Richardson and Cruddas Limited (Acquisition and Transfer of Under-takings) Act ,1972
Act No : 78
Section : SHORT TITLE
RICHARDSON AND CRUDDAS LIMITED (ACQUISITION AND TRANSFER OF UNDERTAKING) ACT, 1972
78 of 1972
30th December, 1972
STATEMENT OF OBJECTS AND REASONS Messrs. Richardson and Cruddas Limited is an old engineering company engaged in the production of goods needed by the defence establishments railways, steel plants and power projects and has three workshops at Bombay Madras and Nagpur. The registered office of that company being at Calcutta, an application was made in December. 1957 to the Calcutta High Court by the Life Insurance Corporation of India alleging mismanagement. On that application, the Calcutta High Court appointed a Special Officer to manage the affairs of this company and lo investigate into the alleged irregularities and mismanagement. The Special Officer's enquiry revealed large scale issue of duplicate and spurious shares and other mismanagement including misappropriation of the company's funds. With the approval of the Court, the Special Officer prepared a provisional share register disallowing the claims of some shareholders. Consequently, the holders of the shares whose claims were rejected filed suits against the company for registration of their names as shareholders and. in the alternative, for damages. The matters relating to the share disputes arc pending before the CuleutUi High Court.
2. The company had suffered considerable losses due to mismanagement. For about 15 years, the company has been managed under the orders of the Court. The company has been subjected to voluminous litigation arising out of the issue of duplicate shares and claims of over Rs. 1 crore towards damages are pending. If the damages were awarded against the company, it would have no means of carrying on its business. The company has been doing valuable work for various Government Projects. For utilising the expertise and the experience built up over several years and for ensuring continued employment of over 2000 workers, it is necessary that proper arrangements are made for the management and development of the company.
3. Government have from time to time extended guarantees to the State Bank of India for extending cash credit facilities to the company amounting to R.s. 217 lakhs and have also given direct loans to it amounting to Rs. 160 lakhs for meeting ils working capital and other needs. It is difficult for the Government to continue these guarantees and advances indefinitely without making arrangements for its long-term management which would ensure adequate Government control over its operations. This aspect has also been emphasised by the Public Accounts Committee from lime to time.
4. The position of a large number of shareholders who were holding genuine shares has remained uncertain for a number of years. A decision on the conflicting claims for membership through the normal processes is likely to take a long time. In the absence of a decision on these claims. It is not possible for the company to provide for its proper management by a duly constituted Board of Directors. The business of the company has been carried on with the help of Government guarantees hut these cannot he continued indefinitely. It is. therefore, considered necessary lo enact a special legislation lo solve the legal and other special problems relating to this company.
5. In view of the above, it is felt that for ensuring the continuity of production and supply of goods it is expedient in the-public interest to acquire the undertaking of Messrs. Richardson and Cruddas Limited together with its liabilities, hy legislation on payment of an amount of Rs. 30 lakhs and lo form a new Government company to be called Richardson and Cruddas (1972) Limited, to which the undertaking of the first mentioned company shall become vested after such acquisition. The proposed legislation also provides for the constitution of a Tribunal for adjudicating (he claims of various persons to the shares of the company, and for the appointment of a Custodian to receive the amount, reconstruct the share register under order of the Tribunal and distribute the amount in accordance with the orders of the Tribunal.-Gaz.. of India, 19-12-1972. Pt. II. section 2. Hxt.. p. 1815.
An Act to provide for the acquisition and transfer of the undertaking of the Richardson and Cruddas Limited for the reconstruction of the register of its members and for matters connected therewith or incidental thereto.
WHEREAS the Richardson and Cruddas Limited, a company formed and registered under the Indian Companies Act, 1913, is engaged in the production of goods needed by the defence establishments. railways,
steel, plants and power projects;
AND WHEREAS the mismanagement of the said company by its erstwhile managing agents and Board of Directors had seriously affected the production and supply of goods by the said company;
AND WHEREAS it is not possible for the said company to provide for its proper management by a duly constituted Board of Directors in view of the existence of a large number of duplicate shares in the capital of the said company;
AND WHEREAS for ensuring, in the interests of the community, the continuity of production and supply of goods by the said company, it is expedient in the public interest to acquire the undertaking of the said company;
BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows :-
SECTION 01: SHORT TITLE
This Act may be called The Richardson and Cruddas Limited (Acquisition and Transfer of Undertaking) Act, 1972.
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