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THE SUGAR UNDERTAKINGS (TAKING OVER OF MANAGEMENTS) ACT, 1978

Title : THE SUGAR UNDERTAKINGS (TAKING OVER OF MANAGEMENTS) ACT, 1978

Year : 1978



(1) Where the Central Government is satisfied--

(a) That any sugar undertaking has in any sugar year failed to commence the manufacture of sugar on or before the appointed day in respect of that year, or having started the manufacture of sugar on or before that day ceased to manufacture sugar before the expiry of the average period of manufacture of sugar in relation to that undertaking; or

(b) That on any date in any sugar year any sugar undertaking has, in relation to the cane 1*[purchased, at any time(whether in that sugar year or in any earlier sugar year or sugar years and whether before or after the commencement of this Act), before that date] for the purposes of the undertaking, arrears of cane dues to the extent of more than ten per cent. of the total price of the cane purchased for the purposes of the undertaking during the immediately preceding sugar year; and

(c) That in either case the effective functioning of the undertaking is necessary for the purposes of this Act the Central Government may issue a notice in such form and in such manner as may be prescribed to the owner or the manager of such sugar undertaking calling upon such owner or manager to report in writing within such time, not being less than five days, as may be specified in the notice, the circumstances under which such undertaking has so failed to commence or ceased to manufacture sugar or, as the case may be, clear the said arrears of cane dues and to show cause as to why the management of such undertaking should not be taken over by the Central Government under this Act.

(2) As soon as may be, after the receipt of the report under sub-
section (1) from the sugar undertaking, or where the sugar undertaking has failed to make such report within the time specified in the notice to that undertaking under sub-section (1), after the expiry of such time, the Central Government may make such further inquiry (if any) as it may deem fit, and-

(a) If the Central Government is satisfied that having regard to all the circumstances of the case and the purposes of this Act that it would be expedient to give further time to the undertaking to enable it to commence or resume production of sugar or, as the case may be, clear the arrears of cane dues, it may, by order in writing, specify the date on or before which and the manner in which such undertaking shall commence or resume production of sugar or, as the case may be, clear the said arrears of cane dues; or

(b) If the Central Government is not satisfied as provided in clause (a), declare by notification that the management of such undertaking shall vest in the Central Government on and from such date as may be specified in such notification.

(3) If a sugar undertaking has failed to comply with an order made under clause (a) of sub-section (2), or having commenced or resumed the production of sugar on or before the date specified in such order, ceased to manufacture sugar before the expiry of the average period of manufacture of sugar in relation to that undertaking, and the Central Government is satisfied that it is necessary so to do for the purposes of this Act, it may, by notification, declare that the management of such sugar undertaking shall vest in the Central Government on and from such date as may be specified in such notification.

(4) Any failure on the part of the owner or manager of the sugar undertaking to utilise the undertaking for the manufacture of sugar during any period shall not be taken into account for the purpose of issuing a notification in respect of that undertaking under clause (b)
of sub-section (2) or sub-section (3) where such failure is attributable to any circumstances (other than financial difficulties)
beyond his control.

(5) Every notification issued under sub-section (2) or sub-
section (3) for vesting the management of a sugar undertaking in the Central Government shall be in force for such period not exceeding three years from the date of vesting as may be specified in the notification 2* the Central Government is of opinion that it is expedient in the public interest that the management of the sugar undertaking should continue to vest in the Central Government after the expiry of the period so specified, it may, from time to time, issue, by notification, directions for such continuance for such further period as may be specified in the directions:

Provided that the total period for which the management of the undertaking may remain vested in the Central Government shall in no case exceed 3*[seven years] from the date of vesting.

(6) For the purposes of this section-

(a) "Cane dues", in relation to any cane purchased by a sugar undertaking, means the price payable in accordance with the agreement (whether express or implied) or arrangement relating to such purchase and where there is no such agreement or arrangement, the price as determined in accordance with the law applicable to such purchase;

(b) Any cane dues being the price payable for any cane acquired for the purposes of a sugar undertaking shall not be deemed to be in arrears at any time before the expiry of fourteen days from the date of delivery of such cane to the undertaking;

(c) The average period of manufacture of sugar in relation to any sugar undertaking with respect to any sugar year (hereafter in this clause referred to as the current sugar year) shall be calculated by dividing the total number of calendar days during which the undertaking manufactured sugar during the period of three sugar years immediately preceding the current sugar year by the number of sugar years in which the undertaking manufactured sugar during the said period of three years.

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1 Subs. by Act 18 of 1979, s. 2 (with retrospective effect).

2 Omitted by Act 44 of 1981, s. 2.

3 Subs. by Act 11 of 1985, s. 2 (w.e.f. 20-11-1984).

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(1) The notified sugar undertaking shall be deemed to include all assets, rights, powers, authorities and privileges, in relation to the said undertaking and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery, automobiles and other vehicles and goods under production or in transit, cash balances, reserve funds, investments and all other rights and interests in, or arising out of, such property as were, immediately before the date of vesting, in the ownership, possession, power or control of that undertaking, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto.

