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Industrial (Development and Regulations) Act, 1951


18FA. Power of Central Government to authorize, with the permission of the High Court, persons to take over management or control of industrial undertakings

(1) If the Central Government is of opinion that there are possibilities of running or restarting an industrial undertaking, in relation to which an investigation has been made under section 15A, and that such industrial undertaking should be run or restarted, as the case may be, for maintaining or increasing the production, supply or distribution of articles or class of articles relatable to the scheduled industry, needed by the general public, that government may make an application to the High Court praying for permission to appoint any person or body of persons to take over the management of the industrial undertaking or to exercise in respect of the whole or any part of the industrial undertaking such functions of control as may be specified in the application.

(2) Where an application is made under sub-section (1), the High Court shall make an order empowering the Central Government to authorize any person or body of persons (hereinafter referred to as the "authorized persons") to take over the management of the industrial undertaking or to exercise functions of control in relation to the whole or any part of the industrial undertaking (hereinafter referred to as the ‘concerned part’) for a period not exceeding five years:

PROVIDED that if the Central Government is of opinion that it is expedient in the interests of the general public that the authorized person should continue to manage the industrial undertaking, or continue to exercise functions of control in relation to the concerned part, as the case may be, after the expiry of the period of five years aforesaid, it may make an application to the High Court for the continuance of such management or functions of control, for such period, not exceeding two years at a time, as may be specified in the application and thereupon the High Court may make an order permitting the authorized person to continue to manage the industrial undertaking or to exercise functions of control in relation to the concerned part:

PROVIDED FURTHER that the total period of such continuance (after the expiry of the initial period of five years) shall not, in any case, be permitted to exceed twelve years.

(3) Where an order has been made by the High Court under sub-section (2) the High Court shall direct the Official Liquidator or any other person having, for the time being, charge of the management or control of the industrial undertaking, whether by or under the orders of any court, or any contract or instrument or otherwise to make over the management of such undertaking or the concerned part, as the case may be, to the authorized person and thereupon the authorized person shall be deemed to be the Official Liquidator in respect of the industrial undertaking or the concerned part, as the case may be.

(4) Before making over the possession of the industrial undertaking or the concerned part of the authorized person, the Official Liquidator shall make a complete inventory of all the assets and liabilities of the industrial undertaking or the concerned part, as the case may be, in the manner specified in section 18FG and deliver a copy of such inventory to the authorized person, who shall, after verifying the correctness thereof, sign on the duplicate copy thereof as evidence of the receipt of the inventory by him.

(5) On taking over the management of the industrial undertaking, or on the commencement of the exercise of functions of control in relation to the concerned part, the authorized person shall take immediate Steps to so run the industrial undertaking or the concerned part as to ensure the maintenance of production.

(6) The authorized person may, on such terms and conditions and subject to such limitations or restrictions as may be prescribed, raise any loans for the purpose of running the industrial undertaking or the concerned part, and may, for that purpose, create a floating charge on the current assets of the industrial undertaking or the concerned part, as the case may be,

(7) Where the authorized person is of opinion that the replacement or repair of any machinery of the industrial undertaking or the concerned part is necessary for the purpose of efficient running of the industrial undertaking or such part, he shall, on such terms and conditions and subject to such limitations or restrictions as may be prescribed, make such replacement or repair, as the case may be.

(8) The loan obtained by the authorized person shall be recovered from the assets of the industrial undertaking or the concerned part, in such manner and subject to such conditions as may be prescribed.

(9) For the purpose of running the industrial undertaking, or exercising functions of control in relation to the concerned part, the authorized person may employ such of the former employees of the industrial undertaking whose services became discharged by reason of the winding up of the company owning such undertaking and every such person employed by the authorized person shall be deemed to have entered into a fresh contract of service with the company.

(10) The proceedings in the winding up of the company, insofar as they relate to-

(a) the industrial undertaking, the management of which has been taken over by the authorized person under this section, or

(b) the concerned part in relation to which any function of control is exercised by the authorized person under this section,

shall, during the period of such management or control, remain stayed, and, in computing the period of limitation for the enforcement of any right, privilege, obligation or liability in relation to such undertaking or the concerned part, the period during which such proceedings remained stayed shall be excluded.



Industrial (Development and Regulations) Act, 1951 Back




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