LexThe Industries(Development and Regulation) Act, 1951
Madhya Pradesh · state statute
Open in Lexace · Ask the AI about this act The Industries(Development and Regulation) Act, 1951
(Act No. 65 of 1951)
***
[31
st October, 1951]
An Act to provide for the development and regulation of certain
industries
BE it enacted by Parliament as follows :-
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement-- (1) This Act may be called the
Industries (Development and Regulation) Act, 1951.
(2) It extends to the whole of India
(3) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.
2. Declaration as to expediency of control by the UnionC It is hereby
declared that it is expedient in the public interest that the Union should take
under its control the industries specified in the First Schedule.
3. Definitions In this Act, unless the context otherwise requires.--
(a) AAdvisory Council@ means the Central Advisory Council established under
section 5;
(aa) Aancillary industrial undertaking@ means an industrial undertaking which, in
accordance with the proviso to sub-section (1) of section 11B and the
requirements specified under that sub-section, is entitled to be regarded as an
ancillary industrial undertaking for the purposes of this Act;
(ab) Acurrent assets@ means bank balances and cash and includes such other
assets or reserves as are expected to be realised in cash or sold or consumed
within a period of not more than twelve months in the ordinary course of
business, such as, stock-in-trade, amounts due from sundry debtors for sale of
goods and for services rendered, advance tax payments and bills receivable, but
does not include sums credited to a provident fund, a pension fund, a gratuity
fund or any other fund for the welfare of the employees, maintained by a
company owning an industrial undertaking;
(ac) Acurrent liabilities@ means liabilities which must be met on demand or
within a period of twelve months from the date they are incurred; and includes
any current liability which is suspended under section 18FB;
(b) ADevelopment Council@ means a Development Council established under
section 6;
(bb) Aexisting industrial undertaking@ means --
(a) in the case of an industrial undertaking pertaining to any of the industries
specified in the First Schedule as originally enacted, an industrial undertaking
which was in existence on the commencement of this Act or for the
establishment of which effective steps had been taken before such
commencement, and
(b) in the case of an industrial undertaking pertaining to any of the industries
added to the First Schedule by an amendment thereof, an industrial undertaking
which is in existence on the coming into force of such amendment or for the
establishment of which effective steps had been taken before the coming into
force of such amendment;
(c) Afactory@ means any premises, including the precincts thereof, in any part of
which a manufacturing 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
working thereon on any day of the preceding twelve months; or
(ii) without the aid of power, provided that on hundred or more workers are
working or were working thereon on any day of the preceding twelve months and
provided further that in no part of such premises any manufacturing process is
being carried on with the aid of power;
(cc) AHigh Court@ means the High Court having jurisdiction in relation the place
at which the registered office of a company is situate;
(d) Aindustrial undertaking@ means any undertaking pertaining to a scheduled
industry carried on in one or more factories by any person or authority including
Government;
(ad) Anew article@, in relation to an industrial undertaking which is registered or
in respect of which 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 which articles ordinarily manufactured or produced in the industrial
undertaking at the date of registration 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), or which is the subject of a patent, if at the date of registration or issue of
the licence or permission, as the case may be, the industrial undertaking was not
manufacturing or producing such article bearing that mark or which is the subject
of that patent;
(e) Anotified order@ means an order notified in the Official Gazette;
(f) Aowner@, in relation to an industrial undertaking, means the person who, or
the authority which, has the ultimate control over the affairs of the undertaking,
and, where the said affairs are entrusted to a manager, managing director or
managing agent, such manager, managing director or managing agent shall be
deemed to be the owner of the undertaking;
(g) Aprescribed@ means prescribed by rules made under this Act;
(h) Aschedule@ means a Schedule to this Act;
(i) Ascheduled industry@ means any of the industries specified in the First
Schedule;
(j) Asmall scale industrial undertaking@ means an industrial undertaking which,
in accordance with the requirements specified under sub-section (1) of section
11B, is entitled to be regarded as a small scale industrial undertaking for the
purposes of this Act;
(k) words and expressions used herein but not defined in this Act and defined in
the Companies Act, 1956 (1 of 1956), have the meanings respectively assigned
to them in that Act.
4. [Saving.] Rep., by the Industries (Development and Regulation) Amendment
Act, 1953 (26 of 1953), s.3 (w.e.f. 1.10.1953).
