3. Acquisition of rights of owners and vesting of the textile undertakings.—(1) On the appointed
day, the right, title and interest of the owner in relation to every textile undertaking shall stand transferred
to, and shall vest absolutely in, the Central Government.
(2) Every textile undertaking which stands vested in the Central Government by virtue of
sub-section (1) shall, immediately after it has so vested, stand transferred to, and vested in, the National
Textile Corporation.
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[(3) Notwithstanding the transfer and vesting of any textile undertaking to the National Textile
Corporation by virtue of sub-section (2), the lease-hold rights of the textile undertakings shall continue to
remain vested in the Central Government on payment of lease-hold rents and shall be discharged, for and
on behalf of that Government, by the National Textile Corporation as and when payment of such
lease-hold rents or any amount becomes due and payable.
(4) Subject to sub-section (3), no court shall have jurisdiction to order divestment from the National
Textile Corporation of the property vested in it by the Central Government.]
4. General effect of vesting.—(1) The textile undertakings referred to in section 3 shall be deemed to
include all assets, rights, lease-holds, powers, authorities and privileges and all property, movable and
immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash
balances, cash on hand, reserve funds, investments and book debts pertaining to the textile undertakings
and all other rights and interests in, or arising out of, such property as were immediately before the
appointed day in the ownership, possession, power or control of the textile company in relation to the said
undertakings, whether within or outside India, and all books of account, registers and all other documents
of whatever nature relating thereto and shall also be deemed to include the liabilities and obligations
specified in sub-section (2) of section 5.
(2) All property as aforesaid which have vested in the Central Government under sub-section (1) of
section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation,mortgage,
charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of
any court or other authority restricting, the use of such property in any manner shall be deemed to have
been withdrawn.
(3) Where any licence or other instrument in relation to a textile undertaking had been granted, at any
time before the appointed day to the owner by the Central Government or a State Government or any
other authority, the National Textile Corporation shall, on and from such date, be deemed to be
substituted in such licence or other instrument in place of the owner referred to therein as if such licence
or such other instrument had been granted to it and shall hold such licence or the textile undertaking
specified in such other instrument for the remainder of the period for which the owner would have held
such licence or the textile undertaking under such other instrument.
(4) Every mortgagee of any property which has vested under this Act in the Central Government and
every person holding any charge, lien or other interest in, or in relation to, any such property shall give,
within such time and in such manneras may be prescribed, an intimation to the Commissioner of such
mortgage, charge, lien or other interest.
(5) For the removal of doubts, it is hereby declared that the mortgagee of any property referred to in
sub-section (2) or any other person holding any charge, lien or other interest in, or in relation to, any such
property shall be entitled to claim, in accordance with his rights and interest, payment of the mortgage
money or other dues, in whole or in part, out of the amounts specified in relation to such property in the
First Schedule, but no such mortgage, charge, lien or other interest shall be enforceable against any
property which has vested in the Central Government.
(6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any
property which has vested in the Central Government under section 3, instituted or preferred by or against
the textile company is pending, the same shall not abate, be discontinued or be, in any way, prejudicially
affected by reason of the transfer of the textile undertakings or of anything contained in this Act, but the
suit, appeal or other proceeding may be continued, prosecuted or enforced by or against the National
Textile Corporation.
(7) Any person who, on the date on which the Textile Undertakings (Nationalisation) Ordinance,
1995 (Ord. 6 of 1995) was promulgated, was in possession of, or had under his custody or control, the
whole or any part of any textile undertaking referred to in section 3, the management of which could not
be taken over by the Central Government by reason of any decree, order or injunction of any court or
otherwise, shall deliver forthwith the possession of such undertaking or part and all books of account,
1. Ins. by Act 36 of 2014, s. 5 (w.e.f. 24-10-2014).
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registers and all other documents of whatever nature relating to such undertaking or part to the Central
Government or the National Textile Corporation or such other person as the Central Government or the
National Textile Corporation, as the case may be, may specify in this behalf.
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[(8) Notwithstanding the fact that the textile operations have been discontinued in any textile
undertaking being revived, shall for all effects and purposes be deemed that the textile operations are
being continued and no suit or proceeding shall be instituted or if instituted be maintainable against the
National Textile Corporation on the ground that it has discontinued such activity in the textile
undertaking.
(9) For the removal of doubts, it is hereby declared that the continued deemed vesting of the leasehold land in the Central Government shall not affect, impair or in any manner prejudice the rights of the
National Textile Corporation to prosecute or defend any proceedings as a subsequent vestee in respect
of any such lease-hold rights and no such proceedings shall fail only on account of the non-impleadment
of that Government.]
5. Owner to be liable for certain prior liabilities.—(1) Every liability, other than the liability
specified in sub-section (2), of the owner of a textile undertaking, in relation to the textile undertakings in
respect of any period prior to the appointed day, shall be the liability of such owner and shall be
enforceable against him and not against the Central Government or the National Textile Corporation.
