THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 1* ACT NO. 65 OF 1951 [31st October, 1951.]

An Act to provide for the development and regulation of certain industries. BE it enacted by Parliament as follows:--

1. Short title, extent and commencement. (1) This Act may be called the Industries (Development and Regulation) Act, 1951. (2) It extends to the whole of India 2***. (3) It shall come into force on such date 3* as the Central Government may, by notification in the Official Gazette, appoint.

2. 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.

3. Definitions. In this Act, unless the context otherwise requires,-- (a) "Advisory Council" means the Central Advisory Council established under section 5; 4*[(aa) "ancillary industrial undertaking" means an industrial undertaking which, in accordance with the proviso to sub-section (1) of section 11B and the requirements specified under that sub-section, is entitled to be regarded as an ancillary industrial undertaking for the purposes of this Act;] 5*[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 or consumed within a period of not more than twelve months in the ordinary course of business, such as, ---------------------------------------------------------------------- 1. This Act has been extended to Goa, Daman and Diu (with modifications) by Reg. 12 of 1962, s. 3 and Sch., to Dadra and Nagar Haveli (w.e.f. 1-7-1965) by Reg. 6 of 1963, s. 2 and Sch. I and to Pondicherry (w.e.f. 1-10-1963) by Reg. 7 of 1963, s. 3 and Sch. I. Extended to and brought into force in the State of Sikkim w.e.f. 5-3-1983: vide Notifn. No. S.O. 163(E), dated 2-3-1983 (with modifications) 2. The words "except the State of Jammu and Kashmir" omitted by Act 51 of 1961, s. 2. 3. 8th May, 1952, vide Notification No. S.R.O. 811, dated the 8th May, 1952, see Gazette of India, Extraordinary, Pt. II, Sec. 3, p. 539. 15th February, 1962, in respect of the State of Jammu and Kashmir; vide Notification No. S.O. 458'IDRA'1'1'62, dated 7th February, 1962, see Gazette of India, Extraordinary, Pt. II. Sec. 3(ii), p. 385. 4. Re-lettered and ins. by Act 4 of 1984, s. 2 (w.e.f. 12-1-1984) 5. Ins. by Act 72 of 1971, s. 2 (w.e.f. 1-11-1971). 94 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; 1*[(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 under section 18FB;] (b) "Development Council" means a Development Council established under section 6; 2*[(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 commencement of this Act or for the establishment of which effective steps had been taken before such commencement, and (b) in the case of an industrial undertaking pertaining to any of the industries added to the First Schedule by an amendment thereof, an industrial undertaking which is in existence on the coming into force of such amendment or for the establishment of which effective steps had been taken before the coming into force of such amendment;]

(c) "factory" means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on-- (i) with the aid of power, provided that fifty or more workers are working or were working thereon on any day of the preceding twelve months; or (ii) without the aid of power, provided that one hundred or more workers are working or were working thereon on any day of the preceding twelve month and provided further that in no part of such premises any manufacturing process is being carried on with the aid of power; 3*[(cc) "High Court" means the High Court having jurisdiction in relation to the place at which the registered office of a company is situate;] ---------------------------------------------------------------------- 1. Re-lettered by Act 4 of 1984, s. 2 (w.e.f. 12-1-1984) 2. Ins. by Act 26 of 1953, s. 2. 3. Ins. by Act 72 of 1971, s. 2. (w.e.f. 1-11-1971). 95 (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;

1*[(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 2* (5 of 1940), or which is the subject of a patent, if at the date of registration or issue of the licence or permission, as the case may be, the industrial undertaking was not manufacturing or producing such article bearing that mark or which is the subject of that patent.]

(e) "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. 3*[(j) "small scale industrial undertaking" means an industrial undertaking which, in accordance with the requirements specified under sub-section (1) of section 11B, is entitled to be regarded as a small scale industrial undertaking for the purposes of this Act;] 4*[3*[(k)] words and expressions used herein but not defined in this Act and defined in the Companies Act, 1956 (1 of 1956), have the meanings respectively assigned to them in that Act.]. 4. Saving. 4. [Saving.] Rep. by the Industries (Development and Regulation) Amendment Act, 1953 (26 of 1953), s. 3. ---------------------------------------------------------------------- 1. Ins. by Act 26 of 1953, s. 2. 2. See now the Trade and Merchandise Marks Act, 1958 (43 of 1958). 3. Re-lettered and ins. by Act 4 of 1984, s. 2 (w.e.f. 12-1-1984). 4. Ins. by Act 72 of 1971, s. 2 (w.e.f. 1-11-1971).

