 bill no 7s of 1976 the laxmirattan and atherton west cotton mills (taking over of management, bill, 1976 a billto ptovide 101' the ~ing over, in the public interest, of the management of the undertakings of certain companies, pending fl4tionalisation of such undertakings, with a view to ensuring the supply of certain varieties of cloth needed by the weaker sections of the community as ouo by the defence department and for matters connected therewith or incidental thereto whereas laxmirattan cotton mills company limited were engaged in the production (besides coarse and medium varieties of cloth needed by the weaker sections of the community) of canvas and do'suti which is needed by the defence department; and whereas the closure of the laxmirattan cotton mills company 5 limited has prejudicially affected the supply of canvas and dosuti to the defence department; and whereas the atherton west and company limited were mainly engaged in the production of coarse and medium varieties of cloth needed 10 by the weaker sections of the community; and whereas as a result of mismanagcm -:'1t the atherton west and company limited has suffered losses exec -d;llg the value of its available assets and has been closed down; and whereas, in view of the adverse financial position of the atherton west and company limited, some members of the board of directors of s that company had, for some time, absconded; and whereas it is necessary in the interests of the general public that the undertakings of the two companies aforesaid should be restarted, so that the production of the needed varieties of cloth may be continued; 10 be it enacted by parliament in the twenty"",eventh year of the republic of india as follows:- chapter i preliminarysborultle 1 (1) this act may be called the laxmirattan and atherton west is and com· cotton mills (taking over of management) act, 1976 menc:ement (2) it shall be deemed to have come into force on the 19th day of jw,~ 1~8 deftnl-2 in this act, unless the context otherwise requires,-tiodl (a) "appointed day" means the 19th day of july, 1976; 20 (b) "custodian" means the person, appointed under section 4, to take over the management of the undertakings of the two cmilpanies; (e) "notification" means the notification published in the offtcial gazette; (if) "two companies" means-2s (i) the atherton west and company limited, a company within the meaning of the companies act, 1956, and having its 1 of 1951 regia_ed oftlee at anwarganj, kanpur, in the state of uttar prac:lesh, &ad (ti) the laxmirattan cotton mills company limited, a company withi1l the meaning of the companies act, 1958, ad having 30 1 of 19m its registered oftlce at behari niwas, kanpur, in the state of uttar pradesh  taking over of 'l'he manar,bmdn: of '£re vndebtajwfg$ of thi: i'wo t:ompalmcs3( 1) on and from the appointed day, the management of the under-5 taitlings of the two companies shan vest in the central government managementot the undertaking of two companies to vest in the central government (2) the undertakings of each of the two companies shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges, and all property, movable and immovable, including lands, buildings, works, workshops, projects, stores, spares, instruments, machinery, equip-10 ment, automobiles and other vehicles, cash balances, reserve fund, investments and book debts aud all other rights and: interests arising out of such property as were, immediately before the appointed day, in the ownership, possession power or "centrol of 'the eenceme4 company,whether within or without imiia, and all book>s of account, !'egistier8, iiild au is other documerts of whatever nature relating thereto (3) any contract, whether express or implied, or other arrangement, in so far as it relates to the management of the business and affairs of either of the twq companies in relation to its undertakings, and in force immediately before the appointed day, shau be deemed to have terminat-20 ed on tbeappointed day (4) all persons in charge of themanagement, including persol'ls holding offices as directors, managers or any other managerial personnel of eifherpf the two companies, inunediately before the appointedday, shall be ,deemed to have vacated their dces as suman ,the ~ day 25 (5) notwithstanding anything e<mtaiaed in any other law for the time being in force, no person in reipect of whom any contract of manaaemen~ or other arrangement is terminated by reasqn of the provisions contained in aub-section '3), or who ceases to hold any-office by reason of t8e provisions oontained in sub-section (4), shall be entitled to claim anyco:ql-30 pensationfor the premature termination of the oontract of management or other altangement or 10r the loss of office, as the cue may be (&) notwiibstanding any judgment, decree or onter of aftiy court, tribunal qr other -authority or anything contained in any other law (other than 'this act) for the time being in foll'ce, fnfiry receiver or ,other 3s person in whose possession or custody or under whose control any undertaking of either of the two companies or any part thereof may be immediately before the appointed day, shall, on the commencement of this cact, 4eliver possession of the said undertaking or  uehpart thereof,as the case maybe to the custodian, where no custodian has been 40 :appointed, to such other personas the central government may d4rect :(7) for the ll"emoval of doubts, it is hereby declared that any liability inann;ed by euher of the two companies in relation to its undertakings befere the appointed day shall be