NATIONAL COMPANY LIMITED (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT 1980

THE NATIONAL COMPANY LIMITED (ACQUISITION AND TRANSFER OFUNDERTAKINGS) ACT, 1980

ACT No. 42 OF 1980

19thJuly, 1980

An Act to provide for the acquisition and transfer of theundertakings of Messrs. National Company Limited with a view to securing theproper management of such undertakings so as to subserve the interests of thegeneral public by ensuring the continued manufacture, products and distributionof articles made of jute, which are essential to the needs of the economy ofthe country and for atters connected therewith of incidental thereto.

WHEREAS Messrs. NationalCompany Limited had been engaged in the manufacture and production of articlesmentioned in the First Schedule to the Industries (Development and Regulation)Act, 1951 (65 of 1951), namely, textiles made wholly or in part of jute;

AND WHEREAS the management ofthe undertakings of Messrs. National Company Limited was taken over bythe Central Government under section 18AA of the Industries (Development andRegulation) Act, 1951(65 of 1951);

AND WHEREAS it is necessary toacquire the undertakings of Messrs. National Company Limited to ensure that theinterests of the general public are served by the continuance, by theundertakings of the company, of the manufacture, production and distribution ofthe aforesaid articles, which are essential to the needs of the economy of thecountry;

BE it enacted by Parliament inthe Thirty–fifth Year of the Republicof India as follows: –

CHAPTER I

PRELIMINARY

1.Short title and commencement: This Act may be called theNational Company Limited (Acquisition and Transfer of Undertaking) Act 1980.

(2) The provisions of section29 and 30 shall come into force at once and the remaining provisions of thisAct shall be deemed to have come into force on the 27th day of April, 1980.

2.Definitions: In this Act, unless thecontext 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" meansthe Messrs. National Company Limited, a Company within the meaning of theCompanies, Act, 1956(1 of 1956), and having its registered office at 18A–BrabourneRoad, Calcutta–700001.in the State of West Bengal;

(d) "existing Governmentcompany" means a Government company which is carrying on business on theappointed day.

(e) "new Governmentcompany" means a Government company formed and registered on or after theappointed 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 provisions of this Act, means such date as the CentralGovernment may, by notification, specify for the purposes of that provision anddifferent dates may specified for different provisions of this Act.

(i) words and expressions underherein and not defined, but defined in the Companies Act, 1956(1 of 1956),shall have the meanings, respectively, assigned to them in that Act.

CHAPTER II

ACQUISITION AND TRANSFER OF UNDERTAKING OF THE COMPANY

3.Transfer to, and vesting in,the Central Government of the undertaking of the Company: On the appointed day, theundertaking of the Company and the right, title and interest of the Company inrelation to that undertaking shall, by virtue of this Act, stand transferredto, and shall vest in, the Central Government.

4.General effect of vesting: (1) The undertaking of theCompany shall be deemed to include all assets, rights, lease–holds,powers, authorities and privileges, and all property, movable and immovable,including land, buildings, workshops, stores, instruments, machinery andequipment, cash balance, cash on hand, reserve funds, investments, books, bookdebts, and all other rights, and interests in, or arising out of, such propertyas were immediately before the appointed day in the ownership, possession,power or control of the Company whether within or outside India, and all booksof account, registers and other documents of whatever nature relating thereto,

(2) All properties as aforesaidwhich have vested in the Central Government under section 3 shall, by force ofsuch 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, tribunal or other authorityrestricting the use of such properties in any manner shall or appointing anyreceiver in respect of the whole or any part of such properties shall be deemedto have been withdrawn.

(3) Every mortgagee of anyproperty which has vested under this Act, in the Central Government and everyperson holding any charge, lien or other interest in, or in relation to, anysuch property, shall give within such time and in such manner as may beprescribed, an intimation to the Commissioner of such mortgage, charge, lien orother 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 inrelation to, any such property shall be entitled to claim, in accordance withhis rights and interests, payment of the mortgage money or other dues in wholeor in part, out of the amounts specified in sections 8 and also out of theamount determined under section 9, but no such mortgage, charge, lien or otherinterest shall be enforceable against any property which has vested in theCentral Government.

