The Industries (Development and Regulation) Act, 1951
An Act to provide for the development and regulation of certain industries. BE it enacted by Parliament as follows:--
CHAPTER I : PRELIMINARY
Section 1: Short title, extent and commencement.
Rules
09-07-1952 | The Registration and Licensing of Industrial Undertakings Rules, 1952 |
Section 2: Declaration as to expediency of control by the Union.
It is hereby declared that it is expedientin the public interest that the Union should take under its control the industries specified in the FirstSchedule.
Section 3: Definitions.
In this Act, unless the context otherwise requires,--
(a) "Advisory Council" means the Central Advisory Council established under section 5;
1[(aa) "ancillary industrial undertaking" means an industrial undertaking which, in accordancewith the proviso to sub-section (1) of section 11B and the requirements specified under thatsub-section, is entitled to be regarded as an ancillary industrial undertaking for the purposes of thisAct;]
2[3[(ab)] "current assets" means bank balances and cash and includes such other assets orreserves as are expected to be realised in cash or sold or consumed within a period of not more thantwelve months in the ordinary course of business, such as, stock-in-trade, amounts due from sundrydebtorsfor sale of goods and for services rendered, advance tax payments and bills receivable,butdoes not include sums credited to a provident fund, a pension fund, a gratuity fund or any otherfund for the welfare of the employees, maintained by a company owning an industrial undertaking;
3[(ac)]"current liabilities" means liabilities which must be met on demand or within a period oftwelve months from the date they are incurred; and includes any current liability which is suspendedunder section 18FB;]
(b) "Development Council" means a Development Council established under section 6;
4[(bb) "existing industrial undertaking" means--
(a) in the case of an industrial undertaking pertaining to any of the industries specified in theFirst Schedule as originally enacted, an industrial undertaking which was in existence on thecommencement of this Act or for the establishment of which effective steps had been takenbefore such commencement, and
(b) in the case of an industrial undertaking pertaining to any of the industries added tothe First Schedule by an amendment thereof, an industrial undertaking which is in existence onthe coming into force of such amendment or for the establishment of which effective steps hadbeen taken before the coming into force of such amendment;]
(c) "factory" means any premises, including the precincts thereof, in any part of which amanufacturing process is being carried on or is ordinarily so carried on--
(i) with the aid of power, provided that fifty or more workers are working or were workingthereon on any day of the preceding twelve months; or
(ii) without the aid of power, provided that one hundred or more workers are working orwere working thereon on any day of the preceding twelve months and provided further that in nopart of such premises any manufacturing process is being carried on with the aid of power;
5[(cc) "High Court" means the High Court having jurisdiction in relation to the place at which theregistered office of a company is situate;]
(d) "industrial undertaking" means any undertaking pertaining to a scheduled industry carriedon in one or more factories by any person or authority including Government;
6[(dd) "new article", in relation to an industrial undertaking which is registered or in respect ofwhich a licence or permission has been issued under this Act, means--
(a) any article which falls under an item in the First Schedule other than the item under whicharticles ordinarily manufactured or produced in the industrial undertaking at the date ofregistration or issue of the licence or permission, as the case may be, fall;
(b) any article which bears a mark as defined in the Trade Marks Act, 1940 (5 of 1940), orwhich is the subject of a patent, if at the date of registration or issue of the licence or permission, as thecase may be, the industrial undertaking was not manufacturing or producing such article bearingthat mark or which is the subject of that patent;]
(e) "notified order" means an order notified in the Official Gazette;
(f) "owner" in relation to an industrial undertaking means the person who, or the authoritywhich, has the ultimate control over the affairs of the undertaking, and, where the said affairs areentrusted to a manager, managing director or managing agent, such manager, managing director ormanaging agent shall be deemed to be the owner of the undertaking;
(g) "prescribed" means prescribed by rules made under this Act;
(h) "Schedule" means a Schedule to this Act;
(i) "scheduled industry" means any of the industries specified in the First Schedule;
7[(j) "small scale industrial undertaking" means an industrial undertaking which, in accordancewith the requirements specified under sub-section (1) of section 11B, is entitled to be regarded as asmall scale industrial undertaking for the purposes of this Act;]
5[8[(k)] words and expressions used herein but not defined in this Act and defined in theCompanies Act, 1956 (1 of 1956), have the meanings respectively assigned to them in that Act.]
Section 4: [Omitted.].
[Saving.]--Omitted by the Industries (Development and Regulation) Amendment Act, 1953 (26 of1953), s. 3 (w.e.f. 1-10-1953).
CHAPER II : THE CENTRAL ADVISORY COUNCILAND DEVELOPMENT COUNCILS
Section 5: Establishment and constitution of Central Advisory Council and its functions.
(1) For thepurpose of advising it on matters concerning the development and regulation of scheduled industries, theCentral Government may, by notified order, establish a Council to be called the Central AdvisoryCouncil.
(2) The Advisory Council shall consist of a Chairman and such other members, not exceeding thirtyin number, all of whom shall be appointed by the Central Government from among persons who are in itsopinion capable of representing the interests of--
(a) owners of industrial undertakings in scheduled industries;
(b) persons employed in industrial undertakings in scheduled industries;
(c) consumers of goods manufactured or produced by scheduled industries;
(d) such other class of persons including primary producers, as in the opinion of the CentralGovernment, ought to be represented on the Advisory Council.
(3) The term of office of, the procedure to be followed in the discharge of their functions by, and themanner of filling casual vacancies among, members of the Advisory Council, shall be such as may beprescribed.
(4) The Central Government shall consult the Advisory Council in regard to--
(a) the making of any rules, other than the first rules to be made under sub-section (3);
and may consult the Advisory Council in regard to any other matter connected with the administration ofthis Act in respect of which the Central Government may consider it necessary to obtain the advice of theAdvisory Council.
Section 6: Establishment and constitution of Development Councils and their functions.
(1) TheCentral Government may, by notified order establish for any scheduled industry or group of scheduledindustries, a body of persons to be called a Development Council which shall consist of members who inthe opinion of the Central Government are--
(a) persons capable of representing the interests of owners of industrial undertakings in thescheduled industry or group of scheduled industries;
(b) persons having special knowledge of matters relating to the technical or other aspects of thescheduled industry or group of scheduled industries;
(c) persons capable of representing the interests of persons employed in industrial undertakings inthe scheduled industry or group of scheduled industries;
(d) persons not belonging to any of the aforesaid categories, who are capable of representing theinterests of consumers of goods manufactured or produced by the scheduled industry or group ofscheduled industries.
(2) The number and the term of office of, and the procedure to be followed in the discharge of theirfunctions by, and the manner of filling casual vacancies among members of a Development Council shallbe such as may be prescribed.
(3) Every Development Council shall be, by virtue of this Act, a body corporate by such name as maybe specified in the notified order establishing it and may hold and transfer property and shall by the saidname sue and be sued.
(4) A Development Council shall perform such functions of a kind specified in the Second Scheduleas may be assigned to it by the Central Government and for whose exercise by the Development Councilit appears to the Central Government expedient to provide in order to increase the efficiency orproductivity in the scheduled industry or group of scheduled industries for which the DevelopmentCouncil is established, to improve or develop the service that such industry or group of industries rendersor could render to the community, or to enable such industry or group of industries to render such servicemore economically.
(5) A Development Council shall also perform such other functions as it may be required to performby or under any other provision of this Act.
Section 7: Reports and accounts of Development Councils.
(1) A Development Council shall prepare andtransmit to the Central Government and the Advisory Council, annually, a report setting out what hasbeen done in the discharge of its functions during the financial year last completed.
(2) The report shall include a statement of the accounts of the Development Council for that year, andshall be transmitted as soon as accounts therefor have been audited, together with a copy of any reportmade by the auditors on the accounts.
(3) The statement of account shall be in such form as may be prescribed, being a form which shallconform to the best commercial standards, and the statement shall show the total of remuneration andallowances paid during the year to members and officers of the Council.
(4) A copy of each such report of a Development Council, or made by the auditors on its accounts,shall be laid before Parliament by the Central Government.
Section 8: Dissolution of Development Councils.
(1) The Central Government may, if it is satisfied that aDevelopment Council should cease to continue in being, by notified order, dissolve that DevelopmentCouncil.
(2) On the dissolution of a Development Council under sub-section (1), the assets of the DevelopmentCouncil, after its liabilities, if any, are met therefrom, shall vest in the Central Government for thepurposes of this Act.
Section 9: Imposition of cess on scheduled industries in certain cases.
(1) There may be levied andcollected as a cess for the purposes of this Act on all goods manufactured or produced in any suchscheduled industry as may be specified in this behalf by the Central Government by notified order a dutyof excise at such rate as may be specified in the notified order, and different rates may be specified fordifferent goods or different classes of goods:
Provided that no such rate shall in any case exceed two annas per cent. of the value of the goods.
Explanation.--In this sub-section, the expression "value" in relation to any goods shall be deemed tobe the wholesale cash price for which such goods of the like kind and quality are sold or are capable ofbeing sold for delivery at the place of manufacture and at the time of their removal therefrom, without anyabatement or deduction whatever except trade discount and the amount of duty then payable.
(2) The cess shall be payable at such intervals, within such time and in such manner as may beprescribed, and any rules made in this behalf may provide for the grant of a rebate for prompt payment ofthe cess.
