Liquidated Damages - Applicability and Enforceablity

Liquidated Damages - Applicability and Enforceablity

P. C. Markanda*

INTRODUCTION

In all building and engineering contracts, it is invariably provided that the subject work shall be completed within the stated time. In order to ensure that the objective is achieved, the parties agree between themselves that a certain percentage of the amount of the whole work shall be completed at different defined stages. It is also provided that default in achieving the target by the contractor at any of the defined stages would attract action by the employer in terms of the liquidated damages clause contained in the contract.

The contracts generally provide that the contractor at 1/4 th, 1/2 and 3/4th stages of the work shall achieve defined progress. If at one-fourth stage, the contractor fails to give progress as agreed, the employer can levy liquidated damages, after observing the requisite formalities, or can, alternatively, call upon the contractor to make up the progress in a period to be given in the notice, failing which a right can be reserved by the employer to levy liquidated damages. Similar action can be initiated after the expiry of half or three-fourth of the stipulated period.

The purpose of inserting liquidated damages clause is only to ensure that the contractor shall execute the work with due diligence and in a workmanlike manner and strive to complete the whole work as given in the contract within the stipulated time. It must be remembered that the stipulation with regard to liquidated damages is not at all aimed to provide revenue to the employer. It is thus, desirable that recourse to imposition of liquidated damages should be taken only in extreme cases. It must be understood that by realising the amount of liquidated damages, the employer is not only reducing the working capacity of the contractor but is also running the risk of bringing the work to a complete halt. Many legal and financial complications can and do arise consequently. There may be an injunction from the Courts restraining the employer from proceeding with the work further pending' decision of the case. In addition, the risk of additional financial burden due to efflux of time has also to be borne in mind by the employer.

In many cases the time fixed by the contract ceases to be applicable on account of some act or default of the employer or his architect or engineer. A provision is, therefore, generally inserted in order to avoid such acts or defaults destroying the right to liquidated damages, by which the architect or engineer is empowered to grant an extension of time on the happening of certain specified events, and the contractor is bound, when such an extension of time has been properly granted to complete within the extended time. This has the effect of substituting for the time fixed by the contract a new date from which the liquidated damages are to run. Such a new date can only be substituted for the original time, under such a power, where the extension is given under the circumstances and on the happening of the events expressly provided by the contract. (1)

MERE USE OF WORDS "LIQUIDATED DAMAGES" AND "PENALTY"' IN A CLAUSE NOT TO BE DECISIVE

The question that arises is as to what is meant by liquidated damages, and secondly, whether or not the stipulation in the contract is in fact for penalty or liquidated damages. Under Common Law, a genuine pre-estimate of damages by mutual agreement was regarded as a stipulation for liquidated damages, a stipulation in contract in ierrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation

The use of the term penalty or liquidated damages by itself is not decisive, even what is described as liquidated damages could turn out to be penalty on the face of given case. The essence of penalty is a sum paid as in terroem while the essence of liquidated damages is a genuine covenanted pre-estimate of damages. A penal stipulation cannot be enforced. Liquidated damages must be the result of a genuine pre-estimate of damages and they do not include a sum fixed in terrorem. The question Is one of construction of a contract to be judged as at the tim c it was made, and mere description as penalty or liquidated damages though relevant is not binding.

The Indian Legislature has sought to cut across the web of rules and presumptions under the EngIish Common Law by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty. (3)

Sometimes it becomes difficult to make out whether the sum named in a clause is a penalty or liquidated damages. In such a case, the Court must take into consideration the intention of the parties, as evidenced by their language and the circumstances of the case. (4)

Mere use of the word "penalty" in a liquidated damages clause would not make the stipulation penal. If the sum named is not in terrorem it would be regarded as liquidated damages despite the fact that it had been given the name "penalty" in the contract.

Where in a contract for electric lighting installation it was provided that the work should be "completed in all respects on or before 26 November, 1898, subject to a penalty of 15 pounds per day, and the Plant by 10 December, subject to a penalty of 3 pounds per day the work remains unfinished to the satisfaction of the authorities or the Engineer, it was held that although the word penalty was used, the amounts accrued owing to the default of the contractor were, in fact, liquidated damages. (5)

On the other hand, if the sum named in the agreement is its lerrorem but has been stipulated to be liquidated damages in the contract, it will not be given effect to by the Courts since, in fact, it is in the nature of penalty.

Where the employer determined the contract on account of alleged breaches by the contractor, and clause 30 of the contract provided that in the event ofthe determination for breach, "all implements of the contractor used in the carrying out of the contract and all materials provided by him.... shall become the sole and absolute property of the employer and shall be considered as unaseertained damages for breach of contract", it was held that the clause was a penalty clause and not a liquidated damages clause.(6)

DISTINCTION BETWEEN LIQUIDATED DAMAGES AND PENALTY

Sometimes there is a very thin line dividing provisions relating to liquidated damages and penalt,.. A distinction as to whether the stipulation is one by way of liquidated damages or penalty has been summed up by the House of Lords in Dunlop Pnumatic. Tyre Co. Ltd. Vs New Garage and Molor Company Ltd. (7) as follows:

A. The parties who use the expression `penalty' or liquidated `damages' may prima facie mean what they say, yet the expressions are not conclusive.

B. The essence of a penalty is a payment of money in terrorem of an offending party; the essence of liquidated damages is a genuine pre-estimate of damayes.

C. The question whether a sum is a penalty or liquidated damages is a matter of construction of the particular contract, to be judged at the time of its and not at the time of its breach.

D. To assist in this task of construction, various tests have been suggested, which if applicable to the case under construction may prove helpful or even conclusive. Some such tests are -

i) the sum stipulated shall be a penalty if it is extravagant and unconscionable in amount in comparison with greatest loss that could conceivably be proved to follow from breach.

ii) it would be a penalty if breach consists only in not paying sum of money and sum stipulated is greater than sum which ought to have been paid;

iii) presumption (but no more) that it is a penalty when single sum made payable by way of compensation, or occurrence of one or more or all of such events, which may occasion serious damage or trifling damage, on the other hand; and

iv) no obstacle to sum stipulated being a genuine pre-estimate of damage that consequences of breach are such as to make precise pre-estimation almost impossible. On the contrary, that is the situation when probably the pre-estimated damage was true bargain between parties.

