribed form along with Demand Draft of

` 2,500.

2009 - June [1] {C} With reference to the relevant legal enactments, write short noteson the following:

(ii) Exempted categories under the importer-exporter code (IEC) number.(3 marks)


Answer:Y IEC No. is short form of Import Export Code number.Y It is a unique 10 digit code issued by DGFT - Director General of Foreign Trade,

Ministry of Commerce, Government of India to Indian companies.Y An Application to the competent authority needs to be made in order, seeking of

IEC number.Y IEC number is very important without which a person cannot import or export.Y Certain categories of importers and exporters have been exempted from obtaining

this code number.Y IEC allotted to an applicant remains valid for all divisions as stated in IEC form.

Y Also refer 2009 Dec [2] (i) of chapter - 2 Foreign Trade Policy and Procedures onPage no. 28


(i) Functions of the National Board for micro, small and medium enterprises underthe Micro, Small and Medium Enterprises Development Act, 2006. (3 marks)

Answer:

Functions of the National Board for Micro small and medium Enterprises. The various functions performed by National Board for Micro, Small and MediumEnterprises are as follows:- 1. To examine the factors affecting the promotion and development of micro, small

and medium enterprises. 2. To review the policies and programmes of the government in regard to facilitating

the promotion and development of such enterprises. 3. To take necessary steps for enhancing the competitiveness of such enterprises.4. To advise the government on all the matters stated above. 5. To advise the Central Government on the use of the fund or funds constituted

under section 12.

2013 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following:

(ii) Investigation into the affairs of a company under liquidation (3 marks)


DISTINGUISH BETWEEN

2008 - Dec [3] (a) Distinguish between the following:(ii) 'Small scale industrial undertaking' and 'ancillary industrial undertaking'.

(5 marks)

Answer:

Small scale industrial undertaking:- An industrial undertaking in which the investmentin fixed assets in plants and machinery whether held on:C Ownership basis orC Lease orC Hire purchase

does not exceed rupees one crore.) The original price of plant and machinery should be considered whether the

machine is first hand or second hand.

While ) Ancillary industrial undertakingY Ancillary industrial undertaking may be defined as: One engaged or proposed

to be engaged in manufacturing of —C PartsC ComponentsC Sub assembliesC Intermediaries

OrY rendering services and undertaking supplies or proposes to supply and renders

not more than 50% of its production/services to one or more undertaking.Y An additional condition which needs to be satisfied by the undertaking to be termed

as an ancillary industrial undertaking is that—) Investment in plant and machinery should not exceed one crore.) Plant & Machinery includes whether held onC Ownership basis orC Lease orC Hire purchase

) Also such ancillary industrial undertaking should not be owned or controlled by anyother industrial undertaking.

2009 - June [3] (a) Distinguish between the following:(ii) 'COB licence' and 'industrial licence'. (5 marks)

Answer:Please refer 2008 - Dec [1] {C} (vii) on page no. 16


INDUSTRIAL LICENCE

An industrial licence is a written permission to an industrial undertaking tomanufacture/produce specified articles mentioned under first schedule granted by theCentral Government.) Licence consists of the following particulars -

C Location of undertakingC Articles to be manufacturedC Maximum capacityC Other Details

) Industrial licence is subject to a prescribed validity period.While

LETTER OF INTENT

) Letter of intent (LOI) is issued on a provisional basis) Validility period of letter of intent: 3 years from production) Extension in validity period: extension by 3 years more can be given by competent

authority) Extension beyond six years can be granted only on exceptional grounds.) The conditions contained in LOI usually relate to setting up pollution control

equipment, site clearance from the State Government and sector specificconditions.

) On fulfilment of prescribed conditions, the holder of LOI can get it converted intoIndustrial Licence.

2011 - Dec [3] (a) Distinguish between the following:(ii) ‘Carry on business licence’ and ‘industrial licence’. (5 marks)

Answer:

Carry on Business Licence:C This licence is required in following situations.C When a small scale unit exceeds the prescribed limit of investment in plant and

machinery such increase in investment should be by way of natural growth.C Withdraw of exemption from industrial licencing for a particular item.C For having carry on business licence, an application is required to be given to

concerned department.

Industrial Licence:C Industrial licence is different from carry on business licenceC It is a licence to an industrial undertaking to manufacture the specified articles,

listed in first Schedule to the Act C This licence is given by the GovernmentC It is given for a particular period.


2013 - Dec [3] (a) Distinguish between the following:(i) ‘Micro enterprise’, ‘small enterprise’ and ‘medium enterprise’ under the Micro,

Small and Medium Enterprises Development Act, 2006. (5 marks)

CS Inter Gr. II

SHORT NOTES


(ii) Scheduled industry. (3 marks)

Answer:C The term Scheduled Industry is defined under Section 3 (i) of Industries

(Development and Regulation) Act, 1951 to include any of the industries specifiedin the First Schedule of the Act.

C As per the preamble of the Industries (Development and Regulation) Act 1951 theAct is enacted ‘to provide for development of certain industries’. These industriesare specified in the First Schedule of the Act and are termed as ScheduledIndustries.Schedule I includes -:6 electrical equipments6 fuels6 boilers6 telecommunication6 fertilizer6 soaps6 cosmetics etc.


(ii) Industrial undertaking (3 marks)(vi) Deemed exports. (3 marks)

Answer:

(ii) ) The term ‘industrial undertaking as defined under Section 3 (d) of theIndustries (Development and Regulation) Act, 1951 includes any undertakingpertaining to a scheduled industry carried in one or more factories by anyperson or authority including Government.


) Where the term factory finds its place under Section 3 (c) to mean anypremises including the precincts thereof in any part of which manufacturingprocess is carried or ordinarily carried on:C Where power is used, by more than 50 workersC Where power is not used, by more than 100 workers

(vi) Y Deemed exports refer to those transactions in which goods supplied, do notleave country and payment for such supplies is received either in Indianrupees or in free foreign exchange.

Y In simple, deemed export means that the goods are considered to have beenexported even if they have not moved out of the country.

Y Deemed exports are transactions entered into with a view to avail benefits/advantage in relation to production including licence for intermediate supply.These are not actually exports yet are deemed as exports and benefitsaccrue to the seller as in case of export.

Y For instance deemed export drawback and advance license forintermediaries.


(i) Industrial Entrepreneur Memorandum. (3 marks)

Answer:C Those industrial undertaking which are exempted from obtaining licence, need to

file Industrial Entrepreneur Memorandum or IEM in shortC IEM comes in two parts-part A and part B, while the former is to be filed by

exempted undertakings before, the latter is filed immediately after commencementof commercial production.

C The format of both Part A and Part B of IEM is prescribed.C It is to be filed with Secretariat of Industrial Assistance (SIA) under the Department

of Industrial Policy and Promotion.

DISTINGUISH BETWEEN

2007 - June [3] (a) Distinguish between the following:(i) ‘Letter of intent’ and ‘industrial licence’. (5 marks)

Answer:

INDUSTRIAL LICENCE

An industrial licence is a written permission to an industrial undertaking tomanufacture/produce specified articles mentioned under first schedule granted by theCentral Government.


) Licence consists of the following particulars -C Location of undertakingC Articles to be manufacturedC Maximum capacityC Other Details

) Industrial licence is subject to a prescribed validity period.While

LETTER OF INTENT

) Letter of intent (LOI) is issued on a provisional basis) Validility period of letter of intent: 3 years from production) Extension in validity period: extension by 3 years more can be given by competent

authority) Extension beyond six years can be granted only on exceptional grounds.) The conditions contained in LOI usually relate to setting up pollution control

equipment, site clearance from the State Government and sector specificconditions.

) On fulfilment of prescribed conditions, the holder of LOI can get it converted intoIndustrial Licence.

2007 - Dec [3] (a) Distinguish between the following:(i) ‘Small scale undertaking’ and ‘ancillary industrial undertaking’. (5 marks)

Answer:

Small scale undertaking:- An industrial undertaking in which the investment in fixedassets in plants and machinery whether held on C Ownership basis orC Lease orC Hire purchasedoes not exceed rupees one crore.

While — Ancillary industrial undertakingPlease refer 2008 - Dec [3] (a) (ii) on page no. 18


DESCRIPTIVE QUESTIONS

2004 - June [2] (a) What is meant by 'effective steps' under the Registration andLicensing of Industrial Undertakings Rules, 1952? (2 marks)

(b) A contract entered into by an industrial undertaking prior to taking over itsmanagement and control by the Central Government with a third party is founddetrimental to the interests of the undertaking. What is the remedy against such acontract? (5 marks)

Answer:

(a) According to Rule 2 of the Registration and Licensing of Industrial UndertakingRules, 1952, the term ' effective steps' means one or more of the following:(a) 60% of the issued capital of industrial undertaking has been paid up.(b) Substantial part of the factory has been constructed.(c) Order for substantial portion of plant and machinery has been placed.

(b) According to provisions of Section 18C of the Industries (Development andRegulation Act 1951 person authorised to takeover the management may apply tothe Central Government to -C Cancel orC Varyan agreement or contract entered before issue of order under Section 18 Aentered between the industrial undertaking and other person.) Authorised person is required to take the approval of Central Government

before applying to the court.) The court may vary the term or cancel the agreement (conditionally or

unconditionally) if it is of the opinion that contract is entered in bad faith andis detrimental to the industrial undertaking’s interest.

2004 - Dec [2] (b) (i) What do you understand by 'industrial entrepreneurs memoran-dum'? (2 marks)

Answer:Please refer 2007 - June [1] {C} (i) on page no. 21

2005 - June [2] (a) "The Industries (Development and Regulation) Act, 1951 has lostits sting as the Licence Raj was given a decent burial by the liberalisation policy of theGovernment:." Discuss. (5 marks)


Answer:The object of the Industries (Development and Regulation) Act, 1951 was to provide for-C Development andC Regulationof certain industries specified in first schedule.) With passage of time, drastic changes were made in the licensing norms.) As the policy of privatisation globalization and liberalisation was adopted by the

government, even our industrial licensing policy and procedures were liberalised.) Business houses were motivated to counteract global business threats and grab

the opportunities.) With the advent of New Industrial Policy in 1991 licencing requirement has been

reduced to merely six industries) Presently only 3 industries are reserved for public sector) Even other provisions like

C InvestigationC Takeover etc.have lost their relevanceThus it can be safely concluded that - “Industries (Development and Regulation)Act, 1951 has lost its sting as Licencing Raj was given a decent burial by theliberalisation policy of the Government.

2005 - Dec [2] (c) How is the value of plant and machinery calculated for the purposesof small-scale and ancillary industrial undertakings under the Industries (Developmentand Regulation) Act, 1951? (3 marks)

Answer:In calculating the value of plant and machinery certain points are to be included whilesome are to be excluded in relation to small scale and ancillary industrial undertaking.) Following items are to be included (in case of imported machinery)

C Import dutyC Shipping chargesC Customs clearance chargesC Sales tax

) Following are to be excluded:-C Cost of procuring cables, wiresC Cost of research and developmentC Installation costC Equipment/component cost like that of tools, jigs, dies etc.

) transportation cost) technical know how related cost) fire fighting equipment related cost.


Repeatedly Asked Questions

No. Question Frequency

1 Write short notes on Industrial EntrepreneurMemorandum.

04-Dec [2] (b) (i), 07 - June [1] {C} (i)

2 Times

Table Showing Marks of Compulsory Questions

Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 3 3 3

Total 3 3 3

5.26

Star Rating


On the basis of Questions included every year from a chapter Nil

On the basis of Compulsory questions from a chapter Nil

2 Foreign Trade Policy and Procedures

This Chapter Includes: Main Features, Served from India Scheme; ExportPromotion Council; Vishesh Krishi and Gram Udyog Yojana; Focus market Scheme;Duty exemption and remission schemes; advance authorisation scheme andD.F.R.C, DEPB; EPCG, etc. EOUS, EHTPs, STPs, BPTS and SEZs.


The Central Government notified the Foreign Trade Policy 2009-2014 by virtue ofpowers granted under Section 5 of Foreign Trade (Development & Regulation) Act,1992. The provisions will remain in force from August 27, 2009 upto March 31, 2014.

[Chapter #### 2] Foreign Trade Policy and Procedures (((( 5.27


OBJECTIVE QUESTIONS

2008 - Dec [2] State, giving reasons in brief, whether the following statements are true

or false.

(v) Duty Free Replenishment Certificate (DFRC) is issued to a merchant exporter

or manufacturer exporter for the imports used in the manufacture of goods

without payment of any basic customs duty whatsoever. (3 marks)

Answer:

Y The given statement is true.

Y DFRC is used in manufacturing goods without the payment of BCD i.e. Basic

customs duty and is issued by merchant/ manufacturer exporter in relation to

products falling within the notified products complying standard input/output

norms.

) Such inputs shall however will subject to additional customs duty equal to

excise duty at the time of import.

2009 - June [2] State, giving reasons in brief, whether the following statements are true

or false.

(i) In case an EOU fails to achieve its export obligations, it shall be liable to pay

penalty at the time of exit.

(vi) The provisions contained in the Special Economic Zones Act, 2005 shall have

effect not withstanding anything inconsistent therewith contained in any other law

for the time being in force. (3 marks each)

Answer:

(i) True:

• Export Oriented Units (EOU) shall be liable to penalty at the time of exit in

case they are unable to fulfill their export obligations.


• Also they shall be required to make payment of Custom duty and Excise dutyand obtain ‘no dues certificate’ from Customs/Excise authority and thusobtain their consent also before adopting an exit route.

• Apart from this, prior approval of Development Commissioner shall also berequired.

• EOU exiting which was operating in the field of gems, jewellery, gold & otherprecious metal is required to be handed over to an agency nominated byMinistry of Commerce & Industry at price so determined by the Agency.

(vi) True: ) The provisions contained in the SEZ Act, 2005 shall have effect ‘NOT

WITHSTANDING’ anything inconsistent in any other law for the time beingin force, thereby granting overriding power.

) Thus, SEZ Act 2005 shall prevail the other laws, irrespective of theinconsistencies.

) To objective of SEZ ACT itself was to provide a long term and stable policyframework with minimum regulatory regime & Provide expeditions & singlewindow clearance mechanism.


(i) A person can export or import without an importer-exporter code (IEC) number.(3 marks)

Answer:

(i) False: ) A person cannot export or import without an Importer-Exporter Code (IEC)

number if that importer or exporter comes under exempted categories.) The foreign trade policy prohibits the export or import by any person without

an Importer-Exporter Code (IEC) Number unless specifically exempted.) The following categories of persons are specifically exempted from taking

IEC Number:• Importers and exporters covered under certain clauses of Foreign Trade

(Exemption from application of Rules in Certain cases) Order, 1993. • Ministries of Central or State Government.• Persons importing or exporting for personal use.• Persons importing/ exporting goods from Nepal provided the CIF value of

a single consignment does not exceed ` 25,000.• Persons importing /exporting good from to Myanmar through Indo-

Myanmar border areas, provided the CIF value of a single consignment

does not exceed ` 25,000.


2009 - Dec [3] (b) Re-write the following sentences after filling-in the blanks spaceswith appropriate word(s)/figure(s):

(iv) For setting-up an EOU, three copies of the application in the prescribed formmay be submitted to the_________. (1 mark)

Answer:(iv) For - setting up on EOU, three copies of the application in the prescribed form

may be submitted to the Development Commissioner.

2010 - June [2] State, with reasons in brief, whether the following statements are

correct or incorrect. Attempt any five:

(vi) Special Economic Zone (SEZ) is deemed to be a foreign territory for thepurposes of trade operations, duties and tariffs. (3 marks)

Answer:

(vi) Correct: ) Special Economic Zone (SEZ) is a specifically delineated duty free enclave

and shall be deemed to be foreign territory for the purposes of tradeoperations and duties and tariffs.


(ii) A SEZ unit may opt out of the SEZ scheme at any time. (3 marks)

Answer:

(ii) True : Y A SEZ unit may opt out of the SEZ Scheme at any timeY However, the same calls for obtaining consent from the Development

commission.Y Also, the SEZ unit will be required to pay off the excise duty as well as

custom duty on finished good and imported items as the case may be.

2010 - Dec [3] (b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s):

(i) The foreign trade policy allows export proceeds to be realised within _________months. (1 mark)

Answer:

(i) The foreign trade policy allows export proceeds to be realised within twelvemonths.


(iv) Special Economic Zones are growth engines. (3 marks)


Answer:

(iv) True:C The above statement is correctC Special Economic Zones (SEZ) are meant to increase the export of goods

& services, boost manufacturing, promote investment, reduceunemployment, improve the infrastructure facilities

C Government provide various incentives to Special Economic Zones (SEZ)to achieve the above mentioned objectives of SEZ.

C SEZ are the growth engines for the developing country like India.C Also refer 2009 - June [2] (vi) on page no. 27

2013 - June [2] State, with reasons in brief, whether the following statements are trueor false.

(iii) Importer-Exporter Code (IEC) number once issued cannot be surrendered by therecipient. (3 marks)

Answer :

FalseC As per Foreign Trade Policy if an Importer - Exporter Code (I E C) number holder

does not wish to operate the allotted I E C number, the same may be surrenderedby informing the issuing authority.

C On receipt of such intimation, the issuing authority immediately cancels the sameand electronically transmit it to Director General Foreign Trade for onwardtransmission to the Customs and Regional Authorities.


(ii) Under foreign trade policy 2009-14, _______ new countries have been includedwithin the ambit of focus market scheme. (1 mark)

Answer :(ii) 29


SHORT NOTES


(ii) Star Export Houses (3 marks)(iii) Salient features of the Special Economic Zones Act, 2005 (3 marks)

Answer:

(ii) ) According to the Foreign Trade Policy, following are the ones eligible formaking an application to be regarded as Star Export Houses:-

) Export Oriented Units (EOUs)

) Merchant and Manufacturer Exporters) Service Providers ) Units in-

• SEZ• EHTP• STP • BTP • AEZ etc.

The advantages/ benefits which accrue to Star Export Houses are asfollows:- ) Custom clearances on self declaration basis.) Exemption from compulsory negotiation of documents via bank, other than

in case of remittance.) No need to furnish Bank Guarantee.) 100% retention of foreign exchange in EEFC account.) Repatriation period of 360 days. ) Input output norms being fixed within a period of 60 days.

(iii) The salient features of Special Economic Zone Act, 2005 are as follows:- • Matters dealing with setting up of Special Economics Zone and units there-

in.• Matters dealing with off-shore banking units and units in International

Financial Service Center (IFSC) in SEZ.• Single window clearance mechanism at zone level • Fiscal regime/scenario for developers of Special Economics Zone and units• Providing authority for each SEZ granting them administrative autonomy

• Setting up special courts to ensure faster settlement of cases and speedyinvestigation in relation to offences committed in Special Economic Zones.


2009 - Dec [1] {C} With reference to the relevant legal enactments, write short notes

on the following:

(i) Export Promotion Council (3 marks)

(iii) Advance authorisation scheme (3 marks)

(vii) Commercial purpose. (3 marks)

Answer:

(i) Export Promotion Council

) Export Promotion Council are the councils which are set up to promote and

develop the export of the country.

) These councils are mainly responsible for particular group of products,

projects and services.

) Functions of Export Promotion Councils:

• To provide useful information and assistance to members in developing

exports .

• To organise trade, fairs, exhibitions.

• To provide advice in the various areas such as technology upgradation,

quality and design improvement, standards and specification,

innovation to its members.

• To maintain proper records of export and import.

• To promote interactions between the exporting community and the

Government both at Central and state levels.

(iii) Advance Authorisation Scheme.

Y An advance authorisation is issued to allow duty free import of inputs, which

are physically incorporated in the export product (making normal allowance

for wastage). In addition to the inputs, fuel, oil, energy , Catalysts etc which

are consumed in the course of their use to obtain the export may also be

allowed under the scheme.

Y Duty free import of mandatory spares upto 10% of the CIF value of the

Authorisation which are required to be exported with the resultant product

may also be allowed under Advance authorization.

Y These types of authorization are issued only on the basis of import and

export items given under SION.


Y Advance authorisation can be issued for import of inputs required in the

manufacture of goods –

• for physical exports (including export to SEZ).

• for intermediate supplies.

• to the main contractor for supply of goods to the specified categories

under deemed export categories.

• Supply of stores on board of the foreign going vessel/ aircraft subject to

the condition that there is specific SION in respect of the items supplied.

Y The items which are imported through authorization scheme are exempted

from payment of basic custom duty, education cess, antidumping duty and

safeguard duty.

(vii) Commercial purpose: The term commercial purpose does not include use by

a consumer of goods bought and used by him exclusively for the purpose of

earning his livelihood by means of self employment. A purchase of good can be

said to be for a ‘commercial purpose’ only if the goods have been purchased for

being used in some profit making activity on a large scale and there is close and

direct nexus between the purchase of goods and profit making activity.

2010 - June [1] {C} With reference to the relevant legal enactments, write short notes

on the following:

(i) Privileges to a star export house (3 marks)

Answer:

Please refer 2008 - Dec [1] {C} (ii) on page no. 31


on the following:

(ii) Functions of Export Promotion Council (3 marks)

Answer:

Please refer 2009 - Dec [1] {C} (i) on page no. 32


DISTINGUISH BETWEEN

2009 - Dec [3] (a) Distinguish between the following:

(ii) 'Duty free replenishment certificate' and 'duty entitlement passbook scheme.'

(5 marks)

Answer:

Distinction between Duty Free Replenishment Certificate and Duty Entitlement

Passbook Scheme

DFRC is issued to a merchant-exporter or manufacturer-exporter for the import of inputs

used in the manufacture of goods without payment of basic customs duty. However,

such inputs are subject to the payment of additional customs duty equal to the excise

duty at the time of import. DFRC is issued on minium value addition of 25% except for

items in gems and jewellery sector for which prescribed value addition is applicable.

The objective of Duty Entitlement Passbook Scheme (DEPB) is to neutralise the

incidence of Customs duty on the import content of the export product. The

neutralisation has been provided by way of grant of duty credit against the export

product.

DFRC may be issued in respect of exports for which payments are received in non-

convertible currency. Such exports have, however, been made subject to value addition

and prescribed conditions.

In fact, DFRC is issued only in respect of products covered under the Standard

Input Output Norms (SION) as notified by DGFT. DFRC is issued for import of inputs

as per SION as indicated in the shipping bills. The validity of such authorisation is 24

months.

The holder of DEPB has been given an option to pay additional customs duty, if

any, in cash as well. The DEPB is valid for a period of 24 months from the date of issue.

The DEPB and/or the items imported against it are freely transferable. The transfer of

DEPB should however be for import at the port specified in the DEPB.

Normally, the exports made under the DEPB Scheme are not entitled for drawback.

However, the additional customs duty/excise duty paid in cash or through debit under

DEPB is adjusted as CENVAT Credit or Duty Drawback.


CS Inter Gr. II

SHORT NOTES


(iv) Special economic zone. (3 marks)

Answer:

(iv) Y Special Economic Zones (or SEZ in short) may be defined as specificallydelineated duty free enclave deemed to be foreign territory for trade operationsand considered as growth engines.

Y Objectives of SEZ -• Making available goods and services free of taxes.• Providing integrated infrastructure for export.• Single window approval mechanism.• Expeditious grant of permission.• Promoting export by giving package of incentives.

Y Advantages of SEZ -• They dynamically contribute to increase in production in industries.• Promote export• Generate lot of employment.

Y SEZ can be established in public, private or joint sectorsY SEZ scheme has been announced in April 2000 with an intention of

providing internationally competitive environment for exports.

2006 - Dec [2] (d) Write a short note on ‘special economic zones’ (SEZs.) (3 marks)

Answer:Please refer 2005 - Dec [1] {C} (iv) on page no. 35


2006 - June [2] (b) Mention any six functions of Development Councils set-up under theIndustries (Development and Regulation) Act, 1951. (3 marks)

(c) What is ‘free trade and warehousing zone’ (FTWZ)? (2 marks)

Answer:

(b) Some of the functions performed by Development Councils established underSection 6 of the Act are -

) Promoting standardisation of products.


) Promoting or undertaking collection of statistics.) Promoting adoption of measures for increasing productivity of labour.) Suggesting norms of efficiency with a view to eliminating waste, obtaining

maximum production, improving quality and reducing costs.) Recommending targets for production and coordinating production programmes) Advising on any matter relating to the industry as to which the government may

request the Development Council to advise and undertaking inquiries in thisregard.

(c) FTWZ is a special category of Special Economic Zone) The focus of these FTWZ is basically on -

C Trading and C Warehousing.

) They have been established with view to create or. establish infrastructure to :-C Facilitate import and export of goods and services.C Provide freedom to continue trade transactions in free currency.

2007 - June [4] (b) Explain the concept of ‘Special Economic Zone’ (SEZ). (5 marks)

Answer:Please refer 2005 - Dec [1] {C} (iv) on page no. 35


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 9 3 3

Total 9 3 3

Topic not yet asked but equally Important for examination

Question No. 1: What are the two major objectives of foreign trade policy?

Answer:

Objectives of Foreign Trade Policy are as follows:C To double India's share of global merchandise trade within 5 years.C To act as means of economic growth by giving a thrust to employment generation.

Question No. 2: Describe the strategies adopted by the Government to achieveobjectives of foreign trade policy.


Answer: Following strategies have been adopted to achieve objectives of foreign trade policy:C Remove controls in the foreign trade so as to boost Indian industrialist.C Simplification of the procedures relating to foreign trade.C Reducing transaction cost involved in such trade.C No duty on imports used in export products.C Development of infrastructural network.C Facilitate development and upgradation of technological and infra structural

facilities of all sectors.C Developing special focus areas to generate employment , being one of the twin

objectives of foreign trade policy.C Revitalising the Board of Trade.C Activating Indian Embassies who can play a crucial role in accelerating export.

Question No. 3: Describe the composition and functions of Board of Trade.

Answer: Board of Trade is composed of one person appointed as President of Board and 25members, at least 10 of whom are experts in trade policy.

) Its meeting is held once in every quarter.) It can establish/set sub committees terms of reference.

Or

Functions:) Advising the Government with regards to framing and executing plans and

dealing with boosting up of export sales.) Reviewing performance in the export field and suggesting measures to remove

the hurdles. Reviewing import and export procedures and rationalising the same.) Examining present import and export framework so as to accomplish the twin

objectives of foreign trade policy.) Identifying important issues in the field of foreign trade so as to promote the same.) Commissioning studies for achieving the above mentioned objectives.

Question No. 4: Explain the procedure for filing of application with regards to foreigntrade.

Answer:

Procedure for filing application is as follows:) Application is required to filed by the applicant.) 'Applicant' term is coined to include person on whose behalf application is made

along with person signing the application.) Applicant needs to fill the details in the application.) Compliance with the provisions of foreign trade policy needs to be made.


) Applicant needs to sign the application.) A soft copy in MS Word format also needs to be filed.) Incomplete application may be rejected.

Question No. 6: What does ASIDE stands for?

Answer: ASIDE stands for Assistance to State for Infrastructure Development of Export. It is ascheme formulated by Department of Commerce to motivate State Government toparticipate in export promotion.

Question No. 7: What privileges are enjoyed by status holders.

Answer: Various privileges enjoyed by status holders in the field of foreign trade are as follows :C Licences and custom clearance on self deceleration basis:C Input output norms are fixed just within 60 days.C Exemption from compulsory negotiation of documents through banks.C Exemption from furnishing bank guarantee.C 100% retention of foreign exchange in EEFC account.C Normal repatriation period to be increased to 360 days.

Question No. 8: Explain the functions of Export Promotion Council for services.

Answer:

Functions performed by Export Promotion Council for services are as follows :C Coordinating with various participants of foreign trade and initiating marketing

programmes C Identifying opportunities in key areas.C Developing / preparing strategic market access programmes for different areas.C Harmonising with recognised modal bodies in the industry.

Question No. 9: What is NFE or Net Foreign Exchange?

Answer: NFE refers Net Foreign Exchange.Mathematically NFE can be calculated as:NFE = FOB value of exports (-)CIF value of imported inputs and capital goods andpayments made in foreign exchange.NFE is calculated cumulatively for block of 5 years from commencement of production.NFE of EOU/EHTP/ BTP/STP needs to be. positive.It is calculated for items mentioned in letter of intent.


Question No. 10: Write short notes on:(a) Duty Free Replenishment Certificate. (DFRC)(b) Duty entitlement passbook scheme. (DEPB)Answer: (a) Duty Free Replenishment Certificate helps the exporters import inputs (to be used

in exports) without payment of basic custom duty. It is issued to exporters in caseswhere value addition exceeds 25% and exports payment are in non convertiblecurrency.

This certificate is granted for products covered under SION (Standard InputOutput Norms) and not against SION with prior import condition.

(b) Duty entitlement passbook scheme has been introduced to nullify the effect ofcustom duty imposed on import inputs which will be incorporated in the exportproduct.Under it, an exporter gets the credit against specified export product at modified ratewhich may be utilised for import of raw material and other intermediaries.Validity pervade of DEPB-24 months from issue.

Question No. 11 Write a short note on Special Economic Zones (SEZ).

Answer: SEZ may be defined as specifically delineated duty free enclave deemed to be foreignterritory in viewpoint of trade operations.) They are considered as growth engines) They help to:

C Boost manufacturingC Augment exportsC Create employment opportunities.

) They stimulate growth by providing:• Single window clearance mechanism.C Integrated infrastructural facilities and incentives to promote export.

5.40

Star Rating




3A Monopolistic, Restrictive

and Unfair Trade Practices

Monopolies and Restrictive Trade Practices Act, 1969 is repealed and is replaced byCompetition Act, 2002.According to Competition Act, 2002 Section 66 provides that the Monopolies andRestrictive Trade Practices Act, 1969 is repealed and Monopolies and RestrictiveTrade Practices commission stand dissolved.

5.41

Star Rating




3B Competition Act, 2002

This Chapter Includes: Definition; Anti Competitive Agreements; Prohibition ofabuse of Dominant Position; CCI; Appearance before Commission; CompetitionAdvocacy; Competition Appellate Tribunal; Appeal to Supreme Court..


Amendments in Competition Act, 2002

1. Section 66 of Competition Act 2002 provides that the Monopolies and RestrictiveTrade Practices Act, 1969 is hereby repealed and the Monopolies and RestrictiveTrade Practice Commission established under subsection (i) of section 5 of thesaid act (herein after referred to as the repealed Act) shall stand dissolved.


2. The repeal of Monopolies and Restrictive Trade Practices Act, 1969 shall however

not affect:

! the previous operations of the act so repealed or anything duly done or

suffered thereunder, or

! any right, priviledge, obligation or liability, acquired, accrued or incurred under

the act so repealed.

3. All cases pertaining to MRTP pending before the MRTP Commission shall on the

commencement of the competition (Amendment) Act, 2009 stand transferred to

the Appellate Tribunal and shall be adjudicated by the Appellate Tribunal in

accordance with the provisions of the repealed Act as if the Act has not been

repealed.

4. Subject to the provisions of sub-section (3), all cases pertaining to Unfair Trade

Practices other than those referred in clause (x) of section 36A of the MRTP Act,

1969 (54 of 1969) and pending before MRTP Commission immediately before

commencement of Competition (Amendment) Act, 2009, shall stand transferred to

the National Commission constituted under the Consumer Protection Act, 1986 and

the National Commission shall dispose of such cases as if they were cases filed

under that Act.

5. All cases pertaining to Unfair Trade Practices referred to in clause (x) of subsection

(I) of section 36A of the MRTP Act, 1969 and pending before the MRTP

Commission shall on the Commencement of Competition (Amendment) Act, 2009

stand transferred to the Appellate Tribunal and the Appellate Tribunal shall dispose

of such cases as if they were cases filed under this Act.

6. All investigations or proceedings, other than those relating to Unfair Trade

Practices, pending before the Director General of Investigation and Registration on

or before the Commencement of this Act shall, on the commencement, stand

transferred to the Competition Commission of India and the Competition

Commission of India may conduct or order for conduct of such investigation or

proceeding in the manner as it deems fit.

[Chapter #### 3B] Competition Act, 2002 (((( 5.43


OBJECTIVE QUESTIONS

2008 - Dec [2] State, giving reasons in brief, whether the following statements are trueor false.

(i) The Competition Act, 2002 prohibits dominance as well as the abuse ofdominant position. (3 marks)

Answer:

The given statement is false. The Competition Act, 2002 aims not to prohibit dominancerather it forbids enterprises from making abuse of such dominant position. Section4(2)(a) and 4(2)(b) describes abuse of dominance position. As per section 4(2), thereshall be abuse of dominant position, if an enterprise or group imposes unfair ordiscriminatory condition in purchase or sale of goods or services or price in purchaseor sale of goods or service. Thus the Competition Act, 2002 prohibits abuse ofdominant position.


(v) The Competition Act, 2002 does not prohibit dominance, but the abuse ofdominant position. (3 marks)

Answer:

True: Section 4 of the Competition Act 2002, expressly prohibits any enterprise or groupfrom abusing its dominant position, meaning thereby a position of strength enjoyed byan enterprise.

Thus the Act does not prohibit the dominance position, it only prohibit the misuse ofsuch dominant position by an enterprise.


(iii) Cartel includes an association of producers, sellers or distributors who, byagreement among themselves, limit, control or attempt to control the production,distribution, sale or price of or trade in goods or provision of services.

(3 marks)

Answer:

Correct: ‘Cartel’ as defined under section 2(c) of the Competition Act,2002 includes anassociation of producers, sellers or distributors, traders or service providers who, byagreement amongst themselves, limit control or attempt to control the production,distribution, sale or price of or, trade in goods.



(ii) The provisions of the Competition Act, 2002 are not applicable to a governmentcompany. (3 marks)

Answer:

False:

C The above statement is not correct

C The provisions of the Competition Act, 2002 are applicable to a governmentcompany.

C Government company falls within the ambit of definition enterprise as definedunder the Act.

C But sovereign functions of Government including activities carried by governmentdepartments dealing with atomic energy, currency, defence are excluded from thedefinition of enterprise.


(i) The Competition Act, 2002 prohibits dominance as well as abuse of dominantposition. (3 marks)

Answer:

False

C The Competition Act, 2002 does not prohibits dominance

C Section 7 of the Competition Act, 2002 prohibits abuse of dominance. Abuse of dominant position results in exploitation of consumers & makes it difficult for theother players to compete with the dominant undertaking as dominant undertakingimpose unfair conditions, predatory pricing, etc.

C also refer 2008 - Dec [2] (i) on page no. 44


(i) There is no positive relationship between competition and innovation,productivity and economic growth. (3 marks)

Answer :

False

C There is a positive relationship between competition and innovation, productivityand economic growth.

C One theory stated that competition is conducive to innovation.


C Intensified product market competition could force managers to speed up theadoption of new technologies.

C Intensive product market competition with incumbent firms engaged in step by stepinnovative activities could enhance each firm incentive to acquire or increase itstechnological lead over its rivals.

C The benefits of competitive forces are for economic growth and consumerswelfare.

C Competition enhances allocative efficiency, productive efficiency and dynamicefficiency.

2013 - Dec [2] State, with reasons in brief, whether the following statements are trueor false:

(iii) The Competition Act, 2002 prohibits dominance as well as the abuse ofdominant position. (3 marks)

SHORT NOTES


(vi) Competition policy (3 marks)

Answer:

Y Competition policy ambits in itself 2 elements.

C One, to increase the competition.

C And secondly it aims to prevent anti-competition.

Y The Objective of Competition policy is -

C To promote competition.

C To prevent those which hamper the growth of competition.

Y Thus, the term competition policy covers the wide range of policies which aim topreserve competition, ensure better use of resources and cater to the needs of thecitizens as a whole.


(iv) Anti-competitive agreements (3 marks)

Answer:

Please refer 2006 - June [1] {C} (I) on page no. 50



(ii) Combinations (3 marks)

Answer:

Combinations:

Combinations include acquisition of control, shares voting rights, assets, merger oramalgamation.

The acquisition or amalgamation of enterprise will be combination if -

(a) any acquisition where -

(I) the parties to the acquisition, being the acquirer and the enterprise wholecontrol, or shares are acquired jointly have

— assets of more than one thousand crore (in India)

— turnover of more than three thousand crore

— assets of more than five hundred million US dollar. (in India and abroad)(Same applies to the group also)

(b) acquiring of control when such person has already direct or indirect control onanother enterprise if:

(I) the enterprise over which control has been acquired with the enterprise overwhich the acquirer already has direct or indirect control jointly have,

— assets of more than one thousand crore (in India).

— turnover of more than three thousand crore

— assets of more than five hundred million US dollar (in India and abroad)(Same applies to group).

(c) any merger or amalgamation in which the enterprise remaining after merger, have:

— assets of more than one thousand crore. (in India)

— turnover of more than three, thousand crore.

— assets of more than five hundred US dollar (in India and abroad)

(Same applies to group)


(ii) Competition Advocacy (3 marks)

Answer:

(i) Provisions relating to competition advocacy are contained under Section 49 ofthe Competition Act 2002.

(ii) This section provides that the Central or State Government can seek any opinionfrom CCI i.e. Competition Commission of India.


(iii) Information seeked may be with regards to the tentative effects of the policy oncompetition.

(iv) It is not necessary to abide by the opinion given by CCI.(v) CCI needs to provide its opinion to State/Central Governments within a time

frame of 60 days of receipt of reference for providing information.


(iii) Anti-competitive agreements (3 marks)Answer:Please refer 2006 - June [1] {C} (i) on page no. 50


(i) Bid rigging (3 marks)Answer:Bid riggingC The term bid rigging is used in relation to Competition Act, 2002C In bid rigging, bidders of the bid makes an arrangement in such a way that they

keep the bid amount at a pre - determined level by means of manipulating theprocess of bidding

C Bidders of the bid act in concert for reducing competition for bids or formanipulating the process of bidding.


(i) Conditions conducive to cartelisation(ii) Resale price maintenance (3 marks each)

Answer:(i) Conditions conducive to cartelisation

As per the provisions of the Act, there are some conditions which are conduciveto cartelisation.Few of these conditions are:• Few competitors in the market• High entry & exit barriers• Similar products• Similar production costs • High dependence of the customers on the product.• Excess capacity.

(ii) Resale price maintenance• Sub-section 4 of Section 3 of Competition Act ,2002 deals with Resale price

maintenance


• It includes any agreement to sell goods on condition that the prices to becharged on resale by the purchaser shall be the prices stipulated by the sellerunless it is clearly stated that prices lower than those prices may be charged.

• Resale price maintenance is a vertical agreement.

• It is an anticompetitive agreement, which means an agreement that causesor is likely to cause an appreciable adverse effect on competition in India.

2013 - June [1] {C} With reference to the relevant legal enactments, write short noteson the following.

(ii) Conditions conducive to cartelisation (3 marks)

(vi) Competition advocacy (3 marks)

Answer :

(ii) Please refer 2012 - Dec [1] {C} (i) on page no. 47

(vi) Competition advocacy.

Please refer 2010 - June [1] {C} (ii) on page no. 46


(v) Bid rigging (3 marks)

DISTINGUISH BETWEEN


(i) 'Relevant geographic market' and 'relevant product market'. (5 marks)

Answer:

Relevant Geographic Market Relevant Product Market.

1. Defined under Section 2(s) of theCompetition Act. 2002.

1. Definition provided under Section 2(t) of the Competition Act, 2002.

2. It consists of area in whichconditions of competition for

• Supply of goods

• Services

• Demand for goods

• Demand for services can besegregated from that of nearbyareas.

2. It consists of those products andservices which can be exchangedwith each other due to similarity offeatures etc.


2011 - June [3] (a) Distinguish between the following:

(i) ‘Competition’ and ‘cartel’. (5 marks)

(iii) ‘Competition Commission’ and ‘Competition Appellate Tribunal’. (5 marks)

Answer:

(i) Competition: Competition can be defined as any situation in the market inwhich firm or sellers independently strive for buyer's patronage in order toachieve the business objective of achieving higher profit, sales or marketshare.

The parties to the competition can be international companies, domesticcompanies, small business firms to shall shops. An healty competition isalways goods for an economy

Cartel: Please refer 2006 - Dec [1] (i) on page no. 51

(iii) Competition Commission

1. Section 7 empowers the central government to establish a commissionto be known as 'Competition Commission of India'.

2. The Commission shall be a body corporate having perpetual successionand common seal.

3. The Commission shall consist of a chairman and other members, whichshall not be less than 2 and more than 10.

4. The Chairman and all other person shall be appointed by the CentralGovernment.

‘Competition Appellate Tribunal’

1. Competition Appellate Tribunal shall be set up by Central Government byvirtue of the powers entrusted to its under section 53A of Competition Act,2002.

2. The Competition Appellate Tribunal shall have the power to hear &dispose of appeals against any direction issued or mode or passed bycompetition commission.

3. Moreover it shall also have the power to adjudicate on claim forcompensation that may arise from the findings of the commission.

4. The appeal to the competition appellate tribunal shall be filed against theorder of competition commission within 60 days from the date on whichthe copy of the direction or order passed is received.

2013 - June [3] (a) Distinguish between the following.

(iii) 'Relevant geographic market' and 'relevant product market'. (5 marks)

Answer :

Please refer 2008 - Dec [3] (a) (i) on page no. 48



2013 - June [4] (c) What are the factors which the Competition Commission of India willtake into consideration in determining whether an agreement has an appreciableadverse effect on competition? (5 marks)

Answer :

Please refer 2007 - June [4] (c) on page no. 54

CS Inter Gr. II

SHORT NOTES


(iv) Cartels (3 marks)

Answer:

Please refer 2006 - Dec [1] {C} (i) on page no. 51


(i) Anti-competitive agreement (3 marks)

Answer:

Y As per Section 3(1) of the Competition Act, 2002. No -

• Enterprise or

• Association of enterprises or

• Person or

• Association of persons

Shall enter into an agreement in respect of

• Production or

• Supply or

• Distribution or

• Storage or

• Acquisition or control of goods or provision of services which causes or islikely to cause an appreciable adverse effect on competition.

Y Agreements made under Section 3(1) are considered as void as they are anticompetitive in nature.


Y Following agreements shall be considered to be agreements made incontravention of Section 3(1), if they cause or are likely to cause appreciableadverse effect on competition.

• Tie up sales

• Exclusive supply agreement

• Exclusive distribution agreement

• Refusal to deal

• Resale price maintenance

+

Also refer 2006 - Dec ]1] {C} (i) on page no. 51


(i) Cartels. (3 marks)

Answer:

As per Section 2 (c) of the Competition Act, 2002 defines Cartels to include:

• Association of producers

• Sellers or distributors

• Traders or service providers

Who by agreement amongst themselves limit control or attempt to control the:

• Production;

• Distribution;

• Sale or Price.

of goods in trade or provision of services.

Following agreements entered between enterprises or associations includingcartels shall be presumed to have adverse effect (unless proved otherwise)

• Directly or indirectly determining purchase or sale prices;

• Limits or controls production supply, market technical, development, investment orprovision of services.

• Shares the market or source of production or provision of service by virtue ofgeographical allocation of market.

• Directly or indirectly results in conclusive bidding.

2006 - Dec [3] (c) Write a brief note on ‘competition advocacy’ under the CompetitionAct, 2002. (3 marks)

Answer:

Section 49 of the Competition Act, 2002 coins the term 'Competition Advocacy'according to which CCI can give recommendation to the Central Government.


• During policy formulation in relation to competition Government may makereference to Commission for its opinion.

• Within 60 days of reference Competition Commission of India shall provideCentral Government with its opinion.

• However the opinion shall only be advisory in nature and not binding upon thegovernment.

+

Also refer 2010 June [1] {C} (ii) on page no. 46


(vi) Objectives of the Competition Act, 2002. (3 marks)

Answer:

The objectives of the Competition Act, 2002 are as follows:-

• To provide for the establishment of a Commission to prevent practices havingadverse effect on competition.

• To promote and sustain competition in the markets.

• To protect interest of consumers

• To ensure freedom of trade

• To provide for incidental matters connected thereto.


(iv) Competition policy (3 marks)

(v) ‘Regulation of combinations’ under the Competition Act, 2002 (3 marks)

Answer:

(iv) Please refer 2008 - Dec [1]{C}(vi) on page no. 45

(v) Y Section 6 of the Competition Act prohibits any person or enterprises fromentering into combination which

• Cause or

• likely to cause

Appreciable adverse effects on competition

Y Such combinations shall be held void

Y Section 6(2) provides that notice need to be given to the Commissionif one proposes to enter into any combination with details and feeswithin 30 days.


2008 - June [1] {C} With reference to the relevant legal enactments, write short noteson of the following:

(vi) Competition policy. (3 marks)

Answer:

Please refer 2008 - Dec [1]{C}(vi) on page no. 45


2006 - June [2] (a) Define the terms ‘acquisition’, ‘competition’ and ‘cartels’.

(6 marks)

Answer:

The term ‘acquisition’ may be defined as acquiring or agreeing to acquire, directly orindirectly:

• Shares, voting rights or assets of any enterprise.

C Control over management or control over assets of any enterprise. The term‘agreement’ includes any agreement or understanding or action in concert:

• whether or not it is in writing or.

• whether or not it is intended to be enforceable by legal proceedings.

Y As per Section 2 (c) of the Competition Act, 2002 defines cartels to include:

• Association of producers

• Sellers or distributors

• Traders or service providers

Who by agreement amongst themselves limit control or attempt to control the-

• Production;

• Distribution;

• Sale or Price.

of trade in goods or provision of services.

Y Following agreements entered between enterprises or associations includingcartels shall be presumed to have adverse effect (unless proved otherwise)

• Directly or indirectly determines purchase or sale prices;

• Limits or controls production supply, market technical, development,investment or provision of services.

• Shares market or source of production or provision of service bygeographical allocation of market.

• Directly or indirectly results in conclusive bidding.


2007 - June [4] (c) Mention the important factors which the Competition Commissionof India will take into consideration for determining whether an agreement has an‘appreciable adverse effect’ on competition. (5 marks)

Answer:

Y The terms ‘adverse appreciable effect on competition’ is an important and crucialterm which is coined as a strategic factor in determination of anti competitiveagreements

Y The important factors to be considered by the CCI for determining whether anagreement has an ‘appreciable adverse effect’ are as follows:-

• Creation of barriers to new competitions:

• Removing existing competitors out of the market:

• Foreclosure of competition by restricting entry

Y These are considered to be ‘anti competitive’ factors. However , following are thefactors which are related to beneficial effects:-

Y Accrual of benefits to customers, improvements in production or distribution ofgoods and services technical, scientific and economic promotion/developmentthrough production/distribution of goods or services.

2008 - June [4] (c) Mention briefly powers of the Competition Commission of Indiaunder the Competition Act, 2002. (3 marks)

Answer:

The powers of the Competition Commission of India under the Competition Act, 2002are as follows :

(a) To eliminate practices having adverse effect on competition.

(b) Protect interests of consumers.

(c) Promote competition.

PRACTICAL QUESTIONS

2005 - Dec [2] (a) Do the following amount to anti-competitive agreements? Givereasons in support of your answer:

(i) An agreement requiring a distributor not to sell the goods of the manufacturerin the States other than Gujarat and Maharashtra.

(ii) A stipulation in an agreement than the dealer shall not sell the goods belowthe stipulated price.


(iii) An agreement containing a clause that there will be discontinuation in thesupply of goods if the dealer is also dealing in the products of supplier’scompetitors.

(iv) An agreement stipulating the source of raw material for ensuring the qualityof goods to be exported. (2 marks each)

Answer:

(i) Yes, the agreement falls within the ambit of restrictive trade practice ascovered under Section 33(1) (g) of MRTP Act, 1969 since the agreementrequires distributor not to sell goods in states other than Gujarat andMaharashtra.

(ii) According to Section 33(1) (d) of MRTP Act, 1969 if an agreement is made topurchase or sell goods only at prices or on terms and conditions agreed upon,it shall be deemed to be a restrictive trade practice.

(iii) Yes, such an agreement will be considered as a restrictive trade practice asit consists of malafide intention to curb competition by providing fordiscontinuation clause if the dealer deals in competitor’s product, thus, suchan agreement calls for registration.

(iv) No, such an agreement containing clause for maintaining the quality of goodsby specifying source of raw material cannot be regarded as a restrictive. tradepractice. The reason behind such a stipulation in the agreement is to ensurethat quality may not deteriorate.



1 With reference to the relevant legal enactments, writenotes on the following:Competition policy 07 - Dec [1] (iv), 08 - Dec [1] (vi) 2 Times

2 With reference to the relevant legal enactments, writeshort notes on the following:Anti-competitive agreements

06 - June [1] (i), 09 - June [1] (iv), 11 - June [1] (iii) 3 Times

3 With reference to the relevant legal enactments, writeshort notes on the following:Competition advocacy 06 - Dec [3] (c), 10 - June [1] (ii),

013 - June [1] (vi)

3 Times


4 With reference to the relevant legal enactments, writeshort notes on the following:Conditions conducive to cartelisation 012 - Dec [1](c)(I),

013 - June [1] (ii)

2 Times

5 Distinguish between the following.'Relevant geographic market' and 'relevant productmarket'. 08 - Dec [3] (a), 013 - June [3] (a) (iii)

2 Times

6 What are the factors which the Competition Commissionof India will take into consideration in determining whetheran agreement has an appreciable adverse effect oncompetition? 2007 - June [4] (c), 013 - June [4] (c)

2 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 3 3 3 3 3 6 6 3

Total 3 3 3 3 3 6 6 3

5.57

Star Rating




3C Consumer Protection-Law

and Practice

This Chapter Includes: Genesis of Consumer Protection Laws; Objects of theConsumer Protection Act, 1986; Consumer Protection Councils; District Forum;State Commission; National Commission; Limitation period for filing of complaint;Powers of the Redressal Agencies; Appeal; Penalties; Gist of Important ConsumerCases.




OBJECTIVE QUESTIONS

2009 - June [3] (b) Choose the most appropriate answer from the given options inrespect of the following:

(i) Under the Consumer Protection Act, 1986, the limitation period forfiling a complaint from the date of cause of action is !(a) 60 days(b) 6 months(c) 1 year(d) 2 years. (1 mark)

Answer:(i) (d) - 2 years

2009 - Dec [3] (b) Re-write the following sentences after filling-in the blanks spaces withappropriate word(s)/figure(s):

(i) The Consumer Disputes Redressal Forum shall not admit a complaint unless itis filed within_________years from the date on which the cause of action hasarisen.

(v) The State Commission under the Consumer Protection Act, 1986 can entertaincomplaints where the value of the goods or services and the compensation, if

any, claimed exceeds `_____, but does not exceed ` _____. (1 mark each)

Answer:

(i) The consumer dispute Redressal Forum shall not admit a complaint unless it is

filed within. 2 years. Years from the date on which the cause of action hasarisen.

(v) The state commission under the Consumer Protection Act, 1986 . Can entertaincomplaints where the value of goods and services and the compensation if any,

claimed exceeds. ` twenty lakhs but does not exceeds one crore.


(i) The Consumer Protection Act, 1986 only reinforces the doctrine of caveat

emptor. (3 marks)

Answer:

(i) Incorrect. The doctrine of ‘Caveat Emptor’ or ‘let the buyer beware’ which cameinto existence in the middle ages has been replaced by the principle of‘consumer sovereignty’. The Consumer Protection Act aims at protection of

[Chapter #### 3C] Consumer Protection-Law and Practice (((( 5.59

consumers and to provide for remedies which are simpler, more accessible,quicker and less expensive. It would not be wrong to say that Act is moreinclined towards the principle of ‘consumer sovereignty.’


(v) The jurisdiction of the State Consumer Disputes Redressal Commission is onlyappellate or revisional. (3 marks)

Answer:

False.Y The jurisdiction of the State Consumer Disputes Redressal Commission is not

just appellate or revisional in nature.Y It also entertains original application from complainant.

Y Wherein the value of goods and services exceed ` 20 Lakh but is lesser than `1 crore, State Consumer Redressal Commission enjoys the territorial jurisdictionover them.


(iv) The Consumer Disputes Redressal Forum, the State Commission or theNational Commission shall not admit a complaint unless it is filed, within_________ year(s) from the date on which the cause of action has arisen.

(1 mark)

Answer:The Consumer Disputes Redressal Forum, the State Commission or the National

Commission shall not admit a complaint unless it is filed within two year (s) from thedate on which the cause of action has arisen.


(i) The consumer forums can entertain a complaint arising out of the contract whichprovides for arbitration of disputes. (3 marks)

Answer:

True: The consumer forums can entertain a complaint arising out of the contract whichprovides for arbitration of disputes.It was held in N.K. Modi v Fair Air Engineers Pvt Ltd. that the consumer forums canentertain a complaint arising out of the contract which provides for arbitration ofdisputes.Even section 35 of the arbitration Act, shall not be a bar on the Jurisdiction of theforums.



(v) The National Consumer Disputes Redressal Commission shall have jurisdictionto entertain complaints where the value of the goods or services and the

compensation, if any, claimed exceeds ` _________. (1 mark each)

Answer:

(v) ` 1 crore


(v) The limitation period for filing a complaint under the Consumer Protection Act,1986 is two years from the date on which the cause of action arises without anyexception. (3 marks)

Answer:

False:C The above statement is not trueC There is an exception to the provision relating to limitation period for filing a

complaint in 2 years under the Consumer Protection Act, 1986C As per the provisions of the Consumer Protection Act, 1986, where the

complainant satisfies the District Forum/State Commission/National Commissionas the case may be that he had sufficient cause for not filing the complaint withinthe prescribed period of 2 years, then in that such complaint may be entertainedsubject that the reasons for condoning the delay has been recorded.


(i) An appeal against the order passed by the Consumer Disputes Redressal Forumhas to be preferred within ___________ days from the date of the order to theState Commission. (1 mark)

Answer:(i) 30


(v) The redressal forums constituted under the Consumer Protection Act, 1986 arequasi-judicial in nature and scope. (3 marks)

Answer:

True:C The redressal forums constituted under the Consumer Protection Act, 1986 are

quasi-judicial in nature & scope.


C They have been vested with the powers of a Civil Court under the Code of CivilProcedure, 1908 while trying a suit.

C Thus redressal forums act as quasi-judicial machineries.

2012 - Dec [2] State, with reasons in brief, whether the following statement is true orfalse.

(iv) Consumer disputes redressal forums constituted under the Consumer ProtectionAct, 1986 are to be construed as judicial authorities and proceedings beforethem can be taken to be the legal proceedings. (3 marks)

Answer:

False:In N.K. Modi v. Fair Air Engineers Pvt. Ltd. (decided on 13.11.1992) the NationalCommission observed that the forums under the Consumer Protection Act are not to beconstrued as judicial authorities and the proceedings before them cannot be taken tobe legal proceedings. For a judicial authority, it is necessary that some part of thejudicial power should be transferred to and vested in the forums as in the case ofcivil/criminal/special courts. Though, the consumer forums have powers to adjudicatedispute, they do not have any trappings of a Court. Except, conforming to the principleof natural justice, consumer forums are not governed by the Evidence Act or the CivilProcedure Code, except for certain limited purposes.


(iv) The National Consumer Disputes Redressal Commission shall not admit acomplaint unless it is filed within__________from the date on which the causeof action has arisen. (1 mark)

Answer:(iv) 2 years


(v) The Consumer Disputes Redressal Forum, the State Commission or theNational Commission shall not admit a complaint unless it is filed within _______year(s) from the date on which the cause of action has arisen. (1 mark)

Answer :(v) two



(iv) The Consumer Disputes Redressal Forum has pecuniary jurisdiction to entertaincomplaints where the value of goods/services complained against and thecompensation, if any, claimed, is upto ` ____________. (1 mark)

SHORT NOTES


(i) Deficiency in service (3 marks)Answer:# Section 2 (1) (g) of the Consumer Protection Act, 1986 defines ‘deficiency in

services’.# Deficiency in services means -

• fault• imperfection• shortcoming or• inadequacy

in the -• quality• nature• mannerof performance which is required to be maintained by or under any law for the timebeing in force or has been undertaken to be performed by a person in pursuanceof a contract or otherwise in relation to a service.

2010 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following:(vii) ‘Complainant’ under the Consumer Protection Act, 1986. (3 marks)

Answer:The term ‘Complainant’ is defined under Section 2(1) (b) of the Consumer ProtectionAct, 1986Y ‘Complainant’ includes-

C ConsumerC In case of death of consumer, his legal heir representativeC Voluntary consumer associationC Central/State GovernmentC One or more consumers where there are numerous consumers having same

interestWho make a complaint



on the following:

(vi) ‘Defect’ in goods under the Consumer Protection Act, 1986 (3 marks)

Answer:

As per Section 2(1)(f) of Consumer Protection Act, 1986 defect means any fault,

imperfection or shortcoming in the quality, quantity, potency, purity or standard which

is required to be maintained by or under any law for the time being in force or under any

contract, express or implied, or as is claimed by the trader in any manner whatsoever

in relation to any goods.

It is clear from the above definition that non-fulfilment of any of the standards or

requirements laid down under any law for the time being in force or as claimed by the

trader in relation to any goods fall under the ambit of defect.


on the following:

(i) Deficiency in service (3 marks)

Answer:

Please refer 2009 - June [1] {C} (i) on page no. 62

2012 - Dec [1] {C} With reference to the relevant legal enactments, write short notes

on the following:

(iii) Commercial purpose (3 marks)

Answer:

Commercial Purpose

C The term ‘commercial purpose’ has been provided in the Consumer Protection

Act, 1986.

C If the goods have been purchased for being used in some profit making

activity on a largescale & there is direct nexus between the purchase of

goods & profit making activity then the purchase of goods will be meant for

commercial purpose.

C Commercial purpose does not include use by a consumer of goods bought &

used by him exclusively for the purpose of earning his livelihood by means of

self employment.


on the following.

(i) Basic rights of consumers (3 marks)


Answer :

'Basic rights of consumers' as provided under the Consumer Protection Act, 1986 can

be described as follows:

(i) Right to safety: Every consumer has the right to safety i.e the right to be

protected against the marketing of goods & services which are hazardous to life

& liberty.

(ii) Right to be informed: Under the Consumer Protection Act, 1986, consumer has

the right to be informed about the quality, quantity, purity, standard & price of

goods & services so as to protect himself against any unfair trade practices.

(iii) Right to choose: Right to choose means right to be assured & have access to

the variety of goods & services at competitive prices. In case of monopolies it

means right to be assured of satisfactory quality & services at a fair price.

(iv) Right to be heard: Consumer Protection Act, 1986 provides the right to be

heard which means that the consumers interest will receive proper & due

consideration at appropriate forums. In broad sense, it also includes right to be

represented at various forums formed to consider the consumer welfare.

(v) Right to seek redressal: One of the basic right of consumer under the

Consumer Protection Act, 1986 is the right to seek redressal which means the

right to seek redressal against unfair practices or restrictive trade practices. It

includes the right to fair settlements of the genuine grievances of the consumers.

(vi) Right to Consumer Education: Basic rights of the consumer under the Act

includes the right to consumer education which means the right to acquire the

knowledge & skill to be an informed consumer.


(iv) ‘Complaint’ under the Consumer Protection Act, 1986 (3 marks)


DISTINGUISH BETWEEN

2010 - June [3] (a) Distinguish between of the following:(ii) ‘Contract of service’ and ‘contract for service’. (5 marks)

Answer:

Contract of service and Contract for employment

Contract of Service Contract for Employment

1. In such a case the employer candirect and control the duties and themanner of performance of theemployee.

The person performing such contractenjoys larger autonomy and discretion inexecution of the contract and the otherperson cannot decide or direct the mannerof performance.

2. Thus, there exists an employer-employee relationship.

Employer-employee relationship does notexists in such a case.

3. The employee is always bound towork as per the supervision of theemployer as master-servantrelationship is present.

Person himself chalks out the programmeand executes them to accomplish thegoals. Day to day control of the other partyis not seen.

4. Contract of service can thus be seenin case of employment.

Example-professional contracts.

2012 - June [3] (a) Distinguish between the following:(iii) ‘Contract of service’ and contract for service’. (5 marks)

Answer:Please refer 2010 - June [3] (a) (ii) on page no. 65

2012 - Dec [3] (a) Distinguish between the following:(i) ‘Pecuniary limits’ and ‘territorial limits’ of consumer disputes redressal forums

constituted under the Consumer Protection Act, 1986. (5 marks)

Answer:

Pecuniary limits of Consumer Disputes Redressal ForumsSection 11 of the Consumer Protection Act, 1986 empowers the District Forum toentertain complaints where the value of goods or services and the compensation, if any,claimed does not exceed rupees twenty lakhs.


As per Section 17 of the Consumer Protection Act, 1986 the State Commission canentertain complaints where the value of the goods or services and the compensation,if any claimed exceed rupees twenty lakhs but does not exceed rupees one crore.

Section 21 provides that the National Commission shall have jurisdiction toentertain complaints where the value of the goods or services and the compensation,if any, claimed exceeds rupees one crore.

Territorial limits of Consumer Disputes Redressal ForumsSection 11 of the Consumer Protection Act, 1986 provides that a complaint to beinstituted in the District Forum within the local limits of whose jurisdiction the oppositeparty or the defendant actually and voluntarily resides or carries on business or has abranch office or personally works for gain, at the time of institution of the complaint; orthe cause of action arises, wholly or in part.

Section 17 of the Consumer Protection Act, 1986 provides that the StateCommission has the jurisdiction to entertain appeals against the orders of any DistrictForum within the State.

Section 21 of the Consumer Protection Act, 1986 provides that the NationalCommission shall have jurisdiction to entertain appeals against the orders of any StateCommission.

2013 - June [3] (a) Distinguish between the following.(i) 'Contract of service' and 'contract for service'. (5 marks)

Answer :Please refer 2010 - June [3] (a) (ii) on page no. 65

PRACTICAL QUESTIONS

2008 - Dec [5] (c) Sangeetha filed a complaint against a bank where her ornamentskept in the bank's locker were found missing and sought compensation through theConsumers Disputes Redressal Forum against the deficiency in service by the bank.The bank submitted a certificate recorded by the custodian of the bank on the daySangeetha had operated the locker which stated that all lockers operated during the dayhad been checked and found properly locked. Will Sangeetha succeed in her claim ?

(5 marks)

Answer:Yes, Sangeetha shall succeed in her claim since the ornaments were found lost fromthe locker and the bank should be regarded as guilty for gross negligence.


2009 - June [4] (c) The insured (since deceased) had taken out four life policies withdouble accident benefits, premium payable half-yearly. When the third premium fell due,an agent of the insurer met the insured and took a bearer cheque towards the premiumpayable by him in respect of the policies. Although, the cheque was encashedimmediately, it was not deposited with the insurer for 3 months. In the meantime, theinsured met with a fatal accident and died. The widow filed a claim for payment of thesum assured. The insurer pleaded that the insurance agent had no implied authority tocollect the premium. Will the widow succeed in her claim? (5 marks)Answer:Under the Consumer Protection Act, 1986 in a case of ‘Harshad J. Shah VLIC ofIndia’ it was held that if the premium is paid by a person to the agent of Life InsuranceCorporation but the agents did not deposit the premium & during that period if the deathof the person takes place then the defendant cannot claim compensation on the groundthat there was no deficiency of service on the part of LIC. Thus the wife of the deceasedwill not succeed in her claim against the Life Insurance Corporation of India.

2009 - Dec [5] (a) Raman purchased a car by taking a loan from a bank and gave post-dated cheques to the bank not only in respect of repayment of loan instalments but alsotowards premium of insurance policy for succeeding 3 years. On the expiry of the policyin the first year, the bank failed to get the policy renewed for the second year. In themeantime, the car met with an accident. Raman brought an action against the bank for'deficiency in service' under the Consumer Protection Act, 1986. Will he succeed ?

(5 marks)Answer:It was held in Pradeep Kumar Jain v/s Citi Bank, the appellant purchased a car bytaking a loan from the respondent bank and gave post dated cheques to the bank forloan installment and insurance premium. On expiry of policy the bank failed to get thepolicy renewed. In the meantime car met with an accident. The Supreme Court heldthat there is no deficiency in service because the obligation to renew the policy was onappellant alone. But merely passing on two cheques to the bank for being paid toinsurance company the appellant would not absolve himself of his liability to renew thepolicy. The appellant also have certain duties to discharge in the matter of obtaining thepolicy and cannot merely pass the blame to someone else. Hence Raman will notsucceed in the above case.

2010 - June [4] (c) Jolly Ltd. maintained a guest house for the use of its managingdirector and other executives. It entered into an agreement with a firm for the installationof central air-conditioning system. The system installed did not function, developedsnags and there was leakage of water from ducting system. The company filed acomplaint claiming compensation for deficiency in service under the ConsumerProtection Act, 1986. Will it succeed? Give reasons with reference to case law, if any.

(5 marks)


Answer:(a) Yes, Jolly Ltd. is entitled to file a complaint as a consumer stands eligible for

claiming compensation for deficiency in services as per the provisions of ConsumerProtection Act, 1986.

(b) As per the facts provided the company entered into an agreement with a firm forinstalling central air conditioning in the guest house which developed some snagsand was not working properly.

(c) The use of air conditioner by Jolly Ltd. was not all commercial since the same wasnot related to the business carried on by the company.

(d) The facts of the case are similar to that of J.K. Puri Engineers v. Mohan Breweries& Distilleries Ltd.

(e) In that case the National Commission decided it in favour of the company.

2010 - Dec [4] (c) Prakash, aged 37 years, was travelling from Mumbai to Delhi by air.When he occupied his seat in the aircraft, an announcement was made that his luggagewas lying on the ground unidentified and that he should disembark to identify hisluggage. When Prakash was stepping down from the aircraft, the ladder was suddenlyremoved as a result of which he fell down sustaining bodily injuries causing 10%

disablement. As against the claim of ̀ 10 lakh filed by Prakash towards compensation,

the airlines was willing to pay ̀ 40,000 which according to it was the maximum statutoryliability of the airlines under the Carriage by Air Act, 1972. However, the State

Commission awarded ` 4 lakh towards compensation and an additional ` 1 lakh formental agony and distress plus costs. Is the order passed by the State Commissionjustified ? If so, give reasons and refer to the decided case law. (5 marks)

Answer:Please refer 2004 - June [5] (i) on page no. 72

2011 - June [4] (b) Mohan made a deposit of ` 1.50 lakh with the Housing Board for ahouse proposed to be built by it. There was a stipulation that the house would becompleted within 2 years. The house could not be completed and possession was nothanded over as promised. The Housing Board pleaded that construction was not uptothe mark and expected level because of the use of low cost technology. Expressingregret, the Housing Board suggested that it was prepared to refund the deposit amountadding that there was no provision to pay any interest charges.

Mohan is not satisfied with the explanation and intends to approach the ConsumerDisputes Redressal Forum for claim of refund amount, interest and compensation, ifany. Will Mohan succeed ? Refer to decided case law, if any. (5 marks)


Answer:In the given question Mohan has made deposit of ` 1,50,000 with housing board for ahouse proposed to be built and possession to be handled to him in a years. Housing board was unable to compete the project in expected time & refund the entiredeposit to Mohan.

Mohan was not satisfied with the refund & additionally demanded interest &compensation & reased to consumer dispute redressel forums.Y In the given case Mohan will succeed & the housing board has to give interest &

compensation besides the refund of deposit amount. Y This case is similar to the case of SP. Dhanaskar v/s Housing Commissioner,

Karnataka Housing Board, wherein it was held that housing board has beengrossly negligent in rendering services and ordered for returning deposit amountwith interest to the depositor.

2011 - Dec [4] (b) Ram Dhenu Ltd. and Diamond Engineers entered into a contract forthe supply of electrical equipments. The contract contained an arbitration clause to referthe disputes to an arbitral tribunal. Ram Dhenu Ltd. made a complaint to the ConsumerDisputes Redressal Forum for ‘deficiency in service’. The opposite party opposed thecomplaint in view of the arbitration clause contained in the contract. Will it succeed?Give reasons. (5 marks)Answer:C In this case, the contract made between the parties contained an arbitration clause

to refer the disputes to an arbitral tribunal.C The forums under the consumer Protection Act are not to be construed as Judicial

authoritiesC Proceedings before the forums cannot be taken to be legal proceedingsC It is to be noted that consumer forums are not governed by the Evidence Act or

Civil procedure code, except for certain limited purposesC Thus, in the above case, though the contract contained an arbitration clause to

refer the disputes to an arbitral tribunal, then also the consumer forums canentertain a complaint.

C The facts of these case are similar to the case of ‘N.K. Modi v/s Fair Air EngineersPvt. Ltd’.

2012 - June [4] (b) Ramesh took out four life insurance policies with double accidentbenefits, premium payable half-yearly. When the third premium fell due, the generalagent of the Life Insurance Corporation (LIC) met Ramesh and took a bearer chequetowards the premium payable by him in respect of the policies. Although the chequewas encashed immediately, yet the payment of premium was not deposited with the LICfor another three months. In the meantime, Ramesh met with a fatal accident and died.Ramesh’s wife filed claim for the payment of the sum assured. Will she succeed? Givereasons. (5 marks)


Answer:

Under the Consumer Protection Act, in a case of ‘Harshad J. Shah VLIC of India’ itwas held that if the premium is paid by a person to the agent of Life InsuranceCorporation but the agents did not deposit the premium & during that period if the deathof the person takes place then the defendant cannot claim compensation on the groundthat there was no deficiency of service on the part of LIC. Thus the wife of the deceasedwill not succeed in her claim against the Life Insurance Corporation of India.

2012 - Dec [4] (b) A school owned a swimming pool and offered swimming facilities tothe public on payment of fees. The school conducted summer swimming training campsto train children in swimming and for this purpose had engaged a trainer/coach.Mohan had enrolled his son for learning how to swim. One day while swimming, thechild died due to drowning. The school authorities maintained that the trainer/coach wasfully qualified for the job and challenged the complainant’s claim for compensation in theconsumer disputes redressal forum.Should the school authorities be held liable to pay compensation for ‘deficiency inservice’? Who is entitled to receive compensation? Give reasons. (5 marks)

Answer:Please refer 2004 - Dec [5] (iii) on page no. 74

2013 - June [5] (b) Ramesh, an industrial employee contributing to ESI Fund wastreated in an ESI hospital. Due to negligent diagnosis at the hospital, his conditiondeteriorated and he had to be shifted to a private hospital. He filed a complaint beforethe Consumer Disputes Redressal Forum seeking compensation from the ESI hospital.His complaint was dismissed on the ground that medical service rendered by the ESIhospital was gratuitous in nature. The State Commission and the National Commissionupheld the decision of the District Forum. Ramesh intends to prefer an appeal beforethe Supreme Court. Will he succeed? Give reasons. (5 marks)

Answer :C The fact of the present case is similar to the case of Kishore Lal V Chairman,

Employee State.

C In this case, Supreme Court held that the appellant is a consumers within the ambitof Section 2 (1) (d) of the Consumer Protection Act, 1986 and the service renderedby the medical practitioners of hospitals /nursing homes run by the ESI Corporationcannot be regarded as a service rendered free of charge.

C The person availing such service under an insurance scheme of medical care,whereunder the charges for consultation, diagnosis and medical treatment areborne by the insurer, such services would fall within the ambit of ‘service’ asdefined in section 2 (i) (o) of the Consumer Protection Act.

C Therefore the contention of consumer forum is incorrect.


CS Inter Gr. II

SHORT NOTES


(ii) Reliefs which a Consumer Disputes Redressal Forum can grant to anaggrieved consumer (3 marks)

Answer:Under the Consumer Protection Act, 1986, reliefs which a Consumer DisputesRedressal Forum can grant to an aggrieved consumer can be as follows:-

(i) To remove the defect pointed out by the appropriate laboratory from the goodsin question.

(ii) To replace the goods.(iii) Consumer Dispute Redressal Forum can direct the supplier to return to the

consumer the price, or the charges paid by the consumer.(iv) It may order to pay the amount for compensation to the consumer for any loss

or injury suffered by him/her.(v) It may pass an order to issue the corrective advertisement at the cost of opposite

party.(vi) Redressal forums may ask to remove the defects in goods or deficiencies in the

services.(vii) It may pass an order not to offer the hazardous goods for sale.(viii) It may order to provide for adequate costs to parties.


