The Textile Undertakings (Nationalisation) Laws (Amendment and Validation) Act, 2014

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The Textile Undertakings (Nationalisation) Laws (Amendment and Validation) Act, 2014 (Act no. 36 of 2014), was enacted with the view to amend the provisions of The Sick Textile Undertakings (Nationalisation) Act, 1974 and The Textile Undertakings (Nationalisation) Act, 1995, for continuing with the leasehold right vested in the National Textile Corporation on completion of the tenure of leasehold. This Amending Act has received the assent of the Hon’ble President of India on 17th December, 2014 and it was provided under the same Amending Act that it should be brought into force on 24th October, 2014.

The provisions of the Sick Textile Undertakings (Nationalisation) Act, 1974, have been amended under Chapter II of this Amending Act of 2014. The section 3 of the Act of 1974 was amended with retrospective effect by inserting new sub sections (3) and (4) therein. The Section 3 of that Act deals with acquisition of rights of owners regarding Sick Textile Undertakings by the Central Government and transferring thereof in National Textile Corporation. Now as per newly added sub section (3), the right of Sick textile Undertaking as to lease-holding are required to be continuously, vested in the Central Government on payment of rent thereof. Moreover, the another newly inserted provision as sub section (4) specifies that, the vesting of property in the National Textile Corporation by the Central Government can not be divested by any Court.

Similarly, the Amending Act of 2014 requires insertion of new sub sections to the Section 4 of the Act of 1974. The section 4 of that Act deals with the effect of vesting of Sick Textile Undertaking in the Central Government and thereupon as National Textile Corporation, as all the rights, liabilities, properties, etc. also all the books of accounts, etc. which the Sick textile Undertaking was having prior to such vesting, should also be transferred to the Central Government. And all the obligations, mortgages and all other encumbrances in respect of the Properties of Sick Textile Undertaking should be treated as cleared on such vesting. As such the Amending Act provides for new sub sections i.e. (8) and (9) to that section 4 of the Act of 1974, which makes provisions as to the operations in textile in the Sick Textile Undertaking which was being discarded or discontinued, was continued or revived on such vesting, such textile operations should be treated as were being continued. Even while such operations was not in continuation, any suit or proceedings should not be initiated against the National Textile Corporation for such discontinuation. And sub section (9) deals with provisions for removing doubts regarding continued vesting of lease-hold land in the Central Government, should not have any effect upon the rights of National Textile Corporation.

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Moreover, the Amending Act provides for another new Section at the end of the Act of 1974 as section 41, which is dealing with the validation of the effect of provisions as has been given under this Amending Act, as that of the Act of 1974. In short, anything done as per provisions of this Amending Act, the same should be covered within the purview of Act of 1974. Even if the Amending Act says that, the lease-hole property if have been divested to any person from the National Textile Corporation under the provisions of Act of 1974, then such property should be against vested in the National Textile Corporation. Also, any suit or proceedings regarding divestment of any such leaseholds property from National textile Corporation, should not be initiated or if have been initiated then should not continue before any Court or otherwise, after this Amending and Validation Act came into effect. And also such lease-hold properties as had been subjected suit or proceedings, should be again vested in the National Textile Corporation.

Another Chapter, i.e. Chapter III of this Amending Act, amends the provisions of The Textile Undertakings (Nationalisation) Act, 1955. Amendment of Section 3 of the Act of 1955 is provided by inserting a new sub sections therein. The new sub section (3) deals with provision which speaks for the continuation of vesting of lease-hold rights of the textile undertakings in the Central Government. And another newly inserted provision i.e. sub section (4) specifies that, the vesting of property in the National Textile Corporation by the Central Government can not be divested by any Court. Moreover, the section 4 of the Act of 1955 is provided with new sub sections (8) and (9) which are more similar to the amendment as has been made in the Act of 1974, the only difference is that of undertaking in the Act of 1974 is Sick Textile undertaking and in respect Act of 1955 it is not sick textile undertaking. Even a new section 39 is also provided with the same effect of validation as has been provided in respect of Act of 1974 as aforementioned.

As such, the Amending Act of 2014 deals with incorporation of new provisions in the Acts of 1974 and 1955 with regard to the lease-hold rights.

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by Faim Khalilkhan Pathan.