A.P. Law for Outsourcing of Non-Core Activity –

A Step in the Right Direction

(By R. Jayarajan, Dy. Manager (Law) & Estate Officer NTPC, Kayamkulam)

Introduction

The legislative wisdom demonstrated by A.P. Assembly in amending certain very vital provisions of the Contract Labour (Regulation and Abolition Act 1970) is highly laudable. This is an area where politicians seldom do anything. This piece of legislation might be termed as "Draconian" by the representatives of the working class as it may appear to be a retrograde step which may result in the revival of old concept of hire and fire rule. But considering the change in the global scenario, acute unemployment and all pervading lethargy of regular employees and also the tendency of the Government to increase the retirement age to overcome economic crisis and also that the increasing tendency of the organized regular employees in the Government and Public Sector to take the common people to ransom by declaring strike, go slow, tools down, pens down and what not, all sensible persons should welcome this bold step initiated by the A.P. Government which is worth emulating by other State Governments.

State legislations on a subject hitherto being governed by a Central Act is bit difficult. "Labour" is a subject appearing in the Concurrent List of the 7th Schedule of the Constitution. As such both Central and State Governments can legislate. But whenever a State Legislation comes in to conflict with a Central Legislation on the same subject, the State Legislation will be rendered void to the extent the provisions are inconsistent with the Central Act. (This being the position of interpretation when the vires of the Act challenged). A.P. Government has got the assent of the President of India for the said Act and the same was published in the gazette and becomes an Act in the State of Andhra Pradesh. It is worthwhile to mention here that the Central Government has already seized off this matter long back but due to variety of reasons the legislation could not see the light of the day but from any time now the Central Government may pass the Act amending the provisions of Central Act or the Central Government now can very cleverly throw this difficult task of liberalizing the deployment of contract labour to the respective States citing the example of Andhra Pradesh. The Government of Karnataka and Maharashtra has already initiated steps in this direction.

Central Act

The single major hurdle in the Act as far as an Industry/Principal employer is concerned is the provision under S.10 which prohibits employment of persons in perennial nature of jobs. The judicial pronouncements and interpretations made the task of deployment of contract labour very difficult for the employers. For an establishment engaged in a particular manufacturing or generation process a lot of activities will be there which can be termed as incidental to the main activity which may not warrant posting of regular labour, but at the same time are off perennial nature. For any industry, the work of horticulture, housekeeping, sanitation, maintenance of plant and equipment, security, canteen etc. are of perennial nature. Deploying regular employees for these type of works will out number the number of employees required in the core activity of the employer which is not a healthy practice for the survival of the industry. Moreover our past experience has proved beyond doubt that the outsourcing of peripheral jobs will increase the quality and efficiency of the job which will create more employment though for short duration instead of a few employment for longer duration. The Central Act because of its stringent provisions augmented by the judicial pronouncements made the employer to practice a miserly approach in the deployment of labour due to the threat of regularisation thereby limiting the employment opportunity. Further employer will shy away from the responsibility of directly providing various welfare benefits to the employees for the reason that the registration of contract labour under various Act like ESI and PF will ultimately prove detrimental to the principal employer when the question of regularisation comes before a court of law.

Salient Features of the New Amendment

The Contract Labour (Regulation and Abolition) (Andhra Pradesh Amendment) Act 2003 contains 6 sections. S.1 deals with the short title, extent and commencement.

S.2 is the most important Section by which a clause (dd) is introduced in the S.2 of the old Act namely, the definition. The crux of the Act is this Section, the S.2 (dd) which defines a "Core Activity of an Establishment" as Core activity means any activity for which the establishment is set up and includes any activity which is essential or necessary to the core activity. Further there is an exclusion clause, sub-s.(1) to (12) which excludes almost all activity which are incidental to the core activity which has been a 'perennial headache' to the principal employer since coming into force of the Central Act. Here the non-core activity excluded as per Act with a view to outsource the work are:

1) Sanitation works, including sweeping, cleaning, dusting and collection and disposal of all kinds of wastes.