(2) Any liability arising in respect of—
(a) loans advanced by the Central Government, or a State Government, or both, to a textile
undertaking (together with interest due thereon) after the management of such undertaking had been
taken over by the Central Government under section 3 of the Textile Undertakings (Taking Over of
Management) Act, 1983, (40 of 1983) or as the case may be, under section 3 of the Laxmirattan and
Atherton West Cotton Mills (Taking Over of Management) Act, 1976 (98 of 1976);
(b) amounts advanced to a textile undertaking [after the management of such undertaking had
been taken over by the Central Government under section 3 of the Textile Undertakings (Taking Over
of Management) Act, 1983 (40 of 1983), or as the case may be, under section 3 of the Laxmirattan
and Atherton West Cotton Mills (Taking Over of management) Act, 1976 (98 of 1976)] by the
National Textile Corporation or by a State Textile Corporation, or by both, together with interest due
thereon;
(c) wages, salaries and other dues of employees of the textile undertaking, in respect of any
period after the management of such undertaking had been taken over by the Central Government,
shall, on and from the appointed day, be the liability of the Central Government and shall be discharged,
for and on behalf of that Government, by the National Textile Corporation as and when repayment of
such loans or amounts becomes due or as and when such wages, salaries or other dues become due and
payable.
(3) For the removal of doubts, it is hereby declared that,—
(a) save as otherwise expressly provided in this section or in any other section of this Act, no
liability, other than the liability specified in sub-section (2), in relation to a textile undertaking, in
respect of any period prior to the appointed day, shall be enforceable against the Central Government
or the National Textile Corporation;
(b) no award, decree or order of any court, tribunal or other authority in relation to any textile
undertaking, passed after the appointed day, in respect of any matter, claim or dispute in relation to
any matter not referred to in sub-section (2),which arosebefore that day shall be enforceable against
the Central Government or the National Textile Corporation;
(c) no liability of any textile undertaking or any owner thereof in relation to any textile
undertaking before the appointed day, for the contravention of any provision of law for the time being
in force, shall be enforceable against the Central Government or the National Textile Corporation.
1. Ins. by Act 36 of 2014, s. 6 (w.e.f. 24-10-2014).
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6. Transfer of any textile undertaking or part thereof to a subsidiary textile Corporation.—
(1) The National Textile Corporation may, by order in writing, transfer any textile undertaking specified
at serial numbers 1 to 13 in the First Schedule or part of any such textile undertaking to the National
Textile Corporation (South Maharashtra) Limited and any textile undertaking specified at serial numbers
14 and 15 in the First Schedule or part of any such textile undertaking to the National Textile Corporation
(Uttar Pradesh) Limited, as the case may be, or to any other subsidiary textile corporation and any such
transfer shall be subject to such terms and conditions as may be specified in the said order.
(2) The subsidiary textile corporation shall, on and from the date of such transfer, be deemed to be
substituted in the licence or other instrument referred to in sub-section (3) of section 4 in place of the
National Textile Corporation as if such licence or other instrument had been granted to the subsidiary
textile corporation, and shall hold such licence or other instrument for the remainder of the period for
which the National Textile Corporation would have held such licence or other instrument.
(3) On the transfer to a subsidiary textile corporation of any textile undertaking or any part thereof,
the liabilities of the National Textile Corporation, referred to in sub-section (2) of section 5, shall, in so
far as they relate to the textile undertaking or part thereof so transferred to the subsidiary textile
corporation, become, on and from the date of such transfer, the liabilities of the subsidiary textile
corporation and shall be discharged by the subsidiary textile corporation as and when any such liability is
required to be discharged.
(4) Save as otherwise expressly provided in this Act, references in this Act to the National Textile
Corporation shall, in respect of any textile undertaking or any part thereof which is transferred to a
subsidiary textile corporation, be construed as references to the subsidiary textile corporation.
7. Shares to be issued by the National Textile Corporation for the value of the assets transferred
to it by the Central Government.—(1) An amount equal to the value of the assets of a textile
undertaking transferred to, and vested in, the National Textile Corporation under sub-section (2) of
section 3, shall be deemed to be contribution made by the Central Government to the equity capital of the
National Textile Corporation; and for the contribution so made, the National Textile Corporation shall
issue (if necessary after amending its memorandum and articles of association) to the Central Government
paid-up shares, in its equity capital, having a face value equal to the amount specified against the textile
undertaking in the corresponding entry in column (4) of the First Schedule.
(2) Where any liability assumed by the Central Government under this Act is taken over by the
National Textile Corporation under section 27, the Central Government shall surrender to that
Corporation the shares issued to it under sub-section (1) having the face value equal to the amount to the
extent to which the liability has been so taken over by the National Textile Corporation and thereupon the
share capital of the National Textile Corporation shall, to the extent of the face value of the shares so
surrendered, stand reduced.