 bill no 102 of 1881 the british india corporation umited (acquisition of shares) bill, 1981 a billto provide fm' the acquisition of certain shares of the british india corporation limited with a view to securing the propet management of the affairs of the company and the continuity and development of the production of goods which il'i'e vital to the needs of the countty and for matters connected therewith fyf' incidental thereto whereas messrs british india corporation limited, kanpur, are engaged in the manufacture and production of pure and blended woollen fabrics which are vital to the needs of the general public; and whirj:as as a result of an investigation macle under section 15 of 88 of 1981 5 the industries (development and regulation) act, 1951, certain directions were issued to the company under section 16 of that act which, inter cilia included the modernisation of the plant and machinery of the undertakings of the company; and whereas for the purpose of carrying out the sail'\ directions, public 10 financial institutions had advanced large sums of money to the company; and whereas the central government and certain· public financial institutions have also invested considerable funds in the share capital of the company; and whereas the state bank of india has advanced consic\erable sums 15 to tlie company and a part thereof has been gu8l1lnteed by the central government;  aj:m w'bjibas further investment of large sums of money is necesslll'j for the maintenance and development of the production af the undertakings of the company and for securing the proper management of the aftaira of the company; and wherilas acquisition by the central government f an effective 5 control over the affairs of the company is necessary to enable it to make the investments aforesaid; be it enacted by parliament in the thirty-second year of the repubuc of india as fo11owa:- chapter i1 (1) this act may be called the british india corporation limited (acquisition of shares) act, 1981 shorttltle andcomj mence-iqedt (z) it shall be deemed to have come into force em the 11th day of 15 june, 1981 de1lnitiodl 2 in this act, unless the context otherwise requires,-(a) "appointed day" means the 11th day of june, 1981; 10 of 1949 (b) "bank" means a banldng company within the meaning of the banking regulation act, 1949; (c) "commissioner" means the commissioner of payments· ao appointed under section 6; (el) "company" means the british india corporation limited, being a company within the meaning of the companies act, 1956, 1 of 19d8 and having its registered office at sutherland house, kanpur, in the state of uttar pradesh; a5 (e) "notification" means a notification publishe<\ in the oftlclal gazette;  (f) "share" means a share, whether ordinary or preference, in the capital of the company, and includes a share pledged by any shbjeholder with any badk or other crectltor, but does not include 80 any share in the capital ot the company held by-(i) the central government; (h) any state government; (ii' the state bank of india, established under section 3 of the state bank of india act, 1955, andfts 8ubsidiary banks; 85 23 of 1965 (tv) thie :ute murance corporation of india, estabhsbed under section 3 of the ufe insurance corporation act, 1986; 31 of 1956 (v) the unit trust of india, estaolished under seetioft 3 of the unit trust of india act, 1963'  ' 82 at 1963 (vi) any corresponding new bank, within the mean'ing of 40 the banking companies ~cqui'sltion and transfer of undertakings) act, 1970;' 6 of 1t'70 (vii) any cd~nding new bank, within the mean1ni of the banking coalpanies (acquisition and tnnsfer of undertakin&s) act, 1980j 0 ot 1980 5'7 of 1972 5 (viii) any general insurance company nationalised by the general insurance business (nationalisation) act, 1972; (g) ''sharehojder'' mead,-(i) a person who, immediately before the appointed day, was registered by the company as the holder of any sbaile and includes his legal representative; or 10 1 of 1956 (it) a perhjl who, before the appoimted day, had lodged wwh tbecompany a proper wtrument of transfer of any share in the fond pre6clibed under aectioo 106 of the companies act, 1856, and frxecuted in accordance with the provisions of that section; or 15 1 of 1958, (ai) a penon who claima under a proper instrumen\ of transfer of any share in the form pwcribed under seetioi:l 106 of the companies act, 1m, and ~livers auca iuvument to the commimioder, duly executed, on or bef~ such date as tbe central government may, by notificatioll, specify in tbis b,ehalf; 120 (h) "specified date"means such date aa the central governsnent may, tor the purpose of any pl"ovision of this act, by notification, ~ and different dates may be specified for di1lerent pro~ons of thia act; 1 of 1956 25 (i) words and expressions used herein and not defined but deftned in the companies act, 1956, have the meaningsrespective1y assigned to ~m in that act  chapter ii al:ql1isitlollj 01' the sharbs of the compalc'y3 (1) oil the appointed day, all the shares of the company shah, by, 30 virtue of this act, stand transferred to, and vest id, the