 the sick industrial companies (special provisions) bill, 1985 arrangement of clauses chapter i preliminary clauses1 short title, extent, commencement and application 2 declaration 3 definitions chapter ii  board and appell;an: authority for industrial and financial reconstruction4 establishment of board 5 constitution of appellate authority 6 term of office, conditions of service, etc, of chairman and other members 7 removal members from office in certain circumstances 8 secretary, oftlcers and other employees of board or appellate authority 9 salaries, etc, be defrayed out of the consolidated fund of india 10 vacancies, etc, not to invalidate proceedings of board and appellate authority 11 members and staff of board and appellate authority to be public servants i2 constitution of benches of board or appellate authority 13 procedure of board and appellate authority 14 proceedings before board or appellate authority to be judicial proceedings  chapter iii references, inqt11ries and schemes15 reference to board 16 inquiry into working of sick industrial companies 17 powers of board to make suitable order on the completion of inquiry 18 preparation and sanction of-schemes 19 rehabilitation by giving financial assistance (i)  'clauses20 winding up of sick industrial company 21 opei'ktlhg agency to prepare complete inventory, etc 22 suspension of legal pr~dings contracts, etc  chapter ivproca:dinas in case of potentially sick industrial companies, misfeas-ance procileduf~ appeals and miscellaneous  , 23 loss of 50 per cent net worth by industrial companies \ 24 misfeasance proceeditlgs 25 appeal 26 bar of juri~ction 27 delegation of powers 28 returns and information   29 power to seek the assistance of chief metropolitan magistrate and district magistrate 30 protection of action taken in good faith 31 saving of pending proceedings 32 effect of the act on other laws 33 penalty for certain offences 34 offences by companies 35 power to remove difficultie1 36 power to make rules the schedule  a billto make, in the public interest, special provisions with a view to securing the timely detection of sick and potentially ii/:k companie8 owm,g ind1j,8tr;al undertakings, the speedy determination by a board of e~ert~ of the preventive, ameuorative, remedial and other measures which need to be taken with respect to such comp&nie8 and the e:z:peditioub enforcement of the measures so detennined and for matters co'ltnecied therewith or incidental thereto be it enacted by parliament in the thirty-sixth year of the republic of indi,a as follows:-chapter i  preliminary5 1 (1) this act may be called the sick industrial companies (~p"cial provisions) act, 1985, (~) it extends to the whole of india (3)- it shall come into force on such date as the central govemm'3nt may, by·notiftcatioll in the official gazette, appoint and di1ferent dates may 10 be appointed for different ~rovisions of this act and any reference in any short title, extent, commencement and application provision of this act to the commencement of this act shall be construed as a reference to the commencement of that provision (4) it shall apply, in the first instance, to all the scheduled industrles other than the scheduled industry relating to ships and other vessels drawn by power 5 (5) the central government may, in consultation with the reserve bank of india, by notification, apply the provisions of this act, qll and from such date as may be specified in the notification, to the scheduled industry relating to 'ships and other vessels drawn by power declaration 2 it is hereby declared that this act is for giving effect to the policy 10 of the state towards securing the principles specified in clauses (b) and (c) of article ·39 of the constitution deftni-3 (1) in this act, unless the context otherwise requires,-tiona ('a) uappellate authority" means the appellate authority for industrial and financial reconstruction constituted under section s; 15 (b) "board" means the board for industrial and financial reconstruction established under section 4; (c) uchairman" means the chairman of the board or, as the case may be, the appellate authority; (d) "company" means a company as defined in section 3 of 20 fhe companies act, 1956, but does not include a government com-1 of 1958 pany as defined in section 617 of that act; (e) "industrial company" means a company which owns oine or more industrial undertakings; (f) uindu'strial undertaking" means any undertaking pertain- 25 ing to a scheduled industry carried on in one or more factories by any company but does not include (i) an ancillary industrial undertaking as defined in clause (aa) of section 3 of the industries (development and regulation) act, 19s1; and 3065 of1951 (ii) a small scale industrial undertaking as defined in clause (j) of the aforesaid section 3; (g) "member" means a member of the board or, as the case may be, the appellate authority and includes the chairman thereof; (h) "notification" means a notific~ticm published in the om- 35 cial gazette; (i) "operating agency" means any public 1fnancial institution as may be specified by general or special order as its ageney by the board; (j) "prescribed" means prescribed by rules made under this 40 act; 1'me£ip<-industrialcompanies (special-irov~ti i~ 1985--(la bajas introduced in ltk sabha) l ___ _ p-age  t1) line 11 against clause tin 1-i after ttremova~ "of" 2 page (ii) line 8 against clause-na23-ie£ "50 ~~ cent" ¥ "fifty per cent" ~3~ line 1,-~_  ~read "in-sti:tution"  4 - ,-page 4, against line 3, in the marginal citarton-for "43 of 1951" read "63 of 1951" ----- sfter --"'(;l~_ omit 6 1 page 5, line 43,-for "until" read "till" 7 page 6, line 6,- after "schedule" omit "to this act" -8 for "bas~" read "ban~" --9 page 9, line 8,-line 2,-"eftcumberances" ,after "respect to" read "such company" r · page 12, read -"encumbrances" n encumbrances" for -u page 12,  i<l£ line 3,-- "encumberances" 12 page 13, line 5,-, 12£ "sub-sectien (4)" read "sub4;&<::uen (5)" \ ' for "said" read "sie'<" -f or-- - ~··-cent1t read "f ifty per eent" -' -i 15 page 16 line 7,-read -16~ page 16 lin 42-for "interest"-: read  -" interest" ~ ,-, ---' 17 page 17, line·14-!2£ "if deems" £!£ "it deems" 16 _  page '17 line 23-is: "llmitat~rrjf·"'··"read  --!!-limitations" '-'--'19 __ t'3q~  17 line 24,-for iif or" read "or" - ~ ~" p'~'je 17 line 25',-i2!:  ~,~ 1j"1:~ons"" ~ "personft 2:1 page 17, line 29-for "sub-section" read·ti-sub-sections" -_ ,  22  page· 17,  lines 28 and 29,-i2!: "sub-l-sectiljri (4)" read "and (4)" 23 page 18, line 12,- for "magistrate ef'j'fead "magistrate or" 24 page 18, line 15,-for "be" read " lie" --~ 2'5 page 18, line 30-iet "and urban" ~ ft and the' urba~" 26 page 18 against line 31, in the marginal eitation-27 - for "33 to 1976" read "33f 1976" - ' pag9 18, 11ne 42,-~ after "'any" ~ •• it 5 anct ioned" 29 page 19, line 41,- aftef "secretary" insert-"and fl'ther f)ff icers and employees" 29 page 21, line 1~,-i<2£ "owned" ~ "ewning" 30 page 23 line 17,-~ "1e'ls" ~ "less" 31 page 23, line 20-!2£ "existin~" ~ "excee~ingn 32 page 23, line 1 fr~m bettom-for "auhority" r~ad " authorityr --33 page 25, line 9,-!i?£ " enquiry" read " inquiry" 34 page'2,), line 2'),-lo!: "ind usria 1" read "industria 1" 35 page 26, line 7 frnm bottr"lm,-fer " comitted" lic!1 " cemmitted" -36 page 28, line ?4,-foi' "clj'jse 19(1)" read "clause 19" --37 • page 29, line 17,-for "commencement of the ~ct" -:read "the assent f the pres ident" -new delhi;  h ra 6,907 (saka)(k) "public financial institutions" mean& any of the following institutions, namely:-(i) the industrial credit and investment corporation of 7 of 19135 india limited, a company formed and registered under the companies act, 1913; 15 of 1948 10 18 of 1964 (ii) the industrial finance corporation of india established under section 3 of the industrial finance corpw'ation act, 1948; (iii) the industrial development bank of india, established under section 3 of the industrial development bank of riuiia act, 1964; (iv) the industrial reconstruction bank of india established under section 3 of the industrial reconstruction bank of india act, 1984; 62 of 18m 15 (v) such other institutions as the central government may, by notification, specify: provided that no institution shall be so specified unless it has been established or constituted by or under any central act, or not less than fifty-one per cent of the paid-up share 20 capital of such institution is held or controlled by the central gdvernment or by anyone or mme of the institutions mentioned in sub-clauses (i) to (iv) or partly by the central government and partly by one or more of the institutions mentioned in subclauses (i) to (iv); \ (l) "reserve bank" means the reserve bank of india constituted under section 3 of the reserve bank of india ·act, 1934; 2 of 19m 2 of 1934 65 of 1951 (m) "scheduled bank" means a bank for the time being included in the second schedule to the reserve bank of india act, 1934; (n) "scheduled industry" means any of· the industries specified for the time being in the first schedule to the industries (development