2) Watch and ward services including security services.

3) Canteen and Catering services.

4) Loading and un-loading operations.

5) Running of Hospitals, Educational & Training Institutions, Guest Houses, Clubs and like where they are in the nature of support services of an Establishment.

6) Courier Services which are in nature of support services of an Establishment.  -

7) Civil and other constructional works, including maintenance.

8) Gardening and maintenance of lawns etc.

9) House keeping and laundry services etc., where they are in nature of support services of an establishment.

10) Transport services including Ambulance services;

11) Any activity of intermittent in nature even if that constitutes a core activity of an Establishment and

12) Any other activity which is incidental to the core activity.

However, a word of caution is also incorporated in the section in the form of proviso which says "provided that the above activities by themselves are not" core Activities of such establishment which means any establishment exclusively set up for any of the non-core activities mentioned above is excluded from the purview of the Act as non-core activity becomes the core activity of that establishment.

The most important section in the new Act is S. 4 which replaces the S.10 of the Central Act. Except the title namely "prohibition of employment of contract labour" the entire section is totally recast and simplified. The sub-s.(1) in categorical terms prohibits employment of contract labour in Core Activities. But as per the section 10 of the Central Act the following legal steps are to the complied before appropriate Government prohibit contract labour.

1. Consultation with Central Board or State Board as the case may be.

2. Notification in the official Gazette to that effect.

Before notification, the appropriate Government shall assess the conditions of work and benefits and other relevant factors with respect to the Contract Labour to ascertain the parameters mentioned in sub-s.(2) (a) to (d) of S.(10) namely, perennial nature of job etc.

Under S.10 of the Central Act once a notification is issued after complying with the requirements of S.10, the prohibition comes into force. But under the new Act the prohibition of employment in contract labour in core-activity is prohibited from the day the Act comes into force.

Further under the new Act of Andhra Pradesh under certain circumstances, the principal employer can engage contract labour directly or through a contractor even in core activity, like:

a) the normal functioning of the establishment is such that the activity is ordinarily done through contractors,

b) the activities are such that they do not require full time workers for the major portion of the working hours in a day or for longer periods as the case may be,

c) any sudden increase of volume of work in the core-activity which needs to be accomplished in a specified time;

In other words, under the new Act there is no activity where the deployment of contract labour is prohibited.

Other Sections of the new Act is either ancillary or to facilitate the implementation of the Act which may not need any elaborate discussion.

Advantages

The Act did not compromise on any of the welfare provisions envisaged for the labour under the Central Act. Since the concept of core and non-core activities are clearly spelt out, future regularisation of contract labour enmasse on account of interpretations of Act/Judicial pronouncement may not come unexpectedly as has happened in the case of few public sector undertakings in view of the various verdicts of the court.

The employer without fear or favour can get the best work force from the market for non-core activities which ultimately helps in the efficiency and economic stability of the organisation.

The employer can concentrate on selection of right people in the core activities .instead of dumping the organisation with people in the non-core area. The size of the organisation will come in handy which will increase the efficiency.

The employer can deploy any number of people in any non-core activity which will create more employment opportunity for the labour in the unorganized sector. This will stop the practice cornering the attractive regular jobs by a handful of people.

Welfare provisions are kept intact and employer can directly involve in extending the facilities such as ESI, PF in non-core area also which employer often avoid due to stringent legal provisions regarding regularisation of contract labour.

Disadvantages

Though the legislation prohibits employment of contract labour in core-activities it allows employment of contract labour under certain contingencies in the core activities which the principal employer may use as a shield to deploy contract labour in core activities also instead of regular employees. Employer may use this provision to introduce retrenchment schemes to eliminate regular employees even in the core-areas and promote contract deployment instead. Having allowed deployment of contract labour in the non-core area the legislation should have fixed the responsibility of providing welfare measures squarely and directly on the principal employer.