central! govern  ment 1' • ' (2) n central governmeat shall be deemed, on and from tbie appoilhed day, to have been registered in the register of members at the comany as tile boldter of each ahare which stands transferred to, s5 add vested in, it by virtue of the pcovisions of sub-section (1) transfer and vest  ingot shares of the companyin the central govern· 'ment (3) all the shares which have vested in the central government under sub-section (1), shall, by force of such vesting, be freed and discharsed of all trusts, liabilities, obligations, mortgages, charges, liens and other encumbrances affecting them, and any attachment, 40 injunction or any decree or order of the court, tribunal or other authority restricting t~ use of such shares in any manner, shall be deemed to have been withdrawn (4) for the removal of doubts, it is hereby declared that the pre>-visions of sub-sections (1) and (2) shall not be deemed to affect-(a) any right of the company subsisting, immediately ·before the appointed day, aga1nst any shareholder to recover from such , abareholder ,any sum, of money on the ground that the ~eholdet has not paid or credited to the companyj the whole or any part of the value of the shares held by him, or, on any othergrowid what-8oe\i'ei';or (b) any right of the shareholder subsisting, immediately 5 before the appointed day, against the company to receive any dividend or other payment due from the company management of the company 4 for the purpose of' enabling tb,ie company to function as, a government company, the central government may, by notification, make such provisions (including changes in the board of  directors, and lo amendrn/mts in the memonmdum and articles of association, of the company) as it may consider necessary and the provisions so made shall have effect notwithstanding anything contained in the companies act, 1956 payment of amounts  5(1) for the transfer to, and vesting in, the central govemment, 15 under section 3, ~ the shal'es of the company, tbere shall begived by the 'central government to the shareholden of the company, in cash and in the manner speclfted in section 7, an amount of rupees twenty-two lakhs and sdty ,thousand (2) the 8dloubt referred to in sub-seetien (1), shajl carry simple 20 interest 1it the rate of four per cent, pet' addum for the period commencing on the appoillted day and ending on the date on which payment of sucb amount is made by the central government to the commissioner 6 (1) the central government sball,for the purpose of dbbul'sing the amounts payable to shareholders of the company under section 5, 25 by notification, appoint a commissioner of payments appointment of commlssioner of payments (2) the central government may  appoint sueb other persons u it may think fit to assist the commissioner and thereupon the commimioner , may authorise ode or more of such penons also to exercise all or aa)' of the powers exercisable by him under this ad, and difterent persons ma, 30 be authorised to exercise different powers (3) any person authorised by the cojdjdisslgiler to 8xel'dse _y of tbe powers exereisahle by tbe comnuasioner may exercise thole powers in the same manner and with the same effect 'as u they have been eeafer:red on tbat :person diredly by this act, and, not by' way of authorisatied 35 (4) the salaries ad allowances of the collulliraaioner and othert persons appointed under this section han be defrayed out of tbe cnsolidated fund of india ' 7 (1) ~ central government shall, within thirty days from the specified date, pay, in cash, to the commissioner, for payment 40 to the shareholders of the company,-(a) an amount equal to the amount speciflled in suh-section (1) of section 5; and payment by the central government to the commissioner (b) an amount equal to the amount determined under subsection (2) of seetion 5 , 45 (2) a deposit acoount shall be opened by the central gqvetn'" ment lin favour of the commilsioner, in the public account of india, and every amount paid under this act to the commissionershall be deposited by him to the 'credit df the said deposit account and the said 5 deposit account shall be operated by the commissioner (3) the interest accruing on the amount standing to the credit of t~ deposit account, referred to in sub-section (2), shall enw'e to the benefit of the shareholders of the company 8 (1) every shareholder, having a claim in relation to rany share 10 acquired by this act, shall prefer such claim before the commissioner within thirty days from the specified date: claims to be made to the commissioner provided that if the commissioner is satisfied that the claimant wal> prevented by suftici,ent cause from preferring the claim within the period of thirty days, he may entertain the claim within a further 15 period of thirty days and not thereafter (2) ev~ shareholder of a preference share shall have a pre--ferential cladm with regard to the amount paid by the central government to the commissioner exam1na nation of claims, 9 on receipt of the claims madre under section 8, thecommis-20 sioner sball separately arrange the claims in relation to