Chapter II ACQUISITION AND TRANSFER OF THE KARNATAKA CO

It is hereby declared that the provisions of this Act are for giving effect to the policy of the State toward securing the principles laid down in clauses (a) and (b) of Article 39 of the Constitution.

On the appointed day, the Karnataka Co-operative Textile Mills (hereinafter referred to as the mills) and the rights, title and interest of the lessor and lessee and owner of land in relation to the mills, shall, by virtue of this Act, stand transferred to, and shall vest absolutely in the Government.

(1) The mills shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, moveable and immoveable, including lands, buildings, workshops, stores, instruments, machinery and equipments, cash balance, 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 appointed day, in the ownership, possession, power or control of the lessor or lessee or owner of land whether within or outside India, and all books of accounts, registers and other documents of whatever nature relating thereto.

(2) All properties aforesaid, which have vested in the Government under section 4 shall, by virtue of such vesting, be freed and discharged from any trust, obligation, mortgage, lease, charge, lien and all other encumbrance affecting them 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or decree or order of any court restricting the use of such property, in any manner shall be deemed to have been withdrawn.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) Every mortgagee of any property and every owner of land having interest in, or in relation to the property which has vested under this Act in the Government and every person holding any charge, lease, 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, lease, charge, lien or other interest.

(4) For the removal of doubts, it is hereby declared that the mortgagee of any property and every owner of land having interest in, or in relation to the property referred to in sub-section (3) or any other person holding any charge, lease, lien or other interest in or in relation to, any such property shall be entitled to claim in accordance with his rights and interest, payment of the mortgage money amount or other dues in whole or in part out of the amount specified in section 9 and also out of the amount determined under section 10 but no such mortgage, charge, lien or other interest shall be enforceable against any property which has vested in the Government.

(5) Any licence or other instrument granted to the lessor or lessee in relation to the mills which has vested in the Government under section 4, at any time before the appointed day and in force immediately before that day shall continue to be in force on and after such day in accordance with its tenor in relation to and for the purposes of the mills, and on and from the date of vesting of the mills under section 8 in the Company, the Company shall be deemed to be substituted in such licence or other instrument in place of the lessor or lessee referred to therein as if such licence or other instrument had been granted to the Company and the Company shall hold it for the remainder of the period for which the lessor or lessee would have held it under the terms thereof.

(6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature, in relation to any property which has vested in the Government under section 4, instituted or preferred by or against the mills, is pending the same shall not abate, be discontinued or be in any way, prejudicially affected by reason of the transfer of the mills or anything contained in this Act but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Government or, where the mills is directed, under section 8 to vest in the Company, by or against the Company.

(1) Every liability other than the liability specified in sub-section (2) of the lessor or lessee in relation to the mills in respect of any period prior to the appointed day, shall be the liability of such lessor or lessee, as the case may be, and shall be enforceable against them and not against the Government or where the mills is directed under section 8 to vest in the Company, against the Company.

(2) Any liability arising in respect of,-

(a) loans taken by the present management (together with interest thereon);

(b) wages, salaries and other dues of employees of the mills in respect of any period after the management of the mills had been taken over by the Government;

shall on and from the appointed day, be the liability of the Government and shall, on and from the date of vesting under section 8 in the Company, be the liability of the Company and shall be discharged by the Company as and when repayment of such loans or amounts become 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 the Act, no liability, other than the liability specified in sub-section (2), of the lessor or lessee in relation to the mills in respect of any period prior to the appointed day shall be enforceable against the Government, or where the mills is directed under section 8 to vest in the Company, against the Company.

(b) No award, decree or order of any court, tribunal or other authority in relation to the mills passed after the appointed day in respect of any matter, claim or dispute in relation to any matter not referred in sub-section (2), which arose before that day, shall be enforceable against the Government or where the mills is directed under section 8 to vest in the Company, against the Company.

(c) No liability incurred by the lessor or lessee before the appointed day for the contravention of any provisions of law for the time being in force shall be enforceable against the Government or where the mills is directed under section 8 to vest in the Company, against the Company.

Notwithstanding anything contained in this Act the Government shall have the right to recover from the lessor or lessee all the amounts paid by the present management to the officers or other employees of the mills towards backwages, gratuity, retirement benefits and other dues on behalf of the lessor or lessee, as arrears of land revenue.

(1) Notwithstanding anything contained in sections 4 and 5, the Government may, subject to such terms and conditions as it may think fit to impose, direct, by notification, that the mills which was vested in the Government under section 4, shall, instead of continuing to vest in the Government vest in the Company either on the date of notification or on such earlier or later date (not being a date earlier than the appointed date) as may be specified in the notification.

(2) Where the right, title and interest in relation to the mills vest in the Company under sub-section (1), the Company shall, on and from the date of such vesting, be deemed to have become the owner in relation to such mills and all the rights and liabilities of the Government in relation to the mills shall, as provided under the Act, on and from the date of such vesting, be deemed to have become the rights and liabilities of the Company.