SC rules that leave encashment should not be included in wages for PF calculation

Credits to Mr. CS Ravichandran of AIG.

In a significant ruling reducing the deductions on the salary sheet , the Supreme Court has held that the money got by an employee from encashing earned leave could not be taken as wages for calculation of provident fund (PF) contributions. Deciding a bunch of petitions in favour of the employees, a bench comprising Justices Arijit Pasayat and P Sathasivam rejected the stand of regional PF commissioner that the amount received on encashment of earned leave had to be taken into account for the purpose of calculating PF contributions.
The bench allowed the appeals -- the lead case being the one filed by Manipal Academy of Higher Education -- saying "the inevitable conclusion is that basic wage was never intended to include amounts received for leave encashment". It took note of a Mumbai case where an employer was including the amount of leave encashment as emoluments for the purpose of calculating PF dues from the employer as well as employees' contribution. When the Employees' Union took up the issue with the commissioner, it was informed that the provision did not provide for deduction of PF on leave encashment.
"Where the wage is universally, necessarily and ordinarily paid to all across the board, such emoluments are basic wages. Conversely, any payment by way of a special incentive or work, is not basic wages," the court said.

Civil Appeal No. 1832 of 2004 With Civil Appeal Nos. 2535, 2536, 2539, 2540 and 2541 of 2004
MANIPAL ACADEMY OF HIGHER EDUCATION
Vs
PROVIDENT FUND COMMISSIONER
Arijit Pasayat and P Sathasivam, JJ.
Dated : March 12, 2008
PF Contribution: Basic wages:
(a) Where the wage is universally, necessarily and ordinarily paid to all across the board such emoluments are basic wages.
(b) Where the payment is available to be specially paid to those who avail of the opportunity is not basic wages. By way of example it was held that overtime allowance, though it is generally in force in all concerns is not earned by all employees of a concern. It is also earned in accordance with the terms of the contract of employment but because it may not be earned by all employees of a concern, it is excluded from basic wages.
(c) Conversely, any payment by way of a special incentive or work is not basic wages.

"The inevitable conclusion is that basic wage was never intended to include amounts received for leave encashment."

For detailed judgment, click http://thisisvj.googlepages.com/basicwagewasneverintendedtoincludeam.doc

Grievances - IR

GRIEVANCES – claims concerning individual/collective RIGHTS under contract of employment/laws/usage;

Causes – ARISES from day-to-day working relations; LEADS to embitterment of working relationship;

PROCEDURE for settlement – fairness & justice through determination of respective Rights & Obligations of parties; a substitute for or a delaying factor in respect of direct action in the form of strikes; has successive steps @ different levels which is binding & final unless appealed.

Essence of MODEL GRIEVANCE PROCEDURE – not only be settled but also seem to be settled in the eyes of aggrieved;
Ä Settlement @ LOWEST level;
Ä Settlement as EXPEDITIOUSLY as possible;
Ä Settlement to the SATISFACTION of aggrieved.

Time-bound THREE TIER SYSTEM

BIPARTITE GRIEVANCE COMMITTEE (highest)à<= 7days
\ lack of satisfaction
DEPARTMENT/FACTORY HEAD à <= 3 days
/ lack of satisfaction
IMMEDIATE SUPERVISOR (lowest) à <= 48 hours

Bipartite Grievance Committee will have representatives from both Management & Workers.
APPEAL lie to Organisation Head <= 3 days of decision.

Understand this for Industrial Relations (IR) - CS final Group III.

Permission for Short Selling of shares by FIIs

Dear All,

Every one aware of that the SEBI has announced permission for short selling of securities by the Financial Institutions including SEBI Registered FIIs.

In terms of A.P.(DIR Series) Circular No.53 dated December 17, 2003 wherein SEBI registered FIIs/sub-accounts of FIIs were permitted to buy/sell equity shares/debentures of Indian companies. In terms of para 5 of the Annex to abovesaid, FIIs are not allowed to engage in short selling and are required to take delivery of securities purchased and give delivery of securities sold.

Vide AP DIR Circular No.23 dated 1^st Janaury 2008 ( Today), It has now been decided in consultation with Government of India and SEBI, to permit Foreign Institutional Investors (FIIs) registered with SEBI and sub-accounts of FIIs to short sell, lend and borrow equity shares of Indian companies. Short selling, lending and borrowing of equity shares of Indian companies shall be subject to such conditions as may be prescribed in that behalf by the Reserve Bank and the SEBI / other regulatory agencies from time to time.

