The Gujarat Closed Textile Undertakings (Nationalisation) Act, 1986

Short title and commencement.—

1. (1) This Act may be called the Gujarat Closed Textile Undertakings (Nationalisation) Act, 1986.
2. (2) It shall be deemed to have come into force on the 2nd day of November, 1985.

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

1. (a) "appointed day" means the 2nd day of November, 1985;
2. (b) "Commissioner" means the Commissioner of Payments appointed under section 15;
3. (c) "Custodian" means the Custodian appointed under section 4;
4. (d) "notification" means a notification published in the Official Gazette;
5. (e) "owner", in relation to a textile undertaking, means any person or body of persons who, or which, is the immediate proprietor, or lessee, or occupier of the textile undertaking or any part thereof and, in the case of a textile undertaking which is being wound up or the business whereof is being carried on by a liquidator or receiver, includes such liquidator or receiver;
6. (f) "prescribed" means prescribed by rules made under this Act;
7. (g) "specified textile undertaking" means a textile undertaking specified in the First Schedule;
8. (h) "textile" includes yarn or any kind of fabric or cloth, or any other article made wholly or in part of cotton, wool, silk, artificial silk or other fibre;
   • (i) "textile company" means a company specified in the Second Schedule being a company which owns one or more specified textile undertakings;
9. (j) "textile undertaking" means an undertaking engaged in the manufacture of textiles and includes all factories, plants, machineries, equipments and other accessories thereof;
10. (k) words and expressions used but not defined in this Act and defined in the Companies Act, 1956 (1 of 1956), shall have the meanings respectively assigned to them in that Act.

Transfer to, and vesting in, the State Government of closed textile undertakings. —

1. (1) On the appointed day, every closed textile undertaking and the right, title and interest of the owner in relation to every such closed textile undertaking shall, by virtue of this Act, stand transferred to, and shall vest absolutely in, the State Government.
2. (2) Every closed textile undertaking which vests in the State Government under sub-section
3. (1) 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 or other authority restricting the use of such closed textile undertaking in any manner or appointing any receiver in respect of the whole or any part of such closed textile undertaking shall be deemed to have been withdrawn.
4. (3) Where any licence or other instrument in relation to a closed textile undertaking had been granted at any time before the appointed day to the owner by the Central Government, the State Government or any other authority, the State Government shall, on and from the appointed day, be deemed to be substituted in such licence or other instrument in place of the owner as if such licence or other instrument had been granted to the State Government and the State Government shall hold it for the remainder of the period for which the owner would have held it.
5. (4) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any property or assets of the closed textile undertaking, which has vested in the State Government under sub-section (1), instituted or preferred by or against the owner is pending, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the closed 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 State Government or, where the State Government directs, by or against the Textile Corporation.

General effect of vesting. —

1. (1) The closed textile undertaking referred to in section 3 shall be deemed to include all assets, rights, leaseholds, 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, whether within or outside the textile undertaking, and all books of account, registers and all other documents of whatever nature relating thereto.
2. (2) All property as aforesaid which have vested in the State Government under sub-section
3. (1) of 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 or other authority restricting the use of such property in any manner shall be deemed to have been withdrawn.
4. (3) Any officer or other person in whose possession, custody or control any such property as is referred to in sub-section
5. (1) or
6. (2) may be, shall deliver, forthwith, the property to the State Government or to such officer or other person as the State Government may appoint in this behalf.
7. (4) The properties which vest in the State Government under section 3 shall, by force of the vesting under that section, 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 or other authority restricting the use of such property in any manner shall be deemed to have been withdrawn.
8. (5) Every mortgagee of any property which has vested under this Act in the State 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.
9. (6) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in sub-section
10. (5) 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 of compensation payable under section 7 in accordance with such priorities as may be determined under section 9, but shall not have any other right in, or in relation to, the property which has vested in the State Government.

Owner to be liable for certain prior liabilities.—

1. (1) Every liability, other than the liability specified in sub-section (2), of the owner of a closed 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 State Government or the State Corporation.
2. (2) Any loan or other liabilities advanced by the Central Government or the State Government or the State Corporation or any financial institution to a closed textile undertaking before the appointed day shall continue to be the liability of such owner and shall be enforceable against him and not against the State Government or the State Corporation.
3. (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 of the owner of a closed textile undertaking in respect of any period prior to the appointed day shall be enforceable against the State Government or the State Corporation;
   • (b) no award, decree or order of any court, tribunal or other authority in relation to a closed textile undertaking passed after the appointed day, in respect of any matter, claim or dispute, not being a matter, claim or dispute in relation to any matter referred to in this Act, shall be enforceable against the State Government or the State Corporation;
   • (c) no liability incurred by the owner of a closed textile undertaking before the appointed day, in contravention of any provision of law for the time being in force, shall be enforceable against the State Government or the State Corporation.

