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REGISTERED No. D-(D) -72

The Gazette of India

EXTRAORDINARY

PART II—Section 1

PUBLISHED BY AUTHORITY

No. 61] NEW DELHI, THURSDAY, AUGUST 21,1975/SRAVANA 30,1897

Separata paging is given to this Part to order that it may be filed

as a separate compilation

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (Legislative Department) New Delhi, the 21st August 1975/Sravana 30, 1897 (Saka)

The following Act of Parliament received the assent of the President on the 20th'August, 1975, and is hereby published for general informa- tion:—

THE PUBLIC FINANCIAL INSTITUTIONS LAWS

(AMENDMENT) ACT, 1975 No. 52 OF 1975

[ 20th August, 1975 ]

An Act further to amend the Industrial Development Bank of India Act; 1964, the Reserve Bank of India Act, 1934, the Industrial Finance Corporation Act, 1948, the State Financial Corporations Act, 1951, the Life Insurance Corporation Act, 1956 and the Unit Trust of India Act, 1963.

BE it enacted by Parliament in the Twenty-sixth Year of the Republic of India as follows: —

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Public Financial Institutions Laws (Amendment) Act, 1975.

Short title and com- mence- ment.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act; and references in any provision to the commencement of this Act shall be construed as references to the commencement of that provision.

CHAPTER II

18 of 1964

Amend- ment of the long title.

AMENDMENTS TO THE INDUSTRIAL DEVELOPMENT BANKOFINDIAACT, 1964 2. In the Industrial Development Bank of India Act, 1964 (hereinafter In this Chapter referred to as the Development Bank Act), in the long title, after the words "Industrial Development Bank of India", the words "as the principal financial institution for co-ordinating, in conformity with national priorities, the working of institutions engaged in financing, pro-

(597)

moting or developing industry, for assisting the development of such in- stitutions" shall be inserted.

3. In section 2 of the Development Bank Act,—

(a) for clause (c), the following clause shall be substituted, Amend- ment of section 2.

namely: —

'(c) "industrial concern" means any concern engaged or to be engaged in,—

(i) the manufacture, preservation or processing of goods;

(ii) ihipping;

(itt) mining;

(iv) the hotel industry;

(u) the transport of passengers or goods by road or by water or by air;

(wi) the generation or distribution of electricity or any other form of power;

(uii) the maintenance, repair, testing or servicing of machinery of any description or vehicles or vessel* or motor boats or trailers or tractors;

(viii) assembling, repairing or packing any article with the aid of machinery or power;

(ix) the development of any contiguous area of land as an industrial estate;

(x) fishing or providing shore facilities for fishing or maintenance thereof;

(xi) providing special or technical knowledge or other services for the promotion of industrial growth; or

(xii) the research and development of any process or product in relation to any of the matters aforesaid.

Explanation.—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 like operation.';

(b) after clause (tl), the following clause shall be inserted,

namely: —

'(da) "nationalised bank" means a corresponding new bank specified in the First Schedule to the Banking Companies (Acqui- sition and Transfer of Undertakings) Act, 1970;';

B Otf X070.

(c) after clause (g), the following clauses shall be inserted, namely: —

•(ga) "State Bank" means the State Bank of India consti-

23 of 1958.

tuted under the State Bank of India Act, 1955;

(gb) "subsidiary bank" has the meaning assigned to It In the

38 of 1069.

cs+n+"> Bank of India (Subsidiary Banks) Act, 1959;';

(d) after clause (i), the following clause snail De inserted,

namely:—

((j) "Unit Trust" means the Unit Trust of India established 52 of 1963.

under section 3 of the Unit Trust of India Act, 1963.*.

Amend- ment of section 3.

4. In section 3 of the Development Bank Act, in sub-section (3), for the words "Reserve Bank", the words "Central Government" shall be substituted.

5. In the Development Bank Act, for section 4, the following sections

shall be substituted, namely: —

Substitu- tion of New sec- tions for section 4.

'4. The authorised capital of the Development Bank shall be one hundred crorea of rupees:

Authoris- ed capital.

Provided that the Central Government may, by notification in the Official Gazette, increase the said capital up to twe hundred crores of rupees.

Transfer of capital to Cen- tral Gov- ernmtjnt, 4A. (1) The issued capital of. the Development Bank which has been subscribed by the Reserve Bank as on the date immediately preceding the commencement of section 5 of the Public Financial Institutions Laws (Amendment) Act, 1975 (hereinafter referred to as the "appointed day"), shall, on such commencement, stand trans- ferred to, and vested in, the Central Government.

(2) Any further Issue of capital made by the Development Bank after the appointed day shall be wholly subscribed by the Central Government.

Payment of amount.

