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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 34] NEW DELHI, MONDAY, NOVEMBER 21, 1977 KARTIKA 30, 1899

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

as a separate compilation

LOK SABHA

BILL N O. 126 OF 1977

A Bill to provide for, in the public interest, the acquisition and transfer

of the right, title and interest of the undertakings of Messrs Smith,

Stanistreet and Company Limited, Calcutta and for matters connected

therewith or incidental thereto.

WHEREAS Messrs Smith, Stamstreet and Company Limited, Calcutta were engaged in the manufacture and distribution of pharmaccuticals and chemicals which are essential to meet the needs of the public;

AND WHEREAS the management of the undertakings of the Company was in a manner highly detrimental to the public interest and had suffered heavy losses;

AND WHEREAS the management of the Company was taken over by the Central Government under section 18A of the Industries (Development and Regulation) Act, 1951;

65 of 1951.

AND WHEREAS for the purpose of reconstructing and rehabilitating the undertakings of the Company so as to subserve the interest of the general public by the augmentation and distribution of the different varieties of essential pharmaceuticals and chemicals produced by the said Company, and to ensure the continued supply thereof, it is necessary to acquire the right, title and interest of the undertakings of Messrs Smith, Stamstreet and Company Limited, Calcutta;

( 6851)

BE it enacted by Parliament in the Twenty-eighth Year of the

Republic of India as follows: —

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Smith, Stanistreet and Company

Limited (Acquisition and Transfer of Undertakings) Act, 1977.

Short title and com- mence- ment.

(2) It shall be deemed to have come into force on the 1st day of

October, 1977.

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

Definitions.

(a) "appointed day" means the 1st day of October, 1977;

1 of 1956.

(b) "Company" means the Smith, Stanistreet and Company Limited, being a company as defined in the Companies Act, 1956 and having its registered office at 18, Convent Road, Calcutta-700014;

(c) "Commissioner" mteans the Commissioner of Payments

appointed under section 14;

(d) "notification" means a notification published in the Official

Gazette;

(e) "prescribed" nteans prescribed by rules made under this

Act;

(f) "specified date" means such date as the Central Govern- ment may, for the purposes of any of the provisions of this Act, by notification, specify and different dates may be specified for different provisions of this Act;

(g) words and expressions used herein and not defined but defined in the Companies Act, 1956 have the meanings respectively assigned to them in that Act.

CHAPTER II

ACQUISITION AND TRANSFER OF THE TXNBERTAKINGS OP THE COMPANY

a. On the appointed day, the undertakings of the Company, and the right, title and interest of the Company in relation to its undertakings, shall, by virtue of this Act, be transferred to, and shall vest in, the Central Government.

Transfer to and vesting In Central Govern- ment oi the under- takings otC the Com- pany.

General effect of vesting.

4. (1) The undertakings of the Company shall be djeemed to include all assets, right3, lease-holds, powers, authorities and privileges, and all property, movable and immovable, including lands, buildings, work- shops, stores, instruments, machinery and equipment, cash balances, cash on hand, reserve funds, investments, book debts and other rights and interests in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of the Company, whether within or outMde India, and all books of

account, registers and all other documents of whatever nature relating thereto.

(2) All properties as aforesaid which have vested in the Central Government under section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other encumbrances affecting it, and any attachment, injunction or decree or order of any court restricting the use of such property in any manner or appointing any receiver in respect of the whole or any part of such property shall be deemed to have been withdrawn.

(3) Every mortgagee of any property which has vested under this Act in the Central Government and every person holding any chargje, lien or other interest in, or in relation to, any such property shall give, within such time and in such manner as may be prescribed, an intimation to the Commissioner of such mortgage, charge, lien or other interest.

(4) For the removal of doubts, it is hereby declared that the mort- gagee of any property referred to in sub-section (3) or any other person holding any charge, lien or Qthier interest in, or in relation to, any such property shall be entitled to claim, in accordance with his rights and interests, payment of the mortgage money or other dues, in whole or in part, out of thtei amount specified in section 7, and also out of the monies determined under section 8, but, no such mortgage, charge, lien or other interest shall be enforceable against any property which has vested in the Central Government.

(5) If on the appointed day, any suit, appeal or other proceeding by or against the Company, of whatever nature in relation to any property which has vested in the Ceritral Governmlent, under section 3, Is pending, the same shall not abate, be discontinued or be, m any way, prejudicially affeqted by reason of the transfer of the undertakings of the Company or of anything contained in this Act, but the suit, appeal or other pro- ceeding may be continued, prosecuted or enforced by or against the Company.

Central Govern- ment or Govern- ment com- pany not 5. (I) Every liability of the Company in respect of any peripd prior to the appointed day, shall be the liability of the Company and shall be enforceable against it and not against the Central Government, or, where the undertakings of the Company are directed, under section 6, to vest in a Government company, against that Government company.

(2) For the removal of doubts, it is hereby deelaned that,—

to be liable for prior liabilities.

(a) save as otherwise expressly provided in this Act, no liability of the Company m relation to its undertakings in respect of any period prior to, the appointed day, shall be enforceable against the Central Government, or, where the undertakings of the Company are directed, under section 6, to vest in a Government company, against that Government company;

(b) no award, decree or order of any court, tribunal or other authority in relation to the undertakings of the Company, passed after the appointed day, in respect of any matter, claim or dispute, which arose before that day, shall be enforceable against the Central Government, or, where the undertakings of the Company are directed, under section 6, to vest in a Government company, against that Government company;

(c) no liability incurred by the Company before the appointed day, for the contravention of any provision of law for the time being

In force, shall be enforceable against the Central Government, or, where the undertakings of the Company are directed, under section 6, to vest in a Government company, against that Government company.

Power of Central Govern- ment to direct ves- ting of the undertak- ings of the Company in a Gov- ernment company.

6, (1) Notwithstanding anything contained in sections 3 and 4, the Central Government may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct, by notification, that the undertakings of the Company and the right, title and interest of the Company in, relation to its undertakings which have vested in that Government under section 3, shall, instead of continuing 'to viest in that Government, vest in the Government company either on the date of the notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.

(2) Where the right, title and interest of the Company in relation to its undertakings, vest in a Government company under sub-section (I), the Government company shall, on and from the date of such vesting, be deemed to have become the ownter in relation to such undertakings, and all the rights and liabilities of the Central Government in relation to such undertakings shall, on and from thie date of such vesting, be deemed to have become the rights and liabilities, respectively, of the Government company.

CHAPTER III

PAYMENT OF AMOUNTS

Payment of amount.

7, For the transfer to, and vestng In, the Central Government, under

section 3, of the undertakings of the Company and the right, title and

interest of the Company In relation to its undertakings, there shall be

given by the Central Government to the Company, in cash, and in the

maniier specified in Chapter VI, an amount of three orores and seventy*-

four thousand rupees.

Payment of further amount.

8, (0 For the deprivation of the Company of the management of Its

undertakings, there shall be given to the Company by the Central Gov-

ernment an amount calculated at the rate of ten • thousand rupees n"r

annum for the-period commencing1 on ftie date on which the management

of the undertakings of the Company was taken over by the Central

Government and ending on the appointed day.

(2) The amount specified in section 7 and the amount determined

under sub-sectionr (2) shall carry simple interest at the rate of four per

centr per- annum for the period commencing on the appointed day and

ending on the date on which the payment of the amount is made by the

Central' Government to the Commissioner.

(3) The amount determined in accordance with the provisions of sub- sections (1) and (2) shall be given by the Central Government to the Company in addition to the amount specified in section 7.

(4) For the removal of doubts, it is hereby declared that the liabilities cf the Company in relation to its undertakings which have vested in the Central Government under section 3, shall be discharged from the amount referred to in section 7, and also from the amounts determined under sub-sections (1) and (-), in accordance with the rights and inter- ests of the creditors of the Company.

CHAPTER IV

MANAGEMENT, ETC , OF THE UNDERTAKINGS OF THE COMPANY

9. (I) The general superintendence, direction, control and manage- ment of the affairs and business of the undertakings of tUe Company, the right, title and interest in relation to which have vested in the Central Government under section 3, shall,—

Manage- ment, etc., of the undertak- ings of the Company.

(a) where a direction has been issued by the Central Govern- ment under sub-section (i) of section C, vest in the Government company specified in such direction; or

(b) where no such direction has been issued by the Central Government, vest in one or more Custodians appointed by the Central Government under sub-section (2),

and thereupon the Government company so specified or the Custodian so appointed, as the case may be, shall be entitled to exercise all such powers and do all such things as the Company is authorised to exercise and do in relation to its undertakings.

(2) The Central Government m& - appoint one or more individuals or a Government company as the Cuncodian of the undertakings of th|e Company in relation to which no direction has been issued by it under sub-section (1) of section 6.

10 (1) On the vesting of the management of the undertakings of the Company m a Government company or on the appointment of a Custo- dian, all persons in charge of the management of the undertakings of the Company immediately before such veiling or appointment, shall be bound to deliver to the Government company or the Custodian, asi the case may be, all assets, books of account, registers or other documents in their custody relating to the undertakings of the Company.

Duty of persons in charge of manage- ment of the under- takings of the Com- pany to deliver all assets, etc. (2) The Central Government may issue, such directions as it may deem desirable in the circumstances of the case to the Government com- pany or the Custodian asi to its or his powers and duties and the Gov- ernment company or Custodian may also, if it or he so desires, apply to the Central Government at any time for instructing as to the manner in which the management of the undertakings of the Company shall be conducted by it or him or in relation to any other matter arising in the course of such management.

