Industries (Development and Regulation) Act, 1951

(1) This Act may be called the Industries (Development and Regulation) Act, 1951. (2) It extends to the whole of India . (3) It shall come into force on such date1 as the Central Government may, by notification in the Official Gazette, appoint.

It is hereby declared that it is expedient in the public interest that the Union should take under its control the industries specified in Schedule I.

In this Act, unless the context otherwise requires,- (a) "Advisory Council" means the Central Advisory Council established under section 5; (aa) ‘ancillary industrial undertaking’ means an industrial undertaking which in accordance with the proviso to sub-section (1) of section 11B and the requirements specified under that sub-section, is entitled to be regarded as an ancillary industrial undertaking for the purposes of this Act; (ab) ‘current assets’ means bank balances and cash and includes such other assets or reserves as are expected to be realized in cash or sold or consumed within a period of not more than twelve months in the ordinary course of business, such as stock-in-trade, amounts due from sundry debtors for sale of goods and for services rendered, advance tax payments and bills receivable, but does not include sums credited to a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the employees, maintained by a company owning an industrial undertaking; (ac) "current liabilities" means liabilities which must be met on demand or within a period of twelve months from the date they are incurred; and includes any current liability which is suspended under section 18FB; (b) "Development Council" means a Development Council established under section 6; (bb) "existing industrial undertaking" means- (a) in the case of an industrial undertaking pertaining to any of the industries specified in the Schedule I as originally enacted, an industrial undertaking which was in existence on the commencement of this Act or for the establishment of which effective steps had been taken before such commencement, and (b) in the case of an industrial undertaking pertaining to any of the industries added to Schedule I by an amendment thereof, an industrial undertaking which is in existence on the coming into force of such amendment or for the establishment of which effective steps had been taken before the coming into force of such amendment; (c) ‘factory’ means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried a on- (i) with the aid of power, provided that fifty or more workers are working or were working thereon on any day of the preceding twelve months; or (ii) without the aid of power, provided that one hundred or more workers are working or were working thereon on any day of the preceding twelve months and provided further that in no part of such premises any manufacturing process is being carried on with the aid of power; (cc) "High Court" means the High Court having jurisdiction in relation to the place at which the registered office of a company is situate; (d) "industrial undertaking" means any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including government; (dd) "new article" in relation to an industrial undertaking which is registered or in respect of which a license or permission has been issued under this Act, means- (a) any article which falls under an item in Schedule I other than the item under which articles ordinarily manufactured or produced in the industrial undertaking at the date of registration or issue of the license or permission as the case may be, fall; (b) any article which bears a mark as defined in the Trade Marks Act, 19402, or which is the subject of a patent, if at the date of registration, or issue of the license or permission, as the case may be, the industrial undertaking was not manufacturing or producing such article bearing that mark or which is the subject of the patent; (e) "notified order" means an order notified in the Official Gazette; (f) "owner" in relation to an industrial undertaking, means the person who, or the authority which, has the ultimate control over the affairs of the undertaking, and, where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent shall be deemed to be the owner of the undertaking; (g) "prescribed" means prescribed by rules made under this Act; (h) "Schedule" means a Schedule to this Act; (i) "scheduled industry" means any of the industries specified in the Schedule I; (j) "small scale industrial undertaking" means an industrial undertaking which, in accordance with the requirements specified under sub-section (1) of section 11B, is entitled to be regarded as a small scale industrial undertaking for the purposes of this Act; (k) words and expressions used herein but not defined in this Act and defined in the Companies Act, 1956 (1 of 1956), have the meanings respectively assigned to them in that Act. Comment: The manufacturing process of appellant's business establishment is being carried out by only 22 workers. Consequently, the appellant's business undertaking cannot be treated as a factory nor an 'industrial undertaking' as defined under Section 3(d), of the Act. Ramnarayan Satyanarayan Agrawal Distilleries Pvt. Ltd. v. Associated Alcohols and Breweries Limited, AIR 1995 SUPREME COURT 1686

[Rep. by Industries (Development and Regulation) Amendment Act, 1953, w.e.f. 1-10-1953 ]

