LAW MADE EASY!

For personal and confidential advice on any legal matte Sri. Mento Isaac can be contacted on : 22455453, 9545426225, Email: mentoassociates@rediffmail.com, Website: www.mentoassociates.com or at his office at # 378, 2nd floor, 9th main, 5th Block, Jayanagar, Bangalore-41

THE PRIZE CHITS AND MONEY CIRCULATION SCHEMES [BANNING] ACT, 1978

Prize chit means any transaction under which a person collects monies in one lump sum or in installments by way of contributions or subscriptions in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-

(i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in hand, whether or not the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement ;

(ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole part of the subscriptions, contributions or other monies collected, with or without any bonus, premium interest or other advantage by whatever name called, on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit.

The act bans prize chits and money circulation schemes or enrolment as members or participation therein. If any body indulges in such activities they shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both.

If an offence under this Act is committed by a Company, every person who, at the time the offence was committed was in charge of and was responsible to the  company for conduct of business of company as well as the company shall be liable for prosecution. The offences punishable under this act shall not be tried by a court inferior to that of a Chief Metropolitan Magistrate. All offences punishable under this act are cognizable offences
A police officer not below the rank of an officer in charge of a Police Station has the power to enter any premises connected with the promotion / conduct of any price chit or money circulation scheme, in contravention of provisions of this act. The Police Officer has also the power to search the said premises and the persons present there. He has the power to take into custody persons found in such premises and produce them before judicial magistrate. The Police Officer has also power to seize things used for such price chits or money circulation schemes.
If a newspaper contains any material connected with any price chit or money circulation scheme, the State Government has the power to forfeit the same.

THE COPYRIGHT ACT 1957 (Part- 2)

The author of a work shall be the first owner of copyright therein. The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially provided that in the case of assignment of copyright in any future work the assignment shall take effect only when the work comes into existence. The author of a work may relinquish all or any of the rights comprised in the copyright in the work by giving notice in the prescribed form to the Registrar of copyrights.

Copyright shall subsist in any literary, dramatic, musical or artistic work (other than a photograph) published within the lifetime of the author until sixty years from the beginning of the calendar year next following the year in which the author dies.

In the case of a literary, dramatic, musical or artistic work (other than a photograph) which is published anonymously or pseudonymously, copyright shall subsist until sixty years from the beginning of the calendar year next following the year in which the work is first published.

In the case of a photograph, copyright shall subsist until sixty years from the beginning of the calendar year next following the year in which the photograph is published.

In the case of a cinematographic film, copyright shall subsist until sixty years from the beginning of the calendar year next following the year in which the film is published.

In the case of a sound recording, copyright shall subsist until sixty years from the beginning of the calendar year next following the year in which the sound recording is published.

PROFESSION TAX IN KARNATAKA

The profession tax in Karnataka is levied through the ‘Karnataka Tax on Professions, Trades, Callings and Employments Act 1976’, in the state of Karnataka. All taxes levied under the said Act are known as profession tax. The state of Karnataka is empowered to levy and collect the tax on professions, trades, callings and employment. Every person who exercise any profession or calling or is engaged in any trade or holds any appointments (public or private) is liable to pay the profession tax.

People who have attained 65 years of age are exempted from paying profession tax. If the person exercise a profession for a period less than 120 days in an year, then he is not liable to pay profession tax in that year. The liability is on the employer to deduct the tax from the salary or wage of the employ and to pay the tax to the Government.

Every employer who is liable to profession tax shall obtain a certificate of registration from the assessing authority.
    
Every employer shall furnish to the assessing authority, within 20 days of the expiry of a month, a statement showing the salary and wages of his employees and the profession tax deducted by him during the preceding month. Every such statement shall be accompanied by a treasury challan, in proof of the payment of the full amount of tax due mentioned in the statement.   

