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TEXTILE UNDERTAKINGS (NATIONALISATION) ACT, 1995
39 of 1995
8th September, 1995
An Act to provide for the acquisition and transfer of the textile undertakings, and the right, title and interest of the owners in respect of the textile undertakings, specified in the First Schedule with a view to augmenting the production and distribution of different varieties of cloth and yarn so as to sub-serve the interests of the general Public and for matters connected therewith or incidental thereto, Whereas the textile companies specified in column (3) of the First Schedule have, through their undertakings specified in column (2) of the said Schedule, been engaged in the manufacture and production of different varieties of cloth and yarn; And whereas, pending acquisition, the management of the said textile undertakings was taken over by the Central Government under Section 3 of the Textile Undertakings (Taking Over of Management) Act, 1983 (40 of 1983)or under Section 3 of the Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act, 1976 (98 of 1976), as the case may be; And whereas large sums of money have been invested with a view to making the said textile undertakings viable; And whereas further investment of very large sums of money is necessary for the purpose of securing the optimum utilisation of the available facilities for the manufacture, production and distribution of cloth and yarn by the said textile undertakings of the companies; And whereas such investment is also necessary for securing the continued employment of the workmen employed in the said textile undertakings; And whereas it is necessary in the public interest to acquire the said textile undertakings of the textile companies to ensure that the interest of the general public are served by the continuance by the said undertakings of the companies of the manufacture, production and distribution of different varieties of cloth and yarn which are vital to the needs of the country; Be it enacted by Parliament in the Forty-sixth Year of the Republic of India as follows:-
SECTION 01: SHORT TITLE AND COMMENCEMENT
(1) This Act may be called the Textile Undertakings (Nationalisation) Act, 1995
(2) The provisions of Sections 31-and32-shall come into force at once and the remaining provisions of this Act shall be deemed to have come into force on the 1st day of April, 1994.
SECTION 02: DEFINITIONS
(1) In this Ordinance, unless the context otherwise requires,-
(a) "appointed day'' means the 1st day of April, 1994;
(b) "bank" means-
(i) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955);
(ii) a subsidiary Bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 ( 38 of 1959);
(iii) a corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970)-;
(iv) a corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition, and Transfer of Undertakings), Act, 1980 (40 of 1980)-;
(v) any other bank, being a scheduled bank as defined in clause (e) of Section 2 of the Reserve Bank of India Act, 1934(2 of 1934)-;
(c) "Commissioner" means a Commissioner of Payments appointed under Section 17-;
(d) Custodian" means a Custodian appointed under Section 4 of the Textile Undertakings (Taking Over of
Management) Act, 1983 (40 of 1983)-or under Section 4 of the Laxmirattan and Atherton West Cotton Mills
(Taking Over of Management) Act, 1976 (98 of 1976)-, as the case may be;
(e) "National Textile Corporation" means the National Textile Corporation Limited formed and registered under the Companies Act, 1956(1 of 1956)-;
(f) "notification" means notification published in the Official Gazette;
(g) "owner", when used in relation to a textile undertaking, means any person or firm who or which is, immediately before the appointed day the immediate
(h) proprietor or lesse occupier of the textile undertaking or any part thereof, and in the case of textile company which is being wound up or the business whereof is being carried on by a liquidator or receiver, includes such liquidator or receiver, and also includes any agent or manager of such owner but does not include any person or body of persons authorised under the Textile Undertakings (Taking Over of Management) Act,83 (40 of 1983)-or under the Laxmirattan and Atherton West Cotton Mills.(Taking Over of Management) Act, 1976(98 of 1976)-to take over the management of the whole or any part, of the textile undertaking;
(h) "prescribed" means prescribed by the rules made under this Act; . : .
(i) "specified date" means such date as the Central Government may, for the purpose of any provision of this
Act, by notification, specify; and different dates may be specified for different provision of this Act;
(j) "subsidiary Textile Corporation" means the National Textile Corporation (South Maharashtra) Limited, the
National Textile Corporation (Utter Pradesh) Limited or, any other textile corporation formed by the National
Textile Corporation as its subsidiary;
(k) "textile" includes yarn or fabrics made either wholly partly of cotton, wool, jute, synthetic and artificial (man-made) fibres;
(l) textile company" means a company [being a company us defined in the Companies Act, 1956 (1 of 1956)-] specified in column (3)of the First Schedule as owing the textile undertaking specified in the corresponding entry in column (2) of that Schedule;
(m) "textile undertaking" or "the textile undertaking" means an undertaking, specified in column (2) of the
First Schedule, the management of which was before the appointed day, taken over by the Central Government under the Textile Undertakings (Taking Over of Management) Act. 1983 (40 of 1983)-, or as the case may be under the Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act, 1976 (98 of 1976) -;
(2) Words and expressions used herein and not defined but defined in the Companies Act, 1956(1 of 1956)-, shall have the meanings respectively assigned to them in that Act.