4B. The Reserve Bank shall be given by the Central Govern- ment, in cash, for the transfer to, and vesting dn, the Central Govern- ment of the issued capital of the Development Bank which has been subscribed by the Reserve Bank, an amount equal to the face value of the said subscribed capital.'.

6. In section 5 of the Development Bank Act,—

(o) for sub-section (2), the following sub-section shall be substi-

tuted, namely: —

Amend- ment of section 5 "(2) Save as otherwise provided in regulations made under this Act,—

(a) the chairman, if he is a whole-time director or if he is holding offices both as the chairman and the managing director, or

(b) the managing director, if the chairman is not a whole-time director, or, if the chairman being a whole-time director, is absent,

shall also have powers of general superintendence, direction and management of the affairs and business of the Development Bank and may also exercise all powers and do all acts and things which may be exercised or dene by the Development Bank."; (b) after sub-section (3), the following sub-section shall be

inserted, namely: —

"(4) In the discharge of its functions under this Act, the Development Bank shall be guided by such directions in matters

of policy Involving public interest as the Central Government may give to it in writing,".

7. For section 6 of the Development Bank Act, the following section

shall be substituted, namely:—

Substitu- tion of new sec- tion for section 6.

"6. (2) The Board shal] consist of the following, namely: —

(o) a chairman and a managing director appointed by the

Constitu- tion of Board.

Central Government:

Provided that the same person may be appointed to function

both as chairman and as managing director;

(b) a Deputy Governor of the Reserve Bank nominated by

that Bank;

(c) not more than twenty directors nominated by the

Central Government of whom—

(i) two directors shall be officials of the Central Gov-

ernment;

(ii) not more than five directors shall be from financial

institutions;

(iii) two directors shall be from amongst the employees of the Development Bank and the financial Institutions, and of such directors, one shall be from amongst the officer em- ployees and the other from amongst the workmen employees, selected In such manner as may be prescribed;

(iu) not more than six directors shall be from the State Bank, the nationalised banks and the State Financial Cor- porations;

(v) not less than five directors shall be persons who have special knowledge of, and professional experience in, science, technology, economics, industry, Industrial co-operatives, law, industrial finance, investment, accountancy, marketing or any other matter, the special knowledge of, and professional ex- perience in, which would, in the opinion of the Central Gov- ernment, be useful to the Development Bank.

(2) The chairman and the managing director shall hold office for auch term not exceeding five years as the Central Government may specify in this behalf and any person so appointed shall be eligible for re-appointment.

(3) The chairman and the managing director shall receive such nalary and allowances as may be determined by the Central Govern- ment.

(4) A nominated director shall hold office during the pleasure of

the authority nominating him.

(5) The Board shall meet at such times and places and shall ob- serve such rules of procedure in regard to the transaction of business at Its meetings as may be prescribed.

(6) The chairman or, if for any reason he Is unable to attend a meeting of the Board, the managing director or, in the event of both

the chairman and the managing director being unable to attend a meeting, any other director nominated by the chairman in this behalf and in the absence of such nomination any director elected by the directors present from among themselves! shall preside at the meeting,

(7) 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 managing director, or in the absence of both the chairman and the managing director, the person presiding, shall have a second or casting vote.

(8) Save as provided in sub-section (7), every director of the Board shall have one vote.".

8. In the Development Bank Act, after section 6, the following gection shall be inserted, namely: —

Insertion of new section 6A.

Financial Institution "6A. Each of the Institutions specified in this section, and no other institution, shall be regarded, for the purposes of this Chapter, as a financial institution, namely: —

7 of 1913.

(i) the Industrial Credit and Investment Corporation of India Limited, formed and registered under the Indian Com- panies Act, 1913;

IB of 1948.

(it) the Industrial Finance Corporation of India, established under section 3 of the Industrial Finance Corporation A.ct, 1948;

(Hi) the Industrial Reconstruction Corporation of India Limi- L of 1956.

ted, formed and registered under the Companies Act, 1956;

(iv) the Life Insurance Corporation of India, established 31 of 1966.

under section 3 of the Life Insurance Corporation Act. 1956;

(v) the Unit Trust; and

(ui) such other institution as the Central Government may, bv notification in the Official Gazette, specify in this behalf.".

9. In section 7 of the Development Bank Act, for sub-section (J), the following sub-section shall be substituted, namely: —

Amend- ment of section 7.

"(1) The Board shall constitute an Executive Committee con- sisting of—

(a) the chairman;

(b) the managing director;

(c) the director nominated by the Reserve Bank under clause (b) of sub-section (1) of section 6;

(d) eight of the directors nominated by the Central Govern- ment of whom—

(I) two shall be directors nominated under Bub-clause (i) of clause (c) of sub-section (I) of section 6; and

(li) six shall be directors nominated under sub-clause (ii) or sub-clause (u) of clause (c) of sub-section £1) of section 6.".

