(1) If compension is payable in respect of an undertaking under Basis A or Basis B, all property belonging to the undertaking including fixed assets, cash, securities, investments, documents, and the like and all its rights, liabilities and obligations as on the vesting date, shall vest or shall be deemed to have vested in the Government:
Vesting of the undertaking or assets.
[Act No. XV of 1954] 9
Provided that liabilities and obligations not incurred in a bonafide manner shall not vest or be deemed to have vested in the Government—
(i) in so far as they are in excess of the value on the vesting date of the corresponding assets, if any, vesting or deemed to have vested in the Government; or
(ii) where there are no corresponding assets which vest or are deemed to have vested in the Government:
Provided further that liabilities and obligations in respect of any amount (other than a loan) payable to the Government shall not vest or be deemed to have vested in the Government but shall attach or shall be deemed to have attached to the compensation payable under this Act in respect of the undertaking.
Explanation.- For the purposes of this sub-section, “undertaking” includes every business carried on by the licensee, the funds of which form part of the funds of the licensee.
(2) (a) If compensation is payable in respect of an undertaking under Basis C, only the property, rights, liabilities and obligations specified herein shall vest or be deemed to have vested in the Government on the vesting date:-
(i) all the fixed assets of the licensee and all the documents relating to the undertaking;
(ii) all the rights, liabilities and obligations of the licensee under hire-purchase agreements, if any, for the supply of materials or equipment made bonafide before the vesting date;
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(iii) all the rights, liabilities and obligations of the licensee under any other contract entered into bonafide before the vesting date, not being a contract relating to the borrowing or lending of money.
(b) All the assets specified in clause (a) (i) shall vest or shall be deemed to have vested in the Government free from any debts, mortgages or similar obligations of the licensee or attaching to the undertaking:
Provided that such debts, mortgages or obligations shall attach or shall be deemed to have attached to the compensation payable under this Act for the assets.
(3) In the case of all undertakings which vest or are deemed to have vested in the Government, the licence granted or the sanction given for the supply of electricity shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply electricity entered into before that date shall devolve or shall be deemed to have devolved on the Government:
Provided that where any such agreement is not in conformity with the rates and conditions of supply approved by the Government and in force on the vesting date, the agreement shall be voidable or shall be deemed to have been voidable at the option of the Government:
Provided further that the Government may, if they deem necessary, revise the rates and conditions of supply at any time after a period of one year from the vesting date.
(4) In respect of any undertaking to which section 4 applies or any undertaking taken over it shall be, and shall be deemed always to have been, lawful for the Government, after removing any obstruction that may be or might have [Act No. XV of 1954] 11 been offered, to take possession of the entire undertaking or, as the case may be, of the fixed assets and of all documents relating to the undertaking which the Government may require, or required, for carrying it on.