The KARNATAKA RELIEF UNDERTAKINGS (SPECIAL PROVISIONS) ACT, 1977

THE KARNATAKA RELIEF UNDERTAKINGS (SPECIAL PROVISIONS)  
ACT,  1977 
ARRANGEMENT OF SECTIONS. 
Statement of Object and Reasons 
Sections: 
 1.  Short title, extent and commencement. 
 2.  Definitions. 
 3.  Declaration of relief undertaking. 
 4.  Power to specify industrial relations and other facilities temporarily. 
 5.  Suspension or modification of certain remedies, etc. 
 6.  Period of limitation. 
 7.  Power to make rules. 
  SCHEDULE 
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STATEMENT OF OBJECTS AND REASONS 
I 
 Act 24 of 1977.- 1.  There are a number of sick undertakings, some of which have  
even remained closed for a considerable length of time resulting in loss of 
production, unemployment and hardship to employees, etc.  It is necessary to revive 
these units, gear up production and provide employment. 
 2.  The causes for sickness of these industries are mainly erosion of capital as a 
result of continuous losses, inadequate working capital because of the Commercial 
Banks and creditors choking up assistance, for fear of dilution of security, poor 
liquidity, pressure from creditors for settlement of claims and the labour unrest like 
strikes, lay-off, etc.  The State Government have in consultation with the concerned 
financial institutions and commercial banks been taking active interest in 
rehabilitating most of such units; for example, Mysore Electro-Chemical Works 
Limited, Karnataka Steel and Wire Products Ltd., Tanfort Tyres Ltd., Sree Shankara 
Textile Mills, Mysore Tools Limited etc.  In the case of Mysore Electro-Chemical 
Works Limited, the Industrial Reconstruction Corporation of India Limited, Calcutta (a 
Government of India Organisation) are the chief promoters for its rehabilitation.  In all 
these cases, the State Government as also the financing institutions and Commercial 
Banks have reasons to apprehend that any effo rt to rehabilitate the undertakings by 
providing the required additional financial assistance might not have the desired 
result (successful rehabilitation) as any move by creditors for liquidation of the 
Company (by filling a liquidation petition in the High Court) might retard nullify the 
entire efforts.   
 Hence this Bill. 
 (Published in the Karnataka Gazette (Extraordinary) Part IV - 2A No.  534 dated 8-
7-1977 at page 7.) 
II 
 Amending Act 23 of 1989. - Section 3 of the Karnataka Relief Undertakings 
(Special Provision) Act, 1977 empowers the State Government to declare in public 
interest by a notification, any State industrial undertakings specified therein to be a 
relief undertaking for a period not exceeding two years, in the first instance and by 
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like notification to extend the period from time to time by any period not exceeding 
one year, so however that the aggregate period shall not be more than ten years. 
 It is considered necessary that certain State industrial undertakings require this 
relief measure for a further period of two years for the purpose of providing continued 
employment and to prevent their closure. 
 Further, as the aggregate period of ten years has expired in the case of Mysore 
Electrical Industries, it was considered necessary and expedient to immediately 
extend the period of relief. 
 This Bill seeks to replace the Karnataka Relief Undertakings (Special Provisions) 
(amendment) Ordinance, 1989 which was promulgated for the purposes stated 
above.   
 Hence this Bill. 
 (Published in the Karnataka Gazette (Extraordinary) Part IV - 2A No.  158 dated 
23-3-1989  at page 3.) 
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KARNATAKA ACT NO.  24 OF 1977 
(First published in the Karnataka Gazette, Extraordinary on the Seventh day of 
September 1977) 
THE KARNATAKA RELIEF UNDERTAKINGS (SPECIAL PROVISIONS) ACT, 1977 
(Received the assent of the President on the First day of September 1977) 
(As Amended by Act 23 of 1989) 
 An Act to make temporary provisions in respect of industrial undertakings the 
running of which is considered essential as a measure of preventing or of providing 
relief against unemployment; 
 W HEREAS it is expedient to enable the State Government to make special 
provisions in respect of industrial relations and other matters in relation to industrial 
undertaking the running of which is considered essential as  a measure of preventing 
or of providing relief against unemployment; 
 B E it enacted by the Karnataka State Legislature in the Twenty-eighth Year of the 
Republic of India as follows:- 
 1. Short title, extent and commencement.- (1)  This Act may be called the 
Karnataka Relief Undertakings (Special Provisions) Act, 1977. 
 (2) It extends to the whole of the State of Karnataka. 
 (3) It shall come into force on such 1[date]1 as the State Government may, by 
notification, appoint. 
1. Act came into force on 5.10.1977 Vide Notification No. CI 208 PUM 77 dt. 4.10.1977 
 2. Definitions.-   In this Act, unless the context otherwise requires,- 
 (1) ‘Government company’ shall have the same meaning assigned to it in section 
617 of the Companies Act, 1956; 
 (2) ‘industry’ means any business, trade, undertaking, manufacture or calling of 
employers and includes any calling, service, employment, handicraft or industrial 
occupation or avocation of workmen and the word ‘industrials’ shall be construed 
accordingly; 
 (3) ‘relief undertaking’ means a State industrial undertaking declared as such 
under section 3; 
 (4)  ‘State industrial undertaking’ means an industrial undertaking,- 
  (a)  which is started or which or the management of which is under any law or 
agreement acquired or otherwise taken over by the State Government or by a 
Government company and is run or proposed to be run by or under the authority of 
the State Government or a Government company; or 
  (b)  to which any loan advanced or grant has been given or in respect of any 
loan whereof, a guarantee has been given by the State Government or a 
Government company or a Corporation owned or controlled by the State 
Government. 
 3. Declaration of relief undertaking. -  The State Government may, if it is 
satisfied that it is necessary or expedient so to do in the public interest with a view to 
enable the continued running of State industrial undertaking as a measure of 
providing relief against unemployment, declare, by notification, that any State 
industrial undertaking shall on and from such date and for such period as may be 
specified in the notification be a relief undertaking: 
 Provided that the period so specified shall not  exceed in the first instance two 
years but may by a like notification be ext ended from time to time by any period not 
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exceeding one year at a time, so, however, that the aggregate shall not be more than 
1[twelve  years]1. 
  1. Substituted by Act 23 of 1989 w.e.f. 9.1.1989 
 4. Power to specify industrial relations and other facilities temporarily.- (1)  
Notwithstanding any law, usage,  custom, contract, instrument, decree, order, award, 
submission, settlement, standing order or other provisions whatsoever,  the State 
Government may, if satisfied that it is necessary so to do for the purpose specified in 
section 3, by notification, direct,- 
  (a) that in relation to relief undertaking all  or  any of the enactments 
specified in the Schedule to this Act shall not apply or shall apply with such 
adaptations, whether by way of modification, addition or omission as may be 
specified in such notification;  or 
  (b) that the operation of all or any of the contracts, assurances of property, 
agreements, settlements, awards, standing orders or other instruments in force (to 
which any relief undertaking is a party or which may be applicable to any relief 
undertaking) immediately before the date on which the State industrial undertaking is 
declared to be a relief undertaking shall remain suspended or that all or any of the 
rights, privileges, obligations and liabilities accruing or arising thereunder before the 
said date shall remain suspended or shall be enforceable with such modifications 
and in such manner as may be specified in such notification. 
 (2) The notification issued under sub-section (1) shall have over-riding effect 
notwithstanding anything to the contrary contained in any other law, agreement, or 
instrument or decree or order of a court, tribunal, officer or other authority. 
 5. Suspension or modification of certain remedies, etc. -  Any remedy for the 
enforcement of any right, privilege, obligation or liability referred to in clause (b) of 
sub-section (1) of section 4 and suspended or modified by a notification under that 
sub-section shall, in accordance with the terms of the notification, be suspended or 
modified and all proceedings relating thereto pending  before any court, tribunal or 
officer or other authority shall accordingly be stayed or be continued subject to such 
modification, so, however, that on the notification ceasing to have effect,- 
 (a) any right, privilege, obligation or liability so suspended or modified shall revive 
and be enforceable as if the notification had never been issued; and  
 (b) any proceeding so stayed shall be proceeded with subject to the provisions of 
any law which may then be in force from the  stage which had been reached when 
the proceeding was stayed. 
 6. Period of limitation.- In computing the period of limitation for the 
enforcement of any right, privilege,  obligation or liability referred to in clause (b) of 
sub-section (1) of section 4, the period during which it or the remedy for the 
enforcement thereof was suspended, shall be excluded. 
 7. Power to make rules.- (1) The State Government may, by notification, make 
rules to carry out the purposes of this Act. 
 (2) Every rule made under this Act shall be laid as soon as may be after it is 
made before each House of the State Legislature while it is in session for a total 
period of thirty days which may be comprised in one 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 
modification in the rule or both Houses agree that the  rule should not be made, the 
rule shall, from the date on which the modification or annulment is notified by the 
Government in the official Gazette, have effect only in such modified form or be of no 
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effect, as the case may be, so however, that any such modification or annulment 
shall be without prejudice to the validity of anything previously done under such rule. 
 