10. In section 8 of the Development Bank Act, for the proviso, the following proviso shall be substituted, namely: —

Amende ment ctf section 8.

"Provided that no fees shall be payable to the chairman, If he is appointed whole-time, or to the managing director or to any other director or member who is an official of the Government, or to a Deputy Governor of the Reserve Bank or to any official of the Deve- lopment Bank.".

11. In section 9 of the Development Bank Act, in sub-section (1),—

Amend- ment of section 9.

(a) for the words "The Development Bank may", the words "The Development Bank shall function as the principal financial institu- tion for co-ordinating the working of institutions engaged in financ- ing, promoting or developing industry and for assisting the develop- ment of such institutions in such manner as it may deem appropriate and may" shall be substituted;

(b) in clause (a), the brakcets and words "(including concern* engaged or to be engaged in the development of any contiguous area of land as an industrial estate)", wherever they occur, shall be omit- ted;

(c) in clause (ka), in sub-clause (ii), for the words "on the re- commendation of", the words "in consultation with" shall be substi- tuted;

(d) in clause (m), the words ", on the recommendation of the Reserve Bank," shall be omitted.

12. In section 16 of the Development Bank Act, after sub-section (1), the following sub-section shall be inserted, namely: —

Amend- ment of section 16,

"(1A) Where the Development Bank considers it necessary or desirable so to do, it may, subject to the provisions of sub-sectiona (2) and (3), disburse or spend from the Development Assistance Fund any amount for one or more of the purposes specified in clause (1) or clause (m) of sub-section (!) of section &.".

13. In section 18 of the Development Bank Act,—

(a) in sub-section (3), for the words "Reserve Bank", the words Amend- ment at section 18.

"Central Government" shall be substituted;

(b) in sub-section (5),—

(i) the words "and the Reserve Bank" shall be omitted;

(ii) for the words "the Development Bank shall cause to be published in the Official Gazette copies of the said balance-sheet, accounts and reports", the words "the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament" shall be substitu- ted.

Amend- ment of sectlont 22.

14. In section 22 of the Development Bank Act, in sub-section (2), for the words "Reserve Bank", the words "Central Government" shall be substituted.

15. In section 23 of the Development Bank Act,—

Amend- ment of section 23.

(o) for the words "Reserve Bank", wherever they occur, the words "Central Government" shall be substituted;

(fa) in sub-section (5), for the words "the Development Bank shall cause to be published in the Official Gazette copies of the said balance-sheet, accounts and reports", the words "the Central Gov- ernment shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament" shall be substi- tuted.

16. In section 26 of the Development Bank Act, after sub-section (2), the following sub-sections shall be inserted, namely: —

Amend- ment of section 26.

" (3) Every member of the staff—

(a) whose services are being, immediately before the appointed day, utilised by the Development Bank under sub- section (2), or

(b) whose services, having been made available to the Deve- lopment Bank, stand immediately before the appointed day, de- puted by that Bank to any other organisation,

shall, on and from the appointed day, be deemed to be appointed by the Development Bank under sub-section (1) on the same salary, emoluments and other terms and conditions of service to which he was entitled immediately before the appointed day:

Provided that every member of the staff aforesaid other than those recruited specifically for utilisation in the Development Bank, may, before the expiry of a period of eighteen months from the ap- pointed day, elect to go back to the Reserve Bank by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option, the Reserve Bank shall, before the expiration of a period of thirty months from the appointed day, take back such member of the staff and on such member being taken back by the Reserve Bank, he shall become a member of the staff of the Reserve Bank and shall cease to be a member of the staff of the Development Bank.

(4) If on the appointed day or at any time thereafter any of the functions of the Reserve Bank ia transferred to the Development Bank, it shall be lawful for the Development Bank to appoint, with the previous approval of the Reserve Bank, such of the members of the staff of the Reserve Bank whose services were, immediately before the transfer aforesaid, being utilised by the Reserve Bank in connection with any of the said functions, and every member of the staff so appointed shall be released by the Reserve Bank and be deemed to be appointed by the Development Bank under sub-section (I) on the same salary, emoluments and other terms and conditions of service to which he was entitled immediately before the date of his appointment:

Provided that every member of the staff aforesaid may, before the expiry of a period of eighteen months from the appointed day, elect to go back to the Reserve Bank by exercising an option in. writing to that effect, the option once exercised being final and on the exer- cise of such option, the Reserve Bank shall, before the expiration of a period of thirty months from the appointed day, take back such member of the staff and on such member being taken back by the Reserve Bank he shall become a member of the staff of the Reserve Bank and shall cease to be a member of the staff of the Development Bank.

