THE RICHARDSON AND CRUDDAS LIMITED (ACQUISITION AND TRANSFER OF 

UNDERTAKING) ACT, 1972                                                                                                                                        

_______ 

ARRANGEMENT OF SECTIONS                                                                                                            

________ 

PART I 

ACQUISITION AND TRANSFER OF THE UNDERTAKING OF RICHARDSON AND CRUDDAS LIMITED 

CHAPTER I.—PRELIMINARY 

SECTIONS 

1. Short title. 

2. Definitions. 

CHAPTER II.—ACQUISITION OF THE UNDERTAKING OF THE RICHARDSON AND CRUDDAS LIMITED 

3. Undertaking of the old company to vest in the Central Government. 

4. General effect of meeting. 

5. Duty to deliver possession of property acquired and documents relating thereto. 

6. Duty to furnish particulars. 

7. Transfer of employees of the old company. 

8. Payment of amount.  

CHAPTER III.—MANAGEMENT AND ADMINISTRATION OF THE NEW COMPANY 

9. Formation and registration of a new company. 

CHAPTER IV.—MANAGEMENT OF THE OLD COMPANY 

10. Management of the old company. 

11. Custodian to be public servant. 

12. Vacation of office by directors, etc., of the old company. 

PART II 

RECTIFICATION OF THE REGISTER OF MEMBERS OF THE OLD COMPANY 

CHAPTER I.—CONSTITUTION OF A TRIBUNAL 

13. Constitution of a Tribunal. 

CHAPTER II.—POWERS AND DUTIES OF THE TRIBUNAL 

14. Tribunal to call upon persons to make claims. 

15. Determination of genuine shares. 

16. No compensation for cancellation of spurious shares. 

17. Power of Tribunal to entertain and dispose of claims for reimbursement. 

18. Suits and legal proceedings, not to be commenced or proceeded with.  

19. Decision of the Tribunal to be final. 

1 

 
 
 
SECTIONS 

CHAPTER III.—DUTY OF CUSTODIAN TO RECONSTRUCT REGISTER OF MEMBERS OF THE OLD COMPANY 

20. Custodian to reconstruct register of members of the old company. 

21. Custodian to issue fresh share certificates. 

22.  No  annual  general  meeting  of  the  old  company  to  be  held  before  the  reconstruction  of  the 

register of members. 

23. Custodian to file accounts until reconstruction of the register of members of the old company. 

PART III 

OFFENCES AND THEIR TRIAL 

24. Penalties. 

25. Offences by companies. 

26. Offences to be triable by a Magistrate of the first class and not to be compoundable. 

PART IV 

MISCELLANEOUS 

27. Protection of action taken in good faith. 

28. Contracts, etc., in bad faith may be cancelled or varied. 

29. Power to terminate contract of employment. 

30. Power to remove difficulty.  

31. Power to make rules. 

2 

 
 
 
THE RICHARDSON AND CRUDDAS LIMITED (ACQUISITION AND TRANSFER OF 
UNDERTAKING) ACT, 1972 

ACT NO. 78 OF 1972 

[30th December, 1972.] 

An  Act  to  provide  for  the  acquisition  and  transfer  of  the  undertaking  of  the  Richardson  and 

Cruddas  Limited,  for  the  reconstruction  of  the  register  of  its  members  and  for  matters        
connected therewith or incidental thereto. 

WHEREAS the Richardson and Cruddas Limited, a company formed and registered under the Indian 
Companies  Act,  1913  (7  of  1913),  is  engaged  in  the  production  of  goods  needed  by  the  defence 
establishments, railways, steel plants and power projects; 

AND WHEREAS the mismanagement of the said company by its erstwhile managing agents and Board 

of Directors had seriously affected the production and supply of goods by the said company; 

AND WHEREAS it is not possible for the said company to provide for its proper management by a duly 
constituted Board of Directors in view of the existence of a large number of duplicate shares in the capital 
of the said company; 

AND  WHEREAS  for  ensuring,  in  the  interests  of  the  community,  the  continuity  of  production  and 
supply of goods by the said company, it is expedient in the public interest to acquire the undertaking of 
the said company; 

BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:— 

PART I 

ACQUISITION AND TRANSFER OF THE UNDERTAKING OF RICHARDSON AND CRUDDAS LIMITED 

CHAPTER I.—PRELIMINARY 

1.  Short  title.—This  Act  may  be  called  the  Richardson  and  Cruddas  Limited  (Acquisition  and 

Transfer of Undertaking) Act, 1972. 

