CHAPTER II

TRANSFER AND VESTING OF THE UNDERTAKING OF DEVELOPMENT BANK IN COMPANY

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.