ABOUT SUMMONS

Summons is the first process adopted by a criminal court to compel the appearance of a person before it. Every summons shall be in writing, in duplicate and signed by the presiding officer of such court and shall bear the seal of the Court.
    A summons shall be served by a police officer or an officer of a court issuing it. The summons shall be served personally on the person summoned by delivering a duplicate of the summons to him. The person on whome a summons is served shall sign a receipt thereof on the back of the summons. If the summons has to be served on a corporate body or a society, it is sufficient to serve it on the secretary, local manager or the Chief Officer of the corporation. It can also be served by letter sent by registered post addressed to the chief officer of the corporation.
     If the person summoned cannot be found, the summons may be served by leaving one of the duplicates for him with some adult male member of the family residing with him.  If a person summoned or an adult male member of his family is not found, the summons may be served by affixing a duplicate of the summons to some conspicuous part of the house in which he resides.
    If a person summoned is a Government servant, the court shall sent it to the head of the office in which that person is employed who shall then serve it to the government servant.

APPLYING FOR A BDA SITE

There is a huge demand from public for Bangalore Development Authority (BDA) sites, directly allotted or for second purchase. A site allotted by BDA which is a governmental authority inspires confidence and trust in the mind of public. In this article let us see the formalities for obtaining a site from BDA.
 The eligibilities for applying for a BDA site are that the applicant should have minimum 15 years domicile in Karnataka and should be more than 18 years old. For officers belonging to All India Services of Karnataka cadre the domicile period required is a minimum of 2 years. Persons whose family members or dependents own a site or house allotted by BDA or a Co-operative Society or KHB or other government agencies are not eligible to apply for allotment of sites. 
Abound 50% of the sites are reserved for backward tribes, SC/ST people, defense personnel, State and Central government employees, public sector employees, physically handicapped and for those who have excelled in the field of arts, science or sports. Rest 50% is meant for general public.
Applicants are selected based on seniority, category, number of earlier attempts, age factor etc. The allottes are given 60 days time period to pay the sital value without interest. After 60 days time period, the amount can be paid with interest.  For alottees belonging to SC/ST and defense personnel, 3 years time period is given for payment of sital value.

LIMITED LIABILITY PARTNERSHIP

The Limited Liability Act, 2008 brought to India a special form of business entity by name Limited Liability Partnership for the first time. Till then we had partnership and limited liability companies. This new form of business identity, combines several features of partnership and limited liability companies; yet it has its own unique features too.
A Limited Liability Partnership (LLP) is a body corporate and is a legal entity separate from that of its partners. It has perpetual succession. Any change in the partners will not affect the existence, rights or liabilities of the LLP.
An individual or body corporate may be a partner in an LLP. Every LLP shall have at least two partners. Every LLP shall have at least two designated partners who shall be individuals and at least one of them shall be a resident of India. Every designated partner of an LLP shall obtain a Designated Partner Identification Number (DPIN) from the central government.
A designated partner is responsible for all compliances and liable for all penalties under the LLP Act, 2008 on behalf of the LLP. Every LLP shall have a registered office to which all communications and notices may be addressed.
A registered LLP can sue and be sued. It can acquire, own, hold and dispose movable and immovable properties. It can have a common seal and can do and suffer lawful acts and things as body corporate.(to be continued--------)

ONLINE FILING OF COMPLAINTS

The Karnataka State Police have introduced the facility to lodge online complaints in their new and modified website www.ksp.gov.in. This facility is available round the clock and the department assures prompt response to the complaints on a day to day basis subject to a maximum of three working days. The department also promises recognition and reward for vigilant citizens. However abusive, vindictive and defamatory information may end up in prosecution of complainant himself
There are four types of complaint that can be lodged using online facility.
(a) Anonymous information:  Here the personal details of the informant are not required to be furnished. However the information will be acted upon by the department.
(b) Petition: Here the informant will be given feedbacks and progress will be intimated to him periodically.
(c) FIR: Here the complainant seeks legal action initiated against for any offence reported and he wants an FIR copy of the information furnished. The jurisdictional police officer may contact the informant for further procedural aspects.
(d) Complaints against police: The public can utilize this facility where there are allegations of harassment, human rights violation, corruption etc against police officials. These complaints will be dealt at highest level of office of DG and IGP. The individuals will be informed about the outcome of action taken.

