FOR OFFICIAL USE ONLY

TEA BOARDMANUAL

A compilation of the Tea Act, 1953 (No. 29 of 1953), the Tea Rules, 1954, the Tea Board Bye Laws1955, the Tea (Distribution & Export) Control Order, 1957, the Tea (Waste) Control Order, 1959,the Investigation of Tea Undertaking/Tea Units (Procedure) Rules, 1981, the Tea (Regulations ofExport Licensing) Order, 1984, the Tea (Marketing) Control Order, 1984, the Tea Warehouses

(Licensing) Order, 1989 and the Tea Board (Write Off Losses) Rules, 1996

(Amended up to 31st March 2001)

TEA BOARD14, BIPLABI TRAILOKYA MAHARAJ SARANI,

KOLKATA - 700 001WEST BENGAL

INDIA

THE TEA ACT, 1953

No. 29 of 1953

( 28th May, 1953 )

AN ACT to provide for the control by theUnion of the tea industry, including the control,in pursuance of the International Agreementnow in force, of the cultivation of tea in,

and of the export of tea from, India and for thatpurpose to establish a Tea Board and Levy aduty of excise on tea produced in India.

Be it enacted by Parliament as follows:-

CHAPTER I

PRELIMINARY

1. Short title, extent and commencement:-(1) This Act may be called the Tea

Act.1953.*(2) It extends to the whole of India:Provided that it shall not apply to the Stateof Jammu and Kashmir except to the extentto which the provisions of this Act relate tothe control of the export of tea from, andthe cultivation of tea in India.** (3 ) It shall come into force on such dateas the Central Government may, bynotification in the Official Gazette, appoint.

2. Declaration as to expediency of controlby the Union :- It is hereby declared that it isexpedient in public interest that the Unionshould take under its control the tea industry.

3. Definitions:- In this Act, unless the context otherwise requires- (a) “Board” means the Tea Board constituted under section 4; (b) “Broker” means a broker of tea; +(c) “cess” means the duty of excise imposed by section 25 ;

(d) “Customs-collector” means a Customs-collector as defined in clause (c) of section3 of the Sea Customs Act, 1878 (VIII of1878) for the purposes of that Act, or ofthat Act as applied to the import and exportof goods by air, or a Collector of LandCustoms as defined in clause (c) of section2 of the Land Customs Act, 1924 (XIX of1924), as the case may be ;

______________________________________________________________________________________** 1st April, 1954 vide Notification No. S.R.O. 943 dated 17th March, 1954 Gazette of India Extraordinary, Part II Section 3, page 1.+ Vide Tea (Amendment) Act 1967 (No. 21 of 1967) published in the Gazette of India Extraordinary, Part II Section 1 dated 14-8-1967.* Extended to the state of Sikim by G.O.I. notification No. S.O. 57(E) dated 29-1-1983.

@ Inserted vide Notification No. K.11012(2)/79-Plant(A) dated 26th October, 1979

(e) “dealer” means a dealer in tea ;

(f) “export” means to take out of Indiaby land, sea or air to any place outside Indiaother than Bhutan and Nepal@ and anyother country or territory notified in thisbehalf by the Central Government bynotification in the Official Gazette ;

(g) “export allotment” means the totalquantity of tea which may be exportedduring any one financial year ;(h) “Fund” means the Tea Fund referred toin section 27 ;(i)“manufacturer” means a manufacturer oftea ;(j) “member” means a member of theBoard:(k) “owner”- (i) with reference to a tea estate or garden

or a sub-division thereof the possessionof which has been transferred by lease,mortgage or otherwise, means thetransferee so long as his right topossession subsists; and

(ii) with reference to a tea estate or agarden or a sub division for whichan agent is employed, means theagent if, and in so far as, he has beenduly authorised by the owner in thatbehalf;

(l) “prescribed” means prescribed by rulesmade under this Act ;(m) “standard export figure” means suchquantity as the Central Government may,by notification in the Official Gazette,specify pursuant to any internationalagreement in this behalf ;(n) “tea” means the plant CamelliaSinensis (L) O. Kuntze as well as allvarieties of the product knowncommercially as tea made from the leavesof the plant Camellia Sinesis (L) O.Kuntze including green tea ;(o) “Tea seed” includes seeds, rootsstumps, cuttings, buds, and any livingportion of the plant Camellia Sinensis (L)O. Kuntze which may be used topropagate that plant.

CHAPTER II

THE TEA BOARD

4. Establishment and constitution of TeaBoard:- (1) With effect from such date as theCentral Government may, by notification in theOfficial Gazette, specify in this behalf, thereshall be established for the purposes of this Acta Board to be called the Tea Board.

(2) The Board shall be a body corporate bythe name aforesaid, having perpetualsuccession and a common seal, with power toacquire, hold and dispose of property, bothmovable and immovable, and to contract, andshall by the said name sue and be sued.

(3) The Board shall consist of a Chairmanand such number or other members notexceeding forty as the Central Governmentmay think expedient, to be appointed by thatGovernment by notification in the OfficialGazette from among persons who are in itsopinion capable of representing –

(a) owners of tea estates and gardens and growers of tea ;

(b) persons employed in tea estates and gardens ;

(c) manufacturers of tea ;(d) dealers including both exporters and

internal traders of tea ; (e) consumers ; (f) Parliament ; (g) the Government of the principal tea growing States ; (h) such other persons or class of persons, who, in the opinion of the Central Govt., ought to be represented on the Board.

*(3A) It is hereby declared that the office ofmember of the Board shall not disqualify its

holder for being chosen as or for being, amember of either House of Parliament.

(4) The number of persons to be appointedas members from each of the categoriesspecified in sub-section (3), the term of officeof the procedure to be followed in the dischargeof their functions by, and the manner of fillingvacancies among the members of the Boardshall be such as may prescribed.

(5) Any officer of the Central Governmentwhen deputed by that Government in this behalfshall have the right to attend meeting of theBoard and take part in the proceeding thereofbut shall not be entitled to vote.

5. Vacancies, etc. not to invalidate acts andproceeding :- No act done or proceeding takenby the Board under this Act shall be questionedon the ground merely of the existence of anyvacancy in, or defect in the contribution of theBoard.6. Salary and allowances of Chairman :- TheChairman shall be entitled to such salary andallowances and such conditions of service inrespect of leave, pension, provident fund andother matters as may from time to time be fixedby the Central Government.

7. Vice-Chairman :- The Board shall electfrom among its members a Vice-Chairman whoshall exercise such of the powers and dischargesuch of the duties of the Chairman as may bedelegated to him by the Chairman.8. Executive and other Committees:- (1) Thereshall be an Executive Committee of the Boardconstituted in the manner prescribed.

(2) The Executive Committee shall exercisesuch of the powers and perform such of the dutiesof the Board as may be prescribed or as the Boardmay delegate to it. (3) Subject to such control and restrictions asmay be prescribed the Board may constitute otherStanding Committees or ad hoc Committees forexercising any power or discharging any duty ofthe Board or for enquiring into or reporting andadvising on any matter which the Board mayrefer to them. (4) A Standing Committee shall consistexclusively of members of the Board. (5) An ad hoc Committee may includepersons who are not members of the Board, buttheir number shall not exceed one-half of itsstrength.

9. Secretary and Staff :- (1) The CentralGovernment shall appoint --

**(a) “a Deputy Chairman of the Board whoshall assist the Chairman in theperformance of his duties and exercisesuch of the powers and perform suchof the duties as may be prescribed or asmay be delegated to him by the Boardor by a Committee constituted by theBoard under section 8 or by theChairman”.

(aa) “a secretary to the Board who shallexercise such power and perform suchduties as may be prescribed or as maybe delegated to him by the Board orthe Chairman” ;

(b) all other officers of the Board drawing*a salary exceeding rupees onethousand seven hundred per month.

(2) Subject to such Control and restriction asmay be prescribed, the Board may appoint suchother officers and employees as may benecessary for the efficient performance of itsfunctions and pay them such salaries andallowances as it may determine from time totime.

(3) The Chairman,*Deputy Chairman,Secretary and other employees of the Board shallnot undertake any work unconnected with theirduties under this Act except with the permissionof the Central Government.

10. Functions of the Board :-(1) It shall be theduty of the Board to promote, by such measuresas it thinks fit, the development under the controlof the Central Govt. of the tea industry. (2) Without prejudice to the generality of theprovisions of sub section (1), the measuresreferred to therein may provide for -

(a) regulating the production and extent ofcultivation of tea ;

(b) improving the quality of tea ;(c) promoting co-operative efforts among

growers and manufacturers of tea ;(d) undertaking assisting or encouraging

scientific, technological and economicresearch and maintaining or assisting inthe maintenance of demonstration farmsand manufacturing stations ;

(e) assisting in the control of insects and otherpests and diseases affecting tea ;

(f) regulating the sale and export of tea ;(g) training in tea testing and fixing grade

standards of tea :(h) increasing the consumption in India and

elsewhere of tea and carrying onpropaganda for that purpose ;

__________________________________________________________________________________* Inserted by the Tea(Second Amendment) Act, 1954 No. 52 of 1964.** Inserted as per Notification in the Gazette of India, Extraordinary, Part II Section I, dated August 16, 1977 (No. 32 of 1977).