The penal provisions for non-compliance of welfare provisions should have been made more stringent.

Unless the law is made applicable uniformly to all States, a Centrally controlled multi unit organization having units in different States may have to adopt different strategy for deploying contract labour for different units.

Conclusion

Considering the lethargy and way of working of Government Servants, Public Sector Employees and those who are in the secured employment, this regulation is a step in the right direction. This will increase the quality and output of the employee to larger extent and increase job opportunity in the area of service functions benefiting the organized unemployed youth both skilled and unskilled.

Dismissal for Default - Whether Meets the Ends of Justice

(By R. Ramanarayana Prabhu, Advocate, Ernakulam)

Dismissal for default for nonappearance of the plaintiff/petitioner/complainant or the pleader in the date on which the case is posted is the easiest way to dispose of the matter. Is it this type of disposal are expected from the court of law or a quasi-judicial Tribunals/Forum? certainly not. My attempt through this Article is to bring into light the implication of such dismissals, modalities adopted by the Courts for such dismissals by strictly following the law books without considering its practical aspects and the vehemence by which Courts/Tribunals resists restoration application by placing hyper technical objections, lack of jurisdiction etc. so as to finish the litigation without probing the merits of the case or the petition for restoration.

2. There may be several reasons for the non-appearance of plaintiff/petitioner or the pleader on the date on which the case is posted. Many of the times the reasons will be mistake in noting the posting date or inability of the pleader to appear before the Court on such day due to several reasons beyond his control, like traffic block, bandh, harthal, etc. etc. Sometimes though the case is posted on a specific date the same will not be called due to oversight by the Bench clerk and such cases will not be posted in the 'A'-dairy for quite some time. Sometimes the same will be called on a different date after its posting date. Sometimes the case will be called out of turn during the roll call. Therefore it can be revealed by the above illustration, that in most of such cases there will not be any laches or negligence on the part of the plaintiff/ petitioner. The fact being so it is a point to be mooted whether a court of law or quasi judicial tribunals/Forums are justified in dismissing the case for default merely on the ground that on a specific date the plaintiff/petitioner or the pleader fails to appear before it? and whether the framers of the procedure codes and statutes really intended such dismissals which fails to fulfil the ends of justice and goal of justice delivery system, especially in a country like India where there is no efficient and sufficient paraphernalia to dispose the cases on merits in a methodological manner as dreamt by the law framers. In my view giving a second chance to the litigant by the court/tribunals is required in order to see that the non appearance is intentional or as a result of neglect or laches.

3. Before arriving to a conclusion, it is better to refer some of the provisions which empowers Courts or quasi Judicial Tribunals/Forums to dismiss a case/petition for default. One of such provision is O.IX, R.8 of CPC. On going through this provisions carefully, one can see that there is no option for the court under O.IX R.8. One is to dismiss the suit for default and other is to decree the suit to the extent to which the defendant admits the claim. Then O.IX R.9( 1) bars fresh suits on the same cause of action but permits the plaintiff to apply for an order to set the dismissal aside, on showing sufficient cause for a non appearance. But filing of such petition and to get an order to restore the suit on file, takes much time and practically works against the principles of justice and good conscience.

4. Similarly S.256 of Cr. PC. is another provision which empower the Court to dismiss the complaint for default. Unlike O.XI R.9(1) C.P.C., there is no power given to the court which dismisses the complaint for default under S.256, to restore the complaint on file on furnishing sufficient reasons for non appearance by the complainant. Hence the complainant has to file Revision Petition before the District Court against the order of dismissal. And it will consume much time to get the complaint restored to file. Here also the said process works against the principles of justice and good conscience.