Vesting of closed textile undertakings in the State Government.—

1. (1) On the appointed day, every closed textile undertaking and the right, title and interest of the owner in relation to every such closed textile undertaking shall, by virtue of this Act, stand transferred to, and shall vest absolutely in, the State Government.
2. (2) The closed textile undertaking which vests in the State Government under sub-section
3. (1) shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other encumbrances affecting it with any attachment, injunction or decree or order of any court or other authority restricting the use of such closed textile undertaking in any manner or appointing any receiver in respect of the whole or any part of such closed textile undertaking shall be deemed to have been withdrawn.
4. (3) Every mortgagee of any property which has vested under this Act in the State 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. (4) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in sub-section
6. (3) 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 of compensation determined under section 7, but shall not have any right to, or in relation to, the property which has vested in the State Government.
7. (5) Any licence or easement in relation to any closed textile undertaking which has vested in the State Government under sub-section
8. (1) shall, on and from the appointed day, continue and shall have the same force and effect in favour of the State Government as it had in favour of the owner of such closed textile undertaking immediately before the appointed day.
9. (6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any property or assets which has vested in the State Government under sub-section (1), instituted or preferred by or against the owner of a closed textile undertaking, is pending, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the closed 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 State Government or, where the State Government directs, by or against the State Corporation.
10. (7) Any person who, on the appointed day, has in his possession or under his control any books, documents or other papers relating to any closed textile undertaking, which has vested in the State Government under this Act and which belongs to the owner of the said closed textile undertaking, shall be liable to account for the said books, documents or other papers to the State Government or the State Corporation and shall deliver them up to the State Government or the State Corporation or to such person as the State Government or the State Corporation may authorize in this behalf.
11. (8) The State Government may take, or cause to be taken, all necessary steps for securing the possession of all closed textile undertakings which have vested in the State Government under this Act.
12. (9) Every owner of a closed textile undertaking shall, within such time and in such manner as may be prescribed, furnish to the State Government or the State Corporation a complete inventory of all the properties and assets (including particulars of book debts, investments and belongings) forming part of the closed textile undertaking immediately before the appointed day.

Power of State Government to direct vesting of the closed textile undertakings in a State Corporation.

1. (1) Notwithstanding anything contained in section 3, the State Government may, if it is satisfied that a State Corporation is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose in this behalf, direct, by notification, that the closed textile undertaking, or the right, title and interest of the owner in relation to the closed textile undertaking, which has vested in the State Government under section 3, shall, instead of continuing to vest in the State Government, vest in that State Corporation either on the date of the publication 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. (2) Where the right, title and interest of the owner in relation to the closed textile undertaking vest in a State Corporation under sub-section (1), the State Corporation shall, on and from the date of such vesting, be deemed to have become the owner in relation to such closed textile undertaking, and all the rights and liabilities of the State Government in relation to such closed textile undertaking shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the State Corporation.

Payment of amount to owners of closed textile undertakings.

1. (1) The owner of every closed textile undertaking shall be given by the State Government, in cash and in the manner specified in section 10, for the vesting in the State Government, under section 3, of the right, title and interest of the owner in relation to such closed textile undertaking, an amount equal to the amount specified against it in the corresponding entry in column 4 of the First Schedule.
2. (2) A separate amount shall be given by the State Government, in cash, to the owner of every closed textile undertaking, in accordance with the provisions of section 11, for the deprivation of such owner of the management of the closed textile undertaking.

Payment of further amount.—(1) Where the Central Government proposes to acquire any textile undertaking, the amount specified in section 7 or, as the case may be, section 8 shall be deemed to be the amount representing the value of the textile undertaking as on the appointed day.

1. (2) In addition to the amount referred to in sub-section (1), there shall be given by the Central Government to the owner of each textile undertaking, simple interest at the rate of four per cent. per annum on the said amount for the period commencing on the appointed day and ending on the date on which the payment of such amount is made by the Central Government to the Commissioner.
2. (3) The further amount payable by the Central Government to the owner of each textile undertaking shall be determined in accordance with the principles specified in the Schedule.

Management, etc., of the closed textile undertakings.—(1) The general superintendence, direction, control and management of the affairs and business of each closed textile undertaking, the right, title and interest in relation to which have vested in the State Government under section 3, shall vest in the State Textiles Corporation.