and regulation) act, 1951; (0) "sick industrial company" means an industrial company (being a company registered for not less than seven y~ars) which has at the end of any financial year accumulated losses equal 35 to or exceeding its entire net worth and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year explanation-for the purposes of this clause-(i) "cash loss" means loss as computed without providing 40 for depreciation; 45 (ii) "net worth" is the sum total of the paid-up capital and free reserves; (iii) "free reserves" means all reserves credited out of the profits and share premium account but does not include reserves credited out of re-evaluation of assets, write back of depreciation provisions and amalgamation; (p) "state level institution" means any of the following institutions, namely:-(i) state financial corporations established under section 3 or section 3a and institutions notified under ection 46 of the state financial corporations act, 1951; 43 of 1951 (ii) state industrial development corporations registered under the companies act, 1956; 5 1 of 1958 (iii) such other institutions, beini companies and not being public financial institutio~s, el)gaged in the development  or financing of industrial undertakings, as the central government may, by notification, specify: provided that no institution shall be so specified unlels not less 10 than fifty-one per cent of the paid-up share capital thereof is held by any state government or gqvernrn~nts or by any inlltitution or institutions mentioned in sub-clauses (i) and (ii) or partly by one or more public financial institutions or institutions mentioned in subclauses (i) and (ii) and partly by one or more state governments 15 (2) (0) words and expressions used and not defined in thi; act shall have the meanings, if any, respectively assigned to them in the companies act, 1856 1 of 1958 (b) words and expressions used but not defined either in this act or in the companies act, 1956 shall have the meanings, if any, :lo 1 of 1958 respectively assigned to them in the industries (development and regulation) act, 1951 65 of 1951 (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 25 corresponding ·law or the relevant provision of the corresponding law, if any in force in that area  chaprer ii board and appella'n aumority for indtrstlual and fua¥cial riloonstbuctiox ~~o:rtabliahment of board 4 (~) with eilect from sucla lllate as the central govemment may by netifieatioa, appoint, tbere hall beestablisbed - board to be known the ''board lor indutrial and financial beeonlltnu:-tion" to e::erci the jurisdiction aad powers and diaeharge the _ctins and duties eoaferred 01' imposed on the boani by or liuer 35 this act (2) 'lhe board shall consist of a chairman and not less than two and not more than fourteen other members, t~ beappoidted by the central government (3) the chairman and other members of the board sball be 40 persons who are or have been or are qualified to be hirh court judges, or persons of ability, integrity and standing who have $pecial knowle~ge of, and professional experi~nce of not less than twenty years in science, technol!jgy, economics, banking indu'stfy, law, ~bdur matters, indtmtrial finance, industrial manjlgement, industrial recolns- 45 trumon, administration, investment, accountancy, marketing or any other matter, the special lmowledge of, or professional experience in wl:lich, wo11ld ·in the opinion of the central government jje useful to the board constitution of appellate aufhority 5 i (1) the central government may by':botilcation, eonstitute, with effect hom sueh date as may be specified thereia, an appellate authority to be called the "appellate authority for industr!al aild financial beeonstruction" consisting of a chairman and dot more than three other members, to be appointed by that government, for hearing appeals against the orders of the board udder this act (2) the chairman of the appellate authority shall be a person who is or has been a judge of the supreme court or who is or has been a judge of a high court for not less than five years 10 (3) a member of the appellate authority shall be a person whd is 01" has beed a judge of a high court or who is or has been an ofticer not below the rank of a secretary to the government of india or who is or has been a member of the board for not less than three years 15 6 (1) before appointing any person as the chairman or other member, the central government shall satisfy itself that the person does not and will not, have any such financial or other int~rest as is likely to affect prejudicially his functions· as such member 20 (2) the chairman and every other member shall hold office for such period, not exceeding ftve years, as may be specified by the central government in the order of his appointment, but shall be eligible for reappointment: tenn of oftlce, conditions of service, etc, of chdrman and other mc'ml;"t!> provided that no person shall hold office as the chairman or other member after he bas attained the age of sixty-five years (3) notwithstandihg anything contained in sub-section (1), a member may-(a) by writing under his hand and addressed to the central government resign his office at any time; (b) be removed from his office in aecordance 'with the provisions of section 7 (4) a vacancy caused by the resignation or removal of the chairman or any other member under sub-section (3) or otherwise shall be filled by fresh appointment -(5) in the event of the occurrence of a vacancy in the oftlce of 35 the chairman by reason of his death, resignation or otherwise, neb one of the members as the central government may, by notuic:etkm, authorise in this behalt shall act as the chairman till the date oil which a new chairman, appointed in accordance with the provisiqns of this act to fill s~ch vacancy, enters upon his office 40 (6) wmn the chairlda!1 is 'udilble to dise~ his :functions 0widg to abtedee, iljj'less or lilly other cause, sudl one of the members as the chairman may authorise in writing in this behalf, shall discharge the functions of the chairman; untiltbe date on whieh the chairman resumes his duties -45 ~1) the !aries ami adbwiiiieeii payable  ad tile -8tiaer  and ee  -t  , tile cijairiua  otjr me__  be oja  may be preiw: provided that neither the salary and ahowances nor the other terms and conditions of service of the chairman or any other mein~ shall be varied to his disadvantage after his appointment (8) the chairman and every other member shall before entering upon his office, make a declaration of fidelity and secrecy in the form 5 set out in the schedule to this act (9) the chairman or any other member ceasing to hold office as such shall not hold any appointment or be connected with the mana~ement or administration in any campany in relation to which any matter has been the subject matter of consideration before the board 10 or, as the case may be, the appellate authority for a period of five years from the date on w;hich he ceases to hold such office 7 (1) the central government may remove from office any member, who--(4) has been adjudged, as insolvent, or j 5 'removal of memb,·ii; frolll office ,in ct:t1aid circumstances (b) has been convicted of an offence which, in tbe opinion of the central government, involves moral turpitude, or (c) has become physically or mentally incapable of acting as a member or (d) has acquired such financial or other interest as is likely to 20 affect prejudicially his functions as a member, or (e) has so abused his position as to render his continuance in office prejudicial to the public interest (2) notwithstanding anything contained in sub-section (1) no' member shall be removed from his office on the ground specified in 25 clause {d) or clause (e) of that sub-section unless the supreme court on a reference being made to: it in this behalf by the central government, has on an inquiry held by it in accordance with such procedure as it may specify in this behalf, reported that the member ought, on such grounds, to be removed 30 8 (1) the central government shall appoint a secretary to the board and a secretary (by whate'ver name called) to the aptjellate authority to exercise and perform, under the codtrol of the ,chairman, such powers an~ duties as may be prescribed or as may be ipecified by the chairman 35 sf'tre_ tary, officers and other emplo-y(1!s of board or appel late authority (2) subject to such restrictions and' conditiods as may be preseribed, the board or, as the case may' be, the appellate authority may appoiat sueh other oiieers and employees as may be necessary for the efficiedt performance 'of its functions (3) ~he eajari and auowaneet payable to and the conditioas of ser- 40 vice of the seeretarj and other omcen add employees ,of the board aad the appellate authority shall be such as may be pretcrllted:  provided that such secretary, officer or othe: employee shall, before entering upon his duties, make a declaration of fidelity and secrecy in the farm set out in the schedule 9 the salaries and allowances payaille to the members and the 5 adldiniitrative