(3) The said cess may be recovered in the same manner as an arrear of land revenue.
(4) The Central Government may hand over the proceeds of the cess collected under this section inrespect of the goods manufactured or produced by any scheduled industry or group of scheduledindustries to the Development Council established for that industry or group of industries, and where itdoes so, the Development Council shall utilise the said proceeds--
(a) to promote scientific and industrial research with reference to the scheduled industry or groupof scheduled industries in respect of which the Development Council is established;
(b) to promote improvements in design and quality with reference to the products of such industryor group of industries;
(c) to provide for the training of technicians and labour in such industry or group of industries;
(d) to meet such expenses in the exercise of its functions and its administrative expenses as maybe prescribed.
CHAPTER III : REGULATION OF SCHEDULED INDUSTRIES
Section 10: Registration of existing industrial undertakings.
1[(1) The owner of every existing industrialundertaking, not being the Central Government, shall, within such period as the Central Government may,by notification in the Official Gazette, fix in this behalf with respect to industrial undertakings generallyor with respect to any class of them, register the undertaking in the prescribed manner.]
(2) The Central Government shall also cause to be registered in the same manner every existingindustrial undertaking of which it is the owner.
2[(3) Where an industrial undertaking is registered under this section, there shall be issued to theowner of the undertaking or the Central Government, as the case may be, a certificate of registration3[containing the productive capacity of the industrial undertaking and such other particulars as may beprescribed].]
4[(4) The owner of every industrial undertaking to whom a certificate of registration has been issuedunder this section before the commencement of the Industries (Development and Regulation) AmendmentAct, 1973 (67 of 1973), shall, if the undertaking falls within such class of undertakings as the CentralGovernment may, by notification in the Official Gazette, specify in this behalf, produce, within suchperiod as may be specified in such notification, the certificate of registration for entering therein theproductive capacity of the industrial undertaking and other prescribed particulars.
(5) In specifying the productive capacity in any certificate of registration issued under sub-section (3),the Central Government shall take into consideration the productive or installed capacity of the industrialundertaking as specified in the application for registration made under sub-section (1), the level ofproduction immediately before the date on which the application for registration was made under subsection(1), the level of the highest annual production during the three years immediately preceding theintroduction in Parliament of the Industries (Development and Regulation) Amendment Bill, 1973, theextent to which production during the said period was utilised for export and such other factors as theCentral Government may consider relevant including the extent of under-utilisation of capacity, if any,during the relevant period due to any cause.]
Rules
05-1952 | The Central Advisory Council (Procedural) Rules, 1952 |
Section 11: Revocation of registration in certain cases.
1[10A. Revocation of registration in certain cases.--If the Central Government is satisfied that theregistration of any industrial undertaking has been obtained by misrepresentation as to an essential fact orthat any industrial undertaking has ceased to be registrable under this Act by reason of any exemptiongranted under this Act becoming applicable thereto or that for any other reason the registration hasbecome useless or ineffective and therefore requires to be revoked, the Central Government may aftergiving an opportunity to the owner of the undertaking to be heard revoke the registration.]
Section 12: Licensing of new industrial undertakings.
(1) No person or authority other than the CentralGovernment, shall, after the commencement of this Act, establish any new industrial undertaking, exceptunder and in accordance with a licence issued in that behalf by the Central Government:
Provided that a Government other than the Central Government may, with the previous permission ofthe Central Government, establish a new industrial undertaking.
(2) A licence or permission under sub-section (1) may contain such conditions including, inparticular, conditions as to the location of the undertaking and the minimum standards in respect of size tobe provided therein as the Central Government may deem fit to impose in accordance with the rules, ifany, made under section 30.
Section 13: Licence for producing or manufacturing new articles.
1[11A. Licence for producing or manufacturing new articles.--The owner of an industrialundertaking not being the Central Government which is registered under section 10 or in respect of whicha licence or permission has been issued under section 11 shall not produce or manufacture any new articleunless--
(a) in the case of an industrial undertaking registered under section 10, he has obtained a licencefor producing or manufacturing such new article; and
(b) in the case of an industrial undertaking in respect of which a licence or permission has beenissued under section 11, he has had the existing licence or permission amended in the prescribedmanner.]
Section 14: Power of Central Government to specify the requirements which shall be complied with by small scale industrial undertakings.
1[11B.Power of Central Government to specify the requirements which shall be complied withby small scale industrial undertakings.--(1) The Central Government may, with a view to ascertainingwhich ancillary and small scale industrial undertakings need supportive measures, exemptions or otherfavourable treatment under this Act to enable them to maintain their viability and strength and so as to beeffective in--
(a) promoting in a harmonious manner the industrial economy of the country and easing theproblem of unemployment, and
(b) securing that the ownership and control of the material resources of the community are sodistributed as best to subserve the common good,
specify, having regard to the factors mentioned in sub-section (2), by notified order, the requirementswhich shall be complied with by an industrial undertaking to enable it to be regarded, for the purposes ofthis Act, as an ancillary, or a small scale, industrial undertaking and different requirements may be sospecified for different purposes or with respect to industrial undertakings engaged in the manufacture orproduction of different articles:
Provided that no industrial undertaking shall be regarded as an ancillary industrial undertaking unlessit is, or is proposed to be, engaged in--
(i) the manufacture of parts, components, sub-assemblies, toolings or intermediates; or
(ii) rendering of services, or supplying or rendering, not more than fifty per cent. of its productionor its total services, as the case may be, to other units for production of other articles.
(2) The factors referred to in sub-section (1) are the following, namely:--
(a) the investment by the industrial undertaking in--
(i) plant and machinery, or
(ii) land, buildings, plant and machinery;
(b) the nature of ownership of the industrial undertakings;
(c) the smallness of the number of the workers employed in the industrial undertaking;
(d) the nature, cost and quality of the product of the industrial undertaking;
(e) foreign exchange, if any, required for the import of any plant or machinery by the industrialundertaking; and
(f) such other relevant factors as may be prescribed.
(3) A copy of every notified order proposed to be made under sub-section (1) shall be laid in draftbefore each House of Parliament, while it is in session, for a total period of thirty days which may becomprised in one session or in two or more successive sessions, and if, before the expiry of the sessionimmediately following the session or the successive sessions aforesaid, both Houses agree indisapproving the issue of the proposed notified order or both Houses agree in making any modification inthe proposed notified order, the notified order shall not be made, or, as the case may be, shall be madeonly in such modified form as may be agreed upon by both the Houses.
(4) Notwithstanding anything contained in sub-section (1), an industrial undertaking which, accordingto the law for the time being in force, fell, immediately before the commencement of the Industries(Development and Regulation) Amendment Act, 1984 (4 of 1984), under the definition of an ancillary, orsmall scale, industrial undertaking, shall, after such commencement, continue to be regarded as anancillary, or small scale, industrial undertaking for the purposes of this Act until the definition aforesaid isaltered or superseded by any notified order made under sub-section (1).]
Section 15: Revocation and amendment of licences in certain cases.
(1) If the Central Government issatisfied, either on a reference made to it in this behalf or otherwise, that any person or authority, towhom or to which, a licence has been issued under section 11, has, without reasonable cause, failed toestablish or to take effective steps to establish the new industrial undertaking in respect of which thelicence has been issued within the time specified therefor or within such extended time as the CentralGovernment may think fit to grant in any case, it may revoke the licence.
(2) Subject to any rules that may be made in this behalf, the Central Government may also vary oramend any licence issued under section 11:
Provided that no such power shall be exercised after effective steps have been taken to establish thenew industrial undertaking in accordance with the licence issued in this behalf.
1[(3) The provisions of this section shall apply in relation to a licence issued under section 11A orwhere a licence has been amended under that section, to the amendment thereof, as they apply in relationto a licence issued under section 11.]
Section 16: Further provision for licensing of industrial undertakings in special cases.
1[13. Further provision for licensing of industrial undertakings in special cases.--(1) No ownerof an industrial undertaking, other than the Central Government, shall--
(a) in the case of an industrial undertaking required to be registered under section 10, but whichhas not been registered within the time fixed for the purpose under that section, carry on the businessof that undertaking after the expiry of such period, or
(b) in the case of an industrial undertaking the registration in respect of which has been revokedunder section 10A2, carry on the business of the undertaking after the revocation, or
(c) in the case of an industrial undertaking to which the provisions of this Act did not originallyapply but became applicable after the commencement of this Act for any reason, carry on thebusiness of the undertaking after the expiry of three months from the date on which the provisions ofthis Act became so applicable, or
(d) effect any substantial expansion of an industrial undertaking which has been registered3[or inrespect of which a licence or permission has been issued], or
(e) change the location of the whole or any part of an industrial undertaking which has beenregistered,
except under, and in accordance with, a licence issued in that behalf by the Central Government, and, inthe case of a State Government, except under and in accordance with the previous permission of theCentral Government.
(2) The provisions of sub-section (2) of section 11 and of section 12 shall apply, so far as may be, inrelation to the issue of licences or permissions to any industrial undertaking referred to in this section asthey apply in relation to the issue of licences or permissions to a new industrial undertaking.
Explanation.--For the purposes of this section, "substantial expansion" means the expansion of anexisting industrial undertaking which substantially increases the productive capacity of the undertaking,or which is of such a nature as to amount virtually to a new industrial undertaking, but does not includeany such expansion as is normal to the undertaking having regard to its nature and the circumstancesrelating to such expansion.]