(3) The Custodian shall receive from the funds of the undertakings of the Company such remuneration as the Central Government may fix and shall hold office during the pleasure of the Government.

Accounts, and audit.

1 of 1950.

11. The Custodian of the undertakings of the Company shall maintain the accounts of the undertakings of the Company in such form and in such manner and under such conditions as may be prescribed and the pror visions of the Companies Act, 1956, shall apply to the audit of the accounts so maintained as they apply to the audit of the accounts of a company.

CHAPTER V

PROVISIONS RELATING TO EMPLOYEES OF THE COMPANY

Employ- ment of emplo- yees to continue.

12. (1) Every person who has been, immediately before the appointed day, employed by the Company in relation to its undertakings, shall become, on and from the appointed day, an employee of the Central Government or, as the case may be, of the Government company referred to in section 6, and shall hold office or service under the Central Government or Government company, as the case may be, with the same remuneration and upon the same terms and conditions, with the same rights and privileges as to pension, gratuity and other matters as would have been admissible to him if there had been no such vesting and shall' continue to do so unless and until his employment under the Central Government or the Government company, as the case may be, is duly terminated or until his remuneration, terms and conditions of service are duly altered by the Central Government or the Government company, as the case may be.

14 of 1947.

(2) Notwithstanding anything contained m the Industrial Disputes Act, 1947 or in any other law for the tune being m force the transfer of the services of any officer or other person employed in the undertakings of the Company to the Central Government or the Government company shall not entitle such officer or other employee to any compensation under this¹ Act oir under any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authority.

Provident and other funds.

13. (1) Where the Company has established a provident, superan- nuation, welfare or other fund for the benefit of the persons employed in the undertakings of the Company, thie monies relatable tq the employees, whose services have become transferred by or under this Act to the Central Government or Government company, shall, out of the monies standing, on the appointed day, to the credit of such provi- dent, superannuation, welfare or other fund, stand transferred to, and shall vest in, the Central Government or the Government company, as the case may be.

COMMISSIONER OF PAYMENTS

Appoint- ment of Commis- sioner of Payments.

(3) Any person authorised by the Commissioner to exercise any of

the powers exerciseable by the Commissioner may exercise those powers

in the same manner and with the same effect as if they have been con-

ferred on that person directly by this Act and not by way of authorisation.

(4) The salaries and allowances of the Commissioner and other persons

appointed under this section shall be defrayed out of the Consolidated

Fund of India.

15. (1) The Central Government shall, within thirty days from the specified date, pay, in cash, to the Commissioner, fnr payment to the Company—

(a) an amount equal to the amount specified in section 7; and

Payment by the Central Govern- ment to the Com- missioner.

(b) an amount equal to the amount payable to fife Company

under section 8.

(2) A deposit account shall be opened by the Central Government in favour of the Commissioner, in the Public Account of India, and every amount paid under this Act to the Commissioner, shall be depo- sited by him to the credit of the said account and the paid deposit account shall be operated by the Commissioner.

(3) Interest accruing on the amounts standing to the credit of thje deposit account referred to in sub-section (2) shall enure to the said account.

Certain powers of the Cen- tral Gov- ernment or Gov- ernment company 16. (1) The Oentral Government or the Government company, as the case may be, shall be entitled to receive up to the specified date, to the exclusion of all other persons, any money due to the Company in rela- tion to its undertakings which have vested in the Central Government, or the Government company, realised after the appointed day notwith- standing that the realisations pertain to a period prior to the appointed day.

(2) The Central Government or the Government company, as the case may be, may make a claim to the Commissioner with regard to every payment made by it after the appointed day for discharging any liability of the Company, in relation to any period prior to the appointed day; and every such claim shall have priority, in accordance with the priori- ties attaching, under this Act, to the matter in relation to which such liability has been discharged by the Central Government or the Gov- ernment company.

(3) Save as otherwise provided in this Act, the liabilities of the Company in respect of any transaction prior to the appointed day, which have not been discharged on or before the specified date, shall be the liabilities of the Company.

17. Every person having a claim against the Company shall prefer such claim before the Commissioner within thirty days from the specified date:

Claims t0 be made to the Commis- sioner.

Provided that if the Commissioner is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the said period of thirty days, he may entertain the claim within a further period of thirty days and not thereafter,

Priority of claims.

18. The claims arising out of the matters specified in the Schedule shall have priorities in accordance with the following principles, namely: —

(a) category I will have precedence over all other categories and category II will have precedence over category III, and so on;

(b) the claims specified m each of the categories, shall rank equally and be paid in full, but, if the amount is insufficient to meet such claims in full, they shall abate in equal proportions and be paid accordingly;

(c) the question of discharging any liability with regard to 8 matter specified in a lower category shall arise only if a surplus is left after meeting all the liabilities specified in the immediately higher category.

Examina- tion of claims

19. (1) On receipt of the claims made undar section 17, the Commis- sioner shall arrange the claims in the order of priorities specified in the Schedule and examine the same in accordance with such order of priorities.

(2) If, on examination of the claims, the Commissioner is of the opi- nion that the amount paid to him under this Act is not sufficient to meet the liabilities specified in any lower category, he shall not be required to examine the liabilities in respect of such lower category.

Admission or re]M> tion of claims.

20. (1) Alter examining the claims with reference to the priority set out in the Schedule, the Commissioner shall fix a date on or before which every claimant shall file the proof of his claim, failing which he shall be excluded from the benefit of the disbursements made by the Commissioner.

(2) Not less than fourteen days' notice of the date so fixed shall be given by advertisement in one issue of the daily newspaper in English language and in one issue of the daily newspaper in the regional langu- age as the Commissioner may consider suitable, and every such notice shall call upon the claimant to file the proof of his claim with the Com- missioner within the time¹ specified in the advertisement.

(3) Every claimant who fails to file the proof of his claim within the time specified by the Commissioner shall be excluded from the disburse- ments made by the Commissioner.

(4) The Commissioner shall, after such investigation as may, in his opinion, be necessary and after giving thp Company an opportunity of refuting the claim and after giving the claimant a reasonable opportunity of being heard, in writing, admit or reject the claim in whole or in part.

(5) The Commissioner shall have the power to regulate his own pro- cedure in all matters arising out of the discharge of his functions, inclu- ding the place or places at which he will hold his sittings and shall, for the purpose of making any investigation under this Act, have the same powers as are vested in a civil court under thft Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely: —

5 of 1908.

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

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

(c) the reception of evidence on affidavits;

(dl) the issuing of any commission for the examination 01

witnesses.

45 of I860.

(6) Any investigation before the Commissioner shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code and the Commissioner shall be deemed to be a civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973-

2 of 1974.

(7) A claimant who is dissatisfied with the decision of the Commis- sioner may prefer an appeal against the decision to the principal civil court of original jurisdiction within the local limits of whose jurisdiction the registered office of the Company is situated:

Provided that where a person who is a Judge of a High Court is ap- pointed to be the Commissioner, the appeal shall lie to the High Court at Calcutta and such appeal shall bj heard and disposed of by not less than two Judges of that High Court.

21. After admitting a claim under this Act, the amount due in respect of, such claims shall be paid by the Commissioner to the person or per- sons to whom such sums are due, and, on such payment, the liability of the Company in respect of such claim shall stand discharged.

22. (1) If, out of the monies paid to him in relation to the undertak- ings of the Company, there is a balance left after meeting the liabilities as specified in the Schedule, the Commissioner shall disburse such ba- lance to the Company.

Disburse- ment of money by Commis- sioner to claimants. Disburse- ment of amounts t0 the Company.

(2) Where any machinery, equipment or other property has vested in the Central Government or a Government company under this Act, but such machinery, equipment or other property does not belong to the Company, it shall be lawful for the Central Government or the Govern- ment company to continue to possess such machinery, equipment or other property on the same terms and conditions under which they were possessed by the Company immediately before the 4th day of May, 1972.

23. Any money paid to the Commissioner which remains undisbursed or unclaimed for a period of three years from the last day on which the disbursement was made, shall be transferred by the Commissioner to the general revenue account of the Central Government; but a claim to any money so transferred may be preferred to the Central Government by the person entitled to such payment and shall be dealt with as if such transfer had not been made, the order, if any, for payment of the claim being treated as an order for the refund of the revenue.

Undis- bursed or unclaimed amount to be deposited with the general revenue account

Assump- tion of liability 24. (I) Where any liability of the Company arising out of all or any of the items specified in category I, category II, category III or category IV of the Schedule are not discharged fully by the Commissioner out of the amount paid to him under this Act, the Commissioner shall intimate in writing to the Central Government the extent of the liability which remains undischarged, and that liability shall be assumed by the Central Government.

(2) The Central Government may, by order, direct the Government company to take over any liability assumed by that Government under sub-section (1), and on receipt of such direction, it shall be the duty of the Government company to discharge such liability.

CHAPTER VII

MISCELLANEOUS

Act to have over- riding effect.

25. The provisions of this Act shall have effect notwithstanding any- thing inconsistent therewith contained in any other law for the tune being in forge or in any instrument having effect by virtue of any law other than this Act, or in any decree or order of any court, tribunal or other authority.

26. (1) Every contract entered into by the Company in relation to its undertakings for any service, sale or supply, and in force immediately befpre the appointed day, shall, on and from the expiry of one hundred and eighty days from that day, cease to have effect, unless such contract is before the expiry of the period, ratified, m writing, by the Central Government or Government company, and, in ratifying such contract, the Central Government or Government company may make such altera- tion or modification therein as it may think fit:

Contracts to cease to have effect un- less ratifi- ed by the Central Govern- ment or Govern- ment com- pany.