CHAPTER II
THE CENTRAL ADVISORY COUNCIL AND DEVELOPMENT COUNCILS
5. Establishment and constitution of Central Advisory Council and its
functions.- (1) For the purpose of advising it on matters concerning the
development and regulation of scheduled industries, the Central Government
may, by notified order, establish a Council to be called the Central Advisory
Council.
(2) The Advisory Council shall consist of a Chairman and such other members,
not exceeding thirty in number, all of whom shall be appointed by the Central
Government from among persons who are in its opinion 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 Central Government, 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 the manner of filling casual vacancies among, members of the
Advisory Council, shall be such as may be prescribed.
(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 of this Act in respect of which the Central
Government may consider it necessary to obtain the advice of the Advisory
Council.
6. Establishment and constitution of Development Councils and their
functions - (1) The Central Government may, by notified order, establish for any
scheduled industry or group of scheduled industries, a body of persons to be
called a Development Council which shall consist of members who in the opinion
of the Central Government are-
(a) persons capable of representing the interests of owners of industrial
undertakings in the scheduled industry or group of scheduled industries;
(b) persons having special knowledge of matters relating to the technical or other
aspects of the scheduled industry or group of scheduled industries;
(c) persons capable of representing the interests of persons employed in
industrial undertakings in the scheduled industry or group of scheduled
industries;
(d) persons not belonging to any of the aforesaid categories, who are capable of
representing the interests of consumers of goods manufactured or produced by
the scheduled industry or group of scheduled industries.
(2) The number and the term of office of, and the procedure to be followed in the
discharge of their functions by, and the manner of filling casual vacancies among
members of a Development Council shall be such as may be prescribed.
(3) Every Development Council shall be, by virtue of this Act, a body corporate by
such name as may be specified in the notified order establishing it, and may hold
and transfer property and shall by the said name sue and be sued.
(4) A Development Council shall perform such functions of a kind specified in the
Second Schedule as may be assigned to it by the Central Government and for
whose exercise by the Development Council it appears to the Central
Government expedient to provide in order to increase the efficiency or
productivity in the scheduled industry or group of scheduled industries for which
the Development Council is established, to improve or develop the service that
such industry or group of industries renders or could render to the community, or
to enable such industry or group of industries to render such service more
economically.
(5) A Development Council shall also perform such other functions as it may be
required to perform by or under any other provision of this Act.
7. Reports and Accounts of Development Councils.- (1) A Development
Council shall prepare and transmit to the Central Government and the Advisory
Council, annually, a report setting out what has been done in the discharge of its
functions during the financial year last completed.
(2) The Report shall include a statement of the account of the Development
Council for that year, and shall be transmitted as soon as accounts therefor have
been audited, together with a copy of any report made by the auditors on the
accounts.
(3) The statement of account shall be in such form as may be prescribed being a
form which shall conform to the best commercial standards, and the statement
shall show the total of remuneration and allowances 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.
8. Dissolution of Development Council - (1) The Central Government may, if it
is satisfied that a Development Council should cease to continue in being, by
notified order, dissolve that Development Council.
(2) On the dissolution of a Development Council under sub-section (1), the
assets of the Development Council, after its liabilities, if any, are met therefrom,
shall vest in the Central Government for the purposes of this Act.
9. Imposition of cess on scheduled industries in certain cases - ( 1) There
may be levied and collected as a cess for the purposes of this Act on all goods
manufactured or produced in any such scheduled industry as may be specified in
this behalf by the Central Government by notified order a duty of excise at such
rate as may be specified in the notified order, and different rates may be
specified for different 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 Avalue@ in relation to any
goods shall be deemed to be the wholesale cash price for which such goods of
the like kind and quality are sold or are capable of being sold for delivery at the
place of manufacture and at the time of their removal therefrom, without any
abatement 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 be prescribed, and any rules made in this behalf may provide for
the grant of a rebate for prompt payment of the 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 in respect of the goods manufactured or produced by any
scheduled industry or group of scheduled industries to the Development Council
established for that industry or group of industries, and where it does so, the
Development Council shall utilise the said proceeds -
(a) to promote scientific and industrial research with reference to the scheduled
industry or group of 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 industry or 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 may be prescribed.
CHAPTER III
REGULATION OF SCHEDULED INDUSTRIES
10. Registration of existing industrial undertakings C (1) The owner of every
existing industrial undertaking, 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 generally or 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 existing industrial undertaking of which it is the owner.