THE SCHEDULED CASTES AND SCHEDULED TRIBES (PREVENTION OF   ATROCITIES) ACT 1989

The Central Government enacted this important piece of legislation with the objective to prevent the commission of offences of atrocities against members of Schedule Castes and Schedule Tribes and to provide for special courts for the trial of such offences and for the relief and rehabilitation of the victims of such offences and for incidental matters.
The following are acts of atrocities against the SC/ ST members which are punishable under the act.
• Forcing a member of SC/ST to drink or eat any inedible or obnoxious substance.
• Dumping excreta, waste matter, carcasses or other obnoxious substance in the premises of an SC/ST member.
• Removing cloths, parading naked with painted face or body etc on a SC/ST person.
• Wrongfully occupying or cultivating any land belonging to SC/ST member.
• Wrongfully dispossessing a person of SC/ST from his land or premises.
• Compelling or enticing a member of SC/ST to do 'begar' or similar forms of forced or bonded labor.
• Forcing a member of SC/ST not to vote or to vote to a particular candidate.
• Instituting malicious, false, vexatious suit, criminal or other legal proceedings against a member of SC/ST.
• Giving false or frivolous information to a public servant resulting in injury or annoyance to a SC/ST person.
• Insulting or intimidating with intent to humiliate a SC/ST person in any place within public view.

The following are the other acts of atrocities against the SC/ ST members which are punishable under the act.
Assaulting or using force on any woman belonging to SC/ST with intent to outrage her modesty.
Denying a member of SC/ST any customary right of passage to a place of public resort, which other members of the public have a right of use.
Whoever commits the above atrocities is liable to be punished with imprisonment for a term which shall not be less than 6 months but which may extend to 5 years and with fine.
If a public servant willfully neglects his duties required to be performed under this act, he shall be punishable with imprisonment for a term which shall not be less than 6 months, but which may extend to one year. Further the act provides for enhanced punishment for subsequent conviction. The court can even forfeit to the government, the property of an accused person which has been used in the commission of the offence proved. During the trial of the offence, the court has the power to attach the properties of the accused and later after the conclusion of the trial forfeit the same to the government.
The special courts under the act can even order the removal of a person, who is likely to commit an offence against the SC/ST people, from any scheduled area or a tribal area. If the person ordered fails to removes himself from the area, the special court can cause him to be arrested and removed in police custody from such area.
 The provisions of anticipatory bail are not applicable for offences under this act.

INCORPORATION OF A LIMITED COMPANY

We have two forms of limited companies in India.

Public limited company where maximum number of members can be unlimited and minimum number of members required is seven. There should be at least three directors and maximum is twelve.

Private limited company where maximum number of members is fifty and minimum number of members required is two. There should be at least two directors and maximum is twelve.

Incorporation is done at the office of Registrar of Companies (ROC). Incorporation is comprised of following steps.
A.Obtaining of Din Number:  The proposed Directors of the company should get Director Identification number (DIN) from the Ministry of Corporate Affairs (MCA).

B.Obtaining of Digital signature:   Since most of the filings to the Registrar of Companies are done on line, at least one of the directors should obtain a Digital Signature.

C. Name Application and Approval: For obtaining the desired name for the company to incorporate, one needs to apply to the ROC in specified form and the processing may take 3 to 5 days subject to the availability of name.

D. Drafting of Memorandum of Association and Articles of Association: Next step involved is preparation of incorporation documents like Memorandum of Association and Articles of Association and signing it by promoters.
E. Submission of Incorporation documents: After Memorandum of Association and Articles of Association is drafted, then it should be submitted to the ROC office. Certificate of incorporation will be issued in 3 to 5 days after submission of the incorporation documents in the ROC office.

