1st pages - kvic.gov.in

1 HANDLING OF COURT CASES

1. Meaning and Definition of Certain Terms . . . . . . . . . . . . . . . . . . . 1

2. Precautions to be taken while dealing with Court Cases . . . . . . . 4

3. Duties and responsibilities of the field office in handling

Court Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4. Extract of Circulars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2 CREATION OF EQUITABLE MORTGAGE

1. Meaning & Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2. Kinds of Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

3. Requisites of a valid Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

4. Kind of Mortgage adopted by the KVIC. . . . . . . . . . . . . . . . . . . . . 39

5. Advantages of Equitable Mortgage . . . . . . . . . . . . . . . . . . . . . . . . 40

6. Disadvantages of Equitable Mortgage. . . . . . . . . . . . . . . . . . . . . . 40

7. Confirmation regarding creation of E.M. . . . . . . . . . . . . . . . . . . . 40

8. Documents required for creation of E.M. . . . . . . . . . . . . . . . . . . . 41

9. Guidelines for creation of E.M. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

10. Applicability of Law of Limitation . . . . . . . . . . . . . . . . . . . . . . . . . 41

11. Release of original title deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

12. Revaluation of immovable properties. . . . . . . . . . . . . . . . . . . . . . 42

13. Compulsory disclosure of Data Base regarding E.M.

in the Official website of KVIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

14. Tripartite Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

15. Inter-se Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

16. Duties and responsibilities of field office in connection

with creation of E.M.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44


3 COLLATERAL SECURITY

1. Meaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

2. Surety Bond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

3. Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

4. Registration of Surety Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

5. Indemnity Bond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

6. Registration of Indemnity Bond . . . . . . . . . . . . . . . . . . . . . . . . . . 113

7. Differences between contract of Indemnity and Contract of

Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

8. Duties and responsibilities of field offices . . . . . . . . . . . . . . . . . . 113

9. Extracts of Circulars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Chapter Title Page No. No.

I N D E X

4. HYPOTHECATION DEED

1. Meaning & Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

2. Stamp duty on Hypothecation Deed. . . . . . . . . . . . . . . . . . . . . . . 116

3. Registration of Hypothecation Deed . . . . . . . . . . . . . . . . . . . . . . . 116

4. Renewal of Hypothecation Deed. . . . . . . . . . . . . . . . . . . . . . . . . . 116

5. Guidelines for execution of Hypothecation Deed . . . . . . . . . . . . . 117

6. Significance of Clause 17 & 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

7. Taking over of Hypothecated Goods . . . . . . . . . . . . . . . . . . . . . . . 117

8. Processing of Hypothecation Deed . . . . . . . . . . . . . . . . . . . . . . . . 117

9. Duties and Responsibilities of Field Office . . . . . . . . . . . . . . . . . . 119


5 LEGAL RECOVERY

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

2. Provisions of KVIC Act & Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

3. Constitution of Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

4. Guidelines for 19 B Recovery Action . . . . . . . . . . . . . . . . . . . . . . . 156

5. Duties and Responsibilities of Field Office . . . . . . . . . . . . . . . . . . 156


6 RECENT AMENDMENTS IN THE KVIC ACT AND RULES

1. Important amendments in the Act . . . . . . . . . . . . . . . . . . . . . . . . 188

2. Important changes in the Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 189

7 CONTRACT LABOUR

1. Main features of the Contract Labour (Regulation and Abolition)

Act, 1970 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

2. Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

3. Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

4. Administrative Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

5. Prohibition on Employment of Contract Labour . . . . . . . . . . . . . . 192

6. Obligations of the Employer/Contractor. . . . . . . . . . . . . . . . . . . . 192

7. Welfare and Health Amenities for Contract Labour . . . . . . . . . . . 193

8. Payment of Wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

9. Registers, Returns and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

10. Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194



8 RIGHT TO INFORMATION ACT, 2005

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 2. The International Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 3. The Indian Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 4. FOI Legislations in States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 5. Movement for Right to Freedom of Information . . . . . . . . . . . . . 204 6. RTI Act, 2005 An Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 7. Role of Public Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 8. Role of Public Information Officers . . . . . . . . . . . . . . . . . . . . . . . . 215 9. Role of Appellate Officers & Information Commission . . . . . . . . . 224 10. Implementation and Monitoring. . . . . . . . . . . . . . . . . . . . . . . . . . 232 11. A guide to RTI Act for PIOs by Shri Shailesh Gandhi . . . . . . . . . . . 234 12. Decided Cases on RTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 13. KVIC & RTI Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 14. Extracts of Circulars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

9 DISPOSAL OF LAND MORTGAGED WITH THE COMMISSION

1. Background Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

2. Permission for the Disposal of Surplus Land . . . . . . . . . . . . . . . . . 279

3. Registration of Charge (Tamilnadu). . . . . . . . . . . . . . . . . . . . . . . . 280

4. Views of the Ministry in the matter of the Properties of the

Khadi Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280


10 MISCELLANEOUS LEGAL ISSUES

1. Direct Listing of institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

2. Fiscal Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

3. Obligation under EPF /ESI Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302

4. Salary Attachment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

5. Recoveries before Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 304

6. Documents for HBA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304

7. Guidelines for Tender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304


11 FORMAT OF LEGAL DOCUMENTS

1. Format of Lease Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363

2. General Power of Attorney for appointment of Administrator . . . 369

3. Tripartite Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375

4. Mortgage Deed for sanction of HBA . . . . . . . . . . . . . . . . . . . . . . . 384

5. Model Byelaws for Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 390


CHAPTER – I

HANDLING OF COURT CASES

1. Meaning and Definition of CertainTerms :

A) Civil and Criminal Case: A litigation involving encroachment of private right of

an individual is a civil case. For that civil law is applicable. The proceedings will

be initiated/conducted before the civil courts. The liability of individuals for

wrongs of a civil nature is also adjudicated there. Criminal cases are those

having their objects in punishment of wrong-doers. While civil cases are of a

remedial nature, the criminal cases are of a punitive nature.

B) Act and Rules: An Act is enacted by a competent authority for law making , i.e.

the Legislature of a State or the Parliament. Rule is framed by the executive.

Rules, ordinance, notifications, regulations bye-laws etc. come under

subordinate legislation.

C) Locus Standi: Locus standi literally means ‘place for standing’. It refers to the

necessity of being aggrieved in order to enable a person to bring or initiate

action before the court. Rising trend in Public Interest Litigation is reducing the

importance of locus standi.

D) Vakalatnama: Vakalatnama is an instrument executed by a party authorizing an

Advocate to appear before a court or a judicial office to act and plead for him.

E) Affidavit: Affidavit is a sworn statement in writing before an authority (person)

who is empowered to administer an oath.

F) Injunction: Injunction is an order of stay granted by a competent court

preventing the opposite party (Defendant) from continuing the alleged act. It

can be (i) ad-interim, (ii) interim or (iii) Permanent injunction.

G) Judgment: Means the statement given by the Judge on the grounds of a decree

or order.

H) Decree: Means the formal expression of an adjudication which, so far as

regards the court expressing it, conclusively determines the rights of the parties

with regard to all or any of the matters in controversy in the suit and may either

preliminary or final.

I) Order: Means the formal expression of any decision of a Civil Court, which is not

a decree. It can be an interim order or a final order.

J) Complaint: It is an application made in writing by a person and filed before a

Magistrate stating the particulars of an offence committed by the other party

/parties with a prayer to initiate proceedings against the offender.

K) Pleading: A Judicial proceeding starts with pleadings which includes plaints &

written statements. Pleadings contain statements in a concise form of the

material facts on which the party relies for his claim or as the case may be.

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L) Plaint: means the statement of facts in brief containing the name of the Court,

name, description and place of resident of the plaintiff, name, description and

place of resident of the defendant, the facts constituting the cause of action,

the facts showing that the Court has jurisdiction and the relief sought for by the

plaintiff.

M) Written Statement: means the statement of facts in brief given by the

Defendant in reply to the plaint specifically denying and/or admitting the

contents of the plaint.

N) F.I.R: First Information Report means an information relating to the

commission of an offence given orally by an informant to the officer in charge

of a police station who shall reduce the same to writing in a book to be kept by

such officer as prescribed by the State Govt. in this behalf.

O) Writ: means the petition made before a High Court or the Supreme Court for

the enforcement of fundamental rights as provided under Article 226 and 32 of

the Indian Constitution. The following are the different types of writs issued by

the Courts.

(I) Certiorari: It is issued to quash a quasi -judicial proceeding or an order of

an administrative authority or a public officer or Govt. under certain

conditions or if made in violation of natural justice.

(ii) Habeas corpus: It is issued directing an authority or the State to produce

before the court a person who is unlawfully detained. On such

production, if the court finds that the person’s detention is unlawful, the

court may set him at liberty.

(iii) Mandamus: It literally means a command and such a writ is issued by the

court directing the public authority to do a particular act which that

authority is obliged to do.

(iv) Quo-warranto: It is issued directing a person or authority to show his

right or qualification to hold a particular office or post . If the court finds

that the person holding the office or post does not possess the required

qualification, his authority can be questioned.

(v) Prohibition: It is a writ issued by a court of superior jurisdiction directing

to an inferior court for the purpose of preventing the inferior court from

usurping a jurisdiction with which it is not legally invested or to compel

courts entrusted with judicial duties to keep within the limits of their

jurisdiction.

P) Evidence: It means and includes –

(1) All statements which the court permits or requires to be made before it

by witnesses, in relation to matters of fact under inquiry; such statements

are called oral evidence;

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(2) All documents produced for the inspection of the court; such documents

are called documentary evidence.

Q) Cause of action: It means the incident leading to the institution of a suit.

R) Jurisdiction: It refers to the powers of a court to entertain and try the suit .

Jurisdiction can be either pecuniary jurisdiction or territorial jurisdiction.

Pecuniary jurisdiction depends on the value (amount) of the subject matter of

the suit. For example, the Munsiff court can try a civil suit, the value of the

subject matter of the suit is less than Rs.25, 000/-. The territorial jurisdiction

refers to the geographical area within which the court can take cognisance of a

suit. This jurisdiction of the court is prescribed by the Govt. from time to time.

S) Natural Justice: It means the justice which comes naturally to a person or

which is part of his nature. It can be defined as “nature sense of what is right

and wrong”. The main principles of Natural Justice are that (i) no one should be

condemned unheard,(ii) no one should be a judge in his own cause and (iii)

every decision should be impartial and capable of ensuring that justice is not

only done but manifestly appears to have been done. That is, before passing

any final order in any judicial/ quasi judicial proceedings a reasonable

opportunity of hearing must be given to the parties concerned, the judgment

shall be impartial and the Inquiry Officer has to follow the procedure in such

manner that justice is not only done but manifestly appears to have been done.

T) Appeal: It means the application in the form of memorandum of appeal moved

to the higher/superior court against the decision of a lower court.

U) Review: It means the application moved by the aggrieved party before the

same court which has passed the decree or order for a review or

reconsideration of its decision.

V) Revision: It means the application moved by the aggrieved party before the

High Court for calling the record of the case which has been decided by any

court subordinate to it and in which no appeal lies thereto, and if such

subordinate court appears:-

(a) to have exercised a jurisdiction not vested in it by law,

(b) to have failed to exercise a jurisdiction so vested,

© to have acted in exercise of its jurisdiction illegally or with material

irregularity.

W) Contempt of Court: It is matter which concerns the administration of justice

and the dignity and authority of Courts/Tribunals. It is an offense against a court

or a person to whom judicial functions are assigned. It is an act of showing any

sort of disrespect to the judiciary either by making default in implementing its

orders or knowingly filing false affidavit/statement in the courts or openly

criticizing the decisions or proceedings of the court. It is a very serious offence.

3

The contempt of court proceedings are initiated by the Court either suo-moto

or on the application made by any of the affected parties to the petition. If it is

established that there is a willful contempt of court, the offenders will be

punished either with imprisonment or fine or with both.

The Contempt can be either Civil or Criminal. Civil contempt means willful

disobedience to any judgment, decree, direction, order, writ or other process

of a court or willful breach of an undertaking given to a court. On the other

hand, Criminal contempt means an act of the Condemner to interfere with the

course of justice including libels or insults to judges and publications

prejudicing the fair conduct of proceedings in courts.

2. The precautions to be taken in dealing with Court Cases:thThe Commission vide Resolution dated 29 June, 1973 and Resolution dated

20.07.1995 read with the Standing Order No. 1546 dated 10.4.1997 fully authorized

and empowered the In- charge of the Field Offices to defend the Court cases on

behalf of the Commission. The Directorate of Legal Affairs has issued guidelines for

empanelment of Advocates and payment of fee to the Advocates for contesting cases

on behalf of the KVIC in various courts. Thus the Field Offices are fully empowered

and equipped to deal with the court cases filed against the KVIC.

Proper care and attention should be given while dealing with court cases right

from the time the notice is received from the court or from the petitioner regarding

the institution of a case against the KVIC, till the time the case is disposed of and the

order passed by the court is implemented in full. It is absolutely necessary to engage

an Advocate on behalf of the KVIC soon after the intimation regarding institution of a

case against the KVIC is received by the Departments/Field Offices. Care should be

taken to ensure that suitable reply in consultation with all the Departments involved

in the case is filed in the court within the time allowed by the Court. Any inaction on

the part of the concerned Department/Field Office in taking the aforesaid actions

may result in passing an order by the Court against the KVIC.

The responsibility of the head of a Department /Field Office does not end with

mere engagement of an Advocate for defending the case and in furnishing the para

wise comments to the petition to him. Proper care must be taken to attend the court

personally or to depute an official well conversant with the facts of the case to attend

the court with all the records on the date of hearing to assist the Advocate in properly

defending the case. In matters involving sensitive issues like challenge to the policy of

the Commission or involving huge financial burden in case decision of the court goes

against the Commission, the concerned Head of the Department/Field Office should

personally attend the court on all the days of hearing.

Wherever any Court has passed an interim stay on any of the orders issued by

the KVIC and the case is not coming up for hearing within a month or so, care should

be taken to ensure that proper application for vacating the stay is moved before the

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appropriate court with the help of the Advocate. Under no circumstances the interim

stay granted by a court should be allowed to continue for an indefinite period.

When an order is passed by a court in any case, the concerned Department

/Field Office should ensure that a copy of the said order along with the opinion of the

Advocate dealt with the case is forwarded to the Central Office, as early as possible,

seeking advice on the further course of action to be taken in the matter. In case it has

been decided to file an appeal against the order of the Court, it must be ensured that

the same is filed within the time limit available for filing an appeal. On the other hand,

if it has been decided to implement the court order, the same should be implemented

within the time limit fixed by the Court and in case there is no specific time limit fixed

by the Court, the order must be implemented within a reasonable time.

The Head of the Departments/ Field office should invariably review all the court

cases pending under his jurisdiction on quarterly basis and report thereon should be

forwarded to the Directorate of Legal Affairs in each quarter.

The Ministry of MSME has directed the KVIC to furnish weekly progress report

of the court cases, wherein the Union of India is a party, to the Ministry and further

directed to appoint a Nodal Officer in the KVIC to ensure submission of weekly

progress report. Accordingly, the KVIC has nominated the Resident Representative of

the KVIC at New Delhi as the Nodal Officer. It is the responsibility of the field Directors

to ensure that the information regarding court case as required by the Ministry are

furnished to the Nodal Officer.

The resolution of the Commission referred to above and various Circulars

issued by the Directorate of Legal Affairs in connection with court cases are at the end

of the Chapter.

3. Duties & Responsibilities of the State/Divisional Offices in Handling

Court Cases:

1. In case of court cases, the field office shall obtain Para-wise comments to the

plaint/petition filed against the Commission from the concerned Department

of the Commission along with the required documents in support of

Commission’s claim/stand.

2. Care should be taken to ensure that counter affidavit on behalf of the KVIC is

filed in the court well within the time allowed by the Court.

3. The field office shall keep in constant touch with the Advocate engaged in the

matter and depute responsible official to attend the Court as and when

required.

4. The field office shall intimate the Directorate of Legal Affairs about the

development taken place in the matters from time to time.

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5. Cases of serious nature such as Contempt of court cases and cases involving

major policies, programme and prestige of the Commission should be

invariably dealt with utmost care and brought to the notice of the Central

Office.

6. As soon as any interim order is passed in any case by the Court, the details of the

same should be intimated as early as possible to the Directorate of Legal Affairs

as well as the concerned Directorate of Commission connected with the matter.

7. Care should be taken to ensure that application for vacating the interim stay,

passed in any case by the Court against the KVIC, shall be filed as early as

possible with the help of the Advocate.

8. The final orders passed in any matter by the Court should be intimated as early

as possible to the Directorate of Legal Affairs as well as the concerned

Directorate of Commission connected with the matter along with the opinion

of the Advocate engaged in the matter, so as to enable the Central Office to take

a decision regarding filing appeal etc., in case the matter is decided against the

KVIC.

9. The field office should ensure that the order of the Court is implemented within

the time by the concerned department of the KVIC and documentary evidence

to that effect is kept in the concerned file.

10. Separate files should be maintained for different cases and all the records

pertaining to a case, such as copy of the petition, reply filed by the KVIC, interim

orders passed, final order passed by the Court in the matter etc. must be kept in

the file. The date wise development of a case, beginning with the date of filing

of a case till the final disposal of that case must be recorded prominently on a

separate sheet attached to the file.

11. The field office should maintain a court diary and submit quarterly report to the

Director (Legal Affairs).

12. Weekly progress report of court cases in which the Union of India is a party

should be furnished to the Ministry through the Nodal Officer i.e. the Resident

Representative, KVIC, New Delhi.

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4. Extracts of the Circulars:thResolution dated 29 June 1973

3/197/CC/73-74,3rd July, 1973

th197 29 June,1973

22. Para (5) : To consider the question of empowering the Directors and the heads

of the sub-offices of the Commission to file or defend civil suits or other civil

proceedings and also to lodge criminal complaint on behalf of the Commission.

*************************************************

22.5 The following resolution was adopted :

“Resolution No.(461): In continuation of the Resolution No.298 passed by the

Commission on 31.8.1966 it is hereby resolved that the Directors in charge of

the State Offices of the Commission and the Officers in charge of the Sub-

Offices of the Commission in various State are hereby authorised to act for and

on behalf of the Commission and to file or defend civil suits or other

proceedings on behalf of the Commission and also to-lodge criminal

complaints wherever necessary against the delinquent persons concerned.

For these purposes they are further authorised to engage pleaders, file plaints

or written statements, lodge complaint, adduce evidence, make statements

and do all acts and things necessary and also to incur necessary expenditure in

that behalf”.

Sd-

(G.D. Chapatwala)

Director, Commission Cell

7

DIRECTORATE OF LEGAL AFFAIRSKHADI AND VILLAGE INDUSTRIES COMMISSION

IRLA ROAD, VILE PARLE (W), MUMBAI - 400 056.

No. Legal/P.C/F.O/02-03 Date: 18.10.2002

- C I R C U L A R -

Instances have come to the notice of the Directorate of Legal Affairs that the State/ Regional Directors are not giving the required importance to the orders / judgments passed by various courts, which some times result in contempt of court proceedings against the Chairman, C.E.O an other Officers of the KVIC.

It is observed that many a time the court orders are received by the Central Office from the State/Regional Directors at the fag end of the time granted by the Court for its implementation, as a result of which the Central Office is facing great difficulties either in the proper implementation of the court orders or in advising the State/Regional Director to prefer an appeal against the said court order.

In order to over come the present embarrassment in the implementation of the court orders the following steps are suggested:

(i) the State/Regional Director should closely monitor the court cases without fail;

(ii) any communication pertaining to the implementation of the court orders should not be handled in routine manner and the same should be attended with all its seriousness it deserve. The state Director is expected to show initiative and take all steps to protect KVIC’s position;

(iii) as soon as any order for implementation by the KVIC is passed by the court, the State/Regional Director should obtain a copy of the said order through the Advocate of the KVIC and the same should be forwarded to the concerned Industry /Programme Director preferably by name with copy to Director (Legal Affairs) at the Central Office immediately by fax/speed post. It should not be addressed to CEO and put in ‘general dack’;

(iv) if the State/Regional Director feels that the time limit granted by the court for implementation of court order by the KVIC is insufficient, immediate application for extension of time for implementation of the court order should be moved through the Advocate;

(v) the State /Regional Director should constantly pursue the concerned Industry /Programme Directors for the timely implementation of the court orders or in communicating the decision regarding filing of appeal against the court order.

The above guidelines may be followed strictly as the implementation of the court order is the collective responsibility of the concerned State/Regional Director and Industry /Programme Director.

Sd/-Chief Executive Officer

To (1) All State/Regional Directors of the KVIC (2) All Industry/Programme Directors (3) All Dy. CEOs in the Central Office (4) Dy. CEO (N.E. Zone) (5) Chairman Cell (6) CEO Cell

8



No. LA/ELI/2004-05 Date: 10.08.2004

- C I R C U L A R -

Instances have come to the notice of this Directorate that many implementing

agencies of the KVIC are filing cases in various courts, against the actions taken by the KVIC

for their irregular activities, by impleading the Central Vigilance Commission also as a party

to the pet`50ition.

In this context, it is brought to the notice of all concerned that as per Section 11 of the

Central Vigilance Commission Act 2003, the Central Vigilance Commission is vested with

the powers of a Civil Court. According Section 12 of the Act, the Central Vigilance

Commission shall be deemed to be a civil court for the purpose of Section 195 and Chapter

XXVI of the CrPC , 1973 and every proceedings before the Commission shall be deemed to

be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of

Section 196 of the IPC. Similarly, as per Section 15 of the Central Vigilance Commission Act

2003, no suit, prosecution or other legal proceedings shall lie against the Commission, the

Central Vigilance Commissioner, any Vigilance Commissioner, the Secretary or against any

staff of the Commission in respect of any thing which is in good faith done or intended to be

done under the Act.

In view of the above statutory provision, if at all the Central Vigilance Commission or

any of its officers are impleaded as party to any petition by the implementing agencies of

the KVIC, the State/ Divisional Director should bring the aforesaid statutory provision to the

notice of the Court through the Advocate of the KVIC or the Govt. Pleader and get the name

of the Central Vigilance Commission or its officers deleted from the petition.

The compliance of the contents of this circular may be communicated to this

Directorate for appraisal of the position to the Chief Vigilance Officer.

Sd/-

Dy. Chief Executive Officer (L.A.)

To

All State /Divisional Directors

9

OFFICE OF THE COMMISSIONERKHADI AND VILLAGE INDUSTRIES

3, IRLA ROAD, VILE PARLE (W), MUMBAI - 400 056.

No: Legal/Pending Court Cases/F.O/04-05 Date: 23.11.2004

- C I R C U L A R -

A reference is invited to the Circular No.Legal/P.C/F.O/02-03 dated 18.10.2002,

wherein the course of action to be adopted for the implementation of the

orders/judgments passed by various courts are stipulated.

Recently it has been observed that some of the Directorates in the Central Office as

well as some of the field offices are not taking prompt action soon after the receipt of the

petitions filed against the Organisation, which is finally resulting in ex-parte orders against

the Organisation. Similarly it is the practice of most of the Directorates/ Field Offices to

forward the copy of the notices / petitions and also the court orders received from the

courts to the Directorate of Legal Affairs for vetting and opinion only at the fag end of the

time limit granted by the court for appearance/ filing reply/ filing appeal/implementation

of the order etc.

In order to avoid embarrassment and ex-parte orders against the organisation, the

following lines of action are suggested for strict compliance by all concerned:

(i) The notices / copy of the petitions and orders received from the courts should

not be dealt with in a routine manner but should be handled with top most

priority;

(ii) The inward clerk should be given specific instruction that any of the papers

pertaining to court cases should not be kept in the Dak File in a routine manner,

but personally brought to the notice of the In charge of the office soon after the

same is received in the office;

(iii) The In charge of the office should ensure that such papers received from the

courts are immediately handed over to the Dealing Assistant for immediate

action;

(iv) The In charge of the office should personally ensure that prompt action is taken

on such papers like engaging the Advocate for defending the case on behalf of

the Commissioner for KVI, furnishing all the required information to the

Advocate to enable him to properly defend the interest of the Organisation.

(v) The In charge of the office should ensure that wherever the opinion/vetting of

the Directorate of Legal Affairs is required, the same has been done well in

advance and not proceeding with the same at the fag end of the time granted

by the court for necessary action on the part of the Commissioner for KVI.

10

(vi) Except in the case of emergency, no papers pertaining to the court cases should

be forwarded to the Directorate of Legal Affairs for opinion / vetting etc.

without giving one clear week time for proper examination of the matter.

(vii) As per part V of the Standing Order No.1546 dated 10.04.1997, In charges of

the field offices are authorized to file and defend legal cases for and on behalf of

the Commissioner for Khadi & Village Industries. However it has been noticed

that in some cases the In charges of the field offices are again sub- delegating

such powers to their sub-ordinates for signing legal documents such as

affidavits, petitions, plaints, written statements etc. Such act of sub- delegation

may however be avoided as far as possible in respect of court cases and they

must exercise such powers by themselves.

All the In-Charges of the field offices and Directorates in the Central Office are

requested to comply with the aforesaid guidelines strictly in the better interest of the

Organisation. Any lapse on the part of the In Charges in dealing with the court matters will

be viewed seriously and action as deem fit will be initiated for such lapses.

Sd/-

Chief Executive Officer

To

(1) All Industry /Programme Directors

(2) All State /Divisional Directors

11

DIRECTORATE OF LEGAL AFFAIRS COMMISSIONERKHADI AND VILLAGE INDUSTRIES


No:Legal/Legal Circulars/06-07 Date: 07.09.2006

- C I R C U L A R -

Sub: Defending of court cases on behalf of the Commission.

Ref: Circular No.Legal/P.C/F.O/02-03 dated 18.10.2002 and 23.11.2004

*********

Attention is invited to the Circulars referred to above on the captioned subject, wherein the course of action to be adopted for the implementation of the orders / judgments passed by various courts and the method to be followed for handling the court cases are stipulated.

Recently it has been observed that in spite of the clear guidelines issued by the Directorate of Legal Affairs in connection with handling and monitoring of court cases some of the Directorates in the Central Office as well as some of the field offices are not following the said guidelines and not taking prompt action for handling the court cases with all the seriousness it requires, which in turn creating difficulty for the Directorate of Legal Affairs to keep a track on the court cases pending against the KVIC in various courts in the country.

All the In charges of the filed offices and the Directorates in the Central Office are once again directed to follow the guidelines contained in the aforesaid Circulars strictly. Further, it is also requested to ensure that in all the cases in which the Chief Executive Officer and /or the Chairperson of the KVIC is/are impleaded as party/parties, the replies to such petitions should be filed only after getting the reply duly approved by the Chief Executive Officer and /or the Chairperson of the KVIC. Therefore, the final reply prepared in consultation with the Advocate of the KVIC may be forwarded to Directorate of Legal Affairs for obtaining the approval of the Chief Executive Officer and /or the Chairperson before the same is filed in the court. Similarly, all the orders (interim as well as final) passed by the courts in all cases should also be forwarded to the Directorate of Legal Affairs along with the opinion of the advocate. All such court orders must be forwarded at least within 15 days from the date of passing the order, so that further course of action can be decided in the matter with the approval of the competent authority within the time limit. Any lapses on the part of the In Charges in dealing with the court cases will be viewed seriously.

This is issued with the approval of the Chief Executive Officer.

Sd/-

Dy. Chief Executive Officer (L.A) To

(1) All the State / Divisional Director

(2) All the Industry / Pragramme Directors in the Central Office

(3) P.S. to Chairperson

(4) P.S. to C.E.O.

(5) P.S. to F.A.

(6) Director (I.T.) with request to include this Circular in the KVIC web site

12



No:Legal/Circular/08-09 Date: 13.05.2008

- C I R C U L A R -

Sub :- Forwarding of judgement/order of the Court to Central Office in time.

******************

Attention is invited to the Circular No.Legal/PC/FO/02-03 dated 18.10.2002

containing a detailed guidelines regarding steps to be taken by the field offices of the KVIC

on the judgements/orders passed by the Court in various cases filed by and against KVIC.

It was specifically mentioned in the said Circular that as soon as any order for

implementation by the KVIC is passed by the Court, the State/Divisional Director should

obtain a copy of the said order through the Advocates of the KVIC and the same should be

forwarded to the concerned Industry/Programme Director preferably by name with copy to

the Director (Legal Affairs) at Central Office immediately by fax/speed post.

Instances have come to notice that inspite of the above clear cut guidelines, the

State/Divisional offices are not communicating the copy of the judgement / order passed

by the Hon’ble Courts to Central Office in time for taking a suitable decision either to file

appeal/revision well in time or to implement the court order within the time stipulated by

the Court as a result of which many a time the KVIC is unable to file appeal / revision against

the order of the Court but to implement the same in order to avoid contempt due to paucity

of time even though positive result could have been achieved if revision/appeal is filed.

The incharge of the field offices are hereby directed to follow the above guidelines

scrupulously. While forwarding the copy of the judgement / order to the Industry /

Programme Directors and Director (Legal Affairs), they should ensure that copy of the

same is also endorsed to CEO and Chairperson.

Further, all the Incharges of the Industry/Programme Directorates of Central Offices

are also directed to ensure that the files containing the orders and judgement of the Court is

moved before the Competent Authorities within two days with time bound flag on the file

and official dealing with the said file should personally follow-up the same.

Sd/-


To:

1) All State/Regional Directors of the KVIC

2) Zonal Dy. C.E.Os

3) All Industry/Programme Directors at C.O. Mumbai

4) The Director(Publicity )…with instruction to publish the same in the ensuing issue

in a prominent page.

5) Director (I.T.) – to place in the website of the KVIC.

13



No.\LA/Emp.Adv./Circular/08-09 Dt. 17.10.2008

- C I R C U L A R -

Sub: Fee for contesting the cases before various Consumer Redressal Forums – reg.

***

A reference is invited to the Standing Order No. 1652 dated 5.8.2005, wherein the fee to be paid to the Advocates for contesting cases before various Courts in the Country has been prescribed. Inadvertently, the rate of fee to be paid to the advocates for contesting cases before various Consumer Redressal Forums were not separately indicated.

2. With a view to enable the Incharges of the Field Offices to settle the fee of the advocate for contesting the cases before different levels of Consumer Redressal Forums, the following guidelines are prescribed:

a) For contesting the cases before the Dist. Consumer Redressal Forum, the fee prescribed in 1(c) of the Appendix-I to the Standing Order No. 1652 dt. 5.8.05 may be adopted in case of Metropolitan Cities of Mumbai, New Delhi, Kolkata and Chennai.

b) For contesting the cases before the Dist. Consumer Redressal Forum, the fee prescribed in 1(c) of the Appendix-II to the Standing Order No. 1652 dt. 5.8.05 may be adopted in case of other Cities.

c) For contesting the cases before the State Consumer Redressal Forum, the fee prescribed in IV(a) of the Appendix-I to the Standing Order No. 1652 dt. 5.8.05 may be adopted in case of Metropolitan Cities.

d) For contesting the cases before the State Consumer Redressal Forum, the fee prescribed in IV(a) of the Appendix-II to the Standing Order No. 1652 dt. 5.8.05 in case of other Cities.

e) For contesting the cases before the National Consumer Redressal Forum, a lumpsum fee of Rs.25,000/- may be paid.

3. All the Incharge of the Field Offices are requested to strictly regulate the fee of the Advocate for contesting the cases before the Consumer Redressal Forum as per the above rates and the aforesaid fee should be intimated to the Advocates on Panel before entrusting the cases to them. Henceforth request for ex-post facto approval of the Central Office for making payment to the advocates at higher rates will not be entertained.

4. This is issued with the approval of F.A. and C.E.O.

Sd/-

DIRECTOR (Legal Affairs)

ToAll State/Divisional Directors

Copy to:1) Zonal Dy. C.E.Os.2) All Industry/Programme Directors at C.O. Mumbai 3) The Director (Publicity) - with a request to publish the same in the

14



No.Legal/Circular/08-09 Date: 01.07.2009

- C I R C U L A R -

Sub: Monitoring of the court cases and submission of quarterly report – reg.

***

Instructions and guidelines were issued on several occasions in the matter of

monitoring the court cases filed against the KVIC as well as the Union of India and in the

matter of submission of quarterly report.

2. It is regretted to state that inspite of repeated instructions, the field offices are not

following the same and the quarterly reports are not being sent regularly. On

account of non-submission of quarterly report on the pending court cases regularly

by the field offices, the Directorate of Legal Affairs is finding it difficult to furnish the

updated and correct quarterly report on the pending court cases to the Ministry.

3. Recently while taking review of the pending court cases filed against KVIC and the

Union of India, the Ministry of MSME expressed its displeasure over the poor

monitoring of the court cases by the field offices and in non-submission of updated

quarterly report by the field offices. Strict instructions are issued by the Ministry for

strengthening the system of monitoring the court cases which are as under:-

i) Any petition filed in any court of law against the Union of India and/or KVIC

where Ministry of MSME is involved should immediately be brought to the

notice of the Ministry.

ii) If the Ministry is the main Respondent or the issue involves policy matter, the

KVIC should prepare parawise comments and forward the same to the Ministry

alongwith factual details for necessary approval.

iii) Where KVIC is the main Respondent and the Ministry is one of the

Respondents, KVIC should file the counter affidavit preferably only after the

parawise comments have been seen/vetted by the Ministry. If sufficient time

for vetting is not available, KVIC may file counter affidavit but the copy of the

counter affidavit should be immediately sent to the Ministry without fail.

iv) Copy of the counter filed before the Court alongwith the details of the counsel

defending the case including his/her office address, telephone/fax number,

mobile number etc. may invariably be forwarded to the Ministry for record.

15

v) All court cases will need to be closely monitored and the outcome of each

hearing alongwith the date of next hearing will invariably need to be sent to the

Ministry immediately on conclusion of the hearing.

vi) Any development which may involve interest of Union of India/Ministry of

MSME will need to be brought to the knowledge of Ministry immediately.

vii) The Court order/judgment which have to be implemented in a time bound

manner or have to be appealed against should be brought to the notice of

Ministry immediately, so that there is no delay.

4. The information/records specified under point (i), (iv), (v), (vi) and (vii) may be

furnished to the Ministry directly by the Incharge of the field offices under intimation

to the Directorate of Legal Affairs. The other information/records are to be furnished

to the Ministry through the Director, Legal Affairs only.

5. In view of the strict instructions given by the Ministry, the Incharge of the field offices

are requested to ensure that the aforesaid instructions are followed strictly. The

Incharge of the field offices should personally review the court cases every month

without fail and ensure that the status report is forwarded to the Director, Legal

Affairs by e-mail and hard copy on or before 10th of every month. The non-receipt of

the same will be viewed very seriously and appropriate action will be initiated against

the Incharge of the field offices who are in default of the same.

6. The State/Divisional Directors should also ensure that the copy of the petition and

the final reply filed in the Court are also furnished to the Directorate of Legal Affairs as

well as concerned Directorates in the Central Office. It is also the responsibility of the

Industry/Programme Director in the Central Office to follow up the matter with the

field offices to ensure that the court cases pertaining to their Directorates are being

defended properly for protecting the interest of the KVIC.

7. In all the contempt of court matters, the Incharge of the field offices should

personally monitor the case and invariably attend the court on all the dates of hearing

and the development taken place on each hearing should be intimated to the Chief

Executive Officer directly and also Director, Legal Affairs. The responsibility in such

cases should not be shifted to lower level functionary, except on exceptional

circumstances with the approval of the Chief Executive Officer.

8. In State/Divisional Offices, Nodal Officer for Legal Affairs should be nominated who

should be a competent officer and having rank not less than a Gazetted Officer.

Wherever Gazetted Officers are not available, the Director I/C himself shall perform

the duties of Incharge of Legal Affairs and ensure that proper follow up is done in each

and every case.

16

9. The instructions contained in the circular should be complied with strictly by all

concerned and any lapses in the matter shall be viewed seriously and strict action as

deem fit will be initiated.

(J.S. MISHRA)

CHIEF EXECUTIVE OFFICER

To

1) All State /Divisional Directors of the KVIC


17



D.O.No.Legal/Circular/08-09 Date: 30.09.2009

Dear Sir,

The Ministry of MSME while reviewing the court cases pending in various Courts in the country against the KVIC and the Ministry, on the basis of the information furnished by the KVIC, expressed its displeasure about the poor monitoring of the cases and the information system that are being adopted by the field offices of the KVIC.

2. On a proper scrutiny of the information pertaining to the pending court cases furnished by various field offices, it is observed that complete and sensible information relating to the cases are not being furnished by most of the offices. It is very difficult to make out the nature of the case, its present position, interim orders in the matter etc. In the column pertaining to subject matter most of the field offices are simply writing ‘service matter / margin money case / recovery matters’ etc. It is very difficult to find out the facts and circumstances of the case from the description given.

3. A scrutiny of the statement furnished by most of the field offices clearly reveals that the information is furnished in a very casual manner and no responsible officer including the State/Divisional Director is bothered to check the same before forwarding the same to the Director, Legal Affairs. On account of the lack of adequate manpower in the Directorate of Legal Affairs, the Directorate of Legal Affairs used to forward the information furnished by the field offices to the Ministry on the good faith that the information furnished by the field offices are in order. However, it proved disastrous while the Ministry strongly criticized the incomplete information furnished by the KVIC.

4. In order to ensure proper monitoring of the court cases and furnishing of correct and uptodate complete information relating to the same by the field offices, a need has been felt to obtain a certificate from the Incharge of the field offices, alongwith the statement of pending court cases, to the effect that the State/Divisional Director concerned has personally verified the records pertaining to the court cases and the information furnished is correct, complete and uptodate in all respects.

5. In view of the above, you are requested to furnish the aforesaid certificate invariably with the statement of pending court cases to the Director, Legal Affairs. In case the information furnished by your office relating to the court cases is found to be incorrect or incomplete or based on earlier status and not uptodate the responsibility will be fixed upon you and appropriate action as deemed fit will be initiated against you. The format and periodicity for forwarding the information will continue to be the same as communicated by the Directorate of Legal Affairs earlier.

With regards, Yours Sincerely (J. S. MISHRA) CHIEF EXECUTIVE OFFICER

Shri ___________________State/Divisional Director,Khadi and V.I. Commission,

18


3, IRLA ROAD, VILE PARLE (WEST), MUMBAI - 400 056.

No:LA/Emp.Adv./2015-16 Date: 10.06.2015

STANDING ORDER NO. 1738

The existing system of engagement of Advocates by the field as well as Central Office

for defending the court cases and rendering legal opinion has been reviewed by the thCommission in its meeting held on 25 November, 2009 and it has been decided to

streamline the system with a view to ensure effective handling of court cases and other

legal issues easily by introducing a viable system by making suitable modifications in the

existing system.

thAccordingly, in supersession of the Standing Order No. 1695 dated 13 January,2010

issued by the Directorate of Legal Affairs on the subject, a revised scheme namely “Panels of stAdvocates and Advocate Fees Scheme 2015” is introduced with effect from 1 June,2015.

The Scheme is enclosed to this Standing Order as Appendix - A for strict compliance by all

concerned.

Sd/-


To:

1) All the State/Divisional Directors 2. All Zonal Dy. CEOs of KVIC. 3. All Directors in the Central Office, KVIC, Mumbai-56. 4. Director (Publicity) with a request to publish this Standing Order in the ensuing

issue of “Jagriti”. 5. Hindi Officer, Hindi Cell, KVIC, Mumbai-56 with a request to issue Hindi version of

this Standing Order. 6. Director (I.T.), KVIC, Mumbai-56 with a request to include the Circular in the Website

19

APPENDIX - A

KHADI AND VILLAGE INDUSTRIES COMMISSION3, IRLA ROAD, VILE PARLE (WEST), MUMBAI - 400 056.

KHADI AND VILLAGE INDUSTRIES COMMISSION’S PANELS OF ADVOCATES AND

ADVOCATES FEES SCHEME, 2015 -

1) SHORT TITLE, EXTENT AND COMMENCEMENT -

(i) This scheme may be called the Khadi and Village Industries Commission (Panels

of Advocates and Advocates Fees) Scheme, 2015;

(ii) This scheme shall apply to all the field offices of the Khadi & Village Industries

Commission (KVIC) as well as the Central Office;

(iii) All the provisions of this scheme shall come in to force w.e.f. 01.07 .2015.

2) CONSTITUTION OF PANEL -

(i) There shall be constituted three panels of Advocate in each State Office and

Divisional Office of KVIC as well as Central Office separately for rendering

opinion on legal issues and contesting the court cases before various courts in

the State on (a) civil matters, (b) criminal matters and © labour/services

matters.

(ii) Each panel for rendering legal opinion and contesting the cases mentioned in (i)

above shall consist of not more than two Advocates. However, considering the

exigencies of work, the number of advocates on any Panel may be extended

with the approval of the Chief Executive Officer of KVIC.

(iii) No Advocate will be enrolled on more than one Panel.

(iv) In the case of small States like Goa, Pondichery, N.E. States etc. the Chief

Executive Officer may after assessing the quantum of cases reduce the number

of Advocates on each panel.

3) ELIGIBILITY -

For being eligible to be enrolled on a panel, an advocate shall have at least ten years

standing practice at the bar. The mere fact of having ten years of experience does not

confer any right on an advocate to get enrollment in the panel. KVIC reserves the

right to accept or reject any application considering the merit of the case and/or

without assigning any reason.

4) MODE OF ENROLLMENT -

(i) An advertisement inviting applications from the advocates possessing the

requisite experience shall be published in one or two Newspapers having wide

circulation in the States by the State/Divisional Offices for selecting suitable

advocates from amongst the applicants on merit. The format of application is

annexed hereto as Form-I.

20

(ii) The State/Divisional Directors have to constitute a Screening Committee under

the chairmanship of Zonal Dy. CEO consisting of following members for

scrutinizing the applications and recommending the names of advocate to be

included in the respective panels –

a) A retired judge of District Court or High Court.

b) An officer not below the rank of Under Secretary of the Ministry of Law of

the State Government posted at that station.

c) Officer In-charge of the Legal Department of the State KVI Board.

d) State/Divisional Director, Convener

(The travelling expenses of (a) above shall be borne by the concerned

State/Divisional Offices.)

(iii) Enrollment of advocates on each panel for the State Offices and Divisional

Offices of KVIC shall be approved by the F.A., CEO and Commissioner/Chairman

in the Central Office on the basis of the recommendations of the Screening

Committee constituted for the purpose by the State/Divisional Offices.

5) TENURE OF THE PANEL -

(i) Enrollment of an Advocate on each Panel shall be for a term of five years,

extendable by another one year at the discretion of KVIC.

(ii) In case, if the State/Divisional Director/Director (Legal Affairs) of KVIC is of the

view that any Advocate on panel has committed breach of any of the conditions

laid down in Clause VI of this scheme or that due to habitual lapses on the part

of the Advocate to appear before any Court or Tribunal, any ex-parte decisions

were given against KVIC or if the State/Divisional Director/Director (Legal

Affairs) is of the opinion that the performance of the Advocate on any Panel is

not satisfactory, the name of such Advocate may be excluded from the Panel by

giving one month notice. The decision of KVIC in this matter shall be final and

binding on the Advocate.

6) TERMS AND CONDITIONS OF ENROLLMENT -

An Advocate who accepts enrollment on any panel shall be deemed to have

undertaken to abide by the following conditions Viz.

(i) During his term, he shall not appear in any court or tribunal against KVIC.

(ii) Every Advocate enrolled on panel shall be paid fee for rendering legal opinion

and the cases handled by him as per the scale of fee mentioned in Schedule at

Annexure–I, II & III as the case may be. The Advocates on panel are not entitled

for any retainer fee.

(iii) Except on such grounds as the State/Divisional Director/Director (Legal Affairs)

find to be reasonable, he shall not refuse to give any legal opinion or accept any

brief on behalf of KVIC when requested to do so.

21

(iv) He shall submit to the State/Divisional Director/Director (Legal Affairs)

quarterly return in Form-II annexed hereto relating to the cases entrusted to

him.

(v) He shall furnish such information as may be required from time to time by the

State/ Divisional Director/Director (Legal Affairs) in respect of the cases

entrusted to him.

(vi) Any Advocate on panel can withdraw himself from the panel by giving one

month’s notice in writing to the Chief Executive Officer of KVIC as well as the

concerned State/Divisional Director/Director (Legal Affairs).

7) ASSIGNMENT OF CASES -

(i) Upon constitution of the panel of Advocates, the State/Divisional

Director/Director (LA) shall, considering the nature of the cases, obtain legal

opinion from the respective panel Advocates as and when required and make

payment for such legal opinion as per the fee prescribed in the Schedule

annexed hereto as Annexure-IV.

(ii) In the matter of contesting court cases on behalf of KVIC, the State/Divisional

Director/Director (LA) shall, after considering the nature of the cases, assign

such cases to the Advocates on Panel and also make payment as per the fee

prescribed in the schedule.

(iii) In case, if the State/ Divisional Director/Director (LA) is of the view that the

court case is to be entrusted to any other Advocate outside the panel (for which

the reasons to be recorded in writing and approval of the Chief Executive

Officer is to be obtained), they are free to do so, but the payment of fee should

be restricted to the amount prescribed in the Schedule.

8) METHOD OF PAYMENTS TO ADVOCATES -

(i) The Advocate on the panel shall prefer his fee by submitted the bill in duplicate

alongwith advance stamped receipt to the respective State/Divisional Office

and in the case of Central Office to the Director, Legal Affairs, as per the manner

specified in the Schedule of Fees.

(ii) The payment of fee shall be regulated as under -

(a) 50% of fee shall be on filing of the plaint/complaint/written

statement/affidavit in reply in respect of suits, writs, labour cases and

appeals;

(b) 50% shall be paid after final disposal of the respective cases;

(c) The payment in respect of caveat applications, application for transfer of

cases and formal appearance before the court where KVIC is not a

necessary party shall be paid in lumpsum;

22

(d) If any pending suits, appeal, writ or other proceedings are transferred to

any other advocate, the fee payable to the advocate to whom such suits,

appeal, writ or other proceedings are transferred shall be the total

amount mentioned in the Schedule as reduced by the amount already

paid to the former advocate;

(e) No separate fee shall be paid for vacating ex-parte injunction or

status–quo orders of similar nature or for restoration of any case in case,

if the case is dismissed for non-appearance of the advocate or any other

lapses on his part.

(iii) On receipt of a bill from an Advocate on the Panel, the State/Divisional

Director/Director (LA) shall scrutinize and certify the claim, make the payment

and thereafter forward the same to the Directorate of Adm-III, Central office,

Mumbai for recoupment.

(iv) The State/Divisional Directors/Director (LA) shall incur the expenditure on legal

matters out of Non-plan Contingency Fund sanctioned by the Directorate of

Administration.

9) T. A. AND D. A. -

If any advocate undertakes journey outside the head quarters in connection with any

matter referred to him by KVIC, he shall be entitled to claim reimbursement of the

traveling expenditure incurred by him (both ways) subject to production of bill and

daily allowance in the following manner –

A) For the journey by Train - First Class/ II A/c fare. Local

conveyance shall be restricted to

Rs.300/- per day.

B) For journey by any other means - Actual fare or restricted to eligible

train fare, whichever is less. Local

Conveyance shall be restricted to

Rs.300/- per day.

C) Daily allowance - As admissible to an officer of KVIC

having the Grade Pay of Rs.6600/-

10) PROVISIONS FOR ENHANCEMENT OF FEE TO THE ADVOCATES OUTSIDE THE PANEL -

The State/ Divisional Directors may entrust any case to any Senior Advocate outside

the panel or to a firm or Solicitor in the following cases -

(i) If any case involves issues of utmost importance, prestige and serious financial

implications, for having regard to the urgency and sensitive nature of the case,

it is necessary to engage any Senior Advocate from outside the panel;

23

(ii) The remuneration to be paid to such Advocate for such cases may be

determined as under -

(a) The remuneration exceeds the prescribed fee and goes up to 50% of the fee

prescribed in the Schedule of fees, the approval of the concerned Zonal Dy.

Chief Executive Officer should be obtained. However, such enhancement of fee

is permissible only for two occasions in a year. For subsequent cases of

enhancement, the approval of Chief Executive Officer should be obtained.

(b) If the remuneration exceeds 50% of the fee prescribed in the Schedule of fees,

the approval of the Chief Executive Officer, KVIC Mumbai should be obtained.

Encl: Annexure - I, II, III Form No.I & II

Director (Legal Affairs)

24

ANNEXURE - I

SCHEDULE OF FEE FOR ADVOCATES (GENERAL)

NATURE OF CASE FEE (LUMPSUM)

I. Civil suits and other proceedings in Lower Courts –

(a) Proceedings for execution of court’s Rs.5000/- inclusive of clerkage and other

Decrees or orders Misc. expenses.

(b) Filing of Caveat or other Misc. Rs.1500/- inclusive of clerkage and other

Applications Misc. expenses & Rs.750/- per application

in case the number of applications Exceeds

one.

(c) Other suits Rs.10000/- inclusive of clerkage and other

Misc. expenses.

II. Appeals –

(a) Appeal against interlocutory Rs.5000/- inclusive of clerkage and other

orders Misc. expenses.

(b) Appeal against final orders passed Rs.10000/- inclusive of clerkage and other

expenses. Misc. in the suits and other proceedings.

III. Labour Cases –

(a) Cases where dispute involves Rs.8000/- inclusive of clerkage and other

General issues relating to one Misc. expenses.

individual worker

(b) Cases where dispute involves Rs.10000/- inclusive of clerkage and other

General issues relating to more Misc. expenses.

categories of workers

IV. In the High Court –

(a) Writs, suits and appeal Rs.12500/- + clerkage and other Misc.

expenses subject to a maximum of

Rs.1000/-.

(b) Payment to Advocate on record Rs.3000/-

where Sr. Counsel is engaged

(c) Filing of Caveat or other Rs.1500/- inclusive of clerkage and other

Misc. Applications Misc. expenses & Rs.750/- per application

in case the number of applications exceeds

one.

(d) For filing application for transfer of Rs.4000/- inclusive of clerkage and other

cases from one court to another Misc. expenses.

and other misc. applications

(e) For formal appearance in a case Rs.5000/- inclusive of clerkage and other.

where KVIC interest is not involved misc. expenses.

25


V. In the Consumer Court –

(a) Consumer cases before District Rs.8000/- inclusive of clerkage and other

Redressal forum misc. expenses.

(b) Consumer cases before State Rs.10000/- inclusive of clerkage and other


(c) Consumer cases before National Rs.25000/- inclusive of clerkage and other


VI. In the Debt Recovery Tribunal –

(a) Original application Rs.10000/-inclusive of clerkage and other

misc. expenses.

(b) Appeal Rs.10000/- inclusive of clerkage and other

misc. expenses.

VII. Verification of title deeds And other relevant documents –

(a) In connection with E.M Rs. 1000/- per Title Deed.

(b) In connection with execution Rs. 1000/- per Surety Bond.

of Surety bond/s

VIII. Drafting of notices/Documents –

(a) Drafting of notices and reply Rs.1000/- per case.

to the Advocate notice

(b) Drafting of deeds and documents Rs.1500/- per deed.

XI. Fee for consultation and rendering legal opinion –

(a) Simple consultation with Rs.1000/-

recorded views

(b) Consultation on important Rs.1500/-

matters involving sensitive

issues like policy matters,

interpretation of the provisions

of the Act & Rules etc.

26

ANNEXURE - II

SCHEDULE OF FEE FOR ADVOCATES IN CITIES OF KOLKATA, CHENNAI,

BANGALORE AND HYDERABAD


I. Civil suits and other proceedings in Lower Courts -

(a) Proceedings for execution of Rs.8000/- inclusive of clerkage and other

court’s Decrees or orders Misc. expenses.

(b) Filing of Caveat or other Rs.1500/- inclusive of clerkage and other

Misc. Applications Misc. expenses & Rs.750/- per

application in case the number of

applications Exceeds one.

(c) Other suits Rs.15000/- inclusive of clerkage and other

Misc. expenses

II. Appeals -

(a) Appeal against interlocutory Rs.8000/- inclusive of clerkage and other

orders Misc. expenses

(b) Appeal against final orders Rs.15000/- inclusive of clerkage and other

passed in the suits and other Misc. expenses

proceedings

III. Labour Cases -

(a) Cases where dispute involves Rs.12000/- inclusive of clerkage and other

General issues relating to one Misc. expenses

individual worker

(b) Cases where dispute involves Rs.15000/- inclusive of clerkage and other

General issues relating to more Misc. expenses


IV. In the High Court -

(a) Writs, suits and appeal Rs.22000/- + clerkage and other Misc.

expenses subject to a maximum of

Rs.1000/-

(b) Payment to Advocate on record Rs.5000/-


(c) Filing of Caveat or other Rs.2000/-inclusive of clerkage and other

Misc. Applications Misc. expenses & Rs.750/- per application


one

27


(d) For filing application for transfer Rs.4500/-inclusive of clerkage and other

of cases from one court to another Misc. expense

(e) For formal appearance in a case Rs.8000/- inclusive of clerkage and other

where KVIC interest is not involved misc. expenses.

V. In the Consumer Court –

(a) Consumer cases before District Rs.12500/- inclusive of clerkage and other


(b) Consumer cases before Rs.18000/- inclusive of clerkage and other

State Redressal forum misc. expenses.

(c) Consumer cases before Rs.25000/- inclusive of clerkage and other

National Redressal forum misc. expenses.

VI. In the Debt Recovery Tribunal –

(a) Original application Rs.15000/-inclusive of clerkage and other

misc. expenses.

(b) Appeal Rs.15000/- inclusive of clerkage and other

misc. expenses.

VII. Verification of title deeds And other relevant documents –

(a) In connection with E.M Rs. 1000/- per Title Deed

(b) In connection with execution Rs. 1000/-per Surety Bond

of Surety bond/s

VIII. Drafting of notices/Documents -

(a) Drafting of notices and reply Rs.2000/- per case

to the Advocate notice

(b) Drafting of deeds and documents Rs.3000/- per deed

XI. Fee for consultation and rendering legal opinion -

(a) Simple consultation with Rs.1500/-

recorded views

(b) Consultation on important matters Rs.2000/-

involving sensitive issues like policy

matters, interpretation of the

provisions of the Act & Rules etc.

28

ANNEXURE-III

SCHEDULE OF FEE FOR ADVOCATES IN OTHER CITIES

OTHER THAN METROPOLITAN CITIES


I. Civil Suits and Other Proceedings in Lower Courts

(a) Proceedings for execution of court's Rs. 6250/- Inclusive of Clerkage and Other

Decrees or orders Misc. Expenses

(b) Filing of Caveat or other Rs. 1250/- Inclusive of Clerkage and Other

Misc. Applications Misc. Expenses &

Rs. 625/- per application in case the

number of applications exceeds one.

(c ) Other suits Rs. 20000/- +Clerkage and Other

Misc. Expenses Rs. 3000/-

II. Appeals

(a) Appeal against Rs. 6250/- Inclusive of Clerkage and Other

Interlocutory orders Misc. Expenses

(b) Appeal against final orders Rs. 20000/- + Clerkage and Other

passed in the suits and Misc. Expenses Rs. 3000/-

other proceedings

III. Labour Cases

(a) Cases where dispute involves Rs. 15000/- Inclusive of Clerkage and Other

General issues relating to one Misc. Expenses

Individual Worker

(b) Cases where dispute involves Rs. 17000/- Inclusive of Clerkage and Other

General issues relating to more Misc. Expenses


IV. In the High Court

(a) Writs, suits and appeal Rs. 25000/- +Clerkage and Other Misc.

Expenses - actual amount incurred,

subject to a maximum of

Rs.5000/-

(b) Payment to Advocate on record Rs. 3500/-


(c) For filing appearance in a case Rs. 6250/- Inclusive of Clerkage and Other

where KVIC interest is not involved Misc. Expense

29


(d) For filing application for transfer of Rs. 3750/- Inclusive of Clerkage and Other

cases from one court to another Misc. Expenses.

(e) For filing caveat or other Rs. 3000/- Inclusive of Clerkage and Other

misc. applications Misc. Expenses & Rs.750/- Per application


one

V. Verification of title deeds and other relevant documents

(a) In connection with E.M. Rs. 600/- Per Title Deed

(b) In connection with execution of Rs. 600/- Per Surety Bond

Surety bond/s

VI. Drafting of notices/Documents

(a) Drafting of notices and reply to the Rs. 1250/- Per Case

Advocate notices

(b) Drafting of deeds and documents Rs. 2500/- Per Deed

VII. Fee for consultation and rendering legal opinion

(a) Simple consultation with recorded Rs. 1250/-

views:

(b) consultation on important matters Rs. 1750/-




30

ANNEXURE-IV

SCHEDULE OF FEE FOR ADVOCATES IN THE CITY OF MUMBAI


I. Civil Suits and Other Proceedings in Lower Courts

(a) Proceedings for execution of Rs. 3750/- Inclusive of Clerkage and Other

court’s Decrees or orders Misc. Expenses

(b) Filing of Caveat or other Rs. 1250/- Inclusive of Clerkage and Other


Rs. 625/- per application in case the

number of applications exceeds one.

(c ) Other suits Rs. 7500/- Inclusive of Clerkage and Other

Misc. Expenses

II. Appeals

(a) Appeal against Interlocutory orders Rs. 3750/- Inclusive of Clerkage and Other

Misc. Expenses

(b) Appeal against final orders passed Rs. 7500/- Inclusive of Clerkage and Other

in the suits and other proceedings Misc. Expenses

III. Labour Cases

(a) Cases where dispute involves Rs. 6250/- Inclusive of Clerkage and Other

General issues relating to one Misc. Expenses

Individual Worker

(b) Cases where dispute involves Rs. 8750/- Inclusive of Clerkage and Other

General issues relating to more Misc. Expenses


IV. In the High Court

(a) Writs, suits and appeal Rs. 10000/- Inclusive of Clerkage and

Other Misc. Expenses

Rs. 2500/-

(b) Payment to Advocate on record Rs. 3750/- Inclusive of Clerkage and Other

where Sr. Counsel is engaged Misc. Expenses

(c) Filing of Caveat or other Rs. 1750/- Inclusive of Clerkage and Other


Rs. 625/- Per application in case the

number of applications exceeds one

(d) For formal appearance in a case Rs. 3750/- Inclusive of Clerkage and Other

where KVIC interest is not involved Misc. Expenses.

31


(e) For filing application for transfer of Rs. 1250/- Inclusive of Clerkage and Other

cases from one court to another Misc. Expenses &

Rs. 625/- Per application in case the

number of applications exceeds one

V. Verification of title deeds and other relevant documents

(a) In connection with E.M. Rs. 500/- Per Title Deed

(b) In connection with execution of Rs. 500/- Per Surety Bond

Surety bond/s

VI. Drafting of notices/Documents

(a) Drafting of notices and reply to the Rs. 600/- Per Case

Advocate notices

(b) Drafting of deeds and documents Rs. 1250/- Per Deed

VII. Fee for consultation and rendering legal opinion

(a) Simple consultation with recorded Rs. 600/-

views:

(b) consultation on important matters Rs. 900/-




32

FORM NO. I

FORMAT OF APPLICATION

APPLICATION FOR ENROLMENT IN THE PANEL OF ADVOCATES OF THE KHADI AND VILLAGE

INDUSTRIES COMMISSION IN RESPECT OF ITS STATE/DIVISIONAL OFFICE/CENTRAL OFFICE

AT_____________________________ (Kindly see Annexure-I)

1. Name of the Advocate in full

2. Age and date of birth

3. Address for communication

(with Telephone/Mobile/Fax No.

and Email Address)

4. Educational Qualifications

5. Registration number and date of

registration with the Bar Council

6. No. of years of experience

7. No. of cases contested at

a. High Court

b. District Courts

c. Subordinate Courts

d. Consumer Courts

e. Labour Court

f. Tribunals

8. Name of the Court in which

mostly appearing

7. Area of Specialization (with details)

8. Number of cases handled so far and

nature of cases

9. Details of major clients

10. Details of court cases won and

reported in the Law Journals

11. Names and addresses of two eminent

personalities for reference

Place:

Date:

Signature

Note: For any other details attach separate sheet.

33

FORM NO.II

FORMAT OF QUARTERLY RETURN TO BE SUBMITTED

BY THE PANEL ADVOCATES.

Quarterly report for the quarter ending………………………

Sr. Details of the Name of court/s Nature Interim Present No. of RemarksNo. cases entrusted where cases of the order if Status cases are filed cases any, of the disposed passed case of

34



No.LA/Circular/2010-11 Date: 12.07.2010

- C I R C U L A R -

Sub: Jurisdiction of Courts for initiating legal proceedings against KVIC- reg.

***

All the institutions, beneficiaries, borrowers or recipients of grants from the

Commission, who have executed security documents in favour of the Commission, are

intimated that the relationship between the Commission and them shall be governed by

the following rule:-

“Any difference of opinion or dispute between the Commission and the

beneficiary/borrower/grantee institution/person relating to any matter, contractual or

otherwise, shall be subject to the jurisdiction of Court in Mumbai alone to the exclusion of

all other courts, notwithstanding the place of business or the situation of the property of

the beneficiary/borrower/grantee institution/person being at any place in India”.

Sd/-


To

All State/Divisional Directors- with a request to bring the content of the circular to the

notice of all the institutions functioning under their jurisdiction.

Copy to:

1) Zonal Dy. C.E.Os.


3) The Director (Publicity) - with a request to publish the same in the ensuing issue of

the Jagriti in a prominent page.

4) Director (I. T)- to place in the web-site of the KVIC.

35


3, IRLD ROAD, VILE PARLE (W), MUMBAI 400 056.

No. LA/OO/MCC/MIN./2010-11 Date: 08.10.2010

OFFICE ORDER NO. 2063

Sub: Appointment of Nodal Officer for Monitoring of the court cases - reg.

***

It is a matter of grave concern that inspite of several instructions, the field offices are

not properly monitoring the court cases and furnishing the information regarding the court

cases properly in the format prescribed by the Directorate of Legal Affairs. On account of

non-receipt of correct and uptodate information regarding the pending court cases from

the field offices, the Directorate of Legal Affairs is not in a position to furnish complete and

correct information to the Ministry and the Ministry has also expressed its displeasure in

the matter on more than one occasion.

2. The Ministry of MSME vide its letter dated 4th October, 2010, while expressing its

concern over the poor monitoring of the court cases by the KVIC, instructed that a

Nodal Officer should be designated in every field offices to monitor the court cases

concerning the KVIC and to furnish weekly progress report on pending court cases

wherein the interest of the Ministry of MSME is involved or the Union of India is

impleaded as one of the Respondents.

3. In compliance of the aforesaid directives of the Ministry, the concerned In-charges of

the field offices are designated as Nodal Officers in their respective offices for

monitoring the court cases concerning the KVIC and to furnish weekly progress

report on the cases in which Union of India is a party or the interest of MSME is

involved to the Ministry through the Resident Representative, KVIC New Delhi and

also to liaison with the Ministry in the matter. In-charges of the field offices are

directed to be more careful and serious in handling the court matters and furnishing

timely information thereon in the format prescribed.

4. The Nodal Officer so appointed has to ensure that copy of all the petitions filed

against KVIC, wherein Union of India is also impleaded as Party should be forwarded

to the Ministry, alongwith the parawise comments on the petition, through the RR,

New Delhi and get the approval of the Ministry on the parawise comments before

final reply is filed in the Court. State/Divisional Directors should also ensure that the

interest of the Union of India is protected in every case and find out whether Central

Govt. Standing Counsel for defending the interest of the Union of India is engaged by

the Branch Secretariat of the Law Ministry or not through the Panel Advocate of the

KVIC, who is defending the case on behalf of the KVIC.

5. In case a Central Govt. Standing Counsel is engaged in a matter on behalf of the Union

of India, all the necessary records pertaining to the case along with the approved

36

parawise comments should be furnished to him to enable him to defend the matter.

In case, no Central Govt. Standing Counsel is appointed, the advocate of the KVIC may

be instructed to defend the interest of the Union of India also and it must be

specifically mentioned in the counter affidavit that the same is filed on behalf of the

KVIC as well as the Union of India. The orders, including interim orders, if any, passed

by the court in any case must also be intimated to the Ministry immediately.

6. Apart from furnishing the weekly progress report as aforesaid to the Ministry, the

Nodal Officer must ensure that the details of pending court cases are furnished to the

Director, Legal Affairs on or before 7th day of every month in the prescribed format

already circulated along with a certificate of the Nodal Officer certifying that a correct

and complete information regarding all the pending court cases concerning his office

has been furnished and there are no lapses in handling the court cases and he is

properly monitoring all the court cases pertaining to his office.

7. The compliance of the directives contained in this circular may be ensured by all

concerned and for any lapses in handling the court cases or in furnishing the weekly

progress report to the Ministry concerning the court cases where Union of India is a

party and monthly progress report of all the pending court cases to the Director, Legal

Affairs, the Incharge of the concerned field office, being the Nodal Officer will be held

personally responsible.

Sd/-


To

1. All State/Divisional Directors of the KVIC

2. The Director (Legal Affairs), KVIC, Mumbai

3. The Resident Representative, KVIC, New Delhi.

37

DIRECTORATE OF LEGAL AFFAIRSKhadi & Village Industries Commission,

3 - Irla Road, Vile Parle (West),

MUMBAI - 400 056.

Telefax : +91 022 671 35 38

No. LA/Legal Circular/ICADR/2010-11 Date: 28.10.2010

- C I R C U L A R -

Sub: Adoption of Alternative Dispute Resolution method through ICADR-reg.

***

As part of speeding up the justice dispensing system in India, the International Center

for Alternative Dispute Resolution (ICADR) has been established as an autonomous

organization under the aegis of the Ministry of Law, Justice & Company Affairs, Govt. of India.

2. The main objectives of the ICADR are the propagation and promotion of different

modes of Alternative Dispute Resolution for the settlement of domestic and

international dispute, providing of administrative and other support services for

holding conciliation, mediation and arbitration proceedings, appointment of

conciliators, mediators, arbitrators etc.

3. The Department Related Parliamentary Standing Committee on Personnel, Public

Grievances, Law and Justice recommended that in order to fully utilize the expertise

of ICADR in Arbitration, Mediation and Conciliation matters, all the Govt.

departments and Public Sector Undertakings should include a clause in the

agreement entered into with other parties which provides for referring matters to

ICADR for arbitration in the event of dispute, instead of going to the Court/s directly.

4. In view of the aforesaid Parliamentary Standing Committee, the Ministry of MSME,

Govt. of India vide memorandum dt. 21st June, 10, had issued an office

memorandum directing the KVIC to comply with the above mentioned

recommendation of the Parliamentary Standing Committee.

5. All the Incharges of the field offices and the Industry/Programme Directors in the

Central Office are hereby directed to take note of the above instructions and ensure

that the provisions for referring the matters to ICADR for arbitration for the

settlement of any dispute arising out of the contract is included in all the

agreements/contracts entered into by the KVIC with other parties in connection with

any matter. The model arbitration/conciliation clause to be incorporated in all the

future contracts/agreements is attached herewith as Annexure-I.

6. The contents of this circular may be followed scrupulously by all concerned.

Encl: Annexure-I

Sd/-


38

ANNEXURE-I

MODEL CONCILIATION/ARBITRATION CLAUSE

“If a dispute arises out of or in connection with this contract/agreement, or in respect

of any defined legal relationship associated herewith or derived therefrom, the parties

agrees either to seek an amicable settlement of that dispute by conciliation under the

ICADR Conciliation Rules, 1996 or to submit that dispute to Arbitration under the ICADR

Arbitration Rules, 1996.

The authority to appoint Conciliator/Arbitrator shall be the International Centre for

Alternative Dispute Resolution.

The International Centre for Alternative Dispute Resolution will provide

administrative service in accordance with the ICADR Conciliation/Arbitration Rules, 1996.

The place of conciliation/arbitration proceedings shall be _________________”.

39



MUMBAI - 400 056.

Telefax : +91 022 671 35 38

No. LA/L.Cir/Monitoring of Court Cases/10-11 Date: 25.11.2010

- C I R C U L A R -

Sub: Timely implementation of the court orders – reminder reg.

Various circulars on the captioned subject were issued from time to time to sensitize

the field offices about the necessity of taking prompt action immediately on receipt of any

court order either to implement the same or to appeal against it in the appropriate court.

2. Specific guidelines were issued vide Circular dated 01.07.2009 to all concerned to pay

more attention to those cases in which the Union of India is also a party and the

instructions communicated by the Ministry of MSME in this regard were also

communicated therein.

3. Inspite of the above, it is a matter of grave concern that the field offices are not paying

the desired attention in handling the court cases and more particularly in the timely

implementation of court orders and as a result several contempt notices and contempt

petitions arising out of the non-implementation of the court orders are being received.

4. Recently, the Secretary to the Ministry of MSME, after reviewing the position of the

court cases of the KVIC, has issued strict instruction that “a close watch may be kept

on court cases. Their review must be done at the appropriate levels. I will not

appreciate any contempt notices arising out of the non-implementation of the court

orders. They should be either complied with, if in order, or should be appealed

against well in time”.

5. In view of the aforesaid instructions of the Secretary, Ministry of MSME, all the In

charges of the field office and Directorates in the Central Office are once again

reminded to be very careful and cautious in the proper monitoring of the court cases

and in the timely implementation of the court orders, if the same is in order, or to file

appeal against it well in time.

6. It is also made clear that for any contempt petitions arising out of the non-

implementation of the court orders, the concerned Director, I/c will be held

personally responsible for the same.

Sd/-

(J.S. MISHRA)


To

1. All State/Divisional Directors of the KVIC

2. All the Directors I/c of the Directorates in the Central Office

40

CHAPTER – II

CREATION OF EQUITABLE MORTGAGE

1. Meaning and Definition:

The mortgage is defined under Section 58 of the Transfer of Property Act as “a Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability”.

The person who is transferring the interest is called ‘the mortgagor’ and the person to whom the interest is transferred is called ‘the mortgagee’ and the principal money and interest of which payment is secured for the time being is called ‘the mortgage money’ and the instrument (if any) by which the transfer is effected is called ‘a mortgage deed’.

2. Kinds of Mortgages:

According to the Transfer of Property Act, there are six types of mortgages. They are:

1. Simple mortgage2. Mortgage by condition of sale3. usufructuary mortgage4. English mortgage5. Mortgage by deposit of title deeds 6. Anomalous mortgage

3. Requisites of a Valid Mortgage:

i) There must be an instrument in writing and registered when the mortgage is simple mortgage or any other kind of mortgage, except Equitable Mortgage, when the amount secured is Rs.100/- or upwards. However, in the case of simple mortgage, even if the amount secured is less than Rs.100/-, registration is compulsory since there is no delivery of possession.

ii) Signature of the mortgagor.

iii) Attestation of the signature of the mortgagor by at least two witness

iv) If the money secured by the mortgage is less than Rs.100/-, all types of mortgages, except Equitable Mortgage, must be effected either by a registered instrument or by delivery of possession.

4. Kind of Mortgage Adopted by the Commission:

As per Rule 9 of the KVIC Loan Rules, a loan will be granted to the borrower on mortgaging immovable property and/or pledging and/or hypothecating movable properties as security for the loan applied for.

41

The KVIC Loan Rule is silent regarding the type of mortgage to be accepted by the Commission. But Commission has taken a policy decision to adopt the Mortgage by deposit of title deeds ,the equitable mortgage as security for the loan advanced to the borrowers. The salient features of the equitable mortgage are as under:

i) There must be a debt. The debt can be existing or a future or partly existing and partly a future debt. The deposit of title deed may be made to cover an existing debt or present or future advances or a general balance that might be due on account, or to cover further advances.

ii) The deposit of title deed must be made in any of the towns specified in the T.P Act or in any of the towns notified by the State Govt. in that behalf. It is not necessary that the property must be situated in the specified towns.

iii) The debtor or his agent must make deposit of title deed to the creditor or his agent.

iv) The deposit must be made of all such deeds, which are material evidence of title. That means, the original title deed along with all other revenue records in support of the title must be deposited.

v) The deposit of title deeds must be made with intent to create a security on immovable property. The intention is the essence of the transaction. Whether the person depositing the title deed is having an intention or not to create a security on immovable property can be established by written documents and / or oral evidence or to be inferred from the circumstances of the case.

5. Advantages of Equitable Mortgage:

a) The procedure for the creation of Equitable Mortgage is very simple as it does not involve the delivery of possession of immovable property as in the case of Usufructuary mortgage.

b) Registration is not compulsory.

c) A mortgage by deposit of title deed shall take effect (prevail upon) against any mortgage deed subsequently executed and registered, which relates to the same property.

6. Disadvantages of Equitable Mortgage:

a) Equitable Mortgage is not required to be registered in view of the fact that there is no delivery of possession, the charge over the property in the revenue records is not created (except in a few States) and hence there is every likely hood of disposing the property by a dishonest borrower, which will lead to unnecessary litigation.

b) A mortgage by deposit of title deed is not possible everywhere. It can be done only in limited cities.

7. Confirmation Regarding Creation of Equitable Mortgage:

Soon after getting the “receipt regarding the creation of Equitable Mortgage” from

42

the Commission, the borrower should confirm in writing regarding the deposit of original title with the Commission. Special care must be taken to ensure that such confirmation is received from the borrower and kept along with mortgage documents.

8. Documents Required for the Creation of Equitable Mortgage:

The documents required for the creation of Equitable Mortgage have been specified in the Annexure-V and VI to the Office Order No.1817 dated 20-12-97, which is placed at the end of the chapter.

9. Guidelines for the creation of Equitable Mortgage:

Guidelines for the creation of Equitable Mortgage have been prescribed in the letters bearing No. Legal/1021/82 dated 14/29-5-82, 20-5-83, 26-4-84 of the Director (Legal) and letter dated 6-1-89, 31-3-89, 24-4-90 of the Dy.CEO(Legal), which are placed at the end of the chapter.

10. Applicability of Law of Limitation:

As per Article 62 of the Limitation Act, 1963 the Equitable Mortgage once created is valid only for 12 years from the date the amount is due and hence it requires renewal before the expiry of every 12 years. The Circular bearing No. Legal/Policy/Part-II/ dated 6.7.1999 issued in this regard is placed at the end of the chapter.

For renewal of Equitable Mortgage all the documents specified in the Annexure (V & VI) to the Office Order No.1817 dated 20.12.1997 have to be obtained except the original title deed and blue print of the immovable property. A fresh receipt for the renewal of Equitable Mortgage has to be issued to the borrower, the format of which is placed at the end of the chapter.

11. Release of Original Title Deeds:

The title deeds deposited by the borrower with the Commission in connection with the creation of Equitable Mortgage shall not be released with out the permission of the Commission. Therefore, under no circumstance, the State/Divisional Directors should release the original title deeds without obtaining the permission.

In the case of the institution and individual borrowers who have applied for financial assistance and created equitable mortgage of their property with the KVIC but no financial assistance has been provided to them by the KVIC, the State/Divisional Directors have been authorised to release the original title deeds to such institution and individual borrowers after obtaining “No Dues Certificate” from the Directorate of Accounts in respect of all such institutions and borrowers. The Circular dated 20.11.2003 issued by the Directorate of Legal Affairs in this regard is placed at the end of the chapter.

In the case of institutions who have been partly funded and created equitable mortgage in favour of KVIC and are ready to make the repayment of the entire amount of loan taken by them along with interest and penal interest to the KVIC, the State/Divisional Directors have been authorised to release the title deeds of the

43

immovable properties after the entire payment of outstanding dues by the borrower has been received in the form of demand draft. The Circular dated 27.11.2003 issued by the Directorate of Legal Affairs in this regard is placed at the end of the chapter.

12 Revaluation of Immovable Property:

The Commission has decided to allow its borrowers to revalue their immovable properties after every 5 years of its original valuation. As such, if the borrowers are revaluing their immovable property, the value of the mortgage has to be enhanced to that extent. For that purpose all the formalities required for the renewal of the Equitable Mortgage have to be followed. The said decision of the Commission has been circulated Vide Circular No.FIN/CIR/98-99 dated 20.05.98 of the Financial Adviser. Another circular No. LA/Legal Circular/EM/2010-11 dated 07.09.2010 was also issued by the Directorate of Legal Affairs instructing the field offices to ensure the revaluation of properties mortgaged with the Commission by the institutions in a time bound manner Both these circulars are placed at the end of the chapter.

13. Compulsory disclosure of Data Base Regarding E.M. in the official website of KVIC:

The Ministry of MSME has issued instruction to the KVIC to display the data base regarding the properties owned by the Khadi and V.I. institutions and mortgaged with the KVIC in the official website of the KVIC.

In compliance with the aforesaid directives of the Ministry of MSME, the Directorate of Legal Affairs in consultation with the Directorate of I.T. has devised a web based computer programme for displaying the details of properties mortgaged by the KVI institutions in the official website of the KVIC.

As the details regarding equitable mortgage created by the KVI institutions are available with the field offices, the field offices are given the access to the aforesaid web based programme for making necessary entries and to update the data base regarding creation of E.M.

It is the responsibility of the field offices to ensure that correct, complete and updated information regarding the details of E.M. created by institutions are displayed in the KVIC Website.

The instructions and circulars issued by the Directorate of Legal Affairs on the subject are included at the end of this chapter.

14. Tripartite Agreement:

With a view to increase the efficiency in the management of big Khadi and V.I. institutions, the Commission had taken a decision to decentralize the management of such institutions. The said object is achieved by means of a Tripartite agreement.

It is an agreement made among the KVIC, parent institution and the Decentralized unit at the time of decentralization of a big institution. By this agreement the parent institution (body) agrees to transfer to the decentralized unit a portion of the assets and liabilities and give the de-facto possession of the share of the properties to the

44

decentralized unit and the KVIC make book adjustments for transferring the liabilities from the name of the parent body to the decentralized unit. As per the agreement, the parent body is required to effect the actual legal transfer of the properties in favour of the decentralized unit subsequently.

The legal transfer of assets by the Parent body to the Decentralized unit, the possession of the which had already given, is highly essential because in most of the cases the security of the funds of the KVIC due from the Decentralized units is only the Tripartite agreement and the KVIC cannot proceed to recover its funds from the property in the possession of the Decentralized unit without the consent and cooperation of the Parent body, as the legal ownership of the properties vest with it. Therefore, it is the responsibility of the every State/Divisional office to ensure that the actual dejure (legal) transfer of the assets are made as per the provisions of the Tripartite Agreement. The format of the Tripartite agreement and the guidelines issued by the Commission in the matter of decentralization of Khadi institutions are also incorporated in the book alongwith format of Tripartite agreement in the Chapter Format of Legal Documents.

15. Inter-se Agreement:

With a view to meet the financial requirement of the KVI institutions, the KVIC with the approval of the Govt. of India had introduced the “Scheme of Interest Subsidy”. As per the said Scheme, the institutions are allowed to borrow funds up to the limit fixed by the KVIC every year from the Nationalized banks. The institutions are liable to pay interest only at a nominal rates fixed by the KVIC and the differential rate of interest is paid by the KVIC to the Banks as Interest Subsidy.

While extending financial assistance to the institutions by the Banks under Interest Subsidy Scheme, the banks are not generally obtaining securities from the institutions and are depending on the KVIC for the security of their funds. The KVIC is issuing two certificates in favour of the banks, namely “the letter of surrender of First Charge” in respect of immovable properties of the institutions mortgaged with the KVIC and “the Disclaimer of prior rights” in respect of movable properties of the institutions hypothecated to the KVIC.

Apart from the above, the KVIC and the financing Bank is entering into an agreement called Inter-se Agreement. As per the said agreement, the KVIC will only surrender the First Charge over the immovable properties mortgaged by the institutions in favour of the banks and the original title deed of the properties are kept by the KVIC. However, if demanded by the Banker, the KVIC will release the original title deed to the banker only for the limited purpose of creating mortgage in the books of the banks and thereafter the original title deed will be returned by the bank to the KVIC. The KVIC will not release the original title deed to the institutions before repaying the entire amount of along with interest to the bank. Similarly, whenever the institution makes any default in repaying the amount due to the bank, the bank can request the KVIC to release the original title deed deposited by the Institution to sell the property of the institution to realize its dues . Any amount left after realizing the amount due to the bank will be remitted to the KVIC. The format of Inter-se agreement is placed at the end of the chapter.

45

16. Duties and Responsibilities of the field office in connection with Creation of Equitable Mortgage:

1) The field office shall ensure that all documents as prescribed in the guidelines have been received from the borrower.

2) The field office shall cause the same examined by the Legal Retainer and make physical verification of the spot/land, if necessary.

3) The field office shall pass a receipt in favour of the borrower in the format prescribed by the Commission.

4) The field office shall make necessary entries regarding creation of Equitable Mortgage in the register maintained for that purpose as prescribed by the Commission.

5) The field office shall ensure that the confirmation letter regarding the creation of Equitable Mortgage has been received from the borrower.

6) The field office shall ensure that the original tittle deed and other connected papers are kept in the safe custody of the Bank.

7) The field office shall ensure that before the expiry of the period of limitation, i.e. 12 years, the mortgage is renewed as per the procedure laid down.

8) The field office shall ensure that no original title deed deposited by the borrower with the Commission is returned with out obtaining the specific permission from the Directorate of Legal Affairs.

9) Wherever permission has been accorded by the Directorate of Legal Affairs for the return of original title deed/s, details of the title deeds returned must be recorded clearly in the Register and proper acknowledgement to that effect should be obtained from the authorized officer bearer of the institution, who have been duly authorized by the Managing Committee to accept the original title deed from the KVIC.

10) Details of the E.M. created by the borrowers should be kept in electronic form and furnished to the Directorate of Legal Affairs at regular intervals.

46

17. Extract of Circulars:

KHADI AND VILLAGE INDUSTRIES COMMISSIONIRLA ROAD, VILE PARLE (W), MUMBAI - 400 056.

No. Legal/1021/82 Date: 14/29.05.1982

The Director,State Office,Khadi & V. I. Commission

Sub: Creation of equitable mortgage by deposit of title deeds by the borrower institutions in favour of the Commission.

**********************

Sir,

The Commission at its meeting held on 8.2.82 has authorised the Directors/Incharges of

the State Office or Sub-Offices to accept the deposit of title deeds from the borrower

institutions with intent to create equitable mortgage if the city wherein the State Office is

situated is notified by the State Govt. for the purpose. The city of ………………… is notified by the

State Govt. of ……………………… You are therefore requested to write to the institutions in your

State that they should deposit title deeds in respect of their immovable properties, with

intention to create equitable mortgage with you in your office at ………... instead of going to

Bombay for the purpose. It may be noted that the title deeds have to be deposited for the

purpose of equitable mortgage only in notified cities. The deposit of title deeds while on tour

cannot be accepted.

In some States the Societies Registration Act, 1860 or the similar Act under which

charitable institutions are registered are amended, requiring the borrowers to take prior

approval of the Registrar/Charity Commissioner or similar authorities before transferring the

immovable properties in any form or creating charge thereon. An equitable mortgage is one of

the form of transfer. You may, therefore, checkup from the latest copy of the Societies

Registration Act, 1860, or the Act under which charitable institutions are formed and registered

to ensure that the legal requirements like prior approval of competent authority for creation of

the charge on the immovable property are complied with. You may also consult our advocate

or the law Ministry of the State if there is any amendment in the State Act to provide for as

above.

I am sending herewith a list of documents required for creation of equitable mortgage

that may be deposited by the borrowers along with the original title deeds.

It may be noted that the deeds deposited for the purpose of creation of equitable

mortgage are in original and not true or duplicate copies of the same. However, with regard to

connected documents such as valuation report, map etc. the true copies may be accepted in

the circumstances where the institution is not in a position to produce the same in original. The

receipt for having created equitable mortgage by deposit of title deeds to be issued to the

institution may be endorsed to Director (Legal), C.A.O. and concerned programme Directors for

further information and record. It may also be noted that the title deeds deposited by the

47

institution with intent to create equitable mortgage should not be returned to the institution

for any reason whatsoever without the permission of the Commission.

While accepting the deposit of title deeds their constitution bye-laws/Rules and

Regulations may be examined to ensure that the objectives contained the provision for

production sale, marketing etc. for development of Khadi & V.I. It should also contain provision

to borrow and to provide securities for the loans in the form of pledge, hypothecation of

movable goods and mortgage of immovable properties. In the case of Cooperative Societies,

the Cooperative Societies Act of the State may be referred to if there is any restrain on transfer

of immovable properties or any procedure laid down. If so, the same may be followed.

When the institutions are asked to visit your office for deposit of title deeds, you may call

for the documents mentioned in the accompanying list.

When the title deeds are deposited they may be posted into a Register. About the form of

Register, provision to provide for the following information may be made in the Register;

(a) The date on which the title deeds are deposited by the institutions.

(b) Name of the institution on whose behalf the title deeds are deposited.

(c) Name of the person and his designation who is authorised to deposit the title

deeds.

(d) The number of the Resolution and date of the meeting of the Managing

Committee of the institution authorizing the aforesaid person to deposit the title

deeds (mentioning in the register the file and the page number where this

resolution is filed).

(e) Details about the title deeds (including number of pages, enclosures and other

accompaniment etc.).

(f) Details about the property represented by the title deeds.

(g) Description of the title deed.

(h) Signature of the Officer in-charge in token of verification of the information given

in the previous columns as correct.

(I) Number and date of receipt acknowledging the receipt of documents.

(j) Signature of the Officer receiving the title deeds and signing the acknowledge-

ment.

(k) Signature of the Officer for having received the title deeds in token of having

satisfied himself about lodging of the same with the officer for safe custody.

(l) Details about return of documents to the institution against delivery of the original

acknowledgement.

(i) Date (ii) Name of the party by whom returned (iii) Name and designation to

whom returned; (iv) Signature of the person in token of receipt.

After the deposit of title deeds are accepted and the register is signed by the Director,

receipt may be passed to the institution depositing the title deeds in the accompanying form.

48

In the form the description of the title deeds and other connected documents have to be

mentioned in the schedule in the form of the receipt. In the Schedule, mentioned may be made

about sale deed. If the document deposited is gift deed or lease deed mentioned may be made

in the receipt accordingly. In case of gift deed, mention may be made of donor and donee in the

place of vendor and vendee. Likewise in the case of lease deed lessor and lessee may be

mentioned.

If you need any further guidance in the matter of deposit of title deeds for creation of

equitable mortgage, please write to me early.

Yours faithfully,

Sd/-

Director (Legal)

N.B.: For the proper safety of the original title deeds and other connected documents

deposited by the borrower institutions with the State Director, the same may be kept

in Schedule Bank. The detailed guidelines in this regard are being furnished

separately.

To

(1) Director State Office Lucknow (U.P.)

(2) Resident Representative New Delhi

(3) Director State Office Calcutta (W.B.)

(4) Director State Office Bangalore (Karnakatka)

(5) Director State Office Madras

49


No. Legal/1021/82 Date: 25.05.1983

The Director/InchargeState Office/Regional OfficeKhadi & V. I. Commission,

………………..........………………..

…………………………...........…….

Sub : Creation of equitable mortgage by deposit of title deeds by the borrower institutions in favour of the Commission.

**************************

Sir,

I am to invite a reference to this office letter of even no. dated 14/05/82 on the subject mentioned above and to state that the documents required to be obtained from the institutions which approach the authorised officer of the Commission for creation of equitable mortgage by deposit of title deeds have already been indicated.

In this regard, the Chairman has observed as under :

“The detailed instructions already issued regarding equitable mortgage is silent on the need for verifying the title of the property being mortgaged. The Officer who accepts the mortgage has to ensure that the institution/individual has clear and marketable title over it. To facilitate this, “an unambiguous certificate may be prescribed and the same obtained (along with other documents) duly signed by a “Government Pleader or our Legal Adviser”.

It has therefore been decided to adopt the following procedure :-

1. The concerned institution should give declaration to the effect that the immovable property in respect of which the charge is to be created is unencumbered and the concerned institution has a clear and marketable title to the same.

2 Such declaration should be supported by a certificate of the Government Pleader.

3. Advocate of the State Office should check the correctness of the factual and legal position in respect of such declaration and the certificate of the Government Pleader. While doing so the Advocate for the Commission should get the search report of the property for the past thirty (30) years prior to the date of execution.

4. Zerox copies of all the title deeds along with the copies of the aforementioned declarations and certificates from the Government Pleader for institution as well as the certificate of the Legal Counsel of the State Office of the Commission should be sent to the Central Office of the Commission and after clearance from

50

the Central Office, the concerned State Office should accept the title deeds for equitable mortgage and pass receipt to that effect to the Mortgagor.

5. The above procedure in addition to the one already intimated under this office letter of even No. dated 14/05/82 may be followed henceforth.