Provided that the Central Government or the Government company shall not omit to ratify a contract, and, shall not make any alteration pr modification in a contract, unless it is satisfied that such contract is unduly onerous or has been entered into in bad faith or is detrimental to the interests of the Central Government or Government company.

(2) The Central Government or Government company shall not omit to ratify a contract, and, shall not make any alteration or modiflcatipn therein, except after giving to the parties to the contract a reasonable opportunity of being heard and except after recording in writing its reasons for refusal to ratify the contract or for making any alteration or modification therein.

27. Any person who,—

Payments.

(a) having in his possession, custody or control any property forming part of the undertakings of the Company, wrongfjully with- holds such property from the Central Government or the Government company or any person or body of persons authorised by that Govern- ment or Government company; or

(b) wrongfully obtains possession of, or retains, any property forming part of the undertakings of the Company or wilfully with- holds or fails to furnish to the Central Government, or the Govern- ment company or any person or body of persons authorised by that Government or Government company any document relating to such undertakings which may be in his possession, custody or con- trol or fails to deliver to the Central Government or the-Government company or any -person or body of persons authorised by that Government or Government company, any assets, books of account, registers or other documents in his possession, custody or control relating to the undertakings of the Company; or

(c) wrongfully removes or destroys any property forming part of the undertakings of the Company or prefers any claim under this Act which he knows or has reasonable cause to believe to be false or grossly Inaccurate,

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 *rtth both.

Offences by com- panies.

28. (i) Where an offence under this Act has been committed by 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 punished 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 diligence 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 connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secre- tary 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

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

Protection of action taken in good faith.

29. No suit, prosecution or other legal proceeding shall lie against the Central Government or any officer of that Government or the Custodian of the undertakings of the Company or the Government company or any officer or other person authorised by that Government or "the Government company for anything which is in good faith done or intended to be done under this Act.

Delegation of powers.

30. (1) The Central Government may, by notification, direct that all or any of the powers exerciseable by it under this Act, other than the power conferred by section 31, may also be exercised by any person or persons as may be specified in the notification.

(2) Whenever any delegation of power is made under sub-section (1), the person to whom such power has been delegated shall act under the direction, control and supervision of the Central Government.

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

t'ower to make rules.

(2) In particular, and without prejudice to the generality of the fore- going power, such rules may provide for all or any of the following matters, namely:—

(a) the time within which and the manner in which an intima- tion referred to in sub-section (3) of section 4 shall be given;

(b) the form and the manner in which, and the conditions under which, the Custodian shall maintain accounts as required by section 11;

(c) the manner in which monies in any provident or other fund referred to in section 13 shall be dealt with;

(d) any other matter which is required to be, or may be, pres-

cribed.

(3) 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 ha 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 previously done under that rule

Power to remove difficulties.

32. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty:

Provided that no such order shall be made after the expiry of a period of two years from the date on which this Act receives the assent of the President.

Declaration as to

33. It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in clause (b) of article 39 of the Constitution.

policy of the State.

Explanation.—In this section "State" has the meaning as in article

12 of the Constitution.

34. (1) The Smith, Stanistreet and Company Limited (Acquisition

and Transfer of Undertakings) Ordinance, 1977, is hereby repealed.

13 of 1977.

Repeal and saving

(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act.

THE SCHEDULE

(See sections 18, 19, 20, 22 and 24)

ORDER OF PRIORITIES FOR THE DISCHARGE OF LIABILITIES OF THE COMPANY

PART 'A'

POST-TAKE-OVER MANAGEMENT PERIOD

Category I.

(a) Wages, salaries and other dues of the employees of the Com-

pany.

(b) Loans advanced by the Central Government.

(c) Loans advanced by Indian Drugs and Pharmaceuticals Limited.

(d) Loans advanced by banks guaranteed by the Central Govern-

ment.

(e) Credit availed of for purposes of trade or manufacturing

operations.

Category II.

(a) Revenue, taxes, cesses, rates or other dues to the Central

Government or a State Government.

(b) Sales tax, rates and taxes, contributions to be made to the Employees' State Insurance Fund and Additional Dearness Allowances payable to employees.

PART 'B'

PRE-TAKE-OVER MANAGEMENT PERIOD

Category III.

Arrears in relation to provident fund, salaries and wages and other amounts due to employees of the Company.

Category IV.

Principal amount due in relation to all secured loans.

Category V.

Amounts due by way of Interest due in relation to the secured loans referred to in category IV.

Category VI.

Revenue, taxes, cesses, rates or any other dues to the Central Government, a State Government, a local authority or a State Electricity Board.

Category VII.

(a) Any credit availed of for purposes of trade or manufacturing operations.

(b) Any other dues.

STATEMENT OF OBJECTS AND REASONS

Messrs. Smith, Stamstreet and Company Limited, Calcutta were en- gaged in the manufacture of drugs and Pharmaceuticals which were essential to the needs of the country. The Company began to show steady decline in production from 1970 onwards and incurred considerable losses. The Company was also being rnismanaged. After investigation into the affairs of the Company through an investigation¹ COftiriiittee, the management of its undertakings was taken over on 4th May, 1972 by the Central Government acting under section 18A of the Industries (Development and Regulation) Act, 1951. The Indian Drugs and Phar- maceuticals Ltd., a Public Sector Undertaking was appointed as authbri'sed controller As the Company had to be modernised and expansion under- taken in order to ensure the augmentation and distribution of the dif- ferent varieties of essential pharmaceutics Is and chemicals produced by the Company and to ensure the continued supply thereof in public inter- est, it was necessary to acquire the right, title and interest of the under- takings of the Company This was done by the Smith, Stanistreet and Company Limited (Acquisition and Transfer of Undertakings) Ordinance, 1977. The Bill seeks the replacement of the Ordinance

ft. N. BAHUGUNA, NEW DELHI;

The 2nd November, 1977

FINANCIAL MEMORANDUM

Clause 7 of the "Bill provides for the payment, m cash, and in the manner specified in Chapter VI of an amount of Rs, 3,00,74,000 (Rupees three crores and seventy-four thousand), for vesting in the Central Gov- ernment, the right, title and interest of the Company in relation to the undertakings owned by it

2 Sub-clause (1) of clause 8 provides for payment of a further amount in cash, in consideration for the deprivation of the Company of the management of its undei takings, an amount calculated at the rate of Rs 10,000 (Rupees ten thousand only) per annum, for the period commencing on the date on which the management of the undertakings of the Company was taken over by the Government and ending with the appointed day. It is estimated that this amount will be of the order of Rs. 55,000 (Rupees fifty-five thousand only)

3 Sub-clause (2) of clause 8 provides for payment of simple interest on the amounts specified in clause 7 and sub-clause (1) of clause 8 at the rate of 4 per cent per annum for the period commencing on the appointed day Cist October, 1977) and ending with the day on which the payment of these amounts is made by the Central Government to the Commissioner of Payments The interest payment m terms of the pro- visions of the said clause is of the order ol R&. 60,000 (Rupees sixty thousand only).

4. Clause 14 of the Bill provides for the appointment of the Commis- sioner of Payments by the Central Government with adequate staff to assist him for the purpose of disbursing¹ the amounts payable to the Company The salary and allowances of the Commissioner of Payments and his staff and expenditure on office and establishment will be defrayed out of the Consolidated Fund of India. The estimated expenditure on this account is likely to be of the order of Rs 10,000 per month

5. The liabilities relating to gratuity payable to employees amounting to Rs. 37 lakhs as well as balance of post-take-over liabilities of sundry creditors amounting to Rs. 24.56 lakhs and principal amounts due in relation to secured loans (pre-take-over) amounting to Rs 48 lakhs, are not likely to be discharged fully by the Commissioner of Payments out of the amount paid to him under clause 7 of the Bill In the interest of the Company and its continued functioning it is proposed that the Central Government may assume these liabilities, as piovided in sub-clause (1) of clause 24.

6. Funds will also have to be provided to the Company for modernisa- iton and expansion. The expenditure on thus account is necessary to make the Company financially viable The total estimated expenditure on the modernisation and expansion scheme is likely to be of. the order of Rs 1 crore (Rupees one crore only) A sum of Rs 50 lakhs has been provided in the budget for 1977-78 towards Non-Plan loans for working capital for this Company and may have to be disbursed to the Company during the year.

7. The Bill, if enacted, ib not likely to involve any other rooming or

non-recurring expenditure.

M E M O R A N D UM R E G A R D I NG D E L E G A T ED L E G I S L A T I ON

Clause 31 of the Bill empowers the Central Government to make rules to carry out the provisions of the Bill Such rules may provide for matters, such as—

(a) the time within which and the manner in which an intima- tion referred to in sub-clause (3) of clause 4 of the Bill shall be given;

(b) the form and the manner in which and the conditions under which the Custodian shall maintain the accounts as provided in clause 11; and

(c) the manner in which monies in any provident or other fund referred to in clause 13 shall dealt with.

2. The matters in I espect of which such rules may be made are matters of procedure and administrative detail and it is not practicable to provide for them in the Bill itself. The delegation of legislative power is, there- fore, of a normal character.

BILL NO 133 OF 1977

A Bill further to amend the Payment of Bonus Act, 1965.

