INDUSTRIAL DEVELOPMENT &

REGULATION ACT & OTHER

BUSINESS LAWS

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR – PGPSE PARTICIPANTS
mobile : 91+9414430763

5 DECEMBER 09 www.afterschool.tk 1
 What is registration and
licencing ?
Sec. 10 Schedule I of IDRA gives a list of
industries, where registration and licensing is
compulsory (that was called licence raj) –
while registration, the company is given some
installed capacity – the company should not
produce beyond that capacity (it looks
ridiculous now).
SSIs and exempted units are not required to go
for registration.
5 DECEMBER 09 www.afterschool.tk 2
 Central advisory council ?

The government sets up a central advisory

council & development council under sec. 5 of
IDRA to advise the government on industrial
promotion.

5 DECEMBER 09 www.afterschool.tk 3
 Where to set up a new unit

As per IDRA - 25 KM away from urban areas

having population of 1 million. However, state
government and environment ministry norms
must also be followed.
Location policy must be followed

5 DECEMBER 09 www.afterschool.tk 4
 How to get environment
clearances ?

Large projects ( 1000 or more persons in office

/ 50000 liters of discharge of sewage /
investment of Rs. 50 Crores or more / hospitals
/ townships etc. ) require EIA clearances
however, SSIs are exempted from EIA
clearances

5 DECEMBER 09 www.afterschool.tk 5
 What is COB licence

COB = carry on business

This licence is required when an SSI exceeds
its limits and reaches medium or large
enterprise limits
apply for this with fees (Rs. 2500)- apply to
Department of Industrial Development

5 DECEMBER 09 www.afterschool.tk 6
 What is IEM?

Industrial Entrepreneur Memorandum – when

a unit is not required to obtain licence, it has to
file IEM.

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Briefly discuss the circumstances in
which the Central Government can
assume management or control of an
industrial undertaking.
Under section 18A to 18F, the government has the power
to takeover any industrial undertaking (after investigation
unde section 15) – when it finds that the company is not
running properly / when the company is flouting the
directions of central government given under Sec. 16. All
the management persons will vacate their office and all
contracts with bad intentions will stand cancelled
thereafter.

5 DECEMBER 09 www.afterschool.tk 8
 Case : P K Bhattacharya v/s
Indian Machinary company 1986

The provisions under chapter IIIA does not

intend to create government ownership – but
gives a temporary control to government so
that the situation can be improved.

5 DECEMBER 09 www.afterschool.tk 9
 Can the government takeover a
company without investigation?

Yes – under section 18AA -

when : 1. the company is closed for at least 3
months 2. the compnay has been managed
recklessly and has been grossly mismanaged.

5 DECEMBER 09 www.afterschool.tk 10
 Case : Swadeshi Cotton Mills
1981

In such cases (sec. 18AA) rule of audi alterem

partem (pre decision hearing) must be followed
another rule of natural justice : nemo debet esse
judex in propria causa (no body should be
judge in his own case) should also be followed.

5 DECEMBER 09 www.afterschool.tk 11
How do you compute the value of
plant and machinery for the
purpose of registering a factory as
MSME Unit?
Micro enterprise : investment in plant and machines less
than 25 lakhs
Small enterprise : investment in plant and machines less
than 2 crores, but more than 25 lakhs
Medium enterprise : investment in plant and machines 2
-to 5 Crores.

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 Exclusion of certain machines :
Following machines are not counted while
taking the value of Plant and Machinery :
fire fighting equipments
generator set / transformers
tools / spare parts / moulds etc
cost of installation / wiring/ cables etc.
bank charges / service charge
transportation charges
5 DECEMBER 09 www.afterschool.tk 13
 What are the penalties under
IDRA ?
Sec. 10 (1) : if industrial undertaking is not
registered
Sec. 11 (1) : if licence is not obtained
Sec. 13(1) : if COB licence is not obtained
failure to comply sec. 16
Sec. 18G : if orders regarding supply /
distribution etc. Are not followed
penalty : 5000 + 6 month jail + 100 per day.
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What are the provisions of Micro,
Small and Medium Enterprises
Development Act relating to
delayed payments.
Sec. 15 : the buyer has to make payment in 45
days.
If delay : pay interest @ 3 times the bank rate
announced by RBI
Sec. 18 : parties can refer their dispute to
MSME fecilitation council for arbitration

5 DECEMBER 09 www.afterschool.tk 15
 THANKS....
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