2005 - June [2] (b) Write an exhaustive note on the functions of the CompetitionCommission of India. (6 marks)

Answer:

The functions of CCI are as follows:C Inquire into agreements relating to production, supply, storage, distribution

between enterprises which causes or is likely to cause negative impact oncompetition.

C Inquire to find out the adverse effect of mergers or amalgamation.C The opinion of the competition commission of India with regards to possible impact

of policy on competition may be seek by the Central Government, though the sameis not binding on the Government, as provided under Section 49 of the Act.


2006 - June [3] (c) Briefly mention the policy initiatives taken by the government to paveway for consumer protection in the country. (3 marks)Answer:The Government has taken several initiatives to pave way for the consumer protectionin the country Government has made various laws for the protection of consumerinterests. But the Consumer Protection Act, 1986 is a special legislation which protectthe interest of consumers to a great extent. Consumer Protection Act, 1986 provides fora three tier quasi- judicial redressal system at the District, State and National levels. Itprovides for simple, quick & easy remedy to consumers.

2008 - June [5] Attempt of the following:(i) Define the term ‘service’ as contained in the Consumer Protection Act, 1986. Are

railway passengers and telephone subscribers ‘consumers’ under the ConsumerProtection Act, 1986 ? Refer to decided case law. (5 marks)

Answer:The term service means:C Service of any description which is made available to potential users.C Service does not includes rendering of any service free of charge.C Examples of service include services relating to banking housing construction,

transport, insurance.— Railway passengers will be considered as consumers as they pay the

stipulated fare.— In the same manner, telephone subscribers will also be 'consumers' under the

Consumer Protection Act, 1986.

PRACTICAL QUESTIONS

2004 - June [5] With reference to the provisions of the Consumer Protection Act, 1986,decide the following giving reasons in support of your answer:

(i) Anju boarded an Express Train at a station in Tamil Nadu to go to Delhi on someprofessional work. She was carrying with her a suitcase in which there weresome research material and cash of ̀ 10,000. She complained to the travel ticketexaminer that a stranger without reservation had entered into the compartmentand despite protest from her and other co-passengers, the stranger occupied theberth and the travel ticket examiner did not do anything to de-train the stranger.When Anju woke up at 2.00 a.m. the next day, to her surprise, she found that hersuitcase was ransacked, and important documents and cash were missing. Shealleged that both travel ticket examiner and the guard were unwilling to receiveher complaint and, therefore, she had registered an FIR with the police at Delhi.And afterwards she filed a case before the District Consumer Forum, Delhi.Whether the railways are liable to pay the damages to Anju? (5 marks)


(ii) A dealer in precious stones and gems had sent four parcels of gems byregistered post duly insured to a consignee in America, but the parcels did notreach the destination. The investigation revealed that the parcels were either lostin transit or were stolen. The postal authorities admitted their liabilities and madepayment of postal charges in respect of each parcel. The insured agreed tosettle the claim. However, he insisted that the payment of the insured amountshould be made in US dollars. The insurer denied their liability to pay in dollarsto the dealer. The dealer proceeded against the insurance company before theNational Consumers Disputes Redressal Commission. Will he succeed?

(5 marks)(iii) After Ranjit. a passenger of air-travel, occupied his seat in the air-craft, an

announcement was made that his luggage was lying on the ground unidentifiedand that he should disembark to identify it. According to Ranjit, he movedtowards the rear door and finding that the step ladder was attached to the reardoor, he stepped out onto the stair case, but before he could put his entire bodyweight on the stair case, the ladder was suddenly removed and as a result, hefell down on the ground and sustained bodily injuries. He filed a case for

compensation of ̀ 10 lakh but the airlines was willing to pay only ̀ 40.000 underits rules framed under the Carriage by Air Act, 1972. Will he succeed for thehigher amount? (5 marks)

Answer:

(i) In the above case, the railways are liable to pay the damages to Anju as therewas a clear deficiency of service on the part of railways. The stranger occupiedthe berth & the travel ticket examiner did not do anything to de-train the stranger.It was considered that there was a deficiency of service & the railways are liableto pay the damages to Anju.

(ii) Under the Consumer Protection Act, 1986, in a case of National Insurance Co.Ltd V. Sky gems the insurer refused to pay the amount in U.S. Dollar on theground that it continued be the owner of the goods. The National Commissioninsisted to pay in U.S. Dollar. But the Supreme Court states that the title to thegoods had not passed to the consignee & the consignor continued to be theowner.

(iii) Under the Consumer Protection Act, 1986 in a case of ‘ Station Manager, IndianAirlines V Dr. Jiteswar Ahir it was held that there is a deficiency in service on thepart of the airlines & therefore the airlines will be liable to pay the compensationas determined by the Commission. There is an injury suffer to Ranjit & thereforehe has the right to seek redressal under the Consumer Forum.


2004 - Dec [5] With reference to the provisions of the Consumer Protection Act, 1986,decide the following giving reasons in support of your answer:

(i) Babul entered into a contract with a share broker for the sale of shares. Theshare broker, after having sold the shares, issued him a cheque but the chequewas dishonoured. Despite repeated reminders, the share broker did not pay himthe money. He took up the matter with the Consumers Forum for redressal. Willhe be regarded as a 'consumer' and will he succeed?

(ii) Madan submitted certain documents before the Sub-Registrar for registrationclaiming these as will. These documents were found to be a deed of conveyanceand also improperly stamped. The Sub-Registrar impounded the documents andforwarded these to the Collector of Stamps. The Collector of Stamps askedMadan to appear before him. He neither appeared before the Collector ofStamps nor submitted any other documents. Madan has instead filed acomplaint before the Consumer Forum that he has been harassed for threeyears and that there has been deficiency in service on the part of theSub-Registrar and the Collector of Stamps. Will he succeed?

(iii) The management of Nalanda School owned a swimming pool and offeredswimming facilities to the public on payment of certain fee. The managementhad engaged an experienced coach for coaching people how to swim. One day,a boy of 14 years got drowned and died while learning swimming. The schoolmanagement denied responsibility by stating that it had requisitioned theservices of a qualified and experienced coach. The coach also deniedresponsibility claiming that he had taken all possible precautions, taken the boyout of water and removed water from his stomach. Will the father of thedeceased succeed in his claim for relief? (5 marks each)

Answer:(i) Under the Consumer Protection Act, 1986, Babul will be regarded as a

consumer & he will be succeeded. He is hiring the services for consideration &since the Babul has been cheated there has been a deficiency of service on thepart of the broker as the cheque was dishonoured. Hence in his complaint to theConsumer Forum, he will be regarded as a consumer & will succeed.

(ii) In the above case, Madan has filed a complaint before the Consumer Forum thatthere has been deficiency in service on the part of the Sub-Registrar & theCollector of stamps Madan will not succeed in his complaint as the Registraronly perform their statutory duties to raise collect the state revenue.

(iii) In the above case, father of the deceased will succeed on his claim for reliefunder the Consumer Protection Act, 1986. The deceased & his father wasconsidered as consumer as they hired of service with consideration which is abasic condition to be a consumer & since there is a deficiency of service on part


of management of Nalanda School & the coach, the father will be considered asa consumer & has a right to get relief under the Consumer Protection Actthrough the redressal forums.

2005 - June [4] (c) Rajan had taken an insurance policy on his life. While he wastravelling in the car of a friend, the vehicle caught fire and all the occupants includingthe driver, sustained serious injuries. Later on, Rajan died in the hospital. His wife fileda claim which was refused on the ground that the driver did not have a valid licence.She filed a case with the Consumer Disputes Redressal Forum. Will she succeed?Decide with reasons and relevant case law, if any. (5 marks)

Answer:In the above case Rajan’s wife will succeed in her claim. Rajan has taken an insurancepolicy on his life & was died in an accident his wife will be entitled for compensation ofthe amount from the insurance company irrespective of the fact whether the driver havea valid licence or not. The insurance company cannot refused the claim on the groundthat the driver has not a valid licence.

2005 - June [5] (c) In February, 1999, Dhirendra opened an account under the nationalsavings scheme in the General Post Office in Nagpur. In March, 2000, he opened asimilar account in another Post Office in Pune. On his retirement from service, he gotboth the accounts transferred to a branch of the Post Office in Bhopal, When he soughtto close the accounts by withdrawing the amount together with interest, the Post Officepointed out that under the National Savings Scheme Rules, he could have opened onlyone account and thus would not be entitled to receive any interest on the secondaccount opened in Pune. Dhirendra wants to file a complaint with the ConsumerDisputes Redressal Forum. Will he succeed? Decide giving reasons and citing caselaw, if any. (5 marks)

Answer:The above case can be related with the decided case of Department of Posts &Telegraphs v Dr. R.C. Saxena. In this case the state commission held that the appellantdepartment did not obtain any undertaking from the complainant that he had notopened any account under the said scheme earlier. If the postal department wants toput the depositor under some disadvantage on account of opening of second accountin pursuance of the rules, it was also under an obligation to inform in advance to thedepositor about the above rules and the disability as above. It can be seen thatdepartment has not done so. So the appellants cannot take away the right of therespondents by taking shelter of rules 3 and 156 (iv) of NSS rules.

The national commission held that the opening of the second account by therespondent was an irregularity not amounting to contravention of the rules. Therespondent was entitled to interest on the deposit.


2005 - June [6] (c) An insurance company did not settle the insurance claim amountingto ` 2 lakh on the plea that Shambhu, the assured, had not disclosed material factsabout his illnesses, i.e., high blood pressure and history of diabetes, at the time ofsubmitting the proposal. Shambhu denies the allegations and pleads that he had notconcealed anything. The 'insurer contended that the onus of proof lies on the assuredto prove beyond doubt that he had not misrepresented about the material facts. Will thecontention of the insurance company be given credence by the Consumer DisputesRedressal Forum? Give reasons in support of your answer and refer to relevant caselaw, if any. (5 marks)Answer:The viewpoint of the insurance company was not right under the Consumer ProtectionAct, 1986. Insurance company plea that the insured person Shambhu had not disclosedmaterial facts about his illness. But the insurer company has failed to proof thatShambhu had suppressed material facts. The onus to proof will lie on the party who isalleging it to be fraud. Thus according to the provisions of the Consumer Protection Act,1986 the insurer company has to settle the claim.

2005 - Dec [5] (a) Good Health Ltd., an Indian insurance company, did not settle amedical claim of ` 2 lakh of Mohan towards open heart surgery on the ground that theassured (Mohan) had not disclosed material' facts, viz., hypertension and angina, at thetime of submitting his proposal form. Mohan pleaded with the insurance company thatthere was no suppression of material facts and it is the insurer who has to provematerial suppression; but did not succeed in his repeated pleas. Will Mohan succeedif he makes a complaint for the non-payment of medical claim under the ConsumerProtection Act, 1986? Give reasons in support of your answer. (5 marks)Answer:Please refer 2005 - June [6] [c] on page no. 76

2005 - Dec [6] (b) Prudent Investments Ltd. was celebrating silver jubilee of itsoperations and in this connection sent invitations by post to 250 top businessmen fora special dinner at a 5-Star Hotel. Due to delay in delivery and/or non-delivery ofinvitation cards by the postal authorities, only 100 invitees attended the dinner. Advisethe company whether it can make a complaint for compensation to the ConsumerDisputes Redressal Forum against the postal authorities for deficiency in service.

(5 marks)Answer:Under the Consumer Protection Act, 1986 National Commission held that the servicesrendered by the post office are merely statutory & there is no contractual liability. In theabove, due to the delay in delivery & or non-delivery of invitation cards by the postalauthorities will not make postal authorities liable company should not make complaintfor compensation to the Consumer Disputes Redressal Forum against the postalauthorities for deficiency on service.


2006 - June [5] (a) A CT scan machine is installed in Daya Ram Charitable Trust andDiagnostic Centre. 80% of the patients are required to pay charges for the servicesrendered by the trust whereas 20% patients are provided free services. On a complaintagainst the trust for deficiency in service, it contended that the trust did not engage inprofit-making activity on a large scale. Will it succeed ? (5 marks)

(c) Kajol purchased 2,000 units from a leading mutual fund in 1999 on monthly incomescheme. On maturity, the mutual fund sent account payee cheque dated 1st

September, 2005 in favour of Kajol at her address lodged with the mutual fundthrough registered post. The registered post letter was not returned undeliveredand the mutual fund believed that the letter containing the cheque was dulydelivered to Kajol. On 19th November, 2005, Kajol asked for payment of thematurity amount and was informed that the cheque was delivered and encashedthrough a co-operative bank. Kajol files a complaint against the mutual fund fordeficiency in service and seeks relief. Will she succeed ? (5 marks)

Answer:

(a) In the above question Daya Ram Charitable Trust & Diagnostic Center whopurchased a CT scan machine will not be considered as a consumer & will not beable to succeed for deficiency in service. It will not make a difference that 20% of thepatients are provided free services.

(c) Under the provisions of the Consumer Protection Act, 1986 Kajol who files acomplaint against the mutual fund will be able to succeed & will be awardedcompensation. There is a deficiency in service on the part of the mutual fund tomake the payment due to Kajol . Thus Kajol will be able to get compensation underthe consumer forum.

2006 - Dec [5] (a) Chhote Lal, a customer of a bank, while waiting to deposit cash of

` 45,000 at the bank counter was robbed of his bag containing cash by a person whoconfronted him with a revolver. The bank security guard did not catch the person evenwhen he was alerted by Chhote Lal. Chhote Lal filed a complaint with the District Forumagainst the bank for deficiency in service and sought relief. Will he succeed ?

(5 marks)

(c) A newly-wedded couple Anand and his wife Anjali had gone to Kathmandu for theirhoneymoon. They could not return in time to attend the reception as the airlineauthorities failed to inform them about cancellation of their return flight. They lodgeda complaint with the consumer’s forum for grant of compensation. However, theairlines authorities pleaded that the mistake was on the part of their agent whom theairlines authorities had informed about the cancellation of the flight. Will theysucceed in getting compensation ? Give reasons in support of your answer.

(5 marks)


Answer:

(a) In the above case, complainant was robbed at the bank counter. The bank securityguard did not catch the person even when he was alerted by Chhote Lal. In theabove case Chhote Lal (complainant) will be a consumer & there is a deficiency onservice on the part of bank. Thus the complaint filed by Chhote Lal with the Districtforum is right & he will succeed.

(c) In the case of M/s. Indian Airlines, Delhi & Ors. v. S.N. Seth & Ors [FIRST APPEAL

NO. 495 OF 1997] the Continental Travel Service (Delhi) Pvt. Ltd., an agent, ofIndian Airlines issued confirmed ticket from Lucknow to Delhi on a day when therewas no flight. Setting aside the order of the State Commission and dismissing theappeal with cost NCDRC held that it is a clear case of deficiency in service forwhich Indian Airlines, the principal is liable.

The National Commission held that travel agent is the agent of the IndianAirlines and it acts on behalf of its principal, the Indian Airlines. If for any negligentact of agent loss is caused to the third party principal is certainly liable. By issuingair ticket on behalf of the Indian Airlines a contract has been entered into betweenCustomer and Indian Airlines. In such circumstances principal would certainly bebound by the terms of the contract.

NCDRC relied on Supreme Court decision in Marine Container Services

South Pvt. Ltd. v. GO GO Garments - (1998) 3 SCC 247 wherein SC observed thatContract Act applies to the complaints filed under the Consumer Protection Act,1986. The Supreme Court observed that “We are not a little surprised to read thatthe Contract Act does not apply to complaints filed under the Consumer ProtectionAct. The Contract Act applies to all the litigants before the Commission under theConsumer Protection Act included. Whether in proceedings before the Commissionor otherwise, an agent is entitled to invoke the provisions of Section 230 of theContract Act and, if the facts found support him, his defence based thereon cannotbe brushed away.

In view of the aforesaid decision, Anand and Anjali can succeed in their claimfor compensation against Airline Authorities under Consumer Protection Act fordeficiency in service. As the agent acted negligently, Airline Authorities are liableas principal for the loss to third party.

2007 - June [5] Attempt the following:(i) A tenant entered into a lease agreement of a flat for use as residential house.

After occupying the flat, the tenant demanded of the landlord to effect somerepairs and re-paint the building. The owner refused on the ground that therewas no such clause in the lease agreement. The tenant filed a complaint in theConsumer Disputes Redressal Forum for ‘deficiency in service’. Will hesucceed ? (5 marks)


Answer:In this case, tenant who filed a complaint in the Consumer Disputes Redressal Forumfor deficiency in service’ will not succeed.

If the landlord who refused to provide the amenities to the tenant & as aconsequence of which, the tenant & his family members suffered mental agony, ill-health, then the landlord will not be liable under the Consumer Protection Act, 1986 tocompensate the tenant as there was an agreement between the tenant & the landlordfor the lease of immovable property. Thus in the above case, the tenant who files acomplaint before the redressal agency under the Consumer Protection Act, 1986 willnot succeed and the landlord will not be liable under the Act.

2007 - June [6] Attempt the following:(iv) Avtar made a complaint to the Consumer Disputes Redressal Forum that the

Regional Provident Fund Commissioner had not settled his provident fund dueswithin the period stipulated in the Employees’ Provident Funds andMiscellaneous Provisions Act, 1952 and for the ‘deficiency in service’. He alsoclaimed damages for non-settlement of the dues within the stipulated period. TheRegional Provident Fund Commissioner in his reply contended that there wasno hiring of service for consideration since he was performing a statutoryfunction. Will Avtar succeed ? (5 marks)

Answer:Facts of the case are similar to Regional Provident Fund Commissioner, Faridabad v.Shiv Kumar Joshi [Revision Petition No. 238 of 1994 decided on 30.0101996 (NCDRC)]wherein the complainant had alleged that his provident fund dues had not been settledwithin the period of 20 days of the claim as provided in the 1952 Act and Scheme and

that this constituted deficiency in service. He claimed damages of ` 65,000 for theCommissioners failure and negligence in setting his claim within the stipulated time. TheCommissioner in reply contended that there was no hiring of service for considerationin this case since he was performing a statutory function.

The District Forum allowed the complaint and its view was affirmed by the StateCommission. In appeal to National Commission, it was contented on behalf of theCommissioner that the expression service excludes rendering of service free of charge,and that the Act and the Scheme did not provide for any consideration being chargedfor executing statutory functions.

Dismissing the revision petition the National Commission observed that it was notcorrect to contend that the Commissioner was exercising statutory power and wasdischarging statutory functions under the 1952 Act and the Scheme and therefore, hecould not come within the ambit of the expression service.


Administration charges were levied and recovered by the Commissioner forpayment of services rendered by him and his staff. Under the Scheme it is theresponsibility of the principal employer to pay both the contribution payable by himselfand also administrative charges. A duty is also cast for investment of moneys belongingto the employees provident fund just as any banker of financial institution under thecontrol of the Central Government. The Commissioner is required to credit interest toeach account.

Referring to Lucknow Development Authority’s case, the National Commissionobserved that the Commissioner under the Act gave statutory service on payment ofadministrative charges and they were required to invest the contributions to theprovident fund like any banker or financing institution and to credit interest to thesubscribers account. This was rendering of service for consideration as defined in theAct.

In view of the aforesaid legal position, Avtar can succeed in his claim for deficiencyin services for not settling his provident fund dues within the period stipulated in theEmployees’ Provident Funds and Miscellaneous Provisions Act, 1952.

2007 - Dec [6] Attempt the following:(ii) Girish, while taking a loan from a bank, gave FDR of his family friend Neena as

a guarantee against the loan received. The bank adjusted the said FDR amountwhen Girish defaulted the loan repayment. Neena claimed return of money fromthe bank contending that she is a third party and it was ‘deficiency in service’ onthe bank’s part. Will Neena succeed ? (5 marks)

(iv) Under the ‘salary saving scheme’ of LIC of India, employees of a company havetaken insurance policies and the premium due on each policy is collected by thecompany from the salaries of the employees and sent to LIC of India. LIC ofIndia neither issued any separate receipts nor used to issue any premiumnotices to the employees. When the widow of a deceased employee made aclaim to the LIC of India on the death of her husband, LIC of India repudiated theclaim on the ground that four instalments of the premium have not been paid.The widow approached the Consumer Disputes Redressal Forum for redressal.Will she succeed? (5 marks)

Answer:(ii) In the above case, the bank adjusted the FDR amount of Neena when Girish

defaulted the loan repayment. The FDR was acting as a guarantee against theloan given to Girish by bank. Neena in the above case will not succeed if sheclaimed return of money from the bank contending that she is a third party. It washeld that there is no deficiency in service on part of bank & bank will not be liableto compensate Neena.

(iv) The widow who approached the Consumer Disputes Redressal Forum forredressal under the Consumer Protection Act, 1986 will succeed as it was theemployer who has the authority & burden of collecting the premium & remitting


to the corporation. LIC of India neither issued any separate receipts nor used toissue any premium notices to the employees. Thus it can be said that LIC isliable to make payment to the widow & widow who approached the RedressalForum will succeed.

2008 - June [6] Attempt of the following:(i) Rajesh made a complaint before the Consumer Disputes Redressal Forum for

seeking compensation against the State Electricity Board contending that dueto fluctuations and fall in electricity voltage in his small scale industrial unit, hesuffered production loss. Will he succeed? (5 marks)

(iii) After the date of booking for purchase of a car, Rakshit was asked to paydifferential amount of increase in the central excise duty at the time of deliveryof the car. Rakshit refused to pay the amount and moved the ConsumerDisputes Redressal Forum. Will he succeed ? (5 marks)

(iv) Rohit, the insured (since deceased), took out four life insurance policies withdouble accident benefits, premium payable half-yearly. When the premium felldue, the general agent of the LIC of India met Rohit and took a bearer chequetowards the premium payable by him in respect of the policies . Although theagent had encashed the cheque immediately thereafter, the amount was notdeposited with the LIC of India. Meanwhile, the insured met with a fatal accident.The widow of Rohit filed a claim for the payment of the sum assured. Will shesucceed ? (5 marks)

Answer:(i) In the above case, Rajesh made a complaint before the Consumer Disputes

Redressal Forum for seeking compensation against the State Electricity Boardcontending that due to fluctuations and fall in electricity voltage in his small scaleindustrial unit. In the above case, Rajesh will succeed and he will be awardedcompensation due to fluctuations and fall in electricity voltage in his small scaleunit.

(iii) In the above case, Rakshit was asked to pay differential amount of increase inthe central excise duty at the time of delivery of the car after the date of bookingfor purchase of car manufacturer's decision to increase the price due to increasein central excise duty is not justified. Thus Rakshit will succeed in the abovecase.

(iv) In the above case, when the premium fell due, the general agent of the LIC ofIndia met Rohit & took a bearer cheque towards the premium payable by him inrespect of the policies. In this case, the amount was not deposited with the LICof India, and the insured met with a fatal accident the widow of the insured(Rohit) filed a claim. In this case, the widow of the Rohit will not succeedbecause the agent had no express authority to receive the premium on behalfof corporation. On the part of LIC, there is no deficiency thus the widow of Rohitwill not succeed in the above case.




1 With reference to the relevant legal enactments, writeshort notes on the following:Deficiency in service 09 - June [1] (i), 12 - June [1] (i)

2 Times

2 Distinguish between ‘Contract of service’ and ‘contract forservice’. 010 - June [3] (a), 013 - June [3] (a) (i)

2 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 3 3 3 3 3 3 3 3

Total 3 3 3 3 3 3 3 3

5.83

Star Rating




4 Essential Commodities and

Standards of Weight and Measures

This Chapter Includes: Objects; Powers of Central Govt.; Seizure andConfiscation of essential commodities; Summary trial; Standards of Weights andMeasures Act, 1976.




OBJECTIVE QUESTIONS

2009 - June [2] State, giving reasons in brief, whether the following statements are trueor false.

(iii) 'Goods' means every kind of movable property other than actionable claims andincludes stock and shares even before allotment.

(iv) Tea is a 'food stuff' and hence constitutes an essential commodity under theEssential Commodities Act, 1955. (3 marks each)

Answer :

(iii) False: Though ‘goods’ include shares and stock but the same are regarded asgoods only when the same are allotted. Thus, before allotment shares andstocks cannot be regarded as goods.

(iv) False: Tea is not regarded as a ‘food stuff’ as it neither nourishes the body norsustains or promotes the growth.

‘Essential commodity’ has been defined under Section (2A) of EssentialCommodities Act, 1955 so as to mean a commodity specified in the schedulewherein the schedule charks out the following commodities -- Drugs - Fertilizer (organic/inorganic/mixed)- Foodstuff- hank yarn made from cotton - Petroleum and petroleum products- raw jute and jute textiles - Seeds of food crops cattle fodder and jute seeds.Some note worthy points following were held to be foods stuff in variousjudgements - Paddy - Turmeric - Milk- Ice- Pepper, cloves etc.However tea is not a food stuff as it neither nourishes the body nor sustains norpromotes its growth.

[Chapter #### 4] Essential Commodities & Standards of... (((( 5.85


(iii) A reasonable opportunity of being heard must be afforded to a person beforeordering confiscation of an essential commodity under the EssentialCommodities Act, 1955. (3 marks)

Answer :

True:Before confiscation of an essential commodity under the Essential Commodities Act1955, an reasonable opportunity of being heard must be afforded to a person whosegoods are about to be confiscated. Before confiscation a notice is required to be servedin writing informing him of the grounds on which it is proposed to confiscate the goods.And also to provide him a reasonable opportunity of making a representation in writingwithin a reasonable time and give him a reasonable opportunity of being heard.

2010 - Dec [3] (b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s) :

(iii) Essential commodity is a commodity specified in_________ to the EssentialCommodities Act, 1955. (1 mark)

Answer :

Essential commodity is a commodity specified in Schedule to the essentialcommodities Act, 1955.


(vi) The Standards of Weights and Measures Act, 1976 provides for thecompounding of offences. (3 marks)

Answer :In terms of offence punishable under section 25, sections 27 to 39, sections 45 to 47either before or after the institution of the prosecution, be compounded, on payment forcredit to the Government of such sum as may be prescribed.However, the Director or legal metrology officer as may be specially authorised by himin this behalf, may compound offences punishable under section 25, sections 27 to 39,or any rule made under sub-section (3) of section 52. The Controller or legal metrologyofficer specially authorised by him, may compound offences punishable under section25, sections 27 to 31, sections 33 to 37, sections 45 to 47, and any rule made undersub-section (3) of section 52:Provided that such sum shall not, in any case, exceed the maximum amount of the fine,which may be imposed under this Act for the offence so compounded.



(vi) There is no difference between the preparation for committing an offence and anattempt to commit an offence under the Essential Commodities Act, 1955.

(3 marks)

Answer:

False:C The above statement is not correctC As per the provisions of the Essential Commodities Act, 1955, there is a difference

between the preparation for committing an offence & an attempt to commit anoffence

C As per the provisions of the Act, any person who attempts to contravene any ordershall be deemed to have contravened that order

C An attempt to commit an offence is punishable whereas preparation to commit theoffence is not punishable under the law.


(iii) Any person aggrieved by an order of confiscation of an essential commodity mayprefer an appeal to the __________ within one month from the date of passingof the order. (1 mark)

Answer:State Government


(iii) Mens rea is an ingredient of the offence punishable under the EssentialCommodities Act, 1955. (3 marks)

Answer:

True:Mens rea is an ingredient of the offence punishable under the Essential CommoditiesAct, 1955. Mens rea or guilty mind is an essential ingredient of any criminal offence.


(i) A person aggrieved by the order of seizure of an essential commodity under theEssential Commodities Act, 1955 can seek remedy in a civil court.

(iii) Every non-standard or unverified weight or measure used in the course of tradeis liable to be forfeited. (3 marks each)


Answer:

(i) False:A person aggrieved by the order of seizure of an essential commodity under theEssential Commodities Act, 1955 cannot seek remedy in a civil court. As per theprovisions of Section 6E of the Act, no Court, tribunal or authority shall havejurisdiction to make order relating to the same.

(iii) False:Every non-standard or unverified weight or measure used in the course of tradeis not liable to be forfeited .As per the Act, such unverified weight or measureshall not be forfeited to the State Government if the person from whom suchweight or measure was seized gets the same verified & stamped withinstipulated time.


(i) __________is the name by which the law relating to weights and measures isknown in international parlance. (1 mark)

Answer:Legal Metrology


(vi) The award of confiscation of an essential commodity under the EssentialCommodities Act, 1955 prevents infliction of any punishment to which the personaffected thereby is liable under the Act. (3 marks)


(iii) Every unit of weight or measure has to be in accordance with the _______based on the international system of units. (1 mark)

SHORT NOTES

2008 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following :

(iv) Legal metrology (3 marks)

Answer :The law relating to weights and measures which is of scientific, technological andindustrial importance is termed as legal metrology in international context.Legal metrology thus covers in its ambit :


• Method of measurement • Instruments of measurement• Units used in measurement etc.

AIM:It aims at providing public guarantee by giving them an assurance of the accuracy andcorrectness of measurement.

SCOPE:In international context, legal metrology covers the following areas:) Commercial Transactions) Industrial measurement) Ensures public health and human safety.


(v) Mens rea under the Essential Commodities Act, 1955 (3 marks)

Answer :In criminal law, mens rea - the Latin term for "guilty mind" - is usually one of thenecessary elements of a crime. The standard common law test of criminal liability isusually expressed in the Latin phrase, actus non facit reum nisi mens sit rea, whichmeans "the act does not make a person guilty unless the mind be also guilty"

With respect to the Essential Commodities Act. 1955, it was observed by theSupreme Court in Nathulal v. State of Madhya Pradesh (AIR 1966 S.C. 43) that mens

rea or guilty mind is an ingredient of the offence punishable under Section 7 of the Acti.e. an intentional contravention of an order made under Section 3. In other words, if thedealer did believe bona fide that he could store the foodgrains for instance, withoutinfringing any order under Section 3, there could be no contravention under Section 7.

In Hariprasad Rao v. State (AIR 1951 SC 264). It was observed that unless aStatute either clearly or by necessary implication rules out mens rea as a constituentpart of a crime, an accused cannot be found guilty of an offence against the criminal lawunless he has got a guilty mind. Therefore, mens rea is an essential ingredient of anoffence under Section 7 of the Act.

2011 - June [1] {C} With reference to the relevant legal enactments, write short noteson the following :

(iv) Applicability of the concept of mens rea under the Essential Commodities Act,1955 (3 marks)


Answer :

Applicability of the Concept of Mens rea under the Essential Commodities Act,

1955.C Mens rea means guilty mind. It means that whatever wrong is done, it is an

intentional act.C In Natulal v/s State of Madhya Pradesh it was held that mens rea or guilty mind is

an ingredient of an offence punishable under Section 7 of the EssentialCommodities Act. of 1955 i.e. an intentional contravention of an order made UnderSection 3 is an essential ingredients of an offence. Under Section 7.Mens rea is an essential ingredient of any criminal offence and it can be excluded

from an statue only where it is absolutely clear that the implementation of mens rea

would defect the object of the statue.


(v) Legal metrology (3 marks)

Answer :

Legal Metrology: Please refer to ‘2008 - Dec [1] {C} (iv) on page no. 87


(vi) Salient features of the Legal Metrology Act, 2009 (3 marks)

Answer :

Please refer to 2008 Dec. [1] {C} (iv) on page no. 87


(iv) Pre-packaged commodity (3 marks)

Answer:

Pre-packaged commodity• Pre-packaged commodity has been defined in Section 2(l) of Legal Metrology Act,

2009. • It means a commodity which is placed in a package without the purchaser is

present, so that the product contained therein has a pre-determined quantity.• As per the provisions of the Act no person shall manufacture, pack, sell, import,

distribute for sale any pre-package commodity unless such package is in thestandard quantities & bears thereon such declarations & particulars.

• It shall contain a declaration as to the net quantity or number of the commoditycontained in the package in such form & in the prescribed manner.



(vi) Legal metrology (3 marks)

DISTINGUISH BETWEEN

2009 - June [3] (a) Distinguish between the following :(i) 'Seizure' and 'confiscation' under the Essential Commodities Act, 1955.

(5 marks)

Answer :% According to Section 6A, if essential commodity is seized as per order passed

under Section 3 report of seizure shall be made to the Collector. By virtue ofsection 6A, the collector is empowered to confiscate the seized commodity.

% Confiscation v/s seizure : Confiscation is an act that takes place after seizure hasbeen done and cannot be done if seizure has not taken place.While exercising his power of confiscation the collector has no power to go into thevalidity of the seizure. Where contravention of seized goods is established thesame can be confiscated.

% Whereas the term ‘seizure’ finds its meaning in the dictionary as taking awaypossession contrary to the wishes of the owner. The term ‘confiscation means’condemnation and adjudication of property to public treasury

% The essential commodity so confiscated can be sold in the following manner, ifsubject to natural decay or if the same is in consonance with public interest-- controlled price or - public auction or - fair price shops

% Sale proceeds shall be paid to the owner from whom the commodity wasseized (after deducting expenses related to sale in the following cases:- - If collector does not passes confiscation order:- If appeal has been made by the aggrieved person to the State Government

under Section 6C and the same is required.- If person concerned is acquitted in the prosecution instituted for contravention

of order. - Appeal against the confiscation order can be made by the aggrieved person to

the concerned State Government within one month of the order.

2012 - June [3] (a) Distinguish between the following:(ii) ‘Seizure of an essential commodity’ and ‘confiscation of an essential commodity’.

(5 marks)

Answer :Please refer 2009 - June [3] (a) (i) on page no. 90


2012 - Dec [3] (a) Distinguish between the following:(iv) ‘Preparation to commit an offence’ and ‘attempt to commit an offence’ under the

Essential Commodities Act, 1955. (5 marks)

Answer:As per the provisions of the Act, any person who attempts to contravene any order shallbe deemed to have contravened that order.• As per the Act, an attempt & an abetment have been placed on the same footing

as a contravention.• Preparation for committing an offence & an attempt to commit an offence are

different.• Preparation for committing an offence is not punishable but attempt to commit an

offence is punishable.


2009 - Dec [5] (c) Mention the provisions of the Essential Commodities Act, 1955regarding confiscation of essential commodities seized in contravention of section 3 ofthe Act. (5 marks)

Answer :Under section 6A, the collector can confiscate the seized commodity.6 Section 6A provides that where any essential commodity is seized, a report of such

seizure shall be made, without unreasonable delay, to the collector of the district.The collector may pass order for confiscation of(a) the essential commodity so seized(b) any package or covering in which such essential commodity is found.(c) any animal, vehicle, vessel or other conveyance used in carrying such

essential commodity.6 Foodgrains or edible oilseeds cannot be confiscated.6 A proper notice before confiscation of essential commodity must be given6 A reasonable opportunity of heard must be given before confiscation.

6 Sale of confiscated commodity.— If the essential commodity is subject to speedy and natural decay or it is

otherwise expedient in the public interest so to do he may.(1) order the same to be sold at controlled price or(2) by public auction or(3) Through fair price shops.

6 Appeal against the confiscation order can be made to state government.


2010 - June [5] (c) Evaluate the efficacy of the Essential Commodities Act, 1955 incontrolling the production, supply and distribution of essential commodities in thecountry. (5 marks)Answer :1. Essential Commodities Act was passed in the year 1955 by the Central

Government.2. As per the preamble of the Essential Commodities Act, 1955 the objective behind

the enactment is to -Provide in the interest of the general public for the control of the production, supplyand distribution of and trade & commerce of certain commodities.Ensure equitable distribution & access at reasonable prices.

3. The Act thus seeks to prevent exploitation in form of black marketing, hoarding orany other undesirable means.

4. Central Government is empowered by virtue of this Act to issue orders & directions.5. Central Government has the power to delegate its authority to State Government

and Union Territories (U.T.).6. Thus it is the Central Government which may be regarded as the highest authority

which works for the public interest of all the citizens.

2010 - Dec [4] (b) Explain the provisions for confiscation of an essential commodityseized in contravention of the Essential Commodities Act, 1955. (5 marks)

Answer :Please refer 2009 - Dec [5] (c) on page no. 91

2013 - Dec [4] (b) Mention the powers of the Central Government to control production,supply and distribution of essential commodities under the Essential Commodities Act,1955. (5 marks)

PRACTICAL QUESTIONS

2012 - Dec [4] (c) “A reasonable opportunity is required to be provided to the personconcerned before confiscation of his commodity or vehicle, etc., under the EssentialCommodities Act, 1955.” Elaborate the statement in the light of relevant legal provisionsand decided case law. (5 marks)

Answer:Please refer 2009 -Dec (5) (c) on page no. 91

As per the provisions of the Act, the owner of the essential commodity, package, etc.should be given a notice in writing informing him of the grounds on which it is proposedto confiscate the above goods to provide him an opportunity of making a representationin writing within a reasonable time limit.




1 Distinguish between the following:‘Seizure of an essential commodity’ and ‘confiscation of anessential commodity’.

09 - June [3] (a) (i), 12 - June [3] (a) (ii) 2 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 3 3 3 3 3 3

Total 3 3 3 3 3 3

5.94

Star Rating

On the basis of Maximum marks from a chapter jjj

On the basis of Questions included every year from a chapter jjjjj

On the basis of Compulsory questions from a chapter jjjj

5 Management of Foreign

Exchange Transactions

This Chapter Includes: Introduction; Definitions; Regulation and Management ofForeign Exchange; Current Account Transactions; Transfer or issue of any ForeignSecurity; Direct Investment Outside India; Acquisition and Transfer of ImmovableProperty; Establishment in India of Branch or Office or Other Place of Business;Export of Goods and Services; Exemptions; Contravention and Penalty; Adjudicationand Appeal; Directorate of Enforcement; Investigation; Contravention byCompanies; Introduction; Definitions; Regulation of foreign contribution and foreignhospitality; Adjudication of Confiscation; Appeal; Penalty and Punishment; Offencesby Companies.


[Chapter #### 5] Management of Foreign Exchange... (((( 5.95


OBJECTIVE QUESTIONS

2008 - Dec [3] (b) Re-write the following sentences after filling-up the blank spaces withappropriate word(s)/figure(s):

(i) Release of foreign exchange facilities for emigration exceeding US$ __________or amount prescribed by the country of emigration requires prior approval of RBI.

(iii) An Indian citizen resident outside India may acquire any immovable property inIndia other than ________ .

(iv) Remittance of foreign exchange exceeding US$ ____________ per project forany consultancy services procured from abroad requires prior approval of RBI.

(v) The minimum time for applying for technological upgradation of the existingcapital goods imported under the Export Promotion Capital Goods (EPCG)Scheme is ____ from the date of issuance of the authorization. (1 mark each)

Answer :

(i) 1,00,000

(iii) Agricultural

(iv) 1 Million

(v) 5 years

2009 - June [2] State, giving reasons in brief, whether the following statements are trueor false.

(ii) A person resident outside India can sell the shares and convertible debenturesof an Indian company to whomsoever he wants.

(v) An association pursuing a definite cultural, economic, educational, religious orsocial programme can receive foreign contribution without any limits.

(3 marks each)

Answer:

(ii) False: A person resident outside India cannot sell the shares and convertibledebentures of an Indian company to whomsoever he wants, rather he can sellthe same only through a registered broker.

(v) True: Section 6 of the FCRA, 1976 allows registered associations pursuingdefinite cultural, economic, educational, religious or social programme canreceive foreign contribution but at the same time they are also required tocommunicate the details of the amount, reasons and source to the CentralGovernment.



(ii) The amount representing the full export value of goods is required tobe realised and repatriated in India within !(a) 6 months(b) 3 months(c) 1 year(d) 2 years.

(iii) The issue of Foreign Currency Convertible Bonds (FCCBs) in anyfinancial year is subject to a ceiling of !

(a) ` 50 crore(b) US $ 500 million

(c) ` 100 crore(d) US $ 1 million.

(v) Foreign direct investment (FDI) is prohibited in !(a) Infrastructure sector(b) Hospitals(c) Retail trade(d) IT sector. (1 mark each)

Answer :

(ii) (c) 1 year

(iii) (b) US $ 500 million (currently is has been raised to $ 750 million in a year)

(v) (c) Hospitals


(ii) Indian parties are prohibited from making investment in a foreign entity engagedin_________.

(iii) The company which has exported goods is required to realise the full value ofgoods within_________ months. (1 mark each)

Answer :

(ii) Indian parties are prohibited from making investment in a foreign entity engaged

in real estate and banking business.

(iii) The company which has exported goods is required to realise the full value of

goods within 12 months.



(i) Foreign contribution means donation, delivery or transfer made by any foreignsource of any article, if the market value in India, of such article, on the date of

such gift, delivery or transfer, exceeds ` .(iii) The amount representing the full export value of goods or software exported is

required to be realised and repatriated to India within month(s) fromthe date of export. (1 mark each)

Answer :

(i) Foreign contribution means donation delivery or transfer made by any foreignsource of any article, if the market value in India, of such article, on the date ofsuch gift, is not more than such sum as may be specified from time to time by theCentral Government by the rules made by it in this behalf.

(iii) The amount representing the full export value of goods or software exported is

required to be realized & repatriated within twelve month (s) from the date ofexport.


(ii) The prior approval of RBI is necessary to make overseas donation exceeding US$_____ per remitter per annum.

(v) Authorised person under the Foreign Exchange Management Act, 1999 includesan authorised dealer, _________, off-shore banking unit or any other person forthe time being authorised to deal with foreign exchange or foreign security.

(1 mark each)

Answer :

(ii) The prior approval of RBI is necessary to make overseas donation exceeding

US$ 5,000 per remitter per annum.

(v) Authorised person under the Foreign Exchange Management Act 1999 includes

an authorised dealer, money changes, off shore banking unit or any otherperson for the time being authorised to deal with foreign exchange or foreignsecurity.


(iii) Indian Companies are free to issue rights/bonus shares to non-residentshareholders.

(iv) There is no difference between ‘person resident in India’ and ‘person resident ofIndia’.


(v) A person can accept foreign contribution by way of a gift irrespective of its value.(3 marks each)

Answer :

(iii) True : According to the provisions of Foreign Exchange Management Act, 1999,Indian companies can freely issue Right / Bonus shares to existing non residentshareholders, subject to adherence to sectoral cap, if any. All law and statueslike Companies Act, 1956, SEBI (ICDR) Regulations etc.

(iv) True : As the term 'Person resident of India' has not been defined under theforeign Exchange Management Act, 1999, it may be assumed that there is nodifference between. 'Person resident in India' and 'Person resident of India'.

(v) True : Section 4 provides that nothing in Section 3 shall apply to the acceptance,by any person specified in that section of any foreign contribution where suchcontribution accepted by him, subject to the provision of Section 10 and wheresuch contribution is accepted by him by way of gift or presentation made to himas a member of any Indian delegation, provided that such gift or present wasaccepted in accordance with the regulations made by the Central Governmentwith regard to the acceptance or retention of such gift or presentation.


(i) The transfer or issue of foreign security is a _________transaction.(ii) A person who has acquired or purchased foreign exchange for a specified

purpose is unable to use the same and is required to surrender it within____days from the date of its acquisition or purchase. (1 mark each)

Answer:(i) Capital Account (ii) 180


(ii) Prior approval of RBI is required for the release of foreign exchange for meetingthe expenses of medical treatment exceeding US $ _________ or its equivalent.

(iv) Foreign direct investment (FDI) in trusts other than _________ is not permitted.(v) Prior approval of RBI is required for availing of foreign exchange facility

exceeding ______ for persons going to USA for employment. (1 mark each)

Answer:

(ii) 1,00,000

(iv) Venture capital fund

(v) US $ 1,00,000



(iv) Foreign direct investment is permitted in infrastructure companies in securitiesmarket (stock exchanges, depositories, and clearing corporations). (3 marks)

Answer:

True:C Foreign direct investment is permitted in infrastructure companies in securities

market through Government approval.C FDI limit of 26% through approval route is permitted.


(iv) Foreign contribution means any donation, delivery or transfer made by _____.(1 mark)

Answer:

(iv) Foreign Source


(ii) Foreign direct investments can be made under two routes namely, automaticroute and __________. (1 mark)

Answer:

(ii) Government Route


(iv) The provisions of the Foreign Exchange Management Act, 1999 read with FEMARegulations, 2000 allow Indian companies to freely issue rights/bonus shares toexisting non-resident shareholders.

(v) The Foreign Contribution (Regulation) Act, 2010 was enacted to regulate and notprohibit the acceptance and utilisation of foreign contribution or hospitality.

(3 marks each)


(i) The amount representing the full export value of goods or software is requiredto be realised and repatriated to India within ____________. (1 mark)


SHORT NOTES


(ii) Declarations for export of goods and services (3 marks)

Answer:The provisions of the Foreign Exchange Management Act, 1999 relating to export ofgoods and services are as follows:-— According to the provisions of Section 7 of FEMA, 1999 every exporter is required

to furnish to RBI or any other authority as prescribed:-! True and correct particulars! Particulars should include details of amount

— Section 7(2) provides that the RBI may, for the purpose of ensuring that full exportvalue or determined value, is received without delay, direct the exporter to complywith such requirement as it feels necessary to be followed.

— Section 7(3) calls upon the exporter to furnish declaration containing true andcorrect particulars relating to services.

— Section 8 requires the exporter of goods and services to take all reasonable stepsto realise and repatriate the foreign exchange due or accrued into India.

2012 - June [1] {C} With reference to the relevant legal enactments, write short noteson the following:(vii) Current account transactions. (3 marks)

Answer:Current account transaction has been defined under Section 2(j) of the ForeignExchange Management Act, 1999 to mean a transaction other than a capital accounttransaction and includes:


— Payment due in connection with foreign trade, other current business, services andshort term banking and credit facilities in the ordinary course of business.

— Payments due as interest on loan and as net income from investments— Remittances for living expenses of parents, spouse and children residing abroad.— Expenses in connection with foreign travel, education and medical care of parents,

spouse and children.


(vi) Depository receipt (3 marks)

Answer:

Depository Receipts • Depository receipts means a negotiable security issued outside India by a

Depository bank, on behalf of an Indian company, which represent the rupeedenominated equity shares of the company held as deposit by custodian bank inIndia.

• Depository receipts are of two types - American Depository Receipts (ADRs)- Global Depository Receipts (GDRs)

• Those depository receipts which are listed & traded in the US markets are knownas American Depository Receipts.

• Those depository receipts which are listed & traded anywhere else are known asGlobal Depository Receipts.

DISTINGUISH BETWEEN

2008 - Dec [3] (a) Distinguish between of the following:(iii) 'Current account transactions' and 'capital account transactions' . (5 marks)

Answer:Current account transaction has been defined under Section 2(j) of the ForeignExchange Management Act, 1999 to mean a transaction other than a capital accounttransaction and includes :-— Payment due in connection with foreign trade, other current business, services and

short term banking and credit facilities in the ordinary course of business.— Payments due as interest on loan and as net income from investments— Remittances for living expenses of parents, spouse and children residing abroad.— Expenses in connection with foreign travel, education and medical care of parents,



According to Section 2 (e) of the Foreign Exchange Management Act, 1999 ‘capitalaccount transaction’ means any transaction which alters the asset or liabilities includingcontingent liabilities outside India of persons resident in India and includes thetransactions specified in section 6 (3) of the FEMA— Subject of certain conditions, Section 6 of the Act allows capital account

transactions. Reserve Bank is empowered to specify any class or classes of capitalaccount transactions permissible and also prescribe its limit. This power of ReserveBank is exercised in consultation with Central Government.

— Foreign Exchange Management (Permissible Capital Account Transactions)Regulations specifies the capital account transaction as follows :-of persons resident in India.! Classes of capital account transactions of person resident outside India.

2010 - Dec [3] (a) Distinguish between the following:(i) ‘Foreign exchange’ and ‘foreign security’. (5 marks)

(iii) ‘Automatic route’ and ‘approval route’ under the FDI policy. (5 marks)Answer:

(i) Foreign exchange: Clause (n) of Section 2 of the Foreign ExchangeManagement Act, 1999 defines the term ‘foreign exchange’ as to mean foreigncurrency and includes deposits, credits, balance payable in foreign currencydrafts, travellers cheques, letters of credits, bills of exchange drawn in Indiancurrency but payable in any foreign currency and draft, travellers cheque, lettersof credit or bills of exchange drawn by banks, institutions or persons outsideIndia but payable in Indian currency has also been included in the definition offoreign exchange.Foreign security: In terms of clause (o) of Section 2 of the Foreign ExchangeManagement Act, 1999. Foreign Security has been defined as to mean anysecurity in the form of shares, stocks, bonds, debentures or any other instrumentdenominated or expressed in foreign currency and includes securities expressedin foreign currency, but where redemption or any form of return such as interestor dividend is payable in Indian currency.

(iii) ‘Automatic route’ and ‘approval route’ under the FDI policy

Basis Automatic Route Approval Route

Meaning As the name suggests automaticroute comes those cases whereinthe foreign investment does not callsfor obtaining any permission /approval from Government of India.

Approval route on the otherhand takes into account thosecases wherein consent of FIPBi.e. Foreign InvestmentPromotion Board is be taken

Example Foreign investment in case of miningand exploration

Areas of Defence


2011 - Dec [3] (a) Distinguish between the following:(iv) ‘Appellate tribunal’ and ‘court’. (5 marks)

Answer:Appellate Tribunal:C It is constituted under a special enactmentC Members of Appellate Tribunal are both judicial & technicalC Procedure followed by it are enshrined in the enactment itselfC Appellate Tribunal is an adjudicating bodyC It discharge judicial functionsCourt:C Members of the court are judicial C Courts follow the procedures prescribed under the Civil Procedure CodeC Courts are constituted by the State and are vested with judicial functions like that

of Appellate Tribunal.

2012 - June [3] (a) Distinguish between the following:(i) ‘Political party’ and ‘an organisation of political nature’. (5 marks)

Answer:

Political Party‘Political party’ means—

(i) an association or body of individual citizens of India—(a) To be registered with the Election Commission of India as a political party

under section 29A of Representation of People Act, 1951 or(b) Which has set up candidates for election to any legislature, but is not so

registered or deemed to be registered under the Election symbols.(Reservation and Allotment) order, 1968;

(ii) A Political party mentioned in column 2 of Table 1 and Table 2 to the notificationof the Election Commission of India No. 56/J&K/02.

An organisation of political natureOrganisation of political nature not being a political party refers to such organisation asa Central Government may specify by order in the Official Gazette, having regards to:

— The activities of the organisation— Ideology propagated by the organisation— Programme of the organisation.— Association of the organisation with the activities of any political party.

The Central Government may, frame the guidelines specifying the ground or groundson which an organisation shall be specified as a organisation of a political nature.

2013 - Dec [3] (a) Distinguish between the following:(ii) ‘Person’ and ‘person resident in India’ under the Foreign Exchange

Management Act, 1999. (5 marks)



2008 - Dec [4] (b) Mention the provisions of the Foreign Contribution (Regulation) Act,

1976 in respect of exemptions from accepting foreign contributions. (5 marks)

Answer:

Section 4 provides ‘that nothing contained in section 3 shall apply to the acceptance,

by any person specified in that section, of any foreign contribution where such

contribution is accepted by him, subject to the provision of section 10;—

(a) by way of

— salary

— wages

— other remuneration

from any foreign source or by way of payment in the ordinary course of business

transacted in India by such foreign source; or

(b) payment for international trade & commerce or in ordinary course of business

transacted by him outside India.

(c) amount received by way of gift or presentation made to him as a member of any

Indian delegations if such gift or present was accepted in accordance with the rules

made by the Central Government with regards to the acceptance or retention of

such gift or presentation.

(d) amount received from his relative.

(e) amount received in ordinary course of business through

÷ any official channel

÷ post office

÷ any authorised person.

(f) by way of any scholarship, stipend or, any payment of like nature.

2010 - Dec [5] (b) What are the exemptions to the prohibition of acceptance of foreign

contribution under the Foreign Contribution (Regulation) Act, 1976 ? (5 marks)

Answer:

Please refer 2008 - Dec [4] (b) on page no. 104


2011 - June [4] (a) With reference to the relevant provisions of the Foreign Exchange

Management Act, 1999 and the rules and regulations made thereunder, advise on the

following:

(i) Karan, a person resident in India, borrows US $20,000 from his friend resident

outside India.

(ii) Rakesh, a person resident in India, is interested in extending an invitation to

George, a person resident outside India, to stay as his guest while on a visit to

India.

(iii) A person, resident outside India, is interested to repatriate outside India the sale

proceeds of an immovable property held in India.

(iv) A person, resident in India, wants to acquire immovable property outside India

by way of gift from a person who is resident outside India.

(v) A foreign investor is interested to invest in an Indian company which is a small

scale industrial unit. (1 mark each)

Answer:

(i) Yes, in this case Karan can borrow US $ 20,000 from his friend resident outside

India subject to the compliance of provisions of Foreign Exchange Management

Act, 1999 and Foreign Exchange Management (Capital Account Transaction)

(Amendment)Regulations, 2007,as it is within the limit of US $2,00,000 allowed

under the Rules.

(ii) There is no prohibition under the Act, for making any payment in rupees towards

meeting expenses on account of boarding, lodging and service related thereto

or travel to and from and within India of a person resident outside India who is

on a visit to India.

So in the given case Rakesh can invite George to stay as his guest on a visit to

India and to expend on his boarding, lodging etc.

(iii) Yes, according to the provision of Foreign Exchange Management Act, 1999 and

Foreign Exchange Management (Acquisition and transfer of immovable property

in India) Regulations, 2000, a person resident outside India can repatriate

outside India the sale proceeds of an immovable property held in India.

(iv) A person resident in India may acquire immovable property outside India by way

of gift or inheritance from a person who was resident out side India, in term of

Sec. 6(4) of FEMA acquired by a person resident in India on or before July 8,

1947 and continued to be held by him with the permission of RBI.


(v) Yes the foreign investor can invest in an Indian company which is a small scaleindustrial limit. But foreign direct investment policy & sectoral cap besides re-entry route & other regulations needs to be complied with.

2012 - Dec [4] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made there under, advise on thefollowing:

(i) Rajiv, a person resident in India, wishes to acquire foreign securities asqualification shares issued by a company incorporated outside India for holdingthe position of a director in the company.

(ii) Shyam, a non-resident Indian working in the USA intends to sell his ancestralhouse in India to a person resident in India.

(iii) Ashok, a person resident in India, has been offered bonus shares of the valueof US $20,000 by a company incorporated outside India.

(iv) Indel Manufacturing Inc., a company incorporated outside India, engaged insoftware development, intends to open its branch in a special economic zone(SEZ) in India.

(v) An Indian company intends to make direct investment in a joint venture outsideIndia. (1 mark each)

Answer:

(i) As per the provisions of the Act, Rajiv can acquire the foreign securities asqualification shares issued by a company incorporated outside India for holdingthe position of a director in the company.

(ii) Foreign Exchange Management Regulations, 2000 permits an Indian residentoutside India to transfer any immovable property in India to a person resident inIndia. Thus Shyam can sell his ancestral house in India to a person resident inIndia

(iii) As per the provisions of the Regulations, a person can acquire bonus shares onforeign securities held in accordance with the provisions of the Act made thereunder. Thus, he can acquire bonus shares of value of US$ 20,000 by a companyincorporated outside India.

(iv) RBI has given a general permission to foreign companies for establishingbranch/ unit in SEZ. Thus the Indel Manufacturing Inc can open its branch inSEZ.

(v) An Indian party has been permitted to make investment in overseas JV/ WhollyOwned Subsidiaries, not exceeding 400% of the net worth. Thus, it can makedirect investment in a joint venture outside India.


2012 - Dec [5] (c) Discuss the powers of the Central Government to prohibit receipt offoreign contribution under the Foreign Contribution (Regulation) Act, 1976. (5 marks)

Answer:Please refer 2007 - June [5] (ii) on page no. 118

PRACTICAL QUESTIONS

2008 - Dec [4] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder, advise on thefollowing :

(i) Indotech Ltd. desires to make payments of commission on exports madetowards equity investment in its joint venture company abroad.

(ii) Rupa intends to take an insurance policy in her name from an insurancecompany abroad involving payment of premium amounting to US$20,000.

(iii) A non-resident shareholder has applied for the issue of additional shares overand above his entitlement of rights shares in an Indian company.

(iv) Girish intends to transfer his shareholding in rupee equivalent to US$20,000. asgift to his son who is a resident outside India.

(v) Microtech Ltd., a software exporter company, desires to receive 25% of the valueof its exports in the form of shares in an overseas software company withoutentering into joint venture agreement. (1 mark each)

Answer:(i) No, Indotech Ltd. is not permitted to make payments of commission on exports

made towards equity investment in its joint venture company abroad sinceSchedule I of FEMA (Current Account Transaction) Rules, 2000 forbids thesame.

(ii) Yes, Rupa can very well take an insurance policy in her name from the foreigninsurance company which involves premium of US$ 20,000 as the same ispermitted to the extent of US$ 2,00,000 by virtue of Schedule I of ForeignExchange Management (Capital Account Transaction) (Amendment)Regulations2007.

(iii) Yes, the shareholder can apply for the issue of additional shares over and abovehis entitlement of rights shares in Indian company even if he is non resident butit should be taken into notice that price charged from non-resident should not beless than that charged from resident shareholder.

(iv) Yes, Girish may transfer his shareholding as the same is less than USD 25,000as a maximum of USD 25,000 worth of security can be transferred as gift in ayear. Also RBI's consent is a prerequisite.


(v) Yes, Microtech Ltd. Can receive 25% of the value of exports in the form ofshares in an overseas software company without entering into joint ventureagreement as it is a software exporter company.

2009 - June [5] (c) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder, advise on thefollowing :

(i) ABC Ltd., a company listed on the National Stock Exchange Ltd., is interestedin investing in a company in the USA.

(ii) Ram, an NRI resident in Nepal, is interested to invest in shares and convertibledebentures of an Indian company.

(iii) A foreign investor wants to invest in an Indian company which is a small scaleindustrial unit.

(iv) Brown, a UK citizen, is interested to make investment in the form of foreign directinvestment (FDI) in retail trading business.

(v) XYZ Ltd., a company listed on the Bombay Stock Exchange Ltd., wants to issueshares under the Employees Stock Option Scheme (ESOP) to the employeesof its joint venture abroad. (1 mark each)

Answer:

(i) Please refer 2005 - Dec [3] (a) (i) on page no. 127

(ii) Yes, Ram can invest in shares and convertible debentures of an Indian companyprovided he made the investment by means of inward remittance via -! Normal banking or ! NRE/FCNR accountThus, Ram even being an NRI residing in Nepal and Bhutan can make thedesired investment.

(iii) Yes, the foreign investor can invest in that Indian company which is a small scaleindustrial unit, subject to the compliance of the maximum limit of 24% of paid upcapital of the Indian company as is required by virtue of FDI policy.

(iv) No, Mr. Brown being a UK citizen shall not be allowed to make investment inform of FDI in retail trading business since the same is prohibited as per theforeign policy.

(v) Subject to compliance with regulation issued by SEBI Act 1992, an Indiancompany may issue shares to.! its own employees or! employees of joint venture or! employees of Wholly Owned Subsidiary WOS abroad

Who are resident outside India.— Face value of shares allotted should not exceed 5% of paid up capital ofthe issuing company.


— A report containing details about number and name along with certificateof Company Secretary is required to be filed within 30 days from issue toReserve Bank.

2009 - Dec [4] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder, advise on thefollowing :

(i) Naresh, an Indian citizen, is interested in sending ` 10,000 to his sister residingin USA as birthday gift.

(ii) A person resident outside India desires to contribute ̀ 10 lakh as capital in a firmengaged in software business in India.

(iii) An Indian company intends to open a foreign currency account in India as wellas outside India.

(iv) A company incorporated in USA desires to establish its manufacturing unit inspecial economic zone in India.

(v) Dinesh, an Indian citizen, wants to use his international debit card for withdrawalof cash during his visit abroad. (1 mark each)

Answer:

(i) Rule 5 of Foreign Exchange Management (Current Account Transaction) Rules,2000 requires prior approval of the Reserve Bank for gift remittances exceedingUS$ 5,000 per remitter/donor per annum.

(ii) Foreign Exchange Management (Investment in Firm, or Proprietary concern inIndia) Regulation, 2000 requires prior approval of Reserve Bank for investmentby way of contribution to capital in firm engaged in software business.

(iii) In terms of Foreign Exchange Management (Capital Account Transaction)Regulations, 2000 an Indian company can open a foreign currency account inIndia as well as outside India.

(iv) Generally, a person resident outside India has been prohibited from establishingin India, without prior approval of the Reserve Bank, a branch or liaison office orany other place of business by whatever name called. However, a companyincorporated outside India has been allowed to establish a manufacturing unitin Special Economic Zones in India, subject to condition that:! such units are functioning in those sectors where 100% FDI is permitted;! such units comply with part XI of the Companies Act, 1956 dealing with

companies incorporated outside India (Section 592 to 602);! such units function on a stand-alone basis;! in the event of winding-up of business and for remittance of winding-up

proceeds, the branch shall approach an Authorised Dealer in ForeignExchange.


In the light of the above legal position, a company incorporated in USA canestablish its manufacturing unit in special economic zones in India.

(v) Dinesh who is an Indian citizen can use his international debit card forwithdrawal of cash during his visit abroad, subject to limit as prescribed to limitas prescribed by virtue of Rule 7 of Foreign Exchange Management (CurrentAccount Transaction) Rules 2000.

2010 - June [4] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder, advise on thefollowing:

(i) An Indian company engaged in financial sector is interested in makinginvestment in banking business abroad.

(ii) An Indian resident wants to purchase foreign securities by making remittancesfrom his resident foreign currency (RFC) account.

(iii) A Bangladeshi millionaire is interested to invest in India subject to FDI policy ofthe Government of India.

(iv) An Indian public limited company wants to issue bonus shares to an existingnon-resident shareholder.

(v) An Indian citizen resident outside India is interested in acquiring a house inChennai and a farm house on the outskirts of Delhi. (1 mark each)

Answer:

(i) No. the Indian company is not entitled to make investment in banking businessabroad since real estate and banking business are prohibited areas where inIndian parties are forbidden to invest.

(ii) Yes, the Indian resident can make use of the RFC i.e. Resident ForeignCurrency Account to purchase foreign securities since there exist nonrestrictions in making such remittances from RFC Account.

(iii) As per the provisions of the Foreign Exchange Management transfer or issueof security by a person resident outside India Regulations 2000, a Bangladeshicitizen is prohibited to make investment in India. The term 'person of Indianorigin' excludes citizen of Pakistan or Bangladesh or Sri Lanka or China orAfghanistan or Iran or Nepal or Bhutan.

(iv) There is no prohibition to issue bonus shares to existing non-resident as perForeign Exchange Management Act and regulations made there under providedcompliance with sectoral ceiling limit or sectoral cap is made and adherencewith SEBI regulations is duly followed.

(v) Though there is no restriction on Indian citizen resident outside India to acquirehouse in Chennai but there is prohibition to acquire farm house.


As per the Foreign Exchange Management (Acquisition and Transfer ofImmovable Property in India) Regulations 2000 a person of Indian originresident outside India may acquire any immovable property other thanagricultural land/farm house/plantation property in India.

2010 - Dec [4] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder, advise on thefollowing:

(i) Shyam, an Indian businessman, is interested in remitting US $8,000 forpurchase of trade mark/franchise in India.

(ii) Suresh, a person resident in India, desires to take a life insurance policy from aforeign insurance company, the yearly premium of which is US $25,000.

(iii) Desire Ltd., a company incorporated outside India, wants to buy shares up to10% of paid-up capital of an Indian company engaged in infrastructuredevelopment.

(iv) Aadarsh Ltd., an Indian company, wants to issue FCCBs for the purpose ofinvesting in the stock market.

(v) An Indian company engaged in software business intends to adjust the value ofits exports towards the value of imported items. (1 mark each)

Answer:

(i) Yes Shyam is permitted to remit US $ 8000 for purchasing of trademark/franchisee.Please refer 2007 - June [4] (a) (iv) on page no. 130

(ii) Yes, Suresh can take a life insurance policy from foreign insurance company,the yearly premium of which is US $ 25,000.Please refer 2008 - June [4] (a) (ii) on page no. 132

(iii) Y Subject to compliance of specified conditions, 100% FDI is permitted in caseof infrastructure development companies.

(iv) No, Adarsh Ltd. which is an Indian company cannot issue FCCBs for thepurpose of investing the same in the stock market.Y Please refer 2007 - Dec [4] (a) (ii) on page no.131Y However, investing the funds in the stock market is restricted.

(v) Y Indian company engaged in software business can adjust the value of itsexports towards the value of imported items.

Y The Indian company shall be required to obtain prior permission of RBI.


(i) Ram, a person resident in India, intends to invest ` 25,000 in foreign securitiesin a calendar year.


(ii) Infotech Ltd., an Indian company owning a micro/small enterprise, intends toissue shares against foreign direct investment.

(iii) Shyam, an Indian resident, wishes to acquire qualification shares for becominga director of a company outside India and the consideration is US $30,000.

(iv) Naresh, an Indian citizen, enters into an agreement for the lease of machineryto a foreign party and intends to ship the machinery abroad.

(v) Mohan, an Indian citizen resident outside India, intends to acquire immovableproperty in India. (1 mark each)

Answer:

(i) C In the above case, Ram, a person resident in India, intends to invest

` 25,000 in foreign securities in a calendar yearC As per the provisions of the Act, investment in foreign securities is a capital

account transaction specified in Schedule1C For capital account transaction specified in Schedule1 a resident individual

may draw from an authorised person, not exceeding US $ 2,00,000 perfinancial year.

C Thus Ram can invest ` 25,000 in foreign securities in a calendar year.

(ii) C As per the provisions of the Foreign Exchange Management Act, 1999 andthe rules and regulations made there under, an Indian company owing amicro/small enterprise, can issue capital against foreign direct investmentsubject to compliance with FDI policy issued by Government.

C Thus in the above case, infotech Ltd. an Indian company owing a micro/small enterprise, can issue shares against foreign direct investment.

(iii) C A person residing in India can acquire foreign securities as qualificationshares for becoming a director of a company provided:

C It does not exceed 1% of the paid up capital of the company and,C Consideration does not exceed US $ 20,000C If the above conditions are not fulfilled then prior approval of RBI is required.C Thus in the above case, Shyam can acquire qualification shares with prior

approval of RBI.Section 24 of the Foreign Exchange Management (Transfer or Issue of AnyForeign Security) (Amendment) Regulations, 2004 provides - GeneralPermission for Acquisition of foreign securities as qualification / rights shares(1)A person resident in India being an individual may acquire foreignsecurities as qualification shares issued by a company incorporated outsideIndia for holding the post of a director in the company, provided that, -(i) the number of shares so acquired shall be the minimum required to be

held for holding the post of director and in any case shall not exceed 1 percent of the paid-up capital of the company, and


(ii) the consideration for acquisition of such shares does not exceed theceiling as stipulated by RBI from time to time, currently USD 20,000.

25. Prior permission of Reserve Bank in certain casesA person resident in India being an individual seeking to acquire qualificationshares in a company outside India beyond the limits laid down in the provisoto clause (a) of sub-regulation (1) of Regulation 24 shall apply to theReserve Bank for prior approval.

(iv) C Prior approval of RBI is required in these circumstancesC Thus in this case, Naresh can enter the above agreement with the prior

approval of RBI.(v) C In the above case Mohan, an Indian citizen resident outside India, intends

to acquire immovable property in IndiaC As per the provisions of the Act, an Indian citizen resident outside India can

acquire immovable property in India other than agricultural or plantationproperty or farm house.

C Thus, Mohan can acquire immovable property other than agricultural orplantation property or farm house.


(i) Anand desires to donate US $ 10,000 to Rotary International, an NGO inChicago, USA.

(ii) Atul Ltd., an Indian company intends to export its software of the value of

` 15,000.(iii) Suresh desires to pay US $10,000 through international credit card being the

remittance out of lottery earnings.(v) Aadarsh Education Society, engaged in education sector, intends to make

investment in the education sector in a joint venture in USA. (1 mark each)

Answer :

(i) As per the provisions of Foreign Exchange Management (Current AccountTransactions) Rules, 2000, any resident individual, if he so desires, may remitthe entire limit of USD 75,000 in one financial year under LRS as gift to a personresiding outside India or as donation to a charitable/educational/ religious/cultural organization outside India. Remittances exceeding the limit of USD75,000 will require prior permission from the Reserve Bank. Under theLiberalised Remittance Scheme, all resident individuals, including minors, areallowed to freely remit up to USD 75,000 per financial year (April – March) forany permissible current or capital account transaction or a combination of both.


The limit was reduced from USD.200,000 to USD.75,000 with effect from August14, 2013.Hence Anand can donate US $ 10,000 to the Rotary.

(ii) Regulation 4 of the FEMA Regulations, 2000 permits export of software if theexporter makes a declaration that they are not more than US $ 25,000.• Hence in the present case, Atul Ltd. an Indian Company can export its

software.

(iii) Suresh cannot remit the amount of US $ 10,000 because as per the FEMARules, 2000, drawal of foreign exchange for the purposes of remittances out oflottery earnings is prohibited. In terms of Section 5 of the FEMA, personsresident in India1 are free to buy or sell foreign exchange for any current accounttransaction except for those transactions for which drawal of foreign exchangehas been prohibited by Central Government, such as remittance out of lotterywinnings, remittance of income from racing/riding, etc., or any other hobby,remittance for purchase of lottery tickets, banned / proscribed magazines,football pools, sweepstakes, etc., payment of commission on exports madetowards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroadof Indian companies, remittance of dividend by any company to which therequirement of dividend balancing is applicable, payment of commission onexports under Rupee State Credit Route, except commission up to 10% ofinvoice value of exports of tea and tobacco and payment related to “call backservices” of telephones. Foreign Exchange Management (Current AccountTransactions) Rules, 2000.

(v) Prior approval of RBI & eligibility criteria as prescribed is required before makinginvestment in the education sector in a Joint Venture or wholly owned subsidiaryoutside India.


(i) Rahul, a person resident in India, intends to borrow £ 10,000 (UK pound sterling)from his friend resident in the United Kingdom.

(ii) Rajan, a foreign investor, is interested to invest in a company incorporated inIndia which is a small scale industrial unit.

(iii) Canbury Consultants Ltd. desires to make payments of commission on exportsmade towards equity investment in its joint venture company abroad.

(iv) Jitesh, a non-resident shareholder wants to apply for the allotment of additionalshares over and above his entitlement of rights shares in an Indian company.


(v) Operative Media, a software export company desires to receive 25% of the valueof its exports in the form of shares in an overseas software company withoutentering into joint venture agreement. (1 mark each)

CS Inter Gr. II

SHORT NOTES


(ii) Authorised person. (3 marks)

Answer:‘Authorized Person’ means an authorized dealer, money changer, offshore banking unitor any other person for the time being authorized under sub-section (a) of the section10 of FEMA to deal in foreign exchange or foreign securities.

As per Section 10 any person who has made an application to RBI may beauthorized by it to act as an authorized person to deal in foreign exchange.Normally, nationalized banks, leading non nationalized banks and foreign banks areappointed as authorized dealers.

Moneychangers are non-banking entities such as travel agents and star hotels.This authorization is granted subject to the conditions laid down by RBI.

However, RBI is empowered to revoke authorization granted to any persons in publicinterest. It may also revoke the authorization after giving an opportunity if the AuthorizedPerson fails to comply with the conditions.


(vi) Objectives of the Foreign Contribution (Regulation) Act, 2010. (3 marks)

Answer:The object to the act is to regulate this acceptance and utilisation of foreign contributionor foreign hospitality by certain individuals or associations or companies and to prohibitacceptance and utilisation of foreign contribution or foreign hospitality for any activitiesdetrimental to the national interest and for the matter connected therewith or incidentalthereto.


(iii) Person resident of India. (3 marks)


Answer:Section 2 (v) of Foreign Exchange Management Act, 1999 defines ‘Person resident inIndia’ as a person residing in India for more than 182 days during the course ofpreceeding financial year.excluding— Person who has gone out of India or who stays outside India, in either case —

! For or on taking up employment outside India! For carrying business or vocation outside India! In any case, where intention to stay outside India for an uncertain period.