BE it enacted by Parliament in the Twenty-eighth Year of the

Republic of India as follows: —

1. (2) This Act may be called the Payment of Bonus (Amendment)

Act, 1977.

(2) It shall be deemed to have come into force on the 3rd day of

September, 1977.

Short title and com- mence- ment.

2. The Payment of Bonus Act, 1965 (hereinafter referred to as the

principal Act) shall,—

(a) in relation to a factory or other establishment to which the principal Act applies immediately before the commencement of this Act; and

Act 21 of 1965 to have modified effect for a parti- cular period (b) in relation to a banking company and the Industrial Recon- struction Corporation of India to which the principal Act applies on and from such commencement by virtue of this Act,

have effect in respect of the accounting year commencing on any day in the year 1976 as If the amendments specified in sections 3 to 20 had b°_en made in that Act.

Explanation.—In this section, the expressions "banking company" and "accounting year" shall have the meanings respectively assigned to them m clauses (8) and (1) of section 2 of the principal Act.

3. In the principal Act, far the long title, the following long title

shall be substituted, namely: —

Substitu- tion of long title.

"An Act to provide for the payment of bonus to persona em- ployed In certain establishments and for matters connected there- with.".

4. In section 2 of the principal Act, in sub-clause (o) of clause (4),

Amend- ment of section 2.

atter the words "being a company", the brackets and words "(other than a banking company)" shall be inserted.

5. For section 4 of the principal Act, the following section shall be

substituted, namely: —

"4. The gross profits derived by an employer from an establish-

ment in respect of the accounting year shall—

(a) in the case of a banking company, be calculated in

Substitu- tion of new sec- tion for section 4, Computa- tion of gross pi oflts

the manner specified in the First Schedule;

(fa) in any other case, be calculated in the manner speci-

fied in the Second Schedule.".

6. In section 6 of the principal Act,—

(a) in clause (b), for the words "development rebate or de-

Amend- ment of section 6.

velopment allowance", the words "development rebate or invest- ment allowance or development allowance" shall be substituted;

(b) in clause (d), for the words "Second Schedule", the words

"Third Schedule" shall be substituted.

Amend- ment of section 7.

7. In section 7 of the principal Act, in clause (e), for the brackets and words "(other than development rebate or development allowance)", the brackets and words "(other than development rebate or Investment allowance or development allowance)" shall be substituted,

8. In section 10 of the principal Act,—

(a) after sub-section (2), the following sub-section shall be

Amend- ment of flection 10.

inserted, namely: —

'(2A) Notwithstanding anything contained in sub-section (7), every employer shall be bound to pay to every employee a minimum bonus which shall be 8 33 per cent, of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus m the accounting year

Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the pro- visions of this sub-section shall have effect m relation to such employee as if for the words "one hundred rupees", the words "sixty rupees" were substituted.';

(b) In sub-section (3), for the wrrds "Third Schedule", the

words "Fourth Schedule" shall be substituted.

9. In section 15 of the principal Act, for the words "Third Schedule"

Amend- ment of wherever they occur, the words "Fourth Schedule" shall be substituted

section 15

10. In section 16 of the principal Act, in sub-section {IB), for the

words "Third Schedule" at both the places where they occur, the wards "Fourth Schedule" shall be substituted.

Amend- ment of section 16.

11. In section 21 of the principal Act, in the Explanation, for the words and figures "sections 22, 23 and 25", the words and figures "sections 22, 23, 24 and 25" shall be substituted.

Amend- ment of section 21.

12. In section 23 of the principal Act, in sub-section (1), for the word and figures "section 25", the words and figures "sections 24 and 25" shall be substituted.

Amend- ment oi section 23.

13 Atter section 23 of the principal Act, the following section shall

be inserted, namely: —

Insertion of new section ?4

Audited accounts of bank- ing com- panies not to bo question- ed. "24 (1) Where any dispute of the nature specified in section 22 between an employer, being a banking company, and its emplo- yees has been referred to the said authority under that section and during the course of proceedings the accounts of the banking com- pany duly audited are produced before it, the said authority shall not permit any trade union or employees to question the correct- ness of such accounts, but the trade union or the employees may be permitted to obtain from the banking company such information aa is necessary for verifying the amount of bonus due under this Act.

10 of 1949.

(2) Nothing contained in sub-section (1) shall enable the trade union or the employees to obtain any information which the bank- ing company is not compelled to furnish under the provisions of section 34A of the Banking Regulation Act, 1949.".

14. In section 27 of the principal Act, after sub-section (4), the

following sub-section shall be inserted, namely:—

Amend- ment of section 27.

"(5) Nothing contained in this section shall enable an Inspector to require a banking company to furnish or disclose any statement or Information or to produce, or give inspection of, any of its books of account or other documents, which a banking company cannot be compelled to furnish, disclose, produce or give inspection of, under the provisions of section 34A of the Banking Regulation Act, 1949 ".

10 of 1949.

Amend- ment of section 31A.

15. In section 31A of the principal Act, in the proviso, for the words "Provided that", the words "Provided further that" shall be substituted and before the proviso as so amended, the following proviso shall be inserted, namely: —

"Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under sub-section (2A) of section 10 shall be null and void in so far aa it purports to deprive them of such right".

1G In section 32 of the principal Act,—

(a) clause (vh) shall b" omitted;

Amend- ment of section 32.

(b) in clause (to) ,—

(i) sub-clause (#) shall be omitted;

(ii) in sub-clause (g), after the words "financial institution", the brackets and words "(other than a banking company)" shall be inserted.

17. For section 34 of the principal Act, the following sections shall be

substituted, namely: —

Substitu- tion of new sec- tions for section 34.

"34. Nothing contained in this Act shall be construed to preclude employees employed in any establishment or class of establishmentb irom entering into agreement with their employer for granting them an amount of bonus under a formula which is different from that un- der this Act:

Provided that no such agreement shall have effect unless it is en- tered into with the previous approval of the appropriate Govern- ment:

Employ- ees and employers not to be precluded from entering into agree- ments foi grant of bonus under a different formula

Provided further that any such agreement whereby the employees relinquish their right to receive the minimum bonus under sub-section (2A) of section 10 shall be null and void in so far as it purports to deprive them of such right:

Provided also that such employees shall not be entitled to be

paid bonus in excess of—

(a) 8 33 per cent, of the salary or wage earned by them dur- ing the accounting year if the employer has no allocable surplus in the accounting year or the amount of such allocable surplus is only so much that, but for the provisions of sub-section (2A) of section 10, it would entitle the employees only to receive an amount ot bonus which is less than the aforesaid percentage, or

(b) twenty per cent, of the salary or wage earned, by them

during the accounting year

34A. Subject to the provisions of sections 31A and 34, the pro- visions of this Act shall have effect notwithstanding anything in- consistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or con- tract of service.".

Effect of laws and agree- ments in- consistent with the Act.

18. In the principal Act, the First Schedule shall be renumbered as

the Second Schedule and,—

Amend- mpnt of the First, Schedule

(a) in that Schedule as so renumbered—

(i) for the brackets, woids and figure "(See section 4)", the brackets, words, figure and letter "[See section 4(b)]" shall be substituted;

(ii) in column (2), against Item No. 2, for the entry "(d) Development rebate/Development allowance reserve.", the entry "(d) Development rebate/Investment allowance/Develop- ment allowance reserve." shall be substituted;

(b) before that Schedule as so renumbered, the following

Schedule shall be inserted, namely: —

'THE FIRST SCHEDULE

[See section 4(0)j

COMPUTATION OF GROSS PROFITS

Accounting Year ending

Remarks Particulars

Amount of sub-items

Amount of main, items

Item No.

Rs.

Rs.

•1. - Net Profit as shown in the Profit and Loss Account after making usual and necessary provisions.

Add back provision for • (a) Bonus to employees. (b) Depreciation. (c) Development Rebate Reserve.

(d) Any other reserves.

Set foot- note (1) See foot- note (1)

Rs.

Total of Item No. 2

Add back also :

3-

See foot- note (1)

(a) Bonus paid to employees, in respect of previous accounting years.

(b) The amount debited in res- pect of gratuity paid or payable to employees in excess of the aggregate of— (f) the amount, if any, paid to, or provided for pay- ment to, an approved gratuity fund; and (n) the amount actually paid to employees on their retirement or on termination of their employment for any reason.

(c) Donations in excess of the amount admissible for income-tax.

See foot-

note (1)

(d) Capital expenditure (other than capital expenditure on scientific research which is allowed as a deduction under any law for the time being in force relating to direct taxes) and capital losses (other than losses on sale of capital assets on which depreciation has been allowed for income- tax).

•Where the profit sub) ct to taxation is shown In th Profit and Loss Account end the provision made for taxes on income 1B I'-onn, ihe . ctual provial >n for tjxes on income shall be deducted from the profit.

Remarks

Particulars

Amount of sub-items

Amount of main items

Item No.

Rs.

Rs.

(e) Any amount certified by the Reserve Bank of India in terms of sub-section (J) of section 34A of the Banking Regulation Act, 1949.

10 of 194ff

(/•) Losses of, or expenditure relating to, any business situated outside India.

R:>.

Total of Item No. 3

4- Add also income, profits or gains (if any) credited directly to published or disclosed re- serves, other than—

{ij capital receipts and_capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for income- tax) ;

(") profits of, and receipts relat- ing to, any business situated [ outside India;

{Hi) income of foreign banking companies from invest- ments outside India.

Rs.

Net total of Item No. 4

Total of Item Nos. 1, 2, 3 and 4. Rs.

5-

Deduct 1

6.

