Elil 122002

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ECONOMIC, LABOUR AND INDUSTRIAL

LAWS (Guideline Answers)
INTERMEDIATE EXAMINATION
DECEMBER 2002
Time allowed: 3 hours Maximum marks: 100
NOTE: Answer SIX questions including Question Nos. 1 and 7 which are
COMPULSORY.
Question 1
Write notes on the following :
i. ‘Current account transactions’ under the Foreign Exchange Management

Act, 1999.
ii. ‘Undertakings’ and ‘associations’ outside the purview of the Monopolies
and Restrictive Trade Practices Act, 1969.
iii. Impact of noise pollution on the health of people.
iv. ‘Basic rights of consumers’ as provided under the Consumer Protection
Act, 1986.
v. ‘Liability for compensation’ under the National Environment Tribunal Act,
1995. (3 marks each)
Answer 1(i)
Current Account Transactions
The term current account transactions as defined in Section 2(j) of Foreign Exchange
Management Act, 1999 means a transaction other than a capital account transaction
and includes payments due in connection with foreign trade, other current business,
services and short term banking and credit facilities in the ordinary course of business;
payments due as interest on loan and as net income from investments; remittances for
living expenses of parents, spouse and children residing abroad and expenses in
connection with foreign travel, education and medical care of parents, spouse and
children.
Section 5 of the Act allows any person to sell or draw foreign exchange to or from an
authorised person if such sale or drawal is a current account transaction. However, the
Central Government may, in the public interest and in consultation with the Reserve
Bank impose such reasonable restrictions for current account transactions.
Answer 1(ii)
Undertakings and Associations
Section 3 of the Monopolies and Restrictive Trade Practices Act, 1969 expressly
provides that the Act shall not apply to undertakings owned or controlled by the
Government, a Government company, a Corporation, a registered cooperative society
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and undertakings the management of which has been taken over by the Central
Government and to trade union and other associations of workmen and financial
institutions unless Central Government, by notification in the Official Gazette
otherwise directs.
However, vide notification dated 27.9.1991, the Government has directed that the
provisions of the MRTP Act shall apply to all undertakings and financial institutions
specified in Section 3 which were outside the purview of the Act, except undertakings
owned or controlled by a Government company, or the Government and engaged in
the production of arms and ammunition and allied items of defence equipment,
defence aircraft and warships, atomic energy, minerals specified in the schedule to the
atomic energy and industrial units under currency and coinage division, Ministry of
Finance.
The trade unions and other associations of workmen or employees formed for their
own reasonable protection as such workmen or employees continue to be exempt from
the applicability of the MRTP Act.
Answer 1(iii)
Impact of Noise Pollution
The impact of noise pollution on the health of people are multifaceted and interrelated.
Noise pollution has ill effect not only on the health of human beings but also on other
living and non-living things. The generation of unreasonable noise within the
environment leads to repeated interference with sleep has ill effect on hearing or may
even lead to deafness. External sounds can interfere with conversation and use of
telephone, as well as the enjoyment of radio and television program and other like
pastimes. It can thus affect the efficiency of offices, schools and other places where
communication is of vital importance. Firecrackers and other excessive and
continuous explosives become physically painful giving rise to neurosis, mental
illness, cardiovascular diseases, stomach ulcers and respiratory disorders reducing
human life. The noise has adverse effect on working efficiency and leads to
psychological problems.
Answer 1(iv)
Basic Rights of Consumers
The Consumer Protection Act, 1986 is a piece of socio-economic legislation which

seeks to protect the interest of the consumers and to provide cheap, simple and quick
remedy to common consumer. The object of the Act, as provided in its preamble is to
provide for better protection of the interests of consumers and for that purpose to make
provisions for the establishment of consumer councils and other authorities for the
settlement of consumers disputes and matters connected therewith.
The basic rights of consumers that are sought to be promoted and protected under the
Act are:
a. The right to be protected against marketing of goods and services which are
hazardous to life and property.
b. The right to be informed about the quality, quantity, potency, purity, standard
and price of goods or services so as to protect the consumers against Unfair

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Trade Practice.
c. The right to be assured, wherever possible, access to variety of goods and
services at competitive prices;
d. The right to be heard and to be assured that consumers’ interest will receive due
consideration at appropriate forums;
e. The right to seek redressal against unfair trade practices or restrictive trade
practices or unscrupulous exploitation of consumers; and
f. The right to consumer education.
Answer 1(v)
Liability for Compensation
Chapter II of the National Environment Tribunal Act, 1995 deals with compensation
for death of or injury to a person or damage to property and environment. Section 3(1)
states that where death of or injury to any person (other than workman) or damage to
any property or environment has resulted from an accident, the owner shall be liable to
pay compensation for such death, injury or damage.
A claimant in any claim for compensation, is under no obligation to plead and

