 bill no 71 of 1116 rhe indian iron and steel company (acquisition) of shares) bill, 1976 billto provide jot the acquisition of certain shares of the indian iron and steel company limited with a view to securing the proper manage ment ot 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 mtjtters connected therewith or incidental thereto whereas the management of the undertaking of the indian iron and steel company limited was taken over by the central government for a limited period under the indian iron and steel company (taking over 50 ot 1972 of management) act, 1972, in order to secure the proper management ot 5 iuch undertaking; and whereas the top management of the company was guilty of mismanagement of the affairs of the company and restoration, after the expiry of the limited period aforesaid, of the management o~ the affairs of the company to such top management would be prejudicial to the 10 interests of the company and to the public interest; and whereas investment of a large amount is necessary for the maintenance and development of the production of the undertakdngs ot the companyi and whereas acquisition by the central government of an effectiv~ control over the affairs of the company is necessary to enable it to make the investment aforesaid; be it enacted by parliament in the twenty-seventh year of the republic of india as follow!: -s  chapter i preliminary1 (1) this act may be called the indian iron and steel company (acquisition of shares) act, 1976 short title and commencement (2) it shall be deemed to have come into force on the 17th day of 10 july, 1976 21- in this act, unless the context otherwise requires,-deftnltlons (a) "appointed day" means the 17th day of july, 1976; (b) "bank" means a banking company within the meaning of the banking regulation act, 1949; is 10 of 1949 (c) "company" means the indian iron and steel company limited, being a company within the meaning of the companies act, 1956, and having its registered office at lisco house, 50, chowrlnghee 1 of 1856 road, calcutta; (d) "cqrnmissioner" means the commissioner of payments 20 appointed under section 5;  (e) "notification" means a notification published in the official gazette; (f) "prescribed" means prest'1'ibed by rules made under this act; (g) "share" means a share, whether equity or preference, in the 25 capital of the company, and includes a share pledged by any share· holder with any bank or other creditor, but does not' inc10de any -share in the capital of the company held by-(i) any state govemment; (it) the state 'bank of india, established under sedion 3 of 30 tile state bank of india act, 1955 and its subsidiary banks; 23 of 1955 (iti) the steel authority· of india, a company formed and registered under the companiesacl 1956, and· haying  its reps 1 of 1956 tered· ()tftce at hiadu8t8n times hou8e, ka8turba oaadhi mug, new delhi; , g5 (iv) the life insurance corporation of india, established under sectio,n 3 of the life insurance corporation act, 1956; 81 of 1956 '(ti) the unit ,trust of ,1ddia, establisbed under gettion 3 of the ,unit trust of :india act, 1963; 52 of 1868 (vi) any corresponding new bank, within the meaning of the 40  banking companies (acquisition and tramfer of undertllidftgs) act, 1970; 6 of 1970 57 of 1972 (vii) any general insurance company nationalised· by the general insurance business (nationalisation) act, 1972; (h) "shareholder" means a person, who, immectiately, hewr • the appointed day, was registered by the company as the holder of any share; (i) "specified date" means such date as the central govermjlent may, for the purpose of any provision of this act, by notification; specify  chapter ii 10 acquisition of the shares of thz company3 (1) on the appointed day, all the shares of the company shall, by virtue of this act, stand transferred to, and vested in, the centraj government (2) the central goverwnent shall be deemed, on and from the is appointed day, to have been registered in the register of members of the company as the holder of each share which stands transferred to, and vested in, it by virtue of the provisions of sub-section: (1) transfer and vesting of shares of the company in the central goye~ menlo (3) all the shares which have vested in the central qovemmej1t under sub-section (1), shall by force of such vesting, be freed and dis-20 charged of all trusts, liabilities, obligati4>ns, mortgages, charges liens and other incumbrances affecting them, and any attachment, injunction or any decree or order of the court, tribunal or other authority restricting the use of such shares in any manner, shall be deemed to have been withdrawn 25 (4) for the remo~al of doubts, it is hereby declared that the provisfons of sub-meiion9 (1) and (2) shall not be deemed to a1fect-(~ any right of the compally