1

5

See foot- note (2)

1

1

(a) Capital receipts and capita profits (other than profit' on the sale 01 assets or which depreciation has beer allowed for income-tax).

Se& foot- note (2)

See foot- note (2)

(b) Profits of, and receipts relating to, any business situated outside India. (c) Income of foreign banking companies from invest- ments outside India. {d) Expenditure or losses (if any) 1 debited directly to publi- shed or disclosed reserves, other than— (0 capital expenditure an< capital losses (other tha losses on sale of capita assets on which depre ciation has not bee: allowed for income-tax'

i n il :- n );

IS

if) losses of eny busineg situated outside India.

Particulars

Remarks

Amount of main items

Amount of

sub-items

Item No.

Rs.

Rs.

i

See foot- note (3)

(e) In the case of foreign bank- ing companies proportion- ate administrative (over- head) expenses of Head Office allocable to Indian business.

i

See foot- note (2)

(/) Refund of any excess direct tax paid for previous ac- counting years and excess provision, if any, of previ- ous accounting years rela- ting to bonus, depreciation, or development rebate, if written back.

See foot- note (2) 1

(g) Cash subsidy, if any, given by the Government or by any body corporate estab- lished by any law for the time being in force or by any other agency through budgetary grants, whether given directly or through any agency for specified purposes and the proceeds of which are reserved for such purposes.

Total of Item No. 6

Rs.

Rs.

7- Gross profits for purposes of bonus (Item No. 5 minus Item No. 6 0

Explanation.—In sub-item (b) of item 3, "approved gratuity fund" has the same meaning assigned to it in clause (5) of section 2 of the Income-tax Act.

Foot-noUt—

(1) If, and t th extent, charged to Profit and Lo8" Account.

(2) If, and to the exten , credited t Profir and Loss Account.

(3) In the proportion of Incjrm Gross Profit (Item N • 7) to Total World Grosg Profit (a$ per Co^solida¹ ed Profit ard Loss Account, adjusted a" In Item No 2 above inly).

19. In the principal Act, the Second Schedule shall be renumbered as the Third Schedule and in that Schedule as so renumbered,—

(a) in column (2), against Item No. 1, for the word "Company", the

Amend, ment of the Second Schedule words "Company, other than a banking company" shall be substituted;

(b) after Item No. 1 and the entries relating thereto, the following item and entries shall be inserted, namely :—

( 2)

(3)

(0

" 2. Banking company

(i) The dividends payable on its preference share capital for the accounting year calculated at the rate at which such dividends are payable ;

(3)

(2)

( I)

(") 7 5 Per c c n t- of Its paid up equity share

capital as at the commencement of the accounting year;

(m) 5 per cent, of its reserves shown in its balance-sheet as at the commencement of the accounting year, including any profits carried forward from the previous accounting year;

\_tv) any sum which, in respect of the

accounting year, is transferred by it—

(a) to a reserve fund under sub-section ( J) of section 17 of the Banking Regu- lation Act, 1949; or

10 of 1949.

(b) to any reserves in India in pur- suance of any direction or advice given by the Reserve Bank of India,

whichever is higher :

1 of 1956.

Provided that where the banking company is a foreign company within the meaning of section 591 of the Companies Act, 1956, the amount to be deducted under this Item shall be the aggregate of—

(") the dividends pay- able to its preference shareholders for the accounting year at the rate at which such dividends ai e payable on such amount as beais the same pro- portion to its total pi eference share capital as its total workioj? funds in India bear to its total world working funds ;

( 2)

(3)

( I)

(it) 7-5 pet cent of such amount as bears the same proportion to its total paid up equity share capital as its total working funds in India bear to its total world working funds;

(in) 5 per cent of such amount as bears that same proportion to its total disclosed leserves as its total working funds in India bear to its total world working funds;

10 of 1949.

(w) any sum which3 in respect of the accounting year, is deposited by it with the Reserve Bank of India f under sub-clause (ii) of clause (b) of sub- section (2) of section 11 of Banking Regulation Act, 1949, not exceeding the amount required under the aforesaid provision to be so deposited.";

(0) in the Explanation, for the figures, brackets and word "l(ni) and 3 (it)", the figures, brackets and word "1 (hi), 2(iii) and 3(ii)" shall be substituted.

20. In the principal Act, the Third Schedule shall be renumbered as

the Fourth Schedule.

21. (7) The Payment of Bonus (Amendment) Ordinance, 1977 is hereby •9 ot 1077.

repealed.

Amend- ment of the Third Schedule- Repeal and saving

(2) Notwithstanding such repeal, anything done or any action taken under the principal Act, by virtue of the amendments thereto made by the said Ordinance, shall be deemed to have been done or taken under the principal Act by virtue of the corresponding amendments thereto made by this Act.

STATEMENT OF OBJECTS AND REASONS

In 1975, a number of substantial amendments were made in the Pay- ment of Bonus Act, 1965 by means of the payment of Bonus (Amend- ment) Ordinance, 1975 promulgated on the 25th September, 1975. This Ordinance was later replaced by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976). As a result of these amendments a minimum bonus of four per cent only was payable m respect of the accounting year commencing on any day in the year 1974 and no minimum bonus was payable in respect of subsequent accounting years if there were no allocable surplus m those years, Snme other changes made by the Amendment Act also advers;ly affected the workers

2L Several representations on the amendments were received by the Government. After careful consideration of the matter, Government decided that the Payment of Bonus Act, 1965 should be amended to provide, inter alia, for the payment of a minimum bonus of 8 33 per cent, -whether there was allocable surplus or not It was also decided that fliese amendments should have effect in respect of the accounting year commencing on any day in the year 1976

3. Since Parliament was nat in session and since it was necessary to take immediate action, the Payment of Bonus (Amendment) Ordinance, 1977 was promulgated by the President on the 3rd September, 1977 The present Bill seeks to replace the aforesaid Ordinance

NEW DELHI;

TKe 11th November, 1977 RAVTNDRA VARMA.

Memorandum regarding modification contained in t/u Bill to replaca the Payment of Bonus (Amendment) Ordinance, 1977

The Bill closely follows the Ordinance with a slight modification •xplained below

2. A new clause 7 has been added to the bill providing for a conse- quential amendment to clause (e) of section 7 of the Payment of Bonu* Aot, 1965. This is only to rectify an omission which had crept in th" Ordinance.

BILL NO 130 OF 1977

A Bill to provide for the acquisition and transfer of the undertakings of

Messrs. Gresham and Craven of Indxa (Private) Limited for the pur-

pose of ensuring the continuity of production of goods which are vital

to the needs of the Railways and of the industries manufacturing

engineering products and for matters connected thereiuith or incidental

therto

WHEBEAS Messrs. Gresham and Craven of India (Private) Limited were engaged in the manufacture and production of components of rolling stock like vacuum brake equipment, ejectors, steam brake valves and vacuum exhausters and the like needed by the Railways and the industries manufacturing engineering products;

AND WHEREAS as a result of the losses suffered by the Company, there

had been a closure of the works owned by the Company;

AND WHEREAS for the purpose of speedily bringing the closed works of the Company into operation, the management of the undertakings of the Company was taken over by the Central Government for a limited period under section 18A of the Industries (Development and Regulation) Act, 1951;

65 of 1051.

AND WHEREAS it is necessary to acquire the undertakings of the Company to ensure the continuance of the production of goods which

are vital to the needs of the Railways and of the industries manufactur- ing engineering products;

BE it enacted by Parliament in the Twenty-eighth Year of the Republic of India as follows: —

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Gresham and! Craven of India (Private) Limited (Acquisition and Transfer of Undertakings) Act, 1977.

Short titl" and Com- mence- ment

(2) The provisions of sections 28 and 29 shall be deemed to have come into force on the 30th day of September, 1977 and the remaining provi- sions of this Act shall be deemed to have come into force on the 1st day of August, 1977.

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

Defini- tions, >

(a) "appointed day" means the 1st day of August, 1977;

(b) "Braithwaite and Company Limited" means the Govern- ment company known as the Braithwaite and Company Limited in which the undertakings of the Braithwaite and Company (India) Limited together with the right, title and interest of the said Company thereon vested with effect from the 1st day of December, 1976, in pursuance of the notification of the Government of India in the Ministry of Industry (Department of Heavy Industry) No. S.O. 771 (E), ctated the 3rd December, 1976, issued under sub- section (1) of section 6 of the Braithwaite and Company (India) Limited (Acquisition and Transfer of Undertakings) Act, 1976;

S6 of 1976.

(c) "Commissioner" means the Commissioner of Payments appointed under section 14;

1 of 1956

(d) "Company" meang the Gresham and Craven of India (Private) Limited, being a company as denned in the Companies Act, 1956, and having its registered office at 22-Gobra Road, Calcutta- 14;'

(e) "Government company" has the meaning assigned to it by 1 of 1956.

section 617 of the Companies Act, 1956;

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

(g) "Ordinance" means the Gresham and Craven of India (Private) Limited (Acquisition and Transfer of Undertakings) Ordinance, 1977;

.14 of 1"7T.

(h) "prescribed" means prescribed by rules made under this.

Act;

(i) "specified¹ date" means such date as the Central Government may, for the purpose of any provision of this Act, by notification, specify and different dates may be specified for different provisions of this Act;

1 "1 >tM.

0) words and expressions used herein and not defined but defined in the Companies Act, 1956, shall have the meaning*, respectively, assigned to them in that Act.