(3) Where an industrial undertaking is registered under this section, there shall
be issued to the owner of the undertaking or the Central Government, as the
case may be, a certificate of registration containing the productive capacity of the
industrial undertaking and such other particulars as may be prescribed.
(4) The owner of every industrial undertaking to whom a certificate of registration
has been issued under this section before the commencement of the Industries
(Development and Regulation) Amendment Act, 1973 (67 of 1973), shall, if the
undertaking falls within such class of undertakings as the Central Government
may, by notification in the Official Gazette, specify in this behalf, produce, within
such period as may be specified in such notification, the certificate of registration
for entering therein the productive 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 industrial undertaking as specified in the
application for registration made under sub-section (1), the level of production
immediately before the date on which the application for registration was made
under sub-section (1), the level of the highest annual production during the three
years immediately preceding the introduction in Parliament of the Industries
(Development and Regulation) amendment Bill, 1973, the extent to which
production during the said period was utilised for export and such other factors
as the Central Government may consider relevant including the extent of
underutilisation of capacity, if any, during the relevant period due to any cause.
10A. Revocation of registration in certain cases C If the Central Government
is satisfied that the registration of any industrial undertaking has been obtained
by misrepresentation as to an essential fact or that any industrial undertaking has
ceased to be registrable under this Act by reason of any exemption granted
under this Act becoming applicable thereto or that for any other reason the
registration has become useless or ineffective and therefore requires to be
revoked the Central Government may after giving an opportunity to the owner of
the undertaking to be heard revoke the registration.
11. Licensing of new industrial undertakings C (1) No person or authority
other than the Central Government, shall, after the commencement of this Act,
establish any new industrial undertaking, except under 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 of the Central Government, establish a new industrial
undertaking.
(2) A licence or permission under sub-section (1) may contain such conditions
including, in particular, conditions as to the location of the undertaking and the
minimum standards in respect of size to be provided therein as the Central
Government may deem fit to impose in accordance with the rules, if any, made
under section 30.
11A. Licence for producing or manufacturing new articles C The owner of an
industrial undertaking not being the Central Government which is registered
under section 10 or in respect of which a licence or permission has been issued
under section 11 shall not produce or manufacture any new article unless --
(a) in the case of an industrial undertaking registered under section 10, he has
obtained a licence for producing or manufacturing such new article; and
(b) in the case of an industrial undertaking in respect of which a licence or
permission has been issued under section 11, he has had the existing licence or
permission amended in the prescribed manner.
11B. Power of Central Government to specify the requirements which shall
be complied with by small scale industrial undertakings - (1) The Central
Government may, with a view to ascertaining which ancillary and small scale
industrial undertakings need supportive measures, exemptions or other
favourable treatment under this Act to enable them to maintain their viability and
strength so as to be effective in -
(a) promoting in a harmonious manner the industrial economy of the country and
easing the problem of unemployment, and
(b) securing that the ownership and control of the material resources of the
community are so distributed as best to subserve the common good,
specify, having regard to the factors mentioned in sub-section (2), by notified
order, the requirements which shall be complied with by an industrial undertaking
to enable it to be regarded, for the purposes of this Act, as an ancillary, or a small
scale, industrial undertaking and different requirements may be so specified for
different purposes or with respect to industrial undertakings engaged in the
manufacture or production of different articles :
Provided that no industrial undertaking shall be regarded as an ancillary
industrial undertaking unless it 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 production or 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 undertaking;
(c) the smallness of the number of 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 industrial undertaking; 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 draft before each House of Parliament, 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
disapproving the issue of the proposed notified order or both Houses agree in
making any modification in the proposed notified order, the notified order shall
not be made, or, as the case may be, shall be made only 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, according to the law for the time being in force, fell,
immediately before the commencement of the Industries (Development and
Regulation) Amendment Act, 1984, under the definition of an ancillary, or small
scale, industrial undertaking, shall, after such commencement, continue to be
regarded as an ancillary, or small scale, industrial undertaking for the purposes
of this Act until the definition aforesaid is altered or superseded by any notified
order made under sub-section (1).
