Published on March 3, 2014
UNIT-5 Sick Industrial Companies Act SICA, a well conceived concept, proved to be a major failure. The regulatory mechanism of SICA was effective only to a limited extent. Some companies perceived SICA as an official exit route. It not only saved them from the harsh legal proceedings but also gave access to various relief and concessions from the financial institutions. Section 22 of SICA created havoc in the banking sector and the quantum of non-performing assets increased at an alarming rate. Internal factors are those which arise within an organisation. They include:Mismanagement in various functional areas of a company like finance, production, marketing and personnel; Wrong location of a unit; Overestimation of demand and wrong dividend policy; Poor implementation of projects which may be due to improper planning or managerial inefficiency; Poor inventory management in respect of finished goods as well as inputs; Unwarranted expansion and diversion of resources such as personal extravagances, excessive overheads, acquisition of unproductive fixed assets,etc.; Failure to modernize the productive apparatus, change the product mix and other elements of marketing mix to suit the changing environment; Poor labour-management relationship and associated low workers' morale and low productivity, strikes,lockouts, etc. External factors are those which take place outside an organisation. They include:Energy crisis arising out of power cuts or shortage of coal or oil; Failure to achieve optimum capacity due to shortage of raw materials as a result of production set-backs in the supply industries, poor agricultural output because of natural reasons, changes in the import conditions,etc. Infrastructural problems like transport bottlenecks;
Credit squeeze; Situations like market recession, changes in technology,etc; International pressures or circumstances, etc. Industrial sickness may be caused by a combination of all such factors. It has several adverse consequences on the economy as a whole. Some of which may be enumerated as follows: It leads to loss of substantial revenue to the Government and enhances its public expenditure; It locks up necessary resources and funds in the sick unit. This also increases the nonperforming assets (NPAs) of banks and financial institutions; It leads to loss of production and productivity in the economy; It aggravates the problem of unemployment in the economy; It vitiates the industrial atmosphere and leads to worker-management disputes,strikes,lockouts,etc; It undermines the public confidence in the functioning of the organised sector in the country which in turn affects the overall investment climate of the economy. Sick Industrial Companies (Special Provisions) Act, 1985 The most important piece of legislation dealing with industrial sickness was the Sick Industrial Companies (Special Provisions) Act,1985 (SICA). It applies to industrial undertakings both in the public and private sectors. SICA pertains to the industries specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, (IDR Act) subject to the exceptions specified in the Act. The basic rationale of enacting SICA was to determine sickness in the industrial units. It also aimed at expediting the revival of potentially viable units so as to make the investments in such units profitable. At the same time, to ensure the closure of unviable units so as to release the investments locked up in such units for productive use elsewhere.
Thus, the broad objectives of SICA were: Timely detection of sick and potentially sick companies. Speedy determination by a body of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies. The expeditious enforcement of the measures so determined and for all matters connected therewith or incidental thereto. The important provisions of SICA were: It provided for the constitution of two quasi-judicial bodies, that is, Board for Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR). BIFR was set up as an apex board to tackle industrial sickness and was entrusted with the work of taking appropriate measures for revival and rehabilitation of potentially sick undertakings and for liquidation of non-viable companies. While, AAIFR was constituted for hearing the appeals against the orders of the BIFR. The measures may include:o The financial reconstruction of the sick industrial company; o The proper management of the sick industrial company by change in or take over of the management of the company; o The amalgamation of the sick industrial company with any other company (transferee company), or any other company with the sick industrial company (transferee company); o The sale or lease of a part or whole of the sick industrial company; o Such other preventive, ameliorative and remedial measures as may be appropriate; o Such incidental, consequential or supplemental measures as may be necessary or expedient in connection with or for the purposes of the measures specified above.
The consumer protection act 1986 Though consumer is the purpose and most powerful motivating force of production, yet at the same time consumer is equally vulnerable segment of the whole marketing system. Attempts have been made to guard the interest of the consumer in a sporadic way till 1986, when Government of India enacted a comprehensive legislation-Consumer Protection Act, to safe guard the interest of the consumer then ever before. The Consumer Protection Act, 1986, applies to all goods and services, excluding goods for resale or for commercial purpose and services rendered free of charge and under a contract for personal service. The provisions of the Act are compensatory in nature. It covers public, private, joint and cooperative sectors. The Act enshrines the rights of the consumer such as right to safety, right to be informed, right to be heard, and right to choose, right to seek redressal and right to consumer education. Consumer: A consumer is any person who buys any goods for a consideration and user of such goods where the use is with the approval of buyer, any person who hires/avails of any service for a consideration and any beneficiary of such services, where such services are availed of with the approval of the person hiring the service. The consumer need not have made full payment. Goods: Goods mean any movable property and also include shares, but do not include any auction able claims. Service: Service of any description such as banking, insurance, transport, processing, housing construction, supply of electrical energy, entertainment, board or lodging. Here: Here is a commercial purpose does not include use by a consumer goods bought and used by him.
Manufacturer: A person who makes or manufacturer any goods or parts. Nature of complaint: a) Any unfair trade practice or restrictive trade practice adopted ;by the trader b) Defective goods b) Deficiency in service c) Excess price charged ;by the trader d) Unlawful goods sale, which is hazardous to life and safety when used Salient Features of Consumer Protection Act are as follows: 1. The Act acknowledges six rights of the consumers: Right of Choice Right to safety Right to be Informed Right to be Heard Right to Redress, and 2. Right to Consumer Education The Act Provides for the establishment of: Central Consumer Protection Council at Central Levels The State Consumer Protection Council at State Levels, and Consumer Disputes Redressal Agencies.
Consumer Protection Councils: Councils have been setup in all states and at the center to promote and protect the rights and interest of consumers. These councils are advisory in nature and can play important role in recommending consumer oriented policies to the state and central Government. The Central Consumer Protection Council.— (1) The Central Government shall, by notification, establish with effect from such date as it may specify in such notification, a Council to be known as the Central Consumer Protection Council (hereinafter referred to as the Central Council). (2) The Central Council shall consist of the following members, namely:— (a) the Minister in charge of the consumer affairs in the Central Government, who shall be its Chairman, and (b) such number of other official or non-official members representing such interests as may be prescribed. Objects of the Central Council.— The objects of the Central Council shall be to promote and protect the rights of the consumers suchas,— (a) the right to be protected against the marketing of goods and services which are hazardous to lifeandproperty; (b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices; (c) the right to be assured, wherever possible, access to a variety of goods and services at competitiveprices; (d) the right to be heard and to be assured that consumer's interests will receive due consideration atappropriateforums; (e) the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulousexploitationofconsumers;and (f) the right to consumer education.
The State Consumer Protection Councils.— ( l ) The State Government shall, by notification, establish with effect from such date as it may specify in such notification, a Council to be known as the Consumer Protection Council. The State Council shall consist of the following members, namely:— (a) the Minister in charge of consumer affairs in the State Government who shall be its Chairman; (b) such number of other official or non-official members representing such interests as may be prescribed by the State Government. Objects of the State Council.—The objects of every State Council shall be to promote and protect within the State the rights of the consumers laid down in clauses (a) to (f) of section 6. The District Consumer Protection Council (hereinafter referred to as the District Council) shall consist of the following members, namely:— (a) the Collector of the district (by whatever name called), who shall be its Chairman; and (b) such number of other official and non-official members representing such interests as may be prescribed by the State Government. (3) The District Council shall meet as and when necessary but not less than two meetings shall be held every year. (4) The District Council shall meet at such time and place within the district as the Chairman may think fit and shall observe such procedure in regard to the transaction of its business as may be prescribed by the State Government. The objects of every District Council shall be to promote and protect within the district the rights of the consumers laid down in clauses (a) to (f) of section 6. A trader or a person against whom a complaint is lodged fails to comply with any order made by any council, is punishable with imprisonment for a term which shall not be less than one month but which may extend to 3 years or with fine shall not be less than Rs. 2000 or may extend to Rs. 10,000 or both
Essential commodities act: The Essential Commodities Act, 1955 is a Central Act. It gives powers to control production, supply, distribution etc. of commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices. Objectives: To control the production, supply and distribution of essential commodities. To check the inflationary trends in price. To ensure equitable distribution of essential commodities. Definitions: The classes of commodities declared as "essential commodities" are defined broadly. They are: (a)"essential commodity" means any of the following classes of commodities :(i) cattle fodder, including oilcakes and other concentrates (ii) coal including coke and other derivatives; (iii) component parts and accessories of automobiles; (iv) cotton and woollen textiles; (v) drugs; The Central Government, under section 3, State Govt., / Central Govt., will issue orders for maintaining or increasing supplies of any essential commodities or for securing their equitable distribution and availability at fair prices, issue orders for regulating or production, supply and distribution thereof.
Delegation of powers: Under Section 5, the Central Government may, by notified order delegate powers to Officers and authorities of the Central Government or subordinate to the State Government. Section 6A provides for confiscation of the essential commodity or any property like package, animal, vehicle, vessel or other conveyance by the Collector/Joint Collector. Before passing an order of confiscation of the stocks, packages, vehicles, vessels, animals etc. by the Collector/Joint Collector a notice under Section 6B should be issued to the party from whom stocks have been seized and he should be given an opportunity for making his representation in writing Appeal against orders of confiscation by the party aggrieved by the Order lies to the judicial authority viz. the District & Sessions Courts authorized by the State Government within 30 days from the date of communication to him. Order of confiscation shall not prevent infliction of punishment to which the person affected is liable under the Act. Penalties: If any person contravenes any order made under Section 3, he shall be punishable 1.With imprisonment upto one year and fine for contraventions pertaining to violations in respect of information or statistics maintenance and production of books and accounts and records of their business for inspection 2. With imprisonment not less than three months but extend upto seven years and fine. However, for a punishment less than three months the court may mention adequate and special reasons in the judgment.
3.Any property in respect of which order have been contravened shall be forfeited. Any packing covering or receptacle in which the property was found or the animal, vehicle, vessel or other conveyance used for carrying the commodity shall be forfeited. The list of commodities under the Essential Commodities Act, 1955. Declared under Clause (a) of Section 2 of the Act 1. Cattle fodder, including oilcakes and other concentrates. 2. Coal, including coke and other derivatives. 3. Component parts and accessories of automobiles. 4. Cotton and woolen textiles. 5. Drugs. 6. Foodstuffs, including edible oilseeds and Oils. 7. Iron and Steel, including manufactured products of Iron & Steel. 8. Paper, including newsprint, paperboard and strawboard. 9. Petroleum and Petroleum products. 10. Raw Cotton, either ginned or unginned and cotton seeds. 11. Raw Jute. Declared under sub-clause (xi) of clause (a) of Section 2 of the Act 12. Jute textiles. 13. Fertilizers, whether inorganic, organic or mixed.
14. Yarn made wholly from cotton. 15. i) seeds of food crops and seeds of fruits and vegetables, ii) seeds of cattle fodder and iii) jute seeds. Environmental Law Environmental law management requires a strong legal framework in order to protect our valuable environment from the sources, which are causing severe environmental pollution. The major environmental pollution by industries. 1. Air and water pollution by industries 2. Forestry 3. Land resources 4. Urbanization 5. Waste management Environmental protection has been made a fundamental duty of every citizen of this country under article 51-A(g) of our constitution which reads as follows: “It shall be the duty of every citizen of India to protect and improve the natural environment including forests, lakes, rivers and wildlife, and to have compassion for living creatures”. Features of Environment Protection Ac t, 1986 1. The act further empowers the Government to lay down procedures and safe guards for the prevention of accidents which cause pollution and remedial measures if an accident occurs. 2. The government has the authority to close or prohibit or regulate any industry or its operation, if the violation of the provisions of the act occur. 3. The penal sections of the act contain more stringent penalities. Any person who fails to comply or who contravenes any provision of the act shall be punishable with imprisonment.
4. If the violation continues an additional fine of rupees 5000nper day may be imposed. 5. The act fixes the liability of the offences punishable under act on the person who is directly in charge. 6. The act empowers the officers of central govt to inspect the site or the plant. Air (Prevention and control of pollution) Act, 1981: This act was enacted in the conference held at Stockholm in 1972. It deals with the problems relating to air pollution. It envisages the establishment of central and state control Boards endowed with absolute powers to monitor air quality and pollution control. “ Air pollution “ means any solid , liquid or gaseous substance(including noise) present in the atmosphere in such concentration as may be or tend to be injurious to human beings or other living creatures or plants or property or environment. Features of Air Act: 1. The central board may lay down the standards for the quality of air. 2. The central boards coordinates and settle disputes between state boards, in addition to providing technical assistance and guidance to state boards. 3. The state boards are empowered to lay down the standards for emissions of air pollutants from industrial units or automobiles or other sources. 4. The state board is to collect and disseminate information related to air pollution and also to function as inspectorates of air pollution. 5. The state boards are to examine the manufacturing processes and the control of equipment to verify whether they meet the standards prescribed. 6. The state board can advise the state government to declare certain heavily polluted areas as pollution control areas and can advise the burning of waste products which cause air pollution in such areas. Objectives of Air Act: The objective of Air Act is to provide for the prevention control and abatement of air pollution, for the establishment with a view to carrying out the aforesaid purpose of Boards for conferring
on and assigning to such Boards powes and functions relating there and for matters connected therewith. Where as decisions were taken at the United Nations Conference on the Human Environment held in Stockholm in june 1992 in which India participated, to take appropriate steps for the preservation of the natural resources of the earth which , among other things include the the preservation in quality of air and the control of air. POWERS: Central board: the main function of the central board is to implement legislation created to improve the quality of air and to prevent and control air pollution in the country. The board advices the central govt on matters concerning the improvement of air quality also coordinates quality. State pollution board: the state board have the power to advise the state govt on any matter concerning the prevention and control of air pollution. They have the right to inspect at all reasonable times any control equipment , industrial plant , or manufacturing process. Penalties: The person managing industry are to be penalized if they produce emission of air pollution in excess of the standards laid down by the state govt. the board has applications to the court for restraining persons causing air pollution. Whoever controversies any of the provisions of the act or any order or direction issued is punishable with imprisonment and fine of rs 10,000. When you see a polluting vehicle takes down the number and send a letter to RTO. If you observe an industry polluting air inform the PCB. Use cars only when absolutely necessary. Use public transport as far as possible. Share vehicle space with relatives and friends. Don’t use air fresheners they released CFCs it damages Ozone layer. Coughing can spread bacteria and viruses.
Water Act 1974: Pollution means such contamination of water or such alternation of the physical, chemical or biological properties of water or such discharge of any sewage or trade or of any other liquid, gaseous or solid substances into water as may or is likely to create a nuisance into water. Features: This act aims at to protect the water from all kinds of pollution and to preserve the quality of water in all aquifers. The act further provides for the establishment of central board and state board for prevention of water pollution. The states are empowered to restrain any person from discharging a pollutant or sewage into any water body. To give guidelines to industrial people. Functions: Take steps to establish any industry or any treatment and disposal system or any extension or addition there to which is likely to discharge effluent into stream. Use any new or altered outlet for the discharge of a sewage. Begin to make any new discharge of sewage. In the event of a violation of the conditions imposed the state board may serve on the offender a notice imposing any such conditions as it might establishment of such outlet or discharge that is a violation of the conditions. Board of Financial Reconstruction BIFR: the board for industrial and financial reconstruction was set up in January 1987 under the sick industrial companies. It has been established with a view to revive potentially viable sick industrial companies for recommended the closure of totally nonviable companies. The BIFR became operational from 15th may 1987.
Objectives: 1. To evaluate the techno- economical viability of sick industrial companies with a view to either rehabilitant them. 2. to stop continued drain of public and private resources. 3. to protect employment as far as it is practicable. Operational procedure: The board for industrial and financial reconstruction was set up in January 1987 under the SICA. 1) Organization: the BIFR shall contains of a chairman ant less than two and not more than 14 members to be appointed by the central govt. 2) Power: it has both administrative and quasi judicial powers. 3) Reference to the BIFR: it is obligatory on the part of the board of directors of a sick industrial company to make a reference to the SICA> remedial measure should be provided within 60 days. As per section 15(2) the central govt , state govt and the RBI, state financial institutions, public financial institutions make reference to BIFR. Since the inspection of the board and up to end of March 2005, the bifr has received 6480 references out of which 1377 cases are rejected on scrutiny. Remaining is resolved by BIFR. 4) Inquiry: after receiving the reference under section 15 the BIFR can makes an inquiry either directly or by appointing an operating agency which have 7 members. The agency have to complete inquiry within 60 days. 5) Appointment of special directors: the act empowers the BIFR to appoint one or more special directors on the board of SICA safe guarding the financial and other interest of the company. The special directors. their features are To hold qualification shares For removal from the office of directorship. To any bar due to age.
Schemes: The BIFR may direct any operating agency to prepare a report relating to the company, if the sick falls to make its net worth positive with a reasonable time. 1. Financial reconstructing of the company. 2. Proper management of the sick industrial company. 3. Amalgamation of the sick industrial company with any other company. 4. Change supervisory system. 5. Sale or lease of a part or whole of the sick industrial company. 7. Winding up: if the BIFR is of the opinion making the inquiry that the sick industrial unit is not likely to make its net worth positive within a reasonable time and that is not likely to become viable in future. 8. Potential sickness unit: in the case of potential sickness of an industry the facts shall be reported to BIFR within 60 days by the board of directors from the date of finalized of the duty audited accounts of that year. The BIFR may require an operating agency to inquire into the potential sickness of an industrial company and make a report to it. 9. Misappropriation of money and property: if the BIFR is of the opinion that any person who has taken apart in the promotion, formation and management of the sick industrial company has misappropriated money or property. 10. Appeal: any aggrieved person by an order of BIFR can make an appeal to the appellate authority of industrial and financial reconstruction with a period of 45 days from the date on which the order is issued to him.
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