SICK TEXTILE UNDERTAKINGS (NATIONALISATION) ACT, 1974
This Act may be called THE SICK TEXTILE UNDERTAKINGS (NATIONALISATION) ACT, 1974.
(2) The provisions of Sections 32 and 33 shall come into force at once and the remaining provisions of this Act shall be deemed to have come into force on the 1 st day of April, 1974.
(1) In this Act, unless the context otherwise requires,-
(a) "appointed day" means the 1st day of April, 1974;
(b) "bank" means-
(i) the State Bank of India constituted under the State Bank of India Act, 1955;
(ii) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959;
(iii) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970;
(iv) any other bank, being a scheduled bank as defined in clause (e) of section 2 of the Reserve Bank of India Act, 1934;
(c) "Commissioner" means a Commissioner of Payments appointed u
(1) On the appointed day, every sick textile undertaking and the right, title and interest of the owner in relation to every such sick textile undertaking shall stand transferred to, and shall vest absolutely in, the Central Government.
(2) Every sick textile undertaking which stands vested in the Central Government by virtue of sub-section (1) shall immediately after it has so vested, stand transferred to, and vested in, the National Textile Corporation.
(1) The sick textile undertaking referred to in section 3 shall be deemed to include all assets, rights, lease-holds, powers authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash on hand, reserve funds, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of the owner of the sick textile undertaking, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto and shall also be deemed to include the liabilities and obligations specified in sub-section (2) of section 5.
(2) All property as aforesaid which have vested in the Central Government under sub-section (1)
(1) Every liability, other than the liability specified in sub-section (2) of the owner of a sick textile undertaking, in respect of any period prior to the appointed day, shall be the liability of such owner and shall be enforceable against him and not against the Central Government or the National Textile Corporation.
(2) Any liability arising in respect of-
(a) loans advanced by the Central Government, or a State Government, or both to a sick textile undertaking (together with interest due thereon) after the management of such undertaking had been taken over by the Central Government.
(b) amounts advanced to a sick textile undertaking (after the management of such undertaking had been taken over by the Central Government), by the National Textile Corporation or by a State Textile Corporatio
(1) The National Textile Corporation may, if it considers it necessary so to do, form subsidiary corporations under the Companies Act, 1956, and register them under that Act.
(2) The National Textile Corporation may, by order in writing, transfer any sick textile undertaking or part thereof to a Subsidiary Textile Corporation and any such transfer shall be subject to such terms and conditions as may be specified in the said order.
(3) The Subsidiary Textile Corporation shall, on and from the date of such transfer, be deemed to be substituted in the licence or other instrument referred to in sub-section (3) of section 4 in place of the National Textile Corporation as if such licence or other instrument had been granted to the Subsidiary Textile Corporation, and shall hold such licence or other instrument for the remainder of the period fo
(1) An amount equal to the value of the assets of a sick textile undertaking transferred to, and vested in, the National Textile Corporation under sub-section (2) of section 3, shall be deemed to be the contribution made by the Central Government to the equity capital of the National Textile Corporation; and for the contribution so made, the National Textile Corporation shall issue (if necessary after amending its memorandum and articles of association) to the Central Government paid-up shares, in its equity capital, having a face value equal to the amount specified agains the sick textile undertaking in the corresponding entry in column (4) of the First Schedule.
(2) Where any liability assumed by the Central Government under this Act is taken over by the National Textile Corporation under section 27, the Central Government shall surrender to that Corporation the shares issued to
The owner of every sick textile undertaking shall be given by the Central Government, in cash and in the manner specified in Chapter VI, for the transfer to and vesting in, it, under sub-section (1) of section 3 of such sick textile undertaking and the right, title and interest of the owner in relation to such sick textile undertaking, an amount equal to the amount specified against it in the corresponding entry in column (4) of the First Schedule.
(1) In consideration of the retrospective operation of the provisions of sections 3, 4 and 5, there shall be given, in cash by the Central Government to the owner of every sick textile undertaking, the management of which was taken over by the Central Government, an amount equal to an amount calculated at the rate specified in section 6 of the Sick Textile Undertakings (Taking Over of Management) Act, 1972, for the period commencing on the appointed day and ending on the date on which the Ordinance was promulgated.