(5) Any licence or otherinstrument granted to the Company in relation to any undertaking which hasvested in the Central Government under section 3 at any time before theappointed day and in force immediately before that day shall continue to be inforce on and after such day in accordance with its tenor in relation to, andfor the purposes of the said undertaking, and, on and from the date of vestingof such undertaking under section 5, in an existing Government company, orunder section 6, in a new Government company, the existing, or new, Governmentcompany, as the case may be, shall be deemed to be substituted in such licenceor other instrument as if such licence or other instrument had been granted tosuch existing, or new, Government Company shall hold it for the remainder ofthe 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 anyproperty or asset which has vested in the Central Government under section 3,instituted or preferred by or against the Company is pending, the same shallnot abate, be discontinued or be, in any way, prejudicially affected by reasonof the transfer of the undertakings of the Company or of anything contained inthis Act, but the suit, appeal or other proceeding may be continued, prosecutedor enforced by or against the Central Government or where the undertakings ofthe Company are directed, under section 5, to vest in an existing Governmentcompany or become transferred by virtue of the provisions of section 6 to a newGovernment company, by or against such Government company.

5.Power of Central Governmentto direct vesting of the undertakings of Company in an existing GovernmentCompany: (1) Notwithstanding anythingcontained in sections 3 and 4, and subject to the provisions of section 6, theCentral Government may, if it is satisfied that an existing Government companyis willing to comply, or has complied, with such terms and conditions as thatGovernment may think fit to impose, direct, by notification, that theundertakings of the Company, and the right, title and interest of the Companyin relation to its undertakings which have vested in the Central governmentunder section 3, shall, instead of continuing to vest in the CentralGovernment, vest in that existing Government company either on the date ofpublication of the notification or on such earlier or later date (not being adate earlier than the appointed day) as may be specified in the notification.

(2) Where the right, title andinterest of the Company in relation to its undertakings vest, under sub–section(1), in an existing Government company, that Government company shall, on andfrom the date of such vesting be deemed to have become, and until the transferof the undertakings by virtue of the provisions of section 6, to a newGovernment company, be deemed to be, the owner in relation to such undertakingand the rights and liabilities of the Central Government in relation to suchundertakings shall, on and from the date of such vesting, be deemed to havebecome, and until the date of such transfer, be deemed to be, the rights andliabilities, respectively, of that existing government company.

6.Transfer of undertakings ofCompany from an existing Government company to a new government company: (1) Notwithstanding anythingcontained in section 3 and 4, where the undertakings of the Company have beendirected, under sub–section (1) of section 5, to vest in an existingGovernment company, the Central Government may, if it is satisfied that a newGovernment company is willing to comply, or has complied, with such terms andconditions as that Government may think fit to impose, declare, bynotification, that the undertakings of the Company be transferred to that newGovernment company; and on the issue of such declaration, the right, title andinterest of the Company in relation to its undertakings, which had beendirected under sub–section (1) of section 5 to vest in an existingGovernment company, shall, instead of continuing to vest in that existing Governmentcompany, vest in that new Government company with effect from the date on whichsuch declaration is made.

(2) Where the right, title andinterest of the existing Government company in relation to the undertakings ofthe Company vest under sub–section (1) in a new Government company, thatnew Government company shall, on and from the date of such vesting, be deemedto have become the owner in relation to such undertakings and the rights andliabilities of the existing Government company in relation to such undertakingsshall, on and from the date, of such vesting, be deemed to have become therights and liabilities, respectively, of that new Government company.

7.Companies to be liable forcertain prior liabilities: (1) Every liability of the Company in respect of any period priorto the appointed day, shall be the liability of the Company and shall beenforceable against it and not against the Central Government, or where theundertakings of the companies vest in an existing, or a new, Government company,against such Government company.