THE KARNATAKA PROTECTION OF INTEREST OF DEPOSITORS IN FINANCIAL ESTABLISHMENTS ACT, 2004 (Part-1)

In recent years many financial establishments not covered by the RBI Act 1934, have cropped up in various parts of India and especially Karnataka. Many of them received deposits from the public on the promise of high rates of interest and easy gains. Most of them have defaulted to return the deposits on maturity and thus cheated the public. Against this background the state of Karnataka enacted this piece of legislation.
As per this act the government or the district Magistrate are empowered to attach properties of financial establishments on default of return of deposits. The district magistrate suo moto or on receipt of any complaint may cause investigation on fraudulent transaction done by a financial establishment.
The government may attach money or property acquired by a financial establishment or personnel assets of the promoters, partners, directors, managers etc of the said financial establishment if the government is satisfied that
a. the financial establishment has failed to return the deposit after maturity or on demand by depositors or
b. to pay interest or other assured benefits or
c. if the government is satisfied that such financial establishment is not likely to return deposits or to pay interest to the depositors.
After the attachment, such properties shall vest in the competent authority appointed by the government, who shall be an officer not below the rank of an assistant commissioner, pending further order from the special court. The competent authority shall within 30 days from the date of receipt of order apply to the special court for further order of attachment to make it absolute. The competent authority has vast powers in dealing with the assets under its custody

THE ENVIRONMENT (PROTECTION) ACT, 1986

The Central Government or any other officer empowered by the Central Government shall have the powers to take the samples of air, water, soil or any other substances from any factory, premises etc for the purpose of analysis. The said officer shall without delay send the container with the sample to the laboratory established or recognized by Central Government. The Central Government has established several environmental laboratories for the purposes of the Environment (Protection) Act.
For the purposes of protecting and improving the quality of the environment and preventing and abetting environmental pollution, the standards of emission or discharge of environmental pollutants from the industries, operations or processes are specified in Schedules 1 to 1V of the Environment (Protection) Rules.
The Central Government takes into consideration various factors while prohibiting or restricting the location of industries and carrying on of processes and operations in different areas.
 Every person carrying on an industry, operation or process requiring consent under the water (prevention and control of pollution) Act, 1974 or under The Air (Prevention and Control of Pollution) Act, 1981 or both or authorization under the Hazardous Waters (Management and Handling) Rules, 1989 shall submit an environmental statement for the financial year ending on the 31st March in Form V to the concerned State Pollution Control Board on or before the  Thirteenth day of September every year, beginning 1993.

NON PROFITABLE ORGANISATIONS

Organizations which have charity as their main motto and which work for the welfare of the society at large, without the motive of profit are known as Non Profit organizations (NPO). In India people have a tendency to call them as NGO (Non Government Organizations), which terminology is not correct in the strict sense, because every non government organization may not be a non profit organization.
Trusts, societies and section 25 companies are the most common forms of NPOs in India. NPOs are entitled for various benefits under the Income Tax Act. Even without registering as an NPO, people can engage in charitable activities, but they register as NPOs to gain the IT benefits. Tax benefits are available to the organization as well as to those who donate to the organization. For this special permission need to be obtain from the Income Tax authorities after the registration of NPO. To obtain tax benefits, it is a condition precedent that the benefits of the NPO shall not be restricted to any particular cast, class or creed but open to all.
Trusts are registered under the Registration Act, Societies under the respective Societies Registration Acts of various states and Section 25 companies under the Companies Act, 1956.For each of these registrations, a deed need to be drafted explaining the main objectives and mode of working of the organization.
There is an increasing trend among the general public to establish NPOs and indulge in profit generating activities, at the same time deriving IT benefits. However, sooner or later the long arms of law will reach them.

