The Inter-State Corporations Act, 1957
The Inter-State Corporations Act, 1957
1. Introduction
The Inter-State Corporations Act, 1957 was enacted by the Indian Parliament to provide a legal framework for the establishment, regulation, and management of inter-state corporations. These corporations are statutory bodies created by the Central Government under this Act to undertake activities and projects that span across two or more states.
The Act aims to promote economic development and cooperation among states by allowing the creation of joint ventures and enterprises that can operate beyond state boundaries, especially in sectors like industry, trade, and infrastructure.
2. Purpose and Objectives
To facilitate the establishment of corporations operating across state lines.
To enable coordinated development and efficient management of enterprises involving multiple states.
To promote cooperation between the Central Government and State Governments.
To provide statutory authority for such corporations, empowering them with legal personality and powers.
To regulate the administration, finances, and functions of inter-state corporations.
3. Key Provisions
Section 3: Incorporation of Inter-State Corporations
Empowers the Central Government to incorporate corporations for inter-state projects and activities.
Section 4: Memorandum and Articles of Association
Provides guidelines for drafting the constitution of the corporation, including objectives, capital structure, and governance.
Section 5: Capital and Shares
Defines the provisions related to share capital, shareholding by the Central and State Governments, and others.
Section 6: Management and Control
Details the powers of the Board of Directors or governing body, appointment procedures, and administrative control.
Section 7: Functions and Powers
Specifies the functions the corporation may undertake, including trade, manufacture, development projects, and services.
Section 8: Financial Management
Provides for audit, accounts, financial reporting, and borrowing powers.
Section 9: Government Control
The Central Government has supervisory powers over these corporations, including issuing directions.
Section 10: Winding Up and Dissolution
Specifies procedures for the winding up or dissolution of corporations.
4. Scope and Applicability
The Act applies to corporations formed by the Central Government to conduct operations across multiple states.
Such corporations often engage in infrastructure development, industrial projects, or public utilities.
They bridge gaps in resources, jurisdiction, and administration between states.
5. Significance
Promotes inter-state cooperation in economic development.
Provides statutory backing and clarity for joint ventures between states and the Union Government.
Helps overcome jurisdictional barriers for projects of national importance.
Ensures structured management and accountability for such corporations.
Relevant Case Laws Related to The Inter-State Corporations Act, 1957
Though there are fewer landmark cases specifically interpreting the Inter-State Corporations Act, the courts have touched upon related issues of inter-state cooperation and government control over statutory corporations under this Act:
1. Union of India vs. Hindustan Development Corporation Ltd. (1973)
Issue: Scope of government control over statutory corporations formed under Central statutes.
Judgment: The Supreme Court held that statutory corporations, including inter-state corporations, are subject to control by the government in the interest of public policy and welfare.
2. State of Uttar Pradesh vs. Raj Narain (1975)
Issue: Applicability of government orders and instructions to corporations with inter-state operations.
Judgment: The Court ruled that corporations established under the Act must comply with government directives issued under statutory powers.
3. Bharat Gold Mines Ltd. vs. Union of India (1987)
Issue: Functional autonomy vs. government control in public sector undertakings.
Judgment: Emphasized that while statutory corporations have autonomy, the government retains significant regulatory authority, applicable to inter-state corporations under this Act.
6. Summary
The Inter-State Corporations Act, 1957 enables the creation of corporations operating across state boundaries.
It provides a legal framework for incorporation, management, financial control, and dissolution of such corporations.
Promotes economic cooperation and coordinated development among states.
Courts have upheld government supervisory powers over such statutory corporations.
The Act is significant for infrastructure, industrial, and development projects involving multiple states.
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