(i) registering and licensing of manufacturers,brokers, tea waste dealers and personsengaged in the business of blending tea

(j) improving the marketing of tea in Indiaand elsewhere ;

*(jj) Subscribing to the share Capital of orentering into any arrangement or otherarrangement (whether by way ofPartnership Joint venture or any othermanner) with any other body Corporatefor the purpose of Promoting thedevelopment of Tea industry or forpromotion and marketing of tea in Indiaor elsewhere :

(k) collecting statistics from growers,manufacturers, dealers and such otherpersons as may be prescribed on anymatter relating to the tea industry ; thepublication of statistics so collected orportions thereof or extracts therefrom ;

(l) securing better working conditions andthe provisions and improvement ofamenities and incentives for workers ;

(m) such other matters as may be prescribed.

(3) The Board shall perform its functionsunder this section in accordance with andsubject to such rules as may be made by theCentral Government.

11. Dissolution of the Board :- (1) TheCentral Government may, by notification inthe Official Gazette, direct that the Boardshall be dissolved from such date and for suchperiod as may be specified in the notification. (2) When the Board is dissolved under theprovisions of sub-section (1)- (a) All members shall, from the date ofdissolution, vacate their offices as suchmembers ; (b) all powers and duties of the Boardshall, during the period of dissolution, beexercised and performed by such person orpersons as the Central Government mayappoint in this behalf ; (c) all funds and other property vested inthe Board shall, during the period ofdissolution, vest in the Central Government ;and (d) as soon as the period of dissolutionexpires, the Board shall be reconstituted inaccordance with the provisions of this Act.

______________________________________________________________________________________________*Inserted as par the Gazette of India Notification No.79 dated 17-12-80.

CHAPTER III

CONTROL OVER THE EXTENSION OFTEA CULTIVATION

12. Method of control of extension of teacultivation :-(1) No one shall plant tea on anyland not planted with tea on the datecommencement of this Act unless permission hasbeen granted to him in writing by or on behalf ofthe Board. (2) No tea area shall be replaced by plantingtea on area not planted with tea unlesspermission has been granted in writing by or onbehalf of the Board. (3) Nothing in this section shall prohibit thein filling or supplying of vacancies on landplanted with tea on the date of commencement ofthis Act or the replanting of tea upon - (i) land planted with tea on the 31st day ofMarch, 1950, from which the original busheshave been uprooted, or (ii) land planted with tea on the 31st day ofMarch, 1948, from which the original busheshave been uprooted.

13 Limitation to the extension of teacultivation:- (1) Subject to the provisions contained insections 15 and 16 , the total area of land inrespect of which the permission referred to insection 12 may be granted, shall not exceed sucharea as may be determined by the Board underthe general instructions of the CentralGovernment.

*(2) The total area of land in any State inrespect of which such permission may begranted shall be such as may be determined bythe Board, Provided that the Board may vary thetotal area so determined for any State in orderto increase or diminish for another State thearea in respect of which such permission maybe granted by an amount corresponding to theextent to which the area in the first mentionedState has been diminished or increased *(3) The Board shall Publish the total aredetermined for India as well as the total areasdetermined for the various States notificationin the Official Gazette of the CentralGovernment as soon as may be after thecommencement of this Act and shall in likemanner publish any subsequent variation ofsuch total areas.14. Grant of permission to plant tea :- (1)Applications for permission to plant tea on anyland not planted with tea on the date ofcommencement of this Act shall be made tothe Board and shall contain a clear statementof all special circumstances justifying theapplication. (2) The Board may require an applicant tosupply such information as it thinks necessaryto enable the Board to deal with theapplication. (3) Subject to such conditions andrestrictions as may be prescribed, the Boardmay by

________________________________________________________________________________________________*Operation of sub-section 2 and 3 which also corresponds to Section 27 of the previous Act has been suspended untilfurther orders by Government of India, Ministry of Commerce Notification No.201(4)-Law (tea )/50 dated 28-10-1950.

order grant or refuse the permission applied for,or may in like manner grant it in part only ormay call for further information from theapplicant. (4) No order by the Board under sub-section (3) shall be called in question by anycourt.

15. Grant of permission to plant tea inspecial circumstances :-(1) Where any landwhich was on the 31st day of March, 1933planted with tea (including land planted with teaon the 31st day of March, 1931 from which theoriginal bushes had been uprooted and whichhad not been replanted with tea on the said 31stday of March, 1933), or where any land plantedwith tea after the 31st day of March, 1933- (a) has since become wholly incapable ofcarrying tea through circumstances due to waror through subsidence flood, erosion,earthquake or other irresistible superhumancause, or (b) has since been compulsorily acquiredunder the provisions of the Land AcquisitionAct, 1894 (1 of 1894) or of any other law forthe time being in force and no longer carriedtea, or (c) has since been transferred to the Centralor a State Government or to a local authorityand no longer carries tea, or (d) has since been resumed by the lessorunder the terms of any lease and no longercarries tea ; (e) the owner of the tea estate in which suchland is situated may apply to the Board forpermission to plant tea on land not planted withtea.

Explanation -- Land taken for purposesconnected with prosecution of war on which teabushes have been allowed to remain forprotective purposes though no longer

cultivated shall be deemed for the purposes ofthis section to be incapable of caring or nolonger to carry tea. (2) Upon such application being madeand upon proof to the satisfaction of the Boardthat the applicant is entitled to the benefit ofsub-section (1) the Board may by order grantpermission to plant tea on land not plantedwith tea ; Provided that the area of land in respect ofwhich such permission is granted shall bewithin the same or an adjacent district andshall belong to the same or an adjacent teaestate and shall not exceed in extent the area ofthe land incapable of carrying tea orcompulsorily acquired, transferred of resumed,as the case may be. (3) All areas of land in respect of whichpermission to plant tea is granted under thissection shall be excluded when computing forthe purpose of section 13 the total area of landin respect of which the permission referred toin section 12 may be granted. (4) If any land falling within theExplanation to sub-section (1) is subsequentlyrestored to the tea estate from which it wassubtracted, the owner of the estate shall eitheruproot the tea planted therein or uproot any teaplanted by him in pursuance of a permissiongranted under sub-section (2).

16. Tea nurseries :- (1) The owner of a teaestate may establish nurseries on land notpreviously planted with tea for the growing ofplants intended for in filling or supplyingvacancies or for replanting land planted withtea within the area of the estate or for any otherpurpose approved by the Board. (2) All areas land utilised for nurseries inaccordance with this section shall be excludedwhen computing for the purpose of section 13the total area of land in respect of which thepermissions referred to in section 12 may begranted.

CHAPTER IIIA

MANAGEMENT OR CONTROL OF TEA UNDER-TAKING OR TEA UNITS BY THECENTRAL GOVERNMENT IN CERTAIN CIRCUMSTANCES.

16A. (1) In this Chapter, unless the contextDefinitions. otherwise requires. (a) “authorised persons” means theperson or body of persons authorised orappointed, by the Central Government under thisAct to take over the management of any teaundertaking or tea unit ; (b)“ Company” means a company1of 1956 within the meaning of section 3 of the Companies Act, 1956;

(c) “district average yield” means theaverage yield of tea in the district in which oneor more tea units are located, as published by theBoard. (d) “notified order” means an ordernotified in the Official Gazette ; (e) “tea undertaking” means asundertaking engaged in the production ormanufacture, or both of tea through one or moretea units ; (f) “tea unit” means a tea estate orgarden including a subdivision thereof, whichhas a distinct entity for which accounts are keptand has a factory of its own for the productionand manufacture of tea.

(2) Reference to an industrial undertaking insuch of the provisions of the Industries (Development and Regulation) Act, 1951, as apply to a tea undertaking or tea unit65 of 1951 by virtue of the provisions of this Chapter, shall be construed asreferences to a tea undertaking or tea unit, as thecase may be, and references in the Act

aforesaid to any provision of that Act, asapplicable to a tea undertaking or tea unit, inrelation to which a corresponding provisionhas been made in this Act, shall be construedas references to such correspondingprovision.

