TEXTILE UNDERTAKINGS (TAKING OVER OF MANAGEMENT) ACT 1983

THE TEXTILE UNDERTAKINGS (TAKING OVER OF MANAGEMENT) ACT, 1983

ACT No. 40 OF 1983

25thDecember, 1983

An Act to provide for the taking over in the public interest ofthe management of the textile undertakings of the companies specified in theFirst Schedule pending nationalisation of such undertakings and for mattersconnected therewith or incidental thereto

WHEREAS by reason ofmismanagement of the affairs of the textile undertakings specified in the FirstSchedule, their financial condition became wholly unsatisfactory even beforethe commencement in January 1982 of the textile strike in Bombay and theirfinancial condition has thereafter further deteriorated;

AND WHEREAS certain publicfinancial institutions have advanced large sums of money to the companiesowning the said undertakings with a view to making the said undertakingsviable;

AND WHEREAS further investmentof very large sums of money is necessary for reorganising and rehabilitatingthe said undertakings and thereby to protect the interests of the workmenemployed therein and to augment the production and distribution at fair pricesof different varieties of cloth and yarn so as to subserve the interests of thegeneral public;

AND WHEREAS acquisition by theCentral Government of the said undertakings is necessary to enable it to investsuch large sums of money;

AND WHEREAS, pending theacquisition of the said undertakings, it is expedient in the public interest totake over the management of the said undertakings;

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

CHAPTER I

PRELIMINARY

1.Short title and commencement: (1) This Act may be called theTextile Undertakings (Taking Over of Management) Act, 1983.

(2) It shall be deemed to havecome into force on the 18th day of October, 1983.

2.Definitions: In this Act, unless thecontext otherwise requires, –

(a) "appointed day"means the date on which this Act comes into force;

(b)"Custodian" means the person appointed under section 4 to take overthe management of the undertakings;

(c) "notification"means a notification published in the Official Gazette;

(d) "textileundertaking" or "the textile undertaking" means an undertakingspecified in the second column of the First Schedule;

(e) "textile company"means a company (being a company as defined in the Companies Act, 1956(1 of1956)) specified in the third column of the First Schedule, as owning theundertaking specified in the corresponding entry in the second column of thatSchedule;

(f) words and expressions usedherein and not defined but defined in the Companies Act, 1956(1 of 1956), shallhave the meanings respectively assigned to them in that Act.

CHAPTER II

TAKING OVER OF THE MANAGEMENT OF CERTAIN TEXTILE UNDERTAKINGS

3.Management of certain textileundertakings to vest in the Central Government: (1) On and from the appointed day, the managementof all the textile undertakings shall vest in the Central Government.

(2) The textile undertakingshall be deemed to include all assets, rights, leaseholds, powers, authoritiesand privileges of the textile company in relation to the said textileundertaking and all property, movable and immovable, including lands,buildings, workshops, projects, stores, spares, instruments, machinery, equipment,automobiles and other vehicles, and goods under production or in transit, cashbalances, reserve fund, investments and book debts and all other rights andinterests in or arising out of such property as were, immediately before theappointed day, in the ownership, possession, power or control of the textilecompany whether within or outside India and all books of account, registers andall other documents of whatever nature relating thereto.

(3) Any contract, whetherexpress or implied, or other arrangement, in so far as it relates to themanagement of the business and affairs of the textile undertaking and in forceimmediately before the appointed day, or any order made by any court in so faras it relates to the management of the business and affairs of the textileundertaking and in force immediately before the appointed day shall be deemedto have terminated on the appointed day.

(4) All persons in charge ofthe management, including persons holding offices as directors, managers or anyother managerial personnel, of the textile company in relation to the textileundertaking, immediately before the appointed day, shall be deemed to havevacated their offices as such on the appointed day.

(5) Notwithstanding anythingcontained in any other law for the time being in force no person in respect ofwhom any contract of management or other arrangement is terminated by reason ofthe provisions contained in sub–section (3), or who ceases to hold anyoffice by reason of the provisions contained in sub–section (4), shallbe entitled to claim any compensation for the premature termination of thecontract of management or other arrangement or for the loss of office, as thecase may be.