enforceable against the concerned company and not against the central government or the custodian c (1) the central government may, as soon as it is convenieht administratively so to do, appoint any pel"son or body of persons (including a government company, whether in existence at the commencement of this act or incorporated thereafter) as the custodian of the undertakings of either, or both, of the two companies for the s purpose of carrying on the management of such undertakings and the custodian so appointed shall carryon the management of the undertakings of the two companies for and on behalf of the central government (2) on the appointment of the custodian under sub-section (1), the management of the undertakings of the two companies shall vest in such 10 custodian and all persons in cherge of the management of such undertakings inunediately before such appointment shall cease to be in charge of such management and bhau be bound to deliver such management to the custodian (3) the central government may, by notification, authorise the custo- is dian to appoint any per~on (~ncluding a government company, whether in existence at the commencement of this act or incorporated thereafter) as the additional custodian of the undertakings of either, or both, of the two companies (4) the additional custodian shall assist the custodian in the 20 exercise of his or its powers and duties under this act and shall function under the direction, supervision and control of the custodianj and the custodian may delegate to the additjional custodian au or such of his or its powers as he or it may think fit (5) subject to any general or special direction given or condition im- 25 posed by the custodian,  any peison authorised by the custodian to exercise any power may exercise that power in the same manner and with the same eifed as if it had been conferred on that person directly by ~his act and not by way of authorisation  (6) the central government may issue such directions (including 0 directions as to initiating, defending or continuing any legal proceedings 3 before any court, tribunal or other authority) to the custodian as to his or its powers and duties as the central government deems to be desirable in the circumstances of the case, and the custodian may also apply to the ce~tral government at any time for instructions as to the manner in wl)ich he or it shall conduct the management of the undertakings of 3s either, or both, of the two companies or in relation to any other matter arising in the course of such management (7) subect to the other provisions of this act ahd the control of the central government, the custodian shall be entitled notwith- 40 standi~g _ anything contained in the companies act, 1956, to ~xereise all 1 of 1956 the powers of the board of directors of the two companies (including  the power to dispose of any properties or assets of the two companies) whether such powers are derived from the companies act, 1956, or from the memorandum and articles of association of the concerned company or 45 from any other source  ta) every person having possession, custody or control of any pro-perty forming part of any undertaking of either of tha two companies shall deliver forthwith such property to the custodian or to any officer or other employee o£ the central government or the custodian, as may s be authorised by the central government in this behalf (9) any person who, on the appointed day, has in his possession or under his control any books, papers or other documents relating to the undertakings of either, or both, of the two companies, including the minutes books containing the resolutions of the persons in charge of 10 the management thereof before the appointed day, the current cheque books relating to the undertakings of such company, any letters, memoranda, notes or other communications between him and such company shall, notwithstanding anything contained in any other law for the time being in force, be liable to account for the books, papers and other docu-is ments (including such minutes books, cheque books, letters, memoranda, notes or other communications) to the custodian and shall deliver them up to the custodian or to any such person (being an officer or other employee of the central government or the custodian) as may be authorised by the central government in this behalf 20 (10) every person in charge o£ the management of the undertakings of either of the two companies immediately before 'the appointed day shall, within ten days from that day or within such further period as thz! central government may allow in this behalf, furnish to the custodian a complete mventory of all the properties and assets (including parti-2s culars of book debts and investments and belongings) forming part of the undertakings of such company immediately before the appointed day and of a11 the liabilities and obligations of such company in relation to its undertakings, subsisting immediately before that day, and also of all agreements entered into by such company in relation to its undertakings 30 and in force immediately before that day (11) the custodian and the additional custodian shall receive from the funds of the undertakings of each of the two companies such remuneration as the central government may fix 5 (1) each of the two companies shall be given by ,the central gov-payment 3s ernment ild amount, in cash, and at the rate specified in sub-section (2), of amount for the vesting in it, under section 3, of the management of the undertakings of each such company (2) for e\lery month