(3) For the removal of doubts,it is hereby declared that –

(a) save as otherwise expresslyprovided in this Act, no liability of Company in relation to its undertakingsin respect of any period prior to the appointed day shall be enforceableagainst the Central Government, or, where the undertakings of the vest in anexisting, or a new, Government company, against such Government company;

(b) no award, decree or orderof any court, tribunal or other authority in relation to the undertakings ofthe Company, passed on or after the appointed day, in respect of any matter,claim or dispute, which arose before that day, shall be enforceable against theCentral Government, or where the undertakings of the Company vest in anexisting, or a new, Government company, against such Government company;

(c) no liability incurred bythe Company before the appointed day, for the contravention of any provision oflaw for the time being in force, shall be enforceable against the CentralGovernment, or, where the undertakings of the Company vest in an existing, or anew, Government company, against such Government company.

CHAPTER III

PAYMENT OF AMOUNTS

8.Payment of amount: For the transfer to, andvesting, in, the Central Government, under section 3, of the undertakings ofthe Company and the right, title and interest of the Company in relation tosuch undertakings, there shall be paid by the Central Government to theCompany, in cash and in the manner specified in Chapter VI, an amount of rupeesten crores and four lakhs.

(2) For the removal of doubts,it is hereby declared that the liabilities of the Company, in relation to itsundertakings shall be met, the accordance with the rights and interests of thecreditors of the Company, from the amount due to the Company under sub–section(1).

9.Payment of further amounts: (1) For the deprivation of theCompany of the management of its undertakings, there shall be given, by theCentral Government, to the Company, in addition to the amount specified insection 8, an amount computed at the rate of ten thousand rupees per annum forthe period commencing on the date on which the management of the undertakingsof the Company was taken over in pursuance of the order made by the CentralGovernment under section 18AA of the Industries (Development and Regulation)Act, 1951(65 of 1951), and ending on the appointed day.

(2) The amount specified insection 8, and the amount computed in accordance with the provisions of sub–section(1), shall carry simple interest at the rate of four percent per annum for theperiod commencing on the appointed day and ending on the date on which paymentof such amount is made by the Central Government to the Commissioner.

(3) The amount determined inaccordance with the provisions of sub–section (1) and (2) shall be givenby the Company in addition to the amount specified in section 8.

CHAPTER IV

MANAGEMENT, ETC, OF THE UNDERTAKINGS OF THE COMPANY

10.Management, etc., of theundertakings of the Company: The general superintendence, direction, control and management ofthe affairs and business of the undertakings of the Company, the right, titleand interest in relation to which have vested in the Central Government undersection 3, shall, –

(a) Where a direction has beenmade by the Central Government under sub–section (1) of section 5, veston and from the date specified in such direction, in the existing Governmentcompany specified therein; or

(b) where a declaration hasbeen made under sub–section (1) of section 6, vest, on and from the dateof such declaration, in the new Government company specified therein, or

(c) where no direction referredto 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 theappointed by the Central Government under sub–section (2),

and thereupon the existing, ornew, Government company or the Custodian or Custodians so appointed, as thecase may be, shall be entitled to exercise, to the exclusion of all otherpersons, all such powers and do all such things as the Company is authorised toexercise and do in relation to the undertakings owned by it.

(2) The Central Government mayappoint one or more individuals or a Government company as the Custodian orCustodians of the undertakings of the Company in relation to which no directionhas been made by it under sub–section (1) of section 5, or nodeclaration has been made by it under sub–section (1) of section 6, andthe Custodian or Custodians so appointed shall receive, from the funds of theundertakings such remuneration as may be specified by the Central Government.

(3) The Custodian or Custodiansof the undertakings of the Company shall maintain an account of theundertakings of the Company in such form and manner and under such conditionsas may be prescribed, and the provisions of the Companies Act, 1956(1 of 1956),shall apply to the audit of the accounts so maintained as they apply of theaccounts of a company.