12. Revocation and amendment of licences in certain cases - (1) If the
Central Government is satisfied, either on a reference made to it in this behalf or
otherwise, that any person or authority, to whom or to which, a licence has been
issued under section 11, has, without reasonable cause, failed to establish or to
take effective steps to establish the new industrial undertaking in respect of
which the licence has been issued within the time specified therefor or within
such extended time as the Central Government 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 or amend any licence issued under section 11:
Provided that no such power shall be exercised after effective steps have been
taken to establish the new industrial undertaking in accordance with the licence
issued in this behalf.
(3) The provisions of this section shall apply in relation to a licence issued under
section 11A or where a licence has been amended under that section, to the
amendment thereof, as they apply in relation to a licence issued under section
11.
13. Further provision for licensing or industrial undertakings in special
cases - (1) No owner of 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 which has not been registered within the time fixed for the
purpose under that section, carry on the business of 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 revoked under section 10A, 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 originally apply but became applicable after the commencement of this Act
for any reason, carry on the business of the undertaking after the expiry of three
months from the date on which the provisions of this Act became so applicable,
or
(d) effect any substantial expansion of an industrial undertaking which has been
registered or in respect 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 been registered,
except under, and in accordance with, a licence issued in that behalf by the
Central Government, and, in the case of a State Government, except under and
in accordance with the previous permission of the Central Government.
(2) The provisions of sub-section (2) of section 11 and of section 12 shall apply,
so far as may be, in relation to the issue of licences or permissions to any
industrial undertaking referred to in this section as they apply in relation to the
issue of licences or permissions to a new industrial undertaking.
Explanation - For the purposes of this section, Asubstantial expansion@means
the expansion of an existing 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 include any such
expansion as is normal to the undertaking having regard to its nature and the
circumstances relating to such expansion.
14. Procedure for the grant of licence or permission - Before granting any
licence or permission under section 11, section 11A, section 13 or section 29B,
the Central Government may require such officer or authority as it may appoint
for the purpose, to make a full and complete investigation in respect of
applications received in this behalf and report to it the result of such investigation
and in making any such investigation, the officer or authority shall follow such
procedure as may be prescribed.
15. 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 of any article or class of articles relatable to that industry or
manufactured or produced in the industrial undertaking or undertakings, as the
case may be; for which, having regard to the economic 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 or class of articles relatable to that industry or manufactured or produced
in the industrial undertaking 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
articles relatable to that industry or manufactured or produced in the industrial
undertaking or undertakings, 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 of conserving any resources of national importance which are utilised in
the industry or the industrial undertaking or undertakings, as the case may be; or
(b) any industrial undertaking is being managed in a manner highly detrimental to
the scheduled industry concerned or to public interest,
the Central Government may make or cause to be made a full and complete
investigation into the circumstances of the case by such person or body of
persons as it may appoint for the purpose.
15A. Power to investigate into the affairs of a company in liquidation - (1)
Where a company, owing an industrial undertaking, is being wound up by or
under the supervision of the High Court, and the business of such company is
not being continued, the Central Government may, if it is of opinion that it 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, to investigate into the possibility of running or re-
starting the industrial undertaking, make an application to the High Court praying
for permission to make, or cause to be made, an investigation into such
possibility by 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 Court shall, notwithstanding anything contained in the Companies
Act, 1956 (7 of 1956), or in any other law for the time being in force, grant the
permission prayed for.
16. Powers of Central Government on completion of investigation under
section 15- (1) If after making or causing to be made any such investigation as is
referred to in section 15 the Central Government is satisfied that action under this
section is desirable, it may issue such directions to the industrial undertaking or
undertakings concerned as may be appropriate in the circumstances for all or
any of the following purposes, namely:-
(a) regulating the production of any article or class of articles by the industrial
undertaking or undertakings and fixing the standards of production;
(b) requiring the industrial undertaking or undertakings to take such steps as the
Central Government may consider necessary to stimulate the development of the
industry to which the undertaking or undertakings relates or relate;
(c) prohibiting the industrial undertaking or undertakings from resorting to any act
or practice which 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 which have been the subject-matter of investigation.
(2) Where a case relating to any industry or industrial undertaking or
undertakings is under investigation, the Central Government may issue at any
time any direction of the nature referred to in sub-section (1) to the industrial
undertaking or undertakings concerned, and any such direction shall have effect
until it is varied or revoked by the Central Government.
17. [Special provisions for direct control by Central Government in certain cases.]
Rep. by the Industries (Development and Regulation) Amendment Act, 1953 (26
of 1953), s.12 (w.e.f. 1-10-1053).
