The Maharashtra State Enterprises (Restructuring and other Special Provisions) Act, 2000

Preamble. Preamble An Act to make special provisions in the public interest for constitution of the Maharashtra Board for Restructuring of State Enterprises with power to determine and recommend timely measures to be taken by the Government of Maharashtra for restructuring, amalgamation, merger, closure, etc., and for determining for recommending measures for disinvestment of the equity capital of the Government in such Enterprises and for matters connected therewith and incidental thereto.

WHEREAS the Directive Principles of State Policy contained in Part IV of the Constitution, which are the guiding principles to be followed in the governance of every State, embody the concept of a Welfare State, and whereas the Supreme Court of India has, in several of its judgements, held that the said principles supplement the fundamental rights in achieving a Welfare State ;

AND WHERAS Maharashtra is a welfare State and also an industrially and commercially advanced State ;

AND WHEREAS as a welfare State it has always been the endeavour of the Government of Maharashtra that all assets and resources of the State are so utilized as to bring the maximum returns for the welfare and prosperity of the people of the entire State ;

AND WHEREAS it has also been the endeavour of the Government to ensure that there is overall balanced social and economic development and progress of the whole State and the wealth and prosperity of the State are shared equitably by the people of the State ;

AND WHEREAS it has been noticed by the Government that in spite of several measures taken in the past for this purpose, the operational and financial viability of serval State Enterprises, established over the years for assisting the achievement of the objectives of the welfare State, has deteriorated progressively, thereby not only straining the resources of the State but also adversely affecting the objectives of these State Enterprises ;

AND WHEREAS the State Government being concerned to ensure that these State Enterprises which have been set up for the development of infrastructure in the State and for facilitating the availability of goods and services to promote social and economic development in the State, continue to play an effective role and remain financially viable;

AND WHEREAS therefore, necessity had arisen of immediate intervention by the Government by way of making available the services of an expert body to provide mandatory advice and assistance to the Government as well as to such State Enterprises with a view to enabling the later to observe strict financial discipline and revive or to reorganize and restructure themselves to become financially viable and operationally sound;

AND WHEREAS for the purposes aforesaid, it was considered expedient to make special provisions;

AND WHEREAS both houses of the State Legislature were not in session;

AND WHEREAS the Governor of Maharashtra was satisfied that circumstances existed which rendered it necessary for him to take immediate action to make a law for the purposes aforesaid; and, therefore, promulgated the Maharashtra State Enterprises (Restructuring and Other Special Provisions) Ordinance, 2000, on the 18th November 2000; Mah. Ord.

Short title, extent and commencement

1. (1) This Act may be called the Maharashtra State Enterprises (Restructuring and Other Special Provisions) Act, 2000.
2. (2) It extends to the whole of the State of Maharashtra.
3. (3) It shall be deemed to have come into force on the 18th November 2000.

