The Asian Refractories Limited (Acquisition of Undertakings) Act, 1971 was enacted on December 23, 1971 and came into effect on October 17, 1971 for the purpose of getting hold of the undertaking under the control of Asian Refractories Limited in order to increase supply of refractories to fulfill the indispensable needs of the iron as well as steel industry. This is necessary because the Asian Refractories Limited had become insolvent and the manufacture of products had come to an end. In India, the manufacture of refractories was deficient and scarce to accomplish the vital requisites of the iron and steel production. The Government also felt that the immediate increase in the supply of refractories was fundamental to bring the Asian Refractories Limited into function and expand the capacity of the undertaking for easy supply of commodities.

The Act provides that from the initiation of the enactment, the enterprise under the management of the company shall be reassigned and be under the control of the Central Government without any impediments or encumbrances. The enterprise of the company means the assets, privileges, ability, supremacy and right as well as benefits that come up out of the assets and the ownership, control and charge of those assets in India or abroad and the statement of accounts, documents, registers which shall after transfer vested with the Central Government. The properties that are transferred to the Central Government as per the provisions of the Act shall be discharged from liabilities, credit, charge and other obligations and attachment, stay or order obtained form any Court which limits the use of the undertaking shall be considered to have introverted. Any litigation with respect to the functioning of the undertaking is pending connected with the company, such suit shall not decline or suspended in the manner detrimental to the company due to such assignment as stated in the enactment.

Besides, the official liquidator working under the company or other officials who hold the management of the undertaking shall convey ownership or custody of the enterprise to the Central Government in the prescribed mode. The official liquidator is also under the duty to hand over the statements of accounts, records, documents or other materials connected with the enterprise to the Central Government or any authorized person designated by the Central Government. The Central Government is empowered under the enactment to take essential steps to get hold of the enterprise by virtue of the Act. The Company is under the obligation to provide all the data and other details related with the enterprise to the Central Government within the specified time. In order to compensate the company, the Central Government is directed to pay Rs. 81,00,000 to the Central administrator of the enterprise either in lump sum or in installments. Initially, the Central Government shall deposit eight lakhs and the balance payment is also prescribed under the Act.

The Act further provides that the enterprise under the control of the Central Government shall be controlled by nominees of the Central Government and such persons are directed to act as per the directions and orders of the Central Government. Where a person has the possession or control of any property which is deemed to be part of the transferred undertaking, such person shall immediately handover the holding of such property to the Central Government. The Act also prescribes penalty for wrongfully retaining possession of the property vested under the enterprise. During the time of conviction, the Court shall order the accused to hand over possession or sufficient security within reasonable time or refund the amount equal to the property under his custody. Any documents or records withheld by the accused shall also be ordered to hand over to the Central Government. The prior permission of the Central Government is necessary to take cognizance of offense as provided under the Act. The litigation against the Central Government in relation with the enterprise shall be barred by virtue of the enactment.