RULES PERTAINING TO HOLIDAYS

The Karnataka Industrial Establishments (National & Festivals Holidays) Act, 1963 and the rules there under provide for holidays for shops, commercial establishments, factories, plantations etc in Karnataka.
As per this Act, every employee shall be given a holiday on 26th January, 15th August and 2nd October. Apart from this, the employees are entitled for seven other holidays for other festivals, a list of which are mentioned in the Schedule attached to the Act. In addition all the establishments shall give holidays to their employees on 1st May and 1st November. However this rule is not applicable to undertakings owned or controlled by the Government of India.
In addition to this every employee whose name is included in the electoral roll of the constituency, where an election to the Legislative Assembly is held, shall be allowed a day’s paid holiday to enable him to exercise his franchise.
Every employer shall display a list of national and festival holidays entitled to his employees in the form of a statement in a conspicuous place in the establishment.
In addition to this every establishment shall remain closed for one day of the week which is available to the employee as a weekly holiday.

RULES PERTAINING TO LEAVE OF EMPLOYEES

Every employee in shops and establishments in Karnataka is entitled for annual leave with wages, calculated at the rate of one day for every twenty days work performed by him.
In addition to this, every employee shall, during the first twelve months of continuous service and during every subsequent twelve months of such service, also be entitled to leave with wages for a maximum period of twelve days. This leave can be availed on the ground of any sickness incurred or accident sustained by the employee or for any other reasonable cause.
The annual leave with wages for which an employee is entitled may be carried forward to the next year in case he has not utilized it during a year. However, the total number of leave days carried forward shall not exceed a maximum of thirty days.
An employee can at any time apply in writing to the manager of the establishment to avail the annual leave. However he shall apply minimum ten days prior the date on which he wishes his leave to begin. However this minimum period of ten days is not applicable in case of medical leaves.

LATEST SUPREME COURT GUIDELINES ON RAGGING

Following the death of 19-year-old medical student Aman Kachroo at Dr. Rajendra Prasad Medical College in Himachal Pradesh, a Supreme Court Bench comprising of Justice Arijit Pasayat and Justice A.K. Ganguly has recently issued strict guidelines to prevent the menace of ragging in colleges and educational institutions. The Supreme Court was also hearing another case in Bapatla Agriculture Engineering College in Andhra Pradesh where a 20-year-old girl, attempted suicide due to ragging. The apex court had earlier appointed a committee headed by former CBI director R K Raghvan to look into the mater. Most of the recommendations of the said committee find a place in the guidelines. The salient features of the guidelines include:

a. The head of the educational institution and the jurisdictional police chief will be held responsible, if any ragging case is reported in their area.

b. A national level committee will be formed to suggest remedial measures in the school curriculum.

c. Immediate suspension of the senior students indulged in ragging.

d. Departmental action against all heads of institutions where ragging takes place.

e. High level security in all hostel premises and a strict vigil to be maintained.

f. Freshers to be divided into small groups and will be affiliated to individual teachers.

g. All colleges should hire psychiatrists to sensitize senior students, freshers and staff against ragging.

h. Panels must be set up to check the increasing incidents of ragging and rampant alcoholism in universities and colleges.

i. Students who indulge in ragging under the influence of alcohol must be sent to de-addiction centers.

j. Each state should have an anti-ragging committee, and anyone indulging in ragging must be given psychological treatment.

The apex court has also directed all state governments to give an undertaking about the steps taken by them to eradicate ragging.

