irda-industrial regulation development authority

IDRA 1951

PRESENTED BY ARGULA

POOSARLAKONDAPARTHI

IDRA

ESTABLISHMENT

MINISTRY OF INDUSTRIES AND COMMERCE

DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION

IDRA

OBJECT TO EMPOWER GOVT

IMPLIMENT INDUSTRIAL POLICY .

PROVIDE DEVELOPMENT AND REGULATION PATTERN.

ENVISAGES BALANCED GROWTH BY EVADING THE TECHNICAL AND OPERATIONAL DEFECTS.

IRDA

CONSTITUTIONAL BACKGROUND

ONLY THE DEFENCE AND PROSECUTION OF WAR.

UNDER ENTRY 7 OF LIST 1 OF 7 SCHEDULE GIVES POWER TO THE GOVT TO CONTROL THE

INDUSTRIES EXPEDIENT IN THE INTEREST OF PUBLIC

IDRA

INDUSTRIES (DEVELOPMENT AND REGULATION) ACT WAS PASSED TO CURB THE STIFLING

ECONOMIC GROWTH INSTEAD OF PROMOTION INDUSTRIES AT A HIGHER RATE WHICH IS A MAJOR DETERMINANT OF OVER ALL ECONOMIC DEVELOPMENT OF THE NATION.

IDRA

ACT CAN BE DEVIDED IN TO FOLLOWING MAJOR HEADS :

1)LICENSING AND REGISTRATION (SEC/1 TO 18) 2)CONTROL AND MANAGEMENT OF

INDUSTRIES (SEC/18A TO 18FH,18G) 3)POWERS AND DIRECTIONS BY CENTRAL

GOVERNMENT.(SEC 19 TO 32)

IDRA

THIS ACT DECLARES THE EXPEDIENCY BY UNION TO CONTROL THE INDUSTRIES SPECIFIED IN THE FIRST SCHEDULE .

FIRST SCHEDULE:• IRON AND STEEL• FUELS• PRIME MOVERS• ELECTRICAL EQUIPMENT• FERMENTATION• FOOD PROCESSING• SUGAR • LEATHER

IDRA• TELECOMMUNICATION• TRANSPORTATION• MACHINERY INDUSTRIAL AGRICULTURAL EARTH MOVING• FERTILIZERS• CHEMICAL• MEDICAL AND SURGICAL• DRUGS AND PHARMACEUTICALS• TEXTILES • TIMBER• DEFENCE

IDRA

ESTABLISHMENT OF CENTRAL ADVISORY COUNCIL IS FOR THE PURPOSE OF ADVISING THE CENTRAL GOVERNMENT ON MATTERS CONCERNING DEVELOPMENT OF INDUSTRIES AND ANY OTHER ASPECT REGARDING THE ADMINISTRATION OF THE ACT WHICH SHALL CONSIST OF REPRESENTATIVES OF OWNERS,EMPLOYEES,CONSUMERS,SUPPLIERS UNDER SEC/5

IDRA

ESTABLISHMENT OF DEVELOPMENT COUNCIL IS FOR THE PURPOSE OF ANY SCHEDULED INDUSTRY OR GROUP OF INDUSTRIES WHICH CONSTITUTES THE MEMBERS REPRESENTING THE INTERESTS OF THE OWNERS, EMPLOYEES,CONSUMERS AND PERSONS HAVING SPECIAL KNOWLEDGE WITH RESPECT TO TECHNICAL ASPECTS OF THE INDUSTRIES UNDER SECTION/6

IDRA

FUNCTIONS OF DC: SCHEDULE 21)RECOMMENDING PRODUCTION TARGETS.2)SUGGESTING NORMS OF EFFICIENCY.3)RECOMMENDS WORKING OF INDUSTRIES

EFFICIENTLY SPECIALLY LESS EFFICIENT UNITS.4)PROMOTES ARRANGEMENTS THOURGH

DISTRIBUTION ,MARKETING BY WHICH CONSUMER IS SATISFIED.

IDRA

DEVELOPMENT COUNCIL SHALL PREPARE AND SUBMITT TO THE CENTRAL GOVERNMENT AND THE ADVISORY COUNCIL ANUALLY SETTING OUT THE FUNCTIONS IT HAS BEEN DISCHARGED DURING THE LAST YEAR ALONG WITH REPORT OF AUDITORS ON THE ACOUNTS UNDER SEC/7.