expe8ie1, ide1udml' ajaries, allowaaees and pension, payable to or in respect of the olieers aad other employees of th~ board and the appellate authority shall be delrayed dot of tbe eoaioudated fund qf india salaries, etc, be defrayed out of the col18oli dated· fund of india ( 10 no act or proceeding of the board or, as the case may be, the 10 appellate authority shall be questioned on the ground merely of the existence of any vacancy or defect in the constitution of the board or the appellate authority or any defect in the appointment of a person acting as a member of the board or the appellate authority vacancies, etc, not toinvalidate proceedings of board and appellate authority  450111160 11 the chairman and other members and the officers and other em-15 ployees of the board and the appellate authority shall be deemed to be public servants within the meaning of section 21 of the indian penal code members andstaft ofboarq and appellate authority to be public servants 12 (1) the jurisdiction powers and authority of the board· or the appellate authority may be e](ercised by benches thereof boaril or appellate authority conatitu~ tionot benches 110 (2) the benches ahall be canstituted by the chairman and each of bench shall consist of not less than two ~embers (3) if the members of a bench di1fer in opinion on any point, they shall state the 'p'oint or points on which they differ and the case shall be referred by the chairman of the board or,as the case may be, the appel-115 late authority for hearing on such point or points by one or more other members and such point or points shall be decided according to the opinion of the majority of the members who have heard the case including those who first heard it 13 (1) subject to the provisions of this act, the board or, as the 30 case may be the appellate authority, shall have powers to regulate--- (a) ,the procedure and conduct of the business; (b) the procedure of the benches, including the places at which the sittings' of the benches shall be held; procedureot board and appellate authority _ -  (c) the delega'tion to one or more members of sueh powers or 35 functions as the board or, 8s the case may be, the appellate autho· rity may specify (2) in particular and without prejudice to the generality of the foregoing provisions, the poivers of the board or, as the case may be, the appellate authority, shall include ~he power to determine the extent to 40 which' persons interested or -claiming to- be interested in the subject matter of 8ny proceeding petore it may be allowed to be present or to be heard, either by themselves or by their representatives 01' to cross-exa· mine witnesses or otherwise to take part in the proceedings  chapter iii'rilli co ~ pllnies ""4,'j b", 1 of 1966 i 01 filii t·i ~ h ~:')~ 1i'  d }' 1'1 \1) if after making an inquiry und~r section 16, the, board is satisfied that a company has become a sick industrial company, the board shall, after considering all the relevant facts and circu~stances of the case, decide, as soon as may be by order in writing whether it is practicab\e for the company to make its net worth positive within a reasoll-5 able time powers (if board to make suitable order on the completion of inquiry (2) if the board decides under sub-section (1) that it is practicable for a sick industrial company to make its net worth positive within a reasonable time, the board, shall by order in writing and subject to such l'estrictions or conditions as may be specified in the order, give such time 10 to the company as it may deem fit to mak~ its net worth positive (3) if the board decides under sub-section (1) that it is not practicable for a sick industrial company to make its net worth positive within a reasonable time and that it is necessary or exp~ient in the public interest to adopt all or any of the measures specified in section 18 in l'e-15 lation to the said company it may, as soon as may be, by order in writing, direct any operating agency ~pecifted in the order to prepare, having regard to such guidelines as may be specified in the order, a scheme oroviding for such measures' in relation to such company, (4) the board may,-:10 (a) if any of the restrictions or conditions specified in an order made under sub-section (2) are not complied with by the company concerned, review such order on a reference in that behalf from any agency referred to in sub-section (2) of section 15 or on its own motion and pass a fresh order in respect, ot such company under 25 sub-section (3); (b) if the operating agency specified in an order made under sub-section (3) makes a submission in that behalf, review such order and modify' the order in such manner as it may deem appropri~ ~ pre-- paration and sanction of schemes 18 '(1) where an order is made under sub-section (3) of section 17 in relation to any sick industrial company, the operating agency specifted in the order shall ,prepare, as expeditiously as possible and ordinarily within a period of ninety days from the date of'such order, a scheme with r'!spect to such company providing for anyone or, 35 more of the following measures;' namely: _ - - (4) the reconstruction, revival or rehabilitation of the sick industrial company; , (b) the ,proper mana'gent~nt' of < the skjt ,i~dlls,trial company by change in, or take over of, management of the 'sick industrial ,~o company; ,,' (c) the amalgamation of 'the, sick industrial company, with any other industrial company (referr~d to in this section as 'transferee industrial company'); (d)', the sale or lese of a part or whole' ot any jndustrial 45 undertaking qf the sitkindustr~l cqmp~y,; (e) such other preventive ameliorative and' ';erjiedial mersurc~' as may be appropriate; (t) such inc1dent~ • consequentiaj oi'stippiem'ental measures as may be necessary 01' expedient ih;,c'orlj'ieetion with qr rdr',the pur- 5n pgses of the me~$ures speq1ftfjd in ctq~!ses (a) to (er\~ ,_,:'1 (2) ~e scheme relerred to in sub-section (1) may provide tor ally one· or more of the ,following, namely:-(a) the constitution, name and registered office, the capital, assets, powers, rights, interests authorities and privileges, duties 5 and obligations of the sick industrial company or, as the case may be, af the transferee industrial company; (b) the transfer to tpe transferee industrial company of the business, properties, assets and liabilities of the sick industrial rompany on such terms and conditions as may be specified in the scheme; 10 (c) any change in the board of directors, or the appointment of a new board of directors, of the sick industrial company and the authority by whom, the manner in which and the other terms and conditions on which, such change or apppintment shall be made and in the case of appointment of a new board of directors or of aoy director, the period for which sucn appointment shall be macie; 15 (d) the alteration of the memorandum or articles of association of the sick industrial company or, as the case may be of the transferee industrial company for the purpose of altering the capital structure thereof or for such other purposes as may be necessary to give effect to the reconstruction or amalgamation; !olo (e) the continuation by, or against, the sick industrial company or, as the case may be, the transferee industrial company of any action or other legal proceeding pendin~ against the sick industrial company immediately before the date of the order made under sub section (3rof section 17; lz5 (f) the reduction of the interest or rights which the shareholders have in the sick industrial cqmpany to such extent as the board considers necessary in the interests of the reconstruct!on, revival or rehabilitation of ~he sick industrial company or for the maintenance of the business of th'! sick industrial company; 35 (g) the allotment to the shareholders of the sick industrial company, of shares· in the sick industrial c'9mpany or, as the case may be, in the transferee indll'strial company and where any sharehold~r claims payment in cash and not allotment of shares, or wliere it is not possible to allot shares to any shareholder the payment of cash to those shareholders in full satisfaction of their claims-(i) in respect of their interest in shares in the sick industrial company before its reconstruction or amalgamation; or ,(ii) where' 8\reh interest has been reduced under clause (f) 40 in respect of their interest in shares as so reduced; (h) any other terms and conditions for the ~()nstruction nr amalga~atiq~ ot tb~ ~~~ iilqu~t:riaj company; company free from all encumb~ 8trtvi'fii!la!tfiltatk w"u?~~ pany or other such encumberances and liabilitiel as may be specified !" ,-,,:,toffit r~a~ pi'1icd~"stiuh; ~htfp :,' i" i:l'p'" "':,i i ttl  ht,rf-; ~;-"~~':tj·)li lrl:t,;" iti1nd~'i!; ~d, '~i_': :i  ,·~d,ti': ,·~r'}liiliq  d·);,,~'· !:n :' c(;)"~:thodi'ot~~r~ii~~'f':'r;lji~~: ;~~1b ~j_if!e=~~9g of 5 the sick industrial company ~ufas ~ pu~bc auction or by mvitillg ,)1'il t~?de~'~~~i~ ~?ji;iw~!~~~f1!'i~~fll~~jm~~ ,b,e ,~~~~i'~~;li"a~~ i for" the manner cal puoucl erei°r, 'j i  ' /,(, i /;;"" fl,!")