2. Definitions.—(1) In this Act, unless the context otherwise requires,— 

(a) “appointed day” means such date1 as the Central Government may, by notification, appoint; 

(b) “Custodian” means the person who is appointed, under section 10, as the Custodian of the old 

company; 

(c) “Nationalised Bank” means a corresponding new bank as defined in the Banking Companies 

(Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970); 

(d)  “new  company”  means  the  Government  company,  formed  and  registered  under  the 

Companies Act, 1956 (1 of 1956), in pursuance of the provisions of section 9; 

(e) “notification” means a notification published in the Official Gazette; 

(f) “old company” means the Richardson and Cruddas Limited, a company formed and registered 
under  the  Indian  Companies  Act,  1913  (7  of  1913)  and  having  its  registered  office  in  the  State  of 
West Bengal; 

(g) “prescribed” means prescribed by rules made under this Act; 

(h)  “scheduled  bank”  has  the  meaning  assigned  to  it  in  the  Reserve  Bank  of  India                      

Act, 1934 (2 of 1934), and includes a Nationalised Bank; 

(i) “share” means a share in the capital of the old company; 

(j) “Tribunal” means the Tribunal constituted under section 13. 

1. 31st March, 1973, vide notification No. G.S.R. 165(E), dated 12th March, 1973, see Gazette of India, Extraordinary, Part II,    

sec. 3(i). 

3 

 
                                                           
(2)  Words  and  expressions  used  herein  and  not  defined  but  defined  in  the  Companies                      

Act, 1956 (1 of 1956), have, save as otherwise expressly provided in this Act, the meanings respectively 
assigned to them in that Act. 

CHAPTER II.—ACQUISITION OF THE UNDERTAKING OF THE RICHARDSON AND CRUDDAS LIMITED 

3. Undertaking of the old company to vest in the Central Government.—On the appointed day, 
the undertaking of the old company shall stand transferred to, and vest in, the Central Government, and 
that Government shall, immediately thereafter, provide, by notification, for the transfer to, and vesting in, 
of such undertaking in the new company. 

4. General effect of meeting.—(1) The undertaking of the old company shall be deemed to include 
all  assets,  rights,  powers,  authorities  and  privileges  and  all  property,  movable  and  immovable,  cash 
balances, reserve funds, investments 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 old 
company  in  relation  to  the  undertaking,  whether  within  or  without  India,  and  all  books  of  account, 
registers (other than register of members and documents relating thereto), records and all other documents 
of  whatever  nature  relating  thereto  and  shall  also  be  deemed  to  include  all  borrowings,  liabilities  and 
obligations of whatever kind then subsisting of the old company in relation to the undertaking. 

(2) Unless otherwise expressly provided by this Act, all contracts, deeds, bonds, agreements, powers 
of attorney, grants of legal representation and other instruments of whatever nature subsisting or having 
effect immediately before the appointed day which relate to the undertaking of the old company, shall be 
of as full force and effect in favour of the Central Government, and on the transfer of such undertaking to 
the new company, of such new company and may be enforced or acted upon as fully and effectively as if 
they had related to the Central Government or the new company, as the case may be. 

(3)  (a)  If,  on  the  appointed  day,  a  proceeding  instituted  by  the  old  company  in  relation  to  the 
undertaking referred to in section 3 is pending, such proceeding may, as from that day, be continued by 
the Central Government or, on the transfer of the undertaking to the new company, by the new company. 

(b) If, on the appointed day, any cause of action is existing against the old company in relation to the 
undertaking referred to in section 3, such cause of action may, as from that day, be enforced against the 
Central Government or, on the transfer of the undertaking to the new company, against the new company. 

(c)  Save  as  otherwise  provided  in  clauses  (a)  and  (b),  no  suit,  proceeding  or  cause  of  action  by  or 
against the old company shall be continued or enforced by or against the Central Government or the new 
company. 