during which the imnagement of the undertakings of each of the two companies remains vested 10 the central gov-40 ernment under this act, the amount, referred to in sub-seciion (1), shall be computed at the rate of-(a) ruppes ten thousand per annum in the case of laxmirattan cotton mills company limited; and (b) rupees eicht thousand per annum in the case of atherton west and company limited  chapter iii power to provide relief to any undertaking or to the underrajwlqs of &ltlii!lr of the two companies6 (1) the central government may, if satisfied, in relation to any undertaking of either of -the two companies or any part thereof, the s management of which has vested in it under this act, that it is necessary so to do in the interests of the general public with a view to preventing any £,all in the volume of production of such undertaking, by notification, declare that-power of central government to make certain declarations in relation to certain undertakings (0) all or any of the enactments specified in the schedule shall 10 not apply or shall apply with such adaptations, whether by way of modification, addition or omission (which does not, however, affect the policy of the said enactments) to such undertaking as may be specified in such notification, or (b) the operation of all or any of the contracts, assurance6 of is property agreements, settlements, awards, standing orders or other instruments in force (to which such undertaking or the company owning such undertaking is a party or which may be applicable to such undertaking or company) immediately before the date of issue of the notification shall remain suspended or that all or any of the 20 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 such manner as may be specified in the notification (2)' the notification made under sub-section (1) shall remain in force, 2s in the first iastance for a period of one year but the duration of such notification may be extended from time to time by a further notification by a period not exceeding one year at a time: provided that no such notification shall, in any case, remain in force after the expiry of three years from the commencement 01 this 30 act (3) any notification made under sub-section (1) shall have effect notwithstanding anything to the contrary contained in any other law agreement or instrument or any decree or order of 'a coilrt, tribunal, ofticer or other authority or of any submission, settlement or standing ol'lder 3s (4) any remedy for the enforcement of any right,privilege, obligation or liability referred to in clause (b) of sub-section (1) and suspended or modified and all proceedings relating thereto pending before ary court, tribunal, officer or other authority shall accordingly remain stayed or be continued subject to such adaptations; so, however, that 40 on the notification ceasing to have effect-(a) any right, privilege, obligation or liability so remaining suspended or modified shall become revived and enforceable as if the notification had never been made; (b) any proceeding so remaining stayed shall be 'proceed~d 4s with subject to the provisions of any law which may be then 10 force, from the stage which had been reached when the proceeding became stayed (5) in computing the period of limitation for the enforcement of any right, privilege, obligation or liability referred to in dause (b) of sub-section (1), the period during which it or the remedy' for the enforcement thereof remained suspended shall be excluded  chapter iv miscellaneous| act     ||---------|| have    || over_   || riding  || effect |7 the provisions of this act o!" any notification, order or rule made thereunder, shall have effect notwithstanding anything ineonsistent therewith contained in any law (other than this act) or in any 10 instrument having effect by virtue of any law other than this act or in any decree or order of any court application of act 1 of 19~6 8 (1) notwithstanding anything contained in the companies act, 1956, or in the jre'morandum or articles of association of either of the two companies, so long as the management of the undertakings of the two is companies remains vested in the central government,-(a) it shall not be lawful for the shareholders of either of the two companies or any other person to nominate or appoint any person to be a director of such company; '(b) no resolution passed at any meeting of the shareholders 20 of either of the two companies on or after the appointed day shall by given effect to unless mpproved by the central government; (c) no proceeding for the winding up of either of the two companies or for the appointment of a liquidator or receiver in respect thereof shall lie in any comt except with the consent of the central government (2) subject to the provisions contained in sub-section (1), and to the other provisions contained in this act and subject to such other exceptions, restrictions and limitations, if any, as the central government may, by notification, specify in this behalf, the companies 1 of 1958 30 act, 1956, shall continue to apply to the two companies in the same manner as it applied, thereto before the appointed day 9 in computing the period of limitation prescribed by any law for the time being in force for any suit or application against any person by either of the two companies in respect of any matter arising out of any 3s transaction in relation to the undertaking of any of the two companies, the time during which this act remains in force shall be excluded exclusion of period ofoperation of this act from limi_ tation 10 (1) no