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INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964 [REPEALED]

Ministry of Law and Justice

Act nº 18 of 1964


  • Chapter 1
  • Chapter 2
  • Chapter 3
  • Chapter 4
  • Chapter 4A. Shares
  • Chapter 4B
  • Chapter 5
  • Chapter 6
  • Chapter 7
  • Chapter 8
  • Schedules
  • Act nº 18 of 1964

Preamble

Preamble 1 - INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ACT, 1964

[Act, No. 18 of 1964]

[16th May, 1964]

PREAMBLE

An Act to establish the industrial Development Bank of India,1[as the principal financial institution for co-ordinating, in conformity with national priorities, the working of institutions engaged in financing, promoting or developing industry, for assisting the development of such institutions] for providing credit and other facilities for the development of industry and for matters connected therewith and further to amend certain enactments.

BE it enacted by Parliament in the Fifteenth Year of the Republic of India as follows:--

1. Inserted by Act 52 of 1975, section 2.


Chapter 1

Section 1. Short title, extent and commencement

(1) This Act may be called theIndustrial Development Bank of India Act, 1964.

(2) It extendsto the whole of India.

(3) It shallcome into force on such date1 asthe Central Government may, by notification in the Official Gazette, appointand different dates may be appointed for different provisions of this Act.

1.Came into forceon 20-6-964 vide, Gazette of India, Extra., Pt. II,Section3 (i), dated 20thJune, 1964.


Section 2. Definitions







In this Act, unless the context otherwiserequires,--

(a)"Board" means the Board of Directors of the Development Bank;

(b)"Development Bank" means the Industrial Development Bank of Indiaestablished under section 3;

1 [(c)"industrial concern" means any concern engaged or to be engaged in,--

(i) the manufacture, preservation or processing ofgoods;

(ii) shipping;

2 [(iii)mining included development of mines;]

(iv) the hotel industry;

(v) thetransport of passengers or goods by road or by water or 3 [by air orby ropeway or by lift;]

4 [(vi) the generation,storage or distribution of electricity or any other form of energy;]

(vii) the maintenance, repair, testing or servicing of5 [machineryor equivalent] of any description or vehiclesor vessels or motor boats or trailers or tractors;

(viii) assembling, repairing or packing any articlewith the aid of machinery or power;

6 [(ix) thesetting up of, or development of, an industrial area or an industrial estate;]

(x) fishing or providing shore facilities for fishingor maintenance thereof;

(xi) providing special or technical knowledge or otherservices for the promotion of industrial growth; or

7 [(xii) providingengineering, technical, financial management, marketing or other services orfacilities for industry;

(xiii) service industry such as altering, ornamenting,polishing, finishing, oiling, washing, cleaning or otherwise treating oradapting any article or substance with a view of its use, sale, transport, deliveryor disposal;

(xiv) providing medical, health or other alliedservices;

(xv) providing services relating to informationtechnology, telecommunication or electronics;

(xvi) leasing, sub-leasing or giving on hire or hirepurchase of industrial plants, equipments, machinery or other assets includingvehicles, ships and aircraft;

(xvii) such other activity as the Central Governmentmay, having regard to the objects of this Act, by notification in the OfficialGazette, 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 mattersaforesaid, including any activities specified under sub-clause (xvii), or anyother matter.

Explanation.--The expression "processing of goods" includes any art or process forproducing, preparing or making an article by subjecting any material to amanual, mechanical, chemical electrical or any other like operation;]

8 [(d) "IndustrialFinance Corporation" means the Industrial Finance Corporation of IndiaLimited formed and registered under the Companies Act, 1956(1 of 1956);]

9 [(da)"nationalised bank" means a corresponding new bank specified in theFirst Schedule to the Banking Companies (Acquisition and Transfer ofUndertakings) Act, 1970 (5 of 1970) or a corresponding new bank specified inthe First Schedule to the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 (40 of 1980);]

(e) "prescribed" means prescribed byregulations made under this Act;

(f) "Reserve Bank" means the Reserve Bank ofIndia constituted under the Reserve Bank of India Act, 1934 (2 of 1934);

(g) "scheduled bank" means a bank for thetime being included in the Second Schedule to the Reserve Bank of India Act.1934 (2 of 1934);

10 [(ga) "StateBank" means the State Bank of India constituted under the State Bank ofIndia Act, 1955 (23 of 1955);

(gb) "subsidiary bank" has the meaningassigned to it in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of1959);]

(h) "State Co-operative Bank" has the samemeaning as in the Reserve Bank of India Act, 1934 (2 of 1934);

(i) "State Financial Corporation" means afinancial corporation established under section 3 or section 3 A of the StateFinancial Corporation Act, 1951 (63 of 1951) and includes the 11 [Tamil Nadu] Industrial Investment Corporation Limited;

10 [(j) "UnitTrust" means the Unit Trust of India established under section 3 of theUnit Trust of India Act, 1963(52 of 1963).]

1. Substituted by act 52 of 1975,section3, for clause (c).

2.Substituted byact 35 of 1986,section2, for sub-clause (iii) (w.e.f. 14-8-1986)

3.Substituted byact 35 of 1986,section2, for "by air" (vi) (w.e.f. 14-8-1986)

4.Substituted byact 35 of 1986,section2, for sub-clause (vi) (w.e.f. 14-8-1986)

5.Substituted byact 35 of 1986,section2, for "Machinery" (w.e.f. 14-8-1986)

6.Substituted byAct 35 of 1986,section2, for Sub-Clause (ix) (w.e.f. 14-8-1986).

7.Substituted byAct 35 of 1986,section2, for Sub-Clause (xii) and Explanation (w.e.f.14-8-1986).

8.Substituted byAct 5 of 1995,section2, for Clause (d) (w.r.e.f. 12-10-1994).

9.Inserted by Act52 of 1975,section3 and Substituted by Act 35 of 1986,section2.

10.Inserted by Act52 of 1975,section3.

11.Substituted byAct 75 of 1972,section2, for "Madras".


Chapter 2

Section 3. Establishment and incorporation of Industrial Development Bank of India

(1) With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be established for the purposes of this Act, a corporation to be known as the Industrial Development Bank of India.

(2) The Development Bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract, and may, by that name sue or be sued.

(3) The head office of the Development Bank shall be at Bombay or at such other place as the 1 [Central Government] may, by notification in the Official Gazette, specify.

(4) Development Bank may establish offices, branches or agencies at any other place in or outside India.

1. Substituted by Act 52 of 1975, sec. 4, for "Reserve Bank".


Section 4. Authorised capital

1[2[ 4. Authorised capital

(1) The authorised capital of the Development Bank shall be two thousand crores of rupees divided into one hundred and fifty crores fully paid up equity shares of rupees ten each and subject to the provisions of section 4E, fifty crores of fully paid-up redeemable preference shares of rupees ten each.

(2) The Development Bank may, from time to time, by a resolution in general meeting, increase the authorised capital to an amount not exceeding five thousand crores of rupees consisting of such number of equity shares and redeemable preference shares as it deems fit. ]]

_
1. Sections 4A and 4B Substituted by Act 52 of 1975, sec. 5, for section 4.

2 . Substituted by Act 5 of 1995, sec. 3, for section 4 (w.r.e.f. 12-10-1994).


Section 4A. Transfer of capital to Central Government

1 [4A. Transfer of capital to CentralGovernment

(1)The issued capital of the Development Bank which has been subscribed by theReserve Bank as on the date immediately preceding the commencement of section 5of the Public Financial Institutions Laws (Amendment) Act, 1975 (hereinafterreferred to as the "appointed day"), shall, on such commencement,stand transferred to, and vested in the Central Government.

2 [***]

1.Sections 4, 4A and 4B Substituted by Act52 of 1975, sec. 5, for section 4.

2.Sub-section (2) omitted by Act 5 of 1995,sec. 4 (w.r.e.f. 12-10-1994).


Section 4B. Payment of amount

1[4B. Payment of amount

The Reserve Bank shall be given by the Central Government, in cash, for the transfer to, and vesting in, the Central Government of the issued capital of the Development Bank which has been subscribed by the Reserve Bank, an amount equal to the face value of the said subscribed capital. ]

_
1 . Sections 4, 4A and 4B Substituted by Act 52 of 1975, sec. 5, for section 4.


Section 4C. Issued capital

1[4C. Issued capital

(1) The issued capital of the Development Bank of seven hundred and fifty-three crores of rupees which stands fully vested in and subscribed by the Central Government immediately before the commencement of the Industrial Development Bank of India (Amendment) Act, 1995 shall, on such commencement, stand divided into seventy-five crores and thirty lakh equity shares of rupees ten