16B.(1) Where the Central Government isPower to cause of opinion in respect ofinvestigation to a tea undertaking or abe made in relation tea unit that-to a tea undertakingor tea unit. (a) the tea undertaking or, as the casemay be, the tea unit, has made losses in threeout of five years immediately preceding theyear in which such opinion as formed ; or (b) the average yield of the teaundertaking, or, as the case may be, the teaunit, during three years out of five yearsimmediately preceding the year in whichsuch opinion is formed, has been lower thanthe district average yield by twenty-five percent or; or more or (c) the persons owning the teaundertaking, or as the case may be, the teaunit, have habitually made default in thepayment of wages, or provident fund dues ofworkers and other employees, or rent of theland, or duties of exercise or such other duesas they are under an obligation to pay underany law for the time being in force : or (d) the tea undertaking, or, as the casemay be, the tea unit, is being managed in amanner highly detrimental to the tea industryor to public interest.

the Central Government may make, orcause to be made, a full and completeinvestigation into the affairs of the teaundertaking or, as the case may be, teaunit, by such person or body of personsas it may appoint for the purpose.

(2) Where a company owning a teaundertaking is being wound up by or under thesupervision of the Court and the business ofsuch company is not being continued, theCentral Government may, if it is of opinion thatit is necessary, in the interest of the generalpublic, and, in particular, in the interest ofproduction, supply or distribution of tea toinvestigate into the possibility of running orrestarting the tea undertaking, make andapplication to the Court praying for permissionto make or cause to be made, an investigationinto such possibility by such person or body ofpersons as that Government may appoint for thepurpose ; and, where such an application ismade, the Court shall, notwithstanding anythingcontained in the1 of 1956 Companies Act, 1956, or in any other law for the time being inforce, grant the permission prayed for.

(3)The person or body of persons appointedto make any investigation under sub-section (1) or, as the case may be, sub-section (2)65 of 1951 shall have the same powers as are specified in section 18 ofthe industries ( Development and Regulation)Act, 1951.

[18.(1) The person or body or personsappointed to make any investigation undersection 15 (or section 15A)* may choose one ormore persons possessing special knowledge ofany matter relating to the investigation to assisthim or it in holding the investigation.

(2) The person or body of persons soappointed shall have all the power of a civilcourt under the Code of Civil Procedure, 1908,for the purpose of taking evidence on oath

(which he or it is hereby empowered toadminister) and of enforcing the attendance ofwitnesses and compelling the production ofdocuments and material objects, and theperson or body of persons shall be deemed tobe a civil court for all the purposes of section195 and Chapter XXXV of the Code ofCriminal Procedure 1898]

*Inserted by Act No. 72 of 1971.

16C (1) if after making or causing to bemade such investigation as is referred to inPower of sub-section (1) of section 16B,Central Govern- the Central Government isment completion of satisfied that action underinvestigation this section is desirable, itmay issue such directions to the teaundertaking or tea unit concerned , as may beappropriate in the circumstances for all or anyof tea following purposes namely :- (a) regulating the production of tea bythe tea undertaking or, as the case may be, teaunit and fixing the standards of production ; (b) requiring the tea undertaking or, asthe case may be, tea unit to take such steps asthe Central Government considers necessaryto stimulate the production, manufacture orplantation, of tea; (c) prohibiting the tea undertaking or,as the case may be, tea unit from resorting toany act or practice which might reduce itsproduction, capacity or economic value ; (d) controlling the prices, or regulatingthe distribution of tea produced ormanufactured by the tea undertaking or, as thecase may be, tea unit .

(2) Where a case relating to any teaundertaking or tea unit is under investigation,the Central Government may issue, at anytime, any direction of the nature referred to insub-section (1) to the undertaking or the teaunit concerned and any such direction shallhave effect until it is varied or revoked by theCentral Government.

16D. (1) If the Central Government is ofopinion that-

(a) a tea undertaking or tea unit, towhich directions have been issued inpursuance of section 16C, has failed

Power of Central to comply with such directions,Government to or the tea undertaking, or asAssume management the case may be, the tea or control of tea unit, has made losses inundertaking or three out of five yearstea unit in certain immediately preceding thecases. year in which such opinion is formed ; or

(b) the average yield of the teaundertaking, or ,as the case may be ; thetea unit, during three years out of fiveyears immediately preceding the year inwhich such opinion is formed, has beenlower than the district average yield bytwenty five percent or more ; or

(c) the persons owning the teaundertaking, or as the case may be, theunit, have habitually made default in thepayment of wages, or provident fundsdues, of workers and other employees, orrent of the land, or duties of excise, or inthe payment of such other dues as areobligatory under any law for the timebeing in force ; or

(d) the undertaking, or as the case maybe, the tea unit, is being managed in amanner highly detrimental to the teaindustry or to public interest, the CentralGovernment may, by notified order,authorise any person or body of persons totake over the management of the whole orany part of the tea undertaking or tea unit,as the case may be or to exercise inrespect of the whole or any part of the teaundertaking or, as the case may be, teaunit, such function of control as may bespecified in the order.

(2) Any notified order issued under sub-section (1) shall have effect for such period ,not exceeding five years, as may be specifiedin the order.

Provided that if the Central Governmentis of opinion that it is expedient in the publicinterest that any such notified order shouldcontinue to have effect after the expiry of theperiod of five years aforesaid, it may fromtime to time issue directions for suchcontinuance for such period, not exceedingone year at a time, as may be specified in thedirection, so, however, that the total periodsuch continuance (after the expiry of the saidperiod of five years) does not exceed sixyears; and where any such direction is issued,a copy thereof shall be laid, as soon as maybe, before both Houses of Parliament.

(3) Any notified order issued under sub-section (1) have the same effect as if it werean order made under sub-section (1) ofsection 18- A of the Industries (Development65 of 1951 and Regulation) Act, 1951, and the provisions of Section 18B of thatAct shall apply accordingly.

[18A. (1) If the Central Government is ofopinion that

(a) an industrial undertaking to whichdirections have been issued inpursuance, of section 16 hasfailed to comply with suchdirections ; or

(b) an industrial undertaking inrespect of which an investigation hasbeen made under section 15 (whetheror not any directions have been issuedto the undertaking in pursuance ofsection (16) is being managed in amanner highly detrimental to thescheduled industry concerned or topublic interest.

the Central Government may, be notified order,authorise any person or body of persons to takeover the management of the whole or any part ofthe undertaking or to exercise in respect ofcontrol as may be specified in the order.

(4) Notwithstanding anything contained inany law for the time being in force, no person,who cease to hold any office by reason of theprovisions contained in clause (a),

or whose contract of management65 of 1951 is terminated by reason ofthe provisions contained in clause (b), of section18B of the Industries (Development andRegulation) Act, 1951, as applicable to a teaundertaking or tea unit by virtue of theprovisions of sub-section (3), shall be entitled toany compensation for the loss of office or forthe premature termination of his contract ofmanagement :

18B. (1) On the issue of a notified orderunder section 18A authorising the taking over ofthe management of a industrial undertaking --

(a) all persons in charge of themanagement including persons holdingoffice as managers or directors of theindustrial undertaking immediately beforethe issue of the notified order, shall bedeemed to have vacated their offices assuch ;(b) any contract of management betweenthe industrial undertaking and anymanaging agent or any director thereofholding office as such immediately beforethe issue of the notified order, shall bedeemed to have been terminated ;(c) the managing agent, if any, appointedunder section 18A shall be deemed tohave been duly appointed as the managingagent in pursuance of the IndianCompanies Act, 1913, and thememorandum and articles of

association of the industrial undertakingand the provisions of the said Act and ofthe memorandum and articles shall,subject to the other provisions containedin this Act, apply accordingly, but nosuch managing agent shall be removedfrom office except with the previousconsent of the Central Government ;(d) the person or body of personsauthorised under section 18A to takeover the management shall take all suchsteps as may be necessary to take into hisor their custody or control all theproperty, effects and actionable claims towhich the industrial undertaking is orappear to be entitled, and all the propertyand affects of the industrial undertakingshall be deemed to be in the custody ofthe person or, as the case may be, thebody of persons as from the date of thenotified order ; and(e) the person, if any, authorised undersection 18A to take over the managementof an industrial undertaking which is acompany shall be for all purposes thedirectors of the industrials undertakingduly constituted under the IndianCompanies Act, 1913 and shall alone beentitled to exercise all the powers of thedirectors of the industrials undertaking,whether such powers are derived fromthe said Act or from the memorandum orarticles of association of the industrialsundertaking from any other source.

(2) Subject to the other provisionscontained in this Act and to the control of theCentral Government, the person or body ofpersons authorised to take over themanagement of an industrial undertaking shalltake such steps as may be necessary for thepurpose of efficiently

managing the business of the industrialundertaking and shall exercise such otherpowers and have such other duties as may beprescribed.

(3) Where any person or body of personshas been authorised to exercise any functions ofcontrol in relation to an industrial undertaking,the undertaking shall be carried on pursuant toany directions given by the authorised person inaccordance with the provisions of the notifiedorder and any person having any functions ofmanagement in relation to the undertaking orpart thereof shall comply with all suchdirections.