subsisting, immediately before the appointed day, against any shareholder to rec~ver from such shareholder any sum of money on the ground that the shareholder has not 30 paid or credited to the company the whole or any part of the value of the shares held by him, or on any other ground wbatloeyer; or (b) any right of the shareholder subsisting, immediately before the appointed day, against the company to receive any dividend or other payment due from the company pa,-ment-gf amounts 3s 4 (1) for the transfer to, and vesting in, the central govemment, under seetioq 3, of th~ shares of tbe comptm1, there shall liven by the central governjdellt to the sharehoyers of the company, in esh  in the mlldd8r spectfted in seetfen 6, an anlotlftt· ci rupees leftll err_, twenty-three lakhs, ninety-8ve thousand aadae hdbdred add thlrty-4dseven apd ftfteen paise (2) 'ihe 1iiiloiiiii, refernd  ia sub-~ticm (1),  carr, simdje interest t the rate of four per cent per ipuiudl for the periocl c  ~dd on the apj!olnted day and ending on the date on which payment of such amount is made by the central government to the commissioner s (1) the ceatral government shall, for the purpose of disbursing the amounts payable to the company under section 4, by notification, appoint a commissioner of payments s appointmentof commissioner of pa7-menta (2) 'ibe central government may appoint sueh other persons a5 it may think fit to assist the commissioner and theftupon the commw;oiler may authorise ode or more of such persons also to exercise all or any of the powers exercisable by him under this act, and different persons may be authorised to exercise different powers 10 (3) any person authorised by the commissioner to exercise any of the powen exercisable by tbe commissioner may exercise those powers in the same manner and with the same effect as if they have been conferred 011 that person directly by this act, and not by way of authorisatio~ 15 (4) the salaries and allowances of the commissioner and other per-sods appointed under this section shall be defrayed out of the consolidated fund of india 6 (1) the central government shall, within thirty days from the specified date, pay, in cash, to the comm1ssioner, for payment to the 20 shareholders of the company,-(&> an amount equal to the amount specified in sub-section (1) of section 4; and payment bytbe central government to the commillioner (b) an amount equal to the amount determined under sub-sectien (2) of section 4 2s (2) a deposit account shall be opened by the central government in favour of the commissioner, in the public account of india, and every amount paid under this act to the commissioner shall be deposited by him to the credit of the said deposit aceount and the said deposit account shall be operated by the commissioner 30 , (3) the interest accruing on the amount standing to the credit of the deposit account, referred to in sub-section (2), shall ensure to the benefit of the shareholders of the company '7 (1) every shareholder, having a cla~m in relation to any share acquired by this act, shall prefer such claim before the commissioner 35 within thirty days from the specified date: claims to be made to the cmnmja, aioder provitled that if the commissioner is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the period of thirty days, he may entertain the claim within a further period of thirty days and not thereafter (2) every shareholder of a preference share shall have a preferential ' claim with regard to the amount paid by the central government to the commissioner examination ot claims 8 on receipt of the claims made under section 7, the commissioner shall separately arrange the claims in relation to preference shares ami in relation to the equity shares and examine the claims in relation to each such share admission or rejection of claim • 5 9 (1) after e!xamining the claims, the commissioner shall fix a certain date on or before which every claimant shall file the proof of his claim or be excluded from the benefit of the disbursements made by the commissioner (2) not less than fourteen days' notice of the date so fixed shall be 10 giveon by advertisement in one issue of the daily newspaper ~n the english language and in one issue of such daily newspaper in the regional language as the commissioner may consider suitable, and every such notice shall call upon the claimant to file the proof of bis claim with the commissioner within the time specified in the advertisement is (3) every claimant, who fails to file the proo~ of his claim within the time specified by the commiss~oner, shall be excluded from the disbursement made by the commissioner (4) the commissioner sball, after such investigation as may, in his opinion, be necessary, and after giving the company an opportunity of 20 refuting the