5. Duty to deliver possession of property acquired and documents relating thereto.—(1) Where 
any property has vested in the Central Government under section 3, every person in whose possession or 
custody or under whose control the property may be, shall deliver the property to the Central Government 
forthwith. 

(2)  Any  person  who,  on  the  appointed  day,  has  in  his  possession  or  under  his  control  any  books, 
documents or other papers relating to the undertaking which has vested in the Central Government under 
this Act and which belong to the old company, or, would have so belonged if the undertaking of the old 
company  had  not  vested  in  the  Central  Government,  shall  be  liable  to  account  for  the  said  books,        
documents or other papers to the Central Government and, on the transfer of such undertaking to the new 
company, to that company, and shall deliver them up to the Central Government or the new company, as 
the case may be, or to such other person as the Central Government or the new company may specify in 
this behalf. 

(3)  The  Central  Government  may  take,  or  cause  to  be  taken,  all  necessary  steps  for  securing 

possession of all properties which have vested in that Government under section 3. 

6.  Duty  to  furnish  particulars.—(1)  The  old  company  shall,  within  such  period  as  the  Central 
Government  may  allow  in  this  behalf,  furnish  to  that  Government,  and  the  new  company,  a  complete 
inventory of all the properties and assets (including particulars of investments) of the old company on the 
appointed  day,  all  liabilities  and  obligations  of  the  old  company  subsisting  on  that  day  and  also  all 

4 

 
agreements  entered  into  by  the  old  company  and  in  force  on  that  day  including  agreements,  whether 
express or implied, relating to leave, pension, gratuity and other terms of service of any officer or other 
employee  of  the  old  company  under  which,  by  virtue  of  this  Act,  the  Central  Government  has,  or  will 
have,  or  may  have,  the  liabilities  and,  for  this  purpose,  the  Central  Government  and  the  new  company 
shall afford the old company all reasonable facilities. 

(2) The old company shall, if required by the Central Government or new company so to do, furnish 
such returns or information relating to the undertaking referred to in section 3, or, any person  employed 
by the old company for the purpose of such undertaking, as may be specified in such requisition. 

7.  Transfer  of  employees  of  the  old  company.—(1)  Every  officer  or  other  employee  of  the  old 

company  (except  a  director  or  any  managerial  personnel  specified  in  section  197A  of  the  Companies   
Act,  1956  (1  of  1956),  or  any  other  person  entitled  to  manage  the  whole  or  a  substantial  part  of  the 
business of the old company under a special agreement with that company) in the employment of the old 
company  immediately  before  the  appointed  day  shall,  in  so  far  as  such  officer  or  other  employee  is 
employed  in  connection  with  the  affairs  of  the  undertaking  of  the  old  company,  become,  as  from  the 
appointed day, an officer or other employee, as the case may be, of the Central Government and, on the 
transfer of such undertaking to the new company, of that company, and shall hold his office on the same 
terms and conditions and with the same rights to pension, gratuity and other matters as would have been 
admissible  to  him  if  the  undertaking  of  the  old  company  had  not  been  transferred  to  and  vested  in  the 
Central Government or the new company, and continue to do so unless and until his employment in the 
Central  Government  or  the  new  company  is  duly  terminated  for  until  the  remuneration,  terms  or 
conditions of service are duly altered by the Central Government or the new company, as the case may 
be: 

Provided  that  if  the  alteration  so  made  is  not  acceptable  to  any  officer  or  other  employee,  his 
employment shall be terminated on payment to him by the Central Government or the new company, as 
the  case  may  be,  of  an  amount  equivalent  to  three  months’  remuneration  in  the  case  of  permanent 
employees and one month’s remuneration in the case of other employees: 

Provided  further  that  nothing  contained  in  this  sub-section  shall  apply  to  any  officer  or  other 
employee  who  has,  by  notice  in  writing  given  to  the  Central  Government  or  the  new  company,  within 
thirty days next following the appointed day, intimated his intention of not becoming an officer or other 
employee of the Central Government or the new company, as the case may be. 

(2) For the persons, who, immediately before the appointed day, were the trustees for any pension, 
provident  fund,  gratuity  or  other  like  fund  constituted  for  the  officers  or  other  employees  of  the  old 
company,  there  shall  be  substituted  as  trustees  such  persons  as  the  Central  Government  or  the  new 
company may, by general or special order, specify. 