A building contract contained a proviso that in case the contract should not in all things be duly performed by the contractors they should pay 1000 pounds as liquidated damages. Held, this was a penalty and not liquidated damages. (8)

If in making a provision for breach of contract, the promisee stipulates that the promisor on the breach only, shall pay such compensation as the Court would deem reasonable in the circumstances of the case, then there is no penalty and the stipulation is not penal. But, if on the other hand, the Court, after a proper consideration of the facts of the case, come to the conclusion that the stipulation was put in not by way of reasonable compensation to the promisee but in order that by reason of its burdensome or oppressive character it may operate i . Pi terrorem over the promisor so as to drive him to fulfill the contract, then such a stipulation is by way of penalty. (9)

The parties to a contract may at the time of entering into it provide, that in case of breach the party in default is to pay to the other a sum certain provided in, or ascertainable from, the contract. This sum may be either liquidated damages, in which case it is not to be interfered with by the Court, or a penalty, which covers the loss if proved but does not assess it. If it is a sum which can be regarded as a genuine pre-estimate by the parties of the loss which they contemplated would flow from the breach, it is liquidated damages. If, on the other hand, the sum does not attempt to assess the loss, but is imposed as security for the due performance of the contract, it is a penalty. Liquidated damages, therefore, are pactional damages agreed to between the parties. Therefore, the essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted, pre-estimate of damage. (10)

WHEN LIQUIDATED DAMAGES TREATED AS COMPENSATION FOR DELAY

In certain cases, the Courts have treated the liquidated damages as compensation for delay caused by the contractor in completing the work. By way of illustration, reference may be made to the two cases which are as under:

(A) The erectors of a silk reducing plant covenanted to pay 20 pounds a week- for every week exceeding eighteen weeks occupied in the erection of the plant. The, period was greatly exceeded, and the silk company contended that this sum was a penalty and that they were entitled to much larger sum as unliquidated damages. Held, the sum of 20 pounds a week was intended by the parties to be the agreed measure of damages as the erectors had declined to be responsible for delay and the sum was provided in place of no compensation and was not a pre-estimate of actual damages, but was an agreed amount to go towards compensation for delay.(11)

(B) Where a contractor entered into a contract with the Government for supply of materials before a specified date for the repair and construction of roads and the parties were aware that the construction work was a matter of extreme urgency and was to be completed with the help of materials to be supplied by the contractor before the specified date, otherwise the construction work would be held up and the Government would suffer loss and damages and also the parties knew before hand that if the contract would not be performed to its completion, it would not be possible for the Government to lead evidence of actual loss and accordingly they assessed such loss on the basis of certain percentage of value of contract and where there was sufficient evidence to prove inlegal injury suffered by the Government by reason of the breach of the contract and also to show that if any other contractor had been employed at that stage, the Government would have suffered certain loss and damage thereby the amount assessed and mentioned in the contract cannot be said to have been assessed by way of penalty but was a genuine pre-estimate of the loss which was to be suffered by the Government in case of failure on the part of the contractor to deliver the materials before the due date mentioned in the contract. Hence, the amount mentioned in the contract would be payable as liquidated damages. (12)

DAMAGES NOT PAYABLE WHEN LIQUIDATED DAMAGES LEVIED

The parties when entering into a contract presuppose that the employer shall not commit any breach of conditions of contract and shall under all circumstances give effect to the stipulations contained in the contract. This is probably the only reason why the contract does not provide a yardstick for measuring damages which the contractor suffers like the manner it is so provided in case of liquidated damages. Thus, the only remedy available to the contractor in case of breach of contract by the employer is to submit his claim for damages to the arbitrator if the contract provides for arbitration in case of disputes between the parties but if there be no arbitration clause, then to file a civil suit. The question whether the employer in addition to the amount stated in the liquidated damages clause, is entitled to damages has been answered in Sir Chunilal V. Mehta and Sons Ltd. Vs Century Spinning and Manufacturing Co. Lid. (13) in the following terms:

"Where the parties name in a contract reduced to writing a sum of money to be paid as liquidated damages they must be deemed to exclude the right to claim an unascertained sum of money as damages. The right to claim liquidated damages is enforceable under section 74 of the Contract Act and where such a right is found to exist no question of ascertaining damages really arises. Where the parties have deliberately specified the amount of liquidated damages there can be no presumption that they at the same time intended to allow the party who has suffered by the breach to give a go by to the sum specified and claim instead a sum of money which was not ascertainable or ascertainable at the date of the breach."

The effect of section 74 of the Indian Contract Act is that a party cannot get the full amount mentioned in the contract as a matter of absolute right or as a matter of course. But if the party proves that he has suffered damage to the extent of the full amount or that the Court considers, even without any proof that the full amount is a reasonable compensation which can be awarded under the circumstances, the Court can award the full amount. One thing is however certain, that.the party is entitled to get some amount, not exceeding the sum named, which the Court considers as reasonable compensation, whether any actual loss or damage is proved to have been suffered by him. (14)

SITUATIONS WHERE LIQUIDATED DAMAGES CANNOT BE REALISED

Realisation of liquidated damges from the contractor is not a matter of course There may be circumstances when the employer loses the right to recover the same from the contractor.

Liquidated damages cease to be payable where the employer has waived the right to insist upon them. e.g. where he has failed to deduct or retain them in cases where it is imperative on his part under the contract to do so.(15)

Where the liquidated damages are stipulated for at so much per day or per week. there must be a definite date from which they are to run. If no such date is fixed by the contract, or if by the operation of intervening circumstances the date fixed by the contract has ceased to be operative and there is no provision in the contract by which another date can be substituted, all rights to recover the sum stipulated for as liquidated damages have gone.(16)

A contractor was delayed and failed to complete the contract on time, partly because of his fault and partly because the employer was late in the delivery of certain fixtures in the building. The employer sued the contractor under a liquidated damages clause for a per diem payment of each day's work overdue. Held, the failure of the employer to deliver precluded him from relying on the penalty clause, notwithstanding that the contractor may have been overdue in any event, in the absence of evidence that the contract could have been completed in time by a special effort on the part of the contractor.(17)

When the contractor had not finished the work by the date fixed in the agreement and the State allowed him to continue and complete it and final bill was prepared without imposing any penalty in terms of contract soon after the contractor's failure to complete by fixed date or rescinding the contract or getting work completed by other contractor, the State was not entitled to compensation as it must be deemed to have waived its right to fix it and recover the same from the contractor.(18)