SCHEDULE 
[See section 4 (1) (a) ] 
1.  The Industrial Employment (Standing Orders) Act, 1946 (Central Act 20 of 1946); 
2.  The Industrial Disputes Act, 1947 (Central Act 14 of 1947); 
3.  The Minimum Wages Act, 1948 (Central Act 11 of 1948); 
4.  The Karnataka Shops and Commercial Establishments Act, 1961 (Karnataka Act 8 of 
1962). 
 * * * * 
  COMMERCE AND INDUSTRIES SECRETARIAT. 
NOTIFICATION  
Bangalore, dated 4th October 1977 [No.  CI 208 PUM 77] 
 G.S.R. 301.-  In exercise of the powers conferred by sub-section (3) of Section 1 of the 
Karnataka Relief Undertakings (Special Provisions) Act, 1977 (Karnataka Act 24 of 1977), the 
Government of Karnataka hereby appoints th e Fifth day of October, 1977 as the date on 
which the said Act shall come into force. 
By Order and in the name of the Governor of Karnataka, 
 
(V.  VENUGAPAL NAIDU,) 
Commissioner for Industries and Secretary to 
Government, 
Commerce and Industries Department. 
 (Published in the Karnataka Gazette (Extraordinary) Part II - 2C (i) dated 4-10-1977 as 
Page No. 813.) 
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