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PUBLIC DEBT ACT

Ministry of Law and Justice

Act nº 18 of 1944


  • Amending Acts
  • Act nº 18 of 1944

Preamble

THE PUBLIC DEBT ACT, 1944

[Act, No. 18 of 1944]

[22nd November, 1944]

PREAMBLE

An Act to consolidate and amend the law relating to Government securities1[* * *] and to the management by the Reserve Bank of India .of the public debt of2[the Government]

WHEREAS it is expedient to consolidate and amend the law relating to Government securities1[* * *] and to the management by the Reserve Bank of India of the public debt of2[the Government];

It is hereby enacted as follows :--

1. The words "issued by the Central Government" were omitted by the Public Debt (Central Government) Amend­ment Act, 1949 (6 of 1949), Section 2 (1-4-1949).

2. Substituted for the words "the Union and the Part A States" by the Public Debt (Amendment) Act, 1956 (57 of 1956), Section 2 (15-10-1956).


Section 1. Short title and commencement

(1) This Act may be called the Public Debt1[x] Act, 1944.

2[ * * * *]

(3) It shall come into force on such3date as the Central Government may, by notification in the official Gazette, appoint in this behalf.

1. The words and brackets "(Central Government)" were omitted by the Public Debt (Central Government) Amend­ment Act, 1949 (6 of 1949), Section 3 (1 -4-1949).

2. Sub-section (2) was omitted by the Public Debt (Amendment) Act, 1956 (57 of 1956), Section 3 (15-10-1956).

3. The Act came into force on 1-5-1946,


Section 2. Definitions

In this Act, unless there is anything repugnant in the subject or context.-

(1) "the Bank" means the Reserve Bank of India;

1[(1A) "the Government" in relation to any Government security means the Central or State Gov­ernment issuing the security;]

(2) "Government security" means--

(a) a security, created and issued,2[by the Government] for the purpose of raising a public loan, and having one of the following forms, namely :--

(i) stock transferable by registration in the books of the Bank; or (ii) a promissory note payable to bearer; or

(iv) a form prescribed in this behalf;

(b) any other security created and issued by3[the Government] in such form and for such of the purposes of this Act as may be prescribed;

(3) "prescribed" means prescribed by rules made under this Act;

(4) "promissory note" includes a treasury bill.

1. Inserted by the Public Debt (Central Government) Amendment Act, 1949 (6 of 1949), Section 4 (1-4-1949).

2.Substituted far the words "whether before or after the commencement of this Act, by the Central Government or a State Government" by the Public Debt (Amendment) Act, 1956 (57 of 1956), Section 5 (15-10-1956).

3.Substituted for the words "the Central Government or a State Government" by the Public Debt (Amendment) Act, 1956 (57 of 1956), Section 5 (15-10-1956).


Section 3. Transfer of Government securities

(1)1[Subject to the provisions of Section 5, a transfer of a Government security shall be made only in the manner prescribed for the making of transfers of securities of the class to which it belongs, and no transfer of a Government security which--

(i) is made after the 30th April, 1946, in the case of a security issued by the Central Government,

(ii) is made after the 31st March, 1949, in the case of a security issued by the Government of a Part A State,

(iii) is made after the 14th October, 1956, in the case of a security issued by the Government of a Part BState other than Jammu and Kashmir,2[*],

(iv) is made on or after the 1st day of November, 1956, in the case of a security issued on or after that day by the Government of any State other than Jammu and Kashmir, shall be valid if--]2[and]

(a) it does not purport to convey the full title to the security, or

(b) it is of such a nature as to affect the manner in which the security was expressed by3[the Government] to be held,

2[(v) is made on or after the 1st day of September, 1972, in the case of a security issued on or after that day by the Government of the State of Jammu and Kashmir.]

(2) Nothing in this section shall affect any order made by the Bank under this Act, or any order made by a Court upon the Bank.

1. Substituted for the opening paragraph of sub-section (1), by 3 A.L.O., 1956 (w.r.e.f. 1-11-1956).

2. Word 'and' at the end of Clause (iii), omitted, and the word 'and' added at the end in clause (iv) and after that clause new clause (v) added by the Public Debt (Amendment) Act, 1972 (44 of 1972), Section 3 (w.r.e.f. 1-9-1972).

3. Substituted for the words the Central Government by the Public Debt (Central Government) Amendment Act, 1949 (6 of 1949), Section 6 (1-4-1949).


Section 4. Transferor of Government securities not liable for amount thereof

Notwithstanding anything contained in the Negotiable Instruments Act, 1881, a person shall not, by reason only of his having transferred a Government security, be liable to pay any money due either as principal or as interest thereunder.

Section 5. Holding of Government securities by holders of public offices

(1) In the case of any public office to which1[the Government] may by notification" in the official gazette, declare this sub­section to apply, a Government security in the form of stock or of a promissory note may be held in the name of the office.

