Statement of Object

Act 24 of 1977-1. There are a number of sick undertakings, some of which have even remained closed for a considerable length of time resulting in loss of production, unemployment and hardship to employees, etc. It is necessary to revive these units, gear up production and provide employment.



2. The causes for sickness of these industries are mainly erosion of capital as a result of continuous losses, inadequate working capital because of the Commercial Banks and creditors choking up assistance, for fear of dilution of security, poor liquidity, pressure from creditors for settlement of claims and the labour unrest like strikes, lay-off, etc. The State Government have in consultation with the concerned financial institutions and commercial banks been taking active interest in rehabilitating most of such units; for example, Mysore Electro-Chemical Works Limited, Karnataka Steel and Wire Products Ltd., Tanfort Tyres Ltd., Sree Shankara Textile Mills, Mysore Tools Limited etc. In the case of Mysore Electro-Chemical Works Limited, the Industrial Reconstruction Corporation of India Limited, Calcutta (a Government of India Organisation) are the chief promoters for its rehabilitation. In all these cases, the State Government as also the financing institutions and Commercial Banks have reasons to apprehend that any effort to rehabilitate the undertakings by providing the required additional financial assistance might not have the desired result (successful rehabilitation) as any move by creditors for liquidation of the Company (by filling a liquidation petition in the High Court) might retard nullify the entire efforts.



Hence this Bill.



(Published in the Karnataka Gazette (Extraordinary) Part IV -2A No. 534 dated 8-7-1977 at page 7.)



Amending Act 23 of 1989-Section 3 of the Karnataka Relief Undertakings (Special Provision) Act, 1977 empowers the State Government to declare in public interest by a notification, any State industrial undertakings specified therein to be a relief undertaking for a period not exceeding two years, in the first instance and by like notification to extend the period from time to time by any period not exceeding one year, so however that the aggregate period shall not be more than ten years.



It is considered necessary that certain State industrial undertakings require this relief measure for a further period of two years for the purpose of providing continued employment and to prevent their closure.



Further, as the aggregate period of ten years has expired in the case of Mysore Electrical Industries, it was considered necessary and expedient to immediately extend the period of relief.



This Bill seeks to replace the Karnataka Relief Undertakings (Special Provisions) (amendment) Ordinance, 1989 which was promulgated for the purposes stated above.



Hence this Bill.



(Published in the Karnataka Gazette (Extraordinary) Part IV -2A No. 158 dated 23-3-1989 at page 3.)