Subject NOT available

(2) Notwithstanding anything contained in sub-section (I), or in any other law for the time being in force, the Tribunal shall not compel the Central Government or the Reserve Bank,—

(a) to produce any books of account or other documents which the Central Government, or the Reserve Bank, claims 5 to be of a confidential nature;

(b) to make any such books or documents part of the record of the proceedings before the Tribunal; or

(c) to give inspection of any such books or documents

I0 to any party before it or to any other person.

36AJ. (I) The Tribunal shall have power to regulate its own Froo"d- oro of tho Tribunal. procedure.

(2) The Tribunal may hold the whole or any part of its in- quiry in camera.

(3) Any clerical or arithmetical error in any order of the *5 Tribunal or any error arising therein from any accidental slip or omission may, at any time, be corrected by the Tribunal either of its own motion or on the application of any of the parties.'.

18. Section 39 of the principal Act shall be re-numbered as sub- ²O Amend- ment ol section 3".

section (i) thereof and after sub-section (1), as so re-numbered, the following sub-section shall be, and shall be deemed always to have been, Inserted, namely: —

Insertion Of new section 47A.

Power of Res"rv" Bank to

impose penalty.

is made by a banking company, then, the Reserve Bani may impose on such banking company—

(a) where the contravention is of the nature referred to in sub-section (3) of section 46, a penalty not exceeding 5 twice the amount of the deposits in respect of which such contravention was made;

(b) where the contravention or default is of the nature referred to in sub-section (4) of section 46, a penalty not ex- ceeding two thousand rupees; and where such contravention jo or default is a continuing one, a further penalty which may extend to one hundred rupees for every day, after the first, during which the contravention or default continues.

(2) For the purpose of adjudging the penalty under lub- section (1), the Reserve Bank shall hold an inquiry in the pres- 15 cribed manner after giving the banking company a reasonable opportunity of being heard.

(3) While holding an inquiry under this section, the Reserve Bank shall have power to summon and enforce the attendance of any person to give evidence or to produce any document or 20 any other thing which, in the opinion of the Reserve Bank, may be useful for, or relevant to, the subject matter of the inquiry.

(4) No complaint shall be filed against any banking com- pany in any court of law in respect of any contravention or de- fault in respect of which any penalty has been Imposed by th* 25 Reserve Bank under this section.

(5) Any penalty imposed by the Reserve Bank under thi" section shall be payable within a period of fourteen days from the date on which notice issued by the Reserve Bank demanding payment of the sum is served on the banking company and In 30 the event of failure of the banking company to pay the sum within such period, may be levied on a direction made by the principal civil court having jurisdiction in the area where tha registered office of the banking company is fituated; or, in the case of a banking company incorporated outside India, where 35 its principal place of business in India is situated:

Provided that no such direction shall be made except on an application made to the court by the Reserve Bank or any officer authorised by that Bank in this behalf.

(6) The court which makes a direction under sub-section (5) shall issue a certificate specifying the sum payable by the banking company and every such certificate shall be enforceable in the same manner as if it were a decree made by the court in a civil suit,

5

(7) Where any complaint has been filed against any banking company in any court in respect of the contravention or default of the nature referred to in sub-section (3) or, as the case may be, sub-section (4) of section 46, then, no proceedings for the imposition of any penalty on the banking company shall be 10 taken under this section.

18, In section 51 of the principal Act,-—

Amend- ment of section 51.

(a) in clause (c) of the proviso, after the words and figures "in section 46", the words, figures and letter "or in section 47A" shall be inserted;

15

(b) the Explanation shall be omitted-

Amend- ment of section 52

]D. In section 52 of the principa] Act, in the proviso to sub-section (3), after the words "this section", the brackets, words, figures and letters "(including the rules made for the first time on matters speci- fied in sections 10A and 47A)" shall be inserted. 20

20. After section 55 of the principal Act, the following section

shall be inserted, namely: —

Insertion of new section aft"r sec- tion 58.

Power to remove difficulties.

2, "55A. If any difficulty arises in giving effect to the provi- sions of this Act, the Central Government may, by order, as occasion requires, do anything (not inconsistent with the provi- f sions of this Act) which appears to it to be necessary for the purpose of removing the difficulty:

Provided that no such power shall be exercised after the expiry of a period of three years from the commencement of sec- tion 20 of the Banking Laws (Amendment) Act, 1967.

30

21. In Part V, m the provisions of the principal Act, as applied to or in relation to co-operative societies,—

Amend, ment of Pert V.

(a) in section 5A, as substituted by clause (d) of section 56 of the principal Act,--

5 (i) in sub-section (1), for the words "this Part", the words "this Act" shall bo substituted;

"< (ii) in sub-section (2), for the words "this Part", the words "this Act" shall be substituted;

(b) in section 7, as substituted by clause (f) of 'the said sec- IJ tion 56, in sub-section (2), after clause (b), the following clause shall be inserted, namely: —

" (c) any co-operative society, not being a primary cre- dit society, formed by the employees of a banking company or 'the State Bank of India or any other banking institution *5 notified by the Central Government under section 51 or the employees of a subsidiary of such banking company or the State Bank of India or, as the case may be, such banking institution.";

(c) in clause (g) of the said section 56, for the word and 20 figures "section 10", the words, figures and letters "sections 10, 10A, 10B, .IOC and 10D" shall be substituted;

(d) in section 18 of the principal Act, as substituted by clause (j) of the said section 56, in the Explanation, for clause (c), the following clause shall be substituted, namely: —

25 " (c) in the case of a State or central co-operative bank, also any deposit of money with it representing the reserve fund or any part thereof required to be maintained with it by any other co-operative society within its area of opera- tion, and in the case of a central co-operative bank, also an 3° advance taken by it from the State co-operative bank of the State concerned;";

(e) for clause (I) of tti'3 said section 56, the following clause shall be substituted, namely: —

" (0 for section 20 oX the principal Act, the following 35 section shall be .substituted, namely: —

20, (/) No co-operative bank shall—

(a) make any loans or advances on the security

of its own shares; or

Restric- tions on loans •nd ad- vanoM.

(b) grant unsecured loans or advances—

(i) to any of its directors; or

(ii) to firms or private companies in which any of its directors is interested as partner or managing agent or guarantor or to individuals 5 in cases where any of its directors is a guaran- tor; or

(in) to any company in which the chairman of the Board of directors of the co-operative bank (where the appointment of a chairman 10 is for a fixed term) is interested as its manag- ing agent, or where there is no managing agent, as its chairman or managing director:

Provided that nothing in clause (b) shall apply to the grant of unsecured loans or advances— 15

(a) made by a co-operative bank—

(i) against bills for supplies or services made or rendered to Government or bills of exchange arising out of bona fide com- mercial or trade transactions, or 20

(ii) in respect whereof trust-receipts

are furnished to the co-operative bank;

(b) made by a primary co-operative bank to any of its directors or to any other person within such limits and on such terms and con- 25 ditions as may be approved by the Reserve Bank in this behalf.

(2) Every co-operative bank shall, before the close of the month succeeding that to which the return relates, submit to the Reserve Bank a return in the 30 prescribed form, and manner showing all unsecured loans and advances granted by it to companies in cases [other than those in which the co-operative bank is prohibited under sub-section (1) to make unsecured loans and advances] in which any of its directors is interested 35 as director or managing agent or guarantor.