— A person who has come to or stays in India, otherwise than –! For taking up employment in India! For carrying business or vocation in India! Other purpose, which indicates that intention to stay in India is for an uncertain

period.


(vi) Restrictions on acceptance of foreign hospitality. (3 marks)

Answer:Section 6 of the Foreign Contribution (Regulation) Act, 2010 prohibits acceptance offoreign hospitality by certain persons while visiting any country or territory outside Indiaexcept with the prior permission of Central Government.• These person includes

— Member of legislature— Office bearer of political party— Judge— Government servant— Employee of any corporation or any body owned or controlled by the

government.• Such prior permission need not to be obtained in case of emergent medical aid due

to illness during foreign visit. However intimation of the source and manner ofreceipt of hospitality has to be made within one month to the Central Government.


(ii) Foreign security. (3 marks)

Answer:Please refer 2004 - June [1] {C} (iii) on page no. 122



(iv) Project exports (3 marks)

Answer:C Regulation 18 FEMA, Export of Goods and Services, Regulations 2000 contains

the provisions relating to project exports. C A proposal of export agreement needs to be sent to the Working Group or

Authorised dealer or Exim Bank for their consent by exporters in case export ofgoods or services is made on deferred payment system.

C The consent is given by them only when the terms and conditions of the projectare in consonance with them.

DISTINGUISH BETWEEN

2007 - Dec [3] (a) Distinguish between the following:(ii) ‘Foreign contribution’ and ‘foreign hospitality’. (5 marks)

Answer:

Foreign ContributionForeign contribution, as defined under the Foreign Contribution (Regulation) Act, 2010means only

• Donation• Delivery• Transfer

made by any foreign source of— article (other than gift given to a person as a gift for his personal use) if the

market value in India, of such article, on the date of gift is not more than suchsum as may be specified from time to time by Central Government.

— any currency, whether Indian or foreign— of any security as defined in clause (h) of section 2 of the Securities Contract

(Regulation) Act, 1956 and includes any foreign security as defined in clause(o) of the Foreign Exchange Management Act, 1999.

Foreign hospitalityForeign hospitality means any offer, not being a purely casual one, made in cash or kindby foreign source for providing a person with—

• Cost of travel to any foreign country and territory• Free boarding, lodging, transport or medical treatment.

[As per FCRA, 2010]


2008 - June [3] (a) Distinguish between of the following:(ii) ‘Political party’ and ‘an organisation of political nature’ under the Foreign

Contribution (Regulation) Act, 2010. (4 marks)

Answer:Please refer 2012 - June [3] (a) (i) on page no. 103


2007 - June [5] Attempt the following:(ii) What are the powers of the Central Government to prohibit receipt of foreign

contribution under the Foreign Contribution (Regulation) Act, 2010? (5 marks)

Answer:Section 9 of Foreign Contribution (Regulation) Act, 2010 provides power to CentralGovernment to prohibit receipt of foreign contribution etc in following cases. AccordinglyCentral Government has been empowered to—

(a) prohibit any person or organisation not specified in section 3, from accepting anyforeign contribution

(b) require any person or class of person not specified in section 6, to obtain priorpermission of the Central Government before obtaining any foreign hospitality.

(c) require any person not specified in section 11, to furnish intimation within suchtime and in such manner as may be prescribed as to— the amount of foreign contribution— the source of such foreign contribution— the manner in which such foreign contribution was received— the purpose and manner in which such foreign contribution was utilised.

(d) without prejudice to the provision of sub section (1) of section 11, require anyperson or class of person specified in that sub section to obtain prior permissionof the Central Government before accepting any foreign contribution

(e) require any person not specified in section 6 to furnish intimation as to— the receipt of foreign hospitality— the source from which such foreign hospitality was received— the manner in which such foreign hospitality was received.

However, the Central Government shall not made such prohibition or requirementunless it is satisfied that acceptance of foreign contribution or foreign hospitality by suchperson is likely to affect prejudicially the soverginity and integrity of India; or publicinterest, or freedom or fairness of election to any legislature or friendly relations with anyforeign state; or harmony between religious, racial, social, linguistic or regional groups,castes or communities.


2008 - June [4] (b) Explain the powers of the Central Government to prohibit receipt offoreign contribution under the Foreign Contribution (Regulation) Act, 2010. (4 marks)


PRACTICAL QUESTIONS

2004 - Dec [3] (c) Modern Educational Institute, New Delhi is a non-profit organisationengaged in building students' careers. Four of its brilliant students are in receipt ofscholarships directly from a US-based educational foundation. Discuss whether therehas been any violation of the provisions of the Foreign Contribution (Regulation) Act,2010. (4 marks)Answer:According to section of Foreign Contribution (Regulation) Act, 2010 if any citizen ofIndia receives:–• Scholarships or• Stipend or• Like nature paymentfrom foreign source is required to give intimation to the Central Government.Recipient is required to give details regarding the following–• Amount of scholarship• Name of the foreign source• Purpose of scholarshipTherefore in the given case intimation to the Central Government about the receipt ofscholarship along with the purpose should be made.

2005 - June [3] (b) Ananda Swar Mondal, a cultural association in Kolkata formed forthe sole purpose of promoting Rabindra Sangeet, has been offered gift of $ 5,000 by asociety in USA. Can the association receive it without violating the provisions of theForeign Contribution (Regulation) Act, 2010? (3 marks)Answer :Yes, Ananda Swar Mandal can receive the gift of $5000 from Society in U.S.A. withoutviolating the provisions of the Foreign Contribution (Regulation) Act, 2010.) According to Section 11(1) of the Act certain associations having definite.

C Cultural orC Economic orC Religious orC Social programmeMay receive foreign contributions provided they give intimation to the CentralGovernment of the same


) Following are to the details which are to be intimated to the Central Government :-C Amount of foreign contributionC Source of foreign contributionC Purpose of foreign contributionC Manner of receipt and use of contribution

) Intimation is to be sent in form fe-3 in duplicate within sixty days of closure of year.

2005 - Dec [3] (c) Gurukul Vidyarthi Manch, a body formed for the purposes of imbibingpatriotism and character-building among students, receives a grant of £ 1,500 fromStuarts, a British-philanthropist. Does it violate the provisions of the ForeignContribution (Regulation) Act, 2010? (3 marks)

Answer :No. Gurukul Vidyarthi Manch has not violated the provisions of the Foreign Contribution(Regulation) Act, 2010.• Gurukul Vidyarthi Manch Comes within the ambit of associations described under

Section 11(1) of the said Act.• Following are to the details which are to be intimated to the Central Government :-

C Amount of foreign contributionC Source of foreign contributionC Purpose of foreign contributionC Manner of receipt and use of contribution

2006 - June [5] (b) Aditya, a director of Amex Ltd., visited Germany thrice in 2005 oninvitations and free air-tickets, board and lodging extended to Amex Ltd. by theChamber of Commerce and Industry, Germany. Has Aditya or the companycontravened the provisions of the Foreign Contribution (Regulation) Act, 2010? Mentionrelevant provisions. (5 marks)

Answer :The Act prohibits acceptance of foreign hospitality by certain persons being member ofLegislature, Judge, Government servant or employee of corporation except with priorpermission of the Government.However as per notification issued on Jan, 3, 1986 and December, 30, 1987exemptions to members of delegations and employees of Central Government isprovided respectively from obtaining prior permission of the Government.

2006 - Dec [5] (b)Do the following transactions amount to contravention of the ForeignContribution (Regulation) Act, 2010 ? Give reasons in support of your answer and referto relevant provisions :

(i) Abhay, general secretary, Loktantrik Sangathan, Moradabad (UP) receives asum of US$ 1,000 by way of payment in the ordinary course of businesstransacted by him outside India.


(ii) Avtar, a government servant, is in receipt of contribution by way of gift as amember of Indian delegation.

(iii) Vidur, a District and Sessions Judge, accepts a diamond studded watch from hisrelative residing in UK.

(iv) Sanjay, a private school teacher, is given a gift by his student living in USA for

his personal use and the market value of the article is ` 2,200 only.(v) Sarva Kalyan Morcha, an organisation pursuing a definite social programme, is

in receipt of $ 5,000 from a charitable trust in Canada. (1 mark each)

Answer :

(i) No, Abhay has not contravened any provision, though Section 9 prohibits certainpersons to accept foreign contribution, by virtue of Section 10 foreigncontribution accepted by way of payment, in the course of international trade orcommerce or in the ordinary course of business transacted in India by suchforeign source.

(ii) The act of Avtar is valid since Section 4 permits acceptance by way of gift orpresentation to him as a member of Indian delegation provided such gift wasaccepted in accordance with regulations made by Central Government.

(iii) Vidhur has no contravened any provisions because Sec. 4 of the Act. providesexemptions in relation to restriction imposed under Sec.3, According to whichforeign contribution received from relative is allowed it has been received withprevious permission of Central Government.

(iv) Sanjay may accept the gift explanation same as point (iii)

(v) Please refer 2005 - June [3] (b) on page no. 119

2007 - Dec [5] Attempt the following:(iii) Destitutes Rehabilitation (India), an NGO devoted to the cause of ameliorating

the lot of destitutes and the needy, has been offered a contribution of $5,000 byan American foundation.Mention the provisions of the Foreign Contribution (Regulation) Act, 2010regulating the receipt of foreign contribution by an organisation pursuing adefinite social, cultural, economic educational or religious programme.

(5 marks)

Answer:Please refer 2005 - June [3] (b) on page no. 119


Foreign Exchange Management Act

SHORT NOTES

2004 - June [1] {C} With reference to the relevant legal enactments, write notes on thefollowing:

(iii) Foreign security (3 marks)

Answer:According to Section 2 (o) of the Foreign Exchange Management Act, 1999, foreignsecurity means security, in the form of shares stocks, bonds, debenture or any otherinstrument denominated or expressed in foreign currency and includes securitiesexpressed in foreign currency but where redemption or any form of return such asinterest or dividend is payable in Indian currency. — Issue on transfer of foreign security is regarded as capital account transaction.— In this regard, Reserve Bank of India has made foreign Exchange Management

(Transfer or Issue of any foreign Security) Regulations 2000.

2004 - June [3] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999, advise on the following:

(i) A person resident in India proposes to retain foreign currency notes acquiredduring a visit to a place outside India. (2 marks)

(ii) A partnership firm, registered in India, is intending to invest in foreign concernsengaged in similar professional activities. (2 marks)

(iii) A public limited company interested to send machinery outside India on leaseterms. (2 marks)

(iv) A person resident outside India intends to seek remittance of sale proceeds ofa security of a company incorporated in India. (2 marks)

Answer:

(i) Possession and retention of foreign exchange are dealt by foreign ExchangeManagement (Possession and Retention of Foreign Currency) Regulations,2000.— According to these regulations foreign exchange needs to be repatriated

within 90 days, if the same was acquired during visit to place outside Indiaand remained unspent.

— Also these regulations provide that foreign exchange upto US $ 2000 orequivalent can be retained in foreign currency.


(ii) Partnership firm can legitimately make investment in foreign concerns engagedin similar professional activities, provided the following conditions are satisfied :-! Investment in a financial year should not exceed US$ 1 million! Form ODA needs to be submitted within 30 days of investement to the

Reserve Bank.(iii) Sending machinery outside India an lease terms will be construed as export and

hence permission of RBI shall be required.— Application with full details of machinery to be sent on lease, needs to be

filed with RBI to seek permission.(iv) Sales proceeds of security can be remitted if seller holds security on repatriation

basis and even Income tax Authority has given No Objection Certificate.— Security should be sold through recognised stock exchange.


(i) Current account transactions (3 marks)Answer:Current account transaction has been defined under Section 2(j) of the ForeignExchange Management Act, 1999 to mean a transaction other than a capital accounttransaction and includes:-— Payment due in connection with foreign trade, other current business, services and

short term banking and credit facilities in the ordinary course of business.— Payments due as interest on loan and as net income from investments— Remittances for living expenses of parents, spouse and children residing abroad.— Expenses in connection with foreign travel, education and medical care of parents,



(iii) Powers of the RBI to compound contraventions of foreign exchange transactions.(3 marks)

Answer:Section 15 read together with Rule 4 empowers the Reserve Bank to compoundoffences since the officers of RBI are treated as Compounding Authority. Compoundingis done in the following manner.

Sum Involved Officer of RBI

(a) ` 10 lakh or below Assistant General Manager

(b) More than ` 10 lakh but less than ` 40 lakh Deputy General Manager

(c) More than ` 40 lakh but less than ` 100 lakhs General Manager

(d) More than ` 100 lakhs Chief General Manager



(vi) Current account transactions. (3 marks)

Answer:Please refer 2005 - June [1] {C} (i) on page no. 123

DISTINGUISH BETWEEN

2008 - June [3] (a) Distinguish between of the following:(i) ‘Person’ and ‘authorised person’ under the Foreign Exchange Management Act,

1999. (4 marks)

Answer:Please refer 2005 - Dec [1]{C} (iii) on page no. 115


2006 - June [3] (a) Discuss the exemptions from the provisions relating to holding,realisation and repatriation of foreign currency under the Foreign ExchangeManagement Act, 1999. (4 marks)

Answer:Section 9 of the Foreign Exchange Management Act, 1999 provides for exemptionsfrom provisions relating to holding, realisation and the re-patriation of foreign currency.

The various exemptions as contained under it are follows:-! Foreign exchange acquired before July 8, 1947 and held outside India is exempted! Foreign exchange acquired by way of gifts or inheritance are exempted subject to

limit specified by RBI.! Exemption may be granted in respect of foreign exchange earned from business

or employment upto specified limit.! Possession of foreign coins by class of person, as specified by RBI is allowed.! Operating foreign currency accounts by class of person and upto specified limit, as

prescribed by Reserve Bank is also not prohibited.

2006 - Dec [3] (b)Mention the classes of capital account transactions which arepermissible to the persons resident in India under the Foreign Exchange Management(Permissible Capital Account Transactions) Regulations, (Amendment) 2007.

(4 marks)


Answer :The classes of capital account transactions which are permissible to the person residentin India under the foreign Exchange Management (Permissible Capital AccountTransactions) Regulations, (Amendment) 2007 are as follows :-! Investment in foreign securities! Loans raised in the country in foreign security.! Transfer of immovable asset outside India.! Remittance of Capital asset outside India,! Export or import of currency notes.! Sale or purchase of foreign exchange derivatives in or outside India and

commodity derivatives outside.! Loans and overdrafts by person resident in India to person resident outside India.! Loans and overdrafts by person resident in India from person resident outside

India.

2007 - Dec [4] (b) Mention the provisions of the Foreign Exchange Management Act,1999 regarding acquisition and transfer of immovable property outside India.

(5 marks)

Answer:A person resident in India is prohibited from acquiring or transferring immovableproperty outside India, until permission whether ! General or! Special

is obtained from RBI— Exceptions to the above mentioned restrictions are as follows:-

! Immovable property held by person resident in India. who is a national of foreignstate.— Property held before 8th of July, 1947, and continued to be held by him.

! Property acquired by means of inheritance or gift person resident in India fromperson resident outside India.

! Property acquired by way of purchase out of foreign exchange in RFC i.e. Residentforeign currency account.

! Company formed in India and having overseas office may be permitted to acquireimmovable property upon compliance with conditions prescribed by RBI.


PRACTICAL QUESTIONS

2004 - Dec [3] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999, advise on the following:

(i) Ramesh, a person resident in India, receives information that Suresh, an NRI,will be on a business trip to India for 15 days. He wants to invite Suresh as hisguest and incur expenditure on his hospitality.

(ii) Mrs. Swapna wants to draw foreign exchange for attending a conference inBangladesh. How much foreign exchange can she draw? Are there anypurposes for which foreign exchange drawal is not allowed for current accounttransactions?

(iii) Hari, a person resident in India, is being offered foreign security as a gift by hiscousin living in England.

(iv) Mark Well Ltd., having its registered office in Kolkata, wants to issue rights

shares to a person residing in Kuwait at the rate of ̀ 12 per share. The company

had earlier issued shares to the Indian public at the rate of ` 15 (a share having

a nominal value of ` 10). (2 marks each)

Answer:

(i) Ramesh is free to invite Suresh as his guest and can incur expenditure on hishospitality as the expenditure being in India rupees and not in foreign exchangedoes not fall within the ambit of FEMA 1999.

(ii) Mrs. Swapna can draw the foreign exchange for attending the confrence atBangladesh.— She is free to draw foreign exchange upto US$ 25,000 for which RBI’s

permission will not be required. However for drawal greater than US$ 25,000RBI’s permission shall be required.

— For second part, refer to 2002 June [1] {C} (iv) of Short Notes. on page no. ?

(iii) Hari can acquire foreign securities as a gift from his cousin living in England.According to foreign Exchange Management (Transfer of Issue of foreignSecurity) Regulation, 2000 permission has been granted to persons resident inIndia to acquire foreign security from person resident outside India as gift.

(iv) No, Markwell Ltd. cannot issue rights shares to person residing in kuwait at ̀ 12.According to the Foreign Exchange Management (Transfer or Issue of Securityby Person Resident Outside India) Regulations, 2000 it cannot issue rightsshares to persons resident outside India at less than that of resident shareholder.


2005 - June [3] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999, advise on the following:

(i) Rani, an Indian national, failed to realise and repatriate foreign exchange

amounting to ` 50 lakh. She is interested, in compounding the said offence.(ii) Vaibhav, an Indian resident, invites Keshav an NRI in the USA, to stay as his

guest while he is in India on a business trip. Does Vaibhav violate the law whileincurring expenditure on his friend's hospitality?

(iii) Rekha, a person resident in India, desires to make a gift of $200 to her brother,a person resident outside India, on the occasion of his marriage.

(iv) Vijay, a person resident outside India, wants to repatriate outside India the saleproceeds of the immovable property in India. (2 marks each)

Answer:

(i) Rani should make an application to the Chief General Manager of Reserve Bankfor non realisation and non-repatriation within 180 days and compound theaforementioned offence.

(ii) No Vaibhav has not violated any law.Please refer 2004 - Dec [3] (a) on page no. 126

(iii) Rekha can make a gift of $ 200 to her brother since foreign ExchangeManagement (Current Account Transactions) Rules, 2000 permit to make giftsupto US$ 5,000.

(iv) Prior permission of the Reserve Bank shall be required to transfer immovableproperty by person resident outside India as per the foreign— Exchange Management (Acquisition and transfer of Immovable property of

India) Regulations, 2000.

Exception:! Person resident outside India being citizen of India.

or! Person of Indian origin— May transfer immovable property if the same was acquired in compliance

of foreign exchange laws and amount of repatriation should be less than costof acquisition.

2005 - Dec [3] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999, advise on the following:

(i) Mehta Chemicals Ltd., a listed Indian company, is interested in investing in theshares of an overseas company.

(ii) Jai Capital Ltd. desires to export plant and machinery from India towards equitycontribution in a joint-venture in Trinidad and Tobago.


(iii) Arora & Co., a proprietary concern in India, wants to apply to authoritiesconcerned for permission to accept shares of a company outside India in lieu offees due to it for professional services rendered to the said company.

(iv) Jolly Ltd. wants to borrow a term loan of £ 5 million @ 6% per annum from itsforeign collaborators to be repaid in 7 years. (2 marks each)

(b) How would you deal with (i) transfer of securities by a person resident outside Indiato a person resident in India; and (ii) purchase of shares by a person residentoutside India? (4 marks)

Answer:

(a) (i) Investment may be made by Mehta Chemicals Ltd. in overseas companyprovided -! Company is listed! It holds shares not less than 10% in listed Indian company! Investment should not exceed 25% of networth

(ii) Section 7 of the foreign Exchange Management Act, 1999 deals with theprovisions relating to exports of plant and machinery.Jai Capital Ltd. can export plant and machinery but has to give declaration inprescribed form.! Quote identification number.

(iii) Arora and Co. should apply in form ODB to RBI for permission to accept sharesof company outside India in lieu of fees due to it for professional servicesrendered.Additional conditions to be satisfied:! Value of shares should not exceed 50% of fees receivable! Share holding in any one Company Outside India accepted as such should

not exceed 10% of paid up capital of company outside India.(iv) According to the regulations of the foreign Exchange Management (Borrowing

or Lending in foreign Exchange) Regulations, 2000.Jolly Limited May borrow £ 5 million term loan from the foreign collaborators.

(b) Transfer of securities by a person resident outside India to be a person resident inIndia; and (ii) purchase of shares by person resident outside India.(i) No person resident outside India can transfer any security except where

permission has been granted by Reserve Bank, subject to imposition ofconditions, on basis of application made to it.

(ii) Subject to conditions, person resident outside India, other than citizen ofBangladesh and Pakistan can purchase shares under the foreign DirectInvestment Scheme.


2006 - June [3] (b) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999, advise on the following:

(i) Adarsh Ltd. had export earnings of ` 15 lakh, ̀ 20 lakh and ` 22 lakh during theyears 2003, 2004 and 2005 respectively. It desires to issue advertisementsthrough a foreign TV channel.

(ii) Paritosh Ltd., an Indian company, wishes to donate $10,000 to a charitableinstitution in Mauritius.

(iii) Abhay, Ltd. an Indian company, which won the bid, has approached theauthorised dealer for further remittance towards acquisition of a company inRomania.

(iv) Sumesh, a person resident in India, has acquired foreign securities asqualification shares in a company incorporated in Luxemburg for holding the postof a director in that company. (2 marks each)

Answer:

(i) Adarsh Ltd. can issue advertisement through foreign TV channel without evenobtaining the permission of the Reserve Bank as the export earning are morethan 10 lakhs in the preceding two years.In case the earnings are less than 10 lakhs then prior permission of RBI isrequired.

(ii) Paritosh Ltd. has to take the permission of Reserve Bank if it wishes to donate$ 10,000 since the amount exceeds $ 5,000 foreign Exchange Management(Current Accounts Transactions) Rules 2000 require permission of ReserveBank of donation exceeding $ 5000 is to be made.

(iii) Abhay Ltd. is correct in its approach. It can remit the amount upto the ceiling limitvia the authorised agents.Secondly he will have to file report to RBI within 30 days of remittance

(iv) The two conditions which need to be satisfied are as follows:-! Purchase consideration should be less than or equal to $ 20,000.! Minimum number of shares required, being not more than 1% paid up capital

of the company should be acquired.

2006 - Dec [3] (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the Foreign Exchange Management Regulations, 2000,advise on the following:

(i) Crescent Ltd. is interested in issuing shares under the Employees Stock OptionScheme to persons resident outside India.

(ii) Mozart Ltd., an Indian company, after winning the bid, intends to approach theauthorised dealer for remittances towards acquisition of the foreign company.


(iii) A mutual fund, registered in India, is interested to invest in the rated bonds of alisted overseas company which has shareholding of 5% in a listed Indiancompany.

(iv) Somesh, a person resident in India, availed of US$3,000 for his one month’sprivate visit to USA in June, 2006. He intends to make another private visit toEurope for one month in December, 2006 and avail of US$ 4,000.

(2 marks each)

Answer:

(i) XYZ Ltd. can issue shares to persons resident outside India under ESOS,provided the following conditions are taken note of:-! Face value of shares issued should not exceed 5% of paid up capital.! Scheme is Dealt/ deem in consonance with SEBI regulations.

(ii) Please refer 2006 - June [3] (b) (iii) on page no. 129

(iii) Mutual fund is permitted to invest in bonds of overseas company and hasshareholding of not less than 10% provided:-• investment do not exceed 25% of its. net worth and is made through

authorised dealer.• investment is within ceiling cap provided by SEBI.

(iv) According to Rule 5 of Foreign Exchange Management (Current AccountTransaction) Rules 2000 forbids drawal of foreign exchange in excess of US $10,000 without pre-permission of R.B.I.

2007 - June [4] (a) State whether the following transactions are valid and permittedunder the Foreign Exchange Management (Current Account Transactions) Rules,2000 :

(i) An NRI sent a gift of US $6,000 to his younger sister on her marriage in June,2006 and again sent another gift of US $4,000 on the occasion of marriage of hisyounger brother in November, 2006.

(ii) An Indian patient is in need of specialised medical treatment in a US hospital ata cost of US $1,25,000.

(iii) A student, after graduation, wants to proceed to USA for pursuing higher studiesin an engineering course for which he requires US $1,25,000 per academic yearwhich is the estimate from the foreign university.

(iv) An Indian businessman wants to remit US $10,000 for purchase of a trademark/franchise in India.

(v) A company incorporated in India has to make a remittance of US $90,000 byway of reimbursement of pre-incorporation expenses. (1 mark each)


Answer:

(i) Prior permission of the Reserve Bank will be required because as per scheduleIII gifts exceeding US $ 5,000 per remitter/per annum will all for obtaining theconsent.Thus Rule 5 of foreign Exchange Management (Current Account Transaction)Rules 2000 drawal of foreign exchange will require prior approval of RBI.

(ii) Except where payment is made through RFC account prior permission of theReserve Bank shall be required since Schedule III provides that in case ofdrawal of foreign exchange in relation to medical expenses treatment being morethan 1,00,000 US$, permission shall be required.

(iii) Transactions included in schedule III require prior permission of the ReserveBank.! According to schedule III release of foreign exchange for studies abroad or

estimate exceeds US$ 1,00,000 per academic year will require RBI's ispermission.

! Hence student needs to take permission except where payments is madethrough RFC account.

(iv) Indian businessman will have to obtain prior permission of Reserve Bank.! Rule 5 of foreign Exchange Management (current Account Transactions)

Rules 2000 drawal of items mentioned in Schedule IV [remittance of preincorporation expenses] requires permission of RBI.

(v) ! The company may make the remittance of US$ 90,000 on account of preincorporation expenses without obtaining prior permission of Reserve Bank.

! Schedule III allows remittances by Indian entity of pre incorporate expensesbeing less than US$ 1,00,000 without prior approval.

2007 - Dec [4] (a) State whether the following transactions are valid and permittedunder the Foreign Exchange Management (Current Account Transactions) Rules,2000 :

(i) Harish, an agent stationed abroad, desires to receive remuneration of $30,000for sale of commercial plots in India.

(ii) Vijeta Ltd., a company incorporated in India, is interested in issuing ‘foreigncurrency convertible bonds’ (FCCBs) for $500 million to a person residentoutside India.

(iii) Shyam, who had purchased $15,000 for his business trip overseas, has $550 onhis return.

(iv) A person resident in India, being an individual, seeks to acquire qualificationshares in a company outside India.

(v) Mehta Investments Ltd., a company incorporated in India, wishes to issue sharesto its employees who are residents outside India. (1 mark each)


Answer:

(i) ! In case the commission for sale of commercial plots in India receivable byagent stationed outside exceed $ 25,000 or 5% of remittance which ever ishigher, the same requires prior permission of Reserve Bank.

! Hence in order to be valid, Harish needs to receive RBI’s consent.(ii) ! An Indian company can issue FCCB to person resident outside India of

amount not more than $ 500 million! Since Vijeta Ltd. is interested in issuing FCCB for $ 500 million to person

resident outside India, the same stands valid.(iii) According to, Foreign Exchange Management (Realisation, Repatriation and

Surrender of Foreign Exchange) Regulations, 2000, in case foreign exchangeacquired or purchased by any person from an authorized person is for thepurpose of Foreign travel, then, the unspent balance of such foreign exchangeshall be surrendered to an authorized person within 90 days from the date ofreturn of the traveler to India, when the unspent foreign exchange is in the formof currency notes and coins and within 180 days, if it is in the form of travelercheques. Hence, Shyam has to return the unspent foreign currency to theauthorized person within the prescribed period.

(iv) Please refer 2006 - June [3] (b) (iv) on page no. 129

(v) Mehta Investments Ltd. can issue shares to persons resident outside India underESOS, provided the following conditions are taken note of :-! Face value of shares issued should not exceed 5% of paid up capital.! Scheme is dream in consonance with SEBI regulations.


(i) Tomb Ltd. desires to make payment of commission on the exports made towardsequity investment in its wholly owned subsidiary abroad.

(ii) Hari, while on a visit abroad, used his international credit card for makingpayment towards meeting stay expenses.

(iii) Jolly, a resident in India, desires to acquire 5% of the paid-up share capital of thecompany abroad to hold the post of director in the foreign company, asqualification shares.

(iv) Ramesh, and NRI, desires to invest on repatriation basis in derivativescontracts, approved by the Securities and Exchange Board of India throughstock exchanges. (2 marks each)

Answer:(i) Please refer 2008 - Dec [4] (a) (i) on page no. 107


(ii) Yes, Hari can make payment using an international credit card for makingpayment towards stay expenses since Rule 7 of Foreign ExchangeManagement(Current Account Transactions) Rules 2000 permits the use ofinternational credit card for meeting the expenses.

(iii) No, Jolly cannot acquire 5% of the paid up share capital in lieu of qualificationshares of company situated abroad, as a ceiling of 1% of paid up capital hasbeen provided also refer 2006 - June [3] (b) (iv) on page no. 129

(iv) No, Ramesh cannot invest in the derivatives contract on repatriation basis, sinceinvestment may be made by NRI out of the funds but the same needs to be onnon repatriable basis.



1 Short Notes on Current account transactions.05 - June [1] (i), 07 - Dec [1] (vi), 12 - June [1] (vii) 3 Times

2 With reference to the relevant legal enactments write shortnotes on Foreign security.

04 - June [1] (iii), 07 - June [1] (ii) 2 Times

3 ‘Political party’ and ‘an organisation of political nature’.07 - June [3] (a) (iii), 08 - June [3] (a) (ii) 2 Times

4 Attempt the following :(ii) What are the powers of the Central Government toprohibit receipt of foreign contribution under the ForeignContribution (Regulation) Act, 1976?

07 - June [5] (ii), 08 - June [4] (b), 09 - June [5] (a), 12-Dec [5] (c) 4 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 3 3 3

Total 3 3 3

5.134

Star Rating

On the basis of Maximum marks from a chapter jjjj


On the basis of Compulsory questions from a chapter j

6 Pollution Control and

Environmental Protection

This Chapter Includes: Introduction; Concept/Principles of Sustainable Development;Government Policy; National Conservation Strategy; Environmental Protection in India; Liabilityfor Pollution; Major provisions of the Act; Introduction; Definitions; Central and State PollutionControl Boards; Composition of State Board; Water (Prevention and Control of Pollution) Act,1974; Introduction; Power Prohibition on use of Stream or well for disposal of polluting matter;Refusal or Withdrawal of consent by a State Board; Appeal; Water (Prevention and Control ofPollution) Act, 1974; Introduction; Scope and Scheme of the Act; Definitions; General Powersof the Central Government; Nature and type of Regulation; Power; EnvironmentalLaboratories; Offences and Penalties; Major provisions of the Act; Definitions; Compensationfor death, injury to a person and damage to property and Environment; Appeal; Penalty forfailure to comply with orders of Tribunal; Major provisions of the Act; Definitions;Compensation for death, injury to a person and damage to property and Environment; Appeal;Penalty for failure to comply with orders of Tribunal.


[Chapter #### 6] Pollution Control and Environmental... (((( 5.135


OBJECTIVE QUESTIONS


(iv) The Public Liability Insurance Act, 1991 was enacted for the purpose of providingimmediate relief to the workers affected by accidents occurring while handlingthe hazardous substances. (3 marks)

Answer:(iv) The given statement is false. The objective behind enactment of this Act was not

to provide relief measures to the workers since in that case there exists specificprovisions of Workmen Compensation Act, rather PLI Act 1991 was enacted toprovide immediate relief to persons affected by accident on account of handlinghazardous substances.


(ii) ‘Electricity’ is a hazardous substance under the Public Liability Insurance Act,1991.

(v) Even sheer negligence on the part of legal advisors in properly drafting thecomplaint against a company can make it (the company) liable under the strictprovisions of environmental laws. (3 marks each)

Answer:

(ii) True: Electricity is a hazardous substance under the Public Liability InsuranceAct, 1991. Electricity is a substance having Physico chemical process and alsohazardous as held in UP Electricity Board & Another V. District Magistrate,Dehradun & Others.

(v) True: In U.P. Pollution Control Board v. Modi Distillery (August 6, 1987) 8 Ind.Jud. Reports (SC) 375, the Supreme Court observed that Parliament enacted theWater (Prevention and Control of Pollution) Act, 1974, to meet the urgent needfor introducing a comprehensive legislation with its established unitary agenciesin the Centre and States to provide for the prevention, abatement and the controlof pollution of rivers and streams for maintaining or restoring wholesomeness ofwater resources and for controlling the existing and new discharges of domesticand industrial wastes, which is a matter of great national concern, the manner inwhich some of the Boards are functioning leaves much to be desired.


This is an instance where due to the sheer negligence on the part of the legaladvisors in drafting the complaint a large business house was allowed to escapethe consequences of the breaches committed by it of the provisions of Act withimpunity. In this case, the error pointed out in drafting was that instead oflaunching prosecution against Modi Industries Ltd. the appellant Boardimpleaded its industrial unit Modi Distillery as respondent and this was theground on which the High Court quashed the complaint.


(iii) The Public Liability Insurance Act, 1991 has been enacted for providingimmediate relief to the persons affected by accidents occurring while handlingany__________and for other incidental and connected matters. (1 mark)

Answer:(iii) Hazardous Substance

SHORT NOTES


(v) Environmental audit (3 marks)(vi) Trade effluent (3 marks)

Answer:

(v) Environmental audit - Please refer 2005 - Dec [1] {C} (v) on page no. 148

(vi) Trade Effluent - Please refer 2005 - Dec [1] {C} (vii) on page no. 148


(iv) The concept of sustainable development (3 marks)

Answer:Please refer 2005 - June [1] {C} (ii) on page no. 148


(iii) Standards for emission of environmental pollutants (3 marks)

Answer:Environment (Protection) Act 1986 was enacted with a view to provide protection andimprovement of environment and prevention of hazards to human being caused as aresult of discharge of environment pollutants. The Act, provides for instilling controlmechanisms to combat adverse impacts caused by hazardous substances:


Y The Act fixes responsibility on person carrying on industrial operationsor handling hazardous substances to comply with certain safeguardsfor:• Prevention• Control and• Abatementof environmental pollution.

Y Under this Act, Central Government has been empowered under Section 3 totake measures to • Improve quality of environment and • Prevention control and abatement of environmental pollutionAlso Central Government is empowered to make rules on matters specifiedunder Section 3 by virtue of Section 6.

Y Chapter III of the Act contains various provisions for prevention, control andabatement of pollution.

Y Section 7 under this chapter prohibits discharge of pollutants in excess ofpreserved standards.

Y Section 8 obligates certain persons to furnish certain information regardingdischarge of pollutants to certain authorities.

Y Section 10 grants power to:! enter,! inspect and! take samplein this connection.

Y Section 10(2) cast responsibility on persons carrying industry, operation orprocess handling any hazardous substances to render assistance, to CentralGovernment.

Y Section 15 of the Act contains the penalty provision in relation tocontravention of any provision of the Act or rules made thereunder.It provides for:

! Fine upto ` 1 lakh, or! Imprisonment upto 5 years, or! Both.

Y Section 7 of environmental protection Act, 1986 prohibits discharge of pollutantsin excess of prescribed standards.

Y The aforementioned standards for emission have been prescribed by virtue ofschedule I to the environmental protection Rules 1986.

Y Apart from these standards, the Central Board or State Board enjoy the powerto provide for more stringent and vigilant standards than prescribed in schedule.


2011 - June [1] {C} With reference to the relevant legal enactments, write short noteson the following:(vii) Sustainable development. (3 marks)


2011 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following:(vii) Principles of sustainable living. (3 marks)



(ii) Hazardous substance(iv) Functions of Central Pollution Control Board (3 marks each)

Answer:

(ii) Please refer 2005 - June [1] {C} (v) on page no. 148

(iv) The various functions of Central Pollution Control Board are as follows:C Advise the Central Government on matter relating to Prevention & Control

of Water Pollution.C Co- ordinate the activities of the State Boards.C Resolving the disputes among the State Boards.C To provide technical assistance to the State Boards.C Organising various programmes which are meant for prevention & control of

water pollution.C Providing training of persons engaged in programmes for the prevention &

control of water pollution.


(iii) Principle of 'no fault liability' (3 marks)(vii) Control of noise pollution. (3 marks)

Answer :(iii) As per the principle of “no fault liability” wrongdoer will be held liable for the

consequences of his acts even though there is no negligence on his part or evenif there is no intention on his part for the consequence.C Principle of “no fault liability” is mentioned under Section 3 of the Public

Liability Insurance Act, 1991.


C It imposes on the owner liability to give relief in case of death or injury toany person or damage to any property, resulting from an accident occurringwhile handling any hazardous substance.

C For the purpose of section 3 injury includes:- permanent total disability - permanent partial disability- sickness resulting out of an accident.

(vii) Control of noise pollution.The salient features of the Noise Pollution (Regulation and Control) Rules, 2000are as follows:) The purpose of framing these rules is to impose regulation and control over

the noise pollution originating from different sources.) It provides for noise related air quality standard for different areas.) These standard needs to be taken into consideration by development

authorities too.) Declaration of silence zone-area comprising 100 meters around:

• Hospitals• Schools/Colleges• Courts

) Prohibits use of loudspeaker during 10 p.m. to 6 a.m.) Penalty provisions in case of breach.

2013 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following:(vii) Water pollution. (3 marks)

DISTINGUISH BETWEEN

2013 - Dec [3] (a) Distinguish between the following:(iii) ‘Environment pollutant’ and ‘air pollutant’. (5 marks)


2008 - Dec [5] (b) State the provisions of the Environment (Protection) Act, 1986relating to the offences by companies. (5 marks)


Answer:For definition of 'hazardous substances' refer 2005 - June [1] {C} (v) on page no. 148

Provisions contained under Section 3 and Section 6 empower the Central Governmentto make rules in relation to handling of hazardous substances in an industry, operationon process worthmentioning in this regards are:

Section 3 (2) (vii): Laying down procedures and safeguards for handling of hazardoussubstances;

Section 6 (2) (c): The procedures and safeguards for handling of hazardoussubstances.

Section 6 (2) (d): The prohibition and restrictions on the handling of hazardoussubstances in different areas.Section 8 provides that no person is authorised to:

• Handle or• Cause to be handled

any hazardous substances except in accordance with the prescribed procedure andcompliance with prescribed safeguards.Provision relating to offences committed by companies are covered under Section 16of the Act.Y According to Section 16 in case of offence committed by the company, following

shall be held guilty:• Person directly incharge/ responsible at the time of offence and • Company itself.• Director, Manager, Secretary or Officer, if offence committed by the company

is with their consents can be proved. Section 15 of the Environment (Protection) Act, 1986 contains the penalty provision inrelation to contravention of any provision of the Act or rules made thereunder.Y It provides for:

• Fine upto 1 lakh or• Imprisonment upto 5 yrs or • Both

Y It also provides for an additional fine of:

• ` 500 per day in case of continuing default.According to Sec 15(2) in case contravention continues beyond one year fromconviction date punishment provided shall be:

• Imprisonment upto 7 years.

2009 - June [5] (b) Write a note on regulatory framework for environmental protectionin India. (5 marks)


Answer:In the present scenario, environment has degraded the most and to combat theproblems caused by the same Government in India has enacted various rules. Toincorporate penal provisions and instill stringency & vigilance so as to preventenvironmental degradation the following Acts were enacted-• Environment Protection Act, 1986• Air (Prevention and Control of Pollution) Act, 1981• The Water (Prevention and Control of Pollution) Act, 1974For the furtherance of the objective of environmental protection, following were alsointroduced• The National Environment Tribunal Act, 1995• PLI (Public Liability Insurance) Act, 1991

2009 - Dec [4] (b) Enumerate the heads under which compensation for damages maybe claimed from the National Environment Tribunal constituted under the NationalEnvironment Tribunal Act, 1995. (5 marks)

Answer:Please refer 2004 - June [6] (a) on page no. 151

2010 - June [4] (b) Critically examine the application of the rule of strict liability whilefixing the liability for environmental pollution. (5 marks)

Answer:The term 'Environment Pollution' finds its room under Section 2(c) of the Environment(Protection) Act, 1986, to mean the presence of any environmental pollutant, Where the term environmental pollutant may be defined as any-• Solid;• Liquid, or• Gaseous substancePresent in such concentration as may be or tend to be injurious to environment.Y The salient features of the judgement in MC Mehta and Another Vs. Union of India

and other [1987] were as follows:• Application for compensation in case of pollution is maintainable as per Article 32

of the Constitution of India.• Application made in such cases is for protection of fundamental rights of people

and courts are empowered to enforce these fundamental rights.• The most important ruling in this case was in relation to liability of enterprise

engaged in hazardous activities posing threat to persons working in the factory andnearby.


• It was held that in such a case their exists an absolute duty on the enterprise totake care that no harm is caused to the:! Persons working in such factory and! Residents in surrounding area.as a result of such hazardous and dangerous activity under taken by the enterpriseTo sum up

• Liability for pollution caused by individual or corporation may be civil or criminal.• Civil liability refers tortious liability where tort is defined as civil wrong.• In the famous case law of Rylands v/s Fletcher it was held that person who keeps

anything on his land likely to do mischief (harm) if it escapes must keep so at hisperil and if there is any failure on his part, he shall be liable for the damage.

The present pollution laws are vigilant that contravention may lead to closure offactories.

2010 - June [5] (b) Critically examine how environmental pollution violates humanrights. (5 marks)

Answer:Please refer 2010 - June [4] (b) on page no. 141 to define Environmental Pollution andjudgement of M.C. Mehta and Another v/s Union of India and other.Environmental pollution results in the degradation of resources and therefore deterioratethe quality of human life resulting in violation of human rights Increase in environmentalpollution leads to impure air and water, loss of sources of energy, health problems evento the extent of physical impairment. Thus, environmental pollution has a direct impacton quality of human life and earnest measures should be taken to protect & preservethe environment.

2010 - Dec [5] (c) Write a note on recent government initiatives to contain environ-mental pollution in the country. (5 marks)


2011 - June [5] (a) “Environmental pollution is the price a country has to pay foreconomic development.” Comment. (5 marks)

(b) Write a note on the efficacy of existing regulatory framework providing forenvironmental protection in the country. (5 marks)

Answer:

(a) "Environmental pollution is the price a country has to pay for economicdevelopment".

With rapid industrialisation environment pollution is bound to happen. Butthere is a need to manage this environment pollution to the extend possible &simultaneously maintaining economic growth.


The National Environment policy recognizes environment protection as anintegral part of the development process and mainstreams environmental concernsin all developmental activities.

An industrial growth is essential to fulfill the increasing human needs, achange in life style, particularly going back to the age of pre industrial revolution isimpossible.

So, these is a need to constantly monitor the environment pollution & takeeffective steps to combat it.

Rapid industrialization leads to climate change, depletion of ozone layer,global warming and other consequences which are directly or indirectly harmful forthe environment.

So, industrial development is necessary for economic growth but theenvironment & other factors is also required to be kept in mind & necessary stepsneeds to be taken besides maintaining healthy environment.

(b) Please refer 2009 - June [5] (b) on page no. 140

2011 - Dec [5] (a) Describe the powers of the National Green Tribunal constituted underthe National Green Tribunal Act, 2010. (5 marks)

(b) An enterprise which is engaged in hazardous or inherently dangerous activity andan industry which poses a potential threat to the health and safety of the persons andof those residing in the surrounding areas owes an absolute and non-delegatable dutyto the community. Comment. (5 marks)

(c) Briefly mention the provisions of the Noise Pollution (Regulation and Control)Rules, 2000 relating to control of noise pollution. (5 marks)

Answer:

(a) National Green Tribunal constituted under the National Green Tribunal Act, 2010has been entrusted with the same powers as are vested in a Civil Court under theCode of Civil Procedure 1908Some of the powers of the National Green Tribunal are as under:

(i) Summoning & enforcing the attendance of any person and examining him onoath.

(ii) Requiring the discovery & production of documents(iii) Receiving evidence on affidavits (iv) Requisitioning any public record or document or copy of the same(v) Issuing summons for the examination of witness or documents(vi) Reviewing its decisions (vii) Setting aside any order(viii) Pass an interim order subject to some conditions


Other powers of National Green Tribunal:C To provide relief and compensation to the victims of pollution and other

environmental damageC To provide for restitution of property damaged C Proceedings before the National Green Tribunal shall be deemed to be the

judicial proceedings.

(b) Please refer 2010 - June [4] (b) on page no. 141

(c) Please refer 2013 - June [1] {C} (vii) on page no. 138

2012 - June [4] (c) Mention the powers of the central government to protect andimprove the quality of environment under the Environment (Protection) Act, 1986.

(5 marks)

Answer:Also Central Government is empowered to make rules on matters specified underSection 3 by virtue of Section 6.

Chapter III of the Act contains various provisions for prevention, control andabatement of pollution.

• Section 7 under this chapter prohibits discharge of pollutants in excess ofpreserved standards.

• Section 8 obligates certain persons to furnish certain information regardingdischarge of pollutants to certain authorities.

• Section 10 grants power to:! enter,! inspect and! take sample

in this connection.• Section 10(2) cast responsibility on persons carrying industry, operation or

process handling any hazardous substances to render assistance, to CentralGovernment.

• Section 15 of the Act contains the penalty provision in relation to contraventionof any provision of the Act or rules made there under.

It provides for:! Fine upto ` 1 lakh, or! Imprisonment upto 5 years, or! Both.

The measures taken by Central Government may relate to the following matters:• Coordinating the actions of ! State government,! Officers and! Authorities


under this Act or other related law;• Planning and implementation of national wide programme;• Specifying standard for quality of environment;• Specifying standards for discharge of environmental pollutants;• Imposing restrictions for carrying industries in certain areas;• Laying down standard for ! Prevention of accidents causing environment pollutant! Handling hazardous substances.

• Carry out inspection and issuing directions;• Establishing or recognising environmental laboratories;• Collecting and disseminating information relating to Environmental Pollution;• Such other matters as considered neccessary by the Central Government.

2012 - Dec [5] (a) What are the heads under which compensation or relief for damagesmay be claimed under the National Green Tribunal Act, 2010. (5 marks)

Answer:The heads under which compensation or relief for damages may be claimed under theNational Green Tribunal Act, 2010 is as under:• Death• Disability which may be permanent, temporary or partial, total.• Medical expenses incurred for treatment of injuries.• Loss of wages due to total or partial disability.• Loss/ damage to private property. • Loss / damage of property other than private property. • Loss of business or employment. • Expenses incurred by Government in providing relief to the affected persons.• Expenses incurred by Government to cope with any harm or damage, including

compensation for environmental degradation & restoration of the quality ofenvironment.

• Claim on account of any harm or damage to the fauna.• Claim on account of any harm or damage to the flora.

2013 - Dec [5] (a) Briefly mention as to how the Public Liability Insurance Act, 1991seeks to achieve the objective of providing immediate relief to the persons affected byaccident occurring while handling any hazardous substance. (5 marks)

(c) What are the main features of regulatory framework for environmental protectionin India? (5 marks)


PRACTICAL QUESTIONS

2012 - June [5] (b) Ajay Ltd. is engaged in the manufacture and sale of industrialalcohol. In the course of manufacture of industrial alcohol, the industrial unit dischargednoxious and polluted trade effluents into a nearby river through a drain, which is astream within the meaning of the Water (Prevention and Control of Pollution) Act, 1974.The company and the industrial unit, had applied for the grant of requisite consent todischarge the trade effluents into the stream but the consent was withheld as it did notmake good the inadequacies and defects pointed out by the State Pollution ControlBoard.

Are the managing director and other members of the Board of directors liable to beproceeded against under the Water (Prevention and Control of Pollution) Act, 1974 inthe absence of prosecution of the company owning the industrial unit? Give reasonsand refer to decided case law, if any. (5 marks)

Answer:

In the above case, company did not have proper arrangement for treatment of the tradeeffluents discharged by it.C Managing Director & other members of the Board of Directors is liable to be

proceeded against under the water (Prevention & Control of Pollution) Act, 1974as they are responsible for the conduct of the business of the company & deemedto be guilty of the offence.

C The offence will be punishable under Section 47 of the Act.C Case Law:- UP Pollution Control Board v/s Modi Distillery (SC) For definition of 'hazardous substances' refer 2005 - June [1] {C} (v) on page no. 148

Provisions contained under Section 3 and Section 6 empower the CentralGovernment to make rules in relation to handling of hazardous substances in anindustry, operation on process worthmentioning in this regards are:

Section 3 (2) (vii): Laying down procedures and safeguards for handling of hazardoussubstances;


Section 6 (2) (d): The prohibition and restrictions on the handling of hazardoussubstances in different areas.Section 8 provides that no person is authorised to:

• Handle or• Cause to be handledany hazardous substances except in accordance with the prescribed procedureand compliance with prescribed safeguards.


Provision relating to offences committed by companies are covered under Section 16of the Act.Y According to Section 16 in case of offence committed by the company, following

shall be held guilty:• Person directly incharge/ responsible at the time of offence and • Company itself.• Director, Manager, Secretary or Officer, if offence committed by the company is

with their consents can be proved.

CS Inter Gr. II

SHORT NOTES


(v) Environmental clearances for setting up industrial projects. (3 marks)

Answer:) Rule 5 of the Environment Protection Rules 1986 grants Central Government the

power to prohibit or restriction setting up of industries in certain areas.) This power is exercised by the Government after taking into account following.

• Standards for quality of environment;• Maximum allowable limit for pollutant;• climatic conditions of the area;• Likely discharge of pollutant;• Net adverse effect expected to be caused.

) Ministry of environment and forest has issued notifications restricting establishmentof industries in certain areas.

) To establish industries in such an area following needs to be submitted:• Prescribed form for application.• Environment impact statement.• Environmental management plan.

) On the basis of the documents so submitted, Government assesses the impact ofthe industries and on being satisfied grants 'clearances to the industries.

) No person is allowed to establish new industry or expand existing industries insuch areas without receipt of environmental clearances by the government.

2004 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following:(vii) Air pollutant. (3 marks)


Answer:As per the Section 2 (a) of Air (Prevention and Control of Pollution) Act 1981, the termair pollution may be defined as any solid, liquid or gaseous substance including noisepresent in the atmosphere in such concentration as may be or tend to be injurious tohuman beings or other living creatures or plants or property or environment.


(ii) Concept of sustainable development (3 marks)(v) Hazardous substance (3 marks)

Answer:(ii) ) The concept of substainable development was bought to limelight at United

Nations Conference on the Human Environment at Stockholm in June 1972.) This approach calls for utilising of the earth's resources sustainably and

prudently so that future generations may also derive their benefit.) In order to accomplish the same, scarce resources of the earth need to be

used to the optimum with little wastage and extravagance.) Each summit held at Rio De Jenerio in Brazil in 1992 known as The United

Nations conference of Environment and Development' focused on issues ofenvironment.

(v) Section 2(e) of Environment (Protection) Act, 1986 defines 'Hazardous'substance as any:• Substance or• PreparationWhich, by reason of its:• Chemical or• Physico chemical properties or handling is liable to cause harm to• Human beings;• Other living creatures;• Micro-organism;• Property or• Environment


(v) Environmental audit.(vii) Trade effluent. (3 marks each)

Answer:

(v) ) Rules 14 of the Environment Protection Rules 1986 provides for thesubmission of environment audit report.


) Audit report is to be submitted in form V as prescribed under the said rules.) Report is to be sent to the concerned State Pollution Control Board.) Report needs to be sent on or before the 15th of the May from 1993 onwards

for the year ending 31st March.) Following are the persons carrying on industry or operation who need to

send the report:• Persons requiring consent under Section 2 of the Air (Prevention and Control

of Pollution) Act;• Authorisation under Section 25 of Water (Prevention and Control of

Pollution) Act;• Both the above mentioned Act,• Permission under the Hazardous wastes (Management and Handling) Rules,

1989.

(vii) As per Section 2(k) of Water (Prevention and Control of Pollution) Act, 1974trade effluent includes any liquid, gaseous or solid substance which isdischarged from any premises used for carrying on any industry, operation orprocess or treatment and disposal system, other than domestic sewage.


(iv) Environmental laboratories (3 marks)

Answer:) Section 12 of Environment (Protection) Act, 1986 grants Central Government

power:• To establish one or more environmental laboratories;• To recognise one or more laboratories or institutes as environmental

laboratories.) These laboratories carry out the functions as specified under Rule 9 of the

Environment (Protection) Rules 1986.• Evolve methods for sampling;• Analysing types of environment pollutant;• Analyse samples sent by Central Government or officer under Section 11(1);• Lay down standards for quality of environment ;• Carryout investigations;• Send periodical report to Central Government of its activities; • Perform such other functions as prescribed by Central Government.

2006 - Dec [6] (Or) (a) Write a brief note on the principles of sustainable living. (5 marks)


Answer:) Refer to point (i) and (ii) discussed above .) The core concentration of the principles of sustainable living / sustainable

development are:• Improving quality of human life;• Conservation of earth's diversity;• Minimizing depletion of non renewable resources;• Proper integration between development and conservation.

) Development should not take place at the cost of future generation.) Even lower income underdeveloped economies must be supported develop

sustainably.) It talks about improvement of quality of life and developing the standard of living of

the public at large.) Last but not the least according to this approach development must be

conservation based.


(iii) Water pollution. (3 marks)

Answer:Section 2(e) of Water (Prevention and Control of Pollution ) coins the term waterpollution so as to mean any such contamination of water or such alteration of thephysical, chemical or biological properties of water of or such discharge of any sewage,or trade effluent or any other liquid, gaseous or solid substances into water or is likelyto create a nuisance or render such water harmful or injurious to public health or safety,or to domestic, commercial, industrial, agricultural, or other legitimate uses, or to the lifeand health of animals or plants or of aquatic organisms.


(iii) Environment impact assessment and management plan (3 marks)

Answer:Please refer 2004 - June [1] {C} (v) on page no. 147


(i) Concept of sustainable development (3 marks)




2004 - June [6] (a) State the provisions of the National Environment Tribunal Act, 1995relating to compensation for death, injury to a person and damage to property andenvironment. (5 marks)

(b) Discuss the offences and penalties prescribed under the Environment (Protection)Act, 1986. (5 marks)

(c) Mention the salient features of the Water (Prevention and Control of Pollution)Cess Act, 1977. (5 marks)

Answer:

(a) Section 3(1) of the National Environment Tribunal Act, 1995 deals with liability forcompensation.Y According to this section the owner shall be liable to pay compensation, in

case:! Death or injury to any person (other than workman) or ! Damage to any property or environment.

has been resulted from an accident.Y The term injury includes:

! Total permanent ! Partial permanent disability! Sickness out of accident

Claimant is under no obligation to prove / establish that death injury or damage wasresult of wrongful act, neglect etc.If death, injury, damage is the result of combined activity then liability forcompensation shall be apportioned among all those responsible for such activitieson equitable basis.Section 4 of the Act provides that an application for claim for compensation maybe made by:

! Person who has suffered injury;! Legal representative in case of death;! Owner of the property to which damage has been caused;! Agent authorised by owner of property mentioned above! An organization - working in the field of environment and! Recognised by Central Government under all or any heads in the

schedule;! Central Government or! State Government or! Local authority


under all or any head mentioned in the schedule.Y Some other provisions:

! Application for compensation should contain prescribed particulars! Application should be accompanied by necessary documents as

prescribed! Application needs to be made within five years of the occurrence of the

accident.Y The various heads under which compensation may be claimed as per the

schedule to the Act are as follows:! Death;! Permanent temporary, total or partial disability or other injury or sickness;! Loss of wages due to total or partial disability or permanent or temporary

disability;! Medical expenses incurred for treatment of injuries or sickness;! Damage to private property;! Expenses incurred by the government on any local authority in providing

relief;! Expenses incurred by government for any administrative or legal action;! Loss to government or local authority due to the activity causing damage;! Claim due to harm caused to fauna! Claim due to harm caused to flora ! Claim due to harm caused to environment (including restoration cost)! Loss of property other than private property! Loss of business or employment or both;! Any other claim arising out of or connected with, any activity of handling

of hazardous substance.

(b) For definition of 'hazardous substances' refer 2005 - June [1] {C} (v) on page no.

148

Provisions contained under Section 3 and Section 6 empower the CentralGovernment to make rules in relation to handling of hazardous substances in anindustry, operation on process worthmentioning in this regards are:

Section 3 (2) (vii): Laying down procedures and safeguards for handling ofhazardous substances;


Section 6 (2) (d): The prohibition and restrictions on the handling of hazardoussubstances in different areas.


Section 8 provides that no person is authorised to:• Handle or• Cause to be handled

any hazardous substances except in accordance with the prescribed procedureand compliance with prescribed safeguards.Provision relating to offences committed by companies are covered under Section16 of the Act.Y According to Section 16 in case of offence committed by the

company, following shall be held guilty:• Person directly incharge/ responsible at the time of offence and • Company itself.• Director, Manager, Secretary or Officer, if offence committed by the

company is with their consents can be proved.

Section 15 of the Environment (Protection) Act, 1986 contains the penalty provisionin relation to contravention of any provision of the Act or rules made thereunder.Y It provides for:

• Fine upto 1 lakh or• Imprisonment upto 5 yrs or • Both

Y It also provides for an additional fine of:• ` 500 per day in case of continuing default.

According to Sec 15(2) in case contravention continues beyond one year fromconviction date punishment provided shall be:

• Imprisonment upto 7 years.

(c) The salient features of Water (Prevention and Control of Pollution) Cess Act,1977are as follows:Y It provides for the levy and collection of cess on water consumed by person

carrying only • Certain industries • local authorities

Y The objective of this Act is to provide financial resources to the Central andState Board

The various sources available with the Board are:• Cess collected under Cess Act• Contributions by Central Government• Contributions by states• Gifts and other donations

Y Availability of funds ensure the effective discharge of its functions andresponsibilities.


2004 - Dec [6] (a) Explain the liability of a company and its directors for offences underthe pollution control laws. (5 marks)

(b) Discuss briefly the provisions of the Environment (Protection) Act, 1986 and therules thereunder regarding environmental clearances and location of industries.

(5 marks)

(c) Mention the emergency powers of the State Boards in case of pollution of streamsor wells under the Water (Prevention and Control of Pollution) Act, 1974.

(5 marks)

Answer:

(a) Section 40 of the Air (Prevention and Control of Pollution) Act, 1981 deals withliability in case of offences by companies.) In such cases.

• Person directly incharge to the company at the time offence wascommitted for the wrong conduct and

• Company itself shall be held guilty and liable to be:! Proceeded and! Perished

) It further provides for punishment to:• Person who consents at an offence or• Where offence is due to the neglect of Director, Manager, Secretary or

other officer the said person.) A person shall not be liable for punishment, in case he proves that:

• The offence was committed without his knowledge or • He exercised due diligence to prevent commission of such offence.

(b) Please refer 2004 - June [1] {C} (v) on page no. 147

(c) Emergency measures available to the State Board in case of pollution of streamor well are contained under Section 32 of the Water (Prevention and Control ofPollution) Act.1974.

Y According to this section where • it appears to the State Board that any poisonous, noxious or polluting

matter is present in any stream or has entered due to any accidentand

• State Board find it necessary to take action.Then it may carry out these operations Y Before taking any steps, State Board needs to records the reasons in

writingY Action by the Board can be taken on account of the following

• Removing matter from stream and disposing in proper manner


• Mitigating pollution caused due to presence of any matter in thestream.

• Restraining persons from discharging poisonous stuff in the streamSection 33 of the Water (Prevention and Control of Pollution) Act, 1974empowers the State Board to make applications to the courts for restrainingapprehended pollution of water in the streams.Y Application should be made in case Board has the following

apprehension-Water in any stream is likely to be polluted on account of disposal or likelydisposal of any matter.Y Application has to be made to court, not less than Metropolitan Magistrate

or Judicial Magistrate (1st class)Y Court may on the receipt of application make the following order:-

• Restraint the person from polluting the Stream.• To desist from taking such action which is likely to cause pollution or,• To remove such matter from such stream.

Y In case the State Board has been authorized by the court to undertakeremoval and disposal, all expenses incurred by the Board shall bedefrayed • Out of money received from disposal, if any• Remaining amount shall be recovered from the person concerned as

arrears of land revenue.

2005 - June [4] (b) Explain the functions of environment laboratories under theEnvironment (Protection) Act, 1986. (5 marks)

Answer:Please refer 2006 - June [1] {C} (iv) on page no. 149

2005 - June [5] (b) State the provisions of the Air (Prevention and Control of Pollution)Act, 1981 and the rules made, thereunder relating to control of noise pollution.

(5 marks)

Answer:Central Government has framed the Noise Pollution (Regulation and Control (Rules),2000 to as to control the noise pollution arising from industrial & construction activityloudspeaker, horns of vehicles etc. Y An area of 100 meters around hospitals, schools etc has been announced

as silence area/zone. No loudspeakers should be used between 10.00 p.m.to 6.00 a.m.

Y The one being guilty of offence shall be liable to penalty Y While engaging itself in any development activities, local bodies and

authorities should take into account air quality standards.


2005 - June [6] (b) Write a note on liability for pollution referring to pronouncements bythe Supreme Court of India. (5 marks)

Answer:The term 'Environment Pollution' finds its room under Section 2(c) of the Environment(Protection) Act, 1986, to mean the presence of any environmental pollutant, Where the term environmental pollutant may be defined as any-

• Solid;• Liquid, or• Gaseous substance

Present in such concentration as may be or tend to be injurious to environment.Y The salient features of the judgement in MC Mehta and Another Vs. Union of India

and other [1987] were as follows:• Application for compensation in case of pollution is maintainable as per Article

32 of the Constitution of India.• Application made in such cases is for protection of fundamental rights of

people and courts are empowered to enforce these fundamental rights.• The most important ruling in this case was in relation to liability of enterprise

engaged in hazardous activities posing threat to persons working in the factoryand nearby.

• It was held that in such a case their exists an absolute duty on the enterpriseto take care that no harm is caused to the-! Persons working in such factory and! Residents in surrounding area.as a result of such hazardous and dangerous activity under taken by theenterpriseTo sum up

• Liability for pollution caused by individual or corporation may be civil orcriminal.

• Civil liability refers tortious liability where tort is defined as civil wrong.• In the famous case law of Rylands v/s Fletcher it was held that person who

keeps anything on his land likely to do mischief (harm) if it escapes must keepso at his peril and if there is any failure on his part, he shall be liable for thedamage.


2005 - Dec [2] (b) What environmental clearances are required to be obtained forsetting-up an industrial project or expanding and modernising existing projects?

(4 marks)


Answer:Please refer 2004 - June [1] {C} (v) on page no. 147

2005 - Dec [5] (b) What are the heads under which compensation for damages maybe claimed under the National Environment Tribunal Act, 1995? (5 marks)

Answer:Please refer 2004 - June [6] (a) on page no. 151

2005 - Dec [6] (a) Discuss the restrictions on the discharge of sewage and tradeeffluents under the provisions of the Water (Prevention and Control of Pollution) Act,1974. (5 marks)

(c) Explain the general powers of the Central Government for protecting and improvingthe quality of the environment and for preventing, controlling and abatingenvironmental pollution under the Environment (Protection) Act, 1986.

(5 marks)

Answer:

(a) Section 24 of the Water (Prevention and Control of Pollution)Act, 1974 prohibitsany person to knowingly cause or permit any • Poisonous, or• noxious, or• polluting matter

to enter directly or indirectly into • Stream or• Sewer or• LandThe standards for this purpose is laid down by the State Board under Section 17.However there lies exceptions to Section 24 i.e. in these cases person shall not beheld guilty of any offence -• Constructing, improving or maintaining in or across the bank, or bed or any

stream any building, bridge dam or other permanent work over which he hadthe right to construct, improve or maintain,

• depositing any materials on the bank or bed of stream done with a view to -´ reclaim land´ Support, repair or protect bank• putting any sand gravel or natural deposits into stream

which has deposited by current of such stream.• An act done in accordance with the permission of State Board.Restrictions on new outlets/discharges has been provided by virtue of Section 25 of the Act.


No person is authorized to commit the following without the prior permission orState Pollution Control Board.• Establish or take steps for establishment of any of the following.´ industry, operation or process´ treatment and disposal system´ extension or addition Likely to discharge sewage or trade effluents into stream etc. • Bring into use any new or altered outlet for discharge of sewage; or• begin to make any new discharge of sewage.State Board has been empowered to make an enquiry in case application for theaforementioned reasons is make to it.

(c) Also Central Government is empowered to make rules on matters specified underSection 3 by virtue of Section 6.Chapter III of the Act contains various provisions for prevention, control andabatement of pollution.• Section 7 under this chapter prohibits discharge of pollutants in excess of

preserved standards. • Section 8 obligates certain persons to furnish certain information regarding

discharge of pollutants to certain authorities.• Section 10 grants power to:

! enter,! inspect and! take samplein this connection.

• Section 10(2) cast responsibility on persons carrying industry, operation orprocess handling any hazardous substances to render assistance, to CentralGovernment.

• Section 15 of the Act contains the penalty provision in relation to contraventionof any provision of the Act or rules made there under.It provides for:

! Fine upto ` 1 lakh, or! Imprisonment upto 5 years, or! Both.

The measures taken by Central Government may relate to the following matters:• Coordinating the actions of

! State government,! Officers and! Authorities


under this Act or other related law;• Planning and implementation of national wide programme;• Specifying standard for quality of environment;• Specifying standards for discharge of environmental pollutants;• Imposing restrictions for carrying industries in certain areas;• Laying down standard for

! Prevention of accidents causing environment pollutant! Handling hazardous substances.

• Carry out inspection and issuing directions;• Establishing or recognising environmental laboratories;• Collecting and disseminating information relating to Environmental Pollution;• Such other matters as considered neccessary by the Central Government.

2006 - June [6] (a) Mention the conditions under which the report in respect of samplesof air or emission from any chimney, flue or duct or any other outlet will be admissiblein evidence under the Air (Prevention and Control of Pollution) Act, 1981. (5 marks)

(b) Describe the powers of the National Environment Appellate Authority. (5 marks)

(c) State briefly the principles of sustainable development. (5 marks)

Answer:

(a) The conditions which needs to be complied with for admissibility of the report inrespect of sample of air or emission from chimney or any other outlet are asfollows:Y When a sample of emission is taken, the person taking the sample shall

• Serve a notice on the occupier or agent of the occupier. • Collect sample of emission in presence of the occupier or his agent.

Place the sample in a container or containers to be marked, sealed and signed byperson taking sample, and Y occupier or agent.

• Send the container to the laboratory established or recognized by StateBoard, or laboratory specified under the Act.In case the authorised person sends notice but the occupier or his agentwilfully absents himself !

• He shall collect the sample and mark, seal and sign the same • In case the occupier or agent refuses to sign the container, he shall along

sign the sample and sent it to the laboratory for further analysis.

(b) The powers of the National Environment Appellate Authority are prescribed undersection 12 of the National Environment Appellate Act 1997. The authority is guidedby principles of natural justice, The various power are as follows:-• Enforcing the attendance of any person;• Summoning and examining the person on oath;


• Requiring discovery and production of documents;• Receipt of evidences on affidavits;• Requisition of any public record, or document or copy of it from public office;• Summoning for examination of witnesses or documents;• Reviewing its decisions;• Dismissing a representation in case of default;• Giving expert decisions;• Setting aside any order;• Any other matter prescribed by Central Government.

(c) Please refer 2005 - June [1] {C} (ii) on page no. 148

2006 - Dec [6] (a) Enumerate the main provisions of the Public Liability Insurance Act,1991. (5 marks)

(b) Mention the provisions of the Environment Protection Rules, 1986 regardingenvironmental clearance and location of industries. (5 marks)

(c) Describe briefly the procedure to be adopted when a sample of water from anytrade effluent, which is passing from any plant into a stream or well, is taken for analysisunder the Water (Prevention and Control of Pollution) Act, 1974. (5 marks)

Answer:

(a) The rationale behind the enactment of Public Liability Insurance Act, 1991 is:To provide relief to the persons affected by accidents while handling anyhazardous substance or incidental matter.The major provisions of this Act are as follows:) Section 3 casts responsibility on the owner to give relief in case an accident

occurs while handling hazardous substances and results:• death or• injury or• damage to property

) Section 4 provides for compulsory insurance to be taken up by the owner.Noteworthy points in this regard are:• Insurance to be taken before starting handling of hazardous substances.• Insurance should not be less than - amount of paid up capital.

) Section 5 requires collector to verify the occurrence of an accident which tookplace within his jurisdiction.

) Section 6 covers matters relating to application for claim for relief.• Application in prescribed format together with documents is to be

submitted to the collector.


• Application can be made by:! Person who has suffered injury on account of accident;! Owner of property damaged;! Legal representative of deceased victim;! Agent authorised in this regard.

) Section 7: When the collector collect or receives the application as discussedin Section 6, he shall.• Inquire into the claims;• Give notice of application to owner• Provide both the parties an opportunity of being heard.• Make an award of relief.• Require insurers to deposit the amount within 30 days of the

announcement.) Section 9, 10 and 11 empowers Central Government to

• Call for information• Enter any

! Place;! Premises or! Vehiclewhere hazardous substance is handledWhereas Section 12 empowers it to give direction including:

• Prohibition or regulation of the handling of any hazardous substance; or• Stoppage or regulation of supply of

! Electricity! Water or! any other service

) Section 14 to 18 relates to offences and penalties in case of contravention ofprovisions.

(b) Please refer 2004 - June [1] {C} (v) on page no. 147

(c) For 'trade Effluent' refer to short Notes ! 2005 - Dec. [1] {C} (vii) on page no. 148

Sewage Effluent: As per Section 2 (g) of Water (Prevention and Control ofPollution), Act 1974 sewage effluent means effluent from any sewerage system orsewage disposal works and includes sewage from open drains.Following is the procedure required to be founded under the Act so as to ensurethat the result of the analysis of sample of sewage or trade effluent is admissiblein the legal proceeding:


A notice shall be served on • person in charge of or• having Control OverPlant or vessel or in occupation of the placeNotice shall be given in the prescribed from and shall state the intention also.Sample shall be collected in the presence of • Occupier or• his agentDivide sample into two parts and mark seal and sign each part of the container.Signature of both• Occupier or his agent and• Person authorized to take samplesare required to be placed on the container.Container needs to be sent to !• Laboratory established or recognized by the Central Board (in case of Union

Territory)• Laboratory established or recognized by the State Board (in any Other Case).

In case of wilful absence of the occupier or the agent the sample shall bemarked, sealed and signed by person taking sample and along with sending thesame to the laboratory inform the Government about the wilful absence.

2007 - June [5] Attempt the following:(iv) Enumerate the general powers of the Central Government for protecting and

improving the quality of the environment and for preventing, controlling andabating environmental pollution under the Environment (Protection) Act, 1986.

(5 marks)

Answer:Please refer 2005 - Dec [6] (c) on page no. 157

2007 - June [6] Attempt the following:(i) Mention the provisions of the National Environment Tribunal Act, 1995 relating to

compensation for death, injury to a person and damage to property andenvironment. (5 marks)

(iii) Mention the provisions of the Environment (Protection) Act, 1986 relating tooffences by companies. (5 marks)

Answer:(i) Please refer 2004 - June [6] (a) on page no. 151

(iii) Section 2(e) of Environment (Protection) Act, 1986 defines 'Hazardous' substanceas any:


• Substance or• PreparationWhich, by reason of its:• Chemical or• Physico chemical properties or handling is liable to cause harm to• Human beings;• Other living creatures;• Micro-organism;• Property or• Environment

Section 15 of the Environment (Protection) Act, 1986 contains the penaltyprovision in relation to contravention of any provision of the Act or rules madethereunder.Y It provides for:• Fine upto 1 lakh or• Imprisonment upto 5 yrs or • BothY It also provides for an additional fine of:

• ` 500 per day in case of continuing default.According to Sec 15(2) in case contravention continues beyond one year fromconviction date punishment provided shall be:• Imprisonment upto 7 years.