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any 
other law for the time being in force, the transfer of the services of any officer or other employee from the 
old  company  to  the  Central  Government  or  the  new  company  shall  not  entitle  such  officer  or  other 
employee to any compensation under that Act or other law, and no such claim shall be entertained by any 
court, tribunal or other authority. 

8. Payment of amount.—(1) For the transfer, under section 3, of the undertaking of the old company 
to the Central Government, there shall be paid by the Central Government to the Custodian an amount of 
rupees thirty lakhs. 

(2) The Custodian shall open an account in the name of the old company in any scheduled bank and 
credit the said amount to the said account and hold the said amount in trust for and on behalf of the old 
company. 

CHAPTER III.—MANAGEMENT AND ADMINISTRATION OF THE NEW COMPANY 

9.  Formation  and  registration  of  a  new  company.—For  the  efficient  management  and 
administration of the undertaking which will vest in the Central Government under section 3, there shall 
be formed and registered, before the appointed day, a Government company, with the name “Richardson 
and Cruddas (1972) Limited”, in accordance with the provisions of the Companies Act, 1956 (1 of 1956). 

5 

 
CHAPTER IV.—MANAGEMENT OF THE OLD COMPANY 

10. Management of the old company.—(1) The affairs of the old company shall be managed by a 

Custodian to be appointed by the Central Government in this behalf: 

Provided  that  the  Central  Government  may,  if  the  Custodian  declines  to  become,  or  to  continue  to 
function as, the Custodian or if it is of opinion that it is necessary in the interests of the old company so to 
do, appoint any other person as the Custodian of the old company. 

(2) The Custodian appointed under sub-section (1) shall receive, from the funds of the old company, 

such emoluments as the Central Government may specify in this behalf. 

(3) The Custodian shall hold office during the pleasure of the Central Government. 

11. Custodian to be public servant.—The Custodian shall be a public servant within the meaning of 

section 21 of the Indian Penal Code (45 of 1860). 

12.  Vacation  of  office  by  directors,  etc.,  of  the  old  company.—(1)  On  the  appointment  of  a 
Custodian, every person holding office, immediately before such appointment, as director or manager of 
the old company shall, notwithstanding anything contained in any other law for the time being in force or 
in any decree or order of any court or tribunal, vacate such office. 

(2) The Custodian shall receive the sum referred to in section 8 and shall deal with the said sum for 
meeting any liability which is incurred by the old company after the appointed day, and the balance, if 
any,  left  after  meeting  the  said  liability,  in  accordance  with  the  wishes  of  the  members  of  the  old 
company,  expressed  in  a  general  meeting  convened  by  the  Custodian,  and  the  provisions  of  the       
Companies Act, 1956 (1 of 1956), shall, so far as may be, apply to such meeting. 

(3) The Custodian may, if the members of the old company so desire, distribute the balance referred 
to in sub-section (2) amongst such members in accordance with their rights and interests and thereafter 
apply to the Court for the winding up of the old company by the Court. 

PART II 

RECTIFICATION OF THE REGISTER OF MEMBERS OF THE OLD COMPANY 

CHAPTER I.—CONSTITUTION OF A TRIBUNAL 

13. Constitution of a Tribunal.—(1) For the purpose of rectification of the register of members of 
the old company, the Central Government shall, by notification, constitute a Tribunal consisting of one 
person who is or has been a Judge of a High Court. 

(2) If, for any reason, a vacancy (other than a temporary absence) occurs in the office of the presiding 
officer  of  the  Tribunal,  the  Central  Government  shall  appoint  another  person,  in  accordance  with  the 
provisions of this section, to fill the vacancy and the proceedings may be continued before the Tribunal 
from the stage at which the vacancy is filled. 

(3) The Central Government shall make available to the Tribunal such staff as may be necessary for 

the discharge of its functions under this Act. 

(4) All expenses incurred in connection with the Tribunal shall be defrayed out of the Consolidated 

Fund of India. 

(5)  The  Tribunal  shall  have  power  to  regulate  its  own  procedure  in  all  matters  arising  out  of  the 

discharge of its functions including the place or places at which it shall hold its sittings: 

Provided that the Tribunal shall, as far as practicable, follow the procedure laid down in the Code of 
Civil Procedure, 1908 (5 of 1908), for the investigation of claims and the decision of the Tribunal shall be 
final. 