(3) If, on examination of any return submitted under sub-section (2), it appears to the Reserve Bank

that any loans or advances referred to in that sub- section are beijng granted to the detriment of the interests of the depositors of the co-operative bank, the Reserve Bank may, by order in writing, prohibit the 3 co-operative bank from granting any such further loans or advances or impose such restrictions on the grant thereof as it thinks fit, and may by like order direct the co-operative bank to secure the re-payment of such loan or advance within such time as may be specified in the 10 order.";

(f) in sub-section (2) of section 22, as substituted by clause (o) of the said section 56, for the proviso, the following proviso shall be substituted, namely: —

"Provided that nothing in clause (b) of sub-section (1) 15 shall be deemed to prohibit—

(i) a co-operative society carrying on business as a co-operative bank at the commencement of the Bank- ing Laws (Application to Co-operative Societies) Act, 1965, or

23 of 1965.

20 (ii) a co-operative bank which has come into exist- ence as a result of the division of any other co-operative society, or the amalgamation of other co-operative societies carrying on business in either case as a co- operative bank or banks at such commencement, or

25 (Hi) a primary credit society which becomes a primary co-operative bank after such commencement,

from carrying on banking business until it is granted a licence in pursuance of this section or is, by a notice in writing, notified by the Reserve Bank that the licence can- 30 not be granted to it.";

(g) in sub-section (1) of section 23, as substituted by clause (p) of the said section 56, in clause (b) of the proviso, for the words "opening of branches", the words "opening or changing the location of branches" shall be substituted;

35 (h) in sub-section (2A) of section 24, as substituted by clause (q) of the said section 56, for clause (b), the following clause shall be substituted, namely: —

"(b) In computing the amount for the purpose of clause (a) ,—-

40 (i) any cash or balances maintained in India by a co-operative bank, other than a scheduled State co-ope- rative bank with itstlf or in current account with the

Reserve Bank or the State Bank of India or with any other bank which may be notified in this behalf by the Central Government and also any balances main- tained with the State co-operative bank of the State concerned, and, in the case of a primary co-operative 5 bank, also any balances maintained with the central co-operative bank of the district concerned or with the State co-operative bank of the State concerned in ex- cess of the aggregate of the cash or balances or both required to be maintained under section 18; and I⁰

2 of 1M4.

(ii) any balance maintained by a scheduled State co-operative bank with the Reserve Bank in excess ef the balance required to be maintained by it under section 42 of the Reserve Bank of India Act, 1934, and any balances in current account maintained in India by 15 a scheduled State co-operative bank with the State Bank of India or with any other bank which may be notified by the Central Government,

shall be deemed to be cash maintained in India.

Eocplanation.—For the purposes of this sub-section,— 20

(a) approved securities, or a portion thereof, repre- senting investment of Agricultural Credit Stabilization Fund of a co-operative bank shall not be deemed to be unencumbered approved securities;

(b) balance with the State co-operative bank of the 25 State concerned or with the central co-operative bank of the district concerned, or a portion thereof, repre- senting investment of Agricultural Credit Stabilization Fund of a co-operative bank shall not be deemed to be cash maintained in India;

30

(c) in case a co-operative bank has taken an ad- vance against any balance maintained with the State Bank of India or with any other bank which may be notified in this behalf by the Central Government or with the State co-operative bank of the State concern- 35 ed or with the central co-operative bank of the district ' concerned, such balancn to the extent to which it has been drawn against or availed of shall not be deemed to be cash maintained in India.";

(i) in the proviso to sub-section (1) of section 35, as insert- ed by clause (w) of the said section 56, the following shall be added at the end, namely: —

"and may, if it considers it necessary and expedient so j to do, supply a copy of the said report to the State co-ope- rative bank or the Registrar of co-operative societies of the State in which the inspected bank is registered";

(j) in clause (sb) of the said section 56, after the word, figures and letter "Part IIA", the word, figures and letter, "Part I0 IIC," shall be inserted."-

22. After the Fourth Schedule to the principal Act, the follow- ing Schedule shall bo inserted, namely: —

Insertion of new Schedule

'THE FIFTH SCHEDULE

(See section 36AG)

r <5 PRINCIPLES OF COMPENSATION

1. The compensation to be given under section 36AG shall be an amount equal to the value of the assets of the acquired bank as on the day immediately before the appointed day, computed in accor- dance with the provisions of Part I of this Schedule less the total 20 amount of liabilities thereof computed in accordance with the pro- visions of Part II of this Schedule.

Part I.—Assets

For the purposes of this Part "assets" means the total of the lollowlng: —

(a) the amount of cash in hand and with the Reserve Bank "⁵ and the State Bank of India (including foreign currency notes which shall be converted at the market rate of exchange);

(b) the amount of balances with any bank, whether on deposit or current account, and money at call and short notice, balances held outside India being converted at the market rate of exchange:

Provided that any balances which are not realisable in full shall be deemed to be debts and valued accordingly;

(c) the market value, as on the day immediately before the v appointed day, of any securities, shares, debentures, bonds and 35 other investments, held by the bank concerned.

Explanation.—For the purposes of this clause,—

(i) securities of the Central and State Governments [other than the securities specified in sub-clauses (ii) and

(iii) of this Explanation} m a t u r i ng for r e d e m p t i on w i t h in five years from the appointed day shall be valued at the face value or the m a r k et value, whichever is higher;

(ii) securities of the Central G o v e r n m e n t, such as Poet

IO Office Certificates and T r e a s u ry Savings Deposit Certificates * and any other securities or certificates issued or to be issued u n d er the Small Savings Scheme of t he Central Govern- m e n t, shall be valued at Lheir face value or the encashable value, as on t he day immediately before the appointed day, whichever is higher;

(Hi) w h e ie the m a r k et value of any G o v e r n m e nt secu- rity such as t he zamindari abolition bonds or other similar security in respect of which the principal is payable in instalments, is not ascertainable or is, for a ny reason, not considered as reflecting t he fair v a l ue thereof or as other- I5 wise appropriale, the security shall be valued at such an a m o u nt as is considered reasonable h a v i ng regard to the instalments of principal and interest r e m a i n i ng to be paid, the period during which such instalments are payable, the yield of a ny security, issued by the G o v e r n m e nt to which the 20 security pertains and h a v i ng thd same or approximately the same maturity, and other relevant factors;

(iv) where the market value of any security, share, debenture, bond or otb.LT investment is not considered reasonable by reason of it¹' hnv n,q been affected by abnormal 25 factors, tlie investment may be valued on the basis of its average markel value ovc-v any reasonable period;

(v) where the market value of any security, sharte, debenture, bond or other investment is not ascertainable, only such value, if any, shall be taken into account as is con- 30 sidered reasonable having regard to the financial position of the issuing concern, the dividend paid by it during the preceding five years and other relevant factors;

(d) the amount of advances (including loans, cash credits, overdrafts, bills purchased and discounted), and other debts, 3*5 whether secured or unsecured, to the extent to which they a r e/ reasonably considered recoverable, having regard to the value of the security, if any, the operations on the account, the report- ed worth and respectability of the borrower, the prospects of realisation and other relevant considerations; 40

(e) the value of any land or buildings;

(f) the total amount 1 f the pvemia paid, in respect of all leasehold properties, reduced m the case of each such premium by an amount which bears to such premium the same propor- tion as the expired 'term of the lease in respect of which such 5 premium shall have been paid bears to Hit to'ial t e rm of the lease;

(y) the written down value as pur books, ur the realisable value, as inay be contidcted reasonably of all furniLurc, fixture* and fittings;

TO (h) the market or realisable value, a,s may be appropriate, of other itsscls appearing on the books of the bank, no valuo b'jinq allowed for capitalised expenses, such as share selling I'umniiss'nn, organisational expenses and brokerage, losses incur- red rmd Mmilar other items.

