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INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951
65 of 1951
An Act to provide for the development and regulation of certain industries BE it enacted by Parliament as follows :-
SECTION 01: 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 India1[* * *].
(3) It shall come into force on such date1as the Central Government may, by notification in the Official Gazette, appoint.
SECTION 02: DECLARATION AS TO EXPEDIENCY OF CONTROL BY THE UNION
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.
SECTION 03: DEFINITIONS
In this Act, unless the context otherwise requires,-
(a) "Advisory Council" means the Central Advisory Council established undersection 5-;
3[(aa)"ancillary industrial undertaking" means an industrial undertaking which, in accordance with the proviso to sub-section (1) ofsection 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;]
4[(ab)] "current assets" means bank balances and cash and includes such other assets or reserves as are expected to be realised in cash or sold orconsumed 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;
7[(ac)] "current 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 undersection 18FB-;
(b) "Development Council" means a Development Council established undersection 6-;
6(bb) "existing 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(a) in the case of an industrial undertaking pertaining to any of the industries specified in the First Schedule as originally enacted, an industrial undertaking which was in existence on the commence- ment of this Act or for the establishment of which effective steps had been taken before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;]
7[(cc)"High Court" means the High Court having jurisdiction in relation to the place at which the registered office of a company is situate;]
(d) "industrial undertaking" means any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government;
8[(dd) "new 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, 1940,9or 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 bear- ing that mark or which is the subject of the 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 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) "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;
10(j) "small scale industrial undertaking" means an industrial undertaking which, in accordance with the requirements specified under sub-section (1) of section IIB, is entitled to be regarded as a small scale industrial undertaking for the purposes of this Act;]
11[(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 04: SAVING
12[Omitted by the Industries (Development and Regulation) Amendment Act, 1953, w.e.f. 1-10-1953.}
SECTION 05: 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 represent- ing 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 subsection (3);
(b)13[* * *] 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.
SECTION 06: 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 noticed 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.
SECTION 07: 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 accounts 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 accounts 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.
SECTION 08: DISSOLUTION OF DEVELOPMENT COUNCILS
(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.
SECTION 09: 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 13 paise per cent of the value of the goods.
(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.
SECTION 10: REGISTRATION OF EXISTING INDUSTRIAL UNDERTAKINGS
18[(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.
19(3) Where an industrial undertaking is registered under this section, there shall be issued to the owner of the undertaking or the Central
Government, as20the case may be, a certificate of registration20 [containing the productive capacity of the industrial undertaking and such other particulars as may be prescribed.]]
20[(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, shall, if the undertaking falls within such class of undertakings as the Central Govern- ment 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.
4(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 extentof under-utilisation of capacity, if any, during the relevant period due to any cause.]
SECTION 10A: REVOCATION OF REGISTRATION IN CERTAIN CASES
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.]
SECTION 11: LICENSING OF NEW INDUSTRIAL UNDERTAKINGS
(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 undersection 30-.
SECTION 11A: LICENCE FOR PRODUCING OR MANUFACTURING NEW ARTICLES
The owner of an industrial undertaking not being the Central Govern- ment which is registered undersection 10-or in respect of which a licence or permission has been issued undersection 11-shall not produce or manufac- ture any new article linless-
(a) in the case of an industrial undertaking registered undersection 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 undersection 11-, he has had the existing licence or permission amended in the prescribed manner.]
SECTION 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 and so as to be effective in :-
(a) promoting in a harmonious manner the industrial economy of the coun- try 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 under- taking 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 inter - mediates; 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).]
SECTION 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 undersection 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 undersection 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.
24[(3) The provisions of this section shall apply in relation to a licence issued under section 11 A-or where alicence has been amended under that section, to the amendment thereof, as they apply in relation to a licence issued undersection 11-.]
SECTION 13: FURTHER PROVISION FOR LICENSING OF 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 undersection 10-, but which has not been registered within the time fixed for the purpose under that section, carry on the business of that under taking 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 section10A-26[* * *] 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 registered27[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) ofsection 11-and ofsection 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, 'substantial 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.]
SECTION 14: PROCEDURE FOR THE GRANT OF LICENCE OR PERMISSION
Before granting any licence or permission under27[section 11-,section 11 A-, 3[section 13-orsection 29B-]], the Central Government may require such officer or authority as it may appoint for the purpose, to make a full and complete investigations 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.
SECTION 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 under- taking 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 Under-takings, 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 utilized in the industry or the industrial undertaking or undertakings, as the case may be; or
29[(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.
SECTION 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, 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 interest 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 restarting 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 subsection (1), the High Court shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or in any other law for the time being in force, grant the permission prayed for.]
SECTION 16: POWERS OF CENTRAL GOVERNMENT ON COMPLETION OF INVESTIGATION UNDER SECTION 15
(l) lf after making or causing to be made any such investigation as is referred to insection 15-the Central Government is satisfied that actionunder 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.
SECTION 17: SPECIAL PROVISIONS FOR DIRECT CONTROL BY CENTRAL GOVERNMENT IN CERTAIN CASES
30[Omitted by the Amendment Act, 1953, w.e.f. 1-10-1953.]
SECTION 18: POWER OF PERSON OR BODY OF PERSONS APPOINTED UNDER SECTION 15
32[or section 15A ] to call for assistance in any investigation
(1) The person or body of persons appointed to make any investigation undersection 15-32[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).
SECTION 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 ofsection 16-has failed to comply with such directions, or (b) an industrial undertaking in respect of which an investigation has been made undersection 15-(whether or not any directions have been issued to the undertaking in pursuance ofsection 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 :35 [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 exceed2[twelve years]; and where any such direction is issued, a copy there of shall be laid, as soon as may be, before both Houses of Parliament.]
SECTION 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
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