establish that the death, injury or damage in respect of which the claim has been made
was due to any wrongful act, neglect or default of any person (referred as ‘strict
liability’). In this context the term “injury” includes, permanent total or permanent
partial disability or sickness resulting out of an accident.
Under Sub-section (3) it is provided that if the death, injury or damage caused by an
accident cannot be attributed to any individual activity but is the combined and
resultant effect of several such activities, operations and processes, the Tribunal may
apportion the liability for compensation amongst those responsible for such activities,
operations and processes on an equitable basis.
Question 2
a. Write a short note on ‘industrial entrepreneurs memorandum’. (3 marks)

b. Explain whether it is necessary for the Central Government to serve a
notice for takeover of an industrial undertaking before passing an order of
takeover without investigation? (4 marks)
c. On the basis of facts mentioned below, state whether these amount to
restrictive trade practices or unfair trade practices. Refer to relevant case
law in support of your answer:
1. A company manufacturing adhesives approached the principals

of some schools to arrange a contest among the school students
for making toys. The participating students were required to
use only adhesives manufactured by that company. The
company had offered attractive prizes and there was no price
increase in its product. (4 marks)
2. Superfine Ltd. was engaged in the manufacture, sale and
distribution of refrigerators and washing machines. The
agreement with the dealer provided that he would sell these
products only to consumers and shall not knowingly re-sell
them to any person/company who was not a consumer and was
purchasing them for the purpose of resale. It also provided that

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a dealer should re-sell the products directly to consumers (end

users) residing in the areas mentioned in the agreement. (4
marks)
Answer 2(a)
Industrial Entrepreneurs Memorandum
Industrial undertakings exempt from obtaining an industrial licence are required to file
Industrial Entrepreneurs Memorandum (IEM) in Part-A with the Secretariat of
Industrial Assistance (SIA), Department of Industrial Policy and Promotion,
Government of India and obtain an acknowledgement. Application to be accompanied
by a fee of Rs.1000/-. This is to be submitted by new units as well as units undertaking
substantial expansion.
No further approval is required. Immediately after commencement of commercial

production, Part ‘B’ of the IEM has to be filed in the prescribed format. There is also
the facility for amending existing IEMs. However, no amendment or modification can
be made to any IEM filed before June 30, 1998 except for clerical errors. Where any
amendment/modification is sought to be made in such IEMs, a fresh memorandum in
Form IEM, along with the prescribed fee has to be filed for which a fresh
acknowledgement will be issued.
An IEM would be cancelled/deleted from the SIA records if, on scrutiny, it is found
that the proposal contained in the IEM is licensable.
Answer 2(b)
Section 18AA of the Industries (Development and Regulation) Act, 1951 empowers
the Central Government to take over Industrial undertakings without investigation
under certain circumstances. Section 18AA of the Act empowers the Central
Government to authorize, by a notified order, any person or body of persons to take-
over the management of whole or part of any industrial undertaking and to exercise
prescribed functions of control, provided the Government is satisfied on the basis of
documentary or other evidences in its possession.
An important question of law arose in Swadeshi Cotton Mills v. Union of India, (AIR
1981 SC 818), as to whether the principle of natural justice of giving notice should be
observed before passing an order under Section 18AA of the Act.
The questions for consideration before the Supreme Court were-(i) whether it was
necessary to observe the rules of natural justice before issuing a notified order under
Section 18AA, or enforcing a decision under Section 18AA and (ii) whether the
provisions of Section 18AA and/or Section 18F impliedly excluded rules of natural
justice relating to prior hearing. Allowing the appeal, the Supreme Court directed that
it shall, within a reasonable time, preferably within three months give a full, fair and
effective hearing to the aggrieved owner of the undertaking i.e. the company, on all
aspects of the matter including those touching the validity and/or correctness of the
impugned order and/or action of take over and then after a review of all the relevant
materials and circumstances including those obtained on the date of the impugned
order, shall take such fresh decision, and/or such remedial action as may be necessary,
just, proper and in accordance with law.

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Supreme Court had clarified in this case that “without investigation” does not mean
“without notice”. It only means that under the exceptional circumstances as envisaged
under Section 18AA, time need not be spent on investigation before takeover, but
prior notice must be given.
Answer 2(c)(i)
The scheme cannot be said to fall within the purview of Section 36A(3)(b) of the
MRTP Act, 1969 and therefore, there is no unfair trade practice.
Section 36A(3)(b) of the said Act deals with the unfair trade practice relating to
conduct of contest, lottery, game of chance or skill, for the purpose of promoting
directly or indirectly the sale, use or supply of any product or any business interest.
The conduct of any contest, lottery, game of chance or even game of skill would be an
unfair trade practice if it was done for the purpose of promoting the sale, etc. or any
business interest resulting in loss or injury to the consumers by eliminating
competition or otherwise.
The facts of the given problem are based on the case of Pedilite Industries Pvt. Ltd.
(UTP Enq. 56 of 1987 dated 22.5.1987). In this case the Commission held that there
was no loss or injury to the participating students which outweighed the educational
benefit derived thereby and therefore, there was no Unfair Trade Practice under
Section 36A(3)(b).
Answer 2(c)(ii)
The facts of the given problem are based on the case of Director General
(Investigation and Registration) v. Godrej-GE Appliances Ltd. and Another, (2002) 46
CLA 72. The MRTP Commission in this held that the impugned clauses of the
agreement did not fall within the purview of various clauses of Section 33(1) of
MRTP Act, 1969. The company has explained that the clause merely stipulated that
the dealer shall sell the goods to actual consumers and not to those who resell them.
This is to ensure free and proper availability of genuine Godrej services to end users
by properly trained staff. Most of the services rendered by the company would not be
rendered by all those who have no infrastructure. It also ensures that spurious parts are
not sold to the consumers. Restrictions would not cause any prejudice to the
consumers, rather they are in the interest of the consumers.
In view of the above mentioned decisions of the MRTP Commission the restrictions
contained in the agreement do not relate to restrictive trade practice infringing
Sections 33(1)(g) of MRTP Act, 1969.
Question 3
1. Two persons applied for registration of the same trade mark at the same
time. In such a case, how will the proprietorship of the trade mark be
decided? (3 marks)
2. An organisation of a political nature is interested in receiving foreign
contribution from a trust in England. How should it proceed? (4 marks)
3. Advise on the following with reference to relevant provisions of the Foreign
Exchange Management Act, 1999:

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i. Rekha, an NRI, is interested in purchasing shares of an Indian

company.
ii. XYZ Ltd., a company incorporated in India, issues shares to persons
resident outside India under the Employees Stock Option Scheme.
iii. Vaibhav, an Indian citizen, is keen to possess foreign coins.
iv. Rohit, a person resident in India, inherits immovable property
situated outside India from a person who was resident outside India.
(2 marks each)
Answer 3(a)
Section 6 of the Trade Marks Act, 1999 requires a register of Trade Mark to be kept at
the head office of the Trade Mark Registry wherein all registered trade marks with
names, addresses and description of the proprietors, notifications of assignment of
transmissions, the names, addresses and descriptions of registered users, conditions,
limitations and such other matter shall be entered. In the instant case, where two
persons applied for registration of the same trade mark at the same time, the name of
the person appearing first in the register shall get priority.
Answer 3(b)
The organisation has to seek permission from the Central Government. Section 5 of
Foreign Contribution Regulation Act, 1976 prohibits an organization of a political
nature, not being a political party, from accepting any foreign contribution, except
with the prior permission of the Central Government. An organisation of a political
nature means such organisation as Central Government may specify having regard to
the activities of the organisation or the ideology propagated by the organisation or the
programme of the organisation or the association of the organisation with the activities
of any political party.
The Central Government has notified in Official Gazette certain organisations as

organisations of political nature, not being a political party.
Answer 3(c)(i)
Rekha a person resident outside India, may purchase shares or convertible debentures
of an Indian company under Foreign Direct Investment Scheme, subject to the
prescribed terms and conditions. However, Rekha is not allowed to purchase shares or
convertible debentures of a company engaged in any prohibited sector/ scheme.
Answer 3(c)(ii)
XYZ Ltd., may issue shares under the Employees Stock Option Scheme to its
employees or employees of its joint venture or wholly owned subsidiary abroad who
are resident outside India, directly or through a trust, provided the scheme has been
drawn in terms of regulations issued by SEBI, and the face value of the shares to be
allotted under the scheme to the non-resident employees does not exceed 5% of the
paid-up capital of the issuing company.
Answer 3(c)(iii)
Foreign Exchange Management (Possession and Retention of Foreign Currency)

Regulations, 2000 provides for limits for possession and retention of foreign currency

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or foreign coins. Under Regulation 3, RBI has specified for possession of foreign
coins by any person without any limit. So, Vaibhav can possess foreign coins without
limit.
Answer 3(c)(iv)
Rohit, may acquire immovable property outside India by way of gift or inheritance
from a person who was resident outside India, in terms of Section 6(4) of Foreign
Exchange Management Act, 1999 or who is a national of foreign state or such
property was acquired by a person resident in India on or before July 8, 1947 and
continued to be held by him with the permission of RBI.
Question 4
a. Write a note on the concept of ‘intellectual property rights’. (5 marks)

b. Explain the meaning of ‘collective trade mark’. (4 marks)
c. State, with reason, whether the following acts amount to infringement:
i. importation of patented products by any person from a person

duly authorised by the patentee to sell or distribute the product.
ii. where a trade mark is registered subject to conditions or
limitations, the use of that trade mark in a manner outside the
scope of registration.
iii. where any person, without a licence granted by the owner of the
copyright or Registrar of Copyrights, does anything for which
the exclusive right is conferred upon the owner of the copyright.
(2 marks each)
Answer 4(a)
Intellectual Property Rights
The term intellectual property relates to the creations of human mind and human
intellect. In other words, intellectual property relates to pieces of information, which
can be incorporated in tangible objects at the same time in an unlimited number of
copies at different locations anywhere in the world. The property right does not vest in
those copies but in the information reflected in those copies. Similar to property rights
in movable and immovable property, intellectual property is also characterized by
certain rights as well as limitations such as right to use and licence and also with
limited duration in the case of copy right and patents.
Usually intellectual property is divided into two branches, namely, industrial property
and copyright. The expression ‘Industrial Property’ is sometimes misunderstood as
relating to movable or immovable property used for industrial production. However,
industrial property is a kind of intellectual property and relates to creation of human
mind, e.g. inventions and industrial designs. The Convention establishing World
Intellectual Property Organisation, 1967 provides that the intellectual property shall
include rights relating to:
i. literary, artistic and scientific works;

ii. performances of performing artists, phonograms and broadcasts;
iii. inventions in the field of human endeavour;
iv. scientific discoveries;