Section 17: Procedure for the grant of licence or permission.
Before granting any licence or permissionunder 1[section 11, section 11A2[section 13 or section 29B]], the Central Government may require suchofficer or authority as it may appoint for the purpose, to make a full and complete investigation in respectof applications received in this behalf and report to it the result of such investigation and in making anysuch investigation, the officer or authority shall follow such procedure as may be prescribed.
Section 18: Power to cause investigation to be made into scheduled industries or industrial undertakings.
Where the Central Government is of the opinion that--
(a) in respect of any scheduled industry or industrial undertaking or undertakings--
(i) there has been, or is likely to be, a substantial fall in the volume of production in respect ofany article or class of articles relatable to that industry or manufactured or produced in theindustrial undertaking or undertakings, as the case may be; for which, having regard to theeconomic conditions prevailing, there is no justification; or
(ii) there has been, or is likely to be, a marked deterioration in the quality of any article orclass of articles relatable to that industry or manufactured or produced in the industrialundertaking or undertakings, as the case may be, which could have been or can be avoided; or
(iii) there has been or is likely to be a rise in the price of any article or class of articlesrelatable to that industry or manufactured or produced in the industrial undertaking orundertakings, as the case may be, for which there is no justification; or
(iv) it is necessary to take any such action as is provided in this Chapter for the purpose ofconserving any resources of national importance which are utilised in the industry or theindustrial undertaking or undertakings, as the case may be; or
1[(b) any industrial undertaking is being managed in a manner highly detrimental to the scheduledindustry concerned or to public interest;]
the Central Government may make or cause to be made a full and complete investigation into thecircumstances of the case by such person or body of persons as it may appoint for the purpose.
Section 19: Power to investigate into the affairs of a company in liquidation.
1[15A. Power to investigate into the affairs of a company in liquidation.--(1) Where a company,owning an industrial undertaking is being wound up by or under the supervision of the High Court, andthe business of such company is not being continued, the Central Government may, if it is of opinion thatit is necessary, in the interests of the general public and, in particular, in the interests of production,supply or distribution of articles or class of articles relatable to the concerned scheduled industry, toinvestigate into the possibility of running or re-starting the industrial undertaking, make an application tothe High Court praying for permission to make, or cause to be made, an investigation into such possibilityby such person or body of persons as that Government may appoint for the purpose.
(2) Where an application is made by the Central Government under sub-section (1), the High Courtshall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or in any other law forthe time being in force, grant the permission prayed for.]
Section 20: Powers of Central Government on completion of investigation under section 15.
(1) If aftermaking or causing to be made any such investigation as is referred to in section 15 the CentralGovernment is satisfied that action under this section is desirable, it may issue such directions to theindustrial undertaking or undertakings concerned as may be appropriate in the circumstances for all orany of the following purposes, namely:--
(a) regulating the production of any article or class of articles by the industrial undertaking orundertakings and fixing the standards of production;
(b) requiring the industrial undertaking or undertakings to take such steps as the CentralGovernment may consider necessary to stimulate the development of the industry to which theundertaking or undertakings relates or relate;
(c) prohibiting the industrial undertaking or undertakings from resorting to any act or practicewhich might reduce its or their production, capacity or economic value;
(d) controlling the prices, or regulating the distribution, of any article or class of articles whichhave been the subject-matter of investigation.
(2) Where a case relating to any industry or industrial undertaking or undertakings is underinvestigation, the Central Government may issue at any time any direction of the nature referred to in subsection(1) to the industrial undertaking or undertakings concerned , and any such direction shall haveeffect until it is varied or revoked by the Central Government.
Section 21: [Omitted.].
[Special provisions for direct control by Central Government in certain cases.]-- Omitted bythe Industries (Development and Regulation) Amendment Act, 1953 (26 of 1953), s. 12 (w.e.f. 1-10-1953).
Section 22: Power of person or body of persons appointed under section 15 to call for assistance in any investigation.
(1) The person or body of persons appointed to make any investigation under section 1524[or section 15A] may choose one or more persons possessing special knowledge of any matter relating tothe investigation to assist him or it in holding the investigation.
(2) The person or body of persons so appointed shall have all the powers of a civil court under theCode of Civil Procedure, 1908 (5 of 1908), for the purpose of taking evidence on oath (which he or it ishereby empowered to administer) and of enforcing the attendance of witnesses and compelling theproduction of documents and material objects, and the person or body of persons shall be deemed to be acivil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure,1898 (5 of 1898).
CHAPTER IIIA : DIRECT MANAGEMENT OR CONTROL OF INDUSTRIAL UNDERTAKINGS BY CENTRAL GOVERNMENT IN CERTAIN CASES
Section 23: Power of Central Government to assume management or control of an industrial undertaking in certain cases.
1[18A. Power of Central Government to assume management or control of an industrialundertaking in certain cases.--(1) If the Central Government is of opinion that--
(a) an industrial undertaking to which directions have been issued in pursuance of section 16 hasfailed to comply with such directions, or
(b) an industrial undertaking in respect of which an investigation has been made under section 15(whether or not any directions have been issued to the undertaking in pursuance of section 16), isbeing managed in a manner highly detrimental to the scheduled industry concerned or to publicinterest,the Central Government may, by notified order, authorise any person or body of persons to take over themanagement of the whole or any part of the undertaking or to exercise in respect of the whole or any partof the undertaking such functions of control as may be specified in the order.
(2) Any notified order issued under sub-section (1) shall have effect for such period not exceedingfive years as may be specified in the order:
2[Provided that if the Central Government is of opinion that it is expedient in the public interest thatany such notified order should continue to have effect after the expiry of the period of five yearsaforesaid, it may from time to time issue directions for such continuance for such period, not exceedingtwo years at a time, as may be specified in the direction, so however that the total period of suchcontinuance (after the expiry of the said period of five years) does not exceed 3[twelve years]; and whereany such direction is issued, a copy thereof shall be laid, as soon as may be, before both Houses ofParliament.]
Explanation.--The power to authorise a body of persons under this section to take over themanagement of an industrial undertaking which is a company includes also a power to appoint anyindividual, firm or company to be the managing agent of the industrial undertaking on such terms andconditions as the Central Government may think fit.]
Section 24: Power to take over industrial undertakings without investigation under certain circumstances.
1[ 2[18AA. Power to take over industrial undertakings without investigation under certaincircumstances.-- (1) Without prejudice to any other provision of this Act, if, from the documentary orother evidence in its possession, the Central Government is satisfied, in relation to an industrialundertaking, that--
(a) the persons in charge of such industrial undertaking have, by reckless investments or creationof incumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about asituation which is likely to affect the production of articles manufactured or produced in the industrialundertaking, and that immediate action is necessary to prevent such a situation; or
(b) it has been closed for a period of not less than three months (whether by reason of thevoluntary winding up of the company owning the industrial undertaking or for any other reason) andsuch closure is prejudicial to the concerned scheduled industry and that the financial condition of thecompany owning the industrial undertaking and the condition of the plant and machinery of suchundertaking are such that it is possible to re-start the undertaking and such re-starting is necessary inthe interests of the general public,
it may, by a notified order, authorise any person or body of persons (hereafter referred to as the"authorised person") to take over the management of the whole or any part of the industrial undertakingor to exercise in respect of the whole or any part of the undertaking such functions of control as may bespecified in the order.
(2) The provisions of sub-section (2) of section 18A shall, as far as may be, apply to a notified ordermade under sub-section (1) as they apply to a notified order made under sub-section (1) of section 18A.
(3) Nothing contained in sub-section (1) and sub-section (2) shall apply to an industrial undertakingowned by a company which is being wound up by or under the supervision of the Court.
(4) Where any notified order has been made under sub-section (1), the person or body of personshaving for the time being, charge of the management or control of the industrial undertaking, whether byor under the orders of any court or any contract, instrument or otherwise, shall, notwithstanding anythingcontained in such order, contract, instrument or other arrangements forthwith make over the charge ofmanagement or control, as the case may be, of the industrial undertaking to the authorised person.
(5) The provisions of sections 18B to 18E (both inclusive) shall, as far as may be, apply to, or inrelation to, the industrial undertaking, in respect of which a notified order has been made under subsection(1), as they apply to an industrial undertaking in relation to which a notified order has been issuedunder section 18A.]]
Section 25: Effect of notified order under section 18A.
1[18B. Effect of notified order under section 18A.--(1) On the issue of a notified order under section18A authorising the taking over of the management of an industrial undertaking,
(a) all persons in charge of the management, including persons holding office as managers ordirectors of the industrial undertaking immediately before the issue of the notified order, shall bedeemed to have vacated their offices as such;
(b) any contract of management between the industrial undertaking and any managing agent orany director thereof holding office as such immediately before the issue of the notified order shall bedeemed to have been terminated;
(c) the managing agent, if any, appointed under section 18A shall be deemed to have been dulyappointed as the managing agent in pursuance of the Indian Companies Act, 1913 (7 of 1913), andthe memorandum and articles of association of the industrial undertaking, and the provisions of thesaid Act and of the memorandum and articles shall, subject to the other provisions contained in thisAct, apply accordingly, but no such managing agent shall be removed from office except with theprevious consent of the Central Government;
(d) the person or body of persons authorised under section 18A to take over the management shalltake all such steps as may be necessary to take into his or their custody or control all the property,effects and actionable claims to which the industrial undertaking is or appears to be entitled, and allthe property and effects of the industrial undertaking shall be deemed to be in the custody of theperson or, as the case may be, the body of persons as from the date of the notified order; and
(e) the persons, if any, authorised under section 18A to take over the management of an industrialundertaking which is a company shall be for all purposes the directors of the industrial undertakingduly constituted under the Indian Companies Act, 1913 (7 of 1913), and shall alone be entitled toexercise all the powers of the directors of the industrial undertaking, whether such powers are derivedfrom the said Act or from the memorandum or articles of association of the industrial undertaking orfrom any other source.