(6) The Tribunal shall, for the purpose of making an inquiry under this Act, have the same powers as 
are  vested  in  a  civil  court under the  Code  of  Civil  Procedure,  1908  (5 of  1908),  while trying  a  suit, in 
respect of the following matters, namely:— 

(a) the summoning and enforcing the attendance of any witness and examining him on oath, 

6 

 
(b) the discovery and production of any document or other material producible as evidence, 

(c) the reception of evidence on affidavits, 

(d) the requisitioning of any public record from any Court or office, 

(e) issue of any commission for the examination of witnesses. 

(7)  Any  proceeding  before  the  Tribunal  shall  be  deemed  to  be  a  judicial  proceeding  within  the 
meaning  of  section  193  of  the  Indian  Penal  Code  (45  of  1860),  and  the  Tribunal  shall  be  deemed  to        
be  a  civil  court  for  the  purpose  of  section  195  and  Chapter  XXXV  of  the  Code  of  Criminal                  
Procedure, 1898 (5 of 1898). 

CHAPTER II.—POWERS AND DUTIES OF THE TRIBUNAL 

14. Tribunal to call upon persons to make claims.—(1) The Tribunal shall, by notification and in 
such other manner as may be prescribed, call upon every person, who claims to have any interest in any 
share, to prefer his claim within thirty days from such date as may be specified in the notification. 

(2) Every person claiming an interest in any share shall make his claim before the Tribunal in such 
form as may be prescribed, stating therein the rights claimed by him in the share and the manner in which, 
and the date on which, such right was acquired by him. 

(3) The Tribunal  may,  if  it  is  satisfied that  any  claimant  had  sufficient cause  for  not preferring  the 
claim  within  thirty  days  from  the  date  specified  in  the  notification,  admit  such  claim  within  a  further 
period of thirty days. 

15.  Determination  of  genuine  shares.—The  Tribunal  shall,  after  taking  such  evidence  as  may  be 
adduced before it and after making such inquiry as it may think fit and after hearing such persons as may 
desire  to  be  heard,  determine  which  of  the  documents  purporting  to  be  shares  represent,  in  reality,  a 
contribution to the capital of the old company, and on such determination, all other documents purporting 
to be shares shall stand declared to be spurious and shall stand cancelled. 

16. No compensation for cancellation of spurious shares.—(1) No holder of a document purporting 
to  be  a  share  shall  be  entitled  to  claim  either  from  the  Central  Government  or  from  the  old  or  new 
company any damages for the cancellation of such document by virtue of the provisions of section 15. 

(2)  Subject  to  the  provisions  of  sub-section  (1),  every  person  who  had  acquired  a  document, 
purporting  to  be  a  share,  bona  fide  for  value  without  notice  of  the  fact  that  it  did  not  represent  any 
contribution to the capital of the old company, shall be entitled to claim reimbursement from the person 
from  whom  such  document  was  acquired  by  him,  and,  the  period  of  limitation  for  any  action  for  such 
reimbursement shall be deemed to commence on the date on which the document held by him as a share 
stands cancelled under section 15. 

17. Power of Tribunal to entertain and dispose of claims for reimbursement.—(1) The Tribunal 

shall  have  jurisdiction  to  entertain  and  dispose  of  any  claim  for  reimbursement  referred  to  in                
sub-section (2) of section 16. 

(2) Every such claim shall be made before the Tribunal within thirty days from the date on which the 

document purporting to be a share stands cancelled under section 15. 

18. Suits and legal proceedings, not to be commenced or proceeded with.—(1) On and from the 
date  on  which  the  Tribunal  is  constituted,  no  suit  or  other  legal  proceeding  shall  be  commenced,  or  if 
pending at the date of such constitution, shall be proceeded with, against the old company except with the 
leave of the Tribunal and subject to such terms as the Tribunal may impose. 