5. In most of the statutes/acts such as Land Reforms Act, Consumer Protection Act, Income Tax Act, Building Tax Act, etc. there is no provision which empowers the Tribunal/Forum to restore the complaint/petition which was dismissed for default. When the complainant/ Petitioner comes up with a petition to restore the complaint/suit/petition, such petitions/ applications are being dismissed for the reason that the Statute/Act does not empower the Presiding Officer to restore the complaint/petition on file. Now we can examine some of the decisions pronounced by Supreme Court and High Court which invests the Presiding Officer with the power to restore. The Supreme Court of India in IT. Commr. Madras v. Chenniappa (AIR 1969 SC 1068 (F.B.)) held that every Tribunal/Forum has inherent jurisdiction to restore the matter which is dismissed for default and further held that the Tribunal has to dispose of the matter on merits and cannot short circuit the same by dismissing it for default of appearance. Similarly, the High Court of Kerala in Gopalan Bhavani v. Raghavan Aravindakshan (1989 (2) KLT 118 DB). held that 'the Tribunal, if not conferred with specific power to dismiss an application for default and to restore the application dismissed for default has no power to dismiss the application for default or to restore an application dismissed for default. 'It is irrational for a court to hold in the absence of specific provision in the statute that the Tribunal has got only the power to dismiss an application for default and has no power to restore an application dismissed for default'. There are other similar decisions on the subject also like one that reported in l.T. Commissioner Madras's case (supra) which are binding on all the courts and tribunals within the territory of India by the grace of Art141 of the Constitution of India. But it seems that the Consumer Forums and State Commissions and other Statutory Authorities constituted under special statutes, for eg., Building Tax Appellate Authorities, Consumer Forums etc. are not following the law declared and principle laid down by the Apex Court in the above matter and dismisses the petition filed by the complainant to restore the complaint which is happened to be dismissed for non appearance of the complainant or the pleader, on the ground that there is no provision in the Act to restore the complaint on file, by relying on some decisions like one reported in III -1963 CP 1273 wherein the National Commission held that under the Act there is no provision for restoration of a case dismissed for default. Here the moot point is whether the National Commission constituted under Consumer Disputes Act is not duty bound under the Art.141 of the Constitution of India to follow the law declared and principles laid down by the Apex Court on this subject? And if the National Commission does not follow the said principles laid down by the Apex Court in the matter of restoration of cases which are dismissed for default, whether the judicial discipline calls up on the District Forum and the State Commission not to follow the principles/Law declared by the Supreme Court of India ignoring Art.141 of the Constitution of India. All these are delicate issues which requires careful consideration by the hands of the Courts, Tribunals/Forums which undoubtedly derives powers and even its existence from the Constitution of India.

6. Therefore in my opinion the provisions which empower the courts and Tribunals/ Forum to dismiss the case for default for non-appearance of the plaintiff/petitioner or the pleader, if exercised without granting the defaulter a fair chance or chances to show sufficient cause, for the non appearance on the appointed day, would lead to denial of justice and would work against the very principles of Natural Justice and good conscious. Similarly when such power is exercised by the Courts and Quasi-judicial Tribunals/Forums, they are empowered to restore the cases, so dismissed on file if sufficient cause is shown by the petitioner/plaintiff for the non appearance on the appointed date. The Hon'ble High Court of Kerala in a recent decision, H.E. Abdul Azeez Sait v. C.D.R.F., dealing of question whether Consumer Forum has power to restore the complaint, relying on. New India Assurance Co. Ltd. v. Sreenivasan (2000 (2) KLT 462 (SC)) held that if the complainant shows good reasons for the non-appearance, the Consumer Disputes Redressal Agencies concerned has inherent power and jurisdiction to restore the complaint dismissed for default.

7. It is well settled principle that all procedures and powers are open to court in order to meet the end of justice, unless otherwise specifically prohibited. Full Bench of Allahabad High Court in Narasingh Das v. Mangal Dubey (ILR (1883) 5 All. 163) held that "The Courts are not to act upon the principle that every procedure is to be taken as prohibited unless it is expressly provided by the Code, but on the converse principle that every procedure is to be understood as permissible till it is shown to be prohibited by the law". The principle was recently considered by the Division Bench of Kerala High Court in M.G. University v. Milu Dandapani (2000 (1) KLT 351). held that "all procedure is always open to a court which is not expressly prohibited".

