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NATIONAL COMPANY LIMITED (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980
42 of 1980
19th July, 1980
STATEMENT OF OBJECTS AND REASONS Messrs. National Company Limited, Calcutta, was promoted in 1917 by Andrew Yule and Company Limited. It functioned under the managing agency of the latter till 1959 when the Express Newspapers Groups acquired a controlling interest in the company. The Company, was not being managed in a manner befitting its size. Investigations also revealed gross mismanagement and grave financial irregularities in the working of the Company. The Company had also been incurring cash losses since 1971. The management of the Company was, therefore, taken over by the Central Government under section 18AA of the Industries (Development and Regulation) Act. 1951, in July 1976. , (2) The Company owns the largest jute mill in the country which produces jute goods which are essential to the needs of the economy of the country. It has an installed capacity to produce 21.5 thousand metric tonnes of carpet backing cloth which not only earns valuable foreign exchange for the country but also represents 10 per cent of the total capacity of this fabric in the country. The main problems besetting this Company had been- (i) Inadequate liquidity; (ii) Poor maintenance of plant and machinery; (iii) High interest burden; (iv) High wage bills because of the surplus labour. The Company had a negative net worth and. on its one, it was not in a position to raise funds required to keep the mill going. (3) Closure of the mill would have thrown out of employment a labour force of 12.000 besides adversely affecting the production of the jute goods. Government and public financial institutions had, therefore, to invest more than Rs. 13 crores in the Company. Further the plant and machinery of the Company had to be modernised and renovated and this involved an additional investment to the tune of about Rs. 10 crores. It was felt that further investment of public funds should be preceded by some arrangement which ensured continuity of the management of the Company with the Government. It was, therefore, decided to acquire the undertakings of this Company. Accordingly, the National Company Limited (Acquisition and Transfer of Undertakings) Ordinance, 1980, was promulgated by the President on the 27th April, 1980. (4) The Ordinance, apart from providing for the acquisition and transfer of the undertakings of the National Company Limited provided for payment of an amount for such acquisition, management of the undertakings of the company after their acquisition) appointment of a Commissioner of Payments for the purpose of disbursing the amount payable to the Company arid for other incidental and consequential matters. (5) The Bill seeks to replace the aforesaid Ordinance-S.O.R.-Gaz. of Ind.,26-8-1980, Pt. II.S. 2, Ext., p. 643.
An Act to provide for the acquisition and transfer of the undertakings of Messrs. National Company Limited with a view to securing the proper management of such undertakings so as to subserve the interests of the general public by ensuring the continued manufacture, production and distribution of articles made of jute, which are essential to the needs of the economy of the country and for matters connected therewith or incidental thereto. WHEREAS Messrs. National Company Limited had been engaged in the manufacture and production of articles mentioned in the First Schedule to the Industries (Development and Regulation) Act, 1951, namely, textiles made wholly or in part of jute; AND WHEREAS the management of the undertakings of Messrs. National Company Limited was taken over by the Central Government under section 18AA of the Industries (Development and Regulation) Act, 1951; AND WHEREAS it is necessary to acquire the undertakings of Messrs. National Company Limited to ensure that the interests of the general public are served by the continuance by the undertakings of the Company, of the manufacture, production and distribution of the aforesaid articles, which are essential to the needs of the economy of the country; BE it enacted by Parliament in the Thirty-first Year of the Republic of India as follows :-
SECTION 01: SHORT TITLE AND COMMENCEMENT
(1) This Act may be called the National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980.
(2) The provisions of sections 29and30-shall come into force at once and the remaining provisions of this Act shall be deemed to have come into force on the 27th day of April, 1980.
SECTION 02: DEFINITIONS
- In this Act, unless the context otherwise requires,-
(a) "appointed day" means the 27th day of April, 1980.
(b) "Commissioner" means the Commissioner of Payments appointed under section 15-;
(c) "Company" means Messrs. National Company Limited, a company within the meaning of the Companies Act, 1956, and having its registered office at 18A, Brabourne Road Calcutta-700001, in the State of West Bengal;
(d) "existing Government company" means a Government company which is carrying on business on the appointed day;
(e) "new Government company" means a Government company formed and registered on or after the appointed day;
(f) "notification" means a notification published in the Official Gazette:
(g) "prescribed" means prescribed by rules made under this Act:
(h) "specified date", in relation to any provision of this Act, means such date as the Central Government may, by notification, specify for the purposes of that provision and different dates may be specified for different provisions of this Act:
(i) words and expressions used herein and not defined but defined in the Companies Act, 1956, have the meanings respectively assigned to them in that Act.