SECTION 03: ACQUISITION OF RIGHTS OF OWNERS AND VOTING OF THE TEXTILE UNDERTAKINGS
(1) On the appointed day, the right, title and interest of the owner in relation to every textile undertaking shall stand transferred to and shall vest absolutely in, the Central Government.
(2) Every textile undertaking which stands vested in the Central Government by virtue of subsection
(1) shall immediately after it has so vested, stand transferred to, and vested in, the National Textile Corporation.
SECTION 04: GENERAL EFFECT OF VESTING
(1) The textile undertakings referred to in Section 3-shall be deemed to include all assets, rights, leaseholds, 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 pertaining to the textile undertakings 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 textile company in relation to the said undertakings, 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) of Section 3-shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of any court or other authority restricting the use of such property in any manner shall be deemed to have been withdrawn.
(3) Where any licence or other instrument in relation to a textile undertaking had been granted at anytime before the appointed day to the owner by the Central Government or a State Government or ally other authority, the National Textile Corporation shall, on and from such date, be deemed to be substituted in Such licence or other instrument in place of the owner referred to therein as if such licence or such other instrument had been granted to it and shall hold such licence or the textile undertaking specified in such other instrument for the remainder of the period for which the owner would have held such licence or the textile undertaking under such other instrument.
(4) Every mortgagee of any property which has vested under this act in the Central Government and every person holding any charge, lien or other interest in, or in relation to, any such property shall give, within such time and in such manner as may be prescribed, an intimation to the Commissioner of such mortgage, charge lien or, other interest.
(5) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in sub-section (2) or any other person holding any charge, lien or other interest in, or in relation to, any such property shall be entitled to claim, in accordance with his rights and interests, payment of the mortgage money or other dues, in whole or in part, out of the amounts specified in relation to such property in the First Schedule, but no such mortgage, charge, lien or other interest shall be enforceable against any property which has vested in the Central Government.
(6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any property which has vested in the Central Government under Section 3-, instituted or preferred by or against the textile company is pending the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the textile undertakings or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted or enforced by or, against the National Textile Corporation
(7) Any person who, on the date on which the Textile Undertakings (Nationalisation) Ordinance,
1995 (Ord. 6 of 1995) was promulgated, was in possession of, or had under his custody or control, the whole or any part of any textile undertaking referred to in Section 3-, 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 deliver forthwith the possession of such undertaking or part and all books of account, registers and all other documents of whatever nature relating to such undertaking or part to the Central Governments or the National Textile Corporation, as the case may be, may specify in this behalf.
SECTION 05: OWNER TO BE LIABLE FOR CERTAIN PRIOR LIABILITIES
(1) Every liability, other than the liability specified in sub-section (2), of the owner of a textile undertaking, in relation to the textile undertakings 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 textile undertaking (together with interest due thereon) after the management of such undertaking had been taken over by the Central Government under Section 3 of the Textile Undertakings (Taking Over of Management) Act, 1983 (40 of 1983)-, or as the case may be, under section 3 of the Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act,1976 (98 of 1976)-;
(b) amounts advanced to a textile undertaking [after the management of such undertaking had been taken over by the Central Government under section 3 of the Textile Undertakings (Taking Over of Management) Act, 1983 (40 of 1983)-, or as the case may be, under section 3 of the Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act, 1976 (98 of 1976)-], by the National Textile Corporation or by a state textile corporation, or by both, together with interest due thereon;
(c) wages, salaries and. other dues of employees of the textile undertaking, in respect of any period after, the management of such undertaking had been taken over by the Central Government, shall, on and from the appointed day, be the liability of the Central Government and shall be discharged for and on behalf of that Government, by the National Textile Corporation as and when repayment of such loans or amounts becomes due or as and when such wages, salaries or other dues become due and payable.
(3) For the removal of doubts, it is hereby declared that,-
(a) save as otherwise expressly provided in this section or in any other section of this Act, no liability, other than the liability specified in sub-section (2), in relation to a textile undertaking, in respect of any period prior to the appointed day, shall be enforceable against the Central Government or the National Textile Corporation;
(b) no award, decree or order of any court, tribunal or other authority in relation to any textile undertaking; passed after the appointed day, in respect of any matter, claim or dispute in relation to any matter not referred to in sub-section (2), which arose before that day shall be enforceable against: the Central Government or the National Textile Corporation;
(c) no liability of any textile undertaking or any owner thereof, in relation to any textile undertaking before the appointed day, for the contravention of any provision of law for the time being in force, shall be enforceable against the Central Government or the National Textile Corporation;
SECTION 06: TRANSFER OF ANY TEXTILE UNDERTAKING OR PART THEREOF TO A SUBSIDIARY TEXTILE CORPORATION
(1) The National Textile Corporation may, by order in writing, transfer any textile undertaking specified at serial numbers 1 to 13 in the First Schedule or part of any such textile undertaking to the National Textile Corporation (South. Maharashtra) Limited and any textile undertaking specified at serial numbers 14 and 15 in the First Schedule or part of any such textile undertaking to the National Textile Corporation (Uttar Pradesh) Limited, as the case may be, or to any other subsidiary textile corporation and any such transfer shall be subject to such terms and conditions as may be specified in the said order.