CHAP THE CENTRAL ADVISORY COUNCIL AND DEVELOPMENT COUNCILS

CHAPTER II THE CENTRAL ADVISORY COUNCIL AND DEVELOPMENT COUNCILS

5. Establishment and constitution of Central Advisory Council and itsfunctions.

5. Establishment and constitution of Central Advisory Council and its functions. (1) For the purpose of advising it on matters concerning the development and regulation of scheduled industries, the Central Government may, by notified order, establish a Council to be called the Central Advisory Council. (2) The Advisory Council shall consist of a Chairman and such other members, not exceeding thirty in number, all of whom shall be appointed by the Central Government from among persons who are in its opinion capable of representing the interests of-- (a) owners of industrial undertakings in scheduled industries; (b) persons employed in industrial undertakings in scheduled industries; (c) consumers of goods manufactured or produced by scheduled industries; (d) such other class of persons including primary producers, as in the opinion of the Central Government, ought to be represented on the Advisory Council. (3) The term of office of, the procedure to be followed in the discharge of their functions by, and the manner of filling casual vacancies among members of the Advisory Council, shall be such as may be prescribed. (4) The Central Government shall consult the Advisory Council in regard to-- (a) the making of any rules, other than the first rules to be made under sub-section (3); 1* * * * * and may consult the Advisory Council in regard to any other matter connected with the administration of this Act in respect of which the Central Government may consider it necessary to obtain the advice of the Advisory Council.

6. Establishment and constitution of Development Councils and theirfunctions.

6. Establishment and constitution of Development Councils and their functions. (1) The Central Government may, by notified order, establish for any scheduled industry or group of scheduled industries, a body of persons to be called a Development Council which shall consist of members who in the opinion of the Central Government are-- (a) persons capable of representing the interest of owners of industrial undertakings in the scheduled industry or group of scheduled industries; ---------------------------------------------------------------------- 1. Cl. (b) omitted by Act 26 of 1953, s. 4. (b) persons having special knowledge of matters relating to the technical or other aspects of the scheduled industry or group of scheduled industries; (c) persons capable of representing the interests of persons employed in industrial undertakings in the scheduled industry or group of scheduled industries; (d) persons not belonging to any of the aforesaid categories, who are capable of representing the interests of consumers of goods manufactured or produced by the scheduled industry or group of scheduled industries. (2) The number and the term of office of, and the procedure to be followed in the discharge of their functions by, and the manner of filling casual vacancies among members of a Development Council shall be such as may be prescribed. (3) Every Development Council shall be, by virtue of this Act, a body corporate by such name as may be specified in the notified order establishing it, and may hold and transfer property and shall by the said name sue and be sued. (4) A Development Council shall perform such functions of a kind specified in the Second Schedule as may be assigned to it by the Central Government and for whose exercise by the Development Council it appears to the Central Government expedient to provide in order to increase the efficiency or productivity in the scheduled industry or group of scheduled industries for which the Development Council is established, to improve or develop the service that such industry or group of industries renders or could render to the community, or to enable such industry or group of industries to render such service more economically. (5) A Development Council shall also perform such other functions as it may be required to perform by or under any other provision of this Act.

7. Reports and accounts of Development Councils. (1) A Development Council shall prepare and transmit to the Central Government and the Advisory Council, annually, a report setting out what has been done in the discharge of its functions during the financial year last completed. (2) The report shall include a statement of the 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 account shall be in such form as may be prescribed, being a form which shall conform to the best commercial standards, and the statement shall show the total of remuneration and allowances paid during the year to members and officers of the Council. (4) A copy of each such report of a Development Council, or made by the auditors on its accounts, shall be laid before Parliament by the Central Government.