IJ; Part II.—L abilities

For the purposes of •this Part "liabilities" means the total amount of all outside liabilities existing on the appointed day, and all con- hn^ent liabilities which th<- Central Government or the transferee b.uik may reasonably be expected to be required to meet out of 20 its own r \s"uives on or after the appointed day.

2. If th'i acquh^d bank is not incorporated in India, the assets or, as the case may be, the liabilities of the bank shall be, for the pur- poses of Part I and Part II, and subject to the other provisions there- in, the assets and liabilities "t the offices of the bank situated in 25 India.

COMPENSATION PAYABLE 10 SHAREHOLDERS

3. Every shareholder of the acquired' bank shall be given such amount as compensation as bears to the total compensation, calculat- ed in accordance with the provisions of paragraph 1, the same pro- 3° portion as the amount of paid-up capital of the shares held by the ^ shareholder bears to the total paid-up capital of the acquired bank.

CERTAIN DIVIDENDS NOT TO UE TAKEN INTO ACCOUNT

4. No -cparatc compensation shall be payable for any profits or any dividend in re.sp^ei of any period immediately preceding the 15 appointed day for which, in the ordinary course, profits would have byen transferred or dividend declared after the appointed day.',

CHAPTER III

AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1034

2a. In the Reserve Bank of India Act, 1934 (hereinafter in this

2 of 1934.

Chapter referred to as the principal Act), in section 2,—

Amend- ment of •ecllon 2.

(a) to clause (cii), the following proviso shall be added, 5 namely: —

"Provided that th;s sub-H'tiise shall not apply to the admis- sion of a co-operative bank as a member by reason of such co- operative bank subsrribing to the share capital of such co-ope- rative society out of lunds provided bv the State Government for I⁰ the purpose.";

(h) lo clause (rhi), the lolluwnj; proviso shall be added, namely:—

"Provided that this sub-clause shall not apply to the admis- sion of a co-operative bank as a member by reason of such co- *5 operative bank subscribing to the share capital of such co-oper- ative society out of funds provided by the State Government for the purpose.";

(c) to clause ( r / r ), the following proviso shall be added, namely:—

20

"Provided that this sub-clause shall not apply to the admis- sion of a co-operative bank as a member by reason of such co- operative bank subscribing to ftje share capital of such co-oper- ative society out of funds provided bv the State Government for the purpose.".

25

24. In section 17 of the principal Act, in the- proviso in clause Amend- ment of •ection 17.

(a) for sub-clause (b) of clause (i), the following sub- clause shall be substituted, namely: —

"(/)) maturing not Ia1c;r than one hundred and eir;htyj 30 days from the date of the loan or advance, and

it will, so long as any part of such loans and advances remains unpaid, continue to hold such bills of exchange of a value not less than the amount of such loans or advances outstanding for the time being; or";

05

(b) for clause (ii), the .following clause shall be substituted, namely: —

"(ii) it has granted a pre-shipment loan or advance to an exporter or any other person in India in order to enable 5 him to export goods from India, the amount of the loan or advance drawn and outstanding at any time being not lean than the outstanding amount of the loan or advance obtain- ed by the borrowing bank from the Bank.",

25. For section 24 of the principal Act, the following section shall I0 be substituted, namely: —

Amend- ment of sec- tion 24,

Denomi- nations of notes.

"24, (I) Subject to the provisions of sub-section (2), bank notes shall be of the denominational values of two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand ,, rupees and ten thousand rupees or of such other denominational values, not exceeding ten 'thousand rupees, as the Central Gov- ernment may, on the- recommendation of the Central Board, specify in this behalf.

(2) The Central Government may, on the recommendation of the Central Board, direct the non-issue or the discontinuance of issue of bank notes of such denominational values as it may specify in this behalf,".

26. In section 33 of the principal Act, in sub-section (4), for the figures and word "2.88 grains", the figures and word "0.118489

Ampnd- ment of section 33. 2, grammes", and for the words "at the market rate", the words "at rates not exceeding the market rates" shall be substituted,

27. In section 451 of the principal Act, to clause (c), the follow- ing Explanation shall be added, namely: —

Amend- ment of section 451.

4 (.>f^38.

"Explanation.—For the removal of doubts, it is hereby dec- lared that a company registered under section 3 of the Insurance Act, ]938, for any class of insurance business and a company, not being a banking company, a corporation or a firm, carrying on, as its principal business, the management, conduct or super- vision, as the foreman or agent, of any transaction or arrange- ment by which it enters into an agreement with a number of subscribers that every one of them shall subscribe a certain sum , by instalments for a definite period and that each subscriber in - his turn, as determined by lot or by auction or by tender or in such other manner as provided in the agreement, shall W ,0 entitled to a prize amount shall be deemed to be, a financial institution as denned in this clause.".

28. After section 54A of the principal Act, the following section shall be inserted, namely: —

Inser- tion of new sec- tion 54AA.

Power of Bank to depute its employees tn other Institu- tions.

'54AA. (1) The Bank may, notwithstanding anything con- tained in any law for the time being in force or in any contract, depute any member of its staff for such period as it may think 5 fit to any institution which is either wholly or substantially owned by the Bank, and thereupon the person so deputed shall, during the period of his deputat'on, render such service to the institution as that institution may require.

(2) Where a person has been deputed to an institution under 10 sub-section (1), he shall no I be entitled to claim any salary, emoluments and other terms and conditions of service which he would not have-¹ been entitled to claim if he had not been so deputed.

(3) Nothing contained in this section shall empower the t

(4) For the purposes of this section, an institution shall be 20 deemed to be substantially owned by the Bank if in the capital of the institution the Bank has not less than forty per cent, share.

Explanation.—-The word "capital" means, in relation to the Unit Trust, thru initial capital of that Trust.'.

CHAPTER IV

,.

AMENDMENTS TO THE STATE BANK OF INDTA ACT, 1955

29. In the State Bank of India Act, 1955 (hereinafter in this Chap-

23 of 1953.

ter referred to as the principal Act), in section 33,—

(a) in sub-clause (/) of clause (i), for the words "goods Amend- ment of section 33,

which are hypothecated", the words "goods or other assets which ,e are hypothecated or assigned" shall be substituted;

(b) in clause (xviii), for the words "si-\- months", the words "twelve months" shall be substituted;

(c) in clause (xixb) ,—

(i) for the words "the advancing or lending of money f' to", the words "the advancing or lending of money to, or discounting or purchase of any negotiable instrument §n behalf of," shall be substituted;

(ii) for the words "in excess nf six months", the wdrds "in excess of twelve months" shall be substituted; .Q

(d) in clause (xixc), for the words "six months", the words "twelve months" shall be substituted.