claim and after giving the claimant a reasonable opportunity of being heard, in writing, admit or reject the claim in whole or in part (5) the cgmmissioner shall have the power to regulate his own procedure in all matters arising out of the discharge of his functions, including the place or places at which he will hold his sittings and shall, 25 for the purpose of making an investigation under this act, have the same powers as are vested in a civil court under the code of civil procedure, 5 of 1908 1908, while trying a suit, in respect of the following matters, namely:-(a) the summoning and enforcing the attendance of any witness and examining him on oath; 30 (b) the discovery ani production of any document or other material object producible as evidence; (c) the reception of evidence on affidavits; (d) the issuing of any commission for the examination of witnesses 35 (6) any investigation before the commissioner shall be deoemed to be a judicial proceeding within the meaning of sections 193 and 228 of 45 of 1860 the indian penal code and the commissioner f;hall be deemed to be ii civil court for the purposes of section 345 and chapter xxvi of the code 2 of 1974 of criminal procedure, 19n , , 40 (7) a claimant, who is dissatisfieod with the decision o~ the commissioner, may prefer an appeal against the decision to the principal civil court of original jurisdiction within the local limits of whose jurisdiction the registered ofbce of the company is situated, disbursement ot money by the com missioner to claimants 18 (1) after admitting a claim under this act, the amount due in respect of each share acquired by virtue of this act shall be paid by the commissioner at the rate of rupees thirty-two and paise seventy-five per preference share, and at the rate of rupees four and paise seventy per equity share to the person or persons to whom such sums are due, anti, s on such payment the liability of the central government in respect of the share so acquired shall stand discharged (2) the commissioner shall also apportion amongst the shareholders, the amount paid to him by way of interest under sub-section (31) of seetion 6 and such apportionment shall be made od the basis of the 10 amount due to each shareholder 11 any money paid to the commissioner which remains undisbursed or unclaimed for a period of three years from the last day on which the disbursement was made, shall be transferred by the commissioner to the general revenue account of the central government; but a claim is to any money so transferred may be preferred to the central government by the person entitled to such payment and shall be dealt with a if such transfer had not been made, the order~ if any; for payment of the claim being treated al'l an order for the refund of revenue undis bursed or unclaimed amount to be deposited to the general revenue account power of inspec tion 12 for the purposes of ascertaining whether any person claiming 20 payment under this act is a shareholder, the commissioner shall have the right to- (a) require any person havinll the possession, cu!:;tody or control of any register or record of the company, to produce such register or record before the commissioner 2s \b} require any person to make any statement or furnish any information which may be required by the commissioner  chapter iii miscellaneousact to have overrid ing effect 13 the provisions of this act shall han efteet notwithstanding 3'0 anything inconsistent therewith contained in any law, other than this act, or in any instrument having effect by virtue of any law, other than this act penalties 101 if any persod,-(a) makes any claim for any payment under this act, knowing 3s or having reason to believe that such claim is false er without any basis; or (b) when required under this act so to do,-(i) omits or fans to produce any register or record of th~ company; or 40 hi) makes any statement or furnishes any information whicla t!'l false in any material particular and which he knows or believe to be raise or does not believe to be· true; or (c) makes any such statement as aforesaid dn any book, acc(luht, record, register, return or other document, he shall be punishable with imprisonment for a tenn which may extend to two years, or with fine which may extend to two thousand rupees, or s with both menees by companies 1& (1) where an offence under this act has been committed by a company,evoery person who, at the time -the offence was committed, was inehar,ge of, and was responsible to, the' company for the conduct of the business of the company as well as the company, shall be deemed to be 10 iuuty of the otfence and shall be liable to be proceeded against and punished accordingly: provided that nothing 'contained in ·this 9ub-aeetion shall -render any such person liable to any punishment, if