THE INDUSTRIAL DEVELOPMENT BANK (TRANSFER OF UNDERTAKING AND REPEAL) ACT, 2003

CHAPTER IPRELIMINARY

1.

 

Short title and commencement.

 

1. Short title and commencement.-(1) This Act may be called the

Industrial Development Bank (Transfer of Undertaking and Repeal) Act,

2003.

(2) It shall come into force on such date as the Central Government

may, by notification, appoint.

 

2.

 

Definitions.

 

2. Definitions.-In this Act, unless the context otherwise requires,-

(a) “appointed day” means such date as the Central Government may, by

notification, appoint under section 3;

(b) “Company” means the Industrial Development Bank of India Limited to

be formed and registered under the Companies Act, 1956 (1 of 1956);

(c) “Development Bank” means the Industrial Development Bank of India

established under sub-section (1) of section 3 of the Industrial

Development Bank of India Act, 1964 (18 of 1964);

(d) “notification” means a notification published in the Official

Gazette;

(e) “Reserve Bank” means the Reserve Bank of India constituted under

the Reserve Bank of India Act, 1934 (2 of 1934).

 

CHAPTER II

TRANSFER AND VESTING OF THE UNDERTAKING OF DEVELOPMENT BANK IN COMPANY

 

3.

 

Undertaking of Development Bank to vest in Company.

 

3. Undertaking of Development Bank to vest in Company.-(1) On such date

as the Central Government may, by notification, appoint, there shall be

transferred to, and vest in, the Company, the undertaking of

Development Bank.

(2) Notwithstanding anything contained in the Banking Regulation Act,

1949 (10 of 1949), the Company referred to in sub-section (1) shall be

deemed to be a banking company within the meaning of clause (c) of

section 5 of the Banking Regulation Act, 1949 and as such shall carry

on banking business in accordance with the provisions of that Act, in

addition to the business which may be carried on and transacted by the

Development Bank:

Provided that such Company shall not be required to-

(a) obtain licence under section 22 of the Banking Regulation Act, 1949

(10 of 1949);

(b) maintain for a period of five years from the appointed day the

percentage of assets required to be maintained under section 24 of the

said Act.

(3) The provisions of the Banking Regulation Act, 1949 (10 of 1949)

shall, as far as may be, to the extent they are not repugnant to any

provision of this Act, apply to such Company.

(4) Notwithstanding anything contained in the Banking Regulation Act,

1949 (10 of 1949), the Central Government may, in consultation with the

Reserve Bank of India, by notification, direct that any of the

provisions of that Act specified in the notification –

(a) shall not apply to the Company; or

(b) shall apply to the Company, only with such exceptions,

modifications and the adaptations as may be specified in the

notification.

(5) A copy of every notification proposed to be issued under subsection

(4), shall be laid in draft 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 following the session or

the successive sessions aforesaid, both Houses agree in disapproving

the issue of the notification or both Houses agree in making any

modification in the notification, the notification shall not be issued

or, as the case may be, shall be issued only in such modified form as

may be agreed upon by both the Houses.

 

4.

 

General effect of transfer and vesting of undertaking.

 

4. General effect of transfer and vesting of undertaking.-(1) The

Central Government, being the shareholder of the Development Bank and

every other shareholder of the Development Bank immediately before the

appointed day shall be deemed to be registered on and from the

appointed day as a shareholder of the Company to the extent of the face

value of the shares held by such shareholder.

(2) The undertaking of the Development Bank which is transferred to,

and which vest in, the Company under section 3 shall be deemed to

include all business, assets, rights, powers, authorities and

privileges and all properties, movable and immovable, real and

personal, corporeal and incorporeal, in possession or reservation,

present or contingent of whatever nature and wheresoever situate

including lands, buildings, vehicles, cash balances, deposits, foreign

currencies, disclosed and undisclosed reserves, reserve fund, special

reserve fund, benevolent reserve fund, any other fund, stocks,

investments, shares, bonds, debentures, security, management of any

industrial concern, loans, advances and guarantees given to any person

or industrial concern, tenancies, leases and book debts and all other

rights and interests arising out of such property as were immediately

before the appointed day in the ownership, possession or power of the

Development Bank in relation to its undertaking, within or without

India, all books of account, registers, records and documents relating

thereto and shall also be deemed to include all borrowings, liabilities

and obligations of whatever kind within or without India then

subsisting of the Development Bank in relation to its respective

undertaking.