8. Dissolution of Development 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.

9. Imposition of cess on scheduled industries in certain cases.

9. Imposition of cess on scheduled industries in certain cases. (1) There may be levied and collected as a cess for the purposes of this Act on all goods manufactured or produced in any such 98 scheduled industry as may be specified in this behalf by the Central Government by notified order a duty of excise at such rate as may be specified in the notified order, and different rates may be specified for different goods or different classes of goods: Provided that no such rate shall in any case exceed two annas per cent, of the value of the goods. Explanation.--In this sub-section, the expression "value" in relation to any goods shall be deemed to be the wholesale cash price for which such goods of the like kind and quality are sold or are capable of being sold for delivery at the place of manufacture and at the time of their removal therefrom, without any abatement or deduction whatever except trade discount and the amount of duty then payable. (2) The cess shall be payable at such intervals, within such time and in such manner as may be prescribed, and any rules made in this behalf may provide for the grant of a rebate for prompt payment of the cess. (3) The said cess may be recovered in the same manner as an arrear of land revenue. (4) The Central Government may hand over the proceeds of the cess collected under this section in respect of the goods manufactured or produced by any scheduled industry or group of scheduled industries to the Development Council established for that industry or group of industries, and where it does so, the Development Council shall utilise the said proceeds-- (a) to promote scientific and industrial research with reference to the scheduled industry or group of scheduled industries in respect of which the Development Council is established; (b) to promote improvements in design and quality with reference to the products of such industry or group of industries; (c) to provide for the training of technicians and labour in such industry or group of industries; (d) to meet such expenses in the exercise of its functions and its administrative expenses as may be prescribed.

10. Registration of existing industrial undertakings. 1*[(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. 2*[(3) Where an industrial undertaking is registered under this section, there shall be issued to the owner of the undertaking or the Central Government, as the case may be, a certificate of registration 3*[containing the productive capacity of the industrial undertaking and such other particulars as may be prescribed].] 4*[(4) The owner of every industrial undertaking to whom a certificate of registration has been issued under this section before the commencement of the Industries (Development and Regulation) Amendment Act, 1973, (67 of 1973) shall, if the undertaking falls within such class of undertakings as the Central Government may, by notification in the Official Gazette, specify in this behalf, produce, within such period as may be specified in such notification, the certificate of registration for entering therein the productive capacity of the industrial undertaking and other prescribed particulars. (5) In specifying the productive capacity in any certificate of registration issued under sub-section (3), the Central Government shall take into consideration the productive or installed capacity of the industrial undertaking as specified in the application for registration made under sub-section (1), the level of production immediately before the date on which the application for registration was made under sub-section (1), the level of the highest annual production during the three years immediately preceding the introduction in Parliament of the Industries (Development and Regulation) Amendment Bill, 1973, the extent to which production during the said period was utilised for export and such other factors as the Central Government may consider relevant including the extent of under-utilisation of capacity, if any, during the relevant period due to any cause.] ---------------------------------------------------------------------- 1. Subs. by Act 26 of 1953, s. 5, for the original sub-section. 2. Ins. by s. 5, ibid. 3. Subs. by Act 67 of 1973, s. 2, for certain words (w.e.f. 7-2- 1974). 4. Ins. by s. 2, ibid. (w.e.f. 7-2-1974).

1*[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.]

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 under section 30.

2*[11A. Licence for producing or manufacturing new articles. The owner of an industrial undertaking not being the Central Government which is registered under section 10 or in respect of which a licence or permission has been issued under section 11 shall not produce or manufacture any new article unless-- (a) in the case of an industrial undertaking registered under section 10, he has obtained a licence for producing or manufacturing such new article; and (b) in the case of an industrial undertaking in respect of which a licence or permission has been issued under section 11, he has had the existing licence or permission amended in the prescribed manner.]

11B. Power of Central Government to specify the requirements which shall becomplied with by small scale industrial undertakings.