The above permission is subject to the following conditions:

(i) The FII participation in short selling as well as borrowing /lending of equity shares will be subject to the current FDI policy and short selling of equity shares by FIIs shall not be permitted for equity shares which are in the ban list and /or caution list of Reserve Bank.
(ii) Borrowing of equity shares by FIIs shall only be for the purpose of delivery into short sale.
(iii) The margin/collateral shall be maintained by FIIs only in the form of cash. No interest shall be paid to the FII on such margin/collateral.

The designated custodian banks shall separately report all transactions pertaining to short selling of equity shares and lending and borrowing of equity shares by FIIs in their daily reporting with a suitable remark (short sold/lent/borrowed equity shares) for the purpose of monitoring by the Reserve Bank.

Thanks & Regards
Alagar
09884731993
Karvy Investment Banking

IDRA-Monthly Production Returns to DIPP

Credits to Dr. KS Ravichandran, PCS, Coimbatore

The industrial units covered under the Industries (Development & Regulation) Act, 1951, are hereby informed that the Centre for Monitoring Indian Economy (CMIE) had been collecting monthly production data on behalf of the Department of Industrial Policy and Promotion (DIPP) as per the agreement signed between DIPP and CMIE. The term of this agreement has come to an end in November, 2007. Therefore, the concerned industrial units are requested to henceforth, send the Monthly Production Return directly to the Director, Industrial Statistics Unit, DIPP, Udyog Bhawan, New Delhi-110 107 by the 10^th of every month by post /Fax (No.011-23063564)/e-mail (ipp_dir-stat@nic.in). The performa of the Monthly Production Return (MPR) can be downloaded from the hyperlink “Forms” available in the main page of the website: www.dipp.nic.in.

Also refer http://dipp.nic.in/isu/NoticeMonthlyProduction_Report.doc

FEMA - Transfer of Shares (A Compendium)

Note on Provisions of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 regarding transfer of shares of an Indian Company

Ready hand Referencer & Compendium in http://thisisvj.googlepages.com/TransferofSharesFEMA.doc

1. Automatic route means there is no approval required for transfer of shares of an Indian Company.
2. Automatic route with FC-TRS means where the transfer of shares from resident to non resident and vice versa, before effecting the such transfer in the Company books, the transferee / transferor shall file form FC –TRS with concerned AD and get approval from them.

Thanks & Regards

Alagar

Karvy Investor Services Limited
09884731993

Micro, Small and Medium Enterprises Development Act, 2006

Thanks to my Guru V.S. Datey for this article on MSMED Act,

Micro and small enterprises

As per section 7 of Micro, Small and Medium Enterprises Development Act, 2006 (which is effective from 2-10-2006) read with notification No. SO 1642(E) dated 29-9-2006, enterprises are classified as follows –

PARTICULARS	Investment in plant and machinery in case of enterprise engaged in manufacture or production of goods	Investment in equipment in case of enterprise engaged in providing or rendering of service
Micro Enterprise	Does not exceed Rs 25 lakh Rupees	Does not exceed Rs 10 lakh Rupees
Small Enterprise	More than Rs 25 lakhs but does not exceed Rs five crores	More than Rs 10 lakhs but does not exceed Rs two crores
Medium Enterprise	More than Rs 5 crore but does not exceed Rs 10 crores	More than Rs 2 crore but does not exceed Rs five crores

The enterprise may be proprietorship, HUF, AOP, cooperative society, partnership or undertaking or any other legal entity - Notification No. SO 1642(E) dated 29-9-2006.

While calculating value of plant and machinery, cost of pollution control, research and development, industrial safety devices and other items as may be specified by notification, shall be excluded. Mode of calculation of value of plant and machinery has been specified in notification No. S.O. 1722(E) dated 5-10-2006, issued by Ministry of SSI. Broadly, cost of toolings, erection and commissioning charges, electrical installations etc. is to be excluded. Second hand machinery is to be valued at price of new machinery.

It is clarified that section 29B of IDRA (which provides for reservation for small industries) will be applicable to enterprise engaged in manufacture, where investment is upto Rs five crores.

As per section 8 of Micro, Small and Medium Enterprises Development Act, 2006 (which is effective from 2-10-2006), micro or small enterprises may, at his discretion file a memorandum with authority prescribed by State Government. A medium enterprise engaged in manufacture or production of goods specified in industry specified in first schedule to IDRA shall file memorandum with authority as specified by Central Government.

The memorandum shall be filed by a medium enterprise engaged in production of goods with General Manager, District industries Centre or any District Level officer of equivalent rank in the department of State Government dealing with Micro, Small and Medium Enterprises (SO No. 1636(E) dated 29-9-2006).