(6) Notwithstanding anyjudgement, decree or order of any court, tribunal or other authority oranything contained in any other law (other than this Act) for the time being inforce, every receiver or other persons in whose possession or custody or underwhose control the textile undertaking or any part thereof may be immediatelybefore the appointed day, shall, on the commencement of this Act, deliver thepossession of the said undertaking or such part thereof, as the case may be, tothe Custodian, or where no Custodian has been appointed, to such other personas the Central Government may direct.

(7) For the removal of doubts,it is hereby declared that any liability incurred by a textile company inrelation to the textile undertaking before the appointed day shall beenforceable against the concerned textile company and not against the CentralGovernment or the Custodian.

4.Custodian of the textileunder takings: (1) TheCentral Government may, as soon as it is convenient administratively so to do,appoint any person or body of persons (including a Government company, whether inexistence at the commencement of this Act or incorporated thereafter) as aCustodian of the textile undertaking for the purpose of carrying on themanagement of such undertaking and the Custodian so appointed shall carry onthe management of the textile undertaking for and on behalf of the CentralGovernment.

(2) On the appointment of aCustodian under–sub–section (1), the management of the textileundertaking shall vest in such Custodian and all persons in charge of themanagement of such undertaking immediately before such appointment shall ceaseto be in charge of such management and shall be bound to deliver suchmanagement to the Custodian.

(3) The Central Government may,by notification , authorise the Custodian to appoint any person (including a Governmentcompany, whether in existence at the commencement of this Act or incorporatedthereafter) as the Additional Custodian of the textile undertaking.

(4) The Additional Custodianshall assist the Custodian in the exercise of his or its powers and dutiesunder this Act and shall function under the direction, supervision and controlof the Custodian; and the Custodian may delegate to the Additional Custodianall or such of his or its powers as he or it may think fit.

(5) Subject to any general orspecial direction given or condition imposed by the Custodian, any personauthorised by the Custodian to exercise any power may exercise that power inthe same manner and with the same effect as if it had been conferred on thatperson directly by this Act and not by way of authorisation.

(6) The Central Government mayissue such directions (including directions as to initiating, defending orcontinuing any legal proceedings before any court, tribunal or other authority)to the Custodian as to his or its powers and duties as the Central Governmentdeems to be desirable in the circumstances of the case, and the Custodian mayalso apply to the Central Government at any time for instructions as to themanner in which he or it shall conduct the management of the textileundertaking or in relation to any other matter arising in the course of suchmanagement.

(7) Subject to the otherprovisions of this Act and the control of the Central Government, the Custodianshall be entitled, notwithstanding anything contained in the Companies Act,1956, to exercise all the powers, in relation to the textile undertaking, ofthe Board of Directors of the textile company (including the power to disposeof any properties or assets of the textile company) whether such powers are derivedfrom the Companies Act, 1956, or from the memorandum and articles ofassociation of the concerned textile company or from any other source.

(8) Every person havingpossession, custody or control of any property forming part of the textileundertaking shall deliver forthwith such property to the Custodian or to anyofficer or other employee of the Central Government or the Custodian, as may beauthorised by the Central Government or the Custodian in this behalf.

(9) Any person who, on theappointed day, has in his possession or under his control any books, papers orother documents relating to the textile undertaking the management of which hasvested in the Central Government under this Act, shall, notwithstandinganything contained in any other law for the time being in force, be liable toaccount for the books, papers and other documents (including such minutesbooks, cheque books, letters, memoranda, notes or other communications) to theCustodian and shall deliver them up to the Custodian or to any such person(being an officer or other employee of the Central Government or the Custodian)as may be authorised by the Central Government or the Custodian in this behalf.

(10) Every person in charge ofthe management of any textile undertaking immediately before the appointed dayshall, within ten days from that day or within such further period as theCentral Government may allow in this behalf, furnish to the Custodian acomplete inventory of all the properties and assets (including particulars ofbook debts and investments and belongings) forming part of the undertakingimmediately before the appointed day and of all the liabilities and obligationsof the textile company in relation to the undertaking, subsisting immediatelybefore that day, and also of all agreements entered into by such textilecompany in relation to the undertaking and in force immediately before thatday.