(2) Subject to the other provisions contained in this Act and to the control of the Central Government,the person or body of persons authorised to take over the management of an industrial undertaking, shalltake such steps as may be necessary for the purpose of efficiently managing the business of the industrialundertaking and shall exercise such other powers and have such other duties as may be prescribed.
(3) Where any person or body of persons has been authorised to exercise any functions of control inrelation to an industrial undertaking, the undertaking shall be carried on pursuant to any directions givenby the authorised person in accordance with the provisions of the notified order, and any person havingany functions of management in relation to the undertaking or part thereof shall comply with all suchdirections.
(4) The person or body of persons authorised under section 2[18A] shall, notwithstanding anythingcontained in the memorandum or articles of association of the industrial undertaking, exercise his or theirfunctions in accordance with such directions as may be given by the Central Government so, however,that he or they shall not have any power to give any other person any directions under this sectioninconsistent with the provisions of any Act or instrument determining the functions of the authoritycarrying on the undertaking except in so far as may be specifically provided by the notified order.]
Section 26: Contracts in bad faith, etc., may be cancelled or varied.
1[18C. Contracts in bad faith, etc., may be cancelled or varied.--Without prejudice to theprovisions contained in section 18B, the person or body of persons authorised under section 18A to takeover the management of an industrial undertaking may, with the previous approval of the CentralGovernment, make an application to any court having jurisdiction in this behalf for the purpose ofcancelling or varying any contract or agreement entered into, at any time before the issue of the notifiedorder under section 18A, between the industrial undertaking and any other person and the court may, ifsatisfied after due inquiry that such contract or agreement had been entered into in bad faith and isdetrimental to the interests of the industrial undertaking, make an order cancelling or varying (eitherunconditionally or subject to such conditions as it may think fit to impose) that contract or agreement, andthe contract or agreement shall have effect accordingly.]
Section 27: No right to compensation for termination of office or contract.
1[18D. No right to compensation for termination of office or contract.--Notwithstanding anythingcontained in any law for the time being in force, no person who ceases to hold any office by reason of theprovisions contained in clause (a) of section 18B, or whose contract of management is terminated byreason of the provisions contained in clause (b) of that section, shall be entitled to any compensation forthe loss of office or for the premature termination of his contract of management:
Provided that nothing contained in this section shall affect the right of any such person to recoverfrom the industrial undertaking moneys recoverable otherwise than by way of such compensation.]
Section 28: Application of Act 7 of 1913.
1[18E. Application of Act 7 of 1913.--(1) Where the management of an industrial undertaking, beinga company as defined in the Indian Companies Act, 1913 (7 of 1913) is taken over by the CentralGovernment, then, notwithstanding anything contained in the said Act or in the memorandum or articlesof association of such undertaking,--
(a) it shall not be lawful for the shareholders of such undertaking or any other person to nominateor appoint any person to be a director of the undertaking;
(b) no resolution passed at any meeting of the shareholders of such undertaking shall be giveneffect to unless approved by the Central Government;
(c) no proceeding for the winding up of such undertaking or for the appointment of a receiver inrespect thereof shall lie in any court except with the consent of the Central Government.
(2) Subject to the provisions contained in sub-section (1), and to the other provisions contained in thisAct and subject to such other exceptions, restrictions and limitations, if any, as the Central Governmentmay, by notification in the Official Gazette, specify in this behalf, the Indian Companies Act, 1913 (7 of1913), shall continue to apply to such undertaking in the same manner as it applied thereto before theissue of the notified order under section 18A.]
Section 29: Power of Central Government to cancel notified order under section 18A.
1[18F. Power of Central Government to cancel notified order under section 18A.--If at any time itappears to the Central Government on the application of the owner of the industrial undertaking orotherwise that the purpose of the order made under section 18A has been fulfilled or that for any otherreason it is not necessary that the order should remain in force, the Central Government may, by notifiedorder, cancel such order and on the cancellation of any such order the management or the control, as thecase may be, of the industrial undertaking shall vest in the owner of the undertaking.]
CHAPTER IIIAA : MANAGEMENT OR CONTROL OF INDUSTRIAL UNDERTAKINGS OWNED BY COMPANIES IN LIQUIDATION
Section 30: Power of Central Government to authorise, with the permission of the High Court, persons to take over management or control of industrial undertakings.
1[18FA. Power of Central Government to authorise, with the permission of the High Court,persons to take over management or control of industrial undertakings.-- (1) If the CentralGovernment is of opinion that there are possibilities of running or re-starting an industrial undertaking, inrelation to which an investigation has been made under section 15A, and that such industrial undertakingshould be run or re-started, as the case may be, for maintaining or increasing the production, supply ordistribution of articles or class of articles relatable to the scheduled industry, needed by the generalpublic, that Government may make an application to the High Court praying for permission to appointany person or body of persons to take over the management of the industrial undertaking or to exercise inrespect of the whole or any part of the industrial undertaking such functions of control as may bespecified in the application.
(2) Where an application is made under sub-section (1), the High Court shall make an orderempowering the Central Government to authorise any person or body of persons (hereinafter referred toas the "authorised person",) to take over the management of the industrial undertaking or to exercisefunctions of control in relation to the whole or any part of the industrial undertaking (hereinafter referredto as the "concerned part") for a period not exceeding five years:
Provided that if the Central Government is of opinion that it is expedient in the interests of the generalpublic that the authorised person should continue to manage the industrial undertaking, or continue toexercise functions of control in relation to the concerned part, as the case may be, after the expiry of theperiod of five years aforesaid, it may make an application to the High Court for the continuance of suchmanagement or functions of control, for such period, not exceeding two years at a time, as may bespecified in the application and thereupon the High Court may make an order permitting the authorisedperson to continue to manage the industrial undertaking or to exercise functions of control in relation tothe concerned part:
Provided further that the total period of such continuance (after the expiry of the initial period of fiveyears) shall not, in any case, be permitted to exceed 2[twelve years].
(3) Where an order has been made by the High Court under sub-section (2), the High Court shalldirect the Official Liquidator or any other person having, for the time being, charge of the management orcontrol of the industrial undertaking, whether by or under the orders of any Court, or any contract orinstrument or otherwise, to make over the management of such undertaking or the concerned part, as thecase may be, to the authorised person and thereupon the authorised person shall be deemed to be theOfficial Liquidator in respect of the industrial undertaking or the concerned part, as the case may be.
(4) Before making over the possession of the industrial undertaking or the concerned part to theauthorised person, the Official Liquidator shall make a complete inventory of all the assets and liabilitiesof the industrial undertaking or the concerned part, as the case may be, in the manner specified in section18FG and deliver a copy of such inventory to the authorised person, who shall, after verifying thecorrectness thereof, sign on the duplicate copy thereof as evidence of the receipt of the inventory by him.
(5) On taking over the management of the industrial undertaking, or on the commencement of theexercise of functions of control in relation to the concerned part, the authorised person shall takeimmediate steps to so run the industrial undertaking or the concerned part as to ensure the maintenance ofproduction.
(6) The authorised person may, on such terms and conditions and subject to such limitations orrestrictions as may be prescribed, raise any loan for the purpose of running the industrial undertaking orthe concerned part, and may, for that purpose, create a floating charge on the current assets of theindustrial undertaking or the concerned part, as the case may be.
(7) Where the authorised person is of opinion that the replacement or repair of any machinery of theindustrial undertaking or the concerned part is necessary for the purpose of efficient running of theindustrial undertaking or such part, he shall, on such terms and conditions and subject to such limitationsor restrictions as may be prescribed, make such replacement or repair, as the case may be.
(8) The loan obtained by the authorised person shall be recovered from the assets of the industrialundertaking or the concerned part, in such manner and subject to such conditions as may be prescribed.
(9) For the purpose of running the industrial undertaking, or exercising functions of control in relationto the concerned part, the authorised person may employ such of the former employees of the industrialundertaking whose services became discharged by reason of the windingup of the company owning suchundertaking and every such person employed by the authorised person shall be deemed to have enteredinto a fresh contract of service with the company.--
(10) The proceedings in the windingup of the company in so far as they relate to
(a) the industrial undertaking, the management of which has been taken over by the authorisedperson under this section, or
(b) the concerned part in relation to which any function of control is exercised by the authorisedperson under this section,
shall, during the period of such management or control, remain stayed, and, in computing the period oflimitation for the enforcement of any right, privilege, obligation or liability in relation to such undertakingor the concerned part, the period during which such proceedings remained stayed shall be excluded.]
CHAPTER IIIAB : POWER TO PROVIDE RELIEF TO CERTAIN INDUSTRIAL UNDERTAKINGS
Section 31: Power of Central Government to make certain declarations in relation to industrial undertakings, the management or control of which has been taken over under section 18A, section 18AA or section 18FA.