When a clause in the agreement provides that compensation shall be deducted from time to time as the delay would occur during the progress of the work, non-levy of the same by the Chief Engineer would amount to waiver of his right to fix the compensation and to recover the same from the contractor.(19)

There are many ways in which completion of the works within the contract time may be prevented by the act or default of the employer, as, for instance, by ordering extras.' by not providing the site at the appropriate time; by failure to supply drawings when required by the contractor, or by failing to supply materials which the employer has agreed to provide. Where the effect of extras being ordered by the employer is to cause delay to the contractor, it is clear that, in the absence of special stipulations in the contract, the date fixed for completion is made inapplicable and the contractor is relieved from his liability to pay liquidated damages for delay.(20)

Where a clause in a contract provided for imposition of penalty if work was not done with due diligence, and the delay occurred due to failure of the department in supplying the stipulated material in time which had been duly intimated from time to time, and even the request of the contractor for grant of extension of time had not been rejected by the department, it was held that imposition of penalty. for delay. cannot be justified.(21)

LIQUIDATED DAMAGES RECOVERABLE ONLY WHEN LEGAL INJURY SUFFERED

The question whether the employer can recover the amount specified in the contract by way of iquidated damages without proving that there had been "legal injury" has been answered in some decided case. In Fateh Chand Vs Balkishan Das (22), the Supreme Court of India has held that Section 74 of the Indian Contract Act undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of "actual loss or damage". however it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good loss or damage which naturally arose in the usual course of things. or which the parties knew when they made the contract, to be likely to result from the breach.

Section 74 of the Indian Contract Act, 1872 does not dispense with the basic condition of the breach resulting in any loss or damae which can be called "legal injury". The party complaining of breach of contract and claiming compensation is entitled to succeed only on proof of "legal injury" having been sustained on account of such breach. The words in Section 74 "whether or not actual damage Or loss is proved to have been caused thereby" have been employed to underscore the departure deliberately made by the Indian Legislature from the complicated principles of English Common Law and also to emphasize that reasonable compensation can be granted even in a case where extent of actual loss or damage is incapable of proof or not proved. Thus, Section 74 deliberately states that what is to be awarded is a reasonable compensation. In a case where the party complaining has not suftered legal injury in the sense of sustaining loss or damage, there is nothing to compensate him, for there is nothing to recompensate, satisfy or make amends. Therefore, he will not be entitled to compensation.(23)

Where the Chief Engineer has very categorically stated that on account of the delay on the part of the contractor in completing the work, there occasioned, in fact, no loss to the Government. compensation cannot be granted by the Courts even if a sum is named in the contract as payable in the event of breach of contract.(24)

In Michel Habib Raji Ayoub Vs Sheikh Suleman EI Taji Forouqui (25), it was observed as under:

"Agreed liquidated damages, if to be enforced must be the result of a genuine pre-estimate of damages' to use the illuminating phrase of LORD DUNREDIN. They do not include a sum fixed in terrorem covering breaches of contract of many varying degrees of importance the possible damages from which bear no relation to the fixed sum, which obviously have at no time been estimated by the contracting parties. It seems right therefore to conclude that now when the code is applied to contracts `damages' will be taken to mean actual damages, and the article will only apply to an agreement which represent a genuine pre-estimate of damages'. Where there is such an agreed sum `no more and no less' can be awarded. But if the Court applying well-known rules has to conclude that the sum agreed was a penalty, whatever it may be called in the agreement, then the penal stipulation shall not be enforced."

SECURITY DEPOSIT CANNOT BE FORFEITED WHEN LIQUIDATED DAMAGES LEVIED

The question whether security deposit of the contractor can also be forfeited when the employer has already exercised its right of recovering liquidated damages has been answered by the Courts in India. Some of the cases relating to this aspect of the matter are as under:

Where on failure of contractor to complete the work within time, the Government in accordance with conditions of contract debited the contractor with actual cost which was spent in getting unfinished work done and forfeited the security amount also, it was held that as the Government did not suffer any damage in consequence of default, it was not entitled to forfeit security deposit inasmuch as forfeiture of security deposit, would amount to imposition of penalty.(26)

The party to the contact taking a security deposit from the other party to ensure due performance of the contract is not entitled to forfeit the security deposit on the ground of default, when no loss is caused to him in consequence of such default.(27)

When in a works contract, the contractor undertook to complete the work within 3 months and on default to forgo the deposit and the building having been completed late without any loss to the department, it was held that the department could not forfeit the deposit and at best could claim reasonable compensation.(28)

A provision in the contract between the contractor and the government cast a duty on the contractor to finish the work within the specified time and if he failed to do so, the Divisional Engineer was given a discretion to cancel the contract and employee some other person to execute the remaining portion thereof The Division Engineer could also recover from the contractor any extra cost that such proceeding might entail or he might allow the contractor to complete the work chasing for each day for the work unfinished by him a penalty. The contractor not having completed the work within the stipulated time, the Government cancelled the contract. The government did not give the work to any other person nor did it allow the contractor to complete it. No notice was given to the contractor before the cancellation of the contract. The government, however, forfeited the earnest money and the security deposit which were deposited by the contractor, on the condition that the amount would be returned to the contractor upon completion of the work It was held that thought the government was entitled to cancel the contract, it had not followed the formalities laid down in the stipulations of the contract and therefore would not be entittled to forefeit the earnest moneyh and further security deposit (29).

Where in a contract between the State government and the contractor. power had been conferred upon the Executive Engineer to grant extension from time to time and for levying and recovering penalty/compensation from the contractor at specified rates for the unfinished work after expiry of the fixed date, it was held that on rescission of, such contract by Government without fixing any further period was illegal and State Government committed a breach of contract and consequently the security deposit of the contractor could not be forfeited.(30)

To justify forfeiture of advance deposit being part of price as "earnest", the terms of contract should be sufficiently explicit and made known to the party making the deposit. Thus, where the contents of the reply submitted by the receiver in the Court were not sutricient to hold that 1/4 th advance deposit of bid money was by way of earnest and as a guarantee for fulfillment of other terms of the contract so as to justify its forfeiture on the alleged breach on the part of the highest bidder, then in the absence of proof of any loss to the auctioning authority the advance deposited by the auction-purchaser could not be forfeited by the receiver as "eamest".(31)

