Section 17 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986
Certain powers of the National Textile Corporation.
- (1)The National Textile Corporation shall be entitled to receive, up to the specified date, to the exclusion of all other persons, any money due to a textile undertaking, realised after the appointed day, notwithstanding that the realisation pertains to a period prior to the appointed day.
- (2)The National Textile Corporation may make a claim to the Commissioner with regard to every payment made by it as the authorised person in relation to a textile undertaking after the appointed day but before the date on which the Ordinance was promulgated for discharging any liability of the Company in relation to any period prior to the appointed day, and every such claim shall have priority, in accordance with the priorities attaching, under this Act, to the matter in relation to which such liability has been discharged by the authorised person.
- (3)Save as otherwise provided in this Act, the liabilities in relation to a textile undertaking in respect of any period prior to the appointed day which have not been discharged by the authorised person shall be the liabilities of the Company. Explanation.--For the purposes of this section, "authorised person" means the person authorised to take over the management of any textile undertaking in pursuance of the order of the Government of India in the late Ministry of Industrial Development No. S.O. 265(E), dated the 13th April, 1978, issued under clause (a) of sub-section (1) of section 18AA of the Industries (Development and Regulation) Act, 1951 (65 of 1951).
Summary
- The National Textile Corporation has the sole right to collect any money owed to the mills up until a specified date, even if the debt originated before the appointed day.
- Between the appointed day and the date the Ordinance was issued, the Corporation (as the authorised manager) might have paid off some of the old Company's prior debts.
- If the Corporation paid off those old debts, it can file a claim with the Commissioner to get that money back out of the compensation funds.
- When claiming this reimbursement, the Corporation gets the same priority level that the original debt would have had.
- Any old debts from before the appointed day that the Corporation did not pay off remain the sole responsibility of the original Company.
Practical examples
FAQ
1. If a client pays a very old invoice today, who gets the money?
The National Textile Corporation is entitled to receive it, to the exclusion of all other persons, up to the specified date.
2. What if the new Corporation used its own money to pay off the old Company's debts?
They can make a claim to the Commissioner to be reimbursed for payments they made between the appointed day and the Ordinance date.
3. Does the new Corporation have to pay off all the old Company's debts?
No, any prior liabilities that the Corporation did not discharge remain the liabilities of the original Company.
4. How does the Commissioner decide when to pay back the Corporation?
The Corporation's claim gets the same priority rating as the original debt they paid off.
Test yourself
Q1.Under Section 17 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, what right does the National Textile Corporation have regarding money realised after the appointed day that pertains to a prior period?
Q2.Under Section 17 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, under what condition can the National Textile Corporation make a claim to the Commissioner?
Q3.Under Section 17 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, if the National Textile Corporation makes a claim for discharging an old liability, how is its priority handled?
Q4.Under Section 17 of The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, what happens to liabilities from before the appointed day that the authorised person (the Corporation) did NOT discharge?