1. (1) In this Act, unless the context otherwise requires,—
   • (a) “Assisting Agency” means any State Enterprise, Private Sector Agency or any other person or body of persons appointed by the Board as its agency to assist in an inquiry or preparation of a scheme, as may be specified by general or special order by the Board ;
   • (b) “Board” means the “Maharashtra Board for Restructuring of State Enterprises” established under section 3 of this Act;
   • (c) “Chairperson” means the Chairperson of the Board;
   • (d) “Department” means any Department of the Government of Maharashtra;
   • (e) “Government” means the Government of Maharashtra;
   • (f) “High Court” means the High Court of Bombay;
   • (g) “Management” means the Board of Directors, Governing Body, Managing Committee or the Board or Authority of any State Enterprise, responsible for the management of the affairs of the said Enterprise;
   • (h) “Member” means a member of the Board and includes the Chairperson thereof;
     • (i) “Number of Days” would be all days as per the calendar and include all holidays;
   • (j) “prescribed” means prescribed by rules made under this Act;
   • (k) “Reserve Bank” means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934; 2 of 1934.
   • (l) “Referred Enterprise” means any State Enterprise in respect of which a reference has been made by the Government to the Board and shall remain as such Referred Enterprise till completion of the sanctioned scheme to the satisfaction of the Board or until discharged by the Board;
   • (m) “Recognized Labour Union or Officers Association” means any union or association of the employees or officers of the State Enterprise which is recognized under the provisions of the relevant Acts;
   • (n) “Schedule”, means a Schedule appended to this Act;
   • (o) “Scheduled Bank” means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934; 2 of 1934.
   • (p) “State” means the State of Maharashtra;
   • (q) “State Enterprise” means any entity, including any subsidiary entity or such an entity, whether or not incorporated under the Companies Act, 1956 or registered under the Societies Registration Act, 1860, the Maharashtra Co-operative Societies Act, 1960 or the Bombay Public Trusts Act, 1950 or an Enterprise formed under any State enactment or any other law for the time being in force, in which the Government holds 50 per cent. or more as paid-up equity or preference capital or has substantial financial interest and which is included in Schedule I of this Act. 1 of 1956. 21 of 1860. Mah. XXIV of 1961. Bom. XXIX of 1950.
2. (2) Words and expressions used but not defined in this Act shall have the meaning, if any assigned to them in the Companies Act, 1956, the Industries (Development and Regulation) Act, 1951, the Maharashtra Co-operative Societies Act, 1960, the Bombay Public Trusts Act, 1950 and such other State Acts and Statutes under which the Government has incorporated various State Enterprises as listed in Schedule I of this Act. 1 of 1956. 65 of 1951. Mah. XXIV of 1961. Bom. XXIX of 1950.
3. (3) Any reference in this Act to any other enactment or any provision thereof shall, in relation to an area in which such enactment or such provision is not in force, be construed as a reference to the corresponding law or the relevant provision of the corresponding law, if any, in force in that area.

1. (1) The Government shall, immediately after the date of coming into force of this Act but not later than thirty days thereof, establish, by notification in the Official Gazette, a Board to be known as the Maharashtra Board for Restructuring of State Enterprises. (2)
   • (a) The Board shall exercise the jurisdiction and powers and discharge the duties and functions as conferred on or assigned to the Board by or under this Act.
   • (b) The Board shall consist of a Chairperson and two other Members. The Government shall appoint the Chairperson. The other two Members of the Board shall also be appointed by the Government after prior consultation with the Chairperson. The Chairperson may request the Government to appoint additional Members for a specified period of time (not exceeding the tenure of three years) to set up an additional Bench of the Board if the work load so warrants.
   • (c) The Chairperson and Members of the Board shall be persons of ability, integrity and standing who have professional experience, in the public or private sector, of not less than fifteen years and have special knowledge of administration, banking, management, finance, accountancy, law, labour matters, company affairs or any other field, the professional experience in or special knowledge of which would, in the opinion of the Government, be useful to the Board.

1. (1) Before any person is appointed as the Chairperson or a Member of the Board, the Government shall satisfy itself that the person has no such financial or other interest as is likely to affect prejudicially his functions as such Chairperson or Member : Provided that, no person shall hold office as the Chairperson or Member after he has attained the age of sixty-five years.
2. (2) Notwithstanding anything contained in sub-section (1), a Member may,—
   • (a) by writing under his hand and addressed to the State Government resign his office at any time; or
   • (b) be removed from his office in accordance with the provisions of section 5.
3. (3) A vacancy caused by the resignation or removal of the Chairperson or any other Member under sub-section
4. (2) or otherwise, shall be filled in by the Government by fresh appointment.
5. (4) In the event of the occurrence of a vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, such Member as the State Government may, by notification, authorise in this behalf, shall act as the Chairperson till the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.
6. (5) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, such a Member of the Board, as the Chairperson may authorise in writing in this behalf, shall discharge the functions of the Chairperson till the date on which the Chairperson resumes his duties.
7. (6) The Government shall, by order, determine the professional fees and allowances payable to and the other terms and conditions of service of the Chairperson and other Members : Provided that, neither the professional fees nor the allowances nor the other terms and conditions of service of the Chairperson or any Member shall be varied to his disadvantage after his appointment.
8. (7) The Chairperson and every other Member shall, before entering upon his office, make a declaration of fidelity and secrecy in the form set out in Schedule II.
9. (8) The Chairperson or any other Member ceasing to hold office as such shall not hold any appointment or be connected with the management or administration in any Referred Enterprise, in relation to which any matter has been the subject matter of consideration before the Board, for a period of two years from the date on which he ceases to hold such office.
10. (9) The tenure of the Chairperson and Members of the Board shall be initially for a period not exceeding three years. Subject to the proviso to sub-section (1), the tenure may be extended from time to time by, the Government at its option, till the exercise of restructuring, etc., of the State Enterprises, is completed to the satisfaction of the Government.

