REGISTERED NO. D. 221

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No.

40]

NEW DELHI, WEDNESDAY, AUGUST 16, 1972/SRAVANA 25, 1894

Separate paging is given to this Part in order that it may be filed

as a separate compilation.

LOK SABHA

The following Bill was introduced in Lok Sabha on the 16th August,

1972:—

BILL NO. 77 OF 1972

A Bill to provided for the taking over of the management of the under-

taking of the Indian Iron and Steel Company Limited for a limited

period in the public interest and in order to secure the proper

management of the undertaking.

BE it enacted by Parliament in the Twenty-third Year of the Republic

of India as follows: —

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Indian Iron and Steel Company

(Taking over of Management) Act, 1972.

(2) It shall be deemed to have come into force on the 14th day of

July, 1972.

2. In this Act, unless the context otherwise requires,--

(a) "appointed day" means the 14th day of July, 1972;

(741)

Short

title and

com-

mence-

ment

Definitions

74^

THE GAZETTE OF INDIA EXTRAORDINARY

|PART it—

(b) "company" or "Indian Iron and Steel Company" means the

Indian Iron and Steel Company Limited, being a company as denned

in the Companies Act, 1956, having its registered office at Martin

I3urn House, 12, Mission Row, Calcutta;

'like over the management of the undertaking of the company;

(d) "prescribed" means prescribed by rules made under tnis Act;

(e) "undertaking", in relation to the company, means the pro-

perty and assets of the company referred to in sub-section (2) of

section 3;

(f) words and expressions used but not denned in this Act

and denned in the Companies Act, 1956, shall have the meanings res-

pectively assigned to them in that Act.

CHAPTER II

MANAGEMENT OF THE UNDERTAKING OF THE INDIAN IRON AND STEEL COMPANY

(1) On and from the appointed day and for a period of two years

thereafter, the management of the undertaking of the company shall vest

in the Central Government.

(2) The undertaking of the company shall be deemed to include all

assets, rights, leaseholds (including mining leases, if any), powers, autho-

rities and privileges and all property, movable and immovable, including

lands, buildings, works, mines, workshops, projects, smelters, refineries,

inpeways, stores, instruments, machinery,

aircraft, locomotives,

auto-

mobiles and other vehicles, cash balances, reserve fund, investments and

book debts and all other rights and interests arising out of such property

as were immediately before the appointed day in the ownership, posses-

sion, power or control of the company in relation to the undertaking,

whether within or without India, and all books of account, registers

maps, plans, sections, drawings, records of survey and all other docu-

ments of whatever nature relating thereto.

(3) Any contract, whether express or implied, or other arrangement

in so far as it relates to the management of the business and affairs of

the company in relation

to its undertaking and in force immediately

before the appointed day, shall be deemed to have terminated on the

appointed day.

(4) All persons in charge of the management, including persons hold-

ing offices as directors, managers or any other managerial personnel of

the company immediately before the appointed day, shall be deemed to

have vacated their offices as such on the appointed day.

4. (1) The Central Government shall, as from the appointed day,

appoint a person as the Custodian of the undertaking of the company

for the purpose of taking over the management thereof and the Custo-

dian shall carry on the management of the undertaking of the company

for and on behalf of the Central Government.

(2) The Central Government may issue such directions (including

directions as to initiating, defending or continuing any legal proceedings

before any Court, tribunal or other authority) to the Custodian as to his

powers and duties as the Central Government deems desirable and the

Manage-

ment of

under-

taking

of the

company

to vest in

Central

Govern-

ment.

Custodian

of the

company.

1 of 1951

1 of 195b

Sic. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

743

Custodian may apply to the Central Government at any time for instruc

lions as to the manner in which the Custodian shall conduct the manage

ment of the undertaking of tb;? company or in relation to any mattM

arising in 1he course of such management.

(3) Subject

to the other provisions

this Act and to the con-

trol of the Central Government, the Custodian shall be entitled, notwith

standing anything contained in the Companies Act, 1956, to exercise al

the powers of the Board of Directors

the company (including the

powers to dispose of any properties or assets of the company) whethei

such powers are derived from the Companies Act, 1956, or from th*

memorandum and articles of association of the company

or from anj

other source.

