A nation’s development is significantly depended on its labour force. By the term “nation’s development” we mean the GDP of a nation. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country in a specific time period. Thus, we see that GDP is related to production of goods and services. Production is undertaken with the aid of resources which are categorised into land, labour,   capital and entrepreneur.  Of these, labour and entrepreneur are the factors which decide the success of an organization as the entrepreneur is the decision maker and the labourers are the ones who execute the work.

Thus, it becomes important to see that the interest of the labourers is also protected. This is done by enacting effective labour laws. These laws are framed to protect the basic financial pay of the labourers, health conditions while working, provision of compensatory benefits in case of injury to labourers, and such other conditions. Thus, the contractor or the employer of an unorganized work cannot take undue advantage of the labourers as these laws also provide for punishments in the form of imprisonments and monetary fines.

Following are the basic labour laws in India that one must know:

1. Minimum Wages Act, 1948

This Act provides for fixation of minimum wages of workers engaged in  unorganized sectors. The Central Government has the jurisdiction  over organizations indulged in railways, mines, major part of corporation controlled by the Central Government or oilfields. The rest are under the jurisdiction of State Governments. Also, the respective governments can review and revise the amount of such wages if it deems fit. (The amount of minimum wages can be accessed at the website of labour ministry https://labour.gov.in/)

The amounts of such wages are usually to be paid in cash but the government can approve any other method like partly wages in cash and kind. The worker is also entitled to overtime payment if he/she is working in excess of normal working hours (i.e. more than 8 hours in a day). Section 18 of the act makes it mandatory for the the employer to maintain registers and records containing  various particulars of employees under his employment (for example the work performed by them and such other particulars as may be prescribed.)

The employer must also issue wage slips to all its employees in respect of each of the wage period.If the services of any employee are terminated for any reason whatsoever, the wages are paid within two working days from the date of such termination. The employer can’t make any unauthorized deduction from the wages of its employees. Where the employer imposes any fine or deducts wages on account of damages caused by any employee, such employee must be given an opportunity of being heard. Section 22 of the Act provides punishment for a term which may extend to 6 months or with fine which may extend to 500 rupees or with both, for employers who pays less than the minimum  wages fixed for that employee’s class of employment or less than the amount due to him under the provisions of this Act.

2. Payment of Wages Act, 1936

This enactment secures timely payment of wages for employees working in certain establishments, without any unauthorized deductions. The wage period cannot exceed 1 month i.e. it can be daily, weekly, fortnightly and monthly and nothing more than a month (S 4). All payments of wages shall be mandatorily made on a working day.

Time for making payments (Section 5)

As per section 6 of the Act, all wages are to be paid in current currency or coin, or by cheques or by crediting the wages in the employee’s bank account. Section 13A provides that every employer has to maintain prescribed registers and records giving specified particulars of persons employed, work performed by them, wages paid to them, the deductions made from their wages, and such other particulars in prescribed form. Every records and registers required to be maintained have to be preserved for a period of three years after the date of the last entry made in it.

3. The Equal Remuneration Act, 1976

According to article 39 of Constitution of India, the State shall direct its policy towards securing equal pay for equal work for both men and women. To give effect to this constitutional provision, the Parliament of India enacted the Equal Remuneration Act, 1976. 

According to section 4 of The Act, equal remuneration should be paid to men and women workers for same work or work of similar nature without any discrimination and section 5 prevents discrimination against women employees while making recruitment for the same work or work of similar nature, or in any condition of service subsequent to recruitment. Section 3 of the Act provides that the provisions of the Act shall have overriding effect with respect to any inconsistency therewith contained in any other law or in any award, contract of service, whether made before or after the commencement of the Act.

Read more at:
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4. Payment of Bonus Act, 1965

A bonus is a payment made in addition to the basic salary or wage of an employee. The main purpose of the Act is to maintain peace and harmony between employer and employees as payment of bonus by the employer shows care and in turn motivates the employees to work hard and be loyal.

Applicability (S- 1(2))

• Every factory (as defined under S- 2(m) of  the Factories Act, 1948
• Every other organizations where 20 or more persons are employed on any day during an accounting year.
• The Government can make the Act applicable to any factory or establishment employing less than 20 but not less than 10 persons,  after giving 2 months notification in the Official Gazette.
• However, it is important to note that according to section 32 of the Act, certain classes of employees are not eligible to receive bonus.
• Likewise, such an employee should not be drawing wages more than rupees 21000/- per month and should not be an apprentice. But he can be a part time employee employed on permanent basis.

Bonus

• According to S-8 an employee is entitled to receive bonus payment if he/she has worked for not less than 30 working days of that year.
• According to S-10, Minimum bonus is to be paid by employer at the rate of 8.33% of the salary or wages in a year or one 100 rupees, whichever is higher (subject to maximum of 20 percent).
• According to S-9, if the employee is dismissed from service for fraud or riotous or violent behavior, or theft, misappropriation of any property of the establishment while on the premises of the establishment, he shall be ineligible to receive bonus.
• The employer is bound to pay minimum bonus even if he suffers losses during the accounting year.
• The bonus is to be paid within a period of 8 months from the closure of the accounting year.

