“Redundant Laws” by VakilNo1

Source: (http://goo.gl/e4NJqm)

There are some laws, which are so detrimental to economic liberalization that without a wide-ranging and comprehensive change program, the entire reform process may collapse.

One of these is the Agricultural and Ceiling Act, which permits non-resident Indians to invest in agriculture but   does not permit absentee cultivation of holdings. By discouraging adoption of modern technology and scientific farming, the Act pressures the government to spend massive amounts to develop rural infrastructure.
Similarly, the Urban Land Ceiling Act keeps land prices artificially high, skews the property market and discourages investment flows.
Although domestic movement of agricultural goods is more or less free, the Essential Commodities Act, 1955, the Cotton Movement Control Order and Paddy Control Order, Milk and Milk Products Order and Agricultural Produce Regulated Market Act continue to exist, distorting the rural economy.
Take the Companies Act, 1956, one of the most voluminous pieces of legislation comprising over 650 sections and 15 Schedules. Despite amendment, there are several sections prescribing needless control and regulation in areas covering incorporation of companies, share capital, procedures, public issues, registration and remuneration which jar in today’s liberalized environment.
For instance, any company wishing to appoint more than 12 directors or give a loan to a director has to get approval from the Government. Section 259 of the Companies Act, 1956 provides;

” Increase in number of directors to require Government sanction

In the case of a public company or a private company, which is a subsidiary of a public company, any increase in the number of its directors, except-

(a) in the case of company which was in existence on the 21st day of July, 1951, and increase which was within the permissible maximum under its articles as in force on that date, and

(b) in the case of a company which came or may come into existence after that date, an increase which is within the permissible maximum under its articles as first registered, shall not have any effect unless approved by the Central Government and shall become void if, and in so far as, it is disapproved by that government:

[Provided that where such permissible maximum is twelve or less than twelve, no approval of the Central Government shall be required if the increase in the number of its directors does not make the total number of its directors more than twelve.] .”

Further Section 295 of the Companies Act, 1956 provides:

” Loans to directors, etc.-

Save as otherwise provided in sub-section (2) no company [hereinafter in this section referred to as “the lending company” [without obtaining the previous approval of the Central Government in that behalf shall, directly or indirectly,] make any loan to, or give any guarantee or provide any security in connection with a loan made by any other person to, or to any other person by,


……… “

Under the same Act, the making of bidis is not an industry, but the publication and printing department of Osmania University is. There is a law governing corporate donations to political parties, while most donations now come from non-corporate sources. The list could go on.

Under the Industrial Disputes Act of 1947, an employer can’t effect any change in working conditions, wages, compensatory allowances, work hours, rest intervals, new disciplinary rules, even raise or reduce the number of workers (except casual) without permission from the appropriate authority.

Section 9A of the Industrial Disputes Act of 1947, provides;

” Notice of change

No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change,-

(a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or

(b) within twenty-one days of giving such notice:Provided that no notice shall be required for effecting any such change-

(a) where the change is effected in pursuance of any [settlement or award]; or

(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defense Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that my be notified in this behalf by the appropriate Government in the Official Gazette, apply. “

The complex Industrial law regime, with over 50 major legislations and an equal number of state laws, include the Workmen’s Compensation Act of 1923, Trade Unions Act of 1926, Minimum Wages Act of 1936, Factories Act of 1948 and Industrial Disputes Act of 1947.

Sections of this Industrial Disputes Act of 1947 make it difficult for employers to recast sick units through modernization and technology up-gradation and it restricts their right to make any change in service conditions while conciliation proceedings are on, thus encouraging trade unions to stall introduction of new technology.

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