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The Air Corporations (Transfer of Undertakings and Repeal) Act, 1994 was enacted by the Parliament which came into force on January 29, 1994. According to the Act ‘company’ denotes Indian Airlines Limited or else Air India Limited created and registered as per the Companies Act, 1956. The word ‘corporations’ means Air India or Indian Airlines constituted in accord with the Air Corporations Act, 1953. The undertakings under the control of Indian Airlines Limited and Air India Limited shall be transferred and vested in Indian Airlines and Air India respectively.

The transferred undertaking or establishment of the corporation and which is under the control of company shall be supposed to consist of assets, privileges, control, authority and rights and the entire properties of any nature and location added with lands, aircraft cash balances, investments, workshops, tenancies, capital reserves, book debts and leases that continue from such property which were directly prior to the appointed day in possession and ownership of the corporation with regard to the establishment in India or abroad, account books and other documents, loans, obligations and responsibility then prevailing connected with the undertaking. The legal agreements and working arrangements prevailing prior to the appointed day and that affects the corporation as closely as related with the establishment cease to exist or enforceable as opposed to that corporation and shall be of complete force and outcome as regards the company where the establishment has vested and enforceable completely similarly that the company is named or will become a party. During any process or cause of action instantly previous to the appointed day by or opposed to the corporation with regard to the undertaking be carried on and made effective in relation to that corporation. But it shall be done if the present legislation has not been enacted and cannot be enforced against that corporation.

Moreover, from the appointed day, the quotas, licenses, exemptions etc given to the corporation for dealing with the affairs and industry of the corporation according to the provisions of any legislation shall be considered to be provided to the company where the undertaking is being vested. If any exclusion from assessment in relation to payment of tax has been provided or any advantage in the manner of set off or carry forward in relation to unabsorbed reduction or investment allowance including other allowance or loss is expanded or granted to the corporation as per the Income Tax Act, 1961 such exemption or benefit shall persist for the company where the undertaking is vested. Additionally, where the expenses of the corporations are excluded from deduction of tax as per Income Tax Act, 1961, the exclusion from tax shall persist with respect to the company where such undertaking is vested. The transfer as well as vesting of the establishment shall not be interpreted to transfer for the reason of capital gain. It shall be for the purposes connected with the administrative affairs of the Corporations.

The guarantee given in relation to the corporation for any advancing of loan or lease finance shall persist to function for that company where the undertaking has vested the corporation. The Act provides detailed provision for the officers and other staff of the corporation. The officers and employees shall have the same remuneration, tenure, insurance, schemes, funds etc as prior to the enforcement of the Act. They shall enjoy the same benefits in pension scheme, provident fund, gratuity etc. The Central Government is empowered under the Act to issue directions for the effective performance of functions and responsibilities by the Company and the Company is under the obligation to comply with such directions. The Central Government can issue orders to overcome the difficulties that arise out of the provisions of the enactment.

The Air Corporations (Transfer of Undertakings and Repeal) Act, 1994 repealed the Air Corporations Act, 1953 and The Air Corporations (Transfer of Undertakings and Repeal) Ordinance, 1994.