Yours faithfully,

Sd/-

Director (Legal)

Copy to :

1) All Dy.Chief Executive Officers

2) Chief Accounts Officer

3) Director Inspection

4) Director Khadi Coordination

5) Director Village Industries

6) P. S. to Chairman

51

// TRUE COPY //

KHADI AND VILLAGE INDUSTRIES3, IRLA ROAD, VILE PARLE (W), MUMBAI - 400 056.

No: Legal/1021/84 Date: 26.04.1984

The Director/Incharge

State Office/Regional Office/Sub-office

Khadi & V. I. Commission,

………………..........………………..

…………………………...........…….

Sub : Creation of equitable mortgage by deposit of title deeds by the borrower institutions in favour of the Commission.

**************************

Sir,

I am to invite a reference to the Circular/Letter of even number dt: 25.05.83 on the

subject mentioned above and to state that in the procedure prescribed for acceptance of

deposit of title deeds with an intent to create equitable mortgage it was mentioned that the

Advocate of the Commission should get search report of the property for the past 30 years

prior to the date of deposit of title deeds. Some of the State Offices/Regional Offices/Sub-

Offices had represented that the period of search report to be given by the Commission’s

Advocate is very long. The matter was examined again. The Commission’s Legal Adviser has

advised that the Commission may get the position of the title of the properties searched at

least for 12 years from the revenue record. He has further advised to obtain an declaration

on Stamp Paper of Rs.10/- from the office bearers of the concerned institutions that they

have not created any charge and that the property being mortgaged is free from any defect

in respect of title deed. It is hoped that the above procedure may remove the

inconvenience in the creation of equitable mortgage by the borrower institutions by

deposit of title deeds in respect of their immovable property.

Yours faithfully,

Sd/-

Director (Legal)

Copy to :

1) All Dy. C.E.O.

2) Chief Accounts Officer

3) Director Inspection

4) Director Khadi Co-ordination

5) Director V. I. Co-ordination

6) P.S. to Chairman

52

// TRUE COPY //


No: Legal/EM:1021:82 Date: 26.04.1984

The State Director

Khadi & V. I. Commission,

………………..........………………..

…………………………...........…….

Sub: Creation of equitable mortgage by deposit of title deed with State Directors of the Commission-making entry of title deed so deposited in the register.

**************************

Sir,

In continuation to this office correspondence referred to above, about creation of

equitable mortgage by the institutions functioning in your State by deposition of title deeds

with you. It is informed that to keep the record upto-date pertaining to deposition of title

deeds, this office has got printed registers. In the register necessary columns are indicated

under which detailed description of the title deeds deposited by the institution from time

to time with the State Director are required to be entered. The one/two sets of such printed

registers is/are sent herewith for using the same for the purpose of making necessary

entries of the title deeds and other connected documents pertaining to equitable mortgage

under relevant columns. You are advised that the said register may be kept under safe-

custody and as and when title deeds so received from institution by the State Directors, are

entered, the necessary entries made therein be attested or signed by the authorised

officer.

2. The receipt of the enclosed register may please be acknowledged.

Yours faithfully,

Sd/-

Dy. Chief

Encl: As above

Executive Officer (Legal)

53

FORMAT OF E.M. REGISTER

(a) The date on which the title deeds are deposited by the institution.

(b) Name of the institution on whose behalf the title deeds are deposited.

(c) Name of the person and his designation who is authorised to deposit the title deeds.

(d) The number of the Resolution and date of the meeting of the Managing Committee of

the institution authorizing the aforesaid person to deposit the title deeds

(mentioning in the register the file and the page number where this resolution is

filed).

(e) Details about the title deeds (including number of pages, enclosures and other

accompaniment etc.).

(f) Details about the property represented by the title deeds.

(g) Description of the title deed.

(h) Signature of the Officer in token of verification of the information given in the

previous columns as correct.

(I) Number and date of receipt acknowledging the receipt of documents.

(j) Signature of the Officer receiving the title deeds and signing the acknowledgement.

(k) Signature of the Officer for having received the title deeds in token of having satisfied

himself about lodging of the same with the officer for safe custody.

(l) Details about return of documents to the institution against delivery of the original

acknowledgement ;

(I) Date (ii) Name of the party by whom returned (iii) Name and designation to whom returned; (iv) Signature of the person in token of receipt.

54


No: Legal/EM/Hyp.Deed/1264 Date: 31.03.1989

To

The Director

State Office

Khadi & V.I. Commission,

………………..........………………..

…………………………...........…….

Sub: Regarding completing the equitable mortgage in the State Office by accepting

the title deeds and other connected documents by the concerned State

Director from the authorised office bearer of the institution concerned.

Ref: This office letter No: Legal / 1021 / EM / 82 dated 14/29.5.82, letter No: Legal /

1021 / 82 dated 29.1.83 and letter No: Legal / EM / 1021 / 82 dated 20.5.83.

**************************

Sir,

The procedure to be followed by the State Director about creation of equitable

mortgage has been communicated under above referred letters.

Under para 4 of the letter No:Legal/1021/82 dated 25.5.83, it was mentioned that

before issuance of final receipt to the institution about creation of equitable mortgage, the

concerned State Director should send the Xerox copies of title deeds and other connected

papers for further vetting from the Legal Section of Khadi and Village Industries

Commission at Central Office, Bombay-56.

With a view to curtail procedural delay and to simplify further, the present system

followed in connection with creation of equitable mortgage by the Khadi institutions, it has

been decided that henceforth State Directors need not refer the Xerox copies of the title

deeds and other connected papers to the Legal Section for the sake of vetting and may

complete the process of equitable mortgage in the State Office itself with the help of local

advocate. The State Directors/Incharges of sub-offices are therefore, advised to follow the

following guidelines pertaining the creation of equitable mortgage:-

1. The State Director may accept the original title deeds along with all connected

papers described in the Legal Section above referred letters from the

authorised office bearers of the institution after satisfying that the documents

deposited by the institution are in order in all respects and accordingly he may

pass the receipt to the institution.

2. With a view to ensure that the immovable property to be mortgaged by the

Borrower Institution is/are free from all encumbrances and is actually in the

physical possession of the borrower institution, the State Director may obtain

(a) the extract of record of rights in respect of the said property/properties duly

55

certified by the Revenue authority (b) Non-encumbrance certificate in respect

of the immovable property concerned duly certified by the Revenue authority

or Government Pleader.

3. That for getting the original title deeds and other connected papers verified

from the Local Advocate, the State Director can incur necessary expenditure

towards the advocate fee to the extent of Rs.250/- for each case. Further the

State Director can incur expenditure towards TA & DA payable to the Local

Advocate so engaged, if he has to go out of town for visiting the Revenue Office

for the purpose of verifying the records and ascertaining the validity of the title

deeds to be deposited by the institutions.

In the cases where the equitable mortgage process remains uncompleted for

want of certain documents and in case where equitable mortgage is completed

the State Director may provide correct information in the following manner to

all the concerned Directors at Central Office, Bombay every year.

(a) Name of the institution with its registered address along with certificate

number issued by the certification committee.

(b) Whether the constitution of the concerned institution contains the

relevant provisions for creating equitable mortgage and execution of

hypothecation deed in respect of its immovable/movable assets for

obtaining funds from the Khadi and Village Industries Commission for the

purpose of undertaking KVI Programmes.

© If, the institution has executed hypothecation deed under Khadi and

Village Industries the date of execution and ceiling amount of

hypothecation deeds are to be indicated.

(d) Whether the Managing Committee of the institution has passed

resolution in the prescribed form for creation of equitable mortgage in

respect of its entire immovable properties, if so, details thereof.

(e) Whether the authorised office bearer of the institution have deposited

the original title deed in respect of its immovable properties, if so, details

thereof be given.

(f) Whether the equitable mortgage process could not be completed for

want of i.e.

I) Valuation Report

ii) Blue prints

iii) Extract of record of rights certified by the Revenue authority

iv) Non-encumbrance certificate from the Revenue authority or from

the Government Pleader.

56

v) Permission from the Charity Commissioner or State Government or

any other authority as the case may be.

vi) Declaration of the property on stamp paper of Rs.5/- by the

institution and any other such documents, (under this para the

State Director, may specifically indicate the documents which are

required to be provided by the institution).

vii) Whether for obtaining required permission from the Charity

Commissioner/State Government or from any authority.

viii) Whether after physical verification the immovable property

possessed by the institution found in proper order in all respects if

so, the certificate of the State Director to that affect.

ix) Whether equitable mortgage is completed or not.

The above procedure is in addition to the procedure already intimated by this office

earlier may be followed henceforth.

Yours faithfully,

Sd/-

DY. CHIEF EXECUTIVE OFFICER (LEGAL)

Copy to: All Directors / Dy.Directors / Incharges under the Commission in and outside

Central Office, Bombay.

57


No:Legal/EM/1021/90-91 Date: 24.04.1990

To

The Director,

State/Regional Office,

Khadi & V.I. Commission,

. . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . .

Sub: Creation of equitable mortgage by the borrower institutions expeditiously

Ref: This office letter of even no. dt. 14.5.82, 29.1.83, 20.5.83 and 14.4.89

******************

Sir,

Instructions have been issued to State Directors from time to time vide letters cited

above indicating the procedure to be followed by the State Directors for creation of

equitable mortgage. But, it is noted that requisite attention is not being paid to ensure that

equitable mortgage are created without any lacunas. I am directed to convey the following

observations and instructions of the Chief Executive Officer in this matter.

2. Instances have come to notice that many of the State Directors do not even have the

basic information about the particulars of immovable properties of the borrower

institutions functioning in their respective States. It is also observed that some of the

State Directors instead of getting equitable mortgage executed expeditiously are

adopting easy ways of recommending the relaxation of equitable mortgage year after

year for the same institution. Hereafter there is no question of relaxation in respect of

all such properties which have been acquired upto 86-87 (with reference to release of

funds for 90-91). Requests for relaxation which should be exception rather than the

rule may be accepted on cogent grounds so that too when the State

Directors/Institution is able to give a specific time frame within which equitable

mortgage shall be created. Ordinarily the time frame should not exceed a period of

six months.

3. All the State Directors are, therefore, hereby advised to collect full information about

the particulars of immovable properties of the borrower institutions functioning in

their respective States and keep the record of such information upto date. They are

further advised to ensure strict compliance of creation of equitable mortgage by the

respective institutions for the proper security of funds sanctioned by the

Commission.

4. It is also observed that many of the borrower institutions who had already mortgaged

the vacant land in favour of the KVIC, and subsequently constructed buildings/sheds,

on such land or constructed additional structure on the existing building already

mortgaged in favour of KVIC, have been finding difficulties for mortgaging such

58

building or additional construction in favour of KVIC. In the circumstances mentioned

above, the borrower institutions which are coming forward to mortgage additional

structure, are required to submit the documents mentioned below for creation of

equitable mortgage.

1) Resolution of the institution

2) Valuation Report

3) Blue Print

4) Extract of records of rights certified by the Revenue Authority

5) Non-encumbrance Certificate from the Revenue Authority or from

Govt.Pleader

6) Permission from Charity Commissioner/State Govt.or any other authority as

the case may be;

7) Declaration Certificate of the properties on stamp paper of Rs. 5/- by the

institution

8) Certificates of Authorised Official of State Offices, after physical verification

that immovable properties possessed by the institution found in proper order.

The above instructions as well as instruction already issued earlier

should be scrupulously observed. Separate instructions will follow regarding those

institutions which do not possess any immovable properties.

Yours faithfully,

Sd/-

Dy.Chief Executive Officer(Legal)

To: All Directors/Dy.Directors/Incharges under the KVIC in and outside Central Office,

Bombay

59

DIRECTORATE OF BANK FINANCEKHADI AND VILLAGE INDUSTRIES COMMISSION


No. Bank Finance/739/93-94/30883 Date: 12/13.07.1993

The State Director/Director

Khadi and V. I. Commission,

State Office/Regional Office.

……………………………...............

………………………….................

Sub: Surrendering of first charge by KVIC in favour of bank-KVIC’s

Interest Subsidy Scheme-regarding.

******************

Sir,

Under the Interest Subsidy Scheme of KVIC and with prior approval of the

Government of India, the Commission has agreed to surrender its first charge over the

assets (movable and immovable) of the concerned institution in favour of bank. At present,

the relinquishment of first charge in respect of movable properties and immovable

properties of the concerned institution in favour of bank is done by issuance of a letter

“disclaimer of prior rights” both in respect of movable and immovable properties.

However, in the case of immovable properties, the Commission is issuing a disclaimer letter

alongwith the particulars of the original title deeds of the concerned institutions deposited

with the KVIC. The Commission do not part with the original title deeds to the bank. This

practice of the Commission issuing a disclaimer letter in respect of movable properties in

favour of the bank and simultaneously withholding the original title deeds do not seems to

be acceptable to the financing institutions. The contention of the bankers is, that, the

disclaimer letter in respect of immovable properties issues by KVIC in favour of the

concerned bank is not sufficient to protect the interest of the banks. Interalia the disclaimer

letter issued by the KVIC in respect of the immovable properties does not tantamount

creation of equitable mortgage by the bank.

2. The above sensitive issue was discussed by the Chairman, KVIC with the Deputy

Governor, Reserve Bank of India in the meeting held at Reserve Bank of India’s office thon 10 May, 1991 where several Heads of Nationalized Banks participated. The

consensus arrived at the above meeting was, that the Reserve Bank of India would

request the State Bank of India (Head Office) Bombay to study this issue and to

suggest a suitable solution to overcome the hurdles as for it relates to the

Commission’s surrendering of its first charge in respect of immovable properties of

the concerned institutions in favour of the Bank. Accordinglky, the State Bank of India

had suggested two alternatives of which one may be adopted by the Commission,

they are as follows :-

60

(a) the concerned bank who has financed an institution may appoint KVIC as its

agent for receiving the title deeds on behalf of the bank. In turn, the KVIC will

record in their books creation of joint mortgage in favour of the bank and KVIC

for the limit(s) granted to the borrower. Thereafter the KVIC will forward a copy

of the recital recorded by it in its books to the concerned bank alongwith the

letter of disclaimer of prior rights of the KVIC.

(b) The KVIC, will release the original title deeds to the bank for a limited purpose

of creating the equitable mortgage by bank and then such original title deeds

be returned to the KVIC by the bank requesting the KVIC not to return the

original title deeds in question to the borrower after the loan is repaid and that

instead the original title deeds be returned to the bank after their loan is fully

liquidated. After the equitable mortgage is created, the bank and KVIC can

enter into an inter-se agreement under which priority charges can be set out.

3. After a detailed study of the alternatives furnished by State Bank of India, the

Commission after consulting its Legal Adviser, agreed to adopt the procedure as

outlined as at (b) above i.e. to set out the priority charges between the KVIC and the

bank through an inter-se agreement.

4. I am enclosing herewith a copy of the inter-se agreement between the KVIC and the

concerned bank. You are requested to pursue the inter-se agreement very carefully.

According to the inter-se-agreement, you will handover the original title deeds of the

borrower institution to the concerned bank for a limited purpose (to the bank for the

purpose) of creating equitable mortgage by the bank and then this original title deeds

will be returned back to the Commission. These title deeds after duly receiver from

the bank should not be returned to the borrower unless and until the entire loan of

the bank is full liquidated. Before handing over the original title deeds to the bank,

your office is required to make a list of the particulars of the original title deeds that

are to be handedover to the concerned bank and thereafter, when the list is finalised,

the original title deeds may be hanedover to the concerned bank after obtaining due

receipt from the bank. Thereafter, when the bank returns the original title deeds to

your office, they have to be checked up once again with the list of particulars

prepared by your State Office earlier.

5. As regards the question of affixing stamp duty on the inter-se agreement the State

Bank of India has stated that one of the following steps may be taken up:

In states other than Maharashtra, Gujarat, Goa and Madhya Pradesh equitable

mortgage may be created since in these states (other than the states mentioned

above) equitable mortgage does not attract any stamp duty.

For states of Maharashtra, Gujarat, Goa and Madhya Pradesh, equitable mortgage

may have to be created by payment of stamp duty by KVIC as an agent of the Bank, or

the procedure as outlined by us before be followed viz. The title deeds may be

released by the KVIC to the bank for the limited purpose of creating equitable

mortgage with the Bank and then such title deeds be returned to KVIC requesting that

61

the original title deeds may not be returned to the borrowers after their loan is repaid

but instead these should be returned to the Bank after their loan is fully liquidated.

The expenditure of stamp duty on inter-se-agreement will be borne by your office,

wherever applicable.

6. In view of the fact that the Commission agrees to surrender its first charge in favour of

the bank no repayment of advances by the concerned institution will be made by the

borrower in favour of one of them i.e. KVIC-Bank, without repaying proportinately

the amount of advances due to the bank and the KVIC.

7. I am therefore, to request you to kindly go through this letter and the enclosed inter-

se-agreement and take appropriate steps at your end. You may also bring the

contents of the letter to all the implementing agencies of the KVIC coming under your

fold for wider circulation. In case, if you have any problem, they can be discussed with

your local legal Adviser. A proper record of the names of the banks with whom you are

entering into inter-se-agreement and also the names of the concerned institution for

whom such agreement has been arrived at may be kept and watched. Whenever your

Office enters an inter-se agreement with the concerned bank, copies of the such

communication may invariably be forwarded to the (I) Director, Legal KVIC, Bombay

56 and (ii) Dy.Chief Executive Officer (Bank Finance) KVIC, Bombay 56. In case of any

problems regarding the original title deeds of the concerned institution, this may be

taken up by you with the Local Legal Adviser and Director (Legal), Central Office,

Bombay under intimation to the Directorate of Bank Finance, Central office.

8. Consequent to above, a quarterly statement on Zonal basis, through Dy.Chief

Executive Officer (Zonal) may be sent to Directorate of Bank Finance of Central Office

of Bombay of cases where such agreement has been executed.

9. Kindly acknowledge receipt of this letter to the Dy.Director I/c (Bank Finance), KVIC

Bombay-56 and compliance reported.

Yours faithfully,

Sd/-

(N.K. Roy)

Dy. Chief Executive Officer (Bank Finance)

Encl: as above

62

This agreement provides for priority of

mortgage and realization of security and

sharing of sale proceeds

(To be stamped as an agreement)

INTERSE AGREEMENT

Memorandum of Articles made this _____________ day of __________ 1991

between State Bank of India constituted under the State Bank of India Act, 1955 (Act No.23

of 1955) having one of its Local Head Offices at ______________ and Branch at

_________________ hereinafter called the “Bank” (which expression shall include its

successors and assigns) of the one part and Khadi and Village Industries/Khadi and Village

Industries Board a corporation constituted by the Khadi and Village Industries Commission

having its office at __________________hereinafter collectively or severally called ‘KVIC’

(which expression shall include its successors and assigns) on the other part.

WHEREAS __________________________ Ltd. (name of the borrower) hereinafter

called the “borrower: (which expression shall include it is successors and assigns) has been

granted loan by the Bank and KVIC. To secure the said loan the Borrower has created an

equitable mortgage in respect of its properties situate at _________________(Description

of the property) in favour of the KVIC on ___________________ in favour of Bank on

________________ OR created in favour of KVIC on ______________ and subsequently

extended in favour of the Bank on ________________(hereinafter called the mortgage) to

secure the loan granted by the Bank and KVIC.

WHEREAS it has been decided between the Bank and KVIC that the mortgage created

in favour of the Bank shall take precedence over, the mortgage created in favour of KVIC.

AND WHEREAS the parties are desirous of recording the arrangement as aforesaid by

agreeing to execute this agreement in the manner hereinafter appearing.

Now therefore, this agreement witnesseth and it is hereby agreed by and between

the parties hereto as follows :-

In consideration of the aforesaid, the Bank and KVIC at their sole and absolute

discretion permit the borrower to avail various limits not exceeding the amount as shown

against their names :-

Bank Maximum Limit Rs.

KVIC Maximum Limit Rs.

The title deeds and documents relating to and in respect of the property deposited by

the Borrower as aforesaid shall be held by and remain in the custody of KVIC or Bank for the

mutual benefits of each them and shall be made available to each other whenever required

against accountable receipt.

63

It is agreed between the parties hereto that all the rights, powers, privileges and

remedies available to the Bank and KVIC under the said mortgage shall remain in force and

will be available to the Bank and KVIC in respect of advances made by them to the

Borrowers.

Unless otherwise agreed to in writing between the Bank, KVIC and the Borrower, no

prepayment of the said advances shall be made by the borrower in favour of one of them

without repaying proportionately the amount of advance due to Bank and KVIC.

Notwithstanding the time of creation of the mortgage in favour of the Bank and KVIC

it is agreed between the parties hereto that for all purpose it will be treated that the

mortgage in favour of the Bank shall rank in priority to the mortgage created in favour of

KVIC. It is further agreed between the parties that on enforcement and realization of the

security the proceeds will be first utilized for the liquidation of various loans, interest, costs,

charges and expenses due to the bank and the remaining amount shall be utilized for the

liquidation of loans, interest costs and expenses due to KVIC. The balance if any shall be

payable to other creditor i.e.KVIC to the borrower. Until such application the amounts

realized by any of the parties or any receiver appointed to them shall be held by it or by such

receiver on trust for the said Bank/KVIC in accordance with their respective rights

hereunder.

The Bank and KVIC shall keep the other advised of all matters affecting these presents

and particularly each of them shall prior to taking any action or other steps for enforcement

of its security consult other and the parties shall co-operate with one another in respect of

all matter so far as the same is practicable without affecting their own respective rights and

each of them shall at all times keep the other informed of all serious and important matters

coming to their knowledge relating to the mortgaged property or any part, portion thereof.

It at any time in the course of enforcement security any of the parties decides to appoint the

receiver it may in exercise of the power reserved therefore, shall appoint such receiver after

consultation with the other.

Each of the parties shall not without the consent of other agree to any modification of

the terms of the advances and shall not without like consent grant time or any indulgence

to the Borrower after the security has become enforceable or being enforced by any of the

parties.

The parties hereto shall be at liberty to take any additional security for the aforesaid

limit or any part thereof and no such security in whole or part shall be released either by the

Bank or by KVIC, without obtaining the concurrence of the other. Such an action shall not

affect prejudicially the operation of this agreement or the rights and remedies of the Bank

or KVIC. The Bank and KVIC shall endeavor to have the benefit on any such additional

security extended to each other. The parties hereto agree that all acts, deeds and things

done in accordance with this agreement by them or either of them as an agent of the other,

shall be construed as acts and things done by them and each of them undertakes to ratify

64

and confirm all and whatsoever the other has done. The parties shall not be liable to each

other for any act, deed or thing done or omitted to be done in good faith under the said

mortgage created by the borrower in favour of the parties.

IN WITNESS whereof the parties hereto have executed this agreement the day and

the year first herein above written.

Signed by the Bank } (1)

By it is constituted attorney }

Signed and sealed by KVIC } (1)

By its } (2)

Duly authorised representatives }

65

KHADI AND VILLAGE INDUSTRIES COMMISSION3, IRLA ROAD, VILE PARLE (W), MUMBAI - 400 056.

V. I. COORDINATION CELL

No.VIC/6/1/97-98 (Part-IV) Date: 20.12.1997


In parlial modification; of ,Office Order No.1795 dt. 30.4-1997 in respect of furnishing

of collateral security by the borrowers, the Commission at its meeting held on 30/31-7-97,

28-8-97 and 23/24-10-97 has prescribed the following guidelines for furnishing of collateral

security by the borrowers viz; individuals/institutions/coop.Societies under V.I.

Programmes :-

FOR INDIVIDUALS

I) The borrower will have to create Equitable Mortgage of all the immovable

properties owned by him/her in favour of KVIC, the value of which should be

adequate to cover the loan amount sanctioned in respect of the project.

ii) Wherever the value of such properties covered in the mortgage is found to be

less than the loan sanctioned for the project, it will be necessary for the

borrower to furnish one or more sureties to the Commission for an amount by

which the value of mortgage falls short of the loan amount sanctioned for the

project.

iii) To dispense with the requirernent of Solvency Certificate/Credit Worthiness

Certificate from the borrowers.

iv) The, borrower will have to furnish a . Personal Indemnity Bond to take care of

the loan sanctioned for the project.

v) The borrower will execute a Hyp. Deed as per existing practice.

FOR INSTITUTIONS/SOCIETIES

vi) Security from Office bearers of Institution/Society be obtained from all

institutions registered with KVIC after 1-4.1985. Since all most all Khadi & V.I.

non problematic institutions which have been with the KVIC prior to 1985,

possess the required infrastructure to undertake new V.I. projects, it was

decided that while following the provisions of Rule 9 of KVIC Loon Rules,

obtaining Surety Bonds from the office bearers of such Institutions should not

be obtained.

vii) The borrower will have to execute a Hypothecation Deed as per the existing

practice.

viii) All though the above security norms will apply to all new institutions which are

coming forward for taking up a new project for the first time, the following

additional requirement has to be complied with by the Institution which had

66

already availed funds from the KVIC for executing KVI programmes. Whenever

an existing institution seeks to avail fresh funds for a new project and if the

value of properties already mortgaged together with the sureties, if any, failed

to add up to the total loan already availed by the institution. it is necessary for

them to furnish ditional security to cover the gap/short-falls.

ix) The following Annexures are enclosed herewith

Annexure - I : Format of Surety Bond to be executed by one person in favour

of individual borrower.

Annexure - II : Format of Surety Bond to be executed by one surety office

bearer in favour of institution.

Annexure - III : Format of Indemnity Bond to be executed by individual

borrower.

Annexure - IV : Format of Memorandum of deposit of Title Deeds.

Annexure - V : List of documents required for creation of Equitable

Mortgage by institution.

Annexure - VI : List of documents required for creation of E.M. by individual,

Annexure - VII : List of documents required for Surety Bond by individual.

Annexure - VII : List of documents required for surety Bond by institution.

2. The above guidelines Shall apply to Individuals/institutions/Coop. Societies

undertaking V.I. programmes. The guidelines for Khadi Institutions will be issued

separately after further examination.

3. The above guidelines shall come into force with effect from 1-11-1997.

Encl: As above

Sd/-CHIEF EXECUTIVE OFFICER

To

1. Jt. CEO.

2. All Dy.C.E.Os in and outside Mumbai

3. All Industry/Programme Directors.

4. All State/Regional Directors

5. General Manager/Dy. General Managet (Banking Division)

6. All Sections in the Central Office, Mumbai

67

ANNEXURE - I

SURETY BOND

This Surety Bond for Rs ................... (Rupees ...............................................................

only) is made and executed on this ................... day of ................... in favour of Khadi and

Village Industries Commission, Mumbai-56, hereinafter called the “the Lender” which

expression shall (unless repugnant to the subject of context) include its Successor,

Successors and representatives in interests or assigns by) ...............................................

S/o ..........................................................................................religion .............................

resident of ............................................................................................................................

hereinafter called ‘the Sureties which expression shall also include his successors or

representatives in interest, legal heirs, executors and Administrators for due performance

of and to secure prompt repayment of the amount of loans and grants under the

agreement executed/agreed to be executed in favour of the lender by

............................................... S/o .......................................................... Resident of Village

................................................ Post ............................. Taluka ............................ Ditrict

.................................. hereinzafter called ‘the borrower’, which expression shall unless

repugnant to the context or meaning thereof, mean and include its successors and assigns.

1. Whereas the borrower, has submitted an application to the Lender for financial

assistances for according a loan of Rs. ................... (Rupees.........................................

only) for the purpose of ...........................................

2. Whereas the Borrower is not possessed of any sufficient movable and immovable

properties to be offered by way of hypothecation or mortgage for security and the

existing properties possessed by the Borrower are not adequate for the purpose of

securing the same to ensure due repayment of the loan.

3. Whereas the Lender ordained that the borrower shall furnish security acceptable to

the Lender for the said sum of loans and grants, for the due performance of and for

due utilization of the loan for the purpose for which it is given within the period and as

per term and conditions prescribed thereof and for repayment of loans and grants

either in lumpsum or by way of instalments as per the terms of the agreement

executed/agreed to be executed by the Borrower in favour of the Lender as per the

terms and conditions prescribed by the Lender from time to time for sanctioning the

relevant loans and grants.

4. Whereas the Surety has agreed to furnish security on behalf of the borrower, as

required by the Lender and acting upon it, the borrower had executed/agreed to be

executed and agreement in favour of the Lender as per the terms and conditions

prescribed by the Lender for releasing relevant loan and grants from time to time.

On Stamp paper of Adequate value as per concerned State Stamp Act and requires registration

Format of Surety Bond to be executed by one person in favour of individual Borrower

68

5. Whereas the Borrower had agreed under the said agreement that they had bound

themselves to utilise the loans and the grants for the specific purpose for which the

said loans and grants have been sanctioned and released within the period

prescribed therefor and in the event of the Borrower failing to do so utilize the said

loans and grants or such portion of the loans and grants as may have not been so

utilized, the borrower has undertaken to make refund of the same to the Lender as

per the terms of agreement.

6. Whereas the Borrower has undertaken to make repayment of loans in such

instalments with such interest and in such manner as has been provided for in the

said agreement dated ....................... referred to above.

7. Whereas the borrower had undertaken to strictly abide by all the terms and

conditions of the said agreement dated ....................... and had undertaken to carry

out the terms of the agreement strictly in accordance therewith.

8. Whereas the Surety having become fully conversant with the terms of the said

agreement dated ....................... referred to above, the same having been read over

and explained to him in a language known to him viz… ....................... and having

understood the rights liabilities and responsibilities arising therefrom has signed a

declaration offering security.

9. Whereas the Lender had in pursuance thereof sanctioned an amount of Rs

.................. (Rupees ..................................................................... only) in pursuance

of the above said agreement dated ....................... and the security for

Rs....................... offered by the Surety.

Now this Indenture witnesseth that in consideration of the loans and grants.

I) sanctioned by the Lender in favour of the Borrower the said Surety doth hereby

for himself and his heirs, executors and administrators covenant and agree with

and bind and oblige himself, his heirs, executors and administrator to the

Lender, that the said Surety and his afore written heirs and Successors shall

stand Sureties for due and strict performance of the terms of the above

agreement and the obligations thereunder the hold himself personally liable

jointly and/or severally to pay or cause to be paid to the Lender at its main office

at Mumbai - 56. Instalments as may be due and repayable with such interest as

provided for in the above greement and due thereunder.

ii) All sums that may fall to be refunded by the borrower to the Lender as per the

terms of the said agreement with interest at ....................... p.a and/or such.

iii) All and every sums either in lumpsum or in rate as is applicable from time to time.

iv) All losses or damages costs expenses and charges that may arise on violation or

breach of all or any of the terms and conditions of the above agreement and

become due and payable by the borrower to the Lender with interest at the rate

of .......................% per annum and/or such rate as is applicable from time to

time for such purpose the said Surety after assuring the Lender that the

69

Schedule properties have not been alienated, hypothecated or otherwise

encumbered to anyone else, hereby hypothecate/mortgage/create charge

over the properties mentioned in the Schedule annexed hereunder and binds

himself by his heirs, executors and administrators and assigns to repay all the

sums aforementioned out of the said properties, and in case of any balance

remaining unpaid to the said Lender, the said Surety and aforewritten shall be

personally liable for satisfying the dues of the said Lender against the Borrower.

And the Surety shall and will indemnify the Lender from and against any loss or

damage or expenses or costs which the Lenders may suffer or incur by reason of

any default or breach on the part of the borrower and/or the Surety AND the

Surety shall not be discharged or released from his/her/their obligations

hereunder or otherwise by any arrangement or compromise or any indulgence

or modification or alteration made in the said agreement or any forbearance

shown in respect of the loan granted.

For purpose of this Surety Bond all the terms and conditions of the above

agreement executed by the borrower in favour of the Lender shall form part of

these presents.

S C H E D U L E

S.No. Description of the property Area Land Market Boundries

Revenue

or tax payable

1 2 3 4 5 6

Bounded by :-

East :-

South :-

West :-

North :-

SIGNATURE OF SURETY

WITNESSES:-

1)

2)

70

ANNEXURE - II

On stamp paper of adequate value

As pr concerned State Stamp Act and

Requires registration.

Format of surety bond to be executed by one

Surety office bearer in favour of institution.

SURETY BOND

This Surety Bond for................... (Rupees ....................................................................

only) is made and executed on this ……………. day of …………………………. In favour of Khadi and

Village Industries Commission, Mumbai-400 056, hereinafter called “the Lender” which

expression shall (unless repugnant to the subject or context) include its Successor,

Successor and representative in interest or assigns by Shri/Smt./Kum……………………

President/Secretary/Member of ……………………………………………………....................................

(Name and Address of the Institution)

resident of ………………………………………………………………………………..........................................

(Residential address)

hereinafter called “the Surety” which expression shall also include his successors or

representatives in interest, legal heirs, executors and Administrators for due performance

of and to secure prompt repayment of the amount of loans and grants under agreement

execute agreed to be executed in favour of one Lender by ………………………………………….........

(Name and Address of the Institution)

hereinafter called the borrower which expression shall unless repugnant to the context or

meaning thereof, man and include its successors and assigns.

1. “Whereas the borrower, has submitted an application to the Lender for financial

assistance for according a loan of ...........................................................................

(Rupees: ............................................................................................................. only)

for the purpose of ………………………………………………………………………

2. Whereas the borrower is not possessed of any sufficient movable and immovable

properties to be offered by way of hypothecation or mortgage for security and the

existing properties possessed by the borrower are not adequate for the purpose of

securing the same to ensure due repayment of the loan.

3. Whereas the Lender ordained that the borrower shall furnish security acceptable to

the Lender for the said sum of Loans and grants, for the due performance of and for

due utilization of the loan for the purpose for which it is given within the period and as

per term and conditions prescribed thereof and for repayment of loans and grants

either in lumpsum or by way of instalments as per the terms of the agreement

executed/agreed to be executed by the borrower in favour of the Lender as per the

terms and conditions prescribed by the Lender from time to time for sanctioning the

relevant loans and grants.

71

4. Whereas the surety has agreed to furnish security on behalf of the borrower, as

required by the Lender and acting upon it, the borrower had execute/agreed to be

executed and agreement in favour of the Lender as per the terms and conditions

prescribed by the Lender for releasing relevant loan and grants from time to time.

5. Whereas the Borrower has agreed under the said agreement that they had bound

themselves to utilize the loan and the grants for the specific purpose for which the

said loans and grants have been sanctioned and released within the period

prescribed therefore and in the event of the borrower failing to do so utilize the said

loans and grants as may have not been so utilized, the borrower has undertaken to

make refund of the same to the Lender as per the terms of agreement.

6. Whereas the Borrower has undertaken to make repayment of loans in such

installments with such interest and in such manner as has been provided for in the

said agreement dated ........................ referred to above.

7. Whereas the borrower had undertaken to strictly abide by all the terms and

conditions of the said agreement dated …………………….. and had undertaken to carry

out the terms of the agreement strictly in accordance therewith.

8. Whereas the Surety having become fully conversant with the terms of the said

agreement dated …………………. referred to above, the same having been read over

and explained to him in a language known to him viz……….. and having understood

the rights liabilities and responsibilities arising therefrom has signed a declaration

offering security.

9. Whereas the Lender had in pursuance, thereof sanctioned an amount of

Rs………………. (Rupees ……………………………………. Only) in pursuance of the abovesaid

agreement dated ………………….. and the security for Rs………………….. offered by the

Surety.

Now this Indenture witnesseth that in consideration of the loans and grants

sanctioned by the Lender in favour of the borrower the said surety doth hereby for

himself and his heirs, executors and administrators covenant and agree with and bind

and oblige himself, his heirs, executors and administrators to the Lender, that the said

Surety and his aforewritten heirs and Successors shall stand Sureties for due and strict

performance of the terms of the above agreement and the obligations thereunder

and hold himself personally liable jointly and/or severally to pay or cause to be paid to

the Lender at its main office at Mumbai - 56.

I) All and every sums either in lumpsum or in instalments as may be due and

repayable with such interest is provided for in the above agreement and due

thereunder.

ii) All sums that may fall to be refunded by the borrower to the Lender as per the

terms of the said agreement with interest at ………% p.a and/or such rate as is

applicable from time to time.

72

iii) All losses or damages costs, expenses and charges that may arise on violation or

breach of all or any of the terms and conditions or otherwise arising out of the

terms and conditions of the above agreement and become due and payable by

the borrower to the Lender with interest at the rate of ……..% per annum and/or

such rate as is applicable from time to time for such purpose the said surety

after assuring the Lender that the Schedule properties have not been

alienated, hypothecated or otherwise encumbrance to anyone else, hereby

hypothecate/mortgage/create charge over the properties mentioned in the

schedule annexed hereunder the binds himself, by his heirs, executors and

administrators and assigns to repay all the sums aforementioned out of the said

properties, and in case of any balance remaining unpaid to the said Lender, the

said surety and aforewritten shall be personally liable for satisfying the dues of

the said Lender against the Borrower. AND the Surety shall and will indemnify

the lender from and against any loss or damage or expenses or costs which the

Lenders may suffer or incur by reason of any default or breach on the part of the

borrower and/or the Surety AND the Surety shall not be discharged or released

from his/her/their obligations hereunder or otherwise by any arrangement or

compromise or any indulgence or modification or alteration made in the said

agreement or any for-bearance shown in respect of the loan granted.

For purpose of this surety bond all the terms and conditions of the above

agreement executed by the borrower in favour of the Lender shall form part of

these present.

S C H E D U L E

S.No. Description of the property Area Land Market Boundries

Revenue value of the

or tax payable property

1 2 3 4 5 6

Bounded by :-

East :-

South :-

West :-

North :-

SIGNATURE OF SURETY

WITNESSES:-

1)

2)

73

ANNEXURE - III

Format of Indemnity Bond to be Executed by the IndividualBorrower on stamp paper ofadequate value as perconcerned State Stamp Actand requires registration

INDEMNITY BOND

KNOW ALL MEN BY THESE PRESENTS that I .....................................................................

........................ S/o ...............................................................................................................

at present residing at ............................................................................................................

(hereinafter referred to as “borrower”) hereby hold and bind myself, my heirs, executors,

administrators, legal representatives and estate to the Khadi and V.I. Commission having its

Central Office at Gramodaya, 3, Irla Road, Vile Parle (West), Mumbai - 56 (hereinafter

referred to as “Lender”) which expression shall (unless repugnant to the subject or context)

include its successor/s and representative/s in interest and assigns for the payment to the

Lender a sum of Rs ................ (Rupees ........................................................................ only),

signed this ..................................... day of .................................. One thousand nine

hundred and ........................

1. WHEREAS the borrower is an individual and applied to the lender for a loan ofRs ........................ (Rupees ................................................................................. only) hereinafter referred to as Village Industries activities and more particularly to execute the project under ........................

2. AND WHEREAS the lender has agreed to sanction a loan of Rs ........................ (Rupees........................................................................ only) to the borrower on the terms and conditions stipulated in the loan application dated ........................ or their letters and in the deed of hypothecation executed by the borrower in favour of the lender.

3. WHEREAS in consideration of having agreed to grant the aforesaid loan and advances to the borrower by the lender the borrower has furnished the securities in the manner prescribed by the lender to ensure the repayment of loan and advance.

4. WHEREAS the lender ordained that the borrower shall furnish indemnity Bond t the lender for the said sum of loans and grants, for due performance of and for due utilisation of te loan for the purpose for which it is given within the period and as per the terms and conditions prescribed thereof and for repayment of loans and grants either in lumpsum or by way of instalment as per the terms and conditions stipulated in the said loan application and agreement.

5. WHEREAS the borrower has undertaken to make repayment of loan to such instalments with such interest and in such manner as has been provided in the said loan application and agreement referred to above.

74

6. WHEREAS the borrower has undertaken to strictly abide by all the terms and conditions stipulated in the said loan application and agreement and undertake to carry out activities strictly in accordance therewith.

7. NOW THIS INDENTURE WITNESSETH that in consideration of the loans and grants sanctioned by the lender in favour of the Borrower, the borrower do hereby for himself/herself and his/her heirs, executors, administrators and estate covenant and agree with. Undertake bind and oblige himself/herself and his/her heirs executors and administrators to the Lender, that the said borrower and his aforewritten heirs and Successors and estate shall stand liable for due and strict performance of the terms of the above agreements and the obligations thereunder and for due repayment of the Loan and hold himself/herself personally liable to pay or cause to be paid to the lender at its Central Office at Mumbai - 56.

The Borrower further undertakes as follows:

I) All and every sums either in lumpsum or in instalments as shall be due and repayable with such interest as provided for in the above agreement and due thereunder.

ii) All sums that may fall to be refunded by the borrower to the Lender as per the terms of the said agreement with interest @ ........................ p.a. and/or such rate as is applicable from time to time.

iii) All losses or damages costs, expenses and charges that may arise in violation or breach of all or any of the terms and conditions or otherwise arising out of the terms and conditions of the above agreement or arising out of any legal action enforced by the lender and become due and payable by the borrower to the Lender with interest at the rate of ........................ per annum and for such purpose the said borrower binds himself/herself by his/her heirs, executors and administrators and assigns to repay all the sums aforementioned and the said borrower and the aforewritten heirs shall personally liable for satisfying the dues of the said Lender. AND the borrower and his/her aforewritten heirs shall and will indemnify the Lender from and against any loss or damage or expenses or costs which the Lender may suffer or incur by reason of any default or breach on the part of the borrower and all legal cost as a result of any legal action adopted by the Lender against the Borrower and borrower and his/her aforewritten heirs shall not be discharged or released from their obligations hereunder or otherwise by any arrangement or compromise or any indulgence or modification or alteration made in the said agreement or any forbearance shown in respect of the loan granted.

For purpose of this Indemnity Bond all the terms and conditions of the above agreement executed by the borrower in favour of the Lender shall form part of these presents.

Signature Borrower

WITNESS:

1)

2)

75

ANNEXURE - IV

MEMORANDUM OF DEPOSIT OF TITLE DEEDS

Sub: Regarding creation of Equitable Mortgage by deposit of original title deeds of immovable properties of ……………………………………………………… with the Commission to provide security of funds advanced and/or that may be advanced by the Commission to the said institution from time to time.

***********************

WHEREAS the Khadi & V.I. Commission hereinafter referred to as the “Commission” has advanced several loans to the ……………….. hereinafter referred to as the “Borrower” for development of Khadi and Village Industries Activities.

AND WHEREAS there is a balance due to the Commission of Rs ………………........……. (Rupees ………………………………….………..............…. only) as on …………………………… from the said Borrower to the Commission. The expression “the balance due to the Commission” shall be taken to include the balance of the moneys from time to time due under the account of borrower with the Commission and also all interest thereon and the amount of all charges and expenses which the Commission may have paid or incurred in any way in connection with the recovery of loan amounts.

AND WHEREAS to provide security for repayment of funds that have been advanced upto …………………. And thereafter and for the funds that may be advanced by the Commission to the Borrower from time to time upto ceiling amount of Rs ……………………. the Borrower has agreed to mortgage its entire immovable property to the Commission and accordingly the Managing Committee of the Borrower vide its resolution No……………dated ……… has authorised Shri ………………………………… Chairman/Secretary/Member of the Borrower to deposit the original title deeds and other connected documents in respect of entire immovable property of the borrower personally with the authorised officer of the Commission at ………………………………… to create Equitable Mortgage in favour of the Commission.

That in pursuance of the said Resolution No............... dated......................Shri ............................................................................... attended the office of the Khadi and V.I. Commission at ...................... on ………………….. in his capacity as Chairman / Secretary / Membebr of the Borrower and deposited with the undersigned in the presence of(1) ……………………………..................……………………………………………………………………………………

(Name and Designation)

(2) ……………………………..................……………………………………………………………………………………

(Name and Designation)

of the Commission the original title deeds and other connected documents set out in the Schedule written hereinunder with intention to create equitable mortgage in favour of the Commission for providing security of loans that has been advanced or that may be advanced by the Commission to the Borrower from time to time together with interest thereon and the amount of all charges and expenses which the Commission may have paid or incurred in anyway in connection with the recovery of the loan amounts.

76

-: S C H E D U L E :-

(Details of each property mortgaged)

1. Description of title deeds.

2. Non-encumbrance certificate from Government Pleader and/or Sub-Registrar.

3. Valuation Certificate from approved Valuer and/or from the concerned Dy. Dist. Collector (Stamp and Valuation).

4. 7/12 Extracts and/or extracts from property Card and/or extracts from record of rights from concerned authority and N. A. Permission from concerned authority for the plot of land on which manufacturing unit is established.

5. Information about immovable property in the prescribed proforma of the Commission.

6. Blue Print.

7. Permission from Charity Commissioner/Registrar of Co-operative Society.

8. Declaration Certificate on stamp paper of Rs.20/- by the authorised Officer of the Borrower as prescribed.

9. True copy of the Bye-Laws of the Borrower.

10. True copy of Resolution of Borrower in the prescribed proforma.

Shri ……………………………………………. Chairman/Secretary/Member of the Borrower further represented and declared as follows :-

a) That the Borrower has a marketable title to the said immovable property and that there is no charge, mortgage, lien or encumbrance or attachment in favour of Govt. or Income tax Department or any other Govt. Department or any person, firm, company/body corporate or society or entity whatsoever and that the Borrower has not entered into any Agreement for sale thereof or any part or parts thereof and that no such mortgage charge, lien or other encumbrance whatsoever will be created by the Borrower nor any attachment allowed to be levied on the said immovable properties or any part of parts thereof in favour of buyer on behalf of any Govt. or Govt. Department or any person, firm, company, body corporate or society or entity whatsoever, except with the prior permission of the Commission so long as the Borrower continues to be indebted or liable to the Commission on any account or in any manner whatsoever and that no proceedings for the recovery of tax are pending against the Borrower under the Income Tax Act, 1961 or any other Law and that no notice has been issued and/or served upon the Borrower under rules of the Income Tax Act, 1961 (as amended) or any other Law and that there is no pending attachment levied whatsoever on the said immovable properties.

The Borrower has been asked to confirm in writing that the authorised office bearer has deposited with the undersigned the original title deeds of the immovable property of the said Borrower and other connected documents listed above and has created equitable mortgage of immovable property

77

covered by the aforesaid title deeds and also to confirm that the Borrower presently does not have any immovable property other than that mentioned above and give undertaking to the effect that in case the Borrower acquire and create other immovable property the same will be also be mortgaged to the Commission.

STATE DIRECTOR

Witness :1)2)

Copy to :1. The Chairman/Secretary of the Borrower2. Director (Legal), KVIC, Mumbai - 563. Directorate of Accounts, KVIC, Mumbai - 56.4. Programme Director.

78

ANNEXURE - V

DOCUMENTS REQUIRED FOR CREATION OF EQUITABLE MORTGAGE BY INSTITUTION

1. Resolution of the Institution

2. Original title deeds.

3. Original Valuation Report from Govt. Registered Valuer/Revenue Authority.

4. Original Blue Prints duly approved by the Competent Authority.

5. Original Extract of record of rights certified by the Revenue Authority

6. Original Non-encumbrance Certificate from the Govt. Pleader or from the Revenue/Competent authority certifying that the property is marketable and free from all encumbrance.

7. Permission from the Registrar of Society, Charity Commissioner, State Govt. or any other authority as provided in respective Societies Registration Act.

8. Maximum ceiling limit certificate from the Registrar of Co-operative Society in respect of Co-operative Society.

9. Declaration of the property on appropriate stamp paper by the authorised member of the institution to the effect that the immovable property/ies in respect of which the charge is/are to be created are unencumbered and the institution has a clear land marketable title to the same.

79

ANNEXURE - VI

DOCUMENTS REQUIRED FOR CREATION OF EQUITABLE MORTGAGE IN CASE OF INDIVIDUAL

1. Original Title Deeds

2. Original Valuation Report from the Government Registered Valuer/Competent Revenue Authority.

3. Original Blue Prints duly approved by the Competent Authority.

4. Original Extract of record of rights certified by the Revenue Authority.

5. Original Non-encumbrance Certificate from the Government Pleader or from the Competent Revenue Authority certifying that the property is marketable and free from all encumbrance.

6. Declaration of property on appropriate stamp paper to the effect that the immovable property/ies in respect of which the charge is/are to be created are unencumbered and the same is having clear and marketable title.

80

ANNEXURE - VII

DOCUMENTS REQUIRED FOR SURETY BOND BY INSTITUTION

1. Resolution of the Institution.

2. Original Surety Bond/s Duly stamped (Non-judicial) as per the Stamp Act of the State.

3. original Valuation Report of the property of the Surety/ies from Government Registered Valuer/Revenue Authority.

4. Original Blue Print/Lay Out Plan of the property of the Surety/ies duly approved by the Competent Authority.

5. Original extract of record of rights certified by the Revenue Authority.

6. Original Non-encumbrance Certificate in respect of the Property/ies of the Surety/ies from a Govt. Pleader or from the Revenue/Competent authority certifying that the property is marketable and free from all encumbrance.

7. The Borrower should submit all extract from the revenue record evidencing that charge has been created on the Revenue record in respect of the property/ies of the Surety/ies for the sum of money indicated in the Surety Bond/s after sanction and before release of funds.

NOTE: Separate set of above documents is to be obtained for each surety.

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ANNEXURE - VIII

DOCUMENTS REQUIRED FOR EXECUTION OF SURETY BOND IN RESPECT OF INDIVIDUAL BORROWER

1. Original Surety Bond/s duly stamped (Non-judicial) as per the Stamp Act of the State.

2. Original Valuation Report of the property of the Surety/ies from Government Registered Valuer/Revenue authorities.

3. Original Blue Print/Lay out plan of the property of the Surety/ies duly approved by the Competent Authority.

4. Original extract of records of rights certified by the Revenue Authority.

5. Original Non-encumbrance certificate in respect of the property/ies of the Surety/ies from Sub-Registrar’s Office or Competent authority of the area certifying that the property is marketable and free from all encumbrance.

6. The Individual borrower should submit an extract from the revenue record evidencing that charge has been created on the Revenue record in respect of the property/ies of the Surety/ies for the sum of money indicated in the Surety Bond/s after sanction and before release of funds.

7. Indemnity Bond should be furnished by the borrower in order to bind his legal heirs about his obligations and liabilities.

NOTE :- ** Separate set of above documents is to be obtained for each Surety.

82


No. FIN/GENL/CIR/98-99 Date: 20.05.1998

C I R C U L A R

Sub: Revaluation of Immovable Properties-regarding.

The matter of streamlining/regulating revaluation of Immovable Properties was thplaced before the Commission in its 478 Meeting held on 25/26.03.1998. The decision of

the Commission on this score is reproduced below, indicating its accounting procedure

thereon.

I) The Institutions are permitted to undertake revaluation of their immovable

properties only after 5 (five) years of original valuation, which should be done

by the Government approved valuers only.

2. The above revaluation amount should be reflected in the Balance Sheet of the

concerned Institution in clear terms by depicting such revaluation amount of

immovable properties on the Asset side as “Revaluation of Land and Building”

and on the Liability side as “Land and Building Reserve Fund” per cent.

3. The Internal Audit Party of State/Regional Offices while analysing the Balance

Sheet of the Institution should ensure compliance of the above directives,

scrupulously.

Sd/-FINANCIAL ADVISER

To

1. Jt. C.E.O., KVIC, Mumbai - 56

2. All Dy.CEOs in and outside Mumbai

3. All Programme/Industry Directors in central Office

4. All State/Regional Directors of KVIC

5. All State/U.T.Khadi and V.I. Boards

6. Secretary to Chairman

7. R.O. to CEO

8. A.O. to F.A.

9. Director Publicity- with a request to publish this Circular in the ensuing edition of

JAGRITI both in English and Hindi for information and needful action of all

concerned.

83


No. Legal/Policy/Part-II/99-2000 Date: 06.07.1999

C I R C U L A R

The Commission vide circular No. Legal/1021/EM/82 dated 14.5.1982 had delegated

the powers to the State/Regional Directors of the Commission for accepting the title deeds

from the Borrowers for the purposes of creation of Equitable Mortgage in favour of the

Commission. The guidelines for creation of Equitable Mortgage were also circulated from

time to time.

It is observed that the Equitable Mortgage once created are not renewed as required

under Article 62 of the Limitation Act, 1963. It is mandatory that every mortgage created

shall have to be renewed before the expiry of twelve (12) years from the date on which the

loan becomes due.

In view of the above position, all the State/Regional Directors are requested to review

the Equitable Mortgages created by the Borrowers and take steps for renewing the same

before the expiry of 12 years by following the guidelines already circulated from time to

time and pass fresh receipt for the same. A copy of such receipt may invariably be

forwarded to the Directorate of Legal Affairs. Directorate of Accounts and the

Industry/Programme Director.


To

All State/Regional Directors

84



No. Legal/E.M/Hy.deed/1264/03-04 Date: 12.11.2003

C I R C U L A R

A reference is invited to the Circular bearing No. Legal/Policy/Part-II/99-2000 dated 06.07.99, wherein all the State /Regional Directors of the KVIC were requested to take steps to review the Equitable Mortgage created by the borrowers and take steps for renewing the same before the expiry of 12 years from the date of its creation by following the guidelines already circulated from time to time and pass fresh receipt for the same.

On making an overall review of the cases concerning renewal of equitable mortgage by the Directorate of Legal Affairs based on the limited records available with it, it is observed that most of the State /Regional Offices have not paid due attention to the said important aspect, which will in turn jeopardize the interest of the KVIC in the matter of security of its funds advanced to the borrowers. According to the Law of Limitation, the equitable mortgage once created is required to be renewed before the expiry of 12 years, failing which such mortgage becomes unenforceable in law. Hence in order to safe guard the interest of the KVIC, it is highly essential to get the equitable mortgages created by the borrowers in favour of the KVIC renewed before the expiry of 12 years.

Requests have been received by the Directorate of Legal Affairs from the field offices for the circulation of specific guidelines for the renewal of equitable mortgage. Accordingly, for the information of all concerned, the following guidelines for the renewal of equitable mortgage has been specified hereunder:

I. Documents required for renewal of equitable mortgage.

The following documents in original must be obtained from the borrower at the time of renewal of equitable mortgage.

(i) Resolution passed by the Managing Committee of the institution authorizing the Secretary/President/Member of the institution for renewing the equitable mortgage;

(ii) Valuation report in respect of property from Govt. Registered Valuer/ Revenue Authority;

(iii) Approved blue print in case of additional structures;

(iv) Extract of record of rights certified by the Revenue Authority;

(v) Non-encumbrance certificate from the Govt. Pleader or from the Revenue Authority;

(vi) Permission from the Registrar of Societies/Charity Commissioner/State govt. or any other authority, wherever applicable;

(vii) Maximum ceiling limit certificate from the Registrar of Co-operative Societies, in respect of Co-operative Societies.

(Note the requirements at Sr.No. (i), (vi) and (vii) are not applicable in the case of

individual borrowers)

85

II. Scrutiny of documents by the State/Regional Offices

On receipt of documents from the borrower for the renewal of equitable mortgage, the concerned dealing official of the State/Regional Office should ensure that all the documents prescribed for the renewal of equitable mortgage, as indicated at (I) above have been received from the borrower. Thereafter the said documents along with the original title deed of the property already deposited by the borrower with the State/Regional Office at the time of creation of equitable mortgage must be forwarded to the Legal Retainer of the State/Regional Office for examination and legal opinion. Once the Legal Retainer is of the view that all the documents are proper and legally acceptable, the State/Regional Office can accept the documents submitted by the borrower for the renewal of equitable mortgage.

III. Issuance of acknowledgement for the renewal of equitable mortgage

After getting the documents submitted by the borrower for the renewal of equitable mortgage legally scrutinized by the Legal Retainer of the State/Regional Office, an Acknowledgement letter concerning the renewal of equitable mortgage should be issued to the borrower in the format enclosed to this Circular as Annexure-I.

IV. Obtaining confirmation letter from the borrower

After the issuance of the letter of acknowledgement regarding the renewal of equitable mortgage by the State /Regional Office, the borrower is required to confirm in writing that it/he has renewed the equitable mortgage of the property situated in Survey No…… with the KVIC on ……. by submitting the required documents, as a security for the loan advanced by the KVIC.

V. Maintenance of Register

The State/Regional Office should record the details of the renewal of the equitable mortgage in a register specifically kept for that purpose.

VI. Safe-custody of documents

After the completion of the formalities for the renewal of equitable mortgage, all the original documents must be kept under safe-custody locker by the State /Regional Office as per the prevailing system.

VII. Supply of certified Xerox copy of the original title deeds

If requested by the borrower in writing, the State /Regional Office may make available certified Xerox copy of the original title deeds, already deposited with the borrower with the State /Regional Office, to enable them to obtain other relevant records pertaining to the property from Revenue Authorities etc. In no case the original title deeds already deposited with the borrower with the State /Regional Office should be returned to the borrower in connection with the renewal of equitable mortgage.

The aforesaid guidelines should be followed by all concerned.

This circular is issued with the approval of the Chief Executive Officer.

Sd/-DIRECTOR (LEGAL AFFAIRS)

To

All State/Regional Directors of the KVIC.

86

ANNEXURE - I

FORMAT OF ACKNOWLEDGEMENT FOR THE

RENEWAL OF EQUITABLE MORTGAGEKHADI AND VILLAGE INDUSTRIES COMMISSION


No. Legal/E.M. Date: 27.10.05

To

The President/Secretary,

.............................................

.............................................

.............................................

Sub: Regarding Renewal of Equitable Mortgage

Sir,

Whereas the Khadi and Village Industries Commission hereinafter referred to as the

‘Commission’ has advanced several loans to the ...................... (hereinafter referred to as

the institution) for the development of Khadi and Village Industries activities.

And whereas to provide security for the repayment of the funds that has been

advanced upto ...................... and thereafter and for the funds that may be advanced by the

Commission to the ...................... from time to time had agreed to mortgage its entire

immovable property in favour of the Commission and accordingly by virtue of the

Resolution No. .............. dated ...................... passed by the Managing Committee of the

said Institution, Shri .................................................................. Secretary of the

...................... had created equitable mortgage by depositing original title deeds and other

relevant documents in respect of entire immovable property of the ......................

mentioned in the schedule–I on ...................... in favour of the Commission.

And whereas there is an balance amount of Rs .................... (Rupees ...........................

....................................... only) is due as on ...................... from the ...................... to the

Commission.

Whereas the Commission ordained the said institution to renew the equitable

mortgage for the amount due to it and the funds that may be advanced in future to the said

institution as security for repayment and accordingly the present Managing Committee of .

...................... took decision vide Resolution No ........... dated ...................... to renew the

equitable mortgage already created in favour of the Commission in respect of the property

mentioned in the Scheduled I hereto and authorised Shri ..............................................

.................... Secretary to approach the Commission for renewal of the equitable mortgage

already created in favour of the Commission and deposit all the relevant documents

mentioned in the Schedule-II hereto as security for repayment of loans.

87

That in pursuance of the said Resolution No ............ dated ......................

Shri .................................................................. Secretary approached the Commission to

renew the Equitable Mortgage already created in respect of the property mentioned in the

Schedule-I hereto and deposited the connected documents mentioned in the Schedule-II

with the intention to renew the Equitable Mortgage already created in favour of the

Commission in respect of the property mentioned in the Schedule-II hereto as security of

loan that has been advanced or that may be advanced by the Commission to .......................

from time to time together with interest thereon.

88




C I R C U L A R

Instances have come to the notice of this office that many institutions and Individual

borrowers who have applied for financial assistance from the KVIC and created Equitable

Mortgage of their immovable properties with the KVIC are now coming forward with a

request to return the original title deed/s of their properties deposited by them on the

ground that no financial assistance has been provided to them by the KVIC.

Considering the large number of requests received by this office for the return of the

original title deeds by the aforesaid categories of borrowers, a proposal was placed before

the Commission for taking a policy decision in the matter. Accordingly, the Commission in its

meeting held on 20/21.10.2003 has decided to authorize the State / Regional Directors of

the KVIC to release the original title deeds to such institutions who have created Equitable

Mortgage in favour of KVIC, but no financial assistance has been granted to them, after

obtaining no dues certificate from the Directorate of Accounts.

In view of the aforesaid decision of the Commission, all the State/ Regional Directors

of the KVIC are hereby authorized to release the original title deeds to such institutions and

Individuals who have created Equitable Mortgage in favour of KVIC, but no financial

assistance has been granted to them, without referring the matter to the Directorate of

Legal Affairs for approval. However, before releasing the original title deed/s a “No dues

certificate” from the Directorate of Accounts in respect of such institutions and Individuals

should be obtained by the concerned State/Regional Directors.


To

All the State /Regional Directors

89




C I R C U L A R

On account of the changes taken place in the funding policy of the KVIC many institutions which have undertaken the Village Industries programmes could not be financed fully by the KVIC and they were directed to obtain financial assistance from the banks. Insistencies have come to the notice of this office that many such partly funded institutions, who have created Equitable Mortgage of their immovable properties with the KVIC, are now coming forward for the repayment of the entire amount of loan taken by them along with interest and penal interest to the KVIC and demanding the return of the original title deed/s of their properties deposited by them to enable them to solicit financial assistance from other sources.

Considering the requests received by this office from the partly funded beneficiaries for accepting the repayment of the entire amount of loan taken by them along with interest and penal interest to the KVIC, a proposal was placed before the Commission for taking a policy decision in the matter. Accordingly, the Commission in its meeting held on 20/21.10.2003 has decided to authorize the State / Regional Directors of the KVIC to accept Demand Drafts for the total outstanding loan amount with interest and penal interest, if any, from such institutions and thereafter release or return their original title deeds, after obtaining “No dues certificate” from the Directorate of Accounts.

In view of the aforesaid decision of the Commission, all the State / Regional Directors of the KVIC are hereby authorized to accept Demand Drafts for the total outstanding loan amount with interest and penal interest, if any, from such partly funded institutions who are coming forward for the repayment of the KVIC dues along with interest and /penal interest and thereafter release or return their original title deeds. However, before releasing the original title deed/s a “No dues certificate” from the Directorate of Accounts in respect of such institutions should be obtained by the concerned State/Regional Directors.


To

All the State/Regional Directors

Copy for information to :

1) Jt. Chief Executive Officer, KVIC, Mumbai - 56.

2) All Dy. CEO's KVIC, Mumbai.

3) All Directors in the KVIC, Mumbai - 56.

4) Director (Publicity) with a request to publish this circular in the ensuing issue of Jagriti.

5) Hindi Officer, Hindi Cell, KVIC, Mumbai - 56 with a request to issue Hindi version of this

circular.

6) Dy. Director, I/c (I.T), KVIC, Mumbai - 56 with a request to include the circular in the

Website

90



No. Legal/I.T.E/ 03- 04 Date: 23.08.2004

C I R C U L A R

A reference is invited to the Office Order No.1817 dated 20.12.1997, wherein the decision of the Commission regarding furnishing of security by the borrowers of the KVIC had been prescribed.

According to the aforesaid Office order No.1817 dated 20.12.1997, an Individual Borrower will have to cerate equitable mortgage of all the immovable properties owned by him in favour of the KVIC, the value of which should be adequate to cover the amount of loan sanctioned. Wherever the amount of equitable Mortgage created falls short of the amount of loan sanctioned, the borrower is required to furnish sureties for the amount of shortfall.

In the case of institutions, apart from creating equitable mortgage for the total amount of loan sanctioned, surety from office bearers of the institution / society is also required to be obtained from the institutions registered with the KVIC after 1985. Those institutions registered with the KVIC prior to 1985 are exempted from the requirement of furnishing additional security.

Subsequently, the Office Order No.1823 dated 13.07.98 and Office Order No.1859 dated 26.07.99 were issued by the Directorate of K.C and VIC respectively specifying therein the guidelines for furnishing of securities by the implementing agencies of Khadi & Polyvastra and V.I.Programmes.

According to Rule 9 of the KVIC Loan Rules, a borrower is required to create equitable mortgage of all its existing properties and also the properties acquired in future in favour of the KVIC to cover up security for the amount of loan sanctioned. Similarly, at the time of creating equitable mortgage all the borrowers are giving an undertaking to the KVIC that all the properties acquired in future out of the funds of the KVIC will also be mortgaged to the Commission.

Inspite of the clear cut guidelines in the matter of obtaining security from the borrowers for the funds advanced by the KVIC, it is observed that most of the State/ Divisional offices are not taking any concrete action to ensure the compliance of the same and ultimately most of the 19 B recovery actions initiated by the KVIC against the institutions for the recovery of its funds became futile on account of the insufficiency of securities.

stIn view of the above position, the Commission in its 531 meeting held on 29/30.07.2004 has taken a decision to communicate the following course of actions to the In-charges of the field offices with a view to safeguard the security of the funds of the KVIC:

(I) Make an evaluation of the funds advanced to the borrowers coming under the jurisdiction of the concerned State / Divisional offices and the amount of equitable mortgage created against the outstanding loans;

91

(ii) In case the amount of equitable mortgage created by any of the borrower falls short of the total amount of money due from it/him, take immediate steps to pursue such borrowers to enhance the equitable mortgage to cover up the entire loan amount due to the KVIC;

(iii) In order to enhance the amount of Equitable Mortgage, the institutions / borrowers will be permitted to revalue their immovable assets mortgaged with KVIC to enable them to enhance the amount of equitable mortgage subject to

ththe conditions and guidelines prescribed under Circular dated 20 May 1998 issued by the Directorate of Finance.

(iv) Having revalued the immovable assets and having cerated E.M of the same in favour of KVIC, if it is found that value of the properties mortgaged with KVIC still falls short of the loan outstanding with the institution, then the borrowers will be asked to furnish solvent sureties to cover the balance amount.

(v) Ensure that all the existing mortgages are renewed by the borrowers before the expiry of 12 years;

(vi) Ensure that hypothecation deed/s are executed properly by all the borrowers and the same are renewed within the time limit prescribed; i.e. three years;

(vii) Obtain a copy of Income Tax Returns filed by the borrower institutions/units and furnish a copy of the same to the Directorate of Legal Affairs in the Central Office regularly;

(viii) No budget proposal for financial assistance, payment of rebate or any other benefit will be entertained or extended to a borrower if it/he has not complied with the aforesaid requirements;

(ix) Ensure that all borrowers (except the institutions of Uttar Pradesh) comply with the above requirements within three months from the date of issue of this Circular;

(x) Ensure that the institutions in Uttar Pradesh, where the permission of the Dist.Judge is required for creation of equitable mortgage, comply with the aforesaid requirements within six months from the date of issue of this Circular;

(xi) Proper records of E.M, Hypothecation deed and Surety will be maintained by the field offices.

Sd/-


ToAll the State /Divisional DirectorsCopy for information to :1) Jt.CEO2) All Dy.CEOs/ CVO3) All Industry / Programme Directors4) Secretary to Chairman5) A.O., F.A cell 6) Dy. Diretor, I/c (I.T) with a request for inclusion of the Circular in the website7) Dy. Director, I/c (Publicity ) for publishing the Circular in the ensuing issue of Jagriti.

92




C L A R I F I C A T I O N

Sub: Clarification to Circular dated 27.11.03 concerning release of

Original title deed to partly funded V.I. institutions.

****************************************

In continuation to the Circular dated 27.11.03 communicating the decision of the

Commission taken in its meeting held on 20/21.10.2003 to authorize the State / Regional

Directors of the KVIC to release the original title deeds to such of the partly funded V.I.

institutions, who have created Equitable Mortgage in favour of KVIC, the following

clarification is issued for the information of all concerned:

Since the words “Village Industries” have not been prefixed to the word “institutions”

appeared in the forth line of the last paragraph of the said Circular dated 27.11.03, there is

an apprehension that the field offices may extend the benefit of the said Circular to the

Khadi institutions also. Hence, with a view to removing the doubt, it is clarified that

acceptance of Demand Draft for the total outstanding loan amount with interest and penal

interest, if any and thereafter release of the original title deed/s is permissible only in

respect of party funded V.I. institutions and not for institutions undertaking Khadi

programme.

Sd/-

DIRECTOR (LEGAL AFFAIRS)

To

All the State / Regional Directors


1) Jt. Chief Executive Officer, CKVI, Mumbai - 56

2) Chief Vigilance Officer, CKVI, Mumbai - 56

3) All Dy. CEO's CKVI, Mumbai.

4) Dy. CEO (N.E.Z), CKVI, Guwahati

5) All Directors in the CKVI, Mumbai - 56.

6) Director (Publicity) with a request to publish this circular in the ensuing issue of Jagriti.

7) Hindi Officer, Hindi Cell, CKVI, Mumbai - 56 with a request to issue Hindi version of this

circular.

8) Dy.Director, I/c (I.T), CKVI, Mumbai - 56 with a request to include the circular in the

Website.

93

OFFICE OF THE COMMISSIONERKHADI AND VILLAGE INDUSTRIES COMMISSION


No. DKPM/UPKGM/NES/2005-06/408 Date: 23.08.2005

C I R C U L A R

In partial modification of Circular No. Legal/ITE/03-04 dt. 23-8-2004 the provisions

regarding full equitable mortgage to cover 100% of the loans outstanding with the

institutions, is relaxed, with the stipulation that the institutions must ensure to cover the

total loan outstanding against them, borrowed from KVIC including CBC funds by equitable

mortgage to the extent of 40% of the borrowings. The remaining security may be provided

by executing hypothecation deed in favour of the Commission in accordance with the

relaxation being granted, Provision No.(viii) of the Circular No. Legal/ITE/03-04

dt. 23.8.2004, shall not apply to those institutions who cover atleast 40% of the loans,

outstanding by equitable mortgage in favour of KVIC. This is also to state explicitly that any

budget of the institutions for the year 2006-2007 will not be entertained by the head office

unless they complete the important formality of covering all the immovable properties

they have by equitable mortgage in favour of the Commission.

The State/Divisional Directors are requested to act accordingly in the matter of

considering budget proposals, payment of rebate, interest subsidy, I.S.E.C., etc. to the

institutions for the year 2004-2005 & 2005-2006.

Sd/-


To

1) All State/Divisional Directors of KVIC.

2) All Programme /Industry Directors in the H.O.


1) All the Dy. CEOs/Zonal Dy. CEOs in the Head Office & Dy. CEO (NEZ), Guwahati.

2) CVO

3) P.A. to CEO

4) P.A. to Jt. CEO

5) Director (Publicity)

6) Director (IT)

7) Director (Legal Affairs)

8) Director (Audit)

9) Director (A/cs)

94

OFFICE OF THE COMMISSIONERKHADI AND VILLAGE INDUSTRIES COMMISSION


No. KPM/UPKGM/NES/2005-06 Date: 12.12.2005

C I R C U L A R

Sub: Providing security for the funds extended to Khadi and

Polyvastra institutions by the Commission.

****************************************

1) The khadi institutions are required as communicated vide Circular No. DKPM /

UPKGM / NES / 05-06 / 408 dt. 23.8.05 to create equitable mortgage to the extent of

40% of the loan outstanding with them. Several representations from khadi

institutions have been received on the problems being faced in releasing rebate,

interest subsidy under ISEC scheme, budget allocations, supply of slivers on credit,

etc. On the other hand the dispensation has created hurdles in making recoveries

from institutions on account of surplus working capital (W.C), overdue loans, interest

on C.B.C. and cost of slivers supplied against rebate dues. The issue was placed before

S.F.C. in its meeting held on 3.12.2005. The S.F.C. authorised Commissioner for KVI to

take appropriate decisions to resolve the issue in the light of rule 9 of KVIC Loan Rules,

which does not prescribe any minimum or maximum limits on creation of E.M.

While considering the question of securitisation of KVIC loans with khadi institutions

as important, it has to be seen that it is done in the light of rule 9 of KVIC loan rule:-

2) Accordingly it has been decided to restore the provision of rule 9 of the KVIC Loan

Rules and conform to the following approach:-

(I) The institutions which own immovable properties will create E.M. covering

entire immovable properties. However, if the E.M. does not cover the entire

borrowings, the shortfall to be covered by executing a proper hypothecation

deed covering all movable assets including cash in favour of the KVIC.

(ii) The institutions which do not have immovable properties to create E.M. such

institutions are required to execute hypothecation deed based on value of all

movable stocks as per the balance sheet and if there be any shortfall, sureties

be furnished so that hypothecation deed (H.D), plus sureties are equal to the

loan outstanding with institutions.

(iii) In the case of decentralized institutions such as Kshetriya Shri Gandhi Ashrams,

Bihar Khadi Gramodyog Sangh, T.N. etc. where the immovable properties vest

with the parent bodies and where the parent bodies have executed tripartite

agreement with the KVIC, the securitisation of the KVIC loans will be ensured by

the value of immovable properties in use of the decentralised unit plus the

95

value of E.M. covering immovable properties acquired and owned by the

decentralised unit plus value of H.D. If there be any shortfall, the decentralised

unit will arrange to provide sureties.

3. In consideration of the factors involved in the creation of E.M. such as

revaluation, search, mutation and in some states requirement of the

permission of the district court, it is decided to allow the institutions adequate

time till 31.12.2006 to complete the E.M. in respect of entire properties owned

by them. However, the condition of executing hypothecation deed and or

sureties, wherever applicable is not relaxed. Accordingly, the field offices may

operate the budget allocations, issue ISEC, settle rebate claim, recover KVIC

dues, conduct budget discussions, etc.

This is issued with the approval of Commissioner for Khadi & V.I. Commission

Sd/-

Jt. Chief Executive Officer

96

DIRECTORATE OF KHADI PROGRAMME & MONITORING OFFICE

OF THE COMMISSIONERKHADI AND VILLAGE INDUSTRIES COMMISSION


No. KPM/EM/Policy-06/433 Date: 20.12.2005

ADDENDUM

With reference to the Circular No: KPM / UPKGM / NES / 2005-06 / dt 12.12.2005 the

Point No. 2, (iii) may be read as follows :

In the case of decentralized institutions such as Kshetriya Shri Gandhi Ashrams, Bihar

Khadi Gramodyog Sangh, Sarvodaya Sanghs in Tamil Nadu etc. where the immovable

properties vest with the parent bodies and where the parent bodies have executed

tripartite agreement with the KVIC, the securitisation of the KVIC loans will be ensured by

the value of immovable properties in sue of the decentralized unit plus the value of

E.M.covering immovable properties acquired and owned by the decentralized unit plus

value of H.D. If there be any shortfall, the decentralized nit will arrange to provide sureties.

This issued with the approval of Joint Chief Executive Officer.

Sd/-

Director

KHADI PROGRAMME AND MONITORING

To

1) All State / Divisional Directors of KVIC

2) CEO, State KVIBs

3) All Programme / Industry Directors in the H.O.

97

DIRECTORATE OF LEGAL AFFAIRS OFFICE OF THE COMMISSIONERKHADI AND VILLAGE INDUSTRIES COMMISSION


No. Legal/E.M./Policy/05-06 Date: 27.10.2005

C I R C U L A R

Sub: Creation of Equitable Mortgage in the filed office of the KVIC

– regarding.

****************************************

As per the practice in vogue, the In charges of the filed offices of the KVIC are

accepting the deposit of original title deeds from the borrowers for the purpose of creating

equitable mortgage. According to Section 58 of the Transfer of Property Act, acceptance of

original title deeds for the purpose of creating equitable mortgage can be done only in the

cities and towns notified by the respective State Governments.

In view of the aforesaid statutory provision, In charges of the field offices of the KVIC

should ensure that the city in which the field office is situated is duly notified by the

concerned State Government for the aforesaid purpose. In case the city is not notified, take

appropriate step to move the concerned State Government for issuing a notification as

required under Section 58 of the Transfer of Property Act, 1882.

All the State / Divisional Directors of the KVIC are request to take up the aforesaid

issue seriously and furnish a status report to the Directorate of Legal Affairs within one

month.

Sd/-


To

All State/Divisional Directors


1) Jt. CEO

2) Chief Vigilance officer

3) All Dy. CEOs

4) All Industry / Programme Directors

5) P.S. to CEO / Commissione

6) P.S. to F.A.

7) Diretor, I/c (I.T) with a request for inclusion of the Circular in the website.

8) Dy. Director, I/c (Publicity) for publishing the Circular in the ensuing issue of Jagriti.

98

SCHEDULE - I

1. All the properties mentioned in the Sale Deed No ........... dated ...................... on

stamp paper of Rs ...................... between Shri ...........................................................

and others of Village ...................... Dist ...................... (Vendors) in favour of Shri

............. .................................................... (Purchaser) in respect of a piece of land

bearing survey plot No ............. adm. area ...................... situated at VIl ..............Dist

...................... Rs ...................... (Rupees ..................................................................

only). The document was registered on dated ...................... in book no. .............

volume no. ..................... at page no. ............... being document no. ................ in

Sub-registrars office ...................... Dist ......................

99

SCHEDULE-II

1. Non-encumbrance/certificate and extract from records of rights issued on dated

...................... by ...................... in respect of the piece of land/building described in

the title deed mentioned at Sr. No. ...................... above.

2. Valuation certificate dated ...................... issued by...................... in respect of

.......................Ashram/Sangh/Mandal property described in the title deed

mentioned at Sr.No ...................... above, value assessed at Rs ...................... (Rupees

.................................................................. only).

3. Information about immovable property in prescribed proforma.

4. True copy of the resolution no. .............. dated...................... passed by the Managing

Committee of the ...................... authorizing Shri .........................................

......................... Secretary/President of ............................................ to renew the

equitable mortgage of the properties mentioned in Schedule-I by depositing the

connected papers thereto personally with the authorised officer of the Commission

for creating E.M. in favour of the Commission.

5. True copy of the Memorandum of Association and Rules and Regulation of the

institution.

Please confirm in writing that you have deposited with the undersigned the original

title deeds of the immovable property of the ...................... and other connected

documents listed above and has created E.M. of ...................... immovable property

covered by the aforesaid title deeds.

Please also confirm that the ...................... presently does not have any immovable

property other than mentioned in this letter and give undertaking to the effect that in case

the ...................... acquire and create other immovable property the same will also be

mortgaged to the Commission.

Yours faithfully,

Sd/-

State/Regional Director

Copy to :

1) Director (Legal Affairs) Khadi & V.I. Commission, Mumbai - 56

2) Director (Accounts), Khadi & VI.Commission, Mumbai - 56

3) Programme Directors/State/Regional Director.

100



No. Legal/Legal Circulars/06-07 Date: 26.12.2006

C I R C U L A R

Sub: Revaluation of immovable properties mortgaged by the

borrowers.

thRef: (i) Circular No. FIN/GENL/CIR/98-99 dated 20 May, 1998

(ii) Legal/E.M./Hy.Deed/1264/03-04 dated 12.11.03

****************************************

Reference is invited to the Circular dated 20th May 1998 referred to above on the

captioned subject, wherein the institutions are permitted to revalue its immovable

properties after the expiry of 5 years of its original valuation. In the said Circular, it has been

specified that the revaluation should be done by Govt. approved valuers only.

Considering the fact that it will be costlier for the borrowers to get the revaluation

done by the Govt. Approved valuer, the Directorate of Legal Affairs while prescribing the

guidelines for renewal of E.M. vide Circular dated 12.11.03 has specified that the

revaluation of the properties can be got done by the Govt. approved valuer or Revenue

authority.

Recently it has been observed that inspite of the clear guidelines issued by the

Directorate of Legal Affairs, some of the institutions have raised complaint that on account

of the high amount of fee demanded by the Govt. Approved Valuers that institutions are

unable to get its properties re-valued.

In view of the above, in partial modification of the Circular No. FIN/GENL/CIR/98-99

dated 20th May 1998, so far it relates to the authority for revaluation of properties, it has

been decided to allow the institutions to get their immovable properties revalued after

every 5 years on the basis of the valuation report obtained from any one of the following

authorities:-

(i) The Govt. Approved Valuer.

(ii) Revenue Authority.

(iii) Market value declared by the Government, which can be obtained from any

published source, including Internet.

In case of revaluation of old building and structures, the valuation has to be Obtained

from the approved valuer or Revenue Authority.

101

The aforesaid method of valuation is restricted for the purpose of creation of

equitable mortgage only and not for any other purpose.

This is issued with the approval of the Financial Adviser, the Chief Executive Officer

and the Chairperson.

Sd/-


To

1. All the State/Divisional Director.

2. All the Industry/Programme Directors in the Central Office.

3. P.S. to Chairperson.

4. P.S. to C.E.O.

5. P.S. to F.A.

6. Director (I.T.) – with a request to include this Circular in the KVIC web site

7. Director (Publicity) - with a request to include this Circular in the ensuing issue of Jagriti.

102

DIRECTORATE OF KHADI PROGRAMME & MONITORINGKHADI AND VILLAGE INDUSTRIES COMMISSION


No. DKPM/SZ/SO/ASS/3/2008-09 Date: 01.04.2009

C I R C U L A R

Sub: Guidelines for amalgamation/merger of two or more Khadi

Institutions/Societies directly aided by KVIC/KVIB– reg.

****************************************

In the past Commission had taken a policy decision to decentralize the large sized

societies/institutions directly aided by KVIC/KVIB into two or more societies and also

prescribed the suitable modalities to be followed. However, there is no policy decision as

regards the amalgamation/merger of two or more khadi institutions/societies directly

aided either by KVIC or KVIB. Keeping in view of these aspects, a proposal for policy decision

alongwith suitable guidelines/modalities in the matter of amalgamation/merger of two or

more khadi institutions have been formulated and placed before Commission for its

consideration and approval.

thAfter detailed deliberation of the issue, the Commission in its 565 meeting held on

22.1.2009 considered the aforesaid proposal in connection with the formation of suitable

guideline/formalities for amalgamation/merger of two or more khadi institutions directly

aided by KVIC/KVIB. Accordingly, the following guidelines/procedures are prescribed in the

matter for strict compliance.

The amalgamation/merger of two or more khadi institutions of the following types

directly aided by KVIC/KVIB should be considered which recorded –

I. Gradual declining of performance year after year, production, sales and

consequently employment.

ii. Increased establishment cost disproportionate to the level of performance.

iii. Accumulations of stocks consisting of primarily shop soiled, slow moving

products and outdated products etc.

iv. Landed in debt trap, accumulated creditors, outstanding salaries to the

workers, non payment of wages to the artisans, non payment of statutory

requirements like provident fund etc.

v. Non payment of over due installment to the KVIC for C.E loan, consequently low

level of performance resulting of surplus working capital and non settlement

thereof.

vi. Constant failure, i.e. to say inspite of possessing large infrastructure such as

lands, sheds, charkhas, looms etc. and capable work force of Karykartas, the

103

institution is not in a position to provide employment to the rural artisans and

the whole purpose is defeated for which it is established with heavy

expenditure of public funds.

vii. Running in continued losses and there is no any scope for revival of the

institution.

viii. Frequent infighting among Managing Committee members – consequently

ignoring developmental activities, incurring heavy expenditure on litigation

etc.

LEGAL PROVISIONS

The dissolution clause of the bye laws of the institutions considered for

amalgamation/merger shall contain provisions to the effect that on the dissolution of the

institution, if after satisfaction of all its debts and liabilities where remains any property or

properties, movable or immovable whatsoever not impressed with any trust or trusts

agreed between the institution and the donor or donors, the same shall not be paid or

distributed amongst the members of the institution or any of them, but shall be given to

some other similar institution with similar objective with the approval of Central

Certification Committee to be determined by the special meeting of the General Body by thvotes of not less than ¾ of members present at the meeting or in default thereof by the

Principal Court of original jurisdiction of the District in which the registered office of the

institution is situated.

Further, there is a provision in the Certification Rule No. 2.10 (a) that in case of its

liquidation, its assets, whatsoever remain, after discharging the debts etc. shall be

transferred to another institution having similar objects with the approval of the

Certification Committee/ Commission.

PROCEDURES TO BE ADOPTED BY THE INSTITUTIONS

While considering the case/proposal for amalgamation/merger of two or more khadi

institutions/societies directly aided by the KIVC/KVIB, the following procedure should be

adopted by the institutions.

I. It should be ensured that amalgamation/merger of two or more khadi

institutions would take place with prior approval of the Registrar of Societies

and by following the procedure prescribed under the Societies Registration Act

and Rules.

ii. It should be ensured that institutions have passed a resolution in their General

Body meeting approving the amalgamation / merger of two or more khadi

institutions.

iii. It should be ensured that the General Body meeting of the amalgamated

institution passed/adopted resolution to the effect that it shall take over all the

assets and liabilities of the amalgamating institution/s such as all the

104

immovable and movable assets, the outstanding amount due to institution/s

and absorb staffs having with it, discharge amounts due by it to KVIC, Bank and

others.

iv. It should be ensured that the General Body meeting of the amalgamating

institution/s passed/adopted resolution to the effect that it shall transfer all the

assets and liabilities such as movable and immovable assets, sundry creditors,

Sundry debtors, liabilities to KIVC and balance to the Bank etc. in favour of the

amalgamated institution.

v. It should be ensured that both the institutions principally agreed to abide by

the Rules and Regulations of KVIC and authorized their office bearers to sign

the formalities in connection with the amalgamation.

vi. It should be ensured that the amalgamated society is ready to bear the cost of

stamp duty and registration fee involved in connection with the legal transfer of

assets in the process of merger/amalgamation and the entire legal procedure

shall be completed within a period of six months. An undertaking to this effect

is also required to be submitted by the amalgamated society.

vi. It should be ensured that in the General Body meeting of the institutions where

the resolution for amalgamation/merger is passed, one of the representatives

of KVIC/KVIB, preferably equal to the rank of Dy. Director and any case not

below the rank of Asstt. Director, is present so as to avoid any future dispute in

the matter.

viii. It should be ensured that the institution is willing to continue the same or

similar KVI activities after amalgamation/merger so that the occupation /

livelihood of artisans and other workers involved does not get adversely

affected due to the proposed merger.

PROCEDURE TO BE ADOPTED BY THE FIELD OFFICES OF THE KVIC

On receipt of the full fledged proposal from the institution concerned, State /

Divisional offices has to adopt the following procedure in order to recommend the proposal

to Central Office for its consideration.

a. The proposal for amalgamation / merger received from the institution are to be

examined in detail and to be placed before State Level Budget Team as well as

Zonal Committee constituted in the respective zone for rendering their

consent/ approval to the said proposal of amalgamation.

b. While recommending the amalgamation proposal to Central Office, the

recommendation/specific comments of Zonal Dy. C.E.O is also be obtained and

furnished.

105

PROCEDURE TO BE ADOPTED BY THE CENTRAL OFFICE

On receipt of proposal with the recommendation/specific comments of the State/Divisional Director, the Zonal Committee, the State Level Budget Team and Zonal Dy. C.E.O. concerned, the programme Directorate in Central Office shall examine the proposal in detail and ensure that legal provision exists in the respective Societies Registration Act which allows merger/amalgamation of institutions. Other important factors like programme implementation, financial management, assets and liabilities and most importantly welfare issues concerning the artisans etc. are also to be examined carefully before allowing such merger / amalgamation. Similarly, adequacy of equitable mortgage for the security of the KVIC funds deployed and the inter se relationship between the members of the managing committees of the institutions under merger / amalgamation, status of the artisans etc. are also to be taken care of.

If it is observed that all the requirements specified in this regard are satisfied in all respects, the opinion of Directorate of Finance would be obtained, as the same involves financial implications. Subsequently, the opinion of Directorate of Legal Affairs is also to be obtained on the proposal, as the same involves legal implications.

After getting the concurrence on the proposal from the Directorate of Finance and the Directorate of Legal Affairs , the proposal for amalgamation / merger of two or more khadi institutions will be submitted for approval of the Financial Advisor, the Chief Executive Officer and the Chairperson of the Commission, before finally submitting the proposal to the Commission.

Once the Commission grants approval for the amalgamation/merger of the institution, it should be ensured by the concerned State/Divisional Director that legal transfer of all the assets and liabilities including dues of the artisans / workers etc. are properly done within 6 months period.

The State / Divisional Directors are requested to bring the contents of Circular to the notice of all the institutions working under their jurisdiction to follow the same strictly.

Sd/-


To

1. All State / Divisional Directors of the KVIC.

2. Zonal Dy. CEO’s.

3. All Industry / Programme Directors at C.O. Mumbai - 56.

4. The Director (Publicity), with a instruction to publish the same in the ensuing Jagriti.

5. Director (I.T.) to place in the web site of the KVIC.

Copy forwarded to

1. Chairman / CCC

2. All Members of the Commission

3. P.S. to Chairperson. For information please.

4. O.S.D. to C.E.O.

5. A.O. to Financial Advisor.

106



No.Legal/Policy/Part -VI/2007-08. Date: 16.04.2008

C I R C U L A R

The Directorate of Legal Affairs on various occasions issued Circulars / Instructions,

with the approval of the Commission, in the matter of security of funds of the Commission.

It was also made very clear that the cases of those institutions which do not fulfill the

security norms of the Commission should not be entertained by the Field Offices for budget

discussion, release of rebate or any other assistance.

2. It is regretted to note that inspite of repeated instructions in the matter, some of the

Filed Offices are not paying any heed to the said instructions and adopting very casual

approach in the matter, resulting in placing the funds of the Commission in jeopardy.