2007 - Dec [6] Attempt the following:(i) What are the important heads under which compensation for damages may be

claimed under the National Environment Tribunal Act, 1995? (5 marks)(iii) Explain the provisions of the Environment (Protection) Act, 1986 regarding

prevention, control and abatement of environmental pollutant in excess ofprescribed standards. (5 marks)

Answer:(i) Please refer 2005 - Dec [5] (b) on page no. 157

(iii) Environment (Protection) Act 1986 was enacted with a view to provide protectionand improvement of environment and prevention of hazards to human beingcaused as a result of discharge of environment pollutants. The Act, provides forinstilling control mechanisms to combat adverse impacts caused by hazardoussubstances:

Y The Act fixes responsibility on person carrying on industrial operationsor handling hazardous substances to comply with certain safeguardsfor:


• Prevention• Control and• Abatementof environmental pollution.

Y Under this Act, Central Government has been empowered under Section 3 totake measures to

• Improve quality of environment and • Prevention control and abatement of environmental pollution

Also Central Government is empowered to make rules on matters specifiedunder Section 3 by virtue of Section 6.

Y Chapter III of the Act contains various provisions for prevention, control andabatement of pollution.

Y Section 7 under this chapter prohibits discharge of pollutants in excess ofpreserved standards.

Y Section 8 obligates certain persons to furnish certain information regardingdischarge of pollutants to certain authorities.

Y Section 10 grants power to:!enter,!inspect and!take samplein this connection.

Y Section 10(2) cast responsibility on persons carrying industry, operation orprocess handling any hazardous substances to render assistance, to CentralGovernment.

Y Section 15 of the Act contains the penalty provision in relation tocontravention of any provision of the Act or rules made thereunder.It provides for:

!Fine upto ` 1 lakh, or!Imprisonment upto 5 years, or!Both.


PRACTICAL QUESTIONS

2008 - June [6] Attempt the following:(ii) Mention the salient features of the Supreme Court judgement in the matter of

M.C. Mehta and Another vs. Union of India and Others (1987) relating to liabilityfor pollution. (5 marks)

Answer:The term 'Environment Pollution' finds its room under Section 2(c) of the Environment(Protection) Act, 1986, to mean the presence of any environmental pollutant, Where the term environmental pollutant may be defined as any-

• Solid;• Liquid, or• Gaseous substance

Present in such concentration as may be or tend to be injurious to environment.Y The salient features of the judgement in MC Mehta and Another Vs. Union of India

and other [1987] were as follows:• Application for compensation in case of pollution is maintainable as per Article

32 of the Constitution of India.• Application made in such cases is for protection of fundamental rights of

people and courts are empowered to enforce these fundamental rights.• The most important ruling in this case was in relation to liability of enterprise

engaged in hazardous activities posing threat to persons working in the factoryand nearby.

• It was held that in such a case their exists an absolute duty on the enterpriseto take care that no harm is caused to the-! Persons working in such factory and! Residents in surrounding area.as a result of such hazardous and dangerous activity under taken by theenterprise

To sum up• Liability for pollution caused by individual or corporation may be civil or

criminal.• Civil liability refers tortious liability where tort is defined as civil wrong.• In the famous case law of Rylands v/s Fletcher it was held that person who

keeps anything on his land likely to do mischief (harm) if it escapes must keepso at his peril and if there is any failure on his part, he shall be liable for thedamage.





1 With reference to the relevant legal enactments, writeshort notes on of the following:(i) Concept of sustainable development

05-June[1](ii), 06-June [6](c), 08 - June [1] (i)

3 Times

2 Environmental clearances for setting up industrial projects.04 - June [1] (v), 05 - Dec [2] (b)

2 Times

3 Mention the provisions of the Environment ProtectionRules, 1986 regarding environmental clearance andlocation of industries.

04 - Dec [6] (b), 06 - Dec [6] (b)

2 Times

4 Enumerate the general powers of the Central Governmentfor protecting and improving the quality of the environmentand for preventing, controlling and abating environmentalpollution under the Environment (Protection) Act, 1986.

05 - Dec [6] (c), 07 - June [5] (iv)

2 Times

5 Mention the provisions of the National EnvironmentTribunal Act, 1995 relating to compensation for death,injury to a person and damage to property andenvironment. 04 - June [6] (a), 07 - June [6] (i)

2 Times

6 What are the important heads under which compensationfor damages may be claimed under the NationalEnvironment Tribunal Act, 1995?

05 - Dec [5] (b), 07 - Dec [6] (i)

2 Times

7 With reference to the relevant legal enactments, writeshort notes on the following:(v) Environmental audit 05 - Dec [1] (v), 09 - Dec [1] (v)

2 Times

8 With reference to the relevant legal enactments, writeshort notes on the following:

(vi) Trade effluent 05 - Dec [1] (vii), 09 - Dec [1] (vi)

2 Times


9 With reference to the relevant legal enactments, writeshort notes on the following: (iv) The concept of sustainable development

05 - June [1] (ii), 08 - June [1] (i);10 - June [1] (iv), 11 - June [1](vii)

4 Times

10 Write a note on the efficacy of existing regulatoryframework providing for environmental protection in thecountry.

09 - June [5] (b), 11 - June [5] (b), 13 - Dec [5] (c)

3 Times

11 With reference to the relevant legal enactments, writeshort notes on the following:Principles of sustainable living.

06 - Dec [6] (Or) (a), 11 - Dec [1] (vii)

2 Times

12 With reference to the relevant legal enactments, writeshort notes on of the following:Hazardous substance

05 - June [1] {C} (v), 12 - June [1] (ii)

2 Times

13 Descriptive Questions of ‘Mention the powers of thecentral government to protect and improve the quality ofenvironment under the Environment (Protection) Act,1986'. 05 - Dec [6] (c), 12 - June [4] (c)

2 Times

14 With reference to the relevant legal enactments, writeshort notes on the following: Water pollution. 07 - June [1] (iii), 13 - Dec [1] (vii)

2 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 6 3 3 3 3 6 6 3

Total 6 3 3 3 3 6 6 3

5.168

Star Rating

On the basis of Maximum marks from a chapter jjjjj


On the basis of Compulsory questions from a chapter jjj

7 Management of Intellectual

Property Rights

This Chapter Include: Introduction; The concept of Intellectual Property; Kinds; Meaningof Industrial Property; Concept of Patent, Trade Mark, Copy Right, Design; Definitions;Exclusive Marketing Rights; Application for Grant of Exclusive Rights; Secrecy of CertainInventions; Grant and Sealing of Patent; Rights of Patentee; Term of Patent; Surrenderof Patents; Revocation of Patent; Patent Agents; Penalties; Protection of Security of India;Scheme of the Act; Definitions Appointment of Registrar and Trade Mark Registry;Appointment of Registrar and Trade Mark Registry; Assignment and Transmission;Removal; Registered User; Collective Marks; Intellectual Property Appellate Board;Offences and Penalties; Offences by Companies; Trade Mark Agents; Definition;Meaning; Term; Copyright Board; Functions; International copyright; Registration ofcopyright; Statutory Exceptions; Remedies against infringement of copyright; Offencesand penalties; Power of police to seize infringing copies.


[Chapter #### 7] Management of Intellectual Property Rights (((( 5.169


OBJECTIVE QUESTIONS


(ii) In all legal proceedings relating to trade marks, registered under the TradeMarks Act, 1999, the original registration and all subsequent assignments andtransmissions thereof shall be conclusive proof of its validity. (3 marks)

Answer:(ii) The given statement is true since Section 31 of the Trademarks Act, 1999

provides that in all the legal proceedings relating to trademarks registered theoriginal registration and all assignments and transmission shall act as conclusiveproof.

2009 - June [3] (b) Choose the most appropriate answer from the given options inrespect of the following: (iv) A registered trade mark requires to be renewed on expiry of the period of !

(a) 7 years(b) 10 years(c) 14 years(d) 5 years. (1 mark)

Answer:(iv) (b) -10 years


(vi) A trade mark may not distinguish the goods of one manufacturer or trader fromsimilar goods of other manufacturers or traders. (3 marks)

Answer:

(vi) False, A trade mark distinguished the goods of one manufacturer or trader fromsimilar goods of other manufacturer or trader.According to definition, a trade mark has been defined as to mean a markcapable of being represented graphically and which is capable of distinguishingthe goods or services of one person from those of others and may include shapeof goods, their packaging and combination of colour.



(ii) In all legal proceedings relating to trade mark registered under the Trade MarksAct, 1999, the original registration and all subsequent assignments andtransmissions thereof shall be prima facie evidence of its validity. (3 marks)

Answer:

(ii) Correct; Section 31 of the Trade Marks Act, 1999 stipulates that in all legalproceedings relating to trade mark registered under the Act, the originalregistration and all subsequent assignments and transmission thereof shall beprima facie evidence of its validity.


(iv) The term of every patent granted afer the commencement of the Patents(Amendment) Act, 2002 shall be year(s) from the date of filing ofapplication for the patent.

(v) Literary, dramatic, musical or artistic works enjoy copyright protection for the lifetime of the author plus year(s) beyond the death of the author.

(1 mark each)

Answer:

(iv) The term of every patent granted after the commencement of the Patents(Amendment) Act, 2002 shall be 20 year (s) from the date of application for thepatent.

(v) Literary, dramatic, musical or artistic works enjoy copyright protection for the lifetime of the author plus 60 year (s) beyond the death of the author.


(iv) Patents are granted merely to enable the patentees to enjoy a monopoly for theimportation of the patented article. (3 marks)

Answer:

False:Y Patents are not granted with the objective to enable the patentees to enjoy a

monopoly for the importation of the patented article.Y Section 83 of the Patents Act, 1970 also provides for the same.


(ii) No action for the infringement of copyright can be brought unless the copyrightis registered. (3 marks)


Answer:

False:Actions can be brought for the infringement of copyright even if the copyright is notregistered. Registration of the work under the copyright Act is not compulsory and isnot a condition precedent for maintaining a suit for damages, if somebody infringes acopyright.

Registration of copy right is only enabling section and do not affect the common lawright to sue for infringement of copyright. The only effect of registration is that it is aprima facie evidence of the particulars entered in the register.

So, an action for infringement can be brought even if the registration has not beendone.


(iii) The term of every patent granted under the Patents Act, 1970 shall be _____years from the date of filing of application for the patent.

(iv) The literary, dramatic, musical or artistic works enjoy copyright protection for thelife time of the author plus ______years beyond. (1 mark each)

Answer:

(iii) 20

(iv) 60


(vi) Registration of a trade mark under the Trade Marks Act, 1999 is a prima facie

evidence of the validity of registration in all legal proceedings. (3 marks)

Answer:

True:• Registration of a trade mark is a prima facie evidence of the validity of registration

in all legal proceedings.


(ii) The registration of trade mark requires to be renewed for successive periods of______ .

(iii) The compulsory licence in respect of a patent is granted after the expiration of______ from the date of grant of a patent subject to certain conditions.

(1 mark each)


Answer:

(ii) 10 years

(iii) 3 years


(vi) The author of a literary work has no moral rights after the assignment of thecopyright. (3 marks)

Answer:

False:The moral rights are independent of the author's copyright and remains with him evenafter assignment of the copyright.

Under Section 57 of the Copyright Act, 1957 the author of a work has the right toclaim authorship of the work and to restrain or claim damages in respect of anydistortion, mutilation, modification or other acts in relation to the said work which is donebefore the expiration of the term of copyright if such distortion, mutilation, modificationor other act would be prejudicial to his honour or reputation. Moral rights are availableto the authors even after the economic rights are assigned.


(v) Under the Copyright Act, 1957 moral rights are available to the authors evenafter the economic rights are assigned.

(vi) A patent obtained in India provides protection to the patent worldwide.(3 marks each)

Answer :

(v) True:C Under the Copyright Act, 1957 moral rights are available to the author even

after the economic rights are assigned .C Under Section 57 of the Act an author of the copyright work can restrain or

claim damages in respect of any distortion mutilation of the work or any otheraction in relation to the said work which would be prejudicial to his honour orreputation.

C These rights can be exercised even after the assignment of copyright.C They can be enforced by an action for breach of contract or confidence, a

suit for defamation, or passing off as the case may be.(vi) False:

C Patent protection is territorial right and therefore it is effective only within theterritory of India.


C However, filing of an application in India enables the applicant to file acorresponding application for same invention in convention countries, withinor before the expiry of twelve month from the filing date in India.

C Therefore, separate patents should be obtained in each country where theapplicant requires protection of his invention in those countries.

C There is no patent valid worldwide.


(ii) The Copyright Act, 1957 provides for civil remedies for infringement of copyright.(3 marks)


(ii) A registered trade mark is required to be renewed on the expiry of the period of________. (1 mark)

SHORT NOTES


(v) Well-known trade mark (3 marks)

Answer:A Well Known trade mark in relation to any goods or services means a mark which hasbecome so popular among the public which uses such goods or services such that theuse of such mark in relation to other goods or service would be likely to be taken asindicating a connection between the goods & services and the first mentioned goods orservices.

2009 - June [1] {C} With reference to the relevant legal enactments, write short notesof the following:

(vi) Contents of complete specification (3 marks)

Answer:Please refer 2007 - June [1] {C} (iv) on page no. 187


(iii) Term of patents(vi) International copyright. (3 marks each)


Answer:

(iii) (i) Provisions Relating to term period of patents are covered under section 53 ofthe Patents Act 1970.

(ii) The term period of patents is 20 years from date of filing application for thepatent.

(iii) However non payment of renewal fees may result in the cessation of the patent.

(vi) Please refer 2007 - June [1] {C} (v) on page no. 187


(iv) Restoration of lapsed patents (3 marks)(v) Term of copyright (3 marks)

Answer:(iv) Please refer 2005 - Dec [1] {C} (vi) on page no. 187

(v) In case of copyright, the author of work of art or any other work in respect ofwhich copyright exists, is granted an exclusive right to make copies or reproducethe subject matter for a certain period.Y The period or term of copyright is defined under section 22 to 29 of the

copyright Act, 1957Y The term of copyright can be expressed by means of the following table:

S. No. Copyright in relation to Term of copyright

1. C Literary workC Artistic workC Dramatic workC Musical work

Life of author + 60 years more

2. C Anonymous workC PhotographsC Cinematographic filmC Sound RecordingsC Government work

60 years from the end of year inwhich the work was first published

3. C Broadcasts made by broadcastingorganization

25 years from the end of the yearin which the broadcast was firstmade


(v) Patent agent (3 marks)


Answer:Please refer 2007 - Dec [1] {C} (i) on page no. 188


(iii) Collective trade mark (3 marks)(vi) Potential infringement of a patent (3 marks)

Answer:

(iii) Collective trade mark: Please refer 2009 - Dec [3] (a) (i) under the head

‘Distinguish between, on page no. 176

(vi) Potential infringement of a patent: C It refers to do any act which comes under the prohibited act with respect to

a patented invention infringement of a patent occurs without permission ofthe patent holder.

C It normally includes using or selling the patented invention.C Patentee relief for infringement are as under

- Interim injunction - Damages on account of profits - Permanent injunction


(v) Term of patent (3 marks)



(v) Inventive step(vii) General principles applicable to working of patented invention. (3 marks each)

Answer:

(v) Inventive step• Inventive step has been defined in Section 2(1) (ja) of Patents Act, 1970• Inventive step means a feature of an invention, that involves technical

advance as compared to the knowledge or having economic significance orboth that makes the invention which is not obvious to a person skilled in theart.

(vii) General principles applicable to working of patented inventionSome of the principles applicable to working of patented invention covered inSection 83 of the Patents Act, 1970 are as under:


• Patents are granted to encourage inventions. • Patents are not granted to merely enable patentees to enjoy a monopoly. • Patents granted do not prohibit Central Government in taking measures to

protect public health.• Benefit of patented invention should be available at reasonable prices to the

public.• Patents granted should act as a instrument to promote public interest

specially in sectors of vital importance. • Patent right should not be abused by the patentee.


(iv) Inherently distinctive marks (3 marks)

Answer :C A trade mark is a sign that is capable of distinguishing the goods or services of one

trading entity from another, at the very least it has to be inherently distinctive mark.C In the case of Imperial Tobacco Co. of India v. The Registrar of Trade Marks, AIR

1977 Calcutta 413, the Calcutta High Court held that the essential conditions ofa trade mark in relation to goods proposed to be registered is (1) distinctive or (2)if not distinctive, or capable of distinguishing the goods as aforesaid, there may besome inherent qualities or distinguishing characteristics in the mark itself whichmay mark it so distinctive or capable of such distinguishing the goods of theapplicant from others.


(iii) Term of patent (3 marks)

DISTINGUISH BETWEEN

2009 - June [3] (a) Distinguish between the following:(iii) 'Invention' and 'patentable invention' under the Patents Act, 1970. (5 marks)

Answer:(iii) Please refer 2008 - June [3] (a) (iii) on page no. 190

2009 - Dec [3] (a) Distinguish between the following:(i) 'Certification trade marks' and 'collective trade marks'. (5 marks)

(iii) 'Provisional specification' and 'complete specification' under the Patents Act,1970. (5 marks)


Answer:

(i) Certification trade mark: The certification trade mark in relation to goodsmeans the mark which is used to show that the goods on which the mark appearare certified by some competent person in respect of certain characteristics ofthe goods such as origin, mode of manufacture, quality etc, A certification trademark can be used in addition to users own trade mark on his goods.

Collective trade mark: A collective trademark means a trademark distinguishingthe goods or service of members of an association of persons, which is theproprietor of the mark, from those of others. The application for registration ofcollective mark should be accompanied with Regulations for use of the collectivemark, specifying persons authorised to use mark, conditions of membership,conditions for use of mark including sanction against misuse and otherprescribed matters.

(iii) A provisional specification is a document, which contains the descriptionregarding the nature of an invention. The description however does not containthe details regarding the invention. Also it does not contain the claims. Theprovisional specification is filed to claim the priority date of an invention. Theadvantages of a provisional specification is that it can be filed as soon as thepatents is conceived and for the recorded of priority date. But the application isonly examined after the complete specification has been filed. Section 9 of thePatents Act, 1970 stipulates that where an application for a patent (not being aconvention application or an application filed under PCT designation India) isaccompanied by a provisional specification, a complete specification shall befiled within twelve months from the date of filing of the application, and if thecomplete specification is not so filed, the application shall be deemed to beabandoned.

Complete specification is the document, which contains the detailed description ofinvention along with the drawings and claims. Also the description regarding prior artis included in the complete specification. Section 10 dealing with contents of Specifications provides that every specification,whether provisional or complete, shall describe the invention and begin with a titlesufficiently indicating the subject matter to which the invention relates. Every completespecification is required to-

(a) fully and particularly describe the invention and the operation or use and themethod by which it is to be performed;

(b) disclose the best method of performing the invention which is known to theapplicant and for which he is entitled to claim protection;

(c) end with a claim or claims defining the scope of the invention for which protectionis claimed; and

(d) be accompanied by an abstract to provide technical information on the invention.



(i) ‘Intellectual property’ and ‘industrial property’.

(iii) ‘Patent’ and ‘patent of addition’. (5 marks each)

Answer:

(i) Please refer 2007 - June [3] (a) (ii) on page no. 189

(iii) Please refer 2011 - June [3] (a) (iv) on page no. 179


(ii) ‘Trade mark’ and ‘certification trade mark’. (5 marks)

Answer:

Distinction between Trade mark and Certification Trade Mark

The term Trade mark has been defined under Section 2(1)(zb) of the Trade Marks Act,

1999 as to mean a mark capable of being represented graphically and which is capable

of distinguishing the goods or services of one person from those of others and may

include shape of goods, their packaging and combination of colours; and

(i) A registered trade mark or a mark used in relation to goods or services for the

purpose of indicating or so as to indicate a connection in the course of trade

between the goods or services, as the case may be, and some person having

the right as proprietor to use the mark; and

(ii) In relation to other provisions of the Act, a mark used or proposed to be used in

relation to goods or services for the purpose of indicating or so to indicate a

connection in the course of trade between the goods or services, as the case

may be, and some person having the right, either as proprietor or by way of

permitted user, to use the mark whether with or without any indication of the

identity of that person, and includes a certification trade mark or collective mark.

Certification Trade Mark:

Section 2(1)(e) of the Trade Marks Act, 1999 defines the term certification trade mark

as to mean a mark capable of distinguishing the goods or services in connection with

which it is used in the course of trade which are certified by the proprietor of the mark

in respect of origin, material, mode of manufacture of goods or performance of services,

quality, accuracy or other characteristics from goods or services not so certified and

registrable as such in respect of those goods or services in the name, as proprietor of

the certification trade mark, of that person.



(ii) ‘Registered proprietor of a trade mark’ and ‘registered user of a trade mark’.

(5 marks)

(iv) ‘Patent’ and ‘patent of addition’. (5 marks)

Answer:

(ii) Registered proprietor of a trade mark means the person for the time being

entered in the register as proprietor of the trade mark.

In other words registered proprietor is simply the person whose name

appears in the register containing the name of owner / proprietor of the trade

mark.

According to the provisions of the section 37 of trade mark Act, the

proprietor has an absolute right to assign the trade mark and thus as a

consequence the person to whom such rights to use the trademark arise

becomes the 'registered user' of the trade mark.

For more information Please refer 2007 - June [1] (vii) under short notes on

page no. 187.

(iv) Patent:

C Patent means a patent granted under the Patent Act, 1970.

C Patent is a grant from government which confers on the grantee, for limited

period of time, the exclusive privileges of making, selling and using the

invention for which the patent has been granted and also of authorizing

others to do so.

C Patent gives its owner a monopoly right to make & sell the subject matter

of the patent. for a defined period of time.

Patent of addition:

C Patent of Addition is a patent for improvement in, or modification of an

invention for which invention, a patent has already been applied for or

granted.

C A patent of addition will remain in force as long as the patent for original

invention remains in force.


2011 - Dec [3] (a) Distinguish between the following:(iii) ‘Invention’ and ‘patentable invention’. (5 marks)

Answer:Please refer 2008 - June [3] (a) (iii) on page no. 190

2012 - June [3] (a) Distinguish between the following:(iv) ‘Infringement of trade mark’ and ‘passing off’. (5 marks)

Answer:

Infringement of trade-mark:Section 29 of the Act states that a registered trade mark is infringed by a person

who, not being the registered proprietor of the trade mark or a registered under thereofusing by way of permitted use, uses in the course of trade a mark which is identical with,or deceptively similar to, the trade mark, in relation to any goods in respect of which thetrade mark is registered and in such manner as to render the use of the mark likely tobe taken as being used as a trade mark. Accordingly, in order to constitute aninfringement, the act complained of must fulfil the following requirements — (1) the markused by the person must be either identical with or deceptively similar to the registeredtrade mark; (2) the goods in respect of which it is used must be specifically covered bythe registration; (3) the use made of the mark must be in the course of trade in areascovered by the registration, (4) the use must be in such a manner to render it likely tobe taken as being used as a trade mark. Whenever, misuse of a trade mark occurs, theproprietor can either, file a civil suit or file a criminal complaint under Sections 78 and79 of the Act. After examination of the complaint and in some cases after a verificationby the complainant, the court issues an order directing the Crime Branch of the Policeto search and seize offending goods, labels and other materials. Wherever there isslavish imitation of a trade mark, it is advantageous to resort to criminal complaint ratherthan undergo the long and cumbersome process of a civil suit. The advantage in acriminal complaint is that it has immediate effect i.e., the premises of the suspectedparties manufacturing, storing, selling or offering for sale spurious goods, can be raidedand the spurious goods can be seized. The problem involved in filing a criminalcomplaint is to obtain the cooperation of the enforcement authorities for timely andeffective action.

A criminal complaint can be filed even if a trade mark is not registered. If thecomplainant can prove to the satisfaction of the court that his mark enjoys sufficientreputation, the court will issue a search and seizure order. By and large, in practice, aMagistrate is not inclined to grant the relief unless the complainant’s mark is registered.

Passing off ;C Passing off is the infringement of trade mark, which is done in a manner where the

trade mark is not only deceptively similar to the trade mark of other company butalso creates confusion for customers.


C Factors which are considered while deciding on action for passing off includes thenature of trade-mark, degree of resembleness between the trade mark, etc.

2012 - Dec [3] (a) Distinguish between the following:(ii) ‘Surrender of a patent’ and ‘revocation of a patent’ under the Patents Act, 1970.(iii) ‘Assignment of a trade mark’ and ‘transmission of a trade mark’ under the Trade

Marks Act, 1999. (5 marks each)Answer:

(ii) Surrender of patents:• Surrender of patents has been provided in Section 63 of the Patents Act,

1970• As per the provisions of the Act, patentee of the patent can offer to surrender

his patent, at any time by giving notice to the controller.• The Controller shall publish the offer in the prescribed manner, once the offer

is made by the patentee.• Any person within the prescribed period after such publication may give notice

of opposition to the controller.• If the controller is satisfied after hearing the patentee & any opponent, he may

accept the offer & by order revoke the patent.Revocation of Patents:• ‘Revocation of patents’ has been covered in Section 64 of the Patents Act,

1970• As per the provisions of the Act, patent may be revoked by any person,

Central Government.• If the Central Government is satisfied that a patent is for invention relating to

atomic energy for which no patent can be granted, it may direct the controllerto revoke the patent.

(iii) Please refer 2005 -June [1] (iii) on page no. 186

2013 - June [3] (a) Distinguish between the following.(iv) 'Trade mark' and 'certification trade mark'. (5 marks)

Answer :Please refer 2010 - Dec [3] (a) (ii) on page no. 178

2013 - Dec [3] (a) Distinguish between the following:(iv) ‘Proprietor of a registered trade mark’ and ‘registered user of a trade mark’.

(5 marks)



2008 - Dec [4] (c) Explain the provisions of the Trade Marks Act, 1999 regardinginfringement of registered trademarks. (5 marks)Answer:Section 29 enumerates the grounds which constitute infringement of a trademark. Whena trademark is used by a person who is not entitled to use such a trade mark under thelaw, it constitute infringement. A trade mark is infringed if:

(a) The trademark is identical and is used in respect of similar goods or services.(b) The mark is similar to registered trade mark and there is an identity or goods &

services covered by trade mark. (c) The trademark is identical and is used in relation to identical goods or services

and that such use is likely to cause confusion on the part of the publicAdvertising of a trade mark to take unfair advantages also constitute infringementof a trade mark. Where the registered trade mark consist of words, the spokenuse of such words as well as visual representation for promoting the sale ofgoods would constitute infringement of trade mark.

2008 - Dec [5] (a) Mention any five inventions which are not patentable under thePatents Act, 1970. (5 marks)


2009 - June [4] (a) What are the circumstances under which a registered trade markis deemed to be infringed under the Trade Marks Act, 1999. (5 marks)

Answer: Please refer 2008 - Dec [4] (c) on page no. 182

2010 - June [5] (a) Mention five important grounds for opposition to the grant of patents.(5 marks)

Answer:Section 25 provides that any person, can apply for the opposition of grant of patent onthe following ground:

1. That the applicant had wrongfully obtained the whole or part of invention fromhim or the person from whom he claims.

2. That the invention has been published before the priority date of the claim.3. That the invention claimed is publicly known or used. 4. That the invention claimed does not involve any inventive step.5. That the invention is not patentable under the Act.6. That the complete specification does not describe the invention properly.7. That the complete specification is provided after the specified time.


2011 - June [4] (c) Mention the provisions of the Trade Marks Act, 1999 relating toassignment and transmission of registered trademarks. (5 marks)

Answer:Please refer 2005 - June [1] (iii) on page no. 186

2012 - June [5] (a) Explain the powers of the Controller in respect of an application fora patent which has substantial risk of infringement. (5 marks)

(c) Discuss the provisions of the Copyright Act, 1957 relating to infringement of acopyright. (5 marks)

Answer:

(a) Section 19 of the Patents Act, 1970 covers the powers of the controller in respectof an application for a patent which has substantial risk of infringement.C If it appears to the controller in respect of an application for a patent which

has substantial risk of infringement, he may direct that a reference to thatother patent, be inserted in the applicant’s complete specification by way ofnotice to the public.

C Such reference will not be inserted if the applicant shows to the satisfactionof the controller that there are reasonable grounds for contesting the validityof the said claim of the other patent.

(c) Section 51 of the Copyright Act, 1957 contemplates situation in which a copyrightshall be deemed to be infringed. This Section says that a copyright is infringedwhen any person without a licence granted by the owner of the copyright or theRegistrar of Copyright or in contravention of the conditions of a licence so grantedor of any condition imposed by a competent authority does(1) Anything for which the exclusive right is conferred upon the owner of the

copyright, or(2) Permits for any place to be used for the communication of the work to public

where such a communication constitutes an infringement of the copyright inthe work, unless he was not aware and had no reasonable ground forbelieving that such communication would be an infringement of copyright.

(3) When any person (i) makes for sale or hire or lets for hire or by way of tradedisplay or offers for sale or hire, or (ii) distributes either for the purpose oftrade or to such an extent as to affect prejudicially the owner of the copyright,or (iii) by way of trade, exhibits in public, or (iv) imports into India anyinfringing copies of the work.

However, import of one copy of any work is allowed for private and domestic useof the importer. Explanation to Section 51 clarifies that the reproduction of literary,dramatic musical or artistic work in the form of cinematograph film shall be deemed tobe an infringing copy.


2012 - Dec [5] (b) Does a patent obtained in India give protection worldwide? Is itpossible to file an international application in India under the Patent Cooperation Treaty(PCT)? (5 marks)

Answer:• A patent obtained in India does not provide protection world wide. • Patent protection is effective only within the territory of India. • Separate patents should be obtained in each country where the applicant requires

protection of his invention in those countries.• It is possible to file an international application in India under the Patent

Corporation Treaty (PCT) in the patent offices located at Kolkata, Chennai, Mumbai& Delhi.

2013 - Dec [4] (c) What are the general principles on the working of patentedinventions? (5 marks)

PRACTICAL QUESTIONS

2009 - Dec [4] (c) Do the following acts constitute infringement of copyright under theCopyright Act, 1957:

(i) Making or publishing of a painting, drawing, engraving or photograph of a workof architecture.

(ii) Reproduction of a literary, dramatic, musical or artistic work in the form of acinematographic film.

(iii) Reconstruction of a building or structure in accordance with the architecturaldrawings or plans by reference to which the building or structure was originallyconstructed.

(iv) Making of any sound recording or visual recording for the private use of theperson making such recording, or solely for the purposes of bona fide teachingor research.

(v) Making translation of a literary work. (1 mark each)

Answer:(i) According to Section 52 of the Copyright Act, 1957 making or publishing of a

painting, drawing, engraving or photograph of a work of architecture does notconsitute any sort of infringement of copyright.

(ii) As per the provisions of Copyright Act 1957 reproduction of any type of literarydramatic, musical or artistic work in form of cinematographic film is consideredas infringement of copyright.


(iii) According to Section 52 of the Copyright Act,1957 reconstruction of a buildingor structure in accordance with the architectural drawings or plans by referenceto which the building was originally constructed does not fall within the purviewof infringement.

(iv) As per the provisions enlisted under Section 52 of the Copyright Act, 1957 thereis no infringement in case sound recording or visual recording is used for privatepurpose or in course of bonafide teaching or research.

(v) Yes, making translation of any form of literary work will fall within the ambit ofinfringement of copyright under the Copyright Act, 1957.

2013 - June [5] (a) Do the following amount to infringement under the Copyright Act,1957? Give reasons in brief:

(i) Prof. Ajay recited in public an extract from a poem by Rabindranath Tagore.(ii) ABC, Publishers published a compilation of speeches of Atal Bihari Vajpayee,

former Prime Minister, delivered in public without permission.(iii) A newspaper publishes a copy of masterpiece painting of Ganesh Pyne while

carrying a story on his death.(iv) A book is not available in India. A librarian makes 10 copies of the book for the

use of the public library.(v) A magazine reproduces an article on a political topic by Kuldip Nayar.

(1 mark each)

Answer :(i) Reciting a poem of Rabindranath Tagore by Prof. Ajay will not amount to

infringement under Section 52 of the copyright Act, 1957, if Prof. Ajay does notclaim that poem as his own.

(ii) ABC publishers published a compilation of speeches of Atal Bihari Vajpaee,former Prime Minister, delivered in public without permission is amount toinfringement under the Copyright Act, 1957.

(iii) Publishing a masterpiece painting of Ganesh Pyne by a newspaper whilecarrying a story on his death is not amount to infringement under Copyright Act,as it only represent the work of deceased.

(iv) A maximum of three copies of book can be taken by a librarian for library if abook is not available in India. In the above case a librarian makes 10 copies ofthe book for the use of the public library which is on infringement of CopyrightAct.

(v) A magazine reproduced an article on a topic by Kuldeep Nayar is amount toinfringement under the Copyright Act, 1957, if the prior permission has not beentaken.


CS Inter Gr. I

SHORT NOTES


(vi) Rights of co-owners of patents. (3 marks)Answer:Section 50 of the Patent Act 1970 provides that where the patent is granted to two ormore persons, each of the persons shall be entitled to an equal undivided share inpatent. It further entitles a co-owner.

Where the patent is for a product, the exclusive right to prevent the third parties inmaking, using, offering for sale, without his consent in India.

A licence under the patent may not be granted or assigned except with the consentof other co-owner.


(iv) Certification trade mark (3 marks)Answer:The certification trade mark in relation to goods means the mark which is used to showthat the goods on which the mark appear are certified by some competent person inrespect of certain characteristics of the goods such as origin, mode of manufacture,quality etc, A certification trade mark can be used in addition to users own trade markon his goods.


(iii) Assignment of a trade mark (3 marks)Answer:1. Section 37 entitles the registered proprietor of a trademark to assign the trademark

for any consideration for such assignment. Section 39 provides that unregisteredtrade mark may be assigned or transmitted.

2. Section 40 contains restriction on assignments or transmission of trademark wheremultiple exclusive right would be created in more than one person in relation tosame goods & services.

3. The assignment is not deemed to be invalid, if having regard to the limitationimposed, the goods are to be sold in different markets - either within India orthrough export.

4. Certification trade mark can only be assigned with the consent of registrar.



(vi) Restoration of lapsed patent. (3 marks)Answer:Section 60 to 62 deals with provisions relating to restoration of lapsed patent, Itprovides that where the patent has ceased to have effect by reasons of failure to payany renewal fees within the period prescribed then the patentee may within eighteenmonths from the date on which the patent ceased to have effect, make an applicationfor restoration of the patent.If the controller is satisfied that the failure to pay fees was unintentional he mayadvertise the application. Any person interested may oppose the restoration and afterconsidering the opposition, the controller will make appropriate orders.


(iii) Surrender of patents (3 marks)

Answer:Section 63 makes provisions for the surrender of patents, It provides that the patenteemay at any time by giving notice, surrender the patent. Where such an offer of surrenderis made, the controller publish such offer in the prescribed manner. Any personinterested may give notice of opposition to the surrender. The controller may afterhearing both the parties make the appropriate orders.


(v) Secrecy of certain inventions. (3 marks)Answer:Secrecy of Certain Inventions: Chapter VII of the Patents Act, 1970 containing Sections35-40 provides for secrecy of certain inventions. These sections empower the CentralGovernment to use such inventions for security of the Country and also empower it toprohibit the publication of the information relating to such inventions by any person.Section 35 deals with secrecy directions relating to inventions relevant for defencepurposes. Section 36 provides for periodical review of secrecy directions, Section 37deals with consequences, Section 38 deals with revocation, Section 39 prohibitsresidents from applying for patent outside India without the prior permission and Section40 deals with liabilities.


(iv) Contents of complete specification. (3 marks)(v) International copyright. (3 marks)

(vii) Registered user. (3 marks)


Answer:(iv) Specification is the description of invention.

The specification can be provisional or complete.The contents of complete specification are (1) Describe the invention, its operation, its use and methods.(2) It must disclose the best method of performing the invention.(3) Ends with a claims defining the scope of invention.(4) Must provide technical information on the invention.(5) A declaration as to the inventor ship of the invention.

(v) Copyright work may not be limited to the territory of India only. Section 40authorises the Central Government to extend the copyright protection to foreignworks.

Section 41 provides that work made or published by certain Internationalorganisations are granted Copyright protection in India.

Accordingly, Government of India enhances the scope of copyrightprotection by passing the copyright order under which copyright protection wasgranted to certain International organisations.

(vii) 1. Section 49 Provides for the registration as registered user.2. Section 50 deals with the power of the registrar to vary or cancel

registration as registered user on the ground that the registered user hasused the trademark otherwise then in accordance with the agreement orused in such a way which is likely to cause confusion or registered userhas failed to disclose any material fact.

3. Section 50 empowers the registrar to require the proprietor to confirm atany time during the continuation of registration as registered user whetherthe agreement on the basis of which registered user was registered is stillin force and if reply not receive within 1 month then remove the name fromregister.

4. Section 52 recognises the right of the registered user to take proceedingsagainst infringement.


(i) Company Secretary as patent agent. (3 marks)

Answer:A person shall be qualified for patent agent if the person is:-Y Citizen of IndiaY Completed the age of 21 yearsY Has obtained a degree in science, engineering or technology


Y Passed the prescribed qualification exams or worked for not less then ten yearsas a examiner or discharged the functions of controller.

In the light of above legal provisions, if a Company Secretary who fulfils the aboveconditions, satisfy the condition then he will be eligible to act as a patent agent.


(ii) Element of ‘novelty’ in an invention (3 marks)

Answer:One of the prerequisite for anything to be regarded as invention is something havinginventive step. Novelty means anything new or strange which is thus indispensable partfor anything to be construed as

CS Inter Gr. II

DISTINGUISH BETWEEN

2007 - June [3] (a) Distinguish between the following:(ii) ‘Intellectual property’ and ‘industrial property’. (5 marks)

Answer:

There are three types of property:! Movable property! Immovable property! See care fully

Y The term ‘intellectual property’ is coined to indicate that kind of propertywhich covers in it, creations of human mind and human intellect.

Y It consists of valuable information which can be converted into tangibleobjects

Y The two types/branches of intellectual property are:! Copyright! Industrial property

Y Owners of intellectual property to enjoy certain rights like right to use andlicence and certain limitations are also placed upon them.

Y Intellectual property includes right relating to:-! Trademarks and Service marks! Patents ! Industrial designs etc.


While— Industrial property

! It is a kind of intellectual property.! It is a collective name given for rights related to industrial orcommercial

activities of a person and this reflect industrial or commercial rights.! Industrial property includes:

PatentsTrademark, service markUtility modelsIndustrial designGeographic originProtection against unfair competition

! It covers:InventionsCreationsNew productsNew ProcessessNew design / modelDistinct marks

2008 - June [3] (a) Distinguish between the following:(iii) ‘Invention’ and ‘patentable invention’ under the Patents Act, 1970. (4 marks)

Answer:Section 2(j) of the Patent Act defines invention as to mean a new product or processinvolving an inventive step and capable of Industrial application. The term 'inventivestep' has been defined under the Patent Act as to mean a feature of an invention thatinvolves technical advance as compared to the existing knowledge or having economicsignificance or both that makes the invention not obvious to a person skilled in the art.

Any invention or technology which has not been anticipated by publication in anydocument or used in the country or elsewhere in the world before the date of filing ofpatent application with complete specification, i.e. the subject matter has not fallen intopublic domain or that it does not form part of the state of the art, which is registered withController of Patent is patentable invention.Section 3 enumerated the list of inventions which are not patentable.



2004 - June [4] (a) State the absolute grounds for refusal of registration of trademarksunder the Trade Marks Act, 1999. (5 marks)

(b) What are the acts which are not considered to be amounting to infringement underthe Patents Act, 1970? (5 marks)

(c) Mention the powers of the copyright societies under the Copyright (Amendment)Act, 1994. (5 marks)

Answer:(a) The absolute grounds for the refusal for registration are

(i) The trade mark which are devoid of any distinctive characteristic.(ii) The trade mark which designate the kind, quality, quantity, etc.(iii) The mark which has become customary is the current language.

(b) The Act which do not constitute infringement of the patent are.1. Any Act of making, constructing, using or selling a patented invention solely

for use reasonably related to development and submission of informationrequired under any law for the time being in force, in India or abroad thatregulates the manufacture, construction, use or sale of any product.

2. Import of patentated product by any person from a person who is dulyauthorized by the patentee to sell or distribute the product.

(c) Copyright societies are the societies which are mainly involved in theadministration of copyright work and issuing licences in respect thereof. The centralgovernment is authorised to register the copyright societies.Powers of the copyright societies are as under:(1) It has the power to issue licences in respect of copyright work.(2) It has the power to collect the fees in respect of the licences issued(3) The copyright societies are empowered to frame a scheme for determining the

quantum of remuneration payable to individual copyright owners.

2004 - Dec [4] (a) Explain the nature and scope of the concept of 'intellectual property'.(5 marks)

(b) Mention briefly the provisions of the Patents Act, 1970 relating to 'exclusivemarketing rights'. (5 marks)

(c) Discuss the provisions of the Trade Marks Act, 1999 regarding assignment andtransmission of registered trademarks. (5 marks)

Answer:(a) There are three types of property:

! Movable property! Immovable property


! See care fullyY The term ‘intellectual property’ is coined to indicate that kind of property

which covers in it, creations of human mind and human intellect.Y It consists of valuable information which can be converted into tangible

objectsY The two types/branches of intellectual property are –

! Copyright! Industrial property

Y Owners of intellectual property to enjoy certain rights like right to use andlicence and certain limitations are also placed upon them.

Y Intellectual property includes right relating to:-! Trademarks and Service marks! Patents ! Industrial designs etc.

(b) The Government of India, in order to meet the obligation of TRIPs agreement ofWTO, inserted new chapter on Exclusive Marketing Rights (EMRs).Section 24A of the Act deals with application for grant of exclusive rights andprovides that an application for grant of exclusive right to sell or distribute the articleor substance in India is required to be in the prescribed form and manner and onpayment of prescribed fee. Application shall be referred by controller to examinerfor making the report as to whether the invention is not an invention under Section3, and invention under Section 4. The controller after receiving the report from theexaminer, after considering all factor may grant the exclusive right.Product Patent may be granted on medicines and drugs, only process patent wasavailable with exclusive marketing rights.

(c) Please refer 2005 - June [1] {C} (iii) on page no. 186

2005 - June [3] (c) Two persons applied for registration of the same trade mark at thesame time. In such a case, how will the proprietorship of the trade mark be decided?

(4 marks)

Answer:The proprietorship of the trade mark is decided by the date of usage of the mark by aperson in business transactions. Although both the person applied for registration of thesame trade mark at the same time the proprietorship is determined by its usage incommercial transaction.

2005 - June [4] (a) State the procedure relating to restoration of a lapsed patent underthe Patents Act, 1970. (5 marks)

Answer:Please refer 2005 - Dec [1] {C} (vi) on page no. 187


2005 - June [5] (a) Mention the provisions of the Trade Marks Act, 1999 regardingremoval of a trade mark for non-use. (5 marks)

Answer:The registered trade mark can be removed from the register if it is not used within fiveyears of its registration. The five years starts from the date on which the trade mark isactually entered on the register. But the trade mark will not be removed from register ifit is not used due to special circumstances which may include restriction imposed byany law or regulation on use of trade mark in India.

2005 - June [6] (a) Explain the provisions of the Copyright Act, 1957 regardingadministration of rights of an owner by a copyright society. (5 marks)

Answer:The copyright societies are empowered to issue licences in respect of any copyrightwork.But the owner of copyright in his individual capacity continues to have control over theright to grant licences in respect of copyright work.Copyright societies performs various function like.1. Issuing licences in respect of copyright work2. Collect fees in respect of licences issued3. Distribute such fees among such owners.

2005 - Dec [4] (a) What is meant by 'intellectual property'? Mention various kinds ofintellectual property and the laws governing intellectual property rights in India.

(5 marks)

(c) What are the acts which are not considered as infringement of a patent as per thePatents Act, 1970? (5 marks)

Answer:

(a) Please refer 2004 - Dec [4] (a) on page no. 191

! Patents - governed under PatentAct 1970 (amended in year 1999)

! Trademark - governed by TrademarkAct 1999 (earlier by Trade and Merchanise Marks Act, 1958)

! Industrial Designs - governed by Designs Act, 2000.! Copyright - Copyright Act 1957! Integrated circuits layout designs are governed by semi conductor integrated

circuits layout Design Act, 2000.

(c) Please refer 2004 - June [4] (b) on page no. 191

2005 - Dec [5] (c) Mention the provisions of the Trade Marks Act, 1999 relating toregistered users of trade marks. (5 marks)


Answer:Please refer 2007 - June [1] {C} (vii) on page no. 187

2006 - June [4] (a) State the grounds under which registration of a trade mark can berefused. (5 marks)(b) Mention the inventions which are not patentable under the Patents Act, 1970.

(5 marks)(c) What amounts to infringement of a copyright under the Copyright Act, 1957 ?

(5 marks)Answer:(a) Please refer 2004 - June [4] (a) on page no. 191

(b) Inventions not patentable under The Patents Act, 1970Section 3 of the Patents Act, 1970 provides that the following are not inventions

and hence not patentable:! an invention which is frivolous or which claims anything obviously contrary to well

established natural laws;! an invention the primary or intended use or commercial exploitation of which could

be contrary to public order or morality or which causes serious prejudice to human,animal or plant life or health or to the environment;

! the mere discovery of a new form of a known substance which does not result inthe enhancement of the known efficacy of that substance or the mere discovery ofany property or mere new use for a known substance or of the mere use of aknown process, machine or apparatus unless such known process results in a newproduct or employs at least one new reactant.

! a substance obtained by a mere admixture resulting only in the aggregation of theproperties of the components thereof or a process for producing such substance;

! the mere arrangement or re-arrangement or ducplication of known devices eachfunctioning independently of one another in a known way;

! a method of agriculture on horticulture;! any process for the medicinal, surgical, curative, prophylactic diagnostic,

therapeutic or other treatment of human beings or any process for a similartreatment of animals in to render them free of disease or to increase their economicvalue or that of their products;

! plants and animals in whole or any part thereof other than micro-organisms butincluding seeds, varieties and species and essentially biological processes forproduction or propagation of plants and animals;

! a computer programme per se other than its technical application to industry or acombination with hardware;

! a literary, dramatic, musical or artistic work or any other aesthetic creationwhatsoever including cinematographic works and television productions;

! a mere scheme or rule or method of performing mental act or method of playinggame;

! a presentation of information;! topography of integrated circuits;


! an invention which in effect, is traditional knowledge or which is an aggregation orduplication of known properties of traditionally known component or components.Section 4 prohibits the grant of patent in respect of an invention relating to atomic

energy falling within Sub-section (1) of Section 20 of the Atomic Energy Act, 1962.

(c) Section 51 states a situation in which a copyright is deemed to be infringed. Theyare.When any act is done on a work for which the exclusive right is given to the ownerof the copyright.(b) Permits for profit any place to be used for the purpose of communication of

such work.(c) When any person

(1) Makes for sale or hire or display any infringed copies of the workcovered under copyright

(2) Distributes, for the purpose of trade which affects prejudicially the ownerof the work.

(3) Exhibits in public for sale the infringed copy of the work.Note: Reproduction of the work after the expiry of Copyright term will not amount toinfringement.

2006 - Dec [4] (a) Mention the provisions of the Trade Marks Act, 1999 regardinginfringement of registered trademarks. (5 marks)

(b) Elaborate the powers of copyright owner in the event of infringement of his rightsunder the Copyright Act, 1957. (5 marks)

(c) State any five important grounds on which the grant of patent can be opposedunder the Patents Act, 1970. (5 marks)

Answer:

(a) Please refer 2008 - Dec [4] (c) on page no. 182

(b) The owner whose rights are infringed have the following remedies• The owner can apply for as injunction• The owner can claim loss of damages.• The owner of the copyright can initiate proceeding for the possession of

infringing copies.

(c) Section 25 provides that any person, can apply for the opposition of grant of patenton the following ground:1. That the applicant had wrongfully obtained the whole or part of invention from

him or the person from whom he claims.2. That the invention has been published before the priority date of the claim.3. That the invention claimed is publicly known or used. 4. That the invention claimed does not involve any inventive step.


5. That the invention is not patentable under the Act.6. That the complete specification does not describe the invention properly.7. That the complete specification is provided after the specified time.

2007 - June [5] Attempt the following:(iii) Mention the conditions subject to which a patent is granted under the Patents

Act, 1970. (5 marks)Answer:The patent under the Patent Act, 1970 is granted subject to certain condition which areas under

(i) Any machine, apparatus or other article in respect of which the patent is granted,may be imported or made by or on behalf of the government for the purposemerely of its own use.

(ii) Any process in respect of which the patent is granted can be used by thegovernment for merely of its own use.

(iii) The machine, apparatus or any article for which the patent is granted can beused by any person, for the purpose merely of experiment or research includingimparting instruction to pupils.

(iv) In the case of a patent in respect of any medicine or drug the medicine or drugmay be imported by the government for the purpose merely of its own use or fordistribution in any dispensary, hospital.

2007 - June [6] Attempt the following:(ii) Discuss the provisions of the Trade Marks Act, 1999 regarding assignment and

transmission of registered trademarks. (5 marks)


2007 - Dec [5] Attempt the following:(ii) Explain the provisions of the Patents Act, 1970 regarding restoration of lapsed

patents. (5 marks)(iv) What are the requisites for conferring copyright protection to works of

international organisations ? (5 marks)

Answer:(ii) Please refer 2005 - Dec [1] (vi) on page no. 187

(iv) The conditions which must be satisfied are:(1) At the time of making the first publication of work, there should not be any

copyright in the work in India.(2) The work must be published under the control of International organisation.


(3) If the work is published under an agreement with the author, such agreementshould not reserve the author any copyright in the work or any copyright inthe work should belong to the organisation.

2008 - June [5] Attempt of the following:(ii) Name the persons who can make an application for the sealing of patent under

the Patents Act, 1970.(iii) Mention the remedies for infringement of copyrights under the Copyright Act,

1957.(iv) What are the acts which do not amount to infringement of a trade mark under the

Trade Marks Act, 1999 ? (5 marks each)

Answer:(ii) Following are the persons who can make an application for the sealing of patent

under the Patents Act, 1970, • true and first inventor • assignee of the above.• legal representative of deceased person, being entitled to make application

before his death.(iii) Please refer 2006 - Dec [4] (b) on page no. 195

(iv) Following are the acts which do not amount to infringement of a trademark under the Section 30 of the Trade Marks Act, 1999: • If there is some restriction or limitation when the trade mark is registered and

if the trade mark is used in a manner which is outside the scope ofregistration.

• In relation to part or accessories of goods/products. • To indicate the kind of quality of the product.

PRACTICAL QUESTIONS

2005 - Dec [4] (b) Do the following acts constitute infringement of copyright? Give briefreasons in support of your answer:

(i) Reproduction of a musical work by a teacher in the course of instructions tostudents.

(ii) Reproduction for research of an unpublished work kept in a public library.(iii) Making a dozen copies of a book borrowed from a library when such book is

available in the market.(iv) Reproduction in a periodical of a write-up by an expert on a social subject of

which the author has expressly retained his copyright.


(v) Making copies of a computer programme from a floppy disc bought from themarket and using it for office work. (1 mark each)

Answer:(i) The reproduction of a musical work by a teacher in the course of instruction to

student will not amount to infringement. It is not done with the intention ofcommercialisation of copyright work, thus will not amount to infringement.

(ii) Reproduction for research of an unpublished work kept in a public library doesnot constitute infringement of copyright in accordance with Copyright Act, 1957.

(iii) It will constitute an infringement of the copyright. Maximum three copies can bemade for the use of public library for the use of the library and that too only ifsuch book is not available for sale in India.

(iv) The reproduction in a periodical of a write up by on expert. On social subject ofwhich the author has expressly retained his copyright will constitute asinfringement.

(v) There is no infringement in making copies of a computer programme from afloppy disc bought from the market and using it for office work.



1 What are the acts which are not considered as infringementof a patent as per the Patents Act, 1970?

04 - June [4] (b), 05 - Dec [4] (c)

2 Times

2 Explain the provisions of the Patents Act, 1970 regardingrestoration of lapsed patents.

05 - June [4] (a), 07 - Dec [5] (ii)

2 Times

3 With reference to the relevant legal enactments, write shortnotes of the following:Contents of complete specification

07 - June [1] (iv), 09 - June [1] (vi)

2 Times

4 Distinguish between the following:'Invention' and 'patentable invention' under the Patents Act,1970. 08 - June [3] (a) (iii), 09 - June [3] (a) (iii)

2 Times


5 With reference to the relevant legal enactments, write shortnotes on the following ‘Restoration of lapsed patents,

05 - Dec [1] (vi), 10 - Dec [1] (iv)

2 Times

6 Distinguish between ‘Patent’ and ‘patent of addition’.10 - June [3] (a) (iii), 11 - June [3] (a) (iii)

2 Times

7 With reference to the relevant legal enactments, write shortnotes on the following:Term of patent

10 - June [1] (iii), 12 - June [1] (v), 13 - Dec [1] (iii)

3 Times

8 Descriptive Question on ‘Discuss the provisions of theCopyright Act, 1957 relating to infringement of a copyright’.

06 - June [4] (c), 12 - June [5] (c)

2 Times

9 Distinguish between the following.'Trade mark' and 'certification trade mark'.

010 - Dec [3] (a) (ii), 013 - June [3](a)(iv)

2 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 3 6 6 3 6 3 6 3 3

Total 3 6 6 3 6 3 6 3 3

5.200

Star Rating




8 Prevention of Money Laundering

This Chapter Includes: The Prevention of Money Laundering was amended in theyear 2005, 2009 and 2012 to remove the difficulties arisen in implementation ofthe Act.


Chapter at a Glance

Key Provisions contained in the Prevention of Money Laundering (Amendment)Bill, 2011 are as follows:-

%%%% Prevention of Money Laundering (Amendment) Bill 2011 was introduced in LokSabha on December 27, 2011

[Chapter #### 8] Prevention of Money Laundering (((( 5.201

%%%% To do away with the difficulties arising in the implementation of the Act, the conceptof ‘corresponding law’ to link the provisions of Indian law with the laws of foreigncountries.

%%%% Concept of ‘Reporting Entity’ has been incorporated in the Act, so as to includebanking company, financial institution, intermediary or a person carryingdesignated business or profession.

%%%% Section 4 of the Act, amended. The original Act levies a fine upto ` 5 lakh. The

Money Laundering Amendment in 2012 did away with the upper limit of ` 5 lakhs.

%%%% ‘Offence’ now to include activities like concealment, acquisition, possession anduse of proceeds of crime.

%%%% Confers power to the Director to call for records of transactions or any additionalinformation for the purpose of investigation.

%%%% Insertion of section 58A and 58B Provides for transfer of scheduled offencespending in court to the special court for trial.


OBJECTIVE QUESTIONS


(iii) Money laundering is a national phenomenon and stern measures are of criticalimportance at the national level. (3 marks)

Answer:(iii) The given statement is false. The reason behind this is that money laundering

is not a national rather international phenomenon and all nations have to takeactions against this to curb this evil practice.


(iii) Money laundering can provide short-term benefits to the economy. (3 marks)

Answer:

(iii) False:C The above statement is not correctC Money laundering has a damping effect on foreign direct investmentC It is the processing of criminal proceeds to disguise its illegal originC Laundered funds which are owned by the criminals escape the

Government’s ability to control and regulate the economy.



(ii) The property confiscated for money laundering vests with the centralgovernment. (3 marks)

Answer:

True: The property confiscated for money laundering vests with the CentralGovernment. Section 9 of the Prevention of Money Laundering Act, 2002 provides thatall rights & title in such property vests to Central Government free from allencumbrances.


(i) The process of money laundering can be classified into _____, layering andintegration. (1 mark)

Answer:(i) Placement


(v) Every offence punishable under the Prevention of Money Laundering Act, 2002is a__________offence. (1 mark)

Answer:(v) cognizable


(i) Know your customer (KYC) procedures enable banks to know/understand theircustomers and their _______ better to manage their risks prudently. (1 mark)

(iv) The process of _______ is classified into three stages namely placement,layering and integration. (1 mark)

Answer :(i) financial dealing

(iv) money laundering


(i) Money laundering is processing of criminal proceeds to disguise its illegal origin.(3 marks)


SHORT NOTES


(iii) Know your customer (KYC) guidelines (3 marks)(vi) Process of money laundering (3 marks)

Answer:(iii) RBI (Reserve Bank of India) has issue the guidelines known as ‘Know Your

Customer’ [KYC]• Issued on November 29,2004

• Objective:-• Safeguard banks from acting as a chain in money laundering activities• Helps banks to know more about the clients and keep a check

• Elements:-• Customer Acceptance Policy• Customer Identification Procedures• Monitoring transactions• Management of risk

(vi) Please refer 2004 - Dec [1] {C} (v) on page no. 206


(vi) Process of money laundering (3 marks)

Answer:Please refer 2004 - Dec [1] {C} (v) on page no. 206


(i) Know your customer guidelines (3 marks)



2009 - June [4] (b) Write a note on global initiatives in the prevention of moneylaundering. (5 marks)


.2009 - Dec [5] (b) What is the objective of 'know your customer' (KYC) guidelines ?When do the KYC guidelines apply? (5 marks)

Answer:

%%%% Objective of KYC Guidelines.The KYC guidelines are introduced to prevent banks from being used, intentionallyor unintentionally, by criminal elements for money laundering activities. It enablebanks to know their customer and their financial dealing which helps them tomanage their risk prudently.

%%%% When does KYC applies.KYC guidelines applies at following stages:— opening a new account.— opening a subsequent account where documents as per current KYC

standards not been submitted while opening the initial account.— opening a locker facility where these documents are not available with the

banks for all the locker facility holders.

%%%% KYC also applies to non account holders who approaches bank for high valuetransactions.

2010 - Dec [5] (a) How is the property involved in money laundering dealt with underthe Prevention of Money Laundering Act, 2002 ? (5 marks)

Answer:Y Section 5 of the Prevention of Money Laundering Act 2002 deals with the

provisions relating to property involved in money laundering.Y It provides for the attachment of the property involved in money laundering.Y The Director or officer authorised by the director not below the position of deputy

director is empowered to attach such property.Y He also enjoys the power of provisional attachment of the property in case the

charge cannot be fully established.Y Provisional attachment will have effect for a period of not more than 150 days from

the date of order.


2011 - June [5] (c) “Despite the deleterious impact of money laundering ondevelopment, it has, of late, assumed alarming proportions and its growth has beencancerous.” Discuss. (5 marks)

Answer:C With an advancement in technology the financial system has become more

interactive, intergrated, interdated and interconnected. C These have increased the opportunity for criminals to expand, widen & deeper their

reach.C With advanced technology in their hand criminals are able to commit crimes such

as fraud, counterfeiting, corruption and embezzlement. C Money laundering activities damages the financial sector institutions that are critical

to the economic growth, reduces the productivity in the economy's real sector bydiverting resources and encouraging crime and corruption, which slows economicgrowth and can distort the economy's external sector, international trade andcapital flows to the detriment of long term economic development.

C So there is a need for effective enforcement of Anti-money laundering legislationswhich can help to prevent us from cancerous growth of money laundering.

2011 - Dec [4] (c) Mention the obligations of banking companies, financial institutionsand intermediaries under the Prevention of Money Laundering Act, 2002. (5 marks)

Answer:Please refer 2007 - Dec [4] (c) on page no. 208

CS Inter Gr. II

SHORT NOTES

2004 - June [3] (b) Write a brief note on the impact of money laundering on theeconomic development of a country. (4 marks)

Answer:The process of converting tainted money into untainted money is called ‘moneylaundering’. In this process the funds finally enter the legitimate economy. The possiblesocial, economic and political effects of money laundering, if left unchecked or dealt withineffectively, are serious for the economic development of a country. Through theprocess of money laundering, organised crime can infiltrate financial institutions, acquirecontrol of large sectors of the economy through investment, or offer bribes to publicofficials and indeed governments. Thus, the economic and political influence of criminalorganisations can weaken the social fabric, collective ethical standards, and ultimately


the democratic institutions of society. The gaps in a national anti-money launderingsystem are exploited by launderers, who tend to move their networks to countries andfinancial systems with weak or ineffective countermeasures. As with the damagedintegrity of an individual financial institution, there is a dampening effect on foreign directinvestment when a country’s commercial and financial sectors are perceived to besubject to the control and influence of organised crime. In times of decelerating growth,an infusion of hard currency can bolster a country’s foreign reserves, ease the hardshipassociated with budget tightening policies and moderate foreign indebtedness. Whilethese are short-term benefits associated with an inflow of criminal monies, the long-termeffects are mostly negative. One difference between official borrowing and launderedfunds is that the former can be controlled by Government, whereas the funds owned bycriminals escape the government’s ability to control and regulate the economy.

2004 - Dec [1] {C} With reference to the relevant legal enactments, write short noteson the following: (v) Money laundering (3 marks)

Answer:Money laundering refers to the processing of criminal proceeds to hide its illegal origin• Under money laundering three stages viz – placement, layering and integration are

adopted so as to disguise the actual origin of funds generated through illegalmeans lay committing financial crimes, smuggling etc .

• It creates adverse impact on social as well as economic life and further acceleratesthe growth of illegitimate criminal activities.

• With a view to prevent the money laundering activities in India, the prevention ofMoney Laundering Act, 2002 was passed, section 3 of which states that whoeveracquires, owns possesses, or transfers any proceeds of crime or knowingly entersinto any transaction which is related to proceeds of crime directly or indirectly orconceals or aids in the concealment of the proceeds of crime, shall be guilty ofmoney laundering.


(v) Money laundering (3 marks)

Answer:(v) Please refer 2004 - Dec [1] {C} (v) on page no. 206


(iv) Impact of money laundering on development. (3 marks)


Answer:With a view to prevent the money laundering activities in India, the prevention of MoneyLaundering Act, 2002 was passed, section 3 of which states that whoever acquires,owns possesses, or transfers any proceeds of crime or knowingly enters into anytransaction which is related to proceeds of crime directly or indirectly or conceals or aidsin the concealment of the proceeds of crime, shall be guilty of money laundering.Y Thus the money laundering process may create the following harmful

effects on the society:• Wide spread use of bribery in government offices leading to corruption.• Control over vast sector of economy by handful persons through investment

by unfair means.• Infiltration of banking and financial institutions through organized crimes.• Dampen social fabric and ethical standards prevelant in the society.• Weakness in the democratic institutions from grassroot level itself .


(iii) Financial Action Task Force (3 marks)

Answer:• Financial Action Task Force was established in 1989.• It is an international body which promotes measures taken up to counteract the

world wide impact of money laundering.• Main tasks/functions of FATF are:- • Y Review the techniques adopted for money laundering.

Y Checks the initiatives made by the countries to counteract money laundering.Y Spread awareness among non- member countries also.

• Thus, FATF study, examine and evaluate the current situation, defines the policyand initiates measures that can act as solution to this problem of moneylaundering.

• FATF recommendations were revised in 1996, 2001, 2003 and 2012 to insure thatthey remain up to date & they are intimated to be a universal application.



2004 - Dec [3] (b) Mention briefly the Indian initiatives in preventing money laundering.(3 marks)

Answer:To counteract the harms caused by money laundering and with a new techniqueprevent the same was introduced on 4th of August, 1998 a bill known as Prevention ofMoney Laundering Bill 1998.• Prevention of Money laundering Bill 1999 was introduced on the basis of

recommendation make by standing committee.• The bill finally became Prevention of Money laundering Act 2002 after receiving

Presidents assent on January 17th, 2003.• This Act provides for offences, punishments in lieu of money laundering,

confiscation, attachment and other adjudication provisions so as to ensure effectiveprevention of money laundering.

2007 - Dec [4] (c) State the obligations of banking companies, financial institutions andintermediaries under the Prevention of Money Laundering Act, 2002. (5 marks)

Answer:Section 12 of the Act cast the obligations on –• Banking companies• Financial institutions and • Intermediaries to maintain record of prescribed transactions based on nature and value, whether suchtransactions comprise of –• Single transactions or• Series of transactions legally connected with each other and had taken place within

a monthY These records are to be maintained for a period of ten years from date of

completion of transaction.Y Information is required to be furnished to the director.Y Director may –

• On his own motion, or• On application made by authority etc. has power to

• Call records and• Make inquiry

Y If records are not maintained as stipulated, Director may impose a fine notexceeding one lakh rupees.




1 With reference to the relevant legal enactments, writeshort notes on the following. Money laundering.

04 - Dec [1] (v), 06 - June [1] (v)

2 Times

2 Mention the obligations of banking companies, financialinstitutions and intermediaries under the Prevention ofMoney Laundering Act, 2002.

07 - Dec [4] (c), 11 - Dec [4] (c)

2 Times

3 Know your customer (KYC) guidelines09 - June [1] (iii), 13 - Dec [1] (i)

2 Times


Year 09J

09D

10J

10D

11J

11D

12J

12D

13J

13D

Short Notes 6 3 3

Total 6 3 3

5.210

Star Rating




9 Minimum Wages Act, 1948

This Chapter Includes: Objects and definitions - an overview of current IndustrialPolicy, Regulatory and Medium Enterprises Development Act, 2006.


Chapter at a Glance

%%%% Applicability & Objective of the Minimum Wages Act, 1948– Minimum Wages Act, 1948 was passed in 1948.– The Act extends to whole of India.– Objective of the Act was to prevent the exploitation of labour & prescribe the

minimum wages for the employees in certain employment.

[Chapter #### 9] Minimum Wages Act, 1948 (((( 5.211

%%%% Who is an EmployeeEmployee means any person who is employed for:– hire or reward to do any work– skilled or unskilled – manual or clericalin a scheduled employment in respect of which minimum rates of wages have beenfixedIncludes:– An out-worker to whom any articles or materials are given out by another

person to be made up, cleaned, washed, altered, ornamented, finished,repaired, adapted or otherwise processed.

– Employee declared to be an employee by the appropriate Government;Excludes:– Member of the Armed Forces.

%%%% What is meant by the term Wages– Wages means all remuneration, capable of being expressed in terms of

money, which would be payable to a person employed in respect of hisemployment in case the terms of the contract of employment were fulfilled.

Includes-– House rent allowanceExcludes-– Any house-accommodation, supply of light, water, medical attendance– Any other amenity or any service excluded by appropriate Government– Any contribution paid by the employer to any PF– Any travelling allowance– Any sum paid to the person employed to defray special expenses– Any gratuity payable on discharge

%%%% Who fixes the minimum rates of wages– The Appropriate Government has to fix the minimum rates of wages payable

to employees employed in an employment.– The appropriate Government shall review the minimum rates so fixed at such

intervals as it may think fit, such intervals not exceeding 5 years and revise theminimum rate of wages, if necessary.

%%%% The manner of fixation of minimum rates of wagesMinimum wages under the minimum Wages Act, 1948 may be fixed as:– Time work– Piece work– Guaranteed time rate– Overtime rate


Apart from the aforesaid manner, it can also be fixed as follows:– Different scheduled employments– Different classes of work– On the basis of adults, adolescents, etc.

%%%% Procedure for Fixing and revising Minimum WagesThere are two methods, the appropriate Government may follow in fixing minimumrate of wages:

– Committee MethodUnder the committee method the appropriate government appoint committees& sub-committees.After considering the advise of the committee, the appropriate Governmentshall fix or revise the minimum wages by official notification in the officialGazette.Government is not bound to accept the recommendations given by thecommittee.

– Notification MethodThe Appropriate Government to fix the minimum rates of wages payable to Under the notification method, the appropriate Government by notification inthe Official Gazette publish the proposals for minimum rates of wagesFrom a date not less than 2 months from the date of notification. The personsso affected by the rates of wages may give their representation.After considering the representation from the various groups, government willprescribe the minimum rates of wages.


OBJECTIVE QUESTIONS

2008 - Dec [7] (b) Re-write the following sentences after filling-up the blank spaces withappropriate word(s)/figures):

(i) Minimum wages are to be fixed on the basis of standard normal working hoursnamely __________ hours a week. (1 mark)

Answer:(i) 48


2009 - June [7] (c) Choose the most appropriate answer from the given options inrespect of the following.

(i) The appropriate government shall revise the minimum rates of wages under theMinimum Wages Act, 1948 at least once in every !(a) 2 years(b) 3 years(c) 4 years(d) 5 years (1 mark)

Answer:(i) (d) 5 years

2011 - June [7] (c) Write the most appropriate answer from the given options in respectof the following:

(i) The government may review the minimum rates of wages so fixed and revise thesame if necessary at such intervals, not exceeding —(a) 3 Years(b) 5 Years(c) 2 Years(d) 1 Year. (1 mark)

Answer:(i) (b) 5 years


(i) The appropriate government may review minimum wages at such intervals, asit may think fit, not exceeding__________and revise the minimum rate of wages,if necessary. (1 mark)

Answer:(i) Five years

SHORT NOTES

2008 - Dec [6] Write notes of the following:(iii) 'Philosophy' behind the enactment of the Minimum Wages Act, 1948.

(5 marks)

Answer:Please refer Question 1 under the head “Topic not yet asked but equally important for

examination” on page no. 216


2009 - June [6] Write notes on the following:(ii) 'Methods of fixing and revising minimum rates of wages' under the Minimum

Wages Act, 1948. (5 marks)

Answer:(ii) Please refer Question No.3 under the head ‘Topic not yet asked but equally

Important for examination’ on page no. 216

2009 - Dec [6] Write notes on the following:(ii) 'Manner of fixation and revision of minimum wages' under the Minimum Wages

Act, 1948. (5 marks)


2010 - Dec [6] Write notes on the following:(v) Procedure for fixing and revising minimum wages under the Minimum Wages


Answer:Please refer Question no. 2 of Topic not yet asked but equally important for examination

of Minimum Wages Act, 1948 on page no 216.

2011 - June [6] Write notes on the following:(iv) Object and scope of the Minimum Wages Act, 1948. (5 marks)

Answer:

Object and Scope of the Minimum Wages Act, 1948.Please refer Question 1of the heading "Topic not yet asked but equally Important for

examination" on page no. 216

DISTINGUISH BETWEEN

2011 - Dec [7] (a) Distinguish between the following:(iv) ‘Committee method’ and ‘notification method’ for the fixation of minimum wages

under the Minimum Wages Act, 1948. (5 marks)


2012 - June [7] (a) Distinguish between the following:(iii) ‘Minimum wages’ and ‘fixation of the minimum rates of wages’ under the

Minimum Wages Act, 1948. (5 marks)


Answer:

Minimum Wages:• It is a bed rock minimum which must be paid in any case to the worker.C Minimum wages is the lowest limit below which no worker should be paid. C Industry which cannot pay the minimum wages to its workers should shut down.Fixation of Minimum Wages.Please refer Q. No. 3 of the Heading ‘Topic not yet asked but equally important for

Examination’ on page no.216

PRACTICAL QUESTIONS

2010 - June [8] Attempt the following stating relevant legal provisions and decided caselaw, if any:

(iii) An out-worker prepared goods at his residence and later on supplied thesegoods to the employer. Will he be treated as an employee under the MinimumWages Act, 1948? (4 marks)

(v) A company was running into losses and was unable to pay the minimum ratesof wages to its workers. The workers pleaded that the employer must pay themthe minimum rates of wages. The employer (company) intends to go to the courtchallenging the constitutional validity of the Minimum Wages Act, 1948. Will thecompany succeed? (4 marks)

Answer:

(iii) Yes, the out worker who prepares good at his residence and later on suppliessuch goods to the employer shall also be held as an employee as per theMinimum Wages Act, 1948. The same find its supporting from the judgement ofLoknath Nathu Lal v. State of Madhya Pradesh.

(v) No. the company will not succeed. Even if the company is running into lossesand finds itself unable to pay the minimum wages, the provisions of MinimumWages Act, 1948 needs to be adhered, to. Mere paucity of funds or pooreconomic condition serves as no ground to challenge the constitutional validityof the Act.




1 Write notes on the 'Manner of fixation and revision ofminimum wages' under the Minimum Wages Act, 1948.

09 - June [6] (ii), 09 - Dec [6] (ii)

2 Times



Question No. 1: What is the objective of minimum wages Act, 1948 ?Answer:

Minimum Wages Act, 1948 was passed in 1948 with the objective to prevent theexploitation of labour & prescribe the minimum wages for the employees in certainemployments specified in the schedule of the Act, The minimum wages Act, 1948extends to whole of India.