8. So the interest of justice and good conscious require that power to dismiss for default is to be exercised sparingly after giving the defaulter a fair chance or chances to show sufficient cause for non appearance on the appointed day. In our country litigations are very expensive and consume much time. It is very easy to throw away a case by merely dismissing the same for default. But such kind of dismissals are not expected from a Court of law or from the quasi-judicial Tribunals/Forums. Before dismissing a case for default the courts shall keep in mind the-well settled proposition of law that no person shall deny justice on technicalities. Such dismissal and non inclination for restoration would definitely lead to multiplicity of proceedings and waste of time and mental agony to the parties involved.

Strike, Whether a Fundamental Right?

(By M. Rajasekharan Nayar, Advocate, Cochin)

Industrial Disputes Act, 1947 is a successor of Trade Disputes Act, 1929. The working of the 1929 Act revealed various defects and to overcome them, a fresh legislation was thought off, which resulted in Industrial Disputes Act, 1947.

Though 1929 Act imposed restrains on the rights of strike and lockout in the public utility service, no provision was made for settlement of Industrial Disputes. This defect was overcome, during the 2nd World War, by framing Rule 81 A of the Defence of India Rules. This R.91A lapsed on 1st October 1946, was kept in force by Emergency Powers (Continuance) Ordinance, 1946 and thereafter the present Industrial Disputes Act, 1947 was enacted.

Chapter V of the Industrial Disputes Act deals with strikes and lockouts. S.22 prohibits strikes and lockouts in public utility service and S.23 deals with strikes and lockouts in the other industrial establishments. S.24 deals with illegal strikes and lockouts and S. 25 prohibits financial aid to illegal strikes and illegal lockouts. From the above provision it could be seen that the strikes and lockouts has got only limited statutory support.

The above statutory provisions were the result of relentless struggle on the part of the workers for more than 100 years. At that time the trade union leaders were dedicated to the cause for which they are struggling. Even Mahatma Gandhi took a prominent part for emancipation of Indigo workers in Chambaran. Gandhiji took the cause of the workers and cultivators only after they agreed to give up some unreasonable demands.

Till the end of 1980 in India, trade unions were led by eminent men and the last of them was late Sri. Ramanujan, who continued as the President of the INTUC till he was appointed as a Governor. But at the same time he was very much worried about the method adopted by the workmen in the organized sector, especially those under the public sector undertakings. By then leaders slowly lost their grip over the workers and who in turn started placing unreasonable demands. As a member of the Central Negotiating Body in the HMT, I was flooded with demands, almost all of them were found to be unreasonable. Even there was claim for split duty allowance for workers who were posted according to their convenience and mainly residing in Company Quarters. The strikes have become an order of the day and it is in this back drop, you have to view the Supreme Court judgment regarding strike.

With the framing of the Indian Constitution, the question that arose was, whether the right to strike is a fundamental right? Art.19(1)(c) recognize right to form associations and unions while under Art.19(4) the Government can impose restrictions on the rights created by Art.19(1)(c). There is no provision in the Constitution, which deals with strike hence cannot be stated that it is a fundamental right. Strike is not mentioned directly in any other enactment, whereas there is indirect references in the Payment of Wages Act, the Bonus Act, the Mines Act and Gratuity Act. According to the provisions of the Minimum Wages Act the worker loses 8 days wages for a day's absence without leave. Mines Act and Bonus Act also indirectly deals with these aspects.