National Board for Micro, Small and Medium Enterprises has been formed vide notification No. GSR 596(E) dated 26-9-2006. Advisory committee for classification of enterprises has been formed vide notification No. SO 1622(E) dated 27-9-2006.

Reservation for small industries – The list of industries reserved for SSI is being pruned. Items reserved for SSI as on 13-3-2007 were 114. Mostly there are low technology items and very few may be of interest to large industries. List is available on following website -

http://www.smallindustryindia.com/publications/reserveditems/Reserved_item_list_114_items.pdf

Also find the Act's Financial Implications in
http://thisisvj.googlepages.com/microsmallmedium.doc

Note on MSMED Act http://thisisvj.googlepages.com/NoteonMSME.doc

Format of letter to be recieved from Suppliers http://thisisvj.googlepages.com/ConfirmationLetterfromsuppliers.doc

Valuable SME Toolkit avail in http://india.smetoolkit.org/

Government site http://www.msme.nic.in/

Yes, this will help you in Company Secretary Final & Inter preparations and other professionals.

Competition Act with Amendments

Yes, This is inspired from the Article by my Guru Shri. V.S. Datey.

Yes, it gives an idea about the new Competition Act & Yes, its made very interesting with various charts.

Please read in http://thisisvj.googlepages.com/Competition.pdf & do comment your experiences.

Thank you,

THE MINIMUM WAGES ACT, 1948

Objective of the minimum wages act - To provide for fixing of minimum rates of wages

WAGES = all remuneration capable of being expressed in money & INCLUDES HRA but DOES NOT INCLUDE supply of light, amenity, etc… excluded by order, contribution to PF, expenditure in the nature of employment, & gratuity on discharge.

S-3 à Fixing Minimum Wages (an administrative act) by the Appropriate Government following prescribed procedure & revised periodically based on time/piece work and ensures a guaranteed rate; also gives overtime rates;

It may be based on hour/day/month/larger period; It will be different for different scheduled employment or class of work or adults/adolescents/child/apprentice.

S-4 à RATE: Consist of Basic Wages +/- Allowances based on ‘cost of living index number’ or an all-inclusive rate can be fixed.

S-5 à PROCEDURE:
STEP1: Appoint Committee;
STEP2: Publish proposals as by means of Notification;
STEP3: Give opportunity of being HEARD;
STEP4: Notify Minimum Wages > 3 months.
MAY NOT be in Scheduled Employment, if < wage =" mean">They can't ask anything more than this in IR. Be thorough with everything in this. Prepare the Notes this way for all subjects of Company Secretary exam study, u can win easily. See, this is the only act in Industrial Relations, that u r studying new, the rest is all what u did in CS Inter.
Enjoy Passin...

Labour Laws

Credits to the author. It can be viewed in http://thisisvj.googlepages.com/LabourLaws.pdf
This PLUS http://www.dateyvs.com/ (Labour Primer) can make you the master of Labour Laws.

Enjoy referring...

The Payment of Bonus (Amendment) ordinance, 2007

Credits to Mr. Dattari, CS Mysore

On 27th October, 2007 the President has promulgated the Payment of Bonus (Amendment) ordinance, 2007 containing the following amendments:-i) Amendment to clause (13) of Section 2 of the Payment of Bonus Act, 1965 to raise the eligibility limit for payment of bonus from the salary or wage of Rs. 3500/- per month to Rs. 10000/- per month.ii) Amendment to section 12 of the Payment of Bonus Act, 1965 to raise the ceiling for calculation purpose from the salary or wage of Rs. 2500/- per month to Rs. 3500/- per month;iii) Deletion of clause (vi) of section 32 of the Payment of Bonus Act, 1965 so as to cover the employees employed through contractors on building operations.Thus the employees, including those employed through contractors on building operations will be entitled to receive bonus as per the revised ceilings, for the year 2006-07 and onwards.
The Ordinance shall be deemed to have come into force on 1st April, 2006.
For further details, kindly refer http://labour.nic.in/

Judgments

VERY VERY IMPORTANT FOR HR/IR & INSURANCE EXAMS

Supreme Court on Indian Drugs & Pharmaceuticals Ltd., v. Workman, Indian Drugs & Pharmaceuticals Ltd., [2007] 79 SCL 21 (SC)

Service matters – Regularisation of TEMPORARY appointees – whether there can be occasions when State or its instrumentalities employ person on temporary or daily wage basis in a CONTINGENCY as additional hands WITHOUT following required procedure, but this does not confer any right on such persons to continue in service or get regular pay; unless appointments are made by following rules, such appointees do not have any right to claim permanent absorption in establishment – HELD, YES;

Whether Courts must exercise judicial restraint, and not encroach into executive or legislative domain; orders for creation of posts, appointment on these posts, regularization, fixing pay scales, continuation in service, promotions, etc…are all executive or legislative functions, and it is highly improper for Judges to step into this sphere, except in a rare and exceptional case – HELD, YES;

Whether therefore, Court/Tribunal cannot direct regularization of temporary appointees de hors recruitment rules, nor can it direct continuation of service of a temporary employee whether called a casual, ad hoc or daily rate employee, or payment of regular salaries to them – HELD, YES.