11.Duty of persons in charge ofmanagement of undertakings of the Company to deliver all assets, etc.: (1) On the vesting of themanagement of the undertakings of the Company in the existing, or new,Government company, or on the appointment of a Custodian or Custodians, allpersons in charge of the management of the undertakings of the Companyimmediately before such vesting shall be bound to deliver to such Governmentcompany, all assets, books of account, registers and other documents in theircustody relating to the undertakings of the Company.

(2) The Central Government mayissue such directions as it may deem desirable in the circumstances of the caseto the existing, or new, Government company or the Custodian or Custodians, andsuch Government company, Custodian or Custodians may also, if it is considerednecessary so to do, apply to the Central Government at any time forinstructions as to the manner in which the management of the undertakings ofthe Company shall be conducted or in relation to any other matter arising in thecourse of such management.

12.Duty of persons to accountfor assets, etc., in their possession: (1) Any person who has, on the appointed day, inhis possession or under his control any assets, books, documents or otherpapers relating to any of the undertakings owned by the Company, which havevested in the Central Government or in the existing, or new, Government companyunder this Act, and which belong to the Company or would be so belonged, if theundertakings owned by the Company had not vested in the Central Government orsuch Government company, shall be liable to account for said assets, books,documents and other papers to the Central Government or Government company, andshall deliver them up to the Central Government or such Government company orto such person or body of persons as the Central Government or the Governmentcompany may specify in this behalf.

(2) The Central Government maytake or cause to be taken all necessary steps for securing possession of theundertakings of the Company which have vested in its under section 3.

(3) The Company shall, withinsuch period as the Central Government may allow in this behalf, furnish to thatGovernment a complete inventory of all their properties and assets, as on theappointed day, pertaining to the undertakings which have vested in the CentralGovernment under section 3, and, for this purpose, the Central Government orthe existing, or new Government company shall afford to the Company allreasonable facilities.

CHAPTER V

PROVISIONS RELATING TO EMPLOYEES OF THE COMPANY

13.Continuance of employees: (1) Every employee of thecompany in connection with any undertaking owned by it, shall become, on andfrom the appointed day, an employee of the Central Government, and where suchundertaking is vested in an existing, or a new, Government company under thisAct, become, on and from the date of such vesting in such Government company,an employee thereof and shall hold office or service under the CentralGovernment or the existing, or new, Government company, as the case may be,with the same rights and privileges as to pension, gratuity and other mattersas would have been admissible to him if there had been no such vesting andshall continue to do so unless and until his employment under the CentralGovernment or the existing, or new, government company, as the case may be, isduly terminated or until his remuneration and other conditions of service areduly altered by the Central Government or the existing, or new, Governmentcompany, as the case may be.

(2) Notwithstanding anythingcontained in the Industrial Disputes Act, 1947(14 of 1947), or in any other lawfor the time being in force, the transfer of the services of any officer orother person employed in any undertaking of the Company to the CentralGovernment or the existing, or new, Government company, shall not entitle suchofficer or other employee to any compensation under this Act or any other lawfor the time being in force and no such claim shall be entertained by anycourt, tribunal or other authority.

14.Provident fund and otherfunds: (1) Where the Company hasestablished a provident fund, superannuation fund, welfare fund or other fundfor the benefit of the persons employed in any of the undertakings owned by it,the monies relatable to the employees whose services have become transferred byor 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, tothe credit of such provident fund, superannuation, welfare or other fund, standtransferred to , and shall vest in, the Central Government or the Governmentcompany, as the case may be.

(2) The monies which standtransferred under sub–section (1) to the Central Government or theexisting, or new, Government company, as the case may be, shall be dealt withby that Government or that company in such manner as may be prescribed.

CHAPTER VI

COMMISSIONER OF PAYMENTS

15.Appointment of Commissionerof Payments: (1) TheCentral Government shall, for the purpose of disbursing the amounts payableunder sections 8 and 9 to each of the two companies, by notification, appoint aCommissioner of Payments.

(2) The Central Government mayappoint such other persons as it may think fit to assist the Commissioner andthereupon the Commissioner may authorise one or more of such persons also toexercise all or any of the powers exercisable by him under this Act anddifferent persons may be authorised to exercise different powers.