1[18FB. Power of Central Government to make certain declarations in relation to industrialundertakings, the management or control of which has been taken over under section 18A, section18AA or section 18FA.--(1) The Central Government may, if it is satisfied, in relation to an industrialundertaking or any part thereof, the management or control of which has been taken over under section18A, whether before or after the commencement of the Industries (Development and Regulation)Amendment Act, 1971 (72 of 1971), or under section 18AA or section 18FA, that it is necessary so to doin the interests of the general public with a view to preventing fall in the volume of production of anyscheduled industry, it may, by notified order, declare that--
(a) all or any of the enactments specified in the Third Schedule shall not apply or shall apply withsuch adaptations, whether by way of modification, addition or omission (which does not, however,affect the policy of the said enactments) to such industrial undertaking, as may be specified in suchnotified order, or
(b) the operation of all or any of the contracts, assurances of property, agreements, settlements,awards, standing orders or other instruments in force (to which such industrial undertaking or thecompany owning such undertaking is a party or which may be applicable to such industrialundertaking or company) immediately before the date of issue of such notified order shall remainsuspended or that all or any of the rights, privileges, obligations and liabilities accruing or arisingthereunder before the said date, shall remain suspended or shall be enforceable with such adaptationsand in such manner as may be specified in the notified order.
(2) The notified order made under sub-section (1) shall remain in force, in the first instance, for aperiod of one year, but the duration of such notified order may be extended from time to time by a furthernotified order by a period not exceeding one year at a time:
Provided that no such notified order shall, in any case, remain in force--
(a) after the expiry of the period for which the management of the industrial undertaking wastaken over under section 18A, section 18AA or section 18FA, or
(b) for more than 2[eight years] in the aggregate from the date of issue of the first notified order,
whichever is earlier.
(3) Any notified order made under sub-section (1) shall have effect notwithstanding anything to thecontrary contained in any other law, agreement or instrument or any decree or order of a court, tribunal,officer or other authority or of any submission, settlement or standing order.
(4) Any remedy for the enforcement of any right, privilege, obligation or liability referred to in clause(b) of sub-section (1) and suspended or modified by a notified order made under that sub-section shall, inaccordance with the terms of the notified order, remain suspended or modified, and all proceedingsrelating thereto pending before any court, tribunal, officer or other authority shall accordingly remainstayed or be continued subject to such adaptations, so, however, that on the notified order ceasing to haveeffect--
(a) any right, privilege, obligation or liability so remaining suspended or modified shall becomerevived and enforceable as if the notified order had never been made;
(b) any proceeding so remaining stayed shall be proceeded with, subject to the provisions of anylaw which may then be in force, from the stage which had been reached when the proceedingsbecame stayed.
(5) In computing the period of limitation for the enforcement of any right, privilege, obligation orliability referred to in clause (b) of sub-section (1), the period during which it or the remedy for theenforcement thereof remained suspended shall be excluded.]
CHAPTER IIIAC : LIQUIDATION OR RECONSTRUCTION OF COMPANIES
Section 32: Power of Central Government to call for report on the affairs and working of managed company.
1[18FC. Power of Central Government to call for report on the affairs and working of managedcompany.--Where the management or control of an industrial undertaking has been taken over undersection 18A, whether before or after the commencement of the Industries (Development and Regulation)Amendment Act, 1971 (72 of 1971), or under section 18AA or section 18FA, the Central Governmentmay, at any time during the continuance of such management or control, call for a report from theauthorised person on the affairs and working of the industrial undertaking and in submitting the report theauthorised person shall take into account the inventory and the lists of members and creditors preparedunder section 18FG.]
Section 33: Decision of Central Government in relation to managed Company.
1[18FD. Decision of Central Government in relation to managed Company.--(1) If, on receipt ofthe report submitted by the authorised person, the Central Government is satisfied,--
(a) in relation to the company owning the industrial undertaking, which is not being wound up bythe High Court, that the financial condition and other circumstances of the company are such that it is not in a position to meet its current liabilities out of its current assets, that Government may, if itconsiders necessary or expedient in the interests of the general public so to do, by order, decide thatthe industrial undertaking should be sold as a running concern as provided in section 18FE andproceedings should simultaneously be started for the winding up, by the High Court, of the company;
(b) in relation to the company, owning the industrial undertaking, which is being wound up by theHigh Court, that its assets and liabilities are such that in the interests of its creditors and contributoriesthe industrial undertaking should be sold as a running concern as provided in section 18FE, it may, byorder, decide accordingly.
(2) Notwithstanding anything contained in sub-section (1), if, on receipt of the report submitted bythe authorised person, the Central Government is satisfied that--
(a) in the interests of the general public, or
(b) in the interests of the shareholders, or
(c) to secure the proper management of the company owning the industrial undertaking,
it is necessary so to do, that Government may, by order, decide to prepare a scheme for the reconstructionof the company owning the industrial undertaking:
Provided that no such scheme shall be prepared in relation to a company which is being wound up byor under the supervision of the High Court, except with the previous permission of that Court.
(3) The powers exercisable by the Central Government under section 18F, in relation to anundertaking taken over under section 18A, shall also be exercisable in relation to an undertaking takenover under section 18AA or section 18FA, but such powers shall not be exercised after the making of anorder under sub-section (1) or, as the case may be, under sub-section (2) of this section.]
Section 34: Provisions where Government decides to follow the course of action specified in section 18FD (1).
1[18FE. Provisions where Government decides to follow the course of action specified in section18FD (1).--(1) The provisions hereinafter laid down shall apply where the Central Government decidesthat the course of action specified in sub-section (1) of section 18FD should be followed, namely:
(a) the decision of the Central Government that the course of action specified in clause (a) ofsub-section (1) section 18FD should be followed in relation to a company owning an industrialundertaking shall be deemed to be a ground specified in section 433 of the Companies Act, 1956 (1 of1956), on which the company may be wound up by the High Court;
(b) the authorised person shall, as soon as may be, after the decision specified in clause (a) ofsub-section (1) of section 18FD has been taken by the Central Government, present an application tothe High Court for the winding up of the company owning the industrial undertaking;
(c) when an application is made by the authorised person, under clause (b), for the winding up, bythe High Court, of the company owning the industrial undertaking, the High Court shall order thewinding up of the company and shall, notwithstanding anything contained in the Companies Act,1956 (1 of 1956), appoint the authorised person as the Official Liquidator in relation to suchundertaking;
(d) whenever the Central Government decides under clause (b) of sub-section (1) ofsection 18FD that the industrial undertaking should be sold as a running concern, it shall cause a copyof its decision to be laid before the High Court;
(e) until the industrial undertaking referred to in clause (a) or clause (b) of sub-section (1) ofsection 18FD is sold or purchased in pursuance of this section, the authorised person shall continue tofunction as the Official Liquidator in relation to the said undertaking in the winding up proceedings ofthe company, and thereafter the Official Liquidator appointed by the Central Government undersection 448 of the Companies Act, 1956 (1 of 1956), shall take over and function as the OfficialLiquidator in the said proceedings.
(2) The authorised person shall make a report to the Central Government as to what should be thereserve price for the sale of the industrial undertaking as a running concern.
(3) In making a report under sub-section (2), the authorised person shall have regard to--
(a) the financial condition of the company owning the industrial undertaking on the date on whichthe order under section 18FD is made--
(i) as disclosed in its books of account,
(ii) as disclosed in its balance-sheet and profit and loss account during a period of five yearsimmediately preceding the said date;
(b) the condition and nature of the plant, machinery, instruments and other equipment from thepoint of view of their suitability for profitable use in the running of the industrial undertaking;
(c) the total amount of liability on account of secured and unsecured debts including overdrafts, ifany, drawn on banks, liabilities on account of terminal benefits to the employees and otherborrowings and other liabilities of the company; and
(d) other relevant factors including the factor that the industrial undertaking will be sold free fromall incumbrances.
(4) Notice of the reserve price determined by the authorised person shall be given in such manner asmay be prescribed to the members and creditors of the company owning such industrial undertaking tomake representations within a specified time to the Central Government through the authorised personand the Central Government shall, after considering the representations received and the report of theauthorised person, determine the reserve price.
(5) The authorised person shall thereafter, with the permission of the High Court, invite tenders fromthe public in such manner as may be determined by the High Court for the sale of the industrialundertaking as a running concern subject to the condition that it will be sold to the person offering thehighest price which shall not be less than the reserve price determined under sub-section (4):
Provided that the High Court shall not refuse to grant such permission if it is satisfied that thecompany is not in a position to meet its current liabilities out of its current assets.
(6) The industrial undertaking shall be sold to the highest bidder, as a running concern, only if theprice offered by him therefore is not less than the reserve price.
(7) Where no offer of price is equal to, or more than, the reserve price, the industrial undertaking shallbe purchased by the Central Government at the reserve price.
(8) (a) The amount realised from the sale of the industrial undertaking as a running concern togetherwith any other sum which may be realised from any contributory, purchaser or any other person fromwhom any money is due to the company shall be utilised in accordance with the provisions of theCompanies Act, 1956 (1 to 1956), in discharging the liabilities of the company and distributing thebalance, if any, amongst the members of the company.
(b) In other respects, the provisions of the Companies Act, 1956 (1 of 1956), relating to the windingup of a company by the High Court shall, as far as may be, apply.
