Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Act,1980
Act No : 67
Section : PRELIMINARY
BIRD AND COMPANY LIMITED (ACQUISITION AND TRANSFER OF UNDERTAKINGS AND OTHER PROPERTIES) ACT, 1980
67 of 1980
27th December, 1980
STATEMENT OF OBJECTS AND REASONS Messrs. Bird and Company Limited was engaged in production of goods vital to the various basic industries like fertilisers, petroleum products, steel, petro-chemicals and power generation. Production of the Company had been going down in the recent years and the Company started incurring losses since 1973-74, The Company Law Board, who had received complaints regarding mismanagement of the Company, came to the conclusion in 1976 that the affairs of the Company were being conducted in a manner oppressive to the members and prejudicial to the interests of the Company, its employees and the public interest, and appointed under section 408 of the Companies Act, 1956. five Government Directors on the Board of the Company, and subsequently also a Managing Director. The Company Law Board also ordered an investigation in respect of the Company under section 237(b) of the Companies Act, 1956.
2. Appointment of Government Directors, however, did not improve the functioning of Bird and Company Limited. The production continued to decline. Turnover of the Company dropped from Rs. 15.38 crores in 1975-76 to Rs.4.28 crores in 1979-80. The accumulated losses increased to Rs. 5.68 crores and the liabilities went up to Rs. 9.0 crores by March, l980. The Company could not execute orders in time for want of working capital. The Central Government gave counter guarantee to the Chartered Bank in 1977 on the basis of which the Bank could issue guarantees to the Company's customers up to an amount of Rs. 1.0 crore. and also gave guarantees to the Industrial Reconstruction Corporation of India in 1980 for an aggregate amount of Rs. 1.15 crores for provision of working capital to the Company.
However. functioning of the Company continued to be unsatisfactory and it was not able to generate sufficient funds to finance the production. Not only the production suffered and losses increased, but the Company was finding it difficult to obtain fresh orders from the customers who lost faith in the Company's ability to execute orders. 1500 employees of the Company had not received their full wages and salaries. The undertaking of the Company was on the verge of closure: and if it had been allowed to be closed down. it would have adversely affected the production of goods vital to the needs of the country. Industrial Development Bank of India had. therefore, prepared a scheme for rehabilitation of the undertaking. The scheme required an investment of Rs. 140 lakhs to be provided by the Central Government
3. Messrs. Bird and Company Limited is a lading company in a group of 23 other companies engaged in manufacturing, mining, trading and investment activities. While two of the companies are subsidiaries of the Company, the other companies in the group are under varying degrees of control of the company through its direct shareholding or by shareholding by the investment companies in the group. The Company provides marketing and management services to some of the group companies. The manufacturing companies in the group are engaged in production of goods which are vital to the needs of' the country. There had been .several allegations against the management of some of these companies indicating misuse of the companies, mismanagement, misfeasance or malfeasance. The Company Law Board ordered investigations in 1977 under section 237 (b) of the Companies Act, 1956, in respect of some of these companies. Four of the companies have already been nationalised. Management of two of the companies has been taken over under the provisions of the Industries ( Development and Regulation) Act. 1951. It was in the public interest to acquire the Company's share in the group companies to secure for the undertakings of the Company the facilities and advantages derived by it by such shareholding and to enable the Central Government to exercise such control on the affairs of the companies as may be necessary to prevent their mismanagement.
4. In view of the circumstances explained above, the Central Government decided that. would be in the public interest to acquire the undertakings of the Bird and Company Limited, its investments in its two subsidiary companies-and shares held by the Company in the other group companies. The Bird and Company Limited (Acquisition and Transfer of Undertakings and Other Properties) Ordinance. 1980 (No. 18 of 1980) was promulgated by the President on 25th October 1980 to give effect to this decision
5. The Bill seeks to replace the sad Ordinance.- Gaz. of Ind... 25- 11-1980, Pti. II, S. 2. Ext.. p. 1135.
An Act to provide for the acquisition and transfer of the undertakings of the Bird and Company Limited for the purpose of ensuring the continuity of production of goods which are vital to the needs of the country and for the acquisition of shares held by the Bird and Company Limited in the specified companies for the purpose of securing to those undertakings the facilities and advantages derived by reason of such shareholding with respect to the operation and functioning of those undertakings and also to enable the entral Government to exercise such control over the affairs of the specified companies as is necessary to ensure that the affairs of those companies are not mismanaged and for matters connected therewith or incidental thereto.
WHEREAS the Bird and Company Limited were engaged in the manufacture of E.O. T. cranes and other varieties of cranes; polystyrene based cation exchange resign; equipment for fertilizers, oil refineries, steel plants, petro-chemical and other industries; tanks and vessels of various shapes and sizes; water treatment equipment and other types of equipment for the control of water pollution and were also engaged in various other activities;
AND WHEREAS the top management of the Bird and Company Limited had so mismanaged the affairs of that Company as to cause heavy losses to the Company and had also managed the affairs of the Company in a manner prejudicial to the interests of the Company and the public interest:
AND WHEREAS in view of the mismanagement aforesaid, the Central Government had, in pursuance of the provisions of section 408 of the Companies Act. 1956, appointed six directors in the Board of Directors of the Bird and Company Limited; AND WHEREAS investment of a large amount-is necessary for the maintenance and development of the production of the undertakings of the Company;
AND WHEREAS it is necessary in the public interest to acquire the undertakings of the Bird and Company Limited to enable the Central Government to have such investment made and to ensure that the interests of the general public are served by the continuance, by the undertakings of the Company, of the manufacture, production and distribution of goods or articles which are essential to the needs of the economy of the country; AND WHEREAS the Bird and Company Limited is holding shares in the specified companies which are either engaged in the production, distribution or marketing of goods which are vital to the needs of the country or are engaged in providing finance too their companies which are so engaged and it is expedient in the public interest to acquire the said shares to secure for the undertakings of the Company the facilities and advantages derived by reason of such shareholding with respect to the operation and functioning of such undertakings and also to enable the Central Government to exercise, through such shareholdings, such control on the affair: of those companies as may be necessary to prevent their mismanagement.
BE it enacted by Parliament in the Thirty-first Year of the Republic of India as follows:-
CHAPTER 01: PRELIMINARY
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