3. Vesting of management of a sugar undertaking in Central Government.—(1) Where the
Central Government is satisfied—
(a) that any sugar undertaking has in any sugar year failed to commence the manufacture of sugar
on or before the appointed day in respect of that year, or having started the manufacture of sugar on
or before that day ceased to manufacture sugar before the expiry of the average period of manufacture
of sugar in relation to that undertaking; or
(b) that on any date in any sugar year any sugar undertaking has, in relation to the cane
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[purchased, at any time (whether in that sugar year or in any earlier sugar year or sugar years and
whether before or after the commencement of this Act), before that date] for the purposes of the
undertaking, arrears of cane dues to the extent of more than ten per cent. of the total price of the cane
purchased for the purposes of the undertaking during the immediately preceding sugar year; and
(c) that in either case the effective functioning of the undertaking is necessary for the purposes of
this Act,
the Central Government may issue a notice in such form and in such manner as may be prescribed to the
owner or the manager of such sugar undertaking calling upon such owner or manager to report in writing
within such time, not being less than five days, as may be specified in the notice, the circumstances under
which such undertaking has so failed to commence or ceased to manufacture sugar or, as the case may be,
clear the said arrears of cane dues and to show cause as to why the management of such undertaking
should not be taken over by the Central Government under this Act.
(2) As soon as may be, after the receipt of the report under sub-section (1) from the sugar
undertaking, or where the sugar undertaking has failed to make such report within the time specified in
the notice to that undertaking under sub-section (1), after the expiry of such time, the Central Government
may make such further inquiry (if any) as it may deem fit, and—
(a) if the Central Government is satisfied that having regard to all the circumstances of the case
and the purposes of this Act that it would be expedient to give further time to the undertaking to
enable it to commence or resume production of sugar or, as the case may be, clear the arrears of cane
dues, it may, by order in writing, specify the date on or before which and the manner in which such
undertaking shall commence or resume production of sugar or, as the case may be, clear the said
arrears of cane dues; or
(b) if the Central Government is not satisfied as provided in clause (a), declare by notification
that the management of such undertaking shall vest in the Central Government on and from such date
as may be specified in such notification.
(3) If a sugar undertaking has failed to comply with an order made under clause (a) of sub-section (2),
or having commenced or resumed the production of sugar on or before the date specified in such order,
ceased to manufacture sugar before the expiry of the average period of manufacture of sugar in relation to
that undertaking, and the Central Government is satisfied that it is necessary so to do for the purposes of
this Act, it may, by notification, declare that the management of such sugar undertaking shall vest in the
Central Government on and from such date as may be specified in such notification.
(4) Any failure on the part of the owner or manager of the sugar undertaking to utilise the undertaking
for the manufacture of sugar during any period shall not be taken into account for the purpose of issuing a
notification in respect of that undertaking under clause (b) of sub-section (2) or sub-section (3) where
such failure is attributable to any circumstances (other than financial difficulties) beyond his control.
1. Subs. by Act 18 of 1979, s. 2, for “purchased before that date” (w.e.f. 31-3-1979).
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(5) Every notification issued under sub-section (2) or sub-section (3) for vesting the management of a
sugar undertaking in the Central Government shall be in force for such period not exceeding three years
from the date of vesting as may be specified in the notification but if 1
* * * the Central Government is of
opinion that it is expedient in the public interest that the management of the sugar undertaking should
continue to vest in the Central Government after the expiry of the period so specified, it may, from time to
time, issue, by notification, directions for such continuance for such further period as may be specified in
the directions:
Provided that the total period for which the management of the undertaking may remain vested in the
Central Government shall in no case exceed 2
[seven years] from the date of vesting.
(6) For the purposes of this section—
(a) “cane dues”, in relation to any cane purchased by a sugar undertaking, means the price
payable in accordance with the agreement (whether express or implied) or arrangement relating to
such purchase and where there is no such agreement or arrangement, the price as determined in
accordance with the law applicable to such purchase;
(b) any cane dues being the price payable for any cane acquired for the purposes of a sugar
undertaking shall not be deemed to be in arrears at any time before the expiry of fourteen days from
the date of delivery of such cane to the undertaking;
(c) the average period of manufacture of sugar in relation to any sugar undertaking with respect to
any sugar year (hereafter in this clause referred to as the current sugar year) shall be calculated by
dividing the total number of calendar days during which the undertaking manufactured sugar during
the period of three sugar years immediately preceding the current sugar year by the number of sugar
years in which the undertaking manufactured sugar during the said period of three years.
4. Assets, etc., of notified sugar undertaking.—(1) The notified sugar undertaking shall be deemed
to include all assets, rights, powers, authorities and privileges, in relation to the said undertaking and all
property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery,
automobiles and other vehicles and goods under production or in transit, cash balances, reserve funds,
investments and all other rights and interests in, or arising out of, such property as were, immediately
before the date of vesting, in the ownership, possession, power or control of that undertaking, whether
within or outside India, and all books of account, registers and all other documents of whatever nature
relating thereto.