Council and its functions (1) For the purpose of advising it on matters concerning the development and regulation of scheduled industries, the Central Government may, by notified order, establish a Council to be called the Central Advisory Council. (2) The Advisory Council shall consist of a Chairman and such other members not exceeding thirty in number, all of whom shall be appointed by the Central Government from among persons who are in its opinion capable of representing the interests of- (a) owners of industrial undertakings in scheduled industries; (b) persons employed in industrial undertakings in scheduled industries, (c) consumers of goods manufactured or produced by scheduled industries; (d) such other class of persons including primary producers, as in the opinion of the Central Government, ought to be represented on the Advisory Council. (3) The term of office of, the procedure to be followed in the discharge of their functions by, and manner of filling casual vacancies among members of the Advisory Council, shall be such as may be prescribed. (4) The Central Government shall consult the Advisory Council in regard to- (a) the making of any rules, other than the first rules to be made under sub-section (3); (b) [Omitted by Act 26 of l973 ] and may consult the Advisory Council in regard to any other matter connected with the administration of this Act in respect of which the Central Government may consider it necessary to obtain the advice of the Advisory Council.

and their functions (1) The Central Government may by notified order, establish for any scheduled industry or group of scheduled industries, a body of persons to be called a Development Council which shall consist of members who in the opinion of the Central Government are- (a) persons capable of representing the interests of owners of industrial undertakings in the scheduled industry or group of scheduled industries; (b) persons having special knowledge of matters relating to the technical or other aspects of the scheduled industry or group of scheduled industries; (c) persons capable of representing the interests of persons employed in industrial undertakings in the scheduled industry or group of scheduled industries; (d) persons not belonging to any of the aforesaid categories who are capable of representing the interests of consumers of goods manufactured or produced by the scheduled industry or group of scheduled industries. (2) The number and the term of office of, and the procedure to be followed in the discharge of their functions by, and the manner of filling casual vacancies among members of a Development Council, shall be such as may be prescribed. (3) Every Development Council shall be, by virtue of this Act, a body corporate by such name as may be specified in the notified order establishing it, and may hold and transfer property and shall by the said name sue and be sued. (4) A Development Council shall perform such functions of a kind specified in the Schedule II as may be assigned to it by the Central Government and for whose exercise by the Development Council it appears to the Central Government expedient to provide in order to increase the efficiency or productivity in the scheduled industry or, group of scheduled industries for which the Development Council is established, to improve or develop the service that such industry or group of industries renders or could render to the community, or to enable such industry or group of industries to render such service more economically. (5) A Development Council shall also perform such other functions as it may be required to perform by or under any other provision of this Act.

(1) A Development Council shall prepare and transmit to the Central Government and the Advisory Council, annually, a report setting out what has been done in the discharge of its functions during the financial year last completed. (2) The report shall include a statement of the accounts of the Development Council for that year, and shall be transmitted as soon as accounts therefor have been audited, together with a copy of any report made by the auditors on the accounts. (3) The statement of accounts shall be in such form as may be prescribed, being a form which shall conform to the best commercial standards, and the statement shall show the total of remuneration and allowances paid during the year to members and officers of the Council. (4) A copy of each such report of a Development Council, or made by the auditors on its accounts, shall be laid before Parliament by the Central Government.

(1) The Central Government may if it is satisfied that a Development Council should cease to continue in being, by notified order, dissolve that Development Council. (2) On the dissolution of a Development Council under sub-section (1), the assets of the Development Council, after its liabilities, if any, are met there from, shall vest in the Central Government for the purposes of this Act.

cases (1) There may be levied and collected as a cess for the purposes of this Act on all goods manufactured or produced in any such scheduled industry as may be specified in this behalf by the Central Government by notified order a duty of excise at such rate as may be specified in the notified order, and different rates may be specified for different goods or different classes of goods: PROVIDED that no such rate shall in any case exceed 13 paise per cent of the value of the goods. Explanation : In this sub-section, the expression "value" in relation to any goods shall be deemed to be the wholesale cash price for which such goods of the like kind and quality are sold or are capable of being sold for delivery at the place of manufacture and at the time of their removal there from, without any abetment or deduction whatever except trade discount and the amount of duty then payable. (2) The cess shall be payable at such intervals, within such time and in such manner as may be prescribed, and any rules made in this behalf may provide for the grant of a rebate for prompt payment of the cess. (3) The said cess may be recovered in the same manner as an arrear of land revenue. (4) The Central Government may hand over the proceeds of the cess collected under this section in respect of the goods manufactured or produced by any scheduled industry or group of scheduled industries to the Development Council established for that industry or group of industries, and where it does so, the Development Council shall utilize the said proceeds- (a) to promote scientific and industrial research with reference to the scheduled industry or group of scheduled industries in respect of which the Development Council is established; (b) to promote improvements in design and quality with reference to the products of such industry or group of industries; (c) to provide for the training of technicians and labor in such industry or group of industries; (d) to meet such expenses in the exercise of its functions and its administrative expenses as may be prescribed.

