Ministry of Textiles
The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, nationalized six textile undertakings of the Swadeshi Cotton Mills Company Limited. The company’s textile units were already under government management due to earlier financial difficulties. This Act aimed to fully acquire these undertakings to ensure continued production and distribution of cloth and yarn, essential commodities for the country. The nationalization was also intended to safeguard the employment of workers in these mills. This Act falls under the Ministry of Textiles.
Enactment Date, Number of Chapters, Number of Sections:
The Act was enacted on May 30, 1986, with sections 27 and 28 coming into force immediately and the rest deemed effective from April 1, 1985. It consists of seven chapters and 33 sections, along with a schedule outlining the order of priorities for discharging the company’s liabilities.
Act Governed By:
The Act’s implementation was overseen by the Central Government, which acquired the textile undertakings and vested them in the National Textile Corporation (NTC). A Commissioner of Payments was appointed to manage the financial transactions related to the acquisition and disbursement of funds.
On Whom It Is Applicable:
The Act primarily applied to the Swadeshi Cotton Mills Company Limited, its employees, shareholders, creditors, and the six nationalized textile undertakings. It also affected the National Textile Corporation and any subsidiary corporations to which the undertakings were transferred.
Penalties/Punishments:
The Act prescribes penalties, including imprisonment and fines, for offenses such as obstructing the acquisition process, making false claims, and wrongfully withholding assets. It also addresses offenses by companies.
Important Pointers:
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Nationalizes six textile undertakings of the Swadeshi Cotton Mills Company Limited.
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Vests the ownership of these undertakings in the National Textile Corporation.
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Provides for compensation to the company for the acquisition.
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Ensures the continued employment of the undertakings’ employees under the NTC, with terms and conditions no less favorable than before.
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Addresses the transfer and management of the company’s provident fund and other employee funds.
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Empowers the NTC to form subsidiary corporations and transfer the undertakings to them.
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Appoints a Commissioner of Payments to manage the disbursement of funds and settlement of claims.
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Establishes a priority of claims against the company, giving precedence to employee dues and secured loans.