The Sick Industrial Companies (Special Provisions) Act, 1985

 
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THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 ACT NO. 1 OF 1986

[8th January, 1986.]

An Act to make, in the public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Thirty-sixth Year of the Republic of India as follows:--

CHAP

PRELIMINARY

CHAPTER I

PRELIMINARY

1.

Short title, extent, commencement and application.

1. Short title, extent, commencement and application. (1) This Act may be called the Sick Industrial Companies (Special Provisions)

Act, 1985.

(2) It extends to the whole of India.

(3) It shall come into force on such date 1* as the Central Government may, by notification in the Official Gazette, appoint and different dates 2* may be appointed for different provisions of this Act and any reference in any provision of this Act to the commencement of this Act shall be construed as a reference to the commencement of that provision.

(4) It shall apply, in the first instance, to all the scheduled industries other than the scheduled industry relating to ships and other vessels drawn by power.

(5) The Central Government may, in consultation with the Reserve Bank of India, by notification, apply the provisions of this Act, on and from such date as may be specified in the notification, to the scheduled industry relating to ships and other vessels drawn by power.

2.

Declaration.

2. Declaration. It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of article 39 of the Constitution.

3.

Definitions.

3. Definitions. (1) In this Act, unless the context otherwise requires,--

(a) "Appellate Authority" means the Appellate Authority for Industrial and Financial Reconstruction constituted under section 5;

(b) "Board" means the Board for Industrial and Financial Reconstruction established under section 4;

[See footnote 1 for this section]

(c) "Chairman" means the Chairman of the Board or, as the case may be, the Appellate Authority;

(d) "company" means a company as defined in section 3 of the Companies Act, 1956 (1 of 1956), 1***;

2*[(da) "date of finalisation of the duly audited accounts"

means the date on which the audited accounts of the company are adopted at the annual general meeting of the company;]

(e) "industrial company" means a company which owns one or more industrial undertakings;

(f) "industrial undertaking" means any undertaking pertaining to a scheduled industry carried on in one or more factories by any company but does not include--

(i) an ancillary industrial undertaking as defined in clause (aa) of section 3 of the Industries (Development and Regulation) Act, 1951 (65 of 1951); and (ii) a small scale industrial undertaking as defined in clause (j) of the aforesaid section 3;

(g) "Member" means a Member of the Board or, as the case may be, the Appellate Authority and includes the Chairman thereof;

2*[(ga) "net worth" means the sum total of the paid-up capital and free reserves.

Explanation.-- For the purposes of this clause, "free rese-

rves" means all reserves credited out of the profits and share premium account but does not include reserves credited out of re-evaluation of assests, write back of depreciation provisions and amalgamation;]

(h) "notification" means a notification published in the Official Gazette;

3*[(i) "operating agency" means any public financial institution, State level institution, scheduled bank or any other person as may be specified by general or special order as its agency by the Board;]

(j) "prescribed" means prescribed by rules made under this Act;

4* * * * *

[See footnote 2 for this section]

(l) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);

(m) "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);

(n) "scheduled industry" means any of the industries specified for the time being in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951);

1*(o) "sick industrial company" means an industrial company (being a company registered for not less than five years) which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.

Explanation.-- For the removal of doubts, it is hereby declared that an industrial company existing immediately before the commencement of the Sick Industrial Companies (Special Provi-

sion) Amendment Act, 1993 (12 of 1994), registered for not less than five years and having at the end of any financial year accumulated losses equal to or exceeding its entire net worth, shall be deemed to be a sick industrial company.]

(p) "State level institution" means any of the following institutions, namely:--

(i) State Financial Corporations established under section 3 or section 3A and institutions notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951);

(ii) State industrial development corporations registered under the Companies Act, 1956 (1 of 1956);

(iii) such other institutions, being companies and not being public financial institutions, engaged in the development or financing of industrial undertakings, as the Central Government may, by notification, specify:

Provided that no institution shall be so specified unless not less than fifty-one per cent. of the paid-up share capital thereof is held by any State Government or Governments or by any institution or institutions mentioned in sub-clauses (i) and (ii) or partly by one or more public financial institutions or institutions mentioned in sub-

clauses (i) and (ii) and partly by one or more State Governments.

(2) (a) Words and expressions used and not defined in this Act shall have the meanings, if any, respectively assigned to them in the Companies Act, 1956 (1 of 1956).

(b) Words and expressions used but not defined either in this Act or in the Companies Act, 1956 (1 of 1956), shall have the meanings, if any, respectively assigned to them in the Industries (Development and Regulation) Act, 1951 (65 of 1951).

[See footnote 3 for this section]

(3) Any reference in this Act to any other enactment or any provision thereof, shall, in relation to an area in which such enactment or such provision is not in force, be construed as a reference to the corresponding law or the relevant provision of the corresponding law, if any, in force in that area.

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BOARD AND APPELLATE AUTHORITY FOR INDUSTRIAL AND

FINANCIALRECONSTRUCTION

CHAPTER II

BOARD AND APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL

RECONSTRUCTION

4.

Establishment of Board.

4. Establishment of Board. (1) With effect from such date as the Central Government may, by notification, appoint, there shall be established a Board to be known as the "Board for Industrial and Financial Reconstruction" to exercise the jurisdiction and powers and discharge the functions and duties conferred or imposed on the Board by or under this Act.

(2) The Board shall consist of a Chairman and not less than two and not more than fourteen other Members, to be appointed by the Central Government.

(3) The Chairman and other Members of the Board shall be persons who are or have been or are qualified to be High Court Judges, or persons of ability, integrity and standing who have special knowledge of, and professional experience of not less than fifteen years in science, technology, economics, banking industry, law, labour matters, industrial finance, industrial management, industrial reconstruction, administration, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in which, would in the opinion of the Central Government be useful to the Board.

5.

Constitution of Appellate Authority.

5. Constitution of Appellate Authority. (1) The Central Government may, by notification, constitute, with effect from such date as may be specified therein, an appellate authority to be called the "Appellate Authority for Industrial and Financial Reconstruction"

consisting of a Chairman and not more than three other Members, to be appointed by that Government, for hearing appeals against the orders of the Board under this Act.

(2) The Chairman shall be a person who is or has been a Judge of the Supreme Court or who is or has been a Judge of a High Court for not less than five years.

(3) A Member of the Appellate Authority shall be a person who is or has been a Judge of a High Court or who is or has been an officer not below the rank of a Secretary to the Government of India or who is or has been a Member of the Board for not less than three years.

6.

Term of office, conditions of service, etc., of Chairman and otherMembers.

6. Term of office, conditions of service, etc., of Chairman and other Members. (1) Before appointing any person as the Chairman or other Member, the Central Government shall satisfy itself that the person does not and will not, have any such financial or other interest as is likely to affect prejudicially his functions as such Member.

(2) The Chairman and every other Member shall hold office for such period, not exceeding five years, as may be specified by the Central Government in the order of his appointment, but shall be eligible for reappointment:

Provided that no person shall hold office as the Chairman or other Member after he has attained the age of sixty-five years.

7 (3) Notwithstanding anything contained in sub-section (1), a Member may--

(a) by writing under his hand and addressed to the Central Government resign his office at any time;

(b) be removed from his office in accordance with the provisions of section 7.

(4) A vacancy caused...

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