(4) The person or body of personsauthorised under section 2(18A) shall,notwithstanding anything contained in thememorandum or articles of association of theindustrial undertaking, exercise his or theirfunctions in accordance with such directions asmay be given by the Central Government so,however, that he or they shall not have anypower to give any other person any directionsunder this section inconsistent with theprovisions of any Act or instrument determiningthe functions of the authority carrying on theundertaking except in so far as may bespecifically provided by the notified order. Contracts in bad faith etc. may be cancelledor varied. Provided that nothing contained in thissection shall affect the right of any such personto recover from the tea undertaking or the teaunit, as the case may be, moneys recoverableotherwise than by way of such compensation]

16E.(1) Without prejudice to any otherprovision of this Act, if, from the documentaryPower to take or other evidence in its possession,over the under the Central Government is satisfiedtaking or tea in relation to a tea undertaking orunit without tea unit, that --investigation undercertain circumstances.

(a) the persons in charge of such teaundertaking or tea unit have, by recklessinvestments or by creation ofencumbrances on the assets of the teaundertaking or tea unit, or by diversion offunds, brought about a situation which islikely to affect the production of tea,manufactured or produced by the teaundertaking or tea unit, and that immediateaction is necessary to prevent such asituation ; or

(b) it has been closed for a period of notless than three months (whether by reasonof the voluntary winding up of thecompany owning the tea undertaking or teaunit or for any other reason) and suchclosure is prejudicial to the concerned teaundertaking or tea unit and that thefinancial condition of the company owingthe tea undertaking or tea unit and the plantand machinery of such tea undertaking ortea unit are such that it is possible to restartthe tea undertaking or tea unit and suchrestarting is necessary in the interests ofthe general public, it may, by notifiedorder, authorise any person or body ofpersons to take over the management of thewhole or any part of the tea undertaking ortea unit or to exercise in respect of thewhole or any part of the tea undertaking ortea unit such functions of control as maybe specified in the order.

* Explanation - For the purposes of this sub-section, “in cumbrances” includes any liabilitywhich may be recovered or satisfied from theassets of the tea undertaking or, as the casemay be tea unit or the person owing the teaundertaking of tea unit.

* Inserted as per the gazette of India notification No. 79 dt. 27-12-80.

(2) On the issue of a notified order sub-section

(1) in respect of a tea undertaking ortea unit--

(a) the provisions of sub-section (2)(3) & (4) of section 16D, and theprovisions of section 16G, shall applyto a notified order made under sub-section (1) as they apply to a notifiedorder made under ; sub-section (1) ofsection 16D ; and(b) the provisions of sub-sections (3)and (4) of section 18AA of theIndustries (Development andRegulation) Act, 1951, shall supply tothe tea undertaking or tea unit, as thecase may be to the same extent as theyapply an industrial undertaking.

[18AA (3) Nothing contained in sub-section(2) shall apply to an industrialundertaking owned by a company which isbeing wound up by or under the supervision ofthe Court.

(4) Where any notified order has beenmade under sub-section (1) the person or bodyof persons having, for the time being, charge ofthe management or control of the industrialundertaking, whether by or under the orders ofany court, or any contract, instrument ofotherwise, shall notwithstanding anythingcontained in such order, contract, instrument orother arrangement, forthwith make over thecharge of management or control, as the casemay be, of the industrial undertaking to theauthorised person.]

16F. Without prejudice to the provisionsof section 18B of the Industries (Development& Regulation) Act, 1961, as applicable to teaContracts in undertaking or tea unit, as thebad faith, etc. case may be, the person ormay be cancelled body of persons authorisedor varied. under section 16D,or as the casemay be, section 16E, to take over themanagement of a tea undertaking or tea unit

may, with the previous approval of the CentralGovernment, make an application to any courthaving jurisdiction in this behalf for the purposeof cancelling or varying any contract oragreement entered into, at any time before theissue of the notified order under section 16D orsection 16E, between the tea undertaking or thetea unit and any other persons; and the courtmay, if satisfied after due inquiry that suchcontract or agreement had been entered into inbad faith or is detrimental to the interests of thetea undertaking or tea unit, make an ordercancelling or varying (either unconditionally orsubject to such conditions as it may think for toimpose) that contract or agreement shall haveeffect accordingly

16G. (1) Where the management or a teaundertaking or tea unit owned by a companyhas been taken over by any person or body ofpersons authorised by the Central GovernmentApplication of under this Act, then notAct 1 of 1956 withstanding anything containedin the said Act or in the memorandum or articlesof association of such company-

(a) it shall not be lawful for the shareholdersof such company or any other person tonominate or appoint any person to be adirector of the company ;

(b) no resolution passed in a meeting ofthe shareholders of such company shallbe given effect to unless approved bythe Central Government ;

(c) no proceeding for the winding up ofsuch company or for the appointmentof receiver in respect thereof shall lie inany court except with the consent of theCentral Government.

(2) Subject to the provisions contained insub-section (1), and to the other provisionscontained in this Act. and subject to such otherexceptions, restrictions and limitations, if any,1 of 1956 as the Central Government may, bynotification in the Official Gazette, specify inthis behalf, the Companies Act, 1956, shallcontinue to apply to such company in the samemanner as it applied thereto before the issue ofthe notified order.

16H. If, at any time, it appears to the CentralGovernment on the application of the owner of atea undertaking or tea unit or otherwise that thepurpose of the order made under section 16D orPower of Central section 16E, has been fulfilledGovernment to or that for any other reason it iscancel notified not necessary that the orderorder under should remain in force, thesection16Dor16E Central Government may bynotified order, cancel such order and, oncancellation of any such order the management orcontrol as the case may be, of the tea undertakingor tea unit, shall vest in the owner of thatundertaking or unit,

16-I. (1) If the Central Government is ofopinion that there are possibilities of running orrestarting a tea undertaking or tea unit in relationto which an investigation has been made undersub-section (2) of section 16B, and that such teaPower of Central undertaking or tea unit should beGovernment to be run or restarted for maintain-authorise, with the -ing or increasing the productionpermission of the Court, supply or distribution of persons to take over tea that Government maymanagement of control of make an application totea undertakings or the court by which thetea units. company owing such teaundertaking or tea unit has been ordered to bewound up, praying for permission to appoint anyperson or body of persons to take over themanagement of the tea undertaking or, as the casemay be, tea unit, or to exercise in respect of thewhole or any part of the tea undertaking or teaunit, such functions of control as may be specifiedin application.

(2) Where an application in made under sub-section (1), --

(a) the provisions of -section (2) of section18FA of the Industries(Developmentand Regulation)Act 1951 shall applyto the undertaking or tea unit, as the

65 of 1951 case may be, subject to the modification that for the words “twelve years”occurring in the second proviso thereto, the words“ six years” shall be substituted ;

[18FA (2) Where an application is madeunder sub-section (I) the High Court shall makean order empowering the Central Governmentto authorise any person or body of persons(hereinafter referred to as the “authorisedpersons”) to take over the management of theindustrial undertaking or to exercise functionsof control in relation to the whole or any part ofthe industrial undertaking (hereinafter referredto as the “concerned part”) for a period notexceeding five years;

Provided that if the Central Government isof opinion that it is expedient in the interest ofthe general public that the authorised personshould continue to manage the industrialundertaking or continue to exercise functions ofcontrol in relation to the concerned part, as thecase may be, after the expiry of the period offive years aforesaid, it may make an applicationto the High Court for the continuance of suchmanagement of functions of control, for suchperiod, not exceeding two years at a time, asmay be specified in the application andthereupon the High Court may make an orderpermitting the authorised persons to continue tomanage the industrial undertaking or to exercisefunctions of control in relation to the concernedpart :

Provided further that the total period ofsuch continuance (after the expiry of the initialperiod of five years) shall not, in any case, bepermitted to exceed ten years. (Twelve years-Act No. 32 of 1974)]

(b) the provisions of sub-sections (3) to(10) both inclusive of section 18FA of theIndustries (Development and Regulation)Act, 1951 shall apply to the teaundertaking or tea unit referred to in sub-section (1) to the same extent as they applyto an industrial undertaking.

[18FA. (3) Whereas an order has been madeby the High Court under sub-section (2), the HighCourt has direct the Official Liquidator or anyother person having, for the time being, charge ofthe management of control of the industrialundertaking, whether by or under the orders ofany court, or any contract or instrument orotherwise, to make over the management of suchundertaking or the concerned part, as the casemay be to the authorised person and thereupon theauthorised persons shall be deemed to be theOfficial Liquidator in respect of the industrialundertaking or the concerned part, as the casemay be.

(4) Before making over the possession ofthe industrial undertaking or the concerned part tothe authorised person the Official Liquidator,shall make a complete inventory of all the assetsand liabilities of the industrial undertaking or theconcerned part, as the case may be, in the mannerspecified in section 18FG and deliver a copy ofsuch inventory to the authorised person, whoshall, after verifying the correctness thereof, signon the duplicate copy thereof as evidence of thereceipt of the inventory by him.