IDRA

SEC/9 IMPOSITION OF CESS ON SCHEDULED

INDUSTRIES.COMMISSIONER OF CENTRAL EXCISE

VTELCO

IDRA

THE OWNER OF EVERY INDUSTRIAL UNDERTAKING SHALL WITH IN THE PERIOD SPECIFIED BY CENTRAL GOVERNMENT, BY NOTIFICATION IN THE OFFICIAL GAZZETTE,MUST REGISTER IN THE PRESCRIBED MANNER ACCORDING TO SEC/ 10 AND IT CAN BE REVOKED UNDER SEC/10A IF THE CENTRAL GOVERNMENT IS SATISFIED THAT IT HAS BEEN OBTAINED BY MISREPRESENTING THE ESSENCIAL FACTS AND ANY UNDERTAKING HAS CEASED TO BE REGISTRABLE UNDER THE ACT.

IDRA

INDUSTRIAL UNDERTAKING (SEC/3(d)): ANY UNDERTAKING PERTAINING TO A

SCHEDULED INDUSTRY CARRIED BY ANY PERSON OR AUTHORITY INCLUDING THE GOVERNMENT.

IDRA

ACCORDING TO SEC/11 THIS ACT EMPOWERS THE CENTRAL GOVERNMENT TO REGULATE THE DEVELOPMENT OF INDUSTIRES BY MEANS OF LICENSING WITH SUITABLE EXEMPTIONS DECIDED BY GOVERNMENT

LICENSING: A WRITTEN STATEMENT FROM THE GOVERNMENT TO AN INDUSTRIAL UNDERTAKING TO MANUFACTURE SPECIFIED ARTICLES INCLUDED IN THE SCHEDULE TO THE ACT

IDRA

AFTER THE COMMENCEMENT OF THIS ACT NO

AUTHORITY OR PERSON SHALL ESTABLISH A NEW INDUSTRIAL UNDERTAKING WITH OUT THE LICENSE ISSUED BY CENTRAL GOVERNMENT ACCORDING TO SEC/11

IDRA

AN INDUSTRIAL UNDERTAKING REGISTERED

UNDER SEC/10 AND OBTAINED LICENSE UNDER SEC/11 SHALL NOT COMMENCE THE PRODUCTION OR MANUFACTURING OF NEW ARTICLE WITH OUT LICENSE ACCORDING TO SEC/11A.

IDRA

NEW ARTICLE: ANY ARTICLE SPECIFIED UNDER THE FIRST

SCHEDULE OF THE ACT AND ANY ARTICLE WHICH BEARS THE TRADE MARK DEFINED UNDER THE TRADE MARKS ACT 1940.

IDRA

ABTAINED LICENSE CAN BE AMENDED AND REVOCKED BY THE CENTRAL GOVERNMENT AFTER IT HAS BEEN SATISFIED THAT REGISTERED UNDERTAKING HAS FAILED TO ESTABLISH OR TAKE EFFECTIVE STEPS IN RESPECT OF LICENSE AQUIRED BUT THIS CANNOT BE EXECUTED IF IN CASE THE UNDERTAKING HAS TAKEN EFFECTIVE STEPS TO ESTABLISH IN ACCORDANCE WITH LICENSE ISSUED UNDER SEC/12.

IDRA

INVESTIGATION: (SEC/14&15) BEFORE THE GRANT OF LICENSE OR

PERMISSION BY CENTRAL GOVERNMENT IT SHALL APPOINT AN OFFICER OR AUTHORITY TO MAKE FULL AND COMPLETE INVESTIGATION IN RESPECT OF APPLICATIONS RECEIVED .

IDRA

IF IT IS OF THE OPINION THAT THE SCHEDULED INDUSTRY OR UNDERTAKING THAT:

1)THERE HAS BEEN A SUBSTANCIAL FALL IN THE VOLUME OF PRODUCTION

2)THERE IS A DETORIATION IN THE QUALITY OF THE PRODUCT 3)THERE HAS BEEN UNJUSTIFIABLE RISE IN THE PRICE OF THE

OUTPUT AND 4)ANY UNDERTAKING IS BEING MANAGED IN A MANNER

HIGHLY DETRIMENTAL TO THE SCHEDULED INDUSTRY OR TO THE PUBLIC INTEREST.

IDRAUNDER THE SEC/16:

BY THE RESULT OF SUCH INVESTIGATION GOVERNMENT IS EMPOWERED TO ISSUE DIRECTIONS TO THE INDUSTRY OR UNDERTAKING :

1) TO REGULATE THE PRODUCTION OF OUTPUT AND FIX THE STANDARDS OF PRODUCTION.

2) REQUIRING THE INDUSTRY TO TAKE STEPS WHICH IT FEELS NECESSARY FOR THE DEVELOPMENT

3)PROHIBITING THE INDUSTRY OR UNDERTAKING TO ACT OR PRACTICE WHICH MIGHT REDUCE PRODUCTION,CAPACITY OR ECONOMIC VALUE

IDRA

SEC/13 FURTHER PROVISIONS FOR LICENSING.SEC/18 CALL FOR ASSISTANCE.SEC/14,17.