(9) When an industrial undertaking is sold to any person under sub-section (6), or purchased by theCentral Government under sub-section (7), there shall be transferred to and vested in the purchaser, freefrom all incumbrances, all such assets relating to the industrial undertaking as are referred to in sub-clause(i) of clause (a) of section 18FG and existing at the time of the sale or purchase.]
Section 35: Provisions where Government decides to follow the course of action specified in section 18FD (2).
1[18FF. Provisions where Government decides to follow the course of action specified in section18FD (2).--(1) Where in any case the Central Government decides that the course of action specified insub-section (2) of section 18FD should be followed, it shall, subject to the provisions of that sub-section,cause to be prepared, by the authorised person, a scheme for the reconstruction of the company, owningthe industrial undertaking, in accordance with the provisions hereinafter contained and the authorisedperson shall submit the same for the approval of that Government.
(2) The scheme for the reconstruction of the company owning the industrial undertaking may containprovisions for all or any of the following matters, namely:--
(a) the constitution, name and registered office, the capital, assets, powers, rights, interests,authorities and privileges, the liabilities, duties and obligations of the company on its reconstruction;
(b) any change in the Board of directors, or the appointment of a new Board of directors of thecompany on its reconstruction and the authority by whom, the manner in which and the other termsand conditions on which, such change or appointment shall be made and in the case of appointment ofa new Board of directors or of any director, the period for which such appointment shall be made;
(c) the vesting of controlling interest, in the reconstructed company, in the Central Governmenteither by the appointment of additional directors or by the allotment of additional shares;
(d) the alteration of the memorandum and articles of association of the company, on itsreconstruction, to give effect to such reconstruction;
(e) subject to the provisions of the scheme, the continuation by or against the company, on itsreconstruction, of any action or proceedings pending against the company immediately before thedate of its reconstruction;
(f) the reduction of the interest or rights which the members and creditors have in or against thecompany before its reconstruction to such extent as the Central Government may consider necessaryin the interests of the general public or in the interests of the members and creditors or for themaintenance of the business of the company :
Provided that nothing contained in this clause shall be deemed to authorise the reduction of theinterest or rights of any creditor (including Government) in respect of any loan or advance made bythat creditor to the company after the date on which the management of the industrial undertaking ofthe company has been taken over under section 18A, section 18AA, or section 18FA;
(g) the payment in cash or otherwise to the creditors in full satisfaction of their claim--
(i) in respect of their interest or rights in or against the company before its reconstruction; or
(ii) where their interest or rights in or against the company has or have been reduced underclause (f), in respect of such interest, or rights as so reduced;
(h) the allotment to the members of the company for shares held by them therein before itsreconstruction whether their interest in such shares has been reduced under clause (f) or not, ofshares in the company on its reconstruction and where it is not possible to allot shares to anymembers, the payment in cash to those members in full satisfaction of their claim--
(1) in respect of their interest in shares in the company before its reconstruction; or
(2) where such interest has been reduced under clause (f), in respect of their interest in sharesas so reduced;
(i) the offer by the Central Government to acquire by negotiations with the members of thecompany their respective shares on payment in cash to those members who may volunteer to sell theirshares to the Central Government in full satisfaction of their claim--
(1) in respect of their interest in shares in the company before its reconstruction; or
(2) where such interest has been reduced under clause (f), in respect of their interest in sharesas so reduced;
(j) the conversion of any debentures issued by the company after the taking over of themanagement of the company under section 18A or section 18AA or section 18FA or of any loansobtained by the company after that date or of any part of such debentures or loans, into shares in thecompany and the allotment of those shares to such debenture-holders or creditors, as the case may be;
(k) the increase of the capital of the company by the issue of new shares and the allotment of suchnew shares to the Central Government;
(l) the continuance of the services of such of the employees of the company as the CentralGovernment may specify in the scheme in the company itself, on its reconstruction, on such termsand conditions as the Central Government thinks fit;
(m) notwithstanding anything contained in clause (l), where any employees of the companywhose services have been continued under clause (l) have, by notice in writing given to the companyat any time before the expiry of one month next following the date on which the scheme is sanctionedby the High Court, intimated their intention of not becoming employees of the company, on itsreconstruction, the payment to such employees and to other employees whose services have not beencontinued on the reconstruction of the company, of compensation, if any, to which they are entitledunder the Industrial Disputes Act, 1947 (14 of 1947), and such pension, gratuity, provident fund andother retirement benefits ordinarily admissible to them under the rules or authorisation of thecompany immediately before the date of its reconstruction;
(n) any other terms and conditions for the reconstruction of the company;
(o) such incidental, consequential and supplemental matters as are necessary to secure that thereconstruction of the company shall be fully and effectively carried out.
(3) (a) A copy of the scheme, as approved by the Central Government, shall be sent in draft to thecompany, to the registered trade unions, if any, of which the employees of the company are members andto the creditors thereof for suggestions and objections, if any, within such period as the CentralGovernment may specify for this purpose.
(b) The Central Government may make such modifications, if any, in the draft scheme as it mayconsider necessary in the light of the suggestions and objections received from the company, from theregistered trade unions of which the employees of the company are members and from any members orcreditors of the company.
(4) The scheme shall thereafter be placed before the High Court for its sanction and the High Court, ifsatisfied that the scheme is in the interests of the general public or in the interests of the shareholders orfor securing the proper management of the company and that the scheme is designed to be fair andreasonable to the members and creditors of the company, may, after giving a reasonable opportunity tothe company and to its members and creditors of showing cause, sanction the scheme without anymodification or with such modifications as it may consider necessary.
(5) The scheme, as so sanctioned by the High Court, shall come into force on such date as that Courtmay specify in this behalf:
Provided that different dates may be specified for different provisions of the scheme.
(6) The sanction accorded by the High Court under sub-section (4) shall be conclusive evidence thatall the requirements of this section relating to the reconstruction of the company have been compliedwith, and a copy of the sanctioned scheme certified by the High Court to be a true copy thereof, shall, inall legal proceedings (whether original or in appeal or otherwise), be admitted as evidence to the sameextent as the original scheme.
(7) On and from the date of the coming into operation of the scheme or any provision thereof, thescheme or such provision shall be binding on the company and also on all the members and othercreditors and employees of the company and on any other person having any right or liability in relationto the company.
(8) On the coming into operation of the scheme or any provision thereof, the authorised person shallcease to function, and the management of the reconstructed company shall be assumed by the Board ofdirectors as provided in the scheme.
(9) Copies of the scheme shall be laid before each House of Parliament, as soon as may be, after thescheme has been sanctioned by the Court.
(10) The provisions of this section and of any scheme made thereunder shall have effectnotwithstanding anything contained in sections 391 to 394A (both inclusive) of the Companies Act, 1956(1 of 1956).]
Section 36: Preparation of inventory of assets and liabilities and list of members and creditors of managed company.
1[18FG. Preparation of inventory of assets and liabilities and list of members and creditors ofmanaged company.--For the purposes of this Act, the authorised person shall, as soon as may be, aftertaking over the management of the industrial undertaking of a company under section 18A or section18AA or section 18FA,--
(a) prepare a complete inventory of--
(i) all properties, movable and immovable, including lands, buildings, works, workshops,stores, instruments, plant, machinery, automobiles and other vehicles, stocks of materials in thecourse of production, storage or transit, raw materials, cash balances, cash in hand, deposits inbank or with any other person or body or on loan, reserve funds, investments and book debts andall other rights and interests arising out of such property as were immediately before the date oftaking over of the industrial undertaking in the ownership, possession, power or control of thecompany, whether within or without India; and all books of account, registers, maps, plans,sections, drawings, records, documents or titles of ownership of property, and all other documentsof whatever nature relating thereto; and
(ii) all borrowings, liabilities and obligations of whatever kind of the company includingliability on account of terminal benefits to its employees subsisting immediately before the saiddate;
(b) prepare separately a list of members, and a list of creditors, of such company as on the date oftaking over of the management of the industrial undertaking showing separately in the list ofcreditors, the secured creditors and the unsecured creditors :
Provided that where the management of the industrial undertaking of a company has been taken overunder the said section 18A before the commencement of the Industries (Development and Regulation)Amendment Act, 1971 (72 of 1971), the aforesaid functions shall be performed by the authorised personwithin six months from such commencement.]
Section 37: Stay of suits and other proceedings.
1[18FH. Stay of suits and other proceedings.--In the case of a company in respect of which an orderunder section 18FD has been made, no suit or other legal proceeding shall be instituted or continuedagainst the company except with the previous permission of the Central Government or any officer orauthority authorised by that Government in this behalf.]
CHAPTER IIIB : CONTROL OF SUPPLY, DISTRIBUTION, PRICE, ETC., OF CERTAIN ARTICLES
Section 38: Power to control supply, distribution, price, etc., of certain articles.
1[18G. Power to control supply, distribution, price, etc., of certain articles.--(1) The CentralGovernment, so far as it appears to it to be necessary or expedient for securing the equitable distributionand availability at fair prices of any article or class of articles relatable to any scheduled industry, may,notwithstanding anything contained in any other provision of this Act, by notified order, provide ofregulating the supply and distribution thereof and trade and commerce therein.