(3) All contracts, deeds, bonds, guarantees, powers of attorney, other

instruments and working arrangements subsisting immediately before the

appointed day and affecting the Development Bank shall cease to have

effect or to be enforceable against the Development Bank and shall be

of as full force and effect against or in favour of the Company in

which the undertaking of the Development Bank has vested by virtue of

this Act and enforceable as fully and effectually as if instead of the

Development Bank, the Company had been named therein or had been a

party thereto.

(4) Any proceeding or cause of action pending or existing immediately

before the appointed day by or against the Development Bank in relation

to its undertaking may, as from the appointed day, be continued and

enforced by or against the Company in which the undertaking of the

Development Bank has vested by virtue of this Act as it might have been

enforced by or against the Development Bank if this Act had not been

enacted and shall cease to be enforceable by or against the Development

Bank.

 

5.

 

Provisions in respect of officers and other employees of Development

Bank.

 

5. Provisions in respect of officers and other employees of Development

Bank.-(1) Every officer or other employee of the Development Bank

(except a director of the Board or the chairman and managing director

or any whole-time director) serving in the employment immediately

before the appointed day shall, in so far as such officer or other

employee is employed in connection with the undertaking which has

vested in the Company by virtue of this Act, become, as from the

appointed day, an officer or, as the case may be, other employee of the

Company and shall hold his office or service therein by the same

tenure, at the same remuneration, upon the same terms and conditions,

with the same obligations and with the same rights and privileges as to

leave, leave fare concession, welfare scheme, medical benefit scheme,

insurance, provident fund, other funds, retirement, voluntary

retirement, gratuity and other benefits as he would have held under the

Development Bank if its undertaking had not vested in the Company and

shall continue to do so as an officer or, as the case may be, other

employee of the Company or until the expiry of a period of six months

from the appointed day, if such officer or other employee opts not to

continue to be the officer or other employee of the Company within such

period.

(2) Where an officer or other employee of the Development Bank opts

under sub-section (1) not to be in employment or service of the

company, such officer or other employee shall be deemed to have

resigned.

(3) Notwithstanding anything contained in the Industrial Disputes Act,

1947 (14 of 1947), or in any other law for the time being in force, the

transfer of the services of any officer or other employee of the

Development Bank to the Company shall not entitle such officer or other

employee to any compensation under this Act or under any other law for

the time being in force and no such claim shall be entertained by any

court, tribunal or other authority.

(4) The officers and other employees who have retired before the

appointed day from the service of the Development Bank and are entitled

to any benefits, rights or privileges shall be entitled to receive the

same benefits, rights or privileges from the Company.

(5) The trust of the provident fund or the gratuity fund of the

Development Bank and any other bodies created for the welfare of

officers or employees would continue to discharge their functions in

the Company as was being done hitherto in the Development Bank and any

tax exemption granted to the provident fund or the gratuity fund or

pension fund would continue to be applied to the Company.

(6) Notwithstanding anything contained in this Act or in the Companies

Act, 1956 (1 of 1956), or in any other law for the time being in force

or in the regulations of the Development Bank, no director of the

Board, chairman and managing director or any whole-time director or any

other person entitled to manage the whole or substantial part of the

business and affairs of the Development Bank shall be entitled to any

compensation against the Development Bank or the Company for the loss

of office or for the premature termination of any contract of

management entered into by him with the Development Bank.

 

 

CHAPTER III

MISCELLANEOUS

 

6.

 

Concession, etc., to be deemed to have been granted to Company.

 

6. Concession, etc., to be deemed to have been granted to Company.-With

effect from the appointed day, all fiscal and other concessions,

licences, benefits, privileges and exemptions granted to the

Development Bank, in connection with the affairs and business of the

Development Bank under any law for the time being in force shall be

deemed to have been granted to the Company.

 

7.

 

Tax exemption or benefit to continue to have effect.