Sections 18A to 18G• Chapter- IIIA Direct Management Or Control Of

Industrial Undertakings By Central Government In Certain Cases)

• Chapter- IIIAA Management Or Control Of Industrial Undertakings Owned By Companies In Liquidation)

• Chapter- IIIAB Power To Provide Relief To Certain Industrial Undertakings)

• Chapter- IIIAC Liquidation Or Reconstruction Of Companies)

• Chapter- IIIB Control Of Supply, Distribution, Price Etc., Of Certain Articles)

Direct Management Or Control Of Industrial Undertakings(IU) By Central Government(CG)

Sec.18A• With investigation.• If CG is of the opinion that,

– IU have failed to follow directions under Sec.16; or

– Report under Sec.15, shows that affairs are being conducted in detrimental manner (to the scheduled industry concerned or the public)

Sec.18AA• Without investigation.• If CG is satisfied (by evidence in its

possession) that,– Persons in-charge of the IU, by their

actions brought a situation which is likely to affect the production (immediate action is necessary to prevent it); or

– Closed for a period not less than 3 months & • Such closure is prejudicial to the

scheduled industry concerned; or• restarting is necessary for the

general interests of the public.

By a notified order, can authorise person or body of persons to take over the management of IU, in whole or in part.Order initially valid for 5 years.

Can be extended time to time by 2 years, to a maximum of 12 years.

Sec. 18B- Effect of order

• Viz, persons holding office as managers or directors of the IU

• Shall be deemed to have vacated their offices.

All persons in charge of the management

•Between the IU and any managing agent or any director,•Shall be deemed to have terminated

Any contract of

management

•Along with the provisions of Companies Act,1956•Are subject to the provisions of this Act.

MOA & AOA

Sec. 18B- Effect of order (Contd.)

Managing agent (Now not in use)

•If any appointed under section 18A, shall be deemed to have been duly appointed in pursuance of the Companies Act, 1956•Removal from office with the previous consent of the Central Government

Property, effects and actionable

claims..etc of the IU

• The authorised person or the body should take effective steps to get those into their custody.

• Custody is deemed.

Authorised persons = Directors

• The authorised person(s) will be deemed to be the directors.

• All the powers exercisable by directors under the MOA and AOA, shall alone be exercisable by authorised person(s).

Sec.18C- Contracts in Bad faith

The authorised person or the body,

With the prior

approval of CG

For varying or cancelling any contract or agreement

Between the IU

and any other

person

That it is detrimental to

The IU and therefore be,

Sec.18D- No compensation for termination of office or contract

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

Sec. 18B (a) or (b)

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 IU moneys recoverable otherwise than by way of such compensation.

Sec.18E- Application Act 7 of 1913

Where the Management of the IU

taken over is a company

As defined under Indian Companies Act,1913

(Now Companies Act,1956)

Notwithstanding anything contained in

the Act, the MOA & the AOA

it shall not be lawful for the shareholders of such IU or any

other person to nominate or appoint any person to be a

director of the IU

no resolution passed at any meeting of the shareholders of such undertaking shall be given effect to unless approved by the

CG

no proceeding for the WU of such IU or for the appointment of a receiver in respect thereof

shall lie in any court except with the consent of the CG.

Sec.18F- Power of CG to cancel notified order

If at any time it appears to the CG on the application

of the owner of the IU or

otherwise

that the purpose of the order made under section 18A has been fulfilled

or

that for any other reason it is not

necessary that the order should

remain in force,

the CG may, by notified order,

cancel such order and

on the cancellation of any such order

the management or the control, as the case may be,

of the IU

shall vest in the owner of

the undertaking.

Other Chapters

Chapter- IIIAA Management Or Control Of Industrial Undertakings Owned By Companies In Liquidation)Chapter- IIIAB Power To Provide Relief To Certain Industrial Undertakings)Chapter- IIIAC Liquidation Or Reconstruction Of Companies)

Powers and Directions by Central Government

Sections 19 to 32 of Industries Act 1951

Power of Inspection S/19

Why inspection ? To ascertain the position or working of industrial

undertaking This section confers rights upon a person

appointed by the CG (a) to enter and inspect any premises; (b) to order the production of any document, book,

register or record in the possession (c) to examine persons related to any industrial

undertaking. A person authorized by the CG under sub-section

(1) shall be deemed to be a public servant.

General Prohibition S/20

Express prohibition on taking over the management or control of any industrial undertaking by the state government or any local authority.