(2) Without prejudice to the generality of the powers conferred by sub-section (1), a notified ordermade thereunder may provide--
(a) for controlling the prices at which any such article or class thereof may be bought or sold;
(b) for regulating by licences, permits or otherwise the distribution, transport, disposal,acquisition, possession, use or consumption of any such article or class thereof;
(c) for prohibiting the withholding from sale of any such article or class thereof ordinarily keptfor sale;
(d) for requiring any person manufacturing, producing or holding in stock any such article orclass thereof to sell the whole or part of the articles so manufactured or produced during a specifiedperiod or to sell the whole or a part of the articles so held in stock to such person or class of personsand in such circumstances as may be specified in the order;
(e) for regulating or prohibiting any class of commercial or financial transactions relating to sucharticle or class thereof which in the opinion of the authority making the order are, or if unregulatedare likely to be, detrimental to public interest;
(f) for requiring persons engaged in the distribution and trade and commerce in any such article orclass thereof to mark the articles exposed or intended for sale with the sale price or to exhibit at someeasily accessible place on the premises the price-lists of articles held for sale and also to similarlyexhibit on the first day of every month, or at such other time as may be prescribed, a statement of thetotal quantities of any such articles in stock;
(g) for collecting any information or statistics with a view to regulating or prohibiting any of theaforesaid matters; and
(h) for any incidental or supplementary matters, including, in particular, the grant or issue oflicences, permits or other documents and the charging of fees therefor.
(3) Where, in pursuance of any order made with reference to clause (d) of sub-section (2), any personsells any article, there shall be paid to him the price therefor--
(a) where the price can consistently with the controlled price, if any, be fixed by agreement, theprice so agreed upon;
(b) where no such agreement can be reached, the price calculated with reference to the controlledprice, if any, fixed under this section;
(c) where neither clause (a) nor clause (b) applies, the price calculated at the market rateprevailing in the locality at the date of sale.
(4) No order made in exercise of any power conferred by this section shall be called in question inany court.
(5) Where an order purports to have been made and signed by an authority in exercise of any powerconferred by this section, a court shall, within the meaning of the Indian Evidence Act, 1872 (1 of 1872),presume that such order was so made by that authority.
Explanation.--In this section, the expression "article or class of articles" relatable to any scheduledindustry includes any article or class of articles imported into India which is of the same nature ordescription as the article or class of articles manufactured or produced in the scheduled industry.]
CHAPTER IV : MISCELLANEOUS
Section 39: Powers of inspection.
(1) For the purpose of ascertaining the position or working of anyindustrial undertaking or for any other purpose mentioned in this Act or the rules made thereunder, anyperson authorised by the Central Government in this behalf shall have the right--
(a) to enter and inspect any premises;
(b) to order the production of any document, book, register or record in the possession or powerof any person having the control of, or employed in connection with, any industrial undertaking; and
(c) to examine any person having the control of, or employed in connection with, any industrialundertaking.
(2) Any person authorised by the Central Government under sub-section (1) shall be deemed to be apublic servant within the meaning of section 21 of the Indian Penal Code (45 of 1860).
Section 40: General prohibition of taking over management or control of industrial undertakings.
After the commencement of this Act, it shall not be competent for any State Government or a localauthority to take over the management or control of any industrial undertaking under any law for the timebeing in force which authorises any such Government or local authority so to do.
Section 41: Certain administrative expenses of Development Councils to be paid from moneys provided by Parliament.
Such administrative expenses as relate to the emoluments of officers of a DevelopmentCouncil who are appointed by or with the approval of the Central Government, shall be defrayed out ofmoneys provided by Parliament.
Section 42: Power of the Central Government to issue directions to Development Council.
In theexercise of its functions under this Act, every Development Council shall be guided by such instructionsas may be given to it by the Central Government and such instructions may include directions relating tothe manner in which, and the purpose for which, any proceeds of the cess levied under section 9 whichmay have been handed over to it, shall be expanded.
Section 43: Decision of Central Government final respecting certain matters.
1[23. Decision of Central Government final respecting certain matters.--If, for the purposes ofthis Act, any question arises as to whether--
(a) there has been a substantial expansion of an industrial undertaking, or
(b) an industrial undertaking is producing or manufacturing any new article,
the decision of the Central Government thereon shall be final.]
Section 44: Penalties.
1[(1) If any person contravenes or attempts to contravene or abets the contraventionof--
(i) the provisions of sub-section (1)2[or sub-section (4)] of section 10 or of sub-section (1) ofsection 11 or of section 11A or of sub-section (1) of section 13 3[or of 4[sub-sections (2), (2A), (2D),(2F) and (2G) of section 29B]], or
(ii) any direction issued under section 16 or sub-section (3) of section 18B, or
(iii) any order made under section 18G, or
(iv) any rule the contravention of which is made punishable under this section,
he shall be punishable with imprisonment which may extend to six months, or with fine which mayextend to five thousand rupees, or with both, and, in the case of a continuing contravention, with anadditional fine which may extend to five hundred rupees for every day during which such contraventioncontinues after conviction for the first such contravention.]
(2) If the person contravening any of the said provisions is a company, every person who at the timethe offence was committed was in charge of, and was responsible to, the company for the conduct of thebusiness of the company, as well as the company, shall be deemed to be guilty of the contravention andshall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to anypunishment provided in this Act, if he proves that the offence was committed without his knowledge orthat he exercised all due diligence to prevent the commission of such offence.
(3) Notwithstanding anything contained in sub-section (2), where an offence under this Act has beencommitted by a company and it is proved that the offence has been committed with the consent orconnivance of, or is attributable to any neglect on the part of, any director or manager, secretary or otherofficer of the company, such director, manager, secretary or other officer shall also be deemed to beguilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.--For the purposes of this section,--
(a) "company" means any body corporate and includes a firm or other association of individuals;and
(b) "director" in relation to a firm means a partner in the firm.
Section 45: Penalty for false statements.
1[24A. Penalty for false statements.--If any person,--
(a) when required by this Act or by any order under this Act to make any statement or furnish anyinformation, makes any statement or furnishes any information which is false in any materialparticular and which he knows or has reasonable cause to believe to be false or does not believe to betrue; or
(b) makes any such statement as aforesaid in any book, account, record, declaration, return orother document which he is required by any order made under this Act to maintain or furnish;
he shall be punishable with imprisonment which may extend to three months, or with fine which mayextend to two thousand rupees, or with both.]
Section 46: Delegation of powers.
1[25. Delegation of powers.--(1) The Central Government may, by notified order, direct that anypower exercisable by it under this Act (other than the power given to it by section 162[,18A, 18AA and18FA]) shall, in relation to such matters and subject to such conditions, if any, as may be specified in thedirection, be exercisable also by such officer or authority (including in the said expressions anyDevelopment Council, State Government or officer or authority subordinate to the Central Government)as may be specified in the direction.
(2) Any power exercisable by a State Government by virtue of a direction under sub-section (1) may,unless otherwise provided in such direction, be exercised also by such officer or authority subordinate tothat State Government as it may, by notified order, specify in this behalf.]
Section 47: Power to issue directions.
1[26. Power to issue directions.--The Central Government may give directions to any StateGovernment as to the carrying into execution in the State of any of the provisions of this Act or of anyorder or direction made thereunder.]
Section 48: Cognizance of offences.
1[27. Cognizance of offences.--No court shall take cognizance of any offence punishable under thisAct except on a report in writing of the facts constituting such offence made by a person who is a publicservant as defined in section 21 of the Indian Penal Code (45 of 1860).]
Section 49: Burden of proof in certain cases.
1[28. Burden of proof in certain cases.--Where any person is prosecuted for contravening any ordermade under section 18G which prohibits him from doing an act or being in possession of a thing withoutlawful authority or without a permit, licence or other document, the burden of proving that he has suchauthority, permit, licence or other document shall be on him.]
Section 50: Jurisdiction of courts.
1[29. Jurisdiction of courts.--(1) Subject to the provisions of sub-section (2), no court inferior to thatof a Presidency magistrate or a magistrate of the first class shall try any offence punishable under thisAct.
(2) Any magistrate or bench of magistrates empowered, for the time being, to try in a summary waythe offence specified in sub-section (1) of section 260 of the Code of Criminal Procedure, 1898 (5 of1898),may, on application in this behalf being made by the prosecution, try in accordance with theprovisions contained in sections 262 to 265 of the said Code any offence which consists of acontravention of an order made under section 8G.]
Section 51: Special provision regarding fines.
1[29A. Special provision regarding fines.--Notwithstanding anything contained in section 32 of theCode of Criminal Procedure, 1898 (5 of 1898), it shall be lawful for any magistrate of the first class andfor any Presidency magistrate to pass a sentence of fine exceeding one thousand rupees on any personconvicted of any offence under this Act.]
Section 52: Power to exempt in special cases.
1[29B. Power to exempt in special cases.--2[(1)] If the Central Government is of opinion, havingregard to the smallness of the number of workers employed or to the amount invested in any industrialundertaking or to the desirability of encouraging small undertakings generally or to the stage ofdevelopment of any scheduled industry, that it would not be in public interest to apply all or any of theprovisions of this Act thereto, it may, by notification in the Official Gazette, exempt, subject to such conditions as it may think fit to impose, any industrial undertaking or class of industrial undertakings orany scheduled industry or class of scheduled industries as it may specify in the notification from theoperation of all or any of the provisions of this Act or of any rule or order made thereunder.
