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THE AIR CORPORATIONS ACT, 1953

Title : THE AIR CORPORATIONS ACT, 1953

Year : 1953



It shall be the duty of each of the Corporations to enter into consultations with the other in matters of common interest to the two Corporations including, in particular, the operation of scheduled air transport services, the routes on which such services should be operated by each of the Corporations, the frequency of such services, the passenger fares and freight rates to be charged, the measures of economy to be adopted, the provision on any services in regard to overhaul and maintenance of aircraft or any other matter falling within the scope of the functions of either of the Corporations, and, generally, in regard to ensuring the fullest co-
operation and co-ordination in respect of all such matters.



The Central Government may, for the purpose of improving the air transport services provided by either of the Corporations or for effecting better co-ordination in respect of such services, direct that with effect from such date as may be specified in the direction and subject to such conditions as may be similarly specified,-

(a) Any scheduled air transport service operated by one Corporation shall no longer be operated by that Corporation but shall be operated by the other Corporation, and

(b) Any property belonging to one Corporation shall be transferred to the other Corporation.



(1) Each of the Corporations may appoint a Committee or Committees consisting of some or any of its 1*[directors] with or without the addition of any officer or employee of the Corporation and delegate any of the functions and powers of the Corporation to such Committee or Committees and may limit the exercise of such delegated authority to any specified area.

(2) Either of the Corporations may, in relation to any particular matter or class of matters or to any particular area, by general or special order, direct that any of its officers or other employees may also exercise all or any of its powers under this Act (except the powers given to it by this section) to the extent to which the Corporation deems it necessary for the efficient running of its day to day administration.

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1 Subs. by Act 49 of 1971, s. 9, for "members" (w.e.f. 1-2-1972).

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1*Each of the Corporations shall constitute in the prescribed manner a Labour Relations Committee consisting of representatives of the Corporation and of its employees, so however, that the number of representatives of the employees on the Committee shall not be less than the number of representatives of the Corporation, and it shall be the duty of the Labour Relations Committee to advise the Corporation on matters which relate to the welfare of the employees or which are likely to promote and secure amity and good relations between the two.

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1 Sub-section (1) and the brackets and figure "(2)" omitted by s.
10, ibid., (w.e.f. 1-2-1972).

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(1) Meetings of the Corporation shall be held at such times and places and, subject to sub-section (2) and (3), the proceedings of the Corporation shall be conducted in such manner as may be provided by the regulations.

(2) The Chairman or in his absence any person chosen by the
1*[directors] present from amongst themselves shall preside at the meeting.

(3) At a meeting of the Corporation all questions shall be decided by a majority of votes of the 1*[directors] present, and for this purpose, each 2*[director] shall have one vote and in the case of equality of votes the Chairman or, in his absence, the person presiding at the meeting shall have a second or casting vote.

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1 Subs. by Act 49 of 1971, s. 11, for "members" (w.e.f. 1-2-1972).

2 Subs. by s. 11, ibid., for "member" (w.e.f. 1-2-1972).

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If a director, managing agent, manager or other officer or employee of an existing air company who willfully withholds or fails to deliver to the Corporation as required by sub-section (2) of section 21 any books, documents or papers which may be in his possession or who wrongfully obtains possession of any property of any such company which has vested in either of the Corporations under this Act or having any such property in his possession wrongfully withholds it from the Corporation or willfully applies it to purposes other than those expressed in, or authorised by, this Act shall, on the complaint of the Corporation concerned, be punishable with fine which may extend to one thousand rupees and may be ordered by the Court trying the offence to deliver up or refund within a time to be fixed by the Court any such property improperly obtained or wrongfully withheld or willfully misapplied or in default to suffer imprisonment which may extend to one year.



(1) The Central Government may, by notification in the Official Gazette, make rules to give effect to the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for an or any of the following matters, namely:-

(a) The terms and conditions of service of the 1*[managing directors] of the two Corporations; and such other categories or officers as may be specified from time to time under sub-section (1) of section 8;

(b) The form in which the budget of the two Corporations shall be prepared and submitted to the Central Government; and the form and the manner in which the accounts of the two Corporations shall be maintained and in which any returns or statistics shall be furnished or submitted;

(c) The reports which should be submitted by the Corporations and the intervals within which they should be so submitted;

(d) The maintenance of books of account;

(e) The establishment and maintenance of a fund by each of the Corporations for meeting any liability arising out of any act or omission in respect of which the Corporation may incur any liability to any third party;