CONCLUSION

Invocation of liquidated damages clause should be taken recourse to by the employer only in such cases where there can be no two opinions that the contractor does not have the capacity to do the work- nor he will be able to complete the work within a reasonable time after the time stated in the contract expires. Any action taken in a hurry would land the employer in problem. Some amount of restraint in proceeding against the contractor must be exercised. The contractor may have genuine problems which he could not have foreseen with reasonable diligence at the time of entering into contract. If the employer takes into consideration the fact that it does not pay the contractor to delay execution of work, then he has to investigate as to why delay is occurring. The employer must endevour to find solutions rather that saying that it is not his headache, since the aimed objective of the employer is to get the work completed rather than enter into any legal or financial complications.
Source Here

Extention of permission/ approval for reimbursement of cost of Neuro-implants

RBI FAQ On Pension

Payment of Pension to Government Pensioners

Scheme for Payment of Pension to Government Pensioners by Authorised Banks - Frequently Asked Questions (FAQs) Reserve Bank of India monitors disbursement of pension by its agency banks in respect of all Central Government Departments (except the Department of Post) and certain State Governments. It has been receiving several queries/ complaints from pensioners in regard to fixation, calculation and payment of pension including revision of pension/ Dearness Relief from time to time, transfer of pension account from one bank branch to another, etc. We have analysed the queries/ complaints, rights and duties of pensioners and put the same in the form of answers to these Frequently Asked Questions. It is hoped that this will cover most of the queries/ doubts in the minds of pensioners. 1. Can the pensioner draw his/ her pension through a bank branch? Yes. Even the Government employees earlier drawing their pension from a treasury or from a post office will have the option to draw their pension from the authorized bank’s branches. 2. Who is the pension sanctioning authority? The Ministry/ Department /Office where the Government servant last served is the pension sanctioning authority. The pension fixation is made by such authority for the first time and thereafter the refixation of pay, if any, is done by the pension paying bank based on the instructions from the Central/ State Government authorities. 3. Is it necessary for the pensioner to open a separate pension account for the purpose of crediting his/ her pension in authorized bank? The pensioner is not required to open a separate pension account. The pension can be credited to his or her existing savings/ current account maintained with the branch selected by the pensioner. 4. Can a pensioner open a Joint Account with his/ her spouse? Yes. All Central Government Pensioners (except the pensioners of the Telecom Department) and those State Governments which have accepted such arrangement can open Joint Account with their spouses. 5. Whether Joint Account of the pensioner with spouse can be operated either by ''Former or Survivor" or " Either or Survivor". The Joint Account of the pensioner with spouse can be operated either by ‘‘Former or Survivor" or “Either or Survivor". 6. What is the minimum balance required to be maintained in the pension account maintained with the banks? RBI has not stipulated any minimum balance to be maintained in pension accounts by the pensioners. Individual banks have framed their own rules in this regard. However, some of the banks have also permitted zero balance in the pensioners’ accounts. 7. Who sends the Pension Payment Orders (PPOs) to the authorized bank branch? The concerned pension paying authorities in the Ministries /Departments/ State Governments forward the PPOs to the bank branches wherefrom the pensioner desires to draw his/her pension. 8. When is the pension credited to the pensioner's account by the paying branch? The disbursement of pension by paying branch is spread over the last four working days of the month depending on the convenience of the pension paying branch except for the month of March when the pension is credited on or after the first working day of April. 9. Can a pensioner transfer his/ her pension account from one branch to another branch of the same bank or to the branch of another bank? (a) Pensioner can transfer his/ her pension account from one branch to another branch of the same bank within the same centre or at a different centre; (b) He/ She can transfer his/ her account from one authorized bank to another within the same centre (such transfers to be allowed only once in a year); (c) He/ She can also transfer his/ her account from one authorized bank to another authorized bank at different centre. 10. What is the procedure for payment of pension in the case of the transfer of PPO to another branch or bank, as the case may be? Pension will be paid on the basis of the photocopy of the pensioner’s PPO at the transferee (new) branch from the date of the last date of payment made at the transferor (old) branch. During this time, both the branches (old and new) are required to ensure that all the required documents are received by the transferee branch within the period of three months. 11. Is it necessary for the pensioner to be present at the branch of the bank along with documents for the purpose of identification before commencement of pension? Yes. Before the commencement of pension, a pensioner has to be present at the paying branch for the purpose of identification. The paying branch shall obtain the specimen signatures or the thumb/toe impression from the pensioner. 12. What is the procedure to be followed by the bank branch if the pensioner is handicapped /incapacitated and is not in a position to be present at the paying branch? If the pensioner is physically handicapped/incapacitated and unable to present at the branch, the requirement of personal appearance is waived. In such cases the bank official visits the pensioner’s residence/hospital for the purpose of identification and obtaining specimen signature or thumb/toe impression. 13. Has the pensioner got right to retain half portion of the PPO for record and to get it updated from paying branch whenever there is a change in the quantum of pension due to revision in basic pension, dearness relief, etc.? Yes. The pensioner has right to retain half portion of the PPO for record and whenever there is a revision in the basic pension/DR etc. the paying branch has to call for the pensioner's half of the PPO and record thereon the changes according to government orders/notifications and return the same to the pensioner. 14. Whether the paying branch has to maintain a detailed record of pension payments made by it in the prescribed form? Yes. The pension paying branch is required to maintain a detailed record of pension payments made by it from time to time in the prescribed form duly authenticated by the authorized officer. 15. Can the pension paying bank recover the excess amount credited to the pensioner’s account? Yes. The paying branch before commencement of pension obtains an undertaking from the pensioner in the prescribed form for this purpose and therefore, can recover the excess payment made to the pensioner's account due to delay in receipt of any material information or due to any bonafide error. The bank has also right to recover the excess amount of pension credited to the deceased pensioner’s account from his/ her legal heirs/nominees. 16. Is it compulsory for a pensioner to furnish a Life Certificate/Non-Employment Certificate or Employment Certificate to the bank in the month of November? Yes. The pensioner is required to furnish a Life Certificate/Non – Employment Certificate or Employment Certificate to the bank in the month of November. However, in case a pensioner is unable to obtain a Life Certificate from an authorized bank officer on account of serious illness / incapacitation, bank official will visit his/her residence/ hospital for the purpose of recording the life certificate. 17. Can a pensioner be allowed to operate his/ her account by the holder of Power of Attorney? The account is not allowed to be operated by a holder of Power of Attorney. However, the cheque book facility and acceptance of standing instructions for transfer of funds from the account is permissible. 18. Who is responsible for deduction of Income Tax at source from pension payment? The pension paying bank is responsible for deduction of Income Tax from pension amount in accordance with the rates prescribed by the Income Tax authorities from time to time. While deducting such tax from the pension amount, the paying bank will also allow deductions on account of relief to the pensioner available under the Income Tax Act. The paying branch will also issue to the pensioner in April each year a certificate of tax deduction as per the prescribed form. If the pensioner is not liable to pay Income Tax, he should furnish to the pension paying branch, a declaration to that effect in the prescribed form (15 H). 19. Can old, sick physically handicapped pensioner who is unable to sign, open pension account or withdraw his/ her pension from the pension account? A pensioner, who is old, sick or lost both his / her hands and, therefore, can not sign, can put any mark or thumb/ toe impression on the form for opening of pension account. While withdrawing the pension amount he/ she can put thumb/toe impression on the cheque/withdrawal form and it should be identified by two independent witnesses known to the bank one of whom should be a bank official. 20. Can a pensioner withdraw pension from his/ her account when he/ she is not able to sign or put thumb/toe impression or unable to be present in the bank? In such cases, a pensioner can put any mark or impression on the cheque/ withdrawal form and may indicate to the bank as to who would withdraw pension amount from the bank on the basis of cheque / withdrawal form. Such a person should be identified by two independent witnesses. The person who is actually drawing the money from the bank should be asked to furnish his/ her specimen signature to the bank. 21. When does the family pension commence? The family pension commences after the death of the pensioner. The family pension is payable to the person indicated in the PPO on receipt of a death certificate and application from the nominee. 22. How the payment of Dearness Relief at revised rate is to be paid to the pensioners? Whenever any additional relief on pension/family pension is sanctioned by the Government, the same is intimated to the agency banks for issuing suitable instructions to their pension paying branches for payment of relief at the revised rates to the pensioners without any delay. The orders issued by Govt. Departments are also hosted on their websites and banks have been advised to watch the latest instructions on the website and act accordingly without waiting for any further orders from RBI in this regard. 23. Can pensioners get pension slips? Yes. As decided by the Central Government (Civil, Defence & Railways), pension paying banks have been advised to issue pension slips to the pensioners in prescribed form when the pension is paid for the first time and thereafter whenever there is a change in quantum of pension due to revision in basic pension or revision in Dearness Relief. 24. Which authority the pensioner should approach for redressal of his/ her grievances? A pensioner can initially approach the concerned Branch Manager and, thereafter, the Head Office of the concerned bank for redressal of his/her complaint. They can also approach the Banking Ombudsman of the concerned State in terms of Banking Ombudsman Scheme 2006 of the Reserve Bank of India (details available at the Bank’s website www.rbi.org.in) This is applicable only in respect of complaints relating to services rendered by banks. For other issues the complainant will have to approach the respective pension paying authority. 25. Where can a pensioner get information about the changes in the pension/ Dearness Relief or any pension related issue? The pensioner can visit the Official Website of the concerned Government Department as also Reserve Bank of India Website (www.rbi.org.in) to get the information about pension related issues.