CHAPTER II

ACQUISITION AND TRANSFER OF THE UNDERTAKINGS OF THE COMPAHY

3. On the appointed day, the undertakings of the Company, and the right, title and interest of the Company in relation to its undertakings, shall, by virtue of this Act, stand transferred to, and shall vest in, th" Central Government.

TMufer

•I Kid

vMttngi*

Hbm Ce"-

trol Gov-

ernment of

Ihe undtr-

WJdngfl of

the Com-

pany

(taMral

* " ot of

ywrttay.

4, (1) The undertakings of the Company shall be deemed to includ* all assets, rights, lease-holds, powers, authorities and privileges, and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash OB hand, reserve funds, investments, book debts and all other rights and interests in, or arising out of, such property as were immediately befor* the appointed day in the ownership, possession, power or control of th" Company, whether within Or outside India, and all books of account registers and all other documents of whatever nature relating thereto.

(2) All properties as aforesaid which have vested in the Central Government under section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and" all other encumbrances affecting them, and any attachment, injunction or decree or order of any court restricting the use of such property in any manner or appointing any receiver in respect of the whole or any part of such properties shall be deemed to have been withdrawn.

(3) Every mortgagee of any property which has vested under thi* Act in the Central Government and every person holding any charga, Hen or other interest in, or in relation to, any such property, shall give, within such time and in such manner as may be prescribed, an inti- mation to the Commissioner of such mortgage, charge, lien or other interest.

(4) For the removal of doubts, it is hereby declared that the mort- gagee of any property referred to in sub-section (3) or any other person holding any charge, lien or other interest in, or in relation to, any sucb property shall be entitled to claim, in accordance with his rights and interests, payment of the mortgage money or other dues, in whole or in part, out of the amounts specified¹ in section 8, and also out of the monies determined under section 9, but no such mortgage, charge, lien or other interest shall be enforceable against any property which haa rested in the Central Government.

(5) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any property which has vested in the Central Government, under section 3, instituted or preferred by or against the Company Is pending, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of transfer of the

undertakings of the Company or of anything contained in thia Act, but ttie suit, appeal or other proceeding may be continued, prosecuted or "nforced by or against the Central Government, or the Braithwaite and Company Limited, or, where the undertakings of the Company ar" directed, under section 7, to vest in a Government company, that Government company.

S. (1) Every liability of the Company an respect of any period prior to the appointed day, shall be the liability of the Company and shall be enforceable against it and not against the Central Government, or the Braltbwaite and Company Limited, or, where the undertakings of the Company are directed, under section 7, to vest in a Government com- pany, against that Government company

(2) For the removal of doubts, it is hereby declared that,—

Central Govern- ment or the Bralth- waite and Company Limited or the Gov- ernment company not to be liable for prior liaWUtloB.

(a) save as otherwise expressly provided in this Act, no liability of the Company in respect of any period prior to the appointed day shall be enforceable against the Central Government, or the Braithwaite and Company Limited, or, where the undertakings of the Company are directed, under section 7, to vest in a Government Company, against that Government company;

(t>) no award, decree or order of any court, tribunal or other authority in relation to the undertakings of the Company, passed after the appointed day, in respect of any matter, claim or dispute which arose before that day, shall be enforceable against the Central Government, or the Braithwaite and Company Limited, or, wheie the undertakings of the Company are directed under section 7, to vest in a Government company, against that Government company,

(c) no liability incurred by the Company before the appointed day, for the contravention of any provision of law for the time being In force, 3hall be enforceable against the Central Government, or the Braithwaite and Company Limited, or, where the undertakings of the Company ai*e directed, under section 7, to vest in a Government company, against that Government company.

Vesting of the under- takings at the Com- pany in the Braith- waite and Company Limited.

". (1) Notwithstanding anything contained in sections 3 and 4, the Central Government shall, as soon as may be, after the promulgation of the Ordinance, direct, by notification, that the undertakings of the Com- pany, and the right, title and interest of the Company in relation to its undertakings, which have vested in the Central Government under section 1, shall, instead of continuing to vest in the Central Government, vest in the Braithwaite and Company Limited either on the date of the noti- fication or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.

(2) Where the right, title and interest of the Company in relation to its undertakings vest in the Braithwaite and Company Limited under 716 THE GAZETTE OF INDIA EXTRAORDINARY [PAST II—

Power of Central Govern- ment to direct vesting of the under- takings of the Com- pany in a Govern- ment company.

7, (1) Notwithstanding anything contained in sections 3, 4 and 6, the Central Government may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions HB that Government may think fit to impose, direct, by notification, that the undertakings of the Company, and the right, title and interest of the Company in relation to its undertakings, which have vested in the Central Government under section 3 and thereafter in the Braithwaite and Com- pany Limited, under section 6, shall, instead of continuing to vest in the Braithwaite and Company Limited, vest in the Government company either on the date of the notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.

(2) Where the right, title and interest of the Company in relation to itg undertakings vest in a Government company under sub-section (1), the Government company shall, on and from the date of such vesting, be deemed to have become the owner in relation to such undertakings, and all the rights and liabilities of the Central Government or the Braith- waite and Company Limited in relation to such undertakings shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the Government company.

CHAPTER III

PAYMENT or AMOUNTS

Payment ol amount.

8. For the transfer to, and vesting in, the Central Government, under

section 3, of the undertakings of the Company and the right, title and

Interest of the Company in relation to Its undertakings, there shall be

given by the Central Government to the Company, In cash, and in the

manner specified in Chapter VI, an amount of rupees one hundred and

seventy-six lakhs.

Payment of further amount,

9. (1) For the deprivation of the Company of the management of its

undertakings, there shall be given to the Company by the Central Gov-

ernment an amount calculated at the rate of rupees fifty thousand per

annum for the period commencing on the date on which the manage-

ment of the undertakings of the Company was taken over by the Central

Government and ending on the appointed day.

(2) In consideration of the retrospective operation of the provisions of

sections 3. 4 and 5, there shall also be given, in cash, by the Central Gov-

ernment to the Company, an amount equal to an amount calculated at

the rate of rupees fifty thousand p"r annum for the period commend*?

on the appointed day and ending on the date of promulgation of the

Ordinance.

(3) The amount specified In section 8 and the amount determined

under sub-sections (J) and (2) shall carry simple interest at the rate of

four per cent, per annum for the period commencing on the date of pro-

mulgation of the Ordinance and ending on the date on which payment

of such amounts is made by the Central Government to the Commissioner,

(4) The amounts determined in accordance with the provisions of sub-sections (1), (2) and (3) shall be given by the Central Government to the Company in addition to the amount specified in section 8.

(5) For the removal of doubts, it is hereby declared that the liabilities of the Company, in relation to its undertakings which have vested in the Central Government under section 3, shall be discharged from the amounts referred to in section 8, and also from the amounts determined under sub-sections (1), (2) and (3) in accordance with the rights and interests of the creditors of the Company.

CHAPTER IV

MANAGEMENT, ETC , OF THE UNDERTAKINGS OF THE COMPANY

10. (1) The Braithwaite and Company Limited in which the under- takings of the Company and the right, title and interest of the Company in relation to its undertakings vested under section 6 shall be entitled to exercise all such powers and do all such things as the Company is autho- rised to exercise and do in relation to its undertakings.

Manage- ment etc. of the undertak- ings of the Company.

(2) The general superintendence, direction, control and management

of the affairs and business of the undertakings of the Company, the right, title and interest in relation to which have vested, under section 3, in the Central Government and. under section 6, in the Braithwaite and Company Limited shall, where a direction has been made by the Central Govern- ment under sub-section (1) of section 7, vest in the Government com- pany specified in such direction, and thereupon the Government company so specified shall be entitled to exercise all such powers and do all such things as the Company is authorised! to exercise and do in relation to its undertakings.

11. (1) On the vesting of the management of the undertakings of the Company in the Braithwaite and Company Limited, all persons in charge of the management of the undertakings of the Company immediately before such vesting shall be bound to deliver to the Braithwaite and Company Limited all assets, books of account, registers or other docu- ments in their custody relating to the undertakings of such Company.

Duty of persons In charge of manage- ment of the under- takings of the Com- pany to deliver all assets, etc. (2) The Central Government may issue such directions as it may deem desirable in the circumstances of the case to the Braithwaite and Company Limited as to its powers and duties and the Braithwaite and Company Limited may also, if it so desires, apply to the Central Government at any time for instructions as to the manner in which the management of the undertakings of the Company shall be conducted by it or in relation to any other matter arising in the course of such management.

(3) On the vesting of the management of the undertakings of the

Company in a Government company, the provisions of sub-sections (1) and (2) shall apply to, or in relation to, the Government company as they apply to, or in relation to, the Braithwaite and Company Limited, subject to the modification that the references to the Braithwaite and Company Limited shall be construed as references \.o the Government company.

CHAPTER V

PROVISIONS RELATING TO THE EMPLOYEES OF THE COMPANY

12. (7) Every person who has been, immediately before the appointed day, employed In any undertaking of the Company shall become, on and from the appointed day or such later date, ai the case may be, an employee of the Braithwaite and Company Limited, or, as the case may be, of the Government company in which the right, title and interest of the Corn-

Employ- ment of certain employees to con- tinue.

pany in relation to its undertakings, have vested under this Act, and shall hold office or service under the Braithwaite and Company Limited, or the Government company, as the case may be, with the same rights and pri- vileges as to pension, gratuity and other matters as would have been admissible to him If there had been no such vesting and shall continue to do so unless and until his employment under the Braithwaite and Company Limited, or the Government company, as the case may be, is duly terminated or until his remuneration and other conditions of Service are duly altered by the Braithwaite and Company Limited, or by the Government company, as the case may be.