The question whether the right to strike is a fundamental right came up for consideration before the Constitution Bench of the Supreme Court in 1953 (AIR 1954 SC 73) and 1961 (AIR 1962 SC 127). Referring to the above provisions Supreme Court held that the right to strike cannot be equated with that of a fundamental right. The right to form an association cannot be equated with the right strike as a fundamental right because the strike impinges, the right of the general public and hence illegal. Other decisions also has held that the strike has got only limited statutory support and can never be equated with that of a fundamental right ((1989) 4 SCC 710). The observations in the above case are per incurium as the two judges has not referred to the Constitution Bench Decision.

There is another side of the picture. It was not considered by the Courts. When United Nations was formed in 1948, members of General Assembly passed universal declaration of human rights. It was recognized by the members of Nations of United Nations. Art.23(4) states as follows : Everybody has the right to form and to join trade unions for the protection of his interests and sub Arts.2 and 3 states as follows : 2- Everyone, without any discrimination, has the right to equal pay for equal work and 3 says everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other-means of social protection. This necessarily means right to form association and espouse their rights by legitimate actions. This, together with international covenants on economic, social and political rights, to some extend support the contention that strike is legitimate weapon in the armoury of workers.

The question then will be, whether these rights guaranteed and recognized by the various international covenants will supersede the rights and limitations prescribed by the fundamental law of respective nations because these covenants say the right to strike could be exercised in conformity the laws of the particular country. Thus the question again raises, the effect of Art.19(1)(c) of the Constitution of India and the law laid down by the Supreme Court, which is binding on all, under Art.141. Even though Supreme Court decision, in Rangarajan's case, 2003 (3) KLT 86 (SC), cannot be said to be wrong, it seems that the judgment is bit harsh.

Homage to Palkhivala - The Greatest Lawyer

(By P.K. Ravindranatha Menon, Sr. Advocate, Ernakulam)

A highly gifted and multi faceted personality, India's far-seeing statesman Shri Rajagopalachari had hailed Palkhivala as a "gift of god to Mother India".

Mr. M.C. Chagla, one of the outstanding Indian patriots and a great judge of international eminence said of Mr. Palkhivala in his autobiography - "Roses in December" - "Mr. Nani Palkhivala is the most brilliant lawyer of our times."

Justice H.R. Khanna, an institution by himself, paying high tributes to Nani Palkhivala's greatness as a lawyer, once said that if a count were to be made of ten top most lawyers of the world, Palkhivala's name would find a prominent place among the ten.

Mr. Palkhivala a legend in his own lifetime had done India proud. Though I did not had the privilege of knowing him, I had the privilege of listening to him and had the greatest privilege of reading hundreds of judgments in cases in which he had appeared before the Supreme Court and before various High Courts.

Mr. Palkhivala had started appearing before the Supreme Court in very important cases even at a very young age of 33.

In the passing of Shri. Palkhivala the Nation has lost not only the greatest lawyer the country had produced but a fine, integrated human being. Mr. Palkhivala's professional skill was legendary. For over half a country he argued thousands of cases, including some of great legal import which have left a deep impact upon our constitutional structure.

Early in his professional career and with the publication of his magnum opus on income tax, he came to be recognized for his pre-eminence as a great expert in the theory and practice of taxation.

"The Law and Practice of Income Tax" authored by Palkhivala, a monumental work, is locus classicus on the subject.

I had the privilege to listen to him. To listen to his arguments in some of the landmark cases in the Supreme Court was to experience the spell of his magic persuasiveness as he would begin to unfold the version of the Founding Fathers of the Constitution and to illumine the path of law.

Mr. Palkhivala was an orator par excellence, he knew that an orator's virtue is to speak the truths He spoke the truth with transparent sincerity and conviction.

It is said 'one moon alone destroys darkness and not millions of stars'. This statement applies with all force and in abundant measure to the life and work of Palkhivala. In the great galaxy of lawyers of this country Palkhivala is a shining moon being the greatest lawyer.

Mr. Palkhi wala was the architect of the basic structure theory of the Constitution. That is the greatest contribution of his to our Nation.