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Validity Period for Sale: 02nd April 2008 to 31st March 2009

Terms & Conditions: Corporate Super Saver ticket(s):

Can be issued only to Corporate Houses / Companies, against a request letter on the letter head. Can be used by multiple users / employees belonging to the same corporate. However, each user / employee must carry the company issued ID card while traveling with the Corporate Super Saver ticket. Corporate House Scheme benefits will be allowed. Name of the passengers and Sectors of travel can be finalized either at the time of ticket issuance or later at the time of making a reservation. Each coupon can be used on any domestic sector operated with IC / AI code flights where there is no change of aircraft and flight number involved. Bookings for AI code flights can be done 3 days prior to departure date. FFP mileage points of 750 / 500 will be awarded for each Executive / Economy class coupons respectively. Booking will be made in J / W classes as applicable All the coupons will be endorsed with " Non-Refundable / Non-endorsable / Non-reroutable". Tickets can be re-validated (due to No-show or Name change or Sector change) at a charge of Rs. 1000/- per coupon. A one-time Validity extension for 3 months only would be permitted at a charge of Rs. 1000/- per coupon.

No refund is permissible, once the Corporate Super Saver tickets are issued.

Revised pay of Canteen staff

Clarification on LTC

Leave Travel Concession Scheme

NACIL is offering you a revised Leave Travel Concession Scheme (LTC-80), which was presently being offered under LTC-30 with effect from 01st December,2008.

Highlights:

Under this scheme you can travel in Economy Class on selected domestic sectors. You can not avail child & Infant Fare or any other discount under this scheme. Tickets booked under LTC Scheme are refundable. However you will have to pay refund Fee of Rs. 100 per ticket, cancelled at least 1hour prior to the departure. But if you get the Ticket cancelled less than 1hour prior to the departure, it will be treated as no-show. you can re-book and change your reservation by paying just Rs.100 per ticket at least 1hour prior to departure. After commencement of the journey you can not Re-Route your booking. For verification you are required to carry the Employee Identity Card while traveling. Your ticket will be Non-endorsable and valid to travel on Air India only. If you are an Employee of the State, Central Government, Public Sector Undertakings or employees of the educational institutions then you and your family members traveling on leave are eligible for availing LTC facility. Under this scheme your booking should be on confirmed basis. You can purchase your ticket under this scheme from Air India booking offices and approved travel agents.

BSNL offers 20% discount in total Broadband bill (Rental+Usage) to State/Central Government and PSU employee with effect from 01/12/2008.

Clarification on child care leave

Clarification regarding date of grant of non-finctional upgradation

Value Added Tax (VAT)

One of the important components of tax reforms initiated since liberalization is the introduction of Value Added Tax (VAT). VAT is a multi-point destination based system of taxation, with tax being levied on value addition at each stage of transaction in the production/ distribution chain. The term 'value addition' implies the increase in value of goods and services at each stage of production or transfer of goods and services. VAT is a tax on the final consumption of goods or services and is ultimately borne by the consumer. It is a multi-stage tax with the provision to allow 'Input tax credit (ITC)' on tax at an earlier stage, which can be appropriated against the VAT liability on subsequent sale. This input tax credit in relation to any period means setting off the amount of input tax by a registered dealer against the amount of his output tax. It is given for all manufacturers and traders for purchase of inputs/supplies meant for sale, irrespective of when these will be utilised/ sold. The VAT liability of the dealer/ manufacturer is calculated by deducting input tax credit from tax collected on sales during the payment period (say, a month). If the tax credit exceeds the tax payable on sales in a month, the excess credit will be carried over to the end of next financial year. If there is any excess unadjusted input tax credit at the end of second year, then the same will be eligible for refund.