Question No. 2: What is the manner of fixation / revision of minimum wages?Answer:Minimum wages under the Minimum Wages Act, 1948 may be fixed in accordance withsection 3(2) as:-

(i) Time work(ii) Piece work(iii) Guaranteed time rate(iv) Overtime rate

Minimum wages under the Act may be fixed in accordance with section 3(3) as:(i) Different scheduled employments(ii) Different classes of work(iii) On the basis of adults, adolescents, etc

Question No. 3: What is the procedure for fixing & revising minimum wages?Answer:According to Minimum Wages Act, 1948, method for fixing the minimum wages can beas follows:-

(i) Committee method: Under the committee method the appropriate governmentappoint committees & sub - committees. After considering the advise of thecommittee the appropriate Government shall fix or revise the minimum wagesby official notification in the official Gazette. It is important to note that thegovernment is not bound to accept the recommendations given by thecommittee.


(ii) Notification Method: Under the notification method, the appropriateGovernment shall, by notification, in the official gazette publish the proposals forminimum rates of wages & give a date not less than 2 months from the date ofnotification, on which the persons so affected by the rates of wages may givetheir representation. After considering the representation from the variousgroups, government will prescribe the minimum rates of wages.Thus there are two methods for fixing or revising the minimum wages i.e.committee method & notification method.

Question No. 4: Whether minimum rates fixed by the Government is to be paid in cashor in kind?

Answer:According to Section 11 of the minimum wages Act, 1948, minimum rates fixed by theGovernment is to be paid in cash. But where it is a custom to pay the wages toemployees/ workers in kind, then the minimum wages fixed under the Act may be paidin kind. The appropriate Government will authorise such payment.

PRACTICAL QUESTIONS

Question No. 5: Mr. Ram is an out worker who prepares goods at his residence & thensupplied them to his employer. Is Mr. Ram will be considered as an employee for thepurpose of the Act?

Answer:According to the minimum wages Act, 1948, an out worker who prepared goods at hisresidence & supplied the goods so prepared to his employer is an employee. Soconsidering the above provisions, Mr Ram is an employee for the purpose of the Act.

Question No. 6: If the appropriate Government does not revise the minimum wagesfixed by it for 8 years violate the provisions of the Act?

Answer:According to Section 3(1) (b) of the minimum wages Act, 1948 Appropriate Governmentmay review the minimum wages at such intervals as it may thinks fit, such intervals notexceeding 5 years. Thus if the appropriate Government has not fixed the minimumwages for the last 8 years the appropriate Government has violated the provisions ofthe Act. The various provisions of the contract labour (Registration and Abolition) Act,1970 with regards to registration of establishments employing contract labour and thoserelating to licensing of contractors are as follows:-Y Section 6 of the Act gives power to the Appropriate Government for:

C Appointment of registering officerC Prescribe powers of the officers.


Exercisable by them) Section 7 requires for registration of such establishment which wishes to engage

20 or more contract, labourers.Application has to be made by the principal employer of the concerned establishmentto the registering officer in

- prescribed manner- definite time frame- registration fee

) Section 8 describes the circumstance under which registration can be revoked:C Where registration was obtained by suppression or misrepresentation of

material fact.C Where registration has become ineffective or useless

Y Section 9 provides for the effect of non registration, being non eligibility forappointment of contract labour Provisions relating to licensing of contracts are asfollows:

Y Section 11 of the Act gives Appropriate government the power to:- Appoint licensing officers- prescribe their jurisdictional limits

Y Section 12 requires for Licensing of contractor who want to get work executed bycontract labour.An application has to be made to the licensing officer for grant of licence in

prescribed manner along with requisite fee.Y Section 13 Provides for the grant of licence subject to a definite validity period after

the expiry of which it needs to be renewed.Y Section 14 deals with the two circumstances in which the licence stands revoked :

C where licence was obtained by suppression or misrepresentation of materialfacts.

C Licence holder has contravened with the provisions of the ActY Section 15 deals with the provisions relating to appeals where by aggrieved person

may Appeal to the appellate to officer within 30 days.

5.219

Star Rating


On the basis of Questions included every year from a chapter j


10 Payment of Bonus Act, 1965

This Chapter Includes: Introduction; Object, Scope and Application of the Act;Important Definitions; Calculation of amount payable as Bonus; Eligibility for Bonusand its Payment; Power of Exemption.


Chapter at a Glance

%%%% Applicability & Objective of the Payment of Bonus Act, 1965– The Act extends to the whole of India & applies to:(a) Factory(b) Other establishment in which twenty or more persons are employed on any

day during an accounting year.


– The objective of the Payment of Bonus Act, 1965 is regarding timelypayment of bonus to the employees.

– The Payment of Bonus Act, contains provisions relating to applicability,valuation, set off, set on, payment, calculation of allocable surplus etc. whichensures that the employees are not exploited by the employers while makingthe payment.

%%%% Who is an Employee

– Any person employed on a salary or wage not exceeding ` 10,000 permensem in any industry to do any skilled or unskilled manual, supervisory,managerial, administrative, technical or clerical work for hire or rewardwhether the terms of employment be express or implied.

– Any person employed on a salary or wage not exceeding 10,000 permensem in any industry to do any skilled or unskilled manual, supervisory,managerial, administrative, technical or clerical work for hire or rewardwhether the terms of employment be express or implied.

– Does not includes an apprentice.

%%%% Classes of employees not covered by Payment of Bonus Act.Following are the classes of persons not governed by Payment of Bonus Act,1965: – Employees employed by any insurer carrying on general insurance or life

insurance – Seamen as per Section 3(42) of the Merchant Shipping Act, 1958.– Employees registered or listed under any scheme made under the Dock

Workers (Regulation of Employment) Act, 1948.– Employees employed by an establishment engaged in any industry called

or by or under the authority of any department of Central Government or aState Government or a local authority.

– Employees employed by:(a) the Indian red cross society or any other institution of a like nature(b) universities and other educational institutions(c) institutions established not for the purpose of profit.

– Employees employed by RBI– Employees employed by

(a) IFCI(b) SFC (State Financial Corporation)(c) Deposit Insurance Corporation(d) NABARD (National Bank for Agriculture & Rural Development)(e) UTI (Unit Trust of India)(f) IDBI (Industrial Development Bank of India)

[Chapter #### 10] Payment of Bonus Act, 1965 (((( 5.221

(g) SIDBI (Small Industries Development Bank of India)(h) NHB (National Housing Bank)(i) any other financial institution (other than banking Company) being an

establishment in public sector, which the central government may bynotification specify.

Employees employed by inland water transport establishments operating onroutes passing through any other country.

% What is Allocable Surplus– In relation to employer being a company (not being a banking company)

which has not made the arrangements prescribed under the Income tax forthe declaration & payments of the dividends within India: 67% of theavailable surplus in an accounting year.

– Other Employers: 60 of the available surplus

% Meaning of Salary/Wage as per Bonus Act– All remuneration (other than remuneration in respect of overtime work)

capable of being expressed in terms of money, which would, if the terms ofemployment, express or implied, were fulfilled be payable to an employeein respect of his employment

– Include:Dearness Allowance (DA)

– Excludes:(a) Any other allowance which the employee is for the time being entitled to.(b) Value of any house accommodation or of supply of light, water, medical

attendance or other amenity(c) Travelling concession(d) Bonus (including incentive, production and attendance bonus)(e) Contribution paid or payable by the employer to any pension/provident fund(f) Retrenchment compensation or any gratuity or other retirement benefit

payable to the employee (g) Commission payable to the employee.

C Free food allowance or free food by his employer shall be deemed toform part of the salary or wage of such employee

C Retaining allowance and dearness allowance paid to the workman isalso included in the definition of salary or wage.

C Lay off compensation also included within the ambit of wages.C Subsistence allowance given during suspension is not included in

wages.


% Calculation of Amount payable as Bonus– Gross profit is calculated as per First or Second Schedule.

Computation of Gross ProfitsThe gross profits derived by an employer from an establishment in respectof any accounting year shall:(a) In the case of a banking company, be calculated in the manner

specified in the First Schedule. (b) In any other case, be calculated in the manner specified in the Second

Schedule. From this Gross profit the sun deductible under section 6 are deducted.

Sums Deductible from Gross Profits(a) any amount by way of depreciation admissible in accordance with the

provisions of sub-section (1) of section 32 of the Income-tax Act(b) any amount by way of development rebate or investment allowance or

development allowance which the employer is entitled to deduct fromhis income under IT Act.

(c) Any direct tax which the employer is liable to pay for the accountingyear in respect of his income, profits and gains during that year

(d) Any other sums as are specified in respect of the employer in the ThirdSchedule.

– Add the sum equal to the difference between the direct tax calculated ongross profit for the previous year and direct tax calculated on gross profitarrived at after deducting the bonus paid or payable to the employees.

– The figure so arrived is available surplus.– Of this surplus, 67% in case of company (other than a banking company)

and 60% in all other cases shall be the “allocable surplus” which is theamount available for payment of bonus to employee.

% Who is Eligibile for Bonus– Every employee shall be entitled to be paid by his employer in an accounting

year, bonus, in accordance with the provisions of this Act, provided he hasworked in the establishment for not less than thirty working days in that year.

% When is an employee disqualified for Bonus– An employee shall be disqualified form receiving bonus if he is dismissed

from service for:(a) Fraud(b) Violent behaviour while on the premises of the establishment(c) Theft, misappropriation or sabotage of any property of the

establishment.


% Concept of Minimum bonus– Every employer shall be bound to pay to every employee a minimum bonus

which shall be 8.33% of the salary or wage earned by the employee duringthe accounting year or one hundred rupees, whichever is higher, whether ornot the employer has any allocable surplus in the accounting year.

– Provided that where an employee has not completed fifteen years of age atthe beginning of the accounting year, the provisions of this section shallhave effect in relation to such employee as if for the words “one hundredrupees”, the words “sixty rupees” were substituted.

% Concept of Maximum bonus.– Where in respect of any accounting year, the allocable surplus exceeds the

amount of minimum bonus payable to the employees under that section theemployer shall, in lieu of such minimum bonus, be bound to pay to everyemployee in respect of that accounting year bonus which shall be an amountin proportion to the salary or wage earned by the employee during theaccounting year subject to a maximum of twenty per cent. of such salary orwage.

– Where the salary or wage of an employee exceeds three thousand and fivehundred rupees per mensem, the bonus payable to such employee, shall becalculated as if his salary or wage were three thousand and five hundredrupees per mensem.

% Time limit for payment of bonus– Where there is a dispute regarding payment of bonus pending before any

authority: Within a month from the date on which the award becomeenforceable

– In any other case: Within a period of eight months from the close of theaccounting year



OBJECTIVE QUESTIONS


(ii) Every employee shall be entitled to be paid by his employer in an accountingyear, bonus, provided he has worked in the establishment for not less than_________ working days in that year. (1 mark)

Answer:(ii) 30


(iii) An employee is entitled to receive bonus provided he has worked in anaccounting year in the establishment for not less than !(a) 30 working days(b) 1 year(c) 8 months(d) 4 months. (1 mark)

Answer:(iii) (a) 30 working days


(i) Bonus must be paid to employees within a period of_________months from theclose of the accounting year. (1 mark)

Answer:(i) Bonus must be paid to employees within a period of eight months from the close

of the accounting year.

2010 - June [7] (c) Choose the most appropriate answer from the given options inrespect of the following:

(i) An application for the recovery of bonus from an employer shall be madewithin—(a) Six months from the date on which the money became due(b) One year from the date on which the money became due(c) 60 Days from the date on which the money became due(d) 90 Days from the date on which the money became due. (1 mark)

Answer:(i) (b) One year from the date on which the money became due


2010 - Dec [7] (c) Choose the most appropriate answer from the given options inrespect of the following:

(v) An employee is entitled to receive bonus provided he has worked in anaccounting year in the establishment for not less than —(a) 30 Working days(b) One year(c) 6 Months (d) 8 Months. (1 mark)

Answer:(v) (a) 30 working days


(i) The Payment of Bonus Act, 1965 is applicable to every factory and to everyother establishment where ___________ are employed on any day during anaccounting year. (1 mark)

Answer:(i) 20 or more persons

2011 - Dec [7] (c) Write the most appropriate answer from the given options in respectof the following:

(i) An employee is not entitled to bonus if —(a) He has worked for less than 6 months(b) He is guilty of any misconduct(c) He is in managerial cadre(d) He is a part-time permanent employee. (1 mark)

Answer:(i) (b) He is guilty of any misconduct


(i) As per the provisions of the Payment of Bonus Act, 1965, an employee isentitled to bonus provided he has worked for not less than ______ in that year.

(1 mark)

Answer:(i) 30 days



(i) Which of the following is not a type of ‘bonus’ under the Payment of Bonus Act,1965 —(a) Profit based bonus(b) Customary bonus(c) Attendance bonus(d) Voluntary bonus. (1 mark)

Answer:(b) Customary Bonus


(i) From the close of the accounting year, the bonus should be paid within—(a) One month(b) Two months(c) Twelve months(d) Eight months. (1 mark)

Answer:(i) (d) Eight months


(v) For the purposes of calculation of bonus, an employee shall be deemed to haveworked in an establishment in any accounting year also on the days on which hehas been absent due to ____________ caused by accident arising out of and inthe course of his employment. (1 mark)

Answer :(v) (d) Go slow.


(i) Bonus should be paid to the employees within how many months from the closeof the accounting year-(a) 2 Months(b) 6 Months(c) 8 Months(d) 10 Months. (1 mark)

Answer :(i) (c) 8 months



(iii) Bonus should be paid to an employee within a period of ____________ from theclose of the accounting year. (1 mark)

(c) Write the most appropriate answer from the given options in respect of the following:(i) Who amongst the following is entitled for bonus under the Payment of Bonus

Act, 1965 –(a) Office assistant working in LIC of India(b) Health worker working for Red Cross Society(c) Printing worker in a newspaper press(d) Computer operator working in a university. (1 mark)

SHORT NOTES

2009 - June [6] Write notes of the following:(iii) Object and scope of the Payment of Bonus Act, 1965. (5 marks)

Answer:

Object and Scope:• The object of the Payment of Bonus Act, 1965 is timely payment of bonus to the

employees.• Bonus is a right of the employees and can enforce the timely and proper discharge

of bonus.• The Payment of Bonus Act, 1965, contains large number of provisions relating to

Applicability, valuation, set off set on, payment, calculation of allocable surplus etcwhich ensures that the employees are not exploited by the employers while makingthe payment.

2011 - June [6] Write notes on the following:(iii) Classes of employees not covered under the Payment of Bonus Act, 1965.

(5 marks)

Answer:

Classes of employees not covered by Payment of Bonus Act, 1965 are as follows:Section 32 of the Act provides that the following class of persons shall not be governedby Payment of Bonus Act, 1965. 1. Employees employed by any insurer carrying on general insurance business and

the employees employed by the Life Insurance Corporation of India.2. Seamen as defined in clause (42) of Section 3 of the Merchant Shipping Act, 1958.


3. Employees registered or listed under any scheme made under the Dock Workers(Regulation of Employment) Act, 1948 and employed by registered or listedemployers.

4. Employees employed by an establishment engaged in any industry called or by orunder the authority of any department of Central Government or a StateGovernment or a local authority.

5. Employees employed by (a) the Indian red cross society or any other institution of a like nature including

its branches, (b) universities and other educational institutions (c) institutions established not for the purpose of profit.

6. Employees employed by Reserve Bank of India. 7. Employees employed by

(a) Industrial Financial Corporation of India. (b) Any financial corporation established under section 3 or any Joint Financial

Corporation established under section 3 A of the State Financial CorporationAct, 1951.

(c) The Deposit Insurance Corporation(d) The National Bank for Agriculture & Rural Development. (e) The Unit Trust of India. (f) The Industrial Development Bank of India.(g) The Small Industries Development Bank of India established under section 3

of Small Industries Development Bank of India Act, 1989. (h) The National Housing Bank (i) any other financial institution (other then Banking Company) being an

establishment in public sector, which the central government may bynotification specify.

(j) Employees employed by inland water transport establishments operating onroutes passing through any other country.

2012 - Dec [6] Write notes on the following:(v) Object and scope of the Payment of Bonus Act, 1965. (5 marks)

Answer:Please refer 2009- June [6] (iii) on page no. 227


DISTINGUISH BETWEEN

2013 - Dec [7] (a) Distinguish between the following:(iii) ‘Customary or interim bonus’ and ‘bonus linked with production or productivity’

under the Payment of Bonus Act, 1965. (5 marks)

PRACTICAL QUESTIONS

2008 - Dec [8] Attempt of the following stating relevant legal provisions and case law,if any:

(iv) An employee contended that subsistence allowance given during the period ofhis suspension should be included in his total wages for the purpose ofcalculation of bonus entitlement. Will he succeed ? (4 marks)

Answer:No, the contention of the employee is not tenable since subsistence allowance givenduring the period of suspension should not be included in the calculation of bonus sincethe same is not part of wage.

2009 - Dec [8] Attempt the following stating relevant legal provisions and decided caselaw, if any:(vii) An employee was dismissed from service for an act of misconduct. The company

did not pay any bonus to the dismissed employee for the accounting year inwhich the dismissal took place. Is the action of the company justified ?

(4 marks)

Answer:(vii) Please refer 2007- June [7] {C} (b) (iii) on page no. 232

2010 - Dec [8] Attempt the following stating relevant legal provisions and decided caselaw, if any:

(ii) Growell Ltd. declared minimum bonus in an accounting year as there was noallocable surplus. However, the workmen claimed that the management wasliable to pay higher amount of bonus in view of the terms of settlement enteredinto between the workmen and the management. Is the plea of the workmentenable in law ? (4 marks)


Answer:Y Yes, the plea of the workmen is tenable in law.Y Though, the company Growell Ltd. has rightly declared minimum bonus in the

accounting year as there was no allocable surplus, yet have entered into settlementwith the workmen for higher bonus which needs to be abide by.


(i) Roler Coaster Ltd. is engaged in the manufacture of electronic goods. Thecompany has been paying puja bonus to its workers during Diwali festival sincethe beginning of its operations. Subsequently, the Payment of Bonus Act, 1965became applicable to the company. The management wants to discontinue pujabonus on the ground that the company is paying bonus as per the Payment ofBonus Act, 1965. Is the management justified ? (4 marks)

Answer:The claim for customary bonus will not be affected by the introduction of statutory bonusas held in the case of Hukamchand Jute Mills limited v/s Second Industrial, TribunalWest Bengal.

Statutory bonus and customary bonus operate in two filed and do not clash witheach other. Hence the action of management is wrong. The management has to pay puja bonus tothe employees.

2011 - Dec [8] Attempt the following stating relevant legal provisions and decided caselaw.

(vi) A workman was dismissed from service on 15th February, 2009 after adepartmental enquiry for an act of misconduct. No bonus was paid to him for theaccounting year during which he was dismissed. Subsequently, he wasreinstated by the court with full back wages. Will the workman be entitled toclaim bonus alongwith full back wages? (4 marks)

Answer:C Workmen is entitled to claim bonus along with full back wagesC Please refer 2006 - June [7] {C} (b) (viii) on page no 231

2013 - Dec [8] Attempt the following stating relevant legal provisions and decided caselaw:

(iv) Shobit, an employee, was placed under suspension for an alleged act ofmisconduct. An inquiry was instituted against him. The charges were, however,not proved against him. He was later on reinstated with full wages of thesuspension period. The employer, however, did not pay bonus for thesuspension period. Shobit intends to challenge the decision of the employer.Will he succeed?


(vii) Mohan was dismissed from service for misappropriation of the property of theestablishment. He was also disqualified from receiving any bonus including thebonus for the accounting year in which the dismissal took place. Is the action ofthe employer justified? (4 marks each)

CS Inter Gr. II

PRACTICAL QUESTIONS

2005 - Dec [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:

(vi) During the accounting year 2003-04, Stingy Ltd. to which the Payment of BonusAct, 1965 applies, suffered heavy losses. The Board of directors decided not topay any bonus to its employees. The employees moved the court for relief. Willthey succeed? (3 marks)

Answer:The employees will succeed in getting the bonus as under the provisions of Paymentof Bonus Act, 1965, even if the employer suffers losses during the accounting year, heis bound to pay minimum bonus as prescribed [Section 10] as held in (State V/s SardarSingh Majithia (1979 Lab I.C.)

2006 - June [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(viii) Manmauji, an employee, was suspended for an alleged misconduct. An inquiry

was conducted and the charges against him could not be proved. As a result, hewas reinstated with full back wages. The employee was, however, not paidbonus for the period of suspension. Can he challenge the employer’s action?

(3 marks)Answer:Manmauji can challenge the employer's action of not paying bonus for the period ofsuspension as the Act provides that an employee suspended but subsequentlyreinstated with full back wages can not be treated to be ineligible for bonus for theperiod of suspension.[Project Manager, Ahmedabad project, ONGC v/s Sham kumar Sahegal]

2007 - June [7] {C} (b) Attempt of the following stating relevant legal provisions andcase law, if any:

(ii) Rajat was suspended from service by the company. He was subsequentlyreinstated with full back wages. The company refused to pay bonus for theperiod of his suspension. Is Rajat entitled to get bonus for the period of hissuspension ? (3 marks)


(iii) Arpit was dismissed from service for an act of misconduct. The company did notpay him any bonus. Arpit contended that he was eligible for payment of bonusfor the accounting year in which dismissal took place. Will he succeed ?

(3 marks)

Answer:

(ii) Please refer 2006 - June [7] {C} (b) (viii) on page no. 231

(iii) According to Payment of Bonus Act, if an employee is dismissed from servicefor any act of misconduct he will be disqualified from receiving any bonus underthe Act, & not the bonus only for the accounting year in which the dismissaltakes place.In this case, Arpit will not succeed on getting bonus under the Act. He is noteligible for bonus under the Act.

2007 - Dec [7]{C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:

(i) An employee was dismissed from service for an act of misconduct. Thecompany did not pay any bonus to the dismissed employee for the accountingyear in which the dismissal took place. Is the action of the company justified?

(3 marks)

Answer:Please refer 2007 - June [7] {C} (b) (iii) on page no. 232

2008 - June [7] {C} (b) Attempt of the following stating relevant legal provisions anddecided case law, if any:

(v) An employee was suspended, but after an inquiry, he was reinstated with fullback wages. He claimed bonus for the period of suspension. Will he succeed ?

(3 marks)

Answer:Please refer 2006 June [7] {C} (b) (viii) on page no. 231

Recent Case Laws

Case Law Decision

1 Mumbai KaamgarSabha

VAbduibhaiFaizullabhi

It was held that the Bonus Act speaks on the solesubject of profit based bonus but is silent and cannot,therefore , annihilate by implication , other distinct anddifferent kinds of bonuses , such as the one orientedon custom. Reasoning of Court leaves no doubt thatthe Act leaves untouched customary bonus


2 Chalthan Vibhag Sahakari Khand

UdyogV

Government LabourOfficer

It was held in this case by the Supreme Court that thedefinition of salary or wage shall cover the payment ofretaining allowance and also dearness allowance.Subsistence allowance given during suspension is notwages, however lay- off compensation is wages

3 Project Manager,Ahmedabad Project,

ONGCV

Sham KumaarSahegai

It was held that in case an employee is dismissed fromservices for any act of misconduct enumerated inSection 9 of the Act , then he stands disqualified fromreceiving any bonus under the Act, and not only thebonus only for the accounting year in which thedismissal takes place

4 Indian RoadwaysCorpn. Ltd.

VPresiding Officer,Principal Labour

Court

It was held that in case an employee is dismissed fromservices for any act of misconduct enumerated inSection 9 of the Act , then he stands disqualified fromreceiving any bonus under the Act, and not only thebonus only for the accounting year in which thedismissal takes place

5 StateV

Sardar SinghMajithia

It was held that in case the employer suffers the lossesduring the accounting year , then also he is bound topay the minimum bonus as prescribed by Section 10 ofthe Payment of Bonus Act,1965


Fill in the blanks

1. Payment of Bonus Act, 1965 apply to every establishment in which 20 or more

persons are employed on any day during an accounting year.

2. Allocable surplus in case of company is sixty seven percent of the available

surplus in an accounting year.

3. Allocable surplus in case of establishment other than company is sixty percent of

the available surplus in an accounting year.


4. According to payment of Bonus Act 1965 “Employee” means any person (other

than an apprentice) employed on a salary or wage not exceeding 10,000 per

mensem in any industry.

5. Every employee shall be entitled to be paid by his employer in an accounting year,

bonus, provided he has worked in the establishment for not less than thirty

working days in that year.

6. Every employer shall be bound to pay to every employee a minimum bonus which

shall be 8.33 per cent. of the salary or wage earned by an employee during the

accounting year or one hundred rupees, whichever is higher, whether or not the

employer has any allocable surplus in the accounting year.

7. Where the salary or wage of an employee exceeds three thousand and five

hundred rupees per mensem, the bonus payable to such employee, shall be

calculated as if his salary or wage were three thousand and five hundred rupees

per mensem.

8. Where for any accounting year, the allocable surplus exceeds the amount of

maximum bonus payable to the employees in the establishment under section 11,

then, the excess shall, subject to a limit of twenty per cent. of the total salary or

wage of the employees employed in the establishment in that accounting year, be

carried forward for being set on in the succeeding accounting year and so on up

to and inclusive of the fourth accounting year to be utilised for the purpose of

payment of bonus.

9. Where a dispute for payment of bonus is pending before any authority under

section 22, all amount payable to an employee by way of bonus shall be paid by

an employer within a month from the date from which the award becomes

enforceable.

10. Bonus must be paid to employees within a period of eight months from the close

of accounting year.


Multiple Choice Questions

1. Payment of Bonus Act 1956 applies to any establishment in which ___________or more persons are employed on any day during accounting year.a. 10b. 15 c. 20 d. 25Answer: 20

2. An employee is entitled to receive bonus provided he has worked in an accountingyear in the establishment for not less than_________a. 30 working daysb. 1 yearc. 8 monthsd. 4 monthsAnswer: 30 working days

3. Which among these are the different types of bonus:a. Profit based bonusb. Customary bonusc. Attendance bonusd. Voluntary bonusAnswer: (a), (b) and (c)

4. An employee shall be disqualified from receiving bonus if he is dismissed fromservice for–a. fraudb. riotous or violent behaviour while on the premises of the establishment.c. theft, misappropriation or sabotage of any property of the establishment.d. All of theseAnswer: (d) All of these

5. What is the minimum amount of bonus payable to an employee?a. 8.33% of the salary earned during the accounting year or ` 100 whichever is

higher.b. 8.63% of the salary earned during the accounting year or ` 100 whichever is

higher. c. 8.73% of the salary earned during the accounting year or ` 100 whichever is

higher.d. 8.83% of the salary earned during the accounting year or ` 100 whichever is

higher.Answer: (a) 8.33% of the salary earned during the accounting year or ` 100

Whichever is higher.


True or False

1. The term “bonus” is not defined in the payment of Bonus Act, 1965.

True2. Payment of Bonus Act applies to whole of India

True3. Payment of bonus Act does not apply to employees employed by the Reserve

Bank of India.

True4. Employee means any person (other than apprentice) employed on a salary or

wages not exceeding ` 10,000 per mensem in any industry.

True5. Part time permanent employees working on fixed hours are not employees under

the Payment of Bonus Act, 1965.

False6. The object of the Payment of Bonus Act, 1965 is timely payment of bonus to the

employees.

True

5.237

Star Rating




11 Payment of Gratuity Act, 1972

This Chapter Includes: Meaning; Application; Nomination; Forfeiture of gratuity;Compulsory Insurance; Exemptions; Application for payment of gratuity; Recoveryof gratuity; Protection of gratuity; Act to override other enactments etc.



OBJECTIVE QUESTIONS



(iii) Under the Payment of Gratuity Act, 1972 where the services of an employeehave been terminated for any act which constitutes an offence involving moralturpitude provided that such offence is committed by him in the course of hisemployment, the gratuity payable to the employee may be -(a) Wholly or partially forfeited(b) Only partially forfeited(c) Wholly forfeited(d) Forfeited in instalments. (1 mark)

Answer:(iii) Ans.(a)


(v) The maximum amount of gratuity payable under the Payment of Gratuity Act,1972 is—

(a) ` 5,00,000

(b) ` 3,50,000

(c) ` 2,50,000

(d) ` 2,00,000. (1 mark)

Answer:

(v) (b) ` 3,50,000


(iii) The employer shall arrange to pay the amount of gratuity within __________days from the date of its becoming payable to the person to whom it is payable.

(1 mark)

Answer:(iii) thirty


(iv) The employer is liable to pay the amount of gratuity within _____ days from thedate of its becoming payable to the employee.

(v) A period of service shall be deemed to be continuous which has not beeninterrupted by a period of absence exceeding ______ days. (1 mark each)

Answer:(iv) 30 days(v) 14 days

[Chapter #### 11] Payment of Gratuity Act, 1972 (((( 5.239


(ii) The ceiling on the amount of gratuity has been enhanced to ̀ __________by thePayment of Gratuity (Amendment) Act, 2010. (1 mark)

(c) Write the most appropriate answer from the given options in respect of thefollowing:(ii) The minimum number of employees required in an establishment for it to

come under the purview of the Payment of Gratuity Act, 1972 is—(a) 10(b) 15(c) 20(d) 25. (1 mark)

Answer:(b) (ii) 10 lakhs(c) (ii) (a) 10


(ii) What is the minimum number of employees required in an establishment for it tocome under the purview of the Payment of Gratuity Act, 1972-(a) 10(b) 15(c) 20(d) 25. (1 mark)

Answer :(ii) (a) 10

SHORT NOTES

2009 - Dec [6] Write notes on the following:(i) 'Concept of continuous service for the payment of gratuity' under the Payment

of Gratuity Act,1972. (5 marks)Answer:• Gratuity shall be payable to an employee on the termination of his employment

after he has rendered continuous service for not less than 5 years.• A person is in continuous service if the employee has worked for:-

6 190 days 6 establishment which works for less than 6 days in a week.6 240 days 6 in any other case.

• In case of seasonal establishment, if he has worked for not less than 75% of thenumber of days on which the establishment was in operation during such period.


2010 - Dec [6] Write notes on the following:(iii) Concept of ‘continuous service’ under the Payment of Gratuity Act, 1972.

(5 marks)

Answer:Please refer 2009 - Dec [6] (i) on page no. 239

2011 - June [6] Write notes on the following:(vi) Rights and obligations of the employer under the Payment of Gratuity Act, 1972.

(5 marks)

Answer:

Rights & obligations of the employer under the payment of Gratuity Act, 1972.C As soon as the Gratuity becomes payable the employer shall determine the

amount of gratuity & shall give the notice to the person to whom the gratuity ispayable & to the controlling authority.

C The employer shall arrange to pay the amount of gratuity within 30 days of the dateof its becoming payable to the person to whom it is payable.

C If such amount is not payable within due time, the employer shall pay from the dateon which the gratuity becomes payable to the date on which it is paid, simpleinterest at the rate of 10% per annum.

C If the employer does not admit the claim submitted by employee, it shall issue anotice to the employee in prescribed format specifying reason why he does notadmit the claim of gratuity.

C If the disputes related as to the amount of gratuity payable, the employer shalldeposit with the controlling authority such, as he admits to be payable by him.

2011 - Dec [6] Write notes on the following:(i) ‘Forfeiture of gratuity’ under the Payment of Gratuity Act, 1972. (5 marks)

Answer:Please refer 2009 - Dec [7] (a) (i) on page no. 241

2012 - June [6] Write notes on the following:(ii) Protection of gratuity under the Payment of Gratuity Act, 1972. (5 marks)

Answer:Payment of gratuity is covered under the Payment of Gratuity Act, 1972.C Generally, gratuity is payable to an employee on the termination of his employment

after he has rendered continuous service for not less than 5 years. • It is one of the retirement benefits offered by the employer to employee.• Gratuity has been exempted from attachment in execution of any decree or order

of any Civil, Revenue or Criminal Court.


DISTINGUISH BETWEEN


(i) 'Partial forfeiture of gratuity' and 'total forfeiture of gratuity' under the Paymentof Gratuity Act,1972. (5 marks)

Answer:(i) Gratuity forfeited on account of such act, omission or negligence which causes

loss, damage or destruction is termed as partial forfeiture of gratuity since thesame can be carried out only to the extent of loss, damage or destruction socaused.As against this, in case the services of an employee get terminated dueto violence or riotous act or committing an offence involving moral turpitude inrelation to his employment, the same can lead to forfeiture of the whole or partof the gratuity.If the services of an employee are terminated due to wilful omission ornegligence which causes damage to the property of an employer, gratuity canbe forfeited to the extent of damage or loss caused. The whole amount cannotbe forfeited for wilful omission by employee.

2012 - Dec [7] (a) Distinguish between the following:(ii) ‘Partial forfeiture of gratuity’ and ‘full forfeiture of gratuity’ under the Payment of

Gratuity Act, 1972. (5 marks)


PRACTICAL QUESTIONS

2008 - Dec [8] Attempt the following stating relevant legal provisions and case law, ifany:

(v) The company declined to pay gratuity to a deceased employee's wife stating thatthe employee had worked for two years only whereas eligibility for receivinggratuity accrues only if he served for a period of five completed years ofcontinuous service. Will she succeed ? (4 marks)

Answer:Yes, the widow shall succeed since proviso to Section 4 of Payment of Gratuity Act,1972 provides the exception to the clause of completion of 5 years of continuous servicein case of death or disablement. Since the employee has died, his wife shall succeedin getting gratuity even though he has worked for two years only.



(i) Mohan was in occupation of a residential quarters allotted to him by hisemployer. On his retirement on superannuation, he failed to vacate the quarters.His employer withheld the gratuity payable to him insisting that he should vacatethe quarters first. Mohan approached the controlling authority claiming gratuity.Will he succeed ? (4 marks)

Answer:(i) No, in case of non-vacation of the house provided by employer, the employee’s

gratuity can not be forfeited. It is not a valid ground for forfeiture of gratuity.


(iv) Mauji Ram was absent from duty without leave. The employer took the plea thatit had resulted in the breach of continuous service for the purposes of gratuityunder the Payment of Gratuity Act, 1972. Is the plea of the employer legal andenforceable? (4 marks)

Answer:No, the plea of the employer on the ground that one of the employee Mauji Ramwas absent from duty without leave and so the same has resulted in the breach ofcontinuous service is not valid.


(i) Suresh retired on attaining the age of superannuation. After retirement, it wasnoticed that he had misappropriated travelling allowance drawn by him. Theemployer decided to deduct the misappropriated amount from the gratuitypayable to him. Is the action of the employer legally tenable ? (4 marks)

Answer:No the action of the employer is not legally tenable.Y The facts of the given case study show resemblance with that of Mathur Spinning

Mills v/s D.C. of labour & othersY Since Suresh has retired and his services have ended, the employer is not

competent to take any sort of disciplinary action against him.Y Thus, Suresh will be entitled to receive the amount of gratuity.



(ii) Dinesh absented himself from duty without applying for leave and left the job.When he claimed gratuity, the company refused to pay gratuity quoting hisabsence from duty without proper leave resulted in break in service. Will he getgratuity ? (4 marks)

Answer:Yes in the given Case Dinesh will get gratuity as mere absence from duty with properleave will not deprive an employee to get gratuity. Mere absence from duty withoutleave cannot be said to result in breach of continuity of service in respect of theprovisions of payment of Gratuity Act, 1872.


(v) Lotus Info. Ltd. entered into a settlement with its workmen providing for paymentof gratuity at the rate of one month’s salary for every completed year of service.An employee retired on superannuation and claimed gratuity as per thesettlement. The employer pleaded that he is under no obligation to pay gratuitymore than the rate prescribed under the Payment of Gratuity Act, 1972. Is theemployer’s contention tenable in law? (4 marks)

Answer:C In this case, employer entered into a settlement for payment of gratuity at the rate

of one month’s salary for every year. But later denied to pay more than the rateprescribed under the Act.

C As per the provisions of Payment of Gratuity Act, 1972, if an employee has madeany agreement as a result of which he can receive better terms of gratuity, than inthat case an employee can receive the gratuity as per the agreement/control.

C Thus employer’s contention is not tenable in law.


(iii) Naresh was working in Navodaya School continuously for 30 years. The schoolhas been employing 30 teachers. On attaining the age of superannuation, heretired from service. The management declined to pay gratuity to Naresh. Hepreferred a claim for the payment of gratuity before the authority concernedunder the Payment of Gratuity Act, 1972. Will he succeed ? (4 marks)


Answer:C In the above case, Naresh will succeed.C Definition of employee has been amended by the Payment of Gratuity

(Amendment) Act, 2009 to include teachers in educational institutionsretrospectively with effect from 3rd April, 1997.

C Thus Naresh will succeed.

CS Inter Gr. II

PRACTICAL QUESTIONS

2004 - Dec [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(iv) Bhushan, who had put in 10 years of continuous service, was dismissed on the

ground of misconduct and the amount of gratuity payable to him under thePayment of Gratuity Act, 1972 was forfeited in full. He was not given anopportunity of being heard and no show cause notice was served on him. Hewants to institute a suit against the management. Will he succeed? (3 marks)

Answer:Gratuity can be forfeited on account of misconduct or wilful negligence or on accountof any offence constituting moral turpitude. But, notice of forfeiture must be given toemployee.In the given case, Bhushan’s gratuity was forfeited without giving any notice which ismandatory on part of employer. Hence, Bhushan will succeed in his claim.

2006 - June [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:

(vi) Ramesh was occupying service quarters of a company at the time of retirement.He did not vacate the house after retirement. The company withheld the paymentof gratuity to the retired employee on this ground. Can Ramesh claim thepayment of gratuity and succeed against the employer ? (3 marks)

Answer:No, in case of non-vacation of the house provided by employer, the employee’s gratuitycannot be forfeited. It is not a valid ground for forfeiture of gratuity.



(iv) Rajesh was occupying service quarters of the company. After his retirement, hedid not vacate the quarters. In retaliation, the company withheld the gratuitypayable to him. Is the action of the company justified ? (3 marks)

Answer:No, in case of non-vacation of the house provided by employer, the employee’s gratuitycan not be forfeited. It is not a valid ground for forfeiture of gratuity.


(v) Kailash, a teacher in a private school having a basic salary of ̀ 3,500 per month,claims gratuity from the school management when he resigned from the serviceafter serving for a period of 12 years. Will he succeed ? (3 marks)

Answer:In a given case as Kailash is a school teacher, he will not succeed as teachers are notan employee under the Act. The teachers are not covered under the definition of‘employee’ as held in Ahmedabad Pvt. Primary teachers association V/s Administrativeofficer.


(vi) A worker went on leave. He continued to remain absent from duty even after theexpiry of leave. The employer treated the ‘absence from duty without leave’ asbreach of continuity of service for the purposes of the Payment of Gratuity Act,1972. Is the employer justified ? (3 marks)

Answer:No, the employer is not justified in treating the 'absence from duty without leave' asbreach of continuity of service, as required under Section 2A of Payment of Gratuity Act,1972, since proper explanation should be sought from the employee.

Recent Case Laws

Case Law Decision

1 Ahmedabad Private Primary

Teacher'sAssociation

VAdministrative

Officer

It was held by the Supreme Court that the definition of'employee' should include teachers in educationalinstitutions . As a result , the definition of 'employee'under the Payment of Gratuity Act, 1972 has beenamended to cover the teachers in educationalinstitutions retrospectively


2 Baluram V

Phoenix Mills Ltd

It was held in this case that gratuity cannot be claimedon the basis of continuous service on being taken backin service after break in service on account oftermination of service for taking part in an illegal strike, where the employee had accepted the gratuity forprevious service and later withdrawn from the industrialdispute.



1 Practical Questions of 06 - June [7] {C} (b) (vi) and 06 -Dec [7] {C} (b) (iv)

2 Times

2 Practical Questions of 08 - June [7] {C} (b)(vi) and 2010 -June [8] (iv)

2 Times

3 Write notes on the following ‘Concept of ‘continuousservice’ under the Payment of Gratuity Act, 1972'

09 - Dec [6] (i), 10 - Dec [6] (iii)

2 Times

4 Distinguish Between the following:‘Partial forfeiture of gratuity’ and ‘full forfeiture of gratuity’under the Payment of Gratuity Act, 1972.

09 - Dec [7] (a) (i), 12 - Dec [7] (a) (ii)

2 Times

5.247

Star Rating




12 Employees’ Provident

Funds and Miscellaneous

Provisions Act, 1952

This Chapter Includes: Introduction; Application of the Act; Important Definitions;Schemes under the Act; Determination and Recovery of Moneys due from and byEmployer; Transfer of Accounts; Protection against Attachment; Power to Exempt.




OBJECTIVE QUESTIONS

2009 - June [7] (b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figures (s):

(i) Minimum years of contributory service is required for entitlement ofpension under the Employees' Provident Funds and Miscellaneous ProvisionsAct, 1952. (1 mark)

Answer:Rewrite the following sentences after filling in the blank spaces with appropriate word(s)/ figure (s) -

(i) Minimum 10 years of contributory service is required for entitlement of pensionunder the Employee’s Providend Funds and Miscellaneous Provisions Act, 1952.


(v) The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 isapplicable to commercial establishments employing !(a) 10 or more employees(b) 20 or more employees(c) 50 or more employees(d) 100 or more employees. (1 mark)

Answer:(v) (b) 20 or more employees


(iii) A minimum of _________contributory service is required for entitlement topension under the Employees' Provident Funds and Miscellaneous ProvisionsAct,1952. (1 mark)

Answer:

(iii) A minimum of ten years contributory service is required for entitlement topension under the Employees Provident Funds and Miscellaneous ProvisionsAct, 1952


(i) The membership of provident fund scheme is compulsory for employees drawing

a pay not exceeding ` per month.

[Chapter #### 12] Employees’ Provident Funds and...... (((( 5.249

(iv) Superannuation in relation to an employee, who is a member of the pensionscheme, means the attainment of the age of years. (1 mark each)

Answer:(i) The membership of provident fund scheme is compulsory for employees drawing

a pay not exceeding ` 6,500 per month.(iv) Superannuation in relation to an employee, who is a member of the pension

scheme, means the attainment of the age of 58 years.


(iii) ‘Basic wages’ under the Employees’ Provident Funds and MiscellaneousProvisions Act, 1952 does not include —(a) Emoluments earned by an employee while on leave (b) Emoluments earned by an employee while on holiday with wages (c) The cash value of any food concession(d) Emoluments earned by an employee which are payable in cash. (1 mark)

Answer:(iii) (c) The cash value of any food concession


(iv) Under the Employees Deposit-Linked Insurance Scheme, employers arerequired to pay contributions for the insurance fund at the rate of __________of the total emoluments. (1 mark)

Answer:(iv) 1%


(ii) The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 isapplicable to all factories and certain establishments employing —(a) 20 or more persons(b) 50 or more persons(c) 10 or more persons(d) Without any limit. (1 mark)

Answer:(ii) (a) 20 or more persons



(ii) Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952,what percentage of the basic wage, dearness allowance and retaining allowanceof an employee is paid or contributed by the employer —(a) 8%(b) 10%(c) 12%(d) 13%. (1 mark)

Answer:(c) 12%


(iii) The authority which has been constituted by the Central Government to presideover the cases regarding determination of monies due from employers under theEmployees’ Provident Funds and Miscellaneous Provisions Act, 1952 is—(a) Employees Provident Fund Appellate Tribunal(b) Employees Provident Fund Consultancy Tribunal(c) Employees Provident Fund Help Desk(d) Employees Provident Fund Information Centre. (1 mark)

Answer:(iii) (a) Employees Provident Fund Appellate Tribunal


(ii) ____________ has been exempted from attachment in execution of any decreeor order of a civil, revenue or criminal courts. (1 mark)

(iii) A minimum of ___________ years contributory service is required for entitlementof pension under the Employees’ Pension Scheme. (1 mark)

Answer :(ii) Provident fund or Gratuity (iii) 10


(iii) Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952what percentage of the basic wage, dearness allowance and retaining allowanceof an employee is paid as ‘contribution’ by the employer-


(a) 8%(b) 10%(c) 12%(d) 13%. (1 mark)

Answer :(iii) (b) 10%


(i) Superannuation in relation to an employee who is a member of pension scheme,means attainment of the age of ________ years.

(iv) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 isapplicable to factories employing _______ or more persons. (1 mark each)

SHORT NOTES

2010 - June [6] Write notes on the following:(iv) ‘Excluded employee’ under the Employees’ Provident Fund Scheme, 1952.

(5 marks)

Answer:Section 2 (f) of the Employees Provident Fund Scheme, 1952 defines ‘excludedemployee’ as - Y ApprenticeY An employee whose pay (Basic Wages + Dearness Allowance i.e. D.A. + cash

value of fixed commission) exceed ` 5,000 per month.Y An employee who has withdrawn the amount accumulated in the funds as per the

provisions of sub - paragraph 69 clause (a) or (c).

2012 - June [6] Write notes on the following:(iii) Employees’ Pension Scheme under the Employees’ Provident Funds and

Miscellaneous Provisions Act, 1952. (5 marks)

Answer:Employee’s Pension Scheme under the Employee’s Provident Funds & MiscellaneousProvisions Act, 1952 is as under:-C Employee’s Pension Scheme, 1995 came into effect from 16.11.1995. C It has been conceived as a benefit defined Social Insurance Scheme formulated

following actuarial principles for ensuring long term financial sustenance.C New Scheme repealed & replaced the erstwhile Family Pension Scheme 1971.


C It is compulsory for all the persons who were the members of the Family PensionScheme, 1971.

C Minimum 10 years contributory service is required for entitlement to pension.C Thus, pension will be payable on fulfilling:- - Minimum 10 years eligible service or - Attaining age of 58 years.

2013 - Dec [6] Write notes on the following:(iv) ‘Excluded employee’ under the Employees’ Provident Fund Scheme, 1952.

(5 marks)

PRACTICAL QUESTIONS

2008 - Dec [8] Attempt the following stating relevant legal provisions and case law, ifany:

(vi) An establishment discontinued deduction towards contribution to provident fundfrom its employees' salary and stopped remitting contribution of its share ofprovident fund when the number of its employees on rolls fell to fifteen. Do theprovisions of the Employees' Provident Funds and Miscellaneous Provisions Act,1952 cease to be applicable to the establishment under such circumstances?

(4 marks)

Answer:No, the provisions of the Employer's Provident Fund Miscellaneous Provisions Act 1952will not cease to be applicable to the establishment merely on the ground that thenumber of employees has rolled down to fifteen. Though the applicability of the Acttakes place on 20 employees yet if the number fall below, even then the Act remainsapplicable.


(ii) Raju has been employed by Fancy Bazar as a part-time sweeper to clean thefloors twice during the day. The provident fund inspector visited theestablishment and raised objections for non-inclusion of his name in the musterroll and not paying provident fund contributions. Is the view held by the inspectorvalid ? (4 marks)

Answer:(ii) The contention of the inspector is legally tenable.

As per Section 2(f) of the Employees Provident Funds and Miscellaneous Act,1952 the term ‘employee’ includes a part time employee. Thus Raju who hasbeen employed by Fancy Bazar as part time sweeper shall be covered within theambit of employee by virtue of Section 2(f) of the Act.



(v) Galaxy Hotels Ltd., located in Aurangabad (Maharashtra), is covered under theprovisions of the Employees’ Provident Funds and Miscellaneous Provisions Act,1952. Recently, it started a new restaurant in Belgaum (Karnataka) where 15employees were employed. The provident fund authorities demandedcontribution in respect of 15 employees in the new establishment contending thatit is a part of Galaxy Hotels ‘Ltd. Is the demand of provident fund authoritiesjustified ? (4 marks)

Answer:Y No, the demand of the provident fund authorities is not justified.Y It is of utmost necessity to ensure that whether there is any inter connection- some

sort of common control and financial interlinkage between the branches/department so as to establish that it the part of parent organisation.


(iii) Hotel Amravati is managed by a firm employing more than 100 employees andcovered under the provisions of the Employees’ Provident Funds andMiscellaneous Provisions Act, 1952. Some of its partners started a newrestaurant in the premises registering the restaurant as a new unit as per theapplicable State enactment. The restaurant employed 15 employees and themanagement of restaurant took a stand that the restaurant is a differentestablishment and is not covered under the Employees’ Provident Funds andMiscellaneous Provisions Act, 1952. Will it succeed ? (4 marks)

Answer:Not the management will not succeed and the provisions of the Provident Fund Actbecomes applicable to it where an establishment to which this Act applies divides itselfand operate as an independent unit. In this case, the Act is applicable to it even if thenumber of employees are less than 20.


(i) Raghu, on retirement, has withdrawn the entire amount of his accumulation inthe provident fund. Later on, he was re-appointed for a fixed tenure. Theprovident fund inspector claimed contribution in respect of the salary paid toRaghu. Is the demand made by the inspector tenable in law? (4 marks)

Answer:C The facts of the case is similar to ‘Bombay Printers Ltd. & Others v/s Union of India

& Others’C In this case, Raghu has withdrawn the entire amount of his accumulation in the

provident fund and later re-appointed.


C As per the provisions of the Act, claim made by the provident fund inspector is nottenable in law as once the employee has withdrawn the full amount ofaccumulation of the provident fund on his requirement then there is no requirementof any contribution in respect of the salary paid.


(vi) Vaibhav Rice Mills is employing 15 persons in its factory for its regular operation.During inspection, the Provident Fund Inspector found that whenever the goodsarrived and also whenever the goods were sent out of the factory premises, afew causal labourers were engaged for loading and unloading purposes. TheProvident Fund Inspector demanded the employer to comply with the provisionsof the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 onthe ground that the total number of employees (including casual labourers)exceeded 20. Is the Provident Fund Inspector justified? (4 marks)

Answer:It was held in ‘RPF’ Commissioner A.P. v/s T.S. Hariharan, SC, that the casual workersare not covered under employees for the purpose of determining the employmentstrength for complying the provisions of the Employee’s Provident Funds &Miscellaneous Provisions Act, 1952 .Thus, Provident Fund Inspector is not justified.

2013 - June [8] Attempt of the following stating relevant legal provisions and decidedcase law. If any:

(i) Sangeeta acquired a suitable plot of land from an authorised agency in Jaipurfor the construction of a dwelling house. Can Amit, husband of Sangeeta,withdraw money from his provident fund being administered under theEmployees’ Provident Funds and Miscellaneous Provisions Act, 1952 for theconstruction of the house? (4 marks)

Answer :Withdrawl from the Provident Fund can be taken subject to conditions laid down in theEmployees Provident Fund for:C purchasing a dwelling house or flat, or C for construction of a dwelling house including acquisition of a suitable site for the

purpose, or C for completing/continuing the construction of a dwelling house, already

commenced by the member or the spouse, andC an additional advance for additions/alteration or substantial improvement

necessary to the dwelling house. Thus, Amit, husband of Sangeeta can withdraw money from provident fund beingadministered under Employees Provident Funds and Miscellaneous Provisions Act,1952 for the Constitution of house.


CS Inter Gr. II

PRACTICAL QUESTIONS


(iv) Jay-Kay Ltd. employed casual workmen for a short duration of two months toexecute a contingency plan of its operations. Are the casual workmen entitledfor provident fund contribution from the employer? (3 marks)

Answer:In a case of Bikaner Cold Storage Co. Ltd. V Regional P.F. Commissioner, Rajasthan,it was held that the persons employed for a short duration, on account of some urgentnecessity or abnormal contingency, should not be considered as an employee as it isnot a regular feature of the business of the establishment. Hence casual workers arenot entitled for P.F.,contribution from the employers.

Recent Case Laws

Case Law Decision

1 P.F. InspectorV

Hariharan

It was held by the Supreme Court that casual workersare not covered under Section 1(3) of Employees'Provident Funds and Miscellaneous Provisions Act,1952 for the purposes of ascertaining the strength ofworkmen

2 P. G. Textile MillsV

Union of India

It was held in this case that a mere change in thepartnership deed does not mean that a new businesshas come into existence for the purpose of Section16(1) of the Employees' Provident Funds andMiscellaneous Provisions Act, 1952

3 Railway employees Co-operative

Banking Society

VThe Union of India

It was held that the definition of "employee" includes apart time employee , who is engaged for any work inthe establishment, a sweeper, a night watchman, agardner, etc


4 State V

S. P. Chandhani

It was held that the Providend Fund Scheme has madethe payment of contribution mandatory and the Actprovides for no exception under which an employer canavoid his mandatory liability

5 GoverdhanlalV

REPC

It was held that in case the sons of the employees arebeing paid wages , then they will be covered under thedefinition of employees for the purpose of Employees'Provident Funds and Miscellaneous Provisions Act,1952



1 Write notes on the following:‘Excluded employee’ under the Employees’ Provident FundScheme, 1952.

10 - June [6] (iv), 13 - Dec [6] (iv)

2 Times

5.257

Star Rating


On the basis of Questions included every year from a chapter jjjj


13 Employee’s State Insurance Act, 1948

This Chapter Includes: Introduction; Important Definitions; Registration of Factoriesand Establishment under this Act; Employees' State Insurance; Administration ofEmployees' State Insurance Scheme; Contributions; Corporations rights whereemployer fails to pay contribution; Employer's Other Duties and Responsibilities;Employees' Insurance Court; Exemption.



OBJECTIVE QUESTIONS



(ii) An insured person under the Employees' State Insurance Act, 1948 is entitledto receive certain benefits. But the insured person is &(a) Not entitled to receive more than one benefit for the same period(b) Entitled to receive more than one benefit for the same period on

compassionate grounds(c) Entitled to receive one benefit partly in cash and receive the other benefit in

kind for the same period(d) Entitled to receive more than one benefit on proof of authorities concerned.

(1 mark)

Answer:(ii) (a)


(ii) The disputes relating to benefits under the Employees' State Insurance Act,1948 are required to be filed in !(a) Civil Court(b) Employees' Insurance Court(c) Labour Court(d) Industrial Tribunal. (1 mark)

Answer:(ii) (b) Employee’s Insurance Court


(i) The ESI corporation to function efficiently has been provided with two wings

namely_______ and Medical Benefit Council.(v) The rate of contribution towards the Employees’ State Insurance Fund is

% and ________ % of employees’ wages by the employers and employeesrespectively. (1mark each)

Answer:(i) The ESI corporation to function efficiently has been provided with two wings

namely Standing Committee and Medical Benefit council.(v) The rate of contribution towards the Employee's State Insurance Fund is 4.75%

and 1.75% of employee's wages by the employers and employees respectively.


(iv) ‘Dependent’ under the Employees’ State Insurance Act, 1948 does not mean anyof the following relatives of a deceased insured person —

[Chapter #### 13] Employee’s State Insurance Act, 1948 (((( 5.259

(a) A widowed mother (b) A widowed grand-mother(c) A widowed daughter-in-law(d) A widow. (1 mark)

Answer:(iv) (b) A widowed grand mother


(ii) Every factory or establishment to which the Employees’ State Insurance Act,1948 applies has to be registered within —(a) 15 Days(b) 30 Days(c) 45 Days(d) 60 Days.

(iv) The term ‘wages’ under the Employees’ State Insurance Act, 1948 does notinclude —(a) Incentives (b) Over-time wages(c) Travelling allowance (d) Any other additional remuneration. (1 mark each)

Answer:(ii) (a) 15 days (iv) (c) Travelling Allowance


(ii) All contributions paid under the Employees’ State Insurance Act, 1948 and othermoneys received on behalf of the ESI Corporation shall be paid into a fund called___________. (1 mark)

Answer:(ii) Employee’s State Insurance Fund


(ii) Under the Employees’ State Insurance Act, 1948, disputes relating to thebenefits are required to be filed in the –(a) Labour Court(b) Civil Court(c) Industrial Tribunal(d) Employees’ State Insurance Court. (1 mark)


SHORT NOTES

2008 - Dec [6] Write notes of the following:(i) 'Employment injury' under the Employees State Insurance Act, 1948.

(5 marks)Answer:Employment injury means an injury caused to an employee arising out of and in thecourse of his employment being an insurable employment, whether the accident occurswithin or outside the territorial limits of India. For an employment injury there must besome nexus between the employment and the accident. Employment injury need notbe confined to employer’s premises only. It extends to time & place (theory of notionalextension)

In the decided case, it was held that mere road accident of an employee whilegoing for employment will not constitute employment injury.

2009 - June [6] Write notes on the following:(i) 'Dependent' under the Employees' State Insurance Act, 1948. (5 marks)

Answer:(i) • Defined under Section 2 (6A) of the Employees’ State Insurance Act, 1948.

• Includes following relatives of a deceased person:-• Widow, minor legitimate son, unmarried legitimate daughter

(Son/daughter may be adopted)• Widow mother

• Son/daughter though attained 18 years of age but were whollydependant on insured person at the time of death.

• Other dependents also included even in case partly depend on theinsured person.

2009 - Dec [6] Write notes on the following:(v) 'Benefits to which insured persons are entitled' under the Employees' State

Insurance Act, 1948. (5 marks)Answer:Section 46 of the Employees State Insurance Act, 1948 provides for the followingbenefits:-(a) periodical payments in case of sickness certified by medical practitioner.(b) periodical payment in case of disablement on account of employment

injury.(c) periodical payment to dependants.(d) medical treatment related payment.(e) In case of death of insured, payment at rate of ` 1500 in relation to funeral

expenses.


2010 - June [6] Write notes on the following:(ii) Purposes for which ESI fund may be expended under the Employees’ State

Insurance Act, 1948 (5 marks)

Answer:Various purposes for which ESI fund may be expended under the Employees StateInsurance Act, 1948. are as follows:-Y Payment of benefits to the insured person or their families.Y Payment in relation to any contract entered for implementing the provisions of the

Act.Y Payment of salaries to the employees of Employee State Insurance Corporation.Y Payment of fees to members of Standing Committee.

2010 - Dec [6] Write notes on the following:(iv) Employees’ Insurance Court constituted under the Employees’ State Insurance


Answer:Y Employees Insurance Court (EIC) is constituted under section 74 of the Employees

State Insurance Act, 1948.Y State Government is empowered to notify the EIC in the official Gazette.Y The judge of such court should be either-

C Judicial officer orC Legal practitioner for at least 5 years.

Y EIC needs to perform the function of both adjudicating disputes as well asdetermining the claims.

2011 - Dec [6] Write notes on the following:(ii) ‘Employment injury’ under the Employees’ State Insurance Act, 1948.

(5 marks)

Answer:Please refer 2008 - Dec [6] (i) on page no. 260

2012 - June [6] Write notes on the following:(iv) Purposes for which ESI fund may be expended under the Employees’ State

Insurance Act, 1948. (5 marks)


2012 - Dec [6] Write notes on the following:(i) Purposes for which Employees’ State Insurance Fund may be expended under

the Employees’ State Insurance Act, 1948. (5 marks)


Answer:Please refer 2010 - June (6) (ii) on page no. 261

2013 - June [6] Write notes on the following.(ii) Employees Insurance Court under the Employees’ State Insurance Act, 1948.

(5 marks)

Answer :Please refer 2010 - Dec [6] (iv) on page no. 261

2013 - Dec [6] Write notes on the following:(iii) ‘Dependent’ under the Employees’ State Insurance Act, 1948. (5 marks)

DISTINGUISH BETWEEN

2008 - Dec [7] (a) Distinguish between the following:(i) 'Principal employer' and 'immediate employer' under the Employees' State


Answer:According to Section 2(17) of the Employees' State Insurance Act, 1948 principalemployer means:-

Type of Organisation

Factory Under Control of Department of any Government Others

Occupier Appointed PersonAuthority responsible

OR for control and H.O.D.(if none is appointed) supervision

'Immediate employer' means a person, in relation to employees employed by or throughhim who has undertaken the execution on the premises of a factory or an establishmentto which this Act applies or under the supervision of principal employer or his agent, ofthe whole or any part of any work which is ordinarily part of the work of the factory onestablishment of the principal employer.

2010 - June [7] (a) Distinguish between the following:(ii) ‘Principal employer’ and ‘immediate employer’ under the Employees’ State




2011 - June [7] (a) Distinguish between the following:(i) ‘Sickness benefit’ and ‘medical benefit’ under the Employees’ State Insurance


Answer:Sickness benefit and medical benefit under the Employee's state Insurance Act, 1948.

Sickness benefit: Sickness benefit is periodical payment to any insured person in casehis sickness is certified by a duly appointed medical practitioner or by any personhaving such qualification and experience as may be specified by ESI Corporation.

Medical benefit: Medical benefit is given to an insured person or a member of hisfamily whose condition requires medical treatment and attendance. Such medical treatment may be given either in the form of out patient treatment andattendance in a hospital or dispensary, clinic etc.

2012 - June [7] (a) Distinguish between the following:(ii) ‘Principal employer’ and ‘immediate employer’ under the Employees’ State


Answer:Please refer 2008 - Dec. [7] (a) (i) on page no. 262

2013 - June [7] (a) Distinguish between the following.(ii) ‘Permanent total disablement’ and ‘permanent partial disablement’ under the

Employees’ State Insurance Act, 1948. (5 marks)

Answer :

Permanent Total Disablement C It means such disablement of a permanent nature as incapacitates an employee

for all work which he was capable of performing at the time of the accident resultingin such disablement.

C Provided that permanent total disablement shall be deemed to result from everyinjury specified in Part- I of the second schedule to the Act or from any combinationof injuries specified in Part- II thereof, where the aggregate percentage of loss ofearning capacity, as specified in the said Part- II against those injuries, amount toone hundred percent or more.

Permanent Partial Disablement

CCCC It means such disablement of a permanent nature, as reduced the earning capacityof an employee in every employment which he was capable of undertaking at thetime of the accident resulting in the disablement.

C Provided that every injury specified in Part II of the second schedule to the Actshall be deemed to result in permanent partial disablement.


PRACTICAL QUESTIONS


(i) Muskan Theatre is maintaining a canteen and a cycle stand through privatecontractors. Regional Director, ESI Corporation sent notices to the managementof the theatre for contribution of the employees engaged in the canteen andcycle stand. The management contends that they are not employees but are theworkmen of the contractor. Hence, the management is not liable. Will themanagement succeed in its contention?

(iv) An employer failed to pay his contribution under the Employees' State InsuranceAct, 1948. After 6 years, the ESI Corporation issued a demand notice forpayment of arrears of contribution. The employer contended that the arrears ofcontribution beyond 5 years are not recoverable. Will the employer succeed?

(4 marks each)

Answer:(i) No, the contention of the management of Muskan Theatre is not legally tenable.

The theatre owner is liable as principal employer for the payment of ESIcontribution in respect of workers employed in canteen/ cycle stand. In case of

Royal Talkies Hyderabad V/s ESIC, the Supreme Court held that the twooperation namely keeping a cycle stand and running a canteen are incidental tothe primary purpose of the theatre and the workers engaged therein are coveredunder the definition of employees.

(iv) In the above case, the employer contended that the arrears of contributionbeyond 5 years are not recoverable. But the employer’s contention is not tenablein law as limitation period of 5 years is not applicable in this case.


(vi) An employee was on his way to the factory. He met with an accident onekilometre away from the place of his employment. He pleaded that the injury wascaused by accident “arising out of and in the course of employment” and claimedemployment injury benefits under the Employees’ State Insurance Act, 1948. Willthe employee succeed? (4 marks)


Answer:No, the employee will not succeed.

+

It will not amount to employment injury. The Supreme Court in Regional Director ESI

V/S Frencis De Costa, held that mere road accident on a public road while theemployee was on his way to place of employment cannot be said to have its origin inhis employment in the factory.Therefore, Mohan is not entitled to benefits under the ESI Act 1948.


(ii) XYZ Ltd., employing more than 50 workmen in its factory, failed to registeritself and pay contributions under the Employees’ State Insurance Act, 1948.The inspector of the ESI Corporation issued a notice to the company anddirected it to register and pay contributions towards its employees. On failureto comply with the terms of notice, ESI Corporation determined thecontributions payable by the company and demanded payment with interestand penalty. The company disputed its liability and asked the ESI Corporationto approach the ESI Court for adjudication of the claim. Is the companyjustified? (4 marks)

Answer:C In the above case, XYZ Ltd. employed more than 50 workmen in its factory. C XYZ Ltd. (employer) denies the liability or applicability of the provisions of the Act.C Employee’s State Insurance Act, 1948 does not stipulate as to who has to

approach the Employees Insurance Court. C In this case, employer is not justified as by general implication of law, employer

should approach the Employees Insurance Court rather than the ESI Corporation.

2012 - June [8] Attempt the following stating relevant legal provisions and decided caselaw, if any:(v) Visual Electronics Ltd. sells household consumer durables such as TV,

washing machines, electric stoves, etc., of various manufacturers in its salesoutlet. While delivering these items to the homes of the customers, it deputesits employees to install and explain the salient features of these items. It paysits employees an additional amount of defray for the actual travellingexpenses. The Employees’ State Insurance Corporation demandedcontribution on this additional payment including travelling expenses under thehead ‘wages’. Is the demand of Employees’ State Insurance Corporationjustified ? (4 marks)


Answer:In the above case, the employer is not liable to pay contribution on travelling allowance.C Travelling allowance does not form part of wages as defined under Section 2 (22)

of the ESI Act as held in ‘S. Ganeshan v/s The Regional Director, ESI Corporation.’C Demand of Employee’s State Insurance Corporation is not justified.


(iii) Lecktronics Ltd. is an establishment covered under the Employees’ StateInsurance Act, 1948. The salesmen of the company were paid a commission@ 10 % of the sales done by them every month. The ESI Inspector asked theemployer to deposit contributions (the sum of money payable to the ESICorporation by the principal employer in respect of an employee) in respectof the commission paid. Is he justified? Give reasons. (4 marks)

Answer:According to ESI Act, 1948 wages includes any remuneration paid at intervals notexceeding two months. The employee receives incentives/ commission in addition towages. As the commission is paid every month, the ESI Inspector can ask the employerto deposit contributions.

2013 - June [8] Attempt of the following stating relevant legal provisions and decidedcase law.

(ii) An employer failed to pay his contribution under the Employees’ StateInsurance Act, 1948 for six years. After the lapse of six years, the ESICorporation issued a demand notice for payment of arrears of contribution.The employer contended that the arrears of contribution beyond 5 years arenot recoverable. Will the employer succeed? (4 marks)

Answer :C The ESI Corporation can recover employer’s contribution even after lapse of five

years.C The Supreme Court in the case of ESIC V CC Santha Kumar has held that the

limitation period of 5 years specified under Section 77 of the ESI Act to bring anaction before the Employees Insurance Court is not applicable in case ofdetermination of the contribution payable under section 45 A of the ESI Act,1948.

C Therefore, the contention of the employer that the ESI Corporation cannot recoverthe dues pertaining to the period prior to five years, is not tenable in law.


CS Inter Gr. II


2005 - Dec [7] {C} (a) Discuss the following: (ii) Benefits under the Employees' State Insurance Act, 1948. (5 marks)

Answer:Employees State Insurance Act 1948 provides benefits to both Insured person anddependants in the following ways: 1. Provide periodical payment in case of sickness certified by medical practitioner.2. Provides medical treatment to an insured person.3. Periodical payment to dependants of insured person.4. Provides payment in case the insured person is suffering from disablement as a

result of employment injury.

5. Payment of funeral expenses at the prescribed rate of ` 1,500/-

PRACTICAL QUESTIONS


(vi) Raju is an employee in an establishment governed by the Employees' StateInsurance Act, 1948. His principal employer defaults in making his contributionto the ESI Fund resulting in Raju becoming disentitled to the benefits under theAct. What is the remedy available to him? (3 marks)

Answer:Under Section 40 of ESI Act it is the primary duty of an employer to pay both hiscontribution and employee’s contribution in the first instance subject to the right ofreimbursement.In the given case Raju can approach the ESI Corporation to seek the remedy as theemployer has made a default by not making required contribution.ESI corporation afterwards may recover the amount as if it were an arrear of landrevenue.


(vi) A worker was injured by his negligent act while knocking the belt of a movingpulley. Does it amount to an employment injury under the Employees' StateInsurance Act, 1948? (3 marks)


Answer:

Yes, it amounts to employment injury. In decided case of Jayanthilal Dhanji Co. V/s

ESIC, a worker was injured while knocking the belt of the moving pulley, though theinjury caused was due to his negligence, yet such an injury amounts to an employmentinjury.


(v) While fixing total remuneration, the employer included travelling allowance aspart of the remuneration of an employee. The employee claimed that theemployer has to include travelling allowance also for the purpose of payment ofcontribution towards ESI fund. Will he succeed ? (3 marks)

Answer:The employee will not be able to succeed in the given case as travelling allowance paidto the employee does not form the part of wages and thus cannot be included for thepurpose of payment of contribution towards ESI fund

Case: S. Ganesan V the Regional Director, ESI Corporation.


(i) There was a canteen and a cycle stand run by a private contractor in a theaterpremises. Is the theater owner liable to pay ESI contribution as ‘principalemployer’ ? (3 marks)

Answer:The theater owner is liable as principal employer for the payment of ESI contribution in

respect of workers employed in canteen/ cycle stand. In case of Royal Talkies

Hyderabad V/s ESIC, the Supreme Court held that the two operation namely keepinga cycle stand and running a canteen are incidental or adjuncts to the primary purposeof the theater and the workers engaged therein are covered under the definition ofemployees.

2007 - June [7] {C} (b) Attempt of the following stating relevant legal provisions andcase law, if any:(vii) Bahadur, an employee deputed by the management to participate in a football

match, met with an accident resulting in his death while on his way to theplayground. Is it an ‘employment injury’ under the Employees’ State InsuranceAct, 1948 ? (3 marks)


Answer:Yes, it is an employment injury. Employment injury need not be confined to any injurysustained by a person within the premises. For an employment injury there must be anexus between the circumstances of an accident and the employment. The theory ofnotional extension will be applied in this case.

2007 - Dec [7]{C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:

(ii) A notice of dismissal is given by an employer to Mukesh, an employee who is inreceipt of sickness benefit under the Employees’ State Insurance Act, 1948. Hasthe employer the right to dismiss Mukesh during the period he is in receipt ofsickness benefit? Give reasons. (3 marks)

Answer:The Employer has no right to dismiss Mukesh during the period he is in receipt ofsickness benefits.Under Section 73 of ESI Act, the employer cannot discharge or reduce or punish anemployee during the period the employee is in receipt of sickness benefit or maternitybenefits.

Recent Case Laws

Case Law Decision

1 Regional Director,E.S.I. Corpn.

VL. Ranga Rao

It was held that there should be a nexus or casualconnection between the accident and employment.The place or time of accident should not be totallyunrelated to the employment for covering under thedefinition of" employment injury" under the Act.

2 Regional Director,E.S.I.

VFrancis de Costa

It was held in this case by the Supreme Court that amere road accident on a public road while employeewas on his way to the place of employment cannot besaid to have its origin in his employment in the factoryand cannot be termed as "employment injury" underthe Act

3 Jayanthilal Dhanji Co.V

E.S.I.C.

It was held that in case a worker was injured whileknocking the belt of the moving pulley, though theinjury was caused due to the negligence of worker ,yet it amounts to " employment injury".


4 E.S.I.C.V

M.M. Suri &Associates Pvt.Ltd.

It was held that for applicability of the Employees'State Insurance Act,1948, it is not sufficient that 20persons are employed in the shop. Important factor isthat they should be employee as per the provisions ofSection 2(9) of the Act.

5 Hyderabad AsbestosCement Products,etc

VE.S.I.C.

It was held that even though the offices are located indifferent towns, the persons employees in zonaloffices and branch offices of a factory and concernedwith administrative work or the work of canvassingsale would be employee under the Employees' StateInsurance Act,1948



1 Distinguish between ‘Principal employer’ and ‘immediateemployer’ under the Employees’ State Insurance Act, 1948.

08 - Dec [7] (a)(i), 2010 - June [7] (a)(ii)

2 Times

2 Write notes on ‘Employment injury’ under the Employees’State Insurance Act, 1948.

08 - Dec [6] (i), 11 - Dec [6] (ii)

2 Times

3 Write notes on the following:Purposes for which ESI fund may be expended under theEmployees’ State Insurance Act, 1948.

