The Sick Textile Undertakings (Taking Over of Management) Act, 1972

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An Act no. 72 of 1972 was enacted by Government of India with short title, ‘The Sick Textile Undertakings (Taking Over of Management) Act, 1972’, which was assented on 23rd December, 1972. The main object and purpose for which the Act was enacted by the Parliament, includes the taking over of management of sick textile undertakings which are not yet nationalised. Such take over is to be done for the purpose of rehabilitation of such undertakings, in the general public interest. The Act itself have provided with its enforcement date, i.e. 31st October, 1972.

There are certain terms used in the Act, which are sought to be defined by the section 2 for the correct interpretation of the provisions. The important term among those defined in the provisions is ‘Sick textile undertaking’, which here means an undertaking owned by such Textile Company which is wound up. Not only this, but it includes the undertakings which are closed for at least 3 months as prejudicial to the textile industry, but can be re-started working. And includes all other categories of textile undertakings which are specifically provided under clause (d) of the section 2 of the Act. section 3 provides for the effect of the provisions of this Act, as should not be affected by any other law, judgement, order, etc. which is being contrary.

Chapter-II is important one, as it is related to the main purpose of the Act. It says that, the management of every sick undertaking which are enlisted under Schedule-I annexed with the Act, should be taken over by and vested in the Central Government, from the date on which the Act brought into force (appointed date). There are, originally, forty six undertaking which are named under first Schedule annexed with this Act. The Schedule also provides for the names of owners of such undertakings also. The Sick textile undertakings, a management of which sought to be vested with the Central Government, are provided to be transferred along with its management, every assets, rights, authorities, property, equipments, etc. and even goods under production by such undertaking, books of accounts, etc. However, if any contracts or instruments, etc. which were entered into by such undertaking prior to such take over, then all such contracts or instruments, etc. should be deemed to be terminated under this Act, after such take over. The Act also provides for de-vesting of management from the persons who were vested with the same prior to such take over.

On such take over, the management is vested with the Custodian so appointed by the Central Government under section 5. Such Custodian can be an Individual or Government company. Similarly, there can be appointed a Custodian General for having supervisions and controls over the management of such undertaking and even earlier appointed Custodian should act under his control. Any Government Company can be appointed as such Custodian general by the Central Government. Moreover, the another important provision is section 6 dealing with payment of amount to the owner of such sick textile undertaking which was taken over by the Central Government. The amount computation is provided under sub section (2) of this section.

The Act provides for certain declarations which the Central Government can made in relation to the Sick textile undertakings for preventing the fall in the volume of production of the textile industry. The Central government under this provision can declare, among other declarations, that the provisions of laws listed under schedule-II annexed with the Act, should not be applied in relation to such undertakings. Such list of laws includes, the Industrial Employment (Standing Orders) Act, 1946, The Industrial Disputes Act, 1947 and the Minimum Wages Act, 1948.

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Under its miscellaneous provisions, the Act provides at the first instance that, a previous consent of the Central Government should be taken before any winding up process initiated or continued before any Court. Similarly, the Custodian general and Custodian are vested with the power to terminate the contract of employment which was entered into by owner of such undertaking or his agent and found undue. For every actions taken or things done or even any damage caused in good faith or in pursuance of the provisions of this Act, there should be no suits or other legal obligations against the Central Government, Custodian or Custodian general. Central Government is further empowered to delegate the powers or functions under this Act to any person, who should act under its authority and directions.

Moreover, section 15 makes penal provisions, wherein a list of offences described and the maximum punishment of 7 years is given along with fine. The Central Government is again empowered to frame rules for given effect to the provisions of this Act and also for carrying out the object and purpose of this Act.

Lastly, the Act sought to repeal the ordinance i.e. The Sick Textile Undertakings (Taking over of Management) Ordinance, 1972, however, the effect of such ordinance was protected.

Recently, this Act was recommended for repeal by the 20th Law commission’s interim report (being report no. 250) while under the study on the ‘Legal enactments: Specification and Streamlining”. The reason put forwarded for repealing this enactment was include that the nationalization of such undertakings were carried out under the provisions of Sick Textile Undertakings (Nationalisation) Act, 1974 and as such the present Act became meaningless. The repealing was proposed with the additional remark that there should be a suitable saving clause made while repealing this Act. Even the report provides that, the P.C. Jain Commission report (Appendix – A-1) also recommended the repeal of this Act, but that time the same was not affected.

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 by Faim Khalilkhan Pathan.