VAT is basically a State subject, derived from Entry 54 of the State List, for which the States are sovereign in taking decisions. The State Governments, through Taxation Departments, are carrying out the responsibility of levying and collecting VAT in the respective States. While, the Central Government is playing the role of a facilitator for the successful implementation of VAT. The Ministry of Finance is the main agency for levying and implementing VAT, both at the Centre and the State level.

The Department of Revenue, under the Ministry of Finance, exercises control in respect of matters relating to all the direct and indirect taxes, through two statutory Boards, namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Customs and Central Excise (CBEC). The Sales Tax Division, of Department of Revenue, deals with enactment and amendment of the Central Sales Tax Act; levy of tax on sales in the course of inter-State trade or commerce; levy of VAT; etc. The Central Board of Excise and Customs (CBEC) deals with the tasks of formulation of policy concerning levy and collection of customs and central excise duties, allowing of Central Value added Tax (CENVAT) credit, etc. While, the decision to implement State level VAT has been taken in the meeting of the Empowered Committee (EC) of State Finance Ministers, held on June 18, 2004, where a broad consensus was arrived at to introduce VAT in all States/ Union Territories (UTs).

The entire design of VAT with input tax credit is crucially based on documentation of tax invoice, cash memo or bill. Every registered dealer, having turnover of sales above an amount specified, needs to issue to the purchaser serially numbered tax invoice with the prescribed particulars. This tax invoice is to be signed and dated by the dealer or his regular employee, showing the required particulars. For identification/ registration of dealers under VAT, the Tax Payer's Identification Number (TIN) is used. TIN consists of 11 digit numerals throughout the country. Its first two characters represent the State Code and the set-up of the next nine characters can vary in different States.

In India's prevalent sales tax structure, there have been problems of double taxation of commodities and multiplicity of taxes, resulting in a cascading tax burden. For instance, in this structure, before a commodity is produced, inputs are first taxed, and then after the commodity is produced with input tax load, output is taxed again. This causes an unfair double taxation with cascading effects. Hence, the VAT has been introduced to replace such sales tax structure. Moreover, it seeks to phase out the Central Sales Tax (CST) and several efforts are being made in this regard.

The main motive of VAT has been the rationalisation of overall tax burden and reduction in general price level. Thus, it seeks to help common people, traders, industrialists as well as the Government. It is indeed a move towards more efficiency, equal competition and fairness in the taxation system. The main benefits of implementation of VAT are:-

• Minimizes tax evasion as VAT is imposed on the basis of invoice/ bill at each stage, so that tax evaded at first stage gets caught at the next stage;
• A set-off is given for input tax as well as tax paid on previous purchases;
  
• Abolishes multiplicity of taxes, that is, taxes such as turnover tax, surcharge on sales tax, additional surcharge, etc. are being abolished;
• Replaces the existing system of inspection by a system of built-in self-assessment of VAT liability by the dealers and manufacturers (in terms of submission of returns upon setting off the tax credit);
• Tax structure becomes simpler and more transparent;
  
• Improves tax compliance;
• Generates higher revenue growth;
• Promotes competitiveness of exports; etc.

At the Central level, there is Central Value Added Tax (CENVAT) which pertains to the rationalisation of Central excise duty structure in India. At present, there is a uniform rate of CENVAT of 16 per cent on most of the inputs and final products. The CENVAT has been introduced to end all the disputes that were taking place due to classification of various types of inputs as rates were different on different varieties. Accordingly, the CENVAT Credit Rules have been notified and amended, from time to time, which are as follows:-

• The Cenvat Credit Rules, 2004
• The Cenvat Credit Rules, 2002
• The Cenvat Credit Rules, 2001
  

Under these, a manufacturer or producer of final products and a provider of output service is allowed to take credit (known as CENVAT credit) of the duty of excise, as mentioned in the Rules, paid on specified inputs and capital goods used in or in relation to the manufacture of specified final products. The CENVAT credit so allowed can be utilized for payment of :- (i) any duty of excise on any final product; or (ii) an amount equal to CENVAT credit taken on inputs, if such inputs are removed as such or after being partially processed; or (iii) an amount equal to the CENVAT credit taken on capital goods, if such capital goods are removed as such; or (iv) service tax on any output service, as per the conditions laid down in the rules. In the latest budget, it is proposed to reduce the general CENVAT rate on all goods from 16 per cent to 14 per cent in order to give a stimulus to the manufacturing sector.

At the State level, the Empowered Committee of State Finance Ministers have finalized a design of VAT to be adopted by all the States/ UTs. This basic design of VAT retains the essential features of VAT and keep them common for all the States/ UTs, like, the rates of VAT on various commodities are kept uniform for all. At the same time, it provides a measure of flexibility to the States/ UTs so as to enable them to meet their local requirements.

At present, there are 2 basic rates of VAT, namely, 4 per cent and 12.5 per cent, besides an exempt category and a special rate of 1 per cent for a few selected items. The items of basic necessities and goods of local importance (upto 10 items) have been put in the zero rate bracket or the exempted schedule. Gold, silver and precious stones have been put in the 1 per cent schedule. There is also a category with 20 per cent floor rate of tax, but the commodities listed in this schedule are not eligible for input tax rebate/set off. This category covers items like motor spirit (petrol, diesel and aviation turbine fuel), liquor, etc. Some of the other features of VAT in the State (as finalized by the Empowered Committee) are:-

• As per provision for eliminating the multiplicity of taxes, all the State taxes on purchase or sale of goods (excluding Entry Tax in lieu of Octroi) are required to be subsumed in VAT or made VATable.
• A provision has been made for allowing 'Input Tax Credit (ITC)' which is the basic feature of VAT. However, since the VAT being implemented is intra-State VAT only and does not cover inter-State sale transactions, ITC is not to be available on inter-State purchases.
• Exports to be zero-rated, with credit given for all taxes on inputs/purchases related to such exports.
• There are provisions to make the system more business-friendly. For instance, provision for self assessment by the dealers; provision of a threshold limit for registration of dealers in terms of annual turnover of Rs. 5 lakhs; and provision for composition of tax liability up to annual turnover limit of Rs. 50 lakhs.
• Regarding the industrial incentives, the States have been allowed to continue with the existing incentives, without breaking the VAT chain. Further, no fresh sales tax/ VAT-based incentives are permitted.