 

7. Tax exemption or benefit to continue to have effect.-(1) Where any

exemption from, or any assessment with respect to, any tax has been

granted or made or any benefit by way of set off or carry forward of

any unabsorbed depreciation or investment allowance or other allowance

or loss has been extended or is available to the Development Bank under

the Income-tax Act, 1961 (43 of 1961), such exemption, assessment or

benefit shall continue to have effect in relation to the Company.

(2) Where any payment made by the Development Bank is exempted from

deduction of tax at source under any provision of the Income-tax Act,

1961 (43 of 1961), such exemption will continue to be available as if

the provisions of the said Act made applicable to the Development Bank

were operative in relation to the Company.

(3) The transfer and vesting of the undertaking of the Development Bank

or any part thereof in terms of section 3 shall not be construed as a

transfer within the meaning of the Income-tax Act, 1961 (43 of 1961) or

any other law for the time being in force.

 

8.

 

Guarantee to be operative.

 

8. Guarantee to be operative.-Any guarantee given for or in favour of

the Development Bank with respect to any loan, lease, finance or other

assistance shall continue to be operative in relation to the Company.

 

9.

 

Shares, bonds and debentures to be deemed to be approved securities.

 

9. Shares, bonds and debentures to be deemed to be approved

securities.-Notwithstanding anything contained in any other law for the

time being in force, the shares, bonds and debentures of the Company

shall be deemed to be approved securities for the purposes of the

Indian Trusts Act, 1882 (2 of 1882) and the Insurance Act, 1938 (4 of

1938).

 

10.

 

Act to have overriding effect.

 

10. Act to have overriding effect.-The provisions of this Act shall

have effect notwithstanding anything inconsistent therewith contained

in any enactment other than this Act or in any instrument having effect

by virtue of any enactment other than this Act.

 

11.

 

Application of other laws not barred.

 

11. Application of other laws not barred.-The provisions of this Act

shall be in addition to, and not in derogation of the provisions of any

other law for the time being in force.

 

12.

 

Amendment to certain enactments.

 

12. Amendment to certain enactments.-The enactments specified in the

Schedule to this Act shall be amended in the manner provided therein.

 

13.

 

Substitution in Acts, rules, regulations or notifications by Company in

place of Development Bank.

 

13. Substitution in Acts, rules, regulations or notifications by

Company in place of Development Bank.-In every Act, rule, regulation or

notification in force on the appointed day,-

(a) for the words “Industrial Development Bank of India”, wherever they

occur, the words “Industrial Development Bank of India Limited referred

to in clause (b) of section 2 of the Industrial Development Bank

(Transfer of Undertaking and Repeal) Act, 2003″ shall be substituted;

(b) for the words “Development Bank”, wherever they occur, the words

“Industrial Development Bank of India Limited referred to in clause (b)

of section 2 of the Industrial Development Bank (Transfer of

Undertaking and Repeal) Act, 2003″ shall be substituted;

(c) for the words and figures “the Development Bank means the

Industrial Development Bank of India, established under section 3 of

the Industrial Development Bank of India Act, 1964 (18 of 1964)”, the

words, brackets, letter and figures “the Industrial Development Bank of

India Limited referred to in clause (b) of section 2 of the Industrial

Development Bank (Transfer of Undertaking and Repeal) Act, 2003″ shall

be substituted.

(d) for the words and figures “the Industrial Development Bank of

India, established under section 3 of the Industrial Development Bank

of India Act, 1964 (18 of 1964)”, the words, brackets, letter and

figures “the Industrial Development Bank of India Limited referred to

in clause (b) of section 2 of the Industrial Development Bank (Transfer

of Undertaking and Repeal) Act, 2003″ shall be substituted.

 

14.

 

Power to remove difficulties.

 

14. Power to remove difficulties.-(1) If any difficulty arises in

giving effect to the provisions of this Act, the Central Government

may, by order published in the Official Gazette, make such provisions

not inconsistent with the provisions of this Act as may appear to it

to be necessary or expedient for removing the difficulty:

Provided that no such order shall be made after the expiry of three

years from the date of commencement of this Act.