Removal of Members from office in certain circumstances The Government may remove from office any Member who,—

1. (a) has been adjudged as insolvent; or
2. (b) has been convicted of an offence which, in the opinion of the Government, involves moral turpitude; or
3. (c) has been become physically or mentally incapable of acting as a Member; or
4. (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member; or
5. (e) has so abused his position as to render his continuance in office prejudicial to public interest.

1. (1) The Government may provide the Board with such other officers and employees as may be necessary for the efficient performance of the functions of the Board. The officers may be given such powers as the Chairperson may decide to be necessary to discharge the administrative functions of the Board, including issue of notices under the seal of the Board.
2. (2) The salaries and allowances and the conditions of service of the officers and employees of the Board shall be such as may be prescribed:

Fees, etc., defrayed out of the Consolidated Fund of the State The professional fees and allowances payable to the Members and Assisting Agencies and the administrative expenses including professional fees, salaries, allowances, pension, etc., payable to or in respect of the experts and officers and other employees of the Board shall be defrayed out of the Consolidated Fund of the State.

No act or proceedings of the Board or, as the case may be, a Member thereof, shall be questioned on the ground merely of the existence of any vacancy or defect in the constitution of the Board or any defect in the appointment of a person acting as a Member of the Board.

The Chairperson and other Members and the officers and other employees of the Board shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code.

1. (1) The jurisdiction, power and authority of the Board may be exercised by a Single Bench thereof.
2. (2) The bench shall be constituted by the Chairperson and shall consist of two Members.
3. (3) If the Members of a Bench differ in opinion on any point, they shall state the point on which they differ and make a reference to the Chairperson of the Board who shall hear the point himself.

Procedure of Board

1. (1) Subject to the provisions of this Act, the Board shall have powers to regulate,—
   • (a) the procedure for conduct of the business of the Board;
   • (b) the procedure of any Bench, including the places at which the sittings of the Bench shall be held; and
   • (c) the delegation, to one or more Members, of such powers or functions, as the Board may specify.
2. (2) The Board shall, for the purposes of any inquiry or for any other purpose under this Act, have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, while trying suits in respect of the following matters, namely:—
   • (a) the summoning and enforcing the attendance of any witness and examining him on oath;
   • (b) the discovery and production of documents or other material object producible as evidence;
   • (c) the reception of evidence on affidavit;
   • (d) the requisitioning of any public record from any court or office;
   • (e) the issuing of any commission for the examination of witnesses;
   • (f) any other matter, which may be prescribed.

The Board shall be deemed to be a Civil Court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 and the proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code, 1860 and for the purposes of section 196 of the said Code.