(2) In addition to the amount referred to in section 8, there shall be given by the Central Government, in cash, to the owner of every sick textile undertaking, simple interest at the rate of four per cent, per annum on the amount specified against such owner in the corresponding entry in column (4) of the First Schedule for the period commencing on the date on which the
(1) Where in pursuance of any decree, order or injunction of a Court or otherwise, the Central Government or the Custodian was prevented from taking over the management of any sick textile undertaking, the owner of such sick textile undertaking shall,
(a) in the case of an undertaking the management of which was subsequently taken over by the Central Government at any time before the date on which the Ordinance was promulgated within sixty days from such date; or
(b) in the case of any other sick textile undertaking, the management of which could not be taken over by the Central Government before the date on which the Ordinance was promulgated, within sixty days from such date.
render accounts in relation to the period commencing on the date of the notified order under the Industries (Developm
The National Textile Corporation or any person which that Corporation may, by order in writing, specify shall be entitled to exercise the powers of general superintendence, direction, control and management of the affairs and business of a sick textile undertaking, the right, title and interest of an owner in relation to which have vested in that Corporation under sub-section (2) of section 3, and do all such things as the owner of the sick textile undertaking is authorised to exercise and do.
1 [11A. Special provisions for disposal of assets of the sick textile undertakings in certain circumstances
If the National Textile Corporation considers it necessary or expedient for the better management, modernisation, restructuring or revival of a sick textile undertaking so to do, it may, with the previous sanction of the Central Government, transfer, mortgage, sell or otherwise dispose of any land, plant, machinery or any other assets of any of the sick textile undertakings :
Provided that the proceeds of no such transfer, mortgage, sale or disposal shall be utilised for other than the purpose for which the sanction of the Central Government has been obtained.]
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1. Inserted by Sick Textile Undertakings (Nationalisation)
On the vesting of the management of a sick textile undertaking in the National Textile Corporation all persons in charge of the management of such sick textile undertaking immediately before such vesting shall be bound to deliver to the National Textile Corporation all assets, books of account, registers or other documents in their custody relating to the sick textile undertaking.
The National Textile Corporation shall maintain the accounts of sick undertakings in accordance with the provisions of the Companies Act, 1956.
(1) Every person who is a workman within the meaning of the Industrial Disputes Act, 1947, and has been immediately before the appointed day, employed in a sick textile undertaking shall become, on and from the appointed day, an employee of the National Textile Corporation, and shall hold office or service in the National Textile Corporation with the same rights and privileges as to pension, gratuity and other matters as would have been admissible to him if the rights in relation to such sick textile undertaking had not been transferred to, and vested in. the National Textile Corporation, and shall continue to do so unless and until his employment in the National Textile Corporation is duly terminated or until his remuneration, terms and conditions of employment are duly altered by the National Textile Corporation.
(2) Every person who is not a workman within the meaning of the Ind
(1) Where the owner of a sick textile undertaking has established a provident fund, superannuation, welfare or other fund for the benefit of the persons employed in such sick textile undertaking the monies relatable to the employees, whose services have become transferred by or under this Act to the National Textile Corporation shall, out of the monies standing on the appointed day, to the credit of such provident fund superannuation, welfare or other fund, stand transferred to, and shall vest in, the National Textile Corporation,
(2) The monies which stand transferred, under sub-section (1), to the National Textile Corporation shall be dealt with by that Corporation in such manner as may be prescribed.
Where any sick textile undertaking or any part thereof is transferred under this Act to a Subsidiary Textile Corporation, every person referred to in sub-section (1) and sub-section (2) of section 14 shall, on and from the date of such transfer, become an employee of the Subsidiary Textile Corporation and the provisions of sections 14 and 15 shall apply to such employee as they apply to an employee of the National Textile Corporation as if reference in the said sections to the National Textile Corporation were references to the Subsidiary Textile Corporation.
(1) For the purpose of disbursing the amounts payable to the owner of each sick textile undertaking, the Central Government shall, by notification in the Official Gazette,-
(a) appoint such number of persons as it may think fit to be Commissioners of Payments; and
(b) define the local limits within which the Commissioners of Payments shall exercise the powers conferred, and perform the duties imposed, on them by or under this Act.
(2) The Central Government may appoint such other persons as it may think fit to assist the Commissioner and thereupon the Commissioner may authorise one or more of such persons also to exercise all or any of the powers exercisable by him under this Act, and different persons may be authorised to exercise different powers.
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(1) The Central Government shall, within thirty days from the specified date, pay in cash to the Commissioner, for payment to the owner of a sick textile undertaking, an amount equal to the amount specified against the sick textile undertaking in the First Schedule and shall also pay to the Commissioner such sums as may be due to the owner of a sick textile undertaking under sub-sections (1) and (2) of section 9.
(2) In relation to the sick textile undertakings the management of which was taken over by the Central Government under the Industries (Development and Regulation) Act, 1951, there shall be paid by the Central Government [in addition to the amount referred to in sub-section (1)], to the Commissioner, in cash, an amount calculated at the rate specified in section 6 of the Sick Textile Undertakings (Taking Over of Management) Act, 1972, for the period commencing on the date
(1) The National Textile Corporation shall be entitled to receive up to me specified date, to the exclusion of all other persons any money due to the sick textile undertaking realised after the appointed day, notwithstanding that the realisations pertain to a period prior to the appointed day.