5. The Payment of Gratuity Act, 1972

Gratuity is a sum of amount paid to an employee by the employer, on completion of his period of employment (at retirement or superannuation). The Act provides for the payment of gratuity to employees engaged in mines, factories, oilfields, railways, plantations, ports, shops or other establishments. , where 10 or more persons are or were employed, on any day of the preceding 12 months.

An employee is eligible to receive gratuity only if he has completed 5 years of continuous service. This condition is not necessary if the termination of the employment is due to death or disablement. Each employee shall nominate one or more member of his family, who shall receive the gratuity in the event of the employee’s death. The maximum amount of Gratuity payable is Rs. 20 lakhs.

Every employer shall pay the gratuity amount within 30 days from the due date. Simple interest at the rate of 10% p.a. shall be payable on the expiry of 30 days.

Formula for calculation of Gratuity = Last drawn salary (basic salary plus dearness allowance) X number of completed years of service X 15/26.

The time period in excess of period of six months is considered as one year.

6. The Employees’ Compensation Act, 1923

• This enactment is a step towards securing social security of workmen.
• It aims at providing financial compensation to the employees and their dependents (in the case of death of the employees) for injuries arising by industrial accidents including certain occupational diseases, arising out of and in the course of employment.
• These injuries can be of temporary nature or permanent nature. The Act makes provisions for payment of compensation in case of such temporary or permanent injuries. These injuries are further listed out in parts of schedules to this Act.
• Further, an employer and an employee cannot enter into any agreement whereby the right to compensation is relinquished.
• The labour commissioner is the person who decides upon the matters regarding payment of compensation and settlements of disputes under this Act.
• Any person who contravenes with the provisions of this Act shall be punishable with a fine upto rupees 5000/-

7. Labour laws regarding child labour

Child labor is a violation of the rights of children and is recognized as a serious social problem in India. Article 24 of the Constitution states that no child below the age of 14 years can be employed in any mines, factory or any hazardous employment. To ensure this, Child Labour (Prohibition and Regulation) Act, 1986 was enacted. Further, the Parliament in 2016 amended the Child Labour (Prohibition & Regulation) Act, and the enactment was renamed the Child and Adolescent Labour (Prohibition and Regulation) Act, 1986, as which came into force w.e.f.  1.9.2016. The Act also regulates employment of adolescent in certain non-hazardous processes and occupations.

According to section 3, no child (below 14 years of age) shall be employed in any occupations or process except which helps his family in other than hazardous occupations, after his school hours or if the child works in audio-visual entertainment industry.

According to S-7 underage children cannot be allowed to work for more than 3 hours at a stretch. There should be a rest interval of 1 hour. And the total working hours per day should not be more than 6 hours. Further, such underage children cannot work between 7 pm. and 8.p.m. and there shall be no overtime for such underage children.

According to section 8, there should be a holiday/week and the day should be mentioned in the notice, which should be displayed at conspicuous place to all workers. Also, such a day once fixed cannot be changed for more than once in three months.

8. The Employees’ State Insurance Act, 1948

This Act provides for certain types benefits to employees in case of maternity, sickness, and employment injury and also makes provisions for certain other related matters. The provisions of this Act shall be applicable to employees who are drawing wages upto rupees 15000/- per month.

The Act covers factories, other than seasonal factories, belonging to the Government. Such factories need to get themselves compulsorily registered under this Act. The employers and employees have to contribute towards the insurance fund named Employees State Insurance Fund which shall be held and administered by the Employees State Insurance Corporation for administration, which is established under the Act for administration of the Employees State Insurance Scheme. It is also to be noted that if a person receives benefits under this Act, such a person is not entitled to receive any benefits under other enactments.

9. Laws related to Maternity Benefits

The Maternity Benefit Act, 1961 and The Maternity (Amendment) Act, 2017, an amendment to the Maternity Benefit Act, 1961, protects the interest of a woman by governing the employment of women in mines, factories, shops and other establishments, the circus industry or plantations employing 10 or more persons. However, the employees who are covered under the Employees’ State Insurance (ESI) are outside the ambit of the enactment.

To avail benefits under this Act, a woman must have worked for a minimum of 80 days in the previous 12 months before the date of her expected delivery.

The amendment Act of 2017 has increased the benefits for a woman.

• The duration of paid maternity leave is 26 weeks (before the amendment, the duration was 12 weeks)
• Of the above mentioned benefit, a maximum of 8 weeks leave can be availed by her before the date of expected delivery and the remaining after the date of delivery.
• Maternity leave of 12 weeks is to be provided to commissioning mothers for children below the age of 3 months.
• Also a provision of “Work from Home” is to be made for women after they resume work, post delivery, if the nature of work provides for the same.

10. Trade Unions Act, 1926

This Act deals with formation of trade unions, their registration, rights and responsibilities. In case of disputes. In many cases, an individual workman is not in a position to keep his demands in front of the employer. If such a workman is a part of the trade union, his demands can be fulfilled, provided such demands are in the interest of all the workmen and are genuine. Needless to say, this enactment prevents the employer to act in such a way as to exploit the workers and in turn the genuine demands of workers can be peacefully fulfilled.