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v. industrial designs;
vi. trademarks, service marks, commercial names and designations;
vii. protection against unfair competition; and
viii. all other rights resulting from intellectual activity in the industrial, scientific,
literary or artistic fields.
Here, it may be clarified that rights relating to (i) and (ii) above constitute copyright,
while (iii), (v) and (vi) constitute industry property.
Answer 4(b)
Collective Trade Mark
The term ‘Collective Mark’ is defined under Section 2(1)(g) of the Trade Marks Act,
1999 as to mean a trade mark distinguishing the goods or services of members of an
association of persons (not being a partnership within the meaning of Indian
Partnership Act, 1932) which is the proprietor of the mark from those of others.
Section 61 to 68 contain provisions relating to the registration of Collective Trade

Marks. These sections provide for registration of a collective mark which belongs to a
group or association of persons and the use thereof is reserved for members of that
group or association of persons. Collective marks serve to distinguish characteristic
features of the products or services offered by those enterprises. It may be owned by
an association which may not use the collective mark but whose members may use the
same. The association ensures compliance of certain quality standards by its members,
who may use the collective mark if they comply with the prescribed requirements
concerning its use. The primary function of a collective mark is to indicate a trade
connection with the Association or Organisation.
Answer 4(c)(i)
The act is not an infringement as per Section 107A of the Patents (Amendment) Act,
2002.
Section 107A states that importation of patented products by any person from a person
who is duly authorised by the patentee to sell or distribute the product, shall not be
considered as an infringement of patent rights.
Answer 4(c)(ii)
The act does not constitute an infringement of Trade Mark as per Section 30 of Trade
Mark Act, 1999.
Section 30(2)(b) of the Trade Marks Act, 1999 states:
A registered trade mark is not infringed where a trade mark is registered subject to any
conditions or limitations, the use of the trade mark in any manner in relation to goods
to be sold or otherwise traded in, in any circumstances, to which, having regard to
those conditions or limitations, the registration does not extend.
Answer 4(c)(iii)
The act is an infringement as per the provisions of Section 51 of Copyright Act, 1957.

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Section 51 of the Copyright Act, 1957 states:
Copyright in a work shall be deemed to be infringed when any person, without a

licence granted by the owner of the copy right or the Registrar of Copyrights under the
Act or in contravention of the conditions of a licence so granted or of any condition
imposed by a competent authority under this Act, does anything, the exclusive right to
do which is by this Act conferred upon the owner of the copyright.
Simply stated, unless the owner of copyright who has exclusive rights to use or give
licence, does not give licence, no one should do anything that owner alone can do.
Question 5
With reference to the provisions of the Consumer Protection Act, 1986, decide
the following giving reasons in support of your answer :
i. Sukh Dukh Ltd. despatched certain consignments of goods by road through

Fastrack Roadways Ltd. The goods were unloaded and stored in a godown
enroute on the suggestion of consignee. A fire broke out in the neighbouring
godown spread to the godown and goods were destroyed. The Fastrack
Roadways Ltd. claimed that there was neither negligence nor deficiency in
service on their part and goods were being carried at “owner’s risk” and
since no special premium was paid, they were not responsible for the loss
caused by fire. Whether Fastrack Roadways Ltd. is liable to pay damages
to consignor?
ii. Life Insurance Corporation (LIC) formulated a scheme called ‘salary
saving scheme’ under which employees of an organisation could buy an
insurance policy. Premium due on each policy was collected by the
employer from the salary of the employee and sent to LIC. The LIC did not
issue any separate receipt to employees nor did it issue any premium notice.
When the widow of the deceased employee made a claim to LIC on the
death of her husband, the LIC repudiated the claim on the ground that
four instalments of premium had not been paid. The widow has
approached the consumer forum for redressal. Is the LIC liable for
deficiency in service?
iii. Raman booked a ticket from Delhi to New York by Lufthansa Airlines. The
airport authorities in New Delhi did not find any fault in his visa and other
documents. However, at Frankfurt airport authorities instituted
proceedings of verification because of which Raman missed his flight to
New York. After necessary verification, Raman was able to reach New
York by the next flight. The airline authorities tendered apology to Raman
for the inconvenience caused to him and also paid as goodwill gesture a sum
of Rs.5,000. Raman intends to institute proceedings under the Consumer
Protection Act, 1986 against Lufthansa Airlines for deficiency in service.
Will he succeed?(5 marks each)
Answer 5(i)
The present problem is based on Nath Bros. Exim International Ltd. v. Best Roadways
Ltd., 2000(2) Scale 517, where the National Commission dismissed the claim. The
Supreme Court allowed the appeal and held that the liability of the carrier is that of an
insurer and is absolute in terms in the sense that the carrier has to deliver the goods at
the destination indicated by the consignor safe, without causing any damage and