The Securitisation Act - 2002 - A View - From the Far

(By V.K. Babu Prakash, Munsiff, Thrissur)

The long awaited Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act - 2002 which will be called hereinafter as Act 54 of 2002 has now come into reality. The ordinance passed had been put into enactment by the Indian Parliament which has come into force on 21.6.02. It has been criticized by the Bank Employee's Association and various other commercial sectors that the Act and the ordinance are the brain child of the World Bank. The Bank Industry in India is slowly passing in to the new work of international prudential norms and account practices. There is no legal provision before coming into force of Act 54 for facilitating the securitisation of financial assets of a bank and financial institutions. Further, unlike international banks the banks and financial institutions in India do not have power to take possession of securities and sell them. The existing legal norm relating to commercial transactions has not kept pace with changing commercial practice and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions. The Central Government appointed Narasimhom Committee 1 & 2 Andhyarjuna Committee for the purpose of examining banking sector reforms. The Committees have considered the need for changes in the legal system in respect of these areas. The Committees have suggested enactment of a new legislation for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the Court. Acting on these suggestions an ordinance was promulgated to regulate the same. The act contains the following provisions: (a) the registration and regulation of securitisation companies or reconstruction companies by the Reserve Bank of India, (b) Facilitating securitisation of financial assets of banks and financial institutions with or without the benefit of underline securities, (c) Facilitating easy transferability of financial assets by the securitisation company or reconstruction company to acquire financial assets of banks and financial institutions by issue of debentures of banks or any other security in the nature of a debenture, (d) Empowering securitisation companies or reconstruction companies to raise funds by issue of security receipts to qualified institutional buyers, (e) Facilitating reconstruction of financial assets acquired by exercising powers of enforcement of securities of changes of management or other powers which are proposed to be conferred on the banks and financial institutions, (f) Declaration of any securitisation company or reconstruction company registered with the Reserve Bank of India as a public financial institution for the purpose of S.4(a) of the Companies Act. (g) Defining security interest as any type of security including mortgage and charge of immovable properties given for due repayment of any financial assets given by any bank or financial institution, (h) Empowering banks and financial institutions to take possession of securities given for financial assets and sell or lease the same or take over management in the event of default, (i) Rights of a secured creditor to be exercised by one or more of its Officers authorised in this behalf in accordance with the rules made by Central Government, (j) An appeal against the action of any company or financial institution to the concerned Debts Recovery Tribunal and a second appeal to the appellate Debts Recovery Tribunal, (k) Setting up or causing to set up a Central Registry by the Central Government for the purpose of registration of transactions relating to securitisation, asset, reconstruction and creation of security interest. (1) Application of the proposed legislation initially to banks and financial institution and empowerment of Central Government to extent the application of the proposed legislation to non-banking financial companies and entities. Non-application of the proposed legislation to security interest in agricultural loans and loans not exceeding to Rs. one lakh. The Act contains 42 sections and 6 chapters. Chapter 1 deals with Preliminary matters and definition. Chapter II deals regulations of securitisation and reconstruction of financial assets of banks and financial institutions. S.3 is the important provision which provides registration of securitisation companies or reconstruction companies. S.4 deals with the power of the Reserve Bank to cancel the registration. S.5 deals with the power of the securitisation company or reconstruction companies to acquire the rights or interest or any financial assets of any bank or financial institutions. S.6 provides to issue notice to the obligor and discharge of obligation. S.12 confers power upon Reserve Bank of India to determine policy regarding this Act. Chapter III deals with enforcement of security interest. S.13 deals with the enforcement of security interest, which says that notwithstanding anything contained in S.69 or 69(A) of the Transfer of Property Act any security interest created in favour of any secured creditor may be enforced without the intervention of the Court or Tribunal by such creditor in accordance with the provisions of this Act. This is the important section which gives a sword of weapon to the banking and other securitisation companies to brandish the same against the borrowers as well as obligants. S.14 deals with the power of Chief Metropolitan Magistrate or District Magistrate to assist the secured creditor in taking possession of the secured asset. S.15 deals with the manner in which the effect of take over and management can be made. S.17 deals with the right of appeal. The right of appeal conferred upon the person aggrieved by any order passed under S.13(4) to Debts Recovery Tribunal and jurisdiction in the manner must be exercised within 45 days from the date on which such measure had been taken. S.18 deals with the appellate tribunal from any order made by the Debts Recovery Tribunal under S.17. S.19 deals with the right to receive compensation and cost. Chapter IV is another important provision which deals with the Central Registry under S.20. The Central Government shall have to cause or set up from such date Central Registry with its own seal for the purpose of registration or transaction of securitisation and reconstruction of financial assets and creation of security interest under the Act. Chapter V deals with offences and penalties committed under S. 27. S.27 deals with 3 kinds of default which call for penalty. The first one is, if default is made with respect to filing of transaction of securitisation before the Central Registry and clause (b) says sending of modification security interest and clause (c) deals with in giving intimation regarding the report of satisfaction of security interest to the Central Registrar. S. 28 deals with penalties of non-compliance of direction made by the Reserve Bank from time to time. Regarding offences under S.27 secured creditor is liable to pay fine of Rs.5,000/- for every day during the default continues. It does not carry imprisonment or default sentence. S.28 imposes penalty with fine of which may extend to 5 lakhs rupees and in the case of continuing offences fine extend to Rs.10,000/- for every day as an additional fine. S.30 deals with cognizance of the offence by Judicial First Class Magistrate or Metropolitan Magistrate. Chapter VI deals with Miscellaneous provisions which gives an exemption to the loan of goods by the provisions of the Contract Act or Sale of Goods Act and other various enactments. It also gives an exemption regarding properties not liable to attachment or sale under S.60(1) of CPC. S.34 contains a non-obstante clause which makes a blanket ban upon the Civil Court to entertain any suit or proceedings in respect of any matter which a Debt Recovery Tribunal or the appellate tribunal has been empowered by this Act. No injunction shall be granted by any Court in respect of any manner covered by the Act.

