MANAGEMENT OR CONTROL OF TEA UNDERTAKINGS OR TEA UNITS BY THE CENTRAL GOVERNMENT IN CERTAIN CIRCUMSTANCESCentral

Section 16D of The Tea Act, 1953

Power of Central Government to assume management or control of tea undertaking or tea unit in certain cases.

1[16D. Power of Central Government to assume management or control of tea undertaking or tea unit in certain cases.--(1) If the Central Government is of opinion that--

(a)a tea undertaking or tea unit, to which directions have been issued in pursuance of section 16C has failed to comply with such directions, or the tea undertaking or, as the case may be, the tea unit, has made losses in three out of five years immediately preceding the year in which such opinion is formed; or
(b)the average yield of the tea undertaking, or, as the case may be, the tea unit, during three years out of five years immediately preceding the year in which such opinion is formed, has been lower than the district average yield by twenty five per cent or more; or
(c)the persons owning the tea undertaking, or, as the case may be, the tea unit, have habitually made default in the payment of wages, or provident fund dues of workers and other employees, or rent of the land, or duties of excise, or in the payment of such other dues as are obligatory under any law for the time being in force; or
(d)the undertaking, or, as the case may be, the tea unit, is being managed in a manner highly detrimental to the tea industry or to public interest, the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the tea undertaking or tea unit, as the case may be, or to exercise in respect of the whole or any part of the tea undertaking or, as the case may be, tea unit, such functions of control as may be specified 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 specified in the order: Provided that if the Central Government is of opinion that it is expedient in the public interest that any such notified order should continue to have effect after the expiry of the period of five years aforesaid, it may from time to time issue directions for such continuance for such period, not exceeding one year at a time, as may be specified in the direction, so, however, that the total period of such continuance (after the expiry of the said period of five years) does not exceed 2[six years]; and where any such direction is issued a copy thereof shall be laid, as soon as may be, before both Houses of Parliament.
(3)Any notified order issued under sub-section (1) shall have the same effect as if it were an order made under sub-section (1) of section 18A of the Industries (Development and Regulation) Act, 1951 (65 of 1956), and the provisions of section 18B of that Act shall apply accordingly.
(4)Notwithstanding anything contained in any law for the time being in force, no person, who ceases to hold any office by reason of the provisions contained in clause (a), or whose contract of management is terminated by reason of the provisions contained in clause (b), of section 18B of the Industries (Development and Regulation) Act, 1951 (65 of 1965), as applicable to a tea undertaking or tea unit by virtue of the provisions of sub-section (3), shall be entitled to any compensation for the loss of office or for the premature termination of his contract of management: Provided that nothing contained in this section shall affect the right of any such person to recover from the tea undertaking or the tea unit, as the case may be, monies recoverable otherwise than by way of such compensation.]

Summary

The Central Government can take over the management of a tea garden or factory if it is failing or being mismanaged.
A takeover can happen if a tea unit ignores specific orders issued to fix its production or prices after an investigation.
The government can step in if the unit loses money or has very low crop yields for three out of five years.
Failure to pay workers their wages or provident fund dues is another reason for a government takeover.
Initial management control lasts up to five years, but the government can extend this one year at a time for up to six more years.
Managers who lose their jobs because of a government takeover are not allowed to claim any compensation for that loss.

Practical examples

1Green Hills Estate in Assam had financial losses from 2020 to 2023. The Central Government issued an official order on June 1, 2024, appointing Mr. Sharma to manage the estate for five years to save it from closing.

2Assam Aroma Factory was ordered under Section 16C to increase its production standards by July 2025. When the owner, Rahul, ignored this order, the government took over the factory's control on October 10, 2025.

3The owners of Nilgiri Breeze repeatedly failed to pay their 200 workers their monthly wages throughout 2024 and 2025. In January 2026, the government authorized a committee to take over management to ensure workers were paid and the unit stayed productive.

FAQ

1. Can the government take over a tea garden under The Tea Act, 1953 Section 16D if it just has one bad year?

No, under Section 16D of The Tea Act, 1953, the government usually looks for a pattern, such as making losses or having low yields for three out of the five years before they take action.

2. How long can a government takeover last under Section 16D of The Tea Act, 1953?

Under Section 16D of The Tea Act, 1953, the initial takeover order can last up to five years, and it can be extended one year at a time for up to six additional years.

3. Do the original managers get paid for losing their jobs during a Section 16D takeover of The Tea Act, 1953?

No, Section 16D of The Tea Act, 1953 specifically states that no person is entitled to compensation for losing their office or having their management contract ended because of the government takeover.

4. What happens if a tea unit ignores the directions given under Section 16C?

If a tea unit fails to follow directions issued under Section 16C regarding production or prices, the Central Government can use Section 16D of The Tea Act, 1953 to take over its management.

Test yourself

1.Under Section 16D of The Tea Act, 1953, what is the maximum total extension period allowed after the initial five year takeover?

2.If the Central Government issues directions to a tea factory under Section 16C of The Tea Act, 1953 to fix its price, and the factory ignores them, what can happen under Section 16D?

3.Under Section 16D of The Tea Act, 1953, which yield-related condition allows the government to take over a tea unit?

4.What is the rule regarding compensation for managers who lose their position during a takeover under Section 16D of The Tea Act, 1953?

16CPreviousSection 16C Power of Central Government on completion of investigation.16ENextSection 16E Power to take over tea undertaking or tea unit without investigation under certain circumstances.

←Section 16C Section 16E→