he proves that the offence was committed without his -knowledge or that he had-er:ercised all due r, diligence to prevent the commission of such offenee (2) notwithstanding anything contained in sub-section (1), where any oftence under this act 'has -been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer, such direetor, manager, secretary or 10 other ofticer shall be deemed to be guilty of that offence and shall be liable to be proceeded ~gainqt and punished accordingly e%plcmation-for the purposes of this section,-(11) 'icompany" means anybody corporate and includes a' firm or other association of individuals; and 2; (b) ''director'', in relation to a firm, means a partner in the firm ,16 no court shall take cognizance of an offence punishable under this act, except with the previous sanction of the central government or of an officer authorised by that government in this behalf 17 (1) the central·government may, by aotification, make rules to 30 carry out 'the provisions of this aet limita_ tion of cognizance of offences 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 made, before each house of padiament, while it is in session, for a total period of thirty daya which· may be comprised in one session or in two or more successive sessions, and if, 35 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 agree that the rule should not be made, the rule shall thereafter have effeet only in such modified form or be of no effect, as the case may be; so,  however, that any such modil1cation 40 or annulment shall be without prejudice to the validity of anything previously done under that fule ;18 the itldian iron and steel company (acquisition of shares) 10 of 197ft ordinance, 1976, is hereby repealed: repeal and saving provided that notwithstanding such repeal, anything done or any 4s action taken under the said ordinance shall be deemed to have been done or taken under the corresponding provision of this act  s·,tatement of objects and reasonsdue to mismanagement, there was a progressive decline in the production of the uudertakings of the indian iron and steel company umited the condition of the plant and equipment was also not satisfactory and required immediate replacement financial difficulties faced by the companyj were also such that the company was not in a position either to make the necessary replacements or to undertake any plant" rehabilitation scheme in the circumstances, the management of the undertakings of the company was taken over by the central government in the public interest for a limited period under a parliamentary legislation there was considerable improvement in the performance of the undertakings of the company after the management thereof had been taken over by the central government and the company, for the first time, achieved the target of production in 1975-76 i~ the circumstances, restoration of the management of the company to the same top management which had been responsible for the sad state of affairs would have, been prejudicial to the public interest the financial condition of the company was very unsatisfactory the burden of interest on loans and advances made to the company had reached the level of rupees 10 crores per year and was expected to reach rupees 14 crores per year within the next three years it was not, therefore, p~sible to make the undertakings of the company viable without financial assistance from the central government direct financial assistance of the order required by the company could not be made available by the central government unless it had acquired a controlling intere,t in the company, to enable ,it to restructure the capital base of the company to make the necessary replacements and planned rehabilitation of the machinery and equipment since the company was engaged in the production of goods vital to the needs of the country, liquidation of the company (for insolvency) would have been against the public interest having regard to these facts and the mounting burden of interest charges, the indian iron and steel company (acquisition of sharee)  ordinance, 1~76 (10 of 1976) was promulgated by the president to provide for the acquisition of the privately held shares in the company the bill seeks to replace the said ordinance i  new delhi; chandrajit yadav'fm 4th august, 1976 prsident's recommendation under article 117 of the constitution of india [copy of letter no ind 11-(49) 176, dated the 6th august, 1976 from shri chandrajit yadav, minister of steel and mines to the secretary-general, lok sabha] the president, having been informed of the subject matter of the above bill for acquisition of certain shares of indian iron and steel company ltd, has recommended under article 117 (1) and 117 (3) of the constitution, the introduction and consideration by lok