(11) The Custodian and theAdditional Custodian shall receive from the funds of the textile undertakingssuch remuneration as the Central Government may fix.

5.Payment of amount: (1) Every textile companyshall be given by the Central Government an amount, in cash, and at the ratespecified in sub–section (2), for the vesting in it, under section 3, ofthe management of the textile undertaking of the company.

(2) For every month duringwhich the management of the textile undertaking remains vested in the CentralGovernment under this Act, the amount, referred to in sub–section (1),shall be computed–

(i) for a spinning unit, at therate of fifty paise per 1,000 spindles or any part thereof;

(ii) for a weaving unit, at therate of one rupee per 100 looms or any part thereof;

(iii) for a composite unit withor without dye–house, at the rate of fifty paise per 1,000 spindles orany part thereof plus one rupee per 100 looms plus one paisa per 10,000 metresof cloth processed in the dye–house based on the average monthlyproduction during the period of three years immediately preceding the appointedday;

(iv) for a wholly processing unit(being a unit which does not have any spindle or loom), one paisa per onethousand square metres or any part thereof of the average of the total quantityof textiles processed during the period of three years immediately precedingthe appointed day in such unit.

CHAPTER III

POWER TO PROVIDE RELIEF TO THE TEXTILE UNDERTAKINGS

6.Power of the CentralGovernment to make certain declarations in relation to certain textileundertakings: (1) TheCentral Government may, if satisfied, in relation to any of the textileundertakings or any part thereof, the management of which has vested in itunder this Act, that it is necessary so to do in the interests of the generalpublic with a view to preventing any fall in the volume of production of suchundertaking, by notification, declare that–

(a) all or any of theenactments specified in the Second Schedule shall not apply or shall apply withsuch adaptations, whether by way of modification, addition or omission (whichdoes not, however, affect the policy of the said enactments) to suchundertaking as may be specified in such notification, or

(b) the operation of all or anyof the contracts, assurances of property, agreements, settlements, awards,standing orders or other instruments in force (to which such textileundertaking or the textile company owning such undertaking is a party or whichmay be applicable to such textile undertaking or textile company) immediatelybefore the date of issue of the notification shall remain suspended or that allor any of the rights, privileges, obligations and liabilities accruing orarising thereunder before the said date, shall remain suspended or shall beenforceable subject to such adaptations and in such manner as may be specifiedin the notification.

(2) The notification made undersub–section (1) shall remain in force, in the first instance, for aperiod of one year but the duration of such notification may be extended fromtime to time by a further notification by a period not exceeding one year at atime:

Provided that no suchnotification shall, in any case, remain in force after the expiry of threeyears from the commencement of this Act.

(3) Any notification made undersub–section (1) shall have effect notwithstanding anything to thecontrary contained in any other law, agreement or instrument or any decree ororder of a court, tribunal, officer or other authority or in any submission,settlement or standing order.

(4) where by virtue of anotification under clause (b) of sub–section (1), any right, privilege,obligation or liability remains suspended or is enforceable subject to theadaptations and in the manner specified in the notification, all proceedingsrelating thereto pending before any court, tribunal, officer or other authorityshall accordingly remain stayed or be subject to such adaptations, as the casemay be; so however, on the notification ceasing to have effect–

(a) suchright, privilege, obligation or liability shall be enforceable as if thenotification had never been made;

(b) any proceedings so remainingstayed shall be proceeded with subject to the provisions of any law which maybe then in force, from the stage which had been reached when the proceedingbecame stayed.

(5) In computing the period oflimitation for the enforcement of any right, privilege, obligation or liabilityreferred to in clause (b) of sub–section (1), the period during which,it or the remedy for the enforcement thereof remained suspended shall beexcluded.

CHAPTER IV

MISCELLANEOUS

7.Act to have overridingeffect: The provisions of this Act orany notification, order or rule made thereunder shall have effectnotwithstanding anything inconsistent therewith contained in any law (otherthan this Act) or in any instrument having effect by virtue of any law otherthan this Act or in any decree or order of any court.

