3. Acquisition of rights of owners in respect of sick textile undertakings.—(1) On the appointed
day, every sick textile undertaking and the right, title and interest of the owner in relation to every such
sick textile undertaking shall stand transferred to, and shall vest absolutely in, the Central Government.
(2) Every sick textile undertaking which stands vested in the Central Government by virtue of
sub-section (1) shall, immediately after it has so vested, stand transferred to, and vested in, the National
Textile Corporation.
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[(3) Notwithstanding the transfer and vesting of any sick textile undertaking to the National Textile
Corporation by virtue of sub-section (2), the lease-hold rights of the sick textile undertakings shall
continue to remain vested in the Central Government on payment of lease-hold rents and shall be
discharged, for and on behalf of that Government, by the National Textile Corporation as and when
payment of such lease-hold rents or any amount becomes due and payable.
(4) Subject to sub-section (3), no court shall have jurisdiction to order divestment from the National
Textile Corporation of the property vested in it by the Central Government.]
4. General effect of vesting.—(1) The sick textile undertaking referred to in section 3 shall be
deemed to include 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 on hand, reserve funds, investments and book debts and all 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 owner of the sick textile undertaking, whether within or
outside India, and all books of account, registers and all other documents of whatever nature relating
thereto and shall also be deemed to include the liabilities and obligations specified in sub-section (2) of
section 5.
1. Ins. by Act 36 of 2014, s. 2 (w.e.f. 17-12-2014).
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(2) All property as aforesaid which have vested in the Central Government under sub-section (1) of
section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage,
charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of
any court restricting the use of such property in any manner shall be deemed to have been withdrawn.
(3) Where any licence or other instrument in relation to a sick textile undertaking had been granted at
any time before the date on which the Ordinance was promulgated, to an owner by the Central
Government or a State Government or any other authority, the National Textile Corporation shall, on and
from such date, be deemed to be substituted in such licence or other instrument in place of the owner
referred to therein as if such licence or other instrument had been granted to it and shall hold such licence
or the sick textile undertaking specified in such other instrument for the remainder of the period for which
the owner would have held such licence or the sick textile undertaking under such other instrument.
(4) Every mortgagee of any property which has vested under this Act in the Central Government and
every person holding any charge, 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.
(5) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in
sub-section (2) or any other person holding any charge, lien or other 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 the amount specified in relation to such property in the
First Schedule, but no such mortgage, charge, lien or other interest shall be enforceable against any
property which has vested in the Central Government.
(6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any
matter specified in sub-section (2) of section 5 in respect of the sick textile undertaking, instituted or
preferred by or against the textile company, is pending, the same shall not abate, be discontinued or be, in
any way, prejudicially affected by reason of the transfer of the sick textile undertaking or of anything
contained in this Act but the suit, appeal or other proceeding may be continued, prosecuted and enforced
by or against the National Textile Corporation.
(7) Any person, who, on the date on which the Ordinance was promulgated, was in possession of, or
had under his custody or control, the whole or any part of any sick textile undertaking referred to in
section 3, the management of which could not be taken over by the Central Government by reason of any
decree, order or injunction of any court or otherwise, shall deliver forthwith the possession of such
undertaking or part and all books of account, registers and all other documents of whatever nature relating
to such undertaking or part to the Central Government or the National Textile Corporation or such other
person as the Central Government or the National Textile Corporation, as the case may be, may specify in
this behalf.
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[(8) Notwithstanding the fact that the textile operations have been discontinued in any sick textile
undertaking being revived, shall for all effects and purposes be deemed that the textile operations are
being continued and no suit or proceeding shall be instituted or if instituted be maintainable against the
National Textile Corporation on the ground that it has discontinued such activity in the sick textile
undertaking.
(9) For the removal of doubts, it is hereby declared that the continued deemed vesting of the
lease-hold land in the Central Government shall not affect, impair or in any manner prejudice the rights of
the National Textile Corporation to prosecute or defend any proceedings as a subsequent vestee in respect
of any such lease-hold rights and no such proceedings shall fail only on account of the non-impleadment
of that Government.]
5. Owner to be liable for certain prior liabilities.—(1) Every liability, other than the liability
specified in sub-section (2) of the owner of a sick textile undertaking, in respect of any period prior to the
appointed day, shall be the liability of such owner and shall be enforceable against him and not against
the Central Government or the National Textile Corporation.
1. Ins. by Act 36 of 2014, s. 3 (w.e.f. 17-12-2014).
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(2) Any liability arising in respect of—
(a) loans advanced by the Central Government, or a State Government, or both, to a sick textile
undertaking (together with interest due thereon) after the management of such undertaking had been
taken over by the Central Government.