30. In section 34 of th.j principal Act,—

Amend- ment of secjt'on34, .(a) in clause (

(b) in sub-section (3), for sub-clause (ti) of clause (b), the following sub-clause shall be substituted, namely: —

L'(i.) save as otherwise provided in this Act, twelve months Irom the date aforesaid if the instrument or security 10 is drawn or issued lor any other purpose.".

STATEMENT OF OBJECTS AND REASONS

A good deal oi concern has been expressed in the recent past about the functioning of the commercial banks in the country in the context of our economic growth and planned development. The re- sources of the banking system need to be distributed equitably and purposefully in conformity with the developmental requirements so that priority sectors receive their due share and particular clients or groups of clients are not favoured in the matter of distribution of credit. A number of steps, both administrative and legislative, are proposed to be taken to secure this objective by extending effective social control over banks. The main object of the Bill is to amend the Banking Regulation Act to incorporate certain new provisions towards achieving this purpose.

2. The more important new provisions of the Bill connected with the management of the banks relate to the reconstitution of their Boards of directors and appointment of full-time chairmen. Every banking company will have to reconstitute its Board of directors so that the majority of persons on the board have special knowledge or practical experience in agriculture, rural economy, small-scale in- dustries, co-operation, banking, finance and other matters which are useful to a banking company and should not have substantial inte- rest or active association with large or medium-sized industrial or business undertakings. The chairman of each bank will be required to be a professional banker and a full-time chief executive officer. it will be open to the Reserve Bank to reconstitute the Board of directors or to appoint a new chairman if it proves to be necessary. There will be a statutory prohibition on the grant of any type of loans and advances to directors and the concerns in which they are interested. The scope of the Reserve Bank's power to issue direc- tions to a banking company is also proposed to be widened to cover matters having a bearing on monetary stability, sound economic qrowth and the equitable allocation and efficient use of its resources/ Power is also proposed to be taken by the Central Government for the acquisition of the business of a banking company if it becomes a persistent defaulter in complying with the requirements ol the law or directions issued thereunder.

3. Opportunity is also being taken la introduce certain minor an* consequential amendments to the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, and the State Bank of India Act, 1955. The details of these amendments have been explained in the notes for clauses.

NEW D m n; MQRARJI DE&Af.

The 18th December, 1987.

PRESIDENT'S RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA

[Copy o£ letter No. F.4(43)-BC/67, dated the 18th December, 1967 from Shri Morarji Desai, Deputy Prime Minister and Minister of Finance to the Secretary, Lok Sabha]

The President having been informed of the* subject matter of the proposed Banking Laws (Amendment) Bill, 1967, recommends the introduction of the Bill in the Lok Sabha under clause (1) of article 117 and its consideration under clause (3) of article 117 of the Constitution,

FINANCIAL MEMORANDUM

Under the Banking Laws (Amendment) Bill, 1967 powers are sought to be taken by the Central Government for the acquisition of a banking company under certain contingencies. The new pro- visions relating to the acquisition of business and other connected matters are contained in the proposed new sections 36AE, 36AF, 36AG, 36AH, 36AI and 36AJ, which are included in a new Part IIC sought to be inserted by clause 15.

The proposed new section 36AE empowers the Central Govern- ment to acquire an undertaking if it is satisfied, upon receipt of a report from the Reserve Bank, that a banking company has been persistently defaulting in complying with any directions given to it under sections 21, 35 or 35A of the Banking Regulation Act and that the acquisition of that bank is considered necessary in the interests of the depositors of the banking company or in the interest of banking policy or for the better provision of credit generally or to any parti- cular sector. The compensation payable in the event ol any such acquisition will be determined in accordance with the provisions of the proposed new section 36AG, read with the Fifth Schedule. The proposed new section 36AH provides for the constitution of a tribunal in case the compensation initially determined in accordance with the principles laid down in the Fifth Schedule are not acceptable to one- fourth or more of the number of share-holders holding one-fourth or more of the paid-up capital, in the acquired bank-

The operative provisions of the legislation are permissive and not mandatory. It is not possible to indicate at this stage the recurring and non-recurring expenditure arising out of the financial provisions contained in the Bill. According to tentative estimates based on available information regarding existing banks in the private sector, the total amount of compensation, in accordance with the principles set out in the Fifth Schedule in the event of all these banks being taken over will be approximately Rs. 100 crores. As regards the expenditure on the setting up of a tribunal, this is likely to be in- curred only if such a tribunal is set up in the event of the specified percentage of shareholders of the acquired bank not accepting the compensation. If the tribunal is set up in respect of a particular ac- quired bank and is able to finish the work within about six months.

the non-recurring expenditure may not be in excess of rupees one Jnkh and fifty thousand and no leciurmg expenditure will be in- volved.

It is not possible at this siago to indicate whether and when any bank will be taken over under the provisions of the BUI. It will be necessary to watch, after the Bill ha^ boen passed into law, how far the banks are working in accordance with the directions issued there- under and it wil] also be necessary to give to any inchv dual hank adequate opportunity to show cause before it is taken over. It is, therefore, unlikely that any bank will be taken over in the current financial year or during the year 1968-69 and no recurring and non- recurring expenditure on this account is, therefore, anticipated during the current financial year or during 1968-69. The provisions which will have to be made in any of the financial year 1969-70 on- wards cannot also be settled or anticipated at this stage

Notts on clauses

Clause % seeks to inurt definitions of certain new expressions in the various clauses amending the Act. The proposed definitions are self-explanatory.

Clause 3 seeks to insert four new sections, namely, 10A, 10B, IOC and 10D.

The proposed new section 10A provides for the reconstitu- tion of the Boards of directors of commercial banks. Every commercial bank will have to so reconstitute its Board of direct tors that the majority of persons on the Boards have special knowledge or practical experience in agriculture, rural economy, co-operation, small-scale industries, banking, finance, law and such other matters as may be useful to the banking company and do not have substantial interest or active association with any large or medium-sized industrial or business undertakings. Of these persons, not less than two directors will represent agri- culture and rural economy, co-operation and small-scale indus- tries. If the composition of the Board of directors of any banking company does not conform to the statutory requirements, the Board will have to be reconstituted, and the persons who are to retire in order to fulfil the requirements of the proposed section shall be determined by lot. If the Board has not been properly reconstituted, the Reserve Bank will have the power to reconstitute it and to remove or appoint directors who fulfil the specified requirements.

The proposed new section 10B provides for the appointment of a whole-time chairman for each banking company who will have special knowledge and practical experience of the working of commercial bonk or financial, economic or business admini- stration. The chairman will be the chief executive officer of the bank and will not be substantially interested in any other company or firm or otherwise actively connected with it. He will be appointed for a period not exceeding five years at a time.y The appointment, removal or termination of appointment of th^t chairman and the terms to be granted to him will require th" approval of the Reserve Bank (vide note on clause 11V '

Thm proposed new section IOC provides that any director of chairman appointed by the Reserve Bank will not be required to hold qualification shares in the banking company.

The proposed new section 10D provides that the appoint- ment or removal of a director or a chairman in pursuance ol the aforesaid clauses shall have effect notwithstanding anything contained in any other law or contract for the time being in force.

Clause 4 seeks to amend the existing section 16 so as to remove the prohibition of common directorship in more than one banking company in respect of a director appointed by the Reserve Bank. Common directorship in the case of a Reserve Bank's director would not have the same implications as for other directors on Boards of more than one commercial bank and the removal of the restriction would enable the Reserve Bank to get over any administrative difficulties of securing suitable persons on the Boards of all com- mercial banks.

