The Sick Textile Undertakings (Nationalisation) Act, 1974

Summary of the Sick Textile Undertakings (Nationalisation) Act, 1974
Objective
The Sick Textile Undertakings (Nationalisation) Act, 1974 was enacted to acquire and nationalise certain sick textile undertakings in the public interest. The Act aims to ensure the continued production of essential textile goods, prevent unemployment, protect the interests of workers, and secure the proper management and revival of sick textile mills through the National Textile Corporation (NTC).
Key Provisions
• Nationalisation of Sick Textile Undertakings: Provides for the acquisition and transfer of specified sick textile undertakings to the National Textile Corporation (NTC).
• Vesting of Assets and Liabilities: Transfers the assets, rights, interests, and certain liabilities of the nationalised undertakings to the Central Government and subsequently to the NTC.
• Protection of Employees: Ensures continuity of service of employees with the same remuneration, tenure, and service conditions after transfer to the NTC or its subsidiary corporations.
• Compensation and Claims: Provides for payment of compensation to the owners of the acquired undertakings through Commissioners of Payments, who examine and settle claims according to statutory priorities.
• Management and Administration: Authorises the NTC and its subsidiary corporations to manage, operate, revive, and modernise the nationalised textile undertakings.
• Penalties and Protection: Prescribes penalties for unlawful withholding of property, records, or assets and protects actions taken in good faith under the Act.
• Rule-making Power: Empowers the Central Government to make rules for carrying out the provisions of the Act.

Legislative History: The Sick Textile Undertakings (Nationalisation) Act, 1974

Parameter Details / Official Record

Act Title The Sick Textile Undertakings (Nationalisation) Act, 1974

Act Number 57 of 1974

Act ID (India Code) 197457

Nodal Ministry Ministry of Textiles

Presidential Assent Date December 21, 1974

Enforcement / Effective Date April 1, 1974

Precedent & Historical Rationale

1. Rationale & Context: During the late 1960s and early 1970s, a large segment of India's traditional textile industry a major pillar of industrial employment and exports faced severe financial distress, obsolescence, and mismanagement, resulting in numerous mills becoming "sick" or shutting down entirely.

2. The Legislative Problem: While the government had previously intervened by taking over the temporary management of certain sick mills under the Industries (Development and Regulation) Act, 1951, these temporary takeovers failed to provide the long-term capital infusion, structural modernization, and legal certainty required to revive production. Furthermore, mounting legacy debts and liabilities crippled operations.

3. The Remedy: Parliament enacted the Sick Textile Undertakings (Nationalisation) Act, 1974 to outright acquire and transfer the right, title, and interest of specified sick textile undertakings to the Central Government. This paved the way for their management and restructuring under the National Textile Corporation (NTC) to safeguard employment and ensure fair-price cloth distribution

Parliamentary Trajectory & Enactment

• Formulation: Designed by the central administration to consolidate control over dozens of mismanaged private mills, shifting them into a structured public sector framework through the NTC and its subsidiary corporations.

• Parliamentary Passage: Tabled and debated extensively in Parliament to address the socio-economic crisis of widespread mill closures, ultimately passing both Houses in December 1974.

• Presidential Assent: Received assent from the President of India on December 21, 1974.

• Enforcement: Enforced on April 1, 1974