SECTION 03: TRANSFER TO, AND VESTING IN, THE CENTRAL GOVERNMENT OF THE UNDERTAKINGS OF THE COMPANY
On the appointed day, the undertakings of the Company, and the right, title and interest of the Company in relation to its undertakings, shall, by virtue of this Act, stand transferred to, and vest in the Central Government.
SECTION 04: GENERAL EFFECT OF VESTING
(1) The undertakings of the Company 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, 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 Company, whether within or outside India, and all books of account, registers and other documents of whatever nature relating thereto.
(2) All properties as aforesaid which have vested in the Central Government under section 3-, shall by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting them, and any attachment, injunction, decree or order of any Court or other authority restricting the use of such properties in any manner or appointing any receiver in respect of the whole or any part of such properties shall be deemed to have been withdrawn.
(3) 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.
(4) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in sub-section (3) 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 section 8-and also out of the amounts determined under section 9-, but no such mortgage, charge, lien or other interest shall be enforceable against any property which has vested in the Central Government.
(5) Any licence or other instrument granted to the Company in relation to any undertaking which has vested in the Central Government under section 3-at any time before the appointed day and in force immediately before the appointed day shall continue to be in force on and after such day in accordance with its tenor in relation to and for the purposes of such undertaking, and on and from the date of vesting of such undertaking, under section 5-, in an existing Government company. or under section 6-, in a new Government company, the existing, or new. Government company, as the case may be, shall be deemed to be substituted in such licence or other instrument as if such licence or other instrument had been granted to such existing, or new. Government company and such existing, or new. Government company shall hold it for the remainder of the period for which the Company would have held it under the terms thereof.
(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 Company, is pending, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertakings of the Company, or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted or enforced by or against the central Government, or where the undertakings of the Company are directed under section 5-, to vest in an existing Government company or become transferred by virtue of the provisions of section 6-to a new Government company, by or against such Government company.
SECTION 05: POWER OF CENTRAL GOVERNMENT TO DIRECT VESTING OF THE UNDERTAKINGS OF THE COMPANY IN AN EXISTING GOVERNMENT COMPANY
(1) Notwithstanding anything contained in sections 3-and4-, and subject to the provisions of section 6-, the Central Government may, if it is satisfied that an existing Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct, by notification, that the undertakings of the Company, and the right, title and interest of the Company in relation to its undertakings which, have vested in the Central Government under section 3-, shall, instead of continuing to vest in the Central Government, vest in that existing Government company either on the date of publication of the notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.
(2) Where the right, title and interest of the Company in relation to its undertakings vest, under sub-section (1), in an existing Government company that Government company shall, on and from the date of such vesting be deemed to have become, and until the transfer of the undertakings by virtue of the provisions of section 6-, to a new Government company, be deemed to be, the owner in relation to such undertakings and the rights and liabilities of the Central Government in relation to such undertakings shall, on and from the date of such vesting, be deemed to have become, and until the date of such transfer, be deemed to be, the rights and abilities, respectively, of that existing Government company.
SECTION 06: TRANSFER OF UNDERTAKINGS OF THE COMPANY FROM AN EXISTING GOVERNMENT COMPANY TO A NEW GOVERNMENT COMPANY
(1) Notwithstanding anything contained in sections 3-and4-, where the undertakings of the Company have been directed, under sub-section (1) of section 5-, to vest in an existing Government company, the Central Government may, if it is satisfied that a new Government company is willing to comply, or has complied with such terms and conditions as that Government may think fit to impose, declare, by notification, that the undertakings of the Company be transferred to that new Government company; and on the issue of such declaration, the right, 'tide and interest of the Company in relation to its undertakings, which had been directed under sub-section (1) of section 5 -to vest in an existing Government company, shall, instead of continuing to vest in that existing Government company vest in that new Government company with effect from the date on which such declaration is made.
(2) Where the right, title and interest of the existing Government company in relation to the undertakings of the Company vest under subsection (1) in a new Government company, that new Government company shall, on and, from the date of such vesting, be deemed to have become the owner in relation to such undertakings and the rights and liabilities of the existing Government company in relation to such undertakings shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of that new Government company.