THE KARNATAKA PROHIBITION OF CHARGING EXORBITANT INTEREST ACT 2004

This is an interesting piece of legislation about which the general public does not have much awareness. The Act has a noble intention of prohibiting the charging of exorbitant interest by financiers and money lenders. An exorbitant interest is an interest at a rate more than what is fixed under section 28 of the Karnataka money lenders Act 1961. This amount to 15 % in case of secured loans and 18% in case of unsecured loans. Hence anybody charging interest more than the above rate is said to charging exorbitant interest.
As per the Act whoever charges exorbitant interest on any loan advanced by him shall be punishable with imprisonment for a term of which may extend to 3 years and also with a fine which may extend to Rupees 30,000/- .
A debtor may deposit the money due in respect of a loan received by him  from any person together with interest thereon into the court along with the petition to record that amount deposited is in full or part satisfaction of the loan including the interest thereon. The Court may after inquiry, pass order recording the satisfaction of the loan and interest therefore in full or in part as the case may be. The Court may, on a petition filed by the debtor for settlement of loan including the interest therefor, pass an order for the adjustment of the interest, if any, paid by the debtor, over and above the rate of interest fixed by the State Government towards the loan.
Where a debtor or any member of his family commits suicide and if it is shown that immediately prior to such suicide the debtor or any member of his family was subjected to molestation by any person, the person who has advanced loan shall, unless the contrary is proved, be deemed to have abetted the commission of such suicide.  

Rules Pertaining to Money Lending

Every money lender is supposed to deliver every year to each of his debtors a legible statement of such debtor's accounts, signed by the money lender of any amount that may be outstanding against such debtor. No such statement is required to be delivered to a debtor, if he is supplied by the money lender, with a passbook which shall be in the prescribed form, and shall contain an up to date account of the transactions with the debtor. The money lender shall deliver a copy of the statement to the Assistant registrar.

No court will order a decree, on account of the interest of a loan, for a sum more than the principal of the said loan. Even if there is an agreement between the money lender and the debtor, the decree for interest can never be more than the principal amount of the loan.

Every money lender shall exhibit his name with the word money lender, over his shop or place of business. Further no money lender shall take any promissory note, acknowledgement, bond or other writing which does not state the actual amount of the loan. No money lender shall execute any instrument in which blanks are left to be filled after execution.
Whoever molests or harass or troubles a debtor for the recovery of a debt due by him to a creditor shall on conviction be punished with imprisonment which may extend to six months or fine which may extend to five thousand rupees or with both.

What is an NBFC?

With many fly by night finance companies raking in moolah, at the cost of innocent investors offering them dream interest rates for their deposits, it is ideal to see what are the legal requirements for an NBFC.

NBFC stands for Non Banking Financial Company.

Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.

An RNBC (Residuary Non-banking Company) is a non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner and not being an Investment, Asset Financing, Loan Company.

An NBFC cannot operate without obtaining a certificate of registration from the Reserve bank Of India. The said company shall have a net owned fund of Rs 2,00,00,000/-. 

NBFCs registered with RBI have been reclassified as
(i) Asset Finance Company (AFC)
(ii) Investment Company (IC) 
(iii) Loan Company  (LC).

CHANGES IN STAMP DUTY

The Government of Karnataka in its 2007-08 budget has introduced several changes in the stamp duty levied on various instruments .These are effective from 1-04-09.Some of them are discussed below:

1. Stamp duty on sale transaction of all immovable properties has been reduced form 7.5% to 6%.The cess on stamp duty will be 10% and surcharge for properties situated within corporation limits will be 2% and within village Panchayaths will be 3%.

2. Sale agreements not involving possession of property. Presently the stamp duty varies from Rs 10 to Rs 200/-.Now the same is increased to .25% of the value of the agreement.

3.  Joint Development Agreements: 1% of the value involved.

4. GPA for Joint development: 1% of the value involved.

5. Other GPAs: Rs 200/-(Presently Rs 100/-)

5. Lease
a. Up to 5 years: 1% on the value of security deposit and average annual rent
b. Above 5 years and  up to 10 years: 2% on the value of security deposit and average annual rent
c. Above 10 years and up to 30 years: 4% on the value of security deposit and average annual rent
d. For a period above 30 years : 6% of the market value.