Haryana became the first State in the country to introduce Value Added Tax (VAT). Till 2007, VAT has been introduced by more than 30 States/UTs, including Tamil Nadu (implemented VAT from January 1, 2007) and the UT of Puducherry (implemented VAT from April 1, 2007). From January 01, 2008, the Government of Uttar Pradesh has made VAT effective in the State. Some of the other States/ UTs which have implemented VAT are:-

• Andhra Pradesh
• Chhattisgarh
• Delhi
• Goa
• Gujarat
• Jammu and Kashmir
• Jharkhand
• Karnataka
• Kerala
• Maharashtra
• Meghalaya
• Orissa
• Rajasthan
• West Bengal

Source :Here

NBU ties up with CSIR

Statesman News Service
SILIGURI, Nov. 27: The University of North Bengal has tied up with the internationally acclaimed Council of Scientific and Industrial Research (CSIR). The Memorandum of Understanding (MoU) giving official seal to the tie-up was signed today at the administrative office of the UNB in the presence of the Head, R and D (Planning Division) CSIR, Dr Naresh Kumar and the Vice-Chancellor, University of North Bengal, Prof. Arunava Basu Majumder.
Describing the tie-up as ‘a breaking of a new dawn in the scientific and industrial research’ in an economically and educationally backward region, Prof. Basu Majumder said that it would enable the faculty members and the students to get a wide exposure to the world of scientific and industrial research being systematically nurtured and developed for years by the world's largest publicly funded industrial R and D organisation.
“Our university feels privileged as it is the first university in the country to have tied up with the globally renowned research organisation,” he said. According to the UNB Vice-Chancellor, initially 10 students, selected by the university, would participate in summer training programmes lasting for six to eight weeks in the course of which they would get access to the research laboratories and libraries being manned by the CSIR in eastern region. “Besides, CSIR scientists would take part in teaching programmes by delivering lectures on topics pertaining to the expertise and course curriculum,” Prof. Basu Majumder said.
“The UNB would accredit participating CSIR scientists for guiding research leading to PHD degree,” he said.
Addressing the MoU signing function the Head, R and D (Planning Division) Dr Naresh Kumar said that today's programme marked a small beginning in the direction of greater academic collaboration between the University of North Bengal and the CSIR. “Depending upon the progress we would definitely think in terms of setting up a CSIR science and research laboratory in Siliguri,” he said.

CSIR CASH AND ACCOUNTS MANUAL-1964

Prosecution sanction- evidence of sanctioning/ authenticating authority

Source here

Pay parity for armed forces a difficult task: Govt

New Delhi, November 23: With the armed forces insisting on a pay hike, the government has said it is "very difficult" to maintain a balance in salaries of government servants doing varied jobs.

"It is a very difficult exercise. Because it is not just a question of ensuring that people get better salaries. It is also a question of parities.... balances," Cabinet Secretary K M Chandrasekhar said in an interview.

He was responding to a question on what steps the government was contemplating in view of the armed forces' demand for pay parity.

Chandrasekhar said issues become more complicated when people start feeling that they are being discriminated against by the Pay Commission recommendations.

"It is very difficult when people feel that this chap has got more than me...that feeling is there. So, to maintain that kind of balance.... it is very difficult," he said.

The Cabinet Secretary said the ministerial committee headed by External Affairs Minister Pranab Mukherjee, who had held both Defence and Finance portfolios earlier, was working on to find out a solution to the demands of the defence forces.

The armed forces have recently strongly conveyed to the government that there should be "no dilution" on their demands for pay parity.

This comes in the wake of reports that the government was trying to find a "middle path" to break the deadlock over the armed forces' demands that included placing Army Lieutenant Colonels and their equivalents in the Navy and Air Force in Pay Band-4.

The Cabinet Secretary said when the armed forces raised the issue of pay parity, the Committee of Secretaries took up it immediately and deliberated on how to find a solution to it for the satisfaction of the defence personnel.

"When the armed forces raised the issue, we sat together at the official level with Principal Secretary to the Prime Minister (P M Nair) and decided that the best thing would be to request the higher level.

"So we requested the External Affairs Minister because he was both Defence and Finance Minister earlier and could consult Defence Minister and Finance Minister and give his views," he said.

Chandrasekhar said a "large majority" of government officials, including the Group C and Group D employees, accepted the Pay Commission recommendations and were "more or less satisfied".

"I do not have too many complaints and whatever complaints are there, we have created a mechanism. We got the anomaly committee, we got a fast track committee to look into those issues," he said.

Highlighting the difficult task carried out by the 6th Pay Commission while framing the recommendations, Chandrasekhar said they had to make a huge change in the structure.

"See normally we used to get pay scales. Here we have gone away from pay scales to the Pay Band structure, which is entirely different structure. So, to maintain the parity was pretty difficult. But still I think we did a pretty good job," he said.

Courtesy : Indian Express

Implementation of 6th Pay Commission - Gr IV Scientist

Source Here

6CPC TA- Clarification

Source: here

Default Option could be on PFRDA's radar: Swarup

Mumbai, Nov 19 (PTI) Pension Fund Regulator PFRDA is considering a fifth option for investment of contribution made by government employees under the new pension scheme.
Called Default Option, it is a life-cycle fund under which the amount of money invested in equity would be more in the initial stages while in the later stages, more money would be invested in debt instruments.

"We are considering the Default Option which is a life-cycle fund. The Deepak Parekh committee which is looking at various investment plans for pension scheme is also considering this option. The committee is expected to submit the report by November 30," Pension Fund Regulatory and Development Authority (PFRDA) Chairman D Swarup told PTI.

"Once recommended PFRDA will take a view on it. It could be one of the options," he said.

The Default Option, which is more balanced, provides a return which is much more than the option where money is invested wholly in debt instruments but certainly gives less returns than high-risk fully equity-based investments.