8.Application of Act 1 of 1956: (1) So long as the managementof the textile undertaking of a textile company remains vested in the CentralGovernment under this Act, notwithstanding anything contained in the CompaniesAct, 1956 or in the memorandum or articles of association of such company, –

(a) it shall not be lawful forthe shareholders of the textile company or any other person to nominate orappoint any person to be a Director of such textile company in relation to suchundertaking;

(b) no resolution affecting(whether directly or indirectly) such undertaking which is passed at anymeeting of the shareholders of the textile company on or after the appointedday shall be given effect to unless approved by the Central Government;

(c) no proceeding for thewinding up of the textile company or for the appointment of a liquidator orreceiver in respect thereof shall lie in any court except with the consent ofthe Central Government.

(2) Subject to the provisionscontained in sub–section (1), and to the other provisions contained inthis Act and subject to such other exceptions, restrictions and limitations, ifany, as the Central Government may, by notification, specify in this behalf,the Companies Act, 1956(1 of 1956), shall continue to apply to the textilecompanies in the same manner as it applied thereto before the appointed day.

9.Exclusion of period ofoperation of this Act from limitation: In computing the period, of limitation prescribedby any law for the time being in force for any suit or application against anyperson by any of the textile companies in respect of any matter arising out ofany transaction in relation to its textile undertaking, the time during whichthis Act remains in force shall be excluded.

10.Protection of action takenin good faith: (1) Nosuit, prosecution or other legal proceeding shall lie against the CentralGovernment or the Custodian or the Additional Custodian or any officer or otheremployee of the Central Government or the Custodian for anything which is ingood faith done or intended to be done under this Act.

(2) No suit or other legalproceeding shall lie against the Central Government or the Custodian or theAdditional Custodian or any of the officers or other employees of the CentralGovernment or the Custodian for any damage caused or likely to be caused byanything which is in good faith done or intended to be done under this Act.

11.Contracts, etc., in badfaith may be cancelled or varied: (1) If the Central Government is satisfied, after such inquiry asit may think proper, that any contract or agreement entered into at any timewithin three years immediately preceding the appointed day between any of thetextile companies or managing or other director of any such textile company andany other person in relation to any service, sale or supply to, or by, itstextile undertaking and in force immediately before the appointed day, has beenentered into in bad faith, or is detrimental to the interests of the textileundertaking of the concerned textile company, it may make, within one hundredand eighty days from the appointed day, an order cancelling or varying (eitherunconditionally or subject to such conditions as it may think fit to impose)such contract or agreement and thereafter the contract or agreement shall haveeffect accordingly:

Provided that no contract oragreement shall be cancelled or varied except after giving to the parties tothe contract or agreement a reasonable opportunity of being heard.

(2) Any person aggrieved by anorder made under sub–section (1) may make an application to theprincipal civil court of original jurisdiction within the local limits of whosejurisdiction the registered office of the concerned textile company is situatedfor the variation or reversal of such order and thereupon such court mayconfirm, modify or reverse such order.

12.Avoidance of voluntarytransfers: Any transfer of property,movable or immovable, or any delivery of goods made by or on behalf of any ofthe textile companies (not being a transfer or delivery made in the ordinarycourse of its business or in favour of a purchaser for valuable considerationand in good faith), if made within a period of six months immediately precedingthe appointed day, shall be void against the Central Government or theCustodian, as the case may be.

13.Power to terminate contractsof employment: If theCustodian is of opinion that any contract of employment entered into by anytextile company or managing or other director of the company in relation to itstextile undertaking at any time before the appointed day is unduly onerous, heor it may, by giving to the employee one month’s notice in writing or salary orwages for one month in lieu thereof, terminate such contract of employment.

14.Penalties: (1) Any person who, –

(a) having in his possession orcustody or under his control any property forming part of any of the textileundertakings, wrongfully withholds such property from the Custodian or anyperson authorised under this Act, or

(b) wrongfully obtainspossession of any such property, or

(c) wilfully retains anyproperty forming part of such textile undertaking or removes or destroys it, or

(d) wilfully withholds from, orfails to deliver to, the Custodian or any person authorised under this Act, anybooks, papers or other documents relating to such textile undertaking which maybe in his possession, power or custody or under his control, or

(e) fails, without anyreasonable excuse, to furnish information or particulars as provided in section4,

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.