18. 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 15 [or section 15A] may
choose one or more persons possessing special knowledge of any matter
relating to the 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 the Code of Civil Procedure, 1908 (5 of 1908), for the purpose of
taking evidence on oath (which he or it is hereby empowered to administer) and
of enforcing the attendance of witnesses and compelling the production of
documents and material objects, and the person or body of persons shall be
deemed to be a civil 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
18A. Power of Central Government to assume management or control of an
industrial undertaking 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 has failed 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), is being managed in a manner highly
detrimental to the scheduled industry concerned or to public interest,
the Central Government may, by notified order, authorise any person or body of
persons to take over the management of the whole or any part of the undertaking
or to exercise in respect of the whole or any part of 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 exceeding five years as may be specified in the order:
[Provided that if the Central Government is of opinion that it is expedient in the
public interest that any such notified order should continue to have effect after
the expiry of the period of five years aforesaid, it may from time to time issue
directions for such continuance for such period, not exceeding two years at a
time, as may be specified in the direction, so however that the total period of
such continuance (after the expiry of the said period of five years) does not
exceed [twelve years]; and where any such direction is issued, a copy thereof
shall be laid, as soon as may be, before both Houses of Parliament.]
Explanation - The power to authorise a body of persons under this section to take
over the management of an industrial undertaking which is a company includes
also a power to appoint any individual, firm or company to be the managing
agent of the industrial undertaking on such terms and conditions as the Central
Government may think fit.
18AA. Power to take over industrial undertakings without investigation
under certain circumstances - (1) Without prejudice to any other provision of
this Act, if, from the documentary or other evidence in its possession, the Central
Government is satisfied, in relation to an industrial undertaking, that -
(a) the persons in charge of such industrial undertaking have, by reckless
investments or creation of incumbrances on the assets of the industrial
undertaking, or by diversion of funds, brought about a situation which is likely to
affect the production of articles manufactured or produced in the industrial
undertaking, 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 the voluntary winding up of the company owing the industrial
undertaking or for any other reason) and such closure is prejudicial to the
concerned scheduled industry and that the financial condition of the company
owing the industrial undertaking and the condition of the plant and machinery of
such undertaking are such that it is possible to re-start the undertaking and such
re-starting is necessary in the interests of the general public.
it may, by a notified order, authorise any person or body of persons (hereafter
referred to as the Aauthorised person@) to take over the management of the
whole or any part of industrial undertaking or to exercise in respect of the whole
or any part of the undertaking such functions of control as may be specified in the
order.
(2) The provisions of sub-section (2) of section 18A shall, as far as may be, apply
to a notified order made 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 undertaking owned 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 persons having for the time being, charge of the management or control
of the industrial undertaking, whether by or under the orders of any court or any
contract, instrument or otherwise, shall, notwithstanding anything contained in
such order, contract, instrument or other arrangement, forthwith make over the
charge of management 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 in relation to, the industrial undertaking, in respect of which a notified
order has been made under sub-section (1), as they apply to an industrial
undertaking in relation to which a notified order has been issued under section
18A.
18B. Effect of notified order under section 18A - (1) On the issue of a notified
order under section 18A authorizing the taking over of the management of an
industrial undertaking-
(a) all persons in charge of the management, including persons holding office as
managers or directors of the industrial undertaking immediately before the issue
of the notified order, shall be deemed to have vacated their offices as such;
(b) any contract of management between the industrial undertaking and any
managing agent or any director thereof holding office as such immediately before
the issue of the notified order shall be deemed to have terminated;
(c) the managing agent, if any appointed under section 18A, shall be deemed to
have been duly approinted as the managing agent in pursuance of the Indian
Companies Act, 1913 (7 of 1913)[See now the Companies Act, 1956 (1 of
1956)], and the memorandum and articles of association of the industrial
undertaking, and the provisions of the said Act and of the memorandum and
articles shall, subject to the other provisions contained in this Act, apply
accordingly, but no such managing agent shall be removed from office except
with the previous consent of the Central Government;
(d) the person or body of persons authorized under section 18A to take over the
management shall take 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 all the property and
effects of the industrial undertaking shall be deemed to be in the custody of the
person or, as the case may be, the body of persons as from the date of the
notified order; and
(e) the persons, if any, authorized under section 18A to take over the
management of an industrial undertaking which is a company shall be for all
purposes the directors of the industrial undertaking duly constituted under the
Indian Companies Act, 1913 (7 of 1913)[See now the Companies Act, 1956 (1 of
1956)], and shall alone be entitled to exercise all the powers of the directors of
the industrial undertaking, whether such powers are derived from the said Act or
from the memorandum or articles of association of the industrial undertaking or
from 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 authorized to take over the
management of an industrial undertaking, shall take such steps as may be
necessary for the purpose of efficiently managing the business of the industrial
undertaking 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 authorized to exercise any
functions of control in relation to an industrial undertaking, the undertaking shall
be carried on pursuant to any directions given by the authorized person in
accordance with the provisions of the notified order, and any person having any
functions of management in relation to the undertaking or part thereof shall
comply with all such directions.