(3) Any person authorised bythe Commissioner to exercise any of the powers exercisable by the Commissionermay exercise those powers in the same manner and with the same effect as ifthey have been conferred on that person directly by this Act and not by way ofauthorisation.

(4) The salaries and allowancesof the Commissioner and other persons appointed under this Section shall bedefrayed out of the Consolidated Fund of India.

16.Payment by CentralGovernment to the Commissioner: (1) The Central Government shall, within thirty days from thespecified ¹ date, pay in cash to the Commissioner, for paymentto the Company, –

(a) an amount equal to theamount specified in section 8, and

(b) an amount equal to theamounts payable to the Company under section 9.

(2) A deposit account shall beopened by the Central Government in favour of the Commissioner in the PublicAccount of India and every amount paid under this Act to the Commissioner shallbe deposited by him to the credit of the said deposit account and the saiddeposit account shall be operated by the Commissioner.

(3) Records shall be maintainedby the Commissioner in respect of the undertakings of the Company in relationto which payments has been made to him under this Act.

(4) Interest accruing on theamount standing to the credit of the deposit account referred to in sub–section(2) shall ensure to the benefit of the Company.

____________________

1. 23.3.91: (Vide NotificationNo.S.O.196 (E), dt.19.3.1981, Gazette of India Exty., Pt.II, section.3 (ii),p.344.)

17.Certain powers of CentralGovernment or Government company: (1) The Central Government or the existing, or new, Governmentcompany, as the case may be, shall be entitled to receive up to the specifieddate, to the exclusion of all other persons, any money due to the Company, inrelation to its undertakings owned by it which have vested in the CentralGovernment or such Government company, and realised after the appointed daynotwithstanding that the realisation pertains to a period prior to theappointed day.

(2) The Central Government, orthe existing, or new, Government company, as the case may be, may make a claimto the Commissioner with regard to every payment made by that Government orGovernment Company, after the appointed day, for discharging any liability ofthe Company in respect of any of the undertakings owned by it, in relation toany period prior to the appointed day, and every such claim shall havepriority, in accordance with the priorities attaching, under this Act, to thematter in relation to which such liability has been discharged by the CentralGovernment or the Government company.

(3) Save as otherwise providedin this Act, the liabilities of the Company in relation to any of theundertakings owned by it, in respect of any transaction prior to the appointedday which have not been discharged on or before the specified date shall be theliabilities of the company.

18.Claims to be made to theCommissioner: Everyperson having a claim against the Company with regard to any of the mattersspecified in the Schedule pertaining to the undertakings of the Company shallprefer such claim before the Commissioner within thirty days from the specifieddate :

Provided that if theCommissioner is satisfied that the claimant was prevented by sufficient causefrom preferring the claim within the said period of thirty days, he mayentertain the claim within a further period of thirty days but not thereafter.

19.Priority of claims: The claims made under section18 shall have priorities in accordance with the following principles, namely: –

(a) Category I shall haveprecedence over all other categories and Category II shall have precedence overCategory III, and so on;

(b) the claims specified ineach of the categories shall rank equally and be paid in full, but, if theamount is insufficient to meet such claims in full, they shall abate in equalproportions and be paid accordingly; and

(c) the question of dischargingany liability with regard to a matter specified in a lower category shall ariseonly if a surplus is left after meeting all the liabilities specified in theimmediately higher category.

20.Examination of claims: (1) On receipt of the claimsmade under section 18, the Commissioner shall arrange the claims in the orderof priorities specified in the Schedule and examine the same in accordance withsuch order of priorities.

(2) If, on examination of theclaims, the Commissioner is of opinion that the amount paid to him under thisAct is not sufficient to meet the liabilities specified in any lower category,he shall not be required to examine the claims in respect of such lowercategory.

21.Admission or rejection ofclaims: (1) After examining the claimswith reference to the priorities set out in the Schedule, the Commissionershall fix a date on or before which every claimant shall file the proof of hisclaim.