(1) The owner of every existing industrial undertaking, not being the Central Government, shall, within such period as the Central Government may, by notification in the Official Gazette, fix in this behalf with respect to industrial undertakings generally or with respect to any class of them, register the undertaking in the prescribed manner. (2) The Central Government shall also cause to be registered in the same manner every existing industrial undertaking of which it is the owner. (3) Where an industrial undertaking is registered under this section, there shall be issued to the owner of the undertaking or the Central Government, as the case may be, a certificate of registration containing the productive capacity of the industrial undertaking and such other particulars as may be prescribed. (4) The owner of every industrial undertaking to whom a certificate of registration has been issued under this section before the commencement of the Industries (Development and Regulation) Amendment Act, 1973, shall, if the undertaking falls within such class of undertaking as the Central Government may, by notification in the Official Gazette, specify in this behalf, produce, within such period as may be specified in such notification the certificate of registration for entering therein the productive capacity of the industrial undertaking and other prescribed particulars. (5) In specifying the productive capacity in any certificate of registration issued under sub-section (3), the Central Government shall take into consideration the productive or installed capacity of the industrial undertaking as specified in the application for registration made under sub-section (1), the level of production immediately before the date on which the application for registration was made under sub-section (1), the level of the highest annual production during the three years immediately preceding the introduction in Parliament of the Industries (Development and Regulation) Amendment Bill, 1973, the extent to which production during the said period was utilized for export and such other factors as the Central Government may consider relevant including the extent of under-utilization of capacity, if any, during the relevant period due to any cause.

(1) No person or authority other than the Central Government, shall, after the commencement of this Act, establish any new industrial undertaking, except under and in accordance with a license issued in that behalf by the Central Government: PROVIDED that a government other than the Central Government may, with the previous permission of the Central Government, establish a new industrial undertaking. (2) A license or permission under sub-section (1) may contain such conditions including, in particular, conditions as to the location of the undertaking and the minimum standards in respect of size to be provided therein as the Central Government may deem fit to impose in accordance with the rules, if any, made under section 30.

(1) If the Central Government is satisfied, either on a reference made to it in this behalf or otherwise, that any person or authority, to whom or to which a license has been issued under section 11, has, without reasonable cause, failed to establish or to take effective steps to establish the new industrial undertaking in respect of which the license has been issued within the time specified therefor or Within such extended time as the Central Government may think fit to grant in any case, it may revoke the license. (2) Subject to any rules that may be made in this behalf, the Central Government may also vary or amend any license issued under section 11: PROVIDED that no such power shall be exercised after effective steps have been taken to establish the new industrial undertaking in accordance with the license issued in this behalf. (3) The provisions of this section shall apply in relation to a license issued under section 11A or where a license has been amended under that section, to the amendment thereof, as they apply in relation to a license issued under section 11.

undertakings in special cases (1) No owner of an industrial undertaking, other than the Central Government, shall- (a) in the case of an industrial undertaking required to be registered under section 10, but which has not been registered within the time fixed for the purpose under that section, carry on the business of that undertaking after expiry of such period, or (b) in the case of an industrial undertaking the registration in respect of which has been revoked under section 10A, carry on the business of the undertaking after the revocation, or (c) in the case of an industrial undertaking to which the provisions of this Act did not originally apply but became applicable after the commencement of this Act for any reason, carry on the business of the undertaking after the expiry of three months from the date on which the provisions of this Act became so applicable, or (d) effect any substantial expansion of an industrial undertaking which has been registered or in respect of which a license or permission has been issued, or (e) change the location of the whole or any part of an industrial undertaking which has been registered, except under, and in accordance with, a license issued in that behalf by the Central Government, and in the case of a State Government, except under and in accordance with the previous permission of the Central Government. (2) The provisions of sub-section (2) of section 11 and of section 12 shall apply, so far as may be, in relation to the issue of licenses or permissions to any industrial undertaking referred to in this section as they apply in relation to the issue of licenses or permissions to a new industrial undertaking. Explanation: For the purposes of this section, "substantial expansion" means the expansion of an existing industrial undertaking which substantially increases the productive capacity of the undertaking, or which is of such a nature as to amount virtually to a new industrial undertaking, but does not include any such expansion as is normal to the undertaking having regard to its nature and the circumstances relating to such expansion.

Before granting any license or permission under section 11, section 11A, section 13 or section 29B the Central Government may require such officer or authority as it may appoint for the purpose, to make a complete investigation in respect of applications received in this behalf, and report to it the result of such investigation and in making any such investigation, the officer or authority shall follow such procedure as may be prescribed.

industries or industrial undertakings Where the Central Government is of the opinion that- (a) in respect of any scheduled industry or industrial undertaking or undertakings- (i) there has been, or is likely to be, a substantial fall in the volume of production in respect of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which, having regard to the economic conditions prevailing, there is no justification; or (ii) there has been, or is likely to be, marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which there is no justification; or (iv) it is necessary to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilized in the industry or the industrial undertaking or undertakings, as the case may be; or (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest; the Central Government may make or cause to be made a full and complete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose.

investigation under section 15 (1) If after making or causing to be made any such investigation as is referred to in section 15 the Central Government is satisfied that action under this section is desirable, it may issue such directions to the industrial undertaking or undertakings concerned as may be appropriate in the circumstances for all or any of the following purposes, namely- (a) regulating the production of any article or class of articles by the industrial undertaking or undertakings and fixing the standards of production; (b) requiring the industrial undertaking or undertakings to take such steps as the Central Government may consider necessary to stimulate the development of the industry of which the undertaking or undertakings relates or relate; (c) prohibiting the industrial undertaking or undertakings from resorting to any act or practice which might reduce its or their production, capacity or economic value; (d) controlling the prices, or regulating the distribution, of any article or class of articles which have been the subject-matter of investigation. (2) Where a case relating to any industry or industrial undertaking or undertakings is under investigation, the Central Government may issue at any time any direction of the nature referred to in sub-section (1) to the industrial undertaking or undertakings concerned, and such direction shall have effect until it is varied or revoked by the Central Government.

Government in certain cases [Rep. by Industries (Development and Regulation) Amendment Act, 1953, w.e.f. 1-10-1953. ]

section 15 or section 15A to call for assistance in any investigation (1) The person or body of persons appointed to make any investigation under section 15 or section 15A may choose one or more persons possessing special knowledge of any matter relating to the investigation to assist him or it in holding the investigation. (2) The person or body of persons so appointed shall have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908), for the purpose of taking evidence on oath (which he or it is hereby empowered to administer) and of enforcing the attendance of witnesses and compelling the production of documents and material objects, and the person or body of persons shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 18983 (5 of 1898).

(1) For the purpose of ascertaining the position of working of any industrial undertaking or for any other purpose mentioned in this Act or the rules made thereunder, any person authorized by the Central Government in this behalf shall have the right- (a) to enter and inspect any premises; (b) to order the production of any document, book, register or record in the possession or power of any person having the control of, or employed in connection with, any industrial undertaking; and (c) to examine any person having the control of, or employed in connection with, any industrial undertaking. (2) Any person unauthorized by the Central Government under sub-section (1) shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code (45 of 1860).

control of industrial undertakings After the commencement of this Act, it shall not be competent for any State Government or a local authority to take over the management or control of any industrial undertaking under any law for the time being in force which authorizes any such government or local authority so to do.

Councils to be paid from moneys provided by Parliament Such administrative expenses as relate to the emoluments of officers of a Development Council who are appointed by or with the approval of the Central Government, shall be defrayed out of moneys provided by Parliament.

Development Councils In the exercise of its function under his act, every development council shall be guided by the such instructions as may be given to it by the Central Government and such instructions may include direction relating to the manner in which, and the purpose for which, any proceeds of the cess levied under section 9 which may have been handed over to it, shall be expended.

matters If, for the purposes of this Act, any 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, the decision of the Central Government thereon shall be final.

(1) If any person contravenes or attempts to contravene or abets the contravention of- (i) the provisions of sub-section (1) or sub-section (4) of section 10, or of sub-section (1) of section 11 or of section 11A or of sub-section (1) of section 13 or of sub-sections (2), (2A), (2D), (2F) and (2G) of section 29B, or (ii) any direction issued under section 16 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, he shall be punishable with imprisonment which may extend to six months or with fine which may extend to five thousand rupees, or with both, and, in the case of continuing contravention, with an additional fine which may extend to five hundred rupees for every day during which such contravention continues after conviction for the first such contravention. (2) If the person contravening any of the said provisions is a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: PROVIDED that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (3) Notwithstanding anything contained in sub-section (2), where an offence under this Act has been committed by a company and it is proved that the 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 company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation: For the purposes of this section- (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director" in relation to a firm means a partner in the firm.