suit, prosecution or other legal proceeding shall lie against the custodian, additional custodian or any officer or other employee of the central government or the custodian for anything which is ~n 40 good faith done or intended to be done under this act protection of action taken in good faith (2) no suit or other legal proceeding shall lie against the central government or the custodian or the additional custodian or any of the oftlcera or other employees of the central government or the custodian for any damage caused or likely to be caused by anything which is in 45 good faith done or intended to be done under this act contracts, etc, in bad faith may be cancelled or varied 11 (1) if the central government is satisfied, after such inquiry as it may think proper, that any contract or agreement entered into at any time within three years immediately preceding the appointed day between either of the two companies or managing or other director of any such: company and any other person in relation to any service, s sale or supply to, or by, the undertakings of either of the two companies, and in force immediately before the appointed day, has been entered into in bad faith, or is detrimental to the interests of the undertaking of the concerned company, it may make, within one hundred and eighty days from the appointed day, an order cancelling or varying (either 10 unconditionally or subject to such conditions as it may think fit to impose) 'such contract or agreement and thereafter the contract or agreement shall have effect accordingly: provided that no contract or agreement shall be cancelled or varied except after giving to the parties to the contract or agreement a reason- is able opportunity of being heard (2) any person aggrieved by an order made under sub-section (1) may make an application to the prindpal civil court of original jurisdiction within the local limits of whose jurisdiction the registered office of the concerned company is situated for the variation or reversal of 20 such order and thereupon such court may confirm, modify or reverse such order avoidanceof voluntary transfers 12 any transfer of property, movable or immovable, or any demvery of goods made by or on behalf of either of the two companies (not being a transfer or delivery made in the ordinary course of its business or in 2s favour of a purchaser for valuable consideration and in good faith), if made within a period of six months immediately preceding the appointed day, shall be void against the central government or the custodian, as the case may be power to terminate contracts of employment 13 if the custodian is of opinion that any contract of employment 30 entered into by either of the two companies or any managing agent or managing or other director of either of the two companies at any time hefore the appointed day is unduly onerous, he or it may, by giving to the employee one month's notice in writing or salary or wages for one month in lieu thereof, terminate such contract of employment 35 14 (1) any person, who-penalties (a) having in his possession or custody or under his control any property forming part of any undertaking of either of the two companies, wrongfully withholds such property from the custodian or 0 any person authorised under this act, or 4 (b) wrongfully obtains possession of any such property, or (c) wilfully retains any property forming pgrt of any undertaking of either of the two companies or removes or destroys it, or (d) wilfully withholds from, or fails to deliver to, the custodian or any person authorised under this act any bookls, papers or 45 other documents relatin~ to any undertaking of either of the two companies, which may be in his possession, power or custody or under his control, or (e) fails, without any reasonable excuse, to furnish information or particulars as provided in sub-6ection (8) of section 4, shall be punishable with imprisonment for a term which may extend 5 to two years, or with fine which may extend to ten thousand rupees, or with both (2) no court shall take cognizance of an offence punishable under this section except with the previous sanction of the central government or an officer authorised by that government in this behalf 15 (1) where an offence under this act has been committed by a oft'encea 10 company, every person who, at the time the offence was committed, by was in charge of, and was responsible to, the company for the conduct companies of the business of the company as well as the company, shall 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 sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge 01' that he had exercised all due diligence to prevent the commission of such offence (2) notwithstanding anything contained in sub-section (1), where 20 an offence under this act has been committed by a company and it is proved that the offence 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 oftlcer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence 25 and shall be liable to be proceeded against and punished accordingly explanation-for the purposes of this section,-(a) "company" means any body corporate ana includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm 30 16 (1) the central government may by notification, make rules for power to carrying out the provisions of this act make rulea (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 parliament while it is in session for a total period 01 thirty days which 35 may be comprised in one session or in two or more successive sessiolls, and if, before the expiry of the