3*[11B. Power of Central Government to specify the requirements which shall be complied with by small scale industrial undertakings. (1) The Central Government may, with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures, exemptions or other favourable treatment under this Act to enable them to maintain their viability and strength so as to be effective in-- (a) promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and (b) securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good, specify, having regard to the factors mentioned in sub-section (2), by notified order, the requirements which shall be complied with by an industrial undertaking to enable it to be regarded, for the purposes of this Act, as an ancillary, or a small scale, industrial undertaking and different requirements may be so specified for different purposes or with respect to industrial undertakings engaged in the manufacture or production of different articles: Provided that no industrial undertaking shall be regarded as an ancillary industrial undertaking unless it is, or is proposed to be, engaged in-- (i) the manufacture of parts, components, sub-assemblies, toolings or intermediates; or (ii) rendering of services, or supplying or rendering, not more than fifty per cent of its production or its total services, as the case may be, to other units for production of other articles. (2) The factors referred to in sub-section (1) are the following, namely:-- (a) the investment by the industrial undertaking in-- (i) plant and machinery, or (ii)land, buildings, plant and machinery; (b) the nature of ownership of the industrial undertaking; (c) the smallness of the number of workers employed in the industrial undertaking; (d) the nature, cost and quality of the product of the industrial undertaking; (e) foreign exchange, if any, required for the import of any plant or machinery by the industrial undertaking; and (f) such other relevant factors as may be prescribed. (3) A copy of every notified order proposed to be made under sub- section (1) shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the proposed notified order or both Houses agree in making any modification in the proposed notified order; the notified order shall not be made, or, as the case may be, shall be made only in such modified form as may be agreed upon by both the Houses. (4) Notwithstanding anything contained in sub-section (1), an industrial undertaking which, according to the law for the time being in force, fell, immediately before the commencement of the Industries (Development and Regulation) Amendment Act, 1984, under the definition of an ancillary, or small scale, industrial undertaking, shall, after such commencement, continue to be regarded as an ancillary, or small scale, industrial undertaking for the purposes of this Act until the definition aforesaid is altered or superseded by any notified order made under sub-section (1).]

12. Revocation and amendment of licences in certain cases. (1) If the Central Government is satisfied, either on a reference made to it in this behalf or otherwise, that any person or authority, to whom or to which, a licence has been issued under section 11, has, without reasonable cause, failed to establish or to take effective steps to establish the new industrial undertaking in respect of which the licence has been issued ---------------------------------------------------------------------- 1. Ins. by Act 26 of 1953, s. 6. 2. Ins. by s. 7, ibid. 3. Ins. by Act 4 of 1984, s. 3 (w.e.f. 12-1-1984) 100A within the time specified therefor or within such extended time as the Central Government may think fit to grant in any case, it may revoke the licence. (2) Subject to any rules that may be made in this behalf, the Central Government may also vary or amend any licence issued under section 11: Provided that no such power shall be exercised after effective steps have been taken to establish the new industrial undertaking in accordance with the licence issued in this behalf. 1*[(3) The provisions of this section shall apply in relation to a licence issued under section 11A or where a licence has been amended under that section, to the amendment thereof, as they apply in relation to a licence issued under section 11.]

13. Further provision for licensing of industrial undertakings in specialcases.

2*[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 under section 10, but which has not been registered within the time fixed for the purpose under that section, carry on the business of that undertaking after the expiry of such period, or ---------------------------------------------------------------------- 1. Ins. by Act 26 of 1953, s. 8. 2. Subs. by s. 9, ibid., for the original section. (b) in the case of an industrial undertaking the registration in respect of which has been revoked under section 10A 1***, carry on the business of the undertaking after the revocation, or (c) in the case of an industrial undertaking to which the provisions of this Act did not originally apply but became applicable after the commencement of this Act for any reason, carry on the business of the undertaking after the expiry of three months from the date on which the provisions of this Act became so applicable, or (d) effect any substantial expansion of an industrial undertaking which has been registered 2*[or in respect of which a licence or permission has been issued], or (e) change the location of the whole or any part of an industrial undertaking which has been registered, except under, and in accordance with, a licence issued in that behalf by the Central Government, and, in the case of a State Government, except under and in accordance with the previous permission of the Central Government. (2) The provisions of sub-section (2) of section 11 and of section 12 shall apply, so far as may be, in relation to the issue of licences or permissions to any industrial undertaking referred to in this section as they apply in relation to the issue of licences or permissions to a new industrial undertaking.

Explanation.--For the purposes of this section, '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.]

14. Procedure for the grant of licence or permission. Beforeg granting any licence or permission under 3*[section 11, section 11A, 4*[section 13 or section 29B]], the Central Government may require such officer or authority as it may appoint for the purpose, to make a full and complete investigation in respect of applications received in this ---------------------------------------------------------------------- 1. The words "on the ground that it had been obtained by misrepresentation as to an essential fact" omitted by Act 71 of 1956, s. 2 (w.e.f. 1-3-1957). 2. Ins. by s. 2, ibid. (w.e.f. 1-3-1957). 3. Subs. by Act 26 of 1953, s. 10, for "section 11 or section 13". 4. Subs. by Act 71 of 1956, s. 3, for "or section 13" (w.e.f. 1-3- 1957). 102 behalf and report to it the result of such investigation and in making any such investigation, the officer or authority shall follow such procedure as may be prescribed.