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without any loss to them. So long as the goods were in the custody of the carrier it
would be his duty to take care as he would have taken of his own goods. Even if the
goods had been carried at owner’s risk the carrier would not be fully absolved of its
liability if the loss or damage was occasioned on account of its negligence or that of its
agents and servants.
Based on the above stated case, it can be inferred that Fastrack Roadways Ltd. is liable
to pay damages to Sukh Dukh Ltd.
Answer 5(ii)
LIC is liable for deficiency in services. In the instant case the employer had implied
authority to collect premium on behalf of the corporation. There is no gainsaying the
fact that if the employer had, after deducting the stipulated amount from the
employee’s salary, failed to remit the premium to the Corporation it was clearly the
fault of the agent of the Corporation. So, LIC has wrongly discharged its liability
under the policy.
The present problem is similar to Delhi Electric Supply Undertaking v. Basanti Devi,
1999(6) Scale 236 where it was held that since the burden of collecting the premium
and remitting it to the corporation was on the employer, it was not the responsibility of
the employee to intimate the Corporation about non-remittance of the premium.
Answer 5(iii)
The present problem is similar to Ravneet Singh Bagga v. KLM Royal Dutch Airlines,
1999(7) Scale 43.
In the present problem, Lufthansa Airlines could not be held to be guilty of deficiency
in service. Although Raman had been subjected to harassment, it is equally true that
none of the respondents’ would be held guilty of deficiency in service. The airline
authorities tendered apology to Raman for the inconvenience caused to him and also
paid him token of compensation. Deficiency of service could not be alleged without
attributing fault, imperfection or shortcoming or inadequacy in the quality, nature and
manner of performance which is required to be performed by a person in pursuance of
a contract or otherwise in relation to any service. So, Raman will not succeed if he
institute proceeding under Consumer Protection Act, 1986.
Question 6
a. Briefly explain the major provisions of the Public Liability Insurance Act, 1991.
b. Discuss briefly the functions of environmental laboratories.
c. Is an application for compensation in a pollution case maintainable under Article 32 of
the Constitution of India.
Refer to decided case law?(5 marks each)
Answer 6(a)
The Public Liability Insurance Act, 1991 has been enacted for the purpose of
providing immediate relief to the persons affected by accidents occurring while
handling any hazardous substance and for other incidental and connected matters.
Major Provisions of the Act

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Section 2 of the Act contains definitions of the important terms. These include
Accident, Hazardous Substance, Handling, the owner etc.
Liability to give Relief: Section 3 of the Act incorporates the principle of liability
without fault and imposes on the owner liability to give relief in case of death or injury
to any person or damage to any property, resulting from an accident occurring while
handling any hazardous substance.
Compulsory Insurance: Section 4 requires the owner to take out one or more insurance
policies, before starting the handling of hazardous substance.
Verification and Publication of Accident: Section 5 of the Act requires the collector to
verify, wherever it comes to his notice that an accident has occurred at any place
within his jurisdiction.
Application for Claim for Relief: Section 6 deals with manner of making application
for claim for relief and provides that an application for claim for relief may be made
by the person who has sustained injury; by owner of the property to which damage has
been caused; and in the case of death resulting from accident, by all or any of the legal
representatives of the deceased, or by any agent duly authorised by such person or
owner of such property.
Award of Relief: Section 7 of the Act requires the collector, on receipt of application
for claim for relief, to hold an inquiry into the claim or each of the claims, after giving
notice of application to owner and after giving the parties an opportunity of being
heard and make an award determining the amount of relief payable to person or
persons.
Establishment of Environment Relief Fund: Section 7A of the Act empowers the

Central Government to establish Environment Relief Fund, by notification in the
official Gazette, to be utilised for paying relief under the award made by the collector
under Section 7 of the Act.
Power to Call for Information, Entry and Inspection etc.: Sections 9, 10 and 11 deal
with certain powers for calling for information, entry and inspection and search and
seizure. The owner of hazardous installation has been put under obligation to submit
to a person authorised by the Central Government such information as that person
reasonably thinks necessary for the purpose of ascertaining whether any requirements
of the Act, rule or directions made there under have complied with.
Power to Give Directions: Under Section 12, the Central Government has been
empowered to issue directions in writing as it may deem fit to any owner or any
person, officer, authority or agency.
Offences and Penalties: Sections 14 to 18 deal with offences, penalties and procedural
provisions connected therewith.
Answer 6(b)
Functions of Environmental Laboratories
Section 12 of the Environment (Protection) Act, 1986 empowers the Central