1. (1) For the purposes of this Act, the authority to make a reference to the Board shall vest only in the Government.
2. (2) The Government may make a reference to the Board in respect of any State Enterprise where the Government,—
   • (i) wants to withdraw its ownership or management from the State Enterprise and desires to divest its control in the ownership or management; or
   • (ii) is of the opinion, after recording reasons in writing, that the financial position of the State Enterprise is not satisfactory and requires immediate remedial measures; or
   • (iii) is of the opinion that two or more State Enterprises or subsidiaries thereof can be merged to bring about improvement in their financial position or operations and management.
3. (3) The management of a State Enterprise may pass a resolution requesting the Government to make a reference to the Board, where the financial position of such Enterprise is, in the opinion of the management, in need of immediate expert guidance or not sound and needs to be improved or is beyond the point of revival. In such cases, the Government shall, within a period of one month from the date of receipt of such resolution, make a reference to the Board: Provided that, no such reference shall be made to the Board by the Government or no such resolution shall be passed by the management of a State Enterprise where the provisions of the Sick Industrial Companies (Special provisions) Act, 1985, are attracted or have become applicable.
4. (4) A reference made to the Board by Government under this section shall not be withdrawn by the Government.

1. (1) Upon receipt of a reference from the Government with respect to any State Enterprise (hereinafter referred to as ‘Referred Enterprise’), under section 13, the Board shall make such inquiry as it may deem fit for ascertaining the financial position of such Enterprise.
2. (2) The Board may, if it deems necessary or expedient so to do for the expeditious disposal of an inquiry under sub-section (1), appoint an Assisting Agency, on such

1. (1) Where report is made under sub-section
2. (2) of section 15 in relation to any Referred Enterprise and such Enterprise fails to revive itself as per the guidelines, within the time frame laid down by the Board, the Board shall, on such terms and conditions as may be determined by the Board, direct the Assisting Agency or any other agency appointed by the Board in this behalf to prepare, as expeditiously as possible and ordinarily within a period of ninety days from the date of such order, a scheme with respect to such Referred Enterprise providing for any one or more of the following measures, namely:—
   • (a) the financial reconstruction of the Referred Enterprise without Government giving financial assistance in any form whatsoever ;
   • (b) the disinvestment of a part or whole of the Government share-holding or stake in any form in the Referred Enterprise to any person, private or public sector organization ;
   • (c) the amalgamation of the Referred Enterprise with any other entity, hereafter referred to as "transferee entity" ;
   • (d) the closure of operations or activities of a part or whole of the Referred Enterprise ;
   • (e) the sale of a part or whole of assets of the Referred Enterprise ; and
   • (f) such other preventive, ameliorative, incidental, consequential, supplemental and remedial measures as may be appropriate : Provided that, the rationalisation, if any, of the managerial, personnel, supervisory staff and workmen shall be done in accordance with law.
3. (2) The Scheme prepared by the Assisting Agency shall be examined by the Board and a copy of the draft scheme with modification, if any, made by the board shall be sent to the Government, the Referred Enterprise, the Assisting Agency, the recognized employees unions or officers associations and, in the case of amalgamation, also to the transferee entity concerned. (3)
   • (a) The Board may consider the suggestions, if any, received from the persons to whom or entities to which, a copy of the draft scheme has been sent under sub-section
4. (2) and make such modifications, if any, in the draft scheme as found suitable and necessary and shall then finalise the scheme.
   • (b) The Board shall thereafter forward such final scheme approved by it to the Government and the Referred Enterprise concerned. It shall thereupon be incumbent for the State Government to direct the Referred Enterprise concerned to take all necessary steps for implementation of the said scheme, subject to and in consonance with all the relevant laws for the time being in force.
5. (4) The Board may, on behalf