10 - June [6] (ii), 12 - June [6] (iv), 12 - Dec 6 (i)

3 Times

4 Distinguish between the following:‘Principal employer’ and ‘immediate employer’ under theEmployees’ State Insurance Act, 1948.

08 - Dec [7] (a) (i), 12 - June [7] (ii)

2 Times

5 Write notes on Employees’ Insurance Court constitutedunder the Employees’ State Insurance Act, 1948.

10 - Dec. [6] (iv), 13 - June [6] (ii)

2 Times

6 Write notes on the following‘Dependent’ under the Employees’ State Insurance Act,1948. 09 - June [6] (i), 13 - Dec [6] (iii)

2 Times

5.271

Star Rating


On the basis of Questions included every year from a chapter jjj


14 Employee’s Compensation Act, 1923

This Chapter Includes: Object and Scope; Definitions; Employees; Disablement;Employer's Liability for Compensation; Remedies of Employer against Employer;Proceedings before the Commissioner; Appeals; Penalties; Special Provisions;Schedule.


Amendment in Employees’ Compensation Act, 1923

CCCC The Workmen’s Compensation Act, 1923 has been renamed as the Employees’Compensation Act, 1923

C For the words “Workman” and “Workmen” the words “Employee” and “Employees”have been substituted respectively for making the Act gender neutral.

C The Amendment has been brought about by the workmen’s compensation(Amendment) Act, 2009 came into force on January 18, 2010.


C For the purpose of calculation of compensation under the Employees’Compensation Act, 1923 monthly wages has been increased by the governmentand minimum rates of compensation for permanent total disablement and death areincreased from ` 80,000/- and ` 90,000/- to ` 1,20,000 and ` 1,40,000/-respectively.


OBJECTIVE QUESTIONS


(i) To make an employer liable under the Employees’ Compensations Act, 1923,it is necessary that the injury is caused by an accident which must arise -(a) Out of employment(b) In the course of employment(c) Out of employment and in the course of employment (d) By any other reason. (1 mark)

Answer:(i) Ans.(c)


(v) Contracting out of compensation by a Employee under an agreement shall be . (1 mark)

Answer:(v) Contracting out of compensation by a Employee under an agreement shall be

void.2009 - June [7] (c) Choose the most appropriate answer from the given options inrespect of the following.(iv) An employer is not liable to pay compensation under the Employees’

Compensation Act, 1923, if the injury does not result in disablement for a periodexceeding !(a) 1 week(b) 3 days(c) 1 month(d) 6 months. (1 mark)

Answer:(iv) (b) 3 days

[Chapter #### 14] Employee’s Compensation Act, 1923 (((( 5.273

2009 - Dec [7] (b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s):(iv) The employer is not liable for compensation when injury to the Employee does

not result in disablement for a period exceeding_________days.(v) The employer is required to send a report to the Commissioner for Employees’

compensation within_________days of the death or serious injury of anemployee. (1 mark each)

Answer:(iv) The employer is not liable for compensation when injury to the Employee does

not result in disablement for a period exceeding three days.(v) The employer is required to send a report to the commissioner for Employees‘

compensation within seven days of the death or serious injury of an employee.


(v) Under the Employees’ Compensation Act, 1923, the employer shall not be liablewhen the injury does not result in disablement for a period exceeding days. (1 mark)

Answer:(v) Under the Employees’ Compensation Act, 1923, the employer shall not be liable

when the injury does not result in disablement for a period exceeding three days.


(iv) The minimum amount of compensation in case of permanent total disablementis—(a) ` 1,20,000(b) ` 90,000(c) ` 80,000(d) 70,000. (1 mark)

Answer: (b) ` 1,20,000


(ii) An employee is not entitled to apply under the Employees’ Compensation Act,1923, if he seeks remedy for grant of compensation in a________. (1 mark)

Answer:(ii) An employee is not entitled to apply the Employees’ compensation Act, 1923, if

he seeks remedy for grant of compensation in a civil court.



(i) Any contract whereby an employee relinquishes any right of compensation fromthe employer shall be _________. (1 mark)

Answer:(i) Null and void


(v) Under the Employees’ Compensation Act, 1923, the Commissioner forEmployees’ Compensation shall not entertain any claim unless it is preferredbefore him on the occurrence of the accident, within —(a) 1 Week(b) 6 Months(c) 1 Year(d) 2 Years. (1mark)

Answer:(v) (d) 2 years.


(iii) Compensation under the Employees’ Compensation Act, 1923 becomes due —(a) On the date of death/accident of the Employee(b) On the date of order of the Commissioner for Employees’ compensation(c) On the completion of one month from the date of accident(d) On demand from the Employee. (1 mark)

Answer:(iii) (a) On the date of death/accident of the Employee


(iii) Which of the following injuries does not come under the term ‘personal injury’under the Employees’ Compensation Act, 1923 —(a) Nervous shock(b) Mental strain(c) Loss of money(d) Breakdown. (1 mark)

Answer:(c) Loss of Money



(iv) The period within which an employer must make a deposit with theCommissioner, if he is liable to pay compensation under the Employees’Compensation Act, 1923 is—(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 60 days of being served the notice. (1 mark)


(iv) What is the period within which an employer must make a deposit with theCommissioner for Employees’ Compensation if he is liable to pay compensationunder the Employees’ Compensation Act, 1923 !(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 40 days of being served the notice. (1 mark)

Answer :(iv) (c) within 30 days of being served the notice.


(iv) What is the period within which an employer must make a deposit with theCommissioner for employees’ compensation if he is liable to pay compensationunder the Employees’ Compensation Act, 1923 –(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 40 days of being served the notice. (1 mark)


SHORT NOTES

2010 - June [6] Write notes on the following:(vi) Theory of notional extension of employment under the Employees’

Compensation Act, 1923. (5 marks)

Answer:The theory of notional extension of employment means that the concept of duty is notlimited to the period during which the employee actually starts his work and end whenhe finally stops at last. It extends to time and place. The theory is based on therelevance of the phrase in the course of employment. If the presence of a employee isrelated with somewhere to his employment, and the accident tooks place then it wouldbe considered to be arising in course of employment.

2010 - Dec [6] Write notes on the following:(ii) The concept of ‘compensation’ under the Employees’ Compensation Act, 1923.

(5 marks)

Answer:Y Section 2(1)(c) of the Employees’ Compensation Act, 1923 defines ‘Compensation’

to mean.Y Schedule II & III provide for the diseases in relation to which the Employee is

entitled to receive compensation.Y Compensation is to be paid by the employer when Employee (as provided in

schedule II) meets with an accident resulting in some disability (as specified inschedule III)

Y The amount of compensation (calculated using factor specified in schedule IV)needs to be paid as soon as it falls due.

2011 - Dec [6] Write notes on the following:(iv) ‘Partial disablement’ under the Employees’ Compensation Act, 1923.

(5 marks)

Answer:Please refer 2004 - June [7] {C} (a) (ii) on page no. 281

2012 - June [6] Write notes on the following:(i) The theory of notional extension of employment under the Employees’


Answer:

Please refer 2010 - June [6] (vi) on page no. 276


DISTINGUISH BETWEEN

2008 - Dec [7] (a) Distinguish between of the following:(iii) 'Partial disablement' and 'total disablement' under the Employees’ Compensation


Answer:

For Partial Disablement !!!! Please refer 2004 - June [7] {C} (a) (ii) on page no. 281

Total Disablement !!!! “Total disablement” means such disablement whether of atemporary or permanent nature, which incapacitates an employee for all work which hewas capable of performing at the time of accident resulting in such disablement.

! Total disablement can also be classified as temporary total disablement andPermanent total disablement.

2009 - Dec [7] (a) Distinguish between the following:(iii) 'Arising out of employment' and 'arising in the course of employment' under the

Employees’ Compensation Act, 1923. (5 marks)

Answer:(iii) The term ‘arising out of employment indicates that there exists some causal

connection between the accidental injury and the employment. The casualconnection as referred above should be proximate and not remote.

On the other hand, the term ‘arising in the course of employment’reflects the fact that at the time of accident, the Employee was employed in theperformance of his duties and accident took place at or about the place wherehe was rendering his services.

2010 - Dec [7] (a) Distinguish between the following:(ii) ‘Partial disablement’ and ‘total disablement’ under the Employees’


Answer:Please refer 2008 - Dec [7] (a) (iii) on page no. 277

2013 - June [7] (a) Distinguish between the following.(i) ‘Arising out of employment’ and ‘arising in the course of employment’ under the


Answer :Please refer 2009 - Dec [7] (a) (iii)on page no. 277


PRACTICAL QUESTIONS


(ii) The services of employee engaged on casual basis for doing a particular urgentwork were terminated after the completion of the said work. Employee soughtcompensation as the termination amounted to retrenchment. Will they succeed ?

(4 marks)(vii) An employee, who was a carpenter, had to get his left arm amputated from

elbow in an injury caused in the course of employment. The company paidcompensation towards partial permanent disablement. The employee demandedcompensation claiming it to be total disablement. Will the employee succeed ?

(4 marks)Answer:

(ii) No, the employee shall not be entitled to claim retrenchment compensationsince they were only casual employee. Section 25F provides for the payment ofretrenchment compensation to employee who is in continuous service for notless than a year.

(vii) In the above case, the employee (Ramu) got amputated from elbow in an injury.It was decided by the Supreme Court in a famous case of 'Pratap Narain SinghDeo V Sriniwas Sabata that the above facts suggest that it is a totaldisablement as the carpenter will not be able to carry his work with one hand inthis case. It will not be considered as a partial disablement.


(ii) Rajat, an employee in a factory, had no vision in his left eye but the defect wasnot visible. Later, during welding operations, accidentally, a spark hit his blindeye. He lost his eye-ball and the blindness became visible. Though, there wasno physical disability, he lost his employment because the defect became visible.Has the accident caused any disablement? Is the employer liable to pay anycompensation ? (4 marks)

(vii) Rohit lost his mental balance as a result of an injury by accident and committedsuicide. Is the employer liable to pay compensation under the employees’compensation Act, 1923? (4 marks )


Answer:(ii) In the above case, Rajat had no vision in his left eye but the defect was not

visible. Later, a spark hit his blind eye and lost his eye-ball and the blindnessbecame visible. He lost his employment as the defect became visible. Thisaccident has resulted in total disablement. The employer will be liable to pay thecompensation. The employee will be able to receive compensation from theemployer. Related Case law !!!! Katras Jherriah Cool Co. Ltd v/s Kamakhya Paul, 1976; itwas held that where the worker lost his vision of one eye permanently in anaccident in course of his employment in colliery the compensation should beassessed in accordance with item 26 part II schedule I.

(vii) If the injury is caused out of and in course of employment then the employeeshall be entitled for compensation. In the above case, suicide is caused due tothe effect of injury. Hence in the above case, the employer is liable to paycompensation under the employees’ Compensation Act, 1923


(vi) Jugal, a railway employee was ordered to travel to certain station and repair apipeline there. After finishing the work, Jugal was hurrying across the platformwhen he slipped and fell and died as a result of the fall. Is the employer liable topay compensation under the Employees’ Compensation Act, 1923 ? (4 marks)

Answer:Yes, the employer will be liable to pay compensation to Jugal under the employees’Compensation Act, 1923 since death of the employee arose out of and in the courseof employment. As per the provisions of employees’ Compensation Act, 1923 anemployer is liable to pay any employees’ in case injury is caused to an employee by anaccident arising out of and in the course of employment. Since the death of Jugal whowas as railway employee occurred in course of employment the same acts as a validground for claiming compensation.


(i) A driver of bus belonging to the employer was involved in an accident whichresulted in the impairment of free movement of his left hand disabling him fromdriving vehicles. He was, however, capable of performing other work. He claimedcompensation contending that the said accident had resulted in permanentdisablement of driving vehicles. Will he succeed? (4 marks)

Answer:No. The driver will not succeed.

+Please refer 2007 - June [7] {C} (b) (i) on page no. 282



(vi) Sajid lost his mental balance as a result of an injury by accident and committedsuicide. Is the employer liable to pay compensation under the employees’Compensation Act, 1923 ? (4 marks)

Answer:Yes, the legal heir of Sajid will be entitled to receive compensation Y Suicide committed by Sajid was the result of the mental trauma that he suffered on

account of injury.Y If the injury arises in course of employment, suicide taking place consequently will

also be within the scope of employment. Y Thus, the employer will be liable to pay compensation under the employees’

Compensation Act, 1923.


(iv) An industrial establishment engaged an employee to assist in one or the otheroperational work incidental to its main industrial operation. However, theemployer denied such an employee the status of an employee on the groundthat his work was not directly connected with the main operation of the industrialestablishment. Can the management do so? Give reasons in support of youranswer.

(vi) A bank made certain appointments on regular basis. On scrutiny later on, thebank found that the appointment of an employee was irregular and contrary toits rules. His services were, therefore, terminated. The aggrieved employeeapproached the court against the termination by the bank. Will he succeed? Givereasons. (4 marks each)

Answer:(iv) In one of the decided cases it was held that, an employee/workman who is not

directly involve in actual operations of the company, but is involved in operationswhich are incidental to the main operations of the company then in that case, theemployee employed in incidental operations will also be regared as employeeand hence will be entitled to all the benefits. Thus in the present case, theemployee was engaged to assist in any operation incidental to the mainindustrial operations, he is an employee and entitled to benefits as such.

(vi)C In the above case, the bank has terminated the services of the employee after

duly complying with the rules of the recruitment procedureC The employee will not succeed as held in the case of ‘Prabhu Dayal Jat V Alwar

Sehkari Bhumi Vikas Bank Ltd. ( 1997).C It was a fit case of retrenchment/ termination & his termination is lawful.


CS Inter Gr. II


2004 - June [7] {C} (a) Discuss the following:(ii) 'Temporary partial disablement' and 'permanent partial disablement' under the


Answer:Disablement is define as reduction in the capacity to work. Partial Disablement means“any disablement as reduces the earning capacity of an employee as a result of someaccident.

Partial Disablement may be6 Temporary Disablement6 Permanent DisablementTemporary Partial Disablement is defined under the act as any disablement as reducesthe earning capacity of an employee in that employment in which he was engaged atthe time of accident.On the other hand, Permanent partial Disablement has been defined as anydisablement which reduces the earning capacity of employee in every employmentwhich he was capable of undertaking at the time of injury.

PRACTICAL QUESTIONS


(iv) A cart-man was engaged by a rice mill to carry rice bags from the mill to railwaystation. The cart-man met with an accident on a public road while returning backand died. The rice mill owner claimed that there was no need to paycompensation as per sections 12, 12(1) and 12(4) of the employees’Compensation Act, 1923. Will he succeed? (3 marks)

Answer:) No the rice mill owner will not succeed.

) The facts are similar to that of Bhuvaneshwari Rice Mills V/s Mannava Pullayya

) In this case it was held that the term 'premises' would cover in its ambit not only therailway station but even to the adjoining route.

) As far as Section 12 of the Employees’ Compensation Act is considered, it clearlycast the responsibility on the owner.



(ii) Sonu and Raju are working as 'gardeners' to look after the garden attached tothe bungalow provided by the company to the managing director. Can they betreated as employee? (3 marks)

Answer:) Yes, Sonu and Raju can be regarded as employee since their exist the relationship

of master and servant which act as key test criteria to check whether one is to beregarded as employee or not.

) As evident from the facts of the question, these gardeners were provided by thecompany hence, their appointment, termination, remuneration, overall control liesin the hands of the company.

) Thus, by virtue of the provision of the Industrial Dispute Act, 1947 also, thegardners fall within the category of employee.


(v) Kutumb Ltd. has a factory in a sub-urban place near Chennai. The companynominated the works manager at the factory as its occupier. There was a fire inthe factory premises resulting in injuries to workmen. The enquiry revealed thatthe accident occurred due to the negligence of supervisory personnel. Will theworks manager be held liable? (3 marks)

Answer:The facts of above question are similar to the case of

'J.K Industries Ltd V. Chief Inspector of factories.In the above case, the work manager will not be liable.


(i) A driver of a bus was involved in an accident which impaired the movement ofhis left hand. He claimed compensation for permanent total disablement underthe Employees’ Compensation Act, 1923. The employer contested the claimstating that the driver is capable of performing other duties. Will the driversucceed ? (3 marks)

Answer:) No, the driver will not be able to succeed in getting the claimed compensation since

the injury incurred in the instant case does not fall within the category of 1st

schedule which are accepted to result in permanent total disablement.) The given facts are similar to that of:

Divisional Manager KSRTCV/sBhimiah


) From the facts provided, it is evident that though the accident has impaired themovement of his left hand yet the driver is capable of performing other duties.

) Even in the case of General Manger, GIP Rly V/s Shankar it was held that if due toan accident the worker has become disabled and cannot do a particular job but ofcapable of doing other jobs, he can be entitled to compensation for partialdisablement and not permanent total disablement.

2007 - Dec [7]{C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(iv) A Municipal Board entrusted electrification work of a town to State employees. A

an employee employed by the State received injuries while doing his work. Whois liable to pay compensation to the employee and why? (3 marks)

Answer:In the above case, state will be liable to pay compensation to the employee as in theAct, the employer will be liable, if the work done is a part of the trade or business of theemployer. In this case, execution of electrical project is not the ordinary business of theMunicipal Board. Hence it is the state & not the board, which is liable to paycompensation to the employee.


(ii) A worker after an accident became partially disabled and could not do his earlierwork. However, the employer offered him another kind of job which he could dowithout any difficulty. Despite the offer of another job, the employee demandedcompensation for partial disablement. Will he succeed ?

(iii) An electrician, who had to go frequently to a heating room from a cooling plant,contracted pneumonia which resulted in his death. Will it be construed as‘physical injury’ ? (3 marks each)

Answer:(ii) Even though the employer has offered the employee who became partially

disabled, another job which he could very well carry out even after suffering fromdisability, the employee remains eligible to claim compensation. Hence, theemployee shall succeed in claiming compensation.

(iii) Yes, the electrician shall be entitled to receive compensation for his death on theground of personal injury since his death was due to pneumonia which wasinturn causes by frequent visit to heating and cooling room.


Recent Case laws

Case Law Decision

1 Baijnath SinghV

O.T. Railway

It was held that a contractor falls within the definitionof employer under the Employees' Compensation Act,1923 . Moreover, a General Manager of a Railway isan employer.

2 Ball V

William Hunt & SonsLtd

It was held that if due to any physical defect, aworkman is unable to get any work of his classordinarily performs, and has thus lost the power to earn, he is entitled to compensation for total disablement. Itis immaterial that workman is physically fit to performsome work

3 Mangru PaljiV

Robinsons

It was held that the loss of physical capacity is coextensive with loss of earning cpacity but loss ofearning is not so co-extensive with loss of physicalcapacity as he may be getting the same wages eventhough there may be loss of physical capacity.

4 Naima BibiV

Lodhne Colliery

In this case, a workman while returning home after dutywas murdered within the premises of the employer , itwas held that there was a casual and proximateconnection between the accident and the employmentand thus his wife is entitles for compensation under theEmployees' Compensation Act ,1923

5 MackenzieV

I.M.Issak

It was held in this case that if the accident hadoccurred on account of a risk which is an incident ofthe employment , he claim for copensation mustsucceed unless of course the workman has exposedhimself to do an added peril by his own imprudence

6 Smt. Jayaamma V

Executive Engineer,P.W.D. Madhugiri

Division

It was held that in Employees' CompensationAct,1923, the compensation becomes due on the deathof employee and not when Commissioner decides it


7 Laxmibai Atma RamV

Bombay Port Trust

In this case a workman suffers from heart disease anddies on account of strain of work by keepingcontinuosly standing or working, then it was held thatthe accident arose out of employment and thus eligiblefor compensation



1 Practical Questions of 07 - June [1] {C} (b)(i), 10 - June [8](i)

2 Times

2 Distinguish between the following ‘Partial disablement’ and‘total disablement’ under the Employees’ CompensationAct, 1923. 08 - Dec [7] (a) (iii), 10 - Dec [7] (a) (ii)

2 Times

3 Write notes on the following:The theory of notional extension of employment under theWorkmen’s Compensation Act, 1923.

10 - June [6] (vi), 12 - June [6] (i)

2 Times

4 Distinguish between 'Arising out of employment' and 'arisingin the course of employment' under the Workmen'sCompensation Act, 1923. 09 - Dec [7] (a) (iii),

013 - June [7] (a) (i)

2 Times

5.286

Star Rating




15 Contract Labour

(Regulation and Abolition)

Act, 1970

This Chapter Includes: Introduction; Objects; Application and Scope of the Act;Constitutional validity of the Act; Important Definition; The Advisory Boards;Registration of establishments employing Contract Labour; Penalties andProcedure; Inspectors; Maintenance of Records and Registers; Effects of Laws andAgreements Inconsistent with the Act; Powers to exempt in special cases and tomake rules.


[Chapter #### 15] Contract Labour Act, 1970 (((( 5.287


OBJECTIVE QUESTIONS


(iv) Under the Contract Labour (Regulation and Abolition) Act, 1970, the principalemployer of an establishment can employ contract labour if -(a) The principal employer has not obtained the certificate of registration(b) The work is of urgent nature(c) The work is not of perennial nature(d) The work provides instant employment to a considerable number of

unemployed persons. (1 mark)

Answer:(iv) (c)


(ii) It is mandatory to register an establishment under the Contract Labour(Regulation and Abolition) Act, 1970 in case it employs labour througha contractor. (1 mark)


(ii) It is mandatory to register an establishment under the Contract Labour

(Regulation and Abolition) Act, 1970 in case it employs equal to 20 or abovelabour through a contractor.


(iv) The Contract Labour (Regulation and Abolition) Act, 1970 applies to everyestablishment wherein workmen employed on any day of the preceding 12months are—(a) 100 or more(b) 50 or more(c) 20 or more(d) 200 or more. (1 mark)

Answer:(iv) (c) 20 or more



(v) The Contract Labour (Regulation and Abolition) Act, 1970 applies to everyestablishment or contractor wherein workmen employed on any day of thepreceding 12 months shall be—(a) 100 Workmen or more(b) 20 Workmen or more(c) 50 Workmen or more(d) 10 Workmen or more. (1 mark)

Answer: (b) 20 workmen or more.


(iii) The Contract Labour (Regulation and Abolition) Act, 1970 shall not apply toestablishments in which work is of ___________. (1 mark)

Answer:(iii) The contract labour (Regulation and Abolition) Act, 1970 shall not apply to

establishment in which work is of casual nature.


(ii) It shall be the duty of the _________to pay wages to the contract labour.(v) The Contract Labour (Regulation and Abolition) Act, 1970 applies to every

establishment or contractor wherein________ or more workmen are or wereemployed on any day of the preceding 12 months as contract labour.

(1 mark each)

Answer:(ii) Contractor (v) Twenty


(iii) As per the Contract Labour (Regulation and Abolition) Act, 1970 and the centralrules, in case the work is completed before the expiry of the wage period, finalpayment shall be made within —(a) 24 Hours of the last working day(b) 48 Hours of the last working day(c) 7 Days of the last working day(d) 3 Days of the last working day. (1 mark)


Answer:(iii) (b) 48 hours of the last working day


(v) The Contract Labour (Regulation and Abolition) Act, 1970 shall not apply toestablishments in which work only of ____________ is performed. (1 mark)

Answer:(v) Casual nature


(iv) The employment of contract labour can be prohibited —(a) By an order of the labour court(b) By notification of the Government(c) When the number of workmen exceeds 50(d) By the Central Advisory Board. (1 mark)

Answer:

(iv) (b) By notification of the Government


(v) The establishments which have been exempted from the purview of the ContractLabour (Regulation and Abolition) Act, 1970 are—(a) Establishments where manufacturing work is performed(b) Establishments where metal work is performed(c) Establishments where embroidery work is performed(d) Establishments where work of intermittent nature is performed. (1 mark)

Answer:(v) (d) Establishment where work of intermittent nature is performed.

SHORT NOTES

2008 - Dec [6] Write notes of the following:(ii) 'Prohibition of employment of contract labour' under the Contract Labour

(Regulation and Abolition) Act, 1970. (5 marks)

Answer:Section 10 of the Contract Labour (Regulation and Abolition) Act 1970 empowers theGovernment to prohibit in any process or operation, the use of contract labour aftertaking into consideration the following factors:-


• Neccessity of such process in trade.• Duration, being perennial or otherwise. • Work ordinarily being performed by whom.• Number of regular workmen.

2009 - June [6] Write notes on the following:(iv) 'Obligations of the principal employer' under the Contract Labour (Regulation

and Abolition) Act, 1970 (5 marks)

Answer:Under the Contract Labour (Regulation and Abolition) Act, 1970 a contractor is

required to provide canteens, rest-rooms, latrines, drinking water, washing facilities andfirst aid facilities for the use of contract labour. (Section 16-19)

If a contractor fails to provide the prescribed amenities, then the principal employerwill be liable to provide such amenities. The principal employer can recover suchexpenses from the contractor. (Section 20)

Besides, the contractor is required to pay wages and a duty is cast on him toensure disbursement of wages in the presence of the authorised representative of theprincipal employer. An obligation is also cast on the principal employer to nominate arepresentative duly authorised by him to be present at the time of disbursement ofwages.

In case of failure on the part of the contractor to pay wages either in part or in full,the principal employer is liable to pay the same and recover the amount so paid fromthe contractor either by deduction from any amount payable to the contractor under anycontract or as a debt payable by the contractor. (Section 21) 2010 - June [6] Write notes on the following:

(v) Prohibition of employment of contract labour under the Contract Labour(Regulation and Abolition) Act, 1970. (5 marks)

Answer:The steps which should be taken by an appropriate government before issuing anotification prohibiting employment of contract labour in any process, operation or otherwork are:) They should appoint a committee to investigate the establishment under the order

of abolition of contract labour ) It should follow the proper procedure laid under the Act.) It should amend the act by incorporating a suitable provision or refer to industrial

adjudicator the question of the direct employment of the contract workers of the excontractor in principal establishment, when the appropriate government abolishesthe contract labour.


2012 - Dec [6] Write notes on the following:(ii) Licensing of contractors under the Contract Labour (Regulation and Abolition)


Answer:C According to the provisions, no contractor can undertake or execute any work

through contract labour except under and in accordance with the license issued inthat behalf by the licensing officer.

C Licence may contain conditions relating to: - hours of work - fixation of wages - essential amenities in respect of contract labour.

C The license is issued on payment of prescribed fees.C This license is non- transferable.

2013 - June [6] Write notes on the following:(iii) Responsibility of the contractor under the Contract Labour (Regulation and

Abolition) Act, 1970. (5 marks)

Answer :A workman shall be deemed to be employed as contract labour in or in connection withthe work of the establishment when he is hired in or in connection with such work by,or through a contractor, with or without the knowledge of principal employer.The various facilities to be provided relating to welfare and health of a contract labourare as under:

(i) Canteen: The appropriate government may frame rules, wherein contract labournumbering 100 or more is employed by a contractor. Where such rules areframed it is the contractor who is under liability to provide a provision of canteenfacilities for employees.

(ii) Rest Room: The contractor is under an obligation to provide rest room facilitywhere the workers are required to stay at night.The rest room must be ventilated and properly lightened.

(iii) Some other facilities may include:) Drinking water facility) Washing facilities) First Aid facilitiesThe primary liability of providing all these facilities is on contractor who employthe contract labour. On the failure of contractor to provide such facility, theprincipal employer becomes liable for providing such facility.


2013 - Dec [6] Write notes on the following:(v) Provisions relating to health and welfare of contract labour under the Contract

Labour (Regulation and Abolition) Act, 1970. (5 marks)

DISTINGUISH BETWEEN

2011 - Dec [7] (a) Distinguish between the following:(iii) ‘Principal employer’ and ‘contractor’ under the Contract Labour (Regulation and

Abolition) Act, 1970. (5 marks)

Answer:

Principal Employer:C Section 2(1) (g) of the Contract Labour (Regulation & Abolition) Act, 1970 defines

the term principal employer.C The owner/ head of the factory/mine/department shall be considered as the

‘principal employer’C There are certain obligation which lies on the principal employerC In case of failure on the part of the contractor to pay wages either in part or in full,

the principle employer is liable to pay the same & recover the amount so paid fromthe contractor

Contractor: C Section 2(1) (c) of the Act describes the term ‘contractor’ C Contractor means who works with contract labour or who supplies the contract

labour for any work of the establishmentC The term contractor also includes sub-contractor C A contractor is required to provide canteens, restrooms, drinking water, washing

facilities & first aid facilities for the use of contract labour.

2013 - Dec [7] (a) Distinguish between the following:(i) ‘Principal employer’ and ‘contractor’ under the Contract Labour (Regulation

and Abolition) Act, 1970. (5 marks)


PRACTICAL QUESTIONS


(i) A contractor made short payment of wages to a worker employed by him ascontract labour. The worker sought the amount due from the principal employer.Will he succeed? (4 marks)

Answer:Section 21 deals with the provisions relating to the payment of wages in case of contractlabour:• Contractor will be primarily responsible for payment of wages to the contract

labour.• The liability to make payment by the principal employer shall arise in such a

situation where the contractor fails to make payment or makes short payment.• Principal employer should nominate an authorised representative who needs to be

present at time of disbursement of wages by contractor.

2010 - June [8] Attempt the following stating relevant legal provisions and decided caselaw, if any:(vii) Some contract labour was engaged by an organisation. There was subsequently

prohibition of employment of contract labour in that category as a consequenceof the notification issued by the Central Government. The employer did notabsorb the contract labour and employ them on regular basis. The workmenchallenged the action of the organisation. Will they succeed? (4 marks)

Answer:No, the workmen will not succeed.

+Refer the case law of Steel Authority of India V. National Union of Water Front Workers

and others AIR 2001 SC 3527 as discussed in 2005 - June [7] {C} (b)(iii) on page 294


(vi) Ten workers working as contract labour in the marketing division of an oil refinerywere engaged in liquified petroleum gas haulage work (loading and unloadingof LPG cylinders). The company did not automatically absorb these contractworkers even after the Central Government had issued a notification prohibitingthe employment of contract labour in the said category of work. The aggrievedworkers intend to take recourse to legal proceedings. Will they succeed?

(4 marks)


CS Inter Gr. II

PRACTICAL QUESTIONS


(iii) Is the principal employer liable to absorb contract labour where engagementof labour force through the contractor to do work of a perennial nature hasbeen abolished? (3 marks)

Answer:In the case of Steel Authority of India V/s National Union of Water Front Workers andOthers AIR 2001 SC 3527, the Supreme Court interpreted Section 10 of the ContractLabour (Regulation and Abolition) Act, 1970 and opined that neither section 10 of theAct nor other provisions of the Act whether expressly or by necessary implicationprovides for absorption of workmen being contract labour as regular one.Hence, the court cannot direct the employer to absorb the workmen concerned inregular service after abolition of the contract labour. Thus, the order is not legallytenable.

Recent Cases

1Steel Authority ofIndia

VNational Union ofWater Front Workersand Others

It was held by the Supreme Court that neitherSection 10 of the Act nor any other provisions in theAct provides for automatic absorption of contractlabour. The principal employer cannot be requiredto order absorption of contract labour working in theconcerned establishment

2 Vegolis Private LtdV

The Workmen

It was held in this case by the Supreme Court thatthe sole jurisdiction for abolition of contract labour inany particular operation vested with the appropriateGovernment and thereafter the Tribunals have nojurisdiction to abolish contract labour




1 Write notes on the following:Prohibition of employment of contract labour under theContract Labour (Regulation and Abolition) Act, 1970.

08 - Dec [6] (ii), 10 - June [6] (v)

2 Times

2 Distinguish between the following.‘Principal employer’ and ‘contractor’ under the ContractLabour (Regulation and Abolition) Act, 1970.

11 - Dec [7] (a) (iii), 13 - Dec [7] (a) (i)

2 Times

5.296

Star Rating

On the basis of Maximum marks from a chapter jj


On the basis of Compulsory questions from a chapter jjjjj

16 Industrial Disputes Act, 1947

This Chapter Includes: Object and Scope of the Act; Important Definitions; Typesof Strike and their Legality; Authorities under the Act and their Duties; Referencesof Disputed; Unfair Labour Practices; Penalties; Protection of Workmen and otherpersons; Schedules.



OBJECTIVE QUESTIONS


(iii) __________ means the temporary closing of a place of employment orsuspension of work or the refusal by an employer to continue to employ anynumber of persons employed by him.

[Chapter #### 16] Industrial Disputes Act, 1947 (((( 5.297

(iv) ______ means the termination by the employer of the services of a workman forany reason whatsoever otherwise than as a ;punishment inflicted by way ofdisciplinary action.

(v) The Trade Unions Act, 1926 provides for the ______ of an unfair labour practiceeither by the employer or the trade unions or workmen. (1 mark each)

Answer:(iii) Lay off(iv) Retrenchment(v) Prohibition/stoppage

2009 - Dec [7] (b) Re-write the following sentences after filling-in the blankspaces with appropriate word(s)/figure(s):

(ii) _________means termination of the services of a workman by the employer forany reason whatsoever, otherwise than as a punishment inflicted by way ofdisciplinary action. (1 mark)

Answer:

(ii) Retrenchment means termination of the services of a workman by the employerfor any reason whatsoever, otherwise than as a punishment inflicted by way ofdisciplinary action.


(ii) means termination of the service of an employee otherwise than onsuperannuation.

(iii) Wages are to be paid within working days from the date of terminationof the employee whatever be the reason of termination. (1 mark each)

Answer:(ii) Retrenchment means termination of the services of an employee otherwise than

on superannuation.(iii) Wages are to be paid within 2 working days from the date of termination of the

employee whatever be the reason of termination.


(iv) An ‘arbitrator’ under the Industrial Disputes Act, 1947 includes an___________.(1 mark)

Answer:(iv) An arbitrator under the Industrial Disputes Act, 1947 includes an Umpire.



(ii) The industrial dispute is a dispute relating to employment or non-employment orterms of employment or ______ of any person. (1 mark)

Answer:(ii) Conditions of labour


(iv) Which of the following is considered an ‘industry’ under the Industrial DisputesAct, 1947 —(a) Posts and Telegraph Department(b) Central Institute of Fisheries(c) Construction and maintenance of National and State highways(d) Dock Labour Board. (1 mark)

Answer:(d) Dock Labour Board


(iii) The subject matter of an industrial dispute should relate to employment or non-employment or terms of employment or the conditions of__________of anyperson. (1 mark)

Answer:(iii) labour


(i) ____________ was the first enactment that dealt with settlement of an industrialdispute. (1 mark)

Answer :Employers’ and Workmen’s Dispute Act, 1860.

2013 - June [7] (c) Write the most appropriate answer from the given options in respectof the following:(v) Which of the following type of strike is not called a primary strike !

(a) Stay in strike(b) Tool down strike(c) Pen down strike(d) Go slow. (1 mark)

Answer :(v) (d) Go slow.


SHORT NOTES

2008 - Dec [6] Write notes of the following:(v) Matters within the jurisdiction of industrial tribunals constituted under the

Industrial Disputes Act, 1947. (5 marks)(vi) Tests for determination of 'industry' under the Industrial Disputes Act, 1947.

(5 marks)Answer:

(v) Labour Court- Under Section 7, the appropriate Government is empowered toconstitute one or more labour court for adjudication of industrial dispute relatingto any matter specified under the second schedule and such other functionsassigned to it. Tribunals - It adjudicate the matters which are specified under the secondschedule or the Third Schedule and for performing other function assigned.

(vi) Industry: As per Section 2(j) of the Industrial Disputes Act, 1947 industry means“any business, trade, undertaking, manufacture or calling of employers andincludes any calling service, employment, handicraft, or industrial occupation oravocation of workmen”.The Supreme Court carried out an in-depth study of the definition of the termindustry in a comprehensive manner in the case of Bangatore Water Supply and

Sewerage Board v. A Rajiappa, AIR 1978 SC 548 after considering variousprevious judicial decisions on the subject and in the process, it rejected some ofthem, while evolving a new concept of the term industry.

Tests for determination of industryAfter discussing the definition from various angles in the above case, theSupreme Court laid down the following tests to determine whether an activity iscovered by the definition of industry or not. It is also referred to as the triple test.

(i) (a) Where there is (i) systematic activity, (ii) organised by co-operationbetween employer and employee, (iii) for the production and/ordistribution of goods and services calculated to satisfy human wants andwishes (not spiritual or religious but inclusive of material things orservices geared to celestial bliss e.g. making, on a large scale, prasador food) prima facie, there is an industry in that enterprise

(b) Absence of profit motive or gainful objective is irrelevant wherever theundertaking is whether in the public private or other sector.

(c) The true focus is functional and the decisive test is the nature of theactivity with special emphasis on the employer-employee relations.

(d) If the organisation is a trade or business, it does not cease to be onebecause of philanthropy animating the undertaking.


(ii) Although Section 2(i) uses words of the widest amplitude in its two limbs, theirmeaning cannot be magnified to over-stretch itself. Undertaking must suffera contextual and associational shrinkage, so also, service, calling and the like.This yields the inference that all organised activity possessing the tripleelements in (i) although not trade or business, may still be industry, providedthe nature of the activity, viz., the employer-employee basis, bearsresemblance to what we find in trade or business. This takes into the fold ofindustry, undertaking, callings and services, adventures analogous to thecarrying on of trade or business. All features, other than the methodology ofcarrying on the activity, viz., in organising the co-operation between employerand employee, may be dissimilar. It does not matter, if on the employmentterms, there is analogy.

(iii) Application of these guidelines should not stop short of their logical reach byinvocation of creeds, cults or inner sense of incongruity or outer sense ofmotivation for or resultant of the economic operations. The ideology of the Actbeing industrial disputes between employer and workmen, the range of thisstatutory ideology must inform the reach of the statutory definition, nothingless, nothing more.Hence, the Supreme Court observed that professions, clubs, educationalinstitutions, co-operatives, research institutes, charitable projects and otherkindred adventures, if they fulfill the triple tests listed in (i), cannot beexempted from the scope of Section 2(j). A restricted category of professions,clubs, co-operatives and gurukulas and little research labs, may qualify forexemption if, in simple ventures, substantially and going by the dominantnature criterion substantively, no employees are entertained but in minimalmatters, marginal employees are hired without destroying the non-employeecharacter of the unit.

2009 - June [6] Write notes on the following:(v) Principles laid down by the Supreme Court with regard to retrenchment under

the Industrial Disputes Act, 1947. (5 marks)

Answer:(v) Please refer 2005 - June [7] {C} (a) (iii) on page no. 313.

Thus, in case the workmen is rendered surplus or any other valid ground, themanagement is empowered to retrench the workmen.However, where there exist no reasonable cause of retrenchment the tribunal isempowered to judge the validity of retrenchment.

2009 - Dec [6] Write notes on the following:(iii) 'Authorities for the investigation and settlement of industrial disputes' under the

Industrial Disputes Act, 1947. (5 marks)


Answer:Settlement means the written agreement arrived between the employer & employeeregarding settlement of Industrial dispute. The various authorities established under the act for settlement are:

1. Work committee - It is required where 100 or more workers are employed in anundertaking. It promotes and develop good relation between the employee andworkman.

2. Board of Conciliation - It shall have a duty to investigate into the dispute andbring a settlement between the employee and employer.

3. Court of Enquiry- It is an authority set up to enquire into the matter reffered toit and to submit its report to appropriate government.

4. Labour Court- Labour court is constituted to adjudicate into the industrialdispute and pass appropriate orders by conducting proper proceedings.

2010 - June [6] Write notes on the following:(i) Principles governing domestic enquiry. (5 marks)

Answer:The principles governing a domestic enquiry are as follows:

(i) The enquiry should be conducted by an unbiased person i.e. who is neither against nor in favour of a particular party.

(ii) Must be conducted honestly.(iii) The enquiry officer need not wait for the criminal proceeding if any, pending

against any workman.(iv) Employee should be given fair opportunity to defend himself.(v) Holding of preliminary enquiry is not mandatary.(vi) Enquiry officer must record the conclusions of enquiry.

2010 - Dec [6] Write notes on the following:(vi) Unfair labour practices on the part of workmen and trade unions of workmen

under the Industrial Disputes Act, 1947. (5 marks)Answer:The various unfair labour practices on part of employee workman includes:

1. To take part or support any illegal strike.2. To force the workman to join the trade union 3. To indulge in the acts of force or violence against non- striking 4. Wrongful demonstrations at the residence of the employers.5. To indulge in wilful damage of employers property.6. For a recognised union to refuse to bargain collectively in good faith with the

employer.

2011 - June [6] Write notes on the following:(v) Legality of strike under the Industrial Disputes Act, 1947. (5 marks)


Answer:

Legality of strike under the Industrial Dispute Act, 1947.C A strike will be legal if it does not violate any provisions of the Act.C The Justifiability of strike has no relation with its legality or illegality. C The court held that the Justifiability will be seen from the standpoint of fairness and

reasonableness of demands made by workmen and not merely from the standpointof their exhausting all other legitimate means open to them for getting their demandfulfilled.

C The Supreme Court in Gujrat Steel Tubes Ltd v/s Gujrat Steel Tubes MajdoorSabha held that justifiability of strike is purely a question of fact. Therefore if the strike is resorted to by the workers in support of their reasonable,

fair and bonafide demands in peacefull manner, then the strike will be justified. Whereit was resorted to using violence or acts of sabotage or for any wrong purpose, then thestrike will be unjustified.

2011 - Dec [6] Write notes on the following:(v) ‘General prohibition of strikes and lock-outs’ under the Industrial Disputes Act,

1947. (5 marks)

Answer:Section 23 of the Industrial Disputes Act, 1947 covers in its ambit the general prohibitionof strike & lock-outs

Some of these situations include:C During the pendency of conciliation proceedingsC Conducting strike during the pendency of arbitration proceedings C Conducting strike during the pendency of proceedings before the Labour Court,

Tribunal or National TribunalC During the period in which a settlement or award is in operation C Section - 22 of the Act covers in its ambit the prohibition of strikes & lock-outs in

public utility services.

2012 - Dec [6] Write notes on the following:(iv) Tests laid down by the Supreme Court in Bangalore Water Supply and Sewerage

Board vs. A. Rajiappa [AIR 1978 SC 548] to determine whether an activity iscovered by the definition of ‘industry’ under the Industrial Disputes Act, 1947.

(5 marks)

Answer:In the case of Banglore Water Supply and Sewerage Board V. A. Rajjappa, AIR 1978SC 548. The Supreme Court laid down the following test to determine whether anactivity is covered by the definition of ‘Industry’ or not. It is also referred to as triple test.


(i) Where there is(a) systematic activity(b) organised by co-operation between employer & employee (c) for the production and/or distribution of goods and services calculated to

satisfy human wants & wishes ( not spiritual & religious but inclusive ofmaterial things or services geared to celestial bliss eg, making on a largescale, prasad or food) prima facie, there is an industry in that enterprise.

(ii) Absence of profit motive or gainful objective is irrelevant wherever theundertaking is whether in the public, joint, private or other sector.

(iii) The true focus is functional and the decisive test is the nature of the activity withspecial emphasis on the employer - employee relation.

(iv) If the organisation is a trade or business, it does not lease to be one becauseof philanthropy animating the undertaking.

2013 - June [6] Write notes on the following:(v) Unfair labour practices on the part of workmen and trade unions of workmen

under the Industrial Disputes Act, 1947. (5 marks)Answer :The various unfair labour practices on part of employee workman includes:1. To take part or support any illegal strike.2. To force the workman to join the trade union.3. To indulge in the acts of force or violence against non-striking4. Wrongful demonstrations at the residence of the employers.5. To indulge in wilful damage of employers property.6. For a recognised union to refuse to bargain collectively in good faith with the

employer.

2013 - Dec [6] Write notes on the following:(i) Prohibition of strikes and lock-outs in public utility services under the Industrial

Disputes Act, 1947. (5 marks)

DISTINGUISH BETWEEN

2008 - Dec [7] (a) Distinguish between of the following:(ii) 'Individual dispute' and 'industrial dispute' under the Industrial Disputes Act,

1947. (5 marks)Answer:Industrial dispute has been defined under Section 2(K) of the Industrial Disputes Act1947 as "Any dispute or difference between employer and employees, or betweenemployers and workmen or between workmen and workmen, which is connected withthe employment or non employment or terms of employment or with the conditions oflabour of any person." Individual dispute on the other hand does not affect a large groupof workmen. It relates to an individual and there does not exist any community ofinterest.


An individual dispute may turn out to be an industrial dispute if there arises acommunity of interest. However, an individual dispute cannot be subsequently treatedas an industrial dispute merely because it (i.e. dispute) received afterwards support ofsome more workmen, once the same has been referred for adjudication.

2009 - June [7] (a) Distinguish between the following:(i) 'Lay-off' and lock-out' under the Industrial Disputes Act, 1947.(ii) 'Arbitration' and 'adjudication' of disputes under the Industrial Disputes Act, 1947.

(5 marks each)Answer:

(i) Please refer 2011 - Dec [7] (a) (ii) on page no. 305(ii) Please refer 2007 - June [7] {C} (a) (i) on page no. 314 [For Adjudication]

• In case of arbitration, the dispute is referred to independent party known asarbitrator.

• They decide the dispute.• It is fast and less costly method• Intervention by arbitrator helps in arriving at relevant decisions• Section 10A of Industrial Disputes Act, 1947 provides for arbitration.

2010 - June [7] (a) Distinguish between the following:(i) ‘Legal strike’ and ‘justified strike’. (5 marks)

Answer:Legal Strike:-A legal strike is one which does not violates the provisions of law. Thus, a strike madewithin the legal boundaries is termed as legal strike.Justified Strike:-As the very name suggest 'justified strike' is one which is justified in other words onewhich is fair as well as reasonable. In case the demands of those involved in strike arelegitimate and bonafide the same will get the nomenclature of 'justified strike'.Thus, the former deals with the legality related aspects while the latter deals with theissue of reasonableness. Thus, a justified strike may be legal or illegal i.e. may be inaccordance with legal framework or not but appears just considering the facts of thecase.

2010 - Dec [7] (a) Distinguish between the following:(i) ‘Award’ and ‘settlement’ under the Industrial Disputes Act, 1947. (5 marks)

Answer:Please refer 2004 - Dec [7] {C} (a) (ii) on page no. 313

2011 - June [7] (a) Distinguish between the following:(ii) ‘Courts of inquiry’ and ‘labour courts’ under the Industrial Disputes Act, 1947.

(5 marks)


Answer:

'Court of enquiry' and 'Labour Court' under the Industrial Dispute Act, 1947

Court of enquiry C The appropriate government may as the occasion arises by notification in official

gazette constitute a court of inquiry to look into any matter of industrial dispute. C A court of inquiry shall consist of one independent person or of such number of

independent person as the appropriate Government may specify & where the courtconsist of more than one member one of them shall act as a chairman.

C The court of enquiry shall inquire into the matters referred to it and shall submit itsreport to appropriate Government within six months.

Labour CourtsC According to the provisions of section 7 of Industrial Dispute Act, 1947, the

appropriate Government is empowered to constitute one or more more labour courtfor adjudication of Industrial Dispute relating to any matter specified in secondschedule and for performing such other function as may be specified from time totime.

C This court shall consist of one person only to be appointed by appropriateGovernment.

C Whenever any industrial dispute is referred to a labour court for adjudication, it isa duty of labour court to hold its proceedings expeditiously and submit its award toappropriate Government.

2011 - Dec [7] (a) Distinguish between the following:(i) ‘Arbitration’ and ‘conciliation’ for the resolution of industrial disputes under the

Industrial Disputes Act, 1947. (5 marks)(ii) ‘Lay-off’ and ‘lock-out’ under the Industrial Disputes Act, 1947. (5 marks)

Answer:

(i) Arbitration: C Arbitration is a procedure in which the parties to a contract opts for a private

dispute resolution procedure instead of going to court.C Arbitration is an alternative for court.C In case of arbitration the dispute is referred to independent party know as

arbitrator.C It is fast & less costly method C Section 10 A of Industrial Disputes Act, 1947 provides for arbitration.

Conciliation:C It is the process of settlement of industrial disputes through third party

intervention C It is different from arbitration as it aims to reduce the extend of differences of

parties and to arrive at an amicable solution.


C In Industrial Disputes Act, 1947 Conciliation officers are appointed byGovernment to create an environment where workers and employers canreconcile their disputes.

(ii)

Basic Lay off Lock out

Meaning In lay off employer refuses togive employment due to somespecific reason

Lock out is a temporary closure of placeof employment or refusal to employ theworkers employed by him.

Business In lay off, business continues In Lock out, business closed down forsome time.

Reason Due to trade reason No such specific reason. It is a weaponof collective bargaining.

Penalties No such Penalties Penalties in case of unlawful Lock-out

2012 - June [7] (a) Distinguish between the following:(i) ‘Lay-off’ and ‘retrenchment’ under the Industrial Disputes Act, 1947. (5 marks)

Answer:‘Lay off’ & ‘retrenchment’ under the Industrial Disputes Act, 1947

Basis Lay off Retrenchment

(i) Meaning

(ii) Reason

(iii) Wages

In lay off employer refusesto give employment due tosome specific reason.

It is the result of tradereasonsWages are not paidunless it is held to beunjustified

It is the termination by theemployer of the service ofthe workmen for anyreason w ha tsoeve rotherwise than as apunishment. It is on account of surpluslabour.Workmen are paid theprescribed compensation.

2012 - Dec [7] (a) Distinguish between the following:(i) ‘Award’ and ‘settlement’ under the Industrial Disputes Act, 1947. (5 marks)

Answer:Please refer 2004 - Dec [7] (a) (ii) on page no. 313


2013 - Dec [7] (a) Distinguish between the following:(ii) ‘Conciliation Officer’ and ‘Board of Conciliation’ under the Industrial Disputes Act,

1947. (5 marks)

PRACTICAL QUESTIONS


(iii) The workman of Bharat Chemicals went on go-slow strike to compel themanagement to concede to their demands. The management contended that go-slow is a serious misconduct and initiated disciplinary action against the erringworkmen. Is the action of the management justified? (4 marks)

(v) Anil, a workmen raised an industrial dispute contending that he was employedwith effect from 1st April, 1986 on regular basis and his services were illegallyterminated on 12th February, 1994. The employer took the stand that theworkman was engaged on casual basis on daily wages for a specific period andfor the specific work and that his services were not terminated on 12 th February,1994 but he had abandoned his job. The employer did not produce attendancerecord before the Labour Court and also failed to prove that the workman hadworked for less than 240 days. The workman alleged violation of the provisionsof the Industrial Disputes Act, 1947 relating to retrenchment. Will he succeed?

(4 marks)

Answer:

(iii) In the above case, the act of workman of Bharat Chemicals was a misconduct.The workman went on go slow strike to compel the management to concede totheir demands. The action of the management is justified.

(v) In the above case, the workman will not succeed. The workman allegationregarding violation of the provisions of the Act relating to the retrenchment willnot be tenable in law as decided in the judicial case.


(iv) The workmen went on sympathetic strike by absenting themselves from work insupport of the workmen belonging to some other employer. The managementintends to take disciplinary action against those workmen. Is the intention of themanagement justified and legal? (4 marks)

(v) Efficiency Ltd. is in the process of reorganising its business. It is likely to resultin some labour being rendered surplus. It has proposed retrenchment ofeconomic dead weight. Can the company do so ? (4 marks)


Answer:

(iv) As sympathetic strikes also falls within the category of unjustified strike wherebyby absenting themselves from work, interruption is caused into the day to dayaffairs. Hence, the same constitutes a valid ground for disciplinary action ofmanagement.

(v) Please refer 2004 - June [7] {C} (b) (iii) on page no. 315


(iii) Mohan has been working in a foundry for the last 20 years. Recently, it wasfound that he was suffering from diabetes. Based on that, the managementterminated his services. Does the action of the management tantamount toretrenchment ? (4 marks)

(vii) A copy of the memorandum of settlement was not despatched by the conciliationofficer to the appropriate government. Will the settlement be treated as invalid?Give reasons. (4 marks)

Answer:(iii) Mohan has been working in a foundry for the last 20 years.

Y Yes, the action of the management tantamount to retrenchment.Y A person suffering from diabetes cannot be regarded as unfit for the

organization.Y Since there was no support for medical illness, the termination of services of

Mohan amounts to retrenchment.(vii) Yes, the settlement will be treated as invalid.

Y Section 12 of the Industrial Disputes Act, 1947 stipulates that the conciliationofficer, needs to send report in relation to settlement of the dispute to theAppropriate Governments.

Y Even in case the settlement has taken place without conciliation officer as anintermediary, the parties need to sent a copy of the same to the labourcommissioner.

Y Since the statutory requirement has not been fulfilled, the settlement shall betreated as invalid.


(iv) Promod Electronics is a small scale industry (SSI) employing 15 workmen. Dueto a fall in demand for its products, the management decided to lay-off itsworkmen. The workmen contended that they cannot be laid-off as there is noprovision to lay-off in the terms and conditions of appointment. Examine thelegality of the action of the management. (4 marks)

(vii) The members of a trade union who are not workmen of the employer raised adispute and sought redressal from the authorities. Will they succeed in theirdispute? (4 marks)


Answer:

(iv) In the given case the action of management is not legal. The power to lay offmust be provided under terms of contract or appointment or must be provided ina statute. The power to lay off is not an inherent right of management. It musthave been specifically provided in terms & conditions of employment agreement.

(vii) The union members who are not workmen of the employer against whom thedispute is sought to be raised, cannot by their support convert an individualdispute into an industrial dispute.

The persons who seek to support the cause must themselves be directly andsubstantially interested in the dispute and person who are not the employees ofthe same employer cannot be regarded as so interested.


(i) A copy of the ‘memorandum of settlement’ was not dispatched by theConciliation Officer to the appropriate government. Will the settlement be treatedas invalid?

(vii) Azad Ltd. implemented a scheme of re-organisation of the business. It resultedin the surplus of 10 employees. The company dispensed with their services. Theemployees union challenged it that it was not a ground for the retrenchment ofthe employees. Will the union succeed? (4 marks each)

Answer:

(i) C In the above case, a copy of `memorandum of settlement’ was not dispatchedby the Conciliation Officer to the appropriate Government which is a mandatoryrequirement under Section 12 of the Industrial Disputes Act, 1947.

C The Conciliation Officer must send a report to the appropriate Government incase the settlement of the dispute is arrived at in the course of the conciliationproceedings.

C Thus, the settlement will be treated as invalid.

(vii) Please refer 2004 - June [7] {C} (b) (iii) on page no. 315


(i) Suresh, a primary school teacher, was dismissed from service due tounauthorised absence for a week. Suresh intends to raise an industrial disputewith regard to his dismissal seeking reinstatement with consequential benefits.Will he succeed? Give reasons in support of your answer.


(ii) A workman was charged with theft of an article from the factory. Themanagement initiated disciplinary proceedings against him for an act subversiveof discipline and simultaneously initiated criminal proceedings by lodging acomplaint with the police. The workman pleaded for stay of disciplinaryproceedings till the outcome of criminal proceedings. Is the plea of the workmantenable? Discuss.

(v) The management of a tea garden terminated the services of a technician on theground of incompetence. His cause was espoused by the workers’ union whichraised an industrial dispute. The management contended that the technician wasnot a member of the workers’ union and that there could not be an industrialdispute in this case. Will the management succeed in its stand? Discuss.

(vii) The management of an industrial establishment declared an unjustified lock-outdue to the illegal and unjustified strike by a section of the workers. Later on whenthe strike was called off, the management did not pay wages for the lock-outperiod. Is the action of the management justified and legally tenable? Givereasons. (4 marks each)

Answer:

(i) In one of the decided cases, Supreme Court held that the teachers employed bythe educational institutions cannot be considered as workmen under theIndustrial Disputes Act as main function of the teachers is imparting of educationwhich can not be considered as skilled or unskilled manual work or supervisorywork or technical work or clerical work.

Manual work comprises of work involving physical exertion as distinct frommental and intellectual exertion. Teaching involves mental & intellectual exertialinstead of manual.

Thus Suresh will not be able to claim benefits under Industrial Disputes Act,1947.

(ii) Disciplinary proceedings can be carried out even if the outcome of criminalproceeding have not come. If any criminal proceeding eg., theft etc. are pendingagainst any workman, the enquiry officer need not wait for the completion ofthose proceedings. Hence workman will not succeed in its plea.

(v) The management will not succeed in its stand.Section 2A of the Industrial Disputes Act, 1947 provides that where any

employer discharges, dismisses, retrenches or otherwise terminates the servicesof an individual workman, any dispute or differences between that workman andhis employer connected with, or arising out of such discharge, dismissal,retrenchment or termination shall be deemed to be an industrial dispute despitenot withstanding that no other workman nor any union of workmen is a party tothe dispute.


(vii) In the case of ‘India Marine Service V. Their Workman’ it was held by theSupreme Court that where a strike is unjustified and is followed by a lock-outwhich becomes unjustified a case for apportionment of blame arises which is tobe determined by industrial court/ tribunal.Hence the action of the management is not justified.


(iv) Five persons were employed as malis (gardeners) in the private houses of seniorfunctionaries of a company. They were looking after the garden attached tobungalows provided by the company to its officers and directors. Are these malis

‘employees’ and ‘employed in an industry’ under the Industrial Disputes Act,1947 ? (4 marks)

(v) The President and General Secretary of a registered trade union were dismissedfrom service for having instigated workers to go on a strike for the acceptanceof their justified demands. Challenging the dismissal in the court of law, theycontended that it was unjust on the part of the employer and that going on strikewas their fundamental and statutory right. Will they succeed ? (4 marks)

(vii) The services of a bus conductor of a state roadways corporation were terminatedon the ground of weak eyesight which was below the standard requirement.Does the termination amount to being due to continued ill-health under theIndustrial Disputes Act, 1947 ? Give reasons. (4 marks)

Answer :

(iv) C In the decided case of “ J. K. Cotton Spinning and Weaving Mills Co. Ltd,” theSupreme Court held that “malis” looking after the garden attached to thebungalow provided by the company to its officers and directors, are engagedin operations incidentally connected with the main industry carried on by theemployer.

C Wherever it is shown that the industry has employed an employee to assistone or the other operation incidental to the main industry operation, it wouldbe unreasonable to deny such an employee the status of a workman on theground that his work is not directly connected with the main work or operationof the industry.

C Thus, yes malis are employees and employed under the Industrial DisputeAct, 1947.

(v) C According to the provisions contained in Industrial Dispute Act, 1947, noemployer or workman or a Trade Union, whether registered or not, shallcommit any unfair labour practice.


C To advice or actively support or investigate any strike deemed to be illegalunder the Act is a unfair labour practice on the part of workmen and tradeunions of workmen.

C Thus, President and General Secretary of a registered trade union will notsucceed.

(vii) Yes, the termination on the ground of weak eyesight which was below thestandard requirement will amount to being due to continued ill - health under theIndustrial Dispute Act, 1947. as held in case of Anand Behari V. RSRTC.


(i) XYZ Ltd. has a factory at town A. It lays-off five of its workmen expressing itsinability to give employment to them due to accumulation of stocks. Thecompany, however, offers these workmen an alternative employment in itsanother factory located at town B which is at a distance of 7 kms. from town A.The workmen refuse the alternative employment. Is the action of the workmentenable in law ? Are they entitled to lay-off compensation ?

(v) Prem and Suresh established a legal consultancy firm. They employed three lawgraduates, a stenographer and a typist to assist the firm. After five years, theservices of the stenographer were terminated without assigning any reason. Heraised a ‘dispute’ before the Labour Court asking for re-instatement orretrenchment compensation as contemplated by the Industrial Disputes Act,1947. Will he succeed? (4 marks each)

CS Inter Gr. II


2004 - June [7] {C} (a) Discuss the following:(i) Industrial discipline. (5 marks)

(iii) Voluntary reference of disputes to arbitration. (5 marks)

Answer:

(i) Industrial Discipline means working by employees to predetermined rules,regulation and code of conduct in the industry. knowledge or information andmotivation are of utmost importance for ensuring good Industrial discipline. Theobjectives of Industrial dispute are.1. Facilitate cooperation of subordinates 2. To reform the offender causing disclosure, deters others from making the

same mistake.


(iii) For settlement of industrial dispute by voluntary reference the following provisionare applicable.1. When an industrial dispute exist, the employer and employee can refer the

dispute under a written agreement to arbitration.2. A copy of arbitration agreement shall be forwarded to appropriate

government and after wards the arbitrator after investigation submit toappropriate government the arbitration award.

2004 - Dec [7] {C} (a) Discuss the following:(ii) Difference between an 'award' and 'settlement' under the Industrial Disputes Act,

1947. (5 marks)

Answer:

Basic Award Settlement

Meaning Award is a determination of anyindustrial dispute by labour court,Industrial Tribunal or NationalTribunal.

A written agreement arrived at incourse of conciliation proceedingsbetween employer & workmanrelating to an industrial dispute.

Agreement There is no such agreementbetween the employer and em-ployee

There is an agreement enteredinto by a employer & employee.

2005 - June [7] {C} (a) Discuss the following:(iii) Retrenchment compensation. (5 marks)

Answer:Retrenchment has been defined under the Industrial Dispute Act, as termination by theemployer of the service of the workmen for any reason whatsoever, otherwise than asa punishment, but does not include voluntary retirement, retirement by superannuationor termination due to ill-health.

On retrenchment the retrenched workmen will be entitled for retrenchmentcompensation under section 25-F of the Act. According to this Section, no workmanemployed in any industry, who has been in continuous service for not less than a yearunder a employer, shall be retrenched, until at the time of retrenchment , be paidcompensation which shall be equivalent to fifteen day’s average pay for everycompleted year of service or any part thereof in excess of six months. If retrenchmentcompensations is not paid at the time of retrenchment, the retrenchment is illegal.

2005 - Dec [7] {C} (a) Discuss the following: (iii) Unfair labour practices on the part of workmen and trade unions of workmen

under the Industrial Disputes Act, 1947. (5 marks)


Answer:Please refer 2010 - Dec [6] (vi) on page no. 301

2006 - June [7] {C} (a) Discuss the following:(i) Principles governing domestic inquiry. (5 marks)

Answer:Please refer 2010 - June [6] (i) on page no. 301

2007 - June [7] {C} (a) Discuss the following:(i) Adjudication as a method of resolution of industrial disputes. (5 marks)(ii) Lay-off compensation. (5 marks)

Answer:

(i) Adjudication means intervention of the dispute by the third party appointed bythe government.The Industrial Dispute Act, 1947 provides for a three -tier system of adjudication.- Labour Court - Industrial Tribunal - National Tribunal The labour court adjudicate upon dispute listed in schedule II of the Act.The Industrial Dispute adjudicate disputes listed in schedule III of the Act. The National Tribunal adjudicate upon disputes which are of nationalimportance.Thus adjudication is the formal decision arrived at by the third partyon an industrial dispute referred to it under the Act. It is one of the method ofresolution of Industrial Dispute.

(ii) Lay-off compensation means temporary inability of an employer to provideemployment to the worker due to any of the following reason.6 Accumulation of stock6 Natural Calamity 6 Shortage of coal, power or raw material 6 Break down of machinery.According to the permissions of the Act, if the employees are laid off inpursuance of Section 2(kkk) they are entitled to lay off compensation. Where aemployer completed year of service and is laid off, he shall be paid by theemployer for all the days during which he has been laid off, 50% of the basicwages and dearness allowance.

2008 - June [7] {C} (a) Discuss the following:(iii) Object and scope of the Industrial Disputes Act, 1947. (5 marks)


Answer:In the case of “The Workmen of Dimakuchi Tea Estate v/s Dimakuchi Tea Estate” theSupreme Court claim down the various objective of the Act These are:

1. Taking measures for good relations between the employer and workman.2. Investigation and settlement of industrial dispute between employers and

employer or between employers & workman or among workman.3. Prevent illegal strike or lock out.4. Protection of workman in case of lay off and retrenchment.5. Promotion of collective bargaining.

PRACTICAL QUESTIONS

2004 - June [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(iii) Raghav was retrenched from service and the reason assigned to him was that

he had become an economic surplusage. Is the action of the employer justified?(3 marks)

(vii) There is an industrial dispute pending before the conciliation officer. Theemployer makes changes in the conditions of service of the workmen in respectof the matters connected with the pending industrial dispute without thepermission of the conciliation officer but the alterations are not to the prejudiceof the workmen. Is the action of the employer justified and legal? (3 marks)

Answer:

(iii) The action of the employer in the given case is fully justified. If in an scheme ofreorganisation of business of the employer results in surplusage of employee,then retrenchment is valid.

(vii) No, the actions of employer in the given case is not justified. As according to theprovisions of the Act, if any industrial dispute is pending before conciliationofficer, Labour Court or Tribunal the employer is allowed to make changes in theservice only after taking proper permission of authority in writing. Thus, theactions of the employer are not justified.


(i) Raman, while working in a factory, died a natural death following a cardiacarrest. The fellow workers refused to work until his family members aresummoned and dead body is sent to his native place. Does it amount to strikeon their part? (3 marks)


(iii) The management without holding any inquiry terminated the services of certainworkmen who had merely participated in an illegal strike. Is the action of themanagement justified? (3 marks)

(viii) Zenith Industries Ltd. terminated the services of five workmen on account ofretrenchment. Their names were displayed on the notice board of the company.Does the action of the management amount to a valid retrenchment under theIndustrial Disputes Act, 1947? (3 marks)

Answer:(i) Yes it will amount to strike as the workers in a factory refuses to work and

cessation of work is the important character of strike on the part of employee.Thus in the above case also workers refuses to work and thus it constitute asstrike.

(iii) The actions of the management is not justified under the act for dismissal ofemployee. Proper domestics enquiry must be undertaken. In the above case theemployees were dismissed for taking part in illegal strike without conductingenquiry, will not be a valid dismissal.

(viii) For valid retrenchment to take place the employee/ workmen must be given 1month notice in writing. The notice must also specify the reason forretrenchment.In the given case the Zenith Industries Ltd. terminated the services without givingsufficient notice as required.


(iv) Adarsh was a primary school teacher in a private school. He was dismissed fromservice after an inquiry. He wants to institute a suit in the Labour Courtchallenging the order of dismissal. Will he succeed? (3 marks)

Answer:He will not succeed in the suit in labour court as teachers were not held to be a workerunder the Industrial Dispute Act.

As in the above situation, Adarsh was a primary school teacher in a private school,and is being dismissed will not be able to succeed as he is not a workmen under theAct.


(iii) Bhaskar, a school teacher, was dismissed from service for gross misconduct. Heseeks reinstatement under the Industrial Disputes Act, 1947 on the ground thathe is a 'workman' and that his dismissal amounts to an industrial dispute. Will hesucceed? (3 marks)

Answer:(iii) Please refer 2005 - June [7] {C} (b) (iv) on page no. 316


2006 - June [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(vii) Due to accumulation of stocks, the company declared lay-off for 5 days. The

workers’ union protested that it was not the legal right of the employer to lay-offthe workers and that they should be paid full wages for the period of lay-off. Willthey succeed in a court of law, if the employer refuses to concede to theirdemand ? (3 marks)

Answer:(vii) No, the trade union will not be able to succeed. The employer has a right to

terminate the services temporary through lay off on the following ground.- Accumulation of stock- Shortage of power, fuel- Natural calamity etc In the above situation, the employer laid off the workers on account ofaccumulation of stock, hence the trade union will not be able to succeed.


(ii) Prem and Qureshi established a legal consultancy firm. They employed threelaw graduates, a stenographer and a typist to assist the firm. After five years, theservices of the stenographer were terminated without assigning any reason. Heraised a dispute before the Labour Court asking for reinstatement orretrenchment compensation as contemplated by the Industrial Disputes Act,1947. Will he succeed ? (3 marks)

(iii) Sameer died suddenly while working in a factory. The workmen refused toresume work to express solidarity with the deceased worker. Does the action ofthe workmen amount to strike under the Industrial Disputes Act, 1947?

(3 marks)(v) Fragile Ltd. was running in continuous losses for 5 years. As a result, the

company’s financial position worsened. The company declared lay-off of 10 ofits employees. The employees protested the lay-off. Is the action of the employerjustified ? (3 marks)

Answer:

(ii) In the above case, the services of stenographer were terminated, but he shallnot be able to succeed in a dispute before the Labour Court.

(iii) Please refer 2004 - Dec [7] {C} (b) (i) on page no. 315

(v) Lay off means the refusal or inability of employer to employ the workmen due toany to the following reason6 Accumulation of stock 6 Shortage of coal, power or raw material.


6 Natural calamity etc.In the given case the company laid off the workers on account of company’sweak financial position which is not justified.

2007 - Dec [7]{C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(vii) Efficiency Ltd. is in the process of reorganistion of its business. It is likely to

result in some labour being rendered surplus. It has proposed retrenchment ofeconomic dead weight. Can the company do so? (3 marks)

Answer:No, the workers in the given case will not be entitled for retrenchment compensationunder the Act. When person is employed on daily wages, there termination from workwill not constitute retrenchment.

2008 - June [7] {C} (b) Attempt of the following stating relevant legal provisions anddecided case law, if any:(vii) The workers in a factory went on strike. The strike was legal. The employer

deducted wages for the strike period on the ground that the legality of strike didnot always exempt the workers form deduction of their wages for the period ofstrike. Was the employer’s action justified? (3 marks)

Answer:If a strike is in contravention of legal provisions it is an illegal strike. Whether the strikeis justified or unjustified will depend upon the fairness and reasonableness of thedemands of workers.

The workmen in order to entitle the wages for the period of strike, the strike mustbe legal as well as justified.

Recent Cases

1 Hospital EmployeesUnion

V Christian Medical College

It was held that Industrial Disputes Act, 1947applies to the industries owned by the Centraland the State Governments also. It applies to allindustries irrespective of religion or caste ofparties


2 J.K. Cotton Spinning and Weaving Mills Co. Ltd

VL.A.T.

It was held by the Supreme Court in this casethat the' malis' looking after the garden attachedto bungalows provided by the company to itsofficer and directors are workman as he isengaged in operations incidentally connectedwith the main industry carried on by theemployer even though his work is not directlyconcerned with the main work of the industry

3 Gujarat Steel Tubes LtdV

Gujarat Steel TubesMajdoor Sabha

It was held by the Supreme Court that if thestrike was resorted to by workers in support oftheir reasonable and bonafide demands inpeaceful manner , then the strike will be justifiedand vice-versa

4 Express Newspapers (P)Ltd

VTheir Workers

It was held that 'lock out' is an antithesis tostrike. Lock out is a weapon available to theemployer to persuade by a coercive process theemployees to see his point of view and toaccept his demands

5 Crompton Greaves LtdV

The Workmen

It was held that for entitlement of wages for thestrike period , the strike should be legal andjustified. Where the strike is legal but at thesame time unjustified , the wokers are notentitled for wages for the strike period



1 Distinguish between the following:'Lay-off' and lock-out' under the Industrial Disputes Act,1947.

09 - June [7] (a) (i), 11 - Dec [7] (a) (ii) 2 Times

2 Distinguish between the following:‘Award’ and ‘settlement’ under the Industrial Disputes Act,1947. 10 - Dec [7] (a) (i), 12 - Dec [7] (a) (i) 2 Times

5.320

Star Rating


On the basis of Questions included every year from a chapter jjj


17 Industrial Employment

(Standing Orders) Act, 1946

This Chapter Includes: Object and Scope of the Act; Important Definitions;Certification of Draft Standing Orders; Appeals; Date of Operation of StandingOrders; Posting of Standing Orders; Duration and Modification of Standing Orders;Payment of Subsistence Allowances; Temporary Application on Model StandingOrders; The Schedule to the Act.