52 of 1963.

(5) Notwithstanding anything contained elsewhere in this Act or in any other law or in any contract, for the time being in force, for a temporary period, not being a period exceeding eighteen months from the appointed day or the date notified under section 4A of the Unit Trust of India Act, 1963, whichever is earlier, if the Reserve Bank in consultation with the Development Bank or the Unit Trust considers it necessary, in the interest of any of the said insti- tutions to promote any member of the staff of any of the said institutions to a post in either of the other two institutions, it shall be lawful, for the Reserve Bank to transfer on promotion any such member of staff to that other institution and on such transfer each "uch member of the staff shall be deemed to be a member of the staff of the other institution to which he is so transferred and shall be entitled to the same salary, emoluments and other conditions of service to which he was entitled immediately before the date of such transfer, including benefits, if any, arising directly out of such pro- motion:

52 of 1963.

Provided that every member of the staff aforesaid may, before the expiry of a period of eighteen months from the appointed day or the date notified under section 4A of the Unit Trust of India Act, 1963, whichever is earlier, elect to go back to the institution from which he was so transferred by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option, that institution shall, before the expiration of a period of thirty months from the appointed day or the date notified under section 4A of the Unit Trust of India Act, 1963, whichever Is earlier, take back such member of the staff and on such member being taken back by that Institution, he shall become a member of its staff and shall cease to be a member of the staff of the Institution to which he was earlier transferred.

(6) Notwithstanding anything contained in any other law or in any agreement, for the time being in force, no member of the staff shall be entitled to claim any compensation for, or in relation to any matter concerning, his transfer, appointment, or as the case may be, return, under sub-sections (3) to (5) and no claim in respect thereof shall be entertained by any court, tribunal or other authority.".

17. In section 29 of the Development Bank Act, after sub-section (1), the following sub-section shall be inserted, namely: —

Amend- ment of section 29

'(1A) The Development Bank may, for the purpose of the effi- cient discharge of its functions under this Act, collect from or fur- nish to the Central Government, the State Bank, any subsidiary bank, nationalised bank or other scheduled bank, State Co-operative

Bank, State Financial Corporation or such other financial institu- tion, as may be notified by the Central Government in this behalf, credit information or other information as it may consider useful for the purpose, in such manner and at such times, as it may think fit.

Eocplanation.—For the purpose of this sub-section, the expression

2 of 1934.

"credit information" shall have the same meaning as in clause (c) of section 45A of the Reserve Bank of India Act, 1934, subject to the modification that "banking company" referred to therein shall mean the State Bank, any subsidiary bank, nationalised bank or other scheduled bank, State Co-operative Bank, State Financial Corporation or other financial institution as aforesaid.'.

18. In section 37 of the Development Bank Act,—

(a) in sub-section (1), for the words "Reserve Bank", the words

Amend- ment of section 37.

"Central Government" shall be substituted;

(b) in sub-section (2), in clause (b), the words "constitution and" shall be omitted.

19. After section 38 of the Development Bank Act, the following sec- Ion shall be inserted, namely: —

Insertion of ntw section 39.

Power to remove difficulty.

"39. If any difficulty arises in giving effect to the provisions of this Act, as amended by the Public Financial Institutions Laws (Amendment) Act, 1975, the Central Government may, by order, do anything, not inconsistent with such provisions, for the purpose of removing the difficulty:

Provided that no such order shall be made after the expiration of three years from the date of commencement of the said Amend- ment Act.".

CHAPTER HI

AMENDMENT TO THE RESERVE BANK OF INDIA ACT, 1934

20. In the Reserve Bank of India Act, 1934, in section 54AA, for sub- 2 of 1934.

section (2), the following sub-section shall be substituted, namely: —

Amend- ment of section 54AA.

"(1) The Bank may, notwithstanding anything contained in any law, or in any agreement, for the time being in force, depute any member of its staff for such period as it may think fit,—

(a) to any institution which is wholly or substantially owned by the Bank; (b) to the Development Bank, so, however, that no such de- putation shall continue after the expiration of thirty months from the commencement of section 5 of the Public Financial In- stitutions Laws (Amendment) Act, 1975;

(c) to the Unit Trust, so, however, that no such deputation shall continue after the expiration of thirty months from the date notified by the Central Government under sub-section (1) of section 4A of the Unit Trust of India Act, 1963,

62 of 1963.

and thereupon the person so deputed shall, during the period of his deputation, render such service to the institution to which he is SO deputed as that institution may require.".

