INDUSTRIAL RECONSTRUCTION BANK (TRANSFER OF UNDERTAKINGS AND REPEAL) ACT 1997

THE INDUSTRIAL RECONSTRUCTION BANK (TRANSFER OF UNDERTAKINGS ANDREPEAL) ACT, 1997

ACT No. 7 OF 1997

[Amended up to date 2001]

19thMarch, 1997

An Act to provide for the transfer and vesting of the undertakingof the Industrial Reconstruction Bank of India to and in the Company to beformed and registered as a Company under Companies Act, 1956, and for mattersconnected therewith or incidental thereto and also to repeal the IndustrialReconstruction Bank of India Act, 1984.

BE it enacted by Parliament inthe Forty–eighth Year of the Republicof India as follows: –

CHAPTER I

PRELIMINARY

1.Short title and commencement: (1) This Act may be called theIndustrial Reconstruction Bank (Transfer of Undertakings and Repeal) Act, 1997.

(2) It shall be deemed to havecome into force on the he 24th day of January, 1997.

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

(a) "appointedday" means such date as the Central Government may, by notification in theOfficial Gazette, appoint under section 3;

(b) "Company" meansthe Industrial Investment Bank of India Limited to be formed and registeredunder the Companies Act, 1956(1 of 1956);

(c) "ReconstructionBank" means the Industrial Reconstruction Bank of India established undersub–section (1) of section 3 of the Industrial Reconstruction Bank ofIndia Act, 1984(62 of 1984).

CHAPTER II

TRANSFER AND VESTING OF THE UNDERTAKINGS OF RECONSTRUCTION BANK INCOMPANY

3.Undertakings of theReconstruction Bank to vest in Company: On such date as the Central Government may, bynotification in the Official Gazette, appoint, there shall be transferred to,and vest in, the Company, the undertakings of Reconstruction Bank.

4.General effect of vesting ofundertakings in Company: (1) The Central Government, being the shareholder of theReconstruction Bank immediately before the appointed day, shall be deemed to beregistered, on and from the appointed day, as a shareholder of the Company.

(2) The undertakings of theReconstruction Bank which are transferred to, and which vest in, the Companyunder 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 on reservation,present or contingent of whatever nature and wheresoeversituate including lands, buildings, vehicles, cash balances, deposits, foreigncurrencies, disclosed and undisclosed reserves, reserve fund, special reservefund, benevolent reserve fund, any other fund, stocks, investments, shares,bonds, debentures, security, management of any industrial concern, loans,advances and guarantees given to industrial concerns, tenancies, leases andbook debts and all other rights and interests arising out of such property aswere immediately before the appointed day in the ownership, possession or powerof the Reconstruction Bank in relation to its undertakings, within or withoutIndia, all books of account, registers, records and documents relating theretoand shall also be deemed to include all borrowings, liabilities and obligationsof whatever kind within or without India then subsisting of the ReconstructionBank in relation to its undertakings.

(3) All contract, deeds, bonds,guarantees, powers of attorney, other instruments and working arrangementssubsisting immediately before the appointed day and affecting theReconstruction Bank shall cease to have effect or to be enforceable against theReconstruction Bank and shall be of as full force and effect against or in favour of the Company in which the undertakings of theReconstruction Bank have vested by virtue of this Act and enforceable as fullyand effectually as if instead of the Reconstruction Bank, the Company had beennamed therein or had been a party thereto.

(4) Any proceeding or cause ofaction pending or existing immediately before the appointed day by or againstthe Reconstruction Bank in relation to its undertakings may, as from theappointed day, be continued and enforced by or against the Company in which theundertakings of the Reconstruction Bank have vested by virtue of this Act as itmight have been enforced by or against the Reconstruction Bank if this Act hadnot been enacted and shall cease to be enforceable by or against the ReconstructionBank.

5.Provisions in respect ofofficers and other employees of Reconstruction Bank: (1) Every officer or otheremployee of the Reconstruction Bank (except a Director of the Board or theChairman and Managing Director) serving in the employment immediately beforethe appointed day shall, in so far as such officer or other employee isemployed in connection with the undertakings which have vested in the Companyby virtue of this Act, become, as from the appointed day, an officer or, as thecase may be, other employee of the Company and shall hold his office or servicetherein by the same tenure, at the same remuneration, upon the same terms andconditions, with the same obligations and with the same rights and privilegesas 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 Reconstruction Bankif its undertakings had not vested in the Company and shall continue to do soas an officer or, as the case may be, other employee of the Company or untilthe expiry of a period of six months from the appointed day if such officer orother employee opts not to continue to be the officer or other employee of the Companywithin such period.

(2) Where an officer or otheremployee of the Reconstruction Bank opts under sub–section (1) not to bein employment or service of the Company, such officer or other employee shallbe deemed to have resigned.

(3) Notwithstanding anythingcontained in the Industrial Disputes Act, 1947(14 of 1947) or in any other lawfor the time being in force, the transfer of the services of any officer orother employee of the Reconstruction Bank to the Company shall not entitle suchofficer or other employee to any compensation under this Act or under any otherlaw for the time being in force and no such claim shall be entertained by anycourt, tribunal or other authority.