(5) On taking over the management of theindustrial undertaking or on the commencementof the exercise of functions of control in relationto the concerned part, the authorised person shalltake immediate steps so as to run the industrialundertaking or the concerned part as to ensure themaintenance of production.

(6) The authorised person may, on suchterms and conditions and subject to suchlimitations or restrictions as may be prescribed,raise any loan for the purpose of running theindustrial undertaking of the concerned part, andmay for that purpose, create a floating charge onthe current assets of the industrial undertaking orthe concerned part, as the case may be.

(7) Where the authorised person is ofopinion that the replacement or repair of anymachinery of the industrial undertaking of theconcerned part is necessary for the purpose of

efficient running of the industrial undertakingand subject to such limitations of restrictionas may be prescribed, make such replacementor repair, as the case may be.

(8) The loan obtained by the authorisedperson, shall be recovered from the assets ofthe industrial undertaking of the concernedpart, in such manner and subject to suchconditions as may be prescribed.

(9) For the purpose of running theindustrial undertaking or exercising functionsof control in relation to the concerned part, theauthorised person may employ such of theformer employees of the industrial undertakingwhose services become discharged by reason ofthe winding up of the company owning suchundertaking and every such person employedby the authorised person shall be deemed tohave entered into a fresh contract of servicewith the company.

(10) The proceedings in the winding up ofthe company in so far as they relate to :-

(a) the industrial undertaking, themanagement of which has been takenover by the authorised person underthis section. or

(b) the concerned part in relation towhich any function of control isexercised by the authorised personunder this section.

[ shall during the period of suchmanagement or control, remain stayed,and, in computing the period oflimitation for the enforcement of anyright, privileges, obligation or liabilityin relation to such undertaking or theconcerned part, the period duringwhich such proceedings remainedstayed shall be excluded].

16J. The Central Government may, if it issatisfied in relation to a tea undertaking, tea unitor any part thereof, the management or control ofwhich has been taken over under section 16D orunder section 16E or under section 16-1, that it isPower of Central necessary so as to do in theGovernment to interests of the general publicmake certain with a view to preventing falldeclaration in in the volume of the productionin relation to of tea, exercise in relation to suchtea undertaking tea undertakings or tea unit oror tea units part thereof the same powers asare exercise able by it in relation to an industrialundertaking under section 18-FB of the Industries(Development and Regulation) Act, 1951, and thesaid section and the Third Schedule referred totherein shall apply to a tea undertaking or the unitaccordingly.

[18FB. (1) The Central Government may, ifit is satisfied, in relation to an industrialundertaking or any part thereof, the managementor control of which has been taken over undersection 18A, whether before or after thecommencement of the Industries (Developmentand Regulation) Amendment Act, 1971, or underSection 18AA or section 18FA, that it isnecessary so as to do in the interest or the generalpublic with a view to preventing fall in thevolume of production of any scheduled industry,it may, be notified order declare that--

(a) all or any of the enactments specifiedin the Third Schedule shall not apply orshall apply with such adaptations, whetherby way of modification, addition oromission (which does not, however, affectthe policy of the said enactments) to suchindustrial undertakings, as may bespecified such notified order, or(b) the operation of all or any of thecontracts, assurances of propertyagreements, settlements, awards, standingorders or other instruments in force (towhich such industrial undertaking or thecompany owing such

undertaking is a party of which may beapplicable to such industrial undertakingor company) immediately before the dateof issue of such notified order shallremain suspended or that all or any of therights, privileges, obligations andliabilities according or arising there underbefore the said date, shall remainsuspended or shall be enforceable withsuch adaptations and in such manner asmay be specified in the notified order.

(2) The notified order made under sub-section (1) shall remain in force, in the firstinstance, for a period of one year, but theduration of such notified order may beextended from time to time by a further notifiedorder by a period not exceeding one year at atime :

Provided that no such notified order shallin any case, remain in force--

(a) after the expiry of the period forwhich the management of the industrialundertaking was taken over under section18A, section 18AA of section 18FA, or(b) for more than five years in theaggregate from the date of issue of thefirst notified order. Whichever is earlier.

(3) any notified order made under sub-section (1) shall have effect notwithstandinganything to the contained in any other I w,agreement or instrument or any a decree ororder of a court tribunal officer of otherauthority of any submission, settlement orstanding order.

(4) Any remedy for the enforcement ofany right privilege, obligation or liabilityreferred to in clause (b) of sub-section (1) andsuspended or modified order made under thatsub-section shall in accordance with the termsof the notified order, remain suspended ormodified, and all proceedings relating thereto

pending before any court, tribunal, officer or otherauthority shall accordingly remain stayed or becontinued subject to such adaptations, so however,that on the notified order ceasing to have effect --

(a) any right, privilege, obligation orliability so remaining suspended ormodified shall become revived andenforceable as if the notified order hadnever been made ;(b) any proceeding so remaining stayedshall be proceeded with, subject to theprovisions of any law which may then be inforce, from the stage which had beenreached when the proceedings becamestayed.

(5) In computing the period of limitation forthe enforcement of any right, privileges, obligationor liability referred to in case (b) of sub-section (1),the period during which it or the remedyenforcement thereof remained suspended shall beexcluded ]

16K. (1) Where the management or control ofa tea undertaking or tea unit, as the case may be,has been taken over under section 16D or undersection 16E or under section 16-1, the Central GovtPower of central may , at any time during theGovernment to continuance of such managementcall for report on or control, call for a reportthe affairs and from the authorised personworking of a on the affairs and working ofmanager tea under- the tea undertaking or teataking or tea unit unit, and in submitting thereport the authorised person shall take into accountthe inventory and list of members and creditorsprepared under section 16L.

(2) On receipt of the report submitted by theauthorised person, the Central Government mayexercise all or any of the powers conferred on it by65 of 1951 sections 18FD, 18FE and 18FF of the industries (Development andRegulation) Act, 1951 to the same extent andsubject to the same conditions, limitations orrestrictions as are specified in the said sections, and

the provisions of the said sections shallbecome applicable to a tea undertaking or teaunit, as the case may be.

[18FD. (1) If, on receipt of the reportsubmitted by the authorised person, theCentral Government is satisfied-

(a) in relation to the company owningthe industrial undertaking, which is notbeing wound up by the High Court, thatthe financial condition and othercircumstances of the company are suchthat it is not in a position to meet itscurrent liabilities out of its currentassets, that Government may, if itconsiders necessary or expedient in theinterest of the general public so as to do,by order, decide that the industrialundertaking should be sold as a runningconcern as provided in section 18FE andproceedings should simultaneously bestarted for the winding up, by the HighCourt, of the company;(b) in relation to the company, owningthe industrial undertaking, which isbeing wound up by the High Court thatits assets and liabilities are such that inthe interest of its creditors andcontributors the industrial undertakingshould be sold as a running concern asprovided in section 18FE, it may, byorder, decide accordingly.

(2) Notwithstanding anything containedin sub-section (1) if, on receipt of the reportsubmitted by the authorised person, theCentral Government is satisfied that--

(a) in the interests of the general public, or(b) in the interest of the shareholders, or(c) to secure the proper management ofthe company owning the industrialundertaking

it is necessary so as to do, that Government may byorder, decide to prepare a scheme for thereconstruction of the company owning theindustrial undertaking;

Provided that no such scheme shall beprepared in relation to a company which is beingwound up by or under the supervision of the HighCourt except with the previous permission of thatCourt.

(3) The powers exercisable by the CentralGovt. under section 18F, in relation to anundertaking taken over section 18A, shall also beexercisable in relation to an undertaking taken overunder section 18AA or section 18FA, but suchpowers shall not be exercised after the making ofan order sub-section (i) or, as the case may be,under sub-section (2) of this section.

Provisions where Govt. decides to follow thecourse of action specified in section 18FD(1).

18FE. (1) The provision hereinafter laid downshall apply where Central Govt. decides that thecourse of action specified in sub section (1) ofsection 18FD should be followed, namely-

(a) the decision of the Central Govt. thatthe course of action specified in clause (a)of sub-section(1) of section 18FD should befollowed in relation tea company owning anindustrial undertaking shall be deemed to bea ground specified in section 433 of theCompanies Act, 1956, on which thecompany may be wound up by the HighCourt ;(b) the authorised person shall, as soon asmay be, after the decision specified in clause(a) of sub-section (1) of section 18FD hasbeen taken by the Central Governmentpresent an application to the High Court forthe winding up of the company owning theindustrial undertaking ;

(c) when an application is made bythe authorised person, under clause(b) for the winding up, by the Highcourt, of the company owning theindustrial undertaking, the High Courtshall order the winding up ofthe company and shallnotwithstanding any thing containedin the Companies Act, 1956, appointthe authorised person as the officialLiquidator in relation to suchundertaking ;(d) whenever the Central Govt.decided under clause (b) of sub-section (1) of section 18FD that theindustrial undertaking should be soldas a running concern it shall cause acopy of its decision on to be laidbefore High Court ;(e) until the industrial undertakingreferred to in clause (a) or clause (b)of sub-section(1) of section 18FD issold or purchased in pursuance of thissection, the authorised person shallcontinue to function as the OfficialLiquidator in relation to the saidundertaking in the winding upproceedings of the company, and,thereafter the Official Liquidatorappointed by the Central Govt. undersection 448 of the Companies Act,1956, shall take over andfunction as the Official Liquidator inthe said proceedings.