This aspect has been viewed very seriously and it has been decided to direct once

again to follow the security norms prescribed by the Commission without any

deviation.

3. The names of delinquent officers/office are being listed and severe action will be

initiated on priority.

The concerned State /Divisional Directors will be held personally responsible for such

lapses and the losses, if any, occasioned to the Commission.

Sd/-


To

1) All State/Divisional Directors of the KVIC.



4) The Director (Publicity)- with instruction to publish the same in the ensuing issue in a

prominent page.

5) Director (I. T) - to place in the web-site of the KVIC.

Copy forwarded to for favour of kind information

1. All Members of the Commission.

2. Financial Adviser

3. Secretary to Chairperson.

Sd/-


107



MUMBAI - 400 056.

Telefax : +91 022 671 35 38

No. LA/Legal Circular/EM/2010-11 Date: 07.09.2010

- C I R C U L A R -

Sub: Revaluation of the immovable properties mortgaged with the Commission- reg.

thAttention is drawn to the circular bearing No. FIN/ GENL/ CIR/ 98-99 dated 20 May,

1998 issued by the Financial Adviser on the captioned subject.

2. As per the said circular the borrower institutions are permitted to undertake

revaluation of their immovable properties after five years of its original valuation.

The revaluation is required to be done only through Govt. Approved Valuers.

3. The above provision of revaluation of the immovable properties by the institutions

was introduced to enable the institutions to enhance its security value and thereby to

make them capable of availing more financial assistance to strengthen their

activities.

4. Inspite of the above, it is observed that most of the institutions have not come

forward to revalue its immovable properties and to enhance the value of its

securities. In many cases, it is also seen that the value of mortgage created by

institutions are not sufficient to cover the present outstanding loan with them

because the mortgage value is shown at the original value of the property.

5. In view of the above, all the Incharges of the field offices are directed to suitably

advice/instruct the institutions functioning under their jurisdiction to revalue its

immovable properties mortgaged with the Commission as per the provisions and in ththe manner provided under circular dt. 20 May, 1998 issued by the Financial Adviser.

It should be ensured that the said exercise is completed by the institutions on or thbefore 30 Nov.,10 and the compliance report is furnished to the Central Office

through the Zonal Dy.C.E.Os.

Sd/-

(J.S. MISHRA)


To

All State/Divisional Directors of the KVIC

Copy to:

All Zonal Dy. C.E.Os.- with a request to ensure the strict compliance of the circular by the

State/Divisional Directors and the institutions

Copy for information to:


2) The Director (Publicity) - with instruction to publish the same in the

108

DIRECTORATE OF LEGAL AFFAIRSKhadi & Village Industries Commission,3 - Irla Road, Vile Parle (West),MUMBAI - 400 056.Telefax : +91 022 671 35 38

No. LA/Legal Circular/Data Base/2010-11 Date: 07.09.2010

- C I R C U L A R -

Sub: Display of data base regarding immovable properties mortgaged by the KVI institutions in the website –reg.

The Ministry of MSME desires to have the details of the immovable properties mortgaged by the Khadi and V.I. institutions with the KVIC alongwith uptodate outstanding loan balances in the official website of the KVIC. A time frame has also been given by the Ministry to complete the task.

2. On the basis of the details of equitable mortgaged furnished by the field offices, the Directorate of Legal Affairs has done the data entry and the same has been uploaded in the KVIC website. However, the Ministry desires to have more clarity and uniformity in the data base regarding equitable mortgage. The original value and the market value of the mortgaged properties are required to be shown separately. Moreover, many offices have given consolidated value of equitable mortgage rather than individual value of properties. Original as well as market value of individual properties are essential. Similarly many field offices have not given complete information such as title deed number, survey number, location of property etc. against each property. The same are also required to be furnished.

3. In order to meet the above requirement, the Directorate of Legal Affairs in consultation with Director, IT has suitably revised the format of data base and the access to the same will be provided to field offices shortly to enable them to make suitable modifications in the data entry concerning the institutions coming under their respective jurisdiction.

4. In view of the above, all the State/Divisional Directors are directed to collect the correct and uptodate information regarding the original and market value of the individual properties mortgaged by the institutions and to upload the same in the website suitably on receipt of password for access to the data base in the website from the Director, IT. As the matter is time bound, it must be ensured that the entire

thexercise is completed on or before 30 Nov.,10 and compliance report is furnished in the matter. For any lapses in the matter, responsibility will be fixed on the Director concerned.

Sd/-(J.S. MISHRA)


Tol State/Divisional Directors of the KVIC

Copy to:

All Zonal Dy. C.E.Os.- with a request to ensure the strict compliance of the circular by the State/Divisional Directors.

109

DIRECTORATE OF LEGAL AFFAIRSKhadi & Village Industries Commission,3 - Irla Road, Vile Parle (West),MUMBAI - 400 056.Telefax : +91 022 671 35 38

No. LA/Legal Circular/OSL/2010-11 Date: 07.09.2010

- C I R C U L A R -

Sub: Display of outstanding loan balances in the KVIC website–reg.

The Ministry of MSME desires to have the details of the immovable properties

mortgaged by the Khadi and V.I. institutions with the KVIC alongwith uptodate outstanding

loan balances in the official website of the KVIC. A time frame has also been given by the

Ministry to complete the task.

2. The Directorate of Legal Affairs in consultation with the Directorate of I.T. has devised

a data base format and on the basis of the information furnished by the field offices

made data entry regarding equitable mortgage created by the institutions and the

same has been uploaded on the KVIC website.

3. The Directorate of Legal Affairs is not having the figures concerning the outstanding

loan balances of the institutions. Therefore, all the State/Divisional Directors are

directed to reconcile the outstanding loan balances of the institutions functioning

under their jurisdiction with Directorate of Accounts immediately and upload the

same in the appropriate column of the data base for equitable mortgage available in

the KVIC website.

4. The access to the aforesaid data base available in the website will be provided to all

the field offices shortly. Therefore, the work of reconciliation should be completed

within one month’s time and uploading of the same in the website should be thcompleted on or before 30 October, 2010 without fail. Non-compliance with be

viewed very seriously and responsibility will be fixed for any lapses in the matter.

Sd/-


To


Copy to:

All Zonal Dy. C.E.Os.- with a request to ensure the strict compliance of the circular by the

State/Divisional Directors.

Copy for information to:

1) All Industry/Programme Directors at C.O. Mumbai .


prominent page.


110

KHADI AND V.I. COMMISSION

(MINISTRY OF M.S.M.E.)'GRAMODAYA' 3, IRLA ROAD, VILE PARLE (W), MUMBAI - 400 056.

DIRECTOR (I.T)

M. RAJANBABU

BY REGD. POST

NO. DIT/SW-GEN/2010-11 Date: _________

To

Director,

Khadi and V.I. Commission,

________________________

________________________

Sub: System for monitoring Equitable Mortgage Created in favour of KVIC

and instn. loan details - reg.

Sir,

It is with pleasure to inform that a software application for monitoring Equitable

mortgage of immovable properties created by KVI institutions has been launched by the

Hon. Chairperson of KVIC on 28-03-2011. In this regard, it is requested to access this web

based software application through the URL mentioned below.

www.kviconline.gov.in/em

The Directorate of Legal Affairs has already entered the available property details in

the package in respect of the concerned offices. The loan details are also to be entered in

the package by the field offices. It is requested to go through the reports of properties and

loans available in the package and do timely modifications / additions in the data. The user

manual for operating the package can be downloaded from the package after login to the

package. User name and password allocated in favour of your office is enclosed separately

in the sealed envelope. The user name and password are to be kept confidentially and given

only to the concerned dealing assistant for doing the data entry, with strict instruction to

keep the user name and password confidentially.

Encl: As above

Yours faithfully,

Director

111

DIRECTORATE OF KHADI COORDINATIONKhadi & Village Industries Commission,


MUMBAI - 400 056.

Telefax : +91 022 671 35 38

No. DKC/EM-Security/Release-MDA-Rebate/2010-11 Date: 20.10.2011

- C I R C U L A R -

Sub: Securitization of funds extended to Khadi and Polyvastra institutions -

Release of MDA / Rebate: Reg.

Ref.: Circular No. KPM / UPKGM / NES / 2005-06 dated 12.12.2005.

Kind attention is invited to the above referred Circular, wherein the following

provisions for securitization of KVIC loans extended to Khadi and Polyvastra Institutions as

per the KVIC loan rule no. 9 were notified for strict compliance:

(i) The institutions which own immovable properties will create E.M. covering

entire immovable properties. However, if the E.M. does not cover the entire

borrowings, the shortfall to be covered by executing a proper hypothecation

deed covering all movable assets including cash in favour of the KVIC.

(ii) The institutions which do not have immovable properties to create E.M., such

institutions are required to execute hypothecation deed bases on value of all

movable stocks as per the balance sheet and if there be any shortfall, sureties

be furnished so that hypothecation deed (HD), plus sureties are equal to the

loan outstanding with institutions.

(iii) In the case of decentralized institutions such as Kshetriya Shri Gandhi Ashrams,

Bihar Khadi Gramodyog Sangh, Sarvodaya Sanghs in Tamil Nadu etc. where the

immovable properties vest with the parent bodies and where the parent

bodies have executed tripartite agreement with the KVIC, the securitization of

the KVIC loans will be ensured by the value of immovable properties in use of

the decentralized unit plus the value of E.M. covering immovable properties

acquired and owned by the decentralized unit plus value of H.D. If there be any

shortfall, the decentralized unit will arrange to provide sureties.

2. While communicating the above provision, it was also mention that the condition of

executing hypothecation deed and or sureties, where ever applicable is not relaxed

and therefore the field offices were directed to operate the budget allocations, issue

of ISEC, settlement of rebate claim, recover KVIC dues, conduct budget discussion

etc... as per specific decision taken by KVIC on the issue.

3. In spite of clear cut guidelines as mentioned above, instances have come to the notice

of Commission and as well as the Ministry in the meeting had with the

representatives of Khadi Mission on 26.08.2010 at Gandhi Darshan, Raighat, New

Delhi that some of the field offices are not following the Circular in right spirit

restricting the institution's rebate / MDA and ISEC etc.

112

th4. The issue was placed before the Commission in its 589 Meeting held on 27.01.2011

for issuance of communication reminding the provisions of Circular No. KPM /

UPKGM / NES / 2005-06 dated 12.12.2005 and the Commission has also approved

the same.

5. The State / Divisional Directors are hereby directed to follow the provisions of the

Circular dated 12.12.2005 meticulously in the matter of considering budget

proposals, payment of rebate / MDA, interest subsidy, Issuance of ISEC etc. for

smooth implementation of KVI Programmes.

Sd/-


To


Copy to:

1) Joint Secretary, MSME, Govt. of India, New Delhi for Information.

2) Chief Vigilance Officer, KVIC, Mumbai - 56.

3) Joint CEO, KVIC, Mumbai - 56.

4) All Zonal by CEOs of KVIC for information.

5) OSD to CEO, KVIC, Mumbai - 56.

6) A.O., FA Cell, KVIC, Mumbai - 56.

7) All Directors in Central Office, KVIC, Mumbai - 56.

8) Director (IT) - for hosting the Circular on web site.

9) Director (Publicity) - with a request to publish the Circular in the ensuing issue of Jagriti.

10) Circular File.

Sd/-

DIRECTOR (KHADI CO-ORDINATION)

113

DIRECTORATE OF KHADI COORDINATIONKhadi & Village Industries Commission,


MUMBAI - 400 056.

Telefax : +91 022 671 35 38

No. DKC/Khadi/MDA Policy/2012-13 Date: 28.08.2012

- C I R C U L A R -

Sub: Relaxation of conditions of E.M. for release of old pending rebate and

MDA-regarding.

Ref.: Circular No. DKC / MDA-POLICY / NES / 2011-12 dated 10.04.2012.

Kind attention is invited to the above referred Circular under reference, wherein, a

comprehensive guidelines on MDA was communicated for smooth implementation of the

Scheme. The Circular also emphasized on settlement of Rebate / MDA with respect to

securitization of KVIC loans extended to Khadi and Polyvastra institutions as per the KVIC

loan rules No. 9.

2. Further, as per the decision of the Commission in its meeting held on 19.12.2011, the

creation of E.M. was delinked with release of old pending rebate and notified vide

circular No. DKPM / Gen Corrs / 2011-12 dated 14/17-02-12. However commission

has decided to enforce execution of H.D. before release of rebate.

3. Int eh light of above, the issue of extending the benefit of relaxation of E.M. to the

institutions for the purpose of availing the benefit of MDA was placed in the ndCommission in its 602 meeting held on 27.06.12.

4. The Commission after detailed deliberation has decided to delink the payment of

MDA from creation / renewal of E.M. as was done in the case of erstwhile rebate

scheme.

5. State / Divisional Directors are hereby directed to notify the decision of the

Commission to all certified Khadi institutions and ensure strict compliance while

disbursing MDA.

This is issued with the approval of FA and CEO.

Sd/-


To

1) All State / Divisional Directors of KVIC.

2) All CEOs / MD / Member Secretary of State KVIB.

114


3 - Irla Road, Vile Parle (West),MUMBAI - 400 056.

Telefax : 022-26713538

No.LA/Circular/Disposal of Land/2015-16 Date : 08.04.2015

- C I R C U L A R -

Sub : Protection of the immovable properties owned by Khadi & V.I.

Institutions – Safeguards reg.

thAttention is invited to the Circular of even No. dated 26 October,2007, Addendum th stdated 19 December,2007 to the said Circular and Circular dated 21 July, 2008, wherein

detailed guidelines to be followed by the Field Offices for safeguarding the properties of

Khadi & V.I. Institutions mortgaged with KVIC had been communicated.

2. In-spite of the above guidelines, it is observed that many khadi institutions are

disposing the properties of the institutions mortgaged with KVIC without the prior

approval of KVIC and resulting in litigations in different courts in the country. This is

mainly due to lack of adherence to the existing guidelines on the subject by the

State/Divisional Offices.

3. As the protection of the valuable properties of Khadi & V.I. Institutions is one of the

primary duties of KVIC to ensure the continued existence of Khadi institutions in

particular and Khadi & V.I. programme in general, the following guidelines, which had

already circulated vide the Circulars referred to above, are reiterated for strict

compliance by the State/Divisional Directors.

(i) The State/Divisional Directors should list out the properties mortgage with

KVIC under Equitable Mortgage and request the Revenue Authorities

concerned to record such mortgage in the revenue records pertaining to the

properties covered under Equitable Mortgage, under the column “Other

rights” so as to prevent the unauthorized sale of such properties. This should

be done on priority as a drive within a period of 45 days from the date of issue of

this circular by deputing concerned officials of the Field Office to the Offices of

the Revenue Authorities and a compliance report may be furnished to this

Directorate within 2 months.

(ii) As soon as, information regarding unauthorised sale of mortgaged properties

by the institutions is received by the Field Offices, immediate legal action, both

the civil as well as criminal, should be initiated against the Office Bearers of the

institutions for their wrong doings. Besides, the State Revenue Authority

should be approached with a request to set-aside the registration of sale deed

effected fraudulently.

115

(iii) All the institutions should be insisted to promptly exhibit a board in the

mortgaged properties with the words “This property is mortgaged with KVIC”.

(iv) Periodic physical verification of all the properties mortgaged by institutions

should be undertaken by the State/Divisional Directors by deputing

responsible officials and a report thereon should be furnished to the

Director(Legal Affairs) as well as the concerned Zonal Dy.Chief Executive

Officer.

(v) All the State/Divisional Directors should ensure that the undertaking in the

prescribed format circulated vide Circular dated 26th October,2007 is obtained

from all the institutions functioning under their jurisdiction, in case the same

has not been obtained so far, and a copy thereof shall be furnished to the


Officer.

(vi) All the State/Divisional Directors should ensure that the Equitable Mortgage

created by the institutions are renewed before the expiry of every 12 years.

(vii) All the State/Divisional Directors should ensure that the data entry made in the

KVIC website regarding Equitable Mortgage created by the institutions are

updated in all respect. The concerned State/Divisional Directors should

undertake a quarterly review of the same and furnish a report thereon to the


Officer.

4. The instructions contained into Circular should be meticulously followed by all the

State/Divisional Directors of KVIC and any lapses on the part of State/Divisional

Directors in protecting the interest of KVIC by safeguarding the valuable properties of

Khadi & V.I. Institutions will be viewed seriously.

Chief Executive Officer & Commissioner

All the State/Divisional Directors

Copy to:-

1. All Zonal Dy.CEOs

2. All the Industry/Programme Directors of the KVIC

3. OSD, C.E.O. Cell.

4. A.O., F.A. Cell.

5. Dy. Director, CVO Cell.

6. The Director (Publicity), KVIC, Mumbai (in duplicate for publication in the ensuing issue

of Jagriti and for Media and PR Cell.

7. The Hindi Officer, Hindi Cell, KVIC, Mumbai with a request to issue Hindi version of this

Circular.

8. The Grievances Officer, KVIC, Mumbai.

9. The Public Relations Officer, KVIC, Mumbai.

10.DIT for website.

116

CHAPTER – III

COLLATERAL SECURITY

1. Meaning:

Collateral security means the security given in addition to the main security in order

to safe guard the interest of the creditor. In case the creditor is unable to recover his

debts fully or partly from the main security, he can proceed against the collateral

security for the realization of his debt.

The following are the collateral securities accepted by the Commission from the

borrowers.

2. Surety Bond:

The dictionary meaning of the word ‘Surety’ is the person who agrees to be

responsible for another.

Section 126 of the Indian Contract Act defines a Contact of Suretyship or Guarantee,

as “a contact of guarantee is a contract to perform the promise, or discharge the

liability of a third person in case of default”.

The person who gives the guarantee is called the Surety. The person on whose behalf

the guarantee is given is called the Principle Debtor and the person to whom the

guarantee is given is called the creditor. In a contract of Suretyship or Guarantee, the

primary responsibility to discharge the obligation/liability lies with Principal Debtor. If

the Principal Debtor fails or makes default in discharging his obligation/liability, then

only Surety becomes liable. Hence, Surety’s liability is only secondary or collateral.

The expression ‘Secondary’, however, does not mean that surety can be proceeded

against only after exhausting the remedies as against the debtor. Many court

decisions show that a surety is liable to the creditor irrespective of the remedy, which

the creditor may have against the principal debtor and the creditor may proceed

against the surety without exhausting his remedies against the principal debtor.

Further, it is not incumbent on the creditor to sue the principal debtor in the first

instance.

3. Guidelines for Execution of Surety Bond:

The guidelines for the execution of Surety bond have been circulated vide Office

Order No.1817 dated 20-12-97 and the documents required for execution of the

surety bond are contained in the Annexure-VII and VIII to the said Office Order, which

is placed at the end of chapter-I.

The guidelines regarding acceptance of surety bond, its safe custody and release of

the same have been circulated vide Circular bearing No. Legal/E.M/Policy-Part-IV/97-

98 dated26-8-97, which is placed at the end of chapter.

117

4. Registration of Surety bond:A Surety bond is required to be registered since it is a security bond, affecting an immovable property.

5. Indemnity Bond:An Indemnity Bond is more or less a document of indemnity. Section 124 of the Indian Contract Act defines a Contact of Indemnity as “ a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person is called a contract of indemnity”.

The person who is giving the promise is called the Indemnifier and the person to whom the promise is given is called the Indemnity holder.

The indemnity holder must have suffered a loss before he can make the indemnifier liable in a contract of indemnity. Happening of the loss is the contingency (condition) on which the liability of the indemnifier springs in to existence.

6. Registration of Indemnity Bond:An Indemnity bond is not required to be registered unless it is a security bond, affecting an immovable property.

7. Differences between Contract of Indemnity and Contract of Guarantee:1. A contract of indemnity is entered into with the object of protecting the

indemnity holder (promisee) against anticipated loss. Whereas in the case of contract of guarantee, the surety (Promisor) undertakes to perform or discharge the liability of a third person in case of default by such third person.

2. In a contract of indemnity there are only two persons, viz. the indemnifier and the indemnity holder. Whereas in a contract of guarantee there are three party, viz. the surety, the principal debtor and the creditor.

3. Contract of indemnity is a direct engagement between the parties. Whereas the contract of guarantee is collateral engagement to be answerable for the debt of a third party.

4. In a contract of indemnity the obligation is undertaken without anybody’s request. That is, there is no third party whose concurrence is required in a contract of indemnity. Whereas, in a contract of guarantee, the surety undertakes his obligation at the request (express or implied) of a third party.

8. Duties and Responsibilities of Field Office in Connection with Surety Bonds:

1) In the case of security bonds (Surety bond and Indemnity bonds), the field office shall have to ensure as to whether the borrower has furnished the security bonds duly executed along with the other relevant documents as per guidelines prescribed in this behalf by the Commission. Thereafter the same may be got vetted from the Legal Retainer of the State/Divisional Offices.

2) The original copies of the security bonds should be forwarded to the Director (Accounts) for keeping the same in safe custody. Copies of the same may be forwarded to concerned Industry/Programme Directors to enable them to process the pay order.

118

9. Extracts of Circulars:


No. Legal/EM./Policy Part-IV/97-98 Date: 26.08.1997

Sub: Safe-custody of Surety Bond executed by the Borrowers and release of the same to the borrowers after creation of Equitable Mortgage for adequate amount.

**********************

In pursuance of Rule 9 of the KVIC Loan Rules, 1958 the Commission has been obtaining Equitable Mortgage from the borrowers of their immovable properties as a security for the funds advanced from time to time. For this purpose necessary powers have already been delegated to all the Directors/Incharges of the State Offices to accept deposit of title deeds from the borrowers for creation of Equitable Mortgage. In case, the borrower does not have its own immovable property, the borrower is required to furnish sureties acceptable to the Commission for securing entire funds advanced by the Commission.

With a view to keep such Surety Bond/s executed by the Borrowers under safe-custody and to release the same after creation of Equitable mortgage for adequate value, the Commission at its meeting held on 30.06.1997 has decided as under:-

1) Surety Bond/s obtained by the Director/Incharge of State/Regional/Sub-offices from the Borrowers should be duly got examined by the empanelled Advocate and forwarded to the Director (Accounts) at Central Office, Mumbai along with loan documents.

2) The Director (Accounts) shall keep such Surety Bond/s and loan documents in safe-custody and initiate further needful action.

3) After creation of Equitable Mortgage by the concerned Borrower for the entire loan advanced to it, the Director (Accounts) shall release the Surety Bond/s after obtaining necessary recommendation of the State/Regional Director/Incharges of Sub-Offices as well as Industry/Programme Directors with the concurrence of the Directorate of Finance and Legal and with the approval of Financial Adviser, Chief Executive Officer and Chairman.

4) The Director (Accounts) shall furnish a list of Sureties released as per the aforesaid procedure to Director (Legal) who shall in turn submit half yearly report to the Commission.

The aforesaid procedures shall come into force with immediate effect.

Sd/-


DIRECTORATE OF LEGAL AFFAIRS

119


No: Legal/Policy/Part -VI /2007-08 Date: 16.04.2008

- C I R C U L A R -

The Directorate of Legal Affairs on various occasions issued Circulars / Instructions,

with the approval of the Commission, in the matter of security of funds of the Commission.

It was also made very clear that the cases of those institutions which do not fulfill the

security norms of the Commission should not be entertained by the Field Offices for budget

discussion, release of rebate or any other assistance.

2. It is regretted to note that inspite of repeated instructions in the matter, some of the

Filed Offices are not paying any heed to the said instructions and adopting very casual

approach in the matter, resulting in placing the funds of the Commission in jeopardy.

This aspect has been viewed very seriously and it has been decided to direct once

again to follow the security norms prescribed by the Commission without any

deviation.

3. The names of delinquent officers/office are being listed and severe action will be

initiated on priority.

The concerned State /Divisional Directors will be held personally responsible for such

lapses and the losses, if any, occasioned to the Commission.

Sd/-


To





prominent page.

5) Director (I.T.) - to place in the web-site of the KVIC.



2. Financial Adviser

3. Secretary to Chairperson

Sd/-


120

CHAPTER – IV

HYPOTHECATION DEED

1. Meaning and Definition:

Hypothecation deed is a document by which a movable property can be offered as

security for the payment of money or performance of any provisions. It empowers

the lender to oblige the borrower to perform his obligation.

The hypothecation is not defined or dealt with in any Indian Statute. But the courts

recognize it on principle of equity. In hypothecation the possession of movable

properties covered under the hypothecation remains with the borrower. In other

wards, there is no question of property or any interest therein being transferred by

Deed of hypothecation. The hypothecation merely creates a charge on the movable

properties.

Since the provisions of the Transfer of property Act and the Civil Procedure Code do not

apply to hypothecation, it is usual and desirable to have the hypothecation evidenced

by a regular document containing all terms and conditions, powers and provisions, to

safeguard the interest of the lender (creditor). Therefore, a deed of hypothecation

contains not only a covenant (condition) to pay the monies borrowed with interest, but

it confers power to the lender (creditor) to take possession of the property in case of

default by the borrower to repay the loan or breach of any condition of the deed as well

as the power to sell the property directly or through court. It also contains other

powers and provisions such as for insurance, safe custody etc.

2. Stamp Duty on Hypothecation Deed:

As regards payment of stamp duty, the provisions of the Indian Stamp Act as well as

State Stamp Act would apply. However, if the instrument of hypothecation is not

attested, it is exempted from payment of stamp duty. In that case it may attract stamp

duty as on a simple agreement.

3. Registration of Hypothecation Deed:

A hypothecation deed is not required to be registered under the Indian Registration

Act.

4. Renewal of Hypothecation Deed:

As per the Office Order No.1823 dated 13-7-98 the hypothecation deed requires to

be renewed before the expiry of every three years. Instructions regarding the

renewal of hypothecation deed have been communicated vide Office Order No.1823

dated 13-7-98, which is placed at the end of chapter.

Further, vide Circular dated 12.11.2003, all the State/Divisional Directors were

informed of the guidelines formulated for regulating the renewal of the

hypothecation deed. The copy of the circular is placed at the end of chapter.

121

The matter of dispensing with the insisting of adoption of model bye-laws by the

institutions at the time of renewal of hypothecation deed has been considered by the

Commission in its meeting held in the month of October 2006 and it has been decided

to do away with the same and in its place decided to ensure the incorporation of 4

main clauses as specified in the Circular No.DKC/CC/Dos & Don’t/2002-03 dated

18.08.2002 issued by the Directorate of K.C for all the existing institutions.

Henceforth adoption of model bye-laws by the institutions at the time of renewal of

hypothecation deed need not be insisted, but only to ensure that the aforesaid 4

essential clauses are available in the bye-laws of the institutions.

5. Guidelines for the Execution of Hypothecation Deed:

The guidelines for the execution of hypothecation have been prescribed by the

Commission and notified vide Circular letters dated 1-3-1989, 3-11-93, 16-1-95, 17-3-

97, 7-1-99 and 21.02.06. which are placed at the end of chapter.

6. Significance of Clause 17 and 18 of the Hypothecation Deed:

The Clause 17 of the hypothecation deed (Clause 16 in the old format) empowers the

commission to enter upon any premises of the borrower and to seize, or to take

possession of the hypothecated goods as Attorneys.

Under Clause 18 (Clause 17 in the old format) of the hypothecation deed the

borrower irrevocably appoints the Commission or its officer/s as the Attorneys for

and in the name of the borrower

As per the powers conferred upon the Commission by the aforesaid clauses, the

Commission can seize, recover, receive and remove the goods or appoint any officer

as Receiver of the hypothecated goods and sell the same either by public auction or

otherwise.

7. Taking over the Hypothecated Goods as Prelude to 19B:

As soon as it comes to notice of the State/Regional Director that the financial

condition of the borrower is not sound and is deteriorating day by day, to safeguard

the Commission funds, as a prelude to 19 B, the State Director in consultation with

the Zonal Dy.C.E.O may freeze the accounts of the borrower with the banks, attach

the movable assets and dispose of the same, without any notice to the borrower, as

per the powers conferred by clause 17 and 18 of the hypothecation deed

(corresponding to clause 16 and 17 of the old format). This action should be taken

very confidentially, quickly and carefully. Necessary guidelines regarding the taking

over of movable assets have been circulated vide Circular-bearing No. LR/Mis/114

dated 30-7-84, which is placed at the end of chapter.

8. Processing of Hypothecation Deed:

With a view to ensure that all the requirements for the execution of hypothecation

deed ,as specified in the Guidelines issued by the Directorate of Legal Affairs, have

been complied with by the institutions executing the hypothecation deed , a format

122

to be used for processing the execution of hypothecation by the field office has been

devised and placed at the end of the Chapter. A copy of the same should also be

forwarded to the Directorate of Legal Affairs along with the hypothecation deed and

other documents.

9. Duties and Responsibilities of the Field Office in Connection with Execution of

Hypothecation Deed:

1) The field office shall ensure that the original hypothecation deed is executed in

the original printed form along with a duplicate.

2) The field office shall ensure that the borrower submits all the documents

prescribed by the Commission.

3) Before forwarding the hypothecation deed for execution on the part of the

Commission, the field office shall ensure that the hypothecation deed is

complete in all respect as per the prescribed guidelines.

4) The field office should ensure that the borrowers are renewing the

hypothecation deeds both under Khadi and Village Industries before the expiry

of three years.

5) The field office should ensure that while forwarding the hypothecation deed to

the Directorate of Legal Affairs for executing on the part of the Commission, all

the 4 essential clauses as specified in the Circular dated 18.08.2002 issued by

the Directorate of K.C are available in the bye-laws of all the existing

institutions.

6) The field office shall ensure that the borrowers are insuring the hypothecated

goods and the insurance policy thereon is endorsed to the KVIC

123



Legal Recovery Section

No. LR/Misc./114 Date: 30.07.1984

- C I R C U L A R -

Sub: Taking over the Hypothecated assets.

**********************

In some cases, where the Commission has taken the decision to recall the funds from an institution, the State Directors are being directed to take possession, of the hypothecated assets of the institution, dispose the same on the lines laid down in clause 16 of the Hypothecation Deed and to remit the sale proceeds for adjustment against dues from the institution to the Commission. This is to be done without notice to the borrower.

It is observed that generally prompt action is not being taken in the State Offices after receipt of authority letters and orders directing them to take over the hypothecated assets of the specified institution.

The objective of taking over the hypothecated assets is to save time required in availing of other remedies for recovery of dues to the Commission. It is also a prelude to action under Section 19-B of the KVIC Act, with regard to the balance amount, designed to ensure that the assets are not dissipated by the management in the light of the knowledge that revenue recovery proceedings are in the offing. Hence, any delay in taking over of hypothecated assets is likely to prove counter productive. It is, therefore, directed that the State Directors should initiate steps to take over the movables within 10 days from the date of receipt of the orders of the Chief Executive Officer. If for any of reasons the Director State Office is likely to take more than 10 days from the date of receipt of authority of the Chief Executive Officer in taking over the hypothecated assets, the State Director should write to the Chief Executive Officer immediately about such reasons.

In the matter of taking over assets the following guidelines should be kept in view :-

1) After due preparation a team of officials headed by the State Director himself, who is authorised to take over the hypothecated assets, should proceed to the institution within a week of receipt of the orders, to take over the movables.

2) If the Director apprehends hostile attitude on the part of the borrower institution he may seek police protection before commencement of the action to take over the hypothecated assets. In some cases it may also be necessary to send police help for protection of the hypothecated assets after they are taken over. Forms of letters that may be addressed to the police authority are enclosed for guidance.

3) It would be desirable to take one staff member for each of the industries for

124

which the institution has been financed, so that they may be able to identify the tools, implements and machinery purchased by the institution and also for the purposes of arranging disposal of tools and implements taken over.

4) Information about the Bank accounts that are maintained by the institution should be ascertained from the records. In the light of this information, the letters signed by Chief Executive Officer addressed to the Manager of the Bank which are sent with the letter of authority should be filled in with particulars about address of the Bank and accounts numbers of the institution. In case there are more Bank accounts than the signed letters supplied with the signature of the Chief Executive Officer, similar letters can be prepared and presented to the concerned Banks over the signature of the State Director as he would have been authorised to take over the hypothecated assets.

5) The trade debtors should be given notices to remit their dues to the institution, to the Director being attorney of the institution under Clause 17 of the Hypothecation Deed.

6) To begin with the books of accounts, stock registers and other records of the institution should be examined to ascertain the movables that should be there as per the records of the institution.

7) A list of available movables to be taken possession of should prepared and compared with the records, in the presence of the representative of the institution or panch of find out whether there may be any items which are not available as per the records. A clarification of the Secretary and/or the Chairman of the institution should be immediately sought about the whereabouts of the missing items.

8) Watch and ward arrangements should be made for safe custody of the movable taken over. Expenditure on the arrangement should be met from the sale proceeds of the hypothecated assets and other realizations.

9) Movable such as machineries, tools, equipments, furniture etc. should be disposed of as expeditiously as possible on the lines laid down in clause 16 of the hypothecation deed ensuing realization of maximum price possible.

It should be remembered that Revenue Recovery proceedings can be initiated only after the amount realized by disposal of all the movables is known, since the correct figures about outstanding loan has to be mentioned in the letter seeking Revenue Recovery Certificate.

All the State Directors are requested to note the above instructions and ensure that cases referred to them for taking over of movables are disposed of as expeditiously as possible.

Sd/-


Encl : As above

125

(To be addressed to Incharge of Local Police Station)

The Khadi and Village Industries Commission is a body corporate established under a special statute of parliament known as the Khadi and Village Industries Commission Act, 1956. It has jurisdiction all over India and is primarily engaged in the development of Khadi and Village Industries in the country. The body is under the administrative control of the Ministry of Rural Reconstruction of the Government of India and all it is expenditure is met from grants and loans provided by the Government of India after due appropriation made by Parliament in this behalf. Out of the funds as received by the Commission from the Government grants and loans are made in favour of various implementing agencies for the development of Khadi and Village Industries. The grants are given on condition that they will be utilized for the purpose for which it is given. The loans are also given subject to the same condition and are also required to be secured by a charge on properties of the agencies. For this purpose appropriate hypothecation deeds are executed by the agencies in respect of their movable assets.

One of the agencies so assisted by the Commission is the ____________________ which is a society registered under the Societies Registration Act 1860. The Commission has advanced large sums by way of loan to this institution totalling approximately Rs.__________________________________. The Commission has reason to believe that the funds provided to the institution are not being utilized for the purpose for which it had been made available and in addition it is considered that the funds of the Commission with the institution are no longer safe. The Commission as constituted Attorney of the _______________________________________ has therefore decided to take possession of the movable assets of the institution in exercise of the irrevocable authority conferred on it under the hypothecation agreement referred to above. It is not unlikely that the institution may resist the taking over or physical possession of these assets by the Commission’s authorised representatives. You are therefore requested to provide suitable assistance to enable the Commission, which as stated above, is a public body under the Government of India to take over possession of movable assets which are duly hypothecated to it and which it is authorised to take over in accordance with the irrevocable agreement with the institution. It is also likely that the institution or its officers may file false or frivolous complaints with malicious contention by distortion of facts so as to create impediment in the aforesaid action of the Commission by way of coercive tactics against the officer of the Commission.

(to be addressed to Incharge of Local Police Station)I

In continuation of our previous intimation about the intention of the Khadi and Village Industries Commission to take over possession of the movable assets of the _______________________________ located at_________________________________ I have to inform you that (with your help and assistance) we have taken over possession of the assets, a list of which is attached. These have been kept, as far as possible, under lock and key at ___________________________________ but some of the assets are not so secured. It is apprehended that there may be attempts by miscreants or even by the institution to steal or otherwise remove these assets and or cause damage to them. Having regard to the fact that these assets are now in the custody of the Khadi and Village Industries Commission, which as stated in our earlier communication is a Central Government organization you are requested to kindly ensure that the safety of the assets are not jeopardised in any way by miscreants or by the institution.

126


No. Legal/Hyd.Deed/95-96 Date: 16.1.1995

Sub: Guidelines for execution of Hyp-Ded formsRef : 1) Circular No. LC/1007 dt. 8.7.68 2) Circular No. LC/HD/92-93 dt.31.3.93 3) Circular No. Legal/HD/93-94/551 dt. 3.11.93

**********************

Guidelines for completion of Hyp-deed forms for execution were circulated in the past to all the field offices. It is observed that while forwarding the Hyp-Deed forms to the Legal Cell of Central Office the field offices are not following the prescribed procedure resulting in avoidable and infractuous correspondence before execution of the Hyp-deed. The delay in execution of the Hyp-Deed adversely affects the KVI Programme implementing by the concerned institutions/societies. In order to overcome this problems, a checklist to be followed and requisite documents to be attached alongwith Hyp-deed forms have been dealt in exhaustively in the enclosed appendix. The State Director/Incharges of field offices may ensure compliance of these requirements before forwarding the Hyp-deed forms to Central Office (Directorate of Legal) for executing the same on behalf of the Commission.

This orders will come into force with immediate effect.

Sd/-

(N. K. Roy)

Dy. Chief Executive Officer (Legal)

Encl : As stated

To

All the field offices.

127

APPENDIX

CHECK LIST FOR COMPLETION OF HYP-DEED FORMS AND SUBMISSION OF

SUPPORTING DOCUMENTS

1. HYPOTHECATION DEED:

i) The authorised office bearers i.e. the Secretary president/Chairman and Member (atleast two ) members of the (Institution/Society) should execute the Hyp-deed/s in duplicate (original on duly stamped form and its duplicate copy ) for the ceiling amount fixed by the incharge of the field offices(i.e. Director, Dy. Director incharge etc. ) in the presence of the Incharge of the offices.

ii) The deed should be executed within two months from the date of passing the resolution.

iii) Each and every page of the deed should be signed by the authorised office bearers affixing rubber stamp of the institution containing (Full name of the office bearers), designation, name and address of the Institution.

iv) The deed should be executed (duly filled in signed and stamped) very neatly and if any corrections, over-writing deletion occur, then, it should invariably be attested by the authorised office bearers.

v) The deed should be filled in with one ink and one handwriting or the same be typed/printed.

vi) At page No.1 of the Hypothecation deed, name and complete postal address of the implementing agency with reference to the address given in the Registration certificate and Bye-laws Memorandum of Association should be mentioned with Registration No., Date of Registration, period of validity (Wherever applicable) and Act under which the Society/Institution is registered. The correctness of the name , address, Registration No. date etc. Should be verified from the Registration certificate issued by the Registering Authority. If there is a change in the address, name etc. then, the institution may be asked to furnish a certificate or a document evidencing intimation to the Registering authority about the change of name and/or address and its acceptance/approval of the Registering authority.

vii) At page 1 of the deed, the authorised office bearers have to mention the amount of loan godown address and a separate letter indicating the address of the godown/s may also be obtained and forwarded.

viii) At present 2,3,4 of the hypothecation deed the amount of loan may be indicated in figure and words.

ix) Under schedule iv, particulars of prior charge, if, any, should be indicated together with the counter signatures of the authorised office bears affixing rubber stamp, containing name and Designation, of the office bearers and name and address of the institutions.

128

At page 7 there should be no writing below the sentence "For and on behalf of the within named borrower" is printed, since the authorised officer so the Commission i.e. Dy. C.E.O., (Legal) or Director (Legal) has to sign and affix the Common Seal of the Commission in that place. On the same page the full name (expanded form) of the office bearers, designation, name and address of the implementing agency should be subscribed affixed. There should not be any variation of signature and name of the office bearers, and in the name and address of the institution. These particulars, may be compared with the Registration certificate Bye-laws/Memorandum of Association, Resolution, Signature Verification certificate etc.

2. RESOLUTION:

i) The borrower institution should pass a resolution in the prescribed format (Annexure-I) authorizing two or more office bearers (Secretary, President / Chairman and a member) to execute the deed/s for the ceiling amount approved/fixed by the Director or Dy. Director (Incharge) of the offices.

ii) The Resolution of the institution should be attested by the Chairman / President / Secretary.

3. SIGNATURE VERIFICATION CERTIFICATE:

The Director or the Dy. Director-in-charge of the offices should verify the signature of the office bearers with reference to the signature subscribed to the Bye-laws / Memorandum of Association and the list of present Managing Committee Members duly certified / countersigned / approved / attested by the Registering Authority. It should be in the prescribed format (Annexure II).

4. CEILING LIMIT CERTIFICATE:

The Ceiling Limit in the prescribed format (Annexure III) should be fixed by the Director/Dy.Director (Incharge) of the office by taking into account all the guidelines and norms prescribed by KVIC from time to time in this regard. While fixing the ceiling limit in respect of Cooperative Society concerned, the Maximum ceiling limit certificate from the concerned Registering / Authority should be obtained and a zerox copy of the same duly attested / certified by the incharge or a Gazetted Officers may be attached.

Permission of the Charity Commissioner to Hypothecate and mortgage moveable and immovable properties to KVIC against loan advanced with ceiling limit should be obtained by implementing agencies where ever it is applicable and a copy of such permission duly attested/certificate by the Director or incharge of the office should be furnished.

5. REGISTRATION CERTIFICATE, BYE-LAWS AND RULES AND REGULATIONS:

i) Copy of Registration Certificate, Bye-laws and rules and regulations (English/Hindi) duly attested by a Gazetted Officer should be furnished. If, it is in other language a translated copy of the same duly translated by an approved/competent translator or certified by a Gazetted Officer should be furnished.

129

ii) The Bye-laws and Rules and Regulations should be in accordance with the approved model bye-laws. The Director or Dy. Director (Incharge) should examine clauses/Rules contained in the bye-laws/Rules and Regulations and ensure that the same are in conformity with the approved model Bye-laws and not inconsistent with the approved model Bye-laws and not inconsistent with the provisions required. If not, the institution/society may be asked to add and/or delete and amend the same accordingly and a copy of the amended bye-laws/Rules and Regulations approved by the Registering Authority duly attested by a Gazetted Officer should be furnished alongwith the deed/s.

6. LETTER OF DIRECT LISTING :

Copy of the letter, taking the institutions/society under the fold of the Commission (direct listing letter) duly attested by the Incharge of the office should be furnished.

7. THE STAMPED DEED SHOULD BE EXECUTED ON THE VALUE OF RS.70/-

(Rs. Seventy only) irrespective of the date of stamping as per the Bombay Stamp Act and as per the letter No…………………………………. dated 30.11.93 of Inspector General of Registration, Pune.

8. In U.P. the validity of the Registration is for 5 years only from the date of Registration of the institution. Therefore, the Incharge of the offices should ensure that the validity of the Registration Certificate is renewed from time to time and an attested copy of the same should be forwarded to this office, wherever applicable.

9. For execution of deed for enhanced ceiling limit, a certificate from the Registering Authority certifying that there is no amendment/s to the original bye-laws/Memorandum of Association should be furnished to this office or an attested copy of the amendment/s made to the original bye-laws/Memorandum of Association should be furnished. The Incharge should ensure that the amendments made are not inconsistent with the model bye-laws of the Commission.

10. LIST OF PRESENT MEMBERS OF THE MANAGING COMMITTEE MEMBERS :

If, there is a change in the Managing Committee members, a list of the present members of the Managing Committee in the prescribed format (Annexure-IV) duly approved by the Registering Authority or a xerox copy of document/paper evidencing intimation to the Registering Authority about the change in the members of the Managing Committee duly attested by a Gazetted Officer or the Incharge of the office should be forwarded.

11. The date of executing of hypothecation should be subsequent to the date of passing of the Resolution by the implementing agencies.

12. At the time of requisition for blank stamped hypothecation deed forms, the incharge of the field offices should forward a statement containing name and address of the institution to whom the deed are to be supplied in the prescribed format(Annexure-V).

130

Annexure – I

On letter head of the Institution/SocietyResolution No…………………… Date ……………….

The Managing Committee of .................................................................................................

..............................................................................................................................................

..............................................................................................................................................(Regn No. ………………….. and Date …………………………..) have resolved on this ………. day of ………………………….. 199 to execute Hypothecation deed in the form prescribed by the Khadi & Village Industries Commission for the ceiling amount of Rs……………………………. (Rupees :………………………………………………………………. Only) under Khadi and Rs………………………… (Rupees :……………………………………………. Only) under Village Industries loans in favour of the Khadi & Village Industries Commission, as security for the repayment of the Commission's funds. The Managing Committee after going through the Hypothecation deed forms prescribed by the Commission hereby agree to observe all the terms and conditions contained therein and resolved that Shri/Smt……………………………………… Secretary Shri/Smt. ……………………………………………………… President / Chairman and Shri/Smt. ……………………………………………………… member of the institution whose signature are attested below herewith are hereby authorised to execute the hypothecation deeds for and on behalf of the institution for the above mentioned ceiling amount in favour of the Khadi & Village Industries Commission.

The Managing Committee further authorise the above named office bearers to do all acts and things necessary for execution of the hypothecation deed/s and approve that all acts and things to be done by the abovenamed office bearers of the institution in pursuance of this resolution for execution of hypothecation deed shall be binding on the ………………………………………

Authorised Office Bearers

Sr. No. Name Designation S pecimen Signature

1.

2.

3.

Signature Verified & Attested

Name :

Designation : Secretary

Seal of the institution

131

Annexure – II

KHADI AND VILLALGE INDUSTRIES COMMISSION(Address of the office)

SIGNATURE VERIFICAITON CERTIFICATE

CERTIFIED that the office bearers of .....................................................................................

..............................................................................................................................................

(NAME, ADDRESS, REGISTRATION NO. & DATE)

..............................................................................................................................................

..............................................................................................................................................

HAVE SIGNED THE HYPOTHECATION DEED/S UNDER Khadi/Village Industries for a ceiling amount of Rs………………. (Rs………….........................................……………….only) and Rs…………………………… (Rs………………............................…………………………………………….. only) respectively in favour of Khadi and Village Industries Commission before me and their signatures have been verified.

Sr. No. Name Designation S pecimen Signature

1. Shri/Smt. 1. 2. 3.

2. Shri/Smt. 1. 2. 3.

3. Shri/Smt. 1. 2. 3.


Name :



132

Annexure – III

KHADI AND VILLALGE INDUSTRIES COMMISSION(Address of the office)

CEILIING LIMIT CERTIFICATE

CERTIFIED that the ceiling limit of Rs. ...........…… (Rs………………………………………..........

.................... only) under Khadi and Rs. ............... (Rs…....................…………………………

………………only) under Village Industries in respect of respect of ………………………………………

(name, address, Regn. No. & Date of the implementing agency) have been fixed by the

undersigned by taking into account all the guidelines and norms prescribed in fixing ceiling

limit and in view of the Khadi and Village Industries Programme envisaged and in pursuance

to the recommendation of the Budget team for the year …………………………………………


Name :



133

Annexure – IV

On the letter head of the institution or on a stamp paper wherever applicable

No. : Date :

LIST OF MANAGING COMMITTEE MMEMBERBS FOR THE YEAR …………..

1. Name of the Institution/ Society and Address :

2. Registration No. & Date :

3. Date of General Body meeting :

4. Total No. of members & No. of members present :

Sr. Name Father's/Husband's Residential Designation SignatureNo. Name Address other than office

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

Signature Name :Designation :

Address/seal of the Institution/Society

Signature, seal and address of theRegistering Authority

134

Annexure – V

(Address of the office)

Statement of Utilisation of Hypothecation deeds under Khadi & Village Industries.

Sr. Name, address & Registration Deed UnderNo. No. of the Institution/Society Khadi V.I.

for a ceiling for a ceiling amount of Rs… amount of Rs…

1.

2.

3,

4,

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

Signature

Name :

Designation :

Address/Seal of the office

135

DIECTORATE OF LEGAL AFFAIRSKHADI AND VILLAGE INDUSTRIES COMMISSION


No. Legal/Hyp.deed/96-97/ Date: 17.03.1997

-: C I R C U L A R :-

Sub: Guidelines for execution of Hyp.deed forms..regarding.

Ref : Circular of even No.dated 16/01/95.

**********************

1. While scrutinizing the hypothecation deed papers for executing on the part of the

Commission, it is observed that in a number of cases, Memorandum of Association ,

Rules and Regulations of the concerned institution do not provide for basic and

essential requirements on the lines of the provisions indicated in the model bye-laws

of the Commission. Besides above, the following lapses have also been noticed.

(I) Xerox copies of the bye-laws, Registration Certificate are not attested by a

Gazetted Officer,

(ii) Resolution is passed subsequent to execution of Hyp.deed,

(iii) Prior charges if any under Schedule IV of the Hyp.deed are not recorded duly

signed by the authorised office bearers,

(iv) The resolution is not received on the letter head of the institution.

(v) The full name and address of the institution is not indicated on page 1 of

Hyp.deed.

(vi) Rubber Stamp and Signature of the authorised office bearers are not affixed on

each pages of Hyp.deed.

(vii) Corrections made in the Hyp.deed are not attested by an authorised officer

bearer etc. etc.

2. As a result of the above omissions/commissions the Directorate of Legal has been

entering into lot of correspondences for compliance of aforesaid requirements with

the concerned State Offices resulting in considerable delay by the concerned State

Offices. On the other hand, concerned Industry/Programme Directorates have been

referring files to the Legal Section for confirmation of the position of hyp.deed

executed by the borrower/s for release of funds. In the meantime, on many

occasions it is also observed that some of the office bearers of the institutions

approach authorities of the Commission complaining about delay in execution of the

hyp.deed.

3. In this connection, attention is invited to this office Letter No:Legal/Hyp.deed/95-96

dated 16.01.95 which prescribe detailed guidelines to be followed strictly before

forwarding hyp.deed to the Central Office by the State Director/Incharge of the

136

Offices.

4. Khadi Registration Certificate up-to-date or any evidence to show that application for

renewal certificate to the Central Certification committee have been submitted is

required. It is also necessary that the Incharge of the office should certify that “the

institution’s Khadi certificate is valid upto March, 19……. (validated upto financial

year) and the certificate is not cancelled by the appropriate authority as on date.

5. With a view to avoid delay in implementing the Khadi & Village Industries

programmes, the institutions are being direct listed by the Khadi & V.I. Commission

and also the hyp.deeds are being executed on the part of Khadi & V.I. Commission

before submission of certified (approved by the Registering authority), amended

copy of Bye-laws/Rules and Regulations. Vide Circular No.D.K.C./DD/Policy/89-90

dated 26.06.1989, it was made clear that the institution may have to submit the

attested/certified copy of the amended Bye-laws/Rules and Regulations duly

approved by the Registering Authority within a year failing which the institution will

not be financed in subsequent years till the same are complied with. The compliance

of this requirement, requires to b e monitored strictly by the In-charges of the field

offices from time to time.

6. With a view to avoid unnecessary delay in execution of hyp.deed., all the State

Director/Incharge of the offices are therefore once again advised to ensure strict

compliance of all the requirements indicated under Circular Dt.16.01.95 referred to

above, before forwarding the hyp.deed to the Legal Section in the Central Office for

executing hyp.deed on the part of the Commission. Failure to comply with the

aforesaid requirements, will be viewed seriously.

Sd/-

DY. CHIEF EXECUTIVE OFFICER (LEGAL)

To:

1. The Jt.C.E.O.

2. All the Dy.C.E.O’s in and outside Bombay

3. Incharge of all field Offices

4. Industry/Programme Directors.

137


No. DKC/RF/VII/98-99 Date: 13.07.1998


Sub: Terms and conditions for sanction and disbursement of loan and grant under budgetary resources of KVIC for the implementation of khadi and polyvastra programme.

Ref.: Office Order No. 1795 dted 30.4.97 – Annexure-C-1 (b)-Collateral Security.

**********************

Funding for Khadi programme was strictly governed by the conditions laid down under Rule 9 of KVIC rules. Accordingly, the implementing agencies have to mortgage immovable property and or pledge/hypothecate movable property as security for loan borrowed from the KVIC. The Office Order No. 1795 dated 30.4.97 clearly prescribed that the institutions eligible for funds from KVIC for implementation of Khadi and polyvastra programme will have to execute equitable mortgage of immovable properties of adequate value or to execute surety bonds with 2 solvent sureties in the prescribed format. The main objective of asking such collateral security is to ensure utilisation of funds released to the implementing agencies for the purpose indicated in the sanction. In the Office Order No. 1817 dated 20.12.97 prescribing certain guidelines for furnishing of collateral security by the borrowers viz. Individuals/institutions/cooperatives etc. under V.I. programmes it was indicated that the guidelines for Khadi institutions would be issued separately after further examination. Accordingly, the Commission in its meeting held in March 98 considered the proposal of the Directorate of Khadi Coordination and decided to constitute a Committee under the Chairmanship of Shri M.A. James, Expert Member (V.I.). The constitution of the committee was notified vide circular of even number dated 21.4.1998 to the concerned.

2. The Commission in its subsequent meeting held in May’ 98 considered the proposal of Directorate of Khadi Coordination containing the recommendations of the aforesaid committee and decided to prescribe the following guidelines for furnishing of collateral security by the implementing agencies under Khadi and polyvastra programme:

1. The existing provision of loan Rules and Section 19B of KVIC Act are sufficient and adequate to safeguard the funds as well as recovery of loan amount extended by the Commission to the impelementing agencies for undertaking KVI programme.

2. As provided under Section 9 of KVIC Loan Rules, adequateequitable mortgage for sureties should be obtained to cover the fixed assets portion of capital of expenditure loan and all movable assets such as implements and working capital should be covered under the Hypothecation Deed.

3. In order to ensure proper utilisation of Loan amount periodical inspection of the functioning of the institution by way of verification of stocks, cash and bank

138

balance etc. should be made by concerned State/Regional Office at least once in six months which is to be reviewed by concerned Programme Director in Central office.

4. Hypothecation Deed executed by the implementing agencies should be renewed once in three years.

3. The above guidelines prescribed by the Commission shall be applicable in respect of all the disbursement to be made with immediate effect.

1. This is issued in supersession of the orders issued earlier on the subject.

Sd/-


To

All the Directors of

State/Regional Office etc. under the Commission

139



No. Legal/Hyp.Deed/98-99 Date: 07.1.1999

- CIRCULAR -

Sub: Guidelines for execution of hypothecation deed inrespect of Individual Borrowers.

Ref: 1) Circular No. LC/1007 dated 8.8.1968

2) Circular No. LC/HD/92-93 dated 31.3.1993

3) Circular No. Legal/HD/93-94/551 dt. 3.11.1993

4) Circular No. Legal/HD/95-96 dated 16.1.1995

5) Circular No. Legal/HD/96-97/1616 dt. 17.3.97

**********************

Guidelines for completion of hypothecation deed for execution in respect of Khadi

and Village Industries implementing agencies were circulated to all the field offices.

The Commission at its meeting (440th) held on 20.03.1995 had decided to finance

the Individual Borrower under Village Industries. This office was executing the deeds in

respect of individual borrowers on the guidelines prescribed for other Khadi and Village

Industries implementing agencies. With a view to streamline execution of hypothecation

deed in respect of individual borrowers following guidelines are prescribed which may

please be complied.

The required documents contained in the guidelines and Annexure-I may be

obtained from the individual beneficiary and Annexure-II & III may be issued by the

Incharge of the Field Office. After compliance of the said requirements, the hypothecation

deed in duplicate alongwith the aforesaid documents may be forwarded to this office for

execution of hypothecation deed.

In order to streamline the procedure and regularise the earlier deed executed by the

Individual Borrower, the in-charges of the field offices under whose jurisdiction the deed of

the individuals have been executed may also be obtained the required documents from the

Individual Borrower and forward the same to Directorate of Legal Affairs immediately.

The contents of this circular should be scrupulously followed by all concerned.

Sd/-


To

All Field Offices.

140

GUIDELINES FOR COMPLETION OF HYPOTYHECATION DEEDAND SUBMISSION OF SUPPORTING DOCUMENTS

IN RESPECT OF INDIVIDUAL BORROWERS

1. HYPOTHECATIN DEED:

I) The Individual Borrowers should execute the deed in duplicate for the ceiling amount fixed by the Incharge of the field office (i.e. Director, Dy.Director/Asstt. Director Incharge)

II) Each and every page of the deed should be signed by the individual borrowers affixing seal/stamp containing name and address of the borrower.

III) The deed should be executed (duly filled in, signed and stamped)very neatly and legibly and if any correction, over-writing, deletion occur, then it should invariably be attested/counter-signed by the borrower.

IV) The Deed should be filled in with one ink and one handwriting or the same be typd/printed.

V) At page 1 of the deed, name and complete address of the borrowers with reference to the address given in Ration Card/Identity Card issued by Election Authority should be mentioned.

VI) At page 2 of the deed, the borrower have to mention the amount of loan, Godown address and a separate letter indicating the address of the working place/factory may also be obtained and forwarded.

VII) At page 2,3 and 4 of the deed the amount of loan in figure and words may be indicated.

VIII) Under Schedule IV, Particulars of Prior Charges, if any, should be indicated.

IX) At page No.7 there should be no writing below the sentence ‘For and on behalf of the within named borrower’ is printed, since the authorised officer of the KVIC has to sign and affix the Common Seal in that place. On the same page the full name (expanded form) of the borrower, and address should be mentioned.

2. CERTIFIED COPY OF THE RATION CARD OR IDENTITY CARD ISSUED BY THE ELECTION AUTHORITY:

A certified copy of Ration Card issued by the Rationing Authority or Identity Card issued by the Election Authority may be obtained from the borrower.

3. IDENTITY CERTIFICATE FROM THE PANCHAYAT OFFICER OR TEHSILDAR OR ANY OTHER GOVERNMENT AUTHORITY:

Identity certificate from the Panchayat Officer or Tehsildar or any other Government Authority of the locality may be obtained form the borrower in the prescribed format (Annexure-I)

141

4. SIGNATURE VERIFICATIN CERTIFICATE:

The Incharge of the office should verify the signature of the borrower in the prescribed format (Annexure-II).

5. CEILING LIMIT CERTIFICATE:

The Incharge of the office should fix the ceiling limit considering the programme in the Prescribed format (Annexure-II)

6.. REGISTRATION CERTIFICATE WITH KVIC:

Certified copy of the Registration Certificate if any with KVIC or a certificate from the Industry Director with regard to sanction of Scheme to the Individual Borrowers.

7. NO OBJECTION CERTIFICATE OR LICENCE FROM THE LOCAL AUTHORITY:

Certified copy of the Licence/No Objection10 Certificate obtained from the Local competent Authority to establish the Village Industry Activity/ies.

8. PHOTOGRAPHS:

Passport size photographs of Individual/Entrepreneur may have to be affixed in the last page of the Hypothecation deeds.

9. TAX RECEIPT:

Tax Receipt of the immovable property of Individual, if any should be obtained.

142

ANNEXURE – I

Address of theAuthority

This is to certify that Shri/Smt./Kum ....................................................................

.............................................................. Son/Daughter/Wife of Shri ...................................

......................................................... is residing at ...............................................................

.......................................................................................................

(mention with full details)

Since .................................... years. He/She is having his/her ancestral/acquired property.

To the best of my knowledge he/she bears a moral character.

Signature

Name

Designation

Seal of the Authority

143

ANNEXURE - II

KHADI AND VILLAGE INDUSTRIES COMMISSIONIRLA ROAD, VILE PARLE (WEST) MUMBAI - 56.

SIGNATURE VERIFICATION CERTIFICATE

CERTIFIED that Shri/Smt/Kum .........................................................................................

Son/daughter/Wife of Shri ................................................................................................

residing at ............................................................................................................................

(address of the borrower)

has signed the hypothecation deed under Village Industries for a ceiling amount of Rs .........

(Rupees ................................................................ only) in favour of Khadi & Village

Industries Commission before me and his/her signatures have been verified.

Name Specimen Signature

Shri/Smt/Kum. (I)

(2)

(3)

PLACE:

DATE :

Signatures have been verified

and attested

Name:

Designation:

Seal of the office

144

ANNEXURE – III

KHADI AND VILLAGE INDUSTRIES COMMISSIONIRLA ROAD, VILE PARLE (WEST) MUMBAI - 56.

CEILING LIMIT CERTIFICATE

CERTIFIED that the ceiling limit of Rs ................... (Rupees ..................................................

only) under Village Industries in respect of Shri Smt. /Kum ....................................................

.............................................. Son/Daughter/Wife of Shri ....................................................

................................... residing at .........................................................................................

....................................

(address of the borrower)

is fixed by the undersigned by taking into account of all the guidelines and norms prescribed

in fixing ceiling limit and in view of Village Industries Programme envisaged and in

pursuance to the sanction of the S.F.C. for the year ................

Signature:

Name

Designation:

Seal of the office

Place:

Date:

145

OFFICE OF THE COMMISSIONERFOR KHADI AND VILLAGE INDUTRIESIRLA ROAD, VILE PARLE (W), MUMBAI - 56.


- C I R C U L A R -

A reference is invited to the Circular bearing No. Legal/Hyp.deed/95-96 dated 16.01.95, and 12.11.03, wherein all the State/Regional Directors of the KVIC were informed the guidelines to be followed for the execution of Hypothecation deed by the borrowers of the KVIC in favour of the KVIC.

Recently a review of the securities to be furnished by the borrowers of the KVIC has been undertaken by the Directorate of KPM and a Circular bearing No. KPM / UPKGM / NES / 2005-06 date 12.12.05 has been issued specifying therein kind of securities to be obtained and the manner in which the value of hypothecation deed is to be determined.

As per the Circular dated 12.12.2005 issued by the Directorate of KPM, in the case of institutions which own immovable properties, for determining the ceiling limit for the execution of Hypothecation deed the value of all movable assets including cash only has to be taken into account. And in the case of institutions which do not own immovable properties, for determining the ceiling limit for the execution of Hypothecation deed the value of all movable stock as per the balance sheet only has to be taken into account.

In view of the above, all the In charges of the filed offices may ensure that while fixing the ceiling limit for the execution of Hypothecation Deed, the norms specified in the aforesaid Circular dated 12.12.05 are fully complied with. The same may be ensured in the case of renewal of Hypothecation deed also.

Further, it has been observed that while forwarding the hypothecation deed and other documents to the Central Office for execution on the part of the KVIC proper care and scrutiny of the documents are not made by the filed offices, resulting in the return of the documents back to the field offices and hardships to the borrower institutions. Therefore, in order to save time and unnecessary expenditure and avoid the aforesaid problem, a proforma for the processing of hypothecation deed at the filed offices is devised and enclosed herewith. The dealing assistant of the filed office may be directed to use the said format for processing the case in the noting side, so that omissions and commissions can be avoided. The Extract of the same should also be forwarded to the Directorate of Legal Affairs along with Hypothecation deed.

Detailed guidelines for filling up of the hypothecation deed form and the details of documents to be forwarded along with the hypothecation deed are specified in the Circular dated 16.01.95 and 12.11.03 referred to above, which may be followed strictly. Further, it is clarified that while filling up the place of execution of hypothecation deed appearing in the first page of the deed, it should be mentioned as “ Mumbai”.

Encl: Proforma.

Sd/-

Dy. Chief Executive Officer

146

FOR KHADI AND VILLAGE INDUTRIESIRLA ROAD, VILE PARLE (W), MUMBAI - 56.

No. LA/EM/Hyp.deed/1264/06-07 Date: 01.06.2006

- C I R C U L A R -

The guidelines to be followed for execution of hypothecation deed by the borrowers

in favour of KVIC had been issued by the Directorate of Legal Affairs vide circular No.

Legal/Hyp.deed/95-96 dated 16.1.95, 7.1.99 and 12.11.03.

The Directorate of KPM vide circular bearing No. KPM/UPKGMS/NES/2005-06 dated

12.12.05 where specifying the kind of securities to be obtained from the borrowers has also

indicated therein, the manner in which the value of hypothecation deed is to be

determined.

A recent review of the same it has been decided that the following aspects are to be

taken into consideration while fixing the ceiling limit for execution of hypothecation deed

by an existing institution :-

1. Book value of movable capital assets, such as vehicles, machineries, tools and

equipments etc.

2. Current assets, less current liability

(a) Current Assets

(i) Debtors

Less than one year old 100%

More than one year but less than three years 50%

More than 3 years Nil

(ii) Stock

finished as well as raw materials held for less than 100%

2 years (moving stock)

More than 2 years but less than 3 years

(slow moving Stock) 80%

More than 3 years but less than 5 years

(non-moving Stock) 50%

More than 5 years (dead stock) Nil

Value of all the stocks may be restricted to

insurance coverage

(iii) All other items under current Assets may be considered as book value.

While considering the current Assets, long term Fixed Deposit (FD)should not be

considered as the institution is expected to use the same for borrowings of its activities and

not expected to lock up the capital.

147

(b) Current liabilities

Sundry Creditors

Irrespective of Age 100%

Other liabilities 100%

In addition to the documents to be obtained from the borrower, for execution of

hypothecation deed specified in the aforesaid circulars, the following documents are also

to be obtained.

1. Copy of the audited balance sheet and statement thereof duly certified by the

Chairman/Secretary/Proprietor of the institution/Units.

2. Attested copy of the insurance certificate of the stock.

3. Statement of stocks/assets on the basis of which ceiling limit of hypothecation

deed has been fixed, with year wise bifurcation of stock held with the

institution/Units.

Apart from the above, the State/Divisional Director shall verify the Stock /assets of

the borrower institution/units at regular intervals and obtain quarterly statements of

assets and its variation from the value of hyp.deed duly certified by the Chairman /

Secretary / Proprietor of the institution/unit.

In the case of a new institution, for which the aforesaid criterion cannot be applied,

the ceiling limit for the execution of the hyp.deed may be fixed taking into account the

“Production target or the amount of working capital” which ever is higher. Similarly, in the

case of Co-Operative Societies and other Societies, where the maximum ceiling limit for the

borrowings is fixed by the Registrar/Charity Commissioner and so on, while fixing the

ceiling limit for the execution of hyp.deed for such institutions by the concerned State

/Divisional Directors by adopting the aforesaid criterion, proper care should be taken to

ensure that the ceiling limit so fixed is not exceeding the Maximum Ceiling Limit fixed by the

Registrar/ Charity Commissioner and so on.

Further, it has been observed that while forwarding the hypothecation deed and

other documents to the Central Office for execution on the part of the KVIC proper care and

scrutiny of the documents are not made by the field offices, resulting in the return of the

documents back to the field offices and hardships to the borrower institutions/units.

Therefore, in order to save time and unnecessary expenditure and avoid the aforesaid

problem, a proforma for the processing of hypothecation deed at the field offices is devised

and enclosed herewith. The dealing assistant of the field office may be directed to use the

said format for processing the case in the noting side, so that omissions and commissions

can be avoided. The extract of the same should also be forwarded to the Directorate of

Legal Affairs alongwith Hypothecation deed.

148

Detailed guidelines for filling up of the hypothecation deed form and the details of

documents to be forwarded alongwith the hypothecation deed are specified in the Circular

dated 16.01.95, 07.01.99 and 12.11.03 referred to above, which may be followed strictly.

Further, it is clarified that while filling up the place of execution of hypothecation deed

appearing in the first page of the deed, it should be mentioned as "Mumbai".

Encl: Proforma.

Sd/-

Dy. Chief Executive Officer(L. A)

149

Proforma for Processing the Execution of Hypothecation Deed

1. Name & Address of the institutions/units

2. Registration No. & Act under which registered

3. Khadi or V.I. for which Hypothecation deed is executed.

4. Whether it is case of Renewal or fresh execution.

5. Whether E.M. has been created or not. If created the value

6. Value of Movable Assets, including cash as per Balance Sheet as on 31.03………..

7. Value of Movable stock as per Balance sheet as on 31.03……..

8. Wherein Statement of stock wise yearwise bifurcation held with the institutions /

units has been furnished.

9. Whether ceiling limit is fixed as per the prescribed norms.

10. In cases where the ceiling limit certificate is to be obtained from the Registrar of

Coop.Society or Charity Commissioner, whether the same has been obtained from

such authorities.

11. Resolution No. & date of the Institution for execution of H.D (Resolution in original in

the letterhead of the institution)

12. Whether the deed is executed within the period of 6 months from the date of passing

the Resolution.

13. Whether the persons executing the H.D. are duly authoried.

14. Whether the signatures of the persons executing the deed have been verified by the

State/Divisional Director & certificate has been issued to the effect.

15. Whether the list of godowns with complete address has been furnished by the

institution.

16. Whether physical verification godowns and stock has been done by the

representative/s of the State/Divisional office.

17. Whether all the important clauses of the model bye-laws circulated by the KVIC has

been adopted by the institution.

18. Whether list of Managing Committee, as intimated to the Registering authority, has

been furnished.

19. Whether copy of the insurance policy covering the stock has been furnished.

20. Whether the common seal of the institution has been affixed in the space provided in

last page of the Hypothecation deed.

21. Whether each page of the H.D. is signed by the authorized persons.

150

22. Whether corrections, if any, in the deed or other documents have been attested by

any of the authorized persons.

23. Whether copy of Registration Certificate, Bye laws & Khadi certificate duly attested by

a Gazetted Officer have been furnished.

24. Whether the English/Hindi traslation of those documents which are in the regional

language are furnished by the institution.

25. Whether all the blanks in the H.D., especially details of prior charges have been filled

in properly.

26. Whether the place of execution appearing on the first page has been written as

"Mumbai".

Certified that all the above information/documents stated herein above have been

carefully verified and scrutinized at the time of execution of hypothecation and they are

found in order.

Signature of the Dealing Asstt.

Signature of the Supdt./Asstt.Director

Signature of the State/Divisional Director

151



No. LA/EM/Hyp.Deed/1264/06-07 Date: 28.06.2006

- CIRCULAR -

The guidelines to be followed for execution of hypothecation deed by the borrowers in favour of KVIC had already been issued by the Directorate of Legal Affairs vide Circular dated 16.1.95, 7.1.99 and 12.11.03. At the time of execution of the hyp-deeds by the borrowers on their part, it is the sole responsibility of the concerned State Office or Divisional Office to strictly ensure the aforesaid guidelines before forwarding the Hypothecation deed/s to Central Office for execution on part of the KVIC. While examining the hyp-deeds in the Directorate of Legal Affairs, it is observed that most of the field offices are forwarding the Hypothecation Deed/s to the Directorate of Legal Affairs without ensuring strict compliance of the aforesaid guidelines, As a result of which, the Directorate of Legal Affairs is compelled to make the correspondence with the concerned field offices for compliance of the requirements. In this process, a lot of time is wasted which could be avoided, if proper care is taken by the respective field offices.

As per the Office Order No. 1823 dated 30.7.98 issued by the Director (KC), the Hyp.deed/s executed by the borrower institutions are to be renewed before the expiry of 3 years from the date of execution of Hyp.deed. Therefore, the hyp-deed of all the borrower institutions should be renewed within the period indicated above. Further, while conducting the audit of the Directorate of Legal Affairs on 8.6.06, the Audit Officer of the Resident Audit desired to know the information about the Hyp-deed/s in the following manner:-

a) Total number of the institutions alongwith their names in which the renewal of hypothecation deed was not done before the due date i.e. before expiry of 3 years from the date of execution of hypothecation deeds;

b) Total number of institutions alongwith their names in which renewal of hypothecation deed was done before due date i.e. before expiry of 3 years from the date of execution of hypothecation deed;

c) Total number of institutions alongwith their names in which renewal is not done at all after the expiry of 3 years.

d) Total number of institutions alongwith their names functioning in the State/Divisional Offices.

e) Total number of institutions alongwith their names who have not at all executed the hypothecation deeds till today for the security of the funds of the KVIC.

It is, therefore, once again brought to the notice of the field offices to strictly observe the guidelines prescribed for execution of hypothecation deeds and to provide the information indicated at (a) to (e) above immediately to the Directorate of Legal Affairs.

Sd/-

Dy. Chief Executive Officer (L. A)

To

All State/Divisional Directors

152

FORMAT FOR PROCESSING HYPOTHECATION DEED(TO BE USED BY THE FIELD OFFICE)

Date :

1. Name & Address of the borrower :

2. Registration No. & Act under

which registered :

3. Hypothecation deed for : Khadi / Village Industries loan

4. Nature of execution : Fresh /Renewal

5. No. and date of Resolution of

the institution (ensure that the

deed is executed within 6 months

from the date of Resolution) :

6. Name of authorised office

bearers of the institution :

7. Amount of Ceiling Limit : Rs.

8. Whether the amount of ceiling

limit has been fixed as per the

norms prescribed by the KVIC

(furnish the detailed calculations) : Yes / No

9. Whether signature verification

certificate issued by the State /

Divisional Director : Yes / No

10. Whether address of the godowns

furnished by the institution : Yes / No

11. Whether the latest list of

M.C. Members has been furnished : Yes / No

12. Whether the institution is holding

a valid Registration Certificate : Yes / No

13. Whether the bye-laws of the institution

contains the 4 essential clauses as

specified in the Circular

dated 16.08.2002 : Yes / No.

(Applicable only for renewal of deeds)

14. Whether the institution has adopted

the model bye-laws prescribed

by the KVIC : Yes / No.

(Applicable in case of fresh execution)

153

15. Whether the deed has been executed

in duplicate : Yes / No

16. Whether all the blanks in the deed

form have been duly filled in : Yes / No

17. Whether particulars prior charges have

been clearly specified in the space

provided for : Yes / No

18. Whether all the pages of the deed have

have been duly signed by the

authorised persons : Yes / No

19. Whether the official seal of the

institution has been affixed on the

last page of the deed in the space

provided for : Yes / No

20. Whether on the first page of Deed the

place of execution has been mentioned

as ‘Mumbai’, in case the Deed is not

executed for and on behalf of the KVIC

by the State/Divisional Director

but send to Director (Legal Affairs) : Yes / No

21. Whether all the corrections in the Deed

have been duly attested by the parties : Yes / No

22. Whether the translated copy of the

Bye-laws has been furnished,

in case the Original Bye-laws are in

regional Language : Yes / No

23. Whether all the Xerox copies are

attested by the Gazetted Officer : Yes / No

Certified that all the requirements specified for the execution of hypothecation deed

have been fully complied with by the borrower and the aforesaid information is furnished

after verifying the relevant documents.

(Signature of Dealing Asst.)

Supdt.

Asst. Director/Accounts Officer

State / Divisional Director

154

No. LA/HD/Policy (Part-VI)/14-15 27.10.2014

- C I R C U L A R -

Sub: Execution of hypothecation Deed – reg.

****

The guidelines to be followed for execution of hypothecation deed by the Institutions

in favour of KVIC had already been issued by the Directorate of Legal Affairs from time to

time. All those guidelines were also included in the Legal Handbook widely circulated by

this Directorate.

2. At the time of execution of the hypothecation deeds by the borrowers on their part, it

is the sole responsibility of the concerned State Office or Divisional Office to ensure

the aforesaid guidelines are strictly followed. While examining the hypothecation

deeds in the Directorate of Legal Affairs, very often it is observed that most of the field

offices are forwarding the Hypothecation Deed/s to the Directorate of Legal Affairs

without ensuring strict compliance of the aforesaid guidelines. As a result of which,

the Directorate of Legal Affairs is compelled to make the correspondence with the

concerned field offices for compliance of the requirements. In this process, a lot of

time is wasted which could be avoided, if proper care is taken by the respective field

offices.

3. As per the guidelines, the following documents are required to be examined while

executing the hypothecation deed.

i) Hypothecation Deed Form:

(a) Each and every page of the deed should be signed by the authorized

office bearers of the institution affixing seal/stamp containing name and

address of the institution.

(b) The deed should be executed (duly filled in, signed and stamped) very

neatly and legibly and if any correction, over-writing, deletion occur, then

it should invariably be attested/counter-signed by the borrower.

(c) At page 1 of the deed, name and complete address of the borrowers with

reference to the address given in Ration Card/Identity Card issued by

Election Authority should be mentioned.

(d) At page 2 of the deed, the borrower have to mention the amount of loan,

Godown address and a separate letter indicating the address of the

working place/factory may also be obtained and forwarded.

(e) At page 2,3 and 4 of the deed the amount of loan in figure and words may

be indicated.

(f) Under Schedule IV, Particulars of Prior Charges, if any, should be

indicated.

155

(g) At page No.7 there should be no writing below the sentence ‘For and on

behalf of the within named borrower’ is printed, since the authorised

officer of the KVIC has to sign and affix the Common Seal in that place. On

the same page the full name (expanded form) of the borrower, and

address should be mentioned.

ii) Signature Verification Certificate: The Incharge of the office should verify the

signature of the borrower in the prescribed format.

iii) Ceiling Limit Certificate: The Incharge of the office should fix the ceiling limit

considering the programme and strictly as per the guidelines issued by the

Directorate of KC in this regard

iv) Registration Certificate of the institution and Letter of Direct listing Certified

copy of the Registration Certificate of the institution should be verified to

ascertain the authenticity of the name and Registration Number of the

institution written in the hypothecation deed. Similarly, the letter of direct

listing issued by the KVIC may also be verified.

v) Resolution passed by the institution authorizing the Office bears to execute the

deed on behalf of the institution in the prescribed form. The deed should be

executed within 6 months of the date of resolution.

vi) Godown address of the institution: The institution should furnish the detailed

address of the godown of the institution where hypothecated good are kept.

vii) Bye-laws of the institution: The byelaws of the Institution should contain all

the essential clauses of model bye-laws of the KVIC

4. In view of the above, State/Divisional Directors are requested to scrutinize the

hypothecation deed papers carefully and before forwarding the same to Directorate

of Legal Affairs, it may be ensured that the hypothecation deed papers are complete

in all respect. A certificate in the format contained in Annexure may also be

forwarded henceforth alongwith hypothecation deed and without which the

hypothecation deed will not be accepted.

5. This is issued with the approval of competent authority.


ToAll State/Divisional Directors

Copy to:


2) All Industry/Programme Directors at C.O. Mumbai .

3) The Director (Publicity) - with a request to publish the same in the ensuing issue in a prominent page.


156

ANNEXURE

CERTIFICATE REGARDING PROCESSING OF HYPOTHECATION DEED(TO BE USED BY THE FIELD OFFICE)

1. Name & Address of the borrower :

2. Registration No. & Act under :

which registered

3. Hypothecation deed for : Khadi / Village Industries Loan

4. Nature of execution : Fresh /Renewal

5. No. and date of Resolution of :

the institution (ensure that the

deed is executed within 6 months

from the date of Resolution)

6. Name of authorised office :

bearers of the institution

7. Amount of Ceiling Limit : Rs.

8. Whether the amount of ceiling : Yes / No

limit has been fixed as per the

norms prescribed by the KVIC

(furnish the detailed calculations)

9. Whether signature verification : Yes / No

certificate issued by the State /

Divisional Director

10. Whether address of the godowns : Yes / No

furnished by the institution

11. Whether the latest list of : Yes / No

M.C. Members has been furnished

12. Whether the institution is holding : Yes / No

a valid Registration Certificate

13. Whether the bye-laws of the : Yes / No

institution contains the 4 essential

clauses as specified in the Circular

dated 16.08.2002.

(Applicable only for renewal of deeds)

14. Whether the institution has : Yes / No.

adopted the model bye-laws

prescribed by the KVIC

157

158

(Applicable in case of fresh execution)

15. Whether the deed has been : Yes / No

executed in duplicate

16. Whether all the blanks in the : Yes / No

deed form have been duly filled in

17. Whether particulars prior charges : Yes / No

have been clearly specified in the

space provided for

18. Whether all the pages of the deed : Yes / No

have been duly signed by the

authorised persons

19. Whether the official seal of the : Yes / No

institution has been affixed on

the last page of the deed in the

space provided for

20. Whether on the first page of : Yes / No

Deed the place of execution has

been mentioned as ‘Mumbai’, in

case the Deed is not executed for

and on behalf of the KVIC by the

State/Divisional Director but send

to Director (Legal Affairs)

21. Whether all the corrections in : Yes / No

the Deed have been duly attested

by the parties.

22. Whether the translated copy of : Yes / No

the Bye-laws has been furnished,

in case the Original Bye-laws are

in regional Language.

23. Whether all the Xerox copies are : Yes / No

attested by the Gazetted Officer

Certified that all the requirements specified for the execution of hypothecation deed have

been fully complied with by the borrower and the aforesaid information is furnished after

verifying the relevant document.

Date:

State / Divisional Director

CHAPTER – V

LEGAL RECOVERY

1. Introduction:

Rule 8(a) of the KVIC Loan Rules provides that the loan shall be repaid by the borrower

in such installments and within such periods as may be determined by the

Commission with the previous approval of Central Govt., for each type of loan from

time to time. Commission may allow extension up to a maximum period of 6 months

for repayment of installment of loans if it is satisfied that such extension is necessary

in the interest of the Commission.

Rule 8(b) provides that the loan shall be utilised by the borrower for the specific

purpose for which it is sanctioned. If any loan is not utilised for the purpose for which

it was sanctioned within one year of the receipt thereof, the whole of it shall

immediately be refunded with interest.

Rule 8© inter-alia provides that any default in payment of interest on the loan or

advance or in the repayment of principal shall be reported by the Chief Executive

Officer to the Commission as soon as possible and the Commission shall cause a

notice to be issued to the defaulter for repayment of the total amount due from the

defaulter.

Therefore, as soon as it comes to notice of the State Director that the financial

condition of the borrower is not sound and is deteriorating day by day, to safeguard

the Commission funds, as a prelude to 19 B, the State Director in consultation with

the Zonal Dy.CEO may freeze the accounts of the borrower with the banks, attach and

the movables and dispose of the same for the realisation of the Commission’s dues,

without any notice to the borrower, as per the powers conferred by clause 17 and 18

of the hypothecation deed(corresponding to clause 16 and 17 of the old format) .

Even after enforcing the aforesaid provisions of the hypothecation deed, if any

amount remains outstanding with the defaulter, the State/Regional Director in

consultation with the Zonal Dy.CEO should immediately initiate proceedings for legal

recovery under Section 19B of the KVIC Act by following the prescribed procedure.

2. Provisions of the KVIC Act and Rules:

(I) Section 19B of the KVIC Act:

(1) Any sum payable to the Commission under any agreement express or

implied, or otherwise howsoever, may be recovered in the manner as

arrears of land revenue.

159

(2) If any question arises whether a sum is payable to the Commission within

the meaning of Sub-Section (1) of Section 19 B, it shall be referred to a

Tribunal constituted by the Central Govt. for the purpose which shall,

after making such inquiry as it may deem fit and after giving to the person

by whom the sum is alleged to be payable an opportunity of being heard,

decide the question; and the decision of the Tribunal shall be final and

shall not be called in question by any court or other authority.

(3) The Tribunal shall consist of one person who is not connected with the

Commission or with the person by whom the sum is alleged to be

payable.

(4) The expense of the Tribunal shall be borne by the Commission.

(ii) Rule 29 of the KVIC Rules

Notice of proposal for recovery of monies due as arrears of land revenue :

(1) Where any sum is payable to the Commission under any agreement,

express or implied, or otherwise howsoever, the Commission may cause

a notice to be served on the person liable to pay the sum directing him to

pay the sum stated therein.

(2) Where the person to whom a notice is served under sub-rule (1) disputes

his liability to pay the sum stated in the notice, he may, within thirty days

of the receipts of the notice make a representation to that effect to the

Commission.

(3) If, within the period referred to in sub-rule (2) the person on whom a

notice is served under sub-rule (1) neither pays the sum stated in the

notice nor makes representation to the Commission under sub-rule (2),

the Commission may request the Collector within whose jurisdiction its

office is situated to take such action as may be necessary for recovering

the sum as arrears of land revenue.

(4) If in the course of proceedings taken against a person for recovery of any

sum requested to be recovered under sub-rule (3), such person denies his

liability to pay the sum or any part thereof, the authority before whom

such proceedings are pending shall forthwith send a notice of such denial

to the Commission.

160

3. Constitution of Tribunal under Rule 30 of the KVIC Rules:

Request for constitution of a Tribunal under Section 19-B and for reference of

question as to denial of liability to such Tribunal

(1) On receipt of a representation under sub-rule (2) or a notice under sub-rule (4),

of rule 29, the Commission shall forward a copy of such representation or, as

the case may be of the notice to the Central Government with a request that a

Tribunal may be constituted for determining the question as to denial of

liability to pay to the Commission made in such representation or referred to in

such notice.

(2) On receipt of a request under sub-rule (1) the Central Government may

constitute a Tribunal in accordance with the provisions of Section 19 B of the

Act and refer the question mentioned in such request to the Tribunal for

decision.

(3) The Tribunal so constituted shall, after making such inquiry as it may deem fit

and after giving to the person denying liability and the Commission a

reasonable opportunity of being heard and after considering such evidence as

may be produced by such person and the Commission, decide the question

whether and if so, what sum is payable by such person to the Commission

within three months from the date of publication in the Official Gazette of the

Notification, notifying the constitution of the Tribunal.

(4) A copy of the decision of the Tribunal shall :

(a) where it is in respect of a representation made under sub-rule (2) of rule

29, be forwarded to the Commission, and if the decision declares any sum

is payable to the Commission, the Commission may take action for having

the sum recovered as arrears of land revenue:

(b) Where it is in respect of denial of liability referred to in a notice under

sub-rule (4) of rule 29, be forwarded to the authority by whom such

notice was issued, for disposal of the proceedings concerned in

accordance with such decision.

Proposal for constitution of Tribunal by field offices: In the event of the

borrower disputing liability soon after the receipt of the demand notice

issued by the Commission or during the course of recovery proceedings

before the revenue authority, the field office has to send the proposal for

the constitution of Tribunal to the Director (Legal Recovery), who in turn

will process the matter and request the Central Govt. for the constitution

of the Tribunal.

161

4. Guidelines for Initiating 19-B Recovery Action:

The guidelines for initiating 19B-recovery action have been circulated vide Circulars

No. Adm.-II/280 dated 6-5-92, 15-10-97 and 19.2.2004 and guidelines regarding

procedure to be followed are placed at the end of chapter.

The format of issuing 30 days demand notice to the borrower and the letter to be

addressed to the Dist. Collector for initiating recovery action are placed at the end of

the chapter.

5. Duties and Responsibilities of Field Office:

1. As soon as it has come to the notice of the field office that the financial

procession of the borrower is deteriorating day by day and borrower has

become the defaulter, the field office should immediately process the case for

obtaining permission for initiating 19B recovery action against the borrower.

2. The proposal should be moved either by getting written intimation regarding

the default position of the borrower from the Industry/Accounts Department

or suo-moto on receipt of information regarding the deteriorating financial

position of the borrower from any other source. In the latter case, the views of

the Incharge of the concerned Industry/Programme may be obtained before

processing the case.

3. The proposal seeking permission of the Central Office for initiating 19B action

should be routed through concerned Zonal Dy.Chief Executive Officer.

4. Constant follow up action should be made with the Directorate of Legal

Recovery for obtaining the permission without much loss of time, after sending

the proposal.

5. Once approval is received from the Dte.of Legal Recovery, the notice in the

prescribed form should be served to the borrower and acknowledgement to

that effect should be kept in the file.

6. If no reply is received from the borrower within the time specified in the notice,

the matter should be referred to the concerned Dist. Collector in the format

prescribed.

7. Care should be taken to ensure that the full particulars such as complete name

and address of the borrower institution and office bearers, details of the

property owned by the institution etc. are furnished to the Collector.

8. Follow up action should be made with the Office of the Revenue Auhority/Distt.

Collector at regular intervals.

9. Care should be taken to ensure that during the pendency of 19B action, the

institution is not alienating its properties in any manner, so as to prejudicially

affect the recovery of funds of the KVIC.

162

10. Proper cooperation should be extended to the Revenue Authority/Distt.

Collector for the auctioning of the property of the borrower.

11. It should be ensured that the representatives of the field office, as far as

possible the concerned State/Divisional Director, are attending the auction

proceedings. If it is felt that the representatives of the borrower institution are

creating a situation wherein nobody is coming forward to buy the property at a

reasonable price, the concerned field office should participate in the action and

purchase the property, in pursuance of the Circular issued in that behalf.

12. After the clause of legal proceedings by the Revenue Authority/Distt. Collector,

if any amount remained unrecovered, a certificate of that effect should be

obtained from the Revenue Authority/Distt.Collector and a proposal for write

off should be sent to the Central Office.

163


KHADI AND VILLAGE INDUSTRIES COMMISSIONIRLA ROAD, VILE PARLE (WEST), MUMBAI - 56.

No. Adm-II/280 Date: 06.05.1992

- C I R C U L A R -

Sub: Authorising State Director for initiating recovery action without waiting for

orders from the Headquarters- reg.

***************

It has been noticed that a number of cases pending for recovery action at any point of

time ranges between 530 to 550 cases. It is also felt that, had the timely corrective

measures been taken at appropriate time, the Commission would have been able to

recover substantial amount and also the number of cases pending would have been

reduced considerably. The outstanding dues of the Commission under the pending cases

also average from Rs. 750 lakhs to 800 lakhs at any point of time. The Commission of late,

with a view to effect recovery timely and expeditiously from the institutions it has decided

to the effect that the State Directors may, in consultation with Dy. CEOs finalize the proposal

and send them to Central Office for consideration for taking action under Section 19B

against the institution. Such step would avoid delay in taking decision in the Central Office.