sabha of the said bill bt theindiaa bob aliid sfeel- ~y (acqubdtiod of slians) 'ordinance, 1976 (10 of 1976), the privately held shares of the indian itoll and steel company limited were acquired by the central government ·on the 17th day of july, 1976 the bill leeks to replace the said  ordinance clause 4: of the bill provides for the payment, in cash, te the share--holders, through the commissioner of payments, and amount of rs 7,23,95,13715 for the acquisition of the said shares the clause also provides that the said amount shall carry simple interest at the rate of 4: per cent per annum commencing on the 17th day of july, 1976, and ending on the date on which payment is made by the central government to the commissioner of payments the amount to be so paid by way of interest is likely to be of the order of rs 4,83,000/- clause 5 of the bill makes provision for the appointment of a commissioner of payments the estimated recurring expenditure with regard to the salaries and allowances of the commissioner and his staff is likely to be of the order of r8 10,0001- per mensem the bill, if enacted, would not involve any other recurring or nonrecurring expenditure but the purpose of acquisition of the privately held shares is to enable the central government to make additional investment of the order of rupees 60 crores (including rupees 2325 crores for which provision has already been made in the budget estimates for the year 197~77) such expenditure will, however, be incurred after due appropriation by parliament by law  clause 17 of the bill seeks to confer on the central government tlae· general rule-making power for carrying out the provisions of the bill when enacted the power of malting rules is confined to matten of detail and procedure 2 the delegation of legislative power, is, therefore, of a normal character ") memorandum explaining the modifications made in the bm to replgce the indian iron and steel company (acquisition of shares) ordimftlet, 1976 (10 of 1976) section 9 (7) of the ordinance confers a right on the claimant, who is dissatisfied with the decision of the commissioner of payment, to prefer an appeal against such decision to the principal civil court of original jurisdiction within the local limits of whose jurisdiction the registered office of the oompany is situated there was, however', a proviso to the said 'sub-section to the effect that where a person, who is a judge of a high court, is appointed to be the commissioner of payments, such appeal shall lie to the high court at calcutta and web appeal shall be heard and disposed of by atleawt two judges (tf the high court since a decision has been taken to appoint the iroil an(~ steel controller as the commissioner of payments the said pr~vue fs not necesisary and, as such, is being omitted section 12 of the ordinance confers a power on the central avel1lment to require any person to produce any regiater or documeat  14-make any statement it is proposed to confer that power oil the c-misaioner of payments instead of the central governmmt  ,  ~  -  &·)l)!q'n ()~ ih~i ~)\s 1\)' 1")1"\~ " ",,~:,i\i'11 ,!,<:1::,,1;,,,·) )1117il\)\  "i;)t" ,,')!'i)i !)lthn 0 (?,'h\)(\'2 to li')t ~h~ i\i~)j \) '" ',! \;, ,) "j ~<)l) ~'?, ;~ ill - ;(j ,'ii • )\( \ lit 1'11\ \' (lh'i)f t·) ii!; 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'int jhloq<{'i ot w)}cflt (i'hr' "'id hu[,!,i'v)b ;l ~)'jii;;~ ,hll!)') rhll i :j~ 08t\fo'j(~ blp~ 9th ,?tn·jn1'~flcr 1'1                                                             ')'liu);,,:~iil["((l) :hij                                                                                               ~(,                                                                                                    ·;·)trni1j")~) fn')j:; j}!)ttilll') \)r1i'id :l( rhl "i                                     ~j'l ,fllpi \t;ii;"::~'i'l<jn i'll' 'i,i'i";ivoo ie'lhl90 edl no 'j:~'ltoq 11  l·,'ln,)') ':'jll!wibc) ')d) 1·) ~:i lil)jh~~ :¢j ';(} jil!lfjtljxb '10 i9jei},}~"                                              '(w~ ar)ljbui! oj no;<s'l'j(f v;iw q1i1'1"fl oj j(i:)/;1 -moo, elf]; no 'if)wo~ jmfl 'l91eto~ 01 o';',::cq()'il{ d tf                                                                                   jfl'){ll':>ti'!j:\ 'i,un oaljilf                   tlhhtfu'l9vod ijl'ljcr9~ 'left 10 hs';')md                                                                               ~tcl~!h'la'{ 10 'r~){1ora::!ill' a  billtg provid~ tor the acquisition ot certain hares of the indian iron and steel company limited with a view to securing the proper management of the aftairl of the company and the continuity and develop-jdent of the production of goods which are vital to the needs of the eountry and for matters connected therewith or incidental thereto   !  ,,:  y':' ; 