(2) The authorised person shall makea report to the Central Govt. as to whatshould be the reserve price for the sale of theindustrial undertaking as a running concern.

(3) In making a report under sub-section (2) the authorised person shall haveregard to-

(a) the financial condition of thecompany owning the industrialundertaking on the date on which theorder under section 18FD is made -

(i) as disclosed in its books of account,

(ii) as disclosed in its balance sheet andprofit and loss a/c during a period of fiveyears immediately preceding the saiddate ;

(b) the condition and nature of the plant,machinery, instruments and otherequipment from the point of view of theirsuitability for profitable use in the runningof the industrial undertaking ;

(c) the total amount of liability on accountof secured an unsecured debts includingoverdrafts, if any, drawn on banks,liabilities on account of terminal benefits tothe employees and other borrowings andother liabilities of the company ; and

(d) other relevant factors including thefactor that the industrial undertaking will besold free from all encumbrances.

(4) Notice of the reserve price determinedby the authorised person shall be given in suchmanner as may be prescribed to the members andcreditors of the company owning such industrialundertaking to make representations within aspecified time to the Central Govt. through theauthorised person and the Central Govt. shall, afterconsidering the representations received and thereport of the authorised person, determine thereserve price.

(5) The authorised person shall thereafter,with permission of the High Court, invite tendersfrom the public in such manner as may bedetermined by the High Court for the sale of theindustrial undertaking as a running concern subjectto the conditions that it will be sold to the personoffering the highest price which shall not be lessthan the reserve price determined under sub-section (4) ;

Provided that the High Court shall notrefuse to grant such permission if it issatisfied that the company is not in aposition to meet its current liabilities out ofits current assets.

(6) The Industrial undertaking shall besold to the highest bidder, as a runningconcern, only if the price offered by himtherefore is not less than the reserve price.

(7) Where no offer of price, is equal to,or more than, the reserve price, the industrialundertaking shall be purchased by theCentral Govt. as the reserve price.

(8) (a)The amount realised from thesale of the industrial undertaking as arunning concern together with any othersum which may be realised from anycontributory, purchaser or any otherperson from whom any money is due tothe company shall be utilised inaccordance with the provisions of theCompanies Act. 1956, in dischargingthe liabilities of the company anddistributing the balance, if any, amongstthe members of the company ;(b) In other respects the provisions ofthe Companies Act. 1956, relating tothe winding up of a company by theHigh Court shall, as far as may beapply.

(9) When an industrial undertaking issold to any person under sub-section (6), orpurchased by the Central Govt. under sub-section (7), there shall be transferred to andvested in the purchaser, free from allencumbrances, all such assets relating to theindustrial undertaking as are referred to insub-clause (i) of clause (a) of section 18FGand existing at time of the sale of purchase.

Provisions where Government decidesto follow the course of action specified insection 18FD (2).

18FF (1) Where in any case the Central Govt.decides that the course of action specified in sub-section (2) of section 18FD should be followed, itshall, subject to the provisions of that sub-sectioncause to be prepared by the authorised person, ascheme for the reconstruction of the company,owning the industrial undertaking in accordancewith the provisions hereinafter contained and theauthorised person shall submit the same for theapproval of that Government.

(2) the scheme for the reconstruction of thecompany owing the industrial undertaking maycontain provisions for all or any of the followingmatters namely ;

(a) the constitution, name and registeredoffice, the capital assets, powers, rights,interests, authorities and privileges, theliabilities duties and obligations of thecompany on its reconstruction ;(b) any change in the Board of Directors, ofthe appointment of a new Board ofDirectors, of the company on itsreconstruction and the authority by whom,the manner in which and the other terms andconditions on which, such change orappointment shall be made and in the caseof appointment of a new Board of Directorsor of any Director, the period for which suchappointment shall be made ;(c) the vesting of controlling interest in thereconstructed company, in the Central Govt.either by the appointment of additionaldirectors or by the allotment of additionalsharer ;(d) the alteration of the memorandum andarticles of association of the company, on itsreconstruction, to give effect to suchreconstruction ;(e) subject to the provisions of the scheme,the continuation by or

against the company, on itsreconstruction, of any action orproceedings pending against thecompany immediately before the date ofits reconstruction ;(f) the reduction of the interest or rightswhich the members and creditors have inor against the company before itsreconstruction to such extent as theCentral Government may considernecessary in the interest of the generalpublic or in the interest of the membersand creditors or for the maintenance ofthe business of the company ;

Provided that nothing contained in thisclause shall be deemed to authorise thereduction of the interest or right of anycreditor ( including Govt.) in respect of anyloan or advance made by that creditor to thecompany after the date management of theindustrial undertaking of the company hasbeen taken over under section 18A, section18AA, or section 18FA.

(g) the payment in cash or otherwise tothe creditors in full satisfaction of theirclaim :-

(i) in respect of their interest or rightsin or against the company before thereconstruction ; or(ii) where their interest or rights in oragainst the company has or have beenreduced under clause (f) in respect ofsuch interest, or rights as so reduced ;

(h) all allotment to the members of thecompany for shares held by them thereinbefore its reconstruction (whether theirinterest in such share has been reducedunder clause (f) or not), of shares in thecompany on its reconstruction and whereit is not possible to allot shares to any

members the payment in cash to thosemembers in full satisfaction of their claim --(i) in respect of their interest in shares in thecompany before its reconstruction ; or(ii) where such interest has been reduced

under clause (f) in respect of theirinterests in shares as so reduced ;

(i) the offer by the Central Govt. to acquire bynegotiations with the members of the companytheir respective shares on payment in cash tothose members who may volunteer to sell theirshares to the Central Govt. in full satisfaction oftheir claim --

(i) in respect of their interest in shares inthe company before its reconstruction ; or(ii) where such interest has been reducedunder clause (f) in respect of their interestsin shares as so reduced ;

(j) the conversion of any debentures issued bythe company after the taking over of themanagement of the company under section 18Aor section 18AA or section 18FA or of anyloans obtained by the company after that date orof any part of such debentures or loans, intoshares in the company and the allotment ofthose shares to such debenture-holders orcreditors, as the case may be ;

(k) the increase of the capital of the companyby the issue of new shares and the allotment ofsuch new shares to the Central Government ;

(l) the continuance of the services of such ofthe employees, of the company as the CentralGovt. may specify in the scheme in thecompany itself, on its reconstruction, on suchterms and conditions as the Central Govt. thinksfits;

(m) notwithstanding anythingcontained in clause (1) where anyemployee of the company whoseservices have been continued underclause (1) have, by notice in writinggiven to the company at any timebefore the expiry of one month nextfollowing the date on which thescheme is sanctioned by the HighCourt, intimate their intention of notbecoming employees of the company,on its reconstruction the payment tosuch employees and to otheremployees whose services have notbeen continued on the reconstructionof the company of compensation, ifany, to which they are entitled underthe Industrial Disputes Act, 1947 andsuch pension, gratuity, Provident fundand other retirement benefitsordinarily admissible to them underthe rules or authorisations of thecompany immediately before the dateof its reconstruction;(n) any other terms and conditions forthe reconstruction of the company;(o) such incidental consequential andsupplemental matters as are necessaryto secure that the reconstruction of thecompany shall be fully and effectivelycarried out.

(3)(a) A copy of the scheme, asapproved by the Central Govt. shall besent in draft to the company, to theregistered trade unions, if any, of whichthe employees of the company aremembers and to creditors thereof forsuggestions and objections, if any,within such period as the Central Govt.may specify for this purpose.

(b) The Central Govt. may make suchmodifications, if any, in the draft scheme asif may consider necessary in the right of thesuggestions and objections received fromthe company, from the registered tradeunions of which the employees of thecompany are members and from anymembers or creditors of the company.

(4) The scheme shall thereafter be placedbefore the High Court for the sanction and theHigh Court if, satisfied that the scheme is in theinterests of the shareholders or for securing theproper management of the company and thatscheme is designed to be fair and reasonable tothe members and the creditors of the company,may after giving a reasonable opportunity to thecompany and to its members and creditors ofshowing cause, sanction the scheme without anymodification or its such modifications as it mayconsider necessary.