session immediately fouowing 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 eftect only in such modified form 40 or be of no effect, as the case may! be; so, however, that any such modiftcation or annulment shan be without prejudice to the validity ot anything previously done under that rule 17 (1) the laxmirattan and atherton west cotton mills (taking over of management) ordinance, 1976·, is hereby repealed 11 of 1978 repeal and saving (2) notwithstanding such repeal, anything done or any action taken under the ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this act s  the schedule (see section 6)] the industrial employment (standing orders) act, 1946 20 of 1948 2 the industrial disputes act, 1947 14 of 194'1 3 the minimum wages act, 1948 10 11 of1948  statement of objects' and reasonsdue to mismanagement, the undertakings of the laxmirattan cotton mills company limited and atherton west and company limited, two large-sized mills at kanpur, which were engaged in the m8l1ufacture of certain varieties of cloth needed by the weaker sections of the community and also by the defence department, were lying closed since may, 1975 the closure had resulted in the unemployment of over five thousand workers 2 various avenues of re-opening the mills were explol'ed by the central government in consultation with the government of uttar pradesh and the bankers of the two companies it was found that liabilities of the two companies had exoeeded their respective assets and a sum of bal 490 crores was needed fo!l' renovation and modernisation before the mills of these companies could re-start the government of uttar pradesh pleaded its inability to shoulder the responsibility the bankers were also reluctant to advance finance to the existing managements of the two companies in the circumstances, there was no alternative other than the nati<>nalisation of the undertakings of the two companies the valuation of the undertakings crt the two companies was necessary to determine the amount to be paid for the acquisition crt the undertakings such valuation would require some time in the meantime, there wall an apprehension that there might be large-scale frittering away of asaets which may prove detrimental to, the public interest in the circumstances, the laxmirattan and atherton west cotton mills (taking over of management) ordinance, 1976, was promulgated by the president on 19th july, 1976 2 the bill seeks to replace the said ordinance minister of commerce new delhi; the 12th august, 1976 sd/- d p chattopadhyaya, president's recommendation under article 117 of the constitution of india [copy of letter no 10/13j76-tex i, dated the 16th august, 1976 from prof d p chattopadhyaya, minister of co,mmerce to the secretary-general, lok sabha] the president having been informed of the subject matter ()f the laxmirattan and atherton west cotton mills (taking over of management) bill, 19'76, to provide for the taking over, in the public interest, of the management of the undertakings of certain companies, pending nationnlisation of such undertakings, with a view to ensuring the supply of certain varieties of cloth needed by the weaker sections of the community as also by the defence department and for matters connected therewith or incidental thereto, recommends under clause (1) of article 117 ()f the constitution of india the introduction of the said bill in lok sabha and also recommends under clause (3) of the same article 117, the consideration of the bill by lok sabha clause 5 of the bill provid~ that for every month during which the management of the undertakings of the two companies rem_ains vested in the central government, the two companies shall be paid in cash an amount at the rate of rs lj(),ooo per annum in the case of laxmirattan cotton mills limited and rs 8,000 per annum in the case of atherton west and company limited the expenditure on this account is likely to be of the order of rs 12,000 during the remaining period of the current financial year 2 money will also have to be provided by the central government for the working capital as well as modernisation of the mills of the twa companies expenditure on modernisation is necessary to make the mills financially viable the total requirements of margin money for working capital for these two mills have been estimated at rs 184 lakhs the requirements on account of modernisation have been estimated at about rs 366 lakhs during the current financial year, it is estimated that an amount of a'bout ru~e9' two crores will be required on account of working capital and modernisation this expenditure will be met from the budget grant of the ministry of commerce 3 the bill, if enacted, is not likely to involve any other recurridc or non-recurring expenditure  memorandum regarding delegated legislationclause 16 f the bill empowers the central government to make rules to carry out the provisions of the bill 2 the matters in respect of which such rules may be made would relate to matters of procedure and administrative detail and it is not practicable to provide them in the bill itself the delegated legislation is, therefore, of a normal character  a bill10 provide for the taking over, in the public interest, of the management of the undertakings of certain companies, pending nationalisation of such undertakings, with a view to ensuring the supply of certain varieties of cloth needed by the weaker sectipns of the community as also by the defence department and for matters connected therewith or incidental thereto (prof d p chattopadhyaya, minister of commerce) 