(It has also been decided now the State Directors be authorised to initiate action without

waiting for orders from the head-quarters of the Commission in consultation with the Zonal

Dy. CEOs). In the past monitoring of the cases were being attended to by State Director,

Industry and Programme Directors at the Central Office. Now it has been decided that

either to Dy. C.E.O. and State Director shall be responsible for supervising and monitoring

the institution and deciding for the purpose of taking action under 19B and or by other legal

resources open to the Commission without waiting orders from the head quarters. In view

of the above the following further fresh guidelines are given below:-

(1) As soon as it comes to the notice of the State Director that the financial condition of

the institution is not sound and the institution is deteriorating day by day, to

safeguard the Commission’s funds, prelude to 19-B, the State Director in consultation

with the Zonal Dy. CEO’s may take decision for attaching and disposing off the

movable assets of the institution by virtue of the Clause 16 & 17 of the hypothecation

deed executed by the institution in favour of the Commission. This action may be

taken very quickly and carefully.

(2) The State Director may initiate action under Section 19B in due consultation with the

concerned Zonal Dy. CEOs without waiting for orders from the Central Office of K V I C

and submit his proposal as per the directions given by the Commission vide

resolution No. (1)(4) dt. 11.2.92 for approval/ratification in the prescribed proforma

through Director (Inspection). However, the State Director may please note that the

action under Section 19-B of the Commission’s Act should be the last resort, where all

efforts for recovery of the Commission’s dues have failed.

164

The State Directors may issue 30 days notice to the institution under Section 19-B for

recovery of the entire outstanding dues including interest thereon.

(3) (a) If no reply is received to the notice from the institution within 30 days from the

receipt of the notice, the State Director may refer the case to the concerned

Dist. Collector for recovery of the Commission’s dues as arrears of the land

revenue (Under Section 5 of Revenue Recovery Act 1890).

(b) If the amount claimed in the notice is disputed by the institution and has

requested for an appointment of the Tribunal as per provision made under KVIC

Rules 25-B, 1957, the State Director may forward the case to the Legal Recovery

Section for approaching the Ministry for appointment of a Tribunal.

(4) After receipt of the award from the Tribunal, the State Director may directly approach

the concerned Dist. Collector for recovery of the Commission’s dues as arrears of land

revenue.

(5) The State Director may keep constant touch with the Dist. Collector for expeditious

actin for recovery of the Commission’s dues. He may assist the Collector to dispose

off the properties movable/immovable belonging to the institution in auction.

However, if State Director finds that the bid is ridiculously low price or no bidder

comes forward to bid in the auction, the Director may participate in the auction, on

behalf of the Commission.

(6) In case of Cop. Societies which are likely to go into liquidation, the State Director may

approach the Coop. Authorities for an appointment of a Liquidator for recovery of the

Commission’s dues under liquidation proceedings after following the provisions of

law regarding procedure in force in the State.

(7) If the claims are certified as irrecoverable by the Revenue authorities/Coop.

Authorities, the State Director may forward the case to the Director of Inspection

after obtaining concurrence of F.A. and KVIC for approaching the Ministry for write off

of the said irrecoverable amount.

Sd/-


To:

1) The Joint Chief Executive Officer.

2) All Dy.Chief $Executive Officer in and outside Bombay.

3) All Directors and other Officers-in charge of the Directorates in the Central Office.

4) All Sections in the Central Office.

5) Secretaries to the Chairman.

6) Sr. P.A. to the Chairman/FA/CEO.

165


No. LR/Policy/19-B action/43/2001-2002/267 Date: 31.10.2001

- C I R C U L A R -

Sub: Submission of cases for approval of action under Clause 19-B of the KVIC Act to

recover the dues of the Commission – reg.

***************

Please refer to Circular No.DKC/Policy/19-B action/2000-2001 dated 14.03.2001

mentioning therein that the proposals for 19-B action are being received with short fall of

certain information as well as varying the proposal from office to office etc. As such a

performa was devised and sent along with the Circular as Annexure-I. However, it is seen

that inspite of providing the format to all State/Regional Directors, some of them are not

submitting the proposals for 19-B as per the format prescribed. All State/Regional Directors

are once again requested to follow the said format.

Also F.A. has desired that the following additional information should invariably be

furnished, while submitting the proposals for 19-B.

i) Sanction accorded and release of funds with year.

ii) Whether the activities are started or not along with reasons.

iii) Whether there has been misutilisation of the funds, if so indicate the same.

iv) The latest finding of the Inspection Report.

v) Copy (ies) of notices under loan Rule (8) issued asking beneficiaries to repay the

principal and interest amount.

vi) Rate of interest to be charged from the defaulter.

The proposal as detailed above should be sent to this Directorate with the

recommendation of Zonal Dy.C.E.O. Sending the copies of proposals of 19-B without the

recommendation of Zonal Dy.C.E.O. do not serve any purpose of this Directorate.

This issues with the concurrence of OSD (L.R.).

Sd/-

Director (Legal Recovery)

To:

All State/Regional Directors.

166

DIRECTORATE OF LEGAL RECOVERYKHADI AND VILLAGE INDUSTRIES COMMISSION

IRLA ROAD, VILE PARLE (WEST), MUMBAI - 56.

No. L.R./Policy Decision/54/01-02 Date: 14.02.2002

- OFFICE ORDER -

Sub: Initiation of action under Clause 16 & 17 of the Hypothecation Deed executed

by the Directly Aided Institution.

***************

Circular No.Adm-II/280 dated 15.10.97 amongst others provides the following

guidelines.

As soon as it comes to the notice of the State Director that the financial condition of

the borrower is not sound and is deteriorating day by day, to safe-guard the Commission's

funds and prelude to action under section 19-B of KVIC Act, 1956 and the rules framed

thereunder, the State Director in consultation with the Zonal Dy.Chief Executive Officer may

take decision for freezing the A/c of the borrower with the Banks, attaching and disposing

off, the movable assets of the borrower by virtue of the clause 16 & 17 of the Hypothecation

deed executed by the borrower in favour of the Commission. This action requires to be

taken very confidentially, quickly and carefully.

2. Though the above action is required to be taken as a prelude to action under section

19-B of KVIC Act,1956 and the rules framed thereunder, it is observed that frequently

even after issuance of approval of F.A., C.E.O. and Chairman for initiating 19-B action ,

the action as per clause Nos. 16 & 17 of Hypothecation Deed is not completed by the

State/Regional Director. Therefore, the following guidelines are provided for seizure

and disposal of movable assets.

1) A Disposal Committee consisting of 3 to 5 members including one Accountant

headed by the State/Regional Director must be constituted for the purpose of

exercising the power conferred under Clause 16 & 17 (Clause 17 & 18 of new

Hypo.deed).

2) Assistance of the local police may be sought, if necessary, in the process of

seizing/sealing/taking over the hypothecated goods etc.

3) State/Regional Directors should prepare a list of seized goods in presence of

two witnesses, preferably, one from the concerned institution.

4) State/Regional Directors should lock the Godown and seal it.

5) The seized goods should be disposed of to a nearby institution within one

month period from the date of seizure of the goods from the institution under

action.

167

6) In case no institution comes forward, there is need to ensure that the assets are

sold by public auction through advertisement in vernacular and English

Newspapers which would fetch the highest possible amount which is to be

adjusted against the dues of defaulting institution.

7) Bank Accounts must be seized by virtue of powers conferred under

Hypothecation Deed executed by the institution.

8) Notices are to be issued to all sundry debtors of the institution to make

payment to KVIC directly.

9) State/Regional Directors should keep the Central office informed by submitting

the monthly progress report in the enclosed format.

10) The guidelines given under the Office Order are suggestive and the S.O./R.O.

and concerned Dy.CEOs of the Zones may act as per the requirements of the

situation to protect KVICs interest.

This issued with the approval of C.E.O.

Sd/-


Encl : As above.

To:

All State/Regiona\l Directors

MONTHLY PROGRESS REPORT IN RESPECT OF GOODS SEIZED

FROM DIRECTLY AIDED INSTITUTION OF THE COMMISSION

KHADI & V.I. COMMISSION

STATE/REGIONAL OFFICE :

Sr. Name & Value of Briefi Value of Date of Name of Value of Remarks

No. Address goods as description goods seizure newspapers goods

of the per of goods seized of goods & dates disposed

institution Hypothecation seized on which

with the Deed notices are

Code No published

(1) (2) (3) (4) (5) (6) (7) (8) (9)

168


No. L.R./Policy Decision/01-02/392 Date: 15.02.2002

- ORDER -

Sub: Initiation of action under Clause 16 & 17 of the Hypothecation Deed executed

by the Directly Aided Institution.

***************

Vide Circular No.Adm-II/280 dt.15.10.1997 guidelines were issued to the State

Directors for initiating recovery action on outstanding dues from defaulting borrower.

However, it has come to the notice of the undersigned that the guidelines issued vide

Circular mentioned herein are not followed scrupulously. Therefore, State Directors are

hereby advised to ensure the compliance of the following actions on their part.

(i) Notice under Section 19-B to the institution must be issued within a fortnight

from receipt of approval of Chairman.

(ii) If no reply is received to the notice from the borrower within 30 days from the

date of receipt of the notice or if the institution ignored or refused to pay the

sum stated in the notice, the State Director may request concerned District

Collector to take such action as may be necessary for recovery of the

Commission's dues as arrears of land revenue.

(iii) The 19-B cases may be classified District-wise and State Directors should attend

the Revenue Recovery Meeting conducted regularly by concerned District

Collectors.

(iv) Personal follow up at least on quarterly basis may be done by an official of the

rank of D.O. at the level of Tehasil/Taluka.

(v) If any institution is willing to come forward to repay the loan and interest before

recovery proceedings are initiated through District Collector, State Director

may settle the same with 25% immediately and balance in installment within a

year from date of receipt of Notice.

(vi) All State Directors are advised to submit monthly progress report in the

enclosed format in respect of all format the institutions against whom 19-B

action has been initiated.

Sd/-


Encl : As above.

169

MONTHLY PROGRESS REPORT IN RSPECT OF THE INSTITUTIONS

AGAINST WHOM 19-B ACTION HAS BEEN INITIATED

KHADI & V. I. COMMISSION

STATE/REGIONAL OFFICE :

District-wise Date of Recoveries Date of Recovery Follow-up

list of notice issued as letter to through action taken

institutions to the consequence District District

under 19-B institution to notice Collector Collector

(1) (2) (3) (4) (5) (6)

STATE/REGIONAL DIRECTOR

170



No. L.R./Policy Decision/55/2001-02 Date: 20.02.2002

- C I R C U L A R -

The issue of effecting Legal Recoveries from the institutions who have neither created

Equitable Mortgage nor provided surety was examined in detail and the legal opinion on

the issue is as follows :-

1. The KVIC as per the provisions contained in the Hypothecation deed executed

by the Borrower Institution can attach all the movable assets, if any, belonging

to the institution and dispose of the same for the realization of its funds.

2. In case the borrower institution does not possess any movable assets or if the

amount realized on the sale of movable assets is insufficient to recover the

whole amount due to the Commission, then the best and cheapest course of

action available with the KVIC is to proceed against the borrower institution for

recovery of fund under Section 19-B of the KVIC Act. It is immaterial whether

the borrower institution has created Equitable Mortgage with the KVIC of its

immovable properties or not. If the institution is having immovable properties

in its own name, the KVIC can go ahead with 19B action against those

properties though the said properties are not mortgaged with the Commission.

The State/Regional Directors are therefore requested to make sincere efforts to find

out whether the defaulter intuitions are possessing any movable or immovable assets of its

own and send the proposals for 19-B action to the undersigned even in the cases where

neither Equitable Mortgage is created nor surety is furnished.

This is issued with the approval of PSO/OSD(LR), F.A. and C.E.O.

Sd/-


To


171



No. L.R./Policy Decision/54(II)/02-03 Date: 09.08.2002

- C I R C U L A R -

As per Circular No.DKC/Policy/19B action/00-01 dated 14.03.01 issued by

Directorate of K.C. a format was devised for submission of 19B proposals by State/Regional

Directors for approval of action under clause 19B of KVIC. However, over the period, the

format prescribed by Directorate of K.C. is not suitable for submission of proposals by

Director (L.R.) to Higher Authorities as the additional information required by Financial

Adviser and communicated to you vide Circular No.LR/Policy/19B action/43/01-02/267

dated 31.10.01 were not incorporated in the earlier format prescribed by Directorate of

K.C. and therefore, a revised format is now enclosed with a request kindly to use the

enclosed format with immediate effect so that protracted correspondence between

Director (L.R.) and field offices could be avoided and the exhaustive proposals as per the

format could be submitted to Higher Authorities for their approval.

This Directorate also clarifies at this stage that though in the proposal the figures of

sanction/releases are given correct upto thousand and the approval from F.A., C.E.O. and

Chairman is also obtained accordingly, they are requested kindly to specify the exact

amount (upto paise) in 30 days notice which they issue to the borrower(s) under Section

19B of the KVIC Act, 1956 and Rule 25A of KVIC Rule, 1957 for repayment of Commission's

entire outstanding dues together with interest and/or penal interest accrued thereon as

per Circular No.Adm-II/280 dated 15.10.97 signed by C.E.O. Also, when the State/Regional

Director is in the stage of reaching the conclusion that the borrower is likely to default,

immediately, he may kindly confirm the amount recoverable from the borrower as per the

accounts maintained by the Directorate of Accounts and compare the same with the details

available in R.O./S.O. and after arriving at the correct figure only send the proposal for 19-B

action through zonal Dy.C.E.O. to Director (L.R.) issuing the notices to defaulter so that

thereafter no question may arise whether a sum is payable to the Commission within the

meaning of Sub-section (1) of Section 19B of KVIC Act 61 of 1956 and as amended upto July

28, 1989. There is no change in the procedure laid down and communicated from time to

time from Central Office for recovering Commission's entire outstanding dues together

with interest and/or penal interest accrued thereon.

Sd/-


Encl : Revised format ToAll State/Regional DirectorsCopy to :1) P.S.O./O.S.D. (LR)/All Zonal Dy.C.E.Os2) Dy.Director I/c (Accounts) 3) A.D. to F.A.4) P.A. to C.E.O.

172

F O R M A T

Sub: Case for approval of action under Clause 19-B of the KVIC Act in respect

of_____________________________________________________________

(Name of the borrower with full address)

1. The above named borrower was sanctioned and disbursed funds as per details given

below :

Sr. Name of Details of funds sanctioned Details of funds

No. Industry/ released

Programme

SFC Budget C.E. Loan W.C. Loan Date Amount

Resolution allocation (Mention the (Mention the (mention the

No. & Date No. & Date source) source source)

1.

2.

2. Amount to be recovered under 19-B action :

3. Details of Hypothecation Deed created by the : Khadi Rs.

V.I. Rs.

4. Details of Equitable Mortgage created by the borrower. :

5. Any other security including surety(ies) furnished

by the borrower : Rs.

6. In case the loan was released with inadequate

securities, reasons thereof. :

7. Value of floating stocks, in case the borrower has

floating stocks :

8. Details of Hypothecation goods including cash in Bank,

taken under possession in exercise of Powers delegated

vide S.O.No._____ dt_____ :

9. Name of official/s who conducted Technical feasibility

(copy(ies) attached) :

10. Name & Designation of official(s) who inspected the

institution during last two years

(Inspection Reports attached) :

11. Details of inspection and latest findings

(Copy(ies) enclosed) :

12. In case the institution is not in possession of any

floating stocks and it has also not created any Equitable

mortgage, how and why the initial Funding was made in

favour of the borrower (Mention briefly) :

173

13. In case the borrower is not in possession of

immovable properties, how do you propose to Recover

the Commission's funds by application of clause 19-B pf

the KVIC Act. :

14. Enumerate all the steps taken by you to recover KVIC's

funds from the borrower (evidence may be furnished) :

15. Reasons for proposing 19-B action against the borrower :

Date : State/Regional Director

Recommended for 19-B action by Dy. C.E.O. (Zone)

I hereby recommend for initiating 19-B action against the borrower, namely ____________

___________________________________ as proposed by the State / Regional Director.

Zonal Dy. C.E.O.

174

DIRECTORATE OF V. I. COORDINATIONKHADI AND VILLAGE INDUSTRIES COMMISSION


No. VIC/VI-COMMITTEE/02.03/ Date: 17/21.10.2002

- CORRIGENDUM -

Sub: Clarification regarding Action under Section 19-B of the KVIC Act action against

partially funded units.

Ref: Circular No.VIC/VI-COMMITTEE/02-03 Date : 27.08.2002

***************

With reference to above Circular communicating the decision of the Commission

taken in meeting held on 23/24.07.2002 while considering the recommendation of

V.I.Committee, on Action undner Section 19B, it is clarified that decision for not imposing

the 19-B action is applicable in respect of those units which have utilized the funds for the

purpose it was sanctioned. For instance, if any unit received the amount towards C.E.loan

fully or partially and balance W.C.loan is to be released, the 19-B action should not be

imposed if the institutions submitted the recoupment bill to S.O./R.O./C.O.after utilizing

the funds for the purpose for which it was sanctioned. However, the partially funded units

which have not utilized funds for the purpose for which it was released, should refund the

same to KVIC failing which 19-B should be imposed.

Industries/Programme and State/Regional Directors shall ensure compliance of

above decisions with immediate effect.

Sd/-


To

1. P.S. to Chairman

2. P.A. to CEO

3. P.A. to F.A.

4. CVO

5. All Dy.CEOs in Central Office

6. All Industry/Programme Directors of KVIC

7. All State/Regional Directors of KVIC

8. All State/UT KVI Boards

9. All Sections in Central Office, Mumbai.

175

DIRECTORATE OF FINANCEKHADI AND VILLAGE INDUSTRIES COMMISSION


No. Finance/Policy/01/2002-03 Date: 28.02.2003

- C I R C U L A R -

Sub: Levy/enforcement of Penal Interest on KVI Loans

***************

Guidelines have been prescribed by the Commission from time to time regarding charging of penal interest, rates for such penal interest etc. Some of the State KVI Boards have represented for exemption of levying penal interest and a few other Boards have represented for waiver of penal interest in respect of defaulters of the Boards. Similar representations have been received form the field offices as well.

In this respect, the Commission in its meeting No. 513th dated 28 & 29.01.2003 has further examined the issue and decided as under:

(I) As there is no mandate to charge the penal interest on any cases “Other than the misutilisation” when the loanee has not misutilised the fund and has been engaged in the KVI programme utilising the same, but for some reason or the other, because of not being very successful, have been in default and such loanee once agrees to pay back the full principal and interest thereon, the same may be accepted and penal interest can be waived by the State KVI Board and such cases need not be referred back to the Commission. However, it is mandatory that, once penal interest is waived by the State KVI Board, the entire principal and interest has to be remitted to the Commission forthwith by the Board within 90(Ninety) days of waiver of the penal interest.

(ii) As regards cases which are directly financed by the Commission, State/Regional Directors shall send specific cases to Commission with indication that, “no misutilisation has taken place”, but beneficiary is willing to pay back the full principal and interest thereon, the concerned penal interest may be waived. The Commission will examine such cases and take appropriate decision on case to case basis.

In the event of enforcing the penal interest, the rates prescribed under Circular No. II/ECR/PAC/139-II/97-98 dated 12/16.2.1998 will be applicable.

The above decision is brought to the notice of all concerned for immediate compliance and it shall take effect from the date of issue of the Circular.

Sd/-


To1. All State Khadi & V.I. Boards.2. All the Industry/Programme Directors/Incharges KVIC.3. All State/Regional Directors, KVIC.

176



No. LR/Policy Decision/54/03-04/671 Date: 19.02.2004

- C I R C U L A R -

Sub: Recovery action on outstanding dues from defaulting borrowers

***************

The Commission expressed its unhappiness on the progress of recovery and directed that, strong measures should be taken to expedite the recovery process. The State/Regional Directors were communicated the procedures for initiating the recovery actions number of times by way of different Circulars and Orders. It is observed that the State/Regional Directors are not putting the required efforts for recovery of the outstanding huge amount lying with the institutions/individuals.

After communicating the approval of the higher authorities for initiating recovery of dues under Section 19B of KVIC Act, 1956 and Rule 25A of KVIC Rule, 1957 for repayment of Commission’s entire outstanding dues together with interest and/or penal interest accrued thereon, no concrete steps are taken by certain State/Regional Directors to send notices to the borrowers and to take further action for informing to the District Collector for recovery of the Commission’s dues as arrears of Land Revenue.

It is expected that, the State/Regional Directors should classify the 19B cases into District-wise and they should attend the Revenue Recovery Meetings conducted regularly by the concerned District Collectors. If by any reason they are not able to attend the Meeting then they should invariably depute Asstt. Director or the Senior Development Officer to attend the same.

If any institution is willing to come forward to repay the loan and interest before recovery proceedings are initiated through District Collector, State Director may settle the same by accepting minimum 25% of amount due immediately and balance in instalment within a year from the date of receipt of Notice.

It is observed that, though it was communicated vide Circular No.LR/Policy/Decision 54(II)/02-03 dated 09.08.2002, that there is no change in the procedure laid down and communicated from time to time from Central office for recovering Commission’s entire outstanding dues, the format for submission of cases for approval of action under clause 19B of the KVIC Act is not filled in properly and the details as regards to S.F.C. Resolution No. and Date, Budget Allocation No. and Date, latest findings of Inspection Report etc.are not properly furnished alongwith the recommendations of Zonal Dy. C.E.O.

All the State/Regional Directors therefore are directed that they should take immediate action to expedite the recovery process and end the laxity forthwith.

Sd/-


To


177



No. L.R./Genl./Meerut/28/2004-05 Date: 11.05.2004

- C I R C U L A R -

Sub: Charging of interest on Partly Funded project of V. I. Units.

***************

The Commission has been directly financing Village Industry Units upto 31st March, 1995 under Pattern of Assistance Scheme and after that, started financing to individuals also under CBC (Margin Money Scheme).

During the period 1990 till 1995 there has been a lot of sanctions under V.I.Programme but due to paucity of funds, the Commission could not release full funds as per sanctions granted by SFC in each case. As a result the institutions could not implement the programme. Under CBC financing also there remain some partly funded units. Recovery from all such units have become due in due course. The main reason in most of the cases has been partly funding for which barring a few institutions, they are not responsible as they have utilized the fund for the purpose for which it was given to them besides there own share.

On the issue of levying of penal interest there has been representations from the loanees for not charging penal interest on the partly funded units. The Commission in its Meeting No.528 dated 22.04.2004 has therefore decided that :-

"No penal interest will be charged on recovery of loans from partly funded units whether financed by KVIC or State KVI Board provided that, the unit has properly utilized the funds".

It is also to state that the cases against whom action under 19-B has already been initiated and where the institution/entrepreneurs have objected for charging of penal interest and/or have resorted to legal action all such cases will be considered in the light of above decision of the Commission. In those cases where the institution/entrepreneurs have already repaid loan as well as interest as per the demand of the Commission shall not be reopened.

The cases falling under the above category will be examined personally by the State/Divisional Directors and sent to the concerned Industry Programme Directors for further processing and obtaining approval of the F.A., C.E.O. and Chairman before final settlement.

The State/Divisional Directors of the Commission will review the cases of all institution/entrepreneurs where recovery is being made in the regular process or through 19-B action or may be in Court case and direct the dealing staff to put up all the cases giving full facts.


To1) The Joint Chief Executive Officer2) All Dy. Chief Executive Officer

178

DIRECTORATE OF LEGAL RECOVERYGUIDELINES FOR 19 B

I) Detection of Institutions which may call 19-B action

State/Divisional Director to monitor the financial condition of the institutions which

show any or all of the following.

Symptoms of deterioration.

1) Continuous loses for more than two years.

2) Frequent infighting, Financial mismanagement, Non-settlement of creditors,

Non-payment of wages, Mismanagement of Artisans Welfare fund, Non-

settlement of dues of other institutions etc.

3) Cancellation of Khadi certificate/Poly Certificate.

II) Ground work to be done

1) Collection of balance sheet for three years.

2) Whether all fixed assets are mortgaged or not.

3) If mortgage, whether these are valid

4) If not valid, go for validation.

5) If not mortgage, try to collect the title deeds.

6) If title deeds are not available, to collect particulars of the property

7) Collect evidence of payment to institution.

8) To check, if in addition to Khadi Funds are released under any V.I. and if the

same are safe.

9) A team consisting of Khadi, V.I., Ec.R. may be formed and sent for physical

verification of units to find out they are functioning or non-functioning, the

whereabouts of the office bearers of the units, their property details etc.

10) Notice under Rule 8 of the KVIC to be issued to repay the instalment and

interest.

III) Action on Hypothecation Deed

1) Whether all movable assets are hypothecated or not.

2) Whether ceiling limit is required to be increased. If required to do so, do it.

3) Whether it is valid, if not, go for renewal.

4) Conduct stock inventory of goods

5) Conduct dead stock inventory.

IV) Action on Equitable Mortgage

1) Whether all the properties are physically available and are in agreement with

the properties shown in the balance sheet.

2) Fix sign board where properties are mortgaged to Commission prohibiting

trespassers.

3) If the property leased out find out from book of A/c’s whether such lease is

there or not, if it is not, take action to get the property vacated from

unauthorized occupants.

179

V) Collect the outstanding balance from the following

1) Director (Accounts)

2) Director Inspection (amount objected)

3) Cotton releases

4) NMCs supplied but not adjusted.

5) Silver released from CSP

VI Action prelude to 19B

1) In consult]nd dispose off the movable assets by virtue of clause 16 & 17 of

Hypothecation Deed.

VII Action for 19-B

1) To finalize and forward the proposal through Zonal Dy.C.E.O. to Director (L.R.)

who in term shall obtain approval from Dy.C.E.O., F.A., C.E.O. and Chairman.

2) After receipt of the approval of Chairman, KVIC for 19-B action, issue notice

under Section 19B of KVIC Act, 1956 and Rule 25A of KVIC Rules, 1957 for

repayment of Commission’s entire outstanding dues together with interest

and/or penal interest accrued thereon.

3) If the institution does not pay the dues as mentioned in notice, approach

concerned District Collector to take such action as may be necessary for

recovery of the Commission’s dues as arrears of Land Revenue.

4) If the amount claimed in the Notice is disputed by the borrower refer the case

to Director (L.R), who in term shall send the proposal to Central Government,

with the approval of Dy. C.E.O.(L.R.), F.A., C.E.O. and Chairman for constituting

the tribunal as per Rule 25B of KVIC Rule, 1957.

5) After receipt of the award from the Tribunal, execute the award for realization

of Commission’s dues.

6) To continuously pursue with the District Collector including personal approach

with the revenue Authorities at various levels.

7) In case of Co-operative societies approach co-operative authorities for an

appointment of liquidators for recovering the Commissions dues.

8) If the claims are certified as irrecoverable by Revenue authorities/co-operative

authorities, forward the case to Director (L. R.) for write-off.

180

REGISTERED: A.D.

Gram: “KHADIGRAM”

KHADI & VILLAGE INDUSTRIES COMMISSIONEstablished under the Khadi & Village Industries Act, 1956.

(No. LXI of 1956)

GRAMODAYA

3, Irla Raod,

Vile Parle, (West)

Bombay – 400 056.

No.

N O T I C E

To

Sir,

A sum of Rs. (Rupees: )

as per statement overleaf is payable by you to the Khadi and Village Industries Commission.

You are directed to pay the same to the Commission within thirty days of receipt hereof by

you, failing which the Commission will proceed to recover the same as arrears of Land

Revenue under Section 19-B of the Khadi and Village Industries Commission Act,1956 and

Rule 25-A of the Khadi and Village Industries Commission’s Rules.

Yours faithfully,

Sd/-


STATEMENT SHOWING DETAILS OF AMOUNTS DUE

Name of Industry Amount of Date of Amount Balance

Loan Rs. Payment repaid Rs. Due Rs.

181

REGISTERED: A.D.

Gram: “KHADIGRAM”

KHADI & VILLAGE INDUSTRIES COMMISSIONEstablished under the Khadi & Village Industries Act, 1956.

(No. LXI of 1956)

GRAMODAYA

3, Irla Raod,

Vile Parle, (West)

Bombay – 400 056.

No.

N O T I C E

To

The Collector of Bombay Suburban District,

Office of the Recovery Mahalkari for

Government dues, B.S.D.

Old Custom House Yard,

Fort, Bombay – 400 001.

Sir,

I have to apply to you under Section 19-B of the Khadi and Village Industries

Commission Act LXI of 1956 and Rule 25-A of the Khadi and Village Industries Commission’s

Rules framed there under to recover from.

A Cooperative Society/registered institution registered under __________________

a sum of Rs. (Rupees:--------------------------------------------------------------------------- only)

which become due and payable to the Khadi and Village Industries Commission.

2. The name and addresses of the Office bearers of the Executive Council of the above

society were at the time of sanction of funds during and at present are as under:-

3. The Society has got movable and immovable property. It’s registered office is

at____________________________________.

4. The total amount to be recovered is Rs…………… as per details given below:

5. The above amount of Rs. ---------------------- has become due and payable to the Khadi

and Village Industries Commission by the above said Society and is recoverable from-

-----------------------------------------------------------------------------------------------------as

arrears of Land Revenue under Section 19-B of the Khadi and Village Industries

Commission Act and Rule 25-A of the Khadi and Village Industries Commission’s Rules

framed thereunder as if it were arrears of Land Revenue which accrued in your

District and so you are hereby requested to recover and remit the amount to Khadi

and Village Industries Commission, Irla Road, Vile Parle(West), Bombay – 400 056.

182

6. The Commission has served a notice (Copy enclosed) on the said society to pay the

above mentioned sum and the said society has not made any representation to the

Commission denying its liability.

7. I have, therefore, to issue at an early date the necessary certificate to the Collector of

-------------------------------- Section 5 of the Revenue Recovery Act, 1890 under advice

to the Commission.

8. The amount recovered may please be remitted by Demand Draft to the Chief

Executive Officer, Khadi and Village Industries Commission, Irla Road, Vile

Parle(West), Bombay – 400 056. The name of the Khadi and Village Industries

Commission is included in the list of offices to who government drafts are issued at

per (Serial) No.38 of Para 4 of appendix 8 of C.T.R. Volume II).

Yours faithfully,

Sd/-


Encl:

183

DIRECTORATE OF LEGAL AFFAIRSKHADI & VILLAGE INDUSTRIES COMMISSION


No. Legal/Circular/08-09 Date: 11/18.06.2008

- C I R C U L A R -

Sub: Proposal for 19B action and filing of FIR for mis-appropriationof funds by the KVI institutions.

***************

Recently a large number of proposals are being received from the field offices seeking approval for initiating 19 B recovery action against the borrower institutions, which have failed to implement the KVI programme either on account of misappropriation of funds or for any other reasons.

2. However, it is observed that most of the field offices are not suo-moto initiating criminal proceedings against the office bearers of the institutions who have misappropriated the KVIC funds granted to the institutions by filing F.I.R. invoking the powers already delegated to them.

3. The Chairperson of the Commission has taken a very serious view for the inaction on the part of the In-charges of the field offices in filing F.I.R. against the erring office bearers who are misappropriating the funds of the institutions and thereby ruining the institutions.

4. All the In charges of the field offices are hereby directed to thoroughly examine the reasons for the failure of the KVI institutions in implementing the programme, without mechanically referring the matter to the Central Office seeking approval for initiating 19 B recovery action, and if it is found that there are misappropriation of funds immediate action should be taken by the In-charges of the field offices to file F.I.R. before seeking the approval for 19 B recovery action.

5. The details of the matter concerning filing of F.I.R. should also be intimated at the time of seeking the approval of 19B recovery action.

6. The aforesaid guidelines may be followed scrupulously.


To

1) All State / Divisional Directors of the KVIC.

2) Zonal Dy. CEOs.

3) All Industry/Programme Directors at C. O. Mumbai

4) The Director (Publicity)-with instruction to publish the same in the ensuing issue in a prominent page.


Copy forwarded to

1) All Members of the Commission }

2) A.O. to Financial Adviser }

3) O.S.D. to C.E.O. }….for kind information

4) Secretary to Chairperson }

184

DIRECTORATE OF LEGAL AFFAIRSKHADI & VILLAGE INDUSTRIES COMMISSION


No. LR/Policy Decision/19-B/09-10 Date: 15.07.2009

- C I R C U L A R -

Sub: Speedy initiation of Recovery proceedings against defaulting institutions- reg

***************

It has been observed that the field offices are not showing required enthusiasm and

interest in recovering the amount due to the Commission from the defaulted institutions by

initiating 19B recovery action.

2. Instances have come to the notice that in several cases after referring the matter for

initiating revenue recovery action to the District Collectors/Revenue Authorities, the

State/Divisional Directors are not at all taking any follow up action or rendering any

assistance to the Revenue Authority in effecting the recovery, which in turn not only

causes delay but also results in the failure of 19B recovery proceedings.

3. Though the 19B recovery action i.e. the recovery of dues as arrears of land revenue is

the speediest, cheapest and efficient mode of recovery, the inaction on the part of

the field offices acts as a hurdle in ensuring the benefit of recovery proceedings by the

Commission. In most of the cases, it is observed that the concerned State/Divisional

Directors are not at all taking up the matter personally with the District

Collector/Revenue Authority but simply assigning the work to the lower level

functionaries. This is not proper and needs immediate improvement.

In order to ensure the success and to achieve the desired result, the following

guidelines are prescribed for the strict compliance by all concerned.

(1) While referring the recovery matter to the Dist. Collector/Revenue Authority,

alongwith the Recovery Certificate, full details of the properties owned by the

defaulter institution, the correct names and addresses of the officer bearers of

the institutions, the statement showing the amount due to the Commission

etc. must be invariably furnished.

(2) A separate register should be maintained by the State/Divisional Directors for

recording the details of the 19B recovery matters. The details of the recovery of

different institutions should be recorded on separate pages of the register. The

details should contain among other things the date of referring the case to the

District Collector, date of subsequent visits made by the State/Divisional

Directors to the office of the Collector, monthly progress in each case, the

reminders made to the District Collector etc.

(3) The State/Divisional Director should personally enquire with the Revenue

Authority regarding any assistance required from the KVIC either in locating the

property or in arranging the auction of the property or for any other

requirement.

185

(4) In certain cases, on account of the lack of funds or for some other reasons, the

Revenue Authorities are making delay in publishing the notice of auction in the

local newspapers. In such cases, the State/Divisional Directors should take up

the matter with the Central Office for obtaining the approval of F.A and C.E.O.

for incurring the expenditure in publishing the notice of auction in the

newspapers.

(5) The State/Divisional Director should invariably be present at the time of

auction of the property by the Revenue Authority and if he feels that there is

some collusion among the bidders and thereby they are quoting amounts at a

very lower side much lesser than the present market value of the property, he

should participate in the auction and purchase the property in the name of the

Commission, as per the guidelines circulated in this regard earlier.

(6) The State/Divisional Director should submit the detailed progress report on the

recovery proceedings on quarterly basis to the Director, Legal Recovery. It

should cover the steps taken by the State/Divisional Director to expedite the

process of recovery, the number of visits made to the office of the Revenue

Authority etc.

(7) In case the Revenue Authorities are facing any difficulty in going ahead with the

recovery proceedings, the same should be brought to the notice of the Director

(Legal Recovery) immediately for a solution in the matter, if it cannot be solved

at the level of State/Divisional Director.

(8) The status of sorted out recovery due and done in a month and cumulative

position in financial year against each State Offices and Divisional Offices will be

submitted for perusal of C.E.O. and Chairperson.

The aforesaid guidelines may be followed scrupulously and the State/Divisional

Director will be held personally responsible for any unreasonable delay or

violation of aforesaid guidelines.

Sd/-


To

1) All State / Divisional Directors of the KVIC.

2) Zonal Dy. CEOs.

3) All Industry/Programme Directors at C. O. Mumbai

4) The Director (Publicity)-with instruction to publish the same in the ensuing issue in a

prominent page.


Copy forwarded to

1) All Members of the Commission }

2) A.O. to Financial Adviser }

3) O.S.D. to C.E.O. }….for kind information

4) Secretary to Chairperson }

186

CHAPTER – VI

RECENT AMENDMENTS IN THE KVIC ACT & RULES

The Khadi & Village Industries Commission (Amendment) Act 2006:

The Central Government vide notification dated 12/05/2006 has made major changes to the Khadi and Village Industries Commission Act by way of amendment, which are as under:

1) Under the definition of “Rural area” in Clause (ff) of Section 2 of KVIC Act, 1956, the number of population has been changed from “ten thousand”, to “twenty thousand”.

2) Under the definition of “Village Industry” in Sub-Clause (i) of Clause (h) of Section 2 the amount of fixed capital investment per head of artisan has been changed from “fifteen thousand rupees”, to “One lakh rupees”. And in the case of any industry located in a hilly area, the amount of fixed capital investment per head of artisan has been fixed as “one lakh and fifty thousand rupees”.

3) In Section 4 of KVIC Act regarding constitution of the Commission, one more sub-section (1A) has been added as “the exercise of all powers and discharge of all functions under this Act, including general Superintendence and direction and management day to day affairs of the Commission has been vested in the Commission.

4) In Section 4 (2) (a) of KVIC Act regarding the qualification of members, the earlier qualification of “having special knowledge and experience of Khadi & Village Industries” has been changed as “having specialised knowledge and not less than 10 years of experience of Khadi and Village Industries”.

5) Under Section 4 (2) of the KVIC Act, the total number of members of the Commission has been increased to13 as under :

(a) Six non-official members having specialized knowledge and not less than 10 years of experience of Khadi or village Industries representing six geographical zones of the country;

(b) four none official members of whom each member shall be from the following disciplines, namely :

i) one member having expert knowledge and experience in Science and Technology.

ii) One member having expert knowledge and experience in Marketing.

iii) one member having expert knowledge and experience in Rural Development.

iv) one member having expert knowledge and experience in Technical Education and Training.

(c) The Chairman State Bank of India or Officer not below the rank of Dy. Managing Director as may be nominated by the Chairman,SBI– “ex-officio”.

(d) The Chief Executive Officer and the Financial Advisor, who shall be the Chief Accounts Officer of the Commission- “ex-officio”.

187

6) By omitting the Proviso after clause (d) to Section 4(2), the Chief Executive Officer and the Financial Adviser have given the voting right.

7) Under Section 5 of the Act, the Chief Executive Officer has to exercise powers and functions under general Superintendence, direction and management of the Commission instead of under the direction and control of the Chairman.

8) Under Section 10 of KVIC Act, the name of “Khadi and Village Industries Board”, has been changed to “National Khadi and Village Industries Board”.

9) A new Section 12A has been inserted which deals with the constitution of Zonal Committee. It consist of the following members i. The respective Zonal Member of the Commission – the Chairman of the Zonal

Committee.ii. One representative of each of the State Khadi & V.I.Boards in the Zone –

Member.iii. Zonal Dy.Chief Executive Officer – Member Convener.iv. State Directors/In charges of the Commission in the Zone – Member.v. A Zonal or Regional Manager of the lead Bank operating in the Zone – Member.vi. One representative of a reputed institution in KVI Sector from each States in the

Zone – Member.

10) In Section 13 of the Act , the term of office of the members of the Commission has been modified as “Every member of the Commission, other than ex-officio members, shall hold office at the pleasure of the Central Government which shall not exceed continuous period of five years”.

11) Under Section 15 of the Act, the Commission has been authorised to collaborate with “Specified Agencies” for the discharge of its functions. Specified agency means the agency which the Central Govt. may by notification in the official Gazettee specify from time to time.

12) Under Section 19A , a new proviso has been inserted , which made the Chief Executive Officer and Financial Advisor as the ex-officio member of the Standing Finance Committee in respect of each of the three separate funds of the Commission.

13) Under Section 25 of the Act, a new sub-Section 3 has been added as under “ Any time after the issue of notification under sub-Section (1), the Central Government re-established the Commission in accordance with the provisions of Section 4 and on and from the date of re-establishment of the Commission, the properties and funds which had previously vested in the Central Government under Clause (a) of sub-Section (2) shall stand vested in the Commission, so re-established”.

Khadi and Village Industries Commission Rules 2006:

The Govt. of India, in supersession of the KVIC Rules 1957, notified the KVIC Rules 2006. Some of the important changes are specified below.

1) As per Rule 7, for the appointment of officers and employees, creation of posts and filling up of vacancies, the prior approval of the Central Govt. is necessary.

2) As per Rule 9, each Standing Finance Committee shall have 5 members . One member

188

from among the six non-official members, one member from among the 4 expert members, the Chairman SBI or his nominee , Chief Executive Officer and the Financial Adviser.

3) Under Rule 10 , powers of the Chairman shall be (i) to preside over the meetings of the Commission,(ii)Cause important papers and matters to be presented to the Commission as early as practicable and (iii) issue directions as to the method of carrying out the decision of the Commission.

4) As per Rule 14, the term of office of the Zonal Committee shall be co-terminus with the term of the Commission.

5) Under Rule 28, the specific heads under which the funds were placed at the disposal of the Commission have been specified. There are 11 heads specified under the Rule.

6) Rule 25A and 25B of the old KVIC Rules 1957 relating to recovery of funds of the KVIC have been re-numbered as Rule 29 and Rule 30 in the new Rules.

7) Under Rule 30, the time limit for deciding the question of liability to pay sums by the person disputing the liability to the KVIC by the Tribunal has been specified as three months from the date of publication of Official Gazettee notifying the constitution of Tribunal.

8) Under Rule 31, the Commission can enter in to contracts or may authorise the Chief Executive Officer, Financial Adviser or taking into account the recommen-dations of the Chief Executive Officer in this behalf any other officer of the Commission to enter in to contracts on behalf of the Commission.

9) Under Rule 32, specifying the agencies to whom the Commission has the power to sanction grants and subsidies, “Specified Agencies” as defined in the Explanation to Section 15 of the Act has been added and the maximum amount of grant that can be sanctioned to an institution engaged in research in khadi and village industries has been increased to Rs.15,00,000/- from Rs.5,00,000/-.

10) Under Rule 35 of the new KVIC Rules (old Rule 30), which deals with powers to write off losses, the maximum limit of Rs.10,000/- has been increased to Rs. 20,000/- in respect of irrecoverable losses of stores or of public money due to theft, fraud or negligence. The limit of the maximum amount of loss which need not be reported to the Govt. has been increased to Rs.5000/- from Rs.1000/-.

The maximum limit of the losses that can be written off by the Commission, the Chief Executive Officer and any other officer not below the rank of Dy.Chief Executive Officer has been increased as follows:

Commission - Up to Rs. 20,000/- (earlier 10,000)

C.E.O - Up to Rs. 10,000/- (earlier 2,000)

Any other } Up to Rs. 5,000/-(earlier 1,000)

Officer, not }

below the rank }

of a Deputy Chief Executive Officer }

189

CHAPTER – VII

CONTRACT LABOUR

1. Main Features of Contract Labour (R&A) Act, 1970:

The Contract Labour was brought on statute book with the object of regulating the employment of contract labour so as to place it at par with labour employed directly, with regard to working conditions and certain benefits available under labour laws. The provisions of this enactment are applicable to (a) every establishment in which 20 or more workmen are employed or were employed on any day of the preceding twelve months as contract labour and (b) to every contractor who employs or who employed on any day of the preceding twelve months, 20 or more workmen. This Act is not applicable to establishment in which work of causal nature is performed.

CONCEPT: The practice of engaging contract labour is prevalent in almost industries and services. There has been a consistent demand by the contract labour for abolition of the system of contract labour. The Act empowers the “appropriate Govt.” to prohibit employment of contract labour in any process, operation or other work in any establishment keeping in view (i) the conditions of the work and benefits provided for the contract labour in that establishment. (ii) whether the process, operation or other work is incidental to or necessary for the work of that establishment and (iii) whether it is of perennial nature.

2. Definition:

Contract Labour

A person is said to be employed as contract labour , in or in connection with work of an establishment, when he is hired for such work by or through a contractor with or without the knowledge of principle employer.

Contractor (including Sub-Contractor) :

Means a person who undertakes to produce a given result for an establishment through contract labour or who supplies contract labour for any work in an establishment. Persons who merely supply goods to or manufacture articles for an establishment are not contractors.

Principal Employer:

Means

(I) In relation to any office or department of the Govt. or a local authority , the Head of that office or department or such other officer as the Govt. or the local authority as the case may be , be specify in this behalf,

(ii) In a factory, the owner or occupier of the factory and where a person has been named as Manager of the factory under the Factories Act ,1948 (63 of 1948), the person so named,

(ii) In a mine, the owner or agent of the mine and where and where a person has been named as Manager of the mine, the person so named,

(iv) In any other establishment, any person responsible for the supervision and control of the establishment.

190

3. Coverage:

The Act covers every workmen employed in or in connection with any work of the establishment, by or through a contractor, with or without the knowledge of the principal employer, but excludes persons employed in managerial or administrative capacity, persons employed as Supervisors and receiving wages exceeding Rs.1,600/- per month.

4. Administrative Authority:

The Act is administered by the Central and the State Government in their respective jurisdiction. The Central/State Governments have set up Advisory Board constituted by representatives of Industry, contractor, workers and Government nominees. The Central or State Advisory Board is constituted to advise the Central or the State Govt. respectively on matters of administration of the Act referred to it and to carry out other functions assigned to it. The Central/State Government may constitute such committees for such purpose, as it may deem necessary. The Govt. also appoints Registration Officer, Licensing Officer and Inspector for carrying out the provisions of the Act. The Central and State Govt.shall make their Rules for enforcement of the Act.

5. Prohibition On Employment Of Contract Labour:

The Central and the State Govt. can prohibit employment in any process, operation or other work in any establishment after considering the conditions of work and benefits provided for contract labour in that establishment and other relevant factors.

Employment of the contract labour may not be permitted for any process operation and other work if :

a) it is incidental to, or necessary for the industry, trade business, manufacturer or occupation that is carried out in the establishment.

b) it is of perennial or perpetual nature of sufficient duration.

c) Whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto.

d) Whether it is sufficient to employ considerable number of whole time workmen.

Note :- If a question arises whether any process, operation or other work is of perpetual or perennial nature, the decision of the Govt. concerned shall be final.

6. Obligation of Employer’s/Contractors:

(1) Registration of Establishment: The principal employer should apply for registration of his establishment with the Registering Officer, in the prescribed Form along with the prescribed fee. On being satisfied with the application, Registering Officer shall issue a registration certificate. The registration certificate is liable to be cancelled if it has been obtained by misrepresentation of facts or if it has become useless.

191

(2) Effect of Non –Registration: An establishment can not employ contract labour if it does not hold a certificate of registration or if its registration has been revoked.

Failure to obtain registration by the principal employer entails penal provisions of Section 23, but does not give a right to the workers engaged by the contractor to claim employment from the principal employer.

(3) Licensing of Contractor: A contractor should apply for Licence for employing contract labour, to the Licensing Officer, in the prescribed Form containing particulars such as location of the establishment, nature of the process, operation or work etc. On being satisfied with the application and after making necessary investigations the Licensing Officer shall grant the Licence on payment of the prescribed fee and security deposit. The licence is valid for the period specified therein, on the expiry of which it has to be renewed from time to time. The Licensing Officer has to act judicially. A copy of the licence has to be displayed prominently at the premises where the contract work is being carried out.

A contractor cannot undertake or execute any work to contract labour if he does not hold a valid licence or its licence has been revoked. Failure to obtain a licence by contractor entails penal provisions but in no case shall the contract labour be deemed as workmen of the principal employer.

No contractor can engage contract labour without obtaining a licence or whose licence has been revoked. No licence can be revoked unless the Licensing Authority gives a fair hearing.

7) Welfare and Health Amenities for Contract Labour:

The contractor is required to provide the following amenities for the welfare and health of the contract labour.

a) One or more canteens for the use of contract labour, where the number of contract labour ordinarily employed is 100 or more.

b) Sufficiently lighted, ventilated, clean and comfortable rest rooms, where the contract labour is required to halt at night in connection with their work.

c) Supply of wholesome drinking water at convenient places, provision for latrines, urinals and washing facilities.

d) Fully equipped first aid boxes readily accessible during all working hours.

If a contractor fails to provide these amenities, the principal employer shall be liable to provide the same and recover the expenses involved from the contractor.

8) Payment of Wages:

The contractor is liable to make regular and timely payment of wages to the contract labour, in presence of an authorised representative of the principal employer. If, however, the contractor fails to make the payment in time or makes short payment,

192

the principal employer should make payment of wages in full or the unpaid balance due to the contract labour and recover the same from the contractor. However, gratuity and bonus will not be payable by the principle employer since these do not come within the definition of wages.

9) Registers, Returns and Notices:

The Principal employer and the contractor should maintain such registers and records containing particulars of contract labour, nature of work performed, rates of wages paid and other prescribed particulars.

The Principal employer and contractor should exhibit in the premises of the establishment, notices containing hours of work, wages period, nature of duty and other prescribed particulars.

10) Other Provisions:

1) Coverage of Contractor Employment under EPF Act & ESI Act:- Contractor’s employees are eligible for provident fund benefits. If the establishment is covered under ESI, the employees engaged by a contractor have to be enrolled as member of ESI.

2) Direct Absorption of Contract Labour:- Persons who get displaced on the expiry of the contract/licence period, do not get any statutory right for absorption in regular service under the employer.

3) Rights of Contract Labour:- The obligations of the contractor and the principal employer are practically the rights of the contract labour. Parity of pay (for same or similar work) with the pay of directly employed workers is a right of the workers employed through contractor. Besides, the contract workmen have also the right to be represented on the Central and State Advisory Boards.

193



No. Adm-II/611/09-10/(166) Date: 13.07.2009


Sub: Engagement of a person on Contract/Daily wage basis.

***************

In suppression of Standing Order No. 1649 dated 15.2.2005 the following guidelines

are hereby issued on the subject cited above in order to avoid administrative/legal

problems:-

a) Whenever needed, the head of field Offices/Central Office at the time of

requirement of the person on contract daily wage basis should contact

Registered/accredited local agencies registered with provides such manpower

on contract basis, and obtain quotations from them, and submit the proposals

with proper justification for engaging manpower on contract/daily wage basis

alongwith said quotations with proper recommendations for seeking approval

of CEO.

b) While engaging the persons from registered agencies, the validity period of

rates quoted by accredited manpower providing agencies registered with the

respective authorities shall be for one year and the persons thus engaged may

be retained up-to a period of one year whenever required with prior approval,

subject to fulfillment of other conditions. In case there is any hitch in engaging

the same person for a longer duration, say one year, the agency may be

requested to change the person, once in six months. If engagement of such

manpower is necessarily required beyond one year that may be made with the

approval of competent authority.

c) While, outsourcing such services, no appointment order and experience

certificate should be issued to any individual, and the payments made directly

to the concerned agency only instead of to individual. Under Contract Labour

(Abolution & Regulation) Act the Contract Labour suppliers are required to

maintain a list of persons to be engaged, approved by the concerned authority

as per the Act, which should contain name of the persons being engaged by our

offices etc. The agency should furnish an undertaking alongwith Quotations to

the effect that all the statutory requirements under the above Act have been

complied by them.

d) Since, there are prohibitions on the engagement of contract labour in certain

categories of employment, before engaging any contract labour the concerned

office should consult a local Advocate expert in labour matters and ensure that

such engagement is not prohibited.

194

e) No appointment, whatsoever, either on daily wages or on contract basis be

made without the specific prior approval of CEO.

The Officers concerned entrusted with the responsibility of appointment of

Contract/Daily wage workers in Central Office as well as in all the field offices of the

Commission shall be responsible for any lapses in this regard. If any slackness is found in

enforcement of the above instructions, it will be viewed seriously.

The revised guidelines will be effective from the date of issue of this Standing Order.

Sd/-

(J. S. Mishra)


To:

All Heads of Offices of KVIC in and outside Mumbai.

195

DIRECTORATE OF ADMINISTRATION & HRKHADI AND VILLAGE INDUSTRIES COMMISSION


No. Adm.II/DPSD/2014-15/(109) Date: 28.05.2014


Sub: Delegation of Financial and General Powers to Various functionariesof the Commission – reg.

***************

thConsequent to the Commission’s decision taken in its 624 meeting held on 22.4.2014, the Financial and General Powers contained under Part-IV of the S.O.No. 1541, 1542, 1543, 1545 & 1546 dated 10.4.1997 are hereby superseded and the modified/revised powers delegated to various functionaries of the Commission is annexed as Annexure. The other contents of aforesaid S.O.’s will remain unchanged.

2. Besides, the stipulations of S.o.No.1682 dated 13.7.2009 regarding getting prior approval of CEO/Competent Authority for engaging Contract/Daily wage workers is hereby withdrawn. State/Divisional Directors/Incharges of field offices/Incharges of Trading Units are hereby empowered to engage contract/daily wage workers for their activities within the approved Budget allocation of the Commission through registered/accredited local agencies to avoid litigation at later stage.

3. Regarding, past un-settled cases for which ex-post-facto sanction is required, such proposal shall be sent to Directorate of Adm. & HR through concerned Zonal Dy. CEO with proper justification.

4. While exercising these powers; the concerned functionaries should follow the provisions of Commission’s Act, Rules, Regulations, Standing Orders, Officer Orders, Circular provisions of the FR/SR, GFR, instructions of Govt. of India and other instructions already issued and those that may be issued from time to time.

5. These orders shall come into force with immediate effect.

6. This is issued with the approval of Competent Authority.

Encl: Annexure.

Sd/-(E.P. Lepcha)

Dy. Chief Executive Officer

To:

All Heads of Offices of KVIC in the outside Mumbai.

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CHAPTER – VIII

RIGHT TO INFORMATION ACT

1. Introduction:

The Govt. of India had come up with a dynamic legislation, namely the Right to Information Act w.e.f. October 12, 2005, which guarantees the citizens the right to get information about the functioning of public authorities. RTI is an empowering tool in the hands of the Citizens and they can use the tool creatively to make the bureaucrats responsive and accountable.

The main object of the Act is to have more transparency and accountability in the administration and a check and balance in the functioning of the public authorities and to prompt them to work in a better and more efficient manner. The Act guarantees citizen’s right to information, meaning thereby access to the information which is held by or under the control of any public authority and includes the right to inspect the work, document, records, taking notes, extracts or certified copies of documents/records and certified samples of the materials and obtaining information which is also stored in electronic form.

The Right to Information and Open Government are considered two of the most important and imperative attributes of liberal democratic countries. There has been an almost indomitable global trend in the recent years towards recognition of the right to information by countries, non-governmental organizations, civil societies and the common.

th thThe Right to Information Act came into force full on the 12 October, 2005 (120 day thof its enactment i.e. 15 June, 2005). Some provisions had come into force with

immediate effect viz. obligations of public authorities [Section 4 (1)], designation of Public Information Officers and Assistant Public Information Officers [Section 5 (1) and 5(2), Constitution of Central Information Commission [Sections 12 and 13], constitution of State Information Commission [Section 15 and 16], non-applicability of the Act to Intelligence and Security Organizations [Section 24] and power to make rules to carry out the provisions of the Act [Sections 27 and 28].

The Right to Information Act, 2005 is one of the most significant legislations enacted by the parliament of India. The Act enable the establishment of an unprecedented regime of right to information for the citizens of the country. It overrides the 'Official Secrets Act' and similar laws/rules. It strikes at the heart of the paradigm long practiced by Government officials and public functionaries that 'confidentiality is the rule and disclosure is an exception'. The Act seeks to establish that "transparency is the norm and secrecy is an exception" in the working of every public authority. It aims to ensure maximum openness and transparency in the machinery and functioning of Government at all levels: Central, State and Local.

The right to information is expected to lead to informed citizenry and transparency of information, which are vital to the functioning of a democracy. It will contain corruption and enable holding Governments and their instrumentalities accountable to the governed.

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The Act mandates a legal-institutional framework for setting out the practical regime of right to information for every citizen to secure access to information under the control of public authorities. It prescribes mandatory disclosure of certain information to citizens, and designation of Public Information Officers ("PIOs") and Assistant Public Information Officers (APIOs") in all public authorities to attend to requests from citizens for information within stipulated time limits. It provides for appeal to officers senior in rank to Public Information Officers [to be referred to as 'Appellate officers' ("AOs")] against the decisions of PIOs. It also mandates the constitution of a Central Information Commission (CIC) and State Information Commissions (SICs) to inquire into complaints, hear second appeals, and guide implementation of the Act.

The 'People's Right to Know' has a long history of prolonged debates, deliberations, discussions, struggles and movements at both national and international levels.

2. The International Perspective:

The importance accorded to Freedom of Information internationally can be gauged from the fact that the United Nations General Assembly, in its very first session in 1946, adopted Resolution 59 (I), which states : "Freedom of information is a fundamental human right and the touchstone of all the freedoms to which the UN is consecrated".

Article 19 of the 'Universal Declaration of Human Rights', a United Nations General Assembly Resolution 217 (III) A of 1948, has laid out equal rights for all people and three fundamental principles governing human rights. The Declaration recognizes Freedom of Expression (FoE) – including Freedom of Information (FoI) and Free Press – a fundamental human right. Freedom of Expression includes the right to seek, receive and impart information and right to access information held by public authorities.

Article 19(2) of the 'International Covenant on Civil and Political Rights' (ICCPR), a United Nations General Assembly Resolution 2200A (XXI) of 1966 states "Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of his choice".

Article 1 of the UNESCO Declaration on "Fundamental Principles concerning the Contribution of the Mass Media to Strengthening Peace and International Understanding to the Promotion of Human Rights and to Countering Racialism, Apartheid and Incitement to War" [1978] states : "the strengthening of peace and international understanding the promotion of human rights and the countering of racialism, apartheid and incitement to war demand a free flow and a wider and better balance dissemination of information". Article 12 of the Declaration states : "…the exercise of freedom of opinion, expression and information, recognized as an integral part of human rights and fundamental freedoms, is a vital factor in the strengthening of peace and international understanding…"

Article 13 of the 'UN convention against Corruption". adopted by the United Nations General Assembly on 31 October 2003 identifies following as important measures to

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be taken by Governments for ensuring the participation of society in governance :i. effective access to information for public;ii. undertaking public information activities contributing to non-tolerance of

corruption (including conducting public education programmes) andiii. respecting, promoting and protecting the freedom to seek, receive, publish

and disseminate information concerning corruption..'

Article 10 of the 'UN convention against Corruption" states : "..to combat corruption, each (member State) shall, in accordance with the fundamental principles of its domestic law, take such measures as may be necessary to enhance transparency in its public administration, including with regard to its organization, functioning and decision-making processes and take measures for :

a) Adopting procedures or regulations allowing members of the general public to obtain, where appropriate, information on the organization, functioning and decision-making processes of its public administration and, with due regard for the protection of privacy and personal data, on decisions and legal acts that concern members of the public;

b) Simplifying administrative procedures, where appropriate, in order to facilitate public access to the competent decision-making authorities; and

c) Publishing information, (including) periodic reports on the risks of corruption in its public administration".

Freedom of Expression and information has been adopted as fundamental human right by regional human right treaties from time to time e.g. the European Convention of Human Rights, 1950, the African Charter on Human and Peoples' Rights 1981, the Inter-American Declaration of Principles of Freedom of Expression 2000 and Declaration of the Principle of Freedom of Expression in Africa 2002. These conventions have reiterated Article 19 of the Universal Declaration of Human Rights. For example, Principle IV of the Declaration of Principles of Freedom of Expression in Africa states, "Public bodies hold information not for themselves, but as custodians of the public good and every one has a right to access this information, subject only to clearly defined rules established by law".

Principle III of the Recommendations on Access to Official Documents adopted by the Committee of Ministers of the Council of Europe in October 2002 provides : Member states should guarantee the right of everyone to have access, on request, to official documents held by public authorities. This principle should apply without discrimination on any ground, including that of national origin".

The World Conference on Human Rights, held in Vienna in 1993 has declared that the Right to Development adopted by United Nations General Assembly in 1986 is a Universal and inalienable right and an integral part of fundamental human rights. The declaration recognizes that democracy development and respect for human rights and fundamental freedoms are interdependent, and mutually reinforcing. Right to Freedom of Expression is regarded as closely linked to the Right to Development. The right to seek, receive and impart information is not merely a corollary of freedom of opinion and expression, it is a right in and of itself. As such, it is one of the rights upon which free and democratic societies depend. it is also a right that gives meaning to the right to participate which has been acknowledged as fundamental to the realization of the Right to Development.

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3. The Indian Context:

Article 19 (Chapter III) of the Constitution of India, guarantees to all citizens, among other things, the Fundamental Right to Freedom of Speech and Expression, subject to certain "reasonable restrictions", imposed by law, on the exercise of such a right…in the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency/morality, or in relation to contempt of court, defamation or incitement to an offence.

Right to receive and right to impart information have been held to be a part of freedom of speech and expression guaranteed by sub-clause (a) of clause (1) of Article 19 of the Constitution subject, of course to the reasonable restrictions, if any, that may be placed on such right in terms of and to the extent permitted by clause (2) of the said Article.

It has been held by the Supreme Court in Secretary, Ministry of I&B, Government of India V Cricket Association of Bengal [(1995) 2 SCC 161] that "The freedom of speech and expression includes right to acquire information and to disseminate it. Freedom of speech and expression is necessary, for self-expression which is a important means of free conscience and self-fulfillment. it enables people to contribute to debates on social and moral issues. It is the best way to find a truest modal of anything, since it is only through it that the widest possible range of ideas can circulate. It is the only vehicle of political discourse so essential to democracy. Equality important is the role it plays in facilitating artistic and scholarly endeavors of all sorts. The right to communicate, therefore, includes right to communicate through any media that is available whether print or electronic or audio-visual such as advertisement, movie, article, speech etc. That is why freedom of speech and expression includes freedom of the press. The freedom of the press in turn includes right to circulate and also to determine the volume of such circulation. This freedom includes the freedom to communicate or circulate one's opinion, without interference, to as large a population in the country, as well as abroad, as is possible to reach".

In "the Cricket Association of Bengal" case, it was held that the right to impart and receive information from electronic media is a part of the right to freedom of speech and expression.

That the right to information is a fundamental right flowing from Article 19 (1) (a) of the Constitution is now well-settled. Over the years, the Supreme Court has consistently rules in favour of the citizen's right to know. The nature of this right and the relevant restrictions thereto, has been discussed by the Supreme Court in a number of other cases as follows:

¨ In Bennett Coleman, 1973, the right to information was held to the included within the right to freedom of speech and expression guaranteed by Article 19(1) (a).

¨ In Raj Narain, 1975, the Court explicitly stated: 'The people of this country have a right to know every public act, everything that is done in a public way by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearings.

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¨ In S.P.Gupta 1982, the right of the people to know about every public act, and the details of every public transaction undertaken by public functionaries was described.

¨ In P.U.C.L. 2004, the right to information was further elevated to the status of a human right, necessary for making governance transparent and accountable. It was also emphasized that governance must be participatory.

4. Movement for Right to Freedom of Information:

Notwithstanding the Constitutional provisions and Supreme Court Judgments, the real movement for right to information in India originated from the grass roots level. A mass based organization called the Mazdoor Kisan Shakti Sangathan (MKSS) took an initiative to lead the people in a very backward region of Rajasthan-Bhim Tehsil- to assert their right to information by asking for copies of bills and vouchers and names of persons who have been shown in the muster rolls on the construction of schools, dispensaries, small dams and community centers as having been paid wages. On paper such development projects were all completed, but it was common knowledge of the villagers that there was gross misappropriation of funds with roofless school buildings, dispensaries without walls, dams left incomplete, community centers having no doors and windows, and poor quality of cement being used for construction. After years of knocking at officials' doors and despite the usual apathy of the State Government, MKSS succeeded in getting photocopies of certain relevant documents. Misappropriation of funds was clearly obvious. In some cases, the muster rolls contained names of persons who either did not exist at all or had died years before. MKSS organized a Jan Sunwai (People's hearing), the first ever in the history of Rajasthan, Politicians, administrators, landless labourers, private contractors were all invited to listen, respond and, if willing, to defend themselves. Popular response was phenomenal, whereas understandably, most Government officials and politicians stayed away and remain silent.

Between December 1994 and April 1995, several other public hearings were organized People's anger made one engineer of the State Electricity Board to return, in public, an amount of Rs.15,000 he had extracted from a poor farmer. This grassroots movement spread fast to other areas of Rajasthan and to other States establishing firmly that information is power and people should have the right to official information – how public money is spent and how the same is accounted for 'Loksatta', an NGO in Andhra Pradesh has undertaken mass awareness campaigns across the State and through a post card campaign' made representations to the Prime Minister of India demanding the enactment of a right to information law.

The Rajasthan experience on demanding right to information was echoed in other States. The growing demand for a right to public information from various sections of the society, led by civil society organizations in these States could no longer be ignored. The need to enact a law on right to information was recognized unanimously by the Chief Ministers Conference on "Effective and Responsive Government", held

thon 24 May, 1997 at New Delhi. The Government of India, Department of Personnel, decided to set-up a 'Working Group' (on the 'Right to Information and Promotion of Open and Transparent Government) in January 1997 under the Chairmanship of Mr. H.D. Shouri, which submitted its comprehensive and detailed report and the draft Bill on Freedom of Information in May 1997.

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The Press Council of India, the Press Institute of India, the 'National Campaign for People's Right to Information' and the Forum for Right to Information unanimously submitted a resolution to the Government of India to amend the proposed Bill in February 2000.

The Government of India introduced the Freedom of Information Bill, 2000 (Bill thNo.98 of 2000) in the Lok Sabha on 25 July, 2000. The Bill, which cast an obligation

upon public authorities to furnish such information wherever asked for, was passed by the Parliament as the Freedom of Information (FoI) Act, 2002. However, the Act could not be brought into force because the date from which the Act could come into force was not notified in the Official Gazette.

The United Progressive Alliance (UPA) Government at the Centre, which came into power in 2004, set up a National Advisory Council (NAC). The Council suggested important changes to be incorporated in the FoI Act. These suggestions were examined by the UPA Government, which decided to make the FoI Act more progressive, participatory and meaningful. Later, however, the UPA Government decided to repeal the FoI Act and enacted a new legislation, the Right to Information Act, 2005, to provide an effective framework for effectuating the right of information recognized under Article 19 of the Constitution of India.

5. FoI Legislations in States:

Even before the FoI Act was passed by the Parliament, several States in India had enacted their own legislations on Freedom of/Right to Information: Tamil Nadu was the first State to introduce the Right to Information Act in April 1996. The legislation aimed at ensuring access to information about Government administration, Goa was the second State to enact the Right to Information legislation in 1997. The grassroots movement led by MKSS compelled the Rajasthan Government to enact the Rajasthan Right to Information Act, 2000, Karnataka Government came out with Karnataka Right to Information Act 2000 which could be operationalised properly only in July 2002, when the Government of Karnataka notified the Karnataka Right to Information Rules. The Maharashtra Right to Information Act, 2000, Delhi Right to Information Act 2001, Assam Right to Information Act 2001, Madhya Pradesh Right to Information Act 2002, Jammu & Kashmir Right to Information Act, 2004 are other State legislations.

6. The Right to Information Act, 2005: An Overview:

1. Citizen’s Right to Information

Section 3 of the Right to Information Act,2005 states ‘Subject to the provisions

of this Act, all citizens shall have the right to information’. The act defines

“Information”, “Record” and “Right to Information” as follows:

Definition of “Information” (Section 2 (f))

“Any material in any form, including:

• Records,

• Documents,

• Memos,

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• E-mails,

• Opinions,

• advices,

• press releases,

• circulars,

• orders,

• logbooks,

• contracts,

• reports,

• papers,

• samples,

• models,

• data material held in any electronic form and

• information relating to any private body which can be accessed by a public authority under any other law for the time being in force”

Definition of “Record” (Section 2(I))

• any document, manuscript and file;

• any microfilm, microfiche and facsimile copy of a document;

• any reproduction of image or images embodied in such microfilm (whether enlarged or not; and

• Any other material produced by a computer or any other device.

Definition of “Right to Information” (Section 2(j))

Right to Information accessible under the RTI Act which is held by or under the control of any public authority and includes the right to –

I. inspection of work documents & records

ii. taking notes, extracts or certified copies of documents or records;

iii. taking certified samples of material;

iv. Obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device.

2. Institutional Framework

The Right to Information Act, 2005 envisages a legal-institutional framework to establish and promote the practical regime of Right to Information for every citizen of the country. This framework comprises some critical authorities as follows:

• Public Authorities

• Public Information Officer (PIO)

• Assistant Public Information Officer (APIO)

• Other Officers

• Designated Appellate Officers

• Information Commission

• Ministries & Departments

• Appropriate Government

• Competent Authority

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The roles and responsibilities of various authorities and functionaries under Act are described below:

3. Public Authorities

Public Authority is defined under Section 2 (h) of the Act as an authority or body or institution of self-government established or constituted (a) by or under the Constitution; (b) by any other law made by Parliament; (c) by any other law made by State Legislature; (d) by notification issued or order made by the appropriate Government; and includes any (i) body owned, controlled or substantially financed and (ii) non- Government Organization substantially financed, directly or indirectly by funds provided by the appropriate Government.

The Act stipulates that every Public Authority:• Shall maintain all its records duly catalogued, indexed, computerized and

connected through network (Section 4 (1) (a))• Shall proactively disclosed stipulated information (Section 4 (1) (b),(c) &

(d))• Shall provide information suo moto at regular intervals and disseminate

the same widely (Section 4 (2),(3) & (4))• Shall designate Public Information Officers (PIOs) and Assistant Public

Information Officer (APIOs) (Section 5 (1)& (2))• Shall make information accessible with PIOs (Section 4 (4))• Shall transfer misdirected requests for information to appropriate Public

Authorities (Section 6 (3))• Shall implement the decisions of the Information Commission, which are

binding under Section 19 (7)of the Act- complying with the provisions of the Act, including providing information; designating a PIO; publishing certain information; (suo moto disclosure under Section 4 (1) (b)) making changes to record management practices; arranging training for officials; providing the Information Commission with annual report; compensating the complainant for any loss or other detriment suffered; ensuring that the concerned PIOs pay the penalties imposed by the Commission on them; and taking disciplinary action against the concerned PIOs based on recommendations of the Information Commission.

4. Public Information Officer (PIO)

Central Public Information Officer or State Public Information Officer designated under the Act:• Shall receive requests from persons seeking information and dispose

such requests, either providing the information requested on payment of prescribed fee or rejecting the request for reasons to be specified within the time period stipulated under the Act (Section 5 (3),5(4)& 7(1))

5. Assistant Public Information Officer (APIO)

Central Assistant Public Information Officer or State Assistant Public Information Officer designated under the Act:• Shall receive applications for information or appeals under the Act for

forwarding the same to the Public Information Officer, Appellate Officer or the information Commission concerned (Section 5 (2))

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6. Other Officers

Other Officers whose assistance is sought by a Public Information Officer :• Shall render all assistance to the Public Information Officer who sought

his or her assistance- to be treated as a Public Information Officer for the purpose of any contravention of the provisions of the Act (Section 5 (5))

7. Designated Appellate Officer

Designated Appellate Officer (officer senior in rank to Public Information Officer) shall deal with and dispose• Appeals from any person who, does not receive a decision on request for

information within the stipulated time or is aggrieved by a decision of the Public Information Officer (Section 19 (1))

• Appeal by a third party against an order made by a PIO (Section 19 (2))

8. Information Commission

Central Information Commission constituted under Section 12 or State

Information Commission constituted under Section 15 of the Act:

• Shall receive and inquire into ‘complaints’ from any person relating to

access to information held by or under the control of public authorities

(may require public authorities to compensate the complainants, impose

penalties on erring Public Information Officers and recommend

disciplinary action against them (Section 18 (1) to 18 (4) and Section 20);

• Shall deal with and dispose appeals against the decisions of the

designated appellate officers (may impose penalties on and recommend

disciplinary action against erring Public Information Officer (Section 19

(3) to 19 (5), 19 (7) to 19 (10) & Section 20)

• May make recommendation to public authorities not conforming with

the provisions or the spirit of the Act, specifying the steps to be taken for

promoting such conformity (Section 25 (5))

9. Ministries & Departments

Ministries and Departments in Government:

• Shall collect and provide such information in relation to the public

authorities within their jurisdiction to the concerned Information

Commission, as is required by it to prepare its annual report and comply

with the requirements, concerning the furnishing of that information and

keeping of records for the purposes (Section 25 (2))

10. Appropriate Government

The Central Government or the State Government, as the case may be, in

relation to a public authority may:

• Cause a copy of the report of the Information Commission laid before the

Parliament or State Legislature, as the case may be (Section 25 (4));

• May, to the extent of availability of financial and other resources-

a) develop and organize educational programmes to advance the

understanding of RTI, in particular among disadvantaged

communities;

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b) encourage public authorities to participate in and themselves

undertake educational programmes on RTI;

c) promote timely and effective dissemination of accurate

information by public authorities about their activities; and

d) train Public Information Officers and produce relevant training

materials for use by the public authorities themselves (Section 26).

• Shall, within 18 months from the commencement of the Act,

compile in its official language a guide containing such

guidelines or information, in an easily comprehensible form

and manner, as may reasonably be required by a person who

whishes to exercise any right specified in the Act and, if

necessary, update and publish such guidelines at regular

intervals (Section 26)

• May, by notification in the Official Gazette, make rules to

carry out the provisions of the Act (Section 27).

11. Competent Authority

The Speaker in the case of the House of the People or the Legislative Assembly of the State or a Union Territory having such Assembly and the Chairman in the case of the Council of States or Legislative Council of a State; the Chief Justice of India in the case of the Supreme Court; the Chief Justice of the High Court in the case of a High Court the President or the Governor as the case may be in the case of other authorities established or constituted by or under the Constitution; the Administrator appointed under Article 239 of the Constitution (Section 2 (e))

• May by notification in the Official Gazette, make rules to carry out the provisions of the Act (Sections 28)

12. Information Exempted from Disclosure

Section 8 of the Act provides a list of 10 categories of information 8 (1) (a) to 8 (1) (i) as follows:

a) Information, disclosure or which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State relation with foreign State or lead to incitement of an offence;

b) Information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court.

c) Information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature;

d) Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;

e) Information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;

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f) Information received in confidence from foreign Government;

g) Information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;

h) Information which would impede the process of investigation or apprehension or prosecution of offenders;

i) Cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers:

• Provided that the decisions of Council of Ministers, the reasons thereof, and the material on the basis of which the decisions were taken shall be made public after the decision has been taken, and the matter is complete, or over:

• Provided further that those matters coming under the exemptions specified in this section shall not be disclosed;

j) information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Public information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information provided that the information which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.

13. Protection of Copyright

Without prejudice to the provisions of Section 8, a Central Public Information Officer or a State Public information Officer may reject a request for information where such a request for providing access would involve an infringement of copyright subsisting in a person other than the State (Section 9).

14. Primacy of Public Interest

Section 8 (2) of the Act provides that notwithstanding anything in the Official Secrets Act, 1923, nor any of the exemptions permissible under Section 8(1) of the Right to information Act, a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests.

15 Non-applicability to Certain Organizations

Section 24 (1) provides that the Act shall not apply to the following intelligence and security organizations established by the Central Government. The organizations are:

1. Intelligence Bureau.

2. Research and Analysis Wing of the Cabinet Secretariat.

3. Directorate of Revenue Intelligence.

4. Central Economic Intelligence Bureau.

5. Directorate of Enforcement.

6. Narcotics Control Bureau.

7. Aviation Research Central.

8. Special Frontier Force.

9. Border Security Force.

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10. Central Reserve Police Force.

11. Indo-Tibetan Border Police.

12. Central Industrial Security Force.

13. National Security Guards.

14. Assam Rifles.

15. Special Service Bureau.

16. Special Branch (CID), Andaman and Nicobar.

17. The Crime Branch-CID-CB, Dadra and Nagar Haveli.

18. Special Branch, Lakshadweep Police.

However, the information pertaining to allegations of corruption and human rights violations shall not be excluded. In the case of information sought in respect of allegations of violation of human rights, the information shall only be provided after the approval of the Central Information Commission, and such information shall be provided within 45 days from the date of the receipt of request for information (Section 24 (1)) Section 24 (4) of the Act stipulates that the Act shall not apply to such intelligence and security organizations established by the State Government, as that Government may, from time to time by notification in the Official Gazette, specify. However, the information pertaining to the allegations of corruption and human rights violations shall not be excluded and further that in the case of information sought for in respect of allegations of violation of human rights, the information shall only be provided after the approval of the State Information Commission and such information shall be provided within 45 days from the date of the receipt of request for information (Section 24 (4)).

16. Action in Good Faith

Section 21 of the Act provides that no suit, prosecution or other legal proceeding shall lie against any person for action done in good faith under the Act or rules.

17. Overriding Effect of Act

Section 22 of the Act contends that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in the Official Secrets Act, 1923 and any other law for the time being in force or in any instrument having effect by virtue of any law other that the Act.

18. Bar of Jurisdiction of Courts

Section 23 of the Act provides that no court shall entertain any suit, application or other proceeding in respect of any order made under the Act and no such order shall be called in question otherwise than by way of an appeal under the Act.

7. Role of Public Authorities:1. Definition of Public Authorities

The Act defines public authorities as including all authorities, bodies or institutions of self-government established or constituted by or under the Constitution of India by the laws passed by Parliament / State Legislatures as

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also those set up by notification(s) or orders issued by the Central or State Government as the case may be. They include bodies owned, controlled or substantially financed and also Non-Government Organizations substantially financed, directly or indirectly by Government funds (Section 2(h)).

The Act extends to the whole of India (except the State of Jammu & Kashmir) at all levels of the Government, Central State and local. It covers both Houses of Parliament, States and UTs, all Courts, and all Municipal and Panchayat Raj Bodies. In so far as the Government is concerned, ideally, it is for the Ministries/Departments to identify the public authorities falling under their jurisdiction including Public Sector Undertakings and NGOs ‘substantially financed’ by Government. However, it would be appropriate if the Appropriate Government notifies a ‘Directory of Public Authorities’ and updates it from time to time.

The obligations of public authorities under the Act are enumerated in the sections below.

2. Record Management

Section 4 (1) (a) of the Act stipulates that every public authority shall:

• Maintain all its records duly catalogued and indexed in a manner and the form which facilitates the right to information under the Act;

• Ensure that all records that are appropriate to be computerized are, within a reasonable time and subject to availability of resources, computerized and connected through a network all over the country on different systems so that access to such records is facilitated

The above provisions of the Act may necessitate a critical review of the existing record management practices, record retention schedules for different categories of records and system of indexing and numbering of records in public authorities. They may also call for changes in the legal framework for record management, especially with regard to the creation and destruction of electronic records. The proper cataloguing and indexing of records based on country wide data/meta data standards is critically important. Pending the above, appropriate up-gradation of the existing record management systems in public authorities would also be necessary in most cases.

3. Proactive Disclosure of Information

Section 4 (1) (b) of the Act provides that every public authority shall;

• Publish with 120 days from the enactment of the Right to Information Act

i) The particulars of its organization, functions and duties.

ii) The powers and duties of its officers and employees;

iii) The procedure followed in the decision making process, including channels of supervision and accountability;

iv) The norms set by it for the discharge of its functions;

v) The rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions;

vi) A statement of the categories of documents that are held by it or under its control;

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vii) The particulars of any arrangement that exists for consultation with or representation by, the members of the public in relation to the formulation of its policy or implementation thereof;

viii) A statement of the boards, councils, committees and other bodies consisting of two or more persons constituted as its part or for the purpose of its advice and as to whether meetings of those boards, councils, committees and other bodies are open to the public or the minutes of such meetings are accessible for public.

ix) A directory of its officers and employees.

x) The monthly remuneration received by each of its officers and employees, including the system of compensation as provided in its regulations;

xi) The budget allocated to each of its agency, indicating the particulars of all plans, proposed expenditures and reports on disbursements made.

xii) The manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes.

xiii) Particulars of recipients of concessions, permits or authorizations granted by it;

xiv) Details in respect of the information, available to or held by it, reduced in an electronic form;

xv) The particulars of facilities available to citizens for obtaining information, including the working hours of a library or reading room, if maintained for public use.

xvi) The names, designations and other particulars of the Public Information Officers;

xvii) Such other information as may be prescribed;

• Update the publications under Section 4(1) (b)(i) to (xvii) every year;

Section 4(1) © of the Act requires that every public authority shall publish all relevant facts while formulating important policies or announcing the decisions which affect the public. Section 4 (1) (d) requires that it shall provide reasons for administrative or quasi-judicial decisions to affected persons.

To facilitate disclosure of various categories of information listed out in Section 4 (1) (b) of the Act, sets of templates or guidelines have been prepared and circulated by many State Governments to their departments and public authorities. These templates are meant to achieve uniformity among the public authorities in their publication schemes and to facilitate convenient and easy access of information to citizens. There is a need to review these templates and revise the same taking into account the experience gained.

The fact that a public authority is required to proactively publish information under various categories following the comprehensive list

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included in the Act under Section 4 (1)(b), does not prevent the public authority from carrying on its existing publication schemes like bringing out periodicals, annual reports etc. public authorities may continue their existing disclosure activities with the necessary additions to the information already being published, as per the requirements of the Act. It may be appropriate that the obligation of proactive disclosure by public authorities be linked to the publication of their ‘Citizen’s Charters’ which specify timelines and standards for delivery of various services.

4. Dissemination of Information

Section 4 (2), (3) & (4) call for a regime of maximum disclosure on the part of the public authorities suo moto so that the public sparingly resort to the use of the Right to Information Act to obtain information. The law stipulates that every public authority shall:

• Constantly endeavour to take steps in accordance with publication under Section 4 (1) (b) to provide as much information as possible suo moto to the public at regular intervals through various means of communications, including internet;

• Proactively disseminate information widely and in such form and manner which is easily accessible to the public, subject to taking into consideration the cost effectiveness, local language and the most effective method of communication in that local area.

All published material may be made available to the public at a reasonable price as determined by the concerned public authority conforming to rules, if any, made under the Act in addition, information can be communicated through notice boards, news papers, public announcements, media broadcasts, the internet or any other means. Maximum suo moto disclosure should be the norm for every public authority. Use of standard formats that facilitate easy access of citizens to public information is highly desirable. Accordingly all public authorities and departments should undertake standardization exercises. These assume critical importance in the context of the nationwide networking of information envisaged under Section 4(1) (a) of the Act so that a citizen can access official information “any where” and ‘any time’.

5. Designation of Information Officers

According to Section 5 of the Act, every public authority shall:

• Designate, within 100 days of the enactment of the Act, as many officers

as Central Public Information Officers or State Public Information Officers

(referred to as ‘PIOs’ in this Manual), as the case may be, in all

administrative units or offices under it as may be necessary to provide

information to persons requesting for information under the Act;

• Designate an officer, with 100 days of the enactment of the Act, at each

sub-divisional/ sub-district level as a Central Assistant Public Information

Officer or a State Assistant Public Information Officer (referred to as

‘APIOs’ in this Manual), as the case may be. The number and level of

officers designated as PIOs would vary from authority to authority.

However, in order to be able to meet the expectations of persons

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requesting for various kinds of information, the number of PIOs

designated by a public authority should be reasonably large in keeping

with the size and functions of the authority. Since PIOs are the points of

decision-making on the requests by citizens for information, the rank of

the officers assumes considerable importance. If they are relatively

senior officers then they can take quick decisions, accessing information

available with other officers in the authority concerned.

6. Availability of Information with PIOs

Section 4(4) of the Act requires every public authority to make information easily accessible, to the extent possible in electronic format with the Central Public Information Officer or State Public Information Officer, as the case may be, so that the same can be made available to applicants requesting for information free or at such cost of the medium or the print cost price as may be prescribed. This is important because the PIOs are required under the law to provide information to the applicants within 30 days, in ge’neral.

7. Transfer of Misdirected Requests

Section 6 (3) of the Act prescribes that every public authority shall transfer request for information (i) which is held by another public authority, or (ii) the subject matter of which is more closely connected with the functions of another public authority, in full or part, as may be appropriate to that other public authority within 5 days of receipt, informing the applicant immediately about such transfer.

8. Implementation of Decisions on Appeals

Section 19 (7) of the Act stipulates that the decisions of the information Commission on appeals “shall be binding”. Thus, every public authority will be required to implement the decisions of the Information Commission regarding taking steps to secure compliance with the provisions of the Act, compensating the complainant for loss or other detriment suffered, imposing penalties on erring Public Information Officers etc. under Section 19 and 20.

As per Section 19 (8), the information Commission may require compliance by a public authority with the provisions of the Act in terms of one or more of the following:• Provide access to information in the form in which it is sought;• Designate a PIO;• Publish information;• Bring in necessary changes in existing systems of maintenance,

management and destruction of records;• Organize training of officials for effective implementation and • Submit annual report.

Similarly, the Information Commission may require payment of compensation to a complainant, impose penalty on and recommend disciplinary action against PIOs.

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9. Management Information Systems

Under Section 25 (1) of the Act, the Information Commission is required to prepare an Annual Report and the same would be laid before the appropriate Legislature. Section 25 (2) indicates that all public authorities keep records and provide information as required by the concerned Ministry or Department every year in connection with furnishing of consolidated information needed by the Information Commission for its Annual Report. This calls for the adoption and maintenance of appropriate Management Information Systems by public authorities and departments. Proper tracking systems covering aspects such as number of requests for information of different kinds, type and manner of information provided, fees collected, grounds for denial of information, whether any appeals were preferred to Appellate Officer/Information Commission, the decisions on appeal, action taken on those decisions etc. will facilitate electronic consolidation of information for the Information Commission’s Report.

Section 4(1) (a) and 4 (1) (b) suggest that it would be appropriate and for ministries, departments and public authorit'ies to develop standard online information systems such as Human Resources Management Information System, Financial Management Information System, Social Benefit Management Information System, Project Management Information, Performance Management Information System etc. these would promote easy access to information held by public authorities to Public Information Officers, other officers and citizens across the country through electronic networks being created under the National e-Governance Plan. Section 4 (3) of the Act requires every public authority to disseminate information widely and also in such form and manner that is easily accessible to the public. In this regard shifting to the electronic medium for storage and dissemination of information will be greatly beneficial in extending the outreach of information maintained at one level to other levels geographically.

Given the requirement of Section 4 (1) (b) in connection with suo moto disclosure of information and that of Section 25 (2) in connection with keeping records for providing annual information to the Information Commission, it is suggested that every department/public authority publishes an annual report of its own conforming to the vision, mission and priorities of the department/authority, the explicit requirements of disclosure under the Act and those required by the Information Commission. The spirit of the Act requires every public authority to be duty-bound to create, maintain, store, retrieve, publish and disseminate information as widely as possible so that the citizens will have no need to take recourse to requesting for information following the procedure stipulated under the Act. Right to Information needs to be preceded by the duty to inform, on the part of public authorities and functionaries.

8. Role of Public Information Officers:

1. Designation of PIOs & APIOs

Section 5 (1) of the Act requires a Public Authority to designate "as many"

officers as Central Public Information Officer or the State Public Information

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Officer, as the case may be in all administrative units and offices under it as may

be necessary to provide information to persons requesting for the same. They

were to be designated within 100 days of the enactment of the Act.

Similarly, Central or State Assistant Public Information Officers are to be designated at "each sub-divisional level or other sub-district level" to receive applications or appeals and forward them on to the concerned Public Information Officers. Designated Appellate Officers and the Information Commission [Section 5(2)]. This is to ensure that the public can apply for information in their own local areas without the need for traveling long distances to the offices of the Public Information officers.

2. Duties & Responsibilities

The Act prescribed the obligations of a Public Information Officer (PIO), Assistant Public Information Officer (APIO) and other officers as follows:

Public Information Officer

¨ to deal with requests from persons seeking information and render reasonable assistance to the persons seeking such information, taking the assistance of any other officer, if considered necessary by him or her for the proper discharge of duties [Section 5(3) & 5(4)];

¨ to render all reasonable assistance, where request for information cannot be made in writing to the person making the request orally to reduce the same into writing [Section 6(1)];

¨ to dispose request for information under the Act, either providing the information requested on payment of prescribed fee or rejecting the request for reasons to be specified within the time period stipulated under the Act [Section 7(1)].

Assistant Public Information Officer

¨ to receive applications for information or appeals under the Act for forwarding the same forthwith to the Central Public Information Officer or the State public Information Officer or Appellate Officer or the Central Information Commission or the State Information Commission, as the case may be [Section 5(2)].

Officer whose Assistance is Sought

¨ to render all assistance to the Public Information Officer who sought his or her assistance;

¨ to be treated as a Public Information Office for the purposes of any contravention of the provisions of the Act. [Section 5 (5)].