Government to establish by notification in the Official Gazette, one or more

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environmental laboratories or recognise one or more laboratories or institutes as

environmental laboratories to carry out certain functions under the Act.
Rule 9 of the Environment (Protection) Rules, 1986 specifies the following functions
of environmental laboratories:
i. To evolve standardised methods for sampling and analysis of various types of

environmental pollutants;
ii. To analyse samples sent by the Central Government or the Officers empowered
under sub-section (1) of Section 11 of the Act;
iii. To carry out such investigations as may be directed by the Central Government,
to lay down standards for the quality of environment and discharge of
environmental pollutants and to monitor and to enforce the standards laid down;
iv. To send periodical reports regarding its activities to the Central Government;
v. To carry out such other functions as may be entrusted to it by the Central
Government from time to time.
These rules also specify the procedure for submission of samples to the laboratories
for analysis/tests, form of the laboratory report, fees payable therefor etc.
The Central Government has also been empowered to appoint or recognise, by

notification in the Official Gazette, such persons having the prescribed qualifications
as Government analysts for the purpose of analysis of samples of air, water, soil or
other substances sent to the environmental laboratories. The qualifications of a
Government analysts have been prescribed under the Environment (Protection) Rules,
1986. As per the provisions of Section 14, any document purporting to be a report
signed by a Government analyst may be used as evidence of facts in any proceeding
under the Act.
Answer 6(c)
The Supreme Court in the historic judgement in M.C. Mehta and Another v. Union of
India and Others (1987) 1 Comp. LJ 99 (SC), ruled that an application for
compensation in a pollution case can be maintained under Article 32 of the
Constitution, for such application is for the protection of the fundamental rights of the
people and the Court has all incidental and ancillary powers including the power to
forge new remedies and fashion new strategies designed to enforce fundamental
rights. The Supreme Court further laid down that an enterprise which is engaged in
hazardous or inherently dangerous activity and an industry which poses a potential
threat to the health and safety of the persons working in the factory and of those
residing in the surrounding areas owes an absolute and non-delegatable duty to the
community to ensure that no harm results to any one on account of an hazardous or
inherently dangerous nature of the activity which it has undertaken.
Question 7
a. Discuss any two of the following:
i. ‘Occupier’ in the case of a company under the Factories Act, 1948.

ii. ‘Lay-off’ and ‘lock-out’.
iii. Immunity from criminal proceedings to an office-bearer of a registered
trade union. (5 marks each)

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b. Attempt any five of the following stating the relevant legal provisions and case law :
i. When does subsistence allowance become payable to an employee?

ii. Under what circumstances can provident fund payable to an employee be
attached in execution of a decree of the court?
iii. When do the model standing orders become applicable?
iv. Contributory service of Prasanna is 33 years. His pensionable salary is
Rs.5,000 per month. Calculate his pension amount as per the provisions of
the Employees Provident Funds and Miscellaneous Provisions Act, 1952.
v. Sanjay, a private contractor, runs a canteen and a cycle stand in Asha
Theatre. Decide if theatre owner is liable as principal employer for the
payment of ESI contribution in respect of workers employed in canteen/
cycle stand.
vi. Are the workers entitled to wages for the strike period which is declared to
be legal?
vii. Can an apprentice be engaged under another employer for the unexpired
period of apprenticeship? (3 marks each)
Answer 7(a)(i)
As per Section 2(n) of the Factories Act, 1948 ‘occupier’ of a factory means the
person who has ultimate control over the affairs of the factory.
Under Section 2(n)(i) of the Act, it is stated that in the case of a firm or other
association of individuals, any one of the partners or members thereof shall be deemed
to be the ‘occupier’.
Further, Section 2(n)(ii) stipulates that in the case of a company, any one of the
directors shall be deemed to be the ‘occupier’.
The definition of ‘occupier’ has been considerably enlarged by the Amendment Act of
1987.
There was a lot of controversy regarding ‘occupier’ in case of a company as the

Section 2(n)(ii) provides that any one of the directors of the company shall be deemed
to be the ‘occupier’ of the factory. The Supreme Court resolved this controversy in JK
Industries Ltd. v. Chief Inspector of Factories, (1997) 1 LLJ SC 772. The Supreme
Court held that only a member of the Board of Directors of the company can be
‘occupier’ of the factory of the company. The ultimate control of factory owned by
company vests in Board of Directors and not in any one else. Company owning
factory cannot nominate its employees or officers except director of the company as
‘occupier’ of its factory. Therefore, an employee of a company cannot be the
‘occupier’.
Answer 7(a)(ii)
According to Section 2(kkk) of the Industrial Disputes Act, 1947, “lay-off” means the
failure, refusal or inability of an employer to give employment to a workman (a)
whose name is borne on the muster-rolls of his industrial establishment, and (b) who
has not been retrenched. The failure, refusal, or inability to give employment may be
due to-
i. shortage of coal, power or raw materials, or

Guidelines
ii. the accumulation of stocks, or

iii. the breakdown of machinery, or
iv. natural calamity or for any other connected reasons.
As per the aforestated definition, the essentials of a “lay-off” are as follows:
a. There must be failure or refusal or inability of the employer to continue

employees in his employment.
b. The employees laid-off must be on the muster-rolls of the establishment on the
day of lay-off
c. The failure, refusal or inability to give employment may be due to shortage of
raw materials or accumulation of stock or breakdown of machinery or natural
calamity or some other reason.
d. The employees must not have been retrenched.
Laying-off thus means putting aside or discharging workmen temporarily.
“Lock-out” as per Section 2(l) of the Industrial Disputes Act, 1947, means the
temporary closing of a place of employment, or the suspension of workmen or the
refusal by an employer to continue to employ any number of persons employed by
him.
The essentials of “lock-out” as per the above mentioned definition are as follows:
a. There is a temporary closing of the place of employment, or suspension or

withholding of the work by the employer in some form;
b. There is an element of demands for which the place of employment is locked-
out or closed; and
c. There is an intension to re-employ the workers if they accept the demands.
Lock-out is employer’s weapon. In Kairbetta Estate v. Rajamanickam, AIR 1960 SC

