Monthly Archives: May 2015

Amendments to Consumer Protection Law

Government is planning a comprehensive amendment to the Consumer Protection Law to encourage class action suits against companies and also in view of rampant consumer dissatisfaction with the e-commerce companies. The gist of their press release released on 29th May, 2015 is given below:

The government has realized the plight of Indian consumers and the Department of Consumer Affairs as the nodal organization for the protection of consumer rights has initiated a major step to rewrite the Consumer Protection Act so as to remove various lacunae in the Act that has been noticed over the last 28 years of its enforcement. This was observed by Shri Arun Jaitley while addressing the “National conference on effective functioning of Consumer Fora” organized by Ministry of Consumer Affairs, Food and Public Distribution, Shri Ram Vilas Paswan here today. He said that comprehensive amendments are therefore on the anvil to the consumer protection law that will introduce far reaching changes.

Presiding over the conference, Shri Ram Vilas Paswan, the Union Minister for Consumer Affairs, Food and Public Distribution reiterated the commitment of the government to Consumer Protection. He pointed out that government alone, regardless of the sector it deals with or the domain it regulates, cannot adequately address several of these challenges. There is a need, he emphasised, for all stakeholders – the Central Government, State Governments to work together. He noted that for the law to be fully effective and serve the purpose for which it was enacted, simple, inexpensive and speedy justice ought to become the very reason for the existence of these courts. And that has to be accomplished through stringent monitoring of the working of the courts. It is also necessary to create an infrastructure that would help consumers understand the law and file complaints smoothly. Only then will we see a different picture of consumer justice and empowerment in India

In his welcome address, Shri Keshav Desiraju, Secretary, Department of Consumer Affairs, noted that consumers are a vulnerable lot for exploitation, more so in a developing country with the prevalence of mass poverty and illiteracy. The challenges that we confront would require policy coherence and coordinated program implementation, harmonization of the legislative framework and the regulatory apparatus. Over the years government has taken, many steps to strengthen the consumer movement in the country and to protect their interests. A legal system and a strong dispute redressal mechanism have been put in place with procedural simplicity and speedy and inexpensive redressal of consumer grievances.

Justice D.K.Jain, the President of the National Consumer Disputes Resolution Commission (NCDRC) noted that India enjoys a unique position in the consumer advocacy movement with a dedicated three tier Quasi­Judicial Consumer Dispute Redress Mechanism established at the District, State and National levels under the law. He emphasized the need for governments at the Centre and the States and the consumer courts to work closely together to provide effective and timely grievance redress to consumers.

The Conference on “Effective Functioning of Consumer Fora” which was attended by President and Members of the National Consumer Disputes Redressal Commission (NCDRC), Ministers and Secretaries in charge of Consumer Affairs in States and Presidents of State Consumer Disputes Redressal Commissions, deliberated upon the problems being faced in the smooth functioning of Consumer Fora and suggested measures to improve their functioning.

In the Conference, it was noted that:

  • There should be uniform recruitment procedure and respectable remuneration for Presidents and Members of the Consumer Fora.
  • It was impressed upon the State Governments to strengthen the infrastructure of the Consumer Fora for their smooth functioning and to expedite furnishing the pending Utilization Certificates of the grants provided by the Central Government and to seek further grants with detailed proposals.
  • All the Consumer Fora need to use complete workflow of the Online Case Monitoring System (OCMS) application under the CONFONET Scheme. The State Governments should cooperate in implementation of the scheme and making it fully operational.
  • Efforts should be made by all concerned to reduce the delay in disposal of consumer complaints. The State Governments were asked to initiate timely action for filling up of the vacancies of President and Member in the Consumer Fora. Endeavour should be made by the Consumer Fora to adhere to the time limits prescribed in the Consumer Protection Act, 1986.
  • To meet the training needs of the Members of the Consumer Fora without having any legal background, it was emphasised that the training programme being administered by IIPA may be fully availed of. In addition, such Members may also be encouraged to undergo the one year distance mode course developed by National Law School University India.

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ECBs denominated in INRs

External Commercial Borrowings denominated in Indian Rupees were allowed by RBI vide its circular dated September 3, 2014. But in that circular the external lenders were required to enter into rupee swap transactions with the Authorised Dealer Category I banks in India. Now they have given some flexibility to recognised lenders abroad to enter into swap transactions with their overseas banks who in turn will enter into a back to back swap transaction with an Authorised Dealer Category 1 bank in India. The detailed instruction are now given in their latest circular dated 21st May, 2015, which is reproduced below:

To facilitate ECB lending denominated in INR by overseas lenders, it has now been decided that such lenders may enter into swap transactions with their overseas bank which shall, in turn, enter into a back-to-back swap transaction with any AD Cat-I bank in India as per the procedure given below:

(i) The recognised non-resident lender approaches his overseas bank with appropriate documentation as evidence of an underlying ECB denominated in INR with a request for a swap rate for mobilising INR for onward lending to the Indian borrower.