3. Procedure for Request for Information

Section 6 of the Act stipulates that the request for information may be made to the Central Public Information Officer or State Public Information Officer, as the case may be, of the concerned public authority or given to the Central Assistant Public Information Officer or State Assistant Public Information Officer, as the case may be. The request for information can be made as follows :

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¨ in writing or through electronic means in English or Hindi or in the official language of the area in which the application is being made.

¨ Oral request to be reduced to writing with assistance sought from Public Information Officer, where such request cannot be made in writing.

¨ to specify the particulars of the information being sought by the applicant;

¨ to be accompanied by fee as prescribed under the rules made under the Act;

¨ Applicant not to be required to give reason for requesting the information or any other personal details except those that may be necessary for the purpose of contacting.

4. Disposal of Request for Information

Section 7 of the Act makes provisions regarding the disposal of request for information as follows:

¨ Request for information shall be disposed by the Public Information Officer within;

¨ 30 days of receipt in general cases and 48 hours of receipt in cases where the information sought for concerns the life or liberty of a person [Section 7(1)];

¨ a period of 5 days shall be added in computing the response time where an application for information is given to an Assistant Public Information Officer [Section 5(2)];

¨ Request to be deemed to have been refused by the Public Information Officer, if decision on the request for information is not given within the period specified as above [Section 7(2)];

¨ where a decision is taken to provide the information on payment of any further fee representing the cost of providing the information, the Public Information Officer shall send an intimation to the person making the request, giving (a) the details of further fees representing the cost of providing the information as determined by him or her, together with the calculations made to arrive at the amount in accordance with fee prescribed, requesting him/her to deposit that fees, and the period intervening between the dispatch of the said intimation and payment of fees shall be excluded for the purpose of calculating the period of 30 days and (b) information concerning the right of the person making request with respect to review the decision as to the amount of fees charged or the form of access provided, including the particulars of the appellate authority, time limit, process and any other forms [Section 7(3)];

¨ where access to the record or a part thereof is required to be provided under the Act and the person to whom access is to be provided is sensorily disabled, the Public Information Officer shall provide assistance to enable access to the information, including providing such assistance as may be appropriate for the inspection [Section 7(4)];

¨ Where access to information is to be provided in the printed or in any electronic format, the applicant shall pay the fee prescribed [Section 7(5)];

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¨ before taking any decision to provide information, the Public Information Officer shall take into consideration the representation made by a third party [Section 11 (1);

¨ Where a request has been rejected, the Public Information Officer shall communicate to the person making the request –

i) The reasons for such rejection;

ii) The period within which an appeal against such rejection may be preferred; and

iii) The particulars of the appellate authority [Section 7(8)].

5. Fees & Costs to be Charged

The Act prescribes the following fees and costs to be charged from persons making request for information;

1) Cost: Section 4(4)-Cost of medium; electronic or print or print cost price

2) Fee: Section 6(1)- Fee accompanying application of request for information

3) Fee: Section 7(1)-Fee as prescribed under rules for furnishing information

4) Fee: Section 7(3)-Further fee representing the cost of providing the information requested as determined by PIO

5) Fee: Section 7(5)- Fee prescribed under rules for supply of information in printed or electronic format. [Fees under Section 7(3) and Section 7(5) can be combined together). Other charges and costs, if any, need to be specified while disposing requests for information. No fee shall be charged from the persons who are below poverty line as may be determined by the appropriate Government [Section 7(5)];

Further, the person making request for information shall be provided the information free of charge where a public authority fails to comply with the stipulated time limits for disposal of request applications [Section 7(6)].

6. Scale of Fees

The Departmental of Personnel & Training Government of India has, under the Right to Information (Regulation of Fees and Cost) Rules, 2005, prescribed an application fee of rupees ten for a request for obtaining information under Section 6(1). This could be in cash against proper receipt or by demand draft or by banker's cheque or Indian Postal Order payable to the Accounts Officer of the public authority. The Government of India Right to Information (Regulation of Fees and Cost) Rules, 2005 provide that the public authority may also charge the following as fees for providing information under Section 7(1):

a) Rs. 2/- for each page (in A4 size paper) created or copied

b) Actual charges or cost of a copy in larger size paper

c) Actual cost or price for samples or models

d) For inspection of records, no fees for the first hour; and a fee for Rs.5 for each hour (or fraction thereof) thereafter;

The fee amounts could be paid in cash against proper receipt or by demand draft or by banker's cheque or Indian Postal Order payable to the Accounts Officer of the concerned public authority.

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Further, for providing information under Section 7(5), the prescribed fee pattern is :

a) for information provided in diskette or floppy, Rs.50/- per diskette or floppy,

b) for information provided in printed form at the price fixed for such publication of Rs.2/- per page of photocopy for extracts from the publication.

7. Form of Access to Information

Section 7(9) provides that information shall ordinarily be provided in the form

in which it is sought unless it would 'disproportionately divert the resources of

the public authority or would be detrimental to the safety or preservation of

the record in question". The information provided to an applicant to the extent

possible, has to be in the form, which is easily understandable to him or her.

8. Time Limits for Disposal of Requests

Section 7(1) requires that the information requested by an applicant to a PIO shall be furnished "as expeditiously as possible". The time limits prescribed under the Act for disposal of requests for information are as follows:

- 30 days: on receipt of a request for information, the PIO has either to provide information on payment of such fees as prescribed or reject the request with reasons for the same.

- 48 hours: If the information sought concerns the life or liberty of a person, the same has to be provided immediately, in any case, within 48 hours.

- 35 days: 5 more days to be added to the above time limits if the application is submitted to the Assistant Public Information Officer.

- 40 days: where third party is involved (If the PIO intends to disclose any information which relates to or has been supplied by a third party and has been treated as confidential by it, the PIO has to give a written notice to such third party within 5 days from the receipt of request inviting such third party to make a submission).

- 45 days: Information pertaining to corruption or human right violations from scheduled security and intelligence agencies.

Under Section 6(3) of the Act, if a request application is made to a public authority on a subject that pertains to another public authority, the same shall be transferred to that other authority within 5 days from the date of receipt of the application. The other public authority will be subject to time limit for disposal from the date of receipt of the application. As per Section 7(3) of the Act, the period intervening between the dispatch of intimation to the applicant and the deposit of further fees representing the cost of providing the information shall be excluded from the stipulated time limit of 30 days.

9. Information up to 20 years

Section 8(3) of the Act stipulates that subject to exemptions relating to information linked to sovereignty, integrity and security matters, breach of privilege of Parliament or the State Legislature and cabinet papers, any

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information relating to any occurrence, event or matter which has taken place, occurred or happened 20 years before the date on which any request is made, shall be provided to any person making a request under the Act. However, where any question arises as to the dated from which the period of 20 years has to be computed, the decision of the Central Government shall be final, subject to the usual appeals provided for in the Act.

10. Protection of Copyright

Section 9 of the Act provides that a Public Information Officer may reject a request for information where such a request for providing access would involve an infringement of copyright subsisting in a person other than the State.

11. Access to Part of Record

Section 10 provides that where a request for access to information is rejected on the ground that it is in relation to information which is exempted from disclosure, access may be provided to that part of the record "which does not contain any information which is exempted from disclosure under the Act" and which can reasonably be from any part that contains exempt information". Where access is granted to a part of the record the Public Information Officer shall give a notice to the applicant under Section 10(2), informing:

a. that only part of the record requested, after severance of the record containing information which is exempt from disclosure, is being provided;

b. the reasons for the decision, including any findings on any material question of fact, referring to the material on which those findings were based;

c. the name and designation of the person giving the decision;

d. the details of the fees calculated by him or her and the amount of fee which the applicant is required to deposit; and

e. his or her rights with respect to review of the decision regarding non-disclosure of part of the information, the amount of fee charged or the form of access provided, including the particulars of the Appellate Officer or the Information Commission, time limit, process and any other form of access.

12. Third Party Information

"Third party" is defined under the Act to mean a person other than the citizen making a request for information and the public authority to whom the request is made. It could be a private individual or a public authority [section 2(n)]. Section 11 of the Act requires that if the information sought by the citizen pertains to a record or part thereof relates to, or has been supplied by a third party and if it is not treated as confidential by that third party, the PIO is at liberty to provide the same to the applicant. If, however such above information is treated as 'confidential' by that third party, the following steps will have to be taken:

¨ The PIO gives a written notice to the third party, within 5 days of receipt of the application, and conveys his intension to disclose the information or

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record while requiring the third party to make a submission, within 10 days from the date of receipt of such notice, regarding whether the information should be disclosed or not.

¨ The third party should, within 10 days from the date of receipt of notice from the PIO, make a representation in writing or orally against the proposed disclosure and given written notice to the third party.

¨ The PIO can, within 40 days after the receipt of application for information, if the third party has been given an opportunity to make representation, make a decision on disclosure and give a written notice to the third party.

¨ The third party is entitled to prefer an appeal against the decision of the PIO. Except in the case of "trade or commercial secrets protected by law", disclosures involving third party information may be allowed, if the public interest in disclosure outweighs the importance of any possible harm or injury to the interests of such third party. If the third party is a private individual, the PIO has to be very cautious and property weigh the consequences, as privacy of an individual is important and protected under Section 9(1)(j).

13. Steps for Disposal of Requests

The procedure to be followed by the PIO right from the stage of receipt of

application for information till the disposal involves a number of steps as follows:

¨ receives application along with the application fee.

¨ scrutinizes the application received and the fees prescribed.

¨ if required, renders reasonable assistance to the applicant by reducing the oral request in writing.

¨ registers the application in the Inward Register.

¨ issues acknowledgement/receipt to the applicant.

¨ transfers the application/part of it to another public authority, if required.

¨ informs the applicant about such transfers.

¨ makes necessary entries in the Register being maintained.

¨ considers the representations of a 'third party’, if any.

¨ incase of rejection, conveys reason for it, the period within which the appeal may be preferred and the details of the Appellate Authority to whom appeal can be preferred.

¨ sends intimation to the applicant for further fee, representing the cost of providing the information, to be paid along with its calculations.

¨ also intimates about the modalities of deposit of fee, the right of the applicant for review of the fees charged and appeal against the calculation or the form of access.

¨ wherever required, provides assistance to citizens for inspection of works, documents, records and taking samples of material.

¨ waives fees for citizens Below Poverty Line.

¨ retains record on each application; disposal etc. so that materials as required may be furnished to appellate authorities in case first/second appeal is preferred.

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14. Inspection of Work/Record/Taking Sample(s)

Right to Information includes, inter alia, inspection of work, documents, records, taking notes, extracts and certified samples of material. In consultation with the concerned divisions/offices in Government Departments, PIOs may fix a day or two of the week for applicants to take samples and for inspection of material. Such an arrangement may not disturb the work in the section/division/office and the citizen would also be aware of the days of visit to the PIO/Public Authority. The General Clauses Act, 1897 defines:

'document' : shall include any matter written, expressed or described upon any substance by means of letters figures or marks, or by more than one of those means which is tended to be used or which may be used, for the purpose of recording that matter.

ndFurther, the Oxford Dictionary of English (2 edition revised) defines some of the terms used in the RTI Act as follows:

‘inspect' : look at (something) closely, typically, to assess its condition or to discover its shortcomings.

'material': the matter from which a thing is or can be made, things needed for an activity, the basic material from which a product is made;

'sample' : a small part or quantity intended to show what the whole is like;

'work' : activity involving mental or physical effort done in order to achieve a result, denoting things or parts made of a specified material or with specified tools…denoting a mechanism or structure of a specified kind.

15. Grounds for Rejection of Requests

(A) Section 8(1): Exemptions from disclosure of information. There is no obligation on the part of a PIO to give any citizen the following:

Information where disclosure would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with the foreign State or lead to incitement of an offence ;

a) Information expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court;

b) Information, the disclosure of which would cause a breach of privilege of Parliament or State Legislature;

c) Information including commercial confidence, trade secrets or intellectual property where disclosure would harm the competitive position of a third party, unless large public interest warrants the disclosure of such information;

d) information available to a person in his fiduciary relationship, unless larger public interest warrants the disclosure of such information;

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e) information received in confidence from a foreign Government;

f) information, the disclosure of which would endanger the life or physical safety of any person or identity the source of information or assistance given in confidence for law enforcement or security purposes;

g) information which would impede the process of investigation or apprehension or prosecution of offenders;

h) Cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers;

I) Personal information, which would causes unwarranted invasion of the privacy of the individual unless larger public interest justifies the disclosure of such information (the information, which cannot be denied to the Parliament or State Legislature, shall not be denied to a person making request for the same). However, a PIO may allow access to information if public interest in disclosure outweighs the harm to the protected interest.

(B) Section 9: Infringement of the copyright subsisting in a person other than the State. This is the only absolute exemption. (Here the PIO need not consider the public interest in disclosure.

(C) Section 11: Third party information treated as confidential by the concerned and involving the case of trade or commercial secrets protected by law and other third party information where the public interest in disclosure does not outweigh the importance of any possible harm or injury to the interests of such third party.

(D) Section 24: Information of exempted intelligence and security organizations except information pertaining to allegations of corruption an human rights violations.

16. Procedure for Rejection of Requests

A PIO is required under the Act to either provide the information, on payment of the requisite fee or reject the request within the time limit prescribed. The Act stipulates that where a request for information is rejected by the PIO, the PIO will communicate the decision to the person making the request along with:

i) the reasons for rejection

ii) the period within which an appeal against such rejection may be preferred (within 30 days of the date of the rejection)

iii) the particulars of the Appellate Authority

17. Delays & Incomplete Information

In the case of delay in providing the requisite information to the person seeking the same or if the information provides its incomplete, such an eventuality could be a basis for appeal. Therefore, the PIO, in addition to maintaining registers for receipt of requests for information and disposal of such requests, will also have to develop checklists and keep a check on the pendency and/or

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completeness of the information provided. This is important because the burden of proving that the PIO acted reasonably and diligently would be solely on the PIO himself or herself and that would certainly require production of documentary evidence.

18. Some Important Tips for PIOs

The PIOs need to constantly keep the following in mind:

¨ Information which cannot be denied to the Parliament or the State Legislature shall not be denied to any citizen.

¨ notwithstanding the exemptions permissible under Section 8(1) of the Act, access to information is to be allowed, if public interest in disclosure outweighs the harm to the protected interest.

¨ The Right to Information Act, 2005 overrides the Official Secrets Act, 1923.

¨ Any material relating to occurrence, event or matter, which has taken place, occurred or happened 20 years before the date of the application has to be given to the applicant.

¨ Access to information should not involve an infringement of copyright subsisting in a person other than the State.

¨ Information supplied by a third party can be provided by the PIO subject to legal safeguards under Section 11.

¨ The burden is on the PIO to prove before the Information Commission in appeal that he acted reasonably and diligently. He has to support the same with documentary evidence.

¨ The PIO is personally liable to pay penalty if the same is imposed by the Information Commission while deciding on complaints and appeals.

9. Role of Appellate officers & Information Commission:

1. Channels of Appeal

The Act Provides two Channels of appeals against the decision of a PIO on the request for information by a citizen-an internal or “first’ appeal to a designated “officer senior in rank’ to the PIO-the first appellate authority (called “Appellate officer” in this Manual) as notified by the Public Authority and a second appeal to the information Commission. The Act also provides for Preferring complaints to the information commission regarding non-implementation of the legal provisions.

If an applicant is aggrieved by the decision of a PIO, he or she can make an appeal to the Appellate officer who, as required by law, would be an “officer senior in rank” to the PIO.

A second appeal the decision of the Appellate officer lies to the information commission.

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2. First Appellate Authority

The Act does not define the first appellate authority precisely. Under section 7(b), it refers to “appellate authority” to whom appeal can be made by a person whose request has been rejected. Section 19(1) refers to first appeal being made to such officer who is senior in rank to the Central Public Information Officer or state Public Information officer, as the case may be. The Information commission is also the second appellate authority. Thus the term “Appellate officer” has been used to connote the appellate authority to whom first appeal be preferred under the Act. Needless to say that the Appellate officer must be an officer superior to the PIO such that he is fully conversant with the work of the organization. The subjects dealt with by it and the functions discharged by various PIOs. The number of designated Appellate officer in a Public Authority could be small as compared to the number of PIOs. One Appellate officer could easily meet the requirement of appeals arising out of the decisions of a number of PIOs. However, keeping the nature of responsibilities to be discharged under the Act and the structure and functions of the origination at various levels in view, each Public Authority has to determine the number of senior officers to be designated as appellate authority, the levels of such officer and the PIOs against whose decisions they would hear appeals. As the Appellate officers could be transferred, they may be notified as appellate authorities by designation.

A question arises whether the head of a public authority himself or can be as appellate authority to hear first appeals There may be distinct advantages if the head of a public authority is also the Appellate officer due to the reasons that he or she:

1) Is fully conversant with the functioning of the organization;

2) Would be the best judge to command various sources of information of the authority and meet the access requirements of the public;

3) Can present to the parent department a complete and correct picture regarding the state of implementation of the Act by the authority;

4) Would usually have first hand knowledge of the operation of the Act within his /her organization.

5) Would be in a position to explain to the next appellate authority, i.e. the Information commission regarding the reason behind the outcomes of first appeals,

6) The fact that he/she is the Appellate officer may inculcate a sense of responsibility on the part of PIOs in the authority to be responsive to the requests of citizens for Information.

Furthermore as the head of the authority, analyzing the type of Information sought from or generation, he or she can be in a better position to determine additional areas requiring proactive disclosure/publication.

The advantages listed above may be weighed against factors such as whether the head of the public authority would be in a position to devote time for deciding time consuming appeals, given the nature and extent of his/her workload. The departments concerned may take appropriate decisions

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weighing the pros and cons. However, it should be kept in mind the appeal lies to the information commission against the decision of the Appellate officer and therefore, the levels of the latter should be reasonably high.

3. Disposal of First Appeals

Section 19 (1) and (2) of the Act stipulate that any person who, does not receive a decision on request for information within the stipulated time or is aggrieved by a decision of the Public information officer including communication of fees to be paid may within 30 days from the expiry of such period or from the receipt of such a decision prefer an appeal to the designated Appellate officer senior in rank to the Public information officer. The Appellate officer may admit the appeal after the expiry of the period of 30 days if her or she is satisfied that the appellant was prevented by sufficient cause from filling the appeal in time.

Where an appeal is preferred against an order made by a Public information officer to disclose third party information the appeal by the concerned third party shall be made within 30 days from the date of the order.

The Act prescribes that the appeal shall be disposed of within 30 days of the receipt of the appeal or within such extended period not exceeding a total 45 days from the date of filing thereof, as the case may be, for reason to be recorded in writing.

4. Information Commissions

Section 12 and section 15 of the Act provide for the constitution of the Central information Commission (CIC) and sate information commission (SIC) respectively to exercise powers conferred on it by the Act (chapter V, section 18-20). The setting up of these commissions to ensure the effective implementation of right to information regime in the country is one fact that the long title of the Act itself makes a mention about the Commissions.

The key provisions for the Central and state information Commissions relate to the following;

• The (Central/state) information Commission shall consist of (a) the Chief information Commissioner/ state Chief information commissioner and (b) such number of (Central/state) information Commissioner, not exceeding 10, as may be deemed necessary [section 12 (1) and section 15 (1)];

• The Chief information Commissioner / State Chief information Commissioner and (Central / State) information Commissioners shall be appointed by the President/Governor on the recommendation of a committee consisting of---

i) The Prime Minister/Chief Minister, who shall be the Chairperson of the Committee;

ii) The Leader of Opposition in the Lok Sabha/State Legislative Assembly; and

iii) A Union Cabinet Minister/Cabinet Minister in the state to be nominated by the Prime Minister/Chief Minister (Section 12 (3) and Section 15 (3);

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• Each Commission would function as an autonomous body exercising the powers conferred on, and performing the function assigned to it under the Act (section 12 (4) and section 15 (4);

• The general superintendence, direction and management of the affairs of the Commission shall vest in the Chief Information Commissioner/State Chief information Commission who shall be assisted by the respective information Commissioners (section 12(4) and section 15 (4);

• The Chief information Commissioner/State Chief information Commissioner and every information Commissioner shall hold officer of a term of five years from the date of entering upon office or till attaining the age of 65 years whichever is earlier (section 13 and section 16);

• The Chief information Commissioner/State Chief information Commissioner or any information Commissioner shall be removed from office only by order of the president/Governor on the ground of proved misbehavior or incapacity after the Supreme Court, on a reference made to it by the President/Governor, has on inquiry, reported that the Chief information Commissioner/State Chief information Commissioner or any information Commissioner, as the case may be ought on such ground be removed (section 14 (1) and section 17 (1);

• The Central/state Government shall provide the Chief information Commissioner/state Chief Information Commissioner and the information Commissioners with such officers and employees as may be necessary for the efficient performance of their functions under the Act and salaries and allowances payable to and the terms and condition of service of the officers and other employees appointed for the purpose of the Act shall be such as prescribed (section 13 (6) and section 16 (6).

The Act empowers the Central information Commission and state information Commission, as the case may be, to receive and inquire into complaint from any person relating to access to information under the control of public authorities. Including imposing penalties on the erring PIOs and recommending disciplinary action against them. They are the authorities to deal with and dispose of appeals against the decisions of the designated appellate officers, including imposing penalties on and recommending disciplinary action against the erring PIOs. They may also make recommending to public authorities not conforming to the provisions or the spirit of the Act. Specifying the steps to be taken for promoting such conformity.

The Right to information Act, 2005 envisages that the Information Commissions play the “role of remedy provider’ enforcer and educator as elsewhere in the world.

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5. Inquiry into Complaints

Section 18 (1) of the Act stipulates that the Information Commission shall receive and inquire into complaint from any person.

a) Who has been unable to submit a request to a Public Information Officer either by reason that no such officer has been appointed under this Act. Or because the Assistant Public Information Officer has refused to accept his or her application for information or appeal under the Act for forwarding the same to the public information officer or Appellate officer or the information Commission as the case may be;

b) Who has been refused access to any information requested under the Act,

c) Who has not been given a response to a request for information or access to information within the time limit specified under the Act;

d) Who has been required to pay an amount of fee which he or she considers unreasonable;

e) Who believes that he or she has been given incomplete, misleading or false information under the Act; and

f) In respect of any other matter relating to requesting or obtaining access to records under the Act.

The Commission may initiate an inquiry in respect of complaint, if satisfied that there are reasonable grounds to inquire into the matter. Section 18 further stipulates that while inquiring into a complaint, the Commission shall have the same powers as are vested in a civil court while trying a suit under the Code of Civil Procedure, 1908, in respect of the following matters, namely.

a) Summoning and enforcing the attendance of persons and compel them to give oral or written evidence on oath and to produce the documents or things;

b) Requiring the discovery and inspection of documents

c) Receiving evidence on affidavit;

d) requisitioning any public record or copies thereof from any court or office;

e) issuing summons for examination of witnesses of documents, and

f) any other matter which may be prescribed.

Further the Commission during the inquiry of any complaint under the Act, may examine any record to which the Act applies which is under the control of the public authority.

No such record may be withheld from it on any grounds notwithstanding anything inconsistent contained in any other Act of Parliament or State Legislature, as the case may be.

6. Disposal of Second Appeals

Section 19 (3) of the Act provides that a second appeal against the decision of the Appellate Officer shall lie, within 90 days from the date on which the decision should have been made or was actually received, with the Information Commission. The Information Commission may admit the appeal after the

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expiry of the period of 90 days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time if the decision of the Public Information Officer against which an appeal is preferred relates to information of a third party, the Information Commission shall give a reasonable opportunity of being heard to that third party.

7. Onus of Proof

Section 19 (5) of the Act provides that in any appeal proceedings, the onus to prove that a denial of a request was justified shall be on the Public Information Officer who denied the request.

8. Decisions in Second Appeals

The Act provides that appeal filed before the Information Commission shall be decided by it in accordance with the prescribed procedure and its decision shall be binding. The Information Commission has the power to –

a) Require the public authority to take any such steps as may be necessary to secure compliance with the provisions of the Act, including-

i) by providing access to information, if so requested, in a particular form;

ii) by appointing a Public Information Officer;

iii) by publishing certain information or categories of information;

iv) by making necessary changes to its practices in relation to the maintenance, management and destruction of records;

v) by enhancing the provision of training on the right to information for its officials;

vi) by providing it with an annual report in compliance with clause (b) of subsection (1) of section 4;

b) require the public authority to compensate the complainant for any loss or other detriment suffered;

c) impose any of the penalties provided under the Act;

d) reject the application (Section 19 (8)

The Information Commission is legally bound to give notice of its decision, including any right of appeal, to the complainant and the public authority. Though it is for the concerned Government to give appropriate operational and budgetary autonomy to the Central or State Information Commission (as the case may be), every public authority needs to gear itself to provide all required support to the Information Commission. Among other things, to enable the Commission to arrive at consistent decisions, the public authority’s information base has to be comprehensive and available in easily retrievable form and in a format, which is also understandable. The number of second appeals preferred would directly be proportionate to the way public authorities identify appropriate officials as PIOs and Appellate Officers, designate them in adequate numbers, the way they publish information proactively and finally the extent and quality of training imparted to the Public Information Officers and the Appellate Officers. In this regard, the Information Commissioners may have to like ‘roving’ ambassadors and be on the move to see for themselves the manner in which the provisions of the Act are being implemented at various levels: State, District and Local.

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9. Appeal Procedure

The Department of Personnel and Training, Government of India, has through a notification on ‘Central information Commission’ (Appeal Procedure) Rules, 2005 prescribed the procedure for deciding appeal by the Central Information Commission. These Rules require that the Order of the Commission shall be pronounced in open proceeding and be in writing duly authenticated by the Registrar or any other officer authorized by the Commission for this purpose.

The Central Information Commission (Appeal Procedure) Rules, 2005

Contents of appeal:

i) name and address of the appellant;

ii) name and address of the Central public Information Officer against the decision of whom the appeal is preferred;

iii) particulars of the order including number, if any, against which the appeal is preferred;

iv) brief facts leading to the appeal;

v) If the appeal is preferred against deemed refusal, the particulars of the application, including number and date and name and address of the Central Public Information Officer to whom the application was made;

vi) Prayer or relief sought;

vii) Grounds for the prayer or relief,

viii) Verification by the appellant; and

ix) Any other information which the Commission may deem necessary for deciding the appeal.

Documents to accompany appeal:

i) Self-attested copies of the Orders or documents against which the appeal is being preferred;

ii) Copies of documents relied upon by the appellant and referred to in the appeal; and

iii) An index of the documents referred to in the appeal.

Procedure in deciding appeal

i) hear oral or written evidence on oath or on affidavit from concerned or interested person;

ii) peruse or inspect documents, public records or copies thereof;

iii) inquire through authorized officer further details or facts;

iv) hear Central Public Information Officer, Central Assistant Public Information Officer or such Senior Officer who decide the first appeal, or such person against whom the complaint is made as the case may be;

v) hear third party; and

vi) receive evidence on affidavits from Central Public Information Officer, Central Assistant Public Information Officer, such Senior Officer who decided the first appeal, such person against whom the complaint lies or the third party.

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10. Imposition of Penalty

Section 20 (1) of the Act provides that the Commission, while deciding a complaint or appeal, shall impose penalty on erring PIOs in cases where the PIO has, without any reasonable cause:

• Refused to receive an application for information or

• Has not furnished information within the time specified (u/s 7 (1)) or

• Malafidely denied the request for information or

• Knowingly given incorrect, incomplete or misleading information or

• Destroyed information which was the subject of the request or obstructed in any manner in furnishing the information.

The scale of the penalty to be imposed is Rs. 250/- each day till application is received or information is furnished subject to the total amount of such penalty not exceeding Rs. 25000/-.

The information Commission is legally bound to give the Public Information Officer a reasonable opportunity of being heard by the Commission before any penalty is imposed on him or her.

The burden of proving that a Public Information Officer acted reasonably and diligently shall be on himself or herself.

11. Disciplinary Action

Section 20 (2) of the Act provides that the Commission shall, while deciding a complaint or appeal, recommend for disciplinary action against the Public Information Officer under the service rules applicable to him or her in cases where the PIO has, without any reasonable cause and persistently:

• Failed to receive an application for information or

• Has not furnished information within the time specified or

• Malafidely denied the request for information or

• Knowingly given incorrect, incomplete or misleading information or

• Destroyed information which was the subject of the request or

• Obstructed in any manner in furnishing the information.

12. Well Reasoned Order

Where the Information Commission, at the time of deciding an appeal or complaint is of the opinion that the PIO has among others, malafidely denied the request for information it will then impose a penalty. However, before imposing the penalty, the commission would give reasonable opportunity to the PIO of being heard. The onus to prove that a denial of request was justified is on the PIO, who denied the request. This burden of proof under Section 19 (5) has to be supported by documentary evidence. As per the provision of Section 7 (8) of the Act, the PIO, when rejecting a request has to communicate (to the person making a request) the following:

i) The reasons for such rejection

ii) The period within which an appeal against such rejection may be preferred and

iii) The particulars of the Appellate Authority to whom appeal can be preferred.

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Similarly, for the requests where information is provided, he/she is required to intimate the amount of fees to be paid, the details of fees levied and also that the decision of levying a certain amount of fee can be appealed against, details of Appellate Authority and the period within which the appeal could be preferred. While providing requisite information or rejecting the request, the PIO has t issue well reasoned communications. The reasons are to be given in proper order and the rights of the citizen to appeal are to be explicitly stated.

Such communication should clarify the position to the applicants and enable the Appellate Authority to identify the cause for rejection or basis for fee determination etc. it will also help the Commission in issuing its decision(s) wherever appeal(s) have been preferred.

13. Principles of Natural Justice

The procedure for deciding an appeal by an Appellate Authority or the Information Commission must take into account the application of the principles of natural justice. No person should be condemned unheard. Both the sides will have to be given opportunity to be heard and also to submit any document etc. for perusal and inspection by the concerned, during appeal. Fair play will thus be an essential ingredient of any decision taken. The procedure for deciding appeal prescribed under the Central Information Commission (Appeal Procedure) Rules, 2005 by the Government of India does not provide any scope for arbitrariness in arriving at a decision or in imposing a penalty.

Necessary notices will have to be given by the Information Commission and the stipulated procedure framed under rules will have to be followed in the disposal of appeals. For this purpose, as has been suggested, the Information Commissioners act like roving ambassadors, undertaking tours to observe for themselves how various public functionaries are performing their duties under the Act and whether the citizens are actually able to exercise their right to information. The Commissions should definitely ensure that they uphold the principles of natural justice in disposing appeals.

10. Implementation and Monitoring:

1. Importance of Monitoring System

Public Authorities, Assistant Public Information Officers, Public Information Officers and Appellate Officers need to maintain registers properly, which would in addition to facilitating effective discharge of their functions, enable them to produce documentary evidence in appeals before the Information Commission. Further, the successful implementation of the Act to usher in the practical regime of right to information will depend on the success of appropriate monitoring at the levels of PIO. Appellate Officer, Public Authority, Information Commission, Departments, Ministries and the Government. This will encompass the quality and quantity of data maintained and supplied at appropriate time by various authorities in the requisite forms. Unless records are maintained properly and updated regularly, the furnishing of mandatory information as required by the concerned Information Commission for compiling its Annual Report under Section 25 of the Act would also not be possible.

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2. Directory of APIOs, PIOs and Appellate Authorities

One of the initial activities of the Government / Departments / Public Authorities is to compile and publish a Directory of APIOs, PIOs and Appellate Authorities, including the information Commissioner. People need to know the names, addresses and contact numbers of all the authorities connected with the implementation of the Act.

The Directory of APIOs, PIOs and Appellate Authorities needs to be given wide publicity so that the citizens are aware of whom to contact for information and whom to approach for appeal in the event of rejection of request for information of redressed of complaints. The Directory may be updated every year as some officers are likely to be transferred during the course of a year.

3. Report of Information Commissions

Section 25 of the Right to Information Act, 2005 mandates an Annual Report to be submitted by the Central/State Information Commission to the Parliament/State Legislature. The Central Information Commission or State Information Commission, as the may be, shall, as soon as practicable after the end of each year, prepare a report on the implementation of the provisions of the Act during that year and forward a copy thereof to the appropriate Government for placing the same before the Parliament/State Legislature. It is mandatory for the Annual Report of the Information Commission to contain, among other things, the following information:a) the number of requests made to each public authority;b) the number of decisions where applicants were not entitled to access to

the documents pursuant to the requests, the provisions of the Act under which these decisions were made and the number of times such provisions were invoked;

c) the number of appeals referred to the Central Information Commission or State Information Commission, as the case may be for review, the nature of the appeals and the outcome of the appeals;

d) particulars of any disciplinary action taken against any officer in respect of the administration of this Act;

e) the amount of charges collected by each public authority under this Act.f) Any facts which indicate an effort by the public authorities to administer

and implement the spirit and intention of the Act;g) Recommendations for reform, including recommendations in respect of

the particular public authorities, for the development, improvement, modernization, reform or amendment to the Act or other legislation or common law or any other matter relevant for operationalising the right to access information. Section 25 (2) of the Act clearly specifies that each Ministry or Department shall, in relation to the public authorities within their jurisdiction, collect and provide information required by the Information Commission to prepare its annual report and comply with the requirements concerning the furnishing of that information and keeping of records for the purposes of this compiling information in the above formats requires information systems to be set up, starting from the level of Assistant Public Information Officers up to the Information Commission, maintaining the same properly and undertaking periodic monitoring.

The Act thus entails huge responsibilities on the competent authorities, appropriate governments, public authorities and their functionaries. More than anything, it calls for a change of work culture and mindset.

(Courtesy : National Productivity Council)

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11. A GUIDE TO THE RIGHT TO INFORMATION ACT, 2005: (22 OF 2005) FOR PUBLIC INFORMATION OFFICERS

- SHAILESH GANDHI

I. INTRODUCTION

Right to Information is a Fundamental Right of Citizens and the Right to Information Act 2005 has only codified this ‘to provide for setting out the practical regime of right to information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority.’

It is a major step in the direction of Citizen empowerment and good governance. This right existed since the Constitution of India was adopted, but was difficult to enforce in the absence of an implementing mechanism. The RTI Act provides this crucial mechanism which aims to bring in good governance through transparency and accountability.

The Public Information Officer (PIO) is the most important functionary in the implementation of this mechanism by giving the individual Citizen the primacy he deserves. The PIOs are the vital institutional interface that would ensure true participatory democracy. In this critical role, the PIO is subject to pulls from the empowered Citizenry seeking to use their right, and an administrative set up steeped in the culture of secrecy and arrogance of power. Given the fact that the Act specifies penalties on erring PIOs, they often feel unreasonably victimized. The truth is that if the PIO acts in a systematic manner, he will increasingly become a key fulcrum in this journey towards a true and meaningful SWARAJ.

II. WHAT IS INFORMATION?

The Act gives a clear definition in Section 2 (f) :

"information" means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force;

In simple terms, ‘information’ has to exist. The PIO has to give information from existing records. If an opinion has been given on a matter, for instance, by a file noting, it would have to be provided. However, the PIO is neither expected to nor supposed to provide his opinion, justification or clarification which does not exist in any file or record. The PIO must provide the information within 30 days of receiving the RTI application. Not giving the information without reasonable cause attracts the penal provisions of the RTI Act. As per Section 20 (1), penalty shall be imposed at Rs. 250 per day of delay if there is no reasonable cause for delay. Refusal to accept a RTI application also attracts the same penalty as per Sections 18 and 20. Section 20 (1) states unequivocally that ‘the burden of proving that he acted reasonably and diligently shall be on the Central Public Information Officer or the State Public Information Officer.’

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Disciplinary action may also be taken against a PIO for unreasonably refusing or delaying giving the information. The implementation of the RTI Act is critically dependent on the PIOs. The PIO carries the responsibility of ensuring the implementation and success of the RTI regime and is also personally liable for any lapses. It is indeed possible to do one’s duty as a good Public Information Officer and also make a useful contribution to the cause of good governance. We assume most PIOs will have a desire to follow the law, and are providing some easy tips to follow which may help them to do their work diligently, and correctly. A proper implementation of the RTI Act by PIOs will be a major contribution to taking India towards a true participatory democracy and the Swaraj we deserve and desire.

What is right to information? Section 2 (j) states:

"right to information" means the right to information accessible under this Act which is held by or under the control of any public authority and includes the right to-

(i) inspection of work, documents, records;

(ii) taking notes, extracts, or certified copies of documents or records;

(iii) taking certified samples of material;

(iv) obtaining information in the form of diskettes, floppies. tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device;

Also, Section 19 (5) clearly puts the responsibility on the PIO

In any appeal proceedings, the onus to prove that a denial of a request was justified shall be on the Central Public Information Officer or State Public Information Officer, as the case may be, who denied the request.

III. PUBLIC INFORMATION OFFICERS AND ASSISTANT

PUBLIC INFORMATION OFFICERS

1. All public authorities have to appoint Public Information Officers. It would be preferable not to have more than one PIO at one location for a department; also it is necessary that all independent administrative units have their own PIO. Administratively it would be a good idea to internally draw up a list of ‘deemed PIOs’, i.e. Officers to whom RTI application would be sent for specific matters. These officials would be deemed PIOs under Section 5 (5) of the Act. If too many PIOs are appointed in a department at one location, it will mean more.

unnecessary work for all PIOs to keep forwarding the applications to the appropriate PIO.

2. Asst. PIOs are to be appointed only at locations where there are no PIOs, and are basically expected to act as postmen, for forwarding applications to PIOs. The Act under Section 5(2) envisages Assistant PIOs at ‘sub divisional level or other sub-district level’. Hence, appointment of APIOs at locations where PIOs exist is superfluous and serves no purpose. This is

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the reason why the Central Government has started a system of having post offices acting as APIOs.

3. It would of course be a good idea to have officials in rural areas acting as PIOs for matters directly in their control.

IV. SUGGESTED TIME PLAN OF ACTION

• RTI application received - 30 days clock starts.

• In cases where the life or liberty of a person is involved, information has to be provided in 48 hours.

• It must be ensured that all RTI applications reach the PIO on the same day.

• Within one day of the receipt of the requisition for information, please check the following:

i) Has the application fee been paid? For Central Govt. bodies, a Citizen can pay 10 rupees by cash, banker’s cheque, Indian Postal order or in a designated Post office.

ii) Is the applicant’s contact information provided?

iii) Is the ‘information’ requested covered by Section 2 (f)?

If the answer is ‘no’, please intimate the requisitioner that what has been asked for is not ‘information’ as defined by Section 2 (f) of the RTI Act.

If the answer is ‘Yes’, i.e. what has been asked for is ‘information’ as defined by the Act, it may be given.

Ø See if the information falls under your ‘public authority’.

Ø If the whole or part of it is available with another public authority, please transfer the entire or part of the application to such other PIO. As per Section 6(3) this must be done within five days of receiving the application with an intimation to the Applicant. Hence, it would be advisable to do this immediately.

V. SECTION 4 - COMPLIANCE

If the information is with your public authority, see if it falls under Section 4, RTI Act. If so, this is information should have been provided suo moto. In this case if the information has been already published, offer to provide it to the Citizen on payment of the applicable fees, and also tell the Applicant where it is available free of cost. If it has not been published, obtain the information, give it to the Applicant, and get your department to publish it.

VI. EXEMPTION

Please check if the information is exempt under Section 8 (1) RTI Act.

Given below are the exemptions under Sections 8 and 9 for your convenience:

8. (1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,-

a. information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;

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b. information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court;

c. information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature;

d. information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;

e. information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;

f. information received in confidence from foreign government;

g. information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;

h. information which would impede the process of investigation or apprehension or prosecution of offenders;

i. cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers:

Provided that the decisions of Council of Ministers, the reasons thereof, and the material on the basis of which the decisions were taken shall be made public after the decision has been taken, and the matter is complete, or over:

Provided further that those matters, which come under the exemptions specified in this section, shall not be disclosed;

j. Information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information:

* Provided that the information, which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.

(2) Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions permissible in accordance with subsection (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests.

(3) Subject to the provisions of clauses (a), (c) and (i) of subsection (1), any information relating to any occurrence, event or matter which has taken place, occurred or happened twenty years before the date on which any request is made under section 6 shall be provided to any person making a request under that section:

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Provided that where any question arises as to the date from which the said period of twenty years has to be computed, the decision of the Central Government shall be final, subject to the usual appeals provided for in this Act.

9. Without prejudice to the provisions of section 8, a Central Public Information Officer or a State Public Information Officer, as the case may be, may reject a request for information where such a request for providing access would involve an infringement of copyright subsisting in a person other than the State.

(* this is clarificatory clause. Public servants are used to providing answers to Parliament and State legislature, and this clause can help the PIO to take a decision easier.)

Ø If the requisition concerns the ‘life and liberty’ of a person, talk to the appropriate people and provide the information immediately.

Ø Information Over 20 Years Old

If the information asked for is over 20 years old and the exemption clauses under Section 8 (1) (a), (c) or (i) do not apply, information has to be provided. This means only three of the ten exemption clauses apply, if the information is over twenty years old.

Ø Public Interest

If the exemption clauses apply, but there is an overriding public interest, information must be disclosed. The Applicant need not show any public interest to justify the demand for information. Only if one of the exemption clauses applies, then information would have to be provided if a larger public interest is shown.

Ø Severability of Information

If the exemption clauses apply, see if any of the information asked for can be severed and given (Section 10). If so, give the information which is not exempt, and give reasons why some of the information cannot be given. After the first few times, this exercise will not take more than a few minutes. The PIO is expected to act judiciously and remember that his role is to give information if possible, not to deny it.

Ø Third Party

If the information asked for has been provided by a third party, and the third party has earlier stipulated that it is confidential, you must give notice to the third party about your intention to give the information. The third party must give you reasons which exemption clause applies, and if you are satisfied, you may deny the information.

Ø Fees

If prima facie you see that information must be provided, see if you have the information with you. If so, see if any fee can be levied as per the rules. For Central Government the prescribed fees are Rs. 2 per page for A4 size photocopy or collated and typed. Intimate the

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Applicant of the calculations and the total amount payable and ask him to pay the amount. If there are items whose cost has not been specified in the rules, e.g. samples, please make a reasonable estimate. On payment of the amount release the information. If some information is not being provided, indicate clearly which information is not being provided and give the reasons as to how any of the exemption clauses are applicable.

Ø Section 5(4)- requisition of information from other officials

If the entire or part of the information is not available with you, please requisition it from the official or officials who might have it (Section 5(4)). Do ensure that you put your request in writing and do it as soon as possible. If the other official, deemed PIO, does not give the information, the responsibility shifts to him. It is also worthwhile for public authorities to identify the appropriate official to be contacted by the PIO for information about specific matters, and agree that the deemed PIO will give the information within 15 days of receiving the requisition from the PIO. The deemed PIO should also give a calculation of the additional fees to be charged for the information. If the deemed PIO claims that the information is exempt, ask him to give the reasons in writing as to which exemption clauses apply and why. Based on this communication, intimate to the Citizen why the information cannot be provided. If the PIO requests for information from the appropriate official without delay, the responsibility for delay, if any, is of the deemed PIO. In most offices the internal processes of identifying the people and ensuring that the deemed PIOs will send their response in writing within 15 days is non-existent, with the result the entire load is transferred to the PIO. Ideally the head of the department should do this, but if this has not been done, the PIO should persuade the head of the department to implement this. If Section 4 of the RTI Act is properly implemented, this would become easy. Also, in certain cases, unnecessary records are kept which are never used and cannot be accessed. If it is seen that in many cases it is taking more than 10 days to provide the information, it is an indication that the record keeping is poor, and this will impact the effective working of the office. In Mexico, the information is provided in 20 days and in the US, the time limit is 20 days. Consider a proper record maintenance schedule, and put it among your Section 4 declaration. Many PIOs feel they should send the intimation only towards the end of the mandated period. This leads to the PIO having to carry the burden of remembering the last dates for the RTI applications, and sometimes missing them, because of some work pressure building up right then. It is a good practice to send the replies to applications as soon as possible.

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VII. A FEW SUGGESTIONS

1. When deciding on what information should be given, look at the matter logically. See if the information asked for falls in the exemption list. If you think it does, think of the reasons how the clauses apply and provide them in writing to the applicant. This will reduce the incidences of appeals. If you think larger public interest would be served by disclosing the information, discuss this with a colleague or senior officer. If he agrees with your perception, provide the information.

2. Providing information is not an unnecessary activity, and the Citizen is not harassing you by asking for information. Just as accounts have to be maintained, internal reports have to be made, Income Tax returns and Sales tax returns have to submitted, so also giving of information is a statutory requirement and has to be fulfilled. You are actually making a major contribution to bringing about participatory democracy, and should feel justifiably proud to do this work.

3. It may be a good practice to calculate if you are providing the information in over 95% cases in time. If not, do ask yourself, if you are correct in your approach.

4. Fees for information: The fees are meant to be a token amount. Do not try and make unreasonable demands. The Citizen owns the information. Also, for information for which fees are not specified, like samples, the fees have to reasonable.

VIII. SOME SUGGESTED FORMATS FOR REPLYING TO APPLICANTS

Sample I

Reply in regard to application under Right to Information Act 2005

From: Name and Designation of PIOAddress and Phone number.To(Name and address of the applicant)Your RTI application dated …….. received on ………..

Sir,

With respect to your above mentioned application, we regret to inform you that the information requested by you, cannot be provided for the reasons given below:

a) Information refused

b) Exemption clause

c) Reason/s why the exemption clause/s applies.

If you wish to appeal against this decision you can appeal within 30 days to:

Name, address and telephone number of Appellate Authority.

Signature of PIO

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Sample II

Reply in regard to application under Right to Information Act 2005

From: Name and Designation of PIOAddress and Phone numberTo(Name and address of the applicant)Your RTI application dated …….. received on ………..

Sir,

With respect to your above mentioned application, we are pleased to inform you that the following information can be provided to you on payment of fees as shown below:

1. A4 size pages nos. @ Rs. 2 each2. Other size papers nos. @ Rs. each3. Floppies or CDs nos. @ Rs. 50 each4. Inspection estimated time….estimated cost…..5. Postage charges ________________

Total Rs.

Please pay the fees at ………………(place), or send a demand draft or IPO in the name of ……… so that we may give you the information. We wish to inform you that the following information is not being given to you, since the following exemption clauses apply:

a) Information severed

b) Exemption clause

c) Reason/s why the exemption clause/s applies

If you wish to appeal against this decision you can appeal within 30 days to:

Name, address and telephone number of Appellate Authority.

Signature of PIO

12. Decided Cases on RTI:

1. No Imagined Exemptions

This Commission is conscious of the fact that it has been established under the Act and being an adjudicating body under the Act, it cannot take upon itself the role of the legislature and import new exemptions hitherto not provided. The Commission cannot of its own impose exemptions and substitute their own views for those of Parliament. The Act leaves no such liberty with the adjudicating authorities to read law beyond what it is stated explicitly. There is absolutely no ambiguity in the Act and tinkering with it in the name of larger public interest is beyond the scope of the adjudicating authorities. Creating new exemptions by the adjudicating authorities will go against the spirit of the Act. Under this Act, providing information is the rule and denial an exception. Any attempt to constrict or deny information to the Sovereign Citizen of India

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without the explicit sanction of the law will be going against rule of law. Right to information as part of the fundamental right of freedom of speech and expression is well established in our constitutional jurisprudence. Any restriction on the Fundamental Rights of the Citizens in a democratic polity is always looked upon with suspicion and is invariably preceded by a great deal of thought and reasoning. Even the Parliament, while constricting any fundamental rights of the citizens, is very wary. Therefore, the Commission is of the view that the Commission,- an adjudicating body which is a creation of the Act,- has no authority to import new exemptions and in the process curtail the Fundamental Right of information of citizens.

REFERENCE:Mangla Ram Jat v. PIO, Banaras Hindu UniversityDecision No. CIC /OK/A/2008/00860/SG/0809

2. Alternative Routes to access InformationNo claim has been made by the PIO of any exemption under the RTI Act to deny the information. If a Public authority has a process of disclosing certain information which can also be accessed by a Citizen other than the route provided by the Right to Information Act, it is the Citizen’s right to decide which route he wishes to use. The existence of another method of accessing information cannot be used to deny the Citizen his freedom to use his fundamental right codified under the Right to Information Act. If Parliament wanted to restrict his right, it would have been stated in the Law. Nobody else has the right to constrain or constrict the rights of the Citizen. There is no provision in the Right to Information Act which restrains the Citizen’s right to use it, if another route to access information has been offered or is available. It is a Citizen’s right to use the most convenient and efficacious means available to him.

REFERENCE:

Dharmender Kumar Garg v. PIO, Registrar of Companies & CAPIO, NCT Delhi and Haryana

Decision No. CIC/SG/C/2009/000702/4128

3. Reasons For Claiming ExemptionsSince Right to Information is a fundamental right of Citizens, where denial has to be only on the basis of the exemptions under Section 8 (1), it is necessary to carefully explain the reasons of how any of the exemptions apply, when a PIO wishes to deny information on the basis of the exemptions. Merely quoting the Subsection of Section 8 is not adequate. Giving information is the rule and denial the exception.In the absence of any reasoning, the exemption under Section 8 (1) ( ) is held to have been applied without any basis.

REFERENCE:G.S. Gangadharappa v. Sr. Personnel Officer & PIO, Rail Wheel Factory,Ministry of Railways, Decision No. CIC/SG/A/2009/000889/3615

4. FiduciaryThe traditional definition of a fiduciary is a person who occupies a position of trust in relation to someone else, therefore requiring him to act for the latter's

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benefit within the scope of that relationship. In business or law, we generally mean someone who has specific duties, such as those that attend a particular profession or role, e.g. financial analyst or trustee. The information must be given by the holder of information when there is a choice- as when a litigant goes to a particular lawyer, or a patient goes to particular doctor. It is also necessary that the principal character of the relationship is the trust placed by the provider of information in the person to whom the information is given. An equally important characteristic for the relationship to qualify as a fiduciary relationship is that the provider of information gives the information for using it for his the benefit of the giver. When a committee is formed to give a report, the information provided by it in the report cannot be said to be given in a fiduciary relationship. All relationships usually have an element of trust, but all of them cannot be classified as fiduciary.

REFERENCE:Rakhi Gupta v. Jt. Director & PIO, National Institute of Open SchoolingDecision No. CIC/SG/A/2009/001343/4053

5. Sub JudiceThe appellate authority had claimed exemption under Section 8 (1) (e), but the PIO has given no reason to justify how Section 8 (1) (e) can apply. The CIC decision cited by the respondent states ‘The matter is sub judice. The appellate authority has correctly advised that information in question could be obtained through Court, which is examining the matter.’ No reasoning has been offered as to which exemption clause of the RTI act applies. The only exemption of Section 8 (1) which might remotely apply is Section 8 (1) (b) which states, ‘information which has been expressly forbidden to be published by any court of law or ribunal or the disclosure of which may constitutet contempt of court;’ can be denied. This clause does not cover sub judice matters, and unless an exemption is specifically mentioned, information cannot be denied. Disclosing information on matters which are sub judice does not constitute contempt of Court, unless there is a specific order forbidding its disclosure. I respectfully have to disagree with the earlier decision cited by the appellant since it is per incuriam. This Commission rules that a matter being sub judice cannot be used as a reason for denying information under the Right to Information Act.

REFERENCE:Ashwani Kumar Goel v. Joint Secretary (Home) & PIO, Office of the Registrar Coop. Societies, GNCTD,Decision No. CIC /WB/A/2008/00838/1777

6. PrivacyUnder Section 8 (1) (j) information which has been exempted is defined as: "information which relates to personal information the disclosure of which hasno relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information:"

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To qualify for this exemption the information must satisfy the following criteria:1. It must be personal information. Words in a law should normally be given

the meanings given in common language. In common language we would ascribe the adjective 'personal' to an attribute which applies to an individual and not to an institution or a corporate.

From this it flows that 'personal' cannot be related to institutions, organisations or corporates. (Hence we could state that Section 8 (1) (j) cannot be applied when the information concerns institutions, organisations or corporates). The phrase 'disclosure of which has no relationship to any public activity or interest' means that the information must have some relationship to a Public activity. Various Public authorities in performing their functions routinely ask for 'personal' information from Citizens, and this is clearly a public activity. When a person applies for a job, or gives information about himself to a Public authority as an employee, or asks for a permission, licence or authorisation, all these are public activities. We can also look at this from another aspect. The State has no right to invade the privacy of an individual. There are some extraordinary situations where the State may be allowed to invade on the privacy of a Citizen. In those circumstances special provisos of the law apply, always with certain safeguards. Therefore it can be argued that where the State routinely obtains information from Citizens, this information is in relationship to a public activity and will not be an intrusion on privacy. Certain human rights such as liberty, freedom of expression or right to life are universal and therefore would apply uniformly in all Countries uniformly. However, the concept of 'privacy' is related to the society and different societies’ would look at these differently. India has not codified this right so far, hence in balancing the Right to Information of Citizens and the individual's Right to Privacy, the Citizen's Right to Information would be given greater weightage.Therefore we can accept that disclosure of information which is routinely collected by the Public authority and routinely provided by individuals, would not be an invasion on the privacy of an individual and there will only be a few exceptions to this rule which might relate to information which is obtained by a Public authority while using extraordinary powers such as in the case of a raid or phone-tapping.REFERENCE:Bishamber Dayal Tyagi v PIO, Delhi Jal BoardDecision No. CIC/SG/A/2009/000172/3092

7. Third PartyIt is clearly stated at Section 11 (1) that ‘submission of third party shall be kept in view while taking a decision about disclosure of information’. Section 11 does not give a third party an unrestrained veto to refuse disclosing information. It only gives the third party an opportunity to voice its objections to disclosing nformation. The PIO will keep these in mind and denial of information can only be on the basis of exemption under Section 8 (1) of the RTI act. The test of public interest is to be applied to give information, only if any of the exemptions of Section 8 apply. Even if the exemptions apply, the Act enjoins that if there is a larger Public interest, the information would still have to be given. There is no

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requirement in the Act of establishing any public interest for information to be obtained by the sovereign Citizen; nor is there any requirement to establish larger Public interest, unless an exemption is held to be valid. Insofar as looking at the credentials of the applicant are concerned, the lawmaker has categorically stated that in Section 6 (2) , ‘An applicant making request for information shall not be required to give any reason for requesting the information or any other personal details except those that may be necessary for contacting him.’ Since the law categorically states that no information shall be required be supplied by the applicant except those that may be necessary for contacting him, it is clear that the credentials of the applicant are of no relevance, and are not to be taken into account at all when giving the information. Truth remains the Truth and it is not important who access it. If there is a larger Public interest in disclosing a Truth, it is not relevant who gets it revealed. Under this Act, providing information is the rule and denial an exception. Any attempt to constrict or deny information to the Sovereign Citizen of India without the explicit sanction of the law will be going against the rule of law. The Citizen needs to give no reasons nor are his credentials to be checked for giving the information. If the third party objects to giving the information, the Public Information Officer must take his objections and see if any of the exemption clauses of Section 8 (1) apply. If any of the exemption clauses apply, the PIO is then obliged to see if there is a larger Public interest in disclosure. If none of the exemption clauses apply, information has to be given.

REFERENCE:Mahesh Kumar Sharma v. PIO, Delhi Jal BoardDecision No. CIC / AT / A / 2008 / 01262 // SG/2109

8. Assets of Public Servant The Commission can allow denial of information only based on the exemptions listed under Section 8 (1) of the Act. Under Section 8 (1) (j) information which has been exempted is defined as:“information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information:”To qualify for this exemption the information must satisfy the following criteria:

1. It must be personal information.Words in a law should normally be given the meanings given in common language. In common language we would ascribe the adjective 'personal' to an attribute which applies to an individual and not to an Institution or a Corporate. From this it flows that 'personal' cannot be related to Institutions, organisations or corporates. (Hence we could state that Section 8 (1) (j) cannot be applied when the information concerns institutions, organisations or corporates.).

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2. The phrase 'disclosure of which has no relationship to any public activity or interest' means that the information must have some relationship to a Public activity.Various Public authorities in performing their functions routinely ask for 'personal' information from Citizens, and this is clearly a public activity. When a person applies for a job, or gives information about himself to a Public authority as an employee, or asks for a permission, licence or authorisation, all these are public activities. The information sought in this case by the appellant has certainly been obtained in the pursuit of a public activity. We can also look at this from another aspect. The State has no right to invade the privacy of an individual. There are some extraordinary situations where the State may be allowed to invade on the privacy of a Citizen. In those circumstances special provisos of the law apply, always with certain safeguards. Therefore it can be argued that where the State routinely obtains information from Citizens, this information is in relationship to a public activity and will not be an intrusion on privacy.

Therefore we can state that disclosure of information such as assets of a Public servant, -which is routinely collected by the Public authority and routinely provided by the Public servants,- cannot be construed as an invasion on the privacy of an individual. There will only be a few exceptions to this rule which might relate to information which is obtained by a Public authority while using extraordinary powers such as in the case of a raid or phone-tapping. Any other exceptions would have to be specifically justified. Besides the Supreme Court has clearly ruled that even people who aspire to be public servants by getting elected have to declare their property details. If people who aspire to be public servants must declare their property details it is only logical that the details of assets of those who are public servants must be considered to be disclosable. Hence the exemption under Section 8(1) (j) cannot be applied in such a case.

REFERENCE:Rajbir Singh v. PIO, MCD (CED)Decision No.CIC/SG/A/2009/001990/5042

9. APPLICABILITY OF SECTION 8(1)(h)

Appeal No. CIC/WB/A/2006/00297 dated 7.6.2006Shri K.C.Aggarwal vs. Directorate of Education, Govt. of NCT of Delhi.

Facts:

Shri K.C.Aggarwal, then Addl. Director of Education and now Addl. Secretary (Law & Judicial), NCT Delhi made an application on 29.3.06 to CPIO, Directorate of Education, Govt. of NCT, Delhi for the following information: - “Notes and correspondence portion of File No. 4(1687)/04/EDN-GOC/”.

In his response to this application dated 31.3.06, Shri Amar Singh, Dy. Director of Education, Education Secretariat, and PIO replied as follows: -

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“Section 7(1) of RTI Act provides for information to be supplied within 48 hours only if such information concerned the life or liberty of person. It has not been specified by you how the information sought by you relates to your life and liberty and, therefore, it may not be required to be provided within the prescribed period.

The information i.e. copies of notes and correspondence portion of the bearing No. 4/1687/04/Edn. contains some confidential documents relating to the investigation by CBI against the applicant, which is still under process of investigation. The information therefore cannot be provided under section 8(1)(h) as it may impede process of investigation. Further, information sought has no relation to any public activity or interest and as such is restricted under section 8(1)(j) of RTI Act.”

Dissatisfied with this response, applicant Shri K. C. Aggarwal moved his first appeal before Smt. Gitanjali G. Kundra, Addl. Director of education and Appellate Authority on 2.3.06 and prayed that the Appellate Authority may be pleased to issue orders:-

i) Directing the CPIO to supply certified copies and/or allow inspection of noting and correspondence portion of File No. 4/1687/04/Edn.

ii) Issue such other orders and directions as may be deemed fit in the interest of justice in the facts and circumstances of the matter including orders that can be made as per relevant provisions of RTI Act 2005.

Before the Appellate Authority, appellant stated as follows as recorded in her Order of 31/3/’06 :-

1. Section 8(1)(h) can not be made applicable in this case as copies of all documents relating to the ongoing case by CBI, which are in the file, have already been supplied to him by the CBI themselves and as such these cannot be stated as classified documents which can be withheld from him. He further stated that even if these documents are exempt from disclosure, the remaining part of the file can be provided to him, while with holding the pages restricted under section 8(1)(h).

2. The appellant further stated that section 8(1)(j) cannot be made applicable in this case as this is a matter personal to him and hence as a public his interest is being served.

Against this, Addl. Director (GOC), who represented the Department argued that information did not include file notings and also because the case has no relation to public activity and would not serve any public interest, copies of notings may not be provided to the applicant. He also cited a decision of this Commission in the case of Shri Aditya Singh vs. Chief Commissioner of Customs (Preventive) wherein the Commission had decided that since the appellant is accused in a criminal prosecution launched by Customs & CBI, the exemption of disclosure of information u/s 8(1)(h) was upheld.

The matter was heard on 27.11.06. Shri K.C. Aggarwal, appellant is present. Although notified, respondents are not present.

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DECISION NOTICE

In the case of Shri Aditya Singh vs. the Office of Chief Commissioner of thCustoms (Preventive), Mumbai, CIC / OK / A / 2006 / 00037 dated 12 May

2006, the Commission’s decision was as follows:

“The appellant is accused in the criminal prosecution launched by the Customs and the CBI. The information sought by the appellant is required to prove his innocence, which would be provided to him under the law by the Prosecution Agency and Court to ensure justice to him. At this juncture when the prosecution proceedings have been initiated and is at the advanced stage, exemption from disclosure of information u/s 8(1)(h) has been correctly applied by the CPIO.”

From the above, it would be quite clear that the Commission’s decision in this case of Aditya Singh Vs. Chief Commissioner of Custom (Preventive) has been misapplied in the present case, particularly because appellant in his first appeal has clearly stated before the Appellate Authority that, as highlighted above, even if there are some documents from the concerned file that are exempt from disclosure, the remaining part of the file can be provided to him. This request of appellant Shri Aggarwal is fully in keeping with the principle of severability laid out in Sec. 10(1), which reads as follows:

Sec. 10(1) “Where a request for access to information is rejected on the ground that it is in relation to information which is exempt from disclosure, then, notwithstanding anything contained in this Act, access may be provided to that part of the record which does not contain any information which is exempt from disclosure under this Act and which can reasonably be severed from any part that contains exempt information.”

Besides the above, in both his first appeal and second appeal, appellant Shri K. C. Aggarwal has made serious charges of forgery and antedating to fabricate the movement of the file. Whereas this would amount to criminal activity on which this Commission has no authority to adjudicate, the gravity of the request for information can be assessed from these allegations, which have not been denied.

PIO Shri Amar Singh, Dy. Director of Education in the Directorate of Education, Govt. of NCT Delhi is directed to supply appellant Shri K. C. Aggarwal with certified copies of File No. 4(1687)/04/Edn-Goc as requested within ten working days of the date of issue of this decision. This Commission has held repeatedly that file notings are part of the file starting with Satya Pal vs. TCIL, case no ICPB/A-1/CIC/2006 dated 31/1/’06, to which attention of first

stAppellate authority was invited by appellant in his 1 appeal, and are to be treated as information. The certified copies of the file provided to appellant will, therefore, include the noting. This, however, is subject to severability in which case those papers required by the CBI for their stated investigation may not be supplied. For this purpose, it is necessary for the Department (Directorate of Education) to obtain from the CBI identification of specifically those papers the disclosure of which in its view would impede investigation. This will be the only ground for denial.

(Wajahat Habibullah)Chief Information Commissioner, 27.11.2006

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Appeal No.CIC/WB/A/2007/00092 dated 27.01.2007Ms. Rukhsana Shaheen Khan vs. Central Vigilance Commission (CVC)

Facts:

By a request of 18.10.06 Ms. Rukhsana Shaheen Khan of Andrews Ganj Extension, Delhi applied to the CPIO Shri K. L. Ahuja Director, CVC seeking the following information regarding an enquiry against her:

“The comments forwarded by Ministry of Defence (Finance)/ CGDA to the CVC ndafter the submission of enquiry report for 2 stage advice of the CVC. The

notings in the CVC leading in the CVC leading to their decision that charges are fully proved.”

To this she received a response on 7.11.06 pleading exemption u/s 8(1) (h) of the RTI Act as disciplinary 0proceedings were still in progress. Ms. Khan then moved her first appeal on 29.11.06 before Shri Balvinder Singh, Addl. Secretary, CVC, who in his order of 21.12.06 observed as follows:

“I observe that action taken by the disciplinary authority on the Commission’s advice is awaited. Therefore, this case is similar to the decision No. 414/IC/(A)/2006 dated 01.12.2006 of the CIC on the appeal of Shri V. R. Gokhale which justified exemption of such documents from disclosure under Section 8(1)(h) of the RTI Act, since disclosure of information would impede the process of implementation of imposition of penalty by the public authority.”

In response to our appeal notice, CPIO Shri K.L. Ahuja has submitted detailed arguments, the sum of which is as below:

“Smt. Khan has now made a second appeal to the CIC stating that the departmental inquiry is over and there is a difference of opinion of the findings of the inquiring authority and the CVC and that it is, therefore, essential for her to go through to the notes of the CVC to know, in a more clarified manner, the reasons for disagreement with the inquiry report. In this regard, it is submitted that the Commission’s advice is not binding on the disciplinary authority, who is required to apply its own mind to the facts and circumstances of the case including the Commission’s advice and arrive at its own conclusion. If the disciplinary authority accepts the Commission advice for disagreement with the findings of the inquiring authority, it is required, under Rule 15(2) of the CCS(CCA) Rules 1965, to forward a copy of the report of the inquiring authority together with its own tentative reasons for disagreement, if any, with the findings of the inquiring authority on any article of charge to the Government servant who shall be required to submit, if he/she so desires, his/her written representation/ submission to the disciplinary authority. The final decision in the case is to be taken by the disciplinary authority.

It is also submitted that the Hon’ble Central Information Commissioner in its recent decision dated 22.8.07 on the appeal of Shri V. R. Gokhale (Appeal No. CIC/WB/A/2006/00853) has clarified that Section 8(1) (h) covers not only

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investigation which would imply the inquiry process in the case but also apprehension and prosecution which will include orders of the final authority on the conclusion of the proceedings. In the instant case, the disciplinary proceedings were pending against the appellant when she made an application seeking information from the CPIO, and therefore, the CPIO’s action in denying the information under section 8(1) (h), and the order of the first appellate authority rejecting the appeal, was justified. Denial of information by the CPIO, and rejection of appeal by the first appellate authority, was also within the time limit prescribed in section 7(1) and 19(6) of the RTI Act respectively. Thus, the present appeal before the CIC does not sustain and deserves to be dismissed. This public authority, therefore, requests the CIC to order accordingly. It is also submitted for kind information of the CIC that the disciplinary proceedings against the appellant are still pending as per the records available with this public authority.”

The appeal was heard on 30.11.07.CPIO Shri K. L. Ahuja Director has affirmed that the disciplinary proceedings in this case are still in their final stage and the matter is before Hon’ble Minister for a final decision.

DECISION NOTICE

In light of Sec. 8(1) (h), if the C.V.C. has come to the conclusion that disclosure of information will impede the process of investigation and prosecution of an offender, we have consistently held that we do not substitute our judgment for that of the authorised investigating agency. Therefore, CPIO CVC is directed that as soon as the disciplinary proceedings are complete, the full documents sought will be provided to appellant Ms. Rukhsana Shaheen Khan. The appeal is disposed of accordingly.

(Wajahat Habibullah)Chief Information Commissioner 30.11.2007


Appeal Nos. CIC/WB/A/2008/01019 & 1020 dated 3-6-2008Shri Sudhir Chopra vs. Central Vigilance Commission (CVC)

FACTS

These are two appeals from Shri Sudhir Chopra at present located in Pune.

File No. CIC/WB/A/2008/01019

By a request of 10-1-08 Shri Sudhir Chopra, Joint Director, National Institute of Defence Estate (NIDE) sought the following information from CPIO, CVC:

1. Details of consultation made with CVC by DG DE/ MOD pertaining to charge sheet issued to the undersigned who is a Joint Director, National Institute of defence Estates Management under DG De Ministry of Defence.

2. The charges being totally false and baseless like signing letters Joint Director & not for Director, writing a letter to transparency Institutional

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to supply their free of cost publication titled Indian Corruption study 2005, what scrutiny/ checks was exercised to ensure that whistle blowers were not harassed and victimized.

3. What are CVC guidelines regarding time frame for deciding minor penalty case and what action has been taken/proposed in the case mentioned at Sr. No. 1 above.

4. No. & details of cases where CVC initiated proceedings against administrative authorities for making false and baseless allegations against public servants to victimize and harass them during last five years.”

To this Shri Sudhir Chopra received a response dated 6-2-08 point-wise as follows:

“Para (1)

The case involving the applicant and other officers has not yet been finalized. Therefore, any disclosure of information at this stage may be used to influence the authorities/proceedings which would impede the process of completion of disciplinary proceedings. Therefore, the information is denied under section 8 (1) (h) of the RTI Act.

Para (2)

The disciplinary case in respect of the said charge sheet against the applicant has not yet reached to its logical conclusion. Disclosure of any information at this stage would impede the process of disciplinary proceedings as the information may be used to influence the authorities/ process. Therefore, information is denied under section 8 (1) (h) of the RTI Act.

Para (3)

A copy of circular No. 000/VGL/18 dated 23.5.2000 is enclosed. Further information is denied as stated under para 1 & 2 above.

Para (4)

The Commission does not maintain such data. Therefore, this information can’t be given as it is not available.”

Because this response had denied the bulk of information sought by him, Shri Sudhir Chopra moved an appeal on 8-3-08 before Shri V.K. Gupta, Appellate Authority, CVC, the gist of which was as follows:

“The refusal of information is totally arbitrary and illegal as no grounds have been given as to how disclosure would impede the process of completion of disciplinary proceedings. In fact Commission’s own circular prescribing a time limit of two months has been violated.

In this connection, your attention is drawn to Delhi High Court’s judgement in W. P. (C) No. 3114/2007 in the matter of Bhagat Singh vs. Chief Information Commissioner & ors.”

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Shri Sudhir Chopra further went on to indicate that no investigation is in process. Upon this, through an order of 11-4-08 Shri Vineet K. Gupta directed as follows:

1. “I have examined the documents/ files connected with the issues and find that the appellant is facing departmental action initiated by MOD. According to the appellant he had furnished his reply about a year back and case has not been finalized. In view of the fact that disciplinary proceedings are not finalized/ reached a logical conclusion, the CPIO's decision to deny information on point (1) and (2) is in order. CIC in the case of A. K. Goyal vs. DTC dated 15.10.2007 observed that ‘Interfering with an already existing disclosure system under the disciplinary proceeding rules through action under the RTI Act had the potentiality of jeopardizing and affecting the proceeding under the Disciplinary Proceedings Rules. Disclosure of a range of information through the RTI Act to such public servants, which he would not be entitled to receive under the Disciplinary Proceedings Rules, which he might be facing, would besides impacting the disciplinary proceeding, could lead to unforeseen consequences and actions. The provisions of the RTI Act are not to allowed to be used to critique the disclosure of information mechanism set up under another Act’. I, therefore, uphold the CPIOs decision on points (1) and (2) to deny information to the appellant under section 8 (1) (h) of the RTI Act.

2. As regards the query of the appellant under point (3), I find that the same is in the nature of question and do not amount to seeking information. CIC in case No. CIC/AT/A/2006/00045 dated 21.4.2006 on the appeal of Dr. D. V. Rao, Superintendent (Legal), Department of Legal Affairs, Ministry of Law & Justice has held that ‘The RTI At does not cast on the public authority any obligation to answer queries, as in this case, in which a petitioner attempts to elicit answers to his questions with prefixes, such as, why, what, when and whether. The petitioner’s right extends only to seeking information as defined in section 2 (f) either by pinpointing the file, document, paper or record etc., or by mentioning the type of information as may be available with the public authority’. Therefore, CPIO’s reply to deny under section 8 (1) (h) is not correct. I am of the view that part of point (3) of appellant’s appeal is not covered within the definition of information as it occurs in section 2 (f) of RTI Act and order accordingly.

3. Regarding point (4) of the RTI application. I find that such separate data/ information is not maintained in the Commission relating to details of cases where proceedings were initiated against authorities for making false and baseless allegations. CPIO’s reply to the appellant is in order and I uphold the same.”

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Appellant’s prayer before us in his second appeal is as below:

“(i) Direction to CPIO to provide requested information as CVC has been mandated to protect the whistle blowers under resolution of GOI filed before Supreme Court in Satyander Dubey murder case.

(ii) Penalty on CPIO and Appellate Authority.

(iii) Compensation and cost to appellant (Rs. 100000+2000) because of mental torture and harassment undergone by him.”

CIC/WB/A/2008/01020

In this application of 11-4-08 Shri Sudhir Chopra sought the following information from CPIO, CVC:

‘It is requested to provide details of three complaints pending with DGDE for more than six months as mentioned in para 2 (ii) of your letter. Please note that section 8 (i) (h) cannot be invoked to deny information in the light of udgment of Delhi High Court in the matter of Bhagat Singh vs. CIC in the P© no 33114/2007. No reasons were given to explain how disclosure of information will speed hamper the process of investigation. In fact the is closure of information will speed up the process of the investigation as the applicant will follow up the matter at all levels to ensure speedy investigation.

This application was in reference to an earlier letter of 14-2-08 received from CVC in response to RTI application of 10-1-08 in which Shri Sudhir Chopra had sought the following information:

“(i) No. & details of cases where CVC had recommended issue of charge sheet for major/ minor penalty against officers of defence Estates Dep’t. during last five years.

(ii) No. & details of cases where charge sheets have been issued as per advise of CVC & those were charge sheets not issued in respect of (i) above.

(iii) No. & details of cases where enquiries have been completed against officers of Defence Estates officers and penalty recommended/not recommended during last five years.

(iv) No. & details of cases were no departmental proceedings initiated against officers of Defence Estates Dep’t. even though CVC had called/received report more than six months ago.

(v) No. & details of cases where departmental proceedings have not been initiated against officers of Defence Estates Dep’t. even when criminal proceedings are going on for sale of public property and pocketing of proceeds (like DDG Vigilance).”

This information was refused by CPIO Ms. Shalini Darbari, Director, CVC by her letter of 22-4-08 stating as follows:

“The details of three complaints pending with DGDE for more than six months cannot be provided, because these complaints are still under investigation.”

Shri Chopra then moved an appeal on 28-4-08 before Shri V.K. Gupta, Addl. Secretary with the following plea:

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“4. Denial of information is in violation of the Constitution of India and also judgment of Delhi High Court in the case of Bhagat Singh vs. CIC and contempt of Court.

4. Keeping in view the above, it is requested to direct CPIO to provide the requisite information without further delay.”

Upon this Shri V.K. Gupta, Addl. Secretary took the following decision:

“I have perused the relevant record and I find that the CPIO had given the requisite information to the appellant to the extent available and admissible under RTI Act. The details sought by the appellant in respect of the complaint cases pending investigation with the DG, DE cannot be provided as the matters are yet to reach a logical end. I am of the view that disclosure of more information/ details would impede the process of investigation in these complaint cases. Further, CIC in the case of Shankar Sharma & Others vs. Income Tax in case No. CIC/AT/A/2007/000007, 10 & 11 dated 10.7.2007 observed that the ‘term investigation sued in section 8 (1) (h) should be interpreted broadly and liberally, inclusive of all actions of law enforcement, disciplinary proceedings, enquiries, adjudications and so on. No investigation could be said to be complete unless it has reached a point where final decision on the basis of that investigation is taken’. In view of CIC orders as above, I uphold the CPIO’s decision to deny information under section 8 (1) (h) of RTI Act.”

Appellant Shri Sudhir Chopra’s prayer before us in his second appeal is as follows:

“Direction to CPIO to provide correct information (ii) penalty on CPIO and appellate authority (ii) compensation and cost to appellant (Rs. 10000+1000).”

In her response to our appeal notice with regard to file No. 1020 Ms. Shalini Darbari, Director CVC has submitted as follows:

“(a) On para (i) the appellant has now made an appeal to the CIC stating that the CPIO has not provided the copy of the three complaints to the appellant which was denied on the grounds that these are still under investigation. It is submitted that the appellate authority of the Commission has also upheld the decision of the CPIO citing decision of the CIC in the case of Shankar Sharma & others vs. Income Tax in case No. CIC/AT/A/2007/000007, 10 & 11 dated 10.7.2007. The appeal before the CIC devoid of merits and deserved to be dismissed.

(b) On para (ii) & (iii) - It is submitted that as available information has been provided to the appellant and information regarding pending complaints has been denied to him under the relevant section of the RTI Act, 2005, there is no merit in his request either for imposition of penalty on CPIO/ Appellate Authority or for compensation and cost to the appellant.

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(c) It may please be noted by CIC that public authority has till date received various applications from the appellant, which have been/ are being disposed, as per the provisions of the RTI Act. However, this has seriously diverted the limited resources of public authority affecting its core function.”

Both appeals were heard together on October 21 2009.

Appellant Shri Sudhir Chopra submitted that he had moved both applications as a Whistleblower to whom the CVC has failed to provide protection. He also submitted a copy of an order of 17-6-08 of Shri J.P. Dhobal, Under Secretary to Govt of India on the disciplinary proceedings instituted against Shri Sudhir Chopra under Rule 16 of CCS (CC&A) Rules 1965 which has concluded with imposition of minor penalty of Censure upon Shri Sudhir Chopra, Jt. Director, NIDE. In this order the Under Secretary, Ministry of Defence has come to the following conclusion:

“AND WHEREAS, after taking into account the submissions made by the CO in his representation dated 7.3.2007, Disciplinary Authority is of the view that the CO has a tendency to defy lawful orders, use offensive language in official correspondence, make un-substantiated allegations against his superiors and refuse to abide by official protocol and all these are available on verifiable records in the office of DGDE. In a nut-shell, the charges contained in the Charge- Memo are provide.”

Respondent Shri P.S. Gupta, Advisor, CVC, however submitted that at the time both the responses were given to the appellant, the matter was still under investigation and hence the disclosure was denied. They had not received the orders on MoD of 17-6-08 and any further action in this matter will be taken after taking these orders into account.

DECISION NOTICE

We find that in both these cases the matter had been referred for investigation to the MoD. What has been established in the hearing is that the CVC was not in continuous touch with the investigating authorities in the case referred to them. Respondent Shri P.S. Gupta submitted a copy of the file noting on the subject for our perusal wherein it is stated that there has been no feedback from the MoD and therefore, CVC must assume that the matter is still under investigation, the disclosure of which could impede this process. Although appellant Shri Sudhir Chopra has repeatedly brought to the notice both of CPIO and Appellate Authority the orders of Delhi High Court in Bhagat Singh Vs. CIC & Ors., no action has been taken on the basis of this decisions by the CPIO, CVC. The following ruling of Hon’ble Ravindra Bhat J. of Delhi High Court in the above cited case is of relevance here:

Access to information under Section 3 of the Act, is the rule and exemptions under Section 8, the exception. Section 8 being a restriction on this fundamental right, must therefore is to be strictly construed. It should not be interpreted in manner as to shadow the very right self. Under Section 8,

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exemption from releasing information is granted if it would impede the process of investigation process cannot be a ground for refusal of the information, the authority withholding information must show satisfactory reasons as to why the release of such information would hamper the investigation process1. Such reasons should be germane, and the opinion of the process being hampered should be reasonable and based on some material. Sans this consideration, Section 8(1)(h) and other such provisions would become the haven for dodging demands for information.

In other words, the appropriate authority must satisfy itself that, in fact, disclosure would impede the process of investigation. In the present case there has been a refusal without even attempting to establish the present position of the investigation before refusing it outright. In both cases, therefore, the information provided by CPIOs Shri A.K. Gupta and Ms. Shalini Darbari are out of line and both decisions of Appellate Authority Shri V.K. Gupta, Addl. Secretary in upholding these decisions are set aside.

CPIO Shri P.S. Gupta will now re-examine both the cases in light of the order of MoD of 17-6-08 and provide the information sought by appellant exempted from disclosure under sub-Section (1) of Section 8 within 10 working days of the date of receipt of this decision notice, taking into account the ruling of the High Court of Delhi cited above. Appellant has also pleaded both for both penalty and compensation. Clearly there is no case of penalty in this regard because there has neither been delay in responding to the RTI application nor is there any evidence of incorrect or misleading information having been ‘knowingly’ provided.

On the other hand there has been a failure on the part of CVC to adhere to the law in that it has cited various decisions of the CIC to withhold disclosure while ignoring the decision of the Delhi High Court in WP No. 3114/07, Bhagat Singh Vs. CIC & Ors. which decision was also cited by appellant in both applications. However, we have no grounds for concluding the extent of any loss or detriment suffered in consequence by appellant Shri Sudhir Chopra. He may, therefore, submit his assessment of such loss to this Commission within 3 weeks of the date of receipt of this decision notice or by 11th November, 2009 whichever is earlier to enable us to take a decision on the merit of his request. This Appeal now stands allowed subject to the above.

(Wajahat Habibullah)Chief Information Commissioner 21-10-2009

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12. APPLICABILITY OF SECTION 4

4 . A d j u n c t t o C o m p l a i n t N o s . C I C / W B / C / 2 0 0 7 / 0 0 8 0 3 , CIC/WB/C/2007/00804, IC/WB/C/2007/00805, CIC/WB/C/2007/00806, CIC/WB/C/2007/00887 to CIC/WB/C/2007/00896, & CIC/WB/C/2008/00047 dated 14/15.11.2007 to 7.2.2008.

O R D E R

In our decision of 3.3.08, we had directed as follows:

“The RTI Act 2005 is quite clear on the issue of suo moto disclosure, which Is what complainants in the present case demand. Sec.4 (1) sub-section (b) sub-section (xiii) reads asfollows:

Sec. 4(1)(b) (xii) and (xiii)

“Every public authority shall publish within one hundred and twenty days from the enactment of this Act the manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes; particulars of recipients of concessions, permits or authorizations granted by it; “

But the issue of concern in this case, which is the discontinuance or suspension of a scheme, can be defined as an administrative decision. Therefore, the above sub section of sec. 4(1) may be read with sec. 4(1) sub sec. (d) which reads as follows:

Sec. 4(1)(d)

“Every public authority shall provide reasons for its administrative or quasi-judicial decisions to affected persons.”

As is, therefore, laid down in the law, this information was expected to have been published within 120 days from the enactment of this Act, which was June 21, 2005. The ‘Old Age Stipend Scheme’ was evidently in operation in June 2005, and seems to have been discontinued, at least insofar as complainants are concerned only in April 2007. Yet, this has not been published to date. PIO Shri S.K. Jha, Dy. Commissioner (South) is, therefore, directed to comply within twenty working days of the date of issue of this Decision with the requirements of Sec. 4(1)(b)(xiii) read with sec. 4(1)(d) of the RTI Act with regard to the ‘Old Age Stipend Scheme’, under intimation to Shri Pankaj K. Shreyaskar, Joint Registrar of this Commission. This can also include the necessary information on Widows’ Pension. Because the failure of the public authority cited above, cannot be ascribed as a failure of a PIO rendering him/her liable for penalty u/s 20(1), since the complaint is not one of failure to respond to an RTI application, no penalty will lie. However, it is clearly established that the complainants have suffered loss as a result of not being provided the information suo moto, as required under Sec 4 (1) of the Act. For this we find that the demand for compensation is reasonable. However, the amount will require to be determined. Shri SK Jha, Deputy Commissioner will therefore pay an ad hoc amount of Rs 1000/- to each of the complainants u/s19 (8) (b), within one month of the date of issue of this Decision Notice under intimation to

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Shri Pankaj K. Shreyaskar, Joint Registrar of this Commission. He will in the meantime also enquire into the loss or detriment suffered by each after hearing them, and send us a report by March 31,2008 to enable us to determine any further compensation payable to complainants by the public authority" Instead of a compliance report, we have received a request for review from Shri S. K. Jha Director (IT) NDMC in which he has submitted as follows:

“As per policy, the old age stipend is given to only those elderly persons whose names are recommended by the respective area Councillors. There is also a quota for Mayor, Deputy Mayor, Chairman Standing Council, Dy. Standing Council, and Leader of Opposition. Since the names of these applicants were not recommended by any of these ,the department could not consider their names for granting the said stipend. This was very much intimated in writing to these people (a copy of which is enclosed for ready reference of the Commission). Therefore, as far as the grant of old age stipend to the above mentioned persons is concerned, the department has not denied them. As such there is no loss or detriment suffered by the applicants for which the department can be held responsible. The department could have only intimated them about the policy that their names needed to be recommended by the respective area Councillor or any other public representative mentioned in the Policy, which the department did in full measure.”

He has then gone on to argue that since the parties were not eligible for old age stipend, and this has not been willfully denied to them, there is no ground for compensation. Having studied the documents, we find that our decision is negated neither on error of fact nor on law. It is quite possible that complainants were no longer eligible for old age stipend. It is not denied, however, that they had been receiving such a stipend earlier and they were not aware of any reason why such a stipend was discontinued which would have been the case had the information as identified in our decision notice been uploaded on the website as was mandatory for the public authority, as per sec. 4(1)(b) and 4(1)(d). Had they been made so aware, they could have sought other means of livelihood in that period. This was not allowed. Moreover, the report of Director (IT) has indicated the fact that the public funds in this matter are dispensed on the recommendations of respective area Councilor or other public representatives mentioned in the Policy, with a quota assigned each. There is nothing objectionable in such a policy, but it goes without saying that the public has a right to know as to which public representative has recommended which beneficiary, which was what the public authority was required to do in providing particulars of recipients of concessions u/s 8(1)(b)(xiii).

The Dy. Commissioner (South), MCD will, therefore, pay the compensation awarded to complainants by us before 7.8.2008, if not already done, under intimation to Shri Pankaj KP Shreyaskar, Joint Registrar in this Commission.


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13. APPLICABILITY OF SECTIONS 4 and 18

Complaint Nos.CIC/WB/C/2007/00803, CIC/WB/C/2007/00804, CIC/WB/C/2007/00805, CIC/WB/C/2007/00806, CIC/WB/C/2007/00887 to CIC/WB/C/2007/00896, & CIC/WB/C/2008/00047 dated 14/15.11.2007 to 7.2.2008

Ms. Saroj of Sheikh Sarai & Othersvs.Deputy Commissioner (DC) South, Municipal Corporation of Delhi (MCD)

Facts:

These are 15 complaints received from the following, submitted between 14.11.07 to 7.2.2008 by beneficiaries of ‘Old Age Stipend Scheme’:

In all these cases the prayer of complainants is as follows:

“Municipal Corporation of Delhi has to devise procedure for providing detailed information to general public urgently under Life & Liberty, under Sec. 4 of the Right to Information Act, 2005, regarding Pension Scheme. This information should have been in simple, easily understandable language and in simple mode such as Ward, Website & Publication.

I am fully dependent on pension granted by Municipal Corporation of Delhi and I am pulling on only through this pension. Because of non-payment of pension since April, 2007 I had to face several problems and my financial position has become worst. Many a times I had to take both ends meals from the neighbours. If M.C.D. had given information u/s 4 of the RTI Act to all, I would not have suffered so much. Non-providing of information by the M.C.D. is violation of RTI Act 2005. Therefore, for the problems/difficulties faced by me, I should be paid compensation of Rs. 10,000/- u/s 19(8)(b).”

We have dealt with a similar set of complaint Nos. CIC/WB/C/2007/00692, 693, 694 & 695 in our Decision of 21.2.2008, which concerned reasons for discontinuance of ‘Widows Pension’ in which cases we have decided as follows:

“We have, therefore, decided to treat this application as a complaint petition u/s18 (1)© of the said Act and hereby directs the PIO, Deputy Commissioner (South), MCD to provide the information sought to applicants Ms. Guddi Devi, Ms Kasturi Devi, Ms. Jamila and Ms. Haseena within 10 working days from the date of receipt of this decision. Since the information has not been supplied within the mandated time frame no fee will be charged in accordance with Sec. 7(6) and any fee charged will be refunded within the period specified above.”

In the present case, however, the issue is publishing of information of beneficiaries on the Old Age Pension Scheme and not a failure to respond to an RTI application.

DECISION NOTICE

The RTI Act 2005 is quite clear on the issue of suo moto disclosure, which is what complainants in the present case demand. Sec.4 (1) sub-section (b) sub-section (xiii) reads as follows:

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Sec. 4(1)(b) (xii) and (xiii)

“Every public authority shall publish within one hundred and twenty days from the enactment of this Act the manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes; particulars of recipients of concessions, permits or authorizations granted by it”

But the issue of concern in this case, which is the discontinuance or suspension of a scheme, can be defined as an administrative decision. Therefore, the above sub section of sec. 4(1) may be read with sec. 4(1) sub sec. (d) which reads as follows:

Sec. 4(1)(d)

“Every public authority shall provide reasons for its administrative or quasi-judicial decisions to affected persons.”