(4) The officers and otheremployees who have retired before the appointed day from the service of theReconstruction Bank and are entitled to any benefits, rights or privilegesshall be entitled to receive the same benefits, rights or privileges from theCompany.

(5) The trust of the providentfund or the gratuity fund of the Reconstruction Bank and any other bodiescreated for the welfare of officers or employees would continue to dischargetheir functions in the Company as was being done hitherto in the ReconstructionBank and any tax exemption granted to the provident fund or the gratuity fundwould continue to be applied to the Company.

(6) Notwithstanding anythingcontained in this Act or in the Companies Act, 1956(1 of 1956) or in any otherlaw for the time being in force or in the regulations of the ReconstructionBank, no Director of the Board, Chairman and Managing Director or any otherperson entitled to manage the whole or substantial part of the business andaffairs of the Reconstruction Bank shall be entitled to any compensationagainst the Reconstruction Bank or the Company for the loss of office or forthe premature termination of any contract of management entered into by himwith the Reconstruction Bank.

CHAPTER III

MISCELLANEOUS

6.Concession, etc., to be deemed to havebeen granted to Company: With effect from the appointed day, all fiscal and otherconcessions, licences, benefits, privileges andexemptions granted to the Reconstruction Bank in connection with the affairsand business of the Reconstruction Bank under any law for the time being inforce shall be deemed to have been granted to the Company.

7.Tax exemption or benefit tocontinue to have effect: (1) Notwithstanding anything contained in the Income–taxAct, 1961(43 of 1961) or any other enactment for the time being in forcerelating to tax on income, profits or gains, the Company shall not be liable topay income–tax or any other tax for a period of five years computed fromthe appointed day in respect of any income, profits or gains derived, or anyamount received by the Company.

(2) The transfer and vesting ofthe undertakings or any part thereof in terms of section 3 shall not beconstrued as a transfer within the meaning of the Income–tax Act,1961(43 of 1961) for the purposes of capital gains.

8.Guarantee to be operative: Any guarantee given for or in favour of the Reconstruction Bank with respect to any loan,lease finance or other assistance shall continue to be operative in relation tothe Company.

9.Arrangement with Company onappointment of directors to prevail: (1) Where any arrangement entered into by thecompany with an industrial or other concern provides for the appointment by thecompany of one or more directors of such concern, such provision and anyappointment of directors made in pursuance thereof shall be valid and effectivenotwithstanding anything to the contrary contained in the Companies Act, 1956(1of 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 such concern, andany provision regarding share qualification, age limit, number ofdirectorships, removal from office of directors and such like conditionscontained in any such law or instrument aforesaid, shall not apply to anydirector appointed by the company in pursuance of the arrangement as aforesaid.

(2) Any director appointed inpursuance of sub–section (1) shall–

(a) holdoffice during the pleasure of the company and may be removed or substituted byany person by order in writing by the company;

(b) notincur any obligation or liability by reason only of his being a director or foranything done or omitted to be done in good faith in the discharge of hisduties as a director or anything in relation thereto;

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

10.Act 18 of 1891 to apply tothe books of Company: The Company shall be deemed to be a bank for the purposes of theBankers’ Books Evidence Act, 1891.

11.Shares, bonds and debenturesto be deemed to be approved securities: Notwithstanding anything contained in any other lawfor the time being in force, the share, bonds and debentures of the Companyshall be deemed to be approved securities for the purposes of the Indian TrustsAct, 1882(2 of 1882), the Insurance Act, 1938(4 of 1938) and the BankingRegulation Act, 1949(10 of 1949).

12.Substitution in Acts, rulesor regulations of company in place of the Reconstruction Bank: In every Act, rule orregulation in force on the appointed day,–

(a) for the words"Industrial Reconstruction Bank of India", wherever they occur,the words "Industrial Investment Bank of India Limited" shall besubstituted;

(b) for the words"Reconstruction Bank", wherever they occur, the words"Industrial Investment Bank" shall be substituted.

13.Repeal and saving of Act 62of 1984: (1) On the appointed day, theIndustrial Reconstruction Bank of India Act, 1984 shall stand repealed.

(2) Notwithstanding the repealof the Industrial Reconstruction Bank of India Act, 1984, –

(a) the Company shall, so faras may be, comply with the provisions of Chapter VII of the Act so repealed forany of the purposes related to the annual accounts and audit of theReconstruction Bank;

(b) the provisions of ChapterVIII of the Act so repealed will continue to be applicable in respect of thearrangements entered into by the Reconstruction Bank with an industrial concernunder section 18 thereof up to the appointed day and the Company will beentitled to act upon and enforce the same as fully and effectually as if thisAct had not been enacted.

CHAPTER IV

AMENDMENT TO THE INDUSTRIAL RECONSTRUCTION BANK OF INDIA ACT, 1984

14.Insertion of new section 4A: ¹ [*]

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1. Repealed by the Repeatingand Amending Act, 2001 (30 of 2001) Section 2 and First Schedule.

15.Repealand Saving: (1) The Industrial Reconstruction Bank (Transfer ofUndertakings and Repeal) Ordinance, 1997(Ord.7 of 1997) is hereby repealed.

(2)Notwithstanding such repeal, anything done or any action taken under theOrdinance so repealed, shall be deemed to have been done or taken under thecorresponding provisions of this Act.

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