Clause 5 seeks to substitute a new section for the existing section 20. At present, the grant of unsecured loans and advances to direc- tors and to their concerns in some circumstances is prohibited. It is now proposed to prohibit the grant of any loans in future, whether the loan is secured or unsecured, and to give or renew any guarantee to any of its directors or to any company or firm in which they are substantially interested or to any company, firm or indi- vidual with which or with whom they are otherwise closely connect- ed. All existing loans will have to be recovered on the expiry of periods specified in the existing loan contracts, or where no periods are specified, within three years of the date on which this provision is brought into force.

Clauses 6 and 7 seek to make minor clarificatory amendments to the existing sections 21 and 24 respectively.

Clause 8 seeks to amend the existing section 30 and provides that the appointment, re-appointment or removal of the auditors of a bank- ing company will require the approval of the Reserve Bank. The Reserve Bank will also be enabled to give to the auditors such spe- cial directions, if any, as may be considered necessary.

Clause 9 seeks to make an amendment of a drafting nature.

Clause 10 seeks to amend section 35A of the Act to amplify the Reserve Bank's powers to issue directions in the interest of banking policy as now proposed to be denned (vide clause 2).

Clause 11 seeks to amend section 35B of the Act and provides that the iippointment, removal and termination of appointment of the

chairmen of banking companies should be made in future with the approval of the Reserve Bank (vide note on clause 3).

Clause 12 seeks to amend section 36 of the Act and enables the Reserve Bank to depute an observer and to exercise certain other powers in the case of any banking company at any time, whether or not an inspection of the bank has been undertaken

Clause 13 seeks to provide for amendments to section 36AA which are of a consequential nature.

Clause 14 seeks to amend section 36AB to enable the Reserve Bank to appoint directors in the interest of the banking policy or in the public interest. At present it is permissible for the Reserve Bank to appoint a director only in the interest of a banking com- pany or its depositors.

Clause 15 seeks to insert two new Parts, namely, Part IIB and Part IIC to the Banking Regulation Act.

Part IIB seeks to insert a new section, namely, 36AD. It is proposed to prohibit the obstruction of business at any office of a bank, and demonstration in or near the premises of its offices to ensure that no inconvenience is caused to the members of the public and no harm is done to the credit-worthiness of a banking company.

Part IIC relates to the acquisition of the undertaking of a banking company in certain cases. This part seeks to insert the following sections, namely, 36AE, 36AF, 30AG, 36AH, 36AI and 36AJ.

The proposed new section 36AE gives powers to the Central Government to take over the business of any bank- ing company if it has persistently failed to comply with the directions given by the Reserve Bank and if it is considered that in the interests of depositors or in the interest of bank- ing policy or for the better provision of credit in general or to particular sectors, it is necessary to acquire the banking company.

The proposed new section 36AF empowers the Central Government to make a scheme, after acquiring any parti- cular bank, for carrying on the business of a bank either directly or by transferring it to some other company or cor- poration. The provision details the different methods which may be provided in the scheme for the effectual transfer of the undertaking.

The proposed new section 36AG provides that the com- pensation payable to shareholders will be in accordance with the principles laid down in the Fifth Schedule (vide clause 22). In case the compensation as initially determined in accordance with 'the Schedule is not acceptable to one-fourth or more of the number of shareholders holding one-fourth or more of the paid-up capital in the acquired bank, a Tri- bunal may be set up by the Central Government to consider and decide the actual amount of compensation in accordance with the principles set out in the Schedule.

The proposed new section 36AH provides for the consti- tution of the Tribunal.

The proposed new section 36AI provides for the confer- ment of the powers of a civi] court on the Tribunal.

The proposed new section 36AJ provides for the regula- tion of the procedure of the Tribunal.

Clause 16 seeks to amend the existing section 39 and seeks to provide for a minor clarificatory amendment.

Clause 17 seeks to insert a new section 47A empowering the Reserve Bank to levy penalty in the case of any bank on its own initiative after a PUT table enquiry.

Clauses 18 and 19 seek to make minor consequential amendments.

Clause 20 seeks to inseii a new section 5&A to provide for the removal of difficulties, if any, in giving effect to the provisions of the Act.

Clause 21 seeks to amend the existing section 56 which provides for the amendment of the various provisions of the Act to the extent they are applicable to the co-operative banks. The incorporation, regulation and winding up of co-operative banks is governed by the respective State laws and the various new provisions of the Bill such as the requirements in regard to the composition of the Board of directors, appointment of whole-time chairmen, directors and observers by the Reserve Bank, approval of the appointment and \ removal of auditors by the Reserve Bank and acquisition of the ^banking companies, if necessary, are not, therefore, being made ap- plicable to the co-operative banks. Certain other minor amend- ments, including clarlficatorj^ explanations have been proposed to the existing provisions.

Clause 22 seeks to insert a new Schedule to the Act setting out the principles on which compensation is to be determined on the basis of the market value of the assets minus the outside liabilities.

Clause 23 seeks to clarify a few definitions in the Reserve Bank of India Act.

Clause 24 seeks to amend section 17 of the Reserve Bank of India Act and to lay down a simplified procedure for the refinancing of pre-shipment loans and advances to exporters.

Clause 25 seeks to substitute the existing section 24 and provides for the issue of bank notes in denominations other than those which are specified in the Reserve Bank of India Act.

Clause 26 seeks to amend section 33 of the Reserve Bank of India Act to provide for the revaluation of gold held in the Issue Depart- ment at the current parity rate, following the devaluation of the rupee and for the valuation of the securities hold in the Issue De- partment at less than the market rates.

Clause 27 seeks to clarify the connotation of a "financial institu- tion" to make it clear thai insurance and chit fund companies fall within the ambit of financial institutions.

Clause 28 seeks to insert a new section 54AA in the Reserve Bank of India Act to provide for the transfer of officers and employees of the Reserve Bank to other institutions wholly owned or substantially owned by the Reserve Bank.

Clauses 29 and 30 seek to provide for amendments to the State Bank of India Act to enable that Bank to grant loans and advances for periods not exceeding twelve months at a time as against six months as at present.

MEMORANDUM REGARDING DELEGATED LEGIS- LATION

Clause 3 of the Bill seeks to insert, inter alia, a new section, name- ly section 10A, in the Banking Regulation Act, 1949. The proposed new section provides that the majority of the members of the Board of directors of a banking company shall have such professional and other qualifications as are specified therein. The proposed section further provides that if the composition of the Board of directors of an existing banking company is such that it docs not fulfil the re- quirements of that section, such Board shall be re-constituted within a period of three months fvom the commencement of the Banking Laws (Amendment) Act, 1967, and if for the purpose of such re-con- stitution it is necessary to retire any director, the banking company shall determine, by lots drawn in -the prescribed manner, which director should retire.

The clause further provides that if the Reserve Bank is of opinion that the composition of the Board of directors of a banking company is such that it does not fulfil the requirements of the proposed new section 10A, it may direct the banking company to re-constitute its Board of directors and in case the banking company fails to comply with such directions within a period of two months, the Reserve Bank may reconstitute the Board after determining, by lots drawn in the prescribed manner, the person who should retire from the Board of directors.

Since the manner in which the lots should be drawn is a matter of detail, the proposed clause provides for the specification of such details by rules. The delegation of the legislative power is, therefore, of a normal character.

