Financial Daily from THE HINDU group of publications
Thursday, Apr 15, 2004
Trade & Labour Unions
Money & Banking - Securitisation
Securitisation Act anti-labour: Unions
Sarbajeet K. Sen
New Delhi , April 14
THE Securitisation Act may have created a deep divide between lenders and borrowers but has created a strong bonding elsewhere - it has brought about unity among diverse labour unions.
Unions with ideological leanings as varied as the Sangh Parivar outfit, Bhartiya Mazdoor Sangh (BMS), which is an affiliate of the Rashtriya Swayamsevak Sangh (RSS), and the left-affiliated All-India Trade Union Congress (AITUC) have come down heavily on the Securitisation Act for lack of provisions to protect labour interests, especially when lenders join hands to withdraw ongoing cases before the Board for Industrial and Financial Reconstruction (BIFR).
The Securitisation Act, whose validity was recently upheld by the Supreme Court, provides that if lenders representing 75 per cent of the value of loans to a defaulting unit agree, then they can seek abatement of the company's case pending before BIFR after recovery proceedings are initiated under it.
"The BIFR provided some foothold for labour through a consensus process. The Securitisation Act bids goodbye to all those procedures under the excuse of loan recovery. Banks and institutions can go straight ahead and put a lock on the factories to recover dues. This is completely undemocratic," Mr Uday Patwardhan, General Secretary, BMS, said.
Mr Patwardhan said that the law was too myopic in its intent. "The Securitisation Act is solely focussed on recovery. It is unmindful that there are larger interests involved in the running of industry. Lender-borrower relationship is not the only relationship in a company," he said.
He said his major concern was the protection of labour dues such as gratuity payment. "Timely payment of gratuity is our basic concern because it remains with the employers and is paid at the fag end of a worker's career. There should be some mechanism to ensure payment of this amount," Mr Patwardhan said.
The Secretary of AITUC, Mr D.L. Sachdev, largely echoed Mr Patwardhan's views. "The Act does not take care of workers' interest. Workers had some representation before the BIFR. But under the Securitisation Act they have no right to be heard."
He said that among AITUC's major concern was the timely payment of statutory dues of the employees.
Mr Sachdev, however, said that AITUC would not be uncomfortable in the event the lending institution takes over the management of the company in question and keeps it functioning. "If lenders take over the management and keep the unit running then it might be good in the long run," he said.
Both AITUC and BMS said that they would take up the labour issues that could crop up due the Securitisation Act with the new Government. "We had pointed out the lacunae at the last session of the Indian Labour Conference. We intend to take up the matter afresh," Mr Patwardhan said.
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