3[(2) Where any notification under sub-section (1) granting any exemption is cancelled, no owner ofany industrial undertaking to which the provisions of section 10, section 11, section 11A or clause (d) ofsub-section (1) of section 13 would have applied, if the notification under sub-section (1) had not beenissued, shall carry on the business of the undertaking after the expiry of such period as may be specifiedin the notification cancelling the exemption except under and in accordance with a licence issued in thisbehalf by the Central Government and, in the case of a State Government, except under and in accordancewith the previous permission of the Central Government.
4[(2A) In particular, and without prejudice to the generality of the provisions of sub-section (1), theCentral Government may, if it is satisfied, after considering the recommendations made to it by theAdvisory Committee constituted under sub-section (2B), that it is necessary so to do for the developmentand expansion of ancillary, or small scale, industrial undertakings, by notified order, direct that any articleor class of articles specified in the First Schedule shall, on and from such date as may be specified in thenotified order (hereafter in this section referred to as the "date of reservation"), be reserved for exclusiveproduction by the ancillary, or small scale, industrial undertakings (hereafter in this section referred to as"reserved article").
(2B) The Central Government shall, with a view to determining the nature of any article or class ofarticles that may be reserved for production by the ancillary, or small scale, industrial undertakings,constitute an Advisory Committee consisting of such persons as have, in the opinion of that Government,the necessary expertise to give advice on the matter.
(2C) The Advisory Committee shall, after considering the following matters, communicate itsrecommendations to the Central Government, namely:--
(a) the nature of any article or class of articles which may be produced economically by theancillary, or small scale, industrial undertakings;
(b) the level of employment likely to be generated by the production of such article or class ofarticles by the ancillary, or small scale, industrial undertakings;
(c) the possibility of encouraging and diffusing entrepreneurship in industry;
(d) the prevention of concentration of economic power to the common detriment; and
(e) such other matters as the Advisory Committee may think fit.
(2D) The production of any reserved article or class of reserved articles by any industrial undertaking(not being an ancillary, or small scale, industrial undertaking) which, on the date of reservation, isengaged in, or has taken effective steps for, the production of any reserved article or class of reservedarticles, shall, after the commencement of the Industries (Development and Regulation) Amendment Act,1984 (4 of 1984), or, as the case may be, the date of reservation, whichever is later, be subject to suchconditions as the Central Government may, by notified order, specify.
(2E) While specifying any condition under sub-section (2D), the Central Government may take intoconsideration the level of production of any reserved article or class of reserved articles achieved,immediately before the date of reservation, by the industrial undertaking referred to in sub-section (2D),and such other factors as may be relevant.
(2F) Every person or authority, not being the Central Government, who, or which, is registered undersection 10 or to whom, or to which, a licence has been issued or permission has been granted undersection 11 for the production of any article or class of articles which has, or have, been subsequentlyreserved for the ancillary, or small scale, industrial undertakings, shall produce, such registrationcertificate, licence or permission, as the case may be, within such period as the Central Government may,by notified order, specify in this behalf, and the Central Government may enter therein all or any ofthe conditions specified by it under sub-section (2D), including the productive capacity of the industrialundertakings and other prescribed particulars.
(2G) The owner of every industrial undertaking (not being an ancillary or small scale, industrialundertaking) which, immediately before the commencement of the Industries (Development andRegulation) Amendment Act, 1984 (4 of 1984), or the date of reservation, whichever is later,--
(a) was engaged in the production of any article or class of articles, which has, or have, beenreserved for the ancillary, or small scale, industrial undertakings, or
(b) had before such commencement or before the date of such reservation, as the case may be,taken effective steps for commencing the production of such reserved article or class of reservedarticles,
without being registered under section 10 or in respect of which a licence or permission has not beenissued under section 11, shall refrain from the production of such reserved article or class of reservedarticles, on and from the date of expiry of three months from such commencement or from the date ofsuch reservation, whichever is later.
(2H) Every notified order made under sub-section (2A) shall be laid, as soon as may be after it ismade, before each House of Parliament, while it is in session, for a total period of thirty days, which maybe comprised in one session or in two or more successive sessions, and if, before the expiry of the sessionimmediately following the session or the successive sessions aforesaid, both Houses agree in making anymodification in the notified order or both Houses agree that the notified order should not be made, thenotified order shall thereafter have effect only in such modified form or be of no effect, as the case maybe; so, however, that any such modification or annulment shall be without prejudice to the validity ofanything previously done under that notified order.]
(3) The provisions of this Act shall apply, so far as may be, in relation to the issue of a licence orpermission to any industrial undertaking referred to in sub-section (2) as they apply in relation to the issueof a licence or permission to a new industrial undertaking.]]
Section 53: Protection of action taken under the Act.
1[29C. Protection of action taken under the Act.--(1) No suit, prosecution or other legal proceedingshall lie against any person for anything which is in good faith done or intended to be done under this Actor any rule or order made thereunder.
(2) No suit or other legal proceeding shall lie against the Government for any damage caused or likelyto be caused by anything which is in good faith done or intended to be done in pursuance of this Act orany rule or order made thereunder.]
Section 54: Debts incurred by the authorised person to have priority.
1[29D. Debts incurred by the authorised person to have priority.--Every debt arising out of anyloan obtained by the authorised person for carrying on the management of, or exercising function ofcontrol in relation to, an industrial undertaking or part thereof, the management of which has been takenover under section 18A or section 18AA or section 18FA,--
(a) shall have priority over all other debts, whether secured or unsecured, incurred before themanagement of such industrial undertaking was taken over;
(b) shall be a preferential debt within the meaning of section 530 of the Companies Act, 1956 (1of 1956),
and such debts shall rank equally among themselves and be paid in full out of the assets of the industrialundertakings unless such assets are insufficient to meet them, in which case they shall abate in equalproportions.]
Section 55: Validation.
1[29E. Validation.-- Notwithstanding anything contained in any judgment, decree or order of anycourt, tribunal or other authority, any power exercised, or action taken or done or purported to have beentaken or done, by the Central Government or, as the case may be, the State Government, shall be deemedto be, and shall always deemed to have been, for all purposes, as validly taken or done or omitted to bedone, as if the amendment made to the First Schedule by the Industries (Development and Regulation)Amendment Act, 2016 had been in force at all material times and no suit or claim or other proceedingsshall be instituted, maintained or continued in any court, tribunal or other authority as such.]
Section 56: Power to make rules.
(1) The Central Government may, subject to the condition of previouspublication, make rules for carrying out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules mayprovide for all or any of the following matters, namely:--
(a) the constitution of the Advisory Council and Development Councils, the term of office andother conditions of service of, the procedure to be followed by, and the manner of filling casualvacancies among members of the Advisory Council or a Development Council;
(b) the form of the statement of account to be furnished by a Development Council;
(c) the intervals at which, the time within which, and the manner in which the cess leviable undersection 9 shall be payable and the rebate for the prompt payment of such cess;
(d) the expenses which a Development Council may meet from the proceeds of the cess leviedunder section 9 which may have been handed over to it;
(e) the appointment by or with the approval of the Central Government of any officers of aDevelopment Council;
(f) the facilities to be provided by any industrial undertaking for the training of technicians andlabour;
(g) the collection of any information or statistics in respect of any scheduled industry;
(h) the manner in which industrial undertakings may be registered under section 10 and the levyof a fee therefor;
(i) the procedure for the grant or issue of licences and permissions under 1[section 11,section 11A2[section 13 or section 29B]], the time within which such licences or permissions shall begranted or issued including, in particular, the publication of notices calling for applications and theholding of such public inquiry in relation thereto as may be necessary in the circumstances;
(j) the fees to be levied in respect of licences and permissions issued under this Act;
(k) the matters which may be taken into account in the granting or issuing of licences andpermissions, including in particular, the previous consultation by the Central Government with theAdvisory Council or any Development Council or both in regard to the grant or issue of any suchlicences or permission;
(l) the procedure to be followed in making any investigation under this Act;
(m) the conditions which may be included in any licences and permissions;
(n) the conditions on which licences and permissions may be varied or amended under section 12;
(o) the maintenance of books, accounts and records relating to an industrial undertaking;
(p) the submission of special or periodical returns relating to an industrial undertaking by personshaving the control of, or employed in connection with, such undertaking, and the forms in which, andthe authorities to which, such returns and reports shall be submitted;
3[(pp) any matter which is to be or may be prescribed for giving effect to the provisions ofChapter IIIAA or Chapter IIIAC;]
(q) any other matter which is to be or may be prescribed under this Act.
(3) Any rule made under this section may provide that a contravention thereof shall be punishableunder section 24.
4[(4) Every rule made under this section shall be laid, as soon as may be after it is made, before eachHouse of Parliament, while it is in session, for a total period of thirty days which may be comprised inone session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modificationin the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect onlyin such modified form or be of no effect, as the case may be; so, however, that any such modification orannulment shall be without prejudice to the validity of anything previously done under that rule.]
Rules
05-1952 | The Central Advisory Council (Procedural) Rules, 1952 |
Section 57: Application of other laws not barred.
The provisions of this Act shall be in addition to andnot, save as otherwise expressly provided in this Act, in derogation of any other Central Act for the timebeing in force, relating to any of the scheduled industries.
Section 58: [Repealed.].
[Amendment of section 2, Act 14 of 1947.]--Rep. by the Repealing and Amending Act 1957 (36 of1957), s. 2 and the First Schedule (w.e.f. 17-9-1957).