2. Clause 15 of the Bill seeks to insert, inter alia, a new Part, namely Part II-C (containing new sections 36AE to 36AJ) in the Banking Regulation Act, 1949. The proposed Part II-C provides for Sthe acquisition of the undertakings of banking companies in certain diascs and for the transfer of the undertaking of the acquired bank to any corporation or company, referred to in the Bill as the trans- feree bank. Clause 36AF empowers the Central Government to make a scheme for carrying out the purposes of such acquisition, and trans- fer, if necessary, to a corporation or company. The scheme may pro- yide for the transfer of the undertaking to a company or corporation,

the constitution of the first Board of management of the transferee bank, the manner of payment of compensation to the shareholders of the acquired bank, the continuance of the services of the employees of the acquired bank, etc.

The clause further provides that copies of every scheme made under the Bill shall be laid before both Houses of Parliament. The natters which are to be provided in the scheme are matters of de- tail. The delegation of the legislative power is, therefore, of a normal character.

3. Clause 17 of the Bill seeks to insert a new section, namely sec- tion 47A, in the Banking Regulation Act, 1949, which empowers the Reserve Bank to impose penalties. The proposed new section em- powers the Reserve Bank to adjudge the penalty after holding an inquiry in the prescribed manner. The manner of inquiry for ad- judging the penalty is a matter of detail. The delegation of the legislative power is, therefore, of a normal character.

BILL N O. 176 OF 1967

A BUI to make provision for civil defence and for matters connected

therewith.

BE it enacted by Parliament in the Eighteenth Year of the

Republic of India as follows: —

CHAPTER I

PRELIMINABY

5 1. (1) This Act may be called the Civil Defence Act, 1967. Short title, extent and com- mence- ment.

51 of 1962

(2) It extends to the whole of India. (3) It shall come into force in a State or part thereof on, such date, not being a date earlier than the date of the expiry of the Defence of India Act, 1962, as the Central Government may, by

fco notification, appoint and different dates may be appointed for diffe-

rent States or different parts thereof.

2. In this Act, unle; s the context otherwise requires,—

Defini- tions.

(a) "civil defence" includes any measures, not amounting

to actual combat, for affording protection 'to any person, pro- perty, place or thing in India or any part of t he territory there- of against any hostile attack, whether from air, land, sea o- other places, or, for depriving any such attack of the whole or part of its effect, whether such measures are taken before, 5 during, at or after the time of such attack;

(b) "Civil Defence Corps" means the Corps formed wholly or mainly to meet t he needs of civil defence and includes an organisation deemed to be a Corps under the proviso to sub- section (1) of section 4;

10

(c) "hostile attack" means any attack by any person of body of persons, w h e t h er during any war, external aggression, internal disturbance or otherwise which endangers the security of any life, property, place or thing in India or any part of the territory thereof;

15

(d) "notification" means a notification published in the Official Gazette;

59 of 1962.

(e) "personal service injury" has the meaning assigned to it in t he Personal Injuries (Emergency Provisions) Act, 1962;

(f) "State Government", in relation to a Union territory, 20 means t he Administrator of the Union territory.

CHAPTER II

POWER OF CENTRAL GOVERNMENT TO MAKE RULES FOR CIVIL DEFENCE

3. (1) The Central Government may, for securing civil defence, by notification, make rules providing for all or any of the following 25 matters, namely:—

Power to make rules for civil defence.

(a) preventing the prosecution of any work likely to pre- judice civil defence;

(b) instruction of members of the public regarding civil defence and their equipment for the purposes of such defence; 30

(c) provision, storage and maintenance of commodities and things required for civil defence;

(d) prohibiting or regulating traffic, and the use of vessels, buoys, lights and signals in parts and territorial, tidal and in- f land waters;

35

(e) control of lights and sounds;

(f) protection of life and property by taking flre preven-

tion and other measures;

(g) securing of any building, premises or other structures from being readily recognisable in the event of a hostile attack;

(h) for the prevention of danger to life or property, the demolition, destruction or rendering useless, of any building, ^ premises or other structures or any other property;

(i) prohibiting or regulating the possession, use or disposal of—

(i) explosives, inflammable substances, corrosive and other dangerous substances or articles, arms and ammuni- 10 tion;

(ii) vessels;

(iii) wireless telegraphic apparatus;

(iv) aircraft; and

(v) photographic and signalling apparatus and any 15 means of recording information;

(j) evacuation of areas and the removal of property or ani- mals therefrom;

(k) accommodation in any area of persons evacuated from another area and the regulation of the conduct of evacuated 20 persons accommodated in such area;

(1) billeting of evacuated person or persons authorised to perform functions under this Act;

(m) salvage of damaged buildings, structures and property and disposal of the dead;

25 (n) seizure and custody or destruction of injured, unclaim- ed or dangerous animals;

(0) ensuring the safety of—

(i) ports, dockyards, lighthouses, lightships, aerodromes and facilities associated with aerial navigation;

30 (ii) railways, tramways, roads, bridges, canals and all other means of transport by land or water;

(iii) telegraphs, post offices, signalling apparatus and all other means of communication;

(iv) sources and systems of water supply, works for the 35 supply of water, gas or electricity and all other works for public purposes;

4 of 1939.

(v) vessels, aircraft, transport vehicles as defined in the Motor Vehicles Act, 1!)!19, and rolling stocks of railways and tramways;

(vi) warehouses and all other places used or intended to be used for storage purposes;

5

(vii) mines, oilfields, factories or industrial o* commer- cial undertakings generally, or any mine, oilfield, factory or industrial or commercial undertaking in particular;

(viii) laboratories and institutions w h e re scientific or technological iresearch or training is conducted or imparted;

(ix) all works and structures being part of, or connected, with, anything earlier mentioned in this clause; and

(x) any other place or thing used or intended to be used for the purposes of Government or a local authority or a semi-Government or autonomous organisation, the pro- 15 tection of which is considered necessary or expedient for securing civil defence;

(p) control of any road or pathway, waterway, ferry or bridge, river, canal or other source of waiev supply;

(q) precautionary measures which the Government or any 2o department thereof or any local authority, members of police force, fire brigade and members of any other service or autho- rity employed primarily for purposes other thnn civil defence purposes should he required to take within their respective jurisdictions or with respect to any personnel employed by 2^ them;

(r) preventing or controlling any use of uniforms, whether official or otherwise, or flags or official decorations like medals, badges or other insignia or anything similar thereto, the wear- ing of which is calculated to deceive or to prejudice civil 30 defence;

(s) precautions to bo taken or action to be taken by per- sons or authorities with a view to protecting or acquainting the general public or any members thereof against the dangers in- volved in any apprehended hostile attack; __

(t) requiring the owner or occupier of any building, stiuc- t u re or premises to make or carry out such arrangements as may be necessary for the purposes of detection and prevention of fire;

(u) taking of specified measures for dealing with outbreaks of fire;

(v) directing that, subject to any specified exemption, no person present in any specified area shall, between such hours 5 as may be specified, be out of doors except under the authority of a written permit granted by a specified authority or person:

(w) (i) prohibiting the nrinUng t"id publication of any newspaper, news-sheet, book or other document containing mat- ters prejudicial to civil defence;

I0 (ii) demanding security from any press used for the pur- pose of printing or publishing, and forfeiting the copies of. any newspaper, news-sheet, book or other document containing any of the matters referred to in sub-clause (i);

(x) regulating the conduct of persons in respect of areas i^ the control of which is considered necessary or expedient, and removal of persons from such areas;

(y) requiring any person or class of persons to comply with any scheme of civil defence;

(z) any other provision which may be necessary for the 20 purposes of civil defence.