(2) Not less than fourteendays’ notice of the date so fixed shall be given by advertisement in one issueof any daily newspaper in the English language having circulation in the majorpart of the country and one issue of any daily newspaper in such regionallanguage as the Commissioner may consider suitable, and every such notice shallcall upon the claimant to file the proof of his claim with the Commissionerwithin the period specified in the advertisement.

(3) Every claimant who fails tofile the proof of his claim within the period specified by the Commissionershall be excluded from the disbursement made by the Commissioner.

(4) The commissioner shall,after such investigation as may, in his opinion, be necessary and after givingthe company an opportunity of refuting the claim and after giving the claimanta reasonable opportunity of being heard, admit or reject by order in writingthe claim in whole or in part.

(5) The Commissioner shall havethe power to regulate his own procedure in all matters arising out of thedischarge of his functions including the place or places at which he may holdhis sittings and shall, for the purpose of making any investigation under thisAct, have the same powers as are vested in a civil court under the Code ofCivil Procedure, 1908(5 of 1908), while trying a suit, in respect of thefollowing matters, namely: –

(a) the summoning and enforcingthe attendance of any witness and examining him on oath;

(b) the discovery andproduction of any document or other material object producible as evidence;

(c) the reception of evidenceon affidavits;

(d) the issuing of anycommission for the examination of witnesses.

(6) Any investigation beforethe Commissioner shall be deemed to be a judicial proceeding within the meaningof sections 193 and 228 of the Indian Penal Code (45 of 1860) and theCommissioner shall be deemed to be a civil court for the purposes of section195 and Chapter XXVI of the Code of Criminal Procedure, 1973(2 of 1974).

(7) A claimant who isdissatisfied with the decision of the Commissioner may prefer an appeal againstsuch decision to the High Court within the local limits of whose jurisdictionthe registered office of the company is situated:

Provided that where a personwho is a Judge of a High Court is appointed to be the Commissioner, suchappeal, shall be heard and disposed of by not less than two Judges of that HighCourt.

22.Disbursement of money byCommissioner: Afteradmitting a claim under this Act, the amount due in respect of such claim shallbe paid by the Commissioner to the person or persons to whom such amount isdue, and on such payment, the liability of the Company in respect any claimrelating to the undertakings owned by it shall stand discharged.

23.Disbursement of amounts tothe Company: (1) Ifout of the monies paid to him in relation to the undertakings owned of theCompany, there is a balance left after meeting the liabilities as specified inthe Schedule, the Commissioner shall disburse such balance to the company.

(2) Where the possession of anymachinery, equipment or other property has vested in the Central Government orthe existing, or new, Government company under this Act, but such machinery,equipment or other property does not belong to the Company, it shall be lawfulfor the Central Government, to continue to possess such machinery or equipmentor other property on the same terms and conditions under which they werepossessed by the Company immediately before the appointed day.

24.Undisbursed or unclaimedamount to be deposited with the general revenue account: Any money paid to theCommissioner which remains undisbursed or unclaimed on the date immediatelypreceding the date on which the office of the Commissioner is finally wound up,shall be transferred by the Commissioner, before his office is finally wouldup, to the general revenue account of the Central Government; but a claim toany money so transferred may be preferred to the Central Government by theperson entitled to such payment and shall be dealt with as if such transfer hadnot been made, and the order, if any, for payment of the claim being treated asan order for the refund of revenue.

CHAPTER VII

MISCELLANEOUS

25.Act to have overridingeffect: The provisions of this Actshall have effect notwithstanding anything inconsistent therewith contained inany other law for the time being in force or in any instrument having effect byvirtue of any law, other than this Act, or in any decree or order of any court,tribunal or other authority.

26.Assumption of liability: (1) Where any liability of theCompany arising out of any item specified in any category in Part I of theSchedule in not discharged fully by the Commissioner out of the amounts paid tohim under this Act, the Commissioner shall intimate in writing to the CentralGovernment the extent of the liability which remains undischarged and thatliability shall be assumed by the Central Government.