(2) No court shall takecognizance of an offence punishable under this section except with the previoussanction of the Central Government or an officer authorised by that Governmentin this behalf.

15.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, shall bedeemed to be guilty of the offence and shall be liable to be proceeded againstand 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 knowledgeand that he had exercised all due diligence to prevent the commission of suchoffence.

(2) Notwithstanding anythingcontained in sub–section (1), where an 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 the partof 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 thepurposes of this section, –

(a)"company" means any body corporate and includes a firm or otherassociation of individuals; and

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

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

(2) 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 a totalperiod of thirty days which may be comprised in one session or in two or moresuccessive 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.

17.Repeal and saving: (1) The Textile Undertakings(Taking Over of Management) Ordinance, 1983, is hereby repealed.

(2) Notwithstanding suchrepeal, anything done or any action taken under the said Ordinance shall bedeemed to have been done or taken under the corresponding provisions of thisAct.

THE FIRST SCHEDULE

[Seesection 2 (d) and (e)]

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Sl .No. Name of the undertaking Nameof the owner

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1 2 3

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1 Elphinstone Spinning and Weaving Mills, TheElphinstone Spinning and Weaving

Elphinstone Road, Bombay. MillsCo.Ltd., Kamani Chambers, 32,

RamjiBhai Kamani Marg, Bombay–38.

 

2 Finlay Mills, 10/11, Dr.S.S.Rao Road, TheFinlay Mills Ltd., Chartered Bank

Bombay. Building,Fort, Bombay–23.

 

3 Gold Mohur Mills, Dadasaheb Phalke Road, TheGold Mohur Mills Ltd., Chartered

Dadar, Bombay. BankBuilding, Fort, Bombay–23.

 

4 Jam Manufacturing Mills, Lalbaug, Parel, TheJam Manufacturing, Co.Ltd., Lal–

Bombay. Baug,Parel, Bombay–12.

 

5 Kohinoor Mills (No.1), Naigaum Cross TheKohinoor Mills Co.Ltd., Killick

Road, Dadar, Bombay. House,Charanjit Rai Marg (Home Street),

Fort,Bombay–1.

 

6 Kohinoor Mills (No.2), Naigaum Cross Road, TheKohinoor Mills Co.Ltd., Killick

Dadar, Bombay. House,Charanjit Rai Marg (Home Street),

Fort,Bombay–1.

 

7 Kohinoor Mills (No.3), Lady Jamshedji Road, TheKohinoor Mills Co.Ltd., Killick

Dadar, Bombay. House,Charanjit Rai Marg (Home Street),

Fort,Bombay–1.

 

8 New City of Bombay Manufacturing Mills, TheNew City of Bombay Manufacturing

63, Tukaram B.Kadam Marg, Bombay. Co.Ltd.,63, Tukaram Bhisaji Kadam

Path,Bombay–33.

 

9 Podar Mills, N.M.Joshi Marg, Bombay. ThePodar Mills Ltd., Podar Chambers,

SyedAbdulla Brevli Road, Fort,

Bombay–1.

 

10 Podar Mills (Process House), Ganpat Rao ThePodar Mills Ltd., Podar Chambers,

Kadam Marg, Bombay. SyedAbdulla Brelvi Road, Fort,

Bombay–1.

 

11 Shree Madhusudan Mills, Pandurang Budhkar ShreeMadhusudan Mills Ltd., 31,

Marg, Bombay. ChowringheeRoad, Calcutta–16.

 

12 Shree Sitaram Mills, N.M.Joshi Marg, ShreeSitaram Mills Ltd., N.M.Joshi Marg,

Bombay. Bombay–11.

 

13 Tata Mills, Dr.Ambedkar Road, Dadar, TheTata Mills Ltd., Bombay House, 24,

Bombay. HomiMody Street, Fort, Bombay–23.

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THE SECOND SCHEDULE

(Seesection 6)

1.The Industrial Employment(Standing Orders) Act, 1946

2.The Industrial Disputes Act,1947.

3.The Minimum Wages Act, 1948.

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