(4) Every person having possession, custody or control of any property

forming part of the undertaken of the company shall deliver forthwith

such property to the Custodian or to any officer or other employee of the

Central Government or the company as may be authorised by the Central

Government in this behalf.

(5) Any person who, on the appointed day, has in his possession 01

under his control any hooks, papers or other documents relating to the

undertaken of the company, including the minutes books containing the

resolutions of the persons in charge of the management before the ap-

pointed day, the current cheque books relating to the undertaking of the

company,

any letters, memoranda,

notes or

other

communications

between him and the company shall, notwithstanding anything contained

in any low for the time being in force, be liable to account for the books,

papers and other docimients (including

such

minutes books, cheque

books, letters, memoranda, notes or other communications) to the Cus-

todian 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

company) as may be authorised by the

Central

Government

in this

behalf.

" '

(6) Every person In charge of the management of the

undertaking

of the company immediately before the appointed dav shall, vithin ten

days from that day <fr within such further period as the Central Govern-

ment may allow in this behalf, furnish to the Custodian a complete in-

ventory of all the properties and assets (including particulars of book

debts and investment and belongings) forming part of the undertaking

nf the company immediately before the appointed dav and of all

the

liabilities and obligations of the company m relation to Its undertaking

subsi^tinrr immed^teiv hpfnre that day and also of all agreements en-

tered into by the company in relation to its undertaking and in

force

immediately before that day.

(7) The Custodian shall receive from the funds of the undertaking

of the company such remuneration as the Central Gr^prnment may fix.

5. (1) The Central Government may, by notification In the Official

Gazette, constitute a Board for considering such matters relating to the

management of the undertaking of the company as may be placed before

it by the Custodian and for discharging such other functions as may be

prescribed.

(2) The Board shall consist of the Custodian, who shall be its Chair-

man, ex officAo, and such number of members, not exceeding ten, as may

he appointed to it by the Central Government.

1 of 1956

l»f 1956.

Advisory-

Board .

744

THE GAZETTE OF fNDU EXTRAORDINARY

[PART II—

(3) A member of the Board shall hold office till the expiry of one yeal

from the date on which he enters upon his office or till the relinquish-

ment of the management of the company by the Central Government

under section 7, whichever is earlier.

(4) The remuneration payable to the members of the Board ard the

other conditions of service of the members of the Board shall be such

as may be prescribed.

(5) All expenses incurred in connection with the Board (including

remuneration payable to the members thereof) shall be met from out of

the funds of the undertaking of the company.

(6) Save as otherwise prescribed, the Board shall have the power to

regulate its own procedure.

6. Notwithstanding anything contained in any law for the time being

in force, no person in respect of whom any contract of management or

other arrangement is terminated by reason of the provisions contained

in sub-section (3) of section 3 or who ceases to hold any office by reason

of the provisions contained in sub-section (4) of that section, shall be

entitled to claim any compensation for the premature termination of the

contract of management or other arrangement or for the loss of office.

7. (1) Notwithstanding anything contained in sub-section (1) of sec-

tion 3, if, at any time before the expiry of the period of two years

referred to in that sub-section, it appears to the Central Government

that the purposes of the vesting of the management of the undertaking

of the company in that Government have been fulfilled or for any other

reason it is not necessary that the management of the undertaking of

the company should remain vested in that Government, it may by order

published in the Official

Gazette relinquish the management of the

undertaking of the company with effect from such date as may be speci-

fied in the order.

(2) On and from the date specified in the order published under sub-

section (I), the undertaking of the company shall be managed Jn accord-

ance with the provisions of the Companies Act, 1956, so, however, that

steps, if any, in relation to the management of the undertaking may be

taken after the publication of the order under sub-section (1),

J*. (1) Notwithstanding anything contained in the Companies Act,

1956, or in the memorandum or articles of association of the company, but

subject to the provisions of sub-section (2) of section 7, so long as the

management of the undertaking of the company remains vested in the

Central Government,—

(a) it shall not be lawful for the shareholders of the company

or any other person to nominate or appoint any person to be n direc-

tor of the company;

(b) no resolution passed at any meeting of the shareholders of

the company on or after the appointed day shall be given effect to

unless approved by the Central Government;

appointment of a liquidator or receiver in respect thereof shall lie

in any court except with the consent of the Central Government.

