Section 26 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980
Assumption of liability.
- (1)Where any liability of the Company arising out of any item specified in any category in Part I of the Schedule is not discharged fully by the Commissioner out of the amounts paid to him under this Act, the Commissioner shall intimate in writing to the Central Government the extent of the liability which remains undischarged and that liability shall be assumed by the Central Government.
- (2)The Central Government may, by order, direct the existing, or new, Government company in which the undertakings of the Company become vested by virtue of any direction made under sub-section (1) of section 5 or declaration made under sub-section (1) of section 6, to take over the liability assumed by the Central Government under sub-section (1), and on receipt of such direction, it shall be the duty of such existing, or new, Government company to discharge such liability.
Summary
- If the Commissioner cannot fully pay off a liability listed in Part I of the Schedule using the funds provided, they must notify the Central Government in writing.
- The Central Government will then take over the responsibility for paying that remaining, unpaid liability.
- The Central Government can order the Government company that received the undertakings to take over and pay this assumed liability.
Practical examples
FAQ
1. What happens if the money given to the Commissioner is not enough to pay employee dues?
The Commissioner tells the Central Government in writing, and the Central Government assumes the remaining debt.
2. Does the Central Government pay these debts directly forever?
Not necessarily, because it can direct the Government company that now owns the business to take over and discharge the liability.
3. Does this rule apply to all types of debts?
No, it only applies to liabilities specified in any category in Part I of the Schedule.
Test yourself
Q1.Under Section 26 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, what must the Commissioner do if a liability from Part I of the Schedule is not fully discharged?
Q2.How do Sections 5 and 6 interact with Section 26 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980 regarding the payment of liabilities?
Q3.Under Section 26 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, which specific liabilities is the Central Government required to assume if funds fall short?
Q4.Under Section 26 of The National Company Limited (Acquisition and Transfer of Undertakings) Act, 1980, what is the duty of the Government company once it receives an order from the Central Government to take over a liability?