A trade union with minimum of seven members can apply for registration. Such a trade union shall mandatorily follow the rules of the Act, pay the prescribed fees to the registrar, maintain the records of the trade union and send to the registrar, audited annual general statement of incomes and expenditures and assets and liabilities for the year ending on 31st December.

11. Other important labour laws

• Factories Act, 1948- this is an Act which governs the working conditions of workers in factories. To ensure that the working conditions in the factories are safe from hazards, the Act imposes upon the owner or the occupier of such factories, certain obligations, to make sure that employment is in conditions conductive to their health and safety.

• Industrial Disputes Act, 1947–  In an organization, there are disputes between the employees and employers. These disputes may take place in forms such as strikes, protests,  lock-outs, dismissal of workers, etc. The Act provides machinery for resolving of disputes in peaceful methods and to promote harmonious relations between employers and employees.

• The Apprentices Act, 1961-  regulates and controls the training of apprentices and for other connected matters therewith. Every employer is under the obligation to provide the apprentice with adequate infrastructure for the training of apprentices in his trade in accordance with the provisions of the Act, and the rules made thereunder.

Read more related to labour law:
https://www.vskills.in/certification/tutorial/legal/labour-law-analyst-certification/

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“I’ll See You in Court” is the most common phrase used by people when there is a heated argument or a dispute, beyond their understanding to settle it by mutual and amicable means, between them. However, the Indian courts have been flooded and overburdened with a number of cases pending before them. As the population of our country is increasing every moment, so are the disputes amongst its people. These disputes range from criminal, civil, commercial, environmental, taxation, corporate and also cross border trade disputes.

According to data on National Judicial Data Grid, more than 49 lakhs cases are pending before the High Courts of the country, of these, over 24 lakhs cases were related to civil matters and over 13 lakhs related to criminal matters, as on 27th Dec, 2018. According to a report, around 66000 cases are pending before district courts and other subordinate courts of the country, as on 30th Dec, 2018, for more than 30 years. Thus, if there is a new dispute brought to the court, one cannot expect a timely disposal of it, as there are tiresome processes and long waiting duration by way of delay in granting hearings and introduction of undiscovered evidences and facts.

The concept of ‘Arbitration’

There are 2 ways of settling the disputes. The primary mode of dispute settlement mechanism is resorting to a suit in a court of law. However, due to various constraints, there emerged an Alternative Dispute Resolution or ADR method to settle certain kinds of civil and commercial disputes. The most common method of ADR is arbitration. Disputes are settled outside the courts by the arbitrator appointed by the parties to the disputes. There may be 1 or more than one person, but in odd numbers, appointed to settle the disputes. The order given by these arbitrators is called as arbitral award, and this award is binding on the parties.

Features of Arbitration

1. It is globally accepted means of disputes settlement and different countries have made their rules to adopt and enforce the method.
2. An independent third party is appointed to act as arbitrator.
3. It is speedy mode of disputes settlement vis-à-vis the litigation.
4. There is confidentiality and matters can be kept in private.
5. There is no prescribed qualification to act as an arbitrator. Parties are free to choose a person so desired to act as arbitrator who may possess subject specific knowledge regarding the matter in disputes. Thus, he/she may be an engineer if dispute is relating to a subject based on engineering backgrounds.
6. It is adopted by corporates in commercial and cross border trade disputes.
7. However, criminal matters cannot be referred to this mode of disputes settlement mechanism.
8. Arbitration and Conciliation Act, 1996, is the legislation governing the conduct of arbitrations conciliations in India.

Integral components in Arbitration (Arbitration and Conciliation Act, 1996)

As mentioned above, the law governing arbitration in India is the ‘Arbitration and Conciliation Act, 1996’ which came to effect on 22^nd August, 1996. The Act provides for, along with domestic arbitrations, international commercial arbitration and enforcement of foreign awards as well. This Act is applicable where the place chosen for arbitration is India. Also the provisions of THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015 have been discussed hereunder.

1. Arbitration Agreement (Section 7)

The matter can be referred to arbitration only if there is a prior consent and agreement signed between the parties thereto. It is also possible to refer a dispute to arbitration if there is an ‘arbitration clause’ in the main contract.

2. Forms of Arbitration

There are 2 modes to refer an arbitration. The first is ad-hoc arbitration where the parties are not governed by specific rules of any institution regarding the appointment of arbitrators, procedure for arbitration and thus, it is up to the parties to make their own procedures and rules. It is governed by the Arbitration and Conciliation Act, 1996. However, in an institutional arbitration, there is a specified institution having its own set of rules and lays down the procedures to settle the disputes. There is no flexibility given to the parties if they choose to refer their disputes to an institution method as the rules are fixed for all. The institution provides facilities regarding appointment of arbitrators from their panel, secretarial services, administration, rooms and support for this purpose, etc.

3. Interim reliefs (Section 9 & 17)

The Act provides for certain safeguards such as interim measures to protect interest of parties during pendency of disputes. There have been instances where there are unreasonable delays which affects the interest of the parties to the disputes. Thus, interim measures can prove to be a relief till the time of execution of awards. The relief to be granted depends on the facts and circumstances of the cases. Any party to the dispute can apply for such interim measures.