(2) Any contract, whether express or implied, or other arrangement (whether under any statute or otherwise) in so far as it relates to the management of the business and affairs of the notified sugar undertaking, and in force immediately before the date of vesting, or any order made by any Court in so far as it relates to the management of the business and affairs of that undertaking and in force immediately before the said date, shall be deemed to have terminated on that date.

(3) All persons in whom the management of the business and affairs of the notified sugar undertaking vests immediately before the date of vesting shall, as from that date, cease to be so vested.

(4) Notwithstanding any judgement, decree or order of any Court, tribunal or other authority or anything contained in any law (other than this Act) for the time being in force, every Receiver, Official
Liquidator or other person in whose possession or costody or under
whose control the notified sugar undertaking or any part thereof may be immediately before the date of vesting, shall, on that date, deliver the possession of the said undertaking or such part thereof, as the case may be, to the Custodian, appointed under section 5, or, where no Custodian has been appointed, to such other person as the Central Government may direct.

(5) The Central Government may take, or cause to be taken, all necessary steps for securing the possession of the notified sugar undertaking.



(1) The Central Government may, as soon as it is convenient administratively so to do, appoint an individual or a body of individuals or a Government company as the Custodian of a notified sugar undertaking or a group of notified sugar undertakings for the purpose of taking over the management of such undertaking or undertakings and the Custodian so appointed shall carry on the management of such undertaking or undertakings for and on behalf of the Central Government.

(2) The Central Government may also appoint an individual or a
Government company as the Custodian-General for exercising supervision and control over all the notified sugar undertakings, and on such appointment, every Custodian appointed under sub-section (1) shall act under the guidance, control and supervision of the Custodian-General.

(3) On the appointment of a Custodian under sub-section (1), the charge of management of the notified sugar undertaking or group of notified sugar undertakings, as the case may be, shall vest in such Custodian and all persons in charge of the management of such undertaking or undertakings immediately before such appointment shall cease to be in charge of such management and shall be bound to deliver to the Custodian all assets, books of account, registter or other documents in their custody relating to such undertaking or group of undertakings.

(4) The Central Government may issue such directions (including directions as to initiating, defending or continuing any legal proceedings before any Court, tribunal or other authority) to the
Custodian or Custodian-General as to his or its powers and duties as the Central Government deems desirable and the Custodian-General or, if there is no Custodian-General, the Custodian may apply to the Central Government at any time for instructions as to the manner in which the Custodian or the Custodian-General shall conduct the management of the notified sugar undertaking or in relation to any matter arising in the course of such management.

(5) Any person, who, on the appointed day, has in his possession or under his control any books, papers or other documents relating to the notified sugar undertaking, shall notwithstanding anything contained in any other law for the time being in force, be liable, to account for the books, papers and other documents, to the Custodian and shall deliver them up to the Custodian or to such other person as may be authorised by the Central Government or the Custodian in this behalf.

(6) Every person in charge of the management of the notified sugar undertaking, immediately before the date of vesting, shall, within ten days from that date or within such further period as the
Central Government may allow in this behalf, furnish to the Custodian a complete inventory of all the properties and assets (including particulars of book debts, investments and belongings) forming part of the undertaking immediately before the date of vesting and of all liabilities and obligations of the undertaking subsisting immediately before that date and also of all agreements entered into by the owner or manager of the undertaking, in relation to the said undertaking, and in force immediately before that date.

(7) The Custodian-General shall hold office during the pleasure of the Central Government and shall receive such remuneration as may be fixed by the Central Government.

(8) Every Custodian or where a body of individuals has been appointed as the Custodian, each such individual shall hold office during the pleasure of the Central Government and shall receive from the funds of the sugar undertakings or group of sugar undertakings concerned, such remuneration as may be fixed by the Central Government.

Explanation.-The remuneration payable to the Custodian of two or more notified undertakings shall be allocated among the funds of the undertakings in such proportion as the Central Government may, having regard to the quantum of work in respect of such undertakings and other relevant circumstances, by order determine.



(1) The owner of every notified sugar undertaking shall be given by the Central Government an amount in cash for vesting in it under section 3 the management of such undertaking.

(2) For every months during which the management of the notified sugar undertaking remains vested in the Central Government under this Act, the amount, referred to in sub-section (1), shall be,-

(a) Where the daily cane crushing capacity of the undertaking is five hundred tonnes or less, an amount of five hundred rupees; and

(b) Where the daily cane crushing capacity of the undertaking is more than five hundred tonnes, an amount computed at the rate of one rupee for each tonne of such capacity or an amount of one thousand two hundred and fifty rupees, whichever is less.
Last updated on July, 2016

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