15. Power to cause investigation to be made into scheduled industries orindustrial undertakings.

15. Power to cause investigation to be made into scheduled industries or industrial undertakings. Where the Central Government is of the opinion that-- (a) in respect of any scheduled industry or industrial undertaking or undertakings-- (i) there has been, or is likely to be, a substantial fall in the volume of production in respect of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which, having regard to the economic conditions prevailing, there is no justification; or (ii) there has been, or is likely to be, a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings as the case may be, for which there is no justification; or (iv) it is necessary to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilised in the industry or the industrial undertaking or undertakings, as the case may be; or 1*[(b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest;] the Central Government may make or cause to be made a full and complete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose.

15A. Power to investigate into the affairs of a company in liquidation.

2*[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 ---------------------------------------------------------------------- 1. Subs. by Act 26 of 1953, s. 11, for the original clause. 2. Ins. by Act 72 of 1971, s. 3 (w.e.f. 1-11-1971). 103 may, if it is of opinion that it is necessary, in the interests of the general public and, in particular, in the interests of production, supply or distribution of articles or class of articles relatable to the concerned scheduled industry, to investigate into the possibility of running or re-starting the industrial undertaking, make an application to the High Court praying for permission to make, or cause to be made, an investigation into such possibility by such person or body of persons as that Government may appoint for the purpose. (2) Where an application is made by the Central Government under sub-section (1), the High Court shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or in any other law for the time being in force, grant the permission prayed for.]

16. Powers of Central Government on completion of investigation undersection 15.

16. Powers of Central Government on completion of investigation under section 15. (1) If after making or causing to be made any such investigation as is referred to in section 15 the Central Government is satisfied that action under this section is desirable, it may issue such direction to the industrial undertaking or undertakings concerned as may be appropriate in the circumstances for all or any of the following purposes, namely:-- (a) regulating the production of any article or class of articles by the industrial undertaking or undertakings and fixing the standards of production; (b) requiring the industrial undertaking or undertakings to take such steps as the Central Government may consider necessary to stimulate the development of the industry to which the undertaking or undertakings relates or relate; (c) prohibiting the industrial undertaking or undertakings from resorting to any act or practice which might reduce its or their production, capacity or economic value; (d) controlling the prices, or regulating the distribution, of any article or class of articles which have been the subject matter of investigation. (2) Where a case relating to any industry or industrial undertaking or undertakings is under investigation, the Central Government may issue at any time any direction of the nature referred to in sub-section (1) to the industrial undertaking or undertakings concerned, and any such direction shall have effect until it is varied or revoked by the Central Government.

17. Special provisions for direct control by Central Government in certaincases.

17. [Special provisions for direct control by Central Government in certain cases.] Rep. by the Industries (Development and Regulation) Amendment Act, 1953 (26 of 1953), s. 12. 104 18. Power of person or body of persons appointed under section 15 to callfor assistance in any investigation. 18. Power of person or body of persons appointed under section 15 to call for assistance in any investigation. (1) The person or body of persons appointed to make any investigation under section 15 1*[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 1808), 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).

CHAP DIRECT MANAGEMENT OR CONTROL OF INDUSTRIAL UNDERTAKINGS BY CENTRALGOVERNMENT IN CERTAIN CASES

2*[CHAPTER IIIA DIRECT MANAGEMENT OR CONTROL OF INDUSTRIAL UNDERTAKINGS BY CENTRAL GOVERNMENT IN CERTAIN CASES

18A. Power of Central Government to assume management or control of anindustrial undertaking in certain cases.

18A. Power of Central Government to assume management or control of an industrial undertaking in certain cases. (1) If the Central Government is of opinion that-- (a) an industrial undertaking to which directions have been issued in pursuance of section 16 has failed to comply with such directions, or (b) an industrial undertaking in respect of which an investigation has been made under section 15 (whether or not any directions have been issued to the undertaking in pursuance of section 16), is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest, the Central Government may, by notified order, authorize any persons 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: 3*[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 ---------------------------------------------------------------------- 1. Ins. by Act 72 of 1971, s. 4 (w.e.f. 1-11-1971). 2. Ins. by Act 26 of 1953, s. 13. 3. Subs. by Act 6 of 1965, s. 2, for the proviso. 104A exceeding two years at a time, as may be specified in the direction, so however that the total period of such continuance (after the expiry of the said period of five years) does not exceed 1*[twelve years]; and where any such direction is issued, a copy thereof shall be laid, as soon as may be, before both Houses of Parliament.]