A court does not entertain a petition for interim reliefs unless the party specifically proves that the interim relief granted by the tribunal is not sufficient. Where section 9 provides for interim measures to be granted by the court, section 17 on the other hand provides for interim measures to be granted by the tribunal.

(Note: As per the amendment of 2015, if the Court grants an interim measure of protection under section 9 prior to commencement of arbitral proceedings, then the arbitral proceedings shall have to commence within a period of 3 months from the date of such order or within such time as the Court may determine. Also the Court shall not entertain any such application unless it finds that the remedy under Section 17 is not efficacious.)

4. Arbitral Tribunal (Section 10 & 11)

The arbitral tribunal is nothing but the arbitrator or arbitrators’ panel who will decide and give the award. The parties can appoint only odd number of arbitrators. In case parties are unable to appoint such number of arbitrators, there shall be only 1 sole arbitrator. Such an arbitrator can be of any nationality. (As per amendment of 2015, if a party fails to act as required under the appointment procedure, or the 2 arbitrators, if so appointed, fail to agree, or if any person or institution in this regard fails to perform his duties, the Supreme Court or the High Court or any person or an institution designated by them shall resolve the issue of the application for appointment of arbitrators within 60 days from the date of service of notice on the opposite party.)

5. Grounds for challenging appointment of arbitrators (Section 12 & 13)

The arbitrator has to be an independent person and he/she shall not have any kind of interest in the parties or the subject matter of the dispute. If such circumstances arise where there is a doubt regarding his independence or if it is found that he does not possess the required qualifications agreed to by the parties, the appointment of such arbitrator shall be challenged. (Note: as per the amendment of 2015, (section 12) a schedule (schedule 5) has been provided which provides grounds which would make the appointment of an arbitrator suspicious of being partial. If a person is not falling under such grounds, then he/she is likely to be impartial and independent. Also, another schedule (schedule 7) is provided which lays down the relationship of parties with the arbitrator and the relationship of the arbitrator with the subject matter of disputes which if established would render the arbitrator ineligible.)

6. Place (Section 20) and Seat of arbitration

(Note: this is an important concept in international commercial arbitrations)

The parties are given freedom to agree on the place of arbitration as they deem fit. In case the parties fail to do so, the arbitral tribunal shall decide the same considering the convenience of parties. However, there has been a confusion regarding the difference between the venue and the seat of arbitration. The seat of arbitration means the court which shall have jurisdiction to supervise the arbitrations agreements. The seat shall be independent of the venue. Since the Act does not have express provisions regarding the difference between the 2, it is wise to consult an attorney cum arbitrator to decide upon this matter.

7. Commencement of arbitration proceedings (Sec 21)

If not specifically agreed by the parties, the arbitration proceedings shall commence on the date when the notice of  ‘dispute to be referred to arbitration’ is received by the other party.

8. Language (Section 22)

The parties are also given freedom to choose the language to be used in arbitral proceedings and in case the parties are unable to decide, the arbitral tribunal shall do the needful.

9. Commencement of arbitration proceedings (Sections 23 to 27)

S-23: the parties have to submit their respective claims, (counter claims by the respondents or plead for set-off as per amendment of 2015) facts, defences and such other material facts within time specified by the parties or determined by the tribunal.

S-24: Unless the parties expressly decide to not hold oral hearings (the amendment of 2015 requires the tribunal to hold oral  arguments or hearings for presentation of evidences, on day to day basis. Also there shall be no adjournments without sufficient cause.), the tribunal shall decide whether to hold oral hearings or not. Also an advance notice of hearing has to be given. All information provided by one party shall be communicated to the other party.

S-25: if the party, without showing proper reasons, fails to communicate his claim, the tribunal shall decide on the basis of evidences before it. (As per the 2015 amendment, the tribunal may treat the respondent’s failure to provide his statement of defence.) as forfeiture of this right by the respondent.)

S-26: the arbitral tribunal shall appoint one or more experts to report on specific issues which the tribunal has to decide.

S-27: the tribunal or a party with the approval of tribunal shall apply to the court for assistance in taking evidences.

10. Provisions for arbitral award (Section 31)

The tribunal shall make the award in writing, signed by the members of the tribunal, state the reasons on which the award is based, it should be dated and should contain the name of the place. A signed copy of the order shall be sent to each party. The tribunal shall also have powers to make an interim order regarding the dispute. The tribunal shall include in its award, to make payment with interest (interest rate as specified by the Act) to the other party.

11. Termination of arbitration proceedings (Section 32)

The arbitral proceedings are terminated by the tribunal giving the final award or where the tribunal finds that the proceedings cannot be continued due to unnecessary or impossible reasons.

12. Correction of award (Section 33)

The award can be corrected by the tribunal or can give an interpretation of the award to the party who may request for such correction or interpretation, within 30 days of the original award. If the tribunal deems fit, it shall do the needful within 30 days of such request. The tribunal can correct computational, clerical, typographical errors or any other errors of similar natures.