-:j;,"),:l )/'ir:~" ,,~  )l,':diij;! ""11; ",),';-:1; ,i'!"t/"i',"':,,'j(/ ,;;',", r:,i; l!:'i: 1·) '{t);;fol'icf(l~rlciliedtil':)~offi~dl!jaainikili?~of6'j,te~jedtif ~'~hitis as  ;iwfy'jb~(:n~~t!$~a~'jt'6j:~~~({6(t~ ii?w tke;jr~bo1i~~~u8h of'jatri~gi~tilln ~ or other measures mentioned in the scheme are fully and effectively !~t:iipfi«~~~ pjl~,)rj;i-~lf 'i~1 llil • !jl:i~:'·'(i!·dl: ',j : •• ,!q::"\' ~i  ';1:-!",', ~n;i'd ~ldj 1"                    ",d '!ht:! 'i; f·;· \                                         ~t1f1                                                ~;i                                                     "i:                                                          '-:1>'1';""                                                                         i';; lt·!'; ;:j                                                                                         :~ 'i':                                                                                                ·h~!                                                                                                       i':   ,; , iq (;1) (1$ a!~op!t j of1th81~e 'p!epmed !br; ,tlle boiiidlliirill',1re1 lent, itt d  ~rthal sn-ddtl_!iaj'dqll~ 8ml~ the' otaentijqj1a"'ytland in the case of amalgamali08jjr,_1_c11:o ·1therinldderee,·tncb8ltnal1wlbpany,; and p any other industrial company concerned in the amalgamation for sug-                                                                                                                                                                                                        g~" an,d 1 p~4~,~~i~~~ ~~! :an~\ i~j!~~, s\lch, ))~ri?r~ l ~st~~ bp~rd may sr'f~           "ftt                'l!:i~,~-;l'·                               : • ;rt···,:~·:                                                ~j· •• ~·)~:·  ,t:::~                                                                  );~                                                                         "\;                                                                              ,;  ~:                                                                                       ~"""  ~~                                                                                                      ,'i "':(4)vl'he"sc1'reme,sham1tfhitutler·'m iilnt,·tnimcwilf sobri,ldis"')!inw be, i by the board r·{tiereitliftdf' tenmi4itto 1i1t"jthej 'tiifti~tt~ti~i;scti~'j" and shall come into force on such date as 'the, ~oard may ~pecify in this ibehihth (\:  i,!                  , :f' , ~: "                          j r ~ :'                                      ~ ,! ( : it:                                              ~                                                j i t i·                                                      ~  !' ~ d;,  ,: ;,: i                                                                  (                                                                   i -p,      '~"            d"j\ll~-·:t,':ir~i                                  '!') p,:j "fi" j',"":"~'                                                                     l                                                                         '1·1/t )                                                                                      'jl:lq i'  i ; ,ppi'jriih~"""t di"t dat8 wiyjbe'~tk~ fbl"'rifteh!6t provisions 40 of the scheme :!,"1i',;;r·,ijo'i"                                                                          ,~,,,,,(; 'ii j''''''ll''1 't i ,',,{; '; -, i ':"l''), ;ii                                                                                                                                                                                                        r'l ~nt, ,:i '(l ;jjil; 1(1 (!i'   i "11wtnt   \'n  ,qh,lt: ;,n;': '')'1( i ~i (c"'"':i,j ,1"'11111'" v'it)'n~'i"iii j'!) 1 of 1'56 rehabilita-tion by elvin" ftnan-cial 8811110 lance 38 (1) where the board, after making inquiry under s~ction 16 and, alter codl:lidel'aucm of all the relevant facts apd circumstances and after giving an opportunity of being heard to all' concerned parties, is of opinion that it is just and equitable that the sick industrial company should be wound up it may record and forward its,opinion to the concerned 5 high court ' (2) the high court shall, on the basis of the opinion of the board order winding up of the sick industrial company and may proceed and cause to proceed with the winding up of the sick i!ldustrial company in aecordance with the provisions of the companies act 1956 10 1 of 1956 -(3) for the purpose of winding up of the said industrial company, the high court may appoint any officer of the operating agency, if the operating agency gives i~ consent, as the liquidator of the sick industrial company and the officer so appointed shall for the purposes of the winding up of the sick industrial company,be deemed to be, and 15 have all the powers ,of, the official liquidator under the companies act, 1956 1 of 1956 (4) notwithstanding anything contained in sub-section (2) or sub-section (3), the board may cause to be, sold the assets 9f the sick industrial company in such manner as it may deem fit and forward the sale 20 proceeds to the high court for orders for distribution in accordance with the provisions of section 529a, and qther provisions of the companies act, 1956 10f 1956 21 where, in relation to an inquiry or scheme, the circumstances so require, the board may, through any operating agency, cause to be pre- 15 pared-operatin, ap"" to prepare complete banntory, etc (ci) with respect to an industrial company, a complete inventory of-(i) all assets and liabilities of whatever nature; (ii) all books of account, registers, maps, plans, records, go documents of title or ownership of property and all other documerits of whatever' nature relating ~heret~; (b) a list of shareholders and a list of creditors showing separately in the list of creditors, the secu,red credi'tors and the unsecured creditors;' >, - ,, "''" , 35 (c) a valuation re~rt in r~t of th~ sliares and assets in order to arrive at 'the reserve price f~r tqe s(lle of a part or ,whole df the industrial undertaking of the company or for fixation of, the lease rent or share exchange ratio; (d) an estimate of reserve price, lease rent or share exchange 4d ratio; and (e) proforma accounts, where no up-to-date audited accounts, are availahie ' ,22' (1) where an inquiry under section 16 is initiated or any scheme referred to in section 17 is under consideration of th~ board or where 45 a sanctioned scheme is under implementation, notwithstanding anything 801penaion of le,al proeeecunlll, cont_", etc: contained in the companies act, 1956 or any other law or the memoran-1 ot 1956 dum and articl~ of association of the sick industrial company or 'any other instrument having effect under the said act or other law no· proceeding for the winding up of such sick industrial company or for any 50 proceedings for execution djstress, or the llke against any of the propertlet 1 of 1956 of the sick ind~trial company qr for the appointment of receiver in respect thereof, shall lie or be ·proceeded with further, except with the consent of the board,  (2) where the management of the sick industrial company is taka 5 over or changed, notwithstanding anything contained in the companies act, 1956 or any other law or in the memorandum 'and artic;jes of' association of such company or any instrument having effect under the said act or other law-jo (al it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to bea director of the company; (b) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the board (3) during the period of consideration of any ~cheme under sedim 1'3 15 or where any such scheme is sanctioned thereunder, for due implemen" tation of the scheme, the board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances ot property, agreements, settlementb,awards, standing orders or other instrum~ts in force to which such sick indus-1011956 20 trial company is a party or which may be applicable· to such sick industrial company immediately before the date· of such order, slj,j11 ~ main suspended or that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in 25 such manner as may be specified by the board: provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate (4) any declaration made under sub-section (3) with respect to a ·sick 30 industrial company shall have effect notwithstanding anything contained in the companies act, 1956 or any other law the memorandum and articles of association of the company or any instrument having effect under the said act or other law or any agreement or any decree or order of a court, 1;ribunal, ofticer or other authority or of any 'subinission, settlelllent or 35 standing order and accordingly,- (4) any remedy for ·the enforcement of any  right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating· thereto pending before any court, triburlal, oftlcer or other authority 'shall remain stayed or be continued subject to such declaration; and  (b) on the declaration ceasing to have effect-(i) any right, privilege, obligation or ~ability so tem~ing suspended or modified, shall become revived and enforceable as if the declaration had never been made;' and <:,  _ 45 (ii) any proceeding so remaining stayed shall 'be proceedecl with, subject to the provisions of any law which may thlril be in force, from the stage which had been reachedwheri the proceedings became stayed ,  -,-(5) in computing the period of limitation for the enforcement of any 50 right, privilege, obligation or liability, the period diiliigwmch it or the remedy foa- the enforcement  thereof remains suspended under ttys seetion shall be excluded,  paocddings in case of potentially sick industrial compands" misn:asance paocadilfgs, appmls and misci:llanilous!s (1) if the accumulated losses of an industrial company, as at the end of any fthanetal year (here1na:ftei referred to as the ,relevant flnanctal 5 year) have resulted in erosion of :fifty per cent or more of its peak net, worth during the immediately preceding fiye financial year,-loa of 50 per cent net 'woldi by idclultriai compuiel (~) the company shall, within a period of sixty days from the ci8te (hereinafter referred to as the relevant date) of finalisation of the duly audited accounts of the company for the relevant financial 10 year-(i) report the fact of such erosion to the board; and (ii) hold a general meeting of the shareholders of the company far considering such erosion;  ~ (b)  the board of ~ectors shall, at least twenty-one days before 15 the "date on which the meeting under sub-clause (ii) of clause (a) is held, fqi'warci, to every member of the company a report as to such erosion and the causes for such erosion;    (0') the company may, by ordinary nsqlution passed at the meeting held under clause (a) remove a d1rectgr (being a dintctor 20 a~idted by the memberso£ the company) and fill the vaeancy created by such removal, so far as may be, in accordance with the preeedure provided in sub-aeetiobs (2) to (6) of section 284 of the companies act, 1956, 1 of 1956 -  (2) a director removed under sub-section (1) shall not be entitled to 25 any compemsation or d~mages for termination of his appointment as director or of any appointment tendinating with that as director (3) if default is made· in complyidg with the provisions of tbiji sactiod~ every director or ether oftlcer of the company who is indefault shall ~ punishable with iiqprisomnent which shall not be less thail six 30 months but which may extend to two y88ft and with fine mill_ace proceedinii· z:4 (1) if, inthe'couflie of serutiny or imp1etnentation of any scheme or proposal, il-~ lppears to the beard that any person who bas faken part in' the oromotion, formation or mstlagt1t1ent of the sick inclustrial company ~li' ita unifertaking, mcluding any past th present director, manager or otlicer 0': em- 35 rloyee of the sick inollstrial company-(a) has misappli'!d or ·retained, or become liable or accountable for, any money or property of the sick industrial company; or (b) has been guilty of any misfeasance, malfeasance or nonfeuance or breach of trust in relation to the sick industrial company'40 tbe btliud' may direct him to rep, or testdrc the money or prrty or any part thereof with or without interest, as it thinks just, or to contribute suchwm'to the assets of the sick industiial oompany or the other person entitled thereto by w:y, of cojapeusation in respect of the misapplication', retainer, misfeasance· oj" tn-th oj 1nzst, as the board thinks just, anti 45 aim jeport the matter·  the ·ctral qavernuumt for any other aetigd which that government may deem fit  (z) no directions al\all be givejl ~y ~he bow under this 8~aii ~ss liuch ,person ~ heed given an opptullity for ma1qng bissubidi- , ' , '' i " • , (3) this section shall apply notwithstanding that the matter is one for which the persoomay bt ~y liable  5 25 (1) any pel'$on aggrieved by an order of the board made under this act may, within forty-five days from the date on which a copy of the order is issued to him, prefer an appeal to the appellate autho,rity: provided that the appellate authority may entertain a~y appeal after the ibid period of forty-fived~s but dot $iter aixty ws frcun the date 10 aforesaid if it is satisfied that 'the appelllpu was prevented by sulle4ent ca_ from filing the appeal in time (~ on receipt of an appeal under sub-section a), the appeuate authority may, after giving an opportunity to the appellant to be heard, if he so desires, and after making such further inquiry as if deems fit, 15 confirm, moduy or set aside the order appealed against 26 no order passed or proposal made under tills 'act shall be appealablg! except as provided therein and no civil court shad ha~ jurimlic:tinn' in respect of any matter which the appelltte authoriiy or the board is empowered by, or 1!nder, this act to odcmline ad(- 00 injunction smll lte granted: ttyldy court ie or other authori~' in rr~rect ri any action taken or to be, taken hi: 'pursuimccj of any power conferred by or under this act ' 'qi11iiiil1ina  ,  27 the board may, by general 0( special ordor, delegate, !ubject to 'such conditiod's and limitation, if any, as may be specified in the ord8r" to any member for secretary or other officer or employee of the board or other 25 persons authorised by the board to mallage ~ industrial company or industrial undertaking or any operating ~ency such powers and duties (except the powers and duties under sub-secticlns (2) nd (4) o~ section 16, lilection 17, sub-sections (3) and (4) of section 19, 'sub:"section (1) subsection (4) of section 20, sub-section (3) of section ~ and sectiton '241 30 under this act as it dlay deem neceuary 0 28 (1) the board shall fumish from time to'time to the celttral government such returns as the' central govemment may require ' ~ ad idformatioa (2) the board may, ,for the purpose of efficient dtscharp of its functiqns und~r this act, collect from, or furnish to-35 (a) t~ c~tral government, (b) the reterw bank,   (c) the scheduled bank or any other bank, (d) the public ,financial institution, or (e) the state-level institution, 40 fiuch information as it may consider useful for tile purpose in such manner and with~ suqb time as it inay think fit ~ (1) the board or any operating aeemcy;on being directed by the board may' in order to take into custody or undpr its control aupraperty, effects and actionable claimr to which a sick industrial,com1)8!ly 45 fs or a'pj)ears to be entitled request, in ~ttn~, the chief' metropolitan majlistrate or the district ma~strate within whoie 1urisdiction any ~ perty, books of aceotmt c1r any other document ot such sick induatrlal powr to __ tho  of cihef metropolitan mliiiilra and coiitp'ty be situate or be found, to take poaseasion thereof,· and the chief ~litan magistrl!~ or the distriet magistrate, as the cue may be, shall, on such request being made to him,-(i) take possession of such property, books of account or other documents; and 5 '(ii) cause the same to be entrusted to the board or the operating agency (2) for the pul"pose of securing compliance with the provisions of sub-section (1), the chief metropolitan magistrate or the district map trate may take or cause to be taken: such steps and use or cause to be used 10 sueh force as may, in his opinion, be n8celli8l"y (3) no act of the chief metropolitan magistrate of the district magistrate done in pursuance of this section shall be called in question in any court or before any authorityoj) any ground whatsoever protection of action tatn idpd faith 30 no suit oj" other legal proceeding shan be against the board or 15 the appellate~um1opw or the chairman or any other member, officer or other employee of the board or the appellate authority, or operating agency or any other person authorised by the board or the appellate authority to discharge any fwiction under this act for any loss or damap caused or likely to be caused by any action which is in iood 20 faith done or intended to be done in pursuance of this act or any other l:aw or provision having the force of law 31 where a receiver or an official liquidator has been appointed in any  ,proceeding pending immediately before the commencement of this act, in any high court for winding up of an industrial company such 25 proceeding shall not abate but continue in that high court e6ct of iiie act od other i  32 (1) the provisions of this act and of any rules or schemes made thereunder shall have etiect notwithstanding anything inconsistent therewith contained in any otlrer taw except the provisions of the foreign exehmge regulation act, 1973 and urban land (ceiling and regulation) 30 -4, of 1973 act, 1976 for the time being in force or in the memorandum or articles 33 to 1978 of aasociation of an industrial company or in any other instrument having effect by virtue of any law other than this act (2) ~e there has beea under juy scheme under tllis act an amalpmation of a sick industr~1 cojdpany with another company, the proviaioas 35 of seetion 7za ~of the income-tax act, 1961, shall, subject to the modift-43 of 1961 eatiods that the power of the central government under that section may be exercised by the boerd without any recommendation· by the speeifled authdy referred to in that section, apply in relation to such amalpmaticiii as they apply in relation to the amal,amation of a ':company owning 40 an industrial undertaking with another company 33 (l) whoever violates the prov~sions of this act !