(2) Notwithstanding anything contained In the Industrial Disputes

14 of 1947.

Act, 1947, or m any other law for the time being in force, the transfer of the services of any officer or other person employed in any undertaking of the Company to the Braithwaite and Company Limited, or the Govern- ment company, shall not entitle such officer or other employee to any compensation under this Act or under any other law for the time being In force and no such claim shall be entertained by any court, tribunal or other authority.

(13) Where, under the terms of any contract of service or otherwise, any person, whose services become transferred to the Braithwaite and Company Limited, or the Government company, bv reason of the pro- visions of this Act, is entitled to any arrears of salary or wages or anv payments for any leave not availed of or any other payment, not being payment by way of gratuity or pension, such person may enforce his claim against the Company, but not against the Central Government, or the Braithwaite and Company Limited, or the Government company,,

Provident fund and other funds.

13. (1) Where the Company has established a provident fund, super- annuation fund, welfare fund or other fund for the benefit of the persons employed in any of the undertakings of the Company, the monies relatabte to the officers or other employees, whose services have become transferred" by or under this Act to the Braithwaite and Company Limited, or the Government company, shall, out of the monies standing, on the appointed day, to the credit of such provident fund, superannuation fund, welfare¹ fund or other fund, stand transferred to, and shall vest in, the Braith- waite and Company Limited, or the Government company, as the case may be.

(2) The monies which stand transferred under sub-section (1) to the Braithwaite and Company Limited, or the Government company, as the case may be, shall be dealt with by the Braithwaite and Company Limit- ed, or the Government company, in such manner as may be prescribed.

CHAPTER VI

COMMISSIONER OF PAYMENTS

14. (0 The Central Government shall,'for the purpose of disbursing the amounts payable to the Company under sections 8 and 9, by notifica- tion, appoint a Commissioner of Payments.

Appoint- ment of Commis- sioner of Payments.

(?) The Central Government may appoint such other persons as it may think fit to assist the Commissioner and thereupon the Commissioner may authorise one or more of such persons alsq to exercise all or any of the

powers exerdseable by him under this Act and different persons may be,

authorised to exercise different powers.

(3) Any person authorised by the Commissioner to exercise any of the

powers exerdseable by the Commissioner may exercise those powers in

the same manner and with the same effect as It they have been conferred

on that person directly by this Act and not by way of authorisation.

(4) The salaries and allowances of the Commissioner and other per-

sons appointed under this section shall he defrayed out of the Con-

solidated Fund of India,

15. (1) The Central Government shall, within thirty days from the specified date, pay, in cash, to the Commissioner, for payment to the Company—

(a) an amount equal to the amount specified in section 8, ana

Payment by the Central Govern- ment to the Com-- missioner.

(0) an amount equal to the amount payable to the Company

under section 9.

(2) A deposit account shall be opened by the Central Government in favour of the Commissioner, in the Public Account of India, and every amount paid under this Act to the Commissioner shall be deposited by him to the credit of the said deposit account and the said deposit account shall be operated by the Commissioner.

(3) The interest accruing on the amount standing to the credit of the deposit account referred to m sub-section (2) shall enure to the benefit of the Company.

IS. (1) The Central Government, or the Braithwaite and Company Limited, or the Government company, as the case may be, shall be entitled to receive up to the specified date, to the exclusion of all other persons, any money due to the Company, in relation to its undertakings which have vested in the Central Government, or the Braithwaite and Company Limited, or the Government company, realised after the appointed day notwithstanding that the realisation pertains to a period prior to the appointed day.

Certain powers of the Cen- tral Gov- ernment or Braith- waite and Company Limited or Govern- ment company (2) The Central Government, or the Braithwaite and Company Limi- ted, or the Government company, as the case may be, may make a claim to the Commissioner with regard to every payment made by it after the appointed day for discharging any liability of the Company in relation to any period prior to the appointed day; and every such claim shall have priority in accordance with the priorities attaching, under this Act, to the matter in relation to which such liability has been discharged by the Central Government, or the Braithwaite and Company Limited, or the Government company.

, (3} Save as otherwise provided in this Act, the liabilities of the Com- pany In respect of any transaction prior to the appointed day, which have not been discharged on or before the specified date, shall be the liabilities of the Company.

17. Every person having a claim against the Company shall prefer such claim before the Commissioner withm thirty days from the specified date:

Claims to be made to the Commis- sioner.

Provided that if the Commissioner is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the said period of thirty days, he may entertain the claim within a further period of thirty days and not thereafter.

18. The claims arising out of the matters specified in the Schedule shall have priorities in accordance with the following principles, namely:—.

Priority of claims.

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

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

(c) the question of discharging any liability With regard to a matter specified in a lower category shall arise only if a surplus is left after meeting all the liabilities specified in the immediately higher category.

Examina- tion of claims.

19. (I) On receipt of the claims made under section 17, (he Com- missioner shall arrange the claims in the order of priorities specified in the Schedule and examine the same in accordance with such order of priorities.

(2) If, on examination of the claims, the Commissioner is of opinion that the amount paid to him under this Act 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 lower category.

Admission or rejec- tion of claims.

20. (2) After examining the claims with reference to the priorities set out in the Schedule, the Commissioner shall fix a certain date on or before which every claimant shall file the proof of his claim failing which he will be excluded from the benefit of the disbursements made by the Commissioner.

(2) Not less than fourteen days' notice of the date so fixed shall be given by advertisement in one issue of a daily newspaper in the English language and in one issue of such daily newspaper in the regional langu- age as the Commissioner may consider suitable, and every such notice shall call upon the claimant to file the proof of his claim with the Com- missioner within the time specified in the advertisement.

(3) Every claimant who fails to file the proof of his claim within the time specified by the Commissioner shall be excluded from the disburse- ments made by the Commissioner.

(4) The Commissioner shall, after such Investigation as may, in his opinion, be necessary and after giving the Company an opportunity of refuting the claim and after giving the claimant a reasonable opportunity of being heard, in writing, admit or reject the claim m whole or in part.

(5) The Commissioner shall have the power to regulate his own pro- cedure in all matters anting out of the discharge of his functions, includ- ing the place or places at which he will hold his sittings and shall, for ihe purpose of making an investigation under this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely.—

5 of 1908.

(d) the summoning and enforcing the attendance of any witness

and examining him on oath,

(b) the discovery and production of any document or othet

material object producible as evidence;

(c) the reception of evidence on affidavits;

(d) the issuing of any commission for the examination of wit-

nesses.

45 Of 1860.

(6) Any investigation before the Commissioner shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code and the Commissioner shall be deemed to be a civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.

2 of 1974.

(7) A claimant who is dissatisfied with the decision of the Commis- sioner may prefer an appeal against the decision to the principal civil court of original jurisdiction within the local limits of whose jurisdiction the registered office of the Company is situated:

Provided that where a person who is a Judge of a High Court is appointed to be the Commissioner, the appeal shall lie to the High Court at Calcutta, and such appeal shall be heard and disposed of by not lese than two Judges of that High Court

21. After admitting a claim under this Act, the amount due in respect of such claim shall be paid by the Commissioner to the person or persons to whom such sums are due, and, on such payment, the liability of the Company in respect of such claim shall stand discharged.

Disburse- ment of money by the Com- missioner to clai- mants.

,22. (1) If, out of the monies paid to him in relation to the undertakings of the Company, there is a balance left after meeting the liabilities as specified in the Schedule, the Commissioner shall disburse such balance to the Company.

Disburse- ment of amounts to the Company.

(2) Where the possession of any machinery, equipment or other pro- perty, has vested in the Central Government or the Braithwaite and Company Limited, or the Government company, under this Act, but such machinery, equipment or other property does not belong to the Company, it shall be lawful for the Central Government, or the Braith- waite and Company Limited, or the Government company to continue to possess such machinery or equipment or other property on the same terms and conditions under which they were possessed by the Company immediately before the appointed day.

23. Any money paid to the Commissioner which remains undisbursed or unclaimed for a period o± three years trom the last day on which the disbursement was made shall be transferred by the Commissioner to the general revenue account of the Central Government; but a claim to any money so transferred may be preferred to the Central Government by the person entitled to such payment and snail be dealt with as if such transfer had not been made, the order, if any, for payment of the claim being treated as an order for the refund of the revenue.

bndis- bursed or unclaimed amount to be deposited to the general revenue account.

CHAPTER VII

MISCELLANEOUS

Act to have over- riding effect.

24. The provisions of this Act shall have effect notwithstanding any- thing inconsistent therewith contained in any other law for the tims being in force or in any instrument having effect by virtue of any law,, other than this Act, or in any decree or order of any court, tribunal or other authority.

25. (1) Every contract entered into by the Company in relation to its undertakings for any service, sale or supply, and in force immediately before the appointed day, shall, on and from the expiry of one hundred and eighty days from the date of promulgation of the Ordinance, cease to have effect unless such contract is, before the expiry of that period, ratified, m writing, by the Central Government, or the Braithwaite and Company Limited, or the Government company, and, in ratifying such contract, the Central Government, or the Braithwaite and Company Limited, or the Government company may make such alteration or modi- fication therein aa it may think fit:

Contracts to cease to have effect un- less ratifi- ed by the Central Govern- ment or Braith- waite and Company Limited or Govern- ment company

Provided that the Central Government, or the Braithwaite and Com- pany Limited, or the Government company shall not omit to ratify a contract, and shall not make any alteration or modification in a contract, unless it is satisfied that such contract is unduly onerous or has been entered into in bad faith or is detrimental to the interests of the Central Government, or the Braithwaite and Company Limited, or the Govern- ment company.