13. Set aside of arbitral award (Section 34)

Set aside means dismissing the original award passed or making it null and void. The parties shall approach the court (Section 2(e)) for setting aside an award. It can be challenged on the following grounds:

1. Incapacity of a party;
2. Invalid arbitration agreement;
3. The party making such an application was not given proper notice of appointment of arbitrators or of the arbitral proceedings or was unable to present his case;
4. The award is not falling within the terms of submission to arbitration;
5. The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
6. Subject matter of the dispute not capable of settlement by arbitration under the law for the time being in force;
7. Award being in conflict with ‘the public policy of India.

(Note: as per the amendment of 2015, an award passed in an international arbitration can be set aside only if (i) the award is vitiated by fraud or corruption; (ii) it is in contravention with the fundamental policy of Indian law; (iii) it is in conflict with basic notions of morality and justice. Also an application for setting aside of an award can be filed only after prior notice in this regard has been issued to other party. The party filing the application has to file an affidavit along with the application stating compliance with the requirement of service of such prior notice on the other party. Such applications shall be disposed within 1 year from the date of service of the advance notice on the other parties.)

It is further to be noted that as per section 34(3) the time limit for making an application to set aside the award is 3 months from the date of receipt of the award.

14. Enforceability of awards (Section 36)

Prior to the amendment of 2015, the section provided an automatic stay on the arbitration proceedings if an application to set aside an award was made under section 34. However, post amendment, the applicant has to make a separate application to the court for grant of stay of arbitration award, even if the application for setting aside under section 34 is already made.

15. Appeals (Section 37)

There lies an appeal to the authorized courts to hear appeals from original decrees of the court passing orders granting or refusing any interim measures under section 9 and where the court grants or refuses to set aside an order under section 34.

(As per the amendment of 2015, an appeal shall be filed if the judicial authority refuses to refer the dispute to arbitration under section 8 which states that it is mandatory for judicial authorities (for example if parties file a suit in  a civil court and there is an arbitration clause regarding that dispute) to refer the parties to arbitration if they have an agreement in this regard.)

16. New sections 29A & 29B

The amendment of 2015 provides a specific time period for the completion of arbitration. It is mandated that the arbitration award is to be given within a period of 12 months from the date of reference to arbitration which can be extended by 6 months and incase it is not completed within extended period, arbitrators’ fee can be reduced by not more than 5%, for every month of delay under Section 29A.

Also, a new provision is inserted regarding fast track arbitration under Section 29B of the act which provides for settlement of dispute by arbitration within 6 months and such arbitrations are based upon written submissions and not oral submissions.

Arbitration in news

Mumbai Centre for International Arbitration

This is the first institution arbitration center in the country. It was established in March 2016. According to “The Indian Express”, most of the global business disputes involving Indians land in the Singapore or the London arbitration centers. The total outflow of funds to resolve such cases works out to around $ 5 billion. Thus the establishment of MCIA will be a faster and effective way to solve global business disputes. Infosys, the IT giant, also included the arbitration clause in its employment agreement and as per the rules of Mumbai Centre for International Arbitration.

New Delhi International Arbitration Centre

On 2 March 2019, The New Delhi International Arbitration Centre Ordinance 2019 was promulgated by the President of India, Shri Ram Nath Kovind, to set up the New Delhi International Arbitration Centre (NDIAC). The main objective is to create an autonomous body for institutional arbitration in India and make this a hub for domestic as well as international institutional arbitrations. The Ordinance directs the transfer of all undertakings of the International Centre of Alternate Dispute Resolution (“ICADR”), established in 1995, to the NDIAC. The Ordinance also states to establish the Chamber of Arbitration and an Arbitration Academy. The Chamber shall be constituted of reputed arbitrators and filter the applications for admission in the panel. The Arbitration Academy shall train arbitrators and undertake research in the field of alternative dispute resolution.

Arbitration and Conciliation (Amendment) Bill, 2018

Following are the features of the amendments proposed:

1. Creation of an independent body named “Arbitration Council of India”, to accredit arbitral institutions and arbitrators which will provide recommendations and guidelines for growth of institutional arbitration in India and shall be completely independent of the government.
2. The amendment bill proposes appointment of arbitrators by designated arbitral institutions instead of the courts.
3. The Amendment Bill proposes to exclude the International Commercial Arbitrations from the purview of Section 29A   as it has been subjected to a lot of  complications from the international community on the grounds that it is not practically possible.
4. The Amendment proposes for an incorporation of a new S. 42A by which confidentiality will be provided in arbitration proceedings except the awards.
5. The Amendment Bill proposes to provide more freedom to the arbitrators by granting immunity to them from any legal proceedings for acts and omissions done during the course of the arbitration proceedings so that they can exercise their function to the best of their ability without any compulsion or fear.

Thus, we see that Alternative mode of dispute resolutions are becoming popular in commercial fields as they are an effective and less time consuming than litigation. We also see that the Government is constantly reviewing the shortcomings of the past enactments and accordingly making way for effective provisions for faster settlement of disputes.