(2) Save as otherwise provided in this Act, the Tribunal shall have, and no court or other tribunal shall 

have, jurisdiction to entertain or dispose of— 

(a) any suit or proceeding by, or on behalf of, or against, the old company; 

(b) any claim made by, or on behalf of, or against, the old company; 

7 

 
(c) any question of priorities and any other question whatsoever, whether of law or of fact, which 
may relate to, or arise in relation to, the genuineness or otherwise of, any share or in relation to any 
rights or obligations under such share, 

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen 
or arises before or after the constitution of the Tribunal. 

(3) If, on the appointed day, any suit, appeal or other proceeding of whatever nature by or against the 
old  company  in  relation  to  any  business  of  that  company  is  pending  in  any  court,  such  suit,  appeal  or 
other proceeding shall, notwithstanding anything contained in any other law for the time being in force or 
in  any  contract,  stand  transferred  to,  and  shall  be  disposed  of  by,  the  Tribunal  and  thereupon  no  other 
court or tribunal shall have jurisdiction to try such suit, appeal or proceeding. 

Explanation.—A suit or other proceeding relating to the title to, or claim in or in relation to, any share 
or any document purporting to be a share shall be deemed to be a suit or other proceeding relating to the 
business of the old company. 

(4) Nothing in sub-section (1) or sub-section (3) shall apply to any petition or appeal arising out of 

any petition made under article 32, article 226 or article 227 of the Constitution. 

19. Decision of the Tribunal to be final.—Every decision, under this Act, of the Tribunal shall be 
final  and  shall  not  be  called  in  question  in  any  court  except  by  way  of  a  petition  under  article  32  or    
article 226 of the Constitution. 

CHAPTER III.—DUTY OF CUSTODIAN TO RECONSTRUCT REGISTER OF MEMBERS OF THE OLD COMPANY 

20. Custodian to reconstruct register of members of the old company.—(1) The Custodian shall 
reconstruct the register of members of the old company and shall include therein the names of the holders 
of the shares which have been declared by the Tribunal as representing, in reality, a contribution to the 
capital of the old company and strike off from the register of members of the old company the names of 
the holders of the documents purporting to be shares which stand, by reason of the determination made by 
the Tribunal under section 15, cancelled. 

(2) On and from the date of reconstruction of the register of members of the old Company,— 

(a)  the  register,  as  so  reconstructed,  shall  be  deemed  to  be  the  register  of  members  of  the  old 

company, and 

(b)  all registers  of  members  maintained  by  the  old  company,  immediately  before  the  said  date, 

shall stand cancelled. 

21. Custodian to issue fresh share certificates.—(1) The Custodian shall issue, in such form as may 
be prescribed, fresh share certificate in relation to the shares which have been declared by the Tribunal as 
representing, in reality, a contribution to the capital of the old company. 

(2) All share certificates issued by the old company before the date of the determination made by the 

Tribunal shall, on and from such determination, stand cancelled. 

22. No annual general meeting of the old company to be held before the reconstruction of the 

of  members.—(1)  Nothwithstanding 

register 
Act, 1956 (1 of 1956), or any other law for the time being in force, no annual or other general meeting of 
the old company shall be held until the reconstruction of the register of members of the old company has 
been completed in accordance with the provisions of this Act. 

contained 

anything 

in 

the  Companies                               

(2) No resolution purported to have been passed at any meeting of the members of the old company 

shall, until the reconstruction of its register of members, have effect. 

23.  Custodian  to  file  accounts  until  reconstruction  of  the  register  of  members  of  the  old 
company.—(1) Until the register of members of the old company is finally reconstructed, the Custodian 
shall file every year with the Registrar, the annual accounts of the old company. 

(2)  The  provisions  of  the  Companies  Act,  1956  (1  of  1956),  shall,  as  far  as  may  be,  apply  to  the 

annual accounts referred to in sub-section (1). 