As is, therefore, laid down in the law, this information was expected to have been published within 120 days from the enactment of this Act, which was June 21, 2005. The ‘Old Age Stipend Scheme’ was evidently in operation in June 2005, and seems to have been discontinued, at least insofar as complainants are concerned only in April 2007. Yet, this has not been published to date. PIO Shri S.K. Jha, Dy. Commissioner (South) is, therefore, directed to comply within twenty working days of the date of issue of this Decision with the requirements of Sec. 4(1)(b)(xiii) read with sec. 4(1)(d) of the RTI Act with regard to the ‘Old Age Stipend Scheme’, under intimation to Shri Pankaj K. Shreyaskar, Joint Registrar of this Commission. This can also include the necessary information on Widows’ Pension. Because the failure of the public authority cited above, cannot be ascribed as a failure of a PIO rendering him/her liable for penalty u/s 20(1), since the complaint is not one of failure to respond to an RTI application, no penalty will lie. However, it is clearly established that the complainants have suffered loss as a result of not being provided the information suo moto, as required under Sec 4 (1) of the Act. For this we find that the demand for compensation is reasonable. However, the amount will require to be determined. Shri SK Jha, Deputy Commissioner will therefore pay an ad hoc amount of Rs 1000/- to each of the complainants u/s19 (8) (b), within one month of the date of issue of this Decision Notice under intimation to Shri Pankaj K. Shreyaskar, Joint Registrar of this Commission. He will in the meantime also enquire into the loss or detriment suffered by each after hearing them, and send us a report by March 31,2008 to enable us to determine any further compensation payable to complainants by the public authority The complaint is disposed of accordingly.


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14. Regardomg doslosure of file notings

Appeal No.ICPB/A-1/CIC/2006, RTI Act – U/S 6/18, Order dt: 30.1.2006Satyapal Vs. CPIO, TCIL

“In the system of functioning of public authorities, a file is opened for every subject/matter dealt with by the public authority. While the main file would contain all the materials connected with the subject/matter, generally, each file also has what is known as note sheets, separate from but attached with the main file. Most of the discussions on the subject/matter are recorded in the note sheets and decisions are mostly based on the recording in the note sheets and even the decisions are recorded on the note sheets. These recordings are generally known as “file notings”. Therefore, no file would be complete without note sheets having “file notings”. In other words, note sheets containing “file notings” are an integral part of a file. Some times, notings are made on the main file also, which obviously would be a part of the file itself. In terms of Section 2(i), a record includes a file and in terms of Section 2(j) right to information extends to accessibility to a record. Thus, a combined reading of Sections 2(f), (i)&(j) would indicate that a citizen has the right of access to a file of which the file notings are an integral part. If the legislature had intended that “file notings” are to be exempted from disclosure, while defining a “record” or “file” it could have specifically provided so. Therefore, we are of the firm view, that, in terms of the existing provisions of the RTI Act, a citizen has the right to seek information contained in “file notings” unless the same relates to matters covered under Section 8 of the Act. Thus, the reliance of the CPIO, TCILO on the web site clarification of the Department of Personnel to deny the information on the basis that ‘file notings’ are exempted, is misplaced.

“Direction :

“Since we have held that file notings are not, as a matter of law, exempt from disclosure, the CPIO, TCIL is directed to furnish the information contained in the file notings, on or before 15.2.2006 to the appellant.

(Padma Balasubramanian) Information Commissioner(Wajahat Habibullah), Chief Information Commissioner

15. Regarding Format of Application

Review Application No CIC/C/I/2006 Dt: 30.1.06 RTI Act – Section18, Order dt 8.2.06.

Ms. Madhu Bhaduri vs. Director(LM), DDA, Delhi

“In the RTI Act, no Department is proscribed from designing an application form that facilitates identification and therefore ease of access to information sought. It cannot be treated as a substitute for a simple application as laid down in Sec 6 (1). Since a standard application cannot be mandated, it is not covered by prescription of Rules but is to be treated simply as an easing of processes. Its absence cannot be grounds for rejection of an application.

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“In its statement of Object & Reasons the RTI Act is "to promote transparency and accountability in the working of every public authority" Hence it is incumbent upon any public authority prescribing a format that it remain simple and comprehensible as well as accessible to common folk.”

(Padma Balasubramanian) Information Commissioner(Wajahat Habibullah), Chief Information Commissioner

16. Regarding Transfer of application

Appeal No.CIC/A/3/2006, Dt: Dec. 12, 05 RTI Act – Section 19, Order dt.

7.2.06

Subhash Chandra Agrawal,1775, Kucha Lattushah, Dariba, Delhi

Vs.

Supreme Court of India

The appellant appeared before the Commission on 7/2/’06 together with Ms

Madhu Moolchandani Counsel for Additional Registrar and CPIO of the Supreme

Court of India (Vakalatnama on file)

The appellant averred that the response of the CPIO to his application for

information on details of action taken on a petition filed by him before the Chief

Justice of India together with information on the movement of the file was

“meaningless and evasive”. The Appellate Authority held that these amounted to

providing adequate information and dismissed the appeal. Hence the appeal to

the Commission.

While the appellant argued before the Commission that the orders of the CPIO

gave him no actionable information, Counsel for the CPIO stated that the

information asked for fell within the jurisdiction of the High Court, a separate

public authority not answerable to the Supreme Court. This was the information

given.

The papers have been examined and both parties heard. The order of the CPIO

reads as follows:

“I am directed to inform you that the aforesaid complaint has been kept on

record in the relevant High court file.”

This is not a speaking order and provides little information on the disposal of the

application although it meets in narrow terms the requirement of Sec 6(3)

dealing with information held by ‘another public authority’ that in the present

case is the High Court. The order does not mention when and under what

reference the application was transferred to the High Court making it impossible

for the appellant to find ways to seek further information.

It is therefore decided that the CPIO of the Supreme Court will now inform the

applicant of the Reference and Date of the orders transferring the application

to the High Court to enable the applicant to make a suitable application to that

public authority to access the information sought.

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It is also observed that under the Proviso to section 6 (3) transfer of an

application pursuant to this Sub-section is to be made in no case later than five

days from the date of receipt of the application. In the present case the letter

informing the applicant of the transfer was made on November 22, in excess

even of the thirty days mandated under Sec 7(1) of the Right to Information Act,

2005 for the disposal of the application. Since this is a case of October 2005,

when the Act had only just come into force, and no claim for damages has been

made, no penalty is imposed making allowance for the formative structure of the

machinery for entertainment of applications under this Act. However, this may

be taken note of in deciding cases in the future.

(Padma Balasubramaniam) Information Commissioner

(Wajahat Habibullah) Chief Information Commissioner

17. Regarding Informing the Reason for Rejection

Appeal No.ICPB/A-4/CIC/2006 dt 10.2.06 Under Section 6/18 of RTI Act

Shri Rajesh Pandita, Regional Manager, M/S Neptune Equipment Private Ltd.

Vs.

CPIO, Department of Post

Direction:

Any rejection of request for information has to be in terms of the provisions of

the RTI Act. In the present case, the CPIO has not relied on any of the

exemption provided in the RTI Act to reject the request for supply of

information sought for by the appellant except that in terms of Clause 7 of the

NIT, the DG Posts has the right to reject an offer without assigning any reason.

The main theme of RTI Act is that there should be transparency in decision

making and therefore, the appellant is entitle to know the reasons for

cancellation of the tender. In her comments furnished to the commission on

the appeal, the CPIO has furnished elaborate information from which we find

that there are no justifiable grounds to reject the information sought for by the

appellant. Therefore, we direct the CPIO, Department of Post to give factual

information relating to the reasons for rejection of the tender within 15 days

from the date of this order.

(Padma Balasubramanian) & (M.M. Ansari) Information Commissioners

18. Regarding Public Authority and Information Under Sub-Judice

Decision No. CIC/SG/A/2009/000619/4212

Appeal No. CIC/SG/A/2009/000619

Mr. Jathedar Kuldip Singh Bhogal

Vs/

Mr. N.S. Badhan, Public Information Officer

Delhi Sikh Gurdwara Management Committee.

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Information sought:

The Appellant had sought following information:

1. Whether it is a fact that Prior to the Delhi Sikh Gurdwara (Amendment) thAct issued vide Delhi Gazettee notification dated 15 September, 2008,

the election of the Executive Board of the Delhi Sikh Gurdwara

Management Committee were due to be held every year under Section

16 of the Delhi Sikh Gurdwara Act, 1971?

2. Whether it is true that the after Gurdwara Elections held in January, 2007,

the Elections of the Executive Board were held on 9th February, 2007 and

the next elections of the Executive Board was due on or before 9th

February, 2008?

3. Reasons for non-holding of elections of the Executive Board of DSGMC till

date may be intimated?

4. Whether it is true that non-holding of elections of the Executive Board in

February, 2008 was a clear violation of the provisions of the Delhi Sikh

Gurdwara Act, 1971?

5. Whether court cases have been filed in the Hon’ble Courts in Delhi to

hold such elections? If yes, details of such cases filed w.e.f. 9/2/2008 till

date be intimated in the format:

Title of Case Name of Court Name of Advocate- Advocate- Present

advocates wise fee paid wise fee yet status of the

contesting on by the to be paid by case

behalf of DSGMC DSGMC

DSGMC

Reply of PIO:

“In this connection it is stated that the information asked for therein being Sub-

Judice can’t be supplied as the Suit No. 613/08 on the subject is pending in the

Hon’ble High Court of Delhi for which next date of hearing has been fixed on

16/01/2009.”

Grounds for First Appeal:

“The reply of the PIO dated 9/1/2009 is completely vague, irrelevant &

misleadin because the information required in our RTI application is not to such

extent that it could not be supplied as the matter being sub-judice.”

Order of the First Appellate Authority:

“After careful consideration of the contents of the appeal application and the

order of the PIO, I am of the considered opinion that the order PIO is not vague,

irrelevant and misleading. When a case is pending in the Hon’ble High Court of

Delhi, it is not prudent to provide any information except before the court.

Accordingly, I concur with the order of the PIO and the appeal application is

disposed of accordingly. ”

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Grounds for Second Appeal:

“The PIO (Appeal) being the Respondent No. 1 also failed to furnish complete

information within the mandatory period of 30 days which expired on

16/02/2009. Only irrelevant & misleading reply was given by him vide his

Appeal Order dated 19/02/2009.”

The Respondent contends that they are not a public authority and the

Commission asked them to give their oral submissions on this matter. The

Respondent states that though in earlier decision of the Commission has held

that the Institution is a Public Authority they wish to state, “the Appellant in the

said case had specifically contended that “Delhi Sikh Gurudwara Management

Committee which receives no funds form the Government has been

established under and Act of Parliament. There are numerous other

Institutions established under Acts of Parliament or Acts of State Legislatures

receiving no funds from the Government. There is a vide spread feeling that

since these Institutions are not receiving any funds from the Government,

those are not subject to the obligations of RTI Act. In view of the above, it

necessary that the true interpretation of Section 2(h) should be set addressed

so as to avoid confusion. Any interpretation given by the CIC shall carry great

persuasive value for the State Commissions. It was in this view of the matter

that and couple with the facts that the statement made by the representative of

the Respondents in the above case was the own opinion of the person

appearing before the Commission, without having obtained any legal opinion

in the matter and without fully bringing to the notice of the Commission

regarding the actual status and working of Delhi Sikh Gurudwara Management

committee and further without reference to the specific provisions of the Delhi

Sikh Gurudwara Act, 1971, after receiving notices in various appeals and after

seeking legal opinion in the matter with regard to the Status of the Delhi Sikh

Gurudwara Management Committee qua its being a public authority, a review

petition was filed before the Hon’ble Commission on 8 April 2009 vide diary no.

18479/09, praying before the Commission to review it order dated 10 July

2008. The said review petition, to the knowledge of the Respondents is pending

adjudication till date. Delhi Sikh Gurudwara Management Committee has

been established under the Delhi Sikh Gurudwaras Act, 1971 and the preamble

of the said Act states as under:

“An Act to provide for the proper management of the Sikh Gurudwaras and

Gurudwara property in Delhi and for matters connected there with.”

That as such the whole purpose of establishing the Committee by the Central

Legislature was only for the Management of Gurudwara and there properties in

Delhi and the character of the Committee is basically restricted to being wholly

religious body. The Committee functions and carries on its objects from the

funds received by it by way of offerings by the devotees and donations and it

does not receive any fund or grant form the Government of India. There is no

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control of any nature by the Government on the functioning of the Committee

and the only aspect where the Government is involved with the Committee is

with regard to holding of the elections of the members of the Committee and

whatever expenses with regard to the elections of the members are spent by

the Government are also recoverable from the Committee under Section 37(1)

of Delhi Sikh Gurudwara Management Act, 1971. That besides that above the

Government exercises no control over any aspect or matter or functioning of

the Committee and even the accounts of the Committee are not subject to

scrutiny of the Comment. That the Committee has also been registered under

Section 12A of the Income Tax Act, 1961 read with Section 12AA of the Income

Tax Act, 1961 and Income Tax exemption have been granted to the Committee

in view of its dominant and religious charitable character. In this view of the

matter, the Committee, though being a creation of the statue, does not fall

within the definition of the public authority as defend under the Act and as such

the Committee cannot be saddled with any liability to comply with the

provisions of the Act by way of parting the information under the provisions of

the RTI Act, being broadly neither owned, controlled nor substantially financed

by the appropriate Government.”

The Commission decides as follows on the contentions of the Respondent:

- Section 2(h) of the RTI Act defines what a public authority is:

“public authority” means any authority or body or institution of self

government established or constituted,—

(a) by or under the Constitution;

(b) by any other law made by Parliament;

(c) by any other law made by State Legislature;

(d) by notification issued or order made by the appropriate Government,

and includes any–

(i) body owned, controlled or substantially financed;

(ii) non-Government organisation substantially financed, directly or

indirectly by funds provided by the appropriate Government;”

Section 2(h)(b) clearly says that any Institution of self Government established

or constituted by any law made by Government is public authority. The

Respondent states that the Delhi Sikh Gurudwara Management Committee is

not financed or controlled by the Government. This is covered by Section

2(h)(d) and the law does not state that sub-sections (a) to (d) need to be

satisfied simultaneously for a body to be considered as public authority. The

Respondet’s argument that they have filed for a review of the earlier decision of

the Commission cannot be an excuse for assuming that the earlier decision

does not hold. Any statutory authority must consciously stay an earlier order or

rescind it failing which the order issued must be considered binding. If this

principle is not followed the rule of law suffers. Since statutory orders can be

264

made inoperable by merely agitating for stays and reviews. In view of this the

Commission holds that the Delhi Sikh Gurudwara Management Committee is a

public authority as defined under the Act. The PIO has claimed that the

information cannot be given since the matter is sub-judice. Section 8 (1) (e)

does not cover matters which are subjudice. This clause does not cover

subjudice matters, and unless an exemption is specifically mentioned,

information cannot be denied. Disclosing information on matters which are

subjudice does not constitute contempt of Court, unless there is a specific

order forbidding its disclosure. This Commission rules that a matter being

subjudice cannot be used as a reason for denying information under the Right

to Information Act. The Respondent says that he wants 30 days to provide the

information in this matter. The Commission does not accepts this contention

since the RTI Act expects the information to be provided within 30 days from

the filling of the RTI Application.

Decision: The appeal is allowed. The information will be provided to the Appellant before 5 August 2009. Shailesh Gandhi Information Commissioner 22 July 2009

19. Regarding Refusal of Information on the Ground of Sub-Judice

Appeal No.CIC/WB/A/2008/001218 dated 17-7-2008

Shri Manohar Singh Vs. Central Information Commission (CIC)

FACTS

By an application of 10-5-2008 Shri Manohar Singh of Uttam Nagar, New Delhi

applied to the CPIO, Shri Tarun Kumar, Jt Secretary,Central Information

Commission seeking the following information:-

“AA. Provide reasons for the administrative decision of not filing counter

affidavits in Civil Writ Petitions Nos. 3530 of 2007 and 6830 of 2007.

BB. What action has been taken so far with respect of W. P. ( C ) No. 6832/2007.

CC. Provide action taken weekly Status Report from the date of receipt of High

Court’s notice in W. P. (C) No. 6832/2007.

DD. Provide copies of documents filed by NTPC (in CIC) during the period

between 1.3.2007 to 30.6.2007 in F. No. CIC/PB/A/2006/00288 vis-a-vis

undersigned’s complaint dated 23.3.2007.”

To this Shri Manohar Singh received a response from CPIO Shri Tarun Kumar, Jt.

Secretary, CIC dated 4.6.2008 seeking to answer each of the questions as

follows:-

265

“AA & BB. The two Writ Petitions bearing nos. 3530 of 2007 and 6832 of 2007

have been received in the Commission and they have endorsed to the Standing

Counsel for taking appropriate action in the Hon’ble High Court.

CC Since the matter is sub-judice, no further action can be taken in the matter.

DD A copy of the affidavit dated 3.5.2007.’

Not satisfied with this response Shri Manohar Singh moved an appeal before

Secretary Shri Mohammad Haleem Khan, Appellate Authority, CIC on 7.6.2008

with the following plea:-

“AA, BB & CC: No information provided reg. Compliance of Hon’ble High Court’s

orders. Further, RTI Act does not prohibit information on a sub-jduice matter

and there are CIC’s decisions to that effect.

DD: Information (received) reveals that Commission has not only violated its

own regulations but also arbitrarily disposed off a complaint resulting in (an

avoidable) writ petition.”

In his order of 2.7.2008 Shri Mohammad Haleem Khan came to the following

conclusion:-

“The issues on which the information supplied by the CPIO were not

considered adequate, were discussed one by one. Following decisions were

taken;-

(i) The CPIO has already informed the appellant of the action taken by the

Commission on the two writs. The CPIO was directed to provide the dates

on which they were sent to this Standing Council for necessary action.

(ii) The appellant has been provided with a copy of the affidavit filed by

NTPC. If the appellant so desires he may be allowed inspection of files of

the Commission and on his inspection if he finds that there are certain

other documents, the copies of the same may be provided to him at the

prescribed cost.

(iii) No other direction is to be issued.’

Shri Manohar Singh has then come in second appeal before us with the

following prayer:-

“a) Providing of requested information excluding para BB.

b) Compliance of section 4 (1) (d) of the RTI Act.

c) Admitting the present appeal with costs and

d) Any other relief as deemed fit.”

Appellant has in his grounds of appeal repeated the following contention:-

“That there is no provision under the Act, which disallows information on

subjudiced matters. Appeal No. 80/ICPB/2006 may be referred.”

266

CPIO Shri Tarun Kumar submitted that information has been provided after

obtaining the same from the Legal Cell, which is custodian of information in this

Commission regarding Writ Petitions in the High Court, and discloses the

present position with regard to each question. On the question of disallowing

information of subjudice matters, however, Shri Tarun Kumar clarified that it is

not that he has refused information on this ground but only that he has

informed appellant Shri Manohar Singh that no further action has been taken

because the matter is subjudice. CPIO Shri Tarun Kumar, however, was unable

to provide any reasons for not filing counter affidavits as requested by

appellant in question AA. Appellant Shri Manohar Singh acknowledged that he

has received the response to question at DD.

DECISION NOTICE

With regard to questions BB and CC, as clarified by CPIO no information has

been denied seeking exemption from disclosure u/s 8 (1) (h). On both these

points the question was for the action taken with respect to the Writ Petition

(C)s mentioned. In response to this the information has been provided that so

far, no further action is possible by the Commission so long as the matter

remains subjudice, and that will constitute the substance of any status report

on action taken.

On the other hand whereas the reference to the Standing Counsel is indeed

part of the information that has been sought by appellant Shri Manohar Singh,

it is not the complete information which is a clarification of reasons for not filing

of counter affidavits. This information must indeed be sought from Standing

Counsel, because he is representing this Commission. The information held by

him is evidently under the control of the Commission and, therefore, accessible

as per the definition of Right to Information Act contained in sub section (j) of

section 2 read with Sec 5(4). For this reason this information will now be

provided to appellant Shri Manohar Singh within 10 working days of the date

of receipt of this decision notice. The appeal is thus allowed in part. There will

be no costs.

(Wajahat Habibullah)

Chief Information Commissioner 18-12-2009

20. Regarding Inspection of Answer Sheet

CBSE v. Aditya Bandopadhyay, (2011) 8 SCC 497

(Right to Information Act, 2005 - Ss. 3, 6, 2(f), 2(i), 2(h), 2(j), 8, 9, and 24)

``information'' under RTI Act - However, right to information is a facet of

freedom of speech and expression under Art. 19 and is subject to reasonable

restrictions - Hence, it is subject to exemptions and exceptions under RTI Act

that may be applicable

267

Right to Information Act, 2005

Ss. 24, 6 and 3 - Exemption under S. 24, whether applicable to examining bodies

- Held, examining bodies are neither ``intelligence'' nor ``security''

organisations and therefore, not covered under S. 24 exemption, (2011) 8 SCC

497-C


Ss. 9, 6 and 3 - Exemption under S. 9, whether applicable to evaluated answer

books in a public examination - Held, disclosure of information with reference

to answer books does not involve infringement of any copyright and therefore,

S. 9 will not apply, (2011) 8 SCC 497-D


Ss. 22, 8, 3, 2(f), 2(i), 2(h) and 2(j) - Overriding effect of S. 22, RTI Act over rules

and bye-laws for public examinations -

Effect on examinee's rights of (a) inspection, and (b) re-evaluation of answer

books - Held, superior statute like RTI Act with overriding provisions like S. 22

will prevail over bye-laws of CBSE - Evaluation of answer books being

information under RTI Act, inspection of answer book is permissible even if

CBSE bye-laws do not provide for such inspection -

Therefore, principles in Maharashtra State Board case, (1984) 4 SCC 27 or other

decisions following it, will not apply so far as inspection of answer books is

concerned - However, re-evaluation is not permissible as it is neither available

under RTI Act nor bye-laws of CBSE, (2011) 8 SCC 497-E

Fiduciary relationship - Non-existence of - Examining body, held, is not a

fiduciary in relation either to examinee or examiner - Rationale for, explained -

Answer books are not information available to an examining body by virtue of a

fiduciary relationship - Therefore, furnishing copy of answer book, is not breach

of confidentiality, privacy, secrecy or trust - Examining body is ``principal'' and

examiner is ̀ `agent'' - Therefore, right of examinee to inspect his answer books

is not barred by exemption under S. 8(1)(e), RTI Act, (2011) 8 SCC 497-F

Right of examinee to inspect evaluated answer books - Time-limit within which

answer books may be assessed - Held, right to access information does not

extend beyond period during which examining body is expected to retain

answer books as per rules - In case of CBSE, answer books are required to be

maintained for a period of three months and thereafter they are liable to be

disposed of/destroyed - Hence application for inspection of the same must be

made within that period - Information Commission cannot extend said period

under S.19(8) of RTI Act, (2011) 8 SCC 497-K

Right to Information Act, 2005 Ss. 4(1)(b), 4(1)(c), 8, 9, 24 and 2 - Three

categories of information distinguished under RTI Act: (a) information which

promotes transparency and accountability has to be suo motu published and

268

disseminated by public authorities [i.e. that information mentioned in Ss.

4(1)(b) and (c)], (b) information other than that mentioned in Ss. 4(1)(b) and (c)

which is important and can be accessed, and (c) information belonging to third

category is information which is not available with public authority and not

required by public authority to maintain, cannot be accessed - Public

authorities also have no obligation to provide information as to their opinion,

advice, inferences or assumptions - Public authorities also cannot cater to

indiscriminate and impractical demands (unrelated to transparency and

accountability) which adversely affect their efficiency, (2011) 8 SCC 497-M

13. KVIC & the Right to Information Act:

As part of implementation of the provisions of the Right to Information Act, the KVIC

has already published in its web-site “ www.kvic.org.in” all the information required

under Section 4 of the Act for the information of the Public.

Further, the KVIC had notified the names and addresses of the Public Information

Officers and vide Circular dated 3.2.2006 is placed at the end of chapter.

Similarly, the format for seeking information, the fee to be paid on different types of

documents, the form in which the appeal is to be made are circulated vide Circular

dated 03.02.2006.

269

OFFICE OF THE COMMISSIONER FORKHADI AND VILLAGE INDUSTRIES

IRLA ROAD, VILE PARLE (WEST), MUMBAI - 56

No. Adm-II/RTI Bill –04/2005-06/(359) Date: 03.02.2006

- C I R C U L A R -

thThe RTI Act, 2005 came into force on October 12, 2005 the 120 day of presidential

assent given to the legislation. The copy of RTI Bill 2004 has already been circulated to all

the Directorates/Offices of KVIC vide Office Order No. 1975 dated 25.4.2005. The Central

Public Information Officers (CPIOs) have been designated in Central Office and all

State/divisional Offices of KVIC vide order of even no. dated 06.09.2005.

Accordingly, CPIOs are the designated authority to receive applications for

information from the members of public for providing information. Such information is to

be provided within 30 days from the date of receiving application and if information

concerns the life and liberty of a person or persons such information are to be provided in

48 hours. Failure to give information will be deemed on refusal, but if there are genuine

reasons for refusal of information, reason for such refusal should be given in writing to the

information seekers. The system has started working.

The procedure for seeking information under the Act, is prescribed under Section 6,

by making a request in writing or through electronic means in English or in the official

language of the area in which the application is being made, accompanying such fee as may

be prescribed. Accordingly, in the KVIC, the Monitoring Committee on R.T.I. Act 2005 in its

meeting held on 22.12.05 approved the (1) application format for obtaining information

under RTI Act, 2005 (2) Application for appeal under R.T.I Act 2005 alongwith the charges

for application fee, Appeal fees, Xerox charges, charges for verification of documents and

charges for information in Floppy Disk etc. The same are enclosed herewith in Annex-A, B

and C.

Therefore, all the CPIOs are advised to follow the above procedure, while receiving

applications for obtaining information under RTI 2005.

All the inchrages in the field office as well as in the Central Office should ensure that

top priority is accorded while furnishing the information under the R.T.I. Act.

This is issued with the approval of Chief Executive Officer/Commissioner.

Encl: as above.

Sd/-DIRECTOR (ADMINISTRATION)

270

ANNEXURE A

APPLICATION FOR OBTAINING INFORMATION UNDERRIGHT TO INFORMATION ACT 2005

ToThe Central Public Information Officer,Office of the Commissioner for Khadi & V.I.3, Irla Road, Vile Parle (W)Mumbai - 56.

1. Name of the Applicant :

2. Address for Communication :

3. Details about the information sought for :

a) Subject :

b) The information related the period (year/month etc.) :

c) Description of the Information :

d) Whether the information is intended to be collected personally OR :

e) The information required by posts :

i) Ordinary Post

ii) Registered Post

iii) Speed Post

4. Whether the applicant is belonging to Below Poverty Line category : Yes/No

5. If belongs to Below Poverty Line category the details of the certificate issued by the competent authority (certified copy must be enclosed along with the application) :

Place:

Date: SIGNATURE OF THE APPLICANT

N.B. : 01. In complete application will not be entertained

02. The application without the application fee will not be entertained

03. The applicant belonging to Below Poverty Line category is exempted from application fee and other charges.

04. The certified copy of the Certificate from the competent authority must be accompanied if the exemption is sought for or else the application will be rejected.

271

ANNEXURE B

APPLICATION FOR APPEAL UNDERRIGHT TO INFORMATION ACT – 2005 (CLAUSE 19(1)

ToThe First Appellate AuthorityOffice of the CommissionerFor Khadi and Village Industries,3, Irla Road, Vile Parle (West)Mumbai - 56

1. Name of the Appellant :

2. Address for Communication :

3. The details of the orders of the C.P.I.O :

4. The date of receipt of the orders of C.P.I.O against which the appeal is made

5. The last date for making an appeal :

6. The reasons for filing an appeal :

7. The details of the information

a) Subject :

b) Name of the Section of which the information is related :

Place:

Date: SIGNATURE OF THE APPLICANT

272

OFFICE OF THE COMMISSIONER FORKHADI AND VILLAGE INDUSTRIES

IRLA ROAD, VILE PARLE (WEST), MUMBAI - 56

No. PIC/RTI-05/359/06-07 Date: 25.07.2006

- C I R C U L A R -

Sub: Implementation of RTI Act, 2005.

Ref: 1. Office Order No.Adm-II/RTI Bill-04/2005-06/(359) dt.25.04.05.

2. Order No.Adm-II/RTI Bill-04/05-06/(359) dt 06.09.05.

3. Office Order No.Adm-II/493/2006-07(47) dt.02.05.06.

4. Circular No.Adm-ii/RTI Bill-0/2005-06/(359) dt.03.02.2006.

The above mentioned orders were issued to ensure implementation of RTI Act 2005 effectively in the Central Office and the field offices of KVIC and for this purpose CPIO has been nominated at Central Office, KVIC, Mumbai as well as in the State/Divisional Offices of KVIC. Ministry of ARI has been asking for monthly information concerning the number of applications received under RTI Act, action taken, appeal if any, made to appellate authority etc. which are to be regularly sent to the Ministry. Since this information has also to be collected from the field offices of KVIC, it is brought to the notice of all CPIOs in the field offices of KVIC to ensure that information in respect of the previous month is sent to CPIO, KVIC, Mumbai positively before 5th of the succeeding month by fax/e-mail/speed post in the format enclosed.

State/Divisional Directors will be responsible for ensuring that the information in respect of their field offices is sent to the CPIO, KVIC, Mumbai in time. Further they should also ensure that application received for information under RTI Act is promptly disposed off within the time limit of the Act.

All Directors and Incharges in the Central Office, KVIC, Mumbai, State/Divisional Directors, Managers of Departmental Sales Outlets and Principal, MDTCs should ensure that information sought by CPIO is attended on priority and the information furnished immediately. It may be noted that “as per Right to information Act –2005, delay in furnishing the information, providing the incomplete and misleading information is termed as contraventions of the provisions of the R.T.I. Act –2005 and the concerned officer may be held responsible for such contraventions, as specified under the Clause5(5), which may please be noted”. In case any official does not provide required information to CPIO, the concerned official will be solely held responsible for the violation of the Act and penalty if any shall be solely recovered from him/her.

All officers in the Central Office and field offices of KVIC may not the above instructions for compliance.

Encl: as above.


273

CENTRAL PUBLIC INFORMATION CELLKHADI & V.I. COMMISSION, MUMBAI – 56.

MONTHLY INFORMATION FORMAT Date:

1. Number of requests received by each authority.

2. Number of decisions where applications were entitled to access the documents pursuant to the requests, the provisions of the Act under which these decisions were made and the number of times such provisions were invoked.

3. The number of appeals referred to Central information Commission for review, the nature of appeals and the outcome of appeals.

4. Details of disciplinary action taken against any officer in respect of administration of this Act.

5. Amount of charges collected by each public authority under this Act.

6. The details to indicate efforts made by the public authorities to administer and implement the spirit.

7. Suitable suggestions for reform, including those requ i red for deve lopment , improvement , modernization, reform for the amendment of the Act or other legislation or common law or any other matter relevant for operationalisation the Right to access the information.

8. Further you are requested to send the monthly report in the following format:

Sr. Name Category Whether Whether there is Whether Whether RemarksNo. of staff of KVIC or disciplinary reply given fees Appli- retired person or proceeding/black in time deposited cant an institution/REGP list pending against period of units or other the institution/ 30days specify officially/personally

(Name & Signature) (Name & Signature) C.P.I.O. State/Divisional Director

274

NO. 8/2/2010-lRGovemrnent of India

Ministry of Personnel, PG & PensionsDepartment of Personnel & Training ***

North Block, New Delhi-110001

Dated: 27.04.2010

OFFICE MEMORANDUM

Subject: Disclosure of third party information under the RTI Act, 2005.

***

The undersigned is directed to say that the Goveminent,'in a number of cases makes inter departmental consultations. In the process, a public authority may send some confidential papers to another public authority. A question has arisen whether the recipient public authority can disclose such confidential papers under the RTI Act, 2005. If yes, what procedure is required to be followed for doing so.

2. Section 11 of the Act provides the procedure of disclosure of 'third party' information. According to it, if a Public Information Officer (PIO) intends to disclose an information supplied by a third party which the third party has treated as confidential, the PIO, before taking a decision to disclose the information shall invite the third party to make submission in the matter. The third party has a right to make an appeal to the departmental Appellate Authority against the decision of the PI0 and if not satisfied with the decision of the Departmental Appellate Authority, a second appeal to the concerned Information Commission. The PI0 cannot disclose such information unless the procedure prescribed in section 11 is completed.

3. As defined in clause (n) of Section 2 of the Act, 'third party' includes a public authority. Reading of the definition of the terin, 'third party' and Section I 1 together makes it clear that if a public authority 'X' receives some information from another public authority 'Y' which that public authority has treated as confidential, then 'X' cannot disclose the infonnation without consulting 'Y', the third party in respect of the information and without following the procedure prescribed in Section 11 of the Act. It is a statutory requirement, non-compliance of which may make the PI0 liable to action.

4. The Public Information Officers and the First Appellate Authorities should keep these provisions of the Act in view while taking decision, about disclosure of third party information in general and disclosure of the third party information, when third party is a public authority, in particular.

5. Hindi version will follow.

(K.G. VERMA)Director

Tei: 23052158

275

Copy to:

1. All the Ministries /Departments of the Government of India.

2. Union Public Service Commission / Lok Sabha SecretariatlRajya Sabha Secretariatl Cabinet Secretariat / Central Vigilance Commission/President's SecretariatlVice-Presidents's Secretariat lPrime Minister's Office / PIanning Commission / Election Commission.

3. Central lnformation Commission/State lnformation Commissions.

4. Staff Selection Commission, CGO Complex, New Delhi.

5. Office of the Comptroller & Auditor General of lndia, 10, Bahadur Shah Zafar Marg, New Delhi.

6. All Officers/Desks/Sections, Department of Personnel & Training and Department of Pension & Pensions Welfare.

Copy to:

Chief Secretaries of all the States/UTs,

276

CHAPTER – IX

DISPOSAL OF LAND MORTGAGEDWITH THE COMMISSION

1. Background Note:1. As part of various initiatives taken by the Commission for safeguarding the

immovable properties of the KVI institutions, the Commission in its meeting thheld on 25 Oct., 07 suggested various measures for safeguarding the

immovable properties of the institution mortgaged with the KVIC and the same were widely circulated vide Circular dated 26.10.2007.

2. The Commission was constrained to come out with various instructions to the Khadi and V.I. institutions for safeguarding the properties of the institutions in the wake of the recent trend amongst the Managing Committees of various khadi institutions in disposing the properties owned by the institutions, including those which are mortgaged with the Commission as security for the funds advanced to the institutions, at a very low price than the market value and without obtaining prior permission from the KVIC.

3. The Commission is allowing KVI institutions to dispose off its surplus land for various purposes authorized by the Commission. Guidelines in this regard are also in place. However, recently several instances have come to the notice of the Commission that the Managing Committee of the some of the institutions are indulging in the practice of refunding the KVIC dues and disposing the properties by total ignoring the interest of the institution in particular and the KVI programme in general.

4. Though the KVIC Loan Rule is silent about the type of mortgage to be obtained from the borrowers by the KVIC for advancing loan, the Commission had chosen to accept equitable mortgage from the borrowers. The drawback of the system is that the equitable mortgage is not required to be registered and the borrower institutions are only required to deposit the original title deeds with the KVIC, without giving the physical possession of the property.

5. As the mortgage is not registered, it is easy for dishonest borrower to deceive the Commission by selling the property on the strength of the certified copy of the title deed. The same strategy has been adopted by the some of the Managing Committee members of the institutions for disposing off the properties of the institution recently.

6. As per the aforesaid Circular dated 26.10.07, all the institutions are required to furnish an undertaking to the effect that all the properties owned by the institution as on date will be mortgaged with the KVIC and any property acquired in future shall also be mortgaged with the KVIC. Further the institution shall not dispose off the immovable property owned by the institution so long as it is carrying out the KVI activities, except with the previous approval of the Commission. It is the responsibility of all the field offices to obtain the said undertaking from the institution coming under their jurisdiction.

7. Though the Legal Adviser to the Commission, considering the problems faced by the KVIC in safeguarding the properties of the institution, had advised very long back to switch over the registered mortgage, instead of equitable

277

mortgage by the Commission, the same has not been considered in view of the heavy stamp duty that will have to be paid in registering the mortgage.

8. Again in the meeting of the Commission held on 29.5.2008, Members expressed their concern over the issue of sale of land by the institutions without following due procedures and making the funds of the Commission unsafe. The Members of the Commission also expressed their concern about some of the institutions conducting such sale for their benefits. The Commission viewed the same very seriously and directed that a policy paper may be brought before the Commission for taking conscious decision in the matter for disposal of unused/ surplus property mortgaged to the Commission by the institutions.

9. In pursuance of the decision taken by the Commission in its meeting held on 29.5.2008, the recommendations of the Committee constituted for the purpose of suggesting suitable guidelines in the matter for the disposal of surplus land/property, as identified by the institution, have been placed before Commission meeting for its consideration and approval.

10. The commission in its meeting held on 24.9.2008 considered the aforesaid proposal / recommendation of the Committee in connection with the formation of suitable guidelines for Disposal of surplus / unused properties identified by the institutions. Accordingly the guidelines were issued by the Directorate of K.C vide Circular dated 05.12.2008.

11. As per the existing guidelines of the Commission, all the institutions are required to submit an undertaking to the effect that the institution has mortgaged all the properties owned by the institution as on date with the Khadi and Village Industries Commission and any property acquired in future shall also be mortgaged with the Commission. By virtue of this undertaking, the KVI institution cannot dispose off the land/immovable property which was not mortgaged to the Commission by following their own procedure and without informing KVIC.

12. Though as per the provisions of the KVIC Loan Rules, all the institutions are required to create equitable mortgage of their existing and future acquired properties with the Commission as a security for the loans and grants advanced to them from time to time, practically it is difficult for the Commission to ascertain whether the institutions have mortgaged all their properties with the Commission. Therefore, it would be desirable if the institutions are mentioning the details of the properties which are mortgaged/not mortgaged in the schedule of fixed assets annexed with the balance sheet. It would be easy for the KVIC to understand the details of mortgage and to insist the institutions to mortgage those properties which are not mortgaged.

2) Permission for the Disposal of Surplus Land:The Commission is allowing the borrower institutions to dispose of their surplus land, the original title deed of which has been deposited with the Commission for creation of Equitable Mortgage, for the following purposes:-i) To pay off-

a) bank loans with interestb) CBC outstanding loans with interest

278

c) Commission’s outstanding C.E. loans with interest and other dues such as surplus Working Capital Fund finalized by audit, raw material dues of CSPs and audit recovery etc.

ii) Payment of statutory dues such as employees provident fund, electricity bill, taxes and Artisans Welfare Fund etc.

iii) Settlement of dues of surplus employees, as per the revival plan approved by the committee constituted for the purpose.

iv) Creation of need based assets like sales outlets, introduction of improved plant and machineries and creation of other assets suitable for future use.

A Property Disposal Committee comprising of the Members specified in the guidelines issued by the Commission is required to be constituted for undertaking the proposal for the sale of the surplus land.

The amount of sale proceeds of surplus land is to be utilized for meeting the specific expenditure for which permission was granted by the Commission. Any amount remaining after meeting the said expenditure is to be kept in a separate bank account with joint signatory arrangement between State/Divisional Director and Secretary of the institution. This amount can be utilized only for the development of KVI activities as per the approved Action Plan.

The guidelines in this regard have been circulated vide Circular No. DKC / RF / New / II / 95-96 dated 3-1-96, Circular dated 20-2-96, Circular No. DKC / Policy / Reconstn / Committee/2004-05 dated 21.12.2004 and finally vide Circular bearing No. DKC/DIS OF PROPERTY / GEN / 2008-09 dated 5/12/2008. The extract of the same are placed at the end of Chapter.

3) Registration of Charge (Tamilnadu):

In some of the States like Tamilnadu have made the registration of equitable mortgage and payment of stamp duty on the same compulsory. However, the amount of registration fee is only Rs.1000/- and the stamp duty is only Rs. 5000/- irrespective of the loan amount. This registration will protect the interest of the KVIC as a charge in favour of the KVIC over the property is created in the Revenue Records.

4. Views of the Ministry in the Matter of the Properties of the Khadi Institutions:

The Ministry of MSME, Govt. of India vide its letter dated 7/2/2012, while intimating the necessity of updating and maintaining proper registers of land and properties owned by the KVIC as well as Khadi institutions, opined that the land of the khadi institutions is not only an asset but also a cultural and spiritual heritage which cannot be and should not be alienated. All the field offices while recommending the proposals for the disposal of land should bear in mind the above views of the Ministry and also ensure that Khadi institutions are not disposing the properties without the

thpermission of the KVIC. The extract of the letter of the Ministry dated 7 February, 2012 is attached at the end of the Chapter.

279

5. Extracts of Circulars:


IRLA ROAD, VILE PARLE (W), BOMBAY – 56.

No. LA/Circular/Disposal of land/07-08 Date: 26.10.2007

- C I R C U L A R -

Sub: Disposal of the properties by the Managing Committee members of the Institution without permission of the KVIC – Strict guidelines on this issue-reg.

**********************

The Khadi and Village Industries Commission (KVIC) had been established by the

Govt. of India with a view to fulfill the dreams and aspirations of the Father of the Nation-

Mahatma Gandhiji about the upliftment of the poor in rural and village areas through the

promotion of khadi and village industries activities.

2. Keeping the above points in view, the main objectives of the KVIC have been framed

aiming at creation and generation of employment in rural areas through the medium

of khadi and village industries activities. The programmes of the KVIC are

implemented mainly through the societies and institutions registered under the

Societies Registration Act or other relevant State Acts.

3. It is undisputed fact that the most of the institutions and societies came forward in

the past for undertaking the noble khadi and village industries activities and got a lot

of properties by way of gift and donations from persons having belief and interest in

Gandhian ideas.

The Govt. of India also provided through KVIC all sorts of financial and other supports

to such institutions to enable them to undertake the Khadi and V.I. activities.

4. Till recently, the KVIC was providing financial assistance for undertaking khadi

activities with zero interest, besides providing grants for the creation of

infrastructures. A number of fiscal concessions are also being provided to the

institutions by the KVIC.

5. Thus in most of the cases, the properties presently held by the institutions are either

gifted or donated or created out of the funds provided by the KVIC and out of the

income generated by carrying out the KVI programmes.

In view of the above, all the ofice bearers of the institutions are bound to preserve all

the properties for the furtherance of the objectives of the institutions and to keep

them under trust. Similarly, all the KVI institutions are also bound to create equitable

mortgage of the properties with the KVIC as security for the funds advanced or to be

advanced by the KVIC. All the institutions have also submitted an undertaking that

the properties acquired in future will also be mortgaged with the KVIC.

280

6. Inspite of the above position, recently it has been observed that there is an increasing

trend on the part of the institutions to dispose of the properties owned by the

institutions without the permission of the KVIC and some of the institutions are

resorting to the tactics of entering into an agreement for sale of the properties

without the permission of the Commission and utilizing the advanced money

received to refund the KVIC dues and thereafter claiming for returning the original

title deeds deposited under equitable mortgage.

The complaints are being received from various quarters to the effect that the office

bearers of the institutions are disposing of the properties of the institutions at a very

low price than the market value and thereby indulging in wrongful gains.

7. Likewise some of the institutions are trying to take undue advantage of the liberal

norms prescribed by the Commission in the matter of securities. To cite an example

the Commission, with a view to help small institutions which are not having enough

immovable properties to create equitable mortgage to secure the funds advanced to

them by the KVIC, had prescribed a guidelines to the effect that equitable mortgage

to the extent of 40% of the borrowings will suffice provided the rest is covered under

hypothecation deed.

8. By taking the advantage of the said policy decision, some of the institutions which are

having enough immovable properties and have created equitable mortgage of the

same with the Commission have come forward with a demand to get release of the

original title deed deposited by them in excess of the 40% of the value of outstanding

loan.

Recently, the Federation of Sarvodaya Sanghs and the Tamilnadu and Pondichery

institutions has passed a resolution to approach the KVIC with a request to return the

original title deed of the properties above the limit of loans advanced by the KVIC and

reiterate that there should not be any objection from the KVIC for selling the property

acquired out of funds of the institution.

9. The above said resolution passed by the Federation of Sarvodaya Sanghs and the

Tamilnadu and Pondichery institutions was deliberated by the Commission in its thmeeting held on 25 November 2007 at length and the Commission expressed

serious concern over the same. It was resolved that said resolution is not at all in the

interest of the over all objectives of the KVI institutions in particular and the KVIC in

general.

Therefore, it has been decided to request the institutions not to indulge in any

practices which are against the objectives of the institutions and not to dispose of the

immovable properties of the institution without the prior permission of the KVIC,

even after repaying the amount due to the KVIC. As the KVI institutions are nursed by

the KVIC and are acting as the agents of the KVIC in implementing its programme of

rural development, the office bearers of the institution cannot simply severe the

relation of the institution with the KVIC by merely repaying the total amount

presently due.

281

10. The Societies Registration Act as well as byelaws of most of the KVI institutions

prohibit the distribution of the assets or properties of the societies amongst its

members even at the time of its winding up, but has to be transferred to other

societies having similar objectives. This also implies that the office bearers cannot

dispose of the properties of the institution on flimsy grounds and make secret profit

out of it which is wrong from all conduction.

11. In the light of the above, the Commission has authorized the Chief Executive Officer of the Commission to take suitable steps for protecting the properties of the KVI institutions. Accordingly, it has been decided to take the following steps:i) The office bearers of all the institutions aided by KVIC should not dispose of the

properties owned by institutions, except for the purpose which are authorized by the Commission and circulated vide Circular dt. 3/11.01.1996.

ii) The institution should once again pass fresh resolution as advised (i) above and authorize its president and/or secretary to furnish an Undertaking to that effect as per the enclosed format.

iii) All the institution to honour the undertaking given by them to the effect that all the properties acquired by the institution shall be mortgaged with the KVIC.

iv) The State/Divisional Directors to ensure periodic review of the properties owned by the institutions and mortgaged with the KVIC. Minimum 10% be reviewed in this financial year.

v) Wherever any institution is disposing its property without the prior permission of the KVIC, the State/Divisional Directors have to initiate legal proceedings, both civil as well as criminal, against the office bearers of the institution.

vi) The State/Divisional Director are authorized to take necessary steps by collecting details of the property of under their jurisdiction and request the District Collector not to register the properties of the institutions without permission of the KVIC with copy to all the Sub-Registrars of the State. This has to be completed within a month period on receipt of this circular and compliance report to be sent to Director (L.A).

vii) An undertaking is to be obtained by the Incharges of the Field Offices, in the enclosed format, on stamp paper of appropriate value from the office bearers of the institution to the effect that the institutions shall not dispose of its properties without the permission of the KVIC, even after repaying the present dues to the KVIC.

viii) The State/Divisional Directors should ensure that no budget meeting, no rebate claims and/or any other assistance to the institutions coming under their jurisdictions are considered without obtaining the undertaking as stated hereinabove.

In view of the above, the office bearers of all the directly aided institutions and the

Incharges of the field offices of the Commission are requested to take note of the above

decision and follow the same strictly.

IT IS TO BE TREATED AS MOST URGENT AND MOST IMPORTANT


282

UNDERTAKING (on stamp paper of appropriate value)

Pursuant to the Resolution bearing No.________________ dated___________

passed by the Managing Committee of the __________________ (Name of the institution),

I, ______________________________Secretary of the said institution do hereby

undertake on behalf of the institution that the institution has mortgaged all the properties

owned by the institution as on date with the Khadi and Village Industries Commission and

any property acquired in future shall also be mortgaged with the said Commission.

I further undertake that the institution shall not dispose of the immovable properties

owned by the institution so long as it is carrying out the Khadi and village industries

activities, except with the previous approval of the Commission and except for the

purposes authorized by the Commission.

(Name and signature of the Secretary)Seal of the institution.

283




- ADDENDUM -

Sub: Disposal of the properties by the Managing Committee Members of the Institution without permission of the KVIC – Strict guidelines on this issue-reg.

*****

A reference is invited to the Circular bearing No. LA/Circular/Disposal of Land/07-08

dated 26.10.07 on the captioned subject, wherein detailed guidelines for protecting the

properties the institution mortgaged with the KVIC have been prescribed.

While receiving the pink paper concerning the decision taken/resolution passed by ththe Commission in its meeting held on 25 October, 2002 on the above subject, it has been

observed that the following important points are also to be included as part of circular

referred to above:-

I) In order to prevent sale of the properties without obtaining clearance from the

Commission, an intimation regarding mortgage made by the institution should

be intimated to the concerned authorities and local authorities for making

entry in their records.

ii) While registering new institutions, an agreement/MOU/Undertaking (in the

format attached with the circular dt. 26.10.07) has to be obtained which would

bind the institution in obtaining prior approval of the Commission before

disposing any of its properties.

All the field offices are requested to ensure that the aforesaid

decisions of the Commission are also implemented without fail and to treat them as

part of the guidelines contained in the Circular dt. 26.10.07.


To: 1) The State/Divisional Directors-for necessary action and circulation of the said circular to

all KVIC directly aided/registered institutions in their jurisdiction.


3) The Director (Publicity)- with instructions to publish the same in the ensuing issue in a prominent page.

4) The Director (I.T) – to place in the web site of the KVIC.

284




- CORRIGENDUM -

Sub: Disposal of the properties by the Managing Committee Members of the Institution without permission of the KVIC – Strict guidelines on this issue-reg.

*****

A reference is invited to the Circular of even no. dated 26.10.2007 on the subject cited

above.

thIn the 4 line of the para No. 9 of the said Circular, a mistake has been occurred

regarding a reference of the date of Commission’s meeting. The date of Commission’s

meeting mentioned therein may be read as 25th Oct.,2007 instead of 25th Nov.,2007.

Sd/-Director (Legal Affairs)

Copy forwarded to:1) The State/Divisional Directors- for necessary action and circulation of the said circular to

all the KVIC directly aided/registered institutions in their jurisdiction.

2) Zonal Dy. C.E.OS.

3) The Director (Publicity)- with instructions to publish the same in the ensuing issue in the

prominent page.

4) The Director (I.T)- to place in the web-site of the KVIC.



1) All Members of the Commission

2) Secretary to Chairperson

3) Financial Adviser

Sd/-


285



No. LA/Circular/08-09 Date: 05.08.2008

- C I R C U L A R -

Sub: Disposal of land belonging to the institutions – reg.

Ref: Circulars bearing No. DKC/RF/New/II/95-96 dt. 3.11.1996 and DKC/Policy/Re-const./Committee/2004-05 dt. 21.12.2004.

*****

Reference is invited to the Circulars referred to above, wherein the Directorate of

Khadi Coordination had communicated the modalities to be adopted in connection with

the disposal of surplus land by the directly aided institutions of the KVIC.

th th2. The Commission in its meeting held on 27 and 28 June, 08 expressed serious

concerns over the non-adherence of the guidelines prescribed by the Commission

and communicated vide Circulars referred to above. The Commission has further

resolved to issue clear instructions in the matter once again stating that any violation

of these instructions will be dealt with severely.

3. Recently a number of court cases have also cropped up in the matter of unauthorized

sale of land mortgaged with the KVIC by the institutions and many khadi institutions

are coming forward for repaying the KVIC dues and demanding the return of title

deeds without indicating any genuine or convincing reasons. Such tendency is

required to be discouraged for the better interest of the Khadi activities and poor

artisans making their livelihood out of the Khadi activities. Various circulars in this

matter have also been issued by the Commission from time to time.

4. All the Incharges of the field offices are once again requested to strictly comply with

the instructions contained in the circulars issued by the Commission in the matter of

disposal of properties of the institutions in latter and spirit and any deviation or

lapses in the matter on the part of the field offices will be viewed very seriously and

appropriate disciplinary action will be taken against the Incharges of the field offices

for such omissions.


To1) All State /Divisional Directors of the KVIC2) Zonal Dy. C.E.Os.3) All Industry/Programme Directors at C.O. Mumbai 4) The Director (Publicity)- with instruction to publish the same in the ensuing issue in a

prominent page.5) Director (I. T)- to place in the web-site of the KVIC.

286



No. DkC/DIS OF PROPERTY/GEN/2008-09 Date: 5.12.2008

- C I R C U L A R -

Sub: Grant of Permission to the institution for the disposal of Unused/surplus land-guidelines – reg.

Ref : i) Circular bearing No. DKC/RF/New/II/1995-96 dated 3.1.1996. ii) Circular bearing No. DkC/policy/reconstn./Committee/2004-05 dated 21.12.2004. iii) Circular bearing no. LA/Circular/disposal of land/07-08 dt. 26.10.07 together with Addendum dt. 14.12.07.

*****

Various directly aided institutions are applying for permission to dispose off its

unused/surplus land/properties mainly for the purpose of repayment of loans taken from

KVIC, Banks or for ploughing back a part of sale proceeds to improve the productive

functions etc. In the circular quoted above guidelines were issued on the composition of

the Property Disposal Committee (PDC) as well as the manner in which the sales proceeds

should be utilized.

th1. In the 557 meeting of the Commission held on 29.5.2008. Members expressed their concern over the issue of sale of land by the institution without following due procedures and making the funds of the Commission unsafe. The Members of the Commission also expressed their concern about some of the institutions conducting such sale for their benefits. The Commission viewed the same very seriously and directed that a policy paper may be brought before the Commission for taking conscious decision in the matter for disposal of unused/surplus property mortgaged to the Commission by the institution.

th2. In pursuance of the decision taken by the Commission in its 557 meeting held on 29.5.2008, the recommendations of the Committee constituted for the purpose of suggesting suitable guidelines in the matter for the disposal of surplus land/property, as identified by the institution have been placed before Commission meeting for its consideration and approval.

3. The Commission in its meeting held on 24.9.2008 considered the aforesaid proposal/recommendation of the Committee in connection with the formation of suitable guidelines for disposal of surplus/unused properties identified by the institution. Accordingly the following guidelines are prescribed in the matter for strict compliance.

A . PURPOSES OF DISPOSAL :

The Commission decided to permit the institution to dispose off their surplus/unused and utilization of funds for the following purposes.

287

i) To pay off –a) Bank loans with interestb) CBC outstanding loans with interest.c) The Commissions outstanding C.E. Loans with interest and other dues,

such as surplus working fund finalized by audit, raw materials dues of CSPs and audit recovery etc.

ii) Payment of statutory dues such as employees Provident Funds Electricity bills, taxes and Artisans Welfare fund etc.

iii) Settlement of dues of surplus employee may be retired, as per the revival plan approved by the Committee.

iv) Creation of need based assets like safe outlets, introduction of improved plant and machineries and creation of other assets suitable for future use. The fixed assists created as such will be mortgaged with KVIC .

NOTE:

a) After meeting the aforesaid expenditure, the remaining amount may be kept in separate bank accounts with joint signatory arrangement between State/Divisional Director and Secretary of the institution . This amount will be utilized for development of KVI activities as per the approved action plan.

b) Interest earned, the above account will be utilized only for the developmental purposes/activities and other committed expenditure.

B) CONSTITUTION OF PROPERTY DISPOSAL COMMITTEE(PC) :

The Commission also approved the constitution of the committee consisting of the following members to undertake the propertydisposal work in respect of institutions, which are willing to sell their surplus land and to make suitable recommendations.

i) Zonal Dy. CEO of KVIC – Chairmanii) One representative of nearby institution, institution may suggest names of

three Karyakarthas of nearby institutions and one among of them will be nominated by C.E.O., KVIC as a member.

iii) One representative of workers of the institution, Managing Committee of the institution may propose three names from workers of the institution and one among of them will be nominated by C.E.O., KVIC as a member.

iv) Chairman of the institution.v) State/Divisional Director of KVIC- Convenervi) Secretary/Administrator of the institution. (in case of Sick institution

Administrator, in case of normal institution Secretary)vii) One representative of Bank (in case of institutions availed Bank Finance).

viii) One representative of State KVI Board.

C. SECURITY FOR RESIDUAL LOAN:

The institution, willing to sell off its properties has to take care of the security and

safety of the funds of the Commission that may remain with it after the partial liquidation of

loan amount, it was suggested that the institution has to keep property for Mortgage for a

minimum 150% of the remaining loan amount. Such a position will help the institution not

only to hold present loan portfolio but also offer scope for mobilizing further loan as and

when it needs.

288

D. MODUS OPERAND:i) The institution willing to dispose off their unusable property has to first identify

the same and apply to the State/Divisional Director, KVIC along with the details specified in para E below with a request to go ahead in the matter and also for the constitution of the Property Disposal Committee as per the guidelines of the KVIC. The proposal of the institution must have concurrence of its managing committee.

ii) State/Divisional Director has to conduct spot verification and forward the proposal to programme Directorate in Central Office, along with his recommendation for further action with in 30 days of receipt of the such proposal from the Institution.

iii) The property Disposal Committee will arrange for sale of property to a buyer as per the G.F.R.

iv) The Commission being the competent authority for such transactions has authorized the Chairman and Chief Executive Officer to approve such recommendations. The same arrangement may be continued.

v) The Directorates concerned (Field as well as Central Office) have to take adequate care so as to complete the entire process of property disposal within 90 days from opening of bid.

vi) The Commission will have full authority to accept or reject any bid.vii) The institution who have availed credit under Bank Finance through ISEC and

properties of the institutions are mortgaged with KVIC by Inter-se-agreement, KVIC has surrended first charge of the mortgaged property to the Bank, therefore, the Bank interest is also involved. As per the terms of first charge, the Bank Liability is to be settled first.

viii) In general, permission for disposal of immovable property should not be given to the institution unless the institution clearly indicates the surplus of land/property and draws and submits suitable action plan as how to maintain the optimum level of activity even after the disposal of the property.

ix) Reserve price of the property should be declared in the advertisement which should not be less than the average Registration price of the property as assessed by the designated Revenue Authority of the State Govt. concerned.

x) A wide publicity for disposal of such properties should be conveyed to all the institutions and all the implementing agencies in the State through leading as well as local papers.

xi) The Committee (PDC) should ensure all the actions of the sale issue of advertisement, scrutiny of tenders, acceptance of the same, receipt of sale proceeds, proper accounting and utilization of the same are monitored and approved by them.

xii) Some of the properties were donated by Local Gandhians and Khadi Veterans for a social cause. During the passage of time, the value of the properties multiplied many fold and the fruits of such valuation should be utilized for the purpose and cause for which the assets were formed.

xiii) The recent fend and attitude of institution to refund the loan of KVIC and to call back the documents of properties which they can dispose off at the whims of the office bearers and the same should be monitored and controlled through strict compliance of guidelines.

289

xiv) There can be no waiver/one time settlement of CBC dues in respect of these institutions who have properties to sell.

xv) There should be a joint account in the name of Director, KVIC and institution and substantial part of the fund should be utilized to continue the same, similar or diversified activities having potential to employ the artisans and workers originally employed when the institution was in its hey day.

E. While Property Disposal Committee making its recommendations to Central Office for approval of the Commission, it should-invariably furnish the following details.

i) General Information :a) Name/location of the property to be disposed off.b) Amount of outstanding C.E./W.C. loans (KVIC, CBC & B.F. etc.)c) Whether said property has been mortgaged or not with KVIC.d) Amount of Equitable Mortgage created in favour of KVIC.e) Amount of E.M. that will remain after disposal of the property in

question.f) Resolution of the Managing Committee of the institution.

ii) Specific Information about property proposed for sale:

(I) Specific revenue details of the property such as Khasra No.Khata No.and

Area etc.

(ii) In whose name, the property in question is registered as owners.(iii) Cost of the property at which it was originally purchased.(iv) Present Market value of the property in question and the basis of such an

assessment. (Govt. Valuer"s report should be attached)(v) Purpose for which the property was being used earlier.(vi) Reason for disposing/sale of the property.(vii) The utilization to which the sale proceeds are proposed to be deployed.

NOTE: This may be drawn up as per para "A" above

iii) Action plan for revitalization of the institutions :The institution has to submit an action plan encompassing the following :i) Proposed plan of production, sales and employment for the next 3 years.ii) Mobilization of Finance.iii) Need based repair and renewal of infrastructure.iv) Managing of expenditure.v) Marketing strategy.vi) Proposed tie-up with nearby major institution.vii) Overall administration etc. in transparent and efficient manner.

The State/Divisional Directors are requested to bring the contents of circular to

the notice of all the institutions working under jurisdiction to follow the same

strictly.

Sd/- (J. S. Mishra)


290

DIRECTORATE OF LEGAL AFFAIRSKhadi & Village Industries Commission,3 - Irla Road, Vile Parle (West),MUMBAI - 400 056.Telefax : +91 022 671 35 38No. LA/Disposal of land/2011-12 Date: 06.05.2011

- C I R C U L A R -

The Commission in its meeting No.592 dated 29/4/11 while approving the note of the

Directorate of E&S regarding monthly progress report of civil work has given emphasise the

need to safeguard the properties of the Commission scattered all over the Country and to

make best use of the same so as to earn a good amount of IRG. The Commission has also

further emphasized and reiterated the need to protect the immovable properties of the

borrower institutions mortgaged with the Commission in order to safeguard the funds

advanced to them and laid down the following guidelines to be adopted for the same.

Commission Properties:

i) A data base of property belonging to KVIC should be documented on priority and

same should be put up in the website.

ii) All the properties should be once again evaluated by engaging professional property

consultant and re-valuated.

iii) A task should be given to prepare Master Plan/Action Plan for effective use of all the

properties of Commission by taking assistance of professional agencies/consultants.

iv) It should be ensured that on all the properties proper and effective fixing of signage

depicting KVIC as the owner of the property etc., to be taken up on mission mode.

v) All the land and properties of the KVIC should be fenced without further loss of time

and adequate budget provision for the same should be made available out of G&M or

VI Grant.

Institution’s properties mortgaged with KVIC:

I) All the State/Divisional Directors should collect the details of the properties of the

institutions whether mortgaged or not under their jurisdiction and request the

District Collector not to register the properties of the institutions without permission

of the KVIC with copy to all the Sub-Registrars of the State. All the State/Divisional

Directors should keep watch on the properties of the institutions and ensure that the

properties of the institutions are not disposed without prior permission of the KVIC

except for the purpose which are authorised by the Commission.

ii) All the State/Divisional Directors to ensure periodic review of the properties owned

by the institutions and mortgaged with the KVIC and inform the progress of such

review to the concerned Directorate at Central Office.

iii) All the State/Divisional Directors to ensure that all the institutions under their

jurisdictions are prominently displaying a board with words “This property is

mortgaged with KVIC”.

291

iv) All the State/Divisional Directors should undertake periodical physical verification of

all the properties mortgaged by the institutions by himself or by deputing responsible

officials working under them and keep a record of the visit and observation.

v) Zonal Dy.C.E.O. should monitor the above effectively and report to the Central Office

on quarterly basis. Needless to mention here that as regard to protecting the

property of the borrower institution mortgaged with the Commission, guidelines

were already issued vide circular bearing No. LA/Circular/Disposal of land/07-08

dated 26/10/07 and LA/Unauthorised sale/Circular dated 21/7/08 covering the

above aspects.

In view of the above decision of the Commission, the State/Divisional Directors are

requested to make compliance of the aforesaid guidelines scrupulously. The Zonal

Dy.C.E.Os are requested to monitor the actions of the State/Divisional Directors effectively

and report the same to Central Office on quarterly basis.

Sd/-

(J.S. MISHRA)


To

All State /Divisional Directors of the KVIC

Copy to:


2) All Industry/Programme Directors at C.O. Mumbai.

3) The Director (Publicity) - with instruction to publish the same in the ensuing issue in a

prominent page.


Sd/-

(G. Guruprasanna)


292

URGENT AND TIME BOUND



MUMBAI - 400 056.

Telefax : +91 022 671 35 38

No. LA/Disposal of land/11-12 Date: 07.07.2011

- C I R C U L A R -

Attention is invited to the circular bearing No. LA/Disposal of land/2011-12 dated

6/5/2011 wherein instructions of the Commission regarding steps to be taken for

protecting the properties of the Commission as well as that of the institutions mortgaged

with the KVIC were communicated.

2. As regards the properties of the institution mortgaged with the KVIC are concerned,

the course of action to be taken by the field Directors were also specified.

3. Though it was specifically mentioned in the abovesaid circular to furnish the progress

on the compliance of the directives of the Commission, the Directorate of Legal

Affairs has not received any compliance report so far from the field offices. The

Directorate of Legal Affairs has to furnish progress report in the matter to the

Commission. In order to ensure the compliance of the directives of the Commission in

the matter and also to furnish ATR on the matter to the Commission, the following

time frame is prescribed:

i) The action regarding collection of the details of the properties of the institution

whether mortgaged or not and to request the District Collector not to register

the properties of the institution without the permission of the KVIC should be thcompleted on or before 15 July, 2011.

ii) The action regarding display of notice board on the properties mortgaged with st the KVIC should be completed on or before 31 July, 2011.

iii) The work of undertaking the physical verification of the properties has to be

completed in the following manner:-

a) Where the number of properties owned by the institution are less than th50, the verification should be completed on or before 15 July,2011;

b) Where the number of properties owned by the institution are less than

100, the verification should be completed on or before 31st July, 2011;

and

c) Where the number of properties owned by the institutions are more than th100, the verification should be completed on or before 15 August,2011.

iv) As specified in the circular referred to above, the field Director should keep

constant watch on the properties of the institutions and ensure that the

properties of the institutions are not dispose of without the prior permission of

293

the KVIC. Similarly, periodic review of the properties owned by the institutions

would be done in a continuous manner ie. atleast once in every quarter and the

review report should be submitted to the Programme Directors as well as

Director, Legal Affairs.

4. The Zonal Dy.C.E.Os are requested to furnish the monitoring report as indicated in the

circular referred to above at the end of every quarter.

5. All the field Directors are requested to strictly adhere to the aforesaid time frame and

furnish report thereon to enable the Directorate of Legal Affairs to appraise the

position to the Commission. Non-compliance of the above will be reported to the

Commission.

Sd/-


To

1) All Zonal Dy. C.E.Os.


Copy to:


2) The Director (Publicity) - with instruction to publish the same in the ensuing issue in a

prominent page.


Copy forwarded to

1) All Members of the Commission )

2) A.O to Financial Adviser )

3) O.S.D to C.E.O. ) for kind information

4) Secretary to Chairperson )

294

No. D-11013(1)/2012-KVI-II

GOVERNMENT OF INDIAMinistry of Mocro, Small and Medium EnterprisesUdyog Bhawan, New Delhi-110011

thDated 7 February, 2012

To,

Shri J.S. Mishra,Chief Executive Officer,Khadi & Village Industries Commission,Gramodaya, 3 Irla Road, Vile Parle (West)

Mumbai - 400 056.

Sub.: Registers of Land and properties and issue of Equitable Mortgage.

Sir,

I am directed to invite attention to the above mentioned subject and to refer to the

discussions and review taken by Secretary, MSME on 3-2-2012.

2. As discussed during the meeting, it is requested that the action may kindly be taken

on the following two points as indicated below:-

(i) Registers of Lands and Properties:- KVIC may update/create and maintain a

Register of Lands and properties in which relevant, salient details of KVIC’s

lands and properties may be entered and periodically updated.

(ii) In a similar manner, KVIC may also update / create and maintain a Register of

Lands and Properties in respect of its affiliated / aided Khadi Institutions and VI

Institutions.

The above may be undertaken in the form of a drive, to be completed, cent per stcent, by 31 May, 2012. Monthly progress reports, beginning 01-03-2012, may

also be submitted by KVIC to the Ministry.

(iii) Issue of Equitable Mortgage:- A decision (in KVIC/public-interest) on the issue

of equitable mortgage may be expedited by KVIC. It may be noted that (i)

financial safeguards cannot and should not be diluted and (ii) land of Khadi

Institutions is not only an asset but also a cultural and spiritual heritage which

cannot and should not be alienated. KVI Commission should settle the issue

(inter alia ) in the light of the afore.

Yours faithfully,

Sd/-

(M.K. Mishra)

Under Secretary to the Government of India

011-23062573

295

MOST IMMEDIATENo. D-11013(1)/2012-KVI-IIGOVERNMENT OF INDIAMinistry of Micro, Small and Medium EnterprisesUdyog Bhawan, New Delhi-110011

thDated 12 June, 2012

To,Shri D. C. Pattanayak,Financial Adviser holding charge of CEO,Khadi and Village Industries Commission,Gramodaya, 3 Irla Road,Vile Parle (West)

Mumbai - 400 056.

Sub: Register of Lands and Properties and issue of Equitable Mortgage.

****

Sir,

I am directed to refer to this Ministry’s letter of even number dated 07.02.2012 and KVIC’s letter No. LA/Disposal of Land/12-13/206 dated 31.05.2012 on the above mentioned subject.

2. Two issues were mentioned in this Ministry’s letter of 07.02.2012, viz. one Registers of Landsd and Properties, and two issue of Equitable Mortgage.

3. Regarding Registers of Lands and Properties, broadly two areas had to be covered, viz. one salient details of KVIC’s Lands andProperties and two salient details of KVIC’s affiliated/aided Khadi and VI Institutions’ properties.

4. In KVIC’s above cited letter of 31.05.2012, KVIC have informed that KVIC is maintaining a proper register containing data of lands and properties owned by KVIC.

5. It is requested that KVIC may give a certificate from the level of the CEO that the register of lands and properties owned by KVIC is complete and up-to-date. The information may also be loaded on KVIC’s website.

6. KVIC have further informed that they have devised a software for maintaining the data regarding lands and properties owned by KVI Institutions and their field offices are in the process of entering and updating the data.

7. This had to to be ensured by 31.05.2012. It is requested that CEO may now ensure that the data regarding lands and properties of KVI Institutions is compiled cent per cent by 30.06.2012.

8. Regarding equitable mortgage, KVIC have informed that data regarding equitable mortgage of properties owned by KVI Institutions and mortgaged with KVIC is available on KVIC Website; their field offices are in the process of updating the same; the entire work in this regard is expected to be completed within a month’s time field offices are already maintaining register of equitable mortgage of immovable properties of KVI Institutons.,

9. Vide this Ministry’s letter of dated 07.02.2012, KVIC had been asked to expedite a decision in KVIC/public interest on the issue of equitable mortgage. KVIC’s attention had also been drawn to the facts that financial safeguards cannot and should not be diluted and that the land of khadi institutions is not only an asset but also a cultural

296

and spiritual heritage which cannot and should not be alienated. The issue originated from demands by KVI Institutions for dilution of prevalent conditions of mortgage. The import of the Ministry’s instructions was clear – that KVIC/Public interest and financial safeguards are paramount and accordingly there can be no dilution of prevalent conditions.

10. KVIC is silent on this aspect. It is requested that CEO may categorically informed this Ministry that there is no dilution of the prevalent conditions qua mortgage of properties of KVI Institutions with KVIC.

11. KVIC have further stated that for protecting the properties of khadi institutions as cultural and heritage properties the Ministry may initiate necessary procedures for declaring the properties of the Khadi institutions as the country’s cultural and heritage properties; unless notifications in this regard is issued by the Govt., it would be difficult for KVIC to prevent the Khadi institutions from disposing their properties by taking the aforesaid ground.

12. The intent and import of the ministry’s instructions of 07-02-2012, which were based on discussions and review taken by Secretary on 03-02-2012 in which CEO and other officers of KVIC were also present, was but that it may be ensured, as per extant rules/laws, that, on the one hand, the prevent conditions in KVIC/public interest qua mortgage may not be diluted and, on the other hand, the Khadi institutions may not alienate their assets in an irregular or illegal or unwarranted or malafide or unreasonable or uncalled for , etc. manner. During the discussions, it was also inter-alia brought out that the Khadi institutions are consltituted in the nature of Trust, Societies, etc. in which the sum and substance of bye-laws/governing rules is that their assets would be used only for the urpose for which they were created – viz. work related to Khadi; in many cases the assets (lands) had been donated by the public/gaon sabha or were a consequences of an exemption from ceiling laws etc. and can therefore not be alienated within the ambit of the existing laws themselves. The only requirement is to delve into the history and facts qua the creation of the institutions and their assets and to ensure that there is no irregular / illegal / unwarranted alienation. The contest in which the discussions took place was also clear-demands for dilution of prevalent conditions of mortgage or for limited/part mortgage only etc. could have but one implication-that the released/unmortgaged part may be unduly alienated. And this had to be prevented.

13. The position is clarified accordingly.

14. However, the extra point which has come in KVIC’s report that, the properties of Khadi institution may be declared as cultural and heritage properties of the country, needs to be further developed and acted upon. For this, CEO and Director, Legal KVIC are requested to furnish the relevant details of the concerned institution and make a regular proposal in the light of the applicable laws. Necessary homework has to be done by KVIC, a perfunctory one-para statemnent to the Ministry will not suffice.

15. KVIC is requested to submit a regular proposal by 31-07-2012 at the latest.

16. This has the approval of Secretary, MSME.

Yours faithfully,

Sd/-

(M.K. Mishra)

Under Secretary to the Govt. of India

011-23062573

297

MOST IMMEDIATENo. D-11013(1)/2012-KVI-IIGOVERNMENT OF INDIAMinistry of Micro, Small and Medium EnterprisesUdyog Bhawan, New Delhi-110011

Dated 30.08 2012

To,Chief Executive Officer,Khadi and Village Industries Commission,Gramodaya, 3 Irla Road,Vile Parle (West),Mumbai - 400 056.

Sub.: Register of Lands and Properties and issue of Equitable Mortgage.

****

Sir,

I am directed to refer to a KVIC letter No. LA/Disposal of Land/12-13 dated 31.07.2012 on the subject mentioned above and to say that –

(i) The selling of KVIC’s properties and lands should not be undertaken or encouraged in normal circumstances.

(ii) And, it should be ensured as per extant rules/laws that Khadi Institutions do not alienate their assets in an irregular or illegal or malafide or unreasonable or uncalled for, etc. manner.

(iii) The sum and substance is that, generally, in the case of KVIC, sale or alienation of its properties and land should not be allowed, and, in the case of Khadi institutions wherever the KVIC has a lawfully authority to permit or deny sale or alienation of the institutions’ properties and lands, the same should not be allowed.

(iv) Further, wherever KVIC exercises its (lawful) authority in permitting any Khadi Institutions to dispose off its assets, the matter may first require a considered decision/approval at a one step higher level-the government.

2. The receipt of the letter may be acknowledged and contents may be noted for strict compliance.

3. This is issued with the approval of Hon’ble Minister (MSME).

Yours faithfully,Sd/-

(M.K. Mishra)

Under Secretary to the Govt. of India011-23062573

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CHAPTER – X

MISCELLANEOUS LEGAL ISSUES

1. Direct listing of the institutions:

Meaning :- Enlistment of the institutions engaged in Khadi &V. I. activities with the KVIC for giving financial assistance/technical guidance and for issuance of approval letters for availing fiscal concessions etc.

Guidelines for Direct Listing : - The guidelines in this regard have been circulated by the Dy. Chief Executive Officer (Legal) vide Circular Nos. LS/Hypothecation/Bye-laws/95-96 dated 16.01.1996, Legal/Bye-laws/1275/2000-2001 dated 6.6.2000 and Dy. Chief Executive Officer (V.I.) vide circular No. 6/127/VIC/96-97 dated 16.05.1996, which are placed at the end of chapter.

2. Fiscal Concession:

1. Issuance of approval letter for Income Tax exemption :

Section 10 (23B) of the Income Tax Act empowers the Commission to issue income tax exemption certificate to its borrower institutions.

Section 10(23B) provides that “ any income of an institution constituted as a Public Charitable Trust or registered under the Societies Registration act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India, and existing solely for the development of Khadi or village industries or both and not for the purpose of profit, to the extent of such income is attributable to the business of production, sale or marketing of Khadi or products of village industries;

Provided that –

(i) The institution applies its income, or accumulates it for application, solely for the development of khadi or village industries or both; and

(ii) The institution is , for the time being, approved for the purpose of this Clause by the Khadi & V.I. Commission;

Provided further that the Commission shall not, at any one time, grant such approval for more than three assessment years beginning with the assessment year next following the financial year in which it is granted.

The aforesaid Section 10(23 B) had been amended with effect from 1st April 2003 (i.e. from the Assessment year 2003-04) and added the following conditions;

(i) The Commissioner (KVIC) is satisfied that the institution has not applied or accumulated its income in accordance with the provisions or the activities of the institution are not being carried out in accordance with all or any of the conditions subject to which such institution was approved.

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(ii) It may, at any time after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned institution.

(iii) By order, withdraw the approval and forward a copy of the order withdrawing the approval to such institutions and to the Assessing Officer.

The Commission in its meeting held on 29/30.08.2003 has decided to impose a processing fee of 0.5% of the net surplus of the institution subject to a minimum of Rs.200/- and maximum of Rs.1000/- from the institutions applying for approval letter for exemption from Income Tax. Further, the power to issue the said approval letter has also been delegated to the State /Divisional Directors.

Guidelines regarding the issuance of approval letter for income tax exemption have been issued vide Circulars bearing No.Legal/ITE/445/Gen/ dated 9-2-89, Circular No. Legal/ITE/445/91-92 dated 27-3-92 and Circular No. Legal/Income Tax Exemption/ 98-99 dated 8-1-99, 18.10.2002 and 24.09.2003, which are placed at the end of the Chapter

2. Exemption from Central Excise :

Meaning :

Excise duty is the duty imposed or levied on the goods ‘manufactured or produced’ in India. It is an indirect tax capable of being passed on to the consumer as part of the price. Excise duty is primarily a duty on production or manufacture of goods within the country. The impact of excise duty is always on the ultimate consumer.

The Constitution of India permits the Union Govt. to levy of excise duty (Entry 84of List I in the Seventh Schedule) on all the goods produced and manufactured within the country except on (a) Alcoholic Liquor for human consumption and (b) Narcotic drugs. The constitutional validity of the taxing statutes can not be challenged on the ground that it imposes an unreasonably high burden on the people.

The Central Excise and Salt Act empowers the Central Govt. to levy basic excise duty. The Excise duty shall be levied and collected in such manner and at such rates as may be prescribed in the Schedule to the Central Excise Tariff Act. All the goods manufactured or produced are not subject to the levy of excise duty. Only the excisable goods which are specified in the schedule to the Central Excise Tariff Act are subject to levy of excise duty.

Exemptions :

So many exemptions are provided under the Central Excise and Tariff Act to the khadi and village industries products and the Commission has been empowered by the Act to issue recognition and /or genuineness certificate for the said purpose. There are General exemptions as well as Specific exemptions provided under the respective Chapters of the Central excise and Tariff Act.

300

3. Exemption from Vat, Octroi , Trade tax etc.

So many exemptions are provided under the respective Acts of the State for the products and Khadi and Village Industries Institutions and empowered the Khadi and Village Industries Commission/ State Khadi and Village Industries Board to issue recognition certificate.

3. Obligation Under EPF /ESI ACT:

There are several Labour Welfare Legislations enacted by the Govt. with a view to safeguard the interest of the workers employed in industrial and other establishments. All these laws are generally applicable to an industrial establishment/factory or other establishment as the Appropriate Govt. may notify from time to time, where 20 or more persons are employed in that establishment. Among the labour laws, the applicability of the provisions ESI Act and EPF on the KVI institutions is creating grave concern for the KVI Sector.

Of course, there are provisions for exemption from the applicability of these laws provided it is proved that the establishment claiming exemption is providing to its employees the benefits that are higher than or at least similar to the benefits provided under the Act. Unless specific exemption is obtained from the authorities concerned, the provisions of the said Acts will continue to be applied to the KVI institutions.

KVIC has been pleading and trying for many years to have a special labour enactment for Khadi institutions as the relationship of employer and employee relationship does not exist, and the Khadi spinner and weavers are to be treated as self-employed. The recommendations of the Kale Committee on the applicability of Labour Laws to KVI Sector had been forwarded to Govt. Recently KVIC has again pleaded this point before the National Commission on Labour constituted by the Govt. of India to study and make recommendations on the labour laws affecting small scale and village industries sector. However, a law on this aspect is still to be enacted.

Very often KVIC Offices have been receiving notices from E.P.F. Commission office under Section 8(3)F of the EPF and M.P. Act directing KVIC to pay to them directly any money which KVIC has to or proposes to pay to the KVI institution, who are defaulters in making payment of EPF dues. This means, if the Employees Provident Fund Commission is unable to collect the defaulted amount from any KVI institution, and if they issue a notice under Section 8(3)F of the aforesaid Act , then KVIC is bound to pay the money payable to the institution by KVIC directly to EPF office. This could be any dues including rebate due etc.

Since the provisions in the EPF and M.P. Act for any non-compliance is very stringent, the Commission after careful consideration in its meeting held on 25.06.02 had decided to make the payment of EPF dues of the defaulter institutions to the EPF Authorities directly whenever demand notice/s in respect of those defaulter institution/s under the aforesaid Section of the EPF Act are received by the KVIC from the EPF Authorities, provided any money is due or may become due from the KVIC to those defaulter institutions.

301

All the State/Regional Directors of the KVIC as well as the Chief Executive Officer of Khadi and V.I.Boards were also requested to bring this to the notice of KVI institutions/implementing agencies functioning under their jurisdiction that whenever demand notice/s are received by the KVIC, the KVIC will make the payment of EPF dues of the defaulter institutions to the EPF authorities directly out of the amount due or may become due under any head to those defaulter institutions without prior notice or intimation to those institutions and the same will be debited in their books of accounts. The Circular bearing No. No:Legal/Labour Laws/part-III/02-03, date 05.08.02 issued by the Directorate of Legal Affairs in this regard is placed at the end of the Chapter.

The same is the case if a default is made by the KVI institution in paying the ESI contribution. Under Section 45 G of the ESI Act, the Recovery officer of the ESI Corporation can direct or issue notice to any person, from whom any money is due and payable to the defaulter, to remit the amount directly to him .

4. Attachment of Salary:

Various Departments in the KVIC are receiving recovery notices issued by various Civil Courts and Recovery Officers of the Co-operative banks/Credit Societies appointed under the Co-operative Societies Act and vested with the powers of a civil court, directing the Drawing and Disbursing Officer of some employees to recover from the salary of the employee the sum stated in the notice and remit the same to the court or to the Bank, as the case may be, in the manner as stated in the notice.

The reasons for the issuance of such salary attachment notices by the Courts and the Recovery Officer of the Co- operative Banks are that some of the employees may be taking loan from the Co-operative banks or other financing institutions, but make default in repayment of loan installments or the employee may be standing surety to any other person, who has availed a loan from the Co-operative banks or other financing institutions, and on account of the failure of the borrower to repay the loan amount, the financiers are proceedings against the surety for the recovery of the amounts due from the borrower.

The legal position, as contained in Section 60 the Civil Procedure Code, in the aforesaid circumstance is that from the salary (gross salary minus all the allowances specifically exempted from attachment) of the employee first Rs1000/- plus 2/3 of the reminder is un-attachable and any attachment in pursuance to the order of a civil court or any Recovery Officer empowered to exercise the powers of the Civil Court in the matter of recovery can be made from the remaining amount.

For the purpose of calculating the attachable amount of salary , the following allowances are to be deducted from the gross amount of salary, as they are exempted from attachment.

(i) All kinds of traveling allowances.

(ii) All kinds of conveyance allowance.

(iii) All allowances granted for meeting the cost of uniforms and rations.

(iv) All CCA including Hill station allowances.

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(v) All HRA

(vi) All D.A.

(vii) Children’s Education allowance or assistance.

(viii) All amounts paid by way of reimbursement of medical expenses.

(ix) Dearness Pay, which is really a part of D.A and is treated as pay for certain purposes only.

(x) Subsistence allowance paid while under suspension.

Thus the amount of attachable salary can be calculated by using the formula:

(x-y) – 1,000/ 3Whereas, x = Gross amount of salaryy = all the exempted allowances.

Where such salary or portion has been under attachment continuously or intermittently for a total period of 24 months, such portion shall be exempt from attachment for a period of 12 months . In case the recovery pursuant to a decree could not be completed even after effecting the recovery for a continuous period of 24 months, the remaining amount shall be exempted from attachment.

If an order of attachment against an employee is received while an earlier order of attachment against the same employee has not been fully complied with, the Drawing and Disbursing Officer can effect recovery pursuant to the second or subsequent order of attachment provided the recoverable amount is within the maximum limit calculated above.

If the new attachment order has the result of increasing the amount to be recovered beyond the maximum limit prescribed, the Drawing and Disbursing Officer shall return the attachment order to the Court concerned along with a statement containing (i) the particulars of existing attachment, (ii) particulars of amount withheld and paid into the court concerned up to date and (iii) amount remaining un recovered.

By observing the above rules, attachment of salary of an employee can be made by the concerned Drawing and Disbursing Officer and remitted to the court concerned without delay. The receipt of remittance should be obtained from the court and filed safely. The cost of remittance to the Court , if any , can be deducted from the amount attached and the net amount only remitted to the Court.

5. Recoveries Before Retirement:

The KVIC has to encounter with many court cases filed by the retired employees of the Commission challenging the action of recovering /withholding part of pensionary benefits towards realization of the amounts due to the KVIC on one or the other counts. In most of the cases the KVIC could not succeed in the matter on account of the decisions of various High Courts and the Supreme Court to the effect that no recovery whatsoever can be made from the gratuity and other pensionary benefits due to the employee.

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With a view to avoiding the aforesaid situation, a comprehensive Standing Order has been issued by the Directorate of Legal Affairs, wherein the manner of effecting the recovery of the dues of the KVIC from an employee due to retire has been prescribed . All the Drawing and Disbursing Officers are bound to follow the procedure laid down the said Circular for safeguarding the funds of the KVIC as well as avoiding litigations. The said Standing Order dated 03.12.2002 issued by the Directorate of Legal Affairs is placed at the end of the Chapter.

6. Documents for HBA:

The employees who wish to avail HBA from the Commission have to comply with the requirements and submit the documents prescribed in the Circular No. Adm-II/HBL/Gen. dated 5.2.1992 and Circular No. Adm-II/ HBL/270/2000-01 (128) dated 2.4.2001, the copies of the same are placed at the end of chapter.

7. Guidelines for Tender:

A comprehensive guidelines in the matter of floating and evalution of tender has been prepared by the Directorate of Finance in consultation with the Directorate of Legal Affairs and the same has been circulated vide Circular No. KVIC/FIN./TEC/2011-12 dated 2/3/2012 and the same is attached at the end of this chapter. The general legal requirements in a tender are incorporation of clauses like termination clause, arbitration clause (ICADR), indemnity clause etc.

304

KHADI AND VILLAGE INDUSTRIES COMMISSIONIRLA ROAD, VILE PARLE (W), BOMBAY – 56.

No. Legal/Hyp.Deed/Bye-laws/95-96 Date: 16.01.1996

- C I R C U L A R -

Sub: Examination and Vetting of byelaws/rules and Regulations of

Khadi and Village Industries implementing agencies for taking

then under the fold of KVIC (direct listing).

Ref: Circular No. 6/127/VIC/94-95 dated 6.12.94 of Dy. C.E.O.(V.I..)

In pursuance to the above circular a number of files containing the Byelaws/Rules and

Regulations of the prospective implementing agencies to consider them for direct listing

with KVIC are being referred to Legal Cell by the Industry and Programme Directorates with

a view to examine/vet the same.

2. It is observed t hat most of the institutions have not adopted the approved Model

Byelaws prescribed by the Commission while registering themselves with the

Registering Authority. Further more, the byelaws/Memorandum of Association of

some of the institutions are in their Regional languages of the States and hence their

examination/vetting by Legal Cell becomes difficult. These papers are required to be

submitted either in Hindi or in English language. In order to clear the direct listing case

of the Institution expeditiously by Legal Cell the concerned Programme/Industry

Directors are to ensure the following before submission of the files to Legal Cell:-

i) The Byelaws/Memorandum of Association of the institution is compared with

that of the prescribed model byelaws of the Commission.

ii) The Byelaws/Memorandum of Association of the institution is either in English

or Hindi language, in case of other modern Indian language a translated copy of

the same duly attested by a Gazetted Officer may be furnished.

iii) A copy of the registration certificate and the copies of the Byelaws and

Memorandum of Association of the institution should invariably be attested by

a Gazetted Officer.

iv) In case of amendments carried out by the Institution to the existing

Byelaws/Memorandum of Association these copies should be attested by a

Gazetted Officer should also accompany.

Sd/-

Dy Chief Executive Officer (Legal)

To:

1. All Field Offices of KVIC.

2. Industry/Programme Directors of KVIC.

305


No. 16/127/VIC/96-97 Date: 16.05.1996

- C I R C U L A R -

Sub: Direct Listing of institutions with KVIC under V.I. Programme.

thThe Commission in its 435 meeting held on 20.10.94, while lifting ban on enlistment

of new institutions with the Commission had prescribed procedure for enlisting an

institutions with KVIC. A Circular to that effect had been issued Vide even No. dt. 6.12.94.

The procedure outlined in the said circular has been reviewed and decided that it should be

modified in order to reduce the time taken for enlisting an institution. Accordingly, a note rdwas submitted to the Commission in its 453 meeting held on 18.4.96 under agenda item

No. 4(3) which was approved by the Commission and decided that in supersession of all

previous decisions on the subject the following method be adopted for direct listing of new

institutions.

"The concerned Industry and Programme Directors on receipt of proposal will

scrutinize the application and get themselves satisfied that all necessary requirement have

been fulfilled get it vetted from the legal angle and then place it for approval of C.E.O.

through concerned Dy.CEOs. After approval of C.E.O., the direct listing certificate will be

issued by concerned Dy.CEOs.

