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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY PART II—Section 1 PUBLISHED BY AUTHORITY

No. 19] NEW DELHI, SATURDAY, MAT 16, 1964/VAISAKHA 26, 1886

Separate paging is given to this Part in order that it may be filed as a separate compilation

MINISTRY OF LAW (Legislative Department) New Delhi, the 16th May, 1964/Vaisakha 26, 1886 (Saka)

The following Act of Parliament received the assent of the Presi- dent on the 16th May, 1964, and is hereby published for general infor- mation:—

THE INDUSTRIAL DEVELOPMENT BANK OF INDIA

ACT, 1964

No. 18 OF 1964

[16th May, 1964] An Act to establish the Industrial Development Bank of India for providing credit and other facilities for the develop- ment of industry and for matters connected therewith and further to amend certain enactments.

BE it enacted by Parliament in the Fifteenth Year of the Republic of India as follows: —

CHAPTER I

PRELIMINARY 1. (1) This Act may be called the Industrial Development Bank of India Act, 1964,

(2) It extends to the whole of India.

Short title, extent and commence- ment.

(3) It shall come into force on such date as the Central Govern- ment may, by notification in the Official Gazette, appoint and differ- ent dates may be appointed for different provisions of this Act.

2. In this Act, unless the context otherwise requires,—

Definitions.

(a) "Board" means the Board of Directors of the Develop- ment Bank;

197

(b) "Development Bank" means the Industrial Develop- ment Bank of India established under section 3;

(c) "industrial concern" means any concern engaged or to be engaged in the manufacture, preservation or processing of goods or in shipping or in mining or in the hotel industry or in the transport of passengers or goods by road or by water or by air or in the generation, or distribution of electricity or any other form of power.

Eoqplanation.—The expression "processing of goods" includes any art or process for producing, preparing or making an article by subjecting any material to a manual, mechanical, chemical, electrical or any other Uke operation;

15 of 1MB (d) "Industrial Finance Corporation" means the Industrial Finance Corporation of India established under the Industrial Finance Corporation Act, 1948;

(e) "prescribed" means prescribed by regulations made under this Act:

(f) "Reserve Bank" means the Reserve Bank of India con- stituted under the Reserve Bank of India Act, 1934;

2 of 1934.

(g) "scheduled bank" means a bank for the time being in- cluded in the Second Schedule to the Reserve Bank of India Act, 1934;

2 of 1934.

(h) "State co-operative bank" has the same meaning as in the Reserve Bank of India Act, 1934;

S3 of 19B1

(i) "State Financial Corporation" means a financial corpo- ration established under section 3 or section 3A of the State Financial Corporation Act, 1951 and includes the Madras Indus- trial Investment Corporation Limited.

CHAPTER II

ESTABLISHMENT OF THE INDUSTRIAL DEVELOPMENT BANK OF INDIA AND CAPITAL THEREOF

3. (1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be estab- lished for the purposes of this Act a corporation to be known as the Industrial Development Bank of India.

Establish- ment and Incorpora- tion of tndustrial Develop- ment Bai* ol India-

(2) The Development Bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with p(>wer, subject to the provisions of this Act, to acquire, hold ana

dispose of property and to contract, and may, 'by that name, sue or be sued.

(3) The head office of the Development Bank shall be at Bombay or at such other place as the Reserve Bank may, by notification in the Official Gazette, specify.

(4) The Development Bank may establish offices, branches or agencies at any other place in or outside India.

4. (1) The authorised capital of the Development Bank shall be fifty crores of rupees:

Authoiiacd and iasued capital Provided that the Reserve Bank may, with the previous approval of the Central Government, increase the said capital up to one hun- dred crores of rupees.

(2) The issued capital of the Development Bank shall, in the first instance, be ten crores of rupees, but the Reserve Bank may, with the previous approval of the Central Government, increase the issued capital from time to time up to such amount as it thinks fit. (3) The issued capital of the Development Bank shall be wholly subscribed by the Reserve Bank.

CHAPTER III

MANAGEMENT OF THE DEVELOPMENT BANK

Manage- ment.

5. (I) The general superintendence, direction and management of the affairs and business of the Development Bank shall vest in a Board of Directors, which may exercise all powers and do all acts and things which may be exercised or done by the Development Bank.

(2) Save as otherwise provided in regulations made under this Act, the chairman and in his absence the vice-chairman shall also have powers of general superintendence, direction and management of the affairs and business of the Development Bank and may exer- cise ajl powers and do all acts and things which may be exercised or done by the Development Bank.

(3) Subject to the provisions of this Act, the Board in discharg- ing its functions shall act on business principles with due regard to pulblic interest.

Board of Directors.

6. (1) The Board shall consist of such persons as for the time be- ing hold office as directors on the Central Board of the Reserve Bank.

(2) The Governor of the Reserve Bank shall be the chairman and a Deputy Governor of the Reserve Bank nominated by that ban.k in this behalf shall be the vice-chairman of the Board.

(3) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of busi- ness at its meetings as may be prescribed.

(4) The chairman or, if for any reason he is unable to attend a meeting of the Board, the vice-chairman or, in the event of both the chairman and the vice-chairman being unable to attend the meeting, any other director nominated by the chairman in this behalf, shall preside at the meeting.

