38. (1) If, at any time, the State Government is of opinion, -
(a) that on account of a grave emergency, the Authority is unable to discharge the functions and duties imposed on it by or under the provisions of this Act; or
(b) that the Authority has persistently made default in complying with any direction issued by the State Government under this Act or in the discharge of the functions and duties imposed on it by or under the provisions of this Act and as a result of which default the financial position of the Authority or the administration of any inland waterway has deteriorated; or
(c) that circumstances exist which render it necessary in the public interest so to do;
then the State Government may, by notification in the Official Gazette, supersede the Authority for such period, not exceeding six months, as may be specified in the notification:
Provided that before issuing a notification under this Act for the reasons mentioned in this Act, the State Government shall give a reasonable opportunity to the Authority to show cause why it should not be superseded and shall consider the explanations and objection, if any, of the Authority.
(2) Upon the publication of a notification under this Act superseding the Authority, -
(a) all the members shall, as from the date of supersession, vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the provisions of this Act, be exercised or discharged by or on behalf of the Authority, shall, until the Authority is reconstituted under this Act, be exercised and discharged by such person or persons as the State Government may direct;
(c) all property owned or controlled by the Authority shall, until the Authority is reconstituted under this Act, vest in the State Government.
(3) On the expiration of the period of supersession specified in the notification issued under this Act, the State Government may,—
(a) extend the period of supersession for such further term, not exceeding six months, as it may consider necessary; or
(b) reconstitute the Authority by fresh appointment and in such case any persons who vacated their offices under clause (a) of sub-section (2) shall not be deemed disqualified for appointment: Provided that the State Government may, at any time before the expiration of the period of supersession, whether as originally specified under sub-section (1) or as extended under this sub-section, take action under clause (b) of this sub-section.
(4) The State Government shall cause the notification issued under sub-section (1) and a full report of any action taken under this section and the circumstances leading to such action to be laid before State Legislature at the earliest opportunity.