3.23 Query
Clarification Regarding Provision Governing Sanction of the Central Government relating to Transactions between an Undertaking taken over under Industries (D&R) Act, 1951, and its Authorised Controller A. We Request you to kindly clarify whether specific sanction of the Central Government is required on the following transactions between and undertaking taken over under the Industries (Development & Regulation) Act, 1951, and its Authorised Controller: -
1. Remuneration charged by the Authorised Controller form the undertaking in the shape of a fixed monthly remuneration or a percentage of working or on some different scale. 2. Interest charged by the Authorised Controller on the amount financed to the undertaking over and above the interest suffered by the Authorised Controller for procuring the Finance.
3. Interest charged by the Authorised Controller on the amount financed to the undertaking out of ‘own funds’ and the rate of interest.
4. Service and other charges levied by the Authorised Controller on an ad-hoc or pro-rata or some other basis, for example cotton Service Charge per bale for purchase of cotton or sale service charge per bale of cloth or proportionate levy or charges for a liaison office set up by the authorised Controller which looks after the work of the other units of the same controller.
5. Salaries of employees of the authorised Controller on a part time basis for looking after the work of the undertaking. B.In case any of the above charges are paid to another undertaking within the management of the same Authorised Controller, whether still the sanction of the Central Government is required.
Kindly refer to Section 18-B (e) of the Industries (D & R ) act which says that the Controller shall for all purposes be the Director of the Company taken over and as such shall exercise all the powers of a director. Articles of Association of the Company do empower the directors of the Company to exercise powers of sanction in respect of the above matters. Accordingly, this stand has been taken by the controller of a unit audited by us. However a doubt exists in our mind. Whether a person shall fix his own remuneration? Whether a person may charge any remuneration or any sum in lieu of the same so long as the same is not fixed or sanctioned by the authority appointing him? Directions as contained in letter No.28103/45/73-Tax (G) dated 31st May, 1973, form Government of India, ministry of industrial Development, New Delhi, addressed to the Managing Director, M.P. State Textile Corporation Ltd. Bhopal , confirm our doubts. Clarifications are sought for another Company.
Opinion September 12, 1974
Normally an Authorised Controller is appointed by an appropriate order which details of the terms of remuneration and other similar matters are specified. His entitlement therefore will depend on the terms of such Order.
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