893, the Supreme Court observed:
“Lock-out can be described as the antithesis of a strike. Just as a strike is a weapon

available to the employees for enforcing their industrial demand, a lock-out is a
weapon available to the employer to persuade by a coercive process the employees to
see his point of view to accept his demands.”
Answer 7(a)(iii)
Section 17 of the Trade Unions Act, 1926 grants immunity from punishment for
criminal offences to its office bearers or members. It states that an office-bearer or
member of a registered trade union shall not be liable to punishment under Section
120-B(2) of the Indian Panel Code, 1860 in respect of any agreement made between
the members for the purpose of furthering any such object of the trade union on which
general funds may be spent. But if the agreement is an agreement to commit an
offence, no immunity can be claimed.
For example, if a strike is accompanied by violence, assault, intimidation, threat etc.

this exemption is not available (Jay Engineering Works v. Workmen, AIR 1968 Cal.
407). Likewise a union leader is not entitled to claim immunity from punishment for
breach of discipline. (Burn & Co. v. Their Workmen, AIR 1959 SC 529)

Guidelines
The protection accorded to office-bearers or members of a registered trade union is

only in respect of agreements made among the members for the purpose of furthering
any legitimate object of the trade union. One of such objects may be the conduct of
trade disputes on behalf of the trade union or any member thereof.
Such protection can not be accorded if there is an agreement to commit an offence,

like an assault on any of the officers or workers in the employment of the employer, or
holding out of the threats or indulging in violence or defamation, even though it may
be in furtherance of a trade dispute.
Answer 7(b)(i)
Section 10A of the Industrial Employment (Standing Orders) Act, 1946 dealing with
payment of subsistence allowance stipulates that where any workman is suspended by
the employer pending investigation or inquiry into complaints or charges of
misconduct against him, the employer shall pay him the subsistence allowance-
i. at the rate of 50 per cent of the wages which the workman was entitled to
immediately preceding the date of such suspension, for the first 90 days of
suspension; and
ii. at the rate of 75 per cent of such wages for the remaining period of suspension if
the delay in the completion of disciplinary proceedings against such workman is
not directly attributable to the conduct of such workman.
Any dispute regarding the payment of subsistence allowance may be referred by the
workman or the employer to the Labour Court. However, if the provisions relating to
payment of subsistence allowance under any other law for the time being in force are
more beneficial then the provisions of such other law shall be applicable.
Answer 7(b)(ii)
Statutory protection is provided to the amount of contribution to provident fund under

Section 10 of the Employees’ Provident Funds and Misc. Provisions Act, 1952 from
attachment to any Court decree.
Section 10 provides that the amount standing to the credit of any member in the
Employees’ Provident Fund or of any exempted employee in a provident fund shall
not in any way be capable of being assigned or charged. It shall also not be liable to
attachment under any decree or order of any Court in respect of any debt or liability
incurred by him. Even the Official Assignee appointed under the Presidency-Towns
Insolvency Act, 1909, or any Receiver appointed under the Provincial Insolvency Act,
1920 has no claim on any such amount. It is further provided that in the event of death
of the member or exempted employee, this amount shall vest in the nominee and shall
be free from any debt or other liability incurred by the deceased or the nominee before
the death of the member or of the exempted employee and shall also not be liable to
attachment under any decree or order of any Court.
The above provisions, shall apply in relation to the family pension scheme or any
other amount payable under the Pension Scheme and also in relation to any amount
payable under the Employee’s Deposit Linked Insurance Scheme as they apply in
relation to any amount payable out of the Provident Fund.
Answer 7(b)(iii)

Guidelines
The Standing Orders become applicable within a period of six months to an

establishment.
Further, it is provided under Section 3(1) of the Industrial Employment (Standing