(ii) The overseas bank, in turn, approaches an AD Cat-I bank for a swap rate along with documentation furnished by the customer that will enable the AD bank in India to satisfy itself that there is an underlying ECB in INR (scanned copies would be acceptable).

(iii) A KYC certification on the end client shall also be taken by the AD bank in India as a one-time document from the overseas bank.

(iv) Based on the documents received from the overseas bank, the AD bank in India should satisfy itself about the existence of the underlying ECB in INR and offer an indicative swap rate to the overseas bank which, in turn, will offer the same to the non-resident lender on a back-to-back basis.

(v) The continuation of the swap shall be subject to the existence of the underlying ECB at all times.

(vi) On the due date, settlement may be done through the Vostro account of the overseas bank maintained with its correspondent bank in India.

(vii) All other Operational Guidelines, Terms and Conditions as contained in the annex to A.P. (DIR Series) Circular No.63 dated December 29, 2011 governing hedging of ECBs denominated in INR shall apply, mutatis mutandis.

(viii) The concerned AD Cat-I bank shall keep on record all related documentation for verification by Reserve Bank.

The RBI circular can be found here i.e. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9731&Mode=0

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NRI investments now considered as domestic investments

The Union Cabinet has allowed some changes in the FDI Policy whereby NRIs are considered on par with OCIs (Overseas Citizens of India) and PIOs (Persons of Indian Origin). Secondly all NRI investments on repatriable basis will be henceforth considered as domestic investments. Since NRI has been clubbed together with OCI and PIO, that means all investments by NRIs, OCIs, PIOs on repatriable basis will be considered as domestic investments. So all reporting requirements under the relevant FEMA regulations will not be necessary in case of NRI/ OCI/ PIO investments in future. The relevant notification to the FEMA regulations is awaited, but the gist of the Press Release is as given below:

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to review of Foreign Direct Investment (FDI) Policy on investments by Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs).  Following are the amendments approved by the Cabinet to incorporated in FDI policy:

(i)           By amending relevant para, definition of NRI will be as under:

‘Non-Resident Indian’ (NRI) means an individual resident outside India who is citizen of India or is an ‘Overseas Citizen of India’ cardholder within the meaning of section 7 (A) of the Citizenship Act, 1955. ‘Persons of Indian Origin’ cardholders registered as such under Notification No. 26011/4/98 F.I. dated 19.8.2002 issued by the Central Government are deemed to be “Overseas Citizen of India’ cardholders”.

(ii)   To provide that investment by NRIs on on-repatriable basis is domestic. Following new para is approved to be added:

‘Investment by NRIs under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment at par with the investment made by residents.’

The decision that NRI includes OCI cardholders as well as PIO cardholders is meant to align the FDI policy with the stated policy of the Government to provide PIOs and OCIs parity with Non Resident Indians (NRIs) in respect of economic, financial and educational fields. Further the decision that NRIs investment under Schedule 4 of FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations will be deemed to be domestic investment made by residents, is meant to provide clarity in the FDI policy as such investment is not included in the category of foreign investment. The measure is expected to result in increased investments across sectors and greater inflow of foreign exchange remittance leading to economic growth of the country.

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Women allowed to work in night shifts in Maha factories

The Maharashtra government on Wednesday has made changes to its Factories Act 1948 that will allow women to work in night shifts in factories, and also give freedom to factories to decide on overtime for its workers without approaching the state for sanction.

Maharashtra chief minister Devendra Fadnavis said that even the Bombay High Court had earlier said that the decision to bar women from doing night shifts was unconstitutional and biased. “While allowing companies to allow women  ..

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New Service Tax Rate

The new service tax rate of 14% is applicable from 1st June, 2015. This has been brought about by a notification dated 19th May, 2015 issued by the Service Tax department. The notification is worded in official legalese so in order to understand this notification you have to visit another notification issued on 1st March, 2015. Would it not have been better for the government to clearly state that the service tax rate of 14% becomes applicable from 1st June, 2015.

However, the sum effect is that new service tax rate comes into force on 1st June, 2015. It is a consolidated rate of 14% without there being any cess in it. So the education cess and secondary education cess has been removed. It is a straight rate of 14%.

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Export of Goods and Services – one less form

RBI has vide its circular dated 14th May, 2015 done away with the requirement of submitting declaration of exports of goods and services in the SDF in the case of exports taking place through EDI ports as the mandatory statutory requirements in the SDF format have been captured in the Shipping Bill. So one less bureacracy for exporters.

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9723&Mode=0

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All new cards to be EMV Chip and Pan Cards

RBI has mandated vide its circular dated 7th may, 2015 that all new cards issued after 1st September, 2015 whether they are debit or credit cards, Indian or international shall be EMV chip and pan card instead of magnetic stripe cards. For gyan on what is EMV chip and pan based technology this link is very useful i.e. https://www.chasepaymentech.com/faq_emv_chip_card_technology.html

As far as the existing magnetic stripe cards are concerned RBI will advise their timeframe of migration to EMV chip and pin based card in due course.

