The Gujarat Sick Textile Undertakings (Nationalisation) Act, 1986

Short title and commencement.—(1) This Act may be called the Gujarat Sick Textile Undertakings (Nationalisation) Act, 1986.

1. (2) It shall be deemed to have come into force on the 2nd day of April, 1986.

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

1. (a) "appointed day" means the 2nd day of April, 1986;
2. (b) "Commissioner" means the Commissioner of Payments appointed under section 17;
3. (c) "Custodian" means the Custodian appointed under sub-section

1. (2) of section 4;
   • (d) "notification" means a notification published in the Official Gazette;
   • (e) "owner", when used in relation to a sick textile undertaking, means any person or firm who or which, immediately before the appointed day, is the immediate proprietor or lessee or occupier of the sick textile undertaking or any part thereof, and in the case of a textile company in liquidation, the liquidator;
   • (f) "prescribed" means prescribed by rules made under this Act;
   • (g) "sick textile undertaking" means one of the textile undertakings specified in the First Schedule, the right, title and interest of the owner in relation to which have vested in the State Government under section 3;
   • (h) "specified date" means such date as the State Government may, for the purpose of any provision of this Act, by notification, specify; and different dates may be specified for different provisions of this Act;
     • (i) "textile" includes yarn or fabrics made either wholly or partly of cotton, wool, silk, synthetic or artificial fibres or other fibre;
   • (j) "textile company" means a company specified in column
2. (2) of the First Schedule, being a company which owns one or more textile undertakings;
   • (k) "textile undertaking" means an undertaking engaged in the manufacture of textiles and includes folding, packing, bleaching, dyeing, printing, finishing or processing of textiles;
   • (l) words and expressions used but not defined in this Act and defined in the Companies Act, 1956 (1 of 1956), have the meanings respectively assigned to them in that Act.

Acquisition of rights of owners in respect of sick textile undertakings

1. (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, by virtue of this Act, stand transferred to, and shall vest absolutely in the State Government.
2. (2) Every sick textile undertaking which vests in the State Government under sub-section
3. (1) shall be deemed to have become vested with all 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 the sick textile undertaking, and all books of account, registers and all other documents of whatever nature relating thereto.
4. (3) All property as aforesaid which have vested in the State Government under sub-section
5. (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 property in any manner shall be deemed to have been withdrawn.
6. (4) 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 the claims in respect of such mortgage, charge, lien or other interest.
7. (5) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in sub-section
8. (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 6, but shall not be entitled to enforce any claim against any property so vested.
9. (6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any property or liability which has vested in the State Government under section 3, instituted or preferred by or against the sick 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 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 State Government or the State Textile Corporation, as the case may be.

Sick textile undertakings to vest in the State Government

1. (1) Notwithstanding anything contained in section 3, the State Government shall, if it is satisfied that a State Textile Corporation is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct that the sick textile undertaking shall, instead of continuing to vest in the State Government, vest in the State Textile Corporation either on the date of publication of the direction or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the direction.
2. (2) Where the right, title and interest of the owner of any sick textile undertaking vest in the State Textile Corporation under sub-section (1), the State Textile Corporation shall, on and from the date of such vesting, be deemed to have become the owner in relation to such sick textile undertaking and all the rights and liabilities of the State Government in relation to such sick textile undertaking shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the State Textile Corporation.
3. (3) The State Textile Corporation may, if it considers it necessary or expedient so to do, entrust, either for the time being or for such period as it may think fit, the management of the sick textile undertaking to any person or body of persons (including a Government company) on such terms and conditions as that Corporation may, with the previous approval of the State Government, determine.

Power of State Government to direct vesting of sick textile undertakings in a State Government company.

1. (1) Notwithstanding anything contained in section 3, the State Government may, if it is satisfied that a State Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct that the sick textile undertaking, and the right, title and interest of the owner in relation to every such undertaking, shall, instead of vesting in the State Government, vest in the State Government company either on the appointed day or on such earlier or later date (not being a day earlier than the appointed day) as may be specified in the direction.
2. (2) Where the right, title and interest of the owner of the sick textile undertaking vest in a State Government company under sub-section (1), the State Government company shall, on and from the date of such vesting, be deemed to have become the owner in relation to such undertaking and all the rights and liabilities of the State Government in relation to such undertaking shall, on and from the date of such vesting, be deemed to have become the rights and liabilities of the State Government company.
3. (3) The provisions of this Act shall apply to the vesting in the State Government company under sub-section (1), as they apply to the vesting in the State Government under section 3; and references in this Act to the State Government shall be construed as references to the State Government company.