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Real estate is considered to be one of the most integral factors in a person’s life. It’s a common dream of every individual to by a home so as to sustain himself and his family with pride. We all have studied since childhood that food, clothing and shelter are the basic needs of a man. But today’s reality is driving a man far away from such basic needs. An individual works hard to earn money, to achieve his objective of buying a house.

However, such individuals are taken for a ride by the cunning developers of such housing projects. A person invests all his hard earned money in a housing project to ensure safe and secured future for himself and his family. In this course, he works overtime at his workplace, obtains personal loans, bank loans, mortgages/ pledges his material investments and still with a smile on his face has a hope of a brighter tomorrow. He has a hope of getting his dream home at a specified date by the developer. However, on the contrary, the project goes for a toss by builder running in bankruptcy, legal hurdles and finally the projects have to be halted.

Thus, the buyer is left helpless by his money invested in dead assets. Only thing that exists is guilt in the minds of such buyers. This was the scenario due to non existence of any laws regulating the real estate sector.

Introduction of RERA ACT

It was in the year 2016 that homebuyers were relieved of the strain and stress with a confidence that what they invested is certainly going to revert. Due credit should be given to the ‘The Real Estate (Regulation and Development) Act, 2016’ (Hereafter to be referred as RERA) which seeks to protect the interests of the home-buyers as well as to increase the investments in the real estate industry.

The Act came into force on 1^st May 2016. The provisions not effected so far, came into force on 1^st May 2017. The provisions are framed in such a way that it will bring uniformity and set minimum standards of accountability of business practices in the real estate sector and in turn will bring transparency of contractual conditions.

Functioning of the Act

RERA ACT is a Central legislation. However, states and union territories have been empowered to make and notify their own Rules in this regards  (since land/ real estate is a state subject) which have to be in accordance with the Central legislation.  The State Governments of respective States were to submit their Rules by 31^st July, 2017. The Act is applicable to whole of India, excluding the states of Jammu and Kashmir.  The Act covers both, residential and commercial projects.

Registration

It has been seen that most of the developers indulge in a common practice of exhibiting “pre-launch offers”. Such projects may not have all the required legal approvals. Even the buyers are lured by such opportunities. This is of great risk to the buyers. To fix such problems or to prevent cropping of such problems, the developers have to get their projects mandatorily registered with the respective real estate authority of that state (Real Estate Regulatory Authority). A project shall be allowed to get registered only if it has complied and received the required approvals.

Thus, the buyer’s interest is protected. In case the builder or developer has not obtained such registration, such developer of a real estate project shall not be permitted to market, advertise, sell, book, or offer for sale, or in any manner in any real estate projects or part of it. It is to be noted that the term builder or developer in this regard under this Act is known as “Promoter”. Where the projects were ongoing as on the date of this Act, and completion certificate was not issued to the promoters of such projects, the said promoters had to get such projects registered with their respective Real Estate Authority within 3 months from when this Act was commenced.

A. Projects outside the scope of this Act(Section 3)

• Area of land where development is to be carried on, is not more than 500 Sq. Meters or, The total number of flats or apartments is not more than 8.
• The total number of flats or apartments is not more than 8.
• The promoter, i.e. the developer of such projects has received the certificate of completion before the commencement of this Act and
• The project so concerned is regarding any renovations or redevelopments, not involving any kind of advertising or marketing of such land or apartment thereto.

B. Application for registration and grant of registration  (Section 4 & 5)

• The promoter   shall submit an application for registration to such authority along with prescribed documents and fees.
• The authority shall give its approval or rejection within  30 days of promoter making the application.
• On registration being approved, the promoter is provided Login id and password for accessing the web page of the authority and thereafter he is supposed to provide the project related details. However, in case of rejection, applicant must be given a reasonable opportunity of hearing.

Note: At the time of application, the promoter has to submit a declaration saying he has legal title to such land along with the legal documents, such land is free from all encumbrances, time period to be taken for completion of project and 70% of amounts received from the buyers, from time to time, shall be deposited in a separate bank account maintained with a scheduled bank, and such amounts shall be utilized to cover the cost of construction of projects.

C. Validity or time period of registration (Section 6)

• The registration is valid for a period, as stated by the promoter during his application.
• If due to extreme conditions, not within the control of the promoters, there is a delay in completion of such real estate projects, the authority shall give an extension, not exceeding a period of 1 year in aggregate.

Note: Application in prescribed form and fees is mandatory for grant of extension.

D. Revocation of registration and consequences  thereupon (Sections 7 & 8)

• If the authority receives any complains or if it itself finds out that the promoter of such projects is indulged in unfair trade practices, or he is violating the provisions of this Act and Rules, or if the promoter makes a default in doing any act which is required to be done in accordance with the act, his registration shall be revoked.
• Note: A 30 days notice is to be served upon the promoter before revocation, stating the reasons, and a reasonable opportunity of hearing should be given.
• The authority may consider the buyers interest and not revoke the registration, but impose certain obligations on the promoter and issue such directions as may be necessary.
• The authority may, after consultation with the Appropriate Government, state that the project shall be continued by other competent authority, in buyers interest. However, if the association of buyers refuse it, the project shall not be considered for development.

e) Real estate agents and their registration (Section 9 & 10)

• There are a number of real estate agents and there have been cases where their services are not satisfactory or provide false claims.
• Hence, the RERA Act has made it mandatory for real estate agents to get themselves registered without which they shall not permitted to act as agents and perform their respective duties.
• The application is supposed to be made in prescribed form along with fees and thereby if the authority deems fit, shall provide registration to such, for a particular period.
• The registration can be revoked if the agents act in a way to deceive buyers or if there  is a violation of the Act and Rules.