preference shares and in relation to the ordinary shares and examine the claims in f!elation to each wah share  admls· sion or rejection of claims 10 (1) after examining the claims, the commissioner shall fix a certain date on or before which every claimant shall file the proof 25 of his claim or ,be jexcluded from the benefit of· the disbursements made by' the commissioner (2) not less than fourteen days' notice of the date so fixed shall be ,given by ad~t in one issue of the daily newspaper in the english lansuage and in one issue of such daily newspaper in the re-30 gioqall~e as the commissioner may consi~r suitable, and every such notice shall call upon the claimant to 1l1e the proof of his claim with the commissioner within the time specified in the adv!ertisement (3) every claimant, who fails to file the proof of his claim within the time specifted by the commissiodjer, shall be excluded from the 35 disbursement made by the corrimi,ssioner (4) the commissioner shall, after such investigation as may, in b'i's opinion, be necessary, and after giving t~ company an opportunity of refuting the claim and after giving the claimant a reasonable opportunity of being heard, in writing, admit or reject the claim in 40 whole or in part (5) thje commissioner shall have the power to r~gulate his own procedure in all matters arising out of the discharge of his functi'ons,  including the place or places at which he will hold his sittings and shall, for the purpose of making an investigation under this act, have the same powers as are ~ ill a <:ivil court \u2der the code of civil proceduie, 1908, while tryidga wit, ill ~·of tee ,ipllowblg matters, nwaely=-(4) the summoning and enforcing the attendance of any witness and examrn'ng him od c:tath; 5 (tt) the discovery and pro<hictiob of any d~d'unat or other mateilial object producible as evicleo<lej (c) the reception of evidel1ce on amdavits; (d)tbe isswng of any commjasioo fdr ~ examiqauoil of wit-10 (6) ady investigation before the commissioner sh'8ll be deemed to be a judicial proceeding within the meaning of sectiou 193 and 228 gt the 1ndian peaal code bdd the cqdlid1isioner shall bte deemed w  be 8 civil court »r the purposes of section 34f) and chapter xxvi of the code of criminal procedure, 1973 15 (7) a claimant, who is dissatisfied with the decision of the commissioner, may prefer an appeal against the decision to the principal civil c~urt of origiilal jurisdiction within the local limits of whose jurisdiction the registered office of the company is situated 1l (1) after admit~ a claim undier this act, the amount due in 20 r~pect of each share acqui11e<l by virtue of this act ahall be paid by the commissioner at the rate of rupees ten per preference share, and at the' rate of fifty paise per ordinary share to lj¥' person or ,pe1'soos to whom such sums are due, and on such payment, the liability of the central government in respect of tb,e share 90 acquired shall stand discharged 25 diaburse--meatqt jdgde7 by the commissiner to claimants (z) the cou\:1'n,ssiouer shall also apportion amongst the shareholclers the amount paid to him by way of interest under sub-jection (3) of section 7, and such apportionment shall be made on the basis of " the amount due to each shareholder ~'i' 12 anymaney paid to the commissioder which reojatna ua4is- 30 bursed or unclaimed 011 the dateimmedia1jely preceding tale date on which the omce of the commissioder is fidally wouad up, smij be tranl6trred by the commilsioner ~ his oftice is bally wound up to the general revenue &ccoudt of tbe central government; but a claim to any money so transferred may be preferred to the central govern- 35 ment by the person entitled to such payment and shall be dealt with as if such transfer had nat been made, the order, if any, for payment of the claim bemg treated as an order for the refund of· ~ue undisbursed orud-claimed amount to be deposited to the general revenue account powerot inspection (b) l'equire any person to make &diy stamment or tumiih any 45 1df0l'jdltion which may be nquirai by theco~"'oil8r powered commissioner to inquire into disputes as to amount 14 where there is any dispute as to the persons· or persona who are entitled to any amount payable under this act (ine1uding any dispute as to who are the legal representatives of any deceased claimant to the amount), the commissioner may, after making such inquiry as he may 5 deem fit, make the payment to such person as appears to him to be best entitled to receive the amount: provided that if the commissioner is unable to determine as to who is the person entitled to the amount and considers that the matter could more appropriately be c\ealt with by the principal civil court of original 10 jurisdiction within the local limits of whose jurisdiction the registered oftlce of the company is situated, he may refer such dispute to the said court, whose decision thereon shall be final: provided further that nothing contained herein shall affect the liability of any person, who may receive the whole or any part of the amount 15 allowed udder this act, to pay the same to the