>r any sanctioned scheme, or any order of the board, or the appellate authority and whoever makes a false statement or gives false evidence to the board or the appellate authority, shall be punishable with simple- imprisonment 45 for a tenn which may extend to three years and shall also be liable to ftne -(2) no court shall take cognizance of any offej1ce under suh-section (1) except on a complaint in writing of the secretary oj" any such other ofticer of the board or any such officer of an operating agency as may be 50 authori~ in this behalf by the board k ~(l) where any offence, punishable under this act has been  off~ by committed by a company, every person who, at the time the offence was compuies 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 5 be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: provided that nothing contained in this sul>eection shall render any such person liable to any punishment, if he' proves that the offence was committed without his knowledge or that he had exercised au due 10 dtligence to prevent the commission of such offence (2) notwithstanding anything contained in sub-section (1), where any offence punishable under this act has been committed by acompany and it is proved that the offence has been conimitted with the consent or connivance of, or is attributable to any neglect on the part of, any director, 15 manager, 'secretary or other officer of the company such director,manager, secretary or other ofticer shall also be deemed to be guilty of that oft'ence and shall be liable to be proceeded against and punished accordingly e1"pl4n4tidn-for the purposes of this section,-(ii) "company" means any body corporate and includes a finn :10 or other associatido of individuals; and (b) "director", in relation to a firm, means a partner in ~ ftrm  35 if any difficulty arises in giving effect to the provision of this act or the rules, schemes or orders made thereunder, the central govern-25 ment may, by notification, remove the difficulty: provided that no such notification shall be made by the central government ·after the expi,ry of a period of three years from the date on which this act receives the assent of the president po- en mate ruloa 36 (1) the central government may, by notification, make rules for 30 carrying out the provi~ions of this act (2) tn particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the fouowiog ~atters, namely:-(a) the salaries and allowances payable to and other -tet"ids and conditions of service of the c1pairman and other mem·bers under sub-section 35(7) of section 6; (b) the powers which may be exeroised and the duties which may be performed by the secretary to the board or the appellate authority udder sub-section (j) of section 8;  (c) the restrictions and conditions subject to which officers and 40 employees may be appointed to the board or the appellate authority under sub-section (2) of section 8; (d) the salaries and allowances and other oonditions of seryicc of the secretary of tbe board or the appellate authority ldlder sub-eectiton (3) of section 8; 45 (e) the additional matters referred to in sub-section (3) of section 13; (1) any other matter which is required to be, or may be, prescribed (a) &wry rule macnt under dlis act sbaji be laid, as ioob as may be atter it is made, before each bouse ofparliamej;l1i, wwie it is ill iii i, for a total period of thirty days which may be comprised in ode seasion or ill two or more stlc-ive,~ add if, befojre the expiry of the smlion ijnidediate)y ibuowing the session or the auocessive sessioftl 5 aforesaid, both houses agree in making  y' modification in the rule or bqij:l h~'qaes agree tbat the l'ule sdould j;lot be ~ ~e l'ijle allall t~ter h,aveeifect ~ illuch mddiile4 ~~ ~ be qf np enact;,  t~ ca~ may be; so, ~vle~, 'ti;alat ~y'l ~atiqd 01' lu$~t shall be without preju4icf to the \'alidif;j 1>f ~i~ p"vi,ojlsjy ""0 unde' that rull!  the s(liei)ulji[see sections 6 (8) and 8(3)] ~n 01' '1'd>-u'y ajm siqqay i, """'"  '  '"  , do hereby declare that i will faithfully, 15 trqiyllnd to the best of ~y skill and ability, ex~te &pod penorm the duties required of me as ~ ~~xber/stt£retbty/o~ ofbeer or employee of ute boiar4, for the industrial and fin~cial reconst~~tion/the authority for industrial and financial reconstruction and which properly re-iate to the office or position held by me in or in relation to the 110 i&id boatd/appellate authority, i further declare that i will ddt communicate or allow to be communicated to any person not legally entitled thereto any information relating to the affairs of the b~rdl appellate authorlty, nor wiu i allow any such person to in~pect or have access to any books or documents 115 belonging to or in possession of the board i appellate authority or the businels of any person having any dealing with the said board/appellate authority ' signature signed before me the ill effects of sickness  in industrial companies such as loss of production, loss of employment, loss of revenue to the central and state governments and locking up of investible funds of banks anc;! financial institutions are of serious concern to the 'government and the society at targe the aoncetn of the gove1'1unetrt is accelltuated by the alarming thcrease in the incidence of sickness in industrial compadies it has been mc:ofisecl that in order to fully utilise the productive i1imutrial assets; afford maximum protection of employment and optimize the use of the funds of the banks ahd financial institutions, jt would be imperative to revt\te and i'eh'abilitate the potentially viable sick industrial companies as quickly as possible it would also be equally -imperative to sal'fage the productive assets and realise the amounts due to the banks and mancia1 institutiol)s, to the extent pqssible, from the non-viable siek iiotdustrial companies through uquidation of tbose companies 2 it has been the experience that the existing institutional arrangements and procedures for revival and rehabilitation of potentially viable sick industrial companies are both inadequate and time-consuming a multiplicity of laws and agencies makes the adoption of a co-ordinated approach for d~aling with sick industrial companies difficult a need has, therefore, been felt to enact in public inter~st a legislation to provide for timl'ly detection of sickness in i-ndustrial companies and 'for expeditious determination by a body of experts of the preventive, ameliorative, remedial and other measures that would need to be adopted with respect to such companies and for enforcement of the measures considered appropriate with utmost practicable despatch 3 the salient features of the bill are- (i) application of the legislation to the industries specifted in the first schedule to the industries (developmedtand regulation) act, 1911, with the initial exception of the scheduled induitry·relattdg to  ships and other vessels drawn by power, which may however be  brought within the ambit of the legislation in due course; (ii) iden:tification of sickness in an industrial eompany, registered for not less than seven years, on the basis of the symptomatic indices of cash losses for two consecutive financial years and accumulated losses equalling or exceeding the net worth of the company as at the end of the second financial year; (iii) the onus of reporting sickness and impending sickness at the stage of erosion of fifty per' cent or more of the net worth of an industrial company is being laid on the board of directors of such company; where the central government or the reserve bank is satisfied that an industrial company has become sick, it may make a ' -'-reference to the board; likewise if any state government, scheduled bank or public financial institution having an interest in an industrial company is satisfied that the industrial comp3ny has become sick, it may also make a reference to the board; (iv) e:stablishment of a board' consisting of experts in various relevant fields with powers to enquire into and determine the incidence of sickness in industrial companies and devise suitable remedial measures through appropriate schemes or other proposals apd for proper'implementation thereof; (v) constitution of an appellate authority consisting of person~ wh~ are or have been supreme court 'judge~, senior high court judges and secretaries to the government of india etc, for hearing appeals against the orders of the board 4 the notes on clauses appended to the b,ill explain the various provisions of the, bill new delhi; vishw anath pratap singh  president's recommendation under articles 117 and 274 of the constitution of india[copy of letter no f 6(3) 185-1 f-ii, dated the 20th august, 1985 from shri vishwanath pratap singh, minister of finance to the secretary-general, lok sabhal