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Section 39 of The Road Transport Corporations Act, 1950 in hindi

Liquidation of a Corporation.

(1)No provision of any law relating to the winding up of companies or corporations shall apply to a Corporation, and no Corporation shall be placed in liquidation save by order of the State Government concerned and save in such manner as may be directed by that Government: Provided that no such order shall be made by any State Government except with the previous approval of the Central Government.
(2)In the event of a Corporation being placed in liquidation, the assets of the Corporation, after meeting the liabilities, if any, shall be divided among the 1[State Government] and such other parties, if any, as may have subscribed to the capital in proportion to the contribution made by each of them to the total capital of the Corporation.

Summary

General laws for closing down companies or corporations do not apply to these entities.
A Corporation can only be closed down if the State Government issues a specific order.
The State Government must get the approval of the Central Government before ordering a closure.
If a Corporation is closed, the remaining assets are divided among the contributors after all debts are paid.
This division of assets is done in proportion to how much capital each party provided.

Practical examples

1The State of Westland decides to close its bus corporation because it is no longer needed. They must first write to the Central Government for permission before they can legally start the liquidation process.

2After the Road Transport Corporation of Southland is dissolved and all its bank loans are paid off, there is 1 crore rupees left. Since the State Government provided 80 percent of the capital and a private group provided 20 percent, the State gets 80 lakhs and the group gets 20 lakhs.

FAQ

1. Can a regular court order the winding up of a bus company under Section 39 of The Road Transport Corporations Act, 1950?

No, Section 39 of The Road Transport Corporations Act, 1950, explicitly states that no law relating to the winding up of companies applies, and liquidation can only happen by order of the State Government.

2. Does the State Government have the final say on closing a corporation under Section 39 of The Road Transport Corporations Act, 1950?

While the State Government issues the order, Section 39 of The Road Transport Corporations Act, 1950, requires them to obtain the previous approval of the Central Government first.

3. How are leftover assets shared under Section 39 of The Road Transport Corporations Act, 1950?

According to Section 39 of The Road Transport Corporations Act, 1950, assets are shared among the State Government and other parties based on the percentage of capital they originally contributed.

Test yourself

1.Under Section 39 of The Road Transport Corporations Act, 1950, whose previous approval is mandatory before a State Government can order liquidation?

2.According to Section 39 of The Road Transport Corporations Act, 1950, which laws are excluded from applying to the winding up of a Corporation?

3.In the event of liquidation under Section 39 of The Road Transport Corporations Act, 1950, when are assets divided among the shareholders?

4.Under Section 39 of The Road Transport Corporations Act, 1950, how is the proportion of asset division determined?

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