However, the State Directors, while forwarding and recommending the proposals will

send all required documents alongwith a Demand Draft for Rs. 100/- as registration fee to

the concerned Dy.CEO alongwith any indication in which Industry the Institution wishes to

start its activity.

Sd/-

Dy.Chief Executive Officer (V.I.)

To:

1. All State/Regional/Sub-Offices of KVIC.

2. All Sections in Central Office.

3. Director (Publicity) with a request to publish the same in Jagriti.

4. All Members. KVIC, Mumbai - 56.

5. All Dy.CEOs in Central Office and Outside Mumbai.

6. Sr. P.A. to CEO, KVIC, Mumbai.

7. F.A. KVIC, Mumbai.

306



No. Legal/Bye-Laws/1275/2000-2001 Date: 06.06.2000

- C I R C U L A R -

Sub: Simplification of procedure for direct listing of Village Industry (V.I.)

Institutions.

**********************

The Commission in its meeting held on 16.5.2000 has now made the model

Memorandum and Articles of Association Rules and Regulations optional for the purpose

of direct listing of V.I. institutions.

2. However, the existing model bye-laws would continue for institution who want to

undertake Khadi activities.

3. The State/Regional Directors may take note of this important change. They need not

insist on model bye laws while forwarding proposal to Director (V.I.Cell.)/Industry

Directors) for direct listing of V.I. Institution. The checklist that will be used by

Directorate of Legal for this purpose is enclosed as Annexure.

4. Please note that direct listing certificate will be continued to be issued by Directorate

of V.I. Cell. The Legal Directorates will only scrutinize the bye laws of the institutions

for purpose of direct listing.

Sd/-


To:

1) P.S. to Chairman

2) C.E.O. Cell

3) F.A. Cell

4) Jt. C.E.O. Cell

5) Chief Vigilance Officer

6) All Dy. Chief Executive Officer in and outside Mumbai

7) All Directorate and Section in Central Officer, Mumbai

8) All Officers under the Commission outside Central office, Mumbai.

307

ANNEXURE - I

CHECKLIST FOR THE EXAMINATION OF BYE-LAWS FOR DIRECT LISTING THE V.I.

INSTITUTIONS WITH KVIC.

A. Memorandum of Association

1. The Memorandum of Association should contain the name, addresses and the

area of operation of the institution.

2. The area of the project V.I. activity/rural developmental programme intents to

be undertaken by the institution falls within the area of operation of the

institution as mentioned in the Memorandum of Association.

3. The Object Clause of the Memorandum must contain as one of its objects

under taking of rural developmental/V.I. activities/employment generation/

social service etc.

B. Rules and Regulations

1. There must be a provision in the rules and Regulations enabling the institution

to mobilize funds in the form of a subscription/donation/grants/gifts /loans

from the Union/State Govt. any person firm. Banks, Local Authorities or

Corporate /Statutory bodies.

2. There must be a provision in the Rules and Regulations enabling the institution

to borrow and raise money by providing security like mortgage surety bonds,

charge, hypothecation or pledge.

3. There must be a provision in the Rules and Regulations for open membership in

the institution. (this clause shall not applicable to Trust registered under the

Trust Act.)

4. There must be a provision in Rules and Regulations regarding conduct of

election among the members for the constitution of Governing Body (this

clause shall not be applicable to the Trust registered under Trust Act).

5. There must be a provision for dissolution of the institution.

Sd/-


308


No. DKC/CC/Dos / Don’ts/2002-03 Date: 16.08.2002

- CIRCULAR -

One of the points mentioned by Khadi Mission in its representation to the

Commission relates to the catalogue containing dos and don’ts circulated by the

Commission on 7.3.2001. The specific point of resentment relates to the following

prescription.

“Do ensure that the byelaws are amended in accordance with the model byelaws

circulated by the Commission”.

2) There is no gainsaying that the State Government authorities do not necessarily

agree with the model byelaws circulated by the Commission in the eighties. In the

second place the minimum requirements for the purpose of the Commission relate

to (1) objective clause, i.e. provision of KVI activities, (2) Borrowing clause i.e.

provision to borrow funds from the Commission, (3) Security clause, i.e. provision to

create EM/HD & (4) dissolution clause, i.e. in the event of dissolution how the

borrowings from the Commission shall be discharged.

3) The provision has been worded in such a way that the institution as well as our field

officers are known to misinterpret it as something binding or mandatory.

It is therefore, proposed to amend the prescription so as to read as follows:-

“In the interest of structural uniformity in the KVI sector, Commission have

circulated a model byelaws. Institutions may endeavour to adopt the same to bring

an harmony in the sector across the country”.

3) In other words, the adoptioin of model byelaws if it is not possible to do so vis-a vis

the Registrar of Societies will not be a mandatory provision as far as KVIC is

concerned, provided the institutions have ensured that the basic minimum four

provisions are duly incorporated if not already done, in their byelaws as mentioned at

point (2) above.

This is issued with the approval of C.E.O.

Sd/-

Dy.Chief Executive Officer(Khadi)

To

1. All State/Regional Offices of KVIC.

2. CEO/MD/Member Secretary of all State KVI Boards.

309

DIRECTORATE OF KHADI PROGRAMME AND MONITORINGKHADI AND VILLAGE INDUSTRIES COMMISSION


No. DKPM-I/DL-Genl/2005-06 Date: 19.01.2006

- C I R C U L A R -

Sub: Certification and registration (direct listing) of new institutions (NGOs) organised and managed by SC/STs for promotion of Khadi and Polyvastra Programme.

*****

In continuation of Circular No.DKC/DL/Policy/2002-03 dt. 24.7.2002, the scope of certification and registration of new institutions is extended, irrespective of the geographical area, to such entities as are organised and managed by the SC/ST for the benefit of artisans such as spinners, weavers etc. While such new institutions are needed to be encouraged care may be taken that they adopt as far as permitted by the local registering authority, the model byelaws circulated by the Commission vide Circular No.Legal/Intitution/1275/88-89 dt. 6.3.1989 or in case of difficulties with the local registering authority, incorporate the 4 minimum provisions circulated by the Commission vide Circular No. DKC/CC/Do’s & Don’t’s/2002-03/853 dated 16.8.2002. While recommending cases of new such institutions to the Head Office for grant of Khadi and Polyvastra certificate and direct listing, the following guidelines may be kept in view:

(i) That the new institutions adopt such Gram Panchayat or group of Gram Panchayats or development block or group of blocks as are either virgin or not adequately covered by the existing institutions.

(ii) That the new institutions start their work by concentrating on marketing of Khadi & Village Industries products procured from certified intitutions of A+, A B & C categories and recognised Vastragars and REGP units, Productin work involving spinning and waving could be added gradually upon the financial position of the new institutions becoming comfortable to sustain the programme.

(iii) That the new institutions opt for Market Development Assistance scheme.(iv) That subject to such approval as may be given by the Ministry, the KVIC would

consider giving start up financial assistance initially for a period of three years to such new institutions as come up in accordance with point (iii) above.

All State/Divisional Directors are advised to include the dissemination of the contents of this Circular in the awareness camps, workshops, EDPs, as also through media publicity campaigns that are held from time to time.

This is issued with the approval of Commissioner for KVI.Sd/-

Jt. Chief Executive OfficerTo1. All State/Divisional Director2. Commissioner/CEO Cell3. F.A.Cell4. Jt.C.E.O. Cell5. C.V.O.6. Zonal Dy.CEOs, etc.

310

DIRECTORATE OF KHADI COORDINATIONKHADI AND VILLAGE INDUSTRIES COMMISSION


Telefax +91-22-2671 5860 e-mail: [email protected] Web: www.kvic.org.in

No. DKC/DL/Policy/2008-09 Date: 09.07.2008


Sub: Guidelines for certification / registration (direct enlistment) of

Khadi and Polyvastra institutions – reg.

*****

The Commission in its 554th meeting held on 16.02.2008 has taken a very important

decision to open up enlistment of new institutions organized and managed by people

belonging to all social categories. The decision of the Commission has already been notified

to the field offices vide Circular No. DKC/DL/Policy/2007-08 dated 08.03.2008.

2. It has been observed that the existing guidelines for enlistment of institution and that

of issuing new khadi certificate are not congruent and therefore it takes lot of time for

their processing. Moreover, though there is a prescribed format for certification of

new khadi institutions but no such prescribed format is available for registration.

Such a situation poses great difficulty not only to the institution but also to the offices

as there is no compatible system for certification and direct enlistment. Moreover,

both of the wings work in a disjoined manner thereby the pace of direct enlistment

and certification cannot pick up.

3. The present situation has thrown up a challenge to the KVIC to rise to the occasion

and simplify the existing procedure so that the system of certification and enlistment

become smooth and effective.

4. The issues related to present system of certification / registration (direct enlistment)

has been deliberated in detail, in the said Commission’s meeting and the salient

features of the modalities / procedure to be adopted in the said processes are as

follows:

a) Single application both for certification as well as direct enlistment.

b) The form takes care of the entire requirement that of certification as well as

enlistment.

c) The processing of papers for certification and enlistment are to be done in such

a manner so that over lapping as well as duplication is avoided.

d) CCC Wing while issuing khadi certificate has to take the concurrence of Legal

Wing of KVIC in order to have perfect scrutiny of the bye laws submitted by

institution.

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e) Commission has already decentralized the direct enlistment work for Village

Industrial units assigning the work to the Zonal Dy. CEOs. In the similar fashion

the enlistment of Khadi/Polyvastra institution has been proposed in the revised

guidelines at the level of Zonal Dy. CEOs.

f) The Programme Director will only process the budget part of the institution in

order to save time and work with speed.

g) The Director (KC) will arrange to collect information from all concerned and

make available the same on the website for keeping track on the institutions.

5. The revised guidelines for certification / registration (direct enlistment) of

institutions/societies with KVIC is attached at Annexure-I.

6. The prescribed application format for certification / registration (direct enlistment) of

institutions/societies with KVIC is attached at Annexure-II.

7. All State / Divisional Directors of KVIC are advised to follow the above guidelines

meticulously while processing the application for issue of new Khadi/Polyvastra

certificate as well as enlistment of new institutions under the fold of KVIC.

Sd/-


Encl : As above

To1. Zonal Dy. Chief Executive Officers (N.Z. / S.Z. / E.Z. / W.Z. / C. Z. / N.E.Z.)2. All Directors / In-charge, State / Divisional Offices, KVIC.

Copy for favour of information :1. All Members of the Commission. 2. Chairman, Central Certification Committee 3. All Members of Central Certification Committee 4. Chairmen of the Zonal Certification Committees (NZ/SZ/CZ/EZ/NEZ/WZ) 5. Chief Vigilance Officer 6. All Members of the Zonal Certification Committees7. All Programme / Industry Directors8. Secretary to Hon’ble Chairperson9. O.S.D. to Chief Executive Officer. 10. Accounts Officer, Financial Advisor Cell. 11. Director (Information Technology) for placing the circular on web site.12. Director (Publicity) with a request to publish the same in the ensuing issue of ‘Jagriti’.13. Circular file.


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Annexure - I

Revised Guidelines for Certification / Registration (Direct Enlistment) of

Institutions/Societies with KVIC

1. Eligible Entities

a) A society registered under the Society Registration act 1860 (Act XXI of 1860) or under any law, for the time being in force of any State.

b) A Co-operative Society registered under the Co-operative Society act 1812 (Act II of 1812) or under any law for the time being in force of any State.

c) A Trust created for Public purposes of a Charitable or religious nature.

2. Status of Eligible Entities

The institutions opting for being directly enlisted with KVIC can be classified in the following groups:

a) New institutions (Which have been recently registered and not availed of any assistance from KVIC for implementation of KVI programmes) and desirous of undertaking both Khadi & Polyvastra Programmes.

b) New Institutions of category – 2(a) but desirous of taking up only Khadi programmes.

c) New institutions of category- 2(a) but desirous of taking up only Polyvastra Programmes.

d) Registered institution which are already implementing various other social upliftment activities- other than KVI programmes - are now desirous of direct enlistment with KVIC for the purpose of implementation of KVI programmes.

e) Institutions / Societies which are already implementing Khadi or V.I. or both activity but are assisted by respective Khadi & V.I. Boards of the States.

f) Institutions / Societies which are already implementing V.I. programmes- but desirous to taking up Khadi programme including Polyvastra.

g) Institutions / Societies which are already implementing Khadi and/ or V.I. programmes but neither enlisted with KVIC / KVIB nor possess valid Khadi/ Polyvastra Certificates, but desirous to avail financial and technical assistance from KVIC, including those who were once enlisted and Khadi / Polyvastra Certificates issued and subsequently became inoperative.

h) Registered Federation / Association of Khadi & V.I. of National / State / District or Block level, formed as per Guidelines issued by KVIC.

3. The entities desirous of certification and enlistment – must have following provisions / clauses in their Memorandum of Association / bye-laws:

a) Whether the constitution of the institution provides to implement KVI activities as per the guidelines issued by the KVIC from time to time.

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b) Whether the constitution of the institution provides nomination of adequate representative in the Managing Committee of the institution from people belonging to SC/ST, Minorities, Women and artisans.

c) Whether the constitution authorizes the institution to take up Khadi and / or V.I. activities.

d) Whether the constitution empowers the institution to borrow funds from the Commission, mortgage and hypothecates its immovable and movable properties as securities to the Commission.

e) Whether the constitution empowers the institution to borrow funds from the banks on the basis of ISEC issued by the Commission and to mortgage / hypothecates their properties as security to the bank.

f) Whether the constitution provides that in respect of any change in office bearers, Commission is kept informed of it, at once.

g) Whether the constitution provides that the Commission’s Officials can under take inspection of its registers, books of accounts and other allied documents as when it deemed fit.

h) In case of institutions belonging to the category of 2(d), if those are interested to take up training and other S&T projects shall make any amendment in their Memorandum of Association.

i) Whether the constitution provides dissolution clause as prescribed in the model bye-laws.

NB.: KVIC has already circulated model bye-laws/Memorandum of Association, institutions, if desire, may make use of the same.

4. Definition of SC/ST/Women/Minorities/OBC institutions:

rdThe minimum number of members in the General Body must be 2/3 belonging to the said category for which the institution applied and to maintain the same for ever to continue under reserved category, any violation, the recognition (Direct Listing) automatically stands cancelled and all consequential benefits are liable for withdrawal. Out of the core Office Bearers-Chairman/President, Secretary, Treasurer – two persons must be belonging to reserved category for which it has applied.

5. Furnishing of Documents

While submitting the application for direct enlistment, the following documents would be required.

a) Attested Xerox copy of the registration certificate of the Society/institution.

b) Attested copies of Registered Memorandum of Association confirming the model bye-law issued by the KVIC, or the clauses mentioned under 3 (a) to (I).

c) Latest list of Managing Committee duly certified by the Registering authority.

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d) Bio-Data of each Office bearer/Managing Committee members with photograph duly attested. (Attested copies of Ration Card, Voter Identity Card – for proof of identity as well as residence).

e) The statement of accounts of the institutions / Societies, in original, duly signed by the Charted Accountant / Statutory Auditors and countersigned by the Office bearers, along with certified copies of statements of Bank Accounts.

f) The institutions desirous of direct listing must submit an affidavit that they will bring in / mobilize minimum own capital of Rs.1.00 lakh preferably in the form of fixed assets to enable create Equitable Mortgage at the time of receiving budget from KVIC. However, at the time of certification/direct enlistment the institution has to produce a certificate form the manager of the transacting branch about minimum deposit of Rs. 20,000/- in the name of the institution.

g) The Institutions/Societies which are enlisted with State Khadi & V.I. Boards and desire to come to the direct list of KVIC will require to furnish the following (i) Reasons for switching over of affiliation to KVIC (ii) Outstanding loan balances to KVIB and other financing institutions and how those are to be settled (iii) No Objection Certificate from the State Board concerned.

6. Foreign Funded Institutions:

Institutions receiving foreign aid may be considered for direct listing provided audited accounts of institutions certified by the Charted Accountants mention that, the institutions did not receive any funds from other sources including foreign aid, for the same purpose for which the Commission extended financial assistance in order to avoid double funding.

7. Modus operandi

a) On receipt of request from new societies, the State/Divisional Office of KVIC has to reach out to them for conducting feasibility. The main objective of the study would be to guide the institution in acquiring first hand information about the nitty-gritty of Khadi activities, formalities to be accomplished and steps to be taken to effectively organize the Khadi activity.

b) The KVIC official (not below the rank of Assistant Development Officer) conducting feasibility should help the society to complete all formalities required for Khadi certification as well as registration. He may also assist the society to prepare an action plan based on his feasibility study.

c) The papers submitted by the society are to be processed on a fast track at the State/Divisional office for granting new Khadi certificate as well as registration.

State/Divisional Directors will collect application form from institutions in triplicate and forward one copy each to Director (CCC) and zonal Dy. CEO after retaining a copy at his office. The prescribed application form is attached as Annexure.

315

d) Director (CCC) will arrange to issue Khadi/Polyvastra certificate after the bye-laws are vetted by Legal wing of KVIC. Zonal Dy. CEOs will arrange to issue enlistment / registration / memorandum after scrutiny of financial aspect.

e) The State/Divisional Director is authorized to form a budget team consisting of State/Divisional Director, representative of Finance, representative of Khadi Programme etc., to recommend the targets for such institutions and the Khadi programme Directorate in Central Office has to arrange speedy sanction of their budget as well as provision of implements and raw material on priority.

f) State/Divisional Directors of KVIC may extend all supports to these institutions to start and continue Khadi activity so that they do not face much difficulty in organizing Khadi activity. Nevertheless it is also imperative on the part of the institution to complete required formalities for purchase of land and mortgage the same with KVIC, as it is very essential to process budget and release fund.

g) KVIC has already formed Performance Appraisal Committee comprising of Zonal Member, Chairman, Zonal Certification Committee and Zonal Dy. Chief Executive Officer and activities of new institutions may also be brought under their purview to have periodic monitoring and review of performance through an arrangement mentioned latter.

h) The field offices are advised to make wide publicity so as to reach beneficiaries of even remote areas so that the performance level of KVI sector can be doubled during the XIth five year plan.

i) The Zonal Dy. CEOs are requested to furnish the details of such institutions (State/Divisional Office-wise) registered by them to the Director (KPM) from time to time and the information thus gathered will be made available in KVIC's official website. Similarly, Director (IT) will arrange to display the name of such institutions that are certified by the Committee in the KVIC website.

8. Authorities to Accord Direct Listing and Issue of Certificate

a) The authority for issuing new certificate will be the Central Certification Committee and Zonal Dy. Chief Executive Officers will be the authority for direct enlistment. The institution should be given only one certificate and the same will make it entitled to produce and / or sale any variety of Khadi.

b) The institution should obtain Khadi / Polyvastra Certificate within one year from the date of receipt of direct listing, failing which the said recognition of direct listing automatically stand cancelled. Similarly, an institution should obtain registration within one year from the date of receipt of Khadi Certificate otherwise the certificate will stand automatically cancelled.

c) The institution should start Khadi activity within one year from the date of certification / enlistment whichever is latest. Otherwise, the khadi Certificate and enlistment will stand automatically cancelled.

d) The Director (KPM) once in a quarter submits progress report on direct listing to the Commission for information.

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9. Feasibility – for Direct Listing - Role of State/Divisional Directors

a) State/Divisional Director should ensure and satisfy himself, about the genuineness of the institution and its capability to under take the programmes of Commission efficiently as well as the safety and security of the Commission’s funds with the institution. In this regard, he may make reasonable inquiries into the reputation and credit worthiness of the office bearers of the institution and also invariably verify original registration certificate.

b) The members of the managing committee should not be in relation by blood or marriage. In case of Khadi or Polyvastra programme they must be habitual Khadi wearers and have no connection with mill-cloth, mill–yarn or un-certified Khadi. The members should not have the background of Khadi institution affiliated to KVIC/State KVIB where 19-B action initiated, certificates cancelled, vigilance cases launched.

c) In case of institutions enlisting for Khadi and or Polyvastra activity, availability of raw material, availability of artisans, availability of trained and /or experienced technical karyakarthas, account knowing persons, availability and readiness to procure tools and equipment, financial resources for conducting activity be ensured. The technical feasibility must be, got conducted by the Khadi technical personnel of the field offices. During feasibility study KVIC official must collect documentary proof of existence of registered office of the institution.

d) The State /Divisional Directors should ensure that, the institution’s own fund is not kept merely in the form of bank deposits or liquid cash etc,. Those are invested in the form of immovable property or fixed assets to substantial extent, which can be mortgaged to the Commission for security to the Commission’s funds.

e) The State/Divisional Directors will send Direct Listing proposals to respective Zonal Dy. CEO for consideration and issuance of letter of registration (Direct Listing). The office of Zonal Dy. Chief Executive Officer will consider the financial aspect of the office processing part to consider direct enlistment.

f) The State/Divisional Directors will recommend for issuance of Khadi and/or Polyvastra Certificate to Central Certification Committee under intimation to Zonal Certification Committee concerned. The Office of Central Certification Committee will arrange to issue Khadi and Polyvastra Certificate after the bye-laws etc. is vetted by Legal Wing of KVIC.

g) The State/Divisional Directors after recommending for Khadi and/or Polyvastra Certificate allow the institution for participating in the annual budget discussions. The programme to be given to the new institution should be economically viable say minimum one unit of implements and proportionate sales outlets.

h) State/Divisional Directors after annual budget sanctions – ensure procurement of raw material from CSPs, coverage of artisans under Khadi Karigar Janashree Bhima Yojana (JBY) as well as under State Level Artisan Welfare Trust by the institutions. Periodical Technical-monitoring visits of at-least three in a financial year is a must, for the first three years and report thereon may be furnished to the Directorate of KPM.

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10. Monitoring

a) Implementation of the programme would be supervised through a Nodal Officer having technical background, assigned for the task by State / Divisional Director. Monitoring of programme implementation by institution will be monitored and reviewed by Standing Performance Monitoring Committee (SPMC).

b) Monthly progress reports in respect of production, sales and employment will be collected in prescribed formats.

c) There will be quarterly review of implementation of the scheme at the State level by SPMC and half-yearly review at the zonal level by the Zonal Committee.

d) Financial sanction for the project to individual institution will take place in the following manner :-

I. Budgeting at State/Division office level through the field level budget team.

ii. Approval of target etc. by Standing Finance Committee of KVIC. Release of fund through field office of KVIC is against compliance of prescribed guideline.

11. Fee to be Charged for Certification and Direct Enlistment

The institution applied for certification and recognition (Direct Listing) by the Commission, will have to pay certificate / registration or direct listing fee of Rs. 1000/- (Rupees One Thousand Only) each, in favour of Chief Executive Officer, Khadi & Village Industries Commission by way of crossed Demand Draft(s) payable at State Bank of India, Vile Parle (West), Branch Mumbai and forward the same along with the proposal. The State/Divisional Offices on receipt of Demand Draft(s), issue acknowledgement and credit to the Internal Resource Generation (IRG) Account under intimation to Office of Central Certification Committee and Zonal Certification Committee as well as Khadi Coordination and Khadi Programme and Monitoring and also Director (Accounts). The Fees once paid are not refundable. Mere payment of fee does not confer any right to the institution unless and other wise, all the conditions are fulfilled.

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Annexure-II

APPLICATION FORM FOR CERTIFICATION / REGISTRATION (DIRECT ENLISTMENT) OF KHADI AND POLYVASTRA INSTITUITONS

(NAME OF THE STATE/DIVISIONAL OFFICE: ………………………………)

To1. Chairman, Central Certification Committee2. Zonal Dy. Chief Executive Officer (_________ Zone), KVIC

PART – I

I. GENERAL (To be filled in by the Secretary / Chairman of the institution)

1. Name and full address of Institution(Headquarters & Place of work) :

2. Registration Particulars(Number, Date & Act under which registered) :

3. Attested copy of Memorandum of Association /Bye-laws :

4. N.O.C. from State Board(strike out which are not applicable)Obtained / Not obtained / Not applicable :

5. Activity proposed to be taken up by institutionKhadi / V.I. / Khadi & V.I. both :

6. Whether Khadi / Polyvastra certificate obtained.If yes, please state certificate No. and valid /renewed up to and a copy may be attached : Yes / No

7. A) Name of the place where the institution aimed to open production centre with the details of spinners and weavers :

B) Estimated annual production (Rs. In lakhs) :

8. A) Name of the place where the institution aimed to open sales outlets :

B) Estimated annual sales (Rs. In lakhs) :

9. NOC from local authorities in conductingKhadi/PV activities : Yes / No

10. Resolution of Managing Committee approachingKVIC for certification and direct enlistment forimplementation of Khadi programme : Yes/No

11. List of Managing Committee Members /Trustees with Photos, Voters Identity card /ration card alongwith bio-data of all furnishedby the institution. : Yes/No

12. Copy of Caste Certificate if the institutionbelongs to SC/.ST / OBC : Yes/No

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13. Declaration that no staff members of KVIC/State KVIB or his / her family members havepromoted this institution (no blood relationwith other Committee members) as requiredin terms of Circular No.Adm/II/492/ 92-93dated 23-12-92. : Yes/No

14. Particulars of payment of Certification fee andRegistration Fee of Rs.1000/- each drawn infavour of C.E.O., KVIC, Mumbai. : DD No. Date Bank & Brancha) Certification :b) Registration / Direct Enlistment :

15. Details of Capital :Capital invested by the institution :Capital borrowed :Total Capital :

16. Certificate of Bank regarding Bank Account andown funds (A minimum amount of Rs.20,000/-needs to be maintained) : Yes/No

17. Details of immovable property available in thename of institution

a) Land (area and value) :b) Building (area and value) :

18. Details of Annual Accounts : a) Estimated Income Expenditure statement

for totally new institution : b) Copy of balance sheet for working

institution :

19. Submission of an undertaking to pay artisansstrictly as per CCC and KVIC guideline. : Yes/No

20. Submission of an undertaking to the effect that,the institution will regularly deposit the AWFin the AWF & Pension Trust. : Yes/No

21. Submission of an undertaking to the effect that,the institution will enroll all the existing as wellas future artisans in the Jana Shree Bima Yojanaand AWFT. : Yes/No

22. Submission of an undertaking to the effect that,the institution shall purchase the raw materialstrictly in accordance with KVIC guidelines : Yes/No.

I/we solemnly affirm implementation of Khadi / Polyvastra programme in accordance with the guidelines issued by Commission and also Central Certification Committee. I/we will never do anything that may infringe ethos of Khadi. Further, I/we promise to return the Khadi/Polyvastra Certificate / Registration letter on expiry of their period or on being informed of their cancellation.

I/we do hereby declare that what is stated above is true to the best of my / our information and belief.

Place:Date:

(SIGNATURE OF THE SECRETARY)With seal

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FOR OFFICE USE

PART – II

I. Recommendation of State/ Divisional Director : 1. Recommended for Certification/Not (The State/Divisional Director on the strength recommended for Certification. of his satisfaction as to the reputation, creditworthiness, capability to implement the 2. Recommended for Registration/KVI programme by the institution only to Not Recommended for Registration.record recommendations).

SIGNATURE OF STATE/DIVISIONAL DIRECTORTo1. Director (CCC), KVIC, Mumbai - 562. Dy. Chief Executive Officer (_____ Zone), KVIC.

PART - III

II. LEGAL ASPECT FOR CERTIFICATION ONLY(Director CCC to finalize in consultation with Director Legal Affairs)

1. Bye-laws of the institution prepared on the lines ofModel Bye-laws prescribed by the Commission. : Yes / No.

2. Provision for undertaking Khadi / V.I. / Khadi & V.I.activities in the bye-laws of the institution. : Yes / No.

3. Provision to take loan / grants from KVIC in thebye-laws of the institution. : Yes / No.

4. Provision to take loan from Banks / other FinancialInstitutions in the bye-laws of the institutions. : Yes / No.

5. Provision to create Equitable Mortgage and executeHypothecation Deed of immovable and movableproperties to KVIC / Financing Institution in thebye-laws of the institution. : Yes / No.

6. Re-loaning clause to provide tools & equipments toindividual artisans after obtaining loan from KVIC /Banks in the bye-laws of the institution. : Yes / No.

7. Whether Dissolution clause as per model bye-law ofKVIC is included in the bye-laws of the institution. : Yes / No.

8. Passed for Issuance of New Khadi Certificate

Director (CCC) Director (LA) Chairman (CCC)

PART – IV

III. FINANCIAL ASPECT FOR ENLISTMENT

1. Submission of Statement of Accounts of the institution/ Society in original duly Certified by Statutory Auditorsand counter signed by the Secretary of the institution. : Yes / No.

2. Submission of latest audited Statement of Accountsduly certified by Chartered Accountant / StatutoryAuditors, in case of the institution implementing otherthan KVI Programmes or aided by the State KVI Board. : Yes / No.

3. Whether declaration is given by office bearers that nofunds have been taken from other agencies.If yes, please furnish details thereof. : Yes / No.

Passed for issuance of Registration / Direct Enlistment

Dealing Officer Asst. Director/ Accounts Officer Zonal Dy. C.E.O. Zonal Office Zonal Office KVIC

321

DIRECTORATE OF KHADI COORDINATIONKHADI AND VILLAGE INDUSTRIES COMMISSION

IRLA ROAD, VILE PARLE (W), BOMBAY – 56.Telefax +91-22-2671 5860 Web: www.kvic.org.in

No. DKC/Direct Listing/Policy/2009-10 Date: 30.03.2010

ADDENDUM TO STANDING ORDER NO. 1672

Sub: Guidelines for Certification/Registration (Direct Enlistment) of Khadi &

Polyvastra institutions

Ref: Standing Order No. 1672 dated 9-7-2008

*****

Kind attention is drawn to Standing Order No. 1672 dated 09-07-2008 on the captioned subject, wherein the guidelines for Certification/ Registration (direct enlistment) of Khadi and Polyvastra institutions were prescribed. The guidelines are further deliberated

thby the Central Certification Committee (Khadi) in its 38 meeting held on 09-06-2009 at Central Office, KVIC, Mumbai, wherein it was decided to incorporate some more clause/ conditions in addition to the existing guidelines.

Further, the existing guidelines are also pursued by keeping the enlistment made earlier under SEP/RPDS Programme by KVIC. Accordingly, it has been decided to incorporate the following clauses/conditions along with the existing guidelines prescribed under Standing Order No.1672 dated 09-07-2008:-

1. That, any new institutions applying for new Khadi Certificate should furnish the details about availability of trained Khadi worker and skilled artisans with the institution.

2. That, any new institutions applying for new Khadi Certificate should furnish the details of connection and association which any member of the Managing Committee is having with any other Khadi & V.I. Institution.

3. That, the Dy. C.E.O of the concerned Zone should recommend the application of the institution for issuance of any new Khadi Certificate and only thereafter the New Khadi Certificate shall be issued.

4. That, the office bearers of those institutions who have not implemented programme under SEP/RPDS, and institutions against whom recovery action under Section 19B of the KVIC Act has been initiated should not be allowed to form another institution to get financial assistance again.

All other conditions envisaged in the Standing Order No.1672 dated 09-07-2008 and a Corrigendum dated 09-07-2009 issued earlier will remain unchanged and this Addendum will come into force with immediate effect.

Sd/-

(J. S. Mishra)


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To1. All Zonal Dy. CEOs2. All State/Divisional Directors, KVIC3. All CEOs/MD/Member Secretary, State KVIBsCopy for information:1. All Members of the Commission2. P.S. to Hon’ble Chairperson3. O.S.D CEO Cell4. A.O, FA Cell5. CVO, KVIC, Mumbai6. Chairman (CCC)7. All Members of CCC8. All Chairman of ZCC9. All Members of ZCC10. All Industry/Programme Directors, KVIC, Mumbai11. Director (Publicity) with request to publish in the ensuing Jagriti12. Director (IT) with a request to place it in the web site

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No. Legal/Labour Laws/part-III/02-03 Date: 05.08.2002

- CIRCULAR -

KVIC has been pleading and trying for many years to have a special labour enactment specially for khadi institutions as the relationship of management and labour does not exist, and the khadi spinner and weavers are to be treated as self-employed. The recommendations of the Kale Committee on the applicability of Labour Laws to KVI Sector had been forwarded to Govt. Recently KVIC has again pleaded this point before the National Commission on Labour constituted by the Govt. of India to study and make recommendations on the labour laws affecting small scale and village industries sector. However, a law on this aspect is still to be enacted.2. Of late, KVIC Offices have been receiving notices from E.P.F.Commission office under

Section 8(3)F of the EPF and M.P. Act directing KVIC to pay to them directly any money which KVIC has to or proposes to pay to the KVI institution, who are defaulters in making payment of EPF dues.

3. This means, if the Employees Provident Fund Commission is unable to collect the default money from any KVI institution, and if they issue a notice under Section 8(3)F of the aforesaid Act , then KVIC is bound to pay the money payable to the institution by KVIC directly to EPF office. This could be a rebate due etc.

4. Since the provisions in the EPF and M.P. Act for any non-compliance is very stringent, the KVIC after careful consideration in its meeting held on 25.06.02 has decided to make the payment of EPF dues of the defaulter institutions to the EPF Authorities directly whenever demand notice/s in respect of those defaulter institution/s under the aforesaid Section of the EPF Act are received by the KVIC from the EPF Authorities, provided any money is due or may become due from the KVIC to those defaulter institutions.

5. All the State/Regional Directors of the KVIC as well as the Chief Executive Officer of Khadi and V.I.Boards are therefore, requested to bring this to the notice of KVI institutions/implementing agencies functioning under their jurisdiction that whenever demand notice/s are received by the KVIC, the KVIC will make the payment of EPF dues of the defaulter institutions to the EPF authorities directly out of the amount due or may become due under any head to those defaulter institutions without prior notice or intimation to those institutions and the same will be debited in their books of accounts.

Sd/-


To:1) All the State/Regional Directors of the KVIC2) All the Chief Executive Officers of the STate Khadi & V.I.BoardsCopy for information to :5) Jt. Chief Executive Officer, KVIC, Mumbai - 56.6) All Dy.CEO's KVIC, Mumbai.7) All Directors in the KVIC, Mumbai - 56.8) Director (Commission Cell).

324

No.L.A./Circular/I.T.E/2015-16 Date: 12.012016

- C I R C U L A R -

Sub: Procedure for issuing approval letter by the KVIC for exemption from

Income-Tax under Section 10(23B) of the Income-tax Act, 1961 to the

institutions undertaking KVI Activities.

In supersession of all the existing Circulars issued by the Khadi and Village Industries

commission on the captioned subject, the consolidated guidelines in the matter issuing

approval letter by the KVIC for exemption from Income-tax under Section 10(23B) of the

Income-tax Act, 1961 to the institutions undertaking KVI Activities are furnished hereunder.

1. Authority to issue the approval letter -

As per the Resolution passed by the Commission in its meeting held on 29/30.08.2003, the State and Divisional Directors of the KVIC are delegated with the power to issue the approval letter for exemption from Income-tax under Section 10(23B) of the Income-tax Act, 1961 to the Khadi and V.I. Institutions undertaking KVI Activities, after observing the procedure hereinafter prescribed. The format of the letter is prescribed in Annexure-I of this Circular.

2. Who are entitled to get approval letter for exemption from Income Tax and the extent of such exception –

An institution constituted as a public charitable trust or registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India, and existing solely for the development of khadi or village industries or both, and not for purposes of profit is entitled to apply to the KVIC for the issuance of the approval letter for exemption from Income-tax, to the extent such income is attributable to the business of production, sale, or marketing, of khadi or products of village industries subject to the following conditions: -

(i) the institution applies its income, or accumulates it for application, solely for the development of khadi or village industries or both; and

(ii) the institution is, for the time being, approved for the purpose of this clause by the Khadi and Village Industries Commission:

3. Format of application to be submitted by the KVI institutions -

The Khadi and V.I. institutions undertaking KVI Activities and direct listed with the

KVIC or State /U.T. Khadi and V.I.Board shall apply to the concerned State/Divisional

Directors of the KVIC in the format prescribed in Annexure-II of this Circular.

4. The period for which approval letter can be issued -

As per the provisions of the Income Tax Act, the Commission shall not, at any one

time, grant such approval for more than three Assessment years beginning with the

Assessment Year next following the financial year in which it is granted.

5. Processing fee payable by the KVI institutions -

The application made by the KVI institutions for issuance of approval letter for

exemption from Income Tax should be accompanied by the processing fee

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(administrative charges) in the form a Demand Draft drawn in favour of the Chief

Executive Officer, KVIC, Mumbai.

The amount payable as processing fee (administrative charges) shall be in

accordance with the following rate;

(i) Rs.5000/- per year if the annual turnover of KVI institution is upto Rs.1 Crore.

(ii) Rs.10000/- per year if the annual turnover of KVI institution is above Rs.1 Crores

and below Rs.3 Crores.

(iii) Rs.15000/- per year if the annual turnover of KVI institution is above Rs.3 Crores

and below Rs.6 Crores.

(iv) Rs.20000/- per year if the annual turnover of KVI institution is above

Rs.6 Crores.

6. Scrutiny of application and analysis of financial statements -

On receipt of application from the KVI institutions for issuance of approval letter for

exemption from Income Tax, the State / Divisional Offices should ensure the following

while processing the application and before the issuance of approval letter:

(i) That the application is complete in all respects in accordance with the

information to be furnished by the KVI institution as per Annexure –II to this

circular;

(ii) That the Demand Draft drawn in favour of Chief Executive Officer, payable at

State Bank of India, Vile Parle (West) towards processing fee (administrative

charges) as per the prescribed rate is attached with the application;

(iii) That the institution has regularly furnished one page progress report pertaining

to production and employment on quarterly basis;

(iv) That the Certificate from the Chartered Accountant produced by the institution

is exactly in accordance with the Annexure-III to this circular;

(v) That the Financial statement of institution for the relevant periods are

forwarded to the Accounts Officer/ Accountant In-charge of Finance, Audit and

Accounts of the State office / Divisional Office for its analysis and his specific

comments are obtained in the matter;

(vi) That no serious irregularities in the functioning of the institution were noticed

during the relevant period for which approval letter is issued; and

(vii) That the approval letter for exemption from Income Tax is not made for more

than three Assessment years at a time.

7. Remittance of processing fee -

The demand draft collected by the State/Divisional offices from the KVI institutions

should be remitted to the Directorate of Accounts, KVIC, Mumbai directly at the end

of every month under intimation to Director (Legal Affairs).

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8. Dispensing with the requirement of budget sanction -

The requirement of valid budget sanction for the institution/unit for applying for the

issuance of approval letter for exemption from Income Tax, as imposed by the SFC(V.I) ndin its meeting held on 22 August,2009 has been reviewed by the SFC in its meeting

ndheld on 22 December 2015 and decided to dispense with the said requirement and

to decided to follow the provisions of the Income Tax Act for the issuance of the

approval letter.

9. Approval Letter to State Khadi & V.I. Board institutions -

The KVI institutions directed listed with or approved by the State KVI Boards are also

entitled to get the issuance of approval letter for exemption from Income Tax from

the KVIC, subject to the fulfillment of conditions specified in this Circular.

KVI institutions direct listed with or approved by the State KVI Boards have to apply to

the concerned State/Divisional Director of the KVIC for the issuance of approval letter

through the concerned State KVI Board and the application should be recommended

by the Secretary of the concerned State KVI Board in the format specified under

Annexure- IV.

10. Withdrawal of approval letter issued to KVI institutions -

The State/Divisional Director may at any time withdraw the approval letter for

exemption from Income Tax issued to any KVI institution, after giving a reasonable

opportunity of showing cause against the proposal withdrawal to the concerned

institution, if he is satisfied that –

(i) The institution has not applied for accumulated its income in accordance with

the provisions stated above; or

(ii) The activities of the institutions are not being carried out in accordance with all

or any of the conditions subject to which such institution was approved.

The State /Divisional Director may forward a copy of the order withdrawing the

approval to such institution and to the Assessing Officer.

11. Uploading the details in KVIC website -

Soon after the issuance of approval letter for exemption from Income Tax to the KVI

institutions , the details of the same should be uploaded in the KVIC web site.

Encl: Annexure - I to IV. Chief Executive Officer

All State/Divisional Directors Copy to : 1. All Zonal Dy. CEOs of KVIC.2. All Directors in the Central Office, KVIC, Mumbai-56.3. Director (Publicity) with a request to publish this Standing Order in the ensuing issue of

“Jagriti”.4. Hindi Officer, Hindi Cell, KVIC, Mumbai-56 with a request to issue Hindi version of this

Standing Order.5. Director (I.T.), KVIC, Mumbai-56 with a request to include the Circular in the Website.

327

328

DIRECTOR OF LEGAL AFFAIRS3, Irla Road, Vile Parle (West), Mumbai-400056.

Tel.022-26713538, Website:www.kvic.org.in

ANNEXURE - IFORMAT OF THE APPROVAL LETTER

(TO BE ISSUED BY KVIC ON LETTER HEAD)By Registered A.D.

No. Date: ______________

The Commissioner of Income Tax Office of the Commissioner of Income Tax______________________________________________________________________________

Sub: Approval letter for exemption from payment of Income Tax issued under

Section 10 (23B) of the Income Tax Act to ________________(name of

the institution) , which is engaged in the development of khadi and village

industries.

Sir,

This is to inform that ______________ (name and complete address of the

institution) is an institution registered under the _________Act with Registration

No.______________. The said institution is approved by Khadi and Village Industries

Commission (KVIC) for undertaking the Khadi and Village Industries Programme during the

year _________ .

2. It is further stated that as per the certificate issued by the Chartered Accountant, the

institution has applied its income or has accumulated it for application, solely for the

development of Khadi or Village Industries or both during the aforesaid period. A

copy of the said certificate is attached.

3. In view of the above, it is recommended that the income of Rs._______/- of the

_________________(name of the institution ), as certified by the Chartered

Accountant, may be considered for the purpose of granting exemption from the total

income during the year ________ under the provisions of Section 10(23B) of the

Income Tax Act,1961.

4. This letter is issued for the Assessment year/s _______ only.

Yours faithfully,State/Divisional Director

329

ANNEXURE -II

FORMAT OF APPLICATION FOR THE ISSUANCE OF APPROVAL LETTER FOR EXEMPTION FROM INCOME TAX UNDER SECTION 10(23B) OF I.T.ACT

1 Name and address of the institution.

2 Act under which the institution is registered and the Registration No.

3 Khadi Certificate No. & Date of the Certificate issued by KVIC and its validity period.

4 Direct listing /Approval letter No. and date issued by the KVIC/State KVI Board.

5 List of KVI activities undertaken by the institution.

6 Whether the activities undertaken by the institution are approved by the KVIC?

7 Whether the institution has hypothecated its movable properties to the Commission

/ State Board?

8 Whether the institution has mortgaged its immovable properties with the

Commission / State Board?

9 How the institution utilized its income /surplus earned from KVI activities during the

period/s for which exemption from Income Tax is claimed? Give details and attach

certificate from the Chartered Accountant in prescribed format.

10 Whether the institution has regularly remitted its contributions towards Artisans’

Welfare Fund Trust and other Social security measures prescribed by the KVIC from

time to time? Furnish the details.

11 Period/s (Assessment Year/s) for which exemption from Income Tax is claimed.

12 Details of remittance of processing fee.

An support of the above information, the following documents are furnished:

1. Copy of Registration Certificate of the Institution.

2. Copy of Khadi Certificate of the institution.

3. Copy of Direct Listing /Approval letter issued by KVIC.

4. Certificate from the Chartered Accountant in the prescribed format.

5. Copies of audited Statement of Accounts, such as Balance-sheet, Trading Profit & Loss

Account manufacturing/production/processing Account etc. for the relevant

period/s.

6. Letter of recommendation (in the case of State KVI Board aided institutions).

7. Demand draft for Rs….. towards processing fee.

I, …………, the Secretary of ………..(name of the institution) hereby certify that the

information furnished above are true and correct to the best of my knowledge and as per

the records maintained by …………(name of the institution).

Dated: Signature Secretary of the Institution

Common SealANNEXURE-III

FORMAT OF THE CERTIFICATE TO BE ISSUED BY THE CHARTERED ACCOUNTANT

Certified that out of the total income of Rs._______ (Rupees_____________ only) as

shown in the Income and Expenditure Account for the year ________ of the

_________________(name and address of institution with Reg.No.), an amount of Rs.

_____ (Rupees______only) is attributable to the business of production, sale, or

marketing, of khadi or products of village industries.

Further, it is certified that the amount of Rs._________(Rupees _________

only) attributable to the business of production, sale, or marketing, of khadi or products

of village industries during the year ______ has been applied or has been accumulated for

application, solely for the development of Khadi or Village Industries or both by the

____________ (name of institution).

________________________SignatureDate: Chartered Accountant(Name, Seal and Reg No.)

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ANNEXURE-IVFORMAT OF THE LETTER OF RECOMMENDATION TO BE ISSUED BY STATE KVI BOARD

(In the letter head of the KVI Board)

No. Date:

ToThe State /Divisional Director, Khadi and V.I. Commission, …………………………................….………………......................………

Sub: Recommendation for the issuance of approval letter for exemption from

Income Tax under Section 10(23 B) of the Income Tax Act.

Sir,

The institution ………………….(name of the institution) is direct listed with/ approved

by the Board for the purpose of undertaking khadi and village industries activities vide

letter bearing No…………. dated…………..

2. The Board is closely monitoring the KVI activities of ………….(name of the institution)

and it is satisfied that the institution is undertaking the KVI activities strictly in

accordance with the norms and guidelines prescribed by the Board and that no

serious irregularities are noticed in its functioning.

3. The institution ……………….(name of the institution) is entitled to get approval letter

for exemption from Income Tax under Section 10(23 B) of the I.T.Act. As such, the

Board hereby recommends to the Khadi and V.I. Commission to consider to issue the

said approval letter to ……….. (name of the institution) for the Assessment year/s

…………. only.

Yours faithfully,

Secretary

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No. Legal/ELI/247/02-03 Date: 03.12.2002

- STANDING ORDER NO. 1615 -

The recent judicial pronouncement by the Hon’ble Supreme Court of India prohibits an employer from recovering, or adjusting or appropriating his dues from the retiral benefits of an employee, which includes provident fund, gratuity and pension. According to Hon’ble Supreme Court pension and gratuity are no longer matters of any bounty to be distributed by Government but are valuable rights acquired and the property in their hands and any delay in settlement and disbursement whereof should be viewed seriously and dealt with severely by imposing penalty in the form of payment of interest.

Instances have come to the notice of the Directorate of Legal Affairs that the KVIC is unable to recover its outstanding dues from retired employees on account of the aforesaid legal position.

It is also observed that though there are standing instructions/ prescribed rules and regulations regarding obtaining of ‘No Dues Certificate’ by the Heads of the Departments in respect of a retiring employee, many of the departments are not following the said instructions and rules and regulations, which ultimately result in great financial loss to the KVIC on account of non-recovery of the out standing dues from the employees before their retirement.

In order to over come the difficulties faced by the KVIC for recovering its outstanding dues from the retired employees, the following guidelines are suggested:

(1) All the Heads of the Departments should make a periodical review at the end of every financial year regarding the advances taken by the employees working under them and ensure that proper adjustment of the same is done within the permissible time limit so as to avoid any accumulation.

(2) As and when an employee is transferred from one department to another or from one office to another, it should be ensured by the Heads of the Directorates that all the outstanding advances are settled as far as possible and wherever the final settlement is not possible, the details of the advances should be communicated clearly to the Head of the office /department where the concerned employee is posted to work.

(3) All the Heads of the Departments should take steps to complete the assessment of dues recoverable from an employee at least eight months prior to the date of retirement of an employee.

(4) All the Heads of the Departments should ensure that all kinds of advances including LTC advances, T.A advance, Medical Advance, House Building Advance etc. are fully adjusted and outstanding, if any, is recovered from the salary of the employee prior to three months of the retirement of an employee.

(5) If the employee is in occupation of Commission’s accommodation, the following steps are required to be taken by the Heads of the departments:(I) in case of transfer, termination or death of an employee, proper

intimation regarding the same shall be made to the Directorate of Adm.-V

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and / Estate Officer to cancel the allotment of accommodation, unless otherwise specifically permitted;

(ii) write to the Estate Officer concerned at least two years before the anticipatory date of retirement of an employee who is in occupation of Commission’s accommodation for the issue of a ‘No demand Certificate’ in respect of the period preceding eight months of the retirement of the allottee employee;

(iii) ensure that the licence fee for the next eight months up to the date of retirement of the allottee is recovered every month from the pay and allowances of the employee;

(iv) ensure that the outstanding licence fee is fully recovered in installments from the current pay and allowances of the allottee;

(6) The Estate Officer of the KVIC after proper scrutiny should issue a No Demand Certificate and inform the Head of the Department eight months before the date of retirement of the allottee of Commission’s accommodation about - (a) the amount of licence fee, if any recoverable from him in respect of the period prior to eight months of his retirement, (b) the amount of licence fee for retention of Commission’s accommodation for the permissible period of two months or the permissible period as may be prescribed by the Commission beyond the date of retirement of an employee.

(7) If it is found by the Estate Officer of the KVIC that any retired employee is unauthorisedly occupying /retaining the Commission’s accommodation after the permissible period of occupation, the Estate Officer should take immediate steps to evict him, as if he is an outsider, by following the provisions of the Public Premises (Eviction of unauthorized Occupants) Act. He should also take steps to assess the licence fee and damage charges as per the provisions contained in F.R.45 A and F.R.45 B as well as the provisions contained in the Public Premises (Eviction of unauthorized Occupants) Act.

This Standing Order is issued in supercession of all standing orders and circulars issued in this regard.

Sd/-

CHIEF EXECUTIVE OFFICERCopy to :1. Jt.Chief Executive Officer, KVIC, Mumbai2. All Dy.CEOs of the Commission in and outside Mumbai. 3. All heads Depts./Offices of the Commission in and outside Mumbai4. All sections in Central Office Mumbai5. Director (Adm.-V)/Estate Officer6. P.S. to Chairman, KVIC, Mumbai7. Director (Publicity) for publication in the ensuing issue of Jagriti8. Public Relation Officer, KVIC, Mumbai9. Grievances officer, KVIC, Mumbai10. 10.CEO Cell, KVIC, Mumbai11. Hindi Officer, Hindi cell, KVIC, Mumbai with a request to issue Hindi version of this

Standing Order.

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No. ADM-II/HBL/Gen Date: 05.02.1992

- C I R C U L A R -

During the course of scrutiny of House Building Advance/Loan application from

various employees of the Khadi and V.I. Commission, it is observed that many of the staff

members do not comply with the legal requirement such as under :

1) N.A. Certificate from the competent authorities (i.e.) Tahasildar or other

competent authorities who have been authorised to issue N.A Certificate.

2) Approved plan by local bodies.

3) Clear title to the Flats/Building/Land from competent authorities.

House is constructed on the land for which N.A. permission from the competent

authority are not obtained and observed that the plans of the said building have also not

been approved by the Municipal Corporation and concerned authorities. While booking

the flats they have also paid advance and entered into agreements with the Builders. After

giving such advances they applied for house building advance. In the context of the fact that

such constructions are in accordance with the law or not, it can not be said in the fitness of

things that the employees of the Commission will have a clear and marketable title to the

flats in the context of the fact the competent authorities may or may not regularize such

construction.

With a view to safe-guard the interest of the employee and security of the

Commission's fund, it is advised to all the employees of KVIC that henceforth before

booking their Flats/Buildings/Lands, particulars in Bombay and nearly area the employees

should take care of and verify as to whether land on which the building is constructed by the

builders is converted into non-agricultural land, the plans layout and the building plan

approved by the competent authorities such as Collector, Municipal Corporation etc. and as

the builders has constructed the buildings in accordance with the conditions laid down by

the concerned authorities. In addition, it may also be examined whether the plot on which

the building is constructed has been permitted by the Competent Authority under Urban

Land Ceiling Regulations Act – 1976 wherever applicable.

Besides, the applicant should submit his application alongwith the following

documents :-

1) A copy of an agreement executed between the Builders and Applicant.

2) A copy of receipt of registration of an agreement with the Sub-Registrar.

3) /12 extract of property.

4) Upto date non-encumbrance certificate from the Govt. Pleader or Revenue

Authorities.

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5) Valuation report from the Govt. approved valuer.

6) N.A. Permission from the concerned Competent Authority.

7) Order from the Competent Authority Unban Land Ceiling Regulations Act-

1976.

8) A copy of approved plan from the concerned authorities.

9) A copy of the construction permission from the concerned authorities.

10) A copy of a Partnership-deed.

11) A copy of sale-agreement executed between the Land Owners and Builders.

12) A copy of Power of attorney executed by the land owners in favour of Builders.

13) A copy of development agreement executed between the land owners and

Builders.

14) Mortgage permission from the Builders on the stamp papers worth of Rs. 10/-

(Rupees Ten only ).

15) A copy of receipt of initial payment made to the Builders.

6) An undertaking from the Builders to the effect that he has constructed the

building in accordance with the condition laid down in the construction

permission by the concerned authorities.

17) Estimates

18) Tax Receipt

19) Patta/Mutation

20) Sale deed.

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No. Adm-II/HBL/270/2000-01/(128) Date: 02.04.2001

- OFFICE ORDER NO. 1890 -

In pursuance of Governments O.M. No.I-17011/23/71-H.III dated 11.11.1999, issued

by Ministry of Urban Development, New Delhi, it is stated that so far House Building

Advance is being sanctioned for central government employees for purchase of

houses/flats from private parties but not from private individuals. Earlier the term “Private

Parties include registered builders, archietects, house building societies but not the private

individuals:. Now in consultation with Ministry of Law & Justice it is clarified that a

registered builders means builders registered under the Companies Act, 1956 or firm of

builders registered with Registrar of Firms under the Indian Partnership Act should be one

who also fulfills the following criteria:-

1. Minimum one partner/member of the Company/Firm ought to be an archietect /

Engineer who is a member of Indian Institute of Archietects/Institution of Engineers

member of Council of Archietects or any other professional Institute in the field of

construction.

2. One member of the Company/Firm, should be a member of Indian Institute of

Chartered Accountants (I.I.C.A) or member of Institute of Cost & Works Accountants

(I.C.W.A.) to ensure the financial credit worthiness of a registered builder

Firm/Company.

3. The Institute/Company/Firm should be registered in the panels as Builder/Architect

etc. with (Urban) Development Authority/Housing Boards of State Govt./Municipal

Authorities/Central Government.

This order is issued for compliance with immediate effect.

Sd/-

CHIEF EXECUTIVE OFFICERTo:1. All Dy.Chief Executive Officers of the Commission in and outside Mumbai.2. All heads of depts/ofices of the Commission in and outside Mumbai.3. P.S. to Chairman, KVIC, Mumbai4. All Sections in the Central Office, Mumbai5. Director, Publicity, KVIC, Mumbai for publication in the ensuing issue of Jagruti.6. Public Relations Officer, KVIC, Mumbai7. Grievances Officer, KVIC, Mumbai8. O.S.D., CEO Cell, KVIC, Mumbai9. Hindi Officer, Hindi Cell, KVIC, Mumbai with a request to issue Hindi version of this

Office Order.

336

DIRECTORATE OF FINANCEKHADI AND VILLAGE INDUSTRIES COMMISSION


No. KVIC/FIN/TEC/2011-12 Date: 02.03.2012

- C I R C U L A R -

Various Programme Directors in the Central Office frequently go for open/limited tendering process for procurement of goods and services and executing works for construction, repairs and maintenance. As per existing practice all such tenders are evaluated by a Tender Committee constituted for that purpose and the same is submitted to the C.E.O. for acceptance of the recommendations of the tender committee as per delegation of financial power vested with the C.E.O. vide Standing Order No.1539 dated 10.04.1997. At present, even for small value tenders this method is followed when the delegation of powers to various level of officers to accord administrative and financial sanction have been substantially increased with the approval of the Commission and circulated vide Standing Order No.1703 dated 19.01.2011.

2. With a view to have a more consistent and uniform tendering process and to make the decision making process faster, henceforth the following three tiers Tender Committee will be in place which will be applicable for all the Programme Directorates in the Central Office, KVIC, Mumbai except those Committees provided in the scheme guidelines like KRDP, Marketing Exhibition Guidelines, etc.

3. So far as field offices are concerned State/Divisional Directors will be the Tender

Accepting Authority for work/procurement value upto ₹.5.00 lakhs. Beyond that limit

Zonal Dy.CEO will be the Tender Accepting Authority. Composition of the Tender Committee may be finalized at the field level keeping in view the spirit of the present Circular by the Tender Accepting Authorities.

4. Regarding departmental trading activities like DSO, CSP, etc. the existing Procurement/Disposal Committees circulated by the Commission time to time, will remain valid.

5. (a) Tender Evaluation Committee with work or procurement value upto Rs.5.00 lakh

Sr. Members of the Committee AcceptingNo. Authority

1. Dy.Director/Asstt. Director in the concerned Directorate

2. Accounts Officer in the concerned Programme Directorate or nominated for the purpose

3. Any Expert member from other Directorate/ department/outstation offices not below the rank of Asstt. Director

4. Accounts Officer of the Directorate of Finance

ProgrammeDirectorconcerned

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5. (b) Tender Evaluation Committee with work or procurement value above Rs.5.00 lakhs and upto Rs.10.00 lakhs


1. Programme Director or In-charge of the Directorate Jt.CEO

2. Accounts Officer in the concerned Programme Directorate or nominated for the purpose

3. Any Expert member from other Directorate/ department/outstation offices not below the rank of Dy. Director

4. Accounts Officer of the Directorate of Finance

5. (c) Tender Evaluation Committee with work or procurement value above Rs.10.00 lakhs


1. Jt. Chief Executive Officer

2. Concerned Programme Director or In-charge of the Directorate

3. Another related Programme Director

4. Any Expert member from other department/ outstation offices not below the rank of Director

5. Director Finance

6. Director Legal Affairs

N.B.

6. Before initiating the tendering process approval of the Tender Accepting Authority should be obtained on file on the estimated cost of the tender, time of completion & constitutions of the committee and draft tender notice. The accepting authority may also nominate any member from other Directorate where there is lack of requisite number of officer to nominate as member. In any case there should not be less than four members in the tender committee in case of committee cited at A & B above.

7. Specified members of the Committee only should attend the meeting. In case of any exigency when a particular member is on leave or out of H.Q. on tour then the link officer or any other member of equivalent rank, nominated by the Tender Accepting Authority, can attend the meeting.

8. In case a lowest tender is to be rejected, the reason for the same should be recorded in clear & unambiguous terms. In that case the Tender Accepting Authority will be as applicable in the next slab. When all tenders are to be rejected the reasons may similarly be recorded and approval of F.A. and C.E.O. should be obtained.

9. Detailed laid down procedure on the item and GFR norms should be followed strictly so as to ensure transparency competition, fairness and elimination of arbitrariness in

CEOon the approvalof F.A.

338

the procurement/tender process. Besides guidelines issued by the CVC time to time also need to be followed.

10. Ministry of Finance, Department of Expenditure (Public Procurement Cell) vide its thO.M. No. 10/1/2011-PPC dated 30 November 2011 has issued detailed guidelines

for Mandatory Publication of Tender Enquiry, on the Central Public Procurement stPortal (CPP Portal) w.e.f. 1 April 2012 for Autonomous/Statutory Bodies. This should

be followed by all the tender issuing authorities.

11. Detailed Guidelines for preparation of tender documents, its evaluation criteria DOs & Don't for Officers are enclosed with this Circular which need to be followed by the Programme Directors in Central Office as well as Field Offices.

Sd/-

(J.S. Mishra)CHIEF EXECUTIVE OFFICER

To:1. All Programme Directors in C.O.2. All State/Divisional Directors.

339

GUIDELINES FOR FLOATING TENDER ANDITS EVALUATION CRITERIA

1. Every tender document issued by various Directorates of Central Offices as well as Field Offices has to incorporate the following details:(i) Brief about the KVIC.(ii) Minimum Qualification Criteria indicating: (a) about the Organization of the

proposed bidder, (b) minimum number of experience in the business, (c) technical capacity and (d) financial capacity.

(iii) Scope of Work.(iv) Deliverables.(v) Estimated cost of the work/value of supply.(vi) Time of completion of the work/supply.(vii) Earnest Money Deposit.(viii) Cost of the Tender Document.(ix) Security Deposit/Performance Guarantee, if any.(x) Mode of submission of tender document in two bid system. Whether single

envelope or two envelope bids.(xi) Validity period of the tender.(xii) Last date and time of issuing tender document with place where it will be

available and last date and time of submission of completed tender document.(xiii) Date, Time and Venue of opening of technical bid in presence of interested

bidders.

2. Adequate time should be given for submitting the bid normally three weeks. Tender should be published in daily newspapers having wide circulation as well as display in the KVIC Website having link with National Web Portal of NIC Website. Website address should be mentioned in the newspaper advertisement. In order to minimize the advertisement cost the content of press advertisement should be minimum and the details should be in Website.(xiii) Complete bidding document should be posted in the Website and to permit

prospective bidders to download the same from the Website. In such cases the price of the bid document should be asked for payment along with technical bid in the prescribed manner.

3. Minimum Pre-Qualification Criteria:

(i) Legal Status of Bidder Organization: It should be specified in the tender document about legal status of the bidder whether it will be a Registered Proprietorship Firm / Partnership Firm / Company under Companies Act / Consortium having legal entity having all statutory licenses/registration for carrying out such activity. It should have mandatory ST registration and PAN with I.T. clearance of previous year.

(ii) Experience: The bidder organization should have a minimum experience of 3 to 5 years as on ………………..(date to be specified) in the field of ……………(to the specified depending on the requirement of the assignment).

(iii) Technical Capacity: The bidder shall have successfully completed from start to finish during the past 3 years preceeding (ending last day of month previous to the one in which applications are invited) (a) Three similar completed works

340

costing not less than the amount equal to 40% of the estimated cost or (b) two similar completed works costing not less than the amount equal to 50% of the estimated cost or (c) One similar completed work costing not less than the amount equal to 80% of the estimated cost. Definition of "Similar Work" should be clearly defined.

The bidder should submit client certificate in support of such completed works. Besides, other required details of having minimum infrastructure facility, machineries, technically competent manpower etc. may also be asked for depending on the nature of the assignment/job.

(iv) Financial Turnover : Minimum average annual turnover of the bidder during last three years ending 31st March of the previous financial year should be at least 30% of the estimated value of present work/supply.

(O.M. No. 12-02-1 CTE-6 dated 17.12.2002 and 7-5-2004 issued by CVC may be referred to).

4. EMD (Earnest Money Deposit)/Bid Security:

Bid security has to be obtained from the bidders except those who are registered with Central Purchase Organization, NSIC or the concerned Ministry of Department. Amount of bid security should ordinarily range between 2% to 5% of the estimated value of the work/supply. The exact amount of bid security should be determined accordingly and indicated in the bidding document. The bid security may be executed in the form of Account Payee Demand Draft, Fixed Deposit Receipt, Bankers Cheque or Bank Guarantee from any of the Commercial Banks in an acceptable form safeguarding KVIC's interest in all respect. The bid security is normally to remain valid for a period of 45 days beyond the financial bid validity period. The bid security of unsuccessful bidders should be returned to them at the earliest after expiry of the financial bid validity and latest on or before 30 days after award of the contract.

5. Evaluation of Tenders:

5.1 Introduction:The entire process of tender evaluation and placement of contract must be transparent. All the aspects, which are to be taken into account for evaluating the tenders including the method to be adopted for evaluation of tenders and the techniques for determining the lowest evaluated responsive tender for placement of contract are to be incorporated in the tender enquiry document in clear and comprehensive manner without any ambiguity and/or confusing stipulations therein, so that the interested tenderers can formulate their competitive offer in a meaningful manner and participate in the tendering process with confidence.All the tenders are to be evaluated strictly on the basis of the terms and conditions incorporated in the tender enquiry document (based on which offers have been received) and the terms, conditions etc. stipulated by the tenderers in their tenders. No new condition should be brought in while evaluating the tenders. Similarly, no tender enquiry condition (specially the significant/essential ones) should be over looked while evaluating the tenders. Aim should be to ensure that no tenderer gets undue advantage at the cost of other tenderers and/or at the cost of the purchaser.

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5.2 Preliminary Examination:

5.2.1 All the tenders so received will first be scrutinized to see whether the tenders meet the basic requirements as incorporated in the tender enquiry document. The tenders, who do not meet the basic requirements, are to be treated as unresponsive and ignored.

The following are the important points, for which a tender may be declared as unresponsive and to be ignored, during the initial scrutiny:(i) The tender is unsigned.(ii) The tenderer is not eligible. (Example: The tender enquiry condition says that the bidder has to

be a registered SSI unit; but the tenderer is a, say, Large Scale Unit). (iii) The tender validity is shorter than the required period.(iv) Required EMD has not been provided.(v) The tenderer has quoted for goods manufactured by a different

firm without the required authority letter from the proposed manufacturer.

(vi) Tenderer has not agreed to give the required performance security.(vii) The goods quoted are sub-standard, not meeting the required

specification etc.(viii) Against a schedule in the List of Requirement (incorporated in the

tender enquiry), the tenderer has not quoted for the entire requirement as specified in that schedule.

(Example: In a schedule, it has been stipulated that the tenderer will supply the equipment, install and commission it and also train the purchaser's operators for operating the equipment. The tenderer has however, quoted only for supply of the equipment).

(ix) The tenderer has not agreed to some essential condition(s) incorporated in the tender enquiry.

(Example: Some such important essential conditions are – terms of payment, liquidated damages clause warranty clause dispute resolution mechanism applicable law and any other important condition having significant bearing on the cost / utility / performance of the of the required goods, etc.).

5.2.2 During the above preliminary examination, the purchaser may also find some minor informality and/or irregularity an/or non-conformity in some tenders. The purchaser may waive the same provided the same does not constitute any material deviation and financial impact and, also, does not prejudice or affect the ranking order of the tenders. Wherever necessary, the purchaser is to convey his observation on such 'minor' issues (as mentioned above) to the tenderer by registered letter/speed post etc. asking the tenderer to respond by a specified date also mentioning therein that if the tenderer does not confirm the purchaser's view or does not respond at all by that specified date its tender will be liable to be ignored. Depending on the outcome such tenders are to be ignored or consideed further.

(Example: A tender enquiry stipulates, as an essential condition, that the

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tenderer, along with its quotation, must also submit a certified copy of its latest income tax clearance certificate (ITCC). If a tenderer does not provide this document, the purchaser may ask for it with target date as above. if, the tenderer does not respond by that target date, its offer will be liable to be ignored).

5.2.3 Non-conformities between the figures and words of the Quoted Prices – Sometimes non-conformities/errors are also observed between the quoted prices in figures and that in words. The same is to be taken care of as indicated below:(a) If, in the price structure quoted for the required goods there is

discrepancy between the unit price and the total price (which is obtained by multiplying the unit price by the quantity), the unit price shall prevail and the total price corrected accordingly, unless in the opinion of the purchaser there is an obvious misplacement of the decimal point in the unit price, in which case the total price as quoted shall govern and the unit price corrected accordingly.

(b) If there is an error in a total corresponding to the addition or subtraction of subtotals, the subtotals shall prevail and the total shall be corrected; and

(c) If there is a discrepancy between words and figures the total in words shall prevail, unless the amount expressed in words is related to an arithmetic error, in which case the amount in figures shall prevail subject to (a) and (b) above.

If there is such discrepancy in an offer the same is to be conveyed to the tenderer with target date on the above lines and if the tenderer does not agree to the observation of the purchaser, the tender is liable to be ignored.

5.2.4 Details of all the tenderers, which have been declared unresponsive and to be ignored as per above analysis and, also, the grounds for their becoming unresponsive are to be accurately recorded in the purchase file.

6. Qualification Criteria:After completing the preliminary examination stated above, it is to be examined whether the remaining tenderers (i.e. other than the unresponsive tenderers) meet the required qualification criteria incorporated in the tender enquiry document. The tenderers, which do not meet the required qualification criteria are to be declared unresponsive and not to be considered further. Details of such tenderers, which do not meet the required qualification criteria are also to be recorded in the purchase file along with the grounds for their becoming unresponsive.(Example: The qualification criteria incorporated in the tender enquiry document stipulates, inter alia, that the tenderer should have successfully manufactured and supplied 150 pieces of the required goods during the last one year from the date of tender opening. A tender during the initial scrutiny is found to be responsive; however, thereafter, while scrutinizing the data furnished by it w.r.t. qualification criteria, it is observed that they had manufactured and supplied only, say, 100 pieces of the required item during the last one year. This tender will, therefore, become unresponsive).

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Note: However, in case of Two Bid System, the technical acceptability of the offers are first determined and, thereafter, the financial bids of only the technically acceptable offers are opened for further scrutiny and processing for placement of contract.

7. Evaluation and Ranking:

7.1 Depending on the terms of delivery and the projected requirement, all the applicable components of the costs, as quoted in the responsive tenders, are to be added to work out the ultimate evaluated costs of the tenders. The evaluation is also to include applicable taxes, duties, etc. in the tender prices. Further, if the tender enquiry document provides for any price preference and/or purchase preference for SSI/PSU etc., the same is also to be kept in view while evaluating such tenders.

7.2 Sometimes, while purchasing sophisticated and costly equipment, machinery, etc. the purchase organization also gives special importance to factors like high quality performance, environmental friendly features, low running cost, low maintenance cost, etc. To take care of the same, relevant details are to be incorporated in the tender enquiry document and the criteria adopted to assess the benefit of such features while evaluating the offers are also to be clearly stipulated in the tender enquiry document so that the tenderers are aware of the same and quote accordingly. While evaluating such offers, these aspects are also to be taken into account.

Such details, whenever considered necessary, should be evolved by competent technical authority for incorporation in the tender documents, so that there is no ambiguity and/or vagueness in the same.

7.3 After completing the entire evaluation process for the responsive tenders on equitable basis as above, they are to be entered into a ranking statement in ascending order of the evaluated prices (like L-1, L-2, L-3 … etc.) along with other relevant details, so that a clear picture of their standing as well as comparative financial impact is available at a glance.

8. Reasonableness of Price:

Before placing the contract on the lowest evaluated responsive tender (L-1), the purchase organization is to ensure that the price to be paid is reasonable.

The broad guidelines for judging the reasonableness of price are as under:

(i) Last purchase price of same (or, in its absence, similar) goods

(ii) Current market price of same (or, in its absence, similar) goods

(iii) Price of raw materials, which go into the production of the goods

(iv) Receipt of competitive offers from different sources

(v) Quantity involved

(vi) Terms of delivery

(vii) Period of delivery

(viii) Cost analysis (material cost, production cost, over- heads, profit margin)

NB: Price paid in an emergency purchase or purchase price of goods offered by a firm through 'distress sale' (i.e. when the firm clears its excess stock at throw away prices to

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avoid further inventory carrying cost etc). are not accurate guidelines for future use.

9. Price not Reasonable – If L-1's price is not reasonable, then, in the first place, the purchase organization is to review its own data & details to recheck whether the reasonable price so arrived is correct or not. If it is correct, the purchase organization may, strictly as an exception, negotiate the price only with the lowest evaluated responsive tender (L-1) in an attempt to bring down the same.

If L-1 reduces the price to the desired level, contract may be placed on it but if it does not agree, then further action like re-tendering etc. may be decided by the purchase organization depending on the merits of the case.

rd th (Circular No. 4/3/07 dated 3 March 2007 and Circular No. 01/01/10 dated 20 January 2010 issued by the CVC may be referred to).

10. Lack of Competition – Sometimes the purchase organization may not receive sufficient number of tenders. A situation may also arise where, after analyzing the tenders, the purchase organization ends up with one responsive tenderer. In such situations, the purchase organization is first to check whether while floating/issuing the tender enquiry, all necessary requirements like standard tender enquiry conditions, industry friendly specification, wide publicity, sufficient time for formulation of tenders, etc. were fulfilled. If not, the tender is to be re-issued/re-floated after rectifying the deficiencies. However, if after scrutiny it is found that all such aspects were fully taken care of and in spite of that the purchaser ends up with one responsive tender only, then contract may be placed on that tenderer provided the quoted price is reasonable.

11. Dividing the Quantity:

As per the standard procedure, each schedule of requirement incorporated in the tender enquiry documents is to be covered on the lowest responsive tenderer for that schedule without dividing the same. The tenderer who does not quote for the complete schedule as required is normally to be treated as unresponsive and ignored. However, there may be special occasions of purchase of very large quantities of goods which are beyond the capacity of a single tenderer and the lowest responsive tenderer is unable to take the load of the entire quantity. In such cases, the remaining quantity may be ordered on the second lowest responsive tenderer (L2) at the rates offered by the lowest responsive tenders (L1), as far as feasible and for this purpose negotiation may be held with the above tenderer (viz.L2). In such cases, if may also become necessary to divide the requirement under a schedule by placing multiple contracts for part quantities on more than 2 responsive tenderers. Such eventuality should normally be foreseen and provided for in the notice inviting tenders. The formula proposed to be adopted for allocation of orders to multiple (responsive) tenderers should be clearly brought out in the notice inviting tenders. The splitting of order by purchasing organization should be an exception rather than a rule.

12. Award of Contract:

Before expiry of the tender validity period, the purchase organization shall notify the successful tenderer in writing, by suitable foolproof method, that its tender (briefly indicating therein relevant details like quantity, specification of the goods ordered, prices etc.) has been accepted. In the same communication, the successful tenderer is to be instructed to furnish the required Performance Security within a specified

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period (generally 21 days). Promptly after the above notification, the purchase organization is also to issue the contract to the successful tenderer asking therein, inter alia, to send its unconditional acceptance of the contract within fifteen days. It should also be made known to the successful tenderer that in case, it does not furnish the required performance security or does not accept the contract within the stipulated target date, such non-compliance will constitute sufficient ground for forfeiture of its EMD and processing the case for further action against it (the successful tenderer).

13. Publication of Tender Result – The name of the successful tenderer awarded the contract should be mentioned in the notice board/bulletin/web site of the concerned Ministry/ Department.

14. Return of EMD to Unsuccessful Tenderers:

The EMDs of the unsuccessful tenders are to be returned to them without any interest, whatsoever as indicated under para 7.3 of Chapter 7.

DO'S AND DON'T FOR OFFICERS ON TENDERS

Do’s

Ø For every work, it is necessary to obtain, the concurrence of the competent authority of the administrative department before commencement. The formal acceptance of the proposals by the competent authority is termed as “administrative approval”. The basic purpose of obtaining “administrative approval” is

• To check whether the work is really required.

• To see whether the estimate is not an inflated one.

• To see whether yardstick for various provisions are not exceeded.

Ø Administrative approval provides an opportunity to take decision regarding scope of work, specifications and cost involved. Otherwise, there is likelihood of misuse of the powers by the subordinate authority.

Ø Do ensure that funds meant for a particular work/job are not diverted to other works/jobs. There is no financial discipline in this case apart from utilizing the funds for the lavish expenditure.

Ø Do prevent inflated Provisions in the Revised Estimates. At the conception stage itself, inflated provisions are sometimes incorporated in the preliminary estimate and the margin thus available in the sanctioned estimate is misused for non-essential works and also for awarding the work at higher rates to the contractor.

Ø Do ensure that major changes are not made during execution. The scope and specifications of the work are not drastically changed by the executing authorities. This exercise is mainly to ensure that no undue benefit to the contractor by allowing him to execute the items at higher rates is given. Apart from the high rates, the contractor should not get additional work without competition.

Ø Do ensure that there is no delay in award of work because in some cases there has been unreasonable delay in administrative approval after submission of the

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estimate, planning and design, inviting tenders, acceptance and award of work after receipt of administrative approval. This sometimes results in exorbitant cost overruns funning into lakhs of rupees.

Ø Do conduct check on the preliminary estimate prepared by Consultants.

Ø The consultants engaged for planning, design and execution of work may furnish the preliminary estimates with ambiguous provisions and inflated rates etc. The administrative departments simply sanction these estimates without scrutiny resulting in the approval of inflated cost estimates which can be a source of corruption.

Ø A consultant prepared an estimate for a project/work. The estimate gives lump sum amount for various components without giving any basis for the Last Supplier amount.

Ø The administrative approval has been accorded without checking the estimate. During the intensive examination it was found that the estimate is an inflated one.

Ø Do observe Yard stick-There must be some yard stick prescribed for various requirement such as floor area, finishing items, air-conditioning works etc., for various type of buildings for a particular use. The competent authority should see that these yard sticks are observed strictly while according administrative approval to safeguard the public money against its misuse for personal comfort and benefit.

Ø Do consider Unit Cost – The estimate prepared for obtaining administrative approval should have some basis, such as unit cost etc. Some organizations such as CPWD follow well-established practice, such as “plinth area rates” for preparation of estimate for accord of administrative approval. If no such practice is adopted, it is difficult to exercise control over the cost, and there is every possibility of approving an inflated cost estimate by the administrative authority.

Ø Do prepare Detailed Estimate & Technical Sanction – The detailed estimate supported by complete details such as schedule of all items, quantities, rate, cost drawings, specifications rate analysis, measurement details needs to be prepared for each work and technical sanction of competent authority should be obtained. Technical sanction ensures that the proposal is structurally sound and estimate is an economical one. The nomenclature of various items of works should be without ambiguity. The rates should be adopted from standard schedule of rates and for non-schedule items, rates should be based on proper analysis of rates. If the estimate is prepared by the Consultants, the estimate has to be checked and sanctioned by the competent engineers of the organization which appointed the consultant to ensure economy as well as structural soundness of the project/work.

Ø Do check the detailed estimates prepared by the consultants because estimates prepared by the consultants are usually inflated one. Invitation of tenders based on such inflated estimates often lead to the possibility of acceptance of the same at higher rates extending undue financial benefit to the contractor/party.

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Ø Do follow schedule of rates and prepare/conduct analysis for non-schedule items. Detailed estimates should be prepared on the basis of standard schedule of rates and in case standard schedule of rates is not followed, the rate need to be analysed based on National Building Organization/CPWD guidelines etc. If this is not followed, it results in adoption of arbitrary rates for items in the Detailed Estimate. This ultimately will lead to inflated estimated cost, which could be a source of corruption.

Ø Do adopt details and reference to drawings for quantities. Sometimes details of measurements and drawings are not made as a part of the detailed estimate resulting in arbitrary adoption of quantities in the estimate. This often led to abnormal and unreasonable deviation in the quantity of various items of the work. The above again can be a source of corruption during execution to extend undue benefit to the contractor.

Ø Do verify use of imported material in the estimate prepared by the Consultants. It is the tendency of the consultants to use costly as well as imported items in the estimate to increase the cost of work as the fee payable to them is fixed as certain percentage of the cost of work. Due to this, the works are awarded at high rates, thereby, the consultants and contractors are benefited during the said process which had become the source of corruption.

Ø Do ensure that pre qualification criteria, performance criteria and evaluation criteria are incorporated in the bid documents in clear and unambiguous terms as these criterions very important to evaluate bids in a transparent manner. Whenever required the departments/organizations should have followed two bid system i.e. technical bid and price bid. The price bids should be opened only of those vendors who were technically qualified by the Department/ Organization.

DON’ts

Ø Don’t do that the process of preparation of detailed estimate and call of tenders was dispensed with and contractors were asked to execute the work.

Ø Don’t give additional work straight away to the contractor who is executing the adjoining work, thereby extending undue favour to the contractor/party who gets the additional work without going through the competition.

Ø Don’t invite tender on the plinth area basis and award the work at exorbitantly high rates based on the rough cost estimate prepared by the plinth area method.

Ø Don’t accord sanction for the estimate without ensuring economy and structural soundness.

Ø Don’t give ambiguous nomenclature of items. Any ambiguity in the nomenclature of the items in the estimate results in quoting of erratic rates by the contractor as well as in disputes, ultimately resulting in loss to the Organization.

Ø Don’t adopt arbitrary lump sum rates. Coefficients for various components of analysis of rates were taken arbitrarily such as contractor’s profit to the tune of 25-30% against the standard 10%. This formed the basis for awarding the work

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at much higher cost than the justified.

Ø Don’t repeat same component in more than one item. Repetitive stipulation of the same component in more than one item in the detailed estimate results in over payment to the contractor e.g. Cement, Steel, Electrical items, etc.

Ø Don’t repeat technical sanction based on earlier accepted rates. Some times, technical sanction of detailed estimates prepared based on the high rates quoted by the contractor and accepted in earlier tenders. It resulted in the high estimated cost, which was used for award of work to the contractor at higher rates extending undue benefit to contractor by corrupt officials.

Ø Don’t indulge in modifications/deviations of conditions specified in the original/standard conditions, after placement of order or finalization of tender by the Competent Authority.

Ø Don’t accept higher rates on the plea that the accepted offer is lowest without adequately justifying the reasonableness.

Ø Don’t indent/procure items in excess of normal annual consumption pattern, with a view to favour a chosen party.

Ø Don’t finalize/accept tenders of materials with short expiry dates.

PRE-QUALIFICATION CRITERIA (PQ)

Ø The pre-qualification criterion is a yardstick to allow or disallow the firms to participate in the bids. A vaguely defined PQ criteria results in stalling, the process of finalizing the contract of award of the contract in a non-transparent manner.

Ø Sometimes PQ criteria from some similar work executed in the past is picked up/incorporated without appropriately amending the different parameters according to the requirements of the present work.

Ø Generally only contractors known to the officials of the organization and to the Architects are placed on the select list. This system gives considerable scope for malpractices, favoritism and corruption. It is, therefore, necessary to fix in advance the minimum qualification, experience and number of similar works of a minimum magnitude satisfactorily executed in terms of quality and period of execution.

Ø While framing the pre-qualification criteria, the end purpose of doing so should be kept in view. The purpose of any selection procedure is to attract the participation of reputed and capable firms with proper track records. The PQ conditions should be exhaustive, yet specific. The factors that may be kept in view while framing the PQ criteria includes the scope and nature of work, experience of firms in the same field and financial soundness of firms.

Ø Don’t accept fake and doubtful proof of pre-qualification, such as single work order, performance certificate, intentionally or unintentionally.

Ø Don’t relax “pre-qualification” criteria to suit particular Vendor while rejecting the other for not meeting out certain “pre-qualification criteria”.

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FOR CIVIL/ELECTRICAL WORKS (AS PER CTE’S GUIDELINES) stØ Average Annual financial turnover during the last 3 years, ending 31 March of

the previous financial year, should be at least 30% of the estimated cost. Ø Experience of having successfully completed similar works during last 7 years

ending last day of month previous to the one in which applications are invited should be either of the following:

Ø Three similar completed works costing not less than the amount equal to 40% of the estimated cost.

Ø Two similar completed works costing not less than the amount equal to 50% of the estimated cost.

Ø Definition of “similar work” should be clearly defined. Ø In addition to above, the criteria regarding satisfactory performance of works,

personnel, establishment, plant, equipment etc. may be incorporated according to the requirement of the Project.

Ø For Store/Purchase Contracts Ø Pre-qualification/Post Qualification shall be based entirely upon the capability

and resources of prospective bidders to perform the particular contract satisfactorily, taking into account their (i) experience and past performance on similar contracts for last 2 years (ii) capabilities with respect to personnel, equipment and manufacturing facilities (iii) financial standing through latest Income Tax Clearance Certificate, annual report (balance sheet and Profit & Loss Account) of last 3 years. The quantity, delivery and value requirement shall be kept in view, while fixing the PQ criteria. No bidder should be denied pre-qualification/post qualification for reasons unrelated to its capability and resources to successfully perform the contract.

ADVANCE PAYMENT & BANK GUARANTEES

Do’s

Ø Payment of mobilization advance should be made only in cases of select works and advance should be interest bearing so that the contractor does not draw undue benefit. (As per CVC guidelines circulated vide Office Memorandum No, NU/POL/19 dated 08.12.97). The payment of interest free advance is in contravention of the guidelines issued by CVC.

Ø Do take timely action for revalidation /encashment of the Bank Guarantee for the advance payment. Don’t allow Bank Guarantees to lapse, thereby, jeopardizing financial interest of the Corporation.

Ø Sometimes though the initial advance payment of say 10-20% is released against the Bank Guarantee, however, further 40-50% progressive payments also made simply against certification of Internal Auditors that the amount claimed does not exceed the progressive expenditure. The payments made in a span of hardly 2 months much before the bulk production clearance and without safeguards like Bank Guarantee etc. The Bank Guarantee for 20% initial advance payment was also followed to lapse. Thereafter, the Contactor / Party / Company don’t make any supplies or execute the work, thereby keeping huge amount un-recovered.

Ø Sometimes, the effective date of contract is linked with the date of receipt of Bank Guarantee for advance payment. This is detrimental to the purchaser’s interest as in the absence of a specific date for submission of Bank Guarantee, it

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would not be possible to establish specific date of breach to enforce the contractual remedies. In such cases, the supplier will get full opportunity to wriggle out of the contract, if he so desires without fulfilling contractual obligations.

Ø The advance payments need to be generally discouraged except in specific cases.

Ø Wherever payment of advance is considered unavoidable, the same should be interest bearing as per CVC guidelines and be allowed after getting an acceptable Bank Guarantee for an equivalent amount with sufficient validity so as to fully protect the Govt. interest. Some reasonable time should be stipulated for submission of Bank Guarantee so that contractual remedies could be enforced, if required.

Ø The Bank Guarantees need to be properly examined with respect to the acceptable format and any conditions deterrent to the Govt. interest should be got withdrawn before acceptance besides verifying the genuineness of the Bank Guarantees from the bankers.

DON’ts

Ø Don’t release advance payment without equivalent amount of Bank Guarantee. Some times, despite provision in the contracts for releasing advance payment against Bank Guarantee, because there are occasions when suppliers fail to discharge their contractual obligations and huge advances still outstands for the last several years.

Ø Don’t accept defective/conditional BG. Normally, the BGs permitting encashment without any demur-merely on a demand from the purchaser is accepted. However, in some cases, though the Bank Guarantees submitted by the suppliers were conditional, stipulating “the encashment only if it is established the supplier had failed to comply with his contractual obligations, “but, the same were accepted.

PERFORMANCE BANK GUARANTEES (PBGS)

Ø Sometimes the requirement of performance Bank Guarantee is not stipulated or its is stipulated with different amount of security deposit/ Performance Bond. Sometimes amount of Performance bank Guarantee is too low in comparison to the contract value.

Ø The validity of Bank Guarantees is also not being scrupulously monitored and the extension in the Bank Guarantee commensurate with the delivery period extensions is not being sought resulting in loss to Corporation in the event of non-performance of the contract.

Ø In order to safeguard the Corporation interest,it would be appropriate to take reasonable amount of Performance Bank Guarantee valid upto warranty period or due performance of the contract. The validity of the Bank Guarantees needs be carefully monitored and whenever extension in the delivery period is granted the validity of Bank Guarantee should also be appropriately extended so as to protect the Corporation interest.

Ø The genuineness of the BGs(Bank Guarantees) should be checked from the issuing bank in variably.

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STIPULATION OF DELIVERY PERIOD IN THE CONTRACT

Ø Delivery period is the essence of any contract. Specific delivery period with reference to the terms of delivery should be incorporated.

Ø Only the date of offering the equipment for Pre-despatch inspection is stipulated as the delivery period, though the terms of delivery are on CIF (Cost Insurance Freight) basis/FOR (Freight on Receipt) destination basis.

Ø Only the date of completion of supply of the equipment is stipulated as the delivery period even though the installation & commissioning of the equipment is also to be carried out by the supplier. For installation & commissioning, no specific date is stipulated. In absence of any contractual binding in this regard, the suppliers claim the full payment for supplies of equipments and then tend to behave in an irresponsible manner and do not bother to take up timely installation/commissioning resulting in the equipment remaining uninstalled for months/years together.

Ø The specific delivery period for supply as per the terms of delivery such as FOR (Freight on Receipt) Station of dispatch/destination and for completion of installation with the necessary provision for Liquidated damages/Penalty clause in the event of delay in supplies/installation needs to be incorporated in the contract.

GUARANTEE/WARRANTY TERMS

Do’s

Ø Do ensure that the modalities for enforcing the warranty obligations are incorporated.

Ø Due to incomplete guarantee/warranty terms, the suppliers take full leverage and do not bother to honour the guarantee/warranty obligations resulting in the equipment remaining defective and unutilized and thereby causing loss to the Corporation.

Ø Sometimes where the installation of the equipment is also included in the scope of contracts but the standard guarantee/warranty clause of 15 months from the date of shipment/ dispatch or 12 months from the date of delivery, whichever is earlier is being incorporated. With the result due to delay in installation of the equipment, the guarantee/warranty expires even before the installation of the equipment or sometimes a very short period of guarantee / warranty is available.