(1) The Central Government may by notified order, direct that any power exercisable by it under this Act (other than the power given to it by sections 16, 18A, 18AA and 18FA) shall, in relation to such matters and subject to such conditions, if any, as may be specified in the direction, be exercisable also by such officer or authority (including in the said expressions any Development Council, State Government or officer or authority subordinate to the Central Government) as may be specified in the direction. (2)Any power exercisable by a State Government by virtue of a direction under sub-section (1) may, unless otherwise provided in such direction, be exercised also by such officer or authority subordinate to that State Government as it may, by notified order, specify in this behalf

The Central Government may give directions to any State Government as to the carrying into execution in the State of any of the provisions of this Act or of any order or direction made thereunder.

No court shall take cognizance of any offence punishable under this Act except on a report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code (45 of 1860).

Where any person is prosecuted for contravening any order made under section 18G which prohibits him from doing an act or being in possession of a thing without lawful authority or without a permit, license or other document, the burden of proving that he has such authority, permit, license or other document shall be on him.

(1) Subject to the provisions of sub-section (2), no court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any offence punishable under this Act. (2) Any Magistrate or bench of Magistrates empowered, for the time being, to try in a summary way the offences specified in sub-section (1) of section 260 of the Code of Criminal Procedure, 18983 (5 of 1898), may, on application in this behalf being made by the prosecution, try, in accordance with the provisions contained in sections 262 to 265 of the said Code, any offence which consists of a contravention of an order made under section 18G.

(1) The Central Government may, subject to the condition of previous publication, make rules for carrying out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely,- (a) the constitution of the Advisory Council and Development Councils, the term of office and other conditions of service of, the procedure to be followed by, and the manner of filling casual vacancies among members of the Advisory Council or a Development Council; (b) the form of the statement of account to be furnished by a Development Council; (c) the intervals at which, the time within which, and the manner in which the cess leviable under section 9 shall be payable and the rebate for the prompt payment of such cess. (d) the expenses which a Development Council may meet from the proceeds of the cess levied under section 9 which may have been handed over to it; (e) the appointment by or with the approval of the Central Government of any officers of a Development Council; (f) the facilities to be provided by any industrial undertaking for the training of technicians and labor; (g) the collection of any information or statistics in respect of any scheduled industry; (h) the manner in which industrial undertakings may be registered under section 10 and the levy of a fee therefor; (i) the procedure for the grant or issue of licenses and permissions under sections 11, section 11A, section 13 or section 29B, the time within which such licenses or permissions shall be granted or issued including, in particular, the publication of notices calling for applications and the holding of such public inquiry in relation thereto as may be necessary in the circumstances; (j) the fees to be levied in respect of licenses and permissions issued under this Act; (k) the matters which may be taken into account in the granting or issuing of licenses and permissions, including in particular, the previous consultation by the Central Government with the Advisory Council or any Development Council or both in regard to the grant or issue of any such licenses or permissions; (l) the procedure to be followed in making any investigation under this Act; (m) the conditions which may be included in any licenses and permissions; (n) the conditions on which licenses and permissions may be varied or amended under section 12; (o) the maintenance of books, accounts and records relating to an industrial undertaking; (p) the submission of special or periodical returns relating to an industrial undertaking by persons having the control of, or employed in connection with, such undertaking, and the forms in which, and the authorities to which such returns and reports shall be submitted; (pp) any matter which is to be or may be prescribed for giving effect to the provisions of Chapter IIIAA or Chapter IIIAC; (q) any other matter which is to be or may be prescribed under this Act; (3) Any rule made under this section may provide that a contravention thereof shall be punishable under section 24. (4) Every rule made under this section shall be laid, as soon as may be after it is made before the house of parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive session aforesaid, both houses agree in making any modification in the rule or both house agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule done under that rule.

The provisions of this Act shall be in addition to and not, save as otherwise expressly provided in this Act, in derogation of any other Central Act for the time being in force, relating to any of the scheduled industries.

[Rep. by Repealing and Amending Act, 1957 (3 6 of 1957) ]