Orders) Act, 1946 that within six months from the date on which this Act becomes
applicable to an industrial establishment, the employer shall submit to the Certifying
Officer five copies of the draft standing orders proposed by him for adoption in his
industrial establishment.
Furthermore, it is expressly stated under Section 12A of the Act that if there are no
Certified Standing Orders applicable to an industrial establishment, the prescribed
Model Standing Orders shall be deemed to be adopted and applicable.
Answer 7(b)(iv)
The formula for calculation of monthly member’s pension is as under:
Member’s Pension* = Pensionable Salary ´ (Pensionable service + 2)
So in case of Mr. Prasanna, applying this formula the pension will work out to
Rs.2,500 per month.
Members Pension =
*Pensionable salary will be average of last 12 months pay.
Answer 7(b)(v)
In the given problem, the theater owner as principal employer is liable for the payment
of ESI contribution to its workers employed in canteen/cycle stand.
The Supreme Court in Royal Talkies, Hyderabad v. E.S.I. Corpn., AIR 1978 SC 1478,
has held that employees of a cycle stand and a canteen run in a cinema theatre by
contractors to whom the cycle stand and canteen have been leased are employees
within the meaning of Section 2(9) of the E.S.I. Act, 1948. The Supreme Court
observed:
“The reach and range of the definition of ‘employee’ in Section 2(9) is apparently
wide and deliberately transcends pure contractual relationships. Section 2(9) contains
two substantive parts. Unless the person employed qualifies under both, he is not an
‘employee’. First, he must be employed ‘in or in connection with’ the work of an
establishment. This expression ropes in a wide variety of workmen who may not be
employed in the establishment but may be engaged only in connection with work of
the establishment. Some nexus must exist between the establishment and the work of
the employee.
Merely being employed in connection with the work of an establishment, in itself,

does not entitle a person to be an ‘employee’. He must not only be employed in
connection with the work of the establishment but also be shown to be employed in
one or other of the three categories mentioned in Section (9)".
Answer 7(b)(vi)

Guidelines
The Division Bench of Supreme Court in the case of Bank of India v. T.S. Kelawale
(1990) 2 Lab IC 39, held that the workers are not entitled to wages for the strike
period. The Court observed that “the legality of strike does not always exempt the
employees from the deduction of their salaries for the period of strike”. The Court,
further observed, “whether the strike is legal or illegal, the workers are liable to lose
wages does not either make the strike illegal as a weapon or deprive the workers of it”.
Answer 7(b)(vii)
An apprentice can be engaged under another employer for the unexpired period of
apprenticeship.
Section 5 of the Apprentices Act, 1961 provides for the novation of contract of
apprenticeship. It states that where an employer is for any reason unable to fulfil his
obligations under the contract and with the approval of the Apprentice Adviser it is
agreed between the employer, the apprentice or his guardian and any other employer
that the apprentice shall be engaged as an apprentice under the other employer for the
unexpired portion of the period of apprenticeship training, the agreement, on
registration with the Apprenticeship Adviser shall be deemed to be the contract of
apprenticeship between the apprentice or his guardian and the other employer. Such
contract on and from the date of such registration shall be terminated with the first
employer and no obligation under that contract shall be enforceable.

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ECONOMIC, LABOUR AND INDUSTRIAL

Time allowed: 3 hours Maximum marks: 100

Write notes on the following :

i. ‘Current account transactions’ under the Foreign Exchange Management

Current Account Transactions

Undertakings and Associations

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Impact of Noise Pollution

Basic Rights of Consumers

The Consumer Protection Act, 1986 is a piece of socio-economic legislation which

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Liability for Compensation

A claimant in any claim for compensation, is under no obligation to plead and

a. Write a short note on ‘industrial entrepreneurs memorandum’. (3 marks)

1. A company manufacturing adhesives approached the principals

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a dealer should re-sell the products directly to consumers (end

Industrial Entrepreneurs Memorandum

No further approval is required. Immediately after commencement of commercial

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i. Rekha, an NRI, is interested in purchasing shares of an Indian

The Central Government has notified in Official Gazette certain organisations as

Foreign Exchange Management (Possession and Retention of Foreign Currency)

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a. Write a note on the concept of ‘intellectual property rights’. (5 marks)

i. importation of patented products by any person from a person

Intellectual Property Rights

i. literary, artistic and scientific works;

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Collective Trade Mark

Section 61 to 68 contain provisions relating to the registration of Collective Trade

Section 30(2)(b) of the Trade Marks Act, 1999 states:

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Section 51 of the Copyright Act, 1957 states:

Copyright in a work shall be deemed to be infringed when any person, without a

i. Sukh Dukh Ltd. despatched certain consignments of goods by road through

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Major Provisions of the Act

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Establishment of Environment Relief Fund: Section 7A of the Act empowers the

Functions of Environmental Laboratories

Section 12 of the Environment (Protection) Act, 1986 empowers the Central

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environmental laboratories or recognise one or more laboratories or institutes as

i. To evolve standardised methods for sampling and analysis of various types of

The Central Government has also been empowered to appoint or recognise, by

a. Discuss any two of the following:

i. ‘Occupier’ in the case of a company under the Factories Act, 1948.

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i. When does subsistence allowance become payable to an employee?

There was a lot of controversy regarding ‘occupier’ in case of a company as the

i. shortage of coal, power or raw materials, or

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ii. the accumulation of stocks, or

As per the aforestated definition, the essentials of a “lay-off” are as follows:

a. There must be failure or refusal or inability of the employer to continue

Laying-off thus means putting aside or discharging workmen temporarily.

a. There is a temporary closing of the place of employment, or suspension or

Lock-out is employer’s weapon. In Kairbetta Estate v. Rajamanickam, AIR 1960 SC

“Lock-out can be described as the antithesis of a strike. Just as a strike is a weapon

For example, if a strike is accompanied by violence, assault, intimidation, threat etc.