18A. Power of Central Government to assume management or control of an
industrial undertaking in certain cases - (1) If the Central Government is of
opinion that -
(a) an industrial undertaking to which directions have been issued in pursuance
of section 16 has failed to comply with such directions, or
(b) an industrial undertaking in respect of which an investigation has been made
under section 15 (whether or not any directions have been issued to the
undertaking in pursuance of section 16), is being managed in a manner highly
detrimental to the scheduled industry concerned or to public interest,
the Central Government may, by notified order, authorise any person or body of
persons to take over the management of the whole or any part of the undertaking
or to exercise in respect of the whole or any part of the undertaking such
functions of control as may be specified in the order.
(2) Any notified order issued under sub-section (1) shall have effect for such
period not exceeding five years as may be specified in the order:
[Provided that if the Central Government is of opinion that it is expedient in the
public interest that any such notified order should continue to have effect after
the expiry of the period of five years aforesaid, it may from time to time issue
directions for such continuance for such period, not exceeding two years at a
time, as may be specified in the direction, so however that the total period of
such continuance (after the expiry of the said period of five years) does not
exceed [twelve years]; and where any such direction is issued, a copy thereof
shall be laid, as soon as may be, before both Houses of Parliament.]
Explanation - The power to authorise a body of persons under this section to take
over the management of an industrial undertaking which is a company includes
also a power to appoint any individual, firm or company to be the managing
agent of the industrial undertaking on such terms and conditions as the Central
Government may think fit.
18AA. Power to take over industrial undertakings without investigation
under certain circumstances - (1) Without prejudice to any other provision of
this Act, if, from the documentary or other evidence in its possession, the Central
Government is satisfied, in relation to an industrial undertaking, that -
(a) the persons in charge of such industrial undertaking have, by reckless
investments or creation of incumbrances on the assets of the industrial
undertaking, or by diversion of funds, brought about a situation which is likely to
affect the production of articles manufactured or produced in the industrial
undertaking, and that immediate action is necessary to prevent such a situation;
or
(b) it has been closed for a period of not less than three months (whether by
reason of the voluntary winding up of the company owing the industrial
undertaking or for any other reason) and such closure is prejudicial to the
concerned scheduled industry and that the financial condition of the company
owing the industrial undertaking and the condition of the plant and machinery of
such undertaking are such that it is possible to re-start the undertaking and such
re-starting is necessary in the interests of the general public.
it may, by a notified order, authorise any person or body of persons (hereafter
referred to as the Aauthorised person@) to take over the management of the
whole or any part of industrial undertaking or to exercise in respect of the whole
or any part of the undertaking such functions of control as may be specified in the
order.
(2) The provisions of sub-section (2) of section 18A shall, as far as may be, apply
to a notified order made under sub-section (1) as they apply to a notified order
made under sub-section (1) of section 18A.
(3) Nothing contained in sub-section (1) and sub-section (2) shall apply to an
industrial undertaking owned by a company which is being wound up by or under
the supervision of the court.
(4) Where any notified order has been made under sub-section (1), the person or
body of persons having for the time being, charge of the management or control
of the industrial undertaking, whether by or under the orders of any court or any
contract, instrument or otherwise, shall, notwithstanding anything contained in
such order, contract, instrument or other arrangement, forthwith make over the
charge of management or control, as the case may be, of the industrial
undertaking to the authorised person.
(5) The provisions of sections 18B to 18E (both inclusive) shall, as far as may be,
apply to, or in relation to, the industrial undertaking, in respect of which a notified
order has been made under sub-section (1), as they apply to an industrial
undertaking in relation to which a notified order has been issued under section
18A.
18B. Effect of notified order under section 18A - (1) On the issue of a notified
order under section 18A authorizing the taking over of the management of an
industrial undertaking-
(a) all persons in charge of the management, including persons holding office as
managers or directors of the industrial undertaking immediately before the issue
of the notified order, shall be deemed to have vacated their offices as such;
(b) any contract of management between the industrial undertaking and any
managing agent or any director thereof holding office as such immediately before
the issue of the notified order shall be deemed to have terminated;
(c) the managing agent, if any appointed under section 18A, shall be deemed to
have been duly approinted as the managing agent in pursuance of the Indian
Companies Act, 1913 (7 of 1913)[See now the Companies Act, 1956 (1 of
1956)], and the memorandum and articles of association of the industrial
undertaking, and the provisions of the said Act and of the memorandum and
articles shall, subject to the other provisions contained in this Act, apply
accordingly, but no such managing agent shall be removed from office except
with the previous consent of the Central Government;
(d) the person or body of persons authorized under section 18A to take over the
management shall take all such steps as may be necessary to take into his or
their custody or control all the property, effects and actionable claims to which
the industrial undertaking is or appears to be entitled, and all the property and
effects of the industrial undertaking shall be deemed to be in the custody of the
person or, as the case may be, the body of persons as from the date of the
notified order; and
(e) the persons, if any, authorized under section 18A to take over the
management of an industrial undertaking which is a company shall be for all
purposes the directors of the industrial undertaking duly constituted under the
Indian Companies Act, 1913 (7 of 1913)[See now the Companies Act, 1956 (1 of
1956)], and shall alone be entitled to exercise all the powers of the directors of
the industrial undertaking, whether such powers are derived from the said Act or
from the memorandum or articles of association of the industrial undertaking or
from any other source.