(2) The National Textile Corporation may make a claim to the Commissioner with regard to every payment made by the Custodian after the appointed day but before the date on which the Ordinance was promulgated for discharging any liability of the owner of a sick textile undertaking in relation to any period prior to the appointed day, and every such claim shall have priority, in accordance with the priorities attaching under this Act, to the matter in relation to which such liability has been discharged by the Custodian.
(3) Save as otherwise provi
Every person having a claim against the owner of a sick textile undertaking shall prefer such claim before the Commissioner within thirty days from the specified date :
Provided that if the Commissioner is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the said period of thirty days he may entertain the claim within a further period of thirty days but not thereafter.
The claims arising out of the matters specified in the Second Schedule shall have priorities in accordance with the following principles namely :-
(a) Category I will have precedence over all other categories and Category II will have precedence over Category III and so on;
(b) the claims specified in each of the categories except Category IV shall rank equally and be paid in full, but if the amount is insufficient to meet such claims in full, they shall abate in equal proportions and be paid accordingly;
(c) the liabilities specified in Category IV shall be discharged, subject to the priorities specified in this section, in accordance with the terms of the secured loans and the priority inter se of such loans, and
(d) the question of payment of
(1) On receipt of the claims under section 20, the Commissioner shall arrange the claims in the order of priority specified in the Second Schedule and examine the same in accordance with the said order.
(2) If on examination of the claims, the Commissioner is of the opinion that the amount paid to him under this Act is not sufficient to meet the liabilities specified by any lower category, he shall not be required to examine the liabilities in respect of such lower category.
(1) After examining the claims with reference to the priority set out in the Second Schedule, the Commissioner shall fix a certain date on or before which every claimant shall file the proof of his claim or be excluded from the benefit of the disbursement made by the Commissioner.
(2) Not less, than fourteen days' notice of the date so fixed shall be given by advertisement in one issue of the daily newspaper in the English language and one issue of the daily newspaper in the regional language as the Commissioner may consider suitable, and every such notice shall call upon the claimant to file the proof of his claim with the Commissioner within the time specified in the advertisement.
(3) Every claimant who fails to file the proof of his claim within the time specified by the Commissioner shall be excluded from the disbursements made by
After admitting a claim under this Act, the amount due in respect of such claim shall be credited by the Commissioner to the relevant fund or be paid to the person or persons to whom such sums are due and on such credit or payment the liability of the owner in respect of such claim shall stand discharged.
(1) If out of the monies paid to him in relation to a sick textile undertaking, there is a balance left after meeting the liabilities as specified in the Second Schedule, the Commissioner shall disburse such balance to the owner of such sick textile undertaking.
(2) Before making any payment to the owner of any sick textile undertaking under sub-section (1), the Commissioner shall satisfy himself as to the right of such person to receive the whole or any pan of such amount, and in the event of there being a doubt or dispute as to the right of the person to receive the whole or any part of the amount referred to in sections 8 and 9, the Commissioner shall refer the matter to the Court and make the disbursement in accordance with the decision of the Court.
(3) For the removal of doubts, it is hereby declared that the entries in column (3
Any money paid to the Commissioner which remains undisbursed or unclaimed for a period of three years from the last day on which the disbursement was made, shall be transferred by the Commissioner to the general revenue account of the Central Government; but a claim to any money so transferred may be preferred to the Central Government by the person entitled to such payment and shall be dealt with as if such transfer had not been made, the order, if any, for payment of the claim being treated as an order for the refund of revenue.
(1) Where any liability of the owner of a sick textile undertaking arising out of any item specified in Category I of the Second Schedule is not discharged fully by the Commissioner out of the amount paid to him under this Act, the Commissioner shall intimate in writing to the Central Government the extent of the liability which remains undischarged, and that liability shall be assumed by the Central Government.
(2) The Central Government may, by order, direct the National Textile Corporation to take over any liability assumed by that Government under sub-section (1) and on receipt of such direction, it shall be the duty of the National Textile Corporation to discharge such liability.
Notwithstanding the vesting, under this Act, of a sick textile undertaking in the National Textile Corporation,-
(a) the Custodian who has been managing the affairs of such undertaking before the date on which the Ordinance was promulgated shall, until alternative arrangements have been made by the National Textile Corporation, continue to manage the affairs of such undertaking as if the Custodian had been authorised by the National Textile Corporation to manage the affairs of such undertaking; and
(b) the Custodian or any person authorised by him for this purpose shall, until alternative arrangements have been made by the National Textile Corporation, continue to be authorized to operate, in relation to the sick textile undertaking, any account of such undertaking in a bank .as if such Custodian or the person authorised by the Custodian
The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any Court, Tribunal or authority.