General effect of vesting.

1. (1) The sick textile undertaking, the right, title and interest in relation to which vest in the State Government or a State Government company under this Act 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 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.
2. (2) All property as aforesaid which vest in the State Government or a State Government company shall, by force of this Act, 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.
3. (3) Where any licence or other instrument in relation to a sick textile undertaking had been granted at any time before the appointed day to the owner by the Central or State Government or any other authority, the State Government or the State Government company, as the case may be, shall be deemed to be substituted in such licence or other instrument in place of the owner and shall hold the licence or the other instrument as if it had been granted to the State Government or the State Government company and the State Government or the State Government company shall hold it for the remainder of the period for which the owner would have held such licence or other instrument.
4. (4) Every mortgagee of any property which has vested under this Act in the State Government or a State Government company 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. (5) For the removal of doubts, it is hereby declared that if any property of the owner of a sick textile undertaking had vested in the State Government or a State Government company under this Act, the mortgagee of such property or any 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 to such owner under section 8, but shall not be entitled to enforce any claim against any property so vested in the State Government or the State Government company.
6. (6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any property or assets of a sick textile undertaking, in respect of which this Act applies, is pending by or against the owner of such undertaking, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of such undertaking or of any thing contained in this Act, but the suit, appeal or other proceeding may be prosecuted, continued and enforced by or against the State Government or the State Government company, as the case may be.

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 textile company 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 Textile Corporation.
2. (2) Any liability arising in respect of—
   • (a) loans advanced by the Central Government, or a State Government, or both, to the textile company (together with interest due thereon),
   • (b) wages, salaries and other dues of employees of the textile company,
   • (c) credit availed of by the textile company for purposes of trade or manufacturing operations,
   • (d) any other dues of employees of the textile company or any other dues, shall, on and from the appointed day, be the liability of the State Government and shall be discharged by the State Government or the Textile Corporation as, and when, repayment of such loans becomes due or as, and when, such wages, salaries, or other dues become due and payable: Provided that the liability in relation to the Provident Fund, Pension Fund, Gratuity or any other fund meant for the welfare of the employees shall be discharged by the State Government or the Textile Corporation only to the extent of the amount which the State Government or the Textile Corporation had considered as the liability of the owner of the textile company and which the State Government or the Textile Corporation has taken over.

Act to override all other enactments.— The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any court, tribunal or other authority.

Contracts involving discontinuance of textile undertaking to cease to have effect. —

1. (1) Any contract, whether express or implied, or other arrangement (not being a contract or arrangement for the supply of goods or services) entered into at any time before the appointed day, between the owner of a sick textile undertaking and any other person, in so far as such contract or arrangement provides for the discontinuance of the production of any article by the sick textile undertaking, shall cease to have effect or, if inconsistent with the provisions of this Act, shall be deemed to have been modified to the extent of such inconsistency.
2. (2) Any contract or arrangement entered into at any time before the appointed day, to the extent that it provides for the transfer of any assets of a sick textile undertaking to any person, shall be void and of no effect.

Duty of persons in charge of management of sick textile undertakings to deliver all assets. —

1. (1) On the vesting of the management of the sick textile undertakings, in the State Government, or, as the case may be, the authorised person, all persons in charge of the management of the sick textile undertakings immediately before such vesting, shall be bound to deliver to the State Government or the authorised person, as the case may be, all assets, books of account, registers or other documents in their custody relating to the sick textile undertakings.
2. (2) The State Government may issue such directions as it may deem desirable to the authorised person for the purpose of taking over the management of the sick textile undertakings.
3. (3) Any person who, on the appointed day, has in his possession or under his control any assets, books, documents or other papers relating to any sick textile undertaking, shall be liable to account for the said assets, books, documents or other papers to the State Government or the authorised person, as the case may be, and shall deliver them up to the State Government or the authorised person on demand.
4. (4) The State Government may take or cause to be taken all necessary steps for securing possession of all sick textile undertakings which have vested in it under this Act.

Duty of persons to furnish particulars.—

1. (1) Every person who has been, or is, in charge of the management of a sick textile undertaking, in relation to which a liquidator has been appointed, shall, within such time and in such form as may be specified by rules made under this Act, furnish to the liquidator a complete inventory of—
   • (a) all the properties, assets, debts and liabilities and obligations of the sick textile undertaking, subsisting at the time of the commencement of this Act;
   • (b) all the books of account, registers, maps, plans, records, documents of other title or other papers or writings in his possession or under his control relating to the sick textile undertaking.
2. (2) If any person fails or neglects to furnish the inventory of properties or the books of account or other records referred to in sub-section (1), he shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both.