person lawfully entitled thereto deposit of amount in court 15 where any dispute has been referred un'cler section 14 by the commissioner to the civil court referred to therein, he shall deposit the amount in that court  chapter iii mlscellaneous16 the provislons of this act shall have effect notwithstanding eything inconsistent therewith contained in any law, other than this act, or in any instrument having effect by virt'lle of any law, other than this 25 act act to have overriding effect, penalties 17 if any person,-(a) makes any ~laim for any payment unaer this act, knowfug' or having reason to believe that such claim is false or without any basis; or ' 30 (b) when required under this act so to do,-(i) omits or fails to produce any register or record of the company; 'or (ti) makes any statement or furnishes any information which is false in any material particular and which he knows 35 or believes to be false or c\oes not believe to be true; or (c) makes any such statement as aforesaid in any book, account, record, register, retunt or other document, he shall be punishable with imprisonment for a term which may extend to two years, or with flne which may extend to two thousand rupees, or 40 with both offences by companies 18 (1) where an offence under this act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be jieemed to be guilty of the offence and shall be liable to be proceeded aaam,t and punished accordingly: provide<! that nothing contained in this sub-section shall render any such pei'son liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due 5 diligence to prevent the commission of such offence (2) notwithstanding anything contained in sub-section (1), where any offence under this act has been committed with the consent or eonnivance of, or is attributable to any neglect on the part of, any cureetor, manager, secretary or other officer, such director, manager, secretary 10 or other officer shall be deemed to be guilty 0'1 that offence and shall be liable to be proceeded against and punished accordingly ezplanatidn-for the pul'p06es of this section,-(4) "company" means any body corporate arul includes aflrm or other association of individuals; and i (0) ''director'', in relation to a firm, means a partner in the firm 11 no court shall take cognizance of an offence pun!shable under thfs act, except with the previous sanction of the central government or of an ofticer authorised by that government in this behalf ~o limitation of coldizanceof offences d (1) the central governinent may, by notification, make rules to carry out the provisions of this act power to make rules (2) every rule made by the central government under this act shall be laid, as soon as may be after it is marte, before each house of parliament, while it is in session, for a total period of thirty days which may ~5 be comprised in one session or in two or more successive sessions, and ;f, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in the rule or both houses a~ee that the rule should not be made, the rule shall thereafter have effect only in such modified form or 30 be of no effect, 8<; the case mav be; so, however that any s'l1ch modification or annulment shall be without prejudice to the validity of anything previously done under that rule ' 21 (1) the british india corporation (acquisition of shares) ordi-8 of 1881 nance, 1981 is hereby repealed 35 repeal and saving (2) notwithstanding such repeal, anything done or any action talren under the ordinance' so repealed shall be deemed to have been done or taken under the corresponding provisions of this act,  statement of objects and reasonsbritish india corporation limited, kanpur, was registered as a public limited company in 1920 the corporation had two woollen mills directly owned and run by it, namely, cawnpore woollen mills (cwm), kanpur and new egerton woollen mills (newm), dhariwal together, these units employed about 8,000 persons and were engagecl in the manufacture of pure woollen and blended goods besides, the corporation illso had substantial shares in various other companies, like the elgin mias co ltd, bruahware ltd, cawnpore textiles ltd, cawnpore sugar works lul champarun sugar co ltd, saran engineering co etc 2 the issued and subscribed capital of the corporation was rs 406 crores consisting of 81,000 cumulative preference shares (valued at rb 81 lakhs) ajui 65,00,000 ordinary shares (valued at rb 325 lakhs) the president of india and public financial institutions together held subltantial shares in the corporation the other major shareholrlers belong ed to the bajoria family the ftnam:ial performance of the corporation during the last two to three years had been becoming a matter of great cqncern lo~ses were mounting and liquidity position was severely aftect e<i the corporation was on the verge rif collapse, thus, affecting the production of goods so vital to the needs of general public, besides affecting the employment of a large number of persons directly on the one hand and adversely affecting the interests of the government, public financial institutions and the state bank