Section 35 in The Warehousing (Development and Regulation) Registration of Warehouses Rules, 2017
35. Power of Authority in the event of potential loss to negotiable warehouse receipt holders.
(1)If the Authority determines that a warehouseman is not likely to make adequate efforts or has communicated his inability to preserve the quantity and quality of goods against which negotiable warehouse receipts have been issued by either relinquishing custody or control of deposited goods, or in any other manner, and such act or omission is likely to cause loss to the quantity and quality of goods against which negotiable warehouse receipts have been issued, the Authority may, for the purpose of preserving the quantity and quality of such goods, immediately take control of and manage, or take control of and liquidate the goods, as it may deem fit.(2)The Authority may act under sub-rule (1) only after the registration of the warehouse, -(a)has been suspended; or(b)has been canceled; or(c)has not been renewed; or(d)has been, or is sought to be, surrendered.(3)While acting under sub-rule (1) the Authority may, -(a)immediately inform all negotiable warehouse receipt holders of such warehouses, and provide sufficient time for taking delivery of goods;(b)appoint an external person for taking control, management and liquidation of the goods; and(c)recover from the warehouseman the costs of any action taken under this rule, and in the event of nonpayment the security deposit of the warehouseman may be forfeited.