SECTION 07: COMPANY TO BE LIABLE FOR CERTAIN PRIOR LIABILITIES
(1) Every liability of the Company in respect of any period prior to the appointed day, shall be the liability of the Company and shall be enforceable against it, and not against the Central Government, or where the undertakings of the Company vest in an existing, or a new. Government company, against such Government company.
(2) For the removal of doubts, it is hereby declared that-
(a) save as otherwise expressly provided in this Act, no liability of the Company in relation to its undertakings, in respect of any period prior to the appointed day, shall be enforceable against the Central Government, or where the undertakings of the Company vest in an existing, or a new. Government company, against such Government company;
(b) no award, decree or order of any court, tribunal or other authority in relation to the undertakings of the Company passed after the appointed day in respect of any matter, claim or dispute, which arose before that day, shall be enforceable against the Central Government, or where the undertakings of the Company vest in an existing, or a new, Government company, against such Government company;
(c) no liability incurred by the Company 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 where the undertakings of the Company vest in an existing, or a new, Government company, against such Government company.
SECTION 08: PAYMENT OF AMOUNT
(1) For the transfer to, and vesting in, the Central Government, under section 3-, of the undertakings of the Company, and the right, title and interest of the Company in relation to such undertakings, there shall be given be the Central Government to the Company in cash and in the manner specified in Chapter VI, an amount of rupees ten crores and four lakhs.
(2) For the reval of doubts, it is hereby declared that the liabilities of the Company, in relation to its undertakings, shall be met, in accordance with the rights and interests of the creditors. of the Company, from the amount due to the Company under sub-section (1).
SECTION 09: PAYMENT OF FURTHER AMOUNT
(1) For the deprivation of the Company of the management of the undertakings owned by it, there shall be given, by the Central Government, to the Company, in addition to the amount specified in section 8-, an amount computed at the rate of ten thousand rupees per annum for the period commencing on the date on which the management of the undertakings of the Company was taken over in pursuance of the order made by the Central Government under section 18AA of the Industries (Development and Regulation) Act, 1951-, and ending on the appointed day.
(2) The amount specified in section 8-, and the amount computed in accordance with the provisions of sub-section (1), shall carry simple interest at the rate of four per cent. per annum for the period commencing on the appointed day and ending on the date on which payment of such amount is made by the Central Government to the Commissioner.
(3) The amounts determined in accordance with the provisions of subsections (1) and (2) shall be given to the Company in addition to the amount specified in section 8-,
SECTION 10: MANAGEMENT, ETC., OF THE UNDERTAKINGS OF THE COMPANY
(1) The general superintendence, direction, control and management of the affairs and business of the undertakings owned by the Company, the right, title and interest in relation to which have vested in the Central Government under section 3-, shall-
(a) where a direction has been made by the Central Government under sub-section (1) of section 5-, vest, on and from the date specified in such direction, in the existing Government company specified therein; or
(b) where a declaration has been made under sub-section (1) of section 6-, vest,
on and from the date of such declaration, in the new Government company specified therein; or
(c) where no direction referred to in clause (a) or declaration referred to in clause (b) has been made, vest, on and from the appointed day, in one or more Custodians appointed by the Central Government under sub-section (2) and thereupon the existing, or new. Government company or the Custodian or Custodians so appointed, as the case may be. shall be entitled to exercise, to the exclusion of all other persons, all such powers and do all such things as the company is authorised to exercise and do in relation to the undertakings owned by it.
(2) The Central Government may appoint one or more individuals or a Government company as the Custodian or Custodians of the undertakings of the Company in relation to which no direction has been made by it under sub-section (1) of section 5-or no declaration has been made by it under sub-section (1) of section 6-, and the Custodian or Custodians so appointed shall receive, from the funds of the undertakings, such remuneration as may be specified by the Central Government.
(3) The Custodian or Custodians of the undertakings of the Company shall maintain an account of the undertakings of the Company in such form and manner and under such conditions as may be prescribed, and the provisions of the Companies Act, 1956, shall apply to the audit of the accounts so maintained as they apply to the audit of the accounts of a company
SECTION 11: DUTY OF PERSONS IN CHARGE OF MANAGEMENT OF THE UNDERTAKINGS OF THE COMPANY TO DELIVER ALL ASSETS, ETC.