The RBI circular can be found here https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9712&Mode=0

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Benami Transactions Prohibition Act,

As a sequel to the announcement in the Budget, the Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to amend the Benami Transactions (Prohibition) Act, 1988 by moving of the Benami Transactions (Prohibition) (Amendment) Bill, 2015 in Parliament.

The Bill provides for attachment and confiscation of benami properties and also fine with imprisonment. This is one more initiative to fight the menace of black money inside the country.

The Department of Revenue in consultation with the Legislative Department has amended the Benami Transactions (Prohibition) Act, 1988.

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Child Labour (Prohibition & Regulation) Amendment Bill

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval for moving official amendments to the Child Labour (Prohibition & Regulation) Amendment Bill, 2012.

The Official Amendments along with the Amendment Bill 2012 proposes to make the following salient amendments to the Child Labour (Prohibition & Regulation) Act, 1986:-

1. Employment of children below 14 years prohibited in all occupations and processes and age of prohibition of employment linked to age under Right of Children to Free and Compulsory Education Act, 2009. However, an exception has been made:

a) where the child helps his family or family enterprises, which is other than any hazardous occupations or processes set forth in the Schedule, after his school hours or during vacations;

b) where the child works as an artist in an audio-visual entertainment industry, including advertisement, films, television serials or any such other entertainment or sports activities except the circus, subject to such conditions and safety measures, as may be prescribed and provided that such work does not affect the school education of the child.

2. A new definition of adolescent has been introduced in the CLPR Act and employment of adolescents (14 to 18 years of age) has been prohibited in hazardous occupations and processes. These provisions would go a long way in protecting adolescents from the employment not suitable to their age.

3. Stricter punishment for employers for violation of the Act has been proposed to act as a deterrent:

a) In case of first offence of employing any child or adolescent in contravention of the Act, penalty would be imprisonment for a term not less than six months but which may extend to two years or with fine not less than Rs.20,000/-, but which may extend to Rs.50,000/- or with both. Earlier penalty for employing any child in contravention of the Act, was imprisonment for term not less than three months but which may extend to one year, or with fine not less than Rs.10,000/-, but which may extend to Rs. 20,000/- or with both.

b) In case of a second or subsequent offence of employing any child or adolescent in contravention of the Act, the minimum imprisonment would be one year which may extend to three years. Earlier penalty for second or subsequent offence of employing any child in contravention of the Act, was imprisonment for a minimum term of six months which may extend to two years.

4. Offence of employing any child or adolescent in contravention of the Act by an employer has been made cognizable. This provision would act as a deterrent against the offence of employing a child or adolescent in contravention of the Act.

5. Punishment for parents/guardians: In the Principal Act, the same punishment was provided for parents/guardians for permitting a child to work in contravention of the Act, as prescribed for the employer of the child. However, taking a realistic view of the socio-economic conditions of the parents/guardians, there would be no punishment in case of a first offence by the parents/guardians and in case of a second and subsequent offence, the penalty would be a fine which may extend to Rs.10,000.

6. Constitution of Child and Adolescent Labour Rehabilitation Fund for one or more districts for the rehabilitation of the child or adolescent rescued. Thus, the Act itself will provide for a fund to carry out rehabilitation activities.

Background:

The Child Labour (Prohibition & Regulation) Act (CLPR Act) 1986 prohibits employment of a child in 18 occupations and 65 processes and regulates the conditions of working of children in other occupations/ processes. As per this Act a child means any person who has not completed 14 years of age. The Act provides punishment for the offence of employing or permitting employment of any child in contravention of the provisions of this Act.

The Right of Children to Free and Compulsory Education Act, 2009 enjoins the State to ensure free and compulsory education to all children in the age group of 6 to 14 years. A corollary to this would be that if a child is in the work place, he would miss school. Thus, the CLPR Act is not aligned to the RTE Act as it permits employment of child below 14 years in occupations/processes not prohibited. Further, CLPR Act is not in conformity with the International Labour Organisation (ILO) Conventions 138 and 182, which provide for minimum age of entry into employment and prohibition of employment of persons below 18 years, in work which is likely to harm health, safety and morals.

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Acknowledgement of Pensioners’ life certificates

RBI has vide its circular dated 7th May, 2015 mandated that all banks receiving pensioners’ life certificates should immediately give a stamped acknowledgement of the same. This was necessitated because many a times, the banks misplace the certificates in the huge mountain of papers in their offices resulting in the pensioners not getting their pensions on due dates. RBI has also introduced an Aadhar based digital life certificate as per this circular i.e. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9394&Mode=0

That will be the subject of my next blog perhaps.

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9710&Mode=0

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