6. For duplicate registration: Rs 500/-(Instead of Rs 50/-)

7. Release: 6% instead of present 2.5% and 3.75%

RETRENCHMENT

In this period of economic recession lakhs of employees face the threat of lay off and retrenchment. People often mistake retrenchment for lay off. Even though in common parlor people use the latter term more often, what actually happens in the case of most of the employees is retrenchment or termination from service.
The Industrial Disputes Act, 1947 defines retrenchment as "termination by the employer of the service of a workman, for any reason whatsoever". The following are not instances of retrenchment.

a.Termination as a form of punishment by way of disciplinary action.

b.Voluntary retirement of the workman.

c.Retirement of the workman on reaching the age of superannuation.

d.Termination of the service as a result of the non renewal of the contract of the employment.

e.Termination on the ground of continuous ill hea


For the retrenchment of a workman who has been employed for a minimum period of one year continuous service, the following conditions shall be met with by the employer:

a.The workman shall be given one month's notice in writing, indicating the reason for retrenchment, or wage equivalent to the period of notice.

b.The workman shall be paid compensation equivalent to 15 days average pay, for every completed year of continuous service.

c.Notice in the prescribed manner shall be served on the appropriated authority.

WHAT IS GRATUITY?

Employees working in factory, mine, oilfield, plantation, port, railway company, shops and establishments where 10 or more persons are employed are eligible for gratuity. Normally gratuity is to be paid to an employee after termination of his service, if he has rendered continuous service of not less than 5 years. If termination is due to death or disablement, then 5 years service is not required. 
The amount of gratuity is calculated at the rate of 15 days wages for every completed year of service. However the maximum gratuity amount shall not exceed Rs 3,50,000/-.
Employers of establishments where gratuity is applicable are supposed to obtain insurance for their liability for payment towards gratuity. They also need to register the establishment with the Controlling authority. The employer is also duty bound to display an abstract of the act and rules in English and language understood by the majority of the employees in a place near the main entrance.
Each employee who has completed one year of service shall make a nomination, within 30 days of the completion of one year service.  If he or she has a family, then the nomination shall be made to a family member and not to a third party. The employee needs to apply for gratuity within 30 days of it becoming payable.
An employer who   makes a false statement or false representation with respect to any gratuity matter is liable for punishment with imprisonment up to 6 months or fine up to 1000 rupees or both.

Tackling Recovery Agents

The reserve Bank of India has issued guidelines dated 24-04-08 to Commercial banks with respect to the employment of recovery agents by them for the purpose of loan recovery. These include:
a. Banks should inform the borrower the details of recovery agency while forwarding default cases to the recovery agency.
b. The agent shall carry a copy of the notice and the authorization letter from the bank along with the identity card issued to him by the bank or the agency.
c. Banks should ensure that there is a tape recording of the calls made by recovery agents to the customers, and vice-versa. Banks shall intimate the customer that the conversation is being recorded.
d. The details of the recovery agency engaged by banks may also be posted on the bank's website.
e. Where a complaint has been lodged by a borrower, banks should not forward cases to recovery agencies till they have finally disposed of the complaint.
f. In cases where the subject matter of the borrower's dues is pending before courts, banks should exercise utmost caution, in referring the matter to the recovery agencies.
g. Each bank should have a mechanism whereby the borrowers' grievances with regard to the recovery process can be addressed. The details of the mechanism should also be furnished to the borrower.
h. All recovery agents shall undergo a certificate course introduced by Indian Institute of Banking and Finance (IIBF).
i. In case of complaints against the Recovery agents, the Reserve Bank may consider imposing a ban on a bank from engaging recovery agents in a particular area. Similar supervisory action could be attracted when the High Courts or the Supreme Court pass strictures or impose penalties against any bank or its agents with regard to the recovery process.

SERVICE TAX ON APARTMENT PURCHASE –LATEST CLARIFICATION

The Central Board of Excise and Customs had come out with a circular dated 29-01-09 clarifying various conflicting opinions regarding the levy of service tax on purchase of apartments. This circular seeks to clarify the applicability of service tax when the developer enters into an agreement, with the ultimate owner for selling a dwelling unit in a residential complex at any stage of construction (or even prior to that) and who makes construction linked payment.

The following are the clarifications of the board: