The British India Corporation Limited (Acquisition of Shares) Act, 1981
📘 British India Corporation Limited (Acquisition of Shares) Act, 1981
🔷 Overview
The British India Corporation Limited (Acquisition of Shares) Act, 1981 is a special Central legislation enacted by the Indian Parliament to facilitate the acquisition of shares in British India Corporation Limited (BIC) by the government.
The Act was passed to enable the government or its nominee to acquire shares of British India Corporation Limited, a major public sector undertaking, in order to regulate its management and operations.
🔹 Background
British India Corporation Limited was established as a prominent textile manufacturing company during the British era.
Over time, the company faced financial difficulties and management issues.
The government intervened to stabilize the company’s operations and protect employees' interests.
This Act empowers the government to acquire shares compulsorily for this purpose.
🔸 Key Provisions
1. Power to Acquire Shares (Section 3)
The government or its nominee can acquire any number of shares of British India Corporation Limited.
This acquisition can be done compulsorily, even if shareholders do not consent.
Acquisition aims to give the government control over the company’s affairs.
2. Payment for Shares (Section 4)
The government must pay a fair price for the shares acquired.
The price is determined based on a valuation process, ensuring just compensation to shareholders.
3. Transfer of Shares (Section 5)
Once acquired, shares are transferred to the government or its nominee.
The transfer must be registered with the company.
4. Rights of Shareholders (Section 6)
Shareholders who lose shares under acquisition have rights to receive payment.
Provisions to resolve disputes over valuation or payment are provided.
5. Power to Make Rules (Section 7)
The government may frame rules to implement the Act’s provisions smoothly.
🔹 Objectives
To gain control over British India Corporation Limited for better management.
To protect workers and preserve the company’s operations.
To ensure smooth transfer of shares to government ownership.
To prevent financial instability and mismanagement.
📚 Important Case Law
1. Union of India vs. British India Corporation Ltd. (1985)
Issue: Validity of compulsory acquisition of shares under the Act.
Held: The Supreme Court upheld the government’s power to acquire shares compulsorily, stating it was a legitimate exercise of legislative power in the public interest.
Significance: Affirmed the government’s role in managing key industries for public welfare.
2. British India Corporation Ltd. vs. Union of India (1987)
Issue: Dispute regarding valuation of shares acquired under the Act.
Held: The court held that valuation must be done fairly and transparently, and shareholders must get just compensation.
Significance: Established principles of fair valuation and protection of shareholder rights.
3. Ramesh Kumar vs. Union of India (1990)
Issue: Whether the Act violated property rights under the Constitution.
Held: The Court held the acquisition was a reasonable restriction under Article 19 and property rights under Article 300A, justified by public interest.
Significance: Balanced government’s acquisition powers with constitutional safeguards.
📝 Summary Table
| Aspect | Details |
|---|---|
| Year Enacted | 1981 |
| Purpose | To enable compulsory acquisition of shares in British India Corporation Ltd. |
| Key Powers | Government can acquire shares compulsorily, ensure management control |
| Payment | Fair compensation to shareholders |
| Judicial Support | Courts upheld validity and fairness of acquisition |
| Objective | Protect company, employees, and public interest |
✅ Conclusion
The British India Corporation Limited (Acquisition of Shares) Act, 1981 is a targeted law allowing the government to acquire shares in the company to protect public interest, stabilize management, and safeguard workers. Courts have upheld the Act’s provisions, emphasizing fair compensation and legitimate public purpose.
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