(5) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes, the chairman or in his absence, the vice-chairman, or in the absence of both the chair- man and the vice-chairman, the person presiding, shall have a second or casting vote.

(6) Save as provided in sub-section (5), every director of the Board shall have one vote.

7. (1) The Board may constitute an Executive Committee consist- ing of guch number of directors as may be prescribed.

Executive Committee and other

(2) The Executive Committee shall discharge such functions as mirte"s. may be prescribed or as may be delegated to it by the Board,

(3) The Board may constitute such other committees whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons for such purpose or purposes as It may think fit.

(4) The Executive Committee or any other committee constitut- ed under this section shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of busi- ness at its meetings as may be prescribed.

8. The directors and the members of a committee shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any committee constituted in pursuance of this Act and for attending to any other work of the Develop- ment Bank:

Fees and allowances of dire t- tors and members of com- mittw"s.

Provided that no fees shall be payable to any director or member who is an officer of the Government or to the Governor or a Deputy Governor of the Reserve Bank or any officer of that bank.

CHAPTER IV

BUSINESS OP THE DEVELOPMENT BANK

9. (1) The Development Bank may carry on and transact any of tn*e following kinds of business, namely :—

Buiincss ot Develop- ment Bank-

(o) granting loans and advances to—

(i) the Industrial Finance Corporation, any State Fin- ancial Corporation or any other financial institution which may be notified by the Central Government in this behalf, by way of refinance of any loans or advances gi anted to indus- trial concerns by such Corporation or institution which are repayable on the expiry of not less than three years and not more than twenty-five years;

(ii) any scheduled bank or State co-operative bank, by way of refinance of any loans or advances granted to indus- trial concerns by such bank which are repayable on the expiry of not lees than three years and not more than ten yean;

(Hi) any scheduled bank or State co-operative bank or the Industrial Finance Corporation or any State Financial 'Corporation or any other financial institution which may be notified by the Central Government in this behalf, by way of refinance of any loans or advances granted to industrial concerns or group of industrial concerns by such bank or institution which are for the purpose of, or in connection with, the export of capital goods, commodities or merchan- dise from India and are repayable on the expiry of not less than six months and not more than ten years; (b) subject to such conditions as may be prescribed, accept- ing, discounting or re-discountlng bills of exchange and promis- sory notes of industrial concerns;

(c) subscribing to or purchasing stocks, shares, bonds or debentures of the Industrial Finance Corporation, any State Financial Corporation or any other financial institution which may be notified by the Central Government in this behalf;

(d) granting loans and advances to any industrial concern or subscribing to, or purchasing, or underwriting the issue of, stocks, shares, bonds or debentures of any industrial concern:

Provided that nothing contained in this clause shall be deem- ed to preclude the Development Bank from granting loans or advances to, or subscribing to debentures of, an industrial con- cern, which may at the option of the Development Bank be con- vertible into stocks or shares of that concern within the period the loan, advance or debenture is repayable;

(e) guaranteeing deferred payments due from any industrial concern;

(f) guaranteeing--

(i) loans raised by industrial concerns which are floated in the public market; and

133 Gof I Ex—2

(ii) loans raised by industrial concerns from any sche- duled bank or State co-operative bank or the Industrial Fin- ance Corporation or any State Financial Corporation or any other f nancial institution which may be notified by the Cen- tral Government in this behalf;

(g) guaranteeing the obligations of any scheduled bank or State co-operative bank or the Industrial Finance Corporation or any State Financial Corporation or any other financial institution which may be notified by the Central Government in this behalf, arising out of, or in connection with, underwriting the issue of stocks, shares, bonds or debentures of any industrial concern;

(h) undertaking research and surveys for evaluating or dealing with marketing or investments and undertaking and car- rying on techno-economic studies in connection with the develop- ment of industry;

(i) providing technical and administrative assistance to any industrial concern or any persrcn for promotion, management or expansion of any industry;

(j) planning, promoting and developing industries to nil up gaps in the industrial structure In India;

(fc) forming or conducting of subsidiaries for carrying out its functions;

(I) performing functions entrusted to, or required of, the Development Bank by this Act or by any other law for the time being in force;

(m) doing any other kind of business which the Central Government, on the recommendation of the Reserve Bank, may authorise;

(n) generally doing such other acts and things as may be incidental to, or consequential upon, the exercise of its powers or tn" discharge of its duties under this Act or any other law for the tjme being in force including sale or transfer of any of its assets.

(2) The Development Bank may receive in consideration of any of the services mentioned in sub-section (I) such commission, brokerage, interest, remuneration or fees as may be agreed upon.

(3) The Development Bank shall not grant any loan or advance or other financial accommodation rm the security of its own bands OT debenture*-

10. The Central Government may, after due appropriation made by Parliament by law in this behalf, advance to the Development Bank-

Loani by Central Goverri- raent.

fa) an interest free loan of ten crores of rupees repayable In fifteen equal annual instalments, commencing on the expiry of a period of fifteen years from the date of the receipt of the loan; and

(b) such further sums of money by way of loan on such terms and conditions as may be agreed upon;

Provided that the Central Government may, on a request being made to it by the Development Bank, increase the number of instalments or alter the amount of any instalment or vary the date on which any instalment is payable under clause (a).

11. (1) The Development Bank may, for the purpose of carrying out its functions under this Act,—

(a) issue and sell bonds end debentures with or without the guarantee of the Central Government;

Borrowing^ and accept- ance of deposits by Develop- ment Bank.

(b) borrow money from the Reserve Bank—

(i) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India;

(ii) against bills of exchange or promissory notes aris- ing out of bona fide commercial or trade transactions, bearing two or more good signatures and maturing within five years from the date of the borrowing;

2 of 1934-

(Hi) out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Re- serve Bank of India Act, 1934 for any of the purposes speci- fied in that section;

(c) borrow money from such other authority, organisation or institution in India as may be generally or specially approved by the Central Government;

(d) accept deposits repayable after the expiry of a period which shall not be less than twelve months from the date of the making of the deposit on such terms as may generally or special- ly b" approved by the Reserve Bank.

(2) The Central Government may, on a request being made to it by the Development Bank, guarantee the bonds and debentures issued by that bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government.

7 of 1M7 Loans in foreign currency.

12. (1) Notwithstanding anything contained in the Foreign Ex- change Regulation Act, 1947 or in any other enactment for the time being in force relating to foreign exchange, the Development Bank may, for the purpose of granting loans and advances under this Act, oorrow, with the previous consent of the Central Government, foreign currency from \any bank or financial institution in any foreign country or otherwise.

(2) The Central Government may, where necessary, guarantee any loan taken by the Development Bank under sub-section (1) or any part thereof as to the repayment of principal and the paynlent of interest and other incidental charges.

(3) All loans and advances out of foreign currency borrowed under sub-section (1) shall be granted by the Development Bank in Indian currency and shall be repayable in Indian currency.

(4) Any loss or profit accruing in connection with any borrowing of foreign currency under sub-section (1) for the purpose of grant- ing loans and advances or its repayment on account of any fluctua- tions in the rates of exchange shall be reimbursed by, or paid to, the recipients of such loans and advances.

13. The Development Bank may receive gifto, grants, donations

or benefactions from Government or any other source.

CHAPTER V

Grams, donations, etc., to Develop- ment Bank,

DEVELOPMENT ASSISTANCE FUND

Develop- ment Assistance Fund.

14. With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, the Development Bank shall establish a special fund to be called the Development Assist- ance Fund.

15. To the Development Assistance Fund shall be credited—

Credits to Develop- ment Assistance Fund.

(a) all amounts received for the purposes of that fund by way of loans, gifts, grants, donations or benefactions from Gov- ernment or any other source;

(b) repayments or recoveries in respect of loans, advances

or other facilities granted from the fund;

(c) income or profits from investments made from the fund;

and

(d) income accruing or arising to the fund, by way of inter- est or otherwise, on account of the application of the fund in accordance with the provisions of section 16.

Utilisation of Deve- lopment Assistance Fund.

16. (1) Where the Development Bank considers it necessary or desirable so to do, it may, subject to the provisions of sub-sections (2) and (3), disburse or spend from the Development Assistance Fund any amount on account or in consequence of the grant of any loan or advance, or on account or in consequence of entering into any arrangement, under clause (d) or clause (e) or clause (f) or clause (g) of sub-section (1) of section 9:

Provided that before granting any such loan or advance to an industrial concern or entering into any such arrangement with or in relation to an industrial concern, the Development Bank shall obtain the prior approval of the Central Government.

(2) Before seeking the approval of the Central Government under sub-section (I), the Development Bank shall satisfy itself that bank- ing or other financial institutions or other agencies are not likely to grant such loan or advance to the industrial concern or to enter into any such arrangement with §?_ in relation to the industrial concern in the ordinary course of business.

(3) The Central Government, before giving its approval, shall satisfy itself that such loan, advance or arrangement is necessary as a matter of priority in the interests of the industrial development of the country.

(4) For the removal of doubts it is hereby declared that nothing contained in this section shall be deemed to preclude the Develop- ment Bank from granting any loan or advance or from entering into any arrangement under clause (d) or clause (e) or clause (f) or clause (g) of sub-section (1) of section 9 without the approval of the Central Government, if no amount in respect thereof is to be dis- bursed or spent from the Development Assistance Fund,

17. (1) To the Development Assistance Fund shall be debited—

(a) such amounts as may from time to time be disbursed or spent under sub-section (1) to (3) of section 16;

Dcbiti to

Develop-

ment

Aisiitanca

Fund.

(b) such amounts as may be required for discharging the liabilities in respect of loans received for the purposes of that fund;

(c) any loss arising on account of investment made out of that fund; and

(d) such expenditure arising out of, or in connection with, the administration and application of the fund as may be deter- mined by the Board.

(2) No amount shall be debited to the Development Assistance Fund except as provided for in sub-section (1).

18. (1) The balance-sheet and accounts of the Development Assistance Fund shall be prepared in such form and manner as may be prescribed.

(2) The Board shall cause the books and accounts of the fund Accounts and audit of Deve- lopment Assistance Fund.

to be closed and balanced as on the 30th day of June each year.

{3) The fund shall be audited by one or more auditors appoint- ed by the Reserve Bank under section 23 who shall make a separate report thereon.

(4) The provisions of sub-sections (2), (3), (4) and (5) of section 23 shall, so far as may be, apply in relation to the audit of the Development Assistance Fund.

(5) The Development Bank shall furnish to the Central Gov- ernment and the Reserve Bank within four months from the date on which the accounts of the fund are closed and balanced, a copy of the balance-sheet and accounts together with a copy of the auditors' report and a report on the operation of the fund during the relevant year and the Development Bank shall cause to be published in the Official Gazette copies of the said balance-sheet, accounts and reDorts.

19. The Development Assistance Fund shall not be closed or wound up save by order of the Central Government and in such manner as that Government may direct

Liquida- tion of Develop - ment Assistant Fund,

CHAPTER VI

GENERAL FUND, ACCOUNTS AND AUBIT

General Fund.

20. All receipts of the Development Bank other than those which are to be credited to the Development Assistance Fund under this Act shall be credited to a fund to be called the General Fund and all payment* by the Development Bank, other than those which are to be debited t" the Development Assistance Fund, shall be made out of the Gentral Fund.

21. (1) The balance-sheet fmd accounts of the Development Bank shall be prepared in such form and manner as may be prescribed-

Prepara- tion of ac- counts and balance- sheet.

(2) The Board shall cause the books and accounts of the Deve- lopment Bank to be closed and balanced as on the 30th day of June each year.

22. (1) The Development Bank may establish a reserve fund to which may be transferred such sums as that bank may deem fit out of the annual profits accruing to the General Fund.

Disposal of profits accruing to Genaral Fund.

(2) After making provision for bad and doubtful debts, depre- ciation of assets and for all other matters for which provision is ne- cessary or expedient or which is usually provided for by bankers and for the reserve fund referred to in sub-section (1), the Deve- lopment Bank shall transfer the balance of the net profits to the Reserve Bank.

23. (2) The accounts of the Development Bank shall be audited , iudit.

1 of 1956.

by auditors duly qualified to act as auditors under sub-section (1) of section 226 of the Companies Act, 1956 who shall be appointed by the Reserve Bank for such term and on such remuneration as the Reserve Bank may fix.

(2) The auditors shall be supplied with a copy of the annual balance-sheet of the Development Bank and it shall be their duty to examine it together with the accounts and vouchers relating thereto and they shall have a list delivered to them of all books kept by the Development Bank and shall at all reasonable time3 have access to the books, accounts, vouchers and other documents of the Develop- ment Bank.

(3) The auditors may. in relation to such accounts, examine any director or any officer or other employee of the Development Bank and shall be entitled to require from the Board or officers or other employees of the Development Bank such information and explana- tion as they may think necessary for the performance of their duties.

(4) The auditors shall make a report to the Development Bank upon the annual balance-sheet and accounts examined by them and in every such report they shall state whether in their opinion the balance-sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and fair view of the state of affairs of the Development Bank and in case they had called for any explanation or information from the Board or any officer or other employe of the Development Bank whether it has been given and whether it i<= sntiufnftnry

(5) The Development Bank shall furnish to the Reserve Bank within four months from the date on which its accounts are closed and balanced, a copy of its balance-sheet and accounts together with a copy of the auditors' report and a report of the working of the Development Bank during the relevant year, and the Development Bank shall cause to be published in the Official Gazette copies of the said balance-sheet, accounts and reports.

(6) Without prejudice to anything contained in the preceding sub-sections, the Central Government may at any time appoint the Comptroller and Auditor-General of India to examine and report upon the accounts of the Development Bank and any expenditure incurred by him in connection with such examination and report shall be payable by the Development Bank to the Comptroller and Auditor-General of India.

Saving. 24. Save as otherwise provided in sub-section (4) of section 18, nothing contained in this Chapter shall apply to the Development Assistance Fund.

CHAPTER VII

TRANSFER OF BUSINESS OF REFINANCE CORPORATION FOR INDUSTRY

25. (1) On such date as the Central Government may, by noti- fication in the Official Gazette, appoint, the entire undertaking of the Refinance Corporation for Industry, Limited (hereinafter in this Chapter referred to as "the company") including all business, pro- perty, assets and liabilities, rights, interests, privileges and obliga- tions of whatever nature, shall stand transferred to and vest in the Development Bank.

Transfer oi assets and ltabiU ties of Refinance Corpora- tion lor Industry.

(2) As compensation for the transfer of the undertaking of the company to the Development Bank under sub-section (1), the Deve- lopment Bank shall pay in cash to the company an amount equal to the total paid-up capital of the company for the purpose of being distributed to the shareholders of the company in proportion to their contribution to such paid-up capital.

(3) All contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the date refer- red to in sub-section (1) and to which the company is a party or which are in favour of that company shall be of full force and effect against or In favour of the Development Bank, as the case may bo, and may bp <"Tiforc"td nr art*>H upon as fully and effectunVIv as if

instead of the company the Development Bank had been a party thereto or as if they had been issued in favour of the Development Bank.

(4) If on the date referred tu in sub-section (2) any suit, appeal or other legal proceeding of whatever nature, is pending by or against the company, the same shall not abate, be discontinued or be in anv way prejudicially affected by reason of the transfer to the Development Bank of the undertaking of the company or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the Develop- ment Bank.

(5) The Central Government may appoint, whether on or after the date referred to in sub-section (2), a suitable person to take over the management of the company for the purpose of winding up its affairs and distributing its assets and simultaneously with such appointment the Central Government may issue directions to be followed by the person in the management of the company for the purpose aforesaid and thereupon—

l of 1936.

(a) the provisions of the Companies Act, 1956 or any other law for the time being in force or any instrument having effect by virtue of any such Act or other law, in so far as they are inconsistent with such directions, shall cease to apply to, or in relation to, the company;

(b) all persons in charge of the management, including any person holding office as manager or director, of the company im- mediately before the issue of such directions, shall be deemed to have vacated their office as such; and

(c) the person appointed to take over the management of the company shall, in accordance wilh those directions, take all such steps as may be necessary to facilitate the winding up of its affairs and the distribution of its assets.

(6) The Central Government, when satisfied that nothing further requires to be done in order to wind up the affairs of the company. may, by order in writing, direct that as from such date as may bv specified therein, the company shall stand dissolved and thereupon any such direction shall have effect accordingly.

1 of 1951

(7) The provisions of this section shall have effect notwithstand- ing anything contained in the Companies Act, 1956 or any other law or any instrument having force by virtue of aucr. Act or other law,

133 Got TEX.-3-

CHAPTER Vill

MISCELLANEOUS

Staff ol Davelop- m*nt Bank.

26- (1) The Development Bank may appoint such number of offi- cers and employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service.

(2) Without prejudice to the provisions of sub-sectioH (1), it shall be lawful for the Development Bank to utilise, and for the Reserve Bank to make available the services of, such staff of the Reserve Bank on such terms and conditions as may be agreed upon between the Development Bank and the Reserve Bank.

Daiefatloi of powers.

27. The Board may, by general or special order, delegate to any committee of directors constituted under section 7 or to any dlrectoi .or to any officer or other employee of the Development Bank, sub ject to such conditions and limitations, if any, as may be specified in the order, such of its powers and duties under this Act as It may deem necessary.

Heturns. 28, The Development Bank shall furnish, from time to time, to the Central Government and the Reserve Bank such returns as the Central Government or, as the case may be, the Reserve Bank, may require.

Obligation as to fide- lity and secrecy.

29. (1) The Development Bank shall not, except as otherwise re- quired by this Act or any other law, divulge any information relat- ing to, or to the affairs of, its constituents except in circumstances in which, it is, in accordance with the law or practice and usage customary among bankers, necessary or appropriate for the Develop- ment Bank to divulge such information.

(2) Every director, member of a committee, auditor or officer or ril yce of the Development Bank or of the Reserve Bank, whose services are utilised by the Development Bank under the pro- visions of this Act, shall, before entering upon hia duties, make a declaration of fidelity and secrecy in the form set out in the First Schedule to this Act.

30, (1) No act or proceeding of the Board or of any committee of

the Development Bank shall be questioned on the ground merely of the existencf of any vacancy in. or defect in the constitution of, the Board or the committee, as the case may be.

Defects in appoint- ments not to Invali- date actfi. etc.

(2) No act done by any person acting in good faith as a director uhall be deemed to be invalid merely on the ground that he was dis- tuamii-'cl to be q director or that there was any other defect in hii .upointmenc

Indemnity of direc- tory.

31. (1) Every director shall" be indemnified by the Development Bank against all losses and expenses incurred by him in, or in rela- tion to, the discharge of his duties, except such as are caused by his own wilful act or default.

(2) A director shall not be responsible for any other director or for any officer ^or other employee of the Development Bank or for any loss or expenses resulting to the Development Bank from th*¹ insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the Development Bank or the insolvency or wrongful act of any debtor or any person under obligation to the Development Bank or anything dnne in good faith In the execution of the duties of his office or in relation thereto.

Protection of action taken under thii Act. 32. No suit or other legal proceeding shall lie against the Deve- lopment Bank or any director or any officer or other employee of the Development Bank or any other person authorised by the Develop- ment Bank to discharge any functions under this Act for any loss or damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or any other law or provision having the force of law.

33. The Bankers' Books Evidence Act, 1891 shall apply in relation to the Development Bank as if it were a bank as defined In section 2 of that Act.

Act 19 off 1891 to apply in relation to Develop- ment Bank.

34. Nothing contained in the Banking Companies Act, 1949, except

section 34A thereof, shall apply to the Development Bank.

Act 10 of 1949 not tai apply to Develop- ment Bank.

Act 43 of 1961 and Act Hot lf)83notto apply to Develop- ment Bank.

Liquids, tion&f Develop- ment Bank.

36- No provision of law relating to the winding up of companies or corporations shall apply to the Development Bank and the Deve- lopment Bank shall not be placed in liquidation save by order of the Central Government and in such manner as it may direct.

Power to make regu lationa.

37. (1) The Board may, with the previous approval of the Reserve Bank, make regulations not inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the pur- pose of giving effect to the provisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for—

(a) the times and places of the meetings of the Board or of any committee constituted under this Act and the procedure to be followed at such meetings including the quorum necessary for the transaction of business;

(b) the constitution and functions of the Executive Commit- tee;

(c) the fees and allowances that may be paid to the direc- tors ^nd the members of a committee;

(d) the conditions which the Development Bank may im- pose in granting loans or advances or entering into any other arrangements;

(e) the conditions on which the Development Bank may ac- cept, discount or rediscount bills of exchange or promissory notes;

(/) the investment (whether by way of deposit in banks or otherwise) of the amounts in the Development Assistance Fund or the General Fund which are not for the time being required for the transaction of business;

(fif) the form and manner in which the balance-sheets and the accounts of the Development Assistance Fund and the Deve- lopment Bank shal] be prepared;

(h) the forms of returns and statements required under this Act;

(i) the duties and conduct, salaries, allowances and condi- tions of service of officers and other employees of the Develop- ment Bank;

(j) the establishment and maintenance of provident or other benefit funds for officers and other employees of the Development Bunk;

(k) generally, the efficient conduct of the affairs of the Development Bank; and

(11 any other matter which is to be, or may be, prescribed.

(3) Any regulation which may be made by the Board under this Act may be made by the Reserve Bank within three months of the establishment of the Development Bank; and any regulation so made may be altered and rescinded by the Board in the exercise of its powers under this Act.

38. The enactments specified in Parts I to IV of the Second Sche- dule to this Act shall be amended in the manner directed in the first column thereof and such amendments shall take effect on the dates specified in the second column of that Schedule.

Amend- ment of certain enact- ments.

THE FIRST SCHEDULE

[See section 29(2)]

Declaration of fidelity and secrecy

I do hereby declare that I will faithfully, truly and to the best of my skill and ability execute and perform the duties re- quired of me as director, member of committee, auditor, offi- cer or other employee (as the case may be) of the Industrial Deve- lopment Bank of India and which properly relate to the office or posi- tion held by me in or in relation to the said Development Bank.

I further declare that I will not communicate or allow to be com- municated to any person not legally entitled thereto any information relating to the affairs of the Industrial Development Bank of India or to< the affairs of any person having any dealing with the said Deve- lopment Bank, nor will I allow any such person to inspect or have access to any books or documents belonging to or in the possession of the said Development Bank and relating 1o the business of the said Development Bank or the business of any person having any dealing with the said Development Bank.

(Signature )

Signed before me.

THE SECOND SCHEDULE

(Stt section 38)

Amendment of certain tnactmmu

PART I

AMENDMENTS TO THI RESERVE BANK OF INDIA ACT, 1934 (2 OF r

Amendments

Date on which atnendu ents shall take effect

(*)

I.

The date of establishment of the Development Bank.

In section 2, after clause (ftfefe), insert the following clause, namely :—

'(bbbb) "Development Bank" means the Industrial Development Bank of India established under the Industrial Dcve- lopmerk Bank of India Act, 1964;'.

3. In section 8—

-Do-

(a) in sub-section (1),—

(i) in clause (a), for the word "three", substitute the words "not more than four";

(it) in clause (c), for the word "six", sub-

stitute the word "ten";

(b) in sub-section (4), omit the words, brac- kets and figure "subject to the provi- sions of sub-section (6)";

(c) omit sub-section (6).

-D"-

3- In sub-section (2) of section 13, for the words "three Directors", substitute the words "four Directors"

In section 17—

4.

(a) after clause (^F), insert the following

clauses, namely:—

"(4G) the making of loans and advances to, and the purchasing of bonds and debentures of, the Develop- ment Bank out of the National Industrial Credit (Long Term Operations) Fund established under section 46C;

Amendments

Date on which amendments shall take effect

( i)

(2)

(4H) the making to the Development Bank of loans and advances—

(a) repayable on demand or on the ex- piry of fixed periods not exceed- ing ninety days, from the date of such loanor advance against the security Tof stocks, funds and securities^(other than immovable property)* in which a trustee is authorised to invest trust money by any law for the time being in force in India; or

(b) against the- security of bills of exchange or promissory note^ arising out of bona fide commer- cial or trade transactions bearing two or more good signatures and maturing within five years from the date of such loan or advan- ce-" •

(b) in clause (8A), after the words, "the Deposit Insurance Corporation", insert the words "the Development Bank".

The date of establishment of the Development Bank.

National

Induiuial

Credit

(Long Term

Operations)

Fund.

After section 46B, insert the following sec- tion, namely:— "46C. (J) The Bank shall establish and maintain a Fund to be known as the National Industrial Credit (Long Term Operations^ Fund to which shall be credited— (a) an initial ium often crores of rupees

by the Bank;

(b) such further sums of money as the Bank may contribute every year: Provided that the annual contribution during each of the five years commencing with the year end- ing on the 30th day of June, 1965 shall not be less than five crores of rupees:

Provided further that the Central Government may, if the circum- stances so require, authorise the Bank to reduce the said^sum of five crores of rupees in any year

Date on which amendments Amendments

shall take effect (2)

CO

The amount in the said fund shall be applied by the Bank only to the following objects, namely — s) the making to the Development Bank of loans and advances for the purpose of the purchase of, or subscription to, stocks, shares, bonds or debentures issued by the Industrial Finance Corporation ot India established under the In- dustrial Finance Corporation Act, 1948, a State Financial Corpora- tion established under the State Financial Corporations Act, 1951, or any other financial institution which may be notified by the Central Government in thif. behalf, or for the purposes of am other business of the Develop- ment Bank;

(*:

) thejpurchasing of bonds and/de- bentures issued by the Develop- ment Bank.".

PART II

AMENDMENT TO THE INDUSTRIAL DISPUTES ACT, 1947 (14 OF 1947)

Amendment

Date on which amendment shall take effect

(2)

CD

The date of establishment of the Development Bank.

[n section 2, in clause (bb), after the words "and includes", insert the words "the Industrial Development Bank of India,".

PART III

AMENDMENTS TO THE INDUSTRIAL FINANCE CORPORATION ACT, 1948 (15 OF 1948)

Amendments

Date on which amendments shall take effect

(1)

CO

1. In" section 2, after clause (b), insert the The date of establishment of the Development Bank.

following clause, namely :— '(bb) "Development Bank" means the In- dustrial Development Bank of India established under the Industrial De- velopment Bank of India Act, 1964;'.

Amendments

Date on which amendments shall take effect

CO

2. In section 4,— (a) omit sub-sections (5) and (6); and

(b) in sub-section (7), for the words "the Central Government, the Reserve Bank", substitute the words "the De- velopment Bank".

The date appointed by the Central Government un- der sub-section (l) of sec- tion 4A of the Industrial Finance Corporation Act, T948 as inserted by this Act.

The date of establishment of 3. After section 4, insert the following section, namely -.—

the Development Bank. Transfer of Share* aod increase of Opital.

"4A. (1) On such date as the Central Government may, bv notification in the Official Gazette, appoint—

(a) all shares of the Corporation held by the Central Government and the Reserve Bank shall stand trans- ferred to tind vest in the Develop- ment Bank and as compensation therefor the Development Bank shall pay to the Central Government and to the Reserve Bank respectively the face value of the shares held by that Government and by Thcit Bank;

(b) the capital issued by the Corpora- tion shall be increased by such number of shares as the Central Government may specify in this behalf and all such shares shall stand allotted to and be subscribed by the Development Bank, so however that after such increase the Development Bank holds not less than fifty per cent, of the paid-up capital of the Corporation.

(3) If and when the remaining shares in the capital of the Corporation, or any part thereof, arc issued, such further shares shall be offered to the holders of the shares of the Corpo- ration in proportion, as nearly as circumstances admit, to the capital paid-up on those shares at the date of such further issue:

Pi •ovided that if any such shares remain unallotted, they shall be subscribed for by the Development Bank.".

133 G. of I, Ex.—3.

Date on which amendments Amendments

shall take effect

In section 6,—

4-

(a) in sub-section (j), for the words "the Central Government", substitute the words "the Development Bank";

The date appointed by the Central Government under sub-section (1) of section 4A of the Industrial Finance Corporation Act 1948 as Inserted by this Act' (b) for sub-section (4), substitute the

following sub-section, namely:—

" (4) If any dispute arises between the Development Bank and the Board as to whether a question is or is not a question of policy, the dispute shall be referred to the Central Government whose decision there- on shall be final.";

(c) in sub-section (5), for the words "laid down by the Central Government", substitute the words "given bv the Development Bank",

Do.

In section io,—

5-

(a) in sub-section (1)—

(0 in clause (a), for the words " t he Board", substitute the words "the Development Bank";

(it) in clause (aa), for the words "the Central Government", substitute the words j "the Development Bnnk";

(m) in clause (ft), for the words "the Central Board of the Reserve Bank", substitute the words "the Central Government"; (iv) In clause (d), for the words "the Central .Government, the Reserve Bank",'; substitute the words "the Development Bank";

(b) after sub-section (1), insert the follow-

ing sub-section, namely:—

"(2) On the date appointed under

sub-section (1) of section 4A, the Direc- tors holding office under clause (aa) or clause (jb) immediately before the said date shall be deemed to have vacated their offices as such ".

Amendments

Date on which amendments

shall take effect

(2)

(0

In section 10A, in sub-section (1), for ' the words " by the Board ", substitute the words " by the Development£Bank".

The date appointed by the Central Government un- der sub-section (1) of section 4A of the Industrial Finance Corporation Act, 1948 as inserted by this Act.

7.

Do.

8.

Do.

y-

Do.

In section 11, in the proviso to sub- section (4), insert at the end the words "or of the Development Bank". In section 13, in sub-section (1), after the words "The Central ^Government may", insert the words " after consultation with the Development Bank". In section 13A, for the words "with the Board", substitute the words "with the Development Bank".

10.

Do.

In section 17, in sub-section (6), for the words "the Central Government or the Reserve Bank", substitute the words "the Development Bank or the Central Government".

11.

Do.

In section 18, for the words "the Central Government", substitute the words "the Development Bank".

12.

Do.

In section 21, in sub-section (4), after the words "borrow money from the Central Government", insert the words "or the Development Bank" and after the words "borrowed by the Corporation from the Central Government", insert the words "and the Development Bank".

In section 23, in sub-section (1)—

Do-

13-

(a) in'kclause (A), for the words "the

Central Government", substitute the words "the Development Bank";

(b) after clause (1), insert the following

clause, namely:— ^

"(it) acquiring with the approval of the Development Bank the under- taking including the business, assets and liabilities of any institution the principal object of which is the promotion or development "of in- dustry in India, or the grant of financial assistance for such pro- motion or development;".

)E\te on which amendments Amendments I

shall take effect

(1)

(")

. In section 24,—

H

(t) for the Jffwords "one crore", wherever^ they occur, substitute the words "two crores";

The date appointed by the Central Government under sub-section (1) of section 4A of the Industrial Finance Corporation Act, 1948 as inserted by this Act.

{n) for the words "the Central Government", substitute the words "the Development Bank".

. For section 32A, substitute the following

Do.

15

section, namely :—

Special re"em fend.

"32A. (j) All dividends accruing on the shares of the Corporation held by the Central Government and the Reserve Bank immediately before the date ap- pointed by the Central Government under sub-section (1) of section 4A in respect of any completed accounting period, whether declared or not, shall be credited to a special reserve fund.

(a) All dividends accruing to the Develop- ment Bank shall, instead of being paid to it, be also credited to the said fund until the aggregate of the sums credited to the fund under sub-section (1) and this sub-section exceeds one crore of rupees.'

(3) The Central Government, the Reserve Bank and the Development Bank only shall have claims to the said fund.".

Do.

16 . In section 34,—

(a) in sub-section (ij—

(t) for the words "the Central Govern- ment in consultation with the Com- ptroller and Auditor-General of India", substitute the words "the Dcyelopment Bank";

(it) for the words "the Central Govern- ment", where they occur for the second time, substitute the word" "the Development Bank";

{*) in sub-section (4), for the words "the Comptroller and Auditor-General of India", substitute the words "the Deve- lopment Bank";

(c) omit sub-section (5) ;

Amendments

(1)

Date on which am^fdrnrrits shall take effect 0)

(d) for sub-section (6), substitute the following sub-section, namely :—

"(6)iWithout prejudice to anything contained in the preceding sub- sections, the Central Government may, at any time, appoint the Comptroller and Auditor-General of India to examine and report upon the accounts of the Corpora- tion and any expenditure incurred by him in connection with such examination and report shall be payable by the Corporation to the Comptroller and Auditor-General of India.".

. In section 35—

17

(a) in sub-section (2), for the words "Central Government", at both places where they occur, t.ubstitute the words "Development Bank";

The date appointed by the Central Government under sub-section (1) of section 4A of the Industrial Finance Corporation Act, 1948 as inserted by this Act.

(i) in sub-section (j), for the words "and the Reserve Bank", substitute the words ''the Reserve Bank and the Develop- ment Bank".

Do.

, Re-number section 36 as sub-section (1)

thereof, and—

(a) in sub-section (1) as so re-numbered, for the words other than the Centra] Government and the Reserve Bank", substitute the words "other than the Development Bank";

)b) after sub-section (j) as so rc-numbered,

insert the following sub-sections, namely 1— "(3) After the acquisition of the shares as provided by sub-section (j), the Central Government shall transfer the shares to the Deve- lopment Bank on that bank paying an amount equal to the amount paid by the Central Government for such acquisition. (j) After the transfer of the shares by the Central Government to the De-

Amendments

Date on which amendment' shall take' effect

(2)

(1)

velopmentjBank under sub-section (j), the Central Government may direct by notification in the Official Gazette that with effect from such date as may be specified in the notification the entire undertaking of the Corporation, including all business, property, assets and lia- bilities, rights (including the right to recover loans and advances gran- ted by the Corporation in accord- ance with the provisions of this Act), interests, privileges and obli- gations of whatever nature, shall stand transferred to and vest in the Development Bank.

(4) For the purpose of giving effect to the transfer of the undertaking of the Corporation to the Develop- ment Bank, the Central Govern- ment shall, by order in writing, frame a scheme providing for all matters for which provision is ne- cessary, and the scheme so framed shall be binding upon the Corpora- tion, its creditors and employees and the Development Bank and shall have effect notwithstanding anything to the contrary contained in any law for the time being in ibrcc or in any contract or other instrument.

(5) The provisions of this section shall have effect notwithstanding any- thing contained in this Act or any other law or any instrument having force by virtue of such Act or other law.".

19.

Removal of difficulties.

The date appointed by the Central Government under sub-sectjon (1) of section 4A of the Industrial Finance Corporation Act, 1948 as inserted by this Act.

After section 40A, insert the following sec- tion, namely :— "40B. (l) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the purposes of this Act as appear to it necessary or expedient for removing the difficulty.

Amendment *.

Date

(2)

CO

(2) An order under sub-section (1) may be made so as to have retrospective effect from a date not earlier than the date appointed under sub-sec- tion (1) of section 4A.".

2 0. In section 42, In sub-section (1), after the words "The Central Government may", insert the words "in consultation with the Development Bank".

The date appointed by the Central Government under sub-section (r) of section 4A of the In- dustrial Finance Corpora- tion Act, 194S as inserted bv this Act.

2 1.

Do.

In section 43, in sub-section (r), for the words "the Reserve Bank", substitute the words "the Development Bank".

PART IV

AMENDMENT TO IHE BANKING COMPANIES ACT, 1040

(10 OF 1949)

Date on which amendment

Amendment

shall take effect

(a)

(0

The date of establishment of

the Development Bank.

In section 34A, in sub-section (5), after the word ''includes", insert the words "the In- dustrial Development Bank of India,".

R. C. S. SARKAR,

Secy, to the Govt, of India,

PRINTED IN INDI\ BY THE GENEI \L MANAGER, GOVERNMENT OF INDIA PRESS, NEW pELHI ANP FUBUflHFD BY 1 Ht MW\r,EF OF PUBLICATIONS, HEI.HT, 1904