(b) amounts advanced to a sick textile undertaking (after the management of such undertaking
had been taken over by the Central Government), by the National Textile Corporation or by a State
Textile Corporation, or by both, together with interest due thereon.
(c) wages, salaries and other dues of employees of the sick textile undertaking, in respect of any
period after the management of such undertaking had been taken over by the Central Government,
shall, on and from the appointed day, be the liability of the Central Government and shall be discharged,
for and on behalf of that Government, by the National Textile Corporation as and when repayment of
such loans or amounts becomes due or as and when such wages, salaries or other dues become due and
payable.
(3) For the removal of doubts, it is hereby declared that,—
(a) save as otherwise expressly provided in this section or in any other section of this Act, no
liability, other than the liability specified in sub-section (2), in relation to a sick textile undertaking in
respect of any period prior to the appointed day, shall be enforceable against the Central Government
or the National Textile Corporation;
(b) no award, decree or order of any court, tribunal or other authority in relation to any sick textile
undertaking passed after the appointed day in respect of any matter, claim or dispute, in relation to
any matter not referred to in sub-section (2), which arose before that day, shall be enforceable against
the Central Government or the National Textile Corporation;
(c) no liability of any sick textile undertaking or any owner thereof for the contravention, before
the appointed day, of any provision of law for the time being in force, shall be enforceable against the
Central Government or the National Textile Corporation.
Explanation.—In this section, “State Textile Corporation” means a corporation, formed and
registered under the Companies Act, 1956 (1 of 1956), in a State, which is in charge of the management
of a sick textile undertaking either as a person authorised under the Industries (Development and
Regulation) Act, 1951 (65 of 1951), or as the Custodian under the Sick Textile Undertakings (Taking
Over of Management) Act, 1972 (72 of 1972) and includes the West Bengal State Textile Corporation
Limited which has advanced amounts to sick textile undertakings in the State.
6. National Textile Corporation to form subsidiary corporations.—(1) The National Textile
Corporation may, if it considers it necessary so to do, form subsidiary corporations under the Companies
Act, 1956 (1 of 1956), and register them under that Act.
(2) The National Textile Corporation may, by order in writing, transfer any sick textile undertaking or
part thereof to a Subsidiary Textile Corporation and any such transfer shall be subject to such terms and
conditions as may be specified in the said order.
(3) The Subsidiary Textile Corporation shall, on and from the date of such transfer, be deemed to be
substituted in the licence or other instrument referred to in sub-section (3) of section 4 in place of the
National Textile Corporation as if such licence or other instrument had been granted to the Subsidiary
Textile Corporation, and shall hold such licence or other instrument for the remainder of the period for
which the National Textile Corporation would have held such licence or other instrument.
(4) On the transfer to a Subsidiary Textile Corporation of any sick textile undertaking or any part
thereof, the liabilities required to be discharged by the National Textile Corporation under sub-section (2)
of section 5, shall, in so far as they relate to the sick textile undertaking or part thereof so transferred to
the Subsidiary Textile Corporation, be discharged, on and from the date of such transfer, by the
Subsidiary Textile Corporation as and when any such liability is required to be discharged.
(5) Save as otherwise expressly provided in this Act, references in this Act to the National Textile
Corporation shall, in respect of any sick textile undertaking or any part thereof which is transferred to a
Subsidiary Textile Corporation, be construed as references to the Subsidiary Textile Corporation.
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7. Shares to be issued by the National Textile Corporation for the value of the assets transferred
to it by the Central Government.—(1) An amount equal to the value of the assets of a sick textile
undertaking transferred to, and vested in, the National Textile Corporation under sub-section (2) of
section 3, shall be deemed to be the contribution made by the Central Government to the equity capital of
the National Textile Corporation; and for the contribution so made, the National Textile Corporation shall
issue (if necessary after amending its memorandum and articles of association) to the Central Government
paid-up shares, in its equity capital, having a face value equal to the amount specified against the sick
textile undertaking in the corresponding entry in column (4) of the First Schedule.
(2) Where any liability assumed by the Central Government under this Act is taken over by the
National Textile Corporation under section 27, the Central Government shall surrender to that
Corporation the shares issued to it under sub-section (1) having the face value equal to the amount to the
extent to which the liability has been so taken over by the National Textile Corporation and thereupon the
share capital of the National Textile Corporation shall, to the extent of the face value of the shares so
surrendered, stand reduced.