(1) Every contract entered into by the owner or occupier of any sick textile undertaking for any service, sale or supply and in force immediately before the appointed day shall, on and from the expiry of one hundred and eighty days from the date on which this Act receives the assent of the President, cease to have effect unless such contract is before the expiry of that period, ratified, in writing, by the National Textile Corporation and in ratifying such contract the National Textile Corporation may, with the previous approval of the Central Government make such alterations or modifications therein as it may think fit : Provided that the National Textile Corporation shall not omit to ratify a contract, and shall not make any alteration or modification in a contract, unless it is satisfied that such contract is unduly onerous or has been entered into in bad faith or is detrimental to the interest of the sick textile undertak
(1) Except with the prior approval of the Central Government, no owner of a sick textile undertaking, specified in the Schedule to the Sick Textile Undertakings (Taking Over of Management) Act, 1972, the management of which could not be taken over by the Central Government by reason of any decree, order or injunction of any Court or otherwise shall, on and from the date of introduction of the Sick Textile Undertakings (Nationalisation) Bill, 1974, in the House of the People, transfer by sale, mortgage or otherwise, any property or other assets forming part of the said sick textile undertaking and any such transfer without the previous approval of the Central Government shall be void and inoperative.
(2) Any person who contravenes the provisions of sub-section (1) shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to ten thou
Any person who,-
(a) having in his possession, custody or control any property forming part of a sick textile undertaking wrongfully withholds such property from the Central Government or the National Textile Corporation, or any person authorised by that Government or Corporation, as the case may be. in this behalf, or
(b) wrongfully obtains possession of, or retains, any property forming part of the sick textile undertaking or wilfully withholds or fails to furnish to the Central Government the National Textile Corporation or any person specified by that Government, or Corporation, as the case may be, any document relating to such sick textile undertaking which may be in his possession. custody or control or fails to deliver to the National Textile Corporation or any person specified by that Corporation any assets, books of account, reg
(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :
Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or is attributa
No suit, prosecution or other legal proceeding shall He against the Central Government or any officer of that Government or the Custodian or the National Textile Corporation or any Subsidiary Textile Corporation or any officer or other person authorised by either of such Corporations for anything which is, in good faith, done or intended to be done under this Act.
No proceeding for the winding up of a textile company, the right, title and interest in relation to the sick textile undertaking owned by which have vested in the National Textile Corporation under this Act or for the appointment of a receiver in respect of the business of the sick textile undertaking shall lie or be proceeded with in any Court except with the consent of the Central Government.
(1) The Central Government may, by notification, direct that all or any of the powers exercisable by it under this Act, other than the power under section 37, may also be exercised by any person or persons as may be specified in the notification.
(2) Whenever any delegation of power is made under sub-section (1), the person to whom such power has been delegated shall act under the direction, control and supervision of the Central Government.
(1) The Central Government may, by notification, make rules to carry out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :-
(a) the time within which the manner in which an intimation referred to in sub-section (4) of section 4 shall be given;
(b) the manner in which monies in any provident or other fund referred to in section 15 shall be dealt with;
(c) any other matter which is required to be, or may be, prescribed.
(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be . after it is made, before each House of Parliament while it is
If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order not inconsistent with the provisions of this Act, remove the difficulty :
Provided that no such order shall be made after the expiry of a period of two years from the date on which this Act receives the assent of the President.
It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in clause (b) of article 39 of the Constitution.
Explanation.- In this section, "State" has the same meaning as in article 12 of the Constitution.
(1) The Sick Textile Undertakings (Nationalisation) Ordinance, 1974, as hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act.
[See sections 2 (h), 8 and 18]
Sl. No. Name of the undertaking Name of the owner Amount (in rupees)
(1) (2) (3) (4)
1 Adoni Cotton Mills, Alur Road, Adoni (Andhra Pradesh) Adoni Cotton Mills Limited, 22, Bell Building, Sir P. M. Road, Bombay- 1. 10,79,000
2 Ahmedabad Jupiter Spinning, Weaving and Manufacturing Mills, Mill No. 1, Dadheechi Road, Ahmedabad (Gujarat) The Ahmedabad Jupiter Spinning, Weaving and Manufacturing Company Limited, Dadheechi Road, Ahmedabad. 1,39,06,000
3 Ahmedabad Jupiter Spinning Weaving and Manufacturing Mills, Mill No. 2, Parel, Bombay- 13 (Maharashtra) 2,35,68,090
4 Ahmedabad New Textile Mills, Outside Raipur Gate, Ahmedabad (Gujara
[See sections 21, 22, 23 and 27]
Order of priorities for the discharge of liabilities in respect of a sick textile undertaking
PART A
Post-take-over management period
Category I.-
(a) Loans advanced by a bank.
(b) Loans advanced by an institution other than a bank.
(c) Any other loan.
(d) Any credit availed of for purpose of trade or manufacturing operations.
Category II.-
(a) Revenue, taxes, cesses, rates or any other dues to the Central Government or a State Government.
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