(4) The person or body of persons authorized under section 18A shall,
notwithstanding anything contained in the memorandum or articles of association
of the industrial undertaking, exercise his or their functions 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 section inconsistent with the provisions of any Act or instrument determining
the functions of the authority carrying on the undertaking except in so far as may
be specifically provided by the notified order.
18C. Contracts in bad faith, etc., may be cancelled or varied - Without
prejudice to the provisions contained in section 18B, the person or body of
persons authorized under section 18A to take over the management of an
industrial undertaking may, with the previous approval of the Central
Government, make an application to any court having jurisdiction in this behalf
for the purpose of cancelling or varying any contract or agreement entered into,
at any time before the issue of the notified order under section 18A, between the
industrial undertaking and any other person and the court may, if satisfied after
due inquiry that such contract or agreement had been entered into in bad faith
and is, detrimental to the interests of the industrial undertaking, make an order
cancelling or varying (either unconditionally or subject to such conditions as it
may think fit to impose) that contract or agreement, and the contract or
agreement shall have effect accordingly.
18D. No right to compensation for termination of office or contract -
Notwithstanding anything contained in any law for the time being in force, no
person who ceases to hold any office by reason of the provisions contained in
clause (a) of section 18B, or whose contract of management is terminated by
reason of the provisions contained in clause (b) of that section, shall be entitled
to any compensation for the 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 recover from the industrial undertaking moneys recoverable otherwise
than by way of such compensation.
18E. Application of Act 7 of 1913 - (1) Where the management of an industrial
undertaking, being a company as defined in the Indian Companies Act,
1913(Now the Companies Act, 1956 (1 of 1956), is taken over by the Central
Government, then, notwithstanding anything contained in the said Act or in the
memorandum or articles of association of such undertaking,-
(a) it shall not be lawful for the shareholders of such undertaking or any other
person to nominate or 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 given effect to unless approved by the Central Government;
(c) no proceeding for the winding up of such undertaking or for the appointment
of a receiver in respect 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 this Act and subject to such other exceptions, restrictions
and limitations, if any, as the Central Government may, by notification in the
Official Gazette, specify in this behalf, the Indian Companies Act, 1913(now the
Companies Act, 1956 (1 of 1956), shall continue to apply to such undertaking in
the same manner as it applied thereto before the issue of the notified order under
section 18A.
18F. Power of Central Government to cancel notified order under section
18A - If at any time it appears to the Central Government on the application of
the owner of the Industrial undertaking or otherwise that the purpose of the order
made under section 18A has been fulfilled or that for any other reason it is not
necessary that the order should remain in force, the Central Government may, by
notified order, cancel such order and on the cancellation of any such order the
management or the control, as the case 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
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 Central Government is of opinion that there are
possibilities of running or re-starting an industrial undertaking, in relation to which
an investigation has been made under section 15A, and that such industrial
undertaking should be run or re-started, as the case may be, for maintaining or
increasing the production, supply or distribution of articles or class of articles
relatable to the scheduled industry, needed by the General public, that
Government may make an application to the High Court praying for permission to
appoint any person or body of persons to take over the management of the
industrial undertaking or to exercise in respect of the whole or any part of the
industrial undertaking such functions of control as may be specified in the
application.
(2) Where an application is made under sub-section (1), the High Court shall
made an order empowering the Central Government to authorise any person or
body of persons (hereinafter referred to as the A authorised person@) to take
over the management of the industrial undertaking or to exercise functions of
control in relation to the whole or any part of the industrial undertaking
(hereinafter referred to as the Aconcerned 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 general public thatExcerpt shown. Open the full act in Lexace.