Explanation.--The power to authorize a body of persons under this section to take over the management of an industrial undertaking which is a company includes also a power to appoint any individual, firm or company to be the managing agent of the industrial undertaking on such terms and conditions as the Central Government may think fit.

18AA Power to take over industrial undertakings without investigation undercertain circumstances.

2*[18AA. Power to take over industrial undertakings without investigation under certain circumstances. (1) Without prejudice to any other provision of this Act, if, from the documentary or other evidence in its possession the Central Government is satisfied, in relation to an industrial undertaking, that-- (a) the persons in charge of such industrial undertaking have, by reckless investments or creation of incumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of articles manufactured or produced in the industrial undertaking, and that immediate action is necessary to prevent such a situation; or (b) it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the company owning the industrial undertaking or for any other reason) and such closure is prejudicial to the concerned scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery of such undertaking are such that it is possible to re-start the undertaking and such re- starting is necessary in the interests of the general public, it may, by a notified order, authorise any person or body of persons (hereafter referred to as the "authorised person") to take over the management of the whole or any part of the industrial undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order. (2) The provisions of sub-section (2) of section 18A shall, as far as may be, apply to a notified order made under sub-section (1) as they apply to a notified order made under sub-section (1) of section 18A. ---------------------------------------------------------------------- 1. Subs. by Act 32 of 1974, s. 2, for "ten years". 2. Ins. by Act 72 of 1971, s. 5 (w.e.f. 1-11-1971). (3) Nothing contained in sub-section (1) and sub-section (2) shall apply to an industrial undertaking owned by a company which is being wound up by or under the supervision of the Court. (4) Where any notified order has been made under sub-section (1), the person or body of persons having, for the time being, charge of the management or control of the industrial undertaking, whether by or under the orders of any court or any contract, instrument or otherwise, shall, notwithstanding anything contained in such order, contract, instrument or other arrangement, forthwith make over the charge of management or control, as the case may be, of the industrial undertaking to the authorised person. (5) The provisions of sections 18B to 18E (both inclusive) shall, as far as may be, apply to, or in relation to, the industrial undertaking, in respect of which a notified order has been made under sub-section (1), as they apply to an industrial undertaking in relation to which a notified order has been issued under section 18A.]

18B. Effect of notified order under section 18A. (1) On the issue of a notified order under section 18A authorizing the taking over of the management of an industrial undertaking-- (a) all persons in charge of the management, including persons holding office as managers or directors of the industrial 105 undertaking immediately before the issue of the notified order, shall be deemed to have vacated their offices as such; (b) any contract of management between the industrial undertaking and any managing agent or any director thereof holding office as such immediately before the issue of the notified order shall be deemed to have terminated; (c) the managing agent, if any, appointed under section 18A shall be deemed to have been duly appointed as the managing agent in pursuance of the Indian Companies Act, 1913 1* (7 of 1913), and the memorandum and articles of association of the industrial undertaking, and the provisions of the said Act and of the memorandum and articles shall, subject to the other provisions contained in this Act, apply accordingly, but no such managing agent shall be removed from office except with the previous consent of the Central Government; (d) the person or body of persons authorized under section 18A to take over the management shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the industrial undertaking is or appears to be entitled, and all the property and effects of the industrial undertaking shall be deemed to be in the custody of the person or, as the case may be, the body of persons as from the date of the notified order; and (e) the persons, if any, authorized under section 18A to take over the management of an industrial undertaking which is a company shall be for all purposes the directors of the industrial undertaking duly constituted under the Indian Companies Act, 1913 1* (7 of 1913) and shall alone be entitled to exercise all the powers of the directors of the industrial undertaking, whether such powers are derived from the said Act or from the memorandum or articles of association of the industrial undertaking or from any other source. (2) Subject to the other provisions contained in this Act and to the control of the Central Government, the person or body of persons authorized to take over the management of an industrial undertaking, shall take such steps as may be necessary for the purpose ---------------------------------------------------------------------- 1. See now the Companies Act, 1956 (1 of 1956). 106 of efficiently managing the business of the industrial undertaking and shall exercise such other powers and have such other duties as may be prescribed. (3) Where any person or body of persons has been authorized to exercise any functions of control in relation to an industrial undertaking, the undertaking shall be carried on pursuant to any directions given by the authorized person in accordance with the provisions of the notified order, and any person having any functions of management in relation to the undertaking or part thereof shall comply with all such directions. (4) The person or body of persons authorized under section 1*[18A] shall, notwithstanding anything contained in the memorandum or articles of association of the industrial undertaking, exercise his or their functions in accordance with such directions as may be given by the Central Government so, however, that he or they shall not have any power to give any other person any directions under this section inconsistent with the provisions of any Act or instrument determining the functions of the authority carrying on the undertaking except in so far as may be specifically provided by the notified order.