(2) 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 for which the National Textile Corporation would have held such licence or other instrument.
(3) On the transfer to a subsidiary textile corporation of any textile undertaking or any part thereof, the liabilities of the National Textile Corporation, referred to in sub-section (2) of Section 5-, shall, in so far as they relate to the textile undertaking or part thereof so transferred to the subsidiary textile corporation, become, on and from the date of such transfer, the liabilities of the subsidiary textile corporation and shall be discharged by the subsidiary textile corporation as and when any such liability is required to be discharged,
(4) Save as otherwise expressly provided in this Act, references in this act to the National Textile
Corporation shall, in respect of any textile undertaking or any part thereof which is transferred to a subsidiary textile corporation, be construed as references to the subsidiary textile corporation.
SECTION 07: SHARES TO BE ISSUED BY THE NATIONAL TEXTILE CORPORATION FOR THE VALUE OF THE ASSETS TRANSFERRED TO IT BY THE CENTRAL GOVERNMENT
(1) An amount equal to the value of the assets of a textile undertaking transferred to, and vested in, the National Textile Corporation under sub-section (2) of Section 3-, shall be deemed to be 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 against the 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 it under sub-section (1) having the face value equal to the amount to the extent to which the liability has been so taken over by the National Textile Corporation and thereupon the share capital of the National Textile Corporation shall, to the extent of the face value of the shares so surrendered, stand reduced.
SECTION 08: PAYMENT OF AMOUNT TO OWNERS OF TEXTILE UNDERTAKING
The owner of every 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 textile undertaking and. the right, title and interest of the owner in relation to such textile undertaking, an amount equal to the amount specified against it in the corresponding entry in column (4) of the First Schedule.
SECTION 09: PAYMENT OF FURTHER AMOUNT
(1) In consideration of the retrospective operation of the provisions of Sections 3-,4-and5-, there shall be given, in cash by the Central Government, to the owner of every 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 5 of the Textile Undertakings (Taking Over of Management) Act, 1983 (40 of 1983)-, or as the case may be, as specified in Section 5 of the Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act; 1976 (98 of 1976)-for the period commencing on the appointed day and ending on the date on which the Textile Undertakings (Nationalisation) Ordinance, 1995 (Ord. 6 of 1995) was promulgated.
(2) In addition to the amount referred to in Sections, there shall be given by the Central Government, in cash, to the owner of every 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 appointed day and ending of the date on which payment of such amount is made by the Central Government to the Commissioner.
(3) The amount representing interest calculated at the rate specified in sub-section (2) shall be given in addition to the amount specified in the First Schedule.
(4) For the removal of doubts, it is hereby declared that the liabilities of the owners in relation to the textile undertakings which have vested in the Central Government under section 3-shall be discharged from the amount referred to in the First Schedule and also from the amounts determined under sub-sections (1) and (2) in accordance with the rights and interests of the creditors of the owner.
SECTION 10: MANAGEMENT, ETC. OF TEXTILE UNDERTAKINGS
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 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 textile undertaking is authorised to exercise and do.
SECTION 11: SPECIAL PROVISION FOR DISPOSAL OF ASSETS OF THE 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 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 textile undertakings: Provided that the proceeds of no such transfer, mortgage, sale of disposal of assets shall be utilized for any purpose other than the purpose for which the sanction of the Central Government has been obtained.
SECTION 12: DUTY OF PERSONS IN CHARGE OF MANAGEMENT OF TEXTILE UNDERTAKINGS TO DELIVER ALL ASSETS ETC
On the vesting of the management of a textile undertaking in the National Textile Corporation, all persons in charge of the management of such 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 textile undertaking.
SECTION 13: ACCOUNTS
The National Textile Corporation shall maintain 'the accounts of the textile undertakings in accordance with the provisions of the Companies Act, 1956 (1 of 1956)-
SECTION 14: EMPLOYMENT OF CERTAIN EMPLOYEES TO CONTINUE
(1) Every person who is a workman within the meaning of the Industrial Disputes Act, 1947 (14 of 1947)-, and has been, immediately before the appointed day, in the employment of a 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 Cooperation 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 textile undertaking had not been transferred to, and vested in, the National Textile Corporation, arid 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 Industrial Disputes Act, 1947(14 of 1947)-, and who has been, immediately before the appointed day, in the employment of a textile undertaking shall, in so far as such person is employed in connection with the textile undertaking which has vested in the National Textile Corporation, become, as from the appointed day, an employee of the National Textile Corporation and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same under the textile undertaking it had not 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.