(1) On the vesting of the management of the undertakings of the Company in an existing, or a new. Government company or on the appointment of a Custodian or Custodians all persons in charge of the management of the undertakings of the Company immediately before such vesting or appointment shall be bound to deliver to such Government company, or the Custodian or Custodians, as the case may be, all assets, books of account, registers and other documents in their custody relating to the undertakings of the Company.
(2) The Central Government may issue such directions as it may deem desirable in the circumstances of the case to the existing, or new. Government company or the Custodian or Custodians, and such Government company, Custodian or Custodians may also, if it is considered necessary so to do, apply to the Central Government at any time for instructions as to the manner in which the management of the undertakings of the Company shall be conducted or in relation to any other matter arising in the course of such management.
SECTION 12: DUTY OF PERSONS TO ACCOUNT FOR ASSETS, ETC., IN THEIR POSSESSION
(1) Any person who has on the appointed day, in his possession or under his control, any assets, books, documents or other papers relating to any undertaking owned by the Company, which has vested in the Central Government or in existing, or a new. Government company under this Act, and which belongs to the Company, or would have so belonged, if the undertakings owned by the Company had not vested in the Central Government or such Government company, shall be liable to account for the said assets, books, documents and other papers to the Central Government or the Government company and shall deliver them up to the Central Government or such Government company or to such person or body of persons as the Central Government or the Government company may specify in this behalf.
(2) The Central Government may take or cause to be taken all necessary steps for securing possession of the undertakings of the Company which have vested in it under section 3-.
(3) The Company shall, within such period as the Central Government may allow in this behalf, furnish to that Government a- complete inventory of all its property and assets, as on the appointed day, pertaining to the undertakings which have vested in the Central Government under section 3-, and, for this purpose, the Central Government or the existing, or new. Government company shall afford to the Company all reasonable facilities.
SECTION 13: CONTINUANCE OF EMPLOYEES
(1) Every employee of the Company in connection with any undertaking owned by it, shall become, on and from the appointed day, an employee of the Central Government, and where such undertaking is vested in an existing, or a new, Government company under this Act, become, on and from the date of such vesting in such Government company, an employee thereof and shall hold office or service under the Central Government or the existing, or new, Government company, as the case may be, with the same rights and privileges as to pension, gratuity and other matters as would have been admissible to him if there had been no such vesting and shall continue to do so unless and until his employment under the Central Government or the existing or new Government company, as the case may be, is duly terminated or until his remuneration and other conditions of service are duly altered by the Central Government or the existing, or new Government company, as the case may be.
(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or in any other law for the time being in force, the transfer of the services of any officer or other person employed in any undertakings owned by the Company to the Central Government or the existing, or new, Government company 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.
SECTION 14: PROVIDENT FUND AND OTHER FUNDS
(1) Where the Company has established a provident fund, superannuation fund, welfare fund. or other fund for the benefit of persons employed in any of the undertakings owned by it, the monies relatable to the employees, whose services have become transferred by or under this Act to the Central Government or an existing, or a new. Government company shall out of the monies standing on the appointed day, to the credt of such provident fund, superannuation fund, welfare fund or other fund, stand transferred to, and shall vest in, the Central Government or the Government company, as the case may be.
(2) The monies which stand transferred under sub-section (1) to the Central Government or the existing, or new. Government company, as the case may be, shall be dealt with by that Government or the Government company in such manner as may be prescribed.
SECTION 15: APPOINTMENT OF COMMISSIONER OF PAYMENTS
(1) The Central Government shall, for the purpose of disbursing the amounts payable under sections 8-and9-to the Company by notification, appoint a Commissioner of Payments.
(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 of the powers exercisable by the Commissioner 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.
SECTION 16: PAYMENT BY THE CENTRAL GOVERNMENT TO THE COMMISSIONER
(1) The Central Government shall, within thirty days from the specified date, pay, in cash, to the Commissioner, for payment to the Company-
(a) an amount equal to that specified in section 8-;
(b) a further amount equal to the amount payable to the Company under section 9-.
(2) 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 and the said deposit account shall be operated by the Commissioner.
(3) Records shall be maintained by the Commissioner in respect of the undertakings of the Company in relation to which payment has been made to him under this Act.
(4) Interest accruing on the amounts standing to the credit of the deposit account referred to in sub-section (2) shall enure to the benefit of the Company.
SECTION 17: CERTAIN POWERS OF THE CENTRAL GOVERNMENT OR GOVERNMENT COMPANY
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