(2) Subject to the other provisions contained in this Act and to the control of the
Central Government, the person or body of persons authorized to take over the
management of an industrial undertaking, shall take such steps as may be
necessary for the purpose of efficiently managing the business of the industrial
undertaking and shall exercise such other powers and have such other duties as
may be prescribed.
(3) Where any person or body of persons has been authorized to exercise any
functions of control in relation to an industrial undertaking, the undertaking shall
be carried on pursuant to any directions given by the authorized person in
accordance with the provisions of the notified order, and any person having any
functions of management in relation to the undertaking or part thereof shall
comply with all such directions.
(4) The person or body of persons authorized under section 18A shall,
notwithstanding anything contained in the memorandum or articles of association
of the industrial undertaking, exercise his or their functions in accordance with
such directions as may be given by the Central Government so, however, that he
or they shall not have any power to give any other person any directions under
this section inconsistent with the provisions of any Act or instrument determining
the functions of the authority carrying on the undertaking except in so far as may
be specifically provided by the notified order.
18C. Contracts in bad faith, etc., may be cancelled or varied - Without
prejudice to the provisions contained in section 18B, the person or body of
persons authorized under section 18A to take over the management of an
industrial undertaking may, with the previous approval of the Central
Government, make an application to any court having jurisdiction in this behalf
for the purpose of cancelling or varying any contract or agreement entered into,
at any time before the issue of the notified order under section 18A, between the
industrial undertaking and any other person and the court may, if satisfied after
due inquiry that such contract or agreement had been entered into in bad faith
and is, detrimental to the interests of the industrial undertaking, make an order
cancelling or varying (either unconditionally or subject to such conditions as it
may think fit to impose) that contract or agreement, and the contract or
agreement shall have effect accordingly.
18D. No right to compensation for termination of office or contract -
Notwithstanding anything contained in any law for the time being in force, no
person who ceases to hold any office by reason of the provisions contained in
clause (a) of section 18B, or whose contract of management is terminated by
reason of the provisions contained in clause (b) of that section, shall be entitled
to any compensation for the loss of office or for the premature termination of his
contract of management:
Provided that nothing contained in this section shall affect the right of any such
person to recover from the industrial undertaking moneys recoverable otherwise
than by way of such compensation.
18E. Application of Act 7 of 1913 - (1) Where the management of an industrial
undertaking, being a company as defined in the Indian Companies Act,
1913(Now the Companies Act, 1956 (1 of 1956), is taken over by the Central
Government, then, notwithstanding anything contained in the said Act or in the
memorandum or articles of association of such undertaking,-
(a) it shall not be lawful for the shareholders of such undertaking or any other
person to nominate or appoint any person to be a director of the undertaking;
(b) no resolution passed at any meeting of the shareholders of such undertaking
shall be given effect to unless approved by the Central Government;
(c) no proceeding for the winding up of such undertaking or for the appointment
of a receiver in respect thereof shall lie in any court except with the consent of
the Central Government.
(2) Subject to the provisions contained in sub-section (1), and to the other
provisions contained in this Act and subject to such other exceptions, restrictions
and limitations, if any, as the Central Government may, by notification in the
Official Gazette, specify in this behalf, the Indian Companies Act, 1913(now the
Companies Act, 1956 (1 of 1956), shall continue to apply to such undertaking in
the same manner as it applied thereto before the issue of the notified order under
section 18A.
18F. Power of Central Government to cancel notified order under section
18A - If at any time it appears to the Central Government on the application of
the owner of the Industrial undertaking or otherwise that the purpose of the order
made under section 18A has been fulfilled or that for any other reason it is not
necessary that the order should remain in force, the Central Government may, by
notified order, cancel such order and on the cancellation of any such order the
management or the control, as the case may be, of the industrial undertaking
shall vest in the owner of the undertaking.