(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) -, or in any other law for the time being in force the transfer of the services of any officer or other employee of textile undertaking to the National Textile Corporation shall not entitle such officer or other employee to any compensation under this Act or any other law for the time being in force and no, such claim shall be entertained by any court, tribunal or other authority.
(4) Where, under the terms of any contract of service or otherwise, any person whose services become terminated or whose services become transferred to the National Textile Corporation by reason of the provisions of this Act is entitled to any arrears of salary or wages or any payment for any leave not availed of or other payment, not being payment by way of gratuity or pension, such person may, except to the extent such liability has been taken over by the Central Government under section 5-, enforce his claim against the owner of the textile undertaking but not against the Central Government or the National Textile Corporation.
SECTION 15: PROVIDENT AND OTHER FUNDS
(1) Where the owner of a. textile undertaking has established a provident, fund, superannuation, welfare or other fund for the benefit of the persons employed in such 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.
SECTION 16: TRANSFER OF EMPLOYEES TO A SUBSIDIARY TEXTILE CORPORATION
Where any 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-and15-shall apply to such employee as they apply to an employee of the National Textile Corporation as if references in the said sections to the National Textile Corporation were references to the subsidiary textile corporation.
SECTION 17: APPOINTMENT OF COMMISSIONERS OF PAYMENTS
(1) For the purpose of disbursing the amount payable to the owner of each 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.
(3) Any person authorised by the Commissioner to exercise any powers may exercise those powers in the same manner and with the same effect as if they have been conferred on that person directly by this Act and not by way of authorisation.
(4) The salaries and allowances of the Commissioner and other persons appointed under this section shall be defrayed out of the Consolidated Fund of India.
(5) References in this Act to the Commissioner shall, where more than one Commissioner has been appointed, be construed as references to the Commissioner in relation to the textile undertaking within the local limits of the jurisdiction specified under clause (b) of sub-section (1).
SECTION 18: PAYMENT BY THE CENTRAL GOVERNMENT TO THE COMMISSIONER
(1) The Central Government shall, within fifty days from the specified date, pay in cash to the Commissioner, for payment to the owner of a textile undertaking, an amount equal to the amount specified against the textile undertaking in the First Schedule and shall also pay to the Commissioner such sums as .may be due to the owner of a textile undertaking under sub-sections
(1) and (2) of Section 9-.
(2) In relation to the textile undertakings, the management of which was taken over by the Central Government under the Textile Undertakings (Taking Over of Management) Act, 1983 (40 of 1983)-, there shall be paid by the Central Government [in addition to the amount referred to in subsection (1)], to the Commissioner, in cash, such amount payable under section 5-of that Act as remains unpaid in relation to the period commencing on the date on which such management was taken over by the Central Government and ending on the appointed day.
(3) In relation to the textile undertakings, the management of which was taken over by the Central
Government under the Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act, 1976(98 of 1976)-, there shall be paid by the, Central Government [in addition to the amount referred to in sub-section (1)], to the Commissioner, in cash, such amount payable under section 5-of that Act as remains unpaid in relation to the period commencing on the date on which such management was taken over by the Central Government and ending on the appointed day.
(4) A deposit account shall be opened, by the Central Government, in favour of the Commissioner, in the Public Account of India, and every amount paid under this Act to the Commissioner shall be deposited by him to the credit of the said deposit account in the Public Account of India, and thereafter the said deposit account shall be operated by the Commissioner.
(5) Separate records shall be maintained by the Commissioner in respect of each textile undertaking in relation to which payments have been made to him under this Act.
(6) Interest accruing on the amounts standing to the credit of the deposit account referred to in sub-section (4) shall inure to the benefit of the owners of the textile undertakings.
SECTION 19: CERTAIN POWERS OF THE NATIONAL TEXTILE CORPORATION
(1) The National Textile Corporation shall be entitled to receive, up to the specified date, to the exclusion of all other persons, any money due to the 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 Textile Undertakings (Nationalisation) Ordinance, 1995 (Ord. 6 of 1995) was promulgated for discharging any liability of the owner of 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 provided in this Act, the liabilities in relation to a textile undertaking in respect of any period prior to .the appointed day which have not been discharged by the Custodian shall be the liabilities of the owner of that textile undertaking.
SECTION 20: CLAIMS TO BE MADE TO THE COMMISSIONER
Every person having a claim against the owner of a 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.
SECTION 21: PRIORITY OF CLAIMS
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 shall have precedence over all other categories and Category II shall 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 a liability with regard to a matter specified in a lower category shall arise only if a surplus is left after meeting all the liabilities specified in the immediately higher category.
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