[Chapter #### 17] Industrial Employment Act, 1946 (((( 5.321


OBJECTIVE QUESTIONS


(iv) The 'employer of an industrial establishment having 100 or more employees isrequired to submit draft standing orders within months from the date onwhich the Industrial Employment (Standing Orders) Act, 1946 becomesapplicable. (1 mark)


(iv) The employer of an industrial establishment having 100 or more employees is

required to submit draft standing orders within six months from the date onwhich the Industrial Employment (Standing Orders) Act, 1946 becomesapplicable.


(iii) From the date on which the Industrial Employment (Standing Orders) Act, 1946becomes applicable to an industrial establishment, an employer is required tosubmit to the Certifying Officer the draft standing orders—(a) Within 3 months(b) Within 6 months(c) Within a month(d) Immediately on receipt. (1 mark)

Answer:(iii) (b) Within 6 months


(i) The employer of an establishment to which the Industrial Employment (StandingOrders) Act, 1946 applies shall submit to the certifying officer draft standingorders proposed by him for adoption in that establishment within—(a) 6 Months(b) 4 Months


(c) 30 Days (d) 2 Months.from the date on which the Act becomes applicable to the establishment.

(1 mark)

Answer:(i) (a) 6 Months


(iii) The function of a certifying officer or the appellate authority is to adjudicate uponthe ________ of the standing orders. (1 mark)

Answer:(iii) Fairness or reasonableness


(v) The interpretation of certified standing orders is within the jurisdiction of —(a) Labour court(b) Certifying officer(c) Workmen(d) Employer and workmen. (1 mark)

Answer:(v) (a) Labour Court


(v) Under the Industrial Employment (Standing Orders) Act, 1946, which of thefollowing documents must a ‘standing order’ be in conformity with —(a) Standard Standing Orders(b) Model Standing Orders(c) Uniform Standing Orders(d) Formal Standing Orders. (1 mark)

Answer:(b) Model Standing Orders


(iv) Standing orders shall come into operation on the expiry of__________from thedate on which the authenticated copies are sent to employer and workers’representatives. (1 mark)

Answer:(iv) 30 days


2013 - June [7] (b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):

(iv) Where any workman is suspended by the employer pending investigation or

inquiry into complaints or charges of misconduct against him, the employer shall

pay to such a workman the subsistence allowance at the rate of __________ %

of the wages which the workman was entitled to, immediately preceding from

the date of such suspension, for the first ___________ days of suspension.

(1 mark)

Answer :

50 %, 90

2013 - Dec [7] (b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):

(v) An employer or a workman can challenge an order given by the Certifying Officer

and file an appeal before the Appellate Authority within _______ days from the

date on which copies are sent to the employer and workers’ representatives.

(1 mark)

SHORT NOTES

2009 - Dec [6] Write notes on the following:

(vi) 'Payment of subsistence allowance' under the Industrial Employment (Standing

Orders) Act,1946. (5 marks)

Answer:

Section 10A of the Industrial Employment (Standing orders) Act, 1946 provides for the

payment of subsistence allowance.

An amount equal to 50% of his last drawn salary for first 90 days of suspension and

75% of wages for the remaining period.

Dispute relating to subsistence allowance may be referred to the Labour Court

formed under Industrial Disputes Act, 1947.

Also refer 2006 - June [7] {C} (a) (ii) on page no.329

2010 - June [6] Write notes on the following:

(iii) Procedure to be followed for the certification of standing orders under the

Industrial Employment (Standing Orders) Act, 1946. (5 marks)

Answer:

Please refer 2012 - June [6] (v) on page no. 324



(i) Matters to be provided in standing orders under the Industrial Employment

(Standing Orders) Act, 1946. (5 marks)

Answer:

The matters that are to be provided in the standing orders under the Act are as follows :-

! Classification of workmen

! Shift Working

! Attendance

! Procedure to be followed for informing hours of work, holidays wages etc. to

workmen

! Procedure to be followed with regards to application and grant of leave

! Redressal procedure available to workmen in case of any unjust practice

advocated by the employer.

! Requirement to enter through specific gates

! Closing and reopening of section or temporary stoppage of work and related

matters

! Termination of employment and notice related thereto

! Suspension or dismissal in case of misconduct.


(vi) ‘Temporary application of model standing orders’ under the Industrial

Employment (Standing Orders) Act, 1946. (5 marks)

Answer:

Please refer 2011 - June [6] (i) on page no. 324


(v) Certification of standing orders under the Industrial Employment (Standing

Orders) Act, 1946. (5 marks)

Answer:

The conditions mentioned under Section 4 of the Industrial employment (Standing

orders) Act, 1946 which needs to satisfied for certification of standing order, are as

follows:

! Provision is made with regards to all the matters specified in the schedule

! Proper compliance has been made with the provisions of the Act.

— Provisions relating to the modification of the certified standing orders are as

follows:


! An employer cannot modify the standing orders after the same has been certified

! Exception - Standing orders can be modified if there is an agreement between

employer and workmen

! Modification cannot be made within 6 months of certification

! In case of an agreement to modify, application needs to be made to the certifying

officer along with 5 copies of proposed modifications.

Section 5 of the Industrial Employment (Standing Orders) Act, 1946 describes the

procedure to be followed for certification of draft standing order by the Certifying Officer.

— Certifying Officer shall forward the copy of standing order received from the

employer to

! Trade union of workmen, if it exists or

! Workmen, if no trade union exists

— The recipient are expected submit their objections within 15 days from receipt of

notice.

— On the basis of objections raised, opportunity of being heard shall be given and

required changes shall be made.

— He shall certify the same and within 7 days send a copy to

! Employer and

! Employees association

2013 - June [6] Write notes on the following:(iv) Procedure to be followed for certification of standing orders under the Industrial


Answer :Please refer 2012 - June [6] (v) on page no. 324


DISTINGUISH BETWEEN

2009 - Dec [7] (a) Distinguish between the following:(ii) 'Model standing orders' and 'certified standing orders' under the Industrial


Answer:The matters that are to be provided in the standing orders under the Act are as follows :-! Classification of workmen! Shift Working! Attendance! Procedure to be followed for informing hours of work, holidays wages etc. to

workmen! Procedure to be followed with regards to application and grant of leave! Redressal procedure available to workmen in case of any unjust practice

advocated by the employer.! Requirement to enter through specific gates! Closing and reopening of section or temporary stoppage of work and related

matters! Termination of employment and notice related thereto! Suspension or dismissal in case of misconduct.The conditions mentioned under Section 4 of the Industrial employment (Standingorders) Act, 1946 which needs to satisfied for certification of standing order, are asfollows:! Provision is made with regards to all the matters specified in the schedule! Proper compliance has been made with the provisions of the Act.

— Provisions relating to the modification of the certified standing orders are asfollows:

! An employer cannot modify the standing orders after the same has been certified

! Exception - Standing orders can be modified if there is an agreement betweenemployer and workmen

! Modification cannot be made within 6 months of certification! In case of an agreement to modify, application needs to be made to the certifying

officer along with 5 copies of proposed modifications.

2010 - Dec [7] (a) Distinguish between the following:(iii) ‘Draft standing orders’ and ‘certified standing orders’ under the Industrial


Answer:


Please refer 2009 - Dec [7] (a) (ii) on page. no. 326

2011 - June [7] (a) Distinguish between the following:(iii) ‘Model standing orders’ and ‘certified standing orders’ under the Industrial


Answer:

'Model Standing orders' and 'certified standing order' under the Industrial Dispute

Act, 1947.Please refer 2009 - Dec [7] (a) (ii) on page no. 326

2012 - Dec [7] (a) Distinguish between the following:(iii) ‘Model standing orders’ and ‘certified standing orders’ under the Industrial



PRACTICAL QUESTIONS


(iv) Naresh, a workman abused his supervisor in a public place outside the factorypremises, for having refused to sanction leave on compassionate grounds. Ona complaint lodged by the supervisor, the management initiated disciplinaryproceedings against Naresh for the act of misconduct. Naresh contended thathis action did not amount to misconduct. Is his contention tenable ?(4 marks)

Answer:Y The facts of the case are quite similar to that of BPL India Ltd.Y The contention of Naresh is not legally tenable.Y Even if there is act of breach of discipline outside the factory premises in a public

place, the act shall be regarded as misconduct.Y The only requirement which needs to be fulfilled is that misconduct should be in

relation to the job only.


(vi) Gemini Ltd. has an industrial unit employing 500 workmen but has not got thestanding orders certified under the Industrial Employment (Standing Orders)Act, 1946. The management initiated proceedings against one of its workmenfor misconduct. The management is of the view that as there are no certified


standing orders applicable to the factory establishment, it is under noobligation to follow any procedure except the principles of natural justice. Statewhether the view held by the management is legally valid. (4 marks)

Answer:The action of management is not correct because in case where there are no certifiedstanding order applicable to a company then model standing order shall becomeapplicable to it.


(iv) Harish, a mechanic, was alleged to have indulged in an act of misconduct. Aninquiry was held into the charge against him as per the procedure laid downin the certified standing orders. The copy of the inquiry report was notfurnished to him before imposing penalty on the ground that it was notprovided under the certified standing orders. Is the plea of the managementtenable in law? (4 marks)

Answer:C The facts of this case are Similar to ‘Shriram Yadav V/s Rajasthan State Road

Transport Corporation, Jaipur & Others.C In this case, Harish was alleged to have indulged in an act of misconduct & inquiry

was held.C In the above situation management is not correct since a copy of the inquiry report

must be supplied to Harish in compliance to the principles of natural justicewhether the standing orders require it or not.

2012 - June [8] Attempt the following stating relevant legal provisions and decided caselaw, if any:(ii) A dispute arose about the payment of subsistence allowance to a suspended

employee. He claimed the allowance as per the rates prescribed by the law ofthe particular State. The employer wanted to pay as per the rate specified in theIndustrial Employment (Standing Orders) Act, 1946. Will the employee succeed?

(4 marks)

Answer:In the above case, employee claimed the allowance as per the rates prescribed bythe law of the particular state & not as per the rate specified in the Act.

C Section 10-A of the Act provide that where provisions relating to the payment ofsubsistence allowance under any law for the time-being in force in any state aremore beneficial than the rate specified in the Act, then provisions of other law shallbe applicable.Thus, the employee will succeed in this case.



(iii) The employer wants to modify standing orders duly certified by the CertifyingOfficer just after the expiry of 3 months form the date on which the standingorders came into operation. Give suitable advice to the employer. (4 marks)

Answer :C Section 10 of the Industrial Employment (Standing Orders) Act prohibits an

employer to modify the standing orders once they are certified under the Actexcept on agreement between the employer and the workmen or a trade union orother representative body of the workmen.

C Such modification will not be affected until the expiry of 6 months from the date onwhich the standing orders were last modified or certified as the case may be.


(ii) Ankit was placed under suspension for an act of alleged misconduct anddisciplinary proceedings were initiated against him. The inquiry officer couldnot complete the proceedings within the stipulated period of 90 days.The suspended employee demanded an increase in subsistence allowance.Is he entitled to an increase in the subsistence allowance under the IndustrialEmployment (Standing Orders) Act, 1946 ? If so, how much ? Will the positionbe different if the delay in the completion of disciplinary proceedings isattributable to the conduct of Ankit ? (4 marks)

CS Inter Gr. II


2006 - June [7] {C} (a) Discuss the following:(ii) Payment of subsistence allowance to a suspended workman under the

Industrial Employment (Standing Orders) Act, 1946. (5 marks)

Answer:Section 10 A of the Industrial Employment (Standing Order) Act, 1946 provides thatwhere any workman is suspended and inquiry/investigation is pending against theemployee, he shall receive subsistence allowance at the following rate:For first 90 days of suspension Period - 50% of wages which the workman was entitledto immediately preceding the date of such suspensionFor first remaining Suspension Period (Provided delay in disciplinary proceeding in notdue to the conduct of - 75% of such wages workman)


Where— Wages shall be calculated on basis of wages he was entitled before date of

suspension.— Disputes regarding 10A shall be referred to labour court.

2007 - Dec [7]{C} (a) Discuss the following:(iii) Important matters which are to be provided in standing orders under the

Industrial Employment (Standing Orders) Act, 1946 (5 marks)


PRACTICAL QUESTIONS


(i) Sam, an employee of Saurabh Ltd., tendered his resignation from the servicesof the company with effect from 1st July, 2003. The management of the companyimmediately accepted his resignation and this fact was known to Sam. But thecommunication of acceptance of his resignation was sent to Sam after 13 daysfrom the date of receipt of his resignation. Meanwhile, on 9th July, 2003, Samsent a fax message to Saurabh Ltd. withdrawing his resignation.(1) What is the date of acceptance of Sam's resignation letter?(2) Whether the employer should take cognizance of the withdrawal letter of

Sam and he be allowed to resume his duties in Saurabh Ltd.? (3 marks)

Answer:In the given case, date of acceptance of Sam’s resignation letter shall be 1st July 2003.

As per the case of Rajkumar V. Union of India (1969), Supreme Court was of theview that where there are no statutory rules governing the terms and conditions ofservice, it will not be open to the employee to withdraw resignation once it has beenaccepted and he became aware of the same.

2004 - Dec [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(vi) As per the provisions of the Industrial Employment (Standing Orders) Act, 1946,

a workman was entitled to subsistence allowance on suspension. However, thecertified standing orders provided that the workman has to mark his attendanceduring the suspension to claim subsistence allowance. The workman argued thathe could not be compelled to attend the office during the period of suspension.Decide. (3 marks)


Answer:The matters that are to be provided in the standing orders under the Act are as follows :-! Classification of workmen! Shift Working! Attendance! Procedure to be followed for informing hours of work, holidays wages etc. to

workmen! Procedure to be followed with regards to application and grant of leave! Redressal procedure available to workmen in case of any unjust practice

advocated by the employer.! Requirement to enter through specific gates! Closing and reopening of section or temporary stoppage of work and related

matters! Termination of employment and notice related thereto! Suspension or dismissal in case of misconduct.Apart from provisions of Sec10A no other condition needs to complied with, in order toreceive subsistence allowance. In BPCL V/S Petroleum employees union and others(2003) it was held that subsistence allowance given to a workman cannot be curtailedby the standing orders. Hence as the facts, it is evident that the suspended workman cannot be compelled toattend the office during the period of suspension.


(i) A workman was suspended for an act of misconduct. The certified standingorders of the establishment provided that the workman has to mark attendanceto be eligible for subsistence allowance. The workman argued that he could notbe compelled to attend office during the period of suspension. Will he succeed?

(3 marks)

Answer:Please refer 2004 - Dec [7] {C} (b) (vi) on page no. 330

2005 - Dec [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any: (vii) Rakshit was suspended for an alleged act of misconduct and an inquiry was

instituted against him. He did not appear before the inquiry officer on the groundthat the allegations levelled against him were false. The inquiry could not becompleted even after the lapse of six months. He files a case for grant of thesubsistence allowance. Will he succeed? (3 marks)


Answer: (vii) Explain the provisions of Section 10A of the Industrial Employment (Standing

Orders) Act, 1946 as discussed in Please refer 2006 - June [7] {C} (a) (ii) on page no. 329 and 2004 - Dec [7] {C}(b) (vi) on page no. 330

Thus, taking into account the provisions of Section 10A, Rakshit will succeed in gettingsubsistence allowance.


(i) A development officer of an insurance company used to remain absent from dutywithout leave. He was asked to show cause why he should not be removed fromthe service. He sent his reply. Thereupon, he was removed from the servicewithout holding any inquiry, is the removal justified ? (3 marks)

Answer:The facts of the given case are similar to that of -State of Rajasthan V. Sujata Malhotra— In this case Supreme Court was of the view that for removal of an employee from

service on the ground of his remaining absent without authorised permission ofleave can be justified only after holding properly the departmental enquiry.

— Hence in the light of these fact we can conclude that development officer of theInsurance company cannot be removed since any inquiry was not held beforeremoving him.

2008 - June [7] {C} (b) Attempt of the following stating relevant legal provisions anddecided case law, if any: (iv) A worker was placed under suspension and disciplinary proceedings were initiated

against him. The proceedings could not be completed in 90 days after which thesuspended worker demanded increase in subsistence allowance under theIndustrial Employment (Standing Orders) Act, 1946. Will he succeed ? (3 marks)

Answer:Yes, the worker will succeed in procuring an increase in subsistence allowanceprovided the delay in disciplinary proceeding is on account of management default andnot of the workmen.

Subsistence allowance for first 90 days is paid at the rate of 50% and later on at75% of the wages if delay is not attributable to conduct of worker.


Recent Case Laws

No.

Case Law Decision

1 Khadi Gram UdyogSangh

VJit Ram

It was held that the appellate authority has no power toset aside the order of Certifying Officer . The appelateauthority can only confirm or amend the StandingOrders

2 Ind ian ExpressEmployees Union

VIndian Express

It was held in this case that Section 10(2) of the TheIndustrial Employment (Standing Orders )Act, 1946does not contain any time limit for making modificationapplication. It can be made at any time

3 Indian Iron and SteelCo. Ltd

VNinth Industrial

Tribunal

It was held that in case there are two categories ofworkers , daily rated and monthly rated but the cerifiedStanding Orders are made only in respect of daily ratedworkmen and not for monthly rated workmen , then insuch circumstances the Model Standing Ordersprovided under Section 12-A of the the IndustrialEmployment (Standing Orders )Act, 1946 can beapplied to the monthly rated workmen

4 Barauni RefineryP r a g a t i S h e e lParishad

VIndian Oil

Corporation Ltd

It was held that the Industrial Employment (StandingOrders )Act, 1946 is set up to have uniform standingorders in respect of matters enumerated in theSchedule to the Act and is applicable to all workersirrespective of their time of appointment

5 Derby Textiles Ltd V

Karamchaari and

Shramik Union

It was held in this case that the certified standingorders as per the Industrial Employment (StandingOrders )Act, 1946 are binding on both the employerand the employees




1 Discuss the following:Important matters which are to be provided in standingorders under the Industrial Employment (Standing Orders)Act, 1946

07 - Dec [7] {C} (a) (iii), 11 - June [6] (i)

2 Times

2 Write notes on the following: 'Payment of subsistenceallowance' under the Industrial Employment (StandingOrders) Act,1946.

06 - June [7] {C} (a) (ii), 09 - Dec [6] (vi)

2 Times

3 Write notes on the following:(iii) Procedure to be followed for the certification of

standing orders under the Industrial Employment(Standing Orders) Act, 1946.

2010 - June [6] (iii), 12 - June [6] (v), 13 - June [6] (iv)

3 Times

4 Distinguish between the following:‘Model standing orders’ and ‘certified standing orders’under the Industrial Employment (Standing Orders) Act,1946.09 - Dec [7] (a) (ii), 11- June [7] (a) (iii), 12 - Dec [7] (a) (iii)

3 Times

5 Practical Question of –08 - June [7] {C} (b) (iv), 13 - Dec [8] (ii)

2 Times

5.335

Star Rating


On the basis of Questions included every year from a chapter jjjj


18 Factories Act, 1948

This Chapter Includes: Object and Scope of the Act; Important Definition; StatutoryAgencies and their Powers for Enforcement of the Act; Approval, Licensing andRegistration of factories; Notice of Occupier; General Duties; Special provisions;Appeals; Display and Service of Notice; Returns; Right of workers; Schedule.



OBJECTIVE QUESTIONS



(v) A premises including precincts thereof is a 'factory' within the meaning of theFactories Act, 1948 wherein a manufacturing process is being carried on with theaid of power and where the number of workers working is &(a) 10 or more workers(b) 20 or more workers(c) 15 or more workers(d) 50 or more workers (1 mark)

Answer:(v) (a)


(iii) A factory is required to appoint a welfare officer where workers areordinarily employed. (1 mark)

Answer:

A factory is required to appoint a welfare officer where greater than 500 workers areordinarily employed.


(i) The 'occupier of a factory is required to appoint a Welfare Officer where—(a) 250 workers are employed(b) 100 workers are employed(c) 200 workers are employed(d) 500 or more workers are employed.

(ii) Out of the following which is not a manufacturing process—(a) Finished goods and packing there of(b) The making of bidis(c) Stitching old gunny bags and making them fit for use(d) Pumping of water from a tubewell. (1 mark each)

Answer:(i) (d) 500 or more workers are employed (ii) (a) Finished goods and packing thereof.


(ii) The occupier of a factory is required to send a written notice to the ChiefInspector of Factories at least—(a) 7 Days before he begins to occupy or use the premises as a factory(b) 15 Days before he begins to occupy or use the premises as a factory(c) 21 Days before he begins to occupy or use the premises as a factory(d) 10 Days before he begins to occupy or use the premises as a factory.

[Chapter #### 18] Factories Act, 1948 (((( 5.337

(iii) The State Government may make rules regarding the provisions andmaintenance of a canteen for the use of workers wherein more than—(a) 250 Workers are ordinarily employed(b) 500 Workers are ordinarily employed(c) 300 Workers are ordinarily employed(d) 100 Workers are ordinarily employed (1 mark each)

Answer:

(ii) (b) 15 Days before he begins to occupy or use the premises as a factory.

(iii) (a) 250 workers are ordinarily employed.


(ii) When a new manager is appointed for a factory, the occupier shall send to theInspector of Factories a notice in writing within —(a) 7 Days(b) 15 Days(c) 30 Days (d) 45 Days. (1 mark)

Answer:(ii) (a) 7 Days


(iv) An adolescent worker shall be allowed to work only for ________ hours in aweek. (1 mark)

Answer:(iv) 48


(iii) Adolescent means a person who has completed ______ of age but notcompleted his 18th year. (1 mark)

Answer:(iii) 15th year


(v) There must be more than__________workers in a factory for the mandatoryappointment of a safety officer. (1 mark)

Answer:(v) one thousand



(ii) Leave with wages is allowed to the employees if they work for _______ days ina month. (1 mark)

(c) Write the most appropriate answer from the given options in respect of the following:(iii) Which of the following is not a ‘manufacturing process’ under the Factories Act,

1948 –(a) Stitching bags and making them usable(b) Industrial training school imparting training for leather products not for sale(c) Conversion of latex into sheet rubber(d) Conversion of sea water into salt.

(v) A premises including precincts thereof is a ‘factory’ within the meaning of theFactories Act, 1948 wherein a manufacturing process is being carried on with theaid of power and where the number of workers working is –(a) 10 or more workers(b) 20 or more workers(c) 15 or more workers(d) 50 or more workers. (1 mark each)

SHORT NOTES

2008 - Dec [6] Write notes of the following:(iv) 'Manufacturing process' under the Factories Act, 1948. (5 marks)

Answer:According to Section 2(K) of the Factories Act, 1948 the term manufacturing processmeans any process for-

(i) Making, altering, repairing, oiling, ornamenting, finishing, packing, washing,clearing, breaking, demolishing or otherwise for sale, disposal delivery; or

(ii) Generating, transforming transmitting power; or.(iii) Pumping oil, water or sewage; or (iv) Printing, composing types for printing or book binding ; or (v) Repairing, constructing, finishing etc of vessels or ships; or(vi) Preserving or storing in cold storage.

2009 - June [6] Write notes on the following:(vi) 'Occupier' under the Factories Act.- 1948. (5 marks)

Answer:The term ‘Occupier’ as defined under Section 2 (a) of the Act, means a person who hasultimate control over the affairs of the factory:


) Following shall be deemed as occupier in these cases:C Firm/association of individual-partner/member.C Company - Any directorC Factory owned/controlled by central or state government - person appointed

to manage the affairs.) are prescribed under section 7A of the Act, [via factories (amendment) Act, 1987]

are as follows:) He should ensure worker’s:

C HealthC Safety andC welfare

) He should make a written statement of the policy adopted by him with respect tothe aforesaid points (health, etc.) and even make the workers aware about thesame.

) He shall provide:C Proper maintenance of the plants so as to ensure that they are safe.C Safety arrangement with regards to use, handling and transportation of

substances C Training and supervisionC Safe access to all places of work in the factory.C Adequate facilities and arrangements for welfare of the workers in the

factory.

2009 - Dec [6] Write notes on the following:(iv) 'Hazardous process' under the Factories Act, 1948. (5 marks)

Answer:‘Hazardous process’ has been defined under the Factories Act, 1948. It means anyprocess or activity which:• causes material impairment to the health of the persons who are engaged in that

process or activity.• result in the pollution of the general environment.Special provisions relating to hazardous process are being there in the Factories Act,1948 such as:-• Constitution of site appraisal committees.• Compulsory disclosure of information by the occupier• Provisions relating to the responsibility of the occupier.

2010 - Dec [6] Write notes on the following:(i) Provisions relating to ‘hazardous processes’ under the Factories Act, 1948.

(5 marks)


Answer:Please refer 2009 - Dec [6] (iv) on page no. 339

2011 - June [6] Write notes on the following:(ii) General duties of an ‘occupier’ under the Factories Act, 1948. (5 marks)

Answer:Please refer 2009 - June [6] (vi) on page no. 338

2011 - Dec [6] Write notes on the following:(iii) ‘Manufacturing process’ under the Factories Act, 1948. (5 marks)


2012 - Dec [6] Write notes on the following:(iii) Special provisions relating to hazardous processes under the Factories Act,

1948. (5 marks)


+The duties and responsibilities of an occupier of factory handling hazardous process ascontained under section 41B and 41C of the Act are as follows:Y Section 41 B casts upon the occupier duty to compulsorily disclose the following

information:C Hazardous processes and related dangers to the Chief Inspector.C Accurate quantitative details of wastes and the disposal of the aforesaid needs

to be given.C Detailed policy with regards to health, welfare and safety of workers of factory

involved in hazardous process to the chief Inspector and local authority needsto be given.

C An onsite emergency plan and detailed disaster control measures to be initiatedin acute cases needs to be drafted by the occupier and spread awareness to theworkers about the same.

C Communication to the inspector within 50 days if factory engages as oncommencement date or proposes to engage, any hazardous process.

C Contravention in the aforesaid may even lead to cancellation of the licence.

Y Specific responsibility as prescribed under section 41C in relation to

hazardous processes are:C Accurate and up to date health records of workers exposed to harmful

substances and ensure accessibility of such records to workers.


C Appoint persons:

! qualified and experienced in handling hazardous substance

! Competent supervisors.

C Insure medical examination of workers involved in handling hazardous

substances.


(i) Provisions relating to employment of women under the Factories Act, 1948.

(5 marks)

Answer :

C The provisions relating to working hours of adult workers, both male and female

are provided under Section 51 to 66.

C Apart from that, additional provisions are contained in section 66 of the Act.

C No exemption will be granted to female worker, from the provisions of Section 54

relating to daily hours of work.

C Women worker shall not be employed between the hours of 6 a.m and 7 p.m.

However, the State Government may by a Notification in the Official Gazette, vary

these limits to the extend that no women shall be employed between the hours of

10 p.m and 5 a.m.

C There shall be no change of shifts except after a weekly holiday or any other

holiday.

C State Government is empowered to make rules granting exemptions from the

above stated restriction in respect of women working in fish - curing or fish canning

factories.


(ii) Special provisions relating to hazardous processes under the Factories Act,

1948. (5 marks)


DISTINGUISH BETWEEN


(iii) 'Young person' and 'adult' under the Factories Act, 1948. (5 marks)

Answer:

Basis Adult Young person

(1) Relevant section Section 2 (a) ofFactories Act, 1948

Section 2 (d) of the FactoriesAct, 1948

(2) Definition A person who hascompleted 18 yearsof age.

Defined as a person who iseither a child or adolescent.Thus excludes adult.


(iii) ‘Premises’ and ‘precincts’ under the Factories Act, 1948. (5 marks)

Answer:

Premises and precincts

The word “premises” is a generic term meaning open land or land with building or

building alone. The term ‘precincts’ is usually understood as a space enclosed by walls.

Expression ‘premises’ including precincts does not necessarily mean that the premises

must always have precincts. It merely shows that there may be some premises with

precincts and some premises without precincts. The word ‘including is not a term’

restricting the meaning of the word ‘premises’, but is a term which enlarges its scope.

All the length of railway lime would be phase wise factories (LAB/C 1999 SC 407).

Company engaged in construction of railway lime is factory. (LAB/C 1999 SC 407).

The Supreme Court in Ardeshir H. Bhiwandiwala v. State of Bombay, AIR 1962

S.C. 29, observed that the legislature had no intention to discriminate between workers

engaged in a manufacturing process in a building and those engaged in such a process

on an open land and held that the salt works, in which the work done is of conversion

of sea water into crystals of salt, come within the meaning of the word ‘premises’.

2011 - June [7] (a) Distinguish between the following:(iv) ‘Premises’ and ‘precincts’ under the Factories Act, 1948. (5 marks)

Answer:Please refer 2010 - June [7] (a) (iii) on page no. 342



(iii) ‘Young person’ and ‘adult’ under the Factories Act, 1948. (5 marks)

Answer :

Please refer 2009 - June [7] (a) (iii) on page no. 342

PRACTICAL QUESTIONS

2008 - Dec [8] Attempt of the following stating relevant legal provisions and case law,

if any:

(iii) Workmen of an electricity generation station claimed that their unit is covered

under the definition of 'factory' considering the process of transforming and

transmission of electricity generated at the power station as a 'manufacturing

process'. Will their claim succeed ? (4 marks)

Answer:

No, the workmen will not succeed since the process of transforming and transmission

of electricity generated at power station does not fall within the purview of manufacturing

process and hence is not a factory.

2009 - June [8] Attempt the following stating relevant legal provisions and decided case

law, if any:

(vi) Ghee brought from various customers is sampled chemically, analysed and

packed in tins for transportation to the head office of the company for sale in the

market. Does it amount to manufacturing process under the Factories Act, 1948?

(4 marks)

Answer:

In the above case ghee brought from the various customers is sampled chemically,

analysed and packed in tins for transportation to the head office of the company for sale

in the market. It will amount to manufacturing process under the Factories Act, 1948.

2009 - Dec [8] Attempt the following stating relevant legal provisions and decided case

law, if any:

(iii) Designers Ltd. is engaged in fabrication work of window grills with the aid of

power and has employed 19 workers. Recently, it appointed 2 gardeners for

gardening in its factory premises. Is the company liable to extend the benefits to

the gardeners as applicable to other factory workers ? (4 marks)


Answer:Yes, the company will be liable to extend the benefits to the gardeners as applicableto other factory workers since all persons employed in the factory whether or notemployed as workers are allowed benefits of the Factories Act, 1948.


(ii) The workers were engaged by beedi manufacturer for rolling beedies at homesubject to the rejection of defective beedies by manufacturer. The workersclaimed that they should be treated as ‘workers’ under the provisions of theFactories Act, 1948. Will they succeed? (4 marks)

Answer:Though Beedi making is regarded as a manufacturing process as per the Factories Act,1948, however persons engaged for rolling beedies at home shall not be treated asworker as was held in Shankar Balaji Waje v/s State of Maharashtra. The personsengaged in rolling of beedies were performing the function at their respective homesand were having full freedom and were not subjected to the direct control orsuperintendence of the employer. Though the owner enjoys the right to reject thedefective beedies yet he doesn’t enjoys an effective control over the beedi roller andthus they cannot be regarded as workers within the meaning of Factories Act, 1948.


(v) A government enterprise issues raw materials to the weavers registered underit to manufacture handloom cloth as per the specifications given. The weaverstake raw material and manufacture cloth in the looms installed by them. Thegovernment enterprise procures the finished goods from the weavers. Statewhether weavers are the workers of the government enterprise under theprovisions of the Factories Act, 1948. (4 marks)

Answer:For calling the weavers to be the employees of the Government, there must beemployee employer relationship between them. That is there must be a contract ofservice and not contract for service. A person is an employer when he has a right ofcontrol & supervision over his employee. In the given case the Government only issues raw material to the weavers tomanufacture cloth, so prima facie it can be observed that weavers cannot called theemployees of Government.



(iii) Sooraj Hospital has a laundry in its premises to ensure a high degree of hygienestandard for washing the linen used in the hospital. The employees of thehospital work in the laundry and the laundry cannot be separated from thehospital. The inspector of factories issued a notice to Sooraj Hospital to registerit as a factory. Is he justified? (4 marks)

(vii) Amar was the owner of a ginning factory. Certain persons were engaged inputting the ginned cotton into what was called bojhas and they were engaged forthat work not by the owner but by the merchants who owned cotton. The ownerhad not entered their names in the attendance register of the factory. Are thepersons employed by the merchants covered under the category of ‘workers’under the provisions of the Factories Act, 1948? (4 marks)

Answer:

(iii) C In this case, the hospital has a laundry in its premises and the inspector offactories issued a notice to hospital to register it as a factory.

C As per the provisions of the Act, the primary character of the main institutionalone has to be taken into consideration to determine whether it is factory ornot

C The laundry in the hospital is not a factory as per the Act since the maininstitution is not a factory

C The inspector of factories is not correct as held in ‘Dr. PSS Sundar Rao V/sInspector of Factories, Vellore’.

(vii) C The facts of the case are similar to ‘Local Government V/s Nauserwanji AIR’C In case the work performed by the workers are incidential to or connected with

the manufacturing process then those workman will be covered under thecategory of workers.

C Thus in the above case the workers employed by the merchants coveredunder the category of ‘workers’ under the provisions of the Factories Act,1948.


(iv) Hotel Harsha Ltd. has engaged an electrician to attend to electricalrepairs required in the hotel. There is an agreement between the hotel and theelectrician that he will be required to attend to repair work whenever required on

call. The electrician is paid a consolidated sum of ` 10,000 per month for theservices rendered by him. Can the electrician be called an employee of the hotelunder the provisions of the Factories Act, 1948 ? (4 marks)


Answer:

C In the above case, agreement between Hotel Harsha Ltd. & electrician is an

agreement for services & not agreement of service.

C There is no existence of right of the employer to supervise & control the work done

by the employee.

C In this case electrician is required to work as & when required & he is an

independent contractor.

• Thus, electrician is not an employee of the hotel under the provisions of the

Factories Act, 1948.

2013 - June [8] Attempt of the following stating relevant legal provisions and decided

case law.

(vi) Some workers were engaged in the processes of moistening, stripping, breaking-

up and packing of sun-cured tobacco leaves with a view to transporting these to

company’s main factory for their use in manufacturing cigarettes. Do these

processes amount to ‘manufacturing process’ under the Factories Act, 1948 ?

(4 marks)

Answer :

Yes, processes of stripping, breaking up, adaption, packaging of sun used tobacco

leaves amount to manufacturing processes under the Factories Act, 1948.

C The same was held in the case of V. P. Gopal Rao. V Public Prosecutor.

2013 - Dec [8] Attempt the following stating relevant legal provisions and decided case

law:

(iii) The Board of directors of a company appointed Chander, its production

manager, who controlled the operations of the factory as the ‘occupier’. The

Chief Inspector of Factories refused to approve the appointment of Chander as

the ‘occupier’. The company intends to challenge the orders of the Chief

Inspector of Factories. Will the company succeed ? (4 marks)


CS Inter Gr. II


2004 - Dec [7] {C} (a) Discuss the following:(iii) 'Occupier' under the Factories Act, 1948. (5 marks)

Answer:(iii) Please refer 2009 - June [6] (vi) on page no. 338

2005 - June [7] {C} (a) Discuss the following:(ii) Special provisions of the Factories Act, 1948 relating to hazardous processes.

(5 marks)Answer:

(ii) Section 41 A empowers state government to appoint site appraisal committeewhose function will be to advise government and examine application forestablishment on expansion of factory involving hazardous processes.

Section 41B requires compulsory disclosure of information by the occupier, detailedpolicy relating to health and safety and disaster control.Section 41C cast specific responsibly on occupier to maintain health record and providefor medical examination of workers.

2007 - June [7] {C} (a) Discuss the following:(iii) General duties of the occupier. (5 marks)

Answer:(iii) Please refer 2009 - June [6] (vi) on page no. 338

PRACTICAL QUESTIONS


(i) A licensed salt producer engaged workmen in open land in which work was doneto convert sea water into crystals of salt. Whether the workmen working in openland are employed in the premises of the factory? (3 marks)

Answer:Yes, the workmen working in open land are employed in the premises of the factory.The ruling of the Supreme Court in case of Ardishir H Bhiwande Wala V. State ofBombay states that salt made from sea water is considered as a manufacturing processand as per section 2(m) of the Factories Act, 1948, factory is defined as a premises


wherein 10 or more persons are engaged if power is used or 20 or more persons wherepower is not used in case of manufacturing process. The term premises even includesland and hence workmen working in open land will be said to be working in thepremises of the factory.


(iv) The Board of directors of a company appointed its deputy general manager, whocontrolled the operational activities of the factory, as its ‘occupier’. The ChiefInspector of Factories (CIOF) did not approve the appointment. Can thecompany succeed against the CIOF for having refused to accept its seniorfunctionary’s appointment as the ‘occupier’ ? (3 marks)

Answer:According to Factories Act, company owing factory cannot nominate its employees orofficers except director of the company as occupier of its factory as held in J.K.Industries Ltd. V Chief Inspector of Factories. In this case it was decided that theonly a member of the board of directors of the company can be the occupier of thefactory of the company hence the company will not succeed against the CIOF for havingrefused to accept its senior functionary’s appointed as the occupier.2006 - Dec [7] {C} (b) Attempt the following stating the relevant legal provisions andcase law, if any:(vii) A small-scale establishment uses materials, like sleepers, bolts, nuts, etc., for

supply to the railway department for laying tracks. Is the establishment carryingon ‘manufacturing process’ ? (3 marks)

Answer:According to the Factories Act, 1948 manufacturing process includes use of rawmaterials like sleepers, bolts, loose rails etc. to adaptation of their use for laying downrailway line as held in Lalmohamad, V Indian Railway Construction Co. Ltd.. Thus,the small scale establishment will be a carrying manufactured process under thefactories Act, 1948.


(v) Dare Davil Ltd. has no industrial dispute pending in any labour court. In orderto rationalise working conditions, it wants to change hours of work, leave withwages, and holidays. Can the company do so? (3 marks)

(vi) Navratna Public Sector Undertakings have factories throughout the country.These undertakings have an impeccable record of best welfare measures andworking conditions. Do these undertakings still require to appoint welfareofficers in their factories? (3 marks)


Answer:(v) Dare Davil Ltd, in order to rationalise the working conditions, wants to change

the hours of work, leave with wages & holidays. But before enforcing thesechanges, the Dare Davil Ltd. has to give notice to the workmen likely to beaffected by such change according to section 9 -A of the Industrial disputes Act,1947 Thus, they are advised to give notice to the workers affected by suchchanges on a proper time period.

(vi) Navaratna Public Sector Undertakings have to appoint welfare officers in theirfactories if the number of workers in the undertaking exceeds the prescribedworkers. It will not be a deciding criteria that whether the undertaking havefactories throughout the country or not.



1 Write notes on the Provisions relating to ‘hazardousprocesses’ under the Factories Act, 1948.

09 - Dec [6] (iv), 10 - Dec [6] (i), 12 - Dec [6] (iii)13 - Dec [6] (ii)

4 Times

2 Write notes on ‘General duties of an ‘occupier’ under theFactories Act, 1948..

07 - June [7] {C} (a) (iii), 11 - June [6] (ii)

2 Times

3 Distinguish between ‘Premises’ and ‘precincts’ under theFactories Act, 1948.

10 - June [7] (a) (iii), 11 - June [7] (a) (iv)

2 Times

4 Write notes on ‘Manufacturing process’ under theFactories Act, 1948. 08 - Dec [6] (iv), 11 - Dec [6] (iii)

2 Times

8 Distinguish between 'Young person' and 'adult' under theFactories Act, 1948. 09 - June [7] (a) (iii),

013 - June [7] (a) (iii)

2 Times

5.350

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19 The National Green Tribunal

Act, 2010



OBJECTIVE QUESTIONS


(v) Under the National Green Tribunal Act, 2010, the Supreme Court, may entertainany appeal after the expiry of ___________ days, if it is satisfied that theappellant was prevented by sufficient cause from preferring the appeal.

(1 mark)

[Chapter #### 19] The National Green Tribunal Act, 2010 (((( 5.351


2013 - Dec [5] (b) Enumerate the powers of the National Green Tribunal for the purposeof discharging its functions under the National Green Tribunal Act, 2010. (5 marks)

Topics not yet asked in Examinations but equally important for examinations.

SHORT NOTES

Question No.1: Write short note on:‘Hazardous Substance’ under National Green Tribunal Act, 2010.

Answer: • Section 2 defines the term ‘Hazardous Substance’.• It means any substance or preparation which is defined as hazardous substance

in the Environment (Protection) Act, 1986, and exceeding such quantity asspecified or may be specified by the Central Government under the Public LiabilityInsurance Act, 1991.

Question No.2: Write a note on:Composition of the Tribunal under the National Green Tribunal Act, 2010.

Answer:Tribunal under the National Green Tribunal Act, 2010 shall consist of chairperson & notless than 10 but subject to.................? notifies and not less 10 but subject to maximumof 25 full time expert members, as the Central Government notify.• The chairperson may invite any one or more person having specialised knowledge

& experience to assist the tribunal in a particular case.


Question No.1: List out the Acts specified on the 1st schedule to the National GreenTribunal Act?

Answer:Some of the Acts specified in the 1st schedule to the National Green Tribunal Act are asunder:-

(i) The Water ( Prevention & Control of Pollution) Act, 1974.(ii) The Water (Prevention & Control of Pollution) cess Act, 1977.


(iii) The Forest (Conservation) Act, 1980.(iv) The Air (Prevention & Control of Pollution) Act, 1981.(v) The Environment (Protection) Act, 1986.(vi) The Public Liability Insurance Act, 1991.(vii) The Biological Diversity Act, 2002.

Question No.2: List out the heads under which compensation for damages may beclaimed in the schedule II to the National Green Tribunal Act, 2010.

Answer:Some of the heads under which compensation for damages may be claimed are asunder:-

(i) Death,(ii) Permanent, temporary, total or partial disability or other injury or sickness.(iii) Loss of wages due to disability arising of total or partial, permanent or temporary

disability.(iv) Medical expenses due to sickness or treatment of injuries.(v) Expenses incurred by Government in providing relief to the affected person.(vi) Claims on account of any harm, damage or destruction to fauna.(vii) Claims on account of any harm, damage or destruction to flora.(viii) Claims on account fo any harm or damage to environment or ecosystem.(ix) Loss’ of employment or business or both.

Question No. 3: Describe the procedure for making an appeal to Tribunal.

Answer:Section 18 provides the procedure for making an appeal to the Tribunal• As per the provisions of Section 18 following persons can make an appeal to

Tribunal.• The person, who has sustained the injury; or.• The owner of the property, whose property has been damaged; or• Legal representative of the deceased persons.• Any agent duly authorised by such person.• Any person aggrieved, including any representative body or organisation; or• Central Government or a State Government, or a Union Territory Administration or

the Central Pollution Control Board or a State Pollution Control Board or a PollutionControl Committee or a local authority or any environmental authority constitutedunder the relevant Act.

[Chapter #### 19] The National Green Tribunal Act, 2010 (((( 5.353

Question No. 4: Enumerate the powers of the National Green Tribunal.

Answer:The powers of the National Green Tribunal are prescribed under Section 19 of the Act.The Tribunal is guided by principles of natural justice............................?Green Tribunal are as follows:-• Enforcing the attendance of any person;• Summoning & examining the person on oath;• Requiring discovery & production of documents;• Receipt of evidences on affidavits;• Requisition of any public record, or document or copy of it from public offer.• Summoning for examination of witnesses or documents.• Reviewing its decisions.• Dismissing a representation in case of default.• Giving expert decisions.• Setting aside any order.• Any other matter prescribed by Central Government.

Question No. 5: State the objective of constituting National Green Tribunal.

Answer:The objectives of constituting National Green Tribunal are as under:-• Effective & Expeditious disposal of cases relating to environmental protection.• To conserve forests & natural resources.• Enforcement of any legal right relating to environment.• Providing relief & compensation for damages to persons & property.• Any other matter connected therewith or incidental thereto.

5.354

Star Rating




20 Objective Questions


2008 - Dec [2] State, giving reasons in brief, whether the following statements are true

or false. Attempt any five:(i) The Competition Act, 2002 prohibits dominance as well as the abuse of

dominant position. (3B)(ii) In all legal proceedings relating to trade marks, registered under the Trade

Marks Act, 1999, the original registration and all subsequent assignments andtransmissions thereof shall be conclusive proof of its validity. (7)

(iii) Money laundering is a national phenomenon and stern measures are of criticalimportance at the national level. (8)

(iv) The Public Liability Insurance Act, 1991 was enacted for the purpose ofproviding immediate relief to the workers affected by accidents occurring whilehandling the hazardous substances. (6)

(v) Duty Free Replenishment Certificate (DFRC) is issued to a merchant exporteror manufacturer exporter for the imports used in the manufacture of goodswithout payment of any basic customs duty whatsoever. (2)

(3 marks each)

Answer:(i) The given statement is false. The Competition Act, 2002 aims not to prohibit

dominance rather it forbids enterprises from making abuse of such dominantposition. Section 4(2)(a) and 4(2)(b) describes abuse of dominance position.Thus the Competition Act, 2002 prohibits abuse of dominant position.

(ii) The given statement is true since Section 31 of the Trademarks Act, 1999provides that in all the legal proceedings relating to trademarks registered theoriginal registration and all assignments and transmission shall act as conclusiveproof.

(iii) The given statement is false. The reason behind this is that money launderingis not a national rather international phenomenon and all nations have to takeactions against this to curb this evil practice.

[Chapter #### 20] Objective Questions (((( 5.355

(iv) The given statement is false. The objective behind enactment of this Act was notto provide relief measures to the workers since in that case there exists specificprovisions of Workmen Compensation Act, rather PLI Act 1991 was enacted toprovide immediate relief to persons affected by accident on account of handlinghazardous substances.

(v) The given statement is true. DFRC is used in manufacturing goods without thepayment of BCD i.e. Basic customs duty and is issued by merchant/manufacturer exporter in relation to products falling within the notified productscomplying standard input/output norms.

(vi) The given statement is false. The term 'unfair trade practice' finds its room inSection 36 A which provides a specific definition. Even when erroneousdescription of manufacturing company has been made but the since is notcovered under Sec. 36A and cannot be construed as unfair trade practice ( formisleading advertisement refer 1999 June[1]{C}(v) on page no. 22)

2008 - Dec [3] (b) Re-write the following sentences after filling-up the blank spaces withappropriate word(s)/figure(s):

(i) Release of foreign exchange facilities for emigration exceeding US$__________ or amount prescribed by the country of emigration requires priorapproval of RBI. (5)

(ii) No permission from the Central Government is required to receive foreign

contribution from a relative not exceeding value of ̀ _________ per year subjectto its intimation to the Central Government. (5)

(iii) An Indian citizen resident outside India may acquire any immovable property inIndia other than ________ . (5)

(iv) Remittance of foreign exchange exceeding US$ _____ per project for anyconsultancy services procured from abroad requires prior approval of RBI. (5)

(v) The minimum time for applying for technological upgradation of the existingcapital goods imported under the Export Promotion Capital Goods (EPCG)Scheme is _________ from the date of issuance of the authorization. (5)

(1 mark each)

Answer:(i) 5000 (ii) 8000

(iii) agricultural (iv) 1 Million(v) 5 years


(i) Minimum wages are to be fixed on the basis of standard normal working hoursnamely __________ hours a week. (9)


(ii) Every employee shall be entitled to be paid by his employer in an accountingyear, bonus, provided he has worked in the establishment for not less than_________ working days in that year. (10)

(iii) __________ means the temporary closing of a place of employment orsuspension of work or the refusal by an employer to continue to employ anynumber of persons employed by him. (16)

(iv) ______ means the termination by the employer of the services of a workman forany reason whatsoever otherwise than as a ;punishment inflicted by way ofdisciplinary action. (16)

(v) The Trade Unions Act, 1926 provides for the ______ of an unfair labour practiceeither by the employer or the trade unions or workmen. (16)

(1 mark each)Answer:

(i) 48 (ii) 30(iii) Lay off (iv) Retrenchment(v) prohibit/stoppage


(i) To make an employer liable under the Workmen's Compensations Act, 1923, itis necessary that the injury is caused by an accident which must arise -

(a) Out of employment(b) In the course of employment(c) Out of employment and in the course of employment(d) By any other reason. (14)

(ii) An insured person under the Employees' State Insurance Act, 1948 is entitledto receive certain benefits. But the insured person is &

(a) Not entitled to receive more than one benefit for the same period(b) Entitled to receive more than one benefit for the same period on

compassionate grounds(c) Entitled to receive one benefit partly in cash and receive the other benefit

in kind for the same period(d) Entitled to receive more than one benefit on proof of authorities

concerned. (13)(iii) Under the Payment of Gratuity Act, 1972 where the services of an employee

have been terminated for any act which constitutes an offence involving moralturpitude provided that such offence is committed by him in the course of hisemployment, the gratuity payable to the employee may be -

(a) Wholly or partially forfeited(b) Only partially forfeited(c) Wholly forfeited(d) Forfeited in instalments. (11)


(iv) Under the Contract Labour (Regulation and Abolition) Act, 1970, the principalemployer of an establishment can employ contract labour if -

(a) The principal employer has not obtained the certificate of registration(b) The work is of urgent nature(c) The work is not of perennial nature(d) The work provides instant employment to a considerable number of

unemployed persons. (15)(v) A premises including precincts thereof is a 'factory' within the meaning of the

Factories Act, 1948 wherein a manufacturing process is being carried on with theaid of power and where the number of workers working is &

(a) 10 or more workers(b) 20 or more workers(c) 15 or more workers(d) 50 or more workers (18)

(1 mark each)

Answer:(i) Ans.(c)(ii) Ans.(a) (iii) Ans.(a)(iv) Ans.(c) (v) Ans (a)

2009 - June [2] State, giving reasons in brief, whether the following statements are true

or false. Attempt any five:(i) In case an EOU fails to achieve its export obligations, it shall be liable to pay

penalty at the time of exit. (2)(ii) A person resident outside India can sell the shares and convertible debentures

of an Indian company to whomsoever he wants. (5)(iii) 'Goods' means every kind of movable property other than actionable claims and

includes stock and shares even before allotment. (4)(iv) Tea is a 'food stuff' and hence constitutes an essential commodity under the

Essential Commodities Act, 1955. (4)(v) An association pursuing a definite cultural, economic, educational, religious or

social programme can receive foreign contribution without any limits. (5)(vi) The provisions contained in the Special Economic Zones Act, 2005 shall have

effect not withstanding anything inconsistent therewith contained in any other lawfor the time being in force. (2)

(3 marks each)


Answer:

(i) True: • Export Oriented Units (EOU) shall be liable to penalty at the time of exit in

case they are unable to fulfill their export obligations.• Also they shall be required to make payment of custom duty and Excise duty

and obtain ‘no dues certificate’ from Customs/Excise authority and thusobtain their consent also before adopting an exit route.

• Apart from this, prior approval of Development Commissioner shall also berequired.

(ii) False: A person resident outside India cannot sell the shares and convertibledebentures of an Indian company to whomsoever he wants, rather he can sellthe same only through a registered broker.

(iii) False: Though ‘goods’ include shares and stock but the same are regarded asgoods only when the same are allotted. Thus, before allotment shares andstocks cannot be regarded as goods.

(iv) False: Tea is not regarded as a ‘food stuff’ as it neither nourishes the body norsustains or promotes the growth.

‘Essential commodity’ has been defined under Section (2A) of EssentialCommodities Act, 1955 so as to mean a commodity specified in the schedulewherein the schedule charts out the following commodities -

- Drugs - Fertilizer (organic/inorganic/mixed)- Foodstuff- hank yarn made from cotton - Petroleum and petroleum products- raw jute and jute textiles - Seeds of foodcrops cattlefodder and jute seeds.Some note worthy points following were held to be foods stuff in variousjudgements - Paddy - Turmeric - Milk- Ice- Pepper, cloves etc.However tea is not a food stuff as it neither nourishes the body nor sustains norpromotes its growth.

(v) True: Section 6 of the FCRA, 1976 allows registered associations pursuingdefinite cultural, economic, educational, religious or social programme canreceive foreign contribution but at the same time they are also required tocommunicate the details of the amount, reasons and source to the CentralGovernment.


(vi) True: The provisions contained in the SEZ Act, 2005 shall have effect ‘NOTWITHSTANDING’ anything inconsistent in any other law for the time being inforce, thereby granting overriding power.Thus SEZ Act 2005 shall prevail the other laws, irrespective of theinconsistencies.


(i) Under the Consumer Protection Act, 1986, the limitation period forfiling a complaint from the date of cause of action is !(a) 60 days(b) 6 months(c) 1 year(d) 2 years. (3C)

(ii) The amount representing the full export value of goods is required tobe realised and repatriated in India within !

(a) 6 months(b) 3 months(c) 1 year(d) 2 years. (5)

(iii) The issue of Foreign Currency Convertible Bonds (FCCBs) in anyfinancial year is subject to a ceiling of !

(a) ` 50 crore(b) US $ 500 million

(c) ` 100 crore(d) US $ 1 million. (5)

(iv) A registered trade mark requires to be renewed on expiry of the period of !(a) 7 years(b) 10 years(c) 14 years(d) 5 years. (7)

(v) Foreign direct investment (FDI) is prohibited in !(a) Infrastructure sector(b) Hospitals(c) Retail trade(d) IT sector. (5)

(1 mark each)


Answer:(i) (d) 2 years(ii) (c) 1 year(iii) (b) US $ 500 million (iv) (b) 10 years(v) (b) Hospitals


(i) Minimum years of contributory service is required for entitlement ofpension under the Employees' Provident Funds and Miscellaneous ProvisionsAct, 1952. (12)

(ii) It is mandatory to register an establishment under the Contract Labour(Regulation and Abolition) Act, 1970 in case it employs labour througha contractor. (15)

(iii) A factory is required to appoint a welfare officer where workers areordinarily employed. (18)

(iv) The 'employer of an industrial establishment having 100 or more employees isrequired to submit draft standing orders within months from the date on

which the Industrial Employment (Standing Orders) Act, 1946 becomesapplicable. (17)

(v) Contracting out of compensation by a workman under an agreement shall be . (14)

(1 mark each)Answer:Re-write the following sentences after filling in the blank spaces with appropriate word(s)/ figure (s) -

(i) Minimum 10 years of contributory service is required for entitlement of pensionunder the Employee’s Providend Funds and Miscellaneous Provisions Act, 1952.

(ii) It is mandatory to register an establishment under the contract. Labour(Regulation and Abolition) Act, 1970 in case it employs equal to 20 or abovelabour through a contractor.

(iii) A factory is required to appoint a welfare officer where greater than 500 workersare ordinarily employed.

(iv) The employer of an industrial establishment having 100 or more employees isrequired to submit draft standing orders within six months from the date onwhich the Industrial Employment (Standing Orders) Act, 1946 becomesapplicable.

(v) Contracting out of compensation by a workman under an agreement shall bevoid.



(i) The appropriate government shall revise the minimum rates of wages under theMinimum Wages Act, 1948 at least once in every !(a) 2 years(b) 3 years(c) 4 years(d) 5 years (9)

(ii) The disputes relating to benefits under the Employees' State Insurance Act,1948 are required to be filed in !(a) Civil Court(b) Employees' Insurance Court(c) Labour Court(d) Industrial Tribunal. (13)

(iii) An employee is entitled to receive bonus provided he has worked in anaccounting year in the establishment for not less than !(a) 30 working days(b) 1 year(c) 8 months(d) 4 months. (10)

(iv) An employer is not liable to pay compensation under the Workmen'sCompensation Act, 1923, if the injury does not result in disablement for a periodexceeding !(a) 1 week(b) 3 days(c) 1 month(d) 6 months. (14)

(v) The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 isapplicable to commercial establishments employing !(a) 10 or more employees(b) 20 or more employees(c) 50 or more employees(d) 100 or more employees. (12)

(1 mark each)

Answer:(i) (d) 5 years(ii) (b) Employee’s Insurance Court(iii) (a) 30 working days(iv) (b) 3 days(v) (b) 20 or more employees


2009 - Dec [2] State, with reasons in brief, whether the following statements are true

or false. Attempt any five:(i) A person can export or import without an importer-exporter code (IEC) number.

(2)(ii) The manufacture of a non-standard weight or measure is prohibited under the

Standards of Weights and Measures Act, 1976. (4)(iii) A reasonable opportunity of being heard must be afforded to a person before

ordering confiscation of an essential commodity under the EssentialCommodities Act, 1955. (4)

(v) The Competition Act, 2002 does not prohibit dominance, but the abuse ofdominant position. (3B)

(vi) A trade mark may not distinguish the goods of one manufacturer or trader fromsimilar goods of other manufacturers or traders. (7)

(3 marks each)

Answer:

(i) False, a person cannot export or import without an Importer-Exporter Code (IEC)number if that importer or exporter comes under exempted categories.

The foreign trade policy prohibits. the export or import by any person withoutan Importer-Exporter Code (IEC) number unless specifically exempted.

The following categories of persons are specifically exempted from takingIEC number:(i) Importers covered by Clause 3(1) Except sub clauses (e) and (i) and

exporter covered by clause 3(2) (except sub clauses (i) and (k) of theForeign Trade (Exemption from application of Rules in Certain cases) Order,1993.

(ii) Ministries of Central or State Government.(iii) Persons importing or exporting for personal use.(iv) Persons importing/ exporting goods from Nepal provided the CIF value of a

single consignment does not exceed ` 25,000.(v) Persons Importing /Exporting good from ‘1' to Myanmar through Indo-

Myanmar border areas provided, the CIF value of a single consignment does

not exceed ` 25,000.

(ii) True, Section 21 of Standards of Weights & Measures Act prohibits use of non-standard weight or measure. It says that no weight, measure or numeral otherthan the standard weight, measure or numeral shall be used as a standard.weight, measure or numeral.Thus the Act prohibits the use non-standard weights and measure.


(iii) True, before confiscation of an essential commodity under the EssentialCommodities Act 1955, an reasonable opportunity of being heard must beafforded to a person whose goods are about to be confiscated. Beforeconfiscation a notice is required to be served in writing informing him of thegrounds on which it is proposed to confiscate the goods. And also to provide hima reasonable opportunity of making a representation in writing within areasonable time and give him a reasonable opportunity of being heard.

(iv) True, According to the definition given under section 2 (V) of Restrictive TradePractices Act, trade practice means any practice relating to the carrying on ofany trade and includes –1. anything done by any person which controls or affects the price charged by

or the method of trading of any trader or any class of trader.2. a single or isolated action of any person in relation to any trader.

6 Thus we can conclude that trade practice includes a single or isolatedaction of any person in relation action to any trade.

(v) True, Section 4 of the Competition Act 2002, expressly prohibits any enterpriseor group from abusing its dominant position, meaning thereby a position ofstrength enjoyed by an enterprise.

Thus the Act does not prohibit the dominance position, it only prohibit themisuse of such dominant position by an enterprise.

(vi) False, A trade mark distinguished the goods of one manufacturer or trader fromsimilar goods of other manufacturer or trader.

According to definition, a trade mark has been defined as to mean a markcapable of being represented graphically and which is capable of distinguishingthe goods or services of one person from those of others and may include shapeof goods, their packaging and combination of colour.


(i) The Consumer Disputes Redressal Forum shall not admit a complaint unless itis filed within_________years from the date on which the cause of action hasarisen. (3C)

(ii) Indian parties are prohibited from making investment in a foreign entity engagedin_________. (5)

(iii) The company which has exported goods is required to realise the full value ofgoods within_________ days. (5)

(iv) For setting-up an EOU, three copies of the application in the prescribed formmay be submitted to the_________. (2)


(v) The State Commission under the Consumer Protection Act, 1986 can entertaincomplaints where the value of the goods or services and the compensation, ifany, claimed exceeds `_________, but does not exceed ` _________. (3C)


(i) The consumer dispute Redressal Forum shall not admit a complaint unless it isfiled within. 2 years. Years from the date on which the cause of action hasarisen.

(ii) Indian parties are prohibited from making investment in a foreign entity engagedin real estate and banking business.

(iii) The company which has exported goods is required to realise the full value ofgoods within 365 days.

(iv) For - setting up on EOU, three copies of the application in the prescribed formmay be submitted to the Development Commissioner.

(v) The state commission under the Consumer Protection Act, 1986 . Can entertaincomplaints where the value of goods and services and the compensation if any,claimed exceeds. ` twenty lakhs but does not exceeds one crore.

2009 - Dec [7] (b) Re-write the following sentences after filling-in the blankspaces with appropriate word(s)/figure(s):

(i) Bonus must be paid to employees within a period of_________months from theclose of the accounting year. (10)

(ii) _________means termination of the services of a workman by the employer forany reason whatsoever, otherwise than as a punishment inflicted by way ofdisciplinary action. (16)

(iii) A minimum of _________contributory service is required for entitlement topension under the Employees' Provident Funds and Miscellaneous ProvisionsAct,1952. (12)

(iv) The employer is not liable for compensation when injury to the workman doesnot result in disablement for a period exceeding_________days. (14)

(v) The employer is required to send a report to the Commissioner for workmen'scompensation within_________days of the death or serious injury of theworkman. (14)


(i) Bonus must be paid to employees within a period of eight months from the closeof the accounting year.

(ii) Retrenchment means termination of the services of a work man by theemployer for any reason whatsoever, otherwise than as a punishment inflictedby way of disciplinary action.


(iii) A minimum of ten years contributory service is required for entitlement topension under the Employees Provident Funds and Miscellaneous ProvisionsAct, 1952

(iv) The employer is not liable for compensation when injury to the workman doesnot result in disablement for a period exceeding three days.

(v) The employer is required to send a report to the commissioner for workmen’scompensation within seven days of the death or serious injury of the workman.


(i) The 'occupier of a factory is required to appoint a Welfare Officer where—(a) 250 workers are employed(b) 100 workers are employed(c) 200 workers are employed(d) 500 or more workers are employed. (18)

(ii) Out of the following which is not a manufacturing process—(a) Finished goods and packing there of(b) The making of bidis(c) Stitching old gunny bags and making them fit for use(d) Pumping of water from a tubewell. (18)

(iii) From the date on which the Industrial Employment (Standing Orders) Act, 1946becomes applicable to an industrial establishment, an employer is required tosubmit to the Certifying Officer the draft standing orders—(a) Within 3 months(b) Within 6 months(c) Within a month(d) Immediately on receipt. (17)

(iv) The Contract Labour (Regulation and Abolition) Act, 1970 applies to everyestablishment wherein workmen employed on any day of the preceding 12months are—(a) 100 or more(b) 50 or more(c) 20 or more(d) 200 or more. (15)

(v) The maximum amount of gratuity payable under the Payment of Gratuity Act,1972 is—(a) ` 5,00,000(b) ` 10,00,000(c) ` 2,50,000(d) ` 2,00,000. (11)

(1 mark each)


Answer:(i) (d) 500 or more workers are employed (ii) (a) Finished goods and packing thereof. (iii) (b) Within 6 months(iv) (c) 20 or more

(v) (b) ` 10,00,000

2010 - June [2] State, with reasons in brief, whether the following statements are

correct or incorrect. Attempt any five:

(i) The Consumer Protection Act, 1986 only reinforces the doctrine of caveat

emptor. (3C)(ii) In all legal proceedings relating to trade mark registered under the Trade Marks

Act, 1999, the original registration and all subsequent assignments andtransmissions thereof shall be prima facie evidence of its validity. (7)

(iii) Cartel includes an association of producers, sellers or distributors who, byagreement among themselves, limit, control or attempt to control the production,distribution, sale or price of or trade in goods or provision of services. (3B)

(v) While calculating the value of plant and machinery for the purposes of smallscale/ancillary industrial undertaking, the following shall be included—(a) the cost of installation of plant and machinery;(b) the cost of research and development equipment and pollution control

equipments;(c) the cost of fire fighting equipments; and (d) the charges paid for technical know-how for erection of plant and

machinery. (1)(vi) Special Economic Zone (SEZ) is deemed to be a foreign territory for the

purposes of trade operations, duties and tariffs. (2)(3 marks each)

Answer:(i) Incorrect: The doctrine of ‘Caveat Emptor’ or ‘let the buyer beware’ which came

into existence in the middle ages has been replaced by the principle of‘consumer sovereignty’. The Consumer Protection Act aims at protection ofconsumers and to provide for remedies which are simpler, more accessible,quicker and less expensive. It would not be wrong to say that Act is moreinclined towards the principle of ‘consumer sovereignty.’

(ii) Correct: Section 31 of the Trade Marks Act, 1999 stipulates that in all legalproceedings relating to trade mark registered under the Act, the originalregistration and all subsequent assignments and transmission thereof shall beprima facie evidence of its validity.


(iii) Correct: ‘Cartel’ as defined under section 2(c) of the Competition Act,2002includes an association of producers, sellers or distributors, traders or serviceproviders who, by agreement amongst themselves, limit control or attempt tocontrol the production, distribution, sale or price of or, trade in goods.

(iv) Correct: As per Section 2(u) of the MRTP Act, 1969. ‘Trade Practice’ means anypractice relating to the carrying on of any trade and includes - (i) anything doneby any person which controls or affects the price charged by or the method oftrading of any trader or any class of trader (ii) a single or isolated action of anyperson in relation to any trade.However, it has also been held that to be a ‘practice a particular conduct mustbe repetitive in nature; if it has happened in one particular case for which thereis some explanation, it cannot be said to be practice. (In Re: Auto Agents andBajaj Auto Ltd. RTP Enq. No. 129/1986 order dated 10.12.1990)

(v) Incorrect: in calculating the value of plant and machinery for the purposes ofsmall scale/ancillary industrial undertaking the cost of installation of plant andmachinery; the cost of research and development equipment and pollutioncontrol equipment; cost of fire fighting equipments and charges paid for technicalknow-how for erection of plant and machinery are excluded.

(vi) Correct: Special Economic Zone (SEZ) is a specifically delineated duty freeenclave and shall be deemed to be foreign territory for the purposes of tradeoperations and duties and tariffs.


(i) Foreign contribution means donation, delivery or transfer made by any foreignsource of any article, if the market value in India, of such article, on the date of

such gift, delivery or transfer, exceeds ` . (5)(ii) Environmental clearance is not required from the Central Government, if

investment is less than for any item reserved for the small scalesector. (1)

(iii) The amount representing the full export value of goods or software exported isrequired to be realised and repatriated to India within month(s) fromthe date of export. (5)

(iv) The term of every patent granted afer the commencement of the Patents(Amendment) Act, 2002 shall be year(s) from the date of filing ofapplication for the patent. (7)

(v) Literary, dramatic, musical or artistic works enjoy copyright protection for the lifetime of the author plus year(s) beyond the death of the author. (7)

(1 mark each)


Answer:(i) Foreign contribution means donation delivery or transfer made by any foreign

source of any article, if the market value in India, of such article, on the date of

such gift, delivery or transfer exceeds ` 1,000.(ii) Environmental clearance is not required from the Central Government, if

investment is less than ̀ 1 crore for any item reserved for the small scale sector.(iii) The amount representing the full export value of goods or software exported is

required to be realized & repatriated within twelve month (s) from the date ofexport.

(iv) The term of every patent granted after the commencement of the Patents(Amendment) Act, 2002 shall be 20 year (s) from the date of application for thepatent.

(v) Literary, dramatic, musical or artistic works enjoy copyright protection for the lifetime of the author plus 60 year (s) beyond the death of the author.


(i) The membership of provident fund scheme is compulsory for employees drawing

a pay not exceeding ` per month. (12)(ii) means termination of the service of an employee otherwise than on

superannuation. (16)(iii) Wages are to be paid within working days from the date of termination

of the employee whatever be the reason of termination. (16)(iv) Superannuation in relation to an employee, who is a member of the pension

scheme, means the attainment of the age of years. (12)(v) Under the Workmen’s Compensation Act, 1923, the employer shall not be liable

when the injury does not result in disablement for a period exceeding days. (14)

(1 mark each)

(c) Choose the most appropriate answer from the given options in respect of thefollowing:(i) An application for the recovery of bonus from an employer shall be made

within—(a) Six months from the date on which the money became due(b) One year from the date on which the money became due(c) 60 Days from the date on which the money became due(d) 90 Days from the date on which the money became due. (10)

(ii) The occupier of a factory is required to send a written notice to the ChiefInspector of Factories at least—(a) 7 Days before he begins to occupy or use the premises as a factory


(b) 15 Days before he begins to occupy or use the premises as a factory(c) 21 Days before he begins to occupy or use the premises as a factory(d) 10 Days before he begins to occupy or use the premises as a factory.

(18)(iii) The State Government may make rules regarding the provisions and

maintenance of a canteen for the use of workers wherein more than—(a) 250 Workers are ordinarily employed(b) 500 Workers are ordinarily employed(c) 300 Workers are ordinarily employed(d) 100 Workers are ordinarily employed (18)

(iv) The minimum amount of compensation in case of permanent totaldisablement is—(a) ` 1,00,000(b) ` 90,000(c) ` 80,000(d) 70,000. (14)

(v) The Contract Labour (Regulation and Abolition) Act, 1970 applies to everyestablishment or contractor wherein workmen employed on any day of thepreceding 12 months shall be—(a) 100 Workmen or more(b) 20 Workmen or more(c) 50 Workmen or more(d) 10 Workmen or more. (15)

(1 mark each)Answer:(b) (i) The membership of provident fund scheme is compulsory for employees

drawing a pay not exceeding ` 6,500 per month.(ii) Retrenchment means termination of the services of an employee otherwise

than on superannuation.(iii) Wages are to be paid within 2 working days from the date of termination of the

employee whatever be the reason of termination.(iv) Superannuation in relation to an employee, who is a member of the pension

scheme, means the attainment of the age of 58 years.(v) Under the Workmen’s Compensation Act, 1923, the employer shall not be

liable when the injury does not result in disablement for a period exceedingthree days.

(c) (i) (b) One year from the date on which the money became due.(ii) (b) 15 Days before he begins to occupy or use the premises as a factory.(iii) (a) 250 workers are ordinarily employed.(iv) (b) ` 90,000(v) (b) 20 workmen or more.


2010 - Dec [2] State, with reasons in brief, whether the following statements are trueor false. Attempt any five.

(i) Small scale units are free from locational restrictions. (1)(ii) A SEZ unit may opt out of the SEZ scheme at any time. (2)(iii) The manufacture of items reserved for the small scale sector can also be taken

up by non-small scale units. (1)(iv) Patents are granted merely to enable the patentees to enjoy a monopoly for the

importation of the patented article. (7)(v) The jurisdiction of the State Consumer Disputes Redressal Commission is only

appellate or revisional. (3C)(vi) Retail package includes a package for retail sales to ultimate consumers who

may be institutional or industrial consumers. (4)(3 marks each)

Answer:(i) True.

Y Small scale units are free from locational restrictions.Y Industrial undertakings other than small scale units need to abide by some

sort of locational restrictions.Y For example, such units need to be located at least 25 kilometers away from

Standard Urban Area in case the population of the city is greater than 1million.

Y However SSI are outside the scope of such restriction(ii) True.

Y A SEZ unit may opt out of the SEZ Scheme at any timeY However, the same calls for obtaining consent from the Development

commission.Y Also, the SEZ unit will be required to pay off the excise duty as well as

custom duty on finished good and imported items as the case may be.(iii) True.

Y The manufacture of items reserved for small scale sector can also be takenup by non-small scale units.

Y However the non-small scale units can do only after applying for industriallicence.

Y Also they need to undertake an export obligation

(iv) False.Y Patents are not granted with the objective to enable the patentees to enjoy

a monopoly for the importation of the patented article.Y Section 83 of the Patents Act, 1970 also provides for the same.

(v) False.Y The jurisdiction of the State Consumer Disputes Redressal Commission is

not just appellate or revisional in nature.


Y It also entertains original application from complainant.

Y Wherein the value of goods and services exceed ̀ 20 Lakh but is lesser than

` 1 crore, State Consumer Redrssal Commission enjoys the territorialjurisdiction over them.

(vi) False.Y Retail package is defined as per Rule 2b of Standards of weights and

measures (packaged commodities) Rules, 1977.Y Retail package includes a package for retail sales to ultimate consumers

only.Y It does not include institutional or industrial consumers.