Supreme Court on Fazilka Co-operative Sugar Mills v. Jatinder Kumar Gupta [2007] 79 SCL 26 (SC)

Section 11A of the Industrial Disputes Act, 1947 – Labour Courts, Tribunal and National Tribunal – Powers of, to give appropriate relief in case of discharge or dismissal of workmen – Respondent-workman, upon his dismissal in year 1992, raised an "industrial dispute" – Meanwhile, workman filed writ petition, wherein appellant was directed to pay subsistence allowance to respondent – As appellant-corporation did not pay said allowance, Labour Court refused to grant opportunity to appellant to lead evidence and directed workman to be reinstated in service with continuity of service along with 50 percent back wages – High Court upheld award passed by Labour Court –

Whether since NO DATE was fixed for payment of said allowance, but dates were fixed in proceedings before Labour Court, payment made by appellant after order of Labour Court closing evidence could not be held arbitrary in any manner – HELD, YES.

Whether after a long passage of time, it would not be proper to direct reinstatement with back wages, and interest of justice would be met, if MONETARY COMPENSATION of Rs. 2 lakhs was to be paid to workman in full and final settlement of his claims – HELD, YES.

In the case of National Insurance Co. Ltd. v Sanjay Shivhare & others à The National Commission reconsiders its own conflicting judgments on "Whether an insurance claim is payable when there is a breach of policy terms" and now settles the law.

HELD that, even if there was a breach of the terms of the policy in respect of its use as a taxi or for hire or reward, the GUIDELINES specifically provided that in such cases 75% OF THE AMOUNT should be paid as a NON-STANDARD CLAIM.

--
Vj
Trezrrr every pulsss
http://yehseeyes.blogspot.com/

Check this !

Interesting & Important Notifications/Cases

CREDIT TO ICSI MYSORE NEWSLETTER http://www.esnips.com/web/icsimysore

Customs

Ø Determination of origin of goods

The Central Government has released the Rules of Determination of Origin of Goods under the Preferential Trading Agreement between India and Chile.

Customs Notification No. 84/2007-Cus. Dt 17/08/07 (NT)

Ø Exemption of additional duty of customs

The Central Government has exempted electronic integrated circuits falling under Customs Tariff Heading 8542 from payment of additional duty of customs in lieu of Sales Tax/VAT.

Customs Notification No. 93/2007-Cus. Dt 08/08/07

Ø HSN-Most suitable for classification

The Tribunal has held that the Explanatory Notes to the internationally recognized and accepted Harmonised System of Nomenclature (HSN) are most suitable for the determination of the customs classification of a product.

Hotel Leela Ventures Ltd. Vs. CC (2007 (145) ECR 222)

FTP

Ø Bank Certificate Not required

The Director General of Foreign Trade (DGFT) has deleted the requirement for filing of a bank certificate related to the financial soundness of the exporter filing an application for grant of Registration cum Membership Certificate (RCMC).

DGFT Public Notice No. 25 (RE-2007)/2004- 09, dt.23/07/07

Ø Procedural change in reimbursement of CST

The Central Government has made changes in the procedures relating to re-imbursement of Central Sales Tax for supplies made to 100% Export Oriented Units (EOU) and Units in Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP).

Public Notice No. 39 (RE-2007)/2004 -2009,dt.24/07/2007

Ø Amendment of FTP

The High Court of Calcutta has held that the Foreign Trade Policy can only be amended by notifications published in the Official Gazette and not otherwise. Further, the High Court has held that the Foreign Trade (Development and Regulation) Act, 1992 does not authorize the Central Government to amend the export and import policy with retrospective effect.

Soubhik Exports Ltd. Vs. Union of India (2007 (214) ELT 334)

Antidumping Duty

Ø Anti-dumping duty has been imposed on the following products:

§ bias tyres, tubes and flaps originating in or exported from the People.s Republic of China and Thailand.

§ hexamine originating in or exported from Russia and Saudi Arabia.

