Transaction resulting in dissipation of assets

(1) This section shall apply where the company has, after the first day of January 1972 and before the vesting date,-

(a) made any payment to any person without consideration or for an inadequate consideration;

(b) sold or disposed of any of its properties or rights without consideration or for an inadequate consideration;

(c) acquired any property or rights for an excessive consideration;

(d) entered into or varied any agreement so as to require an excessive consideration to be paid or given by the company;

(e) entered into any other transaction of such an onerous nature as to cause a loss to or impose a liability on the company exceeding any benefit accruing to the company; or

(f) sold or otherwise transferred any equipment or machinery or other property of book value exceeding rupees ten thousand; and the payment, sale, disposal, acquisition, agreement or variation thereof or other transaction or transfer, was not reasonably necessary for the purpose of carrying on the undertakings of the company, or was made with lack of prudence on the part of the company regard being had, in either case, to the circumstances at the time.

(2) The Government may, at any time, within five year from the vesting date, apply for relief to the Tribunal in respect of any transaction to which in the opinion of the Government this section applies and all parties to the transaction shall, unless the Tribunal otherwise directs, be made parties to the application.

(3) Where the Tribunal is satisfied that the transaction in respect of which an application is made is a transaction to which this section applies, then, unless, the Tribunal is also satisfied that the transaction was a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time, and was not in any way connected with any provisions made by this Act, or in anticipation of the making of any such provision, the Tribunal shall make such order against any of the parties to the application as it thinks just having regard to the extent to which the parties were respectively responsible for the transaction or benefited from it and all the circumstances of the case.

(4) Where an application is made to the Tribunal under this section in respect of any transaction and the application is determined in favour of the Government, the Tribunal shall have exclusive jurisdiction to determine any claims outstanding in respect of the transaction. On any such application, the Tribunal may order that Government deduct from the amount payable to the company under this Act, such amount as it may consider to be the loss sustained by the Government by virtue of any transaction referred to in sub-section (1).

(5) Any amount ordered by the Tribunal to be deducted from the amount under sub-section (4) shall be a first charge on the amount payable to the company and shall have priority over the claims of any person in respect of the amount payable to the company.

(6) For the purpose of satisfying the first charge referred to in sub-section (5), the Government shall withhold ten per centum of the amount payable to the company under section 5.

(7) After satisfying the first charge in favour of the Government under sub-section (5), the balance, if any of the amount withheld under sub-section (6), shall be paid to the company:

Provided that the Tribunal may at any earlier time order payment of such amount as is in excess of the amount which in its opinion would be sufficient to satisfy the first charge under sub-section (5):

Provided further that all payments under this sub-section shall be made in cash with interest at half percent from the vesting date.