(2) Any rule made under sub-section (1) may provide that orders with regard to the matters specified therein may be made by the State Government.

(3) Any rule made under sub-section (1) may provide that a 25 contravention thereof or any order made thereunder shall be punish- able with fine which may extend to five hundred rupees, and where the contravention is a continuing one, with a further fine which may extend to fifty rupees for every day, after the first, during which such contravention continues.

3o CHAPTER III

CIVTL DEFENCE CORPS

4. (1) The State Government may constitute, for any area with- in the State, a body of persons to b- called the Civil Defence Corps (hereinafter referred to as the "Coeps") and may appoint a person, ^ot being, in its opinion, below the rank of a District Magistrate (to

Constitu- tion of Civil De- fence Corps, known as the "Controller") to command such Corps:

Provided that if there is in existence in any area in a State, immediately before the commencement of this Act in that area, an organisation which, in the opinion of the State Government, may he entrusted with the functions of the Corps, the State Government may, instead of constituting a separate Corps for such area, call 5 upon that organisation to take over or discharge the functions of the Corps in that area, and thereupon such organisation shall be deem- ed, for the purposes of this Act, to be the Corps for that area,

(2) The State Government mav. for iht purpose of co-ordinat- ing the activities of the Controllers within the State, appoint a IO Director of Civil Defence and every Controller shall comply with the directions given hv such Director.

Appoint- ment of members and officers.

5. (/) The State Government may appoint as members of the COIDS persons who are fit nnd willing to serve as such and the Con- troller may appoint any member so appointed to such office or com- 13 mand in the Corps, as such member i =3, in the opinion of the Con- troller, fit to hold.

(2) Every person appointed tn be a member of the Corps shall be 3iVen a certificate of membership in such form as may be pres- cribed.

' ~~~™" '20

Dismissal of mem- bers of Civil De- fence Corps.

6. (1) Where any member of the Corps fails or has failed, in the opinion of the Controller, to discharge his duties as such member satisfactorily or is or has been found guilty of any misconduct in the discharge of his duties as such member, the Controller may, after an inquiry In which such member of thp Corps has been given 25 a reasonable opportunity of being heard in respect of the charges against him, by an order, dismiss such member from the Corps,

(2) Where the Controller is oF opinion that the continued pre- sence of any member of the Corps is undesirable, he may, without assigning any reason, summarily dismiss such member from the 30 Corps.

"

Appeal.

7. A member of the Corps who is dismissed from the Corps un- der section 6 may prefer an appeal to the State Government within thirty days from the date of such dismissal and that Government may, on such appeal, confirm, modify or reverse the order made by 35 the Controller or other authority.

8. (1) The members of the Corps shall perform such functions in relation to the carrying out of measures for civil defence as may be assigned to them by rules made under this Act or by any others law for the time being in force

Functions of mem- bers of Civil De- fence Corps,

(2) The State Government or the Controller may, by order, cal! out a member of the Corps for training or for discharging such functions in relation to the carrying out of measures for civil defence as may be specified in such order.

5 (3) Subject to such orders as the Central Government may make

jn this behalf, any member of the Corps of any State may at any time be required, by order, to discharge functions in relation to civil defence in any other State and shall while discharging such functions, be deemed to be a member of the Corps of that other to State and be vested with the powers, functions and privileges and be subject to the liabilities of a member of the Corps in that other :>tate.

9. (2) The Central Government may, by notification, make regula-

tions for carrying out the purposes of this Chapter.

Powvi: in make :•••- tjuiatlnni, 15 (2) In particular, and without prejudice tn the generality of the

foregoing power, such regulations may—

(a) prescribe the functions of the members of the Corps and

regulate the manner in which they may be called out for service,

(0) reyulate the organisation, appointment, conditions of 20 service, discipline, accoutrement and clothing of members of

any or all of the Corps;

(c) prescribe the form tit ccrtificatus of membership o"i' anj

or all of the. Corps.

CHAPTER IV

2 MISCELLANEOUS

50 of 1962

10. The provisions of the Personal Injuries (Emergency Provi- sions) Act, 1962, and of every scheme made thereunder shall apply, so far as may be, to every personal service injury sustained by any person appointed to be a member of the Corps as they apply to pev- 30 sonal service injury sustained hv n civil defence volunteer, subject

to the modifications that—

(a) any reference io a civil defence volunteer under that Act or any scheme made thereunder shall be construed as refer- ence to a member of the Corps; and

(b) i>ny reference therein io the period of emergency shall, relation to a member of the Corps, be construed as the period¹

•Jig which this Acl is in force.

Provi- sions of the Per- sonal In^ juries (Emer- gency Provi- sions) Act to apply 1n injuries sustained by the mem- i bers of the Corps

Penal- ties.

11. (1) If any member of the Corps on being called out by an order under sub-section (2) of section 8 neglects or refuses without sufficient excuse to obey such order or to discharge his functions as such member or to obey any lawful order or direction given to him for the performance of his functions, he shall be punishable 5 with fine which may extend to five hundred rupees, and where such neglect or refusal is a continuing one, with a further fine which may extend to fifty rupees for every day, after the first, during which such contravention continues.

(21 If any person neglects or fails without any reasonable excuse 10

to obev any order made or direction given to him under this Act or rules made thereunder, he shall be punishable with fine which may extend to five hundred rupees, and where such negligence or failure is a continuing one, with a further line which may extend to fifty rupees for every day, after the first, during which such negligence or j 5 failure continues.

12. (1) The provisions of this Act or any rules made thereunder or any order made under this Act or any such rule shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument having effect 20 by virtue of any enactment other than this Act.

Effect of Act and rules, etc, inconsis- tent with other enact- ment*.

(2) Every appointment, order or rule made in relation to civil defence before the commencement of this Act by or under any law relating to civil defence shall, in so far as it is not inconsistent with the provisions of this Act, continue to be in force until it is rescind- 25 ed or altered under this Act, and be deemed to have been made under the corresponding provisions of this Act.

Eocplanation.—"Commencement of this Act", in relation to any

provision or area, means the commencement of that provision or, as the case may be, the commencement of this Act in that area. 30

13. Any authority or person acting in pursuance of this Act shall interfere with the ordinary avocations of life and the enjoyment of property as little as may be consonant with the purpose of ensuring the public safety and civil defence.

Ordinary avocations of life to be inter- fered with MS little as possi- ble.

14. (I) No order made in exercise of any power conferred "

under this Act shall be called in question in any court.

Javings as to order •.

1 of 1872.

(2) Where an. order purports lo have been made and signed by any authority in exercise of any power conferred by or under this Act, a court shall, within the meaning of the Indian Evidence Act, 1872, presume that such order was so made by that authority.

5 15. Nothing contained in this Act or any rule, regulation or order made thereunder shall apply to the Armed Forces of the Union or to any measures taken by any of the authorities in control of the Armed Forces of the Union for the purpose of securing civil defence or safety of such forces or for the protection of any naval, military

10 or air force installations or stores.

Act not to apply to measures taken for the pro- tection of the Armed Forces. Limita- tion of prosecu- tions.

16. No prosecution for any offence punishable under this Act shall be instituted against any person except by, or with the consent of, the Controller or any person authorised by the Controller In this behalf.

i? 17. The State Government may, by notification, direct that— Power to delegate.

(a) all or any of the powers which may be exercised by It under this Act shall, in such circumstances and under such conditions, if any, as may be specified in that notification, be exercised also by such officer, not being, in the opinion of the ao State Government, inferior in rank to that of a District Magis-

trate, as may be specified in the said notification;

(b) all or any of the powers which may be exercised by the Controller under this Act shall, in such circumstances and under such conditions, if any, as may be specified in that notifi- 23 cation, be exercised also by such officer, not being in the opi- nion of the State Government, inferior in rank to that of a SUD- Divisional Magistrate, as may be specified in the said notifica- tion.

Protec- tion of action taken In good faith.

18. (2) No suit, prosecution or other legal proceeding shall lie 30 against the Government, the Director or the Controller or any per- son, authorised by the Government or the Controller, for anything which is in good faith done or intended to be done under this Act or any rules or orders made thereunder or any orders issued under any such rule.

(2) No suit or other legal proceeding shall lie against the Gov- •nment, the Director or the Controller or any person, authorised the Government or the Controller, for any damage caused or \y to be caused by anything which is in good faith done or in- td to be done under this Act or any rule made thereunder or

•der issued under any such rule.

lr> nf K160 10, Any person authorised by the Controller or the State Govern- ment under this Act and every member of the Corps, while func- tioning as such, shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code.

Autho- rised per- sons and members. of l.he Corps tu be public servants.

20. Every rule and every regulation made by the Central Gov- 5 Rules and regu- lations to be laid hefore Parlia- ment.

ernment under this Act shall be laid as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two successive sessions, and if, before the expiry of the session in which it is so laid or the session immediately following, both I⁰ Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation, as the case may be, should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be 15 without prejudice to the validity of anything previously done under that rule or regulation.

STATEMENT OF OBJECTS AND REASONS

Alter the Chinese invasion of our country in 1962 it was felt that in order to minimise loss of life, to maintain continuity of produc- tion and to restore quickly the disrupted civic services, Civil Defence measures should be adopted in places which were the most likely target of enemy air attack. With a view to providing the necessary legal cover, a Chapter on the subject was included in the Defence of India Act, 1962 and rules for Civil Defence services were framed thereunder.

2. This law will, however, cease to be operative six months after the revocation of the emergency but the Civil Defence organisation as such has to be retained to provide the necessary machinery for raising and training the volunteers to man the various Civil Defence services and also to make other preparations so as to enable the authorities to adopt Civil Defence measures at short notice wherever necessary.

3. The Bill aims at providing for continued maintenance of Civil Defence services which are already in position in the States and Union territories. It also enables the Central Government and the State Governments to extend the scope of Civil Defence if and when it may become necessary to do so.

4. This Bill incorporates all the provisions of Chapter III of the Defence of India Act and other relevant provisions spread over other Chapters of the Defence of India Act and Rules. It also provides for payment of compensation to Civil Defence volunteers for injuries sustained while on duty.

NEW DELHI; Y. B. CHAVAN.

The 4sth December, 1967.

PRESIDENTS RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA

[Copy of letter dated 'the 19th December, 1&67 from Shri Y. B. Chavan, Minister of Home Affairs to the Secretary, Lok Sabha.]

The President having been informed of the subject matter of the proposed Bill to make provision for civil defence and for matters connected therewith has, in pursuance of clause (3) of article 117 of the Constitution recommended to the Lok Sabha the considera- tion of the Bill.

FINANCIAL MEMORANDUM

Clauses 3, 4 and 10 of the Bill provide for power to make rules for civil defence, constitution of Civil Defence Corps and payment of compensation to members of the Corps who sustain injury on duty respectively. These provisions will involve expenditure from the Consolidated Fund of India.

2. The entire expenditure on implementation of civil defence measures in Union territory Administration without Legislatures is met directly by the Central Government out of the Consolidated Fund of India and this expenditure is likely to be of the order of Rs. 13'61 lakhs non-recurring and Rs. 7:40 lakhs recurring. The ex- penditure in Union territories with Legislatures is indirectly borne by the Central Government by meeting their revenue gaps through grants-in-aid. This expenditure is likely to be about Rs. 1-80 lakhs non-recurring and Rs. 1 lakh recurring.

3. The expenditure on civil defence in States is initially borne by the State Governments but, later on one-half of the expenditure incurred by them on authorised items of civil defence is reimbursed to them. Besides the said reimbursement, the entire expenditure on civil defence in the State of Assam and in the five northern districts of West Bengal is also reimbursed by the Central Govern- ment. The expenditure on these reimbursements is likely to be of the order of Rs. 93'05 lakhs non-recurring and Rs. 49-60 lakhs recurring.

4. The expenditure on the provision of external air raid warning is met entirely by the Central Government. It is expected that this expenditure will be about Rs. 1 lakh per annum.

5. It will be seen from above that if the Bill is enacted the ex- penditure on implementation of civil defence measures from the Consolidated Fund of India would be of the order of Rs. 108¹46 lakhs non-recurring and Rs. 59 lakhs recurring.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 3 of the Bill empowers the Central Government to make rules for providing Tor matters connected with civil defence. These matters in respect of which rules may be made relate, inter alia, to the prevention ol' the prosecution of any work likely to prejudice civil defence; instruction of members of the public regarding civil defence and their equipment for the purposes of such defence; pro- vision, storage and maintenance of commodities and things required lor civil defence; prohibition or regulation of traffic and the use of vessels, buoys, lights and signals in ports and territorial, tidal or inland waters; control of lights and sounds; protection of life and property by taking fire prevention or other measures, etc. These matters pertain to details necessary lor the effective administratiOTi i-f the provisions of the Bill and as such the delegation of legislative power is of a normal character.

Clause 9 of the Bill empowers the Central Government to make regulations for carrying out the purposes of Chapter III of the Bill. These purposes include the functions of the members of the Civil Defence Corps and regulation of the manner in which they may be (.ailed out for service; regulation of the organisation, conditions of service, discipline, accoutrement and clothing of members of the Civil Defence Corps and the form of certificate of membership of the said Corps. These matters also pertain to details necessary for the effective functioning of the Civil Defence Corps and as such the delegation of legislative power is of a normal character.

Clause 20 of the Bill provides that every rule and every regula- tion made by the Central Government under the Bill shall ba laid before Parliament and shall be subject to modification by Parlia- ment.

Clause 17 of the Bill provides for the delegation of the powers ot the State Government to an officer not below the rank of the District Magistrate and the powers of the Controller to an officer not below the rank of a Sub-Divisional Magistrate under such conditions and restrictions as may be specified in the notification whereby such delegation o[ powers is made. This delegation of powers pertains to procedure necessary for the effective administration of the provisions of the Bill snd cts swh tho delegation of the powers IK of a normal character.

S. L. SHAKDHEE,

Secretary

HUNTED TTY TIIK GENERAL MANAGElt, GOVERNMENT OF INDIA PHKSS, MINTO KOMI NFTW DELHI AND PUGI.KiIIT:i> BY TH5. MENACES OV PUBLICATIONS, 1<)67.