(f) The provision of 2*** reserve and other funds;

(g) The prohibition of persons who are directly or indirectly interested in any subsisting contract with either of the Corporations from becoming or being employees of the Corporation;

(h) The powers which may be exercised by either of the Corporations to facilitate the acquisition of any undertaking;

(i) The issue of bonds by either of the Corporations to meet any compensation payable by it under this Act;

(j) The training of the employees of either of the Corporations or other persons and the fees which may in its discretion be charged therefor;

(k) The term of office and other conditions of service of members of the Air Transport Council constituted under section 30;

(l) The prohibition of any interference with any air transport service or with any property of the Corporation or of any interference with or obstruction of any officer or employee of the Corporation in the performance of his duty;

(m) The punishment which shall not exceed imprisonment for three months or fine of rupees one thousand but which may consist of both such imprisonment and fine, in respect of any contravention of the provisions of any rules made under this section.

1*[(3) Every rule made under this section 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 2*[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 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 no effect, as the case may be; so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.]

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1 Subs. by Act 49 of 1971, s. 12, for "General Managers" (w.e.f. 1-
2-1972).

2 The word "depreciation", omitted by s. 12, ibid. (w.e.f. 1-2-
1972).

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(1) 1*[Subject to the provisions of sub-section (3) each of the Corporations may], by notification in the Official Gazette, make regulations not inconsistent with this Act or the rules made there under for the administration of the affairs of the Corporation and for carrying out its functions.

(2) In particular and without prejudice to the generality of the foregoing power, any such regulations may provide for all or any of the following matters, namely:-

(a) The time and place of the meetings of Corporation and the procedure to be followed for the transaction of business at such meetings;

(b) The terms and conditions of service of officers and other employees of the Corporation other than the 2*[managing director] and officers of any other categories referred to in section 44;

(c) The issue of passes by the Corporation to its officers and other employees either free of cost or at concessional rates for travel on its air services and the conditions relating thereto;

(d) The authentication of orders and decisions of the Corporation and the instruments executed by it;

3*[(e) The grant of refund in respect of any unused tickets and the issue of passes free of cost or at concessional rates;]

(f) The period after the expiry of which unclaimed goods may be disposed of and the manner of their disposal;

(g) The conditions governing the carriage of persons or goods on its services.

4*[(3) No regulation under clause (b) of sub-section (2) shall be made except with the previous approval of the Central Government.]

5*[(4) Every regulation made under this section 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 following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the 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 without prejudice to the validity of anything previously done under that regulation.]

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1 Subs. by Act 49 of 1971, s. 13, for certain words (w.e.f. 1-2- 1979).

2 Subs. by s. 13, ibid., for "General Manager" (w.e.f. 1-2-1972).

3 Subs. by Act 17 of 1962, s. 6, for cl. (e).

4 Ins. by Act 49 of 1971, s. 13 (w.e.f. 1-2-1972).

5 Ins. by Act 24 of 1982, s. 4.

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THE SCHEDULE
(See section 25)

PRINCIPLES FOR DETERMINING COMPENSATION UNDER THIS ACT

Paragraph I.-

The compensation which shall be given by Indian Airlines or Air-India International, as the case may be, to any existing air company in respect of the vesting, in accordance with the provisions of this Act, of the undertaking of such company in that Corporation shall be the sum of the amounts computed in accordance with the provisions of paragraph II, less the sum of the amounts computed in accordance with the provisions of paragraph III.

Paragraph II.-

(a) The aggregate written down value of all air-frames of aircraft in respect of which there are certificates of airworthiness in force or which can be rendered fit for certificates of airworthiness if the Corporation concerned were to incur expenditure within the normal rates for rendering the air frames airworthy, plus-A sum of Rs. 12,000 in respect of each air frame of a Dakota aircraft and a sum of Rs. 24,000 in respect of each air frame of a Viking aircraft in any case where the existing air company had obtained a certificate of airworthiness in respect of it within ninety days immediately preceding the appointed date or if a certificate of airworthiness had not actually been obtained within that period but the existing air company had incurred expenditure within that period for the purpose of rendering that air frame airworthy, the value of the spare parts used for the purpose subject to a maximum of Rs. 12,000 in the case of each air frame of a Dakota aircraft and Rs. 24,000 in the case of each air frame of a Viking aircraft.