(5) The scheme, as so sanctioned by the HighCourt, shall come into force on such date as thatCourt may specify in this behalf.

Provided that different dates may bespecified for different provisions of the scheme.

(6) The sanctioned accorded by the HighCourt under sub-section (4) shall be conclusiveevidence that all the requirements of this sectionrelating to the reconstruction of the companyhave been compiled with and a copy of thesanctioned scheme certified by the High court tobe a true copy there of, shall, in all legalproceeding, (whether original or in appeal orotherwise), be admitted as evidence to the sameextent as the original scheme.

(7) On and from the date of the coming intooperation of the scheme or any provisionthereof, the scheme or such provision shall bebinding on the company and also on all themembers and other creditors and employees ofcompany and on any other person having anyright or liability in relation to the company.

(8) On the coming into operation of thescheme or any provision, thereof, theauthorised person shall cease to function andthe management of the reconstructed companyshall be assumed by the Board of Directors asprovided in the scheme.

(9) Copies of the scheme shall be laidbefore each House of Parliament, as soon asmay be after the scheme has been sanctionedby the Court.

(10) The provisions of this section and ofany scheme made there under shall have effectnotwithstanding anything contained in section391 to 394A (both inclusive) of the CompaniesAct, 1956.

Preparation of inventory of assets andliabilities and list of members and creditors ofmanaged company.

16L. For the purposes of this Act theauthorised person shall as soon as may bePreparation of an inventory after taking over the of the assets and liabilities management of a teaand list of members and undertaking or tea unit,creditors of managed tea prepare a completeundertaking or tea unit inventory of theproperties, belongings, liabilities andobligations of such tea undertaking or tea unit,as the case may be, and a list of members andcreditors of such tea undertaking or tea unit, inaccordance with the provision of section 18FGof the Industries (Development andRegulation) Act, 1951, and the said sectionshall apply to a tea undertaking or tea unitaccordingly.

*16LL. Every debt arising out of any loan orany other financial accommodation obtain by theauthorised person for carrying on theManagement of, or existing functions of controlDebts incurred in relation to the whole or anyand investments part of a tea undertaking or teamade by the unit, the management or which hasauthorised person been taken over or in purportedto have priority to have been taken over undersection 16D or section 16E or section 16-I,

(a) Shall have priority over all other debts,whether secured or unsecured, incurredbefore the management of such teaundertaking or tea unit was taken over ;(b) shall be a preferential debt within themeaning of section 530 of companies Act,1956 and all such debts shall rank equallyamong themselves and be paid in full out ofthe assets of the tea undertaking or tea unit,unless such assets are in sufficient to meetthem, in which case they shall berecoverable from the owner of the teaundertaking that the period of managementor control has ended due to expiry of theperiod for which it was taken over or due tocancellation of the order under section 16FHor pursuance of the order of any Court.

16M. No suit or other legal proceedings shallbe instituted or continued against a teaundertaking or tea unit in respect of which anorder has been made under section 16D or section16E, except with the previous permission of theCentral Government or of any officer authorisedby the Government in this behalf.

16N. Until any rule is made in relation to anymatter referred to in this Chapter, the rules madeby the Central Government under the Industries(Development and Regulation Act, 1951), inrelation to such matter shall, as far as may be,

apply, to the extent they are not repugnant toany provision of this Act or any rule made thereunder and references in such rules to theprovisions of that Act shall be construedaccordingly.

18FG. For the purpose of this Act, theauthorised persons shall as soon as may be, aftertaking over the management of the industrialundertaking of a company under section 18A orsection 18AA or section 18FA.

(a) prepare a complete inventory of -- (i) all properties, movable, andimmovable including lands, buildings,works, workshops, stores, instruments,plant, machinery, automobiles and othervehicles, stocks of materials, cash balancescash production in the course ofproduction, storage or transit, rawmaterials, cash in hand deposit in bank orwith any other person or body or on loan,reserve funds, investments and book debtsand all other rights and interests arising outof such property as were immediatelybefore the date of taking over of theindustrial undertaking in the ownership,possession, power or control of thecompany, whether within or without India;and all books of account, registers, maps,plans, sections, drawings, records,documents or titles of ownership ofproperty and all other documents ofwhatever nature relating thereto; and

(ii) all borrowings liabilities andobligations of whatever kind of the companyincluding liabilities on account of terminalbenefits to its employees subsistingimmediately before the said date ;

* Inserted as per the Gazette of India notification dt. 27-12-80.

(3) Prepare separately a list of members and alist of creditors of such company as on the date oftaking over of the management of the industrialundertaking showing separately in the list ofcreditors, the secured creditors and the unsecuredcreditors ; Provided that where the management of theindustrial undertaking of a company has been taken

over under the said section 18A before thecommencement of the Industrials(Development & Regulation) Amendment Act,1971, the aforesaid function shall be performedby the authorised person within six monthsfrom such commencement.

CHAPTER - IV

CONTROL OVER THE EXPORT OF TEA AND TEA SEED

17. Control of Export of tea and tea seed -- (1) No tea shall be exported unless covered bya licence issued by or on behalf of the Board. (2) No tea seed shall be exported unlesscovered by a permit issued by or on behalf ofthe Central Government. (3) No tea or tea seed shall be taken by land,sea or air of any State to any of the *(French or)Portuguese Settlements bounded by India,unless covered by a permit issued by or onbehalf of the Board.

18. Tea or tea seed for export to be coveredby licence or permit -- (1) No consignment of teaor tea seed shall be shipped or water-borne to beshipped for export or shall be exported until theowner has delivered to the Customs-Collector avalid export licence or a valid permit issued by oron behalf of the Board or the Central Government,as the case may be, covering the quantity to beshipped.

(2) No consignment of tea or tea seed shall beshipped or water-borne to be shipped for carriage(or shall be taken by land or air) to any of the*(French or) Portuguese settlements bounded by

India until the owner has delivered to theCustoms-Collector a permit issued by or onbehalf of the Board covering the quantity to beshipped.

(3) No permit for the passage of any tea ortea seed by land into any of the *(French or)Portuguese Settlements bounded by Indiashall be granted under sub-section (1) ofsections 5 of the Land Customs Act, 1924(XIX of 1924), unless the application forsuch permit is accompanied by a permitgranted in this behalf by the Board coveringthe quantity to be passed.

+19 Export allotment -- The CentralGovernment shall, after consulting the Boardand paying due regard to all interestsconcerned and to the standard export figure,declare, by notification in the Official Gazette,the export allotment to each financial year ; Provided that the Central Govt. may bysubsequent notification at any time during thefinancial year after the export allotment andthereupon the export allotment as so alteredshall be the export allotment for that year.

* Omitted vide French Establishments (Application of Laws) Order, 1954 Published in Govt. of India. NotificationNo. S.R.O. 3315 dated 1-11-54.+ Suspended as per Notification No. SO.[12(2) Plant (A)/61 dt. 14-11-61] issued by the Govt. of India Ministry ofCommerce and Industry, New Delhi.

+ 20. Export quotas and licences --(1) Subjectto such conditions as may be prescribed, any teaestate or any sub-division of a tea estate shall havethe right to receive under this Act an export quotafor each financial year. (2) The export quota of a tea estate, or a sub-division of a tea estate, that, is, the total quantity oftea which may be exported by the owner of a teaestate or a sub-division of a tea estate during thefinancial year, shall be an amount determined bythe Board in accordance with such principles asmay be prescribed. Provided that when an export allotment isaltered under the provisions of sections 19, theexport quota shall be liable to be alteredaccordingly. (3) The total export quotas allotment to teaestate and to sub-divisions thereof at any timeduring any financial year shall not exceed theexport allotment for the time being for that year.

21. Right in export licences -- +(1) Theowner of a tea estate or a sub-division of a teaestate to which an export quota has been allottedfor any financial year shall have the right to obtainat any time export licences during that year to coverthe export of tea up to the amount of the quota lessthe amount for which the export licences havealready been issued against it.

+(2) The right of the owner of a tea estate or asub-division of a tea estate under this section maybe transferred subject to such conditions as may beprescribed, and the transferee of any such right mayagain transfer the whole or any part of his right tothe owner of a tea estate, or a sub-division of a teaestate but not to any other person ;

Provided that nothing in this sub-section shalloperate to restrict the issue of licences for theexport of tea expressed to be sold with exportrights.

+(3) The owner of any tea estate or anysub-division of a tea estate to which an exportquota has been allotted or any person to whomhe has transferred his rights may at any timebefore the 21st day of March of the financialyear to which the quota relates apply in writingto the Board for an export licence to cover theexport of tea up to the amount of theunexhausted balance of the quota.

(4) Every licence shall be in duplicate inthe prescribed form, shall bear the date of itsissue and shall be valid up to the end of thefinancial year in which it is issued.