Note: agents who deal in secondary market or resale of property or dealing in rental properties  are not liable to get themselves registered.

Provisions of the RERA Act regarding “Promoters”

As discussed above, the term “Promoter” in layman’s term is called a builder or developer, and the Act has framed provisions regarding his obligation towards the buyers.

a) The web page created after registration shall include details of registration, quarterly updated

• number and types of apartments, garages booked,
• Approvals granted and pending after receipt of commencement certificate,
• Status of projects.

b) The prospectus of the project shall have the details of the website and the registration number.

c) Provide the buyer information regarding projects which are sanctioned,  time period of project and the stages in which such time is divided,

d) Obtain Occupancy certificate and Completion Certificates.

e) Execute conveyance deed and sale agreement in the favor of buyers.

f) Where a buyer makes payment on the basis of information provided to him and he suffers loss due to such information being incorrect or fraudulent, he shall be compensated by the promoter.

g) The promoter cannot accept a sum of money more than 10% of the cost of property as advance, without entering into a valid sale agreement with the buyer. Such agreement shall contain the dates on which further payments are to be made by the buyers and the date on which procession of property shall be granted to him and the rate of interest in case of default by the promoters.

h) Promoter shall not make any alterations in the sanctioned plans without prior consent of the authority. However he may make any minor alterations required by the buyer or any changes due to structural or architectural reasons after informing the buyers.

i) If there are defects in the quality or services provided by the promoter as per the agreement and if such defects are informed to him by the buyers within 5 years from granting procession, the promoter is liable to fix the defect without any charges from buyers within 30 days of such information.

j) In case the promoter is not able to give the possession of the property to the buyer, as per the agreement, he is liable, if the buyers so demand, to refund the amount received by him from buyers at an interest rate as specified by the respective governments and also provide for the compensation. If the buyer still wants to be in the project, he shall have the right to receive interest for every month of delayed period.

Real Estate Regulatory Authority (Section 20)

a) It is mandatory for every state and union territory, to establish a Real Estate Regulatory Authority, to enforce and govern the provisions of the RERA Act. It is also provided that 2 states can have 1 single authority and also 1 state can have more than one authority in this matter.

b) It shall consist of a chairman and minimum 2 members appointed by the government on the recommendations made by the Selection Committee. Such persons shall hold office for a term of 5 years or upto 65 years of age, whichever event occurs before.

Appeals

The appropriate Government shall, by notification, establish an Appellate Tribunal to be known as the  (name of the State or Union territory) Real Estate Appellate Tribunal (REAT). If any  party  is aggrieved by the order of Real Estate Regulatory Authority, they can appeal before REAT, which is supposed to adjudicate such cases within 60 days. If any of the parties is not satisfied with the order of REAT, they can appeal  to the High Court within 60 days.

Offences and Penalties

Realty Check post RERA Act

As seen above, the state of realty sector used to pose a greater risk to the home buyers before the RERA was enacted by the parliament. It is also seen that the provisions of the Act discussed above are framed in such a manner which brings accountability and transparency, ensures systematic work and protects the home buyers interest. However, let us see what the scenario post implementation of these legislations:

1. Around 90% of the complaints registered with the Maharashtra RERA are regarding delay in execution of projects. The Maharashtra Real Estate Authority decided to give developers a second chance to complete the delayed projects after the usual extension of a year, provided more than 50% customers of the property have given their consent.

2. Karnataka RERA Act- 1,076 projects have been identified by RERA for not having registered with the RERA. Even after notices being served on them, they have not explained the reasons for not registering with RERA. A majority of them are in Bengaluru.

3. Maharashtra Real Estate Regulatory Authority directed promoter of project Kohinoor to pay simple interest at rate of 10.55% on a home buyer’s investment of Rs 1.25 crore from January 1, 2017 for every month of delayed possession. MahaRERA also imposed a penalty of 1 lakh on the developer for violating section 13 of Real Estate (Regulation and Development) Act by not registering an agreement for sale despite the buyer paying 87% of the flat cost. The developer was also directed to execute a registered agreement for sale as per the terms and conditions in the allotment letter with a mutually agreed date of possession.

4. Maharashtra Real Estate Regulatory Authority had issued a warrant in the year 2018,   against the developer and was supposed to refund the amount with interests within 3 months. However, the complainant said he did not receive his refund even after 6 months despite several communications with the office and the home department.

5. The builders in Noida said about 25000 flats were ready however the buyers were not given possession due to non receipt of completion certificates, fire and structural safety certificates and pending dues with the authority.

6. According to Ministry of Housing and Urban Affairs, around 34893 projects and 27073 real estate agents have been registered across the country as of 31^st December, 2018.