CHAPTER IV

EXTENSION OF THE INDUSTRIAL FINANCE CORPORATION ACT, 1948 TO

KOHIMA AND MOKOKCHUNG DISTRICTS

21. The Industrial Finance Corporation Act, 1948, shall, as from the commencement of the Public Financial Institutions Laws (Amendment) Act, 1975, extend to the Kohima and Mokokchung districts In the State of Nagaland and shall come into force therein on such date as the Central Government may, by notification in the Official Gazette, appoint.

CHAPTER V

Extension of Act 15 of 1948 to Kohima and Mokok- chung districts In Naga- land.

AMENDMENT TO THE INDUSTRIAL FINANCE CORPORATION ACT, 1948

15 of 1948.

22. In section 10A of the Industrial Finance Corporation Act, 1948 Amend- ment of section 10A.

(hereinafter in this Chapter referred to as the Industrial Finance Cor- poration Act), in sub-section (2), for the words "three years", the words "four years" shall be substituted.

23. In section 42 of the Industrial Finance Corporation Act,—

Amend-

ment of

section

42.

(i) in sub-section (1), for "The Central Government may, In consultation with the Development Bank", substitute "the Central Government may, in consultation with the Development Bank and by notification in the Official Gazette,";

(ii) in sub-section (2), for "two successive sessions, and, if, be- fore the expiry of the session in which it is so laid or the session im- mediately following," substitute "two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid".

CHAPTER VI

AMENDMENTS TO THE STATE FINANCIAL CORPORATIONS ACT, 1951

63 of 1851,

Amend- ment of section 9A,

24. In the State Financial Corporations Act, 1951 (hereinafter in this Chapter referred to as the State Financial Corporations Act), in sub-sec- tion (1) of section 3A, for the words "Reserve Bank", the words "Deve- lopment Bank" shall be substituted.

Amend- ment of section 4.

25. In section 4 of the State Financial Corporations Act, in sub-s"ction (1), for the words "five crores", the words "ten crores" shall be substi- tuted.

26. In section 4A of the State Financial Corporations Act,—

(a) for sub-section (1), the following sub-section shall be sub- stituted, namely: —

Amend- ment of section 4A.

"CO The State Government may, in consultation with the Development Bank, specify from time to time such part of the unissued capital of the Financial Corporation as shall be alloca- ted for the issue of a special class of shares."'

(b) in sub-sections (2) and (3), for the words "Reserve Bank" wherever they occur, the words "Development Bank" shall be sub' stituted.

* e

21. After section 4A of the State Financial Corporations Act, the fol-

lowing sections shall be inserted, namely:—•

Insertion of new sections 4B and 4C.

Transfer of share capital to Develop- ment Bank.

"4B. On such date as the Central Government may, by notifica- tion in th* Official Gazette, specify (hereinafter referred to as the specified date), all the shares of every Financial Corporation sub- scribed by the Reserve Bank as on the date immediately preceding the sp9Cifled date, shall, stand transferred to, and vested in, the Deve- lopment Bank.

Payment of amount.

4C. The Reserve Bank ahall be given by the Development Bank, in cash, for the transfer to, and vesting in, the Development Bank of the shares of every Financial Corporation which have been sub- scribed by the Reserve Bank, an amount equal to the face value of the shares of the Financial Corporation so subscribed.".

Amend- ment of section 6.

28. In section 5 of the State Financial Corporations Act, after the words '*the Reserve Bank", the words "the Development Bank" shall be inser- ted.

29. In section 7 of the State Financial Corporations Act.—

Amend- ment of section 7.

(a) in sub-section (1), after the words "in consultation with",

the words "the Development Bank and" shall be inserted;

(b) after sub-section (2), the following sub-section shall be in-

serted, namely: —

" (2A) No money shall be borrowed by the Financial Cor- poration from the Reserve Bank under sub-section (2), except with the previous approval of the Development Bank.";

(c) in sub-section (3), after the words "in consultation with",

the words "the Development Bank and" shall be Inserted;

(d) in sub-section (4), for the words "Reserve Bank", the words

"Development Bank" shall be substituted.

:'~Tr:

Amend- ment of section. 8.

30. In section 8 of the State Financial Corporation* Act, in ^ub-sec- tion (1), for the words '-the State Government and the Reserve Bank", the words "the State Government, the Development Bank and the ;Re- .serve.Bank" shall be substituted.

.31. In section 10 of the State Financial Corporations Act,—

Amend- ment of section 10.