Payment of Expenses S/21

Administrative Expenses incurred towards emoluments (wages) of officers of DC and such other are to be defrayed(paid) from the moneys provided by parliament.

Power of CG to Issue Directions S/22

The DC shall be guided by the instructions of the CG and such instructions may include directions relating to the manner in which, and the purpose for which, any proceeds of the cess levied under section 9 shall be expanded.

Decision of CG Final S/23

Decision of CG shall be final where a question arises as to whether (a) there has been a substantial

expansion of an industrial undertaking, or

(b) an industrial undertaking is producing or manufacturing any new article,

Penalties S/24

24(1) if any person contravenes or attempts to contravene or abets the contravention of

i) Any the following provisions S 10(1) or 10(4) or S 11(1) or 11(A) 0r S 13(1) or S 29B , 29B(2) , 29B(2A) , 29B(2D) , 29B(2F) and 29B(2G)

(ii) any direction issued under section 17 or sub-section (3) of section 18B, or(iii) any order made under section 18G, or(iv) any rule the contravention of which is made punishable under this section Shall be punishable with imprisonment for 5 years or with fine upto rupees 5000 or both. Rupees 500 for continuing contravention.

24(2) If the person contravening is a company then Every person who was in charge of company, and Was responsible for the conduct of the business

At the time of offence shall be deemed to be guilty of contravention and liable for punishment.Exception 1: No person shall be held liable if he can prove that(i) He exercised all due diligence to prevent commission of offence or(ii) He had no knowledge of the offence

24(3) Notwithstanding anything in S.24(2)

Where an Offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of any director or manager secretary or other officer of the companySuch office holder shall be deemed to be guilty and punishable.

Penalty for False Statements S/24A

Any person when required by this act or by any order under this act Makes any statement or Furnishes any informationWhich is false and he/she reasonably believes to be false or doesn’t believe to be true shall be punishable with 3 months of imprisonment or with a fine of 2 thousand rupees or both.

Power Delegation S/25

The CG may by a notified order direct that any power exercised by it(except under sections 16, 18A, 18AA and 18FA), may be exercised by any other directed specified authority which is sub-ordinate to the CG.

S/26- The CG may give directions to state governments for execution of any of the provisions of the Act or any order or direction made.

Cognizance of Offence S/27 This act expressly bars the Courts to take

cognizance of any offence punishable under this act, until and unless there is a report of facts constituting such offence made by a person who is a public servant.(u/s 21 of IPC)

S/28 : Where a person is prosecuted for contravening any

order under S/18G which prohibits him from doing an act or being in possession of a thing without lawful authority, burden of proof lies on him.

s/29 :No court inferior to first class magistrate shall try any offence punishable under this act.

Power to Exempt in Special Cases s/29B

29(B)(1)If the CG thinks fit, having regard of smallness of no. of workers or amount invested, can exempt through a notification any industrial undertaking or class of

industrial undertakings or any schedule industry or class of scheduled industries

From all or any provision of this act and any rule or order which is made under this act.

S/29B(2A) The CG, after considering the

recommendations made to it by the Advisory Committee(constituted under 2B considering aspects under 2C), for the purpose of development and expansion of small scale industrial undertakings, direct that such article or class of articles specified in the First Schedule be reserved for exclusive production.

S29B(2C) The advisory committee may make recommendations

after considering the following (a) the nature of any article or class of articles which may be

produced economically by the ancillary, or small scale, industrial undertakings;

(b) the level of employment likely to be generated by the production of such article or class of articles by the ancillary, or small scale, industrial undertakings;

(c) the possibility of encouraging and diffusing entrepreneurship in industry;

(d) the prevention of concentration of economic power to the common detriment; and

(e) such other matters as the Advisory Committee may think fit.

S29(B)2D Any industry(other than ancillary)

carrying on the production of any reserved article or class of reserved articles on the date of reservation, shall be subject to conditions through orders notified by CG

While specifying conditions under 2D, the CG shall take into consideration the level of production.(section 2E)

Section 2F requires (every person or authority

registered under s/10) for production of registration certificate, permission 0r license before the CG, which is producing reserved articles.

Owner of every industrial undertaking, other than ancillary or small scale, who is in production of reserved article or has taken steps for production, without being registered under s/10, shall refrain from production.(2G)

Immunity

S/29(C) No suit shall lie against the govt. or any person acting in

good faith in pursuance of the act. S/30 Provides for power to make rules regarding various

aspects like Constitution of DC & AC, members, terms of office etc. Intervals, time, manner in which cess can be levied facilities to be provided for training of technicians and labor by

IU Collection of stats or info reg. IU Manner of registration u/s 10 Procedure for grant of licenses u/s 11, 11A, 13, 29B Matters to be considered for granting licences maintenance of books, accounts and records