7. The MahaRERA provided that any alert citizen can register complaint against the unregistered real estate projects on its website without charging fees, provided such a complainant is not in need of any hearing. The officers appointed by the authority shall look into the complaint by gathering information from promoter and through site visits.

Conclusion

Thus, we have seen the Act has provided provisions to safeguard the interests of home buyers. However, there are many promoters who don’t comply with the provisions and the buyers have to suffer. The government is trying its best and improving its functioning with every new case put before the authority.

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1. The Maternity Benefit

It is important to regulate the working conditions of women at workplace. However, it is even more important when such a female worker is carrying a child in her womb. This is the time when a woman has to observe rest and utmost care. However, it is also important for her to work to earn money. Thus, the Maternity Benefit Act in India outlines a framework which secures safety for a pregnant woman during work. An amendment to this Act “The Maternity Benefit (Amendment) Act, 2017″ has further increased the better conditions of work by increasing the duration of paid maternity leave available for women employees from the existing 12 weeks to 26 weeks. The benefit can be availed by women for a period extending up to 8 weeks before the expected date of delivery and the remaining can be availed post childbirth.

For women who are expecting after having 2 children, the duration of paid maternity leave shall be 12 weeks (i.e., 6 weeks before and 6 weeks after expected date of delivery). The benefit has also been extended to adoptive and commissioning mothers and provides for the woman who adopts a child to be given 12 weeks of maternity leave from the date of adoption. The Act has also introduced a provision for “work from home” for women, which may be exercised post expiry of the 26 weeks’ leave period. Depending upon the nature of work, women employees may be able to avail this benefit on terms that are mutually agreed with the employer.

2. Collecting foreign currencies? Beware

Many people have a hobby of collecting or possessing foreign currencies. But be careful, you might be attracting the the provisions of Foreign Exchange Management Act, 1999. One can hold foreign exchange up to US$2,000 in form of foreign currency notes or TCs (travellers’ cheques) for future use. However, there isn’t such  restriction on residents holding foreign coins. The criteria which governs the holding of foreign currencies is laid down in the mentioned enactment. So before you hold such foreign currencies, make sure you aren’t violating the foreign exchange rules.

3. Adult couple can live together without marriage

According to Prohibition of Child Marriage Act a girl can’t marry before the age of 18, and a boy before 21.  However, In May, 2018, the Honorable Supreme Court of India in its judgment held that an adult couple has the right to live together without marriage. Thus, Even if the couple is not competent to enter into wedlock they have right to live together even outside wedlock as they are adults.

4. Flying a kite? make sure there is a valid permit

There are a huge number of people who love to fly kites, and why not, after all it is one of the oldest games played till date. However, one must know that it is illegal to fly kites and can even lead to fine and imprisonment.

Wondering how?

The Aircraft Act, 1934 states that “Whoever willfully flies any aircraft in such a manner as to cause danger to any person or to any property on land or water or in the air shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ten lakh rupees, or with both.” Now it is to be noted that according to this Act,  “aircraft” includes balloons, whether fixed or free, airships, kites, gliders and flying machines.

5. The Dry States of India

According to “The World Health Organization”, (specialized agency of the United Nations that deals with international public health) around 30% of Indians consume alcohol on regular basis. However, to cut down the menace due to consumption of alcohol,   five states of the country have banned it. Gujarat, Naga-land, Mizoram and Manipur, officially prohibit drinking liquor. Bihar recently announced ban on the sale and consumption of liquor and it came into force on April 1, 2016.

6. Rules regarding sleeper class seats in trains

Indian railways is the backbone of commuting within the country. But are you aware about the timings of the sleeper berths? Yes you heard it right, the sleeper berths are to be used for the purpose of sleeping as per rules prescribed by the Indian Railways. The sleeper accommodation timings are between 10pm and 6am in all reserved coaches with sleeping accommodation. In other words, the total duration for sleeping accommodation is 8 hours.

7. Alternate Dispute Resolutions

Nobody wants to see the doors of courts for seeking justice due to the lengthy and complicated nature of courts. If you ever do come across certain disputes which are non –criminal in nature, you can resort to alternative ways of resolving them. There is one common method- “Arbitration” where in case of dispute between 2 or more people can be settled by one or more people (the number should be odd) who they think are capable of resolving the dispute. This method is completely recognized by the Indian Law. This method is most suited for commercial issues. The other methods are conciliation and mediation.

8. You can fight your own case in the courts

If the circumstances permit, an individual, not being a licensed advocate can fight his case by himself. Section 32 of  “ADVOCATES ACT, 1961” gives this power to an ordinary person, an opportunity to appear before the court and defend his case but, such a person though may know the facts but it is also important to know the laws otherwise this move shall let you close the case by losing.

9. Price in excess of MRP for a bottle of water?

Many of us have experienced that shopkeepers charge us more than MRP for packaged water. Even when we go to hotels and restaurants, this continues. Things are still not firm regarding this act by general stores, but the Supreme Court in the recent years said that hotels and restaurants can charge more than MRP for bottled water as they provide services and not just packaged water, thus whenever you go to a hotel, be ready to pay MRP +X price.

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