(2) Any contract, whether express or implied, or other arrangement (whether under any statute or
otherwise) in so far as it relates to the management of the business and affairs of the notified sugar
undertaking, and in force immediately before the date of vesting, or any order made by any Court in so far
as it relates to the management of the business and affairs of that undertaking and in force immediately
before the said date, shall be deemed to have terminated on that date.
(3) All persons in whom the management of the business and affairs of the notified sugar undertaking
vests immediately before the date of vesting shall, as from that date, cease to be so vested.
(4) Notwithstanding any judgment, decree or order of any Court, tribunal or other authority or
anything contained in any law (other than this Act) for the time being in force, every Receiver, Official
Liquidator or other person in whose possession or custody or under whose control the notified sugar
undertaking or any part thereof may be immediately before the date of vesting, shall, on that date, deliver
the possession of the said undertaking or such part thereof, as the case may be, to the Custodian,
appointed under section 5, or, where no Custodian has been appointed, to such other person as the Central
Government may direct.
1. The words “the period so specified is less than three years from the date of vesting and” omitted by Act 44 of 1981, s. 2
(w.e.f. 30-11-1981).
2. Subs. by Act 11 of 1985, s. 2, for “six years” (w.e.f. 20-11-1984).
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(5) The Central Government may take, or cause to be taken, all necessary steps for securing the
possession of the notified sugar undertaking.
5. Appointment of Custodian.—(1) The Central Government may, as soon as it is convenient
administratively so to do, appoint an individual or a body of individuals or a Government company as the
Custodian of a notified sugar undertaking or a group of notified sugar undertakings for the purpose of
taking over the management of such undertaking or undertakings and the Custodian so appointed shall
carry on the management of such undertaking or undertakings for and on behalf of the Central
Government.
(2) The Central Government may also appoint an individual or a Government company as the
Custodian-General for exercising supervision and control over all the notified sugar undertakings, and on
such appointment, every Custodian appointed under sub-section (1) shall act under the guidance, control
and supervision of the Custodian-General.
(3) On the appointment of a Custodian under sub-section (1), the charge of management of the
notified sugar undertaking or group of notified sugar undertakings, as the case may be, shall vest in such
Custodian and all persons in charge of the management of such undertaking or undertakings immediately
before such appointment shall cease to be in charge of such management and shall be bound to deliver to
the Custodian all assets, books of account, registers or other documents in their custody relating to such
undertaking or group of undertakings.
(4) The Central Government may issue such directions (including directions as to initiating,
defending or continuing any legal proceedings before any Court, tribunal or other authority) to the
Custodian or Custodian-General as to his or its powers and duties as the Central Government deems
desirable and the Custodian-General or, if there is no Custodian-General, the Custodian may apply to the
Central Government at any time for instructions as to the manner in which the Custodian or the
Custodian-General shall conduct the management of the notified sugar undertaking or in relation to any
matter arising in the course of such management.
(5) Any person, who, on the appointed day, has in his possession or under his control any books,
papers, or other documents relating to the notified sugar undertaking, shall, notwithstanding anything
contained in any other law for the time being in force, be liable, to account for the books, papers and other
documents, to the Custodian and shall deliver them up to the Custodian or to such other person as may be
authorised by the Central Government or the Custodian in this behalf.
(6) Every person in charge of the management of the notified sugar undertaking, immediately before
the date of vesting, shall, within ten days from that date or within such further period as the Central
Government may allow in this behalf, furnish to the Custodian a complete inventory of all the properties
and assets (including particulars of book debts, investments and belongings) forming part of the
undertaking immediately before the date of vesting and of all liabilities and obligations of the undertaking
subsisting immediately before that date and also of all agreements entered into by the owner or manager
of the undertaking, in relation to the said undertaking, and in force immediately before that date.
(7) The Custodian-General shall hold office during the pleasure of the Central Government and shall
receive such remuneration as may be fixed by the Central Government.
(8) Every Custodian or where a body of individuals has been appointed as the Custodian, each such
individual shall hold office during the pleasure of the Central Government and shall receive from the
funds of the sugar undertaking or group of sugar undertakings concerned, such remuneration as may be
fixed by the Central Government.
Explanation.—The remuneration payable to the Custodian of two or more notified undertakings shall
be allocated among the funds of the undertakings in such proportion as the Central Government may,
having regard to the quantum of work in respect of such undertakings and other relevant circumstances,
by order determine.
6. Payment of amount.—(1) The owner of every notified sugar undertaking shall be given by the
Central Government an amount in cash for vesting in it under section 3 the management of such
undertaking.
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(2) For every month during which the management of the notified sugar undertaking remains vested
in the Central Government under this Act, the amount, referred to in sub-section (1), shall be,—
(a) where the daily cane crushing capacity of the undertaking is five hundred tonnes or less, an
amount of five hundred rupees; and
(b) where the daily cane crushing capacity of the undertaking is more than five hundred tonnes,
an amount computed at the rate of one rupee for each tonne of such capacity or an amount of one
thousand two hundred and fifty rupees, whichever is less.