18C. Contracts in bad faith, etc., may be cancelled or varied.

18C. Contracts in bad faith, etc., may be cancelled or varied. Without prejudice to the provisions contained in section 18B, the person or body of persons authorized under section 18A to take over the management of an industrial undertaking may, with the previous approval of the Central Government, make an application to any Court having jurisdiction in this behalf for the purpose of cancelling or varying any contract or agreement entered into, at any time before the issue of the notified order under section 18A, between the industrial undertaking and any other person and the Court may, if satisfied after due inquiry that such contract or agreement had been entered into in bad faith and is detrimental to the interests of the industrial undertaking, make an order cancelling or varying (either unconditionally or subject to such conditions as it may think fit to impose) that contract or agreement, and the contract or agreement shall have effect accordingly.

18D. No right to compensation for termination of office or contract.

18D. No right to compensation for termination of office or contract. Notwithstanding anything contained in any law for the time being in force, no person who ceases to hold any office by reason of the provisions contained in clause (a) of section 18B, or whose contract of management is terminated by reason of the provisions contained in clause (b) of that section, shall be entitled to any compensation for the loss of office or for the premature termination of his contract of management: ---------------------------------------------------------------------- 1. Subs. by Act 36 of 1957, s. 3 and Sch. II, for "18". 107 Provided that nothing contained in this section shall affect the right of any such person to recover from the industrial undertaking moneys recoverable otherwise than by way of such compensation.

18E. Application of Act 7 of 1913. (1) Where the management of an industrial undertaking, being a company as defined in the Indian Companies Act, 1913 1* (7 of 1913), is taken over by the Central Government, then, notwithstanding anything contained in the said Act or in the memorandum or articles of association of such undertaking,-- (a) it shall not be lawful for the shareholders of such undertaking or any other person to nominate or appoint any person to be a director of the undertaking; (b) no resolution passed at any meeting of the shareholders or such undertaking shall be given effect to unless approved by the Central Government; (c) no proceeding for the winding up of such undertaking or for the appointment of a receiver in respect thereof shall lie in any Court except with the consent of the Central Government. (2) Subject to the provisions contained in sub-section (1), and to the other provisions contained in this Act and subject to such other exceptions, restrictions and limitations, if any, as the Central Government may, by notification in the Official Gazette, specify in this behalf, the Indian Companies Act, 1913 1* (7 of 1913), shall continue to apply to such undertaking in the same manner as it applied thereto before the issue of the notified order under section 18A. 18F. Power of Central Government to cancel notified order under section10A. 18F. Power of Central Government to cancel notified order under section 10A. If at any time it appears to the Central Government on the application of the owner of the industrial undertaking or otherwise that the purpose of the order made under section 18A has been fulfilled or that for any other reason it is not necessary that the order should remain in force, the Central Government may, by notified order, cancel such order and on the cancellation of any such order the management or the control, as the case may be, of the industrial undertaking shall vest in the owner of the undertaking. ---------------------------------------------------------------------- 1. See now the Companies Act, 1956 (1 of 1956).

CHAP MANAGEMENT OR CONTROL OF INDUSTRIAL UNDERTAKINGS OWNED BY COMPANIES INLIQUIDATION

1*[CHAPTER IIIAA MANAGEMENT OR CONTROL OF INDUSTRIAL UNDERTAKINGS OWNED BY COMPANIES IN LIQUIDATION

18FA Power of Central Government to authorise, with the permission of theHigh Court, persons to take over management or control of industrialundertakings.