Power of State Government to make certain declarations.— The State Government may, if it is satisfied, after such inquiry as it may think fit and after consideration of the report of the liquidator, that it is necessary so to do for the purpose of the management of a sick textile undertaking, declare by notification in the Official Gazette, that—

1. (a) the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force (to which such sick textile undertaking or the company owning such undertaking is a party or which may be applicable to such sick textile undertaking or company) immediately before the appointed day shall be suspended or shall be enforceable by or against the State Government or the company, as the case may be;
2. (b) all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the appointed day shall remain suspended or shall be enforceable with such modifications and in such manner as may be specified in such notification: Provided that no such declaration shall be made without giving an opportunity of being heard to the parties to the contract, assurance of property, agreement, settlement, award or other instrument in force.

Penalties.

1. (1) Any person who—
   • (a) having in his possession, custody or control any property forming part of a sick textile undertaking, wrongfully withholds such property from the State Government or the person authorised by that Government, or
   • (b) wrongfully obtains possession of, or retains, any property forming part of the sick textile undertaking or wilfully withholds or fails to furnish to the State Government or any person specified by that Government any document or inventory relating to the sick textile undertaking which may be in his possession, custody or control, or
   • (c) wilfully removes or destroys any property forming part of the sick textile undertaking or prefers any claim under this Act which he knows or has reasonable cause to believe to be false or grossly inaccurate, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ten thousand rupees, or with both.

Offences by companies.

1. (1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
2. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section,—
   • (a) "company" means any body corporate and includes a firm or other association of individuals; and
   • (b) "director", in relation to a firm, means a partner in the firm.

Limitation of cognizance of offences.- No court shall take cognizance of any offence punishable under this Act except with the previous sanction of the State Government or an officer authorised in this behalf by it.

Protection of action taken in good faith.-

1. (1) No suit, prosecution or other legal proceeding shall lie against the State Government or any officer of that Government or the Custodian for anything which is in good faith done or intended to be done under this Act.
2. (2) No suit or other legal proceeding shall lie against the State Government or any officer of that Government or the Custodian for any damage caused or likely to be caused by anything which is in good faith done or intended to be done under this Act.

Power 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 published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for removing the difficulty: Provided that no such order shall be made after the expiry of a period of two years from the appointed day.

(See section 3) List of sick textile undertakings (a) The Ahmedabad New Cotton Mills Company Limited, Ahmedabad. (b) The Himabhai Manufacturing Company Limited, Ahmedabad. (c) The Jahangir Vakil Mills Company Limited, Ahmedabad. (d) The New Shorrock Spinning and Manufacturing Company Limited, Ahmedabad unit. (e) The Sarangpur Cotton Manufacturing Company Limited, Ahmedabad (Unit No. 1). (f) The Sarangpur Cotton Manufacturing Company Limited, Ahmedabad (Unit No. 2). (g) The Tarun Commercial Mills Company Limited, Ahmedabad. (h) The Ahmedabad Jupiter Spinning, Weaving and Manufacturing Company Limited, (Ahmedabad Unit). (i) The Bhalakia Mills Company Limited, Ahmedabad. (j) The Monogram Mills Company Limited, Ahmedabad. (k) The Ahmedabad Shri Ramkrishna Mills Company Limited, Ahmedabad. (l) The Marsden Spinning and Manufacturing Company Limited, Ahmedabad. (m) The Aryodaya Spinning and Weaving Company Limited, Ahmedabad. (n) The Aryodaya Ginning and Manufacturing Company Limited, Ahmedabad. (o) The Ahmedabad Cotton Mills Company Limited, Ahmedabad. (p) The Silver Cotton Mills Company Limited, Ahmedabad. (q) The Petlad Bulakhidas Mills Company Limited, Petlad. (r) The Baroda Spinning and Weaving Company Limited, Baroda. The Fine Knitting Company Limited, Ahmedabad. (t) The Mahalaxmi Mills Limited, Bhavnagar. (u) The Rajkot Spinning and Weaving Mills Limited, Rajkot. (v) The Shree Amarsinhji Mills Limited, Wankaner. (w) The Petlad Textile Mills, Petlad (a unit of the Gujarat State Textile Corporation Limited).