(a) in clause (a),—

(i) for the word "three", the word "four" shall be substitu-

ted;

(ii) after the words "by the State Government", the words "of whom one director shall be a person who has -special know- ledge of or experience in small-scale industries" shall be inserted;

(Hi) after the proviso, the following further proviso shall be

inserted, namely: —

"Provided further that in the case of a Joint Financial Corporation, the director, who shall have special knowledge of, or experience in, small-scale industries, shall be nomina- ted by that participating State which, according to the terms of agreement between the participating States, is entitled to make such nomination.";

(b) in clause (c), for the words "one director", the words "two

directors" shall be substituted;

(c) in clause (f), for the words "Reserve Bank", the words

"Development Bank" shall be substituted.

32, In section 17 of the State Financial Corporations Act, in sub-sec- Amend- ment of section 17

tion (1), in the proviso to clause (a), after the words "State Govern- ment", the words "or the Development Bank" shall be inserted.

33. In section 18 of the State Financial Corporations Act, in sub-sec-

tion (1), in clause (a),—

Amend- ment of section 18.

(a) for the words "two directors elected by the nominated direc- tors, one from among the directors nominated by the State Govern- ment, and one", the words "four directors elected by the nominated directors, of whom two shall be from among the directors nominated by the State Government and two" shall be substituted;

(b) in the proviso, for the words "one director elected", the

wnrrls "two rHrpctnrs plected" shall be substituted.

Amend- ment of section 23.

34. In section 23 of the State Financial Corporations Act, in the pro- viso, for the words "Reserve Bank", the words "Development Bank" shall be substituted.

Amend- ment of flection 25.

36. In section 25 of the State Financial Corporations Act, in sub- section (1), in clause (f), and in sub-section (J), for the words "Reserve Bank", wherever they occur, the words "Development Bank" shall be substituted.

36. In section 35A of the State Financial Corporations Act, in sub- section (1), after the proviso, the following further proviso shall be in- serted, namely:—

Amend- ment of section 35A.

'Provided further tkat after the specified date this sub-section shall have effect as if for the words "the State Government, the Re- serve Bank and the Development Bank", the words "the State Gov- ernment and the Development Bank" have been substituted except as regards all dividends accruing in respect of any completed accounting period prior to the specified date.'.

37 In the State Financial Corporations Act, in sections 37A, 39, 46A and 48, for the words "Reserve Bank", wherever they occur, the words "Development Bank" shall be substituted.

Amend- ment of sections 37A, 39, 46A and 48.

38. In the State Financial Corporations Act, in section 38,—

Amend-

ment of

section 38.

(a) for the words "to the State Government and to the Reserve Bank", wherever they occur, the words "to the State Government, the Development Bank and the Reserve Bank" shall be substituted;

(b) in sub-section (2) as so amended, for the words "the State Government or the Reserve Bank", the words "the State Government or the Development Bank or the Reserve Bank" shall be substituted.

39. After section 48 of the State Financial Corporations Act, the following section shall be inserted, namely: —

Insertion

of new

section 49.

Power to remove difficulty.

"49. If any difficulty arises in giving effect to the provisions of this Act, as amended by the Public Financial Institutions Laws (Amendment) Act, 1975, the Central Government may, by order, do anything, nqt inconsistent with such provisions, for the purpose of removing the difficulty:

Provided that no such order shall be made after the expiration of three years from the commencement of the said Amendment Act.".

CHAPTER VII

AMENDMENTS TO THE LIFE INSURANCE CORPORATION ACT, 1956

31 of 1956,

40 Tn tVie Life Insurance Corporation Act, 1956 (hereinafter referred Amend- msnt at section 4.

to as the Life Insurance Act), in section 4, In sub-section (I), for the word "fifteen", the word "sixteen" shall be substituted.

41. After section 6 of the Life Insurance Act, the following section

shall be inserted, namely: —

Insertion

of new

lection 6A.

Power to

impose

condi-

tions, etc.

"6A, (1) In entering into any arrangement, under section 6, with any concern, the Corporation may impose such conditions as it may think necessary or expedient for protecting the interest of the Cor- poration and for securing that the accommodation granted by it is put to the hest use by the concern.

1 of 1986.

(2) Where any arrangement entered into by the Corporation under section 6 with any concern provides for the appointment by the Corporation of one or more directors of such concern, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contain- ed in the Companies Act, 1956, or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the concern, and any provision regarding share qualification, age limit, number of director-ships, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the Corporation in pursuance of the arrangement as aforesaid.

(3) Any director appointed as aforesaid shall—

(a) hold office during the pleasure of the Corporation and may be removed or substituted by any person by order In writing by the Corporation;

(b) not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or anything in relation thereto;

(c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement.".

Amend- ment of section 19.

42. In section 19 of the Life Insurance Act, in sub-section (2), for the words "seven members of whom not less than three", the words "eight members of whom not less than four" shall be substituted.