Provided that, save as provided in section22, the Board shall not issue any export licenceafter the end of the financial year in which theapplication for licence was made.

+22. Special export licences -- (1) Wheretea in respect of which an export licence hasbeen or could have been granted under this Acthas not been exported before the end of thefinancial year in which the licence was or couldhave been issued, the person to whom licencewas could have been granted may, before the14th day of April of the following financialyear forward an application to the Board for aspecial export licence covering the samequantity of tea, and the Board shall, on receiptof the prescribed fee, if any, issue a specialexport licence accordingly. (2) A person to whom a special exportlicence has been issued under sub-section (1)may transfer the special export licence with allthe rights conferred thereby to a person orpersons nominated by him, but a licence onceso transferred shall not be further transferable. (3) A special export licence shall be induplicate in the prescribed form, shall bear thedate of its issue and shall be valid up to the 31stday of May of the financial year in which itwas issued.

+ Suspended as per Notification No. SO.[ 12(2) Plant (A)/61 dated 14-11-61] issued by the Govt. of India Ministry ofCommerce and Industry, New Delhi.

(4) The quantity to tea covered by a specialexport licence shall be accounted for against theexport quota of the year in which the originallicence was or could have been issued under thisAct.

(5) Notwithstanding anything contained in theforegoing sub-section the Board may, with thegeneral or special previous sanction of the CentralGovt. refuse to issue a special export licence orpostpone for so long as the Central Govt. mayrequire the issue of any special export licence.

+23. Board to maintain account of quotas --(1) The Board shall maintain an account of everyexport quota showing, in addition to such otherparticulars as the Board may think fit, the licencesissued against it and the unexhausted balance.

(2) Any owner of a tea estate or a sub-divisionof a tea estate shall be entitled on payment of therequisite fee, to a copy of the account relating to hisquota, certified in the manner laid down in the by-laws made by the Board.

24. Limitation of application of Chapter --Nothing in this Chapter shall apply to tea :--

(a) proved to the satisfaction of theCustoms collector to have been importedinto India from any port outside India ; or

(b) shipped as stores on board any vesselor aircraft in such quantity as the Customscollector considers reasonable havingregard to the number of the crew andpassengers and length of the voyage onwhich the vessel or aircraft is about todepart ; or

(c) exported by post in packages notexceeding *(Five Kilograms) in weight ; or

(d) exported with the previous sanctionof the Central Govt. within limitsprescribed in this behalf, by a Red CrossSociety or by any organisation forproviding amenities for troops overseas ; or

(e) taken as part of the personal luggageof a passenger.

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+ Suspended as per Notification No. SO.[12(2) Plant (A)/61 dated 14-11-61] issued by the Govt. of India Ministry ofCommerce and Industry, New Delhi.* Amended under the Customs Duties and Cesses (Conversion to Metric Units) Act 1960 (No.40)of 1960) publishedin the Gazette of India Extraordinary dated 22-9-60 and enforced with effect from 1-10-60 as per Notification,Extraordinary of the Govt. of India in the--Ministry of Commerce & Industry No. 2348 dated 23-9-1960.

CHAPTER V

FINANCE, ACCOUNTS AND AUDIT

** @ 25. Imposition of cess on tea producedin India -- (1) There shall be levied andcollected as a cess for the purposes of this Act aduty of excise on all tea produced in India atsuch rate not exceeding fifty paisa per kilogramas the Central Govt. may, by notification in theOfficial Gazette fix. Provided that different rates may be fixedfor different varieties or grades of tea havingregard to the location of,and the climaticconditions pervailing in the tea estates orgardens producing such varieties or grades oftea any other circumstances applicable to suchproduction. (2) The duty of excise levied under sub-section (1) shall be in addition to the duty ofexcise leviable on tea under the Central Excisesand Salt Act, 1944, or any other law for the timebeing in force, (1 of 1944). (3) The provision of the Central Excises andSalt Act, 1944 and the rules made there under,including those relating to refund and (1 of1944) exemption from duty, shall, so far as maybe, apply in relation to the levy and collectionof the duty of excise under this section as theyapply in relation to the levy and collection ofthe duty of excise on tea under the said Act.

26. Payment of proceeds of cess to theBoard - proceeds of the cess levied under sub-section (1) of section 25 shall first be credited tothe Consolidated Fund of India and the CentralGovt. may thereafter, from time to time pay tothe Board from an out of such proceeds such

sums of money as it may think fit after deductingthe expenses of collection.

*26A. Grants and loans by the CentralGovt. to the Board - The Central Govt., may afterdue appropriation by Parliament by law in thisbehalf pay to the Board by way of grants of loanssuch sums of money as Central Govt. mayconsider necessary.

27. Constitution of Fund - (1) There shallbe formed a fund to be called the Tea Fund, andthere shall be credited thereto -

(a) the proceeds of the cess made over tothe Board by the Central Government:***(ab) any sum of money includingdividend, if any, realised by the Board incarrying out any measure referred to in clause(ii) of sub-section (2) of section 10; (b) all fess levied and collected in respectof licences, permits and permission issuedunder this Act; and (c) any other fee that may be levied andcollected under this Act or the rules madethere under.

(2) The Fund shall be applied towards meetingthe expenses of the Board and the cost of themeasures referred to in section 10.

28. Borrowing Powers of Board - Subject to suchrules as may be made in this behalf, the Boardshall have power to borrow on the security of thefund or any other asset for any purposes for whichthe fund may be applied.

@ Substituted-Vide the Tea (Amendment) Act, 1967 (No.21 of 1967). Published in Gazette of India Extraordinary,Part-II Section I dated 14-8-1967.* Inserted as passed by Parliament and published in the Extraordinary Gazette of India Part II Section I on25.5.1970.** Amended as per the Tea (Amendment ) Act, 1986 Published in the Gazette of India Extraordinary Part II sectionI. New Delhi, dated 14.05.1986.*** Inserted as per the gazette of India Notification No.79 dt. 27.12.80.

@ 28A. Writing off losses - Subject to suchconditions as may be specified by the CentralGovt., where the Board is of opinion that anamount due to, or any loss, whether of money orof property incurred by the Board isirrecoverable, the Board may, with the previousapproval of the Central Govt., sanction thewriting off finally of the said amount or loss;

Provided that no such approval of theCentral Govt., shall be necessary where suchirrecoverable amount of loss does not exceed inany individual case and in the aggregate in anyyear such amounts as may be prescribed.

29. Account and Audit - (1) The Board shallcause accounts to be kept all moneys received andexpended by it.

(2) The account shall be audited every yearby auditors appointed in this behalf by the CentralGovt. and such auditors shall disallow every item,which in their opinion is not authorised by thisAct or any rule made or direction issued thereunder.

(3) The Board may, within three months fromthe date of communication to it of the disallowanceof any item as aforesaid, appeal against suchdisallowance to the Central Govt. whose decisionshall be final.

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@ Inserted as per Tea (Amendment) Act, 1986 Published in the Gazette of India, extraordinary Part II Section 1 dt. 14-5-86

CHAPTER VI

CONTROL BY THE CENTRAL GOVERNMENT

30. Power to control price anddistribution of tea or tea waste - (1) TheCentral Govt. may, by order notified in theOfficial Gazette, fix in respect of tea of anydescription specified therein -

(a) the maximum price or the minimumprice or maximum and minimum priceswhich may be charged by a grower of tea,manufacturer or dealer, wholesale or retail,whether for the Indian market or for export; (b) the maximum quantity which may inone transaction be sold to any person.

(2) Any such order may for reasons to bespecified therein -

(a) fix prices for such tea differently indifferent localities or for different classesof dealers, or for growers of tea ormanufacturers; (b) instead of specifying the price orprices to be charged, direct the price orprices shall be computed in such mannerand by reference to such matters as may beprovided by the order;

(3) The Central Govt. may, by general orspecial order -

(a) prohibit the disposal of tea or teawaste except in such circumstances andunder such conditions as may be specifiedin the order; (b) direct any person growing,manufacturing or holding in stock, tea ortea waste, sell the whole or a part of suchtea waste so grown or manufactured duringany specified period, or to sell the whole ora part of the tea or tea waste so held in

stock, to such person or class of persons andin such circumstances as may be specified inthe order;(c) regulate by licences, permits or otherwisethe production, storage, transport ordistribution of tea or tea waste.

(4) Where in pursuance of any order madewith reference to clause (b) of sub-section (3), anyperson sells the whole or a part of any quantity oftea or tea waste, there shall be paid to him as pricethere for -

(a) where the price can be fixed byagreement consistently with the order, if any,relating to the fixation of price issued undersub-section (1) the price so agreed upon; (b) where no such agreement can bereached, the price calculated with referenceto any such order as is referred to in clause(a); (c) where neither clause (a) not clause (b)applies, the price calculated at the market rateprevailing in the locality at the date of sale.

(5) Without prejudice to