Ø Detailed guarantee/warranty clause embodying all the safeguards be incorporated in the tender enquiry and the resultant contract. Do ensure that in installation / commissioning contracts, the guarantee/warranty should reckon only from the date of installation/ commissioning.

DON’ts

Ø Don’t incorporate sketchy guarantee/warranty clause.

Ø Don’t forget to incorporate guarantee/warranty clause invariably.

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POST MODIFICATION OF CONTRACT TERMS/ SPECIFICATIONS

Ø After award of the contract, amendments / modifications having financial implications are authorized in the contract terms/specifications gibing undue benefit to the suppliers.

Ø After conclusion of the contract, any relaxation in the contract terms / specifications should be severely discouraged. However, in exceptional cases where the modifications/amendments are considered to be absolutely essential, the same should be allowed after taking into account the financial implications for the same.

Ø Post-contract amendments should be an exception without having any financial repercussions and contravening the accepted tender conditions.

Ø While acceding to a request for amendment to the provision of a purchase order, ensure that lowest offers have not been over looked at the time of acceptance for not having same provisions.

Ø Specifications should not be diluted e.g. though specific makes/models of an equipment are specified in the contract as per firm’s tender, subsequently, supply of some more alternative makes/models of the equipment are without taking into account the financial implications thereof. It has been observed that generally lower priced alternative makes/models are being included subsequently in the contract giving undue benefit to the supplier.

Ø The payment terms should not be amended in order to favour the supplier e.g. amendment to give loans and advance payment even when there is no provision in the contract for making advance payments.

Ø Pre-despatch inspection clause should not be waived subsequently without valid reasons.

Ø Warranty/Guarantee clause should not be liberalized / waived as it is likely to damage the interests of Corporation and cause undue benefit to the supplier as well.

Ø The final bill is paid and security deposit refunded without effecting recoveries.

Ø Enhancing the contract rates for some items of works or supplies when the contract does not provide for such enhancement.

Ø Substitution and deviation from the original contract conditions.

POST-CONTRACT MONITORING

Do’s

Ø In some cases even after expiry of delivery schedule stipulated in the contract and without extension of time granted by the purchaser, the consignees keep on exchanging correspondence with the suppliers and thereby keep the contract alive. This may result in serious legal complications if it is intended to cancel the contract.

Ø Generally, the purchaser extends the delivery period of the contracts. Thus don’t allow supplier to extend the delivery period of the contract at his own.

Ø Determine the completion period of the contract under award.

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Ø Do incorporate Liquidated damages/Penalty clause for imposing the penalty in case of failure of the suppliers to deliver the equipment within the stipulated schedule.

Ø The suppliers quote short delivery period and in absence of deterrent conditions in the contract, manage repeated extensions. In some of the cases, it has been observed that Liquidated damages for delay in supplies are not being levied and recovered from the suppliers.

Ø There had been delay attributable on the part of the supplier in making the timely supplies, however, sometimes the letter of credit is extended with the proviso that the L/C extension charges shall be borne by the Corporation, thereby giving undue benefit to the suppliers.

Ø Do accord priorities to the post contract follow up. The delivery period should be extended on bonafide reasons only and not in a routine and casual manner.

Ø After expiry of delivery period, the consignees should be refrained from exchanging correspondence with the supplier. In case of delay in supplies by the supplier, the liquidated damages to the extent possible need to be recovered.

Ø In case of delay attributable on the part of the supplier, the L&C extension charges should be to supplier’s account. In nutshell, there is a need to discipline the suppliers so that the non-performers could be weeded out and the suppliers which can be relied upon with consistent performance, in terms of quality and delivery schedule are encouraged.

Ø Sanctioning of modifications in the specifications when parties are unable to supply stores strictly in accordance with the samples or specifications.

Ø Do report and monitor on performance of the Contractors/ Licensees, etc. from time to time.

DON’ts

Ø Don’t dilute the specifications e.g. though specific makes/models of an equipment or item are specified in the contract as per firm’s tender, however, subsequently supply of some more alternative makes/models of the equipment or item are authorized without taking into account the financial implications thereof.

Ø Don’t include lower priced alternative makes/models subsequently in the contract giving undue benefit to the supplier.

Ø Don’t amend payment terms to favour the supplier e.g. advance payments are authorized even when there was no provision in the contract for making advance payments. At times higher advance payments than stipulated in the contract are authorized.

Ø Don’t waive Pre-dispatch inspection clause without any justified reason, there by jeopardizing the quality aspects as per contractual requirement.

Ø Don’t waive submission of Performance Bank Guarantee.

Ø Don’t change destination clause. Sometimes, even though the contracts were placed on FOR destination, the locations of the consignees are changed nearer to the supplier’s premises without taking into account the benefit of freight charges.

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Ø Don’t handle post contract monitoring in a very casual and lackadaisical manner. Due to lack of coordination and diversified approach followed by various agencies in the implementation of the projects the same resulted in time and cutover-runs.

Ø Don’t accept the material and release payments as and when the supplier makes the supplies.

Ø Don’t disregard to the contracting norms relating to delivery period, which is the essence of the contract.

EARNEST MONEY DEPOSIT (EMD)

Do’s

Ø Ignore the bids not accompanied with earnest money deposit along with the tenders as per bids requirements.

Ø Do ensure that the primary objective of submission of Earnest Money Deposit (EMD) is to establish the earnestness of the bidder so that he does not withdraw, impair or modify the offer within the validity of the bid.

Ø Submission of EMD helps in restricting if not eliminating ‘speculative’, ‘frivolous’ or ‘wait and see’ bids.

Ø Do specifically stipulate in the tender that the offers without Earnest Money Deposit would be considered as unresponsive and rejected.

Ø Do incorporate Earnest Money Deposit in case of Two-bid system as a fixed and reasonable amount on the basis of estimated value of the purchase.

Ø Do have a fixed policy in regard to EMD. Sometimes tenders without Earnest Money are considered and sometimes they are rejected out right in order to favour a particular party.

DON’ts

Ø Don’t stipulate insufficient Earnest Money Deposit amount in the tender document for protecting the Corporation interest in case of breach committed by the bidder.

Ø Don’t ask the bidders to submit EMD, after tender opening.

Ø Don’t relax submission of Earnest Money Deposit as it has financial implications besides giving encouragement to the bidders to submit frivolous bids.

Ø Don’t stipulate Earnest Money Deposit as percentage of the tender cost instead of fixed amount in the two-bid system. In the Two-bid system, if EMD is taken on the basis of some stated percentage of tender value and with the announcement of the amount of EMD submitted by the bidders at the time of tender opening, the same will give every bidder a good indication of the prices quoted by the competitors by making back calculations. A bidder can use this information to the disadvantage of his competitor, if prices are subsequently modified.

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OPEN TENDERS

Do’s

Ø In addition to existing rules and practices of publicity of tenders through Newspapers, Trade Journals and providing tender documents manually and through post, etc., the complete bid documents along with application form should be published on the web site of the KVIC as well as CPP Portal, Complete web site address must be given in the advertisement/NIT published in the newspapers.

Ø Till such time the penetration of information technology is adequate and dedicated website for Government tenders is available, Organization may continue with publishing of NIT(Notice Inviting Tender) in Newspapers in concise format and put the detailed information in their respective websites.

Ø Do finalise tenders within validity period.

Ø Do properly access and evaluate bids particularly special conditions offered by tenderer.

Ø Don’t reject the tender of new bidder(s) on flimsy or unrealistic grounds in order to favour the existing bidder(s).

DON’ts

Ø Don’t accept an unsolicited offer from other than the lowest tenderer and award the contract without giving an equal opportunity to others.

Ø Don’t consider a tender based on false information given in the general and special conditions of contract without the knowledge of tenderers.

Ø Don’t place orders at higher rate on flimsy grounds, technical or otherwise.

Ø Don’t shorten completion period/delivery schedule of the contract/WO(Work Order)/PO(Purchase Order) etc.

Ø Don’t hold file, after acceptance of the tender, for arrival of ‘speed money’ before the orders are issued.

Ø Don’t refuse issue of tender forms on flimsy grounds.

Ø Don’t issue tender documents without verifying eligibility criteria.

Ø Don’t publish the NIT (Notice Inviting Tender) in newspapers at far off places rather than the area of demand.

Ø Don’t evaluate incorrect facts and figures particularly special concession offered by the parties.

Ø Don’t process tendering action on single response against open tendering as a normal course or except in very specific unavoidable circumstances, and without keeping due record of such circumstances.

LIMITED TENDER

Ø Don’t do that in order to fulfill the condition of obtaining quotations from more than one firm, three quotations are obtained from a single source but on different letterheads, two of which may be pertaining to non-existing firms. This is generally done for procurement of store items.

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Ø Don’t inform rates quoted by the other two suppliers so as to enable the third favoured firm to quote a slightly lower rate.

Ø Sometimes the staff deputed to obtain quotations from the market do so from the firms owned by their sons, daughters, wife and close relations only.

Ø Don’t obtain quotations from benami firms belonging to officers/staff/relatives of the IRCTC.

Ø Don’t split requirement to bring the tender value within the powers of the lower level sanctioning authority.

Ø Don’t include favorite firms in the list of limited tender although not eligible.

Ø Don’t include dummy firms to inflate/delete the number and ultimately consider favoured firms.

Ø Don’t accept higher rates on the plea that the accepted offer is lowest without adequately justifying reasonableness; and

Ø Don’t ignore the lowest offers on the plea of being technically unsuitable or due to unsatisfactory performance.

Ø Don’t prepare defective tender schedule lacunae in technical description necessitating clarifications or negotiations after opening of tenders.

Ø Don’t consider a tender based on data materially different from that given in the general and special conditions of the contract without the knowledge of tenderers.

Ø Don’t make out special case for issue of LTE, other than approved, registered vendors who would not meet pre-qualifications in press/open tender.

Ø Bulk requirements of stationary items of daily office use are split so as to bring within financial limits of interested officials and orders are placed for particular ‘brands’ only, though not of best quality under limited Tender system.

Ø Don’t accept furniture made of ordinary wood against teak wood furniture or teak wood of an inferior quality under limited Tender enquiry system.

PROCUREMENT OF STORES ITEMS

Ø Don’t book transaction of purchase and issue of the stores without physical procurement particularly in the consumable items.

Ø Don’t modify description of the items so as to make them non-stock items, leading to local purchase.

While accepting store items do ensure that the actual inspection of stores including inspection of different stages of production affords no opportunities for corrupt practices.

Ø Do always accept material strictly as per the specifications and wherever the material supplied is of any inferior specifications but acceptable on technical grounds, the same should be accepted only after off setting the financial implication thereof with prior concurrence of Competent Authority in exceptional cases only.

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Ø For any recurring type of consumable items particularly in catering always go for rate contract rather than procuring the same in piecemeal basis from whatever source.

Ø Do ensure the consumption pattern of an item before placing indent for its procurement.

Ø Always insist on stock verification of the store items at the time of taking over the charge.

Ø Always maintain bin cards/ledgers/prescribed records for every issue of item(s) from store rather than postponing the entries to a later date.

Ø Don’t place indent for high cost equipment or item unless the same is necessary for the organization.

Ø Don’t manipulate the Stores Receipt Vouchers (SRVs) and Store Issue Vouchers (SIVs) in collusion with indenting department.

QUOTATIONS/TENDERS

Do’s

Ø Do allow adequate and reasonable time for opening of tenders with a view to get maximum response.

Ø Do ensure timely supply of copies of approved plans for tenderers, where special items rates to be quoted.

Ø Do record in writing reason for non-issue of tender.

Ø Do give wide publicity including publication in local newspapers except in the case of proprietor items.

Ø Do always observe specified dates and timings for receipt of tenders and opening thereof.

Ø Do ensure that the list of contractors/licensees/parties is kept job wise, value wise and performance wise so that assessment of the party is not required at the time of award of work.

Ø Do assess the rates of the extra items and substituted items well before the award of the contact rather than putting the same in abeyance and taking up the same after the item has been executed.

DON’ts

Ø Don’t call Tenders under urgent category unless there is actual urgency.

Ø Don’t deliberately split the work to bring it in the category of limited tender.

Ø Don’t obtain quotations in an open cover/envelope.

Ø Don’t award work at high rates;

Ø Don’t execute the work even before calling or acceptance of quotations.

Ø Don’t change the offer of the lowest tenderer to boost up the rates, while still remaining lowest.

Ø Don’t change the Tender Committee members once constituted, without prior approval of Competent Authority.

Ø Don’t consider delayed/late tenders except under specified exceptional circumstances, with the approval of Competent Authority.

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Ø Don’t allow anomalies in evaluation of special conditions to affect the acceptance of the offer recommended.

Ø Don’t tender a work without indicating the complete scope of the work.

Ø Don’t give tender documents of approved parties to one party as it would lead to manipulations.

Ø Don’t accept open quotations at any stage of tendering.

Ø Don’t entertain letter/representations of tenders subsequent to the opening/negotiations/ consideration of tenders.

Ø Don’t consider individual items rates which are abnormally high or unworkable in respect of major items of work in a tender.

Ø Don’t consider a single tender unless the work is very urgent with prior approval of the Competent Authority.

Ø Don’t treat the Tender Committee’s recommendations with dissenting notes from one of more members of the Tender Committee, as a unanimous recommendation.

Ø Don’t advise the Tender Committee prior to their deliberations on the suitability or otherwise of any particular offer.

Ø Don’t order negotiation if the tender committee recommended for fresh tenders due to poor response.

Ø Don’t accept modified offers, not considered by the Tender Committee.

Ø Don’t allow addition/deletion in the minutes of the tender committee.

Ø Don’t operate non-schedule items where it is possible to do work as per scheduled items or a combination thereof.

Ø Don’t operate non-schedule items without sanction of the competent authority. In exceptional cases where it has to be done, maintain necessary site records.

Ø Don’t award works on quotations in a routine manner and strictly follow annual financial limits laid down.

Ø Don’t allow two or more agencies to do similar works at one site. Departmental works and works being executed through contracts should not be allowed to be mixed.

Ø Don’t give any advance intimation of the indent requirements to friendly parties.

Ø Don’t refuse or allow delay tactics in supply of tender documents.

Ø Don’t extend the date of submission tenders without justification and approval by the Competent Authority, wherever, it is done, due notices should be given to all interested parties.

AMENDMENTS IN THE CONTRACTS/WORK ORDERS

Ø Don’t waive or modify on inspection clause.

Ø Don’t relax technically rigid requirements.

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Ø Don’t relax commercial terms e.g. waiving Security Deposit or exemption from furnishing Bank Guarantee against warranty obligations, extension of delivery period, change of consignee, relaxed payment terms etc.

Ø Don’t make amendments in the contracts/work orders in a routine manner. It should be in exceptional cases.

Ø Don’t entertain representations/letters from the tenderers subsequent to the opening, consideration and finalization of the contract/work order and issue amendment in the Purchase/Work Order having financial implication.

Ø Don’t make amendments for payment of bonus to Architects or contractors when such payments are not admissible under the original terms of the contract.

Ø Don’t enhance the contract rates for some items of works or supplies when the original contract does not provide for such enhancement.

Ø Don’t change in the form of contracts after the contracts have been entered into; providing for change in rates and quality and various escalations; giving price preference; extension of time for performance of the contract, non-inspection or harassment during inspections, acceptance or refusal of modifications in the specifications, determination of imposition of damages in case of non-performance or delayed performance and by delaying payments.

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No. DKC/Khadi/DL/Policy/2013-14 Date: 06.05.2013

- CIRCULAR -

SUB: Guidelines for Certification / Registration (direct enlistment) of Khadi

and Polyvastra Institutions - regarding.

REF.: 1. Standing Order No. 1672 dated 09.07.2008

2. Corrigendum No. DKC/Direct Listing/Policy/09-10 dt. 9.7.2009

3. Addendum No. DKC/Direct Listing/Policy/10-11 dt. 16.4.2010

4. Circular No. DKC/Khadi/DL/Policy/2011-12 dt. 25.5.2011

The modalities / procedure to be adopted in enlistment of new institutions was communicated vide Standing Order referred at 1 above and subsequent Corrigendum & Addendum referred at 2 & 3 and Circular at 4 above.

th th2. The Commission in its 610 and 611 meetings held on 27.02.2013 and 20.03.2013 deliberated the issue of granting Khadi Certificate by Central Certification Committee (CCC) to new Khadi Institutions and enlistment of institutions which are not possessing Khadi Certificates. After detailed deliberations, the following decisions are arrived at:

i) While Zonal Certification Committee is the authority for renewal of Khadi/Polyvastra Certificates, new Khadi/Polyvastra Certificates are issued by Central Certification Committee (CCC) with the recommendation of Zonal Dy. CEOs. In this connection, Commission directed that in future all new Khadi/Polyvastra Certificates should be issued by the CCC with the concurrence of Dy. CEOs as well as Zonal Member.

ii) While the authority for direct enlistment of Khadi institutions has been deletated to Zonal Dy. CEO, Commission directed that in future all direct listing of Khadi institutions should be done by Zonal Dy. CEO with the concurrence of the Zonal Member.

iii) Further, it is mandatory for an institution to obtain Khadi/Polyvastra Certificate within one year from the date of direct listing, failing which the said recognition of direct listing of the institution would be automatically cancelled.

iv) In order to streamline the process of new certification and direct enlistment, it is advised that the institutions should obtain new certificate before they are enlisted.

3. State / Divisional Directors are hereby advised to comply the decision of the Commission accordingly with immediate effect.

4. This is issued with the approval of Chief Executive Officer.

Sd/-


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To:1. All State / Divisional Directors of KVIC.

2. All CEOs/MD/Member Secretary of State KVIB.

Copy to:

1. Joint Secretary, MSME, Govt. of India, New Delhi for information.


3. All Zonal Dy. CEOs of KVIC for information.

4. Secretary to Chairman, KVIC, Mumbai - 56.

5. OSD to CEO, KVIC, Mumbai - 56.

6. A.O., FA Cell, KVIC, Mumbai - 56.

7. Chief Vigilance Officer, KVIC, Mumbai - 56.

8. Joint CEO, KVIC, Mumbai - 56.

9. All Directors in Central Office, KVIC, Mumbai - 56.

10. Director (IT) for hosting the Circular on web site.

11. Director (Publicity) with a request to publish the Circular in the ensuing issue of Jagriti.

12. Hindi Officer, Hindi Cell, C.O., KVIC, Mumbai - with a request to furnish the Hindi version of the circular.

Sd/-DIRECTOR (KHADI CO-ORDINATION)

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CHAPTER – XI

FORMAT OF LEGAL DOCUMENTS

1. LEASE AGREEMENT

THIS INDENTURE OF LEASE MADE at ……………………… this …………………day of …………………….................................……in the Christian Year 1985 BETWEEN Shri/Smt………………………………………………………………. Adult Indian Inhabitant residing at …………………………………………….. hereinafter called “the Lessor” (which expression shall unless it be repugnants to the context or meaning thereof mean and include his/her heirs, executors, administrators and assigns) of the ONE PART and the Khadi and Village Industries Commission, a body corporate established under the Khadi and V.I.Commission Act (Union Act 61 of 1956) having its Central Office at “Gramodaya”, Irla Road, Vile Parle(West), Bombay-56, hereinafter called “the Lessee” (which expression shall unless it be repugnant to the context or meaning thereof be deemed to include its Successor or Successors in office and assigns) of the other PART.

WHEREAS the Lessor aforesaid is the absolute owner seized and possessed of and otherwise well and sufficiently entitled to the land with buildings and structures standing hereditaments the thereon and premises situate lying and being at ………………………………………………………… bearing Municipal No………………………… Village Panchayat No………… Tika No………………… Survey No…………………and City Survey No………. in the State ……………………………. More particularly described in the Schedule hereunder written and delineated on the plan annexed hereto and shown thereon surrounded by red coloured boundary lines hereinafter for brevity’s sake referred to as the “Demised Premises”.

AND WHEREAS by mutual negotiations BETWEEN THE Lessor and the Lessee, the Lessor has agreed to give on lease and the Lessee has agreed to take on lease the said “Demised Premises” on a monthly/yearly rent of Rs………………………….. and on certain terms and conditions more particularly mentioned hereunder :

NOW THIS INDENTURE WITNESSETH AND it is hereby agreed by and BETWEEN THE PARTIES hereto as under :-

1) That, in pursuance of the said agreement & in consideration of the rent hereby reserved and covenants, conditions, stipulations and agreements on the part of the Lessee to be observed as hereunder mentioned, the Lessor doth hereby demise unto the Lessee all that piece of parcel of land with buildings and structures standing thereon bearing Plot No…………………. Tika No…………………… House No………………. situated and being at …………………….. in the Registration District and Sub-District of …………………… in the State of ………………………… more particularly described in the Schedule hereunder written and delineated on the plan thereof hereto annexed and thereon shown surrounded by red coloured boundary liner together with amenities and rights for a period of ……………………. Years commencing from ………………………. On the agreed rent of Rs……………………… per month/per annum.

2) That the Lessee shall keep deposited with the Lessor a sum of Rs………………… (Rupees: …..................…………………………………. Only) equivalent to three

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months rent as and by way of Security Deposit which shall be refunded by the Lessor to the Lessee by a Demand Draft without interest on expiration of the Lease or sooner determination as hereunder provided.

3) That the Lessee shall pay the agreed monthly/yearly rent as aforesaid on or th stbefore the 10 day of each and every month on or before the 31 day of January

every year without any deduction or abatement there from and such rent shall be tendered at the place and in the manner as may be specified by the Lessor in writing.

4) That the Lessor shall keep the Demised Premises and the buildings thereon at all times in the “State of good and tenantable repairs and in sanitary conditions at his/her own cost.

5) That the Lessee will not make or permit to be made any alternations in or addition to the Demised Premises or other erections for the time being on the demised premises or erect or permit to be erected any structure on the building or on the Demised Premises, without previous permission in writing of the Lessor and/or the Municipal Authority or any other authorities as may be necessary in the case, in accordance with the terms and stipulations for additions and alternations to the existing structure or for construction of new structure and if any deviation from such terms and in the approved plan if made, the Lessor shall bring it to the notice of the Lessee and on receipt of such notice from the Lessor or the Municipal or such other authorities requiring the Lessee so to do, correct such deviation as aforesaid and if the Lessee fails to carry out and rectify such deviation within a reasonable period after receipt of such notice from the Lessor or from other authorities as aforesaid then it shall be lawful for the Lessor to carry out such repairs to the Demised Premises and get the same reimbursed from the Lessee, provided however, reasonableness of such expenses shall be duly certified to the authorities concerned to the satisfaction of the Lessee.

6) That the Lessee will provide to maintain at his/her own cost the internal minor repairs to the Demised Premises and the structures standing thereon so as to maintain the Demised Premises in clean and good sanitary and tenantable condition.

7) That the Lessee will not carry on or permit to be carried on in the “Demised Premises” any obnoxious trade or business whatsoever or use the same or permit the same to be used for any purpose other than Khadi and Village Industries activities and for housing offices, laboratories, research centers, guest house, Vidyalayas, experimental laboratories, hostels for students, dormitories, administrative offices etc. for the various activities of the Lessee under its constituent Act.

8) That the Lessee will not, without previous consent in writing of the Lesser, transfers, sub-let. Relinquish, mortgage or assigns, the Demised Premises or any part thereof or any building standing thereon or as a whole and every such transfer, assignment, relinquishment mortgaging or sub-letting or both shall be subject to the transferor or assigns be bound by all the covenants, conditions

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hereunder contained and are answerable to the Lessor in all respects therefore and the Lessee will in no case assign, relinquish, mortgage, sub-let, transfer or part with possession of any portion for the purpose other than Khadi and Village Industries activities and other incidental requirements of the Lessee more particularly mentioned above; provided however, the prior permission as aforesaid shall not be necessary in the event of a sub-lease assignment with or without compensation in favour of the Central or State Government or in favour of any, person, agency, institution or society carrying on Khadi and Village Industries activities with the help of financial assistance given by the Lessee.

9) That the Lessee will not make any excavation upon any part of the “Demised Premises” in order to remove any stone, sand, gravel, clay part or any other materials there from except so far as may be in the opinion of the Lessee necessary for the purpose of forming the foundation of the building and compound walls land other necessary structures and executing any authorised work and for leveling the area under this demise.

10) The terms of demise hereby created is initially for a period of ……………………. years commencing from ………………………………….. as aforesaid and the same shall be renewed at the option of the Lessee if the Lessee so desires and the option to do the same shall be exercised by the Lessee by giving 3months advance notice in writing to the Lessor of its intention, to renew the lease or otherwise. If, however, the Lessee shall have no intention for such renewal, then the lease shall stand terminated on the expiration of the period of lease hereby agreed whereupon the Lessee shall remove all its belonging and articles and vacate and handover the vacant and peaceful possession of the “Demised Premises” to the Lessor; provided however, the deposit of 3 months rent kept with the Lessor as mentioned in the foregoing clause shall be refunded by the Lessor to the Lessee or in the alternative the Lessee shall be entitled to adjust the said deposit amount towards the last three months rent immediately preceding the termination of the lease.

11) That the Lessee complying with and fulfilling the conditions and covenants on its part as herein contained shall be entitled for renewal of lease if so opted by it in the manner aforesaid for a further period of like term or shorter or longer duration at its sole discretion either on the existing terms and conditions or such altered terms and conditions as may be mutually agreed upon by and between the parties hereto.

12) That the rent hereinabove fixed shall not be altered during the period of demise hereunder created and the Lessor shall not be entitled to agitate the issue regarding enhancement of rent on any account whatsoever during the period of lease herein created, provided, however, the permitted increases on account of taxes and assessments by the local authorities or Government agencies are excepted.

13) (i) The Lessor hereby covenants with the Lessee “(a) to bear pay and discharge all the present and future rents, taxes, assessment, duties,

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impositions and outgoing whatsoever imposed or charged upon the said premises, including society/maintenance charges water tax and education cess, etc. (b) to execute and complete all such documents and to do all such acts, things and deeds as would be necessary for ‘giving effect to the “Agreement for lease”.

(ii) The Lessee shall be at liberty to make such name-boards on the said premises as may be considered necessary or desirable by him”.

IT IS HEREBY FURTHER AGREED AND DECLARED BY AND BETWEEN THE PARTIES TO THIS DEMISE AS FOLLOWS :-

(I) Notwithstanding anything hereinbefore contained, if there shall have been in the opinion of Lessee any deterioration in the structural part of any building on the “Demised Premises” the Lessee shall give a notice in writing to the Lessor to rectify the same and put the “Demised Premises” in good tenantable and sanitary condition and if the Lessor fails to carry out such repairs and rectification, then in that case the Lessee shall do the same at its own cost and shall be entitled to recover the same from the Lessor by adjusting from the monthly/yearly rent payable to the Lessor in suitable installments.

(ii) The Lessee shall be at liberty to remove and appropriate to itself all buildings, erection and structure if any made by it out of its own funds and to take away all materials from the “Demised Premises” after paying dues, if any, and lease rent up-to-date to the Lessor and other taxes, rates, assessment and other outgoing to the authorities concerned then due at the time of quitting from the premises if so payable by the Lessee within 3 months from the date of expiration and in case of failure on the part of the Lessee to do so, such buildings and erection standing on the “Demised Premises” and all materials thereof shall vest in the Lessor and the Lessee shall then have no right to claim for refund of any money paid by it to the Lessor up to that time or to claim any compensation for the structures and materials put up by it on the “Demised Premises”.

(iii) Provided further that the right of entry and determination of the lease shall be exercised by the Lessor only if there is a serious breach of any of the conditions and covenants on the part of the Lessee and not otherwise.

(iv) On termination of the lease hereunder created either by afflux of time or sooner determination on any account as hereinabove provided, the Lessee shall handover the vacant peaceful possession of the demised premises to the Lessee, provided however, the Lessee shall be entitled to receive compensation from the Lessor for the improvement made by it on the “Demised Premises” on account of construction of buildings or such other improvements and reasonableness of such compensation shall be decided by mutual consultation and if there is any dispute the same shall be referred for the valuation by the Central or State Public Works Department for proper valuation and on obtaining such valuation as aforesaid, the Lessor shall pay to the Lessee the amount so certified by the said authorities failing which the Lessee shall continue to held the demised premises and shall have a charge on the demised premises to the extent of the valuation for the said improvements made on the demised premises by investing its own funds and Lessor shall raise no objection on that account.

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(v) All notices, consents, approvals to be given and notifications of any decision by the Lessor shall be in writing and signed by the Lessor or by a person duly authorised on behalf of the Lessor and shall be considered as duly served, if the same shall have been delivered to left or posted addressed to the Lessee at the usual address or last known address or office or at the place of the “Demised Premises” if the same shall have been affixed to any building or erection whether temporary or otherwise on the “Demised Premises”.

(vi) Notwithstanding anything contained in any other provision herein above to the contrary, the Lessee shall be entitled to put up the “Demised Premises” for any or all of its activities and the Lessor shall have no right to determine the lease on that account. The decision of the Lessee shall be final and binding in regard to the use of the “Demised Premises” for implementation of any of the Activities under the Khadi & village Industries Scheme and any scheme under any of the Village Industries defined in schedule appended to the Khadi & V.I. Commission Act and the Lessor hereby expressly agrees to abide by the decision of the Lessee as regards the usage of the Demised Premises for any of its activities.

(vii) That on the lessee paying the rent hereby reserved and observing and complying with all the conditions and covenants on its part hereinabove contained, shall peacefully and quietly hold, occupy, possess and enjoy the ‘Demised Premises’ during the said period of lease, without any interruption or disturbances by the lessor or by any person or persons lawfully or equitably claiming, or to claim through by, from, under or in trust for the Lessor.

(viii) That in the event of this lease being determined by the Lessor by notice the value of the Lessee’s interest in the building (excluding plot thereof) at the date of such notices in addition to the value of improvement made to the building in accordance with the terms and conditions of this demise after deducting 5% from such value, the lessor shall be answerable to pay remaining cost in entirety.

(ix) If at any time the rent hereby reserved or any part thereof shall remain unpaid for a period of 3 months/3 years after the same becoming payable whether formally or legally demanded by the Lessor or not or if any covenant on the Lessee’s part as herein contained shall not be performed or observed than on any of such events, it shall be lawful for the Lessor to give to the Lessee 3 calendar months notice requiring the Lessee to remit the same and on the expiration of such notice, unless the same shall be complied with, to re-enter upon the ‘Demised Premises’ or any part thereof in the name of the whole and thereupon, the demise hereunder created shall determine, without prejudice to any claim, right, action or remedy of the Lessor against the Lessee in respect of any breach of Lessee’s covenant and stipulation herein above contained.

In case the ‘Demised Premises’ or any part thereof is acquired under the provision of the Land Acquisition Act, 1996 or under the Acquisition and Requisition of Immovable property Act or under any statutory enactment, the Lessee shall be entitled to the value of compensation which may be awarded and he and be payable in respect of the ‘Demised Premises’ to the extent of the improvement and investments made by it and the Lessor and the Lessee in such cases will be entitled to

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share the compensation which may be awarded or be payable in respect of the ‘Demised Premises, if acquired as aforesaid, according to their respective interests.

The stamp duty and registration fee chargeable if any on this Indenture of lessee and a duplicate copy thereof shall be borne and paid by the Lessor and the Lessee in equal proportion.

SCHEDULE ABOVE REFERRED

IN WITNESS WHEREOF THE PARTIES HERETO HAVE HEREUNTO SIGNED THEIR RESPECTIVE HANDS AND SEAL, THE DAY AND YEAR FIRST HEREINABOVE MENTIONED.

Signed, sealed and delivered )

by the withinnamed Lessor )

Shri/Smt. . . . . . . . . . . . . . )

In the presence of : )

(1)

(2)

The Common seal of the Commission )

is hereunto affixed and Shri/Smt )

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . )

has hereunto signed his/her )

hands in the presence of: )

(1)

(2)

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2. GENERAL POWER OF ATTORNEY FOR APPOINTMENT OF ADMINISTRATER

WHEREAS the _____________________________________(hereinafter referred to as the _________________________________ in its Trust Board Meeting held on ___________________________at _________________under Resolution No.____ has decided to irrevocably authorise and appoint the Khadi and V.I. Commission, Bombay, as to sole Attorney of the ______________. On appointment as Attorney of the _____________, the said Commission shall have authority to appoint its officers or any person as Administrator of the _____________to exercise all powers hereinafter mentioned for and on behalf of the _____________and to deal with the properties (moveable and imovable) of the ______________in the manner required and to operate bank account etc. jointly and/or individually as the Attorney may decide with the main object of repaying the loans due from the ____________to the Khadi and V.I. Commission and to meet the objective to run the Khadi and Village Industries activities of the __________mentioned in schedule “A” as a going concern if necessary. For this purpose the ________________________________authorisedShri __________________________________________________, __________ and ___________________ of the _______________to execute the required General Power of Attorney in favour of the said Khadi and V.I. Commission to function as the constituted Attorney of the ______________through its officer or any person appointed/to be appointed, as Administrator as aforesaid.

NOW THEREFORE in pursuance of the said decision and as empowered by the said resolution of the ___________, I, ______________________________and ________________________________ Chairman and _____________for and on behalf of the _______________hereby execute the following General Power of Attorney in favour of the said Attorney, the Khadi and Village Industries Commission.

KNOW ALL MEN by these presents, I _____________________________and __________________________________Chairman/Member Secretary of the ____________a Society registered under the Societies Registration having its registered office at ______________________________for and on behalf of the said ________________hereby nominate, constitute and appoint the said Khadi and Village Industries Commission, Bombay-56 a body corporate established under the Khadi and Village Industries Commission Act, 1956 (Act No.61 of 1956) to the true and lawful attorney of the said _________________in its name and on its behalf to do and execute all or any of the following acts, deeds and things in respect of the activities mentioned in Schedule ‘A’ and the properties mentioned in Schedule ‘A’ herewith annexed.

1. To manage the activities of the _____________particularly mentioned in Schedule ‘A’ hereto written, including production, purchase and sale of and research and training in connection with the Khadi and Village Industries.

2. To also purchase and sell handicrafts articles.

3. To incur office and other expenses for equipments etc. to run the activities in question.,

4. To enter into contracts including agreements in respect of activities and giving bills, invoices orders and trading materials.

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5. To raise further funds if considered necessary to run the acitivities in question on behalf of the __________on such terms and on such securities as the Attorney may think fit and to repay the dues to the lender.

6. To receive grants and subsidies on behalf of the ___________________and utilise them for the activities in question.

7. To take insurance in the name of the _______________covering buildings, furniture fixtures and stocks against losses owing to fire, thefts or natural calamities and pay premium out of funds of the ________________.

8. To deal with and if necessary dispose of the entire assets of the _________________________________________ both movable and immovable with a view to repaying the loans payable to the Commission.

9. To appoint new employees, fix their salaries and terms and conditions of their service, and to assign work and duties to such staff including existing employees and to take action against employees wherever necessary under the Rules and Regulations to increase or retrench staff whenever felt justified and necessary.

10. To start new activities of Khadi and Village Industries or close down any activity which the Attorney does not consider to be economically viable or otherwise not workable.

11. To do any other function/functions required to be done directly or indirectly by the ________________for effectively carrying out the functions of the ____________.

12. To assess possibilities of viable expansion of Khadi and Village Industries Programme, keeping in view profitablity of the programme and/or the institution as a whole and furnish estimates and budget proposals.

13. To screen the personnel with a view to assess their efficiency and integrity and ensure retrenchment of surplus and delinquent staff.

14. To ensure closure of uneconomical, centres/units which cannot be revived and strengthen chose centres/units which indicate potential to make profits and are suitable for expansion.

15. To ensure implementation of directives of the Commission.

16. To ensure submission of progress reports to the Commission periodically.

17. To take or enter into possession or receipt of the rents and profits and income of all houses, lands, tenements and hereditaments, farms, fields, gardens and stables which are now or which may hereinafter be vested in the ______ alone or jointly with any other person or persons either absolutely or by way of mortgage or otherwise however.

18. To demolish, rebuild or repair all or any such houses or buildings as occasion may require and to do every other act and thing for the improvements of the same or any part thereof.

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19. To pay, settle, adjust and allow all accounts claims and demands for quit rent assessment and repairs and other outgoings in respect of the said premises.

20. To let or lease any such houses, lands, tenements and hereditaments from month to month or for any term or terms of years and upon such conditions as the Commission or its authorised representative shall think fit and advise accordingly from time to time.

21. To collect and receive rent from the tenants and occupiers of any such houses or lands, farms fields and stables, all rents and sums of money now due or hereafter to become due towards rent for use and occupation thereof and to take all lawful proceedings by way of distress, suit or otherwise for recovery of all arrears of rent now due or hereafter to become due to the ______________.

22. To make allowances arrangements with all or any of the tenants or occupiers for the time being of any such houses, lands, tenants and hereditaments, farms fields and stables, determine tenancies and give notice to quit and to enter under the powers reserved in any leases and to accept surrenders of proceedings and means for evicting or objecting defaulting tenants and occupiers from all or any of the said premises determining the tenancies of occupancies thereof and for obtaining, recovering and retaining possession of all or any of the premises held occupied by such defaulters.

23. To sell any of the property (movable and immovable) of the ______________, share or shares in all or any real or personal property and on such sales being effected to receive the purchase money arising therefrom.

24. To sell and dispose of all or real or personal asset and effects which now is are or at any time hereafter may be vested in the ____________by way of mortgage in due exercise of any power and powers vested in the ________________by the deeds of mortgage or by law and to give notice and do all other acts if any that may be necessary for the purpose in order to entitle the ________________to execute such power and to appoint receivers, effect insurance and exercise all other powers, if any vested in the ____________in respect of any such mortgaged properties either by the deeds of mortgage or by law.

25. To execute from time to time recoveyances, transfers or mortgage, reassignments or surrenders of properties that may have been mortgaged to the ______________either alone or jointly with another or others, as may be fit and to lodge the documents for registration and admit execution thereof before the Sub-Registrar or Registrars.

26. To ask, demand, sue for recover and receive of and from all persons, companies and bodies liable to pay, transfer and deliver the same respectively all sums of money, deposits advances stocks funds, interest, dividends, debts, dues, goods effects and things of whatsoever nature and description which now are of which at any time or times during subsistence of these present shall or may become due owing, payable, deliverable or belonging to the _______________ or any right title, ways or means however, and upon receipts or delivery thereof or any part thereof in the name of ________________to make sign, execute or deliver such receipts to discharge for the same as said Commission or its representative shall think fit to advice.

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27. To pay and discharge all or any debt, debts sum or sums now due of hereafter to become due or owing the ______________ any person or persons, whosoever, including the said Khadi and Village Industries Commission.

28. To pay or deposit with any bankers all moneys which shall come to the said _____________and to withdraw any moneys lying at the credit of the _____________in any bank or banks or elsewhere whatsoever from time to time and for that purpose, for the ________________and in the name of the _____________to draw, sign and endorse any cheques or withdrawal forms or receipts on any bank or bankers as the main signatory.

29. To discount, draw, accept, endorse, renew and negotiate promissory notes endorse pledge, hypothecate or otherwise negotiate any bills of exchange or promissory notes and to sign, seal execute deliver, endorse, assigns or transfer all mortgage deeds, bills etc. as may appear to the said Commission or its representatives to be necessary expedient or desirable or desirable to do so.

30. To commence, prosecute, endorse, defend answer or oppose all actions, suit and other legal proceedings and demand touching any of the matter in which the _________________is or may thereafter be interested or concerned and also, if the said Commission thinks for fit to compromise, refer to arbitration, abandun, submit to judgement or become non-suited any such action, suit or legal proceedings a aforesaid and in such actions to file such appeal applications for review revision or otherwise as the Commission or its representative may think fit.

31. To appear in the Courts and to petition for a receiving order to orders in bankruptcy against any debtor or debtors and to prove any debt or debts due to the ______________ and to vote in the choice of assignees, trustees and committees and to oppose or consent to the provisions or final discharge of any such bankrupt debtor or debtors, to receive any dividend or dividends and to vote at meetings or creditors for approval of composition schemes or other questions arising in their insolvancies and also to act in any other matters concerned with the bankruptcy state of affairs of such debtors and to take or receive and dividend money from the officials assignee or any such officer or receiver.

32. To appear on behalf of the _____________and represent its interest before the Collector or Commissioner of Income-tax, collector of land revenue and Assessor or Municipal Taxes and rates, Commissioner of Police and Municipal Officer for renewal a grant of licence or permit or for other purposes as may be necessary under the local acts, rules and regulations or before any public or Government Officer or authority whosoever.

33. To declare and affirm all plaints, written statements, applications, petitions, affidavits and other necessary legal documents in the name of the _________________and on behalf of the _____________and to appear before any judge, Magistrate or other Officer empowered by law to hear any suit or proceedings or any other enquiry relating to any of the matters of the ___________or in which the _______________ may be interested.

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34. To adjust, settle, compromise or submit to arbitrations any accounts, claims debts, demands, disputes and matters touching any of the matters which are now subsisting or any hereafter way arise between the ________________and any person or persons whosoever or in such manner and in all respects as the Commission or its representative shall think fit.

35. To examine adjust and settle all accounts and reckoning between the ___________________and any other person or persons whosoever the _____________and any other person or persons whosoever and to pay or receive, a the case may be, the balance if any which shall appear to be due on the settlement of such accounts and reckonings and compounds for any debt or debts due to or owing by the __________________.

36. To compound and accept parts in lieu of and in satisfaction for the whole of or to compromise any debts or sum of money now or hereafter owing or becoming due and payable to the _______________or any other claims or demands which the ________________may have against any person and upon payment of money to give, sign or pass receipts, release and discharge for the same or to grant an extension of time for payment of satisfaction thereof upon such terms as may be deemed with or without taking security for the same or otherwise to act with respect thereto as may be deemed expedient.

37. To purchase, sell endorse or negotiate securities of the State Govt. and/or the Central Govt. of local or semi Govt. bodies or share of joint stock companies and other securities.

38. To sell any of the investment of the ________________and for that purpsoe to employ and pay to brokers and other agents in that behalf and to receive and give receipts for purchase money payable in respect of such sales, to transfer any of the investment of the ________________to sell to the purchaser or purchasers thereof or as he or they may direct and for those purpose to sign and execute all such contracts, transfer deeds and other writings and to all such other acts as may be necessary for effectual transferring the same or completing the sale.

39. To sign execute, register or otherwise perfect or cause to be signed executed registered and perfected any agreement lease, conveyance reconveyance, assignment, surrender reassignment, transfer or mortgage and other assurance which in the opinion of the Commission’s or its representative be expedient or necessary for any of the foregoing purpose.

40. To appoint and employ such agents, attorneys, advocates, substitute and/or other person at such remuneration and on such terms and with such powers as the attorney on its representatives may think proper and to dismiss and discharge them.

41. In general to do all other acts, deeds, matters and things whatsoever in or about the estate property and affairs of __________________herein either particularly or generally as described and effectually to all intends and purpoes as the _______________could do itself and also to exercise all executive and administrative control over all the employees of the ____________.

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42. And for more effectually removing any doubt which may arise as to the true meaning of these present or as to the construction or application of the powers hereby granted shall not in any case be deemed to revoke any power or authorities hereto for given by the _________________to the said Khadi and V.I. Commission as Attorney or deemed to be limited to such transactions and matters as are herein expressly mentioned by the same are intended to extend and shall in all cases extend to any other matters and transactions not herein precisely mentioned or defined which in course of general business of the ________________be deemed to be requisite or expedient to be done or performed.

And the ___________ hereby agrees to ratify and confirm and all whatsoever said Attorney the Khadi and V.I. Commission, shall do or any other substitute or substitutes acting under the Commission shall or purport to do or cause to be done by virtue of these presents.

IN WITNESS WHEREOF I HAVE HEREUNTO SET BY HANDS AND SEAL THIS…………. Day of ……………………..

Signed, sealed and delivered by Sd/-Withinnamed……………. Signature of the executant for and on behalf of the . . . . . . .

Secretary/Chairman of the Instn. For . . . . . . . . .…………….for and on behalf of …….. (seal of the institution)

(Name of the Institution concerned) Sd/-In the presence of Chairman

1. Sd/-

2. Member Secretary

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3. TRIPARTITE AGREEMENT

THIS AGREEMENT MADE AND ENTERED INTO THIS …………… DAY OF ………………. In the Christian year, two thousand .........................................

B E T W E E N

The Khadi & Village Industries Commission, a body corporate, established under the Khadi and Village Industries Commission Act, 1956 (Union Act No.61 of 1956) having its Central Office at ‘Gramodaya’ Irla Road, Vile Parle (West) Bombay 56 hereinafter referred to as ‘Commission’ (which expression shall unless repugnant to the context or meaning thereof include its successor/successors in office and assigns) of the ONE PART.

A N D

__________________________________________________(Name of the institution) a society, registered under the Societies Registration Act, 1860 having its registered office at ____________hereinafter referred to as the Sangh (which expression shall unless repugnant to the context or meaning thereof include its successor or successors in the office and assigns) of the SECOND PART.

A N D

THIS INSTITUTION namely ______________________________________________ (Name of the institution) registered under the Societies Registration Act, 1860 having its Registered office at _________________________________________________ hereinafter referred to as INSTITUTION (which expression shall unless repugnant to the context or meaning thereof include its successor or successors in office as assigns of the THIRD PART.

WHEREAS the Commission, had lent and advanced from time to time to the Sangh various sums of money by way of loan and grants for the development of Khadi and Village Industries on certain terms and conditions AND WHEREAS the ___________________________________________________(Name of the institution) had from time to time repaid to the Commission certain sums out of such repayable advance and whereas on the __________day of __________an aggregate sums of Rs. ................................................................... remain due and payable by the ________________________________to the Commission.

AND WHREAS THE Sangh vide its Resolution No._____ dated __________resolved to amalgamate part of its functions and activities in connection with the development of Khadi and Village Industries and incidental thereto which newly formed independent institutions hereinabove mentioned, for undertaking Khadi and Village Industries and other work connected therewith and incidental thereto in the respective area and certified by the Khadi and Village Industries Commission, having similar aims and objects as those of the ___________________________ (Name of the institution) alongwith assets and liabilities in the proportion and in the manner more particularly mentioned in the schedule hereunder written.

AND AWHEREAS in pursuance of the said Resolution, the assets (movable and immovable) of the ___________________________ (Name of the institution) in the proportion more particularly mentioned in the Schedule hereunder written has been

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handed over or otherwise well and sufficiently given in full and final possession to the aforesaid, decentralized, newly formed institution though the dejure transfer of the immovable properties are yet to be done by completing the requisite legal formalities.

AND WHEREAS THE ___________________________ (Name of the institution) and the newly formed independent institution as aforesaid, have jointly and severally requested the Commission the principal creditor and financier to carry out the necessary change in their books of Account on the same terms and conditions which the Commission the principal creditor and financier to carry out the necessary change in their books of account on the same terms and conditions which the Commission has agreed to do, provided the ___________________________ (Name of the institution) and the aforesaid newly formed institution should jointly and severally bind, undertake and agree to initiate all necessary action in the form and manner required by the Commission from time to time to secure the agreeing sum of Rs………… due and payable by the ___________________________ (Name of the institution) to the Commission, as herein above mentioned by getting executed from the said newly formed institution necessary legal document for creating charge on the respective shares of movable and immovable properties thus transferred in the name of the newly formed said institution to the extent of its share of the liabilities so transferred to them, more particularly mentioned in the schedule hereunder written.

AND WHEREAS THE ___________________________ (Name of the institution) vide Resolution No………. dated ………. and the said institutions resolved to execute this instrument, and have given their unqualified consents to execute necessary legal documents in the form and manner or required by the Commission from time to time and to do all necessary acts and things jointly and severally to safeguard and secure the repayment of the loan and grant amount to the tune of Rs………. alongwith interest which amount represents the respective share of liabilities transferred to the institutions by the ___________________________ (Name of the institution) alongwith the assets more particularly mentioned in the Schedule hereunder written.

NOW THIS INDENTURE WITNESSETH AND IT IS HEREBY MUTUALLY AGREED BETWEEN THE PARTIES HERETO AS UNDER :-

I) That in pursuance to this Agreement and for consideration thereof the institution hereby unconditionally and irrevocably accept/s the liabilities of the ___________________________ (Name of the institution) to the Commission to the extent of the amount/s particularly mentioned in the Schedule hereunder written and undertake to secure the repayment of the same by creating charge on all its movable and immovable properties including those transferred to it by the ___________________________ (Name of the institution) as shown in the Schedule hereunder written.

ii) That in consideration of the properties and assets (movable and immovable) of the ___________________________ (Name of the institution) transferred and/or to be transferred in the name of the Institution to the extent more particularly mentioned in the Schedule hereunder written, the institution hereby assure and unconditionally undertake/s to execute create all necessary

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legal documents in the form and manner required by the Commission from time to time either severally and/or alongwith the _______________________ (Name of the institution) such as Agreement undertaking deed of hypothecation, pledge, mortgage etc. creating charge on all such movable and immovable properties in favour of the Commission by way of security for the repayment of Commission’s dues to the extent of proportionate share of liability accepted by the institution on its part out of the aggregate loan and grant balance including interest, if any, which become due and payable by the __________________________ (Name of the institution) to the Commission.

iii) That the institution does hereby agree and undertake to create equitable or such other mortgage in the form and manner required by the Commission creating charge of the immovable properties transferred in its favour by the ___________________________ (Name of the institution) to the extent more particularly mentioned in the Schedule hereunder and as soon as the said immovable properties are actually conveyed in its name according to law after completion of requisite legal formalities.

iv) That the institution hereby undertake/s and assure/s the Commission that the institution/s shall not encumber with or in any way deal with the properties transferred to it by the ___________________________ (Name of the institution) which may weaken the security for repayment of the said sum of . . . . . . . . . . . . . . . . . . . . . .

v) That the institution hereby also undertakes assure/s that all rights remedies and actions legally subsisting and enforceable by the Commission against the ___________________________ (Name of the institution) in the said sum of . . . . . . . . . . . . . . . . . . . . . . shall hereafter continue to subsist against the institution and shall be enforceable against it.

vi) That the institution/and/or the ___________________________ (Name of the institution) in the event of the security or charge created on the movable and immovable properties mentioned in the schedule hereunder on becoming insufficient at any time (as to which the decision of the Commission shall be final) the institution and/or ___________________________ (Name of the institution) as the case may be shall, when so required by the Commission furnish sufficient security or such additional security accordingly as the Commission may direct.

vii) That the ___________________________ (Name of the institution) hereby undertake and agree with the Commission to execute all necessary legal documents in the form and manner required by the Commission from time to time jointly and/or severally and to do such other acts and things legally required in order to perfect the said transfer of the movable and immovable properties more particularly mentioned in the schedule hereunder in the name of the institution.

viii) That nothing herein contained shall prejudice the rights or remedies of the Commission in respect of any present or future security, guarantee obligations or decree or any indebtedness of the ___________________________ (Name of the institution) to the Commission.

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SCHEDULE

Name of the Institution Assets transferred Liabilities Name of the Instn.To whom assets and movable/immovable given creating equitableLiabilities are transferred mortgage

(1) (2) (3) (4)

Name(s) of the person Particulars of Land area Particulars of the buildingor institution in whose Khata and Khasra Nos (in area, kinds ofconstructionfavour the property is revenue records)location holding No.in Municipal or recorded as per title deeds boundry/surroundings. Govt.records, location, and as per Municipal/Govt boundry surroundings etc.

1 2 3

Book value of the land Encumbrances if Rent case/or and Remarksbuildings (show separa any of the property taxes rates etc.tely whenever possible payable on the said land and building

10 11 12

IN WITNESS WHEREOF THE PARTIES TO THESE AGREEMENT HAVE HEREUNTO signed their respective names and affixed their respective seals the date and year first hereinabove written :-

Signed, Sealed and delivered by :-Shri ...........................................for and on behalf of the . ............Signed, sealed and delivered by Shri ...........................................for and on behalf of the . ............1)2)The common seal of the Khadi and V.I. Commission hereunto affixed and Shri. ...........................................of the Commission hereunto signedthis name in the presence of1)2)

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DRAFT RESOLUTION TO BE PASSED BY THE PARENT INSTITUTION NAMELY ............................ FOR EXECUTING TRIPARTITE AGREEMENT/OTHER DOCUMENTS

Resolution No. Date:

WHEREAS the (Name of the parent institution) ...........................................................

................................................ having its registered office at........................................... hereinafter referred to as Sangh/Ashram/Samiti has been undertaken Khadi & Village Industries Programme in the vast area of State of . . . . . . . . . .. . . . . AND WHEREAS the Khadi and Village Industries Commission, Bombay hereinafter referred to as “Commission” from time to time, has advanced several loans to the Sangh/. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . AND WHEREAS there is balance due by the Sangh to the Commission amounting to Rs.. . . . . . . . . . (Rupees : .............................................................. only) AND WHEREAS by its Resolution No.................. dated . . . . . .. . . .. . . . the Sangh/Ashram/Samiti .............................................. for effective implementation of the Khadi & Village Industries Programme and also to repay the due of the Commission has amalgamated its activities in connection with the development of Khadi and Village Industries and incidental thereto alongwith part of its liabilities including assets both movable and immovable with the following institutions hereinafter referred to as decentralised institutions.

1.

2.

3.

4.

5.

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AND WHEREAS in consideration of the properties and assets of the ___________________ (Name of the institution) so transferred or to be transferred in the name of institution, to the extent of proportionate share of liabilities accepted by the respective Institutions.

THE SANGH/Ashram/Samiti do hereby resolve on this .................... day of .................... to execute Tripartite/Agreement all other legal documents as required by the Commission from time to time either severally and/or alongwith the institutions as security for the repayment of Commission dues/advances which the Sangh is liable to pay and which may be payable by the Sangh/Institution, in future, alongwith interest thereon.

Further by this Resolution Shri ............................................................ of this Sangh/Ashram/Samiti has been duly authorised to execute Tripartite Agreement on behalf of the ___________________________ (Name of the institution) and to do all acts and things necessary for the execution of Tripartite Agreement/all other legal documents including creation of equitable mortgage signing on the hypothecation deed etc. And in pursuance of this Resolution all things and acts in whatsoever manner done or to be done by Shri ..................................................................... in connection with the said transaction shall be binding on this ___________________________ (Name of the institution)

(Signature)Chairman/President/Secretary

of the of the institution__________________________

with seal.

(Signature) of the authorised Office bearer

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DRAFT RESOLUTION TO BE PASSED BY THE DECENTRALISED INSTITUTION FOR EXECUTING TRIPARTITE AGREEMENT/OTHER DOCUMENTS

Resolution No. Date:

WHEREAS the .............................................................. (Name of the parent institution) having its registered office at .............................................................. hereinafter referred to as the Sangh .............................................................. (Name of the institution) has amalgamated part of its activities alongwith assets and liabilities, with the (Name of the decentralized institution) .............................................................. having its registered office at .............................................................. hereinafter referred to the institution in connection with the development of Khadi & Village Industries activities and incidental thereof and also to repay the dues of the Khadi & Village Industries Commission hereinafter referred to as Commission.

AND WHEREAS in consideration of the properties and assets of the Sangh so transferred or to be transferred in the name of this institution, the .............................................................. (Name of the institution) do hereby resolve on this day of ..................................................... to execute the Tripartite agreement and all other legal documents in the form and manners as required by the Commission from time to time either severally and/or alongwith the ___________________________ (Name of the institution) as security for repayment of Commission dues to the extent of proportional ratio/share of liabilities accepted by their institution on its part out of the aggregate loan grant made by the Commission to the ___________________________ (Name of the institution) or which may become due and payable to the Commission in future, alongwith interest thereon.

Further by this Resolution Shri .............................................................. this institution has been duly authorised to execute Tripartite agreement on behalf of the institution and to do all acts and things necessary for the execution of Tripartite Agreement/all other legal documents including creation of equitable mortgage signing on the hypothecation deed etc. and in pursuance of this Resolution all things and acts whatever to be done by Shri .............................................................. in connection with the said transaction shall be binding on this institution.

Chairman/Secretary of theinstitution with seal.

Signature of the Authorised Office bearers

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No. CKH/CIR/GENL/1986-87 Date 1.1.1987

To,All the State Directorate & R.O.Khadi & V.I. Commission

Sub.: Guidelines for considering decentralization of KVI institution.

Sir,

In order to promote Khadi and Village Industries and cover the maximum number of rural artisans under KVI production and employment programme, decentralization and such institutions which have unwieldy area of operation has come to occupy a catalytic role in furthering development. Consequently, the institutions and the State Directors have to work out necessary arrangements for decentralization of a monolith organization into small, workable and viable decentralised units with much smaller area of operation, but aiming at as wider coverage as possible.

It has, therefore, been decided to circulate the following guidelines, so that proposals from the field are submitted taking into consideration all possible aspects of the proposed arrangements. These guidelines will also serve to restore a degree of uniformity in these matters for assisting the authorities in taking expeditious decision.

Guidelines:

(1) The parent institution should adopt a resolution to the effect that it has decided to decentralize its work among a pre-determined number of decentralized units on the basis of apportionment of staff, assets and liabilities.

(2) The next step would be for the proposed decentralized units to register themselves with the Registrar of Societies so that independent decentralized entities are born legally.

(3) The next step would be for the decentralized units to elect Managing Committee and adopt resolutions to take over the work of the erstwhile monolith organization in the specified area of operation.

(4) Specific area of operation in respect of the proposed decentralized units should be carved out of the erstwhile monolith organization. In case, the proposed decentralized units have to cover new areas of operation, it should be stated so and in case some other institutions are already functioning in that area, their no objection should also be obtained. This would become necessary in order to avoid conflicts and duplication of work.

(5) The next step would be on apportionment of the liabilities amount the proposed decentralized units including the parent organization.

(6) Simultaneously, the apportionment of assets among all the proposed decentralized units as well as the parent organization should also be made.

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(7) Together with the above steps, apportionment of the existing worker of the monolith parent organization will also have to be made, depending upon the share of work the proposed decentralized units would inherit from the parent body vis-à-vis the needs of the parent body for carrying out its part of the work.

(8) A necessary and reasonable condition for decentralization of any monolith organization into smaller independent units would be the question of economic viability. Therefore, economic analysis in respect of each decentralized unit should be worked out on the basis of the liabilities, assets, income expenditure and profitability.

(9) As funding by the Commission is contingent upon adequate collateral security on the part of the decentralized units, proper arrangements for creating equitable mortgage either independently by the decentralized units or by way of tripartite agreement between the Commission, the parent body and the proposed decentralized units should be worked out.

(10) After concluding the aforesaid arrangements, the case of the proposed decentralized units should be considered by the State Level Advisory Certification Committee for clarification.

(11) The next step would be for the State Director to recommend the cases of the decentralized independent units for direct enlistment to the Commission and approval by the Commission for according recognition to the decentralized units.

Yours faithfully,Sd/-

DY. CHIEF EXECUTIVE OFFICER (KHADI)

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4. DEED OF MORTGAGE FOR THE HBA

This indenture made this ________ Day of _________ Two Thousand Five ___________ between at the present employed as in the______________________________________ herein after called "THE MORTGAGOR" (which expression shall unless excluded by or repugnant to the subject or context, include his/her heirs, executors, administrator and assigns) of the ONE PART and the Khadi and Village Industries Commission, an authority established under Clause (1) of Article 73 of the constitutes of India, having its Central Office at "Gramodaya", Irla Road, Vile Parle (West), Mumbai – 4000 056 hereinafter called "THE MORTGAGEE" (Which expression shall unless excluded by or repugnant to the subject or context, include his/her successor or successor in office and assigns) of the OTHER PART.

WHEREAS the MORTGAGOR is the absolute and sole beneficial owner and is seized and possessed of or otherwise well and sufficiently entitles to the land and or house flat hereditaments and premises hereinafter described in the Schedule hereunder written and for greater clearness delineated on the plan annexed here to and thereon shown with the boundaries thereof coloured plan enclosed and expressed to be hereby conveyed, transferred and assured (thereinafter referred to as the said "Mortgaged property).

AND WHEREAS the MORTGAGOR applied to the MORTGAGEE for an advance of Rs. _________(Rupees ________________________only) for the purpose of enabling the MORTGAGOR to construct a House on the said hereditaments, or (to enlarge living accommodation the house on the said hereditaments).

AND WHEREAS, after scrutiny of the case and after taking into account of the eligibility of the house building advance of the MORTGAGOR aforesaid, the Mortgagee agree to advance to Mortgagor the said sum of Rs. ____________(Rupees ______________________________only) vide the sanction order No. _____________________dated__________, a copy of which is annexed with these presents for the purpose aforesaid on the terms and conditions set forth there in etc.

AND WHEREAS one of the conditions for the aforesaid advance is that Mortgagor should secure the repayment of the said advance and due observance of all the terms and conditions contained in the Khadi & Village Industries Commission (House Building Advance) Regulation, 1977 read with the House Building Advance Rules applicable to the Central Govt. servants (hereinafter referred as the "said Regulations" which expression shall where the context so admits include any amendment thereof or addition thereto for the time being in force), by a mortgage of the property described in the schedule hereunder written.

AND WHEREAS THE MORTGAGEE

It has sanctioned to this Mortgagor an advance of Rs. ___________(Rupees _______________________ only) payable by such instalments and in the matter as hereinafter appearing and in the manner provided in the said Regulations upon having the repayment of the loan with interest and the observance of all the terms and conditions contained in the said Regulations as hereinafter mentioned and secured in the matter as hereinafter appearing.

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AND WHEREAS THE MORTGAGOR is to receive from the Mortgagee the aforesaid advance in the following instaments Rs. ______ (Rupees __________________only) on the execution of the indenture by the Mortgagor in favour of the Mortgagee.

Rs. ____________(Rupees ______________________Only) when the construction of the house reaches plinth level.

Provided the Mortgagee satisfied that the development of the area in which the house is built is complete in respect of amenities such as water supply, street lightning, roads, drainage and sewerage.

NOW THIS INDENTURE WITNESSTH as follows :-

(I) (b) In pursuance of the said Regulations and in consideration of the said advance sanctioned paid by the MORTHAGEE to the MORTGAGOR pursuant to the provisions contained in the said Regulations the MORTGAGOR DOTH hereby covenant with the MORTGAGEE that the Mortgagor shall always duly observe and perform all the terms and conditions of the said regulations and shall repay to the Mortgagee the said advance of Rs. ___________(Rupees ______________________________only) by _____ monthly instalments of Rs. __________(Rupees _______________________only) from the pay of the Mortgagor commencing from the month of __________or from the month following the completion of the house or purchase of flat as the case may be whichever is following the completion of the house or purchase of flat as the case may be whichever is earlier, till the date of his superannuation and the balance then remaining out-standing on his/her superannuation together with the interest on the amount advanced from the date of the advance to the date of repayment from his/her gratuity/GPF accumulation etc and the Mortgagor hereby authorizes the Mortgagee to make deductions from his monthly pay leave salary of the amount of instalments and from his gratuity/GPF accumulation of such of the balances remaining unpaid at the date if his death retirement superannuation as herein before mentioned, failing which Mortgagee shall be entitled to enforce this security of the Mortgagee at any time thereafter and recover the balance of the advance then due together with interest and costs of recovery by sale of the mortgaged property or in such other manner as may be permissible under the law. It will however, be open to the Mortgagor to repay the amount in the shorter period.

(ii) If the MORTGAGOR shall utilize the advance for purpose other than that for which the advance is sanctioned or if the MORTGAGR shall become insolvent or shall cease to be in service of the Office of the Khadi and Village Industries Commission for any reason other than normal retirement, superannuation or if he she dies before payment of the advance in full or if the MORTGAGOR shall fail to observe or perform any of terms, conditions and stipulations specified in the said Regulations and on his/her part to be observed and performed then in any such cases the whole of the principle amount of the advance or so must thereof as shall then remain due and unpaid shall become payable forth with to the MORTGAGEE with interest thereon at _________per cent per annum calculated from the date of payment of the MORTAGEE of the first instalment of the said advance. Notwithstanding anything contained herein, if the Mortgagor utilizes the advance for a purpose other than that for which the advance is sanctioned, it shall be open to the Mortgagee to take such disciplinary action against the Mortgagor as may be appropriate under the Rules and Regulations of service applicable to the Mortgagor.

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(iii) In further pursuance of the said Regulations and for the consideration aforesaid and to secure repayment of the aforesaid advance and interest as shall at any time or times hereinafter be due the MORTGAGEE under the terms of these presents the MORTGAGOR doth hereby grant, convey, transfer, assign and assure unto the MORTGAGEE ALL AND SINGULAR the said Mortgaged property fully described in the Schedule hereunder written together with buildings erected or to be erected by Mortgagor of the said Mortgaged property or materials for the time being thereon with all rights, casements and appurtenances to the said Mortgaged property or any of them belonging to HOLD the said Mortgaged property with their appurtenances including all erections and buildings erected and built or to be erected and built hereafter, on the said Mortgaged or materials for the time being thereon unto and to the use of the Mortgagee absolutely forever free from all encumbrances. SUBJECT NEVERTHLESS to the proviso for redemption hereinafter contained PROVIDED ALWAYS AND it is hereby agreed and declared by and between the parties hereto that if the MORTGAGOR shall duly pay to MORTGAGEE the said principle sum and interest hereby secured in the manner herein provided and also the other money (if any) determined to be payable by he MORTGAGOR to the MORTGAGEE under terms and condition of the said Regulations then the MORTGAGEE will at any time thereafter upon the request and at the cost of MORTGAGOR reconvey, retransfer and reassure the said Mortgaged property unto and to the use of the Mortgagor or as he she may direct.

IT IS HEREBY EXPRESSLY AGREED AND DECLARED that if there shall be any breach by the MORTGAGOR of the covenants on his her part herein contained or if the MORTGAGOR shall become insolvent or shall cease to be in service of the Khadi and Village Industries Commission for any reason other than normal retirement superannuation or if he she dies before all the dues payable to the Mortgagee under these presents together with interests thereon shall have been fully paid off or if the said advance or any part thereof becomes payable forthwith under these presents or otherwise then and in any of such cases it shall be lawful for the MORTGAGEE without intervention of the court to sell the said Mortgaged property or any part thereof either together or in parcels and either by public auction or by private contract with power to buy in or rescind any contract for sale and to resell without being responsible for any loss which may be occasion thereby and do and executed all such acts and assurances for effectuating any such sale as the MORTGAGEE shall think fit AND IT IS HEREBY declared that the receipt of the MORTGAGEE for the purchase money of the premises sold or any part thereof shall effect discharge the purchaser or purchasers there from AND IT IS HEREBY declared that the MORTGAGEE shall hold the money to arise from any sale in pursuance of the aforesaid power upon TRUST in the first place there out to pay all the expenses incurred on such sell and then to pay moneys in or towards the satisfaction of the money for the time being owing on the security of these presents and the balance if any to be paid to Mortgagor.

V) The MORTGAGOR hereby covenants with the MORTGAGEE as follows:-a) That the MORTGAGOR now hath in himself herself good right and lawful

authority to grant convey transfer assign and assure the MORTGAGED property unto and to the use of the MORTGAGEE in manner aforesaid.

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b) That the mortgagor shall carry out the construction of the house addition to living accommodation in the aforesaid house exactly in accordance with the approved plan and specifications on the basis of which the above advance has been computed and sanctioned unless a departure there from is permitted by the Mortgagee. The Mortgagor shall certify. When applying for installments of advance admissible at the plinth roof level that the constructions is being carried out in accordance with the plan and estimates furnished by him to the Mortgagee that the construction has reached plinth roof level and that the amount already drawn out of the sanctioned advance has actually been used on the construction of the house. He she will allow the Mortgagee to carry out either directly or through its authorized officer or representative an inspection to verify the correctness of the aforesaid certificates. If a false certificate is furnished by the Mortgagor, He she will be liable to pay to the Mortgagee forthwith the entire advance received by him/her together with interest thereon at ______per cent per annum and further shall also be liable to appropriate disciplinary action under the rules and Regulations of service applicable to the Mortgagor.

c) That the Mortgagor shall complete the construction of the house additions to living accommodation in the aforesaid house within eighteen months from the date of drawal of the 1st installment unless on extension of time is allowed in writing by the Mortgagee in case of default the Mortgagor shall be liable to repay forthwith the entire amount advanced to him together with interest calculated under the said Rules Regulations in one lump sum. The Mortgagor shall report to the Mortgagee the date of completion of the house and furnish a certificate to the Mortgagee that the full amount of the advance has been utilized for the purpose for which it was sanctioned.

d) That the mortgagor shall immediately insure the house flat at his own cost with the General Life Insurance Corporation of India for a sum not less that the amount of the aforesaid advance and shall keep it so insured against loss or damage by fire, flood and lightning as provided in the said Regulation till the advance is fully repaid to the Mortgagee and deposit the policy of insurance with the Mortgagee. The Mortgagor shall pay regularly the premium in respect of the said insurance from time to time and will when required produce to the MORTGAGEE the premium receipt for inspection. In the event of failure on the part of the MORTGAGOR to effect the insurance against fire flood and lightning it shall be lawful but not obligatory for the MORTGAGEE to insure the said house flat at the cost of the MORTGAGOR and add the amount of the premium to the outstanding amount of the advance and the MORTGAGOR shall thereupon be liable to pay interest thereon as if the amount of premium had been advanced to him as part of the aforesaid advance at prevailing rates till the amount is repaid to the MORTGAGEE OR is recovered as if it were an amount covered by the security of these presents. The Mortgagor shall give a letter to the Mortgagee as often as required

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addressed to the Insurer with which the house is insured with a view to enable the Mortgagee to notify the Insurer the fact that the Mortgagee is interested in the insurance policy secured.

e) That the Mortgagor shall maintain the aforesaid house in good repair at his her own cost and shall pay all the Municipal and other local rates taxes and all other outgoing in respect of the Mortgaged property regularly until the advance has been repaid to the Mortgagee in full. The Mortgagor shall also furnish to the Mortgagee an annual certificate to the above effect.

f) The Mortgagor shall afford full facility to the Mortgagee for carrying out Inspections after completion of the house to ensure that it is maintained in good repair until the advance has been repaid in full.

g) The Mortgagor shall refund to the Mortgagee any amount together with interest if any due thereon drawn on account of the advance in excess of the expenditure incurred for which the advance was sanctioned.

h) That the Mortgagor shall not during the continuance of these presents charge encumber alien or otherwise dispose of the Mortgaged property. However, if the Mortgagor covenants to create a second mortgage in favour of any other financial institution, he shall not do so without obtaining the prior permission of the Mortgagee and on the consent being given the draft of the second mortgage will be submitted to the Mortgagee for approval.

Provided Always that in the event of the Mortgagor created a second Mortgage on the same premises only by deposit of title deeds in favour of a financial institution including HDFC or a Bank the Mortgagee may at the written request of the Mortgagor and the financial institution concerned to this Mortgagee hand over such documents of title to the said premises as are in possession of this Mortgagee to the said financial institution for the sole purpose of creating the said proposed second Mortgage.

It is strict condition that before the said documents of title are handed over by the Mortgagee to the said financial institution as hereinbefore provided that the said financial institution and the Mortgagor shall assure and undertake to Mortgagee in writing in such form as may be determined by this Mortgagee that – (i) The said documents of title shall be held and retained by the

financial institution concerned only as a second Mortgage subject and subordinate to the rights of this Mortgagee hereunder.

(ii) The said financial institution shall not at any time or for any reason part with such title deeds without written consent of the Mortgagee first hand and obtained and on such conditions as may be imposed by the Mortgagee at its desecration.

(iii) After at any time the said financial institution ceases to be second Mortgagee of the said premises the said financial institution shall be obliged to return the said title deeds to this Mortgagee only whether or not any demand in this behalf is made by this Mortgagee.

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(iv) The said financial institution shall produce or cause to be produced the said title deeds as and when required by this Mortgagee for any reason whatsoever regardless of whether the said proposed second Mortgage due to be in existence or otherwise discharged. This will be in the understanding that as soon as the purpose is served the same shall returned by the Mortgager to the financial institution to be dispenses subject to these conditions.

(v) Nothing in these provisions shall be construed to create any financial or other obligations or liabilities in this Mortgagee vis-à-vis the financial institution or shall in any manner alter or abridge or abrogate the rights of this Mortgagee hereunder who shall always be and continue to be the paramount Mortgagee.

Notwithstanding anything contained herein the Mortgagee shall be entitled to recover the balance of the advance with interest remaining unpaid at the time of his/her retirement or death preceding retirement from the whole or any specified part of the Gratuity G.P.F. accumulation etc. that may be sanctioned to the Mortgagor.

SCHEDULE ABOVE REFERRED TO*

Plot of land bearing No._________ Re-Survey No.______ admeasuring _______ Sq.mt. situated Village ______________________ Taluka: ___________ Dist______ Sub-District ___________

Boundaries :- East______, West___________ North______, South__________.

IN WITNESS WHEREOF THE MORTGAGOR has hereunto set his/her hand and Shri._________________________________ (for and on behalf of) the Khadi and Village Industries Commission has hereunto set his hand.

(Signed by the said Mortgagor)…………………………………………

In the presence of st1 Witness of

Address Occupation

nd2 WitnessAddressOccupation

The common seal of the Commissioner for Khadi & Village Industries was hereunto affixed and Shri. ______________________________

(For and on behalf of)

Khadi & Village Industries Commission has Hereunto signed his name in the presence of :-

st1 Witness of Address Occupation

nd2 WitnessAddressOccupation

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5. MODEL BYLAWS FOR INSTITUTIONS

MEMORANDUM OF ASSOCIATION

1) Name of the Institution shall be

2) Registered Address:-

The Registered Address of the Institution shall be

Village/Town ..................................... Post Office ..................................... Taluqa ..................................... District ..................................... State .....................................

(If there is any change in the Address, it shall be intimated to Khadi and V.I. Commission as well as the Registering Authority of the Institution within 15 days from the date on which the change was made).

3. Area of Operation The area of operation of the Institution shall be Taluqa / Block / Mandalam / of____________District.

4. Year The Financial year of the Institution would be from 1st April to March 31st of succeeding year.

5. Objects:

The objects for which the Institution is established shall be as follows:

a) To improve the economic, moral and social standards of villagers in the area of operation of the Institution.

a) To alleviate poverty and bring about better living conditions mutual cooperation and unity among the villagers and in general rural development by implementing KVI Programmes.

b) To start, encourage, assist and carry on such other activities which are incidential for implementation of KVI Programmes.

c) For furtherance of all or any of the aforesaid objects, the institution shall have authority.

I) to solicit obtain or accept subscription, donation, grants, gifts, bequests and trusts from any person, firm, Bank or local authorities or corporate bodies like Khadi and Village Industries Commission and/or State KVI Boards and/or any State KVI Board and/or any institution and/or the Union/State Government.

ii) To acquire by gift, purchases, exchange, lease on hire or otherwise howsoever, any land, building, easements and any property movable and/or immovable and for any estate or interest for the furtherance of all or any of the objects of the institution.

iii) To build, construct and maintain houses, structures or buildings and alter extend improve, repair, enlarge or modify the same

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including any existing buildings (and or provide and equip the same with light, water, drainage furniture, fittings, instruments, apparatus and appliances) and all other necessities for the use to which such buildings is to be put up or held.

iv) To sell, manage, transfer, exchange, mortgage, demise, lease or let out dispose of or otherwise deal with the properties whatever (movable or immovable) belonging to the Institution.

v) To borrow and raise moneys with or without security or mortgage, charge, hypothecation or pledge over all or any of the immovable or movable properties belonging to the Institution or in any other manner whatsoever.

vi) To open and operate accounts in Bank/s or to deal with bank/s in any manner whatsoever required, for furtherance of objects of the institution.

vii) To open and conduct branches and to undertake such other activities for furtherance of all or any of the objects of the institution.

d) to do all other lawful things incidental or conductive to the attainment of any other objects of the institution and to incur necessary expenditure thereon.

e) The profits of the institution shall be utilized in furtherance of the objects of the Institution and shall not be distributed amongst the members.

6) The management of the affairs of the institution shall be entrusted to the duly constituted managing committee as provided in the rules and regulations of the institution from time to time.

7) The following persons shall constitute the first Managing Committee to administer the affairs of the institution.

Sr.No. Name Designation Occupation & Address (outside the institution)

1

2

3

4

5

6

7

8

9

10

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8) We, the several persons whose signatures are affixed hereunder for organizing this institution namely__________________pursuant to this memorandum and are desirous of getting the institution registered under Societies Registration Act XXI of 1860.

Sr.No. Name Signature Designation & Address

1

2

3

4

5

6

7

8

9

10

(1) RULES AND REGULATIONS

These rules shall be called rules of_________________________________For these rules, unless there is some thing repugnant to the context or meaning thereof, shall mean and include all the rules of the _______________________ (name of the Institution) that may be framed from time to time or altered by a special resolution of the General Body.

(2) DEFINITION

a. ‘Institution’ means __________________________________ (Name of the Institution)

b. “KVIC” means “Khadi & Village Industries Commission established under KVIC Act, 1956.

c. “State Board” means “State Khadi & V.I. Board” established under KVIC.d. “Khadi” means “Any cloth woven on handlooms using cotton, silk and

woollen yarn spun by hand in India or from a mixture of the two or all of the above.

e. “Village Industries” means “a Village Industry as defined under Section 2(h) of the KVIC Act, 1956”.

f. Office bearers shall include Chairman/Vice-Chairman, President/Vice-President, Secretary, Treasurer and Other members of the Managing Committee of the Institution.

stg. “Year” means “ The financial year commencing from 1 April and end on st31 March of the succeeding year”.

h. “Person” “Shall mean and include individuals, firms, societies, Banks, Clubs, associations, corporations and incorporate bodies.”

I. Words imparting the ‘Masculine’ gender and ‘Singular’ number shall respectively include the ‘feminine gender and ‘Plural number’ and vice versa.

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(3) MEMBERSHIP

Any person male or female fully qualified for membership and agree to abide by and strive for attainment of the aims and objects of the ___________________ could be admitted to the membership of the Institution. (Name of the Institution) There shall be three types of members of the Institution.I) Patron MembersII) Life MembersIII) Ordinary Members

A separate register for all classes of members shall be maintained.

(4) QUALIFICATION FOR MEMBERSHIP

I) Patron Members :-Any person dedicated to constructive work and who is having belief in the aim and objects of the _________________________ (name of the institution) and willing to serve in the field in future and contribute Rs.2,000/- or more or donates property worth Rs.2,000/- or more to the _______________________ (name of the institution) qualified for admission as Patron Member.

II) Life Members :-Any person or body dedicated to constructive work and who is having belief in the aims and objectives of the _____________________ (name of the institution) should contribute Rs.1,000/- or more in cash or donate property worth Rs.1,000/- or more within a period of one year can be admitted as Life Members.

III) Ordinary Members :-Artisans or individuals who are engaged in the field of Khadi and Village Industries; who have faith in the aims and objects of the ____________________ (name of the institution) may be admitted to membership of the institution on payment of Rs.5/- as entrance fee and Rs.20/- as annual subscription.

a. should be above 18 years in age.b. should not be one who is incapacitated by law to enter into

contractual obligations.c. should be a wearer of Khadi or one agreeable to become a wearer

of khadi on admission to membership.d. should be one willing to work, for the attainment of the aims and

objects of the ____________________e. Persons, desirous of becoming members of the _______________

shall be sign the application form prescribed for the purpose and pay the amount prescribed for the category of membership applied for as specified in rule 4(i), (ii) and (iii)and submit the form to the secretary of the institution. The Secretary shall place the same before the Managing Committee whose decision on admission of members shall be final.

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(5) CESSATION AND REMOVAL OF MEMBERSHIP

A person shall cease to be member of the ___________________a) on his death.b) On his resignation in writing and acceptance of the same by the

Managing Committee of the ____________________(name of the institution).

c) On his being mentally disabled or incapacitated to enter into contractual obligation.

d) On his failure to pay the subscription within the due period.e) Any person whose activities are considered detrimental to the interests

of the institution can be removed from the membership of the ______________________ (name of the institution) be a decision of the majority of the members present and voting at the meeting of the General Body of the institution specially convened for the purpose. The quorum for such meeting shall be two thirds of the total number of members or 20 whichever is less.

f) Those members whose names appear on the list of the members of the st_______________ as on 31 January of the calendar year shall be entitled

to vote in the General Body meeting.g) A separate register for all classes of members shall be maintained.

(6) FUNDS

The __________________________________ shall raise its funds.a) by membership fees.b) by entrance fees.c) By grants, donations and contributions from members or public.d) By raising loans for such period and any such rate of interest as may be

decided by the Managing Committee of the ______________________.e) By seeking financial assistance under recognized scheme for

development of Khadi & Village Industries as loans and grant and subsidies from Khadi & V.I. Commission, Central Government and other corporate bodies established by Central and State Government, and other corporate bodies established by Central and State Government banking institutions and other financing agencies/institutions for the development of Khadi and Village Industries.

(7) GENERAL BODY

The General Body shall comprise of all the three types of members as aforesaid and shall meet at least once in a year to transact business and lay down guidelines for conducting the affairs of the ____________________________ (name of the institution).

(8) QUORUM FOR GENERAL BODY

Two fifths of the total number of members on the rolls of the s t_______________ as on 31 January of the calendar year

___________________ shall form the quorum for the General Body Meeting.

The following among other are the functions of the General Body.a) To elect the Managing Committee.

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b) To appoint a Secretary and to fix his honorarium.c) To appoint person to audit account of the ______________________.d) To receive from the Managing Committee the report of the working of

the _______________ during the proceeding financial year together with statements showing the receipt and expenditure accounts and about the liabilities and profit and loss account for the year.

e) To consider the audit reports and any other communications received from the Commission/State Board or from financial agencies in respect of the matters concerning the business of the _______________________.

f) To consider amendments to rules and regulations.g) To lay down policies.h) To consider application for admission to membership.i) To consider any other business brought forward.

(9) The annual general meeting of the General Body shall be called within three months from the closing of the financial year and shall transact the business as per Memorandum of Association and rules and regulations of the ______________________.a. In case of the annual general body meeting 14 days notice shall be given

by publication of notice which shall specify the date, hour and place fixed for holding the meeting and shall state the business to be transacted at the meeting.

b. The notice of a General Body meeting shall be given :-c. by circulation of the notice or copies thereof among all the members of

the _____________________ and getting signature of members thereon as token of having received such notice or intimation.

d. by sending a notice by post under certificate of posting..

(10) Two fifths of the total number of member shall form a quorum. In the absence of the quorum meeting shall be adjourned and in adjourned meeting if there is no quorum then the business shall be disposed of without a quorum.

(11) The Secretary shall be responsible for calling General Body Meeting. If the Chairman/President considers that the Secretary has without valid reasons failed to call the General Body meeting as required under rules, he may himself call the meeting.

(12) On a request in writing made by 6/5th of the members the Secretary/Chairman shall call a General Body meeting. In the event of the Secretary/Chairman failing to call for the General Body Meeting for a specific purpose then the members themselves can call for the requisitioned meeting by designating one of them as conveyor for the purpose.

(13) At all General Body Meeting the President/Chairman of the institution shall preside and transact the business. In the absence of the President, Vice-President, Vice-Chairman shall preside and in the absence of both the members present shall elect a person to preside over the meeting and transact business.

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(14) MANAGING COMMITTEE

The Managing Committee shall consist of not less than 9 and not more than 15 selected member, Two fifth members of Managing Committee shall form the quorum. The Chairman/President of the ______________________________ shall preside over all meetings of the Managing Committee when he is present and in his absence, the Vice-President/Vice Chairman and in his absence the members present shall elect a Chairman from amongst themselves. Every members of the Managing Committee shall have one vote but the Chairman shall have a costing vote in addition, if there is tie.

(15) The Functions of the Managing Committee shall be as under :-

a) to frame rules and regulations for the conduct of the business of the institution not in consistent with the object, rules and regulations.

b) to consider and recommend the applications for membership as per rules of the ___________________________

c) to appoint, promote, punish=, suspend or dismiss employees and to frame rules and regulations of service for the employees of the ______________

d) To raise loans and deposits with or without security and decide the terms and conditions on which they should be accepted, and to offer necessary security thereon.

e) To sanction loans and advances to members.

f) To purchase raw materials and implements and equipments to sell and supply semi finished goods and finished goods and to made arrangements for storing them.

g) To sell and/or supply and/or give on hire purchase basic, implements and equipments to member.

h) To organize and conduct production and processing Khadi and Village Industries products and other products of rural industries and other activities in conformity with the objects of the ____________________.

i) To organize production and repairs of implements and equipments and training of existing members and other and to improve methods of production.

j) To arrange for proper maintenance of accounts and preparation of balance sheets, statements etc. and submission of progress report and other obligatory returns to concerned authorities.

k) To see that stock taking of all goods belonging to the institution is done every year at least.

l) To insure properties of the institution.

m) To do all such other acts and things that are necessary for the proper conduct of the business of the institution in furtherance of its objects.

(16) The managing Committee shall be competent to delegate any of its powers to the Chairman, Secretary or any Sub-Committee constituted by it for any specific purpose.

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(17) Subject to the rules and regulations and the resolutions passed by the ________ at the General Body Meeting the Managing Committee shall have full authority to carry on the business as provided for in the Memorandum of Association of the _____ Normally it shall meet not less than once in a month for the transaction of business.

(18) Business of an urgent nature may be disposed of by circulation of relevant papers amongst the members of the Managing Committee provided that a

thresolution is passed by 3/4 majority of the members of the managing Committee to ratify such action. All resolutions passed accordingly by circulations will be ratified by in the subsequent meeting of the Managing Committee.

(19) If there is a vacancy on the Managing Committee on account of death resignation etc. of an elected member it shall be filled in by the remaining member of the Managing Committee by co-option and such member shall hold office till the next General Body meeting. The members so co-opted shall be from the class of members to which the members in whose place he has been co-opted belonged to and shall have power to vote.

(20) In case any vacancy arises in the Managing Committee for any reason whatsoever, the remaining members shall be competent to function in the normal course provided that there are at least as many members as are required to form the quorum for the meeting that there are at least as many members as are required to form the quorum for the meeting.

(21) In case the number of members in the Managing Committee at anytime is less than the minimum number required to form the quorum, a special general body meeting shall be called within a month for filling up the vacancies by election.

(22) DUTIES OF THE SECRETARY

The duties of the Secretary shall be :-

A) to convene meetings of the General Body as well as Managing Committee and to attend and record all proceedings of such meetings in the Minute Book.

B) to carry on the correspondence pertaining to the general administration of the Institution and to maintain or cause to maintain all its books of accounts and registers in the requisite manner.

C) to receive and disburse money on behalf of the institution under the orders of the Managing Committee and to attend all business entrusted to him by the Managing Committee.

MISCELLANEOUS :

(23) The Commission shall have powers to give directions to the Managing Committee or to the Institution in respect of the financial policy and other matters of the Institution and the Managing Committee or the institution as the case may shall abide by such direction of the Commission.

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(24) No amendment to or alteration in the rules of the institution or the enactment of a new rules shall be made except at the meeting of General Body convened

rdfor the purpose and passed by 2/3 number of the members present and voted for it.

(25) The institution shall sue or be sued through its Chairman/Secretary.

(26) The proceeding of all meetings of General Body, Managing Committee Sub-Committees shall be entered in separate books kept for the purpose by the President/Chairman of the meeting.

(27) No Member of the institution shall be eligible at anytime for any claim over the profits made by the institution.

(28) 1. No body who is not a habitual and full Khadi Wearer and No body who was dealings in Mill Yarn, Mill Cloth or uncertified Khadi can be elected as an office bearer or a member of Managing Committee can be appointed as an employee of the Society.

2. The Institution shall not deal in or use as raw material at any stage Mill Yarn or cloth in the production of Khadi.

3. The excess margin shall be utilized for the benefit of the workmen as may be directed by the certification Committee of the Khadi and V.I. Commission.

4. The rules laid down by the Certification committee of the Khadi and V.I. Commission in the matter of payment of standard wages and fixation of prices shall be carried out by the institution as per certification rules with the approval of Central certification Committee, Lucknow.

(29) DISSOLUTION

For any reason whatsoever if the activities of the __________________

come to a stand still or to be wind up, the Managing Committee by a resolutions shall recommend this to the General Body, which in its turn at as meetings specially, convened for the purpose received by not less than 3/4th majority to dissolve the institution after giving 30 days written notice of the meeting with specific instruction of the purpose thereof.

(30) "On the dissolution of the _______________ if after satisfaction of all its debts and liabilities where remains any property or properties, movable or immovable whatsoever not impressed with any trust of trusts agreed between the institution and the donor or donors the same shall not be paid or distributed amongst the members of the institution or any of them, but shall be given to some other similar institution with similar objective with the approval of Central certification Committee to be determined by the special meeting of the General Body by votes of not less that 3/4th of members present at the meeting or in default thereof by the principal court of original jurisdiction of the District in which the registered office of the institution is situated . "

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