N» right

to com-

pensation

for termi-

nation of

contract

or office.

Jlttlinqulsl

ment of

manage-

ment of

the under,

taking

of the

company.

Applica-

tion of

Act 1 of

1936.

1 of 19S8.

Sic. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

745

(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 Govern-

ment may, by notification in the Official Gazette, specify in this behalf,

the Companies Act, 1956, shall continue to apply to the company in the

same manner as it applied thereto before the appointed day.

CHAPTER III

MISCELLANEOUS

9. (1* Any person, who —

(a) having in his possession or custody or under his control any

property forming part of the undertaking of the company, wrongfully

withholds such property from the Custodian or any person authorised

under this Act, or

(b) wrongfully obtains possession of any such property, or

taking of the company or removes or destroys it, or

(d) wilfully withholds or fails to deliver any books, papers or

other documents which may be in his possession or custody or under

his control to the Custodian or any person authorised under this Act, or

(e) fails, without any reasonable cause, to furnish information

or particulars as provided in sub-section (6) of section 4,

shall be punishable with imprisonment for a term which may extend to

two years, or with fine which may extend to ten thousand rupees, or with

both.

(2) No court shall take cognizance of an offence punishable under this

section except with the previous sanction of the Central Government or

of an officer authorised by the Central Government in this behalf.

10. (1) Where an offence under this Act has been committed

a company, every person who at the time the offence was committed was

in charge of, and was responsible to, the company for the conduct of the

business of the company as well as the company, shall be deemed to be

guilty of the offence and shall be liable to be proceeded against and pun-

ished accordingly:

Provided that nothing contained in this sub-section shall render any

such person liable to any punishment, if he proves that the offence was

committed without his knowledge or that he had exercised all due dili-

gence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any

offence under this Act has been committed by a company and it is

proved that the offence has been committed with the consent or con-

nivance of, or is attributable to, any neglect on the part of any director,

manager, secretary or other officer of the company, such director,

manager! secretary or other officer shall be deemed to be guilty of that

offence and shall be liable to be proceeded against and punished

accordingly.

Explanation.—For the purposes of this section,—

(a) "company" means any body corporate and includes a firm or

other association of individuals; and

1 of 1856.

Penalties,

Offences

by compa

nies,

74^

THI GAZETTE OF r'DJA EXTRAORDINARY

[PART II-

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

11. In computing the period of limitation prescribed by law for the

time being in force for any suit or application against any person by the

company in respect of any matter arising out of any transaction in relation

to the undertaking of the company, the time during which this Act

is in force shall be excluded.

12. The provisions of this Act or any notification, order or rul*

made thereunder shall have effect notwithstanding anything inconsistent

therewith contained in any law other than this Act or in any instru-

ment having effect by virtue of any law other than this Act or in iny

decree or order of any court.

13. (1) No suit, prosecution or other legal proceeding shall lie against

the Custodian or any officer or other employee of the Central Government

or the company for anything which is in good faith done or Intended to

be done under this Act.

(2) No suit or other legal proceeding shall lie against the Central Gov-

ernment or the Custodian or any of the officers or other employees of the

Central Government or the company for any damage caused or likely to

be caused by anything which is in good faith done or intended to be done

under this Act.

14. (J) If the Central Government is satisfied, after such enquiry as it

may think fit, that any contract or agreement entered into at any time

within three years immediately preceding the appointed day, between

the company or the managing agents of the company and any other per-

son, in so far as such contract or agreement relates to the undertaking of

the company, has been entered Into in bad faith, or is detrimental to

the interests of the undertaking of the company, it may make an order

cancelling or varying (either unconditionally or subject to such conditions

as it may think fit to impose) such contract or agreement and thereafter

the contract or agreement shall have effect accordingly:

Provided that no contract or agreement shall be cancelled or varied

except after giving to the parties to the contract or agreement reason-

able opportunity of being heard.