§ partially oriented yarn, originating in or exported from People.s Republic of China.

§ nonylphenol originating in or exported from Chinese Taipei.

Customs Notification Nos. 88/2007 dt. 24/07/2007, 89/2007 dt. 25/07/2007,92/2007 dt. 03/08/2007 & 94/2007 dt.22/08/2007

Ø The Antidumping Duty levied on partially oriented yarn, originating in or exported from the Republic of Korea and Turkey, has been withdrawn.

Customs Notification 95/2007 dt. 22/08/2007

ESI

Ø ESI medical services are covered under consumer protection Act

The medical service rendered in an ESI hospital/dispensary to an insured employee fails with in the ambit of section 2(1) (o) of the Consumer Protection Act, and, therefore, the Consumer Protection Act have jurisdiction to adjudicate upon a dispute arising between the insured and the Employees. State Insurance Corporation.

Chairman, Employees. State Insurance Corporation,2007

LLR 740

--
Vj
Trezrrr every pulsss
http://yehseeyes.blogspot.com/

WTO - FTP - Understand this way ....

FOREIGN TRADE POLICY [FTP] 2004-09

By Director General of Foreign Trade (DGFT)

Under Ministry of Commerce

Using the powers given under

Foreign Trade (Development & Regulation) Act, 1992 [FTDR]

 

FTP OVERRIDES Handbook of Procedures (Hp) by DGFT[Narendra Udeshi V UOI]

 

CONTENTS:

 

VOLUME 1: Basics of Policy;

VOLUME 2: Procedural Aspects of Policy; [Hp Volume-1];

VOLUME 3: SION [Standard Input Output Norms] of Products; [Hp Volume-2];

VOLUME 4: ITC (HSN) à Items under Import & Export policy;

VOLUME 5: Handbook of DEPB rates.

 

ADMINISTRATION:

1. Issue of licenses by DGFT   à  Licensing Committee/Regional Authority;
2. Procedures as per Hp;
3. Interpretation & Classification of DGFT à FINAL & BINDING;
4. DGFT license/clarification OVERRIDES Customs Authorities;

 

IEC [IMPORT EXPORT CODE]: MANDATORY for Exporters/Importers.  The exceptions include,

1. Central Government & its agencies; State Governments;
2. For personal use, not being trade/agriculture/manufacturing;
3. EXIM to/from Nepal/Myanmar upto Rs. 25000 per Single Consignment;

 

SUSPENSION/CANCELLATION OF IEC: After DGFT notice & Heard on,

1. Contravention of CEA, CA, FEMA, FTDR, or Economic offences;
2. EXIM prejudicial to trade relations or injurious;

Just remember this ! SCHEMES ENCOURAGING EXPORTS ARE NOT IN VIOLATION OF WTO STIPULATIONS: All export promotion schemes are directed towards ensuring that Inputs as well as Final products are made 'tax free'.

 Now,                                 STAR EXPORT HOUSES [Status Holders] 

1.       Based on average [FOB/FOR export value during Current & 3 preceeding years] Export Performance but not to consider re-exports, deemed exports, jewellery, precious stones, and supplies from SEZ/EHTP/EOU.

 

DEEMED EXPORTS:- When projects are financed with free forex as goods & services do not leave the country and suppliers get payment in Rupees.   It includes evaluation of bids for global tenders without Customs, Supplies to EOU and Supplies against Annual Advance License (AAL).

 

2.       SSI, Handicrafts, Agro exports or exports to sub-saharan Africa units with ISO 9000 status are entitled to double weightage when considering export performance.

 

3.        

ONE STAR EXPORT HOUSE	RUPEES 15 CRORES;
TWO STAR EXPORT HOUSE	RUPEES 100 CRORES;
THREE STAR EXPORT HOUSE	RUPEES 500 CRORES;
FOUR STAR EXPORT HOUSE	RUPEES 1500 CRORES;
FIVE STAR EXPORT HOUSE	RUPEES 5000 CRORES;

 

4.       Procedural simplifications for all status holders:

Ø      License/Certificate/Permissions on self-declaration basis;

Ø      Fixation of SION within 60days;

Ø      Exemption from compulsory negotiation of documents from banks;

Ø      100% retention of FOREX in EEFC A/C.;

Ø      Enhancement of repatriation period from 180 to 360 days;

Ø      Entitlement to Annual Advance Licenses (AAL) for annual requirements;

Ø      Priority long term finance;

Ø      Letter of Undertaking instead of Bank Guarantee;

>   Additional facilities for fast clearances.

 

--
Vj
Trezrrr every pulsss
http://yehseeyes.blogspot.com/