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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) No proceeding for the winding up of a notified sugar undertaking, being a company, shall lie in any Court or be continued whether by or under the supervision of any Court or voluntarily, except with the consent of the Central Government.

(2) In computing the period of limitation prescribed by any law for the time being in force for any application which may be made in the course of winding up of any such notified sugar undertaking in respect of any matter arising out of any transaction in relation to such undertaking, the time during which the making of such application was barred by this Act shall be excluded.



(1) If the Central Government is satisfied, after such inquiry as it may think fit, that any contract or agreement entered into by the owner or manager of a notified sugar undertaking, in relation to the said undertaking, at any time within twelve months immediately preceding the date of vesting, has been entered into in bad faith or is detrimental to the interests of the undertaking, it may make an order cancelling or varying (either unconditionally or subject to such conditions as it may think fit to impose) the contract or agreement and thereafter the contract or agreement shall have effect accordingly:

Provided that no contract or agreement shall be cancelled or varied except after giving to the parties to the contract or agreement a reasonable opportunity of being heard.

(2) Any person aggrieved by an order made under sub-section (1)
may make an application to the principal Court of civil jurisdiction within the local limits of whose jurisdiction the registered office of the sugar undertaking is situated for the variation or reversal of such order and, thereupon such Court may confirm, vary or reverse such order.



If the Custodian or Custodian-General is of opinion that any contract of employment entered into by any owner or member of a notified sugar undertaking or its agent in relation to the said undertaking, at any time before the date of vesting, is unduly onerous, he may, by giving to the employee one months notice in writing or the salary or wages for one month in lieu thereof, terminate such contract of employment.



(1) Pending the taking over by a Custodian, appointed under section 5, of the physical possession of any notified sugar undertaking, the person in charge of the management of such undertaking immediately before the date of vesting shall, on and from that date, be in charge of the management such undertaking shall for and on behalf of the Central Government; and the management of such undertaking shall be carried on by such person subject to the provisions contained in sub-section (2) and such directions, if any, as the Central Government may give to him, and no other person, including the said undertaking shall, so long as such management continues, exercise any powers of management in relation to the said undertaking.

(2) No person in charge, under sub-section (1), of a notified sugar undertaking shall, without the previous approval of the
Custodian-General appointed under section 5,-

(i) Incur any expenditure from the assets appertaining to the undertaking otherwise than for the purpose of making routine payments of salaries or commissions to employees, agents or for the purpose of meeting the routine day to day expenditure;

(ii) Transfer or otherwise dispose of any such assets or create any charge, hypothecation, lien or other incumbrance thereon;

(iii) Invest in any manner any moneys forming part of such assets;

(iv) Acquire any immovable property out of the moneys forming part of such assets;

(v) Enter into any contract of service or agency, whether expressly or by implication, for purposes connected wholly or partly with the undertaking or vary the terms and conditions of any contract relating to any such transaction subsisting on the date of vesting.

(3) The approval of the Custodian-General may be given either generally in relation to certain classes of transactions relating to the notified sugar undertaking or specially in relation to any of its transactions.



(1) No suit, prosecution or other legal proceeding shall lie against the Government, the Custodian-General or any other officer of Government or any Custodian in respect of anything which is in good faith done or intended to be done under this Act.

(2) No suit or other legal proceeding shall lie against the
Government, the Custodian-General or any other officer of Government or any Custodian for any damage caused, or likely to be caused, by anything which is in good faith done or intended to be done under this Act.



(1) The Central Government may, by notification, direct that all or any of the powers exercisable by it under this Act, other than those under this section or section 8 or section 20 may also be exercised by any person or persons as may be specified in the notification.

(2) Whenever any delegation of power is made under sub-section
(1), the person to whom such power has been delegated shall act under the direction, control and supervision of the Central Government.



Every debt arising out of any loan advanced to a notified sugar undertaking by the Central Government or a State Government for carrying on the management of such undertaking-

(a) Shall have priority over all other debts, whether secured or unsecured, incurred before the management of such undertaking was taken over under this Act;

(b) Shall be a preferential debt within the meaning of section 530 of the Companies Act, 1956,and such debts shall rank equally among themselves and be paid in full out of the assets of the undertaking unless such assets are insufficient to meet them, in which case they shall abate in equal proportions.



If any person-

(a) Fails to deliver to the Custodian any assets, books of account, registers or any other documents in his custody relating to any notified sugar undertaking, or

(b) Retains any property of such undertaking or removes or destroys its, or

(c) Fails to comply with the provisions of section 5, or

(d) Fails to comply with any direction made under this Act,he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.



(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided
that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-For the purposes of this section,-

(a) "Company" means any body corporate and includes a firm or other association of individuals; and

(b) "Director", in relation to a firm, means a partner in the firm.



(1) The provisions of this Act shall not apply to any sugar under taking which is owned by or is under the management of the Central Government or a State Government or a corporation established by or under an enactment (including an Ordinance) or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956).

(2) For the purposes of sub-section (1), the management of a sugar undertaking by a receiver or an authorised controller appointed by the Central Government or a State Government under any law for the time being in force shall also be deemed to be management of the undertaking by the Central Government or a State Government, as the case may be.



The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any law (other than this Act) or any judgment, decree or order of any Court, tribunal or other authority or any instrument having effect by virtue of any law other than this Act.



The Central Government may, by notification, make rules to carry out the provisions of this Act.



Every rule made by the Central Government under this Act and every notification made under section 7 shall be laid, as soon as may be after it is made, before each House of Parliament,while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification or both Houses agree that the rule or notification should not be made, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.



(1) The Sugar Undertakings (Taking Over of Management) Ordinance, 1978 (5 of 1978), is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed shall be deemed to have been done or taken under the corresponding provisions of this Act.

Last updated on July, 2016

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