Sections 5-7

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Debt bondage

These provisions effectively liberate bonded labourers from their debts and order creditors to refund the property taken as mortgage or guarantee. If the creditor refuses to comply with these provisions, the Adjudicating Authority shall impose a fine on him or her of no less than ten thousand Rupees and no more than fifteen thousand Rupees.

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Section 6.  Deeds (instrument) or Agreement to be void: Notwithstanding anything contained in the prevailing law, all the deeds (instrument) or written or gentleperson agreement (verbal agreement) concluded between the creditor and the bonded labourer in respect of debt shall, ipso facto, be void after the commencement of this Act.

Section 7. Obligation to refund the property taken as a mortgage or guarantee: The creditor shall refund the property taken by him/her as a mortgage or guarantee, if any, in the course of providing debt to the bonded labourer to the concerned person within a period of Three months after the commencement of this Act.

Law / 20th April 2002 / Nepal / Bonded Labour (Prohibition) Act, 2002

This Act was created in order to ban the practice of bonded labour in Nepal, rehabilitate its victims and deliver justice. Bonded labour has been a traditional form of debt recovery in Nepal, whereby a labourer provided services to a creditor in order to back his or her own debt or the debt of their family. This practice often led to exploitative situations, in which the labourer suffered numerous human rights abuses, including slavery, forced labour and forms of degrading treatment.