43. In section 48 of the Life Insurance Act, for sub-section (3), the

following sub-section shall be substituted, namely: —

Amend- ment of section *8-

' (3) Every rule made by the Central Government 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 or more successive sessions, and if, before the expiry of the session immediately follow- ing the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only In such modified form or be of* no effect, as the case ihay be; BO, how- ever, that any such modification or annulment shall be without pre- judice to the validity of anything previously done under that rule.'.

CHAPTER VIII

AMENDMENTS TO THE UNIT TRUST OF INDIA ACT, 1963

44. In section 2 of the Unit Trust of India Act, 1963 (hereinafter

82 of 1963.

Amend- ment of section 2.

referred to as the Unit Trust Act), clause (cc) shall be re-lettered as clause (cb) and before clause (cb) as so re-lettered, the following clause shall be ihserted, namely: —

'(ca) "Development Bank" means the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964;'.

IB of 1964.

Amend- ment of section 3.

45. In section 3 oi the Unit Trust Act, in sub-section (2), for the words "Reserve Bank", the words "Development Bank" shall be sub- stituted.

46. After section 4 of the Unit Trust Act, the following Sections shall

be inserted, namely:—

Insertion of now sections 4Aand4K

Transfer of initial capital to Develop- ment Bank.

"4A. On such date as the Central Government may, by notifica- tion in the Official Gazette, appoint (hereinafter referred to as the notified date), all the contributions made by the Reserve Bank to the initial capital of the Trust, as on the date immediately preceding the notified date, shall, stand transferred to, and vested in, the Develop- ment Bank.

Payment of amount.

4B. The Reserve Bank shall be given by the Development Bank, In cash, for the transfer to, and vesting in, the Development Bank of the contributions made to the initial capital of the Trust by the Reserve Bank, an amount equal to the contributions to the initial capital so transferred.".

47. In section 10 of the Unit Trust Act,—

Amend- ment of section 10.

(a) in clause (a), for the words "Reserve Bank", the words "Central Government in consultation with the Development Bank" shall be substituted;

(b) after clause (a), the following clause shall be inserted,

namely: —

" (a

(c) in clauses (b) and (f), for the words "Reserve Bank" wherever they occur, the words "Development Bank" shall be sub- stituted.

48. After section 10 of the Unit Trust Act, the followjng section shall

be inserted, namely:—

Insertion of new section 10A.

"10A. Every person holding office, immediately before the noti- fied date, as Chairman under clause (a) of section 10 or as trustee, not being an officer of the Reserve Bank, nominated under clause (b) of that section or as executive trustee appointed under clause (f) thereof, shall, notwithstanding the amendment of this Act by the Public Financial Institutions Laws (Amendment) Act, 1975, continue, subject to the same conditions, to hold office for the un- expired portion of his term.".

Transi- tional provision for continu- ance of Chairmai and certain trustees of the Board.

Amend- ment of section 11.

49. In section 11 of the Unit Trust Act, in sub-sections (1) and (2), after the words "Reserve Bank" wherever they occur, the words "or the De- velopment Bank" shall be inserted and in sub-section (1) as so amended, before the words, brackets and letter "under clause (b)", the words, brackets and letters "under clause (aa) or" shall be inserted.

50. In section 12 of the Unit Trust Act, in clause (d), for the words "Reserve Bank", the words "Development Bank" shall be substituted.

Amend- ment erf section 12.

Amend- ment of section 13.

5L In section 13 of the Unit Trust Act, after the words "of the Re- serve Bank" at the two places where they occur, the words "or of the Development Bank" shall be inserted.

52. In the Unit Trust Act, in sections 14, 15, 18, 25, 27, 30, 41 and sub- section (1) of section 43, for the words "Reserve Bank" wherever they occur, the words "Development Bank" shall be substituted.

Amend- ment of sections H 15, 18. 25, 27, 30. 41 and 43.

53. After section 19 of the Unit Trust Act, the following section shall

be inserted, namely:—

Insertion of new section 19A.

Power to impose condi- tions, etc.

"19A. (1) In entering into any arrangement, under section 19, with any concern, the Trust may impose such conditions as it may think necessary or expedient for protecting the interest of the Trust and for securing that the accommodation granted by It is put to the best use by the industrial concern.

I of 1956.

(2) Where any arrangement entered into by the Trust under section 19 with any concern provides for the appointment by the Trust of one or more directors of such concern, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary con- tained in the Companies Act, 1956, or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the concern, and any provision regarding share qualification, age limit, number of director-ships, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the Trust in pursuance of the arrangement as aforesaid.

(3) Any director appointed as aforesaid shall,—

r

(a) hold office during the pleasure of the Trust and may be removed or substituted by any person by order in writing by the Trust;

(b) not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or any- thing in relation thereto;

(c) not be liable to retirement by rotation and shall not be taken into account for computing the number of directors liable to such retirement.".

54. In section 20A of the Unit Trust Act,—

Amend- ment of section 20A.

(a) for the words "The Reserve Bank may", the words "The Reserve Bank or the Development Bank may" shall be substituted;

(b) for the words "payable to the Reserve Bank", the words "payable to the Reserve Bank or, as the case may be, the Develop- ment "Ranlr" aViall ho aiihatitllted-

55. In the Unit Trust Act, for section 29, the following section shall

be substituted, namely: —

Substitu- tion of new section for section 29.

Furnish- ing of informa- tion.

"29. The Reserve Bank or the development Bank may, from time to time, call upon the Trust to furnish such information as either of the said banks may require, and the Trust shall be bound to furnish the same.".

5ft. In section 31 of the Unit Trust Act, after sub-section (2), the following sub-sections shall be inserted, namely: —

Amend' ment of section 31.

"(3) Every member of the staff of the Reserve Bank,—

(a) whose services are being, immediately before the noti- fied date, utilised by the Trust under sub-section (2), or

(b) whose services, having been made available to the Trust, stand, immediately before the notified date, deputed by the Trust to any other organisation,

shall, on and from the notified date, be deemed to be appointed by the Trust under sub-section (I) on the same salary, emoluments and other terms and conditions of service to which he was entitled immediately before the notified date:

Provided that every member of the staff aforesaid may, be- fore the expiry of a period of eighteen months from the notified date, elect to go back to the Reserve Bank by exercising an option in writing tot that effect, the option once exercised being final, and on the exercise of such option, the Reserve Bank shall, before the expiration of a period of thirty months from the notified date, take back such member of the staff and on such member being taken back by the Reserve Bank, he shall become a member of the staff of the Reserve Bank and shall cease to be a member of the staff of the Trust.

(4) Notwithstanding anything contained elsewhere in this Act or in any other law or in any contract, for the time being in force, for a temporary period, not being a period exceeding eighteen months from the notified date or the date of commencement of sec- tion 5 of the Public Financial Institutions Laws (Amendment) Act, 1975, whichever is earlier, if the Reserve Bank, In consultation with the Trust or the Development Bank, considers it necessary in the interests of the said institutions, to promote any member of the staff of any of the said institutions to a post in either of the other two institutions, it shall be lawful for the Reserve Bank to transfer on promotion any such member of the staff to that other institution, and on such transfer each such member of the staff shall be deemed to be a member of the staff of the institution to which he is so transferred and shall be entitled to the same salary, emoluments and other terms and conditions of service to which he was entitled immediately before the date of such transfer including benefits, if any, arising directly out of such promotion:

Provided that every member of the staff aforesaid may, before the expiry of a period cf eighteen months from the notified date or the date of commencement of section 5 of the Public Financial Institutions Laws (Amendment) Act, 1975, whichever is earlier, elect to go back to the institution from which he was so transferred by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option, that insti- tution shall, before the expiration of a period of thirty months from

the notified date or the date of commencement of section 5 of the Public Financial Institutions Laws (Amendment) Act, 1975, which- ever) is earlier, take back such member of the staff and on such member being taken back by that institution, he shall become a member of its staff and shall cease to be a member of the staff of the institution to which he was earlier transferred.

(5) Notwithstanding anything contained in any other law or in any agreement, for the time being in force, no member of the staff shall be entitled to claim any compensation for, or in relation to, any matter concerning, bis transfer, appointment or, as the case may be, return, under sub-sections (3) and (4), and no claim in respect thereof, shall be entertained by any court, tribunal or other autho- rity.".

57. In section 37 of the Unit Trust Act, for the words "the Reserve Bank" at the two places where they occur, the words "the Reserve Bank or the Development Bank" shall be substituted.

Amend- ment of section 37.

58. After section 44 of the Unit Trust Act, the following section shall

be inserted, namely: —

Insertion of new section 45.

Power to remove difficulty.

"45 If any difficulty arises in giving effect to the provisions oi this Act, as amended by the Public Financial Institutions Laws (Amendment) Act, 1975, the Central Government may by- order do anything, not inconsistent with such provisions, for the purpose of removing the difficulty:

Provided that no such order shall be made after ^ expixa^on of three years from the date of commencement of the said Amend ment Act.".

K. K. SUNDARAM, Secy, to the Govt. of India,

~~t^TNTED BY THE GENERAL MANAGER, GOVERNMENT OF INDIA PRES8. MINTO ROAD OTW DELffl^fp PUBLISHED BY THE CONTROLLEH OF PUBLICATIONS, DELHI, 1975