Chapter II ACQUISITION OF THE RIGHTS OF THE OWNERS OF SICK TEXTILE UNDERTAKINGS

(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 undertakings shall, by virtue of this Act, stand transferred to, and shall vest absolutely in, the State Government. (2) Every sick textile undertaking which stands vested in the State Government, by virtue of sub-section (1) shall, immediately after it has so vested, stands transferred to and vest in, the State Textile Corporation.

(1) Every sick textile undertaking referred to in section 3 shall be deemed to include all assets, rights, lease-holds, powers, authorities and privileges and all property, movable and immovable, including land, 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 possession, power or control of the authorised person and all books of account, registers and all other documents of whatever nature relating thereto and shall also be deemed to include the liabilities and obligations specified in sub-section (2) of section 5. (2) All properties as aforesaid which have vested in the State Government under sub-section (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or decree or order of any court restricting the use of such property in any manner shall be deemed to have been withdrawn. (3) Where any license or other instrument in relation to a sick textile undertaking had been granted at any time before the appointed day to an owner by the Central Government or a State Government or any other authority, the State Textile Corporation shall, on and from the appointed day, be deemed to be substituted in such licence or other instrument in place of the owner referred to there in as if such license or other instrument had been granted to it and shall hold such licence or the sick textile undertaking specified in such other instrument for the reminder of the period for which the owner would have held such licence or the sick textile undertaking under such other instrument. (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 For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in sub-section (2) 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 interest, payment of the mortgage money or other dues, in whole or in part, out of the amount specified in relation to such property, in the First Schedule, but no such mortgage, charge, lien or other interest shall be enforceable against any property which has vested in the State Government. If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any matter specified in sub-section (2) of section 5 in respect of the sick textile undertaking, instituted or preferred by or against the textile company or the authorised person, 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 understanding or of anything contained in this Act but the suit, appeal or other proceeding may be continued, prosecuted and enforced by the State Textile Corporation.

(1) Every liability, other than the liability specified in sub-section (2), of the owner of a sick 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 to the State Government or the State Textile Corporation (2) any liability arising in respect of- (a) Loans advanced by the Central Government or the State Government to a sick textile undertaking (together with interest due thereon) after the management of such undertaking had been taken over by the Central Government under section 18AA of the Industries (Development and Regulation) Act, 1951 (Central Act 65 of 1951); (b) amounts advanced to a sick textile undertaking (after the management of such undertaking had been taken over by the Central Government under the said section 18AA ) by the State Textile Corporation together with interest due thereon; (c) wages, salaries and other dues of employees of the sick textile undertaking, in respect of any period after the management of such undertaking had been taken over by the Central Government under the said section 18AA, shall on and from the appointed day, be the liability of the State Government and shall be discharged, for and on behalf of that Government, by the State Textile Corporation 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-action. (2), in relation to a sick textile undertaking in respect of any period prior to the appointed day, shall be enforceable against the State Government or the State Textile Corporation. (b) no award, decree or order of any court, tribunal or other authority in relation to any sick textile undertakings passed after the appointed day in respect of any matter, claim or dispute, in relation to any matter not referred to in sub-section (2), which arose before that day, shall be enforceable against the State Government or the State Textile Corporation. (c) no liability of any sick textile undertaking or any owner thereof for the contravention, before the management of such undertaking had been taken over by the Central Government under Section 18 AA of the Industries (Development and Regulation) Act, 1951 (Central Act 65 of 1951), of any provision of a law for the time being in force, shall be enforceable against the State Government or the State Textile Corporation.

(1) The State Textile Corporation may, if it considers it necessary to do so, form subsidiary corporations under the Companies Act, 1956 (Central Act 1 of 1956), and register them under that Act. (2) The State Textile Corporation may, by order in writing, transfer any sick textile undertaking or part thereof to a subsidiary textile corporation and any such transfer shall be subject to such terms and conditions as may be specified in the said order. (3) The subsidiary Textile Corporation shall, on and from the date of such transfer, be deemed to be substituted in the licence or other instrument referred to in sub-section (3) of section 4 in place of the State Textile Corporation as if such licence or other instrument had been granted to the Subsidiary Textile Corporation, and shall hold such licence of other instrument for the remainder of the period for which the State Textile Corporation would have held such licence or other instrument. (4) On the transfer to a Subsidiary Textile Corporation of any sick textile undertaking or any part thereof, the liabilities required to be discharged by the State Textile Corporation under sub-section (2) of section 5 shall, in so far as they relate to the sick textile undertaking or part thereof so transferred to the Subsidiary Textile Corporation, be discharged, on and from the date of such transfer by the Subsidiary Textile Corporation as and when any such liability is required to be discharged. (5) Save as otherwise expressly provided in this Act, references in this Act to the State Textile Corporation shall in respect of any sick textile undertaking or any part thereof which is transferred to a Subsidiary Textile Corporation, be construed as references to the Subsidiary textile corporation.

(1) An amount equal to the value of the assets of a sick textile undertaking transferred to, and vested in, the State Textile Corporation under sub-section (2) of section 3, shall be deemed to be the contribution made by the State Government to the equity capital of the State Textile Corporation; and for the contribution so made, the State Textile Corporation shall issue (if necessary after amending its memorandum and articles of association) to the State Government paid-up shares, in its equity capital, having a face value equal to the amount specified against the sick textile undertaking in the corresponding entry in column (4) of the First Schedule. (2) Where any liability is assumed by the State Government under sub section (1) of section 25, they may call upon the State Textile Corporation to issue (if necessary after amending the memorandum and articles of association of the Corporation) to the State Government additional paid-up shares. In its equity capital, having a face value equal to the amount of the liability assumed by the State Government under the said sub-section.