of india, its bankers, onthe other the central government had repeatedly to issue guarantees totalling rs 817 lakhs to keep the company going 3 the plant and machinery of the corporation required to be modernized and renovated but the corporation was not in a position to complete even the first phase of this important exercise further, substantial investments of public funcis were called for however, it was considered prudent for the government and for the financial institutions to invest more funds in the corporation only if the ownership vests wholly with the government it was, therefore, decided to acquire compulsorily all the shares of the company which were in private hands accordingly, the british india corporation (acquisition of shares) ordinance, 1981 (no5 of 1981) was promulgatert by the president on 11th june, 1981 4 the ordinance apart from providing for acquisition and transfer - of all privately held shares of the company to the central government, provided for payment of an amount for such acquisition, management of the undertakings of the corporation after acquiring its ownership, appointment of a commissioner of payments for the purpose of disbursing the amount payable to the sbarehol~ ,qf the company whose shares are so acquired and for other incioental and consequential matters 5 this bill seeks to replace the aforesaid ordinance new delhi; pranab mukherjee the 11th august, 1981  president's recommendation under articles 117 and 274 of the constitution of india[copy of letter no 22111/81-wt(iii) , dated the 11th august, 1981 from shri pranab kumar mukherjee, minister of commerce and steel and mines to the secretary lok sabha] the president, having been informed of the subject matter df the bill to provide for the acquisition and transfer of the shares of the british india corporation limited, kanpur, held in' private hands, to the central government with a view to securing the proper management of the affairs of the company and the continuity and development of the production of goods which are vital to the needs of the country and for mafters connected therewith or incidental thereto, recommends under clauses (1) and (3) of article 117 and cl8'ube (1) of article 274 (if the constitution the introduction of the said bill in and ita consideration by lok sabha,  financial memorandumsub-clause (1) of clause 3 of the bill provides for the acqu1siuon of the shares of the british incua corporation ltd, kanpur, by the central government 2 sub-clause (1) of clause 5 of the bill provides for payment, in cash, and in the manner specified in chapter ii of the bill, of an amount of rs 22,60,000 (rupees twenty-two lakhs and sixty thouaand oj?ly) for the transfer to and vesting in the central government of the shares of the company 3 sub-clause (2) of clause 5 of the bill provides for payment of a further amount of simple interest at the rate of four per cent per annum in respect of the amount payable under sub-clause (1) of clause 5, for the period commencing on the appointed day and ending on the date on which payment of such amount is made by tfte central government to the commissioner of payments it is estimateri that this amount is likely to be of the order of about rs 7,500 (rupees seven thousand and five hundred only) per month 4 clause 6 of the bill provides for the appointment of a commissioner of payments by the central government with adequate staff to assist him for the purpose of disbursing the amounts payable to the shareholders of the company the salary and allowances of the commissioner of payments and his staff ann expenditure on office and establishment will be defrayed out of the consolidated fund of india the estimated expenditure on this a<:count is likely to be eventually of the order of rs 25,000 (rupees twenty-five thousand only) per month, but the exact quantum cannot be estimated at this stage in 1981-82, the expenditure on this account is likely to be about rs 50,000 (rupees fifty thousand only) 5 the bill if enacted, is not likely to involve any other recurring or non-recurring expenditure  memorandum regarding delegated legislationthough there is no spt'!cific provision in the bill which would require the making of the rules, it may not be possible to rule out altogether any contingency that may arise in future which might necessitate the making df rules hence, as a matter of abundant caution, clauje 20 has been incorporated in the aid to empower the central govemment to make rules to carry out tlte provisions bf the bill '!be matters in respect of which such rules may be made wauld relate to procedure or other details the delegation of legislative power involved would be of a normal and routine character  a billto provide for the acquisition of certain shares of the british india corporation limited with a view to securing the prbper management of the aftairs of the company and the continuity add development of the production of goods which are vital to the needs of the country and for matters connected therewith or incidental thereto (shri pranab kumar mukhe7-;ee minilter of commerce and steel and mine,) 