Note.-In this Schedule, the expression "air frame" includes also the equipment of the aircraft, whether fixed or removable;

(b) The aggregate written down value of all such power plants, hero-engines, air screws, spare hero-engines, and spare air screws(all of which are in this Schedule collectively referred to as power plants) as are suitable for use in the air frames mentioned in sub-clause (a) and as are of an approved standard or can be rendered fit to be of an approved standard if the Corporation concerned were to incur expenditure within the normal rates for such purposes, plus the following, namely:-

(i) A sum of Rs. 6,000 in respect of each engine of a Dakota aircraft and a sum of Rs. 12,000 in respect of each engine of a Viking aircraft in any case where the existing air company had made it an approved engine within a period of ninety days immediately preceding the appointed date or if the engine had not been made completely fit to be an approved engine within that period but the existing air company had incurred expenditure within the said period for the purpose of making that engine an approved engine, then, the value of the spare parts used for that purpose subject to a maximum of Rs. 6,000 in the case of each engine of a Dakota aircraft and Rs. 12,000 in the case of each engine of a Viking aircraft; and

(ii) A sum of Rs. 2,000 in respect of the air screws and accessories of the power plant of a Dakota aircraft and a sum of Rs. 4,000 in respect of the air screws and accessories of the power plant of a Viking aircraft in any case where the air screws and accessories had been rendered completely fit for the approved standard within a period of ninety days immediately preceding the appointed date or if the same had not been rendered completely fit for that standard within that period but the existing air company had incurred expenditure within that period for the purpose of rendering the same fit for the approved standard, then, the value of the spare parts used for that purpose subject to a maximum of Rs. 2,000 in the case of air screws and accessories of a Dakota aircraft and Rs. 4,000 in the case of air screws and accessories of a Viking aircraft.

Note.-In this Schedule, the expression "approved standard" means such condition of efficiency of the power plant as satisfies the requirements laid down in Section E of Schedule III to the Indian Aircraft Rules, 1937;

(c) The cost of purchase of all serviceable general stores and all such other serviceable stores and spare parts (all of which are in this Schedule collectively referred to as stores and spare parts)belonging to the existing air company as are suitable for use in respect of the aircraft or power plants referred to in sub-clauses (a) and (b), reduced in each case by 20 per cent. of such cost of purchase:

Provided that the reduction shall be 10 per cent. in the case of stores and spare parts pertaining to Constellation and Sky master aircraft.

Note.-In this Schedule-

(a) Stores shall be deemed to be serviceable if they are such as to satisfy the requirements laid down in Section E of Schedule III to the Indian Aircraft Rules,1937;

(b) Without prejudice to the clause immediately preceding, stores (other than general stores) and spare parts shall also be deemed to be serviceable if by incurring expenditure of an amount not exceeding half the cost of purchase of such stores and spare parts, they can be rendered suitable for use in respect of the aircraft or power plants;

(d) The aggregate actual cost to the existing air company of all lands other than lease-holds;

(e) The total amount of the premiums paid by the company in respect of all leaseholds reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term on the appointed date of the lease in respect of which such premium shall have been paid bears to the total term of the lease;

(f) The scrap value of all such aircraft, power plants, propellers and other accessories, spare parts and stores, not falling within any of the preceding sub-clauses, and all properties as have become obsolete on the appointed date, the scrap value for the purposes of this Act being one per cent. of the book value of the relevant item of property;

(g) The price paid by the existing air company for any trustee security held by it;

(h) The value of any shares held by any existing air company in any other existing air company, the value being calculated on the basis of the valuation of the air transport undertaking of that other company in accordance with the provisions of this Schedule;

(i) The market value on the appointed date or the purchase price whichever is less, of any other investments held by any existing air company in any concern other than another existing air company which, subject to the provisions of section 22, have vested in the
Corporation;

(j) The amount of cash held by any existing air company on the appointed date whether in deposit with a bank or otherwise;

(k) The amount of debts other than bad debts due to any existing air company, to the extent to which they are reasonably considered to be recoverable, less the amount of the debts, if any, excluded from the transfer to the Corporation concerned under the provisions of section 22;

(l) The aggregate cost of all licence fees paid by the company under clause (c) of sub-rule (1) of Rule 154 of the Indian Air craft Rules, 1937, in respect of the licences granted to it for the operation of any scheduled air transport services and held by it on the appointed date and which but for the provisions of section 19. would continue to remain valid plus a sum of Rs. 100 for each such licence:-

Provided that the fees paid for each such licence shall be reduced by an amount which bears to such fees the same proportion as the period of the licence which shall have expired on the appointed date bears to the total period of the licence;

(m) The aggregate written down value of all tangible assets other than those falling within the preceding clauses;

(n) An aggregate amount not exceeding ten thousand rupees as may be agreed upon between the Corporation and the existing air company concerned or, failing agreement, which may be assessed by the Tribunal, in respect of all such assets, intangible or other wise, as do not fall within any of the preceding sub-clauses and in respect of the loss of any future profits which the existing air company might have earned but for the passing of this Act:

Provided
that in assessing any amount under this clause regard shall be had to the following circumstances, namely:-

(i) The profits, if any, earned by it annually during the six years immediately preceding the appointed date on which income-tax has been paid,

(ii) The subsidies, if any, given to that company by the Central Government during such period, and

(iii) The probability or otherwise of the company earning future profits if it were allowed to continue its scheduled air transport services for the remaining period of the licence held by it after having due regard to the fact that the licences held by it did not confer any monopoly upon it in respect of the routes concerned and the fact that no subsidy would have been payable by the Central Government after the 31st day of December, 1952.

Explanation A.-For the purposes of this Schedule, the written down value in respect of each class of assets means the actual cost to the existing air company of such assets respectively, less the total depreciation calculated at the rates and in the manner following, namely:-

(i) In respect of each air frame, depreciation shall be calculated at 15 per cent. per annum for Constellation and Sky-master aircraft and 18 per cent. per annum for other aircraft from the date on which the aircraft concerned was first used in revenue operations by the company till the 31st day of December, 1952, the rates being applied as follows:-

For the first year, on the actual cost of acquisition;

For the second year, on an amount obtained by reducing from the actual cost of acquisition the amount of depreciation calculated as aforesaid for the first year;

For the third year, on an amount obtained by reducing from the actual cost of acquisition the aggregate amount of depreciation calculated as aforesaid for the preceding two years;and so on;

(ii) In respect of power plants, the depreciation shall be calculated at 20 per cent. per annum for Constellation and Sky master aircraft and at 24 per cent. per annum for other aircraft from the date on which the power plant concerned was first used in revenue operations by the company till the 31st day of December, 1952, the rates being applied as follows:-

For the first year, on the actual cost of acquisition;

For the second year, on an amount obtained by reducing from the actual cost of acquisition the amount of depreciation calculated as aforesaid for the first year;

For the third year, on an amount obtained by reducing from the actual cost of acquisition the aggregate amount of depreciation calculated as aforesaid for the preceding two years;and so on;

(iii) In respect of all tangible assets falling within clause (m) of paragraph II, depreciation shall be calculated at the normal annual rates for which provision is made in the Indian Income-tax Act, 1922.(11 of 1922) and in the manner provided therein, but excluding initial or other special depreciation, from the date such assets were acquired or created by the existing air company until the 31st day of December, 1952:

Provided
that in respect of any such asset for which no provision has been made in the Indian Income-tax Act, 1922, (11 of 1922) the rate of depreciation shall be 10 per cent. per annum:

Provided further that in respect of any such asset situate on lease- hold land other than land rented from Government, the depreciation shall be either-

(a) As provided in the preceding provisions of this clause, or

(b) Equivalent to an amount which bears the same ratio to the total cost of acquisition or creation of the asset (situate on lease-hold land) as the expired portion of the lease on the appointed date bears to the total period of the lease currently running, whichever is greater.

Explanation B.-For the purposes of this Schedule, the actual cost shall include, in the case of air frames, in addition to the cost of purchase or acquisition,-

(i) The actual expenditure, if any, incurred by the existing air company for reconversion or reconstruction of the air-frame in order to render it fit for civil air transport before it was used in revenue operations by the company, plus

(ii) The actual expenditure incurred in making the air frame air worthy before its first use in revenue operations.

Explanation
C.-In the case of power plants, the actual cost shall include, in addition to the cost of purchase or acquisition, the cost incurred by the company for conversion or reconditioning, repairing or overhauling the power plant, in order to render it fit for the purposes of a certificate under paragraph 4 of section E of Schedule III to the Indian Aircraft Rules, 1937, before the date of its first use in revenue operations.

Paragraph III.-

Subject to the provisions of sections 22 and 23, all such liabilities as have been declared by the existing air company under the provisions of section 22:-

Provided
that if any liability so declared has been under-stated, the Corporation may recover the additional amount from the company.

Last updated on September, 2016

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