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[Cites 0, Cited by 52] [Entire Act]

Union of India - Section

Section 13 in The Industries (Development And Regulation) Act, 1951

13.

/629Statement of Objects and Reasons.-The object of this Bill is to provide the Central Government with the means of implementing their industrial policy which was announced in their Resolution No. 1(3)-44(13)-48, dated 6th April, 1948 and approved by the Central Legislature. The Bill brings under Central control the development and regulation of a number of important industries the activities of which affect the country as a whole and the development of which must be governed by economic factors of all-India import. The planning of future development on sound and balanced lines is sought to be secured by the licensing of all new undertakings by the Central Government. The Bill confers on Government, power to make rules for the registration of existing undertakings, for regulating the production and development of the industries in the Schedule and for consultation with Provincial Governments on these matters. Provision has also been made for the constitution of a Central Advisory Council, prior consultation with which will be obligatory before the Central Government takes certain measures such as the revocation of a licence or taking over the control and management of any industrial concern.Amendment Act 26 of 1953-Statement of Objects and Reasons.-The Industries (Development and Regulation) Act, 1951, came into force on the 8th May, 1952. In the course of the working of this Act, certain practical difficulties have come to light.2. Some of those difficulties are:(a) the period allowed under section 10 of the Act for the registration of undertakings has not been found to be adequate in actual practice, and, therefore, requires to be extended;(b) while powers are available in the existing Act to revoke licences in certain cases, no such powers are available for the revocation of registration where it is necessary to do so;(c) the provisions relating to licensing are not complete inasmuch as they do not apply to(i) industrial undertakings which, though required to be registered, are not registered within the time limited for the purpose;
(ii)industrial undertakings which, though not registrable at the commencement of the Act, become registrable subsequently by reason of the definitions in the Act becom ing applicable thereto;
(iii)industrial undertakings proposing to change their location;
(iv)industrial undertakings proposing to take up the manufacture of goods of new brands (and types) within the same scheduled industry or of goods pertaining to any other scheduled industry, without any additional plant and machinery or factory buildings;
(d) the explanation of the term "substantial expansion" is not free from ambiguity;(e) Government cannot take over the management of any industrial undertaking, even in a situation calling for emergent action, without first issuing directions to it and waiting to see whether or not they are obeyed;
(f)the law, as it stands, does not deal in any detail with the consequences of Government taking over the management of an undertaking;
(g) certain items in the First Schedule are not sufficiently descriptive so as to include all important sections of the industries concerned.The object of this Bill is mainly to remove such difficulties.3. At present, the power to control prices and distribution of various goods under this Act is confined to industrial undertakings. registered or licensed under the Act. In all other cases, it is necessary to have recourse to powers derived from the Essential Supplies (Temporary Powers) Act, 1946 and the Supply and Prices of Goods Act, 1950. Both these enactments have a limited period of life. It is proposed to add a Chapter taking power to control the distribution and price of goods produced in scheduled industries and of similar goods even though they may be of imported origin.4. Opportunity is also taken to remove a doubt which may arise by reason of the phraseology of section 4 which says that nothing in the Act shall apply to industrial undertakings of which the capital invested does not exceed rupees one lakh. This provision is liable to be misconstrued to mean that even the declaration contained in section 2 is inapplicable to such undertakings. It is also difficult to define "capital invested" suitably for the purpose of the Act. It is, therefore, proposed to omit section 4, and wherever necessary, exemptions would be granted under the new section 28 to any undertakings or scheduled industries. Incidentally, six more important industries, namely, the silk, the artificial silk, the dyestuff, the soap, the plywood and the ferromanganese industries are being added to the Schedule.Amendment Act 72 of 1971-Statement of Objects and Reasons.-The industries included in the First Schedule to the Industries (Development and Regulation) Act, 1951 are those the control of which by the Union has been considered to be expedient in the public interest. The proper development of these industries is vital to the economic development of the country. These industries not only substantially contribute to the Gross National Pro-duct of the country, but also afford gainful employment to millions of people. For diverse reasons, a number of industrial undertakings engaged in these industries have had to close down and the continuing economic operation of many others is best with serious difficulties affecting industrial production and employment. Action has, therefore, to be taken to rehabilitate such undertakings by investment of public funds and managerial skill and put them on their feet. While provisions already exist for Government to take over sick industrial undertakings, such undertakings have got to be returned to the original owners after a period of 15 years or less. During the period of take over Government has to invest public funds in such undertakings and it must be able to do so with a measure of confidence about the continued efficient management of the undertakings at the end of the period of take over. In order to ensure that at the end of the period of take over by Government, the industrial undertaking is not returned to the same hands which were responsible for its earlier misfortunes, it has been provided in the Bill that in relation to an undertaking taken over by them, Government will have the power to move for (i) the sale of the undertaking at a reserve price or higher (Government purchasing it at the reserve price, if no offer at or above the reserve price is received), action being taken simultaneously for the winding up of the company owning the industrial undertakings; or (ii) the reconstruction of the company owning the industrial undertaking with a view to giving the Government a controlling interest in it.2. At present, Government has no power to take over the management of industrial undertakings in respect of which proceedings for liquidation are pending before a Court. It has been provided in the Bill that Government may, notwithstanding anything contained in the Companies Act, move the Court for permission to investigate into the affairs of such an undertaking and also take over its management with the permission of the Court. The Bill also provides that in relation to such an undertaking, Government may, if it considers necessary, resort to the further course of action, i.e., the sale of the undertaking at the reserve price or higher or reconstruction of the company, as explained in the preceding paragraph. 