(2) When a Government security is so held, it shall be deemed to be transferred without any or further endorsement or transfer deed from each holder of the office to the succeeding holder of the office on and from the date on which the latter takes charge of the office.

(3) When the holder of the office transfers to a party not being his sucessor-in-office a Government security so held, the transfer shall be made by the signature of the holder of the office and the name of the office in the manner and subject to the conditions laid down in section 3.

(4) This section applies as well to an office of which there are two or more joint holders as to an office of which there is a single holder.

1 . Substituted for the words "the Central Government" by the Public Debt (Central Government) Amendment Act, 1949 (6 of 1949), Section 6 (1-4-1949).


Section 6. Notice of trust not receivable

(1) No notice of any trust in respect of any Government security shall be receivable by1[the Government], nor shall1[the Government] be bound by any such notice even though expressly given, nor shall1[the Government] be regarded as trustee in respect of any Government security.

(2) Without prejudice to the provisions of sub-section (1), the Bank may, as an act of grace and without any liability to the Bank or to1[the Government], record in its books such directions by the holder of stock for the payment of interest on, or of the maturity value of, or the transfer of, or such other matters relating to, the stock as the Bank thinks fit.

1. Substituted for the words "the Central Government" by the Public Debt (Central Government) Amendment Act, 1949 (6 of 1949), Section 6 (1-4-1949).


Section 7. Persons whose title to a Government security of a deceased sole holder may be recognised by the Bank

Subject to the provisions of section 9 the executors or administrators of a deceased sole holder of a Government security and the holder of a succession certificate issued under Part X of the Indian Succession Act, 1925, shall be the only persons who may be recognised by the Bank as having any title to the Government security :

Provided that nothing in this section shall bar the recognition by the Bank of the manager or the sole surviving male member of a Hindu undivided family governed by the Mitakshara Law as having a title to a Government security when the security appears to the Bank to stand in the name of a deceased member of the family and an application is made by such manager or sole surviving member for recog­nition of his title and is supported by a certificate signed by such authority and after such inquiry as may be prescribed to the effect that the deceased belonged to a Hindu undivided family governed by the Mitakshara Law, that the Government security formed part of the joint property of the family, and that the applicant is the managing or sole survivng male member of the family.

Explanation.-- The expression "Hindu undivided family governed by the Mitakshara Law" shall, for the purposes of this section, be deemed to include a Malabar tarwad.

Section 8. Right of survivors of joint holders or several payees

Notwithstanding anything contained in section 45 of the Indian Contract Act, 1872,--

(a) when a Government security is held by two or more persons jointly and either or any of them dies, the title to the security shall vest in the survivor or survivors of those persons, and

(b) when a Government security is payable to two or more persons severally and either or any of them dies, the security shall be payable to the survivor or survivors of those persons or to the representative of the deceased or to any of them :

Provided that nothing contained in this section shall affect any claim which any representative of a deceased person may have against the survivor or survivors under or in respect of any security to which this section applies.

Explanation.-- For the purposes of this section1[a body incorporated or deemed to be incorporated under the Companies Act, 1956] or the Co-operative Societies Act, 1912, or any other enactment for the time being in force whether within or without2[India], relating to the incorporation of the associations of individuals, shall be deemed to die when it is dissolved.

1. Substituted for the words "a body incorporated under the Indian Companies Act, 1913" by the Public Debt (Amendment) Act, 1956 (57 of 1956), Section 7 (15-10-1956). Substituted for the words "the provinces" by A.L.O., 1950 (26-1 -1950).

2. Substituted for the words "the provinces" by A.L.O., 1950 (26-1 -1950).


Section 9. Summary procedure on death of holder of Government securities not exceeding five thousand rupees face value

Notwithstanding anything contained in section 7, if within six months of the death of a person who was the holder of a Government security or securities the face value of which does not in the aggregate exceed five thousand rupees, probate of his will or letters of administra­tion of his estate or a succession certificate issued under Part X of the Indian Succession Act, 1925, is not produced to the Bank, or proof to the satisfaction of the Bank that procedings have been instituted to obtain one of these is not furnished, the Bank may determine who is the person entitled to the security or securities, or to administer the estate of the deceased and may make an order vesting the security or securities in the person so determined.

Section 9A. Application of s 9-B, 9-C, etc

1[9A. Application of Sections 9-B, 9-C, etc.

Notwithstanding anything contained in section 1-A, the provisions of sections 9-B and 9-C and the power to make rules in relation to any of the matters referred to in sections 9-B and 9-C shall apply only to such classes of Government securities created and issued by the Central Government, whether before or after the commencement2of the Public Debt (Amendment) Act, 1959, as that Government may, by notification3in the Official Gazette, specify, and in relation to such classes of securities the provisions of sections 7 and 9 shall have effect subject to the provisions contained in sections 9-B and 9-C.

1. Sections 9-A, 9-B and 9-C were inserted by the Public Debt (Amendment) Act 1959 (44 of 1959), Section 2 (with effect from 1-8-1960).

2. That is 1st August, 1960.

3 . Provisions of Sections 9-B and 9-C have been applied to the securities created in the form of 10-Year Defence Deposit Certificates-


Section 9B. Nominations by holders of Government securities

1 [9-B. Nominations by holders of Government securities

(1) Notwithstanding anything contained in any law for the time being in force or in any disposition whether testamentary or otherwise, in respect of a Government security, where a nomination made in the prescribed manner purports to confer on any person the right to receive payment of the amount for the time being due on the security on the death of the holder thereof the nominee shall, on the death of the holder of the security, become entitled to the security and to payment thereon to the exclusion of all other persons, unless the nomina­tion is varied or cancelled in the prescribed manner.

(2) Any nomination referred to in sub-section (1) shall become void if the nominee predeceases, or where there are two or more nominees all the nominees predecease, the holder of the security making the nomination.

3) A transfer of a Government security made in the prescribed manner shall automatically cancel a nomination previously made :

Provided that where a Government security is held by or on behalf of any person as a pledgee or by way of security for any purpose such holding shall not have the effect of cancelling a nomination, but the right of the nominee shall be subject to the right of the person so holding it.

(4) Where the nominee is a minor it shall be lawful for the holder of a security to appoint in the prescribed manner any person to receive the amount for the time being due on the security in the event of his death during the miniority of the nominee, and, where any such appointment has been made, the Government security shall, after the death of the holder and during the minority of the nominee, be deemed to be vested in that person as representing the minor.

1. Sections 9-A, 9-B and 9-C were inserted by the Public Debt (Amendment) Act 1959 (44 of 1959), Section 2 (with effect from 1-8-1960).


Section 9C. Payment of death of holder

1[9C. Payment of death of holder

(1) If a person dies and he is at the time of his death the holder of a Government security and there is in force at the time of his death a nomination in favour of any person, the amount for the time being due on the security shall be paid to the nominee.

(2) Where the nominee is a minor, the amount for the time being due on the Government security shall be paid--

(a) in any case where a person has been appointed to receive it under sub-section (4) of section 9-B, to that person; and

(b) where there is no such person, to the guardian of the minor for the use of the minor.

(3) Where the amount due for the time being on a Government security is payable to two or more nominees and either or any of them is dead, the title to the security shall vest in the survivor or survivors of those nominees and the amount for the time being due thereon shall be paid accordingly.

(4) Nothing contained in this section shall be deemed to require any person to accept payment of the amount due on a Government security before it has reached maturity or otherwise than in accordance with the terms of the security.

(5) Any payment made in accordance with the provisions of this section of the amount due for the time being on a Government security shall be a full discharge in respect of the security :

Provided that nothing contained in this section or in section 9-B shall affect any right or claim which any person may have against the person to whom any payment is made under this section.

1. Sections 9-A, 9-B and 9-C were inserted by the Public Debt (Amendment) Act 1959 (44 of 1959), Section 2 (with effect from 1-8-1960).


Section 10. Government securities not exceeding five thousand rupees face value belonging to minor or insane person

When a Government security or securities belong to a minor or a person who is insane and incapable of managing his affairs and the value of the security or securities does not in the aggregate exceed five thousand rupees, the Bank may make such order as it thinks fit for the vesting of such security or securities in such person as it considers represents the minor or insane person.

Section 11. Issue of duplicate securities and of new securities on conversion, consolidation, subdivision or renewal

(1) If the person entitled to a Government security applies to the Bank alleging that the security has been lost, stolen or destroyed, or has been defaced or mutilated, the Bank may, on proof to its satisfaction of the loss, theft, destruction, defacement or mutilation of the security, subject to such conditions and on payment of such fees as may by prescribed order the issue of a duplicate security payable to the applicant.

(2) If the person entitled to a Government security applies to the Bank to have the security con­verted into a security of another form, or into a security issued in connection with another loan or to have it consolidated with other like securities, or to have it sub-divided, or to have it renewed, the Bank may, subject to such conditions and on payment of such fees as may be prescribed, cancel the security and order the issue of a new security or securities.

(3) The person to whom a duplicate security or a new security is issued under this section shall be deemed for the purposes of section 19 to have been recognised by the Bank as the holder of the security;

and a duplicate security or new security so issued to any person shall be deemed to constitute a new contract between1[the Government] and such person and all persons deriving title thereafter through him.

1. Substituted for the words "the Central Government" by the Public Debt (Central Governments) Amendment Act 1949 (4 of 1949) Section 6 (1-4-1949).