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The Smith, Stanistreet and Company Limited (Acquisition and Transfer of Undertakings) Act, 1977

An Act no. 41 of 1977 being ‘The Smith, Stanistreet and Company Limited (Acquisition and Transfer of Undertakings) Act, 1977’ was enacted with the view to acquire and transfer the rights, interests, etc. of the Calcutta based M/s. Smith, Stanistreet and Company Limited to the Central Government. The was originally, dealing with the manufacturing and distribution of Pharmaceuticals and chemicals being essential to the serve for the needs of the public. The management thereof was taken over by the Central Government under the provisions of Industries (Development and Regulation) Act, 1951 (Act no. 65 of 1951). The Act was assented on 17th December, 1977 and was brought into force on 1st October, 1977 as has been given under the Act itself. Prior to the enactment of this Act there was an Ordinance namely, The Smith, Stanistreet and Company Limited (Acquisition and Transfer of Undertakings) Ordinance, 1977  (Ordinance no. 13 of 1977), which was repealed under this Act, without affecting effect thereof.

The very important provisions contained under second Chapter of the Act relating to the main purpose of this Act. It provides that, from the appointed date i.e. the date on which the Act brought into force, the undertaking of the concerned Company along with its rights, titles, etc. to be transferred to the Central Government. Not only this, but the assets, rights, powers, privileges, etc. attached to the undertaking should also be treated to have transferred along with to the Central Government. Notable, the properties hereinbefore mentioned should be transferred as free from all encumbrances. Any previous liabilities i.e. the liabilities which the Company was having prior to the concerned transfer, should not be transferred along with to the Central Government and even the Government Company should not be held liable for such liabilities if in case the Central Government transfers undertaking to the Central Government, under this Act.

The third chapter makes provisions for payment of amounts i.e. rupees Three crores and Seventy Four Thousand along with interest by the Central Government to the Company for such transfer of undertaking. Even an amount of rupees 10,000 along with interests for every years preceding to the appointed day and from the date on which the Central Government has taken over the management of the undertaking, to be paid by it to the Company for the reason of deprivation thereof. There is a provision to appoint a commissioner for dealing with payments to the Company as aforesaid, are provided under sixth chapter of the Act.

Moreover, the management, control, etc. of the undertaking to be vest with the Government company if the Central Government has decided to vest it with that Government Company or if not, then with one or more appointed Custodians. Such Custodians can be appointed by the Central Government either from amongst the individuals or otherwise a Government Company. Such Custodians are especially responsible to maintain the accounts of the undertakings of the Company.

Chapter V of the Act says that whoever was employed by the Company in connection to such undertaking prior to such transfer, should be treated as employees of the Central Government or otherwise that of Government company as the case may be. And the conditions relating to their service, salaries privileges, etc. should be same. Moreover, if the that Company has already established provided, etc. funds for employees’ benefits then the same should be vested to the Central Government on such transfer.

Under its miscellaneous provisions the section 25 says that the provisions of the Act should be having applicability even in case other laws containing inconsistent provisions or even if any court’s, tribunal’s or etc. decree or order contained contrary to the provisions of the Act. In short, the provisions of the Act should in all these cases survive. Also all contracts which the concerned company had entered into in relating to such undertaking either contract of service or of sale, etc., to be treated terminated after such transfer, however, if the Central Government satisfied after rectification thereof to keep the contract then the same will not be ceased from having effect thereon. Moreover, under section 27 of the Act, penal provisions have been given as if any person wrongfully withholds the property from the Central Government or otherwise from any persons connected therein, or even any persons fails to furnish information which the Central Government required from him then such persons will be punished under this Act. And the punishment includes the maximum imprisonment of 2 years or fine, maximum rupees ten thousands or with both imprisonment and fine. Section 28 deals with offence by companies and persons against whom punishment can be provided. Further an immunity is provided to the Central Government and officers and also to Custodians, against the legal actions for the actions taken in good faith or sought to be taken under the provisions of this Act. Any person can be authorized by the Central Government for exercising its powers delegated under section 30 of the Act. The Central Government is also entitled under this Act, especially under section 31 to make rules for carrying on the purposes of this Act and for other matters provided under this provision.

Recently, on 14th November, 2014 the 20th Law commission has submitted its fourth interim report, being report no. 251 namely “Obsolete Laws: warranting Immediate” on its study on “Legal Enactments: Simplifications and Streamlining” (LESS), where it has identified certain laws to be considered for repeal including this one also. The reason for its repeal provided as the purpose of this Act has been served in so far the nationalisation of the concerned entity was concerned and the same does not provide for the management of the nationalised entity.

by Faim Khalilkhan Pathan.