A demand notice under S.13(2) has to be issued by the secured creditor to the borrower or his obligant. Though as per the rule of Debt Recovery Tribunal, it has got jurisdiction above matter of Rs.10 lakhs the power exercised by the tribunal under the Act is of Appellate authority so that pecuniary question of jurisdiction does not arise therein. Under S.13(7) of the Act the money realised by a secured creditor on sale of security under the Act should be held in trust and is not capable of being appropriated detrimental to the interest of prior charge holders. It is clearly mentioned that the secured creditor cannot take action under S.13(4) unless the claim is made within the period of limitation: The notice contemplated under S.13(2) must be issued within the period of limitation. The limitation period is calculated from the date of cause of action or default after serving notice. As per S.13(1) of the Act any security interest created in agricultural land is excluded from the purview of the Act. Agricultural land and implements are exempted under the provision of CPC which is made applicable so that agricultural land cannot be received as security by the bank. The provision regarding Central Registry is in suspended animation and will come into play only when notified and set up. However, the non constitution of the Central Registry does not in any way affect the right of the bank to enforce security interest ie., hypothecation, mortgage, charge etc. without going to the court as per the provisions of the Act. The authorised Officer of the bank alone is entitled to take possession of the property. After taking possession of the property under the Act till the disposal of the same it should be under the safe custody of the authorised officer. The term District Magistrate includes the District Collector of the area who can assist the creditor to take over the security. Thus the scheme of the Act gives a power upon the creditor himself to move against the security furnished by the borrower. The creditor need not go to the court for enforcing the claim. Thus a new arena is going to veil up thereby the Civil Courts in the country will no more be crammed by money suits of the banking and other institutions hereafter.