Section 38 of The Road Transport Corporations Act, 1950
Power to supersede a Corporation.
- (1)If the State Government is of opinion that a Corporation established by that Government is unable to perform, or has persistently made default in the performance of the duties imposed on it by or under the provisions of this Act or has exceeded or abused its powers, the State Government may, 1*** by notification in the Official Gazette, supersede the Corporation for such period as may be specified in the notification: Provided that before issuing a notification under this sub-section the State Government shall give a reasonable time to the Corporation to show cause why it should not be superseded and shall consider the explanation and objections, if any, of the Corporation.
- (2)Upon the publication of a notification under sub-section (1) superseding a Corporation--
- (a)all the 2[Directors] of the Corporation shall, as from the date of supersession, vacate their offices as such a 2[Directors];
- (b)all the powers and duties which may, by or under the provisions of this Act or of any other law, be exercised or performed by or on behalf of the Corporation shall, during the period of supersession, be exercised and performed by such person or persons as the State Government may direct;
- (c)all property vested in the Corporation shall, during the period of supersession, vest in the State Government.
- (3)On the expiration of the period of supersession specified in the notification issued under sub-section (1), the State Government may--
- (a)extend the period of supersession for such further term as it may consider necessary; or
- (b)reconstitute the Corporation in the manner provided in section 5.
Summary
- The State Government can supersede (completely replace) a Corporation if it fails to do its job.
- This happens if the company is unable to perform, ignores its duties, or abuses its power.
- Before doing this, the government must give the company a chance to explain itself.
- When superseded, all Directors must leave their offices immediately.
- A person appointed by the government takes over all powers and duties.
- All property owned by the company temporarily belongs to the State Government.
Practical examples
FAQ
1. What does "supersede" mean in Section 38 of the Road Transport Corporations Act?
In Section 38 of the Road Transport Corporations Act, it means the government replaces the current management of the Corporation for a specific period because they failed to perform their duties.
2. Do the Directors keep their jobs if a company is superseded under the Road Transport Corporations Act, 1950 Section 38?
No, under Section 38 of the Road Transport Corporations Act, all Directors must vacate their offices as soon as the notification is published.
3. Can a Corporation defend itself before being superseded under Section 38 of the Road Transport Corporations Act?
Yes, Section 38 of the Road Transport Corporations Act requires the State Government to give the Corporation reasonable time to "show cause" and explain why it should not be superseded.
Test yourself
1.Under Section 38 of the Road Transport Corporations Act, 1950, where does the company's property go during the period of supersession?
2.What happens when the period of supersession ends according to Section 38 of the Road Transport Corporations Act, 1950?
3.Which of these is a valid reason for supersession under Section 38 of the Road Transport Corporations Act, 1950?
4.According to Section 38 of the Road Transport Corporations Act, 1950, what must the State Government consider before taking over?