(2) The Central Government, or the Braithwaite and Company Limited, or the Government company shall not omit to ratify a contract, and shall not make any alteration or modification therein, except after giving to the parties to the contract a reasonable opportunity of being heard and except after recording, in writing, its reasons for refusal to ratify the contract or for making any alteration or modification therein.

Protection of action taken in good faith.

26. (2) No suit, prosecution, or other legal proceeding shall lie. against the Central Government or any officer of that Government, or the Braith- waite and Company Limited, or the Government company, or any officer or other person authorised by that Government, or the Braithwaite anc) Company Limited, or the Government 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 Government or any of its officers or other employees, or the Braithwtaite and Company Limited, or the Government company, or any officer or other person authorised by the Braithwaite and Company Limited, or the Government company, for any damage caused or likely to be oaused by anything which is in good faith done or intended to be done under this Act.

Delegation of powers.

27. (1) The Central Government may, by notification, direct that all or any of the powers exerciseable by it under this Act, other than the power conferred by section 30, may also be exercised by such person or persons as may be specified in the notification.

(2) Whenever any delegation of power is made under sub-section (1), the person to whom such power has been delegated shall act under the direction, control and supervision of the Central Government.

Penalties.

28. Any person who,—

(a) having in his possession, custody or control > any- property forming part of any undertaking of the Company, wrongfully with^ holds such property from the Central Government, or the Bralth- waite and Company Limited, or the Government company; or

(0) wrongfully obtains possession of, or retains, any property forming part of any undertaking of the Company or wilfully with- holds or fails to furnish to the Central Government, or the Braith- waite and Company Limited, or the Government company, or any person or body of persons specified by that Government, or the Braithwaite and Company Limited, or the Government company, any document relating to such undertaking which may be In his possession, custody or control or fails to deliver to the Central Gov- ernment, or the Braithwaite and Company Limited, or the Govern- ment campany, or any person or body of. persons specified by that Government, or the Braithwaite and Company Limited, or the Gov- ernment company, any assets, books of account, registers - or other documents in his possession, custody or control, relating to the undertaking of the Company; or

(/c) wrongfully removes or destroys any property forming part of any undertaking of the Company or prefers any claim under this Act which he knows or has reasonable cause to believe to be false or grossly inaccurate,

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.

Offences by com- panies.

29. (1) Where an offence under this Act has been committed by 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 punished 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) t 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 conni- vance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, mana- ger, 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,—

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

or other association of individuals;

(fa) "director¹', in relation to a firm, means a partner in the firm.

30. (1) The Central Government may, by notification, make rules for

carrying out the provisions of this Act.

Power to make rules.

Power to remove difficulties.

Declara- tion as to the policy of the State.

14 of 19 77, Repeal and saving.

THE SCHEDULE

(.See section;, 18, 19, 20 and 22)

OSDEB OF PRIORITIES fOR THE DISCHARGE OF LIABILITIES OF THE COMPANY

PAHT A

I'osi-tukc-oi

Category U

Wages, salaries and other dues of the employees of the Company.

Category II

(t) Loans advanced by the Central (Government

(u) Loans advanced by Banks.

Category 111

Any credit availed of by the Company for the puipose of carry- ing on any trading or manufacturing operations.

Category IV

Any other loans.

Category V

Revenue, tax^s cesses, rates or an\ other dues to ih^ Cential Government or a State Government.

PART B

Pre-take-over management penod

Category Vi

Arrears in 1 elation to contributions to be made by the Company to the provident fund, salaries, wages and other amounts due to the- employees of the Company.

Category VII

Overdrafts from Banks.

Category VIII

Revenue, taxes, cesses, rates or any other dues to the Central Government, a Stat^ Government, a Local Authority or a State Electucity Board

Category IX

(u Any credit availed of by the Company for the purpose of carrving on any trading or manufacturing operations

(it) Any other dues.

STATEMENT OF OBJECTS AND REASONS

Messrs Gresham and Craven of India (Private) Limited was a private company wholly-owned by the Westinghouse Brake and Signal Company Limited nf UK and its nominee. For various reasons including mis- management, the company started incurring losses from 1966 and ulti- mately it had to be closed down on the 6th January, 1971 It remained closed for three months and then the Government of India, after investi- gation, took over the management of the company on the 31st March, 1071, under the provisions of section 18A of the Industries (Development and Regulation) Act, 1951. The factory was reopened on the 12th April, 1971. The company is mainly engaged in the manufacture of rolling stock components of the Indiin Railwavs, surh as, vacuum brake equipment, electors, stea.n valves, vacuum exhausters, etc. Af er take-over of the management bv the Central Government, then) had been considerable progress in the production performance of the company. The actual pro- *iuciioi for the ve-ir 1H76-77 lind been of the order oE Rs 177 ]rJdus. Alter tarefnl consideration of tho whole matter, the Government decided to acquire the undertakings of thn company

At the time of take-over of tbo management of the company, it was eleev 1>, it it WJF nr;t pn:,siblc for the company to vn^st nil Hs pist dues. Accordingly, moratorium was impored on the 14t'i Auguwl, 1972 jn ac- cordance v/ilh ilie provisions of section 18FB of the Industries (Develop- ment un.fl Regulation) Act, 1951, on rsalisation of tha dues from the com- pany. The period of this moratorium which cannot exceed five year> in aggregate, expired on the 13th August, 1977. Since early actioi was neces- sary, the Undertakings of the Company were acquned by pro^nlgrfi?n of the Gresham and Craven of India (Private) Limif-pd (Acquit/ion and Transfer of Undertakings) Ordinance, 1977 on the 30th September, 1977.

The Bill seeks to replace the said Ordinance.

GEORGE FERN ANDES.

NEW DELHI,

The lOfh November, 1077.

FINANCIAL MEMORANDUM

Clause 8 of the Bill provides for the payment, in cash, and in the manner specified in Chapter VI of the Bill, an amount of Rs. 1,76,00,000 for vesting in the Central Government, the right, title and interest of the Gresham and Craven of India (Private) Limited in relation to the under- takings owned by it.

2. Sub-clause (1) of clause 9 provides for payment of further amount ,.1 cash, in consideration for the deprivation of the Company of the- management oi its undertakings, an amoun. to be calculated at the rate of Rs. 50,000 per annum, for thu periori commencing on the date on which the management of the undertakings of r,he Company was laken over by the Central Government and ending on ihe 1st August, 1077, the appointed day. It ia estimated tb&t this amount will be of the order of Rs 3,20,000,

3. Sub-clause (2) of clause 9 provides that in consideration of the retrospective operation of certain pro unions of the Bill a=: fipcinVd therein, thoie shall be given, m cash, by the Control Government io the Company, an amount equal to the amount calculated at the rate of Rs. 50,000 per annum for the period comrn.jncm^ on the appointed day r."id encJj;ig on the d;ut; of proAVUiS-LtK.n •>" t'i-J '--• wiiaai a-id leaven cl Irdia (Priv.iV) Limited (Acquisition and Transfer of Undertakings} Ordinance, 1&77. This amount is estimated to bo of the order of Rs. 10,000,

4 Sub-clause (3) of clause 9 provide ±>r paynent of sMinlc: mtoreat

at the rate of four per cent, per annum for the period cotimencin;j on the date of promulgation of 1'ie Ordjnance and on tTie date on which th" 1 i; ment of such amounts 1;; made by the Commissioner of Payments It is estimated that the mierest payment in terms of the provisions oi. the said sub-clause is likely to be of the order of Rs, 60,000 per month

5 Clause 14 of the Bill provides for appointment of Commissioner of

Payments by the Government with adequate staff to assist him for the purpose of disbursing the amounts payable to t ie Company. The salary and allowance of the Commissioner of Payments and his staff and expen- diture on office and establishment will be defrayed out of the Consolidated Fund of India. The estima ed expenditure on this account is likely to be of the order of Rs 10.U00 per month.

6. Funds will!also have to be provided for capital expenditure for modernisation and expansion of the undertakings to make them financi- ally viajble. It is estimated that abotft Rs. 77,00,000 may have to be pro- vided on this account during the current financial year (1977-78) and the next financial year (1978-79) This expenditure will also be incurred after due¹ appropriation by Parliament by law

7 Tlie Bill, if enacted, is not likely to involve any other recurring or

non-recurring expenditure

MEMORANDUM REGARDING DELEGATED' LEGISLATION

Clause 30 of the Bill empowers the Central Government to make rules to carry out the provisions of the Bill Such rules may provide for matters, such as—

(a) the time withm which, and the manner in which, an intimation

referred to in sub-clause (3) of clause 4 of the Bill shall be given; and

(b) the manner in which the monies in any provident fund or other fund referred to in clause 13 shall be deaU with.

The matters m respect of which such rules may be made are matters of procedure and administrative detail and it is not practicable to provide for them in the Bill itself The delegation of legislatrv^jpower is, there- fore, of normal character.

AVTAR SINGH RIKHY,

Secretary

PHINTED TY THE GENERAL MANAGER, GOVERNMENT OP INDIA PRESS MINTO ROAD, NEW DELHI AND PVJBLISHfcD BY THF (. WTROLLBR Of PUBLICATIONS, DELHI, 1 9 78