Primary law, Tamil Nadu land law
The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986
Parliament enacted the Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986, Act No. 30 of 1986, dated 30 May 1986, to acquire six textile undertakings and transfer them through the Central Government to the National Textile Corporation Limited. The transfer covers the undertakings' land, buildings, machinery, rights and records, while prior liabilities generally remain with the Swadeshi Cotton Mills Company Limited.
What the Act governs
The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 applies to six undertakings:
- Swadeshi Cotton Mills, Kanpur
- Swadeshi Cotton Mills, Pondicherry
- Swadeshi Cotton Mills, Naini
- Swadeshi Cotton Mills, Maunath Bhanjan
- Udaipur Cotton Mills, Udaipur
- Rae Bareli Textile Mills, Rae Bareli
The Central Government had earlier taken over their management under Government of India, late Ministry of Industrial Development Order No. S.O. 265(E), dated 13 April 1978. Parliament later enacted the acquisition law to support continued manufacture and distribution of cloth and yarn, proper management and continued employment.
Transfer of property
The Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 provides that, on 1 April 1985, every covered undertaking and the company's rights, title and interest in it transferred to the Central Government. Immediately afterwards, they transferred to the National Textile Corporation Limited.
The transferred property includes:
- Land, buildings, workshops, stores, machinery and equipment
- Leasehold interests, rights, powers, authorities and privileges
- Cash, reserve funds, investments and book debts
- Books of account, registers and other documents
- Other movable and immovable property connected with the undertakings, whether within or outside India
The National Textile Corporation Limited may transfer an undertaking, or part of one, to a subsidiary textile corporation by written order and on specified terms.
Mortgages, claims and liabilities
Property vested under the Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986 is freed from trusts, mortgages, charges, liens and other encumbrances. Court attachments, injunctions and orders restricting its use are treated as withdrawn.
Mortgagees and other interest holders must notify the Commissioner of Payments in the prescribed manner. They may claim mortgage money or other dues from the amounts made available under the Act, but cannot enforce their security against the vested property.
Liabilities relating to periods before 1 April 1985 generally remain liabilities of the Swadeshi Cotton Mills Company Limited. They are not enforceable against the Central Government or the National Textile Corporation Limited, subject to the Act's express provisions.
Who may be affected
The acquisition provisions may affect buyers, lenders, employees, claimants or professionals dealing with property or rights connected to any of the six listed undertakings. Pending property proceedings may continue by or against the National Textile Corporation Limited. The penalty and company offence provisions came into force at once, while the remaining provisions are deemed to have commenced on 1 April 1985.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
Does the Act cover every property owned by Swadeshi Cotton Mills Company Limited?
The Act covers property, rights and interests connected with the six textile undertakings listed in it. The supplied text does not state that every unrelated company property is included.
Can a mortgage be enforced against land transferred under the Act?
No. A mortgage, charge, lien or other interest cannot be enforced against vested property, although the holder may claim payment from the amounts provided under the Act.
Who is responsible for liabilities arising before 1 April 1985?
Prior liabilities relating to the textile undertakings generally remain with the Swadeshi Cotton Mills Company Limited. They are generally not enforceable against the Central Government or the National Textile Corporation Limited.
Does the acquisition include the Pondicherry mill?
Yes. Swadeshi Cotton Mills, Pondicherry is one of the six textile undertakings expressly listed in the Act.