8 

 
PART III 

OFFENCES AND THEIR TRIAL 

24. Penalties.—(1) Any person who,— 

(a)  having  in  his  possession,  custody  or  control  any  property  forming  part  of  the  undertaking 
which  has  vested  in  the  Central  Government  under  section  3,  wrongfully  withholds  such  property 
from the Central Government or new company, or 

(b) wrongfully obtains possession of any property forming part of such undertaking, or 

(c) being required by sub-section (2) of section 5 so to do, wilfully withholds or fails to furnish to 
the Central Government, new company or any other person specified by that Government or the new 
company, any document which may be in his possession, custody or control, or 

(d)  wilfully  fails  to  furnish  an  inventory  as  required  by  section  6,  or  furnishes  an  inventory 
containing  any  particulars  which  are  incorrect  or  false  in  material  particulars  and  which  he  either 
knows or believes to be false or does not believe to be true, or 

(e) being required by the Central Government or the new company in writing so to do, fails to 
furnish  any  return,  statement  or  other  information  relating  to  the  undertaking  of  the  old  company 
which has vested in the Central Government under section 3, or 

(f) makes a false or frivolous claim before the Tribunal with regard to the ownership of, or any 

right in, any share, or 

(g) fails to comply with any order of direction made under this Act, 

shall be  punishable  with imprisonment  for a term  which  may  extend to  three  years,  or  with  fine  which 
may extend to ten thousand rupees, or with both: 

Provided that the court trying any offence under clause (a), clause (b) or clause (c) of this sub-section 
may, at the time of convicting the accused person, order him to deliver up or refund, within a period to be 
fixed by the court, any property or money wrongfully withheld or wrongfully obtained or any document 
wilfully withheld or not furnished. 

(2)  No  court  shall  take  cognizance  of  an  offence  punishable  under  this  section  except  with  the 

previous sanction of the Central Government or an officer authorised by that Government in this behalf. 

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

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

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

Explanation.—For the purposes of this section,— 

(a)  “company”  means  any  body  corporate  and  includes  a  firm  or  other  association  of    

individuals; and 

(b) “director” in relation to a firm, means a partner in the firm. 

9 

 
 
 
26.  Offences 

to  be 

triable  by  a  Magistrate  of 

compoundable.—Notwithstanding 
Procedure, 1898 (5 of 1898),— 

anything 

contained 

the 
in 

first  class  and  not 
Code 
the 

of 

to  be             

Criminal                           

(a) every offence against this Act shall be triable by a Magistrate of the first class, and 

(b) no offence against this Act shall be compoundable. 

PART IV 
MISCELLANEOUS 

27.  Protection  of  action  taken  in  good  faith.—(1)  No  suit,  prosecution  or  other  legal  proceeding 
shall lie against the Custodian in respect of anything which is in good faith done or intended to be done 
under this Act. 

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

28.  Contracts,  etc.,  in  bad  faith  may  be  cancelled  or  varied.—(1)  If  the  Central  Government  is 
satisfied, after such inquiry as it thinks fit, that any contract or agreement entered into at any time within 
twelve months immediately preceding the appointed day, between the old company and any other person 
has  been  entered  into  in  bad  faith and  is  detrimental  to  the interests  of the  old  company  or  of  the  new 
company, it may make an order cancelling or varying (either unconditionally or subject to such conditions 
as it may think fit to impose) the contract or agreement and thereafter the contract or agreement shall have 
effect accordingly: 

Provided that no contract or agreement shall be cancelled or varied except after giving to the parties 

to the contract or agreement a reasonable opportunity of being heard. 

(2)  Any  person  aggrieved  by  an  order  made  under  sub-section  (1)  may  make  an  application  to  the 
Tribunal for the variation or reversal of such order and thereupon the Tribunal may confirm, modify or 
reverse such order. 

29. Power to terminate contract of employment.—If the Custodian is of opinion that any contract 
of employment entered into by or on behalf of the old company at any time before the appointed day is 
unduly onerous, he may, by giving to the employee one month’s notice in writing or the salary or wages 
for one month in lieu thereof, terminate such contract of employment. 

30.  Power  to  remove  difficulty.—If  any  difficulty  arises  in  giving  effect  to  the  provisions  of  this 
Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the 
difficulty: 

Provided  that  no  such  order  shall  be  made  after  the  expiry  of  a  period  of  two  years  from  the 

commencement of this Act. 

31. Power  to  make rules.—(1) The  Central  Government  may,  by  notification,  make  rules  to  carry 

out the provisions of this Act. 

(2)  In  particular,  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for all or any of the following matters, namely:— 

(a) the form and manner in which every claim shall be preferred before the Tribunal; 

(b) the form in which fresh shares shall be issued by the Custodian; 

(c) any other matter which is required to be, or may be, prescribed. 

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

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