3. With a view to ensuring speedy action by Government, it has been provided in the Bill that if the Government has evidence to the effect that the assets of the company owning the industrial undertakings are being frittered away or the undertaking has been closed for a period not less than three months and such closure is prejudicial to the concerned Scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery installed in the undertaking is such that it is possible to restart the undertaking and such restarting is in the public interest, the Government may take over its management without an investigation.4. The smooth running of industrial undertakings taken over by the Government is also liable to be hampered by the various claims and liabilities, etc., which existed prior to the date of take over. It has been suspended for a maximum period upto five years, the past obligations, liabilities, etc., of the undertaking, the Government may also decide to grant relief to an undertaking taken over by them from the operation of certain Acts, i.e., (i) the Industrial Employment (Standing Orders) Act, 1946, (ii) the Industrial Disputes Act, 1947, and (iii) the Minimum Wages Act, 1948.5. An Ordinance to amend the Industries (Development and Regulation) Act, 1951 was promulgated by the President on the 1st November, 1971 to give effect to the above proposals.6. The Bill seeks to replace the said Ordinance.Amendment Act 67 of 1973-Statement of Objects and Reasons.-At the time of enacting the Industries (Development and Regulation) Act, 1951, it was provided in the Act that the owner of every industrial undertaking which existed at the commencement of the Act shall get the undertaking registered with the Central Government. Such undertakings seeking registration were required to furnish information regarding monthly installed capacity, the number of shifts, number of working days in a month, past production during the last three years, etc. The form of registration certificate issued to the undertaking which was prescribed under the rules, did not, however, contain any column for specifying the productive capacity. Accordingly, in many cases the productive capacity of the undertaking was not specified in the registration certificates.2. It has come to the notice of the Government that certain registered undertakings have increased their production to a much higher level than what was reported by them at the time of registration. Such increases are likely to be detrimental to the interests of the small and medium units as also likely to lead to other adverse results. If such a state of affairs is allowed to continue, the production level of such undertakings will remain indeterminate and cannot be pegged to a specified level as distinguished from the undertakings licensed after the commencement of the Act, for which the specific productive capacities are mentioned in the licence.3. The Bill, therefore, proposes to empower the Government to call for the registration certificates from any class of undertakings for entering therein the productive capacity of the industrial undertaking and other prescribed particulars. The Bill seeks to provide that for the purpose of specifying the productive capacity, the Central Government shall take into consideration the productive or installed capacity of the industrial undertakings as specified in the application for registration, the level of production immediately before the date on which application for registration was made, the level of average annual production during the three years immediately preceding the commencement of the proposed Amending Act, the level of export and such other factors as the Central Government may consider relevant.4. It has also been provided in the Bill that failure to produce the registration certificate by any undertaking after the issue of notification in this regard by the Central Government, shall be punishable under the provisions of the Act.5. "Linoleum, whether felt based or jute based" is an important industry and the item is required both by Government Departments and the public. As such, a scheme of regulation for this industry is necessary on the same basis as other industries covered by First Schedule to the Act. To enable the Government to do so the Bill provides for the inclusion of the said item in the First Schedule to the Act.Amendment Act 4 of 1984-Statement of Objects and Reasons.-One of the important policy measures adopted by the Government to improve the competitive strength of industrial undertakings in the small scale sector, is to reserve selected items for exclusive production by such undertakings. Under this policy, 872 items are presently so reserved. The Government has been making such reservations since 19th February, 1970 through the exercise of powers under section 29-B of the Industries (Development and Regulation) Act, 1951 which provides that the Central Government, having regard to the smallness of the number of workers employed or the amount invested in the industrial undertaking or to the desirability of encouraging small undertakings generally or to the stage of development of any scheduled industry, may exempt any undertaking from the operation of all or any of the provisions of the Act.2. As there is no specific mention in section 29-B of the Act about reservation of items for exclusive production by small scale undertakings, doubts have been raised about the competence of the Government to take such action. With a view to placing the matter beyond doubt, the President has promulgated the Industries (Development and Regulation) Amendment Ordinance, 1984 (1 of 1984) making specific provision in the Industries (Development and Regulation) Act, 1951, empowering the Government to(a) specify the requirements to be complied with by an industrial undertaking to enable it to be regarded as an ancillary or a small scale industrial undertaking;(b) make reservation of any article or class of articles for exclusive production by an ancillary or a small scale industrial undertaking;(c) fix the productive capacity of large and medium scale units, already producing such reserved items on the date of reservation; and(d) provide for all other matters incidental thereto.The Bill seeks to replace the said Ordinance.3. No financial commitment or expenditure from the Consolidated Fund of India is likely to be involved if the proposed Bill is enacted.4. The notifications whereby small scale or ancillary industrial undertakings were defined and the notifications whereby articles were reserved for production by small scale or ancillary industrial undertakings which are proposed to be validated by the Bill, are being laid on the Table of each House of Parliament.[31 st October, 1951] An Act to provide for the development and regulation of certain industries.Be it enacted by Parliament as follows:-
The Act has been extended to the State of Jammu and Kashmir by Act 51 of 1961.It has been also been extended to the Union territories of Goa, Daman and Diu by Regulation 12 of 1962. Goa is now a State, see Act 18 of 1987, and to Dadra and Nagar Haveli by Regulation 6 of 1963, Section 2 and Sch. I (w.e.f. 1.7.1965) and Pondicherry by Regulation 7 of 1963, Section 3 and Sch. I.Brought into force on 8.5.1952.