(2) Every order made under this section shall be laid, as soon as may

be after it is made, before each House of Parliament.

 

15.

 

Repeal and saving of Act 18 of 1964.

 

15. Repeal and saving of Act 18 of 1964.-(1) On the appointed day, the

Industrial Development Bank of India Act, 1964, shall stand repealed.

(2) Notwithstanding the repeal of the Industrial Development Bank of

India Act, 1964, the provisions of section 30A of the Act so repealed

will continue to be applicable in respect of the arrangement entered

into by the Development Bank with an industrial concern up to the

appointed day and the Company will be entitled to act upon and enforce

the same as fully and effectually as if this Act has not been enacted.

 

THE SCHEDULE

 

(See section 12)

 

THE SCHEDULE

(See section 12)

AMENDMENTS TO CERTAIN ENACTMENTS

PART I

AMENDMENTS TO THE RESERVE BANK OF INDIA ACT, 1934

(2 OF 1934)

AMENDMENTS

1. In section 2, clause (bvii) shall be omitted.

2. In section 17, –

(a) in sub-sections (4G) and (4H), the words “the Development Bank or”

shall be omitted;

(b) in sub-sections (4-I), (8A) and (12B), the words “the Development

Bank” shall be omitted.

3. In section 42, in sub-section (1), in the Explanation, in clause

(c ), in sub-clause (ii), the words “or from the Development Bank”

shall be omitted.

4. In section 45-I, in clause (bb), in sub-clause (iv), the item (a)

shall be omitted.

5. In section 46C, in sub-section (2), clauses (a) and (b) shall be

omitted.

PART II

AMENDMENTS TO THE BANKING REGULATION ACT, 1949

(10 OF 1949)

AMENDMENTS

1. In section 5, clause (ffa) shall be omitted.

2. In section 34A, in sub-section (3), the words “the Development

Bank” shall be omitted.

3. In section 36AD, in sub-section (3), the words “the Development

Bank,” shall be omitted.

PART III

AMENDMENT TO THE INDUSTRIAL DISPUTES ACT, 1947

(14 OF 1947 )

AMENDMENT

In section 2, in clause (bb), the words ” the Industrial Development

Bank of India” shall be omitted.

PART IV

AMENDMENTS TO THE SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA ACT, 1989

(39 OF 1989)

AMENDMENTS

In section 2,-

(a) for clause (h), the following clause shall be substituted, namely:-

(h) “industrial concern in the small scale sector” means any concern

engaged or to be engaged in,-

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

(ii) shipping;

(iii) mining including development of mines;

(iv) the hotel industry;

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

or by ropeway or by lift;

(vi) the generation, storage or distribution of electricity or any

other form of energy;

(vii) the maintenance, repair, testing or servicing of machinery or

equipment of any description or vehicles or vessels or motor boats or

trailers or tractors;

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

machinery or power;

(ix) the setting up of, or development of, an industrial area or 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;

(xii) providing engineering, technical, financial, management,

marketing or other services or facilities for industry;

(xiii) service industry such as altering, ornamenting, polishing,

finishing, oiling, washing, cleaning or otherwise treating or adapting

any article or substance with a view to its use, sale, transport,

delivery or disposal;

(xiv) providing medical, health or other allied services;

(xv) providing services relating to information technology,

telecommunication or electronics;

(xvi) leasing, sub-leasing or giving on hire-purchase of industrial

plants, equipments, machinery or other assets including vehicles, ships

and aircraft;

(xvii) such other activity as the Central Government may, having regard

to the objects of this Act, by notification, specify in this behalf; or

(xviii) the research and development of any concept, technology,

design, process or product whether in relation to any of the matters

aforesaid, including any activities specified under sub-clause (xvii),

or any other matter and which is regarded as a small-scale undertaking

under section 11B of the Industries (Development and Regulation) Act,

1951 (65 of 1951);

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 (la), the following clauses shall be inserted, namely:-

(lb) “Reserve Bank” means the Reserve Bank of India constituted

under the Reserve Bank of India Act, 1934 (2 of 1934);

(lc) “scheduled bank” means a bank for the time being included in the

Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);

(c) clause (q) shall be omitted.