(2) The Central Government may,by order, direction the existing, or new, Government company in which theundertakings of the Company become vested by virtue of any direction made undersub–section (1) of section 5 or declaration made under sub–section(1) of section 6, to the over the liability assumed by the Central Governmentunder sub–section (1), and on receipt of such direction, it shall be theduty of such existing, or new, Government company to discharge such liability.

27.Management to continue tovest in the Custodian until alternative arrangements have been made: Notwithstanding the Vestingunder this Act of the undertakings of the Company in the Central Government oran existing, or a new, Government company, –

(a) The Custodian who has beenmanaging the affairs of such undertaking before the date on which theundertaking had so vested shall, until alternative arrangements have been madeby the Central Government or, as the case may be, such Government company, forthe management of such undertakings, continue to manage the affairs of theundertakings as if the Custodian had been authorised by the Central Governmentor, as the case may be, such Government company, to manage such undertakings;

(b) the Custodian or any personauthorised by him for this purpose shall, until alternative arrangements havebeen made by the Central Government or, as the case may be, such Governmentcompany, continue to be authorised to operate, in relation to the undertakingsof the Company, any account of such undertakings in any bank as if theCustodian or the person authorised by him had been authorised by the CentralGovernment or such Government company to operate such account.

28.Contracts to cease to haveeffect unless ratified by the Central Government or the Government company: Every contract entered into bythe Company in relation to any of the undertaking, owned by it, which hasvested in the Central Government under section 3 for any service, sale orsupply, and in force immediately before the appointed day, shall, on and fromthe expiry of a period of one hundred and eighty days from the appointed day,cease to have effect unless such contract is, before the expiry of that period,ratified, in writing, by the Central Government or the existing, or new,Government company in which such undertakings have been vested under Act, andin ratifying such contract, the Central Government or the Government companymay make such alteration or modification therein as it may think fit:

Provided that the CentralGovernment or such Government shall not omit to ratify a contract and shall notmake any alteration or modification in a contract–

(a) unless it is satisfied thatsuch contract is unduly onerous, or has been entered into in bad faith, or isdetrimental to the interest of the Central Government or the Government company;and

(b) except after giving theparties to the contract a reasonable opportunity of being heard and exceptafter recording in writing its reasons for refusal to ratify the contract orfor making any alteration or modification therein.

29.Penalties: Any person who–

(a) having in his possession,custody or control any property forming part of any undertaking of either ofthe Company, wrongfully withholds such property from the Central Government orthe Government company; or

(b) wrongfully obtains possessionof or retains, any property forming part of any undertaking of the Company; or

(c) wilfully withholds or failsto furnish to the Central Government or the existing or new, Government companyor any person or body of persons specified by that Government or suchGovernment company, as the case may be, any document relating to theundertaking, owned by the Company, which may be in his possession, custody orcontrol; or

(d) fails to deliver to theCentral Government or the existing, or new, Government company, or any personor body of persons specified by that Government or Government company, anyassets, books of account, registers or other documents in his possession,custody or control, relating to the undertakings of the Company; or

(e) wrongfully removes ordestroys any property forming part of any undertaking of the owned by theCompany; or prefers any claim under this Act which he knows or has reason tobelieve to be false or grossly inaccurate,

shall be punishable withimprisonment for a term which may extend to two years, or with fine which mayextend to ten thousand rupees, or with both.

30.Offences by companies: (1) Where an offence underthis Act has been committed by a company, every person who, at the time theoffence was committed, was in charge of, and was responsible to, the companyfor the conduct of the business of the company, as well as the company, shallbe deemed to be guilty of the offence and shall be liable to be proceededagainst and punished accordingly:

Provided that nothing containedin this sub–section shall render any such person liable to anypunishment, if he proves that the offence was committed without his knowledgeor that he had exercised all due diligence to prevent the commission of suchoffence.

(2) Notwithstanding anythingcontained in sub–section (1), where any offence under this Act has beencommitted by a company and it is proved that the offence has been committedwith the consent or connivance of, or is attributable to any neglect on thepart of, any director, manager, secretary or other officer of the company, suchdirector, manager, secretary or other Officer shall be deemed to be guilty ofthat offence and shall be liable to be proceeded against and punishedaccordingly.