1. (2) The State Textiles Corporation shall be entitled to exercise all such powers and do all such things as the owner of the closed textile undertaking is authorised to exercise and do.
2. (3) The State Textiles Corporation may authorise any person or persons to exercise all or any of the powers exercisable by it under this Act and the person or persons so authorised shall manage the business of the closed textile undertaking in accordance with the direction of the State Textiles Corporation.
3. (4) Notwithstanding anything contained in any law for the time being in force, the State Textiles Corporation may appoint as many persons as it thinks fit to serve as managers of the closed textile undertaking and shall exercise general superintendence, direction and control over them.

Duty of persons in charge of management of closed textile undertakings to deliver all assets, etc.

1. (1) On the appointed day, every person in charge of the management of a closed textile undertaking immediately before such day shall deliver to the Government or to such person as the Government may appoint in this behalf, all assets, registers, books of account, records and other documents in his possession or under his control relating to the closed textile undertaking.
2. (2) The Government may take, or cause to be taken, all necessary steps for securing possession of all assets, registers, books of account, records and other documents which relate to the closed textile undertaking and which have not been delivered to the Government or the person appointed by it under sub-section (1).

Accounts and audit.

1. (1) The accounts of the closed textile undertaking shall be maintained, and audited in such manner as may be prescribed for the period beginning on the appointed day and ending on the date on which the closed textile undertaking is transferred to and vested in the State Textile Corporation.
2. (2) The provisions of sub-section
3. (1) shall apply to the State Textile Corporation in respect of the closed textile undertaking transferred to and vested in it, as they apply to the management of any other textile undertaking under its control.

Power of State Government to make rules.

1. (1) The State Government may, by notification in the Official Gazette, make rules to carry out the provisions of this Act.
2. (2) Every rule made by the State Government under this Act shall be laid, as soon as may be after it is made, before the State Legislature 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 in which it is so laid or the session immediately following, the State Legislature agrees in making any modification in the rule or the State Legislature agrees that the rule should not be made, the rule shall thereafter have effect only in such modified form or be 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. If any difficulty arises in giving effect to the provisions of this Act, the State Government may, by order not inconsistent with the provisions of this Act, remove the difficulty:

Power of State Government to exercise powers of the owner in certain cases Power of State Government to exercise powers of the owner in certain cases.—(1) If the State Government is satisfied that the owner of any specified textile undertaking has, at any time before the appointed day, disposed of any property of the textile undertaking, whether by sale, mortgage, lease or otherwise, otherwise than in the ordinary course of business, then, the State Government may, notwithstanding anything contained in any law for the time being in force, by order, direct that such property shall be restored to the textile undertaking.

1. (2) On the issue of an order under sub-section (1), the property to which the order relates shall vest in the textile undertaking and where the property has been sold, the purchaser shall be required to refund the sale price to the textile undertaking.
2. (3) Where the property has been mortgaged or leased, the mortgage or lease, as the case may be, shall stand cancelled and the textile undertaking shall be liable to refund such amount as may be determined in this behalf by the State Government, having regard to the value of the property and other relevant factors.
3. (4) Any person aggrieved by an order of the State Government under this section may, within thirty days from the date of the order, prefer an appeal to the Commissioner of Textile and the decision of the Commissioner of Textile thereon shall be final: Provided that the Commissioner of Textile may entertain the appeal after the expiry of the said period of thirty days if he is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.

Repeal and saving.—(1) The Gujarat Closed Textile Undertakings (Nationalisation) Ordinance, 1986 is hereby repealed.

1. (2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act.

Schedule ("List of Closed Textile Undertakings") 1. The Ahmedabad New Cotton Mills Company Limited, Ahmedabad. 2. The Ahmedabad Shri Ramkrishna Mills Company Limited, Ahmedabad. 3. The Ahmedabad Sarangpur Mills Company Limited, Ahmedabad. 4. The Ajit Mills Limited, Ahmedabad. 5. The Ananta Mills Company Limited, Ahmedabad. 6. The Bhalakia Mills Company Limited, Ahmedabad. 7. The Biharilal Ramcharan Cotton Mills Limited, Ahmedabad. 8. The Marsden Spinning and Manufacturing Company Limited, Ahmedabad. 9. The Monogram Mills Company Limited, Ahmedabad. 10. The Nabhit Textile Mills Limited, Ahmedabad. 11. The New Commercial Mills Company Limited, Ahmedabad. 12. The New Swadeshi Mills of Ahmedabad Limited, Ahmedabad. 13. The Rajratna Naranbhai Mills Company Limited, Petlad. 14. The Rohit Mills Limited, Ahmedabad. 15. The Silver Cotton Mills Company Limited, Ahmedabad. 16. The Tarun Commercial Mills Company Limited, Ahmedabad.