(i) The foreign trade policy allows export proceeds to be realised within _________months. (2)

(ii) The prior approval of RBI is necessary to make overseas donation exceeding US$_____ per remitter per annum. (5)

(iii) Essential commodity is a commodity specified in_________ to the EssentialCommodities Act, 1955. (4)

(iv) The Consumer Disputes Redressal Forum, the State Commission or theNational Commission shall not admit a complaint unless it is filed, within_________year(s) from the date on which the cause of action has arisen. (3C)

(v) Authorised person under the Foreign Exchange Management Act, 1999 includesan authorised dealer,_____, off-shore banking unit or any other person for thetime being authorised to deal with foreign exchange or foreign security. (5)

(1 mark each)

Answer:

(i) The foreign trade policy allows export proceeds to be realised within twelvemonths.

(ii) The prior approval of RBI is necessary to make overseas donation exceeding

US$ 5,000 per remitter per annum.

(iii) Essential commodity is a commodity specified in Schedule to the essentialcommodities Act, 1955.

(iv) The Consumer Disputes Redressal Forum, the State Commission or the

National Commission shall not admit a complaint unless it is filed within two year(s) from the date on which the cause of action has arisen.

(v) Authorised person under the Foreign Exchange Management Act 1999 includes

an authorised dealer, money changer, off shore banking unit or any otherperson for the time being authorised to deal with foreign exchange or foreignsecurity.



(i) The ESI corporation to function efficiently has been provided with two wings

namely_______ and Medical Benefit Council. (13)(ii) A workman is not entitled to apply under the Workmen’s Compensation Act,

1923, if he seeks remedy for grant of compensation in a____________. (14)(iii) The Contract Labour (Regulation and Abolition) Act, 1970 shall not apply to

establishments in which work is of ___________. (15)(iv) An ‘arbitrator’ under the Industrial Disputes Act, 1947 includes

an_____________. (16)(v) The rate of contribution towards the Employees’ State Insurance Fund is

% and ________ % of employees’ wages by the employers and employeesrespectively. (13)

(1mark each)

(c) Choose the most appropriate answer from the given options in respect of thefollowing:

(i) The employer of an establishment to which the Industrial Employment (StandingOrders) Act, 1946 applies shall submit to the certifying officer draft standingorders proposed by him for adoption in that establishment within—(a) 6 Months(b) 4 Months(c) 30 Days (d) 2 Months.from the date on which the Act becomes applicable to the establishment. (17)

(ii) When a new manager is appointed for a factory, the occupier shall send to theInspector of Factories a notice in writing within —(a) 7 Days(b) 15 Days(c) 30 Days (d) 45 Days. (18)

(iii) ‘Basic wages’ under the Employees’ Provident Funds and MiscellaneousProvisions Act, 1952 does not include —(a) Emoluments earned by an employee while on leave (b) Emoluments earned by an employee while on holiday with wages (c) The cash value of any food concession(d) Emoluments earned by an employee which are payable in cash. (12)


(iv) ‘Dependent’ under the Employees’ State Insurance Act, 1948 does not meanany of the following relatives of a deceased insured person —(a) A widowed mother (b) A widowed grand-mother(c) A widowed daughter-in-law(d) A widow. (13)

(v) An employee is entitled to receive bonus provided he has worked in anaccounting year in the establishment for not less than —(a) 30 Working days(b) One year(c) 6 Months (d) 8 Months. (10)

(1 mark each)

Answer:

(b) (i) The ESI corporation to function efficiently has been provided with two wingsnamely Standing Committee and Medical Benefit council.

(ii) A workman is not entitled to apply the Workmen’s compensation Act, 1923, if heseeks remedy for grant of compensation in a civil court.

(iii) The contract labour (Regulation and Abolition) Act, 1970 shall not apply toestablishment in which work is of casual nature.

(iv) An arbitrator under the Industrial Disputes Act, 1947 includes an Umpire.(v) The rate of contribution towards the Employee's State Insurance Fund is 4.75%

and 1.75% of employee's wages by the employers and employees respectively.

(c) (i) (a) 6 Months(ii) (a) 7 Days(iii) (c) The cash value of any food concession(iv) (b) A widowed grand mother (v) (a) 30 working days

2011 - June [2] State, with reasons in brief, whether the following statements are true

or false. Attempt any five:(i) The consumer forums can entertain a complaint arising out of the contract which

provides for arbitration of disputes. (3C)(ii) No action for the infringement of copyright can be brought unless the copyright

is registered. (7)(iii) Indian companies are free to issue rights/bonus shares to non-resident

shareholders. (5)(iv) There is no difference between ‘person resident in India’ and ‘person resident of

India’. (5)


(v) A person can accept foreign contribution by way of a gift irrespective of its value.(5)

(vi) The Standards of Weights and Measures Act, 1976 provides for thecompounding of offences. (4)

(3 marks each)

Answer:

(i) True: The consumer forums can entertain a complaint arising out of the contractwhich provides for arbitration of disputes. It was held in N.K. Modi v Fair Air Engineers Pvt Ltd. that the consumer forumscan entertain a complaint arising out of the contract which provides for arbitrationof disputes.Even section 35 of the arbitration Act, shall not be a bar on the Jurisdiction of theforums.

(ii) False: Actions can be brought for the infringement of copyright even if thecopyright is not registered. Registration of the work under the copyright Act isnot compulsory and is not a condition precedent for maintaing a suit fordamages, if some body infringes a copyright. Registration of copy right is only enabling section and do not affect the commonlaw right to sue for infringement of copyright. The only effect of registration is thatit is a prima facie evidence of the particulars entered in the register. So, an actionfor infringement can be brought even if the registration has not been done.

(iii) True: According to the provisions of Foreign Exchange Management Act, 1999,Indian companies can freely issue Right / Bonus shares to existing non residentshareholders, subject to adherence to sectoral cap, if any. All law and statueslike Companies Act, 1956, SEBI (ICDR) Regulations etc.

(iv) For answer to person resident in India refer to 2008 - June [3] (a) on page no.124

As the term 'Person resident of India' has not been defined under the foreignExchange Management Act, 1999, it may be assumed that there is no differencebetween. 'Person resident in India' and 'Person resident of India'.

(v) Section 8 of the foreign contribution (Regulation) Act, 1976 contain exemptionto the prohibition on the acceptance of foreign contribution by any personspecified in Section 4. Accordingly Section 8, allow the acceptance of foreign contribution by the personspecified in section 4, subject however to section 10 and where such contributionis accepted by him by way of gift or presentation made to him as a member ofany Indian delegation, provided that such gift or present was accepted inaccordance with the regulations made by the central government with regard tothe acceptance or retention of such gift or presentation.


(vi) Standards of weight & measure Act, contains provision relating to compoundingof offences. The offence which are punishable under section 50, 55, 56, 57, 58, 59, 60, 63,64, 65, 66, or 67 can be compounded by the director or authorised officer onpayment of such sum as may be prescribed. However, such shall not in any case exceed the maximum amount of fine whichmay be imposed under the Act for the offence so compounded. Any Second or subsequent offence committed after expiry of three years fromthe date on which the offence was compounded, shall be deemed to be a firstoffence.


(i) The transfer or issue of foreign security is a _________transaction. (5)(ii) A person who has acquired or purchased foreign exchange for a specified

purpose is unable to use the same and is required to surrender it within____days from the date of its acquisition or purchase. (5)

(iii) The term of every patent granted under the Patents Act, 1970 shall be _____years from the date of filing of application for the patent. (7)

(iv) The literary, dramatic, musical or artistic works enjoy copyright protection for thelife time of the author plus ______years beyond. (7)

(v) The National Consumer Disputes Redressal Commission shall have jurisdictionto entertain complaints where the value of the goods or services and the

compensation, if any, claimed exceeds ` _________. (3C)(1 mark each)

Answer:(i) Capital Account (ii) 180(iii) 20(iv) 60

(v) ` 1 crore


(i) Any contract whereby a workman relinquishes any right of compensation fromthe employer shall be _________. (14)

(ii) It shall be the duty of the _________to pay wages to the contract labour. (15)(iii) The function of a certifying officer or the appellate authority is to adjudicate upon

the ________ of the standing orders. (17)


(iv) An adolescent worker shall be allowed to work only for ________ hours in aweek. (18)

(v) The Contract Labour (Regulation and Abolition) Act, 1970 applies to everyestablishment or contractor wherein________ or more workmen are or wereemployed on any day of the preceding 12 months as contract labour. (15)

(1 mark each)

(c) Write the most appropriate answer from the given options in respect of the following:(i) The government may review the minimum rates of wages so fixed and revise the

same if necessary at such intervals, not exceeding —(a) 3 Years(b) 5 Years(c) 2 Years(d) 1 Year. (9)

(ii) Every factory or establishment to which the Employees’ State Insurance Act,1948 applies has to be registered within —(a) 15 Days(b) 30 Days(c) 45 Days(d) 60 Days. (13)

(iii) As per the Contract Labour (Regulation and Abolition) Act, 1970 and the centralrules, in case the work is completed before the expiry of the wage period, finalpayment shall be made within —(a) 24 Hours of the last working day(b) 48 Hours of the last working day(c) 7 Days of the last working day(d) 3 Days of the last working day. (15)

(iv) The term ‘wages’ under the Employees’ State Insurance Act, 1948 does notinclude —(a) Incentives (b) Over-time wages(c) Travelling allowance (d) Any other additional remuneration. (13)

(v) Under the Workmen’s Compensation Act, 1923, the Commissioner forWorkmen’s Compensation shall not entertain any claim unless it is preferredbefore him on the occurrence of the accident, within —(a) 1 Week(b) 6 Months(c) 1 Year(d) 2 Years. (14)

(1mark each)


Answer:

(b) (i) Null and void (ii) Contractor (iii) Fairness or reasonableness (iv) 48 (v) Twenty

(c) (i) (b) 5 years(ii) (a) 15 days (iii) (b) 48 hours of the last working day (iv) (c) Travelling Allowance (v) (d) 2 years.

2011 - Dec [2] State, with reasons in brief, whether the following statements are trueor false. Attempt any five:

(i) Registration of an undertaking belonging to the First Schedule of the Industries(Development and Regulation) Act, 1951 is not necessary in certain cases. (1)

(ii) The provisions of the Competition Act, 2002 are not applicable to a governmentcompany. (3B)

(iii) Money laundering can provide short-term benefits to the economy. (8)(iv) Special Economic Zones are growth engines. (2)(v) The limitation period for filing a complaint under the Consumer Protection Act,

1986 is two years from the date on which the cause of action arises without anyexception. (3C)

(vi) There is no difference between the preparation for committing an offence and anattempt to commit an offence under the Essential Commodities Act, 1955.


(i) True: Registration of an undertaking belonging to the first Schedule of theindustries (Development and Regulation) Act, 1951 is not necessary in certaincases the conditions for the same are:-C Undertaking is a small scale industrial undertakingC It is exempt from the licensing or registration under the ActC Undertaking is not satisfying the definition of the term ‘factory’ under the

Act.

(iii) False:C The above statement is not correctC The provisions of the Competition Act, 2002 are applicable to a

government company.C Government company falls within the ambit of definition ‘enterprise’ as

defined under the Act.


C But sovereign functions of Government including activities carried bygovernment departments dealing with atomic energy, currency defence areexcluded from the definition of enterprise.

(iii) False:C The above statement is not correctC Money laundering has a damping effect on foreign direct investmentC It is the processing of criminal proceeds to disguise its illegal originC Laundered funds which are owned by the criminals escape the

Governments ability to control and regulate the economy.

(iv) True:C The above statement is correctC Special Economic Zones (SEZ) are meant to increase the export of goods

& services, boost manufacturing, promote investment, reduceunemployment, improve the infrastructure facilities

C Government provide various incentives to Special Economic Zones (SEZ)to achieve the above mentioned objectives of SEZ.

C SEZ are the growth engines for the developing country like India.

(v) False:C The above statement is not trueC There is an exception to the provision relating to limitation period for filing

a complaint in 2 years under the Consumer Protection Act, 1986C As per the provisions of the Consumer Protection Act, 1986, where the

complainant satisfies the District Forum/State Commission/NationalCommission as the case may be that he had sufficient cause for not filingthe complaint within the prescribed period of 2 years, then in that suchcomplaint may be entertained subject that the reasons for condoning thedelay has been recorded

(vi) False:C The above statement is not correctC As per the provisions of the Essential Commodities Act, 1955, there is a

difference between the preparation for committing an offence & an attemptto commit an offence

C As per the provisions of the Act, any person who attempts to contraveneany order shall be deemed to have contravened that order

C An attempt to commit an offence is punishable whereas preparation tocommit the offence is not punishable under the law.



(i) An appeal against the order passed by the Consumer Disputes Redressal Forumhas to be preferred within ___________ days from the date of the order to theState Commission. (3C)

(ii) Prior approval of RBI is required for the release of foreign exchange for meetingthe expenses of medical treatment exceeding US $ ____ or its equivalent. (5)

(iii) Any person aggrieved by an order of confiscation of an essential commodity mayprefer an appeal to the __________ within one month from the date of passingof the order. (4)

(iv) Foreign direct investment (FDI) in trusts other than _____ is not permitted. (5)(v) Prior approval of RBI is required for availing of foreign exchange facility

exceeding ____________ for persons going to USA for employment. (5)(1 mark each)

Answer:(i) 30(ii) 1,00,000(iii) State Government(iv) Venture capital fund(v) US $ 1,00,000


(i) The Payment of Bonus Act, 1965 is applicable to every factory and to everyother establishment where ___________ are employed on any day during anaccounting year. (10)

(ii) All contributions paid under the Employees’ State Insurance Act, 1948 and othermoneys received on behalf of the ESI Corporation shall be paid into a fundcalled ___________. (13)

(iii) The employer shall arrange to pay the amount of gratuity within __________days from the date of its becoming payable to the person to whom it is payable.

(11)(iv) Under the Employees Deposit-Linked Insurance Scheme, employers are

required to pay contributions for the insurance fund at the rate of __________of the total emoluments. (12)

(v) The Contract Labour (Regulation and Abolition) Act, 1970 shall not apply toestablishments in which work only of ____________ is performed. (15)

(1 mark each)


(c) Write the most appropriate answer from the given options in respect of the following:(i) An employee is not entitled to bonus if —

(a) He has worked for less than 6 months(b) He is guilty of any misconduct(c) He is in managerial cadre(d) He is a part-time permanent employee. (10)

(ii) The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 isapplicable to all factories and certain establishments employing —(a) 20 or more persons(b) 50 or more persons(c) 10 or more persons(d) Without any limit. (12)

(iii) Compensation under the Workmen’s Compensation Act, 1923 becomes due —(a) On the date of death/accident of the workman(b) On the date of order of the Commissioner for workmen’s compensation(c) On the completion of one month from the date of accident(d) On demand from the workman. (14)

(iv) The employment of contract labour can be prohibited —(a) By an order of the labour court(b) By notification of the Government(c) When the number of workmen exceeds 50(d) By the Central Advisory Board. (15)

(v) The interpretation of certified standing orders is within the jurisdiction of —(a) Labour court(b) Certifying officer(c) Workmen(d) Employer and workmen. (17)

(1 mark each)Answer:(b) (i) 20 or more persons

(ii) Employee’s State Insurance Fund(iii) thirty (iv) 1%(v) Casual nature

(c) (i) (b) He is guilty of any misconduct(ii) (a) 20 or more persons(iii) (a) On the date of death/accident of the workman(iv) (b) By notification of the Government(v) (a) Labour Court


2012 - June [2] State, with reasons in brief, whether the following statements are trueor false. Attempt any five:

(i) The Competition Act, 2002 prohibits dominance as well as abuse of dominantposition.

(ii) The property confiscated for money laundering vests with the centralgovernment.

(iii) Mens rea is an ingredient of the offence punishable under the EssentialCommodities Act, 1955.

(iv) Foreign direct investment is permitted in infrastructure companies in securitiesmarket (stock exchanges, depositories, and clearing corporations).

(v) The redressal forums constituted under the Consumer Protection Act, 1986 arequasi-judicial in nature and scope.

(vi) Registration of a trade mark under the Trade Marks Act, 1999 is a prima facieevidence of the validity of registration in all legal proceedings. (3 marks each)

Answer:(i) False

C The Competition Act, 2002 does not prohibits dominanceC Section 7 of the Competition Act, 2002 prohibits abuse of dominance. Abuse of

dominant position results in exploitation of consumers & makes it difficult for theother players to complete with the dominant undertaking as dominantundertaking impose unfair conditions, predatory pricing, etc.

(ii) True:-The property confiscated for money laundering vests with the Central Government.Section 9 of the Prevention of Money Laundering Act, 2002 provides that all rights& title in such property vests to Central Government free from all encumbrances.

(iii) True:-Mens rea is an ingredient of the offence punishable under the EssentialCommodities Act, 1955. Mens rea or guilty mind is an essential ingredient of anycriminal offence.

(iv) True:-C Foreign direct investment is permitted in infrastructure companies in securities

market through Government approval.C FDI limit of 26% through approval route is permitted.

(v) True:-C The redressal forums constituted under the Consumer Protection Act, 1986 are

quasi-judicial in nature & scope.C They have been vested with the powers of a Civil Court under the Code of Civil

Procedure, 1908 while trying a suit.C Thus redressal forums act as quasi-judicial machineries.


(vi) True:-C Registration of a trade mark is a prima facie evidence of the validity of

registration in all legal proceedings.


(i) The process of money laundering can be classified into _____, layering andintegration.

(ii) The registration of trade mark requires to be renewed for successive periods of______ .

(iii) The compulsory licence in respect of a patent is granted after the expiration of______ from the date of grant of a patent subject to certain conditions.

(iv) Foreign contribution means any donation, delivery or transfer made by _____.(v) The total surface area of the package where the information is required to be

given is called _____ . (1 mark each)

Answer:(i) Placement (ii) 10 years(iii) 3 years(iv) Foreign Source(v) Principal Display Panel


(i) As per the provisions of the Payment of Bonus Act, 1965, an employee isentitled to bonus provided he has worked for not less than ______ in that year.

(ii) The industrial dispute is a dispute relating to employment or non-employment orterms of employment or ______ of any person.

(iii) Adolescent means a person who has completed ______ of age but notcompleted his 18th year.

(iv) The employer is liable to pay the amount of gratuity within _____ days from thedate of its becoming payable to the employee.

(v) A period of service shall be deemed to be continuous which has not beeninterrupted by a period of absence exceeding ______ days. (1 mark each)

Answer:(i) 30 days(ii) Conditions of labour(iii) 15th year(iv) 30 days(v) 14 days



(i) Which of the following is not a type of ‘bonus’ under the Payment of Bonus Act,1965 —(a) Profit based bonus(b) Customary bonus(c) Attendance bonus(d) Voluntary bonus.

(ii) Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952,what percentage of the basic wage, dearness allowance and retaining allowanceof an employee is paid or contributed by the employer —(a) 8%(b) 10%(c) 12%(d) 13%.

(iii) Which of the following injuries does not come under the term ‘personal injury’under the Workmen’s Compensation Act, 1923 —(a) Nervous shock(b) Mental strain(c) Loss of money(d) Breakdown.

(iv) Which of the following is considered an ‘industry’ under the Industrial DisputesAct, 1947 —(a) Posts and Telegraph Department(b) Central Institute of Fisheries(c) Construction and maintenance of National and State highways(d) Dock Labour Board.

(v) Under the Industrial Employment (Standing Orders) Act, 1946, which of thefollowing documents must a ‘standing order’ be in conformity with —(a) Standard Standing Orders(b) Model Standing Orders(c) Uniform Standing Orders(d) Formal Standing orders. (1 mark each)

Answer:(i) (b) Customary Bonus(ii) (c) 12%(iii) (c) Loss of Money(iv) (d) Dock Labour Board(v) (b) Model Standing Orders



(i) A person aggrieved by the order of seizure of an essential commodity under theEssential Commodities Act, 1955 can seek remedy in a civil court. (4)

(ii) ‘Electricity’ is a hazardous substance under the Public Liability Insurance Act,1991. (6)

(iii) Every non-standard or unverified weight or measure used in the course of tradeis liable to be forfeited. (4)

(iv) Consumer disputes redressal forums constituted under the Consumer ProtectionAct, 1986 are to be construed as judicial authorities and proceedings beforethem can be taken to be the legal proceedings. (3C)

(v) Even sheer negligence on the part of legal advisors in properly drafting thecomplaint against a company can make it (the company) liable under the strictprovisions of environmental laws. (6)

(vi) The author of a literary work has no moral rights after the assignment of thecopyright. (7)


(i) False: A person aggrieved by the order of seizure of an essential commodityunder the Essential Commodities Act, 1955 cannot seek remedy in a civil court.As per the provisions of Section 6E of the Act, no Court, tribunal or authorityshall have jurisdiction to make order relating to the same.

(ii) True: Electricity is a hazardous substance under the Public Liability InsuranceAct, 1991. Electricity is a substance having Physico chemical process and alsohazardous as held in UP Electricity Board & Another V. District Magistrate,Dehradun & Others.

(iii) False: Every non-standard or unverified weight or measure used in the courseof trade is not liable to be forfeited .As per the Act, such unverified weight ormeasure shall not be forfeited to the State Government if the person from whomsuch weight or measure was seized gets the same verified & stamped withinstipulated time.

(iv) False: In N.K. Modi v. Fair Air Engineers Pvt. Ltd. (decided on 13.11.1992) theNational Commission observed that the forums under the Consumer ProtectionAct are not to be construed as judicial authorities and the proceedings beforethem cannot be taken to be legal proceedings. For a judicial authority, it isnecessary that some part of the judicial power should be transferred to andvested in the forums as in the case of civil/criminal/special courts. Though, theconsumer forums have powers to adjudicate dispute, they do not have anytrappings of a Court. Except, conforming to the principle of natural justice,consumer forums are not governed by the Evidence Act or the Civil ProcedureCode, except for certain limited purposes.


(v) True: In U.P. Pollution Control Board v. Modi Distillery (August 6, 1987) 8 Ind.Jud. Reports (SC) 375, the Supreme Court observed that Parliament enacted theWater (Prevention and Control of Pollution) Act, 1974, to meet the urgent needfor introducing a comprehensive legislation with its established unitary agenciesin the Centre and States to provide for the prevention, abatement and the controlof pollution of rivers and streams for maintaining or restoring wholesomeness ofwater resources and for controlling the existing and new discharges of domesticand industrial wastes, which is a matter of great national concern, the mannerin which some of the Boards are functioning leaves much to be desired.

This is an instance where due to the sheer negligence on the part of thelegal advisors in drafting the complaint a large business house was allowed toescape the consequences of the breaches committed by it of the provisions ofAct with impunity. In this case, the error pointed out in drafting was that insteadof launching prosecution against Modi Industries Ltd. the appellant Boardimpleaded its industrial unit Modi Distillery as respondent and this was theground on which the High Court quashed the complaint.

(vi) False: The moral rights are independent of the author's copyright and remainswith him even after assignment of the copyright.Under Section 57 of the Copyright Act, 1957 the author of a work has the rightto claim authorship of the work and to restrain or claim damages in respect ofany distortion, mutilation, modification or other acts in relation to the said workwhich is done before the expiration of the term of copyright if such distortion,mutilation, modification or other act would be prejudicial to his honour orreputation. Moral rights are available to the authors even after the economicrights are assigned.


(i) __________is the name by which the law relating to weights and measures isknown in international parlance. (4)

(ii) Foreign direct investments can be made under two routes namely, automaticroute and __________. (5)

(iii) The Public Liability Insurance Act, 1991 has been enacted for providingimmediate relief to the persons affected by accidents occurring while handlingany__________and for other incidental and connected matters. (6)

(iv) The National Consumer Disputes Redressal Commission shall not admit acomplaint unless it is filed within__________from the date on which the causeof action has arisen. (3)

(v) Every offence punishable under the Prevention of Money Laundering Act, 2002is a__________offence. (8)

(1 mark each)


Answer:(i) Legal Metrology (ii) Government Route(iii) Hazardous Substance(iv) 2 years(v) cognizable


(i) The appropriate government may review minimum wages at such intervals, asit may think fit, not exceeding__________and revise the minimum rate of wages,if necessary. (9)

(ii) The ceiling on the amount of gratuity has been enhanced to ̀ __________by thePayment of Gratuity (Amendment) Act, 2010. (11)

(iii) The subject matter of an industrial dispute should relate to employment or non-employment or terms of employment or the conditions of__________of anyperson. (16)

(iv) Standing orders shall come into operation on the expiry of__________from thedate on which the authenticated copies are sent to employer and workers’representatives. (17)

(v) There must be more than__________workers in a factory for the mandatoryappointment of a safety officer. (18)

(1 mark each)

(c) Write the most appropriate answer from the given options in respect of thefollowing:(i) From the close of the accounting year, the bonus should be paid within—

(a) One month(b) Two months(c) Twelve months(d) Eight months. (10)

(ii) The minimum number of employees required in an establishment for it tocome under the purview of the Payment of Gratuity Act, 1972 is—(a) 10(b) 15(c) 20(d) 25. (11)

(iii) The authority which has been constituted by the Central Government topreside over the cases regarding determination of monies due fromemployers under the Employees’ Provident Funds and MiscellaneousProvisions Act, 1952 is—


(a) Employees Provident Fund Appellate Tribunal(b) Employees Provident Fund Consultancy Tribunal(c) Employees Provident Fund Help Desk(d) Employees Provident Fund Information Centre. (12)

(iv) The period within which an employer must make a deposit with theCommissioner, if he is liable to pay compensation under the Employees’Compensation Act, 1923 is—(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 60 days of being served the notice. (14)

(v) The establishments which have been exempted from the purview of theContract Labour (Regulation and Abolition) Act, 1970 are—(a) Establishments where manufacturing work is performed(b) Establishments where metal work is performed(c) Establishments where embroidery work is performed(d) Establishments where work of intermittent nature is performed. (15)

(1 mark each)

Answer:

(b) (i) Five years (ii) 10 lakhs(iii) labour (iv) 30 days(v) one thousand

(c) (i) (d) Eight months(ii) (a) 10(iii) (a) Employees Provident Fund Appellate Tribunal (iv) (c) Within 30 days of being served the notice.(v) (d) Establishment where work of intermittent nature is performed.

2013 - June [2] State, with reasons in brief, whether the following statements are true

or false. Attempt any five:(i) There is no positive relationship between competition and innovation,

productivity and economic growth. (3B)(ii) Indian parties are prohibited from making investment in a foreign entity engaged

in real estate or banking business. (5)(iii) Importer-Exporter Code (IEC) number once issued cannot be surrendered by the

recipient. (2)(iv) Foreign direct investment (FDI) regulations are not covered by the penal

provisions of the Foreign Exchange Management Act, 1999. (5)


(v) Under the Copyright Act, 1957 moral rights are available to the authors evenafter the economic rights are assigned. (7)

(vi) A patent obtained in India provides protection to the patent worldwide. (7)(3 marks each)

Answer :(i) False.

C There is a positive relationship between competition and innovation,productivity and economic growth.

C One theory stated that competition is conducive to innovation.C Intensified product market competition could force managers to speed up the

adoption of new technologies.C Intensive product market competition with incumbent firms engaged in step

by step innovative activities could enhance each firm incentive to acquire orincrease its technological lead over its rivals.

C The benefits of competitive forces are for economic growth and consumerswelfare.

C Competition enhances allocative efficiency, productive efficiency anddynamic efficiency.

(ii) True. C Regulation 5 of Foreign Exchange Management ( Transfer on issue of any

Foreign security ) Regulation 2004 deals with Prohibition on DirectInvestment outside India.

C It states that - no person resident in India shall make any direct investment outside

India, and - no Indian party shall make any direct investment in a foreign entity

engaged in real estate business or banking business.(iii) False

C As per Foreign Trade policy if an Importer - Exporter (I E C) number holderdoes not wish to operate the allotted I E C number, the same may besurrendered by informing the issuing authority.

C On receipt of such intimation, the issuing authority immediately cancels thesame and electronically transmit it to Director General Foreign Trade foronward transmission to the customs and Regional Authorities.

(iv) False.CCCC Foreign Direct Investment (FDI) is a capital account transaction and thus any

violation of FDI regulations are covered by the penal provisions of theForeign Exchange Management Act, 1999 (FEMA).

C If a person violates, contravenes any FDI Regulations, by way of breach,non - adherence, non compliance, contravention of any rule, regulation, etcor contravenes any conditions subject to which an authorization is issued by


Government of India, FIBP, Reserve Bank of India, he shall uponadjudication, be liable to a penalty up to thrice the sum involved in suchcontravention where such amount is quantifiable, or up to two lakh rupeeswhere the amount is not quantifiable, and where such contraventions is acontinuing one, further penalty which may extend to five thousand rupees forevery day after the first day during which the contraventions continues.

(v) True.C Under the Copyright Act, 1957 moral rights are available to the author even

after the economic rights are assigned .C Under Section 57 of the Act an author of the copyright work can restrain or

claim damages in respect of any distortion mutilation of the work or any otheraction in relation to the said work which would be prejudicial to his honour orreputation.

C These rights can be exercised even after the assignment of copyright.C They can be enforced by an action for breach of contract or confidence, a

suit for defamation, or passing off as the case may be.(vi) False

C Patent protection is territorial right and therefore it is effective only within theterritory of India.

C However filing of an application in India enables the applicant to file acorresponding application for same invention in convention countries, withinor before the expiry of twelve month from the filing date in India.

C Therefore separate patents should be obtained in each country where theapplicant requires protection of his invention in those countries.

C There is no patent valid Worldwide.


(i) Know your customer (KYC) procedures enable banks to know/understand theircustomers and their _______ better to manage their risks prudently. (8)

(ii) Under foreign trade policy 2009-14, _______ new countries have been includedwithin the ambit of focus market scheme. (2)

(iii) No court inferior to that of a ______ shall try any offence punishable under theIndustries (Development and Regulation) Act, 1951. (1)

(iv) The process of _______ is classified into three stages namely placement,layering and integration. (8)

(v) The Consumer Disputes Redressal Forum, the State Commission or theNational Commission shall not admit a complaint unless it is filed within _______year(s) from the date on which the cause of action has arisen. (3C)

(1 mark each)


Answer :(i) financial dealing(ii) 29(iii) presidency magistrate or a magistrate of first class(iv) money laundering(v) two.


(i) ____________ was the first enactment that dealt with settlement of an industrialdispute. (16)

(ii) ____________ has been exempted from attachment in execution of any decreeor order of a civil, revenue or criminal courts. (12)

(iii) A minimum of ___________ years contributory service is required for entitlementof pension under the Employees’ Pension Scheme. (12)

(iv) Where any workman is suspended by the employer pending investigation orinquiry into complaints or charges of misconduct against him, the employer shallpay to such a workman the subsistence allowance at the rate of __________ %of the wages which the workman was entitled to, immediately preceding fromthe date of such suspension, for the first ______ days of suspension. (17)

(v) For the purposes of calculation of bonus, an employee shall be deemed to haveworked in an establishment in any accounting year also on the days on which hehas been absent due to ____________ caused by accident arising out of and inthe course of his employment. (10)

(1 mark each)Answer :

(i) Employers’ and workmen’s Dispute Act, 1860.(ii) Provident fund or Gratuity.(iii) 10 (iv) 50 %, 90 (v) temporary disablement.


(i) Bonus should be paid to the employees within how many months from the closeof the accounting year-(a) 2 Months(b) 6 Months(c) 8 Months(d) 10 Months. (10)


(ii) What is the minimum number of employees required in an establishment for itto come under the purview of the Payment of Gratuity Act, 1972-(a) 10(b) 15(c) 20(d) 25. (11)

(iii) Under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952what percentage of the basic wage, dearness allowance and retaining allowanceof an employee is paid as ‘contribution’ by the employer-(a) 8%(b) 10%(c) 12%(d) 13%. (12)

(iv) What is the period within which an employer must make a deposit with theCommissioner for Employees’ Compensation if he is liable to pay compensationunder the Employees’ Compensation Act, 1923 !(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 40 days of being served the notice. (14)

(v) Which of the following type of strike is not called a primary strike !(a) Stay in strike(b) Tool down strike(c) Pen down strike(d) Go slow. (16)

(1 mark each)

Answer :(i) (c) 8 months(ii) (a) 10(iii) (b) 10%(iv) (c) within 30 days of being served the notice. (v) (d) Go slow.

2013 - Dec [2] State, with reasons in brief, whether the following statements are true

or false. Attempt any five:(i) Money laundering is processing of criminal proceeds to disguise its illegal origin.(ii) The Copyright Act, 1957 provides for civil remedies for infringement of copyright.(iii) The Competition Act, 2002 prohibits dominance as well as the abuse of

dominant position.


(iv) The provisions of the Foreign Exchange Management Act, 1999 read with FEMARegulations, 2000 allow Indian companies to freely issue rights/bonus sharesto existing non-resident shareholders.

(v) The Foreign Contribution (Regulation) Act, 2010 was enacted to regulate and notprohibit the acceptance and utilisation of foreign contribution or hospitality.

(vi) The award of confiscation of an essential commodity under the EssentialCommodities Act, 1955 prevents infliction of any punishment to which the personaffected thereby is liable under the Act. (3 marks each)


(i) The amount representing the full export value of goods or software is requiredto be realised and repatriated to India within ____________.

(ii) A registered trade mark is required to be renewed on the expiry of the period of________.

(iii) Every unit of weight or measure has to be in accordance with the _______based on the international system of units.

(iv) The Consumer Disputes Redressal Forum has pecuniary jurisdiction to entertaincomplaints where the value of goods/services complained against and the

compensation, if any, claimed, is upto ` ____________. (v) Under the National Green Tribunal Act, 2010, the Supreme Court, may entertain

any appeal after the expiry of ___________ days, if it is satisfied that theappellant was prevented by sufficient cause from preferring the appeal.

(1 mark each)


(i) Superannuation in relation to an employee who is a member of pension scheme,means attainment of the age of ________ years.

(ii) Leave with wages is allowed to the employees if they work for _______ days ina month.

(iii) Bonus should be paid to an employee within a period of ____________ from theclose of the accounting year.

(iv) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 isapplicable to factories employing _______ or more persons.

(v) An employer or a workman can challenge an order given by the Certifying Officerand file an appeal before the Appellate Authority within _______ days from thedate on which copies are sent to the employer and workers’ representatives.

(1 mark each)


(c) Write the most appropriate answer from the given options in respect of the following:(i) Who amongst the following is entitled for bonus under the Payment of Bonus

Act, 1965 –(a) Office assistant working in LIC of India(b) Health worker working for Red Cross Society(c) Printing worker in a newspaper press(d) Computer operator working in a university.

(ii) Under the Employees’ State Insurance Act, 1948, disputes relating to thebenefits are required to be filed in the –(a) Labour Court(b) Civil Court(c) Industrial Tribunal(d) Employees’ State Insurance Court.

(iii) Which of the following is not a ‘manufacturing process’ under the Factories Act,1948 –(a) Stitching bags and making them usable(b) Industrial training school imparting training for leather products not for sale(c) Conversion of latex into sheet rubber(d) Conversion of sea water into salt.

(iv) What is the period within which an employer must make a deposit with theCommissioner for employees’ compensation if he is liable to pay compensationunder the Employees’ Compensation Act, 1923 –(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 40 days of being served the notice.

(v) A premises including precincts thereof is a ‘factory’ within the meaning of theFactories Act, 1948 wherein a manufacturing process is being carried on with theaid of power and where the number of workers working is –(a) 10 or more workers(b) 20 or more workers(c) 15 or more workers(d) 50 or more workers. (1 mark each)

5.394

June - 2012


Paper 5(Answer Question No. 1 which is compulsory

and any three of the rest from this part.)

1. With reference to the relevant legal enactments, write short notes on any five ofthe following:

(i) Deficiency in service(ii) Hazardous substance(iii) Predatory pricing(iv) Functions of Central Pollution Control Board(v) Term of patent(vi) Salient features of the Legal Metrology Act, 2009(vii) Current account transactions. (3 marks each)

2. State, with reasons in brief, whether the following statements are true or false.

Attempt any five:(i) The Competition Act, 2002 prohibits dominance as well as abuse of

dominant position.(ii) The property confiscated for money laundering vests with the central

government.(iii) Mens rea is an ingredient of the offence punishable under the Essential

Commodities Act, 1955.(iv) Foreign direct investment is permitted in infrastructure companies in

securities market (stock exchanges, depositories, and clearingcorporations).

(v) The redressal forums constituted under the Consumer Protection Act, 1986are quasi-judicial in nature and scope.

(vi) Registration of a trade mark under the Trade Marks Act, 1999 is a prima

facie evidence of the validity of registration in all legal proceedings.(3 marks each)

3. (a) Distinguish between any two of the following:(i) ‘Political party’ and ‘an organisation of political nature’.(ii) ‘Seizure of an essential commodity’ and ‘confiscation of an essential

commodity’.(iii) ‘Contract of service’ and contract for service’.(iv) ‘Infringement of trade mark’ and ‘passing off’. (5 marks each)

(b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s):(i) The process of money laundering can be classified into _____, layering

and integration.

Question Paper (((( 5.395

(ii) The registration of trade mark requires to be renewed for successive

periods of ______ .(iii) The compulsory licence in respect of a patent is granted after the

expiration of ______ from the date of grant of a patent subject to certainconditions.

(iv) Foreign contribution means any donation, delivery or transfer made by________.

(v) The total surface area of the package where the information is requiredto be given is called _____ . (1 mark each)

4. (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder,advise on the following:(i) Anand desires to donate US $10,000 to Rotary International, an NGO in

Chicago, USA.(ii) Atul Ltd., an Indian company intends to export its software of the value of

` 15,000.(iii) Suresh desires to pay US $10,000 through international credit card being

the remittance out of lottery earnings.

(iv) Super Green Tea Ltd. intends to send its tea bags of the value of ̀ 50,000as gift to its foreign customers.

(v) Aadarsh Education Society, engaged in education sector, intends to makeinvestment in the education sector in a joint venture in USA.

(1 mark each)(b) Ramesh took out four life insurance policies with double accident benefits,

premium payable half-yearly. When the third premium fell due, the generalagent of the Life Insurance Corporation (LIC) met Ramesh and took a bearercheque towards the premium payable by him in respect of the policies.Although the cheque was encashed immediately, yet the payment of premiumwas not deposited with the LIC for another three months. In the meantime,Ramesh met with a fatal accident and died. Ramesh’s wife filed claim for thepayment of the sum assured. Will she succeed? Give reasons. (5 marks)

(c) Mention the powers of the central government to protect and improve thequality of environment under the Environment (Protection) Act, 1986.

(5 marks)5. (a) Explain the powers of the Controller in respect of an application for a patent

which has substantial risk of infringement. (5 marks)(b) Ajay Ltd. is engaged in the manufacture and sale of industrial alcohol. In the

course of manufacture of industrial alcohol, the industrial unit dischargednoxious and polluted trade effluents into a nearby river through a drain, which


is a stream within the meaning of the Water (Prevention and Control ofPollution) Act, 1974. The company and the industrial unit, had applied for thegrant of requisite consent to discharge the trade effluents into the stream butthe consent was withheld as it did not make good the inadequacies anddefects pointed out by the State Pollution Control Board.

Are the managing director and other members of the Board of directorsliable to be proceeded against under the Water (Prevention and Control ofPollution) Act, 1974 in the absence of prosecution of the company owning theindustrial unit? Give reasons and refer to decided case law, if any.(5 marks)

(c) Discuss the provisions of the Copyright Act, 1957 relating to infringement ofa copyright. (5 marks)

Part — B(Answer ANY TWO questions from this part.)

6. Write notes on any four of the following:(i) The theory of notional extension of employment under the Workmen’s

Compensation Act, 1923.(ii) Protection of gratuity under the Payment of Gratuity Act, 1972.(iii) Employees’ Pension Scheme under the Employees’ Provident Funds and

Miscellaneous Provisions Act, 1952.(iv) Purposes for which ESI fund may be expended under the Employees’

State Insurance Act, 1948.(v) Certification of standing orders under the Industrial Employment (Standing

Orders) Act, 1946. (5 marks each)

7. (a) Distinguish between any two of the following:(i) ‘Lay-off’ and ‘retrenchment’ under the Industrial Disputes Act, 1947.(ii) ‘Principal employer’ and ‘immediate employer’ under the Employees’

State Insurance Act, 1948.(iii) ‘Minimum wages’ and ‘fixation of the minimum rates of wages’ under the

Minimum Wages Act, 1948. (5 marks each)(b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):(i) As per the provisions of the Payment of Bonus Act, 1965, an employee

is entitled to bonus provided he has worked for not less than ______ inthat year.

(ii) The industrial dispute is a dispute relating to employment or non-employment or terms of employment or ______ of any person.

(iii) Adolescent means a person who has completed ______ of age but notcompleted his 18th year.


(iv) The employer is liable to pay the amount of gratuity within _____ days

from the date of its becoming payable to the employee.(v) A period of service shall be deemed to be continuous which has not been

interrupted by a period of absence exceeding ______ days.(1 mark each)

(c) Write the most appropriate answer from the given options in respect of thefollowing:(i) Which of the following is not a type of ‘bonus’ under the Payment of

Bonus Act, 1965 —(a) Profit based bonus(b) Customary bonus(c) Attendance bonus(d) Voluntary bonus.

(ii) Under the Employees’ Provident Funds and Miscellaneous ProvisionsAct, 1952, what percentage of the basic wage, dearness allowance andretaining allowance of an employee is paid or contributed by theemployer —(a) 8%(b) 10%(c) 12%(d) 13%.

(iii) Which of the following injuries does not come under the term ‘personalinjury’ under the Workmen’s Compensation Act, 1923 —(a) Nervous shock(b) Mental strain(c) Loss of money(d) Breakdown.

(iv) Which of the following is considered an ‘industry’ under the IndustrialDisputes Act, 1947 —(a) Posts and Telegraph Department(b) Central Institute of Fisheries(c) Construction and maintenance of National and State highways(d) Dock Labour Board.

(v) Under the Industrial Employment (Standing Orders) Act, 1946, which ofthe following documents must a ‘standing order’ be in conformity with —(a) Standard Standing Orders(b) Model Standing Orders(c) Uniform Standing Orders(d) Formal Standing orders. (1 mark each)


8. Attempt any five of the following stating relevant legal provisions and decided caselaw, if any:(i) A copy of the ‘memorandum of settlement’ was not dispatched by the

Conciliation Officer to the appropriate government. Will the settlement betreated as invalid?

(ii) A dispute arose about the payment of subsistence allowance to a suspendedemployee. He claimed the allowance as per the rates prescribed by the lawof the particular State. The employer wanted to pay as per the rate specifiedin the Industrial Employment (Standing Orders) Act, 1946. Will the employeesucceed?

(iii) Naresh was working in Navodaya School continuously for 30 years. Theschool has been employing 30 teachers. On attaining the age ofsuperannuation, he retired from service. The management declined to paygratuity to Naresh. He preferred a claim for the payment of gratuity before theauthority concerned under the Payment of Gratuity Act, 1972. Will hesucceed?

(iv) Hotel Harsha Ltd. has engaged an electrician to attend to electrical repairsrequired in the hotel. There is an agreement between the hotel and theelectrician that he will be required to attend to repair work whenever requiredon call. The electrician is paid a consolidated sum of ` 10,000 per month forthe services rendered by him. Can the electrician be called an employee ofthe hotel under the provisions of the Factories Act, 1948 ?

(v) Visual Electronics Ltd. sells household consumer durables such as TV,washing machines, electric stoves, etc., of various manufacturers in its salesoutlet. While delivering these items to the homes of the customers, it deputesits employees to install and explain the salient features of these items. It paysits employees an additional amount of defray for the actual travellingexpenses. The Employees’ State Insurance Corporation demandedcontribution on this additional payment including travelling expenses underthe head ‘wages’. Is the demand of Employees’ State Insurance Corporationjustified ?

(vi) Vaibhav Rice Mills is employing 15 persons in its factory for its regularoperation. During inspection, the Provident Fund Inspector found thatwhenever the goods arrived and also whenever the goods were sent out ofthe factory premises, a few causal labourers were engaged for loading andunloading purposes. The Provident Fund Inspector demanded the employerto comply with the provisions of the Employees’ Provident Funds andMiscellaneous Provisions Act, 1952 on the ground that the total number ofemployees (including casual labourers) exceeded 20. Is the Provident FundInspector justified ?


(vii) Azad Ltd. implemented a scheme of re-organisation of the business. It

resulted in the surplus of 10 employees. The company dispensed with theirservices. The employees union challenged it that it was not a ground for theretrenchment of the employees. Will the union succeed ? (4 marks each)

December - 2012


Paper 5

PART—A

Answer Question No. 1 which is compulsory and any three of the rest from this part.

1. With reference to the relevant legal enactments, write short notes on any five ofthe following:(i) Conditions conducive to cartelisation(ii) Resale price maintenance(iii) Commercial purpose(iv) Pre-packaged commodity(v) Inventive step(vi) Depository receipt(vii) General principles applicable to working of patented invention.

(3 marks each)2. State, with reasons in brief, whether the following statements are true or false.

Attempt any five?(i) A person aggrieved by the order of seizure of an essential commodity under

the Essential Commodities Act, 1955 can seek remedy in a civil court.(ii) ‘Electricity’ is a hazardous substance under the Public Liability Insurance Act,

1991.(iii) Every non-standard or unverified weight or measure used in the course of

trade is liable to be forfeited.(iv) Consumer disputes redressal forums constituted under the Consumer

Protection Act, 1986 are to be construed as judicial authorities andproceedings before them can be taken to be the legal proceedings.

(v) Even sheer negligence on the part of legal advisors in properly drafting thecomplaint against a company can make it (the company) liable under the strictprovisions of environmental laws.

(vi) The author of a literary work has no moral rights after the assignment of thecopyright. (3 marks each)


3. (a) Distinguish between any two of the following:(i) ‘Pecuniary limits’ and ‘territorial limits’ of consumer disputes redressal

forums constituted under the Consumer Protection Act, 1986.(ii) ‘Surrender of a patent’ and ‘revocation of a patent’ under the Patents Act,

1970.(iii) ‘Assignment of a trade mark’ and ‘transmission of a trade mark’ under

the Trade Marks Act, 1999.(iv) ‘Preparation to commit an offence’ and ‘attempt to commit an offence’

under the Essential Commodities Act, 1955. (5 marks each)(b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):(i) __________is the name by which the law relating to weights and

measures is known in international parlance.(ii) Foreign direct investments can be made under two routes namely,

automatic route and __________.(iii) The Public Liability Insurance Act, 1991 has been enacted for providing

immediate relief to the persons affected by accidents occurring whilehandling any__________and for other incidental and connected matters.

(iv) The National Consumer Disputes Redressal Commission shall not admita complaint unless it is filed within__________from the date on which thecause of action has arisen.

(v) Every offence punishable under the Prevention of Money Laundering Act,2002 is a__________offence. (1 mark each)

4. (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder,advise on the following:

(i) Rajiv, a person resident in India, wishes to acquire foreign securities asqualification shares issued by a company incorporated outside India forholding the position of a director in the company.

(ii) Shyam, a non-resident Indian working in the USA intends to sell hisancestral house in India to a person resident in India.

(iii) Ashok, a person resident in India, has been offered bonus shares of thevalue of US $20,000 by a company incorporated outside India.

(iv) Indel Manufacturing Inc., a company incorporated outside India, engagedin software development, intends to open its branch in a specialeconomic zone (SEZ) in India.

(v) An Indian company intends to make direct investment in a joint ventureoutside India. (1 mark each)


(b) A school owned a swimming pool and offered swimming facilities to the public

on payment of fees. The school conducted summer swimming training campsto train children in swimming and for this purpose had engaged atrainer/coach.Mohan had enrolled his son for learning how to swim. One day whileswimming, the child died due to drowning. The school authorities maintainedthat the trainer/coach was fully qualified for the job and challenged thecomplainant’s claim for compensation in the consumer disputes redressalforum.Should the school authorities be held liable to pay compensation for‘deficiency in service’? Who is entitled to receive compensation? Givereasons. (5 marks)

(c) “A reasonable opportunity is required to be provided to the person concernedbefore confiscation of his commodity or vehicle, etc., under the EssentialCommodities Act, 1955.” Elaborate the statement in the light of relevant legalprovisions and decided case law. (5 marks)

5. (a) What are the heads under which compensation or relief for damages may beclaimed under the National Green Tribunal Act, 2010. (5 marks)

(b) Does a patent obtained in India give protection worldwide? Is it possible to filean international application in India under the Patent Cooperation Treaty(PCT)? (5 marks)

(c) Discuss the powers of the Central Government to prohibit receipt of foreigncontribution under the Foreign Contribution (Regulation) Act, 1976.

(5 marks)Part — B

Answer any TWO questions from this part.6. Write notes on any four of the following:

(i) Purposes for which Employees’ State Insurance Fund may be expendedunder the Employees’ State Insurance Act, 1948.

(ii) Licensing of contractors under the Contract Labour (Regulation andAbolition) Act, 1970.

(iii) Special provisions relating to hazardous processes under the Factories Act,1948.

(iv) Tests laid down by the Supreme Court in Bangalore Water Supply andSewerage Board vs. A. Rajiappa [AIR 1978 SC 548] to determine whetheran activity is covered by the definition of ‘industry’ under the IndustrialDisputes Act, 1947.

(v) Object and scope of the Payment of Bonus Act, 1965. (5 marks each)7. (a) Distinguish between any two of the following:

(i) ‘Award’ and ‘settlement’ under the Industrial Disputes Act, 1947.


(ii) ‘Partial forfeiture of gratuity’ and ‘full forfeiture of gratuity’ under thePayment of Gratuity Act, 1972.

(iii) ‘Model standing orders’ and ‘certified standing orders’ under theIndustrial Employment (Standing Orders) Act, 1946. (5 marks each)

(b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s):(i) The appropriate government may review minimum wages at such

intervals, as it may think fit, not exceeding__________and revise theminimum rate of wages, if necessary.

(ii) The ceiling on the amount of gratuity has been enhanced to`__________by the Payment of Gratuity (Amendment) Act, 2010.

(iii) The subject matter of an industrial dispute should relate to employmentor non-employment or terms of employment or the conditionsof__________of any person.

(iv) Standing orders shall come into operation on the expiryof__________from the date on which the authenticated copies are sentto employer and workers’ representatives.

(v) There must be more than__________workers in a factory for themandatory appointment of a safety officer. (1 mark each)

(c) Write the most appropriate answer from the given options in respect of thefollowing:(i) From the close of the accounting year, the bonus should be paid within—

(a) One month(b) Two months(c) Twelve months(d) Eight months.

(ii) The minimum number of employees required in an establishment for it tocome under the purview of the Payment of Gratuity Act, 1972 is—(a) 10(b) 15(c) 20(d) 25.

(iii) The authority which has been constituted by the Central Government topreside over the cases regarding determination of monies due fromemployers under the Employees’ Provident Funds and MiscellaneousProvisions Act, 1952 is—(a) Employees Provident Fund Appellate Tribunal(b) Employees Provident Fund Consultancy Tribunal(c) Employees Provident Fund Help Desk(d) Employees Provident Fund Information Centre.


(iv) The period within which an employer must make a deposit with the

Commissioner, if he is liable to pay compensation under the Employees’Compensation Act, 1923 is—(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 60 days of being served the notice.

(v) The establishments which have been exempted from the purview of theContract Labour (Regulation and Abolition) Act, 1970 are—(a) Establishments where manufacturing work is performed(b) Establishments where metal work is performed(c) Establishments where embroidery work is performed(d) Establishments where work of intermittent nature is performed.

(1 mark each)8. Attempt any five of the following stating relevant legal provisions and decided case

law, if any:(i) Suresh, a primary school teacher, was dismissed from service due to

unauthorised absence for a week. Suresh intends to raise an industrialdispute with regard to his dismissal seeking reinstatement with consequentialbenefits. Will he succeed? Give reasons in support of your answer.

(ii) A workman was charged with theft of an article from the factory. Themanagement initiated disciplinary proceedings against him for an actsubversive of discipline and simultaneously initiated criminal proceedings bylodging a complaint with the police. The workman pleaded for stay ofdisciplinary proceedings till the outcome of criminal proceedings. Is the pleaof the workman tenable? Discuss.

(iii) Lecktronics Ltd. is an establishment covered under the Employees’ StateInsurance Act, 1948. The salesmen of the company were paid a commission@ 10 % of the sales done by them every month. The ESI Inspector asked theemployer to deposit contributions (the sum of money payable to the ESICorporation by the principal employer in respect of an employee) in respectof the commission paid. Is he justified? Give reasons.

(iv) An industrial establishment engaged an employee to assist in one or the otheroperational work incidental to its main industrial operation. However, theemployer denied such an employee the status of a workman on the groundthat his work was not directly connected with the main operation of theindustrial establishment. Can the management do so? Give reasons insupport of your answer.

(v) The management of a tea garden terminated the services of a technician onthe ground of incompetence. His cause was espoused by the workers’ unionwhich raised an industrial dispute. The management contended that the


technician was not a member of the workers’ union and that there could notbe an industrial dispute in this case. Will the management succeed in itsstand? Discuss.

(vi) A bank made certain appointments on regular basis. On scrutiny later on, thebank found that the appointment of an employee was irregular and contraryto its rules. His services were, therefore, terminated. The aggrieved employeeapproached the court against the termination by the bank. Will he succeed?Give reasons.

(vii) The management of an industrial establishment declared an unjustified lock-out due to the illegal and unjustified strike by a section of the workers. Lateron when the strike was called off, the management did not pay wages for thelock-out period. Is the action of the management justified and legally tenable?Give reasons. (4 marks each)

June - 2013


Paper 5(Answer Question No. 1 which is compulsory

and any three of the rest from this part.)

1. With reference to the relevant legal enactments, write short notes on the following.

Attempt any five:(i) Basic rights of consumers(ii) Conditions conducive to cartelisation(iii) Principle of 'no fault liability'(iv) Inherently distinctive marks(v) Person of Indian origin(vi) Competition advocacy(vii) Control of noise pollution. (3 marks each)


Attempt any five:(i) There is no positive relationship between competition and innovation,

productivity and economic growth.(ii) Indian parties are prohibited from making investment in a foreign entity

engaged in real estate or banking business.(iii) Importer-Exporter Code (IEC) number once issued cannot be surrendered

by the recipient.(iv) Foreign direct investment (FDI) regulations are not covered by the penal

provisions of the Foreign Exchange Management Act, 1999.


(v) Under the Copyright Act, 1957 moral rights are available to the authors

even after the economic rights are assigned.(vi) A patent obtained in India provides protection to the patent worldwide.

(3 marks each)

3. (a) Distinguish between the following. Attempt any two:(i) 'Contract of service' and 'contract for service'.(ii) 'Depository receipt' and 'foreign currency convertible bond'.(iii) 'Relevant geographic market' and 'relevant product market'.(iv) 'Trade mark' and 'certification trade mark'. (5 marks each)

(b) Re-write the following sentences after filling-in the blank spaces withappropriate word(s)/figure(s):

(i) Know your customer (KYC) procedures enable banks toknow/understand their customers and their _______ better to managetheir risks prudently.

(ii) Under foreign trade policy 2009-14, _______ new countries have beenincluded within the ambit of focus market scheme.

(iii) No court inferior to that of a ______ shall try any offence punishableunder the Industries (Development and Regulation) Act, 1951.

(iv) The process of _______ is classified into three stages namelyplacement, layering and integration.

(v) The Consumer Disputes Redressal Forum, the State Commission or theNational Commission shall not admit a complaint unless it is filed within_______ year(s) from the date on which the cause of action has arisen.

(1 mark each)4. (a) With reference to the relevant provisions of the Foreign Exchange

Management Act, 1999 and the rules and regulations made thereunder,advise on the following:

(i) Zenith Ltd., a foreign company is interested in purchasing its sharesissued to some of its employees, who are residents in India, under theESOP scheme.

(ii) A Malaysian diplomat entered into an agreement with a real estatecompany in India to purchase non-agricultural land near New Delhi toestablish a laboratory.

(iii) ABC Ltd., a company incorporated in India, is eligible to issue sharesto persons resident outside India under the FDI policy and intends toretain the share subscription amount in a foreign currency account.

(iv) Dr. Sukant, who is permanently resident in India, retains foreigncurrency notes of US $ 5,000 which he had acquired during his visit toUSA by way of expert medical advice rendered to patients there.


(v) Jay, a person resident in India, desires to take a life insurance policyfrom a foreign insurance company, the yearly premium of which is US$ 25,000. (1 mark each)

(b) Ashok, a director of a public limited company, was on a business trip to USA.Suddenly, he developed chest pain there and was provided medical treatmentin a hospital, the funds for which were provided by one John, a US national,who happened to be his friend. Did Ashok violate the provisions of the ForeignContribution (Regulation) Act, 2010? Give reasons. (5 marks)

(c) What are the factors which the Competition Commission of India will take intoconsideration in determining whether an agreement has an appreciableadverse effect on competition? (5 marks)

5. (a) Do the following amount to infringement under the Copyright Act, 1957? Givereasons in brief:

(i) Prof. Ajay recited in public an extract from a poem by RabindranathTagore.

(ii) ABC, Publishers published a compilation of speeches of Atal BihariVajpayee, former Prime Minister, delivered in public without permission.

(iii) A newspaper publishes a copy of masterpiece painting of Ganesh Pynewhile carrying a story on his death.

(iv) A book is not available in India. A librarian makes 10 copies of the bookfor the use of the public library.

(v) A magazine reproduces an article on a political topic by Kuldip Nayar.(1 mark each)

(b) Ramesh, an industrial employee contributing to ESI Fund was treated in anESI hospital. Due to negligent diagnosis at the hospital, his conditiondeteriorated and he had to be shifted to a private hospital. He filed a complaintbefore the Consumer Disputes Redressal Forum seeking compensation fromthe ESI hospital. His complaint was dismissed on the ground that medicalservice rendered by the ESI hospital was gratuitous in nature. The StateCommission and the National Commission upheld the decision of the DistrictForum. Ramesh intends to prefer an appeal before the Supreme Court. Willhe succeed? Give reasons. (5 marks)

(c) Healthy Foods gave an advertisement in the daily newspaper for its pre-packed snacks mentioning retail sale price of the package. However, in theadvertisement, neither the net quantity nor the number of snacks contained inthe package was given. What are the legal provisions in this regard andwhether the advertisement given by Healthy Foods is appropriate andsufficient as per relevant law? (5 marks)


PART—B

(Answer ANY TWO questions from this part.)

6. Write notes on the following. Attempt any four:(i) Provisions relating to employment of women under the Factories Act, 1948.(ii) Employees Insurance Court under the Employees’ State Insurance Act,

1948.(iii) Responsibility of the contractor under the Contract Labour (Regulation and

Abolition) Act, 1970.(iv) Procedure to be followed for certification of standing orders under the

Industrial Employment (Standing Orders) Act, 1946.(v) Unfair labour practices on the part of workmen and trade unions of workmen

under the Industrial Disputes Act, 1947. (5 marks each)

7. (a) Distinguish between the following. Attempt any two:(i) ‘Arising out of employment’ and ‘arising in the course of employment’

under the Employees’ Compensation Act, 1923.(ii) ‘Permanent total disablement’ and ‘permanent partial disablement’ under

the Employees’ State Insurance Act, 1948.(iii) ‘Young person’ and ‘adult’ under the Factories Act, 1948.

(5 marks each)(b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):(i) ____________ was the first enactment that dealt with settlement of an

industrial dispute.(ii) ____________ has been exempted from attachment in execution of any

decree or order of a civil, revenue or criminal courts.(iii) A minimum of ___________ years contributory service is required for

entitlement of pension under the Employees’ Pension Scheme.(iv) Where any workman is suspended by the employer pending

investigation or inquiry into complaints or charges of misconduct againsthim, the employer shall pay to such a workman the subsistenceallowance at the rate of __________ % of the wages which theworkman was entitled to, immediately preceding from the date of suchsuspension, for the first ___________ days of suspension.

(v) For the purposes of calculation of bonus, an employee shall be deemedto have worked in an establishment in any accounting year also on thedays on which he has been absent due to ____________ caused byaccident arising out of and in the course of his employment.

(1 mark each)


(c) Write the most appropriate answer from the given options in respect of thefollowing:

(i) Bonus should be paid to the employees within how many months fromthe close of the accounting year-(a) 2 Months(b) 6 Months(c) 8 Months(d) 10 Months.

(ii) What is the minimum number of employees required in anestablishment for it to come under the purview of the Payment ofGratuity Act, 1972-(a) 10(b) 15(c) 20(d) 25.

(iii) Under the Employees’ Provident Funds and Miscellaneous ProvisionsAct, 1952 what percentage of the basic wage, dearness allowanceand retaining allowance of an employee is paid as ‘contribution’ bythe employer-(a) 8%(b) 10%(c) 12%(d) 13%.

(iv) What is the period within which an employer must make a depositwith the Commissioner for Employees’ Compensation if he is liable topay compensation under the Employees’ Compensation Act, 1923 !(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 40 days of being served the notice.

(v) Which of the following type of strike is not called a primary strike !(a) Stay in strike(b) Tool down strike(c) Pen down strike(d) Go slow. (1 mark each)


8. Attempt any five of the following stating relevant legal provisions and decided case

law. If any:

(i) Sangeeta acquired a suitable plot of land from an authorised agency in

Jaipur for the construction of a dwelling house. Can Amit, husband of

Sangeeta, withdraw money from his provident fund being administered under

the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 for

the construction of the house?

(ii) An employer failed to pay his contribution under the Employees’ State

Insurance Act, 1948 for six years. After the lapse of six years, the ESI

Corporation issued a demand notice for payment of arrears of contribution.

The employer contended that the arrears of contribution beyond 5 years are

not recoverable. Will the employer succeed ?

(iii) The employer wants to modify standing orders duly certified by the Certifying

Officer just after the expiry of 3 months form the date on which the standing

orders came into operation. Give suitable advice to the employer.

(iv) Five persons were employed as malis (gardeners) in the private houses of

senior functionaries of a company. They were looking after the garden

attached to bungalows provided by the company to its officers and directors.

Are these malis ‘employees’ and ‘employed in an industry’ under the

Industrial Disputes Act, 1947?

(v) The President and General Secretary of a registered trade union were

dismissed from service for having instigated workers to go on a strike for the

acceptance of their justified demands. Challenging the dismissal in the court

of law, they contended that it was unjust on the part of the employer and that

going on strike was their fundamental and statutory right. Will they succeed?

(vi) Some workers were engaged in the processes of moistening, stripping,

breaking-up and packing of sun-cured tobacco leaves with a view to

transporting these to company’s main factory for their use in manufacturing

cigarettes. Do these processes amount to ‘manufacturing process’ under the

Factories Act, 1948?

(vii) The services of a bus conductor of a state roadways corporation were

terminated on the ground of weak eyesight which was below the standard

requirement. Does the termination amount to being due to continued ill-

health under the Industrial Disputes Act, 1947 ? Give reasons.

(4 marks each)


December - 2013


Paper 5

PART—A

Answer Question No. 1 which is compulsory and any three of the rest from this part.

1. With reference to the relevant legal enactments, write short notes on the following.

Attempt any five:(i) Know your customer guidelines(ii) Investigation into the affairs of a company under liquidation(iii) Term of patent(iv) ‘Complaint’ under the Consumer Protection Act, 1986(v) Bid rigging(vi) Legal metrology(vii) Water pollution. (3 marks each)


Attempt any five:(i) Money laundering is processing of criminal proceeds to disguise its illegal

origin.(ii) The Copyright Act, 1957 provides for civil remedies for infringement of

copyright.(iii) The Competition Act, 2002 prohibits dominance as well as the abuse of

dominant position.(iv) The provisions of the Foreign Exchange Management Act, 1999 read with

FEMA Regulations, 2000 allow Indian companies to freely issue rights/bonusshares to existing non-resident shareholders.

(v) The Foreign Contribution (Regulation) Act, 2010 was enacted to regulate andnot prohibit the acceptance and utilisation of foreign contribution or hospitality.

(vi) The award of confiscation of an essential commodity under the EssentialCommodities Act, 1955 prevents infliction of any punishment to which theperson affected thereby is liable under the Act. (3 marks each)

3. (a) Distinguish between the following. Attempt any two:(i) ‘Micro enterprise’, ‘small enterprise’ and ‘medium enterprise’ under the

Micro, Small and Medium Enterprises Development Act, 2006.(ii) ‘Person’ and ‘person resident in India’ under the Foreign Exchange

Management Act, 1999.(iii) ‘Environment pollutant’ and ‘air pollutant’.(iv) ‘Proprietor of a registered trade mark’ and ‘registered user of a trade

mark’. (5 marks each)


(b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):(i) The amount representing the full export value of goods or software is

required to be realised and repatriated to India within ____________.(ii) A registered trade mark is required to be renewed on the expiry of the

period of ________.(iii) Every unit of weight or measure has to be in accordance with the

_______ based on the international system of units.(iv) The Consumer Disputes Redressal Forum has pecuniary jurisdiction to

entertain complaints where the value of goods/services complained

against and the compensation, if any, claimed, is upto ̀ ____________.(v) Under the National Green Tribunal Act, 2010, the Supreme Court, may

entertain any appeal after the expiry of ___________ days, if it is satisfiedthat the appellant was prevented by sufficient cause from preferring theappeal. (1 mark each)

4. (a) With reference to the relevant provisions of the Foreign ExchangeManagement Act, 1999 and the rules and regulations made thereunder,advise on the following:(i) Rahul, a person resident in India, intends to borrow £ 10,000 (UK pound

sterling) from his friend resident in the United Kingdom. (ii) Rajan, a foreign investor, is interested to invest in a company

incorporated in India which is a small scale industrial unit.(iii) Canbury Consultants Ltd. desires to make payments of commission on

exports made towards equity investment in its joint venture companyabroad.

(iv) Jitesh, a non-resident shareholder wants to apply for the allotment ofadditional shares over and above his entitlement of rights shares in anIndian company.

(v) Operative Media, a software export company desires to receive 25% ofthe value of its exports in the form of shares in an overseas softwarecompany without entering into joint venture agreement. (1 mark each)

(b) Mention the powers of the Central Government to control production, supplyand distribution of essential commodities under the Essential CommoditiesAct, 1955. (5 marks)

(c) What are the general principles on the working of patented inventions?(5 marks)

5. (a) Briefly mention as to how the Public Liability Insurance Act, 1991 seeks toachieve the objective of providing immediate relief to the persons affected byaccident occurring while handling any hazardous substance. (5 marks)


(b) Enumerate the powers of the National Green Tribunal for the purpose ofdischarging its functions under the National Green Tribunal Act, 2010.

(5 marks)(c) What are the main features of regulatory framework for environmental

protection in India? (5 marks)

PART - B(Answer ANY TWO questions from this part.)

6. Write notes on the following. Attempt any four:(i) Prohibition of strikes and lock-outs in public utility services under the Industrial

Disputes Act, 1947.(ii) Special provisions relating to hazardous processes under the Factories Act,

1948. (iii) ‘Dependent’ under the Employees’ State Insurance Act, 1948.(iv) ‘Excluded employee’ under the Employees’ Provident Fund Scheme, 1952.(v) Provisions relating to health and welfare of contract labour under the Contract

Labour (Regulation and Abolition) Act, 1970. (5 marks each)

7. (a) Distinguish between the following. Attempt any two:(i) ‘Principal employer’ and ‘contractor’ under the Contract Labour

(Regulation and Abolition) Act, 1970.(ii) ‘Conciliation Officer’ and ‘Board of Conciliation’ under the Industrial

Disputes Act, 1947.(iii) ‘Customary or interim bonus’ and ‘bonus linked with production or

productivity’ under the Payment of Bonus Act, 1965. (5 marks each)(b) Re-write the following sentences after filling-in the blank spaces with

appropriate word(s)/figure(s):(i) Superannuation in relation to an employee who is a member of pension

scheme, means attainment of the age of ________ years.(ii) Leave with wages is allowed to the employees if they work for _______

days in a month.(iii) Bonus should be paid to an employee within a period of ____________

from the close of the accounting year.(iv) The Employees’ Provident Funds and Miscellaneous Provisions Act,

1952 is applicable to factories employing _______ or more persons.(v) An employer or a workman can challenge an order given by the Certifying

Officer and file an appeal before the Appellate Authority within _______days from the date on which copies are sent to the employer andworkers’ representatives. (1 mark each)


(c) Write the most appropriate answer from the given options in respect of the

following:(i) Who amongst the following is entitled for bonus under the Payment of

Bonus Act, 1965 –(a) Office assistant working in LIC of India(b) Health worker working for Red Cross Society(c) Printing worker in a newspaper press(d) Computer operator working in a university.

(ii) Under the Employees’ State Insurance Act, 1948, disputes relating to thebenefits are required to be filed in the –(a) Labour Court(b) Civil Court(c) Industrial Tribunal(d) Employees’ State Insurance Court.

(iii) Which of the following is not a ‘manufacturing process’ under theFactories Act, 1948 –(a) Stitching bags and making them usable(b) Industrial training school imparting training for leather products not

for sale (c) Conversion of latex into sheet rubber(d) Conversion of sea water into salt.

(iv) What is the period within which an employer must make a deposit withthe Commissioner for employees’ compensation if he is liable to paycompensation under the Employees’ Compensation Act, 1923 –(a) Within 10 days of being served the notice(b) Within 20 days of being served the notice(c) Within 30 days of being served the notice(d) Within 40 days of being served the notice.

(v) A premises including precincts thereof is a ‘factory’ within the meaning ofthe Factories Act, 1948 wherein a manufacturing process is being carriedon with the aid of power and where the number of workers working is –(a) 10 or more workers(b) 20 or more workers(c) 15 or more workers(d) 50 or more workers. (1 mark each)

8. Attempt any five of the following stating relevant legal provisions and decided caselaw, if any :(i) XYZ Ltd. has a factory at town A. It lays-off five of its workmen expressing its

inability to give employment to them due to accumulation of stocks. Thecompany, however, offers these workmen an alternative employment in itsanother factory located at town B which is at a distance of 7 kms. from townA. The workmen refuse the alternative employment. Is the action of theworkmen tenable in law ? Are they entitled to lay-off compensation ?


(ii) Ankit was placed under suspension for an act of alleged misconduct anddisciplinary proceedings were initiated against him. The inquiry officer couldnot complete the proceedings within the stipulated period of 90 days.The suspended employee demanded an increase in subsistence allowance.Is he entitled to an increase in the subsistence allowance under the IndustrialEmployment (Standing Orders) Act, 1946 ? If so, how much ? Will the positionbe different if the delay in the completion of disciplinary proceedings isattributable to the conduct of Ankit ?

(iii) The Board of directors of a company appointed Chander, its productionmanager, who controlled the operations of the factory as the ‘occupier’. TheChief Inspector of Factories refused to approve the appointment of Chanderas the ‘occupier’. The company intends to challenge the orders of the ChiefInspector of Factories. Will the company succeed ?

(iv) Shobit, an employee, was placed under suspension for an alleged act ofmisconduct. An inquiry was instituted against him. The charges were,however, not proved against him. He was later on reinstated with full wagesof the suspension period. The employer, however, did not pay bonus for thesuspension period. Shobit intends to challenge the decision of the employer.Will he succeed?

(v) Prem and Suresh established a legal consultancy firm. They employed threelaw graduates, a stenographer and a typist to assist the firm. After five years,the services of the stenographer were terminated without assigning anyreason. He raised a ‘dispute’ before the Labour Court asking for re-instatement or retrenchment compensation as contemplated by the IndustrialDisputes Act, 1947. Will he succeed?

(vi) Ten workers working as contract labour in the marketing division of an oilrefinery were engaged in liquified petroleum gas haulage work (loading andunloading of LPG cylinders). The company did not automatically absorb thesecontract workers even after the Central Government had issued a notificationprohibiting the employment of contract labour in the said category of work. Theaggrieved workers intend to take recourse to legal proceedings. Will theysucceed?

(vii) Mohan was dismissed from service for misappropriation of the property of theestablishment. He was also disqualified from receiving any bonus includingthe bonus for the accounting year in which the dismissal took place. Is theaction of the employer justified? (4 marks each)

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