18FA. Power of Central Government to authorise, with the permission of the High Court, persons to take over management or control of industrial undertakings. (1) If the Central Government is of opinion that there are possibilities of running or re-starting an industrial undertaking, in relation to which an investigation has been made under section 15A, and that such industrial undertaking should be run or re-started, as the case may be, for maintaining or increasing the production, supply or distribution of articles or class of articles relatable to the scheduled industry, needed by the general public, that Government may make an application to the High Court praying for permission to appoint any person or body of persons to take over the management of the industrial undertaking or to exercise in respect of the whole or any part of the industrial undertaking such functions of control as may be specified in the application. (2) Where an application is made under sub-section (1), the High Court shall make an order empowering the Central Government to authorise any person or body of persons (hereinafter referred to as the "authorised persons") to take over the management of the industrial undertaking or to exercise functions of control in relation to the whole or any part of the industrial undertaking (hereinafter referred to as the "concerned part") for a period not exceeding five years: Provided that if the Central Government is of opinion that it is expedient, in the interests of the general public that the authorised person should continue to manage the industrial undertaking, or continue to exercise functions of control in relation to the concerned part, as the case may be, after the expiry of the period of five years aforesaid, it may make an application to the High Court for the continuance of such management or functions of control, for such period, not exceeding two years at a time, as may be specified in the application and thereupon the High Court may make an order permitting the authorised person to continue to manage the industrial undertaking or to exercise functions of control in relation to the concerned part: Provided further that the total period of such continuance (after the expiry of the initial period of five years) shall not, in any case, be permitted to exceed 2*[twelve years]. (3) Where an order has been made by the High Court under sub- section (2), the High Court shall direct the Official Liquidator or any ---------------------------------------------------------------------- 1. Ins. by Act 72 of 1971, s. 6 (w.e.f. 1-11-1971). 2. Subs. by Act 32 of 1974, s. 2 (w.e.f. 29-6-1974). 107B other person having, for the time being, charge of the management or control of the industrial undertaking, whether by or under the orders of any court, or any contract or instrument or otherwise, to make over the management of such undertaking or concerned part, as the case may be, to the authorised person and thereupon the authorised person shall be deemed to be the Official Liquidator in respect of the industrial undertaking or the concerned part, as the case may be. (4) Before making over the possession of the industrial undertaking or the concerned part to the authorised person, the Official Liquidator shall make a complete inventory of all the assets and liabilities of the industrial undertaking or the concerned part, as the case may be, in the manner specified in section 18FG and deliver a copy of such inventory to the authorised person, who shall, after verifying the correctness thereof, sign on the duplicate copy thereof as evidence of the receipt of the inventory by him. (5) On taking over the management of the industrial undertaking, or on the commencement of the exercise of functions of control in relation to the concerned part, the authorised person shall take immediate steps to so run the industrial undertaking or the concerned part as to ensure the maintenance of production. (6) The authorised person may, on such terms and conditions and subject to such limitations or restrictions as may be prescribed, raise any loan for the purpose of running the industrial undertaking or the concerned part, and may, for that purpose, create a floating charge on the current assets of the industrial undertaking or the concerned part, as the case may be. (7) Where the authorised person is of opinion that the replacement or repair of any machinery of the industrial undertaking or the concerned part is necessary for the purpose of efficient running of the industrial undertaking or such part, he shall, on such terms and conditions and subject to such limitations or restrictions as may be prescribed, make such replacement or repair, as the case may be. (8) The loan obtained by the authorised person shall be recovered from the assets of the industrial undertaking or the concerned part, in such manner and subject to such conditions as may be prescribed. (9) For the purpose of running the industrial undertaking, or exercising functions of control in relation to the concerned part, the authorised person may employ such of the former employees of the industrial undertaking whose services became discharged by reason of the winding up of the 107C company owning such undertaking and every such person employed by the authorised person shall be deemed to have entered into a fresh contract of service with the company. 10 The proceedings in the winding up of the company in so far as they relate to-- (a) the industrial undertaking, the management of which has been taken over by the authorised person under this section, or (b) the concerned part in relation to which any function of control exercise by the authorised person under this section, shall, during the period of such management or control, remain stayed, and in computing the period of limitation for the enforcement of any right, privilege, obligation or liability in relation to such undertaking or the concerned part, the period during which such proceedings remained stayed shall be excluded.