Explanation: For thepurpose of this section, –

(a) "company" meansany body corporate and includes a firm or other association of individuals; and

(b) "director", inrelation to a firm, means a partner in the firm.

31.Protection of action takenin good faith: (1) Nosuit, prosecution or other legal proceeding shall lie against the CentralGovernment or any officer of that Government or the existing, or new,Government Company in which the undertakings of the company have vested underthis Act or other person authorised by that Government or Government companyfor anything which is in good faith done or intended to be done under this Act.

(2) No suit, or other legalproceeding, shall lie against the Central Government or any of its officer orother employee or the existing, or new, Government company aforesaid or anyofficer or other person authorised by that company for any damage caused orlikely to be caused by anything which is in good faith done or intended to bedone under this Act.

32.Delegation of powers: (1) The Central Governmentmay, by notification direct that all or any of the powers exercisable by itunder this Act, other than the powers conferred by this Section, section 33 and34, may also be exercised by such person or person as may be specified in thenotification.

(2) Whenever any delegation ofpower is made under sub–section (1), the person to whom such power hasbeen delegated shall act under the direction, control and supervision of theCentral Government.

33.Power to make rules: (1) The Central Government may,by notification, make rules for carrying out the provisions of his Act.

(2) In particular, and withoutprejudice to the generality of the foregoing power, such rules may provide forall or any of the following matters, namely: –

(a) the time within which, andthe manner in which, an intimation referred to in sub–section (3) ofsection 4 shall be given;

(b) the form and manner inwhich and the conditions under which accounts shall be maintained by theCustodian or Custodians as required by sub–section (3) of section 10;

(c) the manner in which themonies in any provident fund or other fund referred to in sub–section(2) of section 14 shall be dealt with;

(d) any other matter which isrequired to be, or may be, prescribed.

(3) Every rule made by theCentral Government under this Act shall be laid, as soon as may be after it ismade, before each House of Parliament while it is in session, for atotal period of thirty days which may be comprised in one session or in two ormore successive sessions and if, before the expiry of the session immediatelyfollowing the session or the successive sessions aforesaid, both Houses agreein making any modification in the rule or both Houses agree that the ruleshould not be made, the rule shall thereafter have effect only in such modifiedform or be of no effect, as the case may be;, so however, that any suchmodification or annulment shall be without prejudice to the validity ofanything previously done under that rule.

34.Power to removedifficulties: If anydifficulty arises in giving effect to the provisions of this Act the CentralGovernment may by order, not inconsistent with the provisions of this Act,remove the difficulty:

Provided that no such ordershall be made after the expiry of a period of two years from the appointed day.

35.Repeal and saving: (1) The National CompanyLimited (Acquisition and Transfer of Undertakings) Ordinance, 1980(4 of 1980),is hereby repealed.

(2) Notwithstanding such repealanything done or any action taken under the said Ordinance shall be deemed tohave been done or taken under the corresponding provisions of this Act.

THE SCHEDULE

[Seesections 18, 20, 21 23 and 26]

Order of Priorities

Part I

Category I

Employees’ dues on account ofunpaid salaries, wages, provident fund, Employees’ State Insurance Contributionor premium relating to the Life Insurance Corporation of India and any otheramounts due to employees in respect of any period whether before or after themanagement of the undertakings of the company had been taken over by theCentral Government.

Category II

Secured loans obtained by anyjute company from nationalised banks and public financial institutions duringany period whether before or after the management of the undertakings of thatcompany had been taken over by the Central Government.

Category III

Amounts due to trade othercreditors in relation to any transaction which took place during the post–tax–overmanagement period.

Category IV

Revenue, taxes, cesses, ratesor other dues to the Central Government, a State Government or any localauthority or State Electricity Board for the pre–take–overmanagement period.

Category V

Amounts due to trade othercreditors in relation to any transaction which took place during the post–tax–overmanagement period.

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