"Default Option has become a global trend. It is a future pension plan. In a country like India where financial literacy is very low and there is an inability to sense future risks, Default Option will be an appropriate option," LIC Pension Fund Chief Executive Officer, H Sadhak, said. PTI

Mockery of Low paid staff by 6th Pay Commission

I do not know that how many of you are getting real picture of 6th pay commission implementation. But as far as my experience says it is quite socking to Low paid staff. why?
(1) 6th CPC say they maintain the ratio of 1:12 between lowest & Highest. Tell me whether the difference between 5740 (or 10000) (min)& 75000 (max) is same as compared difference between 2550(min) & 26000(max).
(2) Previously the difference of increment between lowest & highest paid staff is only Rs 595 which is fixed, Now it is 2200 & it will increase with time.
(3) On promotion there is no more protection of lowest basic attached with post except when there is change of pay band. So what is happening is that on many time low paid employee will get lower basic on promotion when compared to fixation under 5th pay commission. While on the other hand if a highly paid staff supposedly get promotion after 4/5 Yr of service from 12000-375-18000 (PB3) to 14300-300-18300(PB4) he will get minimum salary of 37400+8700. A minimum jump of over 10000 on promotion. Even if the promotion is from PB1 to PB2 or PB2 to PB3 the promotional jump is negligible when compared to promotion from PB3 to PB4.(Particularly where time frame is fixed for promotion)
(4) The difference of minimum to maximum TA is now becomes 2800+DA compared to earlier 775 .
(5) For each BP + DP in the pre revised scale there is a corresponding pay in the corresponding pay band. Grade pay is added to this figure to arrive at the new basic pay. Revised pay in the pay band is a multiple of the previous BP + DP. This multiplication factor should be the same for all. Then only we can say that there is a common yard stick used in the 6 cpc implementation. But unfortunately it is not done that way. There is a lot of anomaly as I am listing down below.

Previous BP ----- Revised Pay ----- Multiplication Factor used
---------------------in Pay Band
10200 ------------- 18980 ---------------------------- 1.86
12400 ------------- 23070 ---------------------------- 1.86
14325 ------------- 26650 ---------------------------- 1.86
12000 ------------- 22320 ---------------------------- 1.86
14625 ------------- 27210 ---------------------------- 1.86

14300 ------------- 37400 ------------------2.62 - in the grade Rs 14300 - Rs 18300

You can see that all lower ranking people are given a multiplication factor 0f 1.86, while as higher ranking people get 2.62. This is a gross injustice done to all lower ranking employees in Government service. If at all it is different it should be higher for lower ranking people and not the other way.

As an example, a person with a prerevised basic pay of Rs 5000/-, has his pay revised to Rs 9300/- plus grade pay (multiplication factor of 1.86). If he is given the same treatment as higher ranking people his revised pay should become Rs 13,100/- plus grade pay (multiplication factor of 2.62); a difference of Rs 3800/- in basic pay itself. This is the type of injustice done to all lower ranking people by 6 cpc. The effect to others are

Previous BP --- Revised BP ---Deserving pay ----Revised BP is less by
4000 --------------------- 9840 --------------------12880 --------------------- 3040
5000 -------------------- 12100 ------------------- 15900 --------------------- 3800
6050 -------------------- 15460 ------------------- 20060 --------------------- 4600
7100 -------------------- 17410 ------------------- 22810 --------------------- 5400
8125 -------------------- 19720 ------------------- 25890 --------------------- 6170
9100 -------------------- 22330 ------------------- 29250 --------------------- 6920
10200 ------------------- 24380 ------------------- 32130 --------------------- 7750
11950 ------------------- 28830 ------------------- 37910 --------------------- 9080
13125 ------------------- 32020 ------------------- 41990 --------------------- 9970
14250 ------------------- 34110 ------------------- 44940 --------------------- 10830

14300 -------- 46100 --------------- 46100 ---------0 - in the grade Rs 14300 - Rs 18300

It is clear that a lower official s lose an amount between Rs 3000/- and Rs 12000/- per month in Basic pay.

Children Education Allowance- Clarification

Clarification on child care leave

Department of Personnel and Training, Ministry of Personnel, Public Grievances & Pensions vide OM No No. 130 18/2/2008-Estt. (L) dt 18th Nov 2008 mentioned that the intention of the Pay
Commission in recommending Child Care Leave for women employees was to facilitate women employees to take care of their children at the time of need. However, this does not mean that CCL should disrupt the functioning of Central Government offices. The nature of this leave was envisaged to be the same as that of earned leave. In this regard following clarification are issued

i) CCL cannot be demanded as a matter of right. Under no circumstances can any employee proceed on CCL without prior proper approval of the leave by the leave sanctioning authority.

ii) The leave is to be treated like the Earned Leave and sanctioned as such.

iii) Consequently, Saturdays, Sundays, Gazetted holidays etc. falling during the period of leave would also count for CCL, as in the case of Earned Leave.

iv) CCL can be availed only if the employee concerned has no Earned Leave at her credit.
Link here

Deputation/ delegation abroad- acceptance of invitation

CVC Direction on time bound processing of procurement

No raise in retirement age of Central govt employees: Cab Secy

NEW DELHI: Putting an end to speculation that the retirement age of Central Government employees will be raised, the center made it clear that it has no plans to raise the age for superannuation.
"No, there is no such plan. There is no thinking at all. The status quo will continue," Cabinet Secretary K M Chandrasekhar told PTI when asked whether there is any move in this regard.
Currently, the retirement age of Central government employees is 60 years. Chandrasekhar said there have been rumours that it would be raised but it was nothing but a "wishful thinking".
"I tried to find out. But there is no file in (Department of) Expenditure, no file in DoPT (Department of Personnel and Training). There is nothing. It is more of a wishful thinking," he said in an interview.
The Cabinet Secretary also said the government has no plans to bring an uniformity in the retirement age among the state government employees.
"The states will decide their own retirement age," he said. All states have their own retirement age - starting from 55 years (Kerala) to 60 years (Uttar Pradesh, Assam etc). The Madhya Pradesh government teachers retire at the age of 62 years.
Asked whether the government would resort to job cuts or stop recruitment like the private sector in the wake of the global financial crisis, the Cabinet Secretary made it clear that no such step will be taken.
"No, not at all. The government will have to necessarily keep activity going. We cannot really stop exercise. We want as much activity as possible. Government is not going to scale down," he said.
On corruption, Chandrasekhar admitted that corruption does take place and it happens due to crisis in certain areas.
"I think corruption does take place. Not only in India, but in many parts of the world. It is an unfortunate thing. Corruption takes place mainly because of shortage in certain areas," he said.
The Cabinet Secretary said the country must have a strong information system and there should be awareness among people to eliminate the menace.
"There should be strong public awareness. When public awareness is higher, the level of corruption is low. Literacy rate is by and large going up. It helps checking corruption. Media is also active, particularly the vernacular press is very active against corruption. They are very vigilant," he said.

Source : Economic times