[See section 2 (q)] A. Enterprises constituted under the Companies Act, 1956.-- 1. Maharashtra Small Scale Industries Development Corporation Limited. 2. Maharashtra State Textile Corporation Limited. 3. Maharashtra State Mining Corporation Limited. 4. Western Maharashtra Development Corporation Limited. 5. Konkan Development Corporation Limited. 6. Vidarbha Development Corporation Limited. 7. Marathwada Development Corporation Limited. 8. Maharashtra Electronics Corporation Limited. 9. Leather Industries Development Corporation of Maharashtra Limited. 10. MAFCO Limited 11. Maharashtra Agro-Industries Development Corporation Limited. 12. Maharashtra State Powerlooms Corporation Limited. 13. Maharashtra State Handlooms Corporation Limited. 14. Maharashtra Fisheries Development Corporation Limited. 15. Maharashtra State Seeds Corporation Limited. 16. Maharashtra Mendhi and Sheli Development Corporation Limited. 17. Maharashtra Land Development Corporation Limited. 18. Maharashtra Tourism Development Corporation Limited. 19. Maharashtra Film, State and Cultural Development Corporation Limited. 20. Mahatma Phule Backward Class Development Corporation Limited. 21. Mahila Arthik Vikas Mahamandal Limited. 22. CIDCO Limited. 23. Haffkine Bio-Pharmaceutical Corporation Limited. 24. Maharashtra State Farming Corporation Limited. 25. Forest Development Corporation of Maharashtra Limited. 26. Maharashtra State Police Housing and Welfare Corporation Limited. 27. Vasantrao Naik Vimukta Jati and Nomadic Tribes Development Corporation Limited. 28. Lokshahir Annabhau Sathe Development Corporation Limited. 29. Kolhapur Chitranagari Corporation Limited. 30. Shivashahi Punarvasan Prakalp Limited. 31. Maharashtra State Road Development Corporation Limited. 32. Maharashtra State Other Backward Class Financial and Development Corporation Limited. 33. Annasaheb Patil Economically Backward Development Corporation Limited. 34. Maulana Azad Minorities Financial Development Corporation Limited. 35. Maharashtra Petrochemical Corporation Limited. 36. Shabari Tribal Finance and Development Corporation Limited. B. Enterprises constituted under Maharashtra Acts.-- 37. Maharashtra Industries Development Corporation. 38. Maharashtra Khadi and Village Industries Board. 39. Maharashtra State Labour Welfare Board. 40. Maharashtra Krishna Valley Development Corporation. 41. Vidarbha Irrigation Development Corporation. 42. Konkan Irrigation Development Corporation. 43. Tapi Irrigation Development Corporation. 44. Godavari-Marathwada Irrigation Development Corporation. 45. Maharashtra Maritime Board. 46. Maharashtra Housing and Area Development Authority. 47. Mumbai Metropolitan Region Development Authority. 48. Maharashtra Jeevan Pradhikaran. C. Enterprises constituted under Government of India Acts.-- 49. Maharashtra State Finance Corporation. 50. Maharashtra State Electricity Board. 51. Maharashtra State Warehousing Corporation. 52. Maharashtra State Road Transport Corporation. 53. Maharashtra Pollution Control Board. D. Enterprises Registered under the Maharashtra Co-operative Societies Act, 1960.-- 54. Maharashtra State Co-operative Tribal Development Corporation Limited. 55. Maharashtra State Co-operative Marketing Federation. 56. Maharashtra State Handlooms Co-operative Federation. 57. Maharashtra State Cotton Growers Marketing Federation. 58. Maharashtra State Oil Seeds Growers Federation. E. Enterprises Registered under the Societies Registration Act, 1860.-- 59. Haffkine Institute for Training, Research and Testing. 60. Maharashtra Energy Development Agency.

[See section 4 (7) and 6 (2)] I, ..............., do hereby declare that, I will faithfully, truly and to the best of my skills and ability, execute and perform the duties required of me as the Chairman/Member/ Other Officer or Employee of the Maharashtra Board for Restructuring of State Enterprises and which properly relate to the office or position held by me in or in relation to the said Board. I, further declare that, I will not communicate or allow to be communicated to any person not legally entitled thereto any information relating the affairs of the Board, nor will I allow any such person to intercept or have access to any books or documents belonging to or in possession of the Board or the business of any person having any dealing with the said Board. Signed before me. Signature.