the president, having been informed of the subject matter of the proposed bill, recommends under clause (1) of article 117 read with clause (1) of article 274 of the constitution, the introduction of the sick industrial companies (spe¢al provisions) bill, 1985 in lok sabha· and also recommends to lok sabha under clause (3) of article 117 of the constitution, the consideration of 'the bill clause 1 deals with the short title, extent, commencement and: application of the l~gislation the enactment would, in the first instance, apply to all industries included in the first schedule to the industries (development an~ regulation) act 1951,' except the industry relating to ships and other vessels drawn by power which, may, however, be subsequently brought under the purview of the enactment by a notf'ftcation issued by the central govemment in consultation with the reserve bank of india  clause 2 carries a declaration that the legislation is being enacted for giving effect toi the policy of the state towards securing the pr~nci­pies specified in clauses (b) and (e) of article 39 of the constitution clause 3 contains definitions of the terms used in the legislation spe-' cia! mention may be made about the definition of the term "industrial' company" which means a company owned one or more industrial un~er­takings; and the term "sick industrial company" which means an tndustrial company registered as company for not lees than seven :tears and has suffered cash losses for two consecutive financial years and at the end of the second of 'such financial years has acc~mulated, losses equal or existing its net worth clause 4 provides for the establishment of a board consisting of a chairman and not less than two and not more than fourteep other members being experts in various relevant fields to be appointed by the central government clause  5 provides for the constitution of an appellate authority consisting of a chairman and three other members being persons who are or have been judges of the supreme court, senior judges of high courts and the secretaries to the government of india etc, to be appointed· by the central government clause 6 contains provisions relating to the conditions on which the central government should be satisfied befor~ appointing a perlon as a ¥ember of the board or the appellate authority; the tenure of the members; resignation or removal of a member; the mode of filling up of u vacancy and the fixation of salaries and allowances 'and prescription of other terms and conditions ot service of the m'!mbers etc clause 7 deals with contingencies in which the central government may remove a member from the board or the appellate authority and the contingencies in which the ceptral government may remove such members only with the consent of the supreme court clause 8 provides for appointment by the central government of a secretary each to assist the board and the appellate authority and! appointment by the board and the appellate auhority of such other officers and employees as may be prescribed with such salaries and allowances and other conditions of service as may be prescribed clause 9 provides for the salaries and allowances of the mempers and the salaries, allowances, and pension of the officers and employees of the board and appellate authority to be defrayed out of the consolidated fund of india clause 10 affords prot~tion for ,acts or proceedings of the board or the appellate authority from being questioned merely on account of :my vacancy or defect in constitution of the board or appellate authority clause 11 specifies that the members, officers and other employees of the board and the appellate authority shall be deemed to be public servants - clause 12 provides for the benches of the board and appellate authority clause 13 empowers the board and the appellate authority to regulate their own procedure and conduct of business clause 14 lays down that the board or the appellate authority shall be deemed to bea civil court for the purposes of certain provisions of the code of criminal procedure, 1973 and the indian penal code clause 15 lays down that 'a sick industrial company should· make a reference to the board within sixty days from the date of finalisation of duly audited accounts or even defore such finalisation if there are sufficient reasons to form the opinion that the company has become' sick where the ,central government or the reserve bank is satisfied that an industrial company has been sick, it may make a reference to the board; likewise if any state government, scheduled bank or public financial institution having an interest in an industrial company is satisfied' that the industrial company has become sick, it may make a reference to the board: clame 16 enables the board on receipt of a reference under clause 15 or otherwise to make or cause to be made an inquiry for the purpose of determ,ining whether the industrial company has become sick industrial company clause 17 empowers the board to allow time to a sick industrial company to make its net worth positive within a specified period if the board decides that it is not practicable for the sick industrial company to make its net worth positive within a reasonable time, it may direct any public financial institution, designated as the operating agency, to prepare a scheme, for rehabilitation of the company clause 18 provides for the operating agency, on being directed by the board to prepare a scheme for reconstruction, revival, rehabilitation, change in or take over of management, amalgamation, sale or iease of a part' or the whole of any industrial undertaking of· the sick industrial company or any other prev~tive ameliorative or revival measures it also provides for eliciting objections and suggestions from the concerned companies on the draft schemes and for making mociiftcations, if any, and for sanctioning schemes clause 19 provides that where any rehabilitation schelile involves provision of financial assistance or any other reliefs or concessions or sacrifies from the central government, a state government, air bank or financial institution or state level institution or any other institution, authority or creditor, such scheme shall be referred to all concerned for consent  clause 20 provides that if the board after making sufficient enquiry is of the opinion that it would be just and equitable to wind up the siele industrial company it would forward its opinion to the concerned high court for winding up of the company the board may, however, sell the assets of the company and forward the sale proceeds to the high court for distribution in accordance with the provisions of the companies act, 1956 clause 21 enables the board, through an operating agency to prepare a complete inventory of all assets and liabilites, etc clause 22 provides for the suspension of legal proceedings, contracts, etc, with respect to certain sick industrial companies clause 23 lays down that an industrial company in which the accumulated losses as at the end of any financial year have eroded fifty per cent or more of the peak net worth during any of the preceding five financial years, shall report the fact of such erosion to the board, within sixty days from the date of finalisation of th~ audited accounts such indusrial company would also be required to hold a general meeting ot its shareholders for considering the erosion after forwarding a report of the causes of the erosion to every shareholder atieast twenty one days before the date of the meeting change of any director other than a director appointed by the central government or a public financial institution, could be effected by an ordinary resolution passed at the meeting clause 24 provides f9r rectification of misfeasance, malfeasance, etc, and report of such matters to the central government clause 25 provides for a person aggrieved by an order made by the board to appeal to the appellate authority clause 26 bars the jurisdiction of civil courts, except as provided in the act against any matter falling within the purview of the board or the appellate authority clause 27 provides for delegation of certain powers of the board clause ·28 provides for the central government to call for returns from the board and for the board to collect from or furnish to the central government, reserve bank any bank, public financial institution or state level institution, any information clause 29 prpvides for the board or any operating agency to seek! tjv! assistance of the chief metropolitan magistrate or the district magistrate far taking possession of the property of a sick industrial company clause 30 i~ the usual clause relating to the protection of action taken in good faith clause 31 lays down that if any receiver or official liquidator has been appointed in any winding up proceedings at the time of the commencement of the legislation the proceedings shall continue' in the respective high courts clause 32 gives overriding effect to the provisions of the legislation ov~r all·other enactments except the foreign exchange regulation act, 19'13 and the urban -land (ceiling and regulation) act, 1976 the powers of the central government under section 72a of the incom~ tax act, 1961 to give tax benefit to the transferee industrial company ill cases of amalgamation are coriferred on the board clause 33 specifies the penalties for violation of the provisions of the legislation or sanctioned schemes or orders of the board or appellate authority and for making or giving false statement or evidence before the board or appellate authority clause 34 provides that any offence comitted by a company and punishable under the legislation would cover the p~rsons in charge of company clause 35 is an enabling provision to remove diftlculties by the central government up to a period of three years c14use 36 confers on the central government the power to make ewes for carrying out the provisions of the legi$lation clause 4 of the bill provides for the establishment of the board for industrial and financial reconstruction with a chairman and not less than two and not more than fourteen other members to be appointed by the central government clause 5 provides for the constitu  tion of the appellate authority for industrial and financial reconstruc  tion consisting of a chairman and not more than three other members to be appointed by the central government sub-clause (7) of clause 6 provides hat the salaries and allowances payable to the chairman and other members of the board anlt· the appellate authority shall be such as may be prescribed as a person who is or has been a judge of the supreme court is eligible to be appointed as the chairman of the appellate authority and a person who is or has been a judge of a high cdurt or who is or has been an officer not below the rank· of a secretary to the government of india, is eligible to be appointed as a memb~r of the appellate authority, the pay and allowances of the chairman and other members of the appellate authority will require to be fixed commensurate with these eligibility criteria it is expected that an expenditure of rupees eighty-four thousand would be iricurred, annually, towards the salary and allowances of the chairman of the appellate authority at the maximum level of pay ·or rupees sevenlyeight thousand, annually, at the minimum level of pay, an annual expenditure of rupees two lakhs and sixteen thousand is ~te~ to be incurred towards the salary and allowances of the members of the appellate authority at the maximum levels of payor rupees one lakh and ninety-eight thousand at the minimum levels of pay as persons who are or have been qualified to be high court judges may be appointed, among others, to be the chairman or any other member of the board, the salary and allowances of the chairman and other memben; of the board would have to be commensurate with the salary and allowances of the high court judges keeping in view these considerations, it is expected that in the event of the board consisting of one chairman and fourtgen other members,· an annual expenditure of rupees nine lakhs and ninety-six thousand would be incurred towards salary and allowances of the chairman and the members of the board at the maximum levels of pay and rupees nine lakhs and six thousumd at the minimum levels of pay in the event of the board consisting of the specified ~inimum number of one chairman and two members only  the ·annual expenditur'! towards salary and allowances of the chairman and members of the board may be expected to: be rupees one lakh and thirtytwo thousand at the maximum levels of pay and rupees one lakh and twenty thousand at the minimum levels of pay 2 under clause 8 the central government shall appoint a secretar:v each to assist the board and the appellate authority and the board and the appellate authority may appoint such other officers and employees as may be necessary the salary and allowances payable to the secretary, other officers and employees of the board or the appellate authority would be as prescribed it is expected that on account of the f'alary and allowances of the secretaries, 08icers and other employees of the board and the appellate authority • an annual expenditure of rupees twenty-six lakhs and twenty-one thousand would be incurred at the maximum levels of pay and rupees fifteen lakhs and fifty thousand at the minimum levels of pay in terms of clause 8 of the bill, the pension payable to the officers and other employees of the board and the appellate authority would need to be defrayed from the consolidated fund of india the amount i)f pension payable would be dependent upon the number of officers and the status of officen retiring each year the amount payable as pension annually cannot be precisely quantified at this stage, although it may be estimated that on an average the amount payable may not exceed rupees twenty thousand annually , 3 in terms of clause 9 of the bill, the administrative expenses of the board and the appellate authority would need to be defrayed from the consolidated fund of india it is expected that the board and the appellate; authority would incur an expenditure df rupees fifty lakhs as establishment and other administrative expenditure in the first year of their establishment and would incur establishment and other administrative expenditure of rupees twenty-five lakhs, annually, in the ~ubsequent years,  4 under clause 19(1h the central government may be called upon to provide loans, advances, guarantees, reliefs, concessions or other sacriftces of financial nature to certain sick industrial com~ies to rehabilitate them itis not possible at this stage, to quantify the extent of  the financial involvement that may devolve on the central government under this clause 5 in terms of sub-clause (2) of clause 32 of the bill in cases of amalgamation of a sick industrial company with a non-sick industrial c:lmpany, the board shall exercise the powers of the central government within the meaning of section 72a of the income-tax act, 1961 for giving the beneftts of the carry forward of accumulated loss and unabaorbed depreciation of the sick industrial company to the non-sick transferee industrial company exercise of these powers by the board would have the effect of foregoing incolme-tax the extent of income-tax benefit that may be allowed to the transferee industrial company 'would depend upon the number of schemes that may be approved and the extent of the accumulated loss and unabsorbed de--preciation of the sick industrial company being amalgamated hence the extent of income-tax to be foregone under these provisions cannot be quantified at this stage clause 17 read with clause 18 empowers the board for industrial and financial reconstruction to cause schemes to be prepared for the reconstruction, revival' or rehabilitation of the sick industrial companies;' for the proper management of the sick industrial company by change in, or take over of, managem~nt of a sick industrial company; for the amalgamation of sick industrial company with any other company; for the sale or lease of a part or whole of the sick industrial company; for devising other preventive ameliorative and remedial measures, etc if any difficulty arises in giving effect to the provisions of the scheme, the board may, by order, do anything, not inconsistent with such provisions, which appears to it to be necessary or expedient for the purpose of removing thl: difficulty [vide sub-clause (9) of clause 18] clause 35 empowers the central government to remove, by notification, any difficulty which may arise in giving effect to the provisions of the act, with a safeguard that no <;uch notification may be issued after the expiry of a period of three years from the date of commencement of the act 2 clause 36 empowers the central government to make rules for the salaries and allowances payable "to, and other terms and conditions of service of, the chairman imd other members of the board and appellate authority; the conditions and restrictions subject to which officers and employees may be appointed to the board or the appellate authority and· also their salaries and allowances and" other conditions of service and the powers which" may be exercised and the duties which may be performed by the secretaries of the board "or the" appellate authority, etc 3 the matter with respect to which the schemes or rules may be made are matters of administrative or procedural detail and are matters for which it is not practicable to make provisions in the bill the matters in respect of which orders may be made unde: c~ause 35 of the bill are matters which cannot be visualised at this stage the delegation of legislative power is, therefore, of a normal character  a bnlto make, in the public interest, special provisipns with a view to securing the timely detection of lick and potentially sick companies owning industrial undertakings, tlu; speedy determidation by a board (if experts of the preventive, ameliorative, remedial and otber measures ·whieh need to be takea with _peet to such compauies anel tbe expeditious enforcement of the measures so determined and for matters connected theremth or incidental thereto 