(2) Any person aggrieved by an order under sub-section (1) may

make an application to the High Court at Calcutta for the variation or

reversal of such order and thereupon such court may confirm, modify

or reverse such order.

15. If the Custodian is of the opinion that any contract of employment

entered into by the company or the managing agents of the company in

relation to the undertaking of the company, at any time before the ap-

pointed day, is unduly onerous, he may, by giving to the employee one

month's notice in writing or the salary or wages for one month in Heu

thereof, terminate such contract of employment.

16. (1) The Central Government may, by notification In the Official

Gazette, make rules to carry out the purposes of this Act.

Exclusion o

period of

operation

of Act.

Act

to hav«

over-

riding

effect.

Protec-

tion of

action

taken in

good

faith.

Contracts

in bad

faithi

maybe

cancelled

or varied.

Power to

terminate

contract

of employ

ment.

Power to

make

Sic. 2]

T11L GAZETTE OJ' lWJJl/\ >;XTH A ORDINARY

71?

(2) In particular, and without prejudice to the generality of the fore-

going power, such rules may provide for—

(a) the remuneration payable to, and other conditions of service

of, the members of the Board referred to in section 5;

(b) the procedure to be followed by the said Board.

(4) Every rule made by the Central Government under this Act shall

be laid, as soon as may be after it is made, before each House of Parlia-

ment, 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 making any modifica-

tion in the rule or both Houses agree that the rule should not be made,

the rule shall thereafter have effect only in such modified form or be of

no' effect, as the case may be; so, however, that any such modification or

annulment shall be without prejudice to the validity of anything previ-

ously done under that rule.

17. (1) The Indian Iron and Steel Company (Taking over of Manage-

ment) Ordinance, 1972, is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken

under the said Ordinance shall be deemed to have been done or taken

under the corresponding provision of this Act.

C of 1972.

Repeal

and

savings.

74«

THE GAZETTE OF INDIA EXTKAORDINAEY

LPARI jl .-

STATEMENT OF OBJECTS AND REASONS

The production of steel is vital to the economy of the country. At

present, there is a wide gap between the demand and the domestic pro-

duction. It is, therefore, imperative that the production from the existing

Steel Plants is increased to the maximum extent possible.

2. Government were viewing with great concern the progressive de-

cline in the production of the Steel Plant of Indian Iron and Steel Co.

Ltd., and the deterioration in the condition of the Plant, resulting frOm

lack of adequate attention to maintenance. Against the rated capacity of

the Plant of one million tonnes of steel ingots, the production which was

10,27,000 tonnes in 1963-64 had fallen to 6,17,000 tonnes in 1971-72 and

the indications were that the performance during 1972-73 would be sub-

stantially worse than in 1971-72. The management of the company had

been unable to halt the steady deterioration in production

prospects,

There had also been no recognition on their part of the urgency of im-

plementing schemes lor the modernisation of the Plant and its expansion,

Government could not, therefore,

watch passively the deteriorating

state of affairs in the company.

3. Government, therefore, decided to take over the management of the

undertaking for » limited period of two years to secure the proper

management of the company and to subserve the public good in the con-

text of the steel requirements of the country. The management of the

undertaking was, therefore, taken over by the Central Government with

effect from the 14th July, 1972 under the Indian Iron and Steel Com-

pany (Taking over of Management) Ordinance, 1972.

4. The Bill seeks to replace the Ordinance.

NEW DELHI;

S. MOHAN KUMARAMANGALAM.

The 1th August, 1972.

S«C. 2]

THE GAZETTE OF INDIA EXTRAORDINARY

749

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 16 which empowers the Central Government to make

rules

generally to carry out the purposes of the Bill when enacted will enable

the making of rules for matters of procedure and administrative detail

which it is not practicable to provide for in the Bill itself. Thfl matters

in respect of which such rules may be made relate inter alia to the re-

muneration payable to members of the Board referred to in clause 5

and the procedure to be followed by the said Board. The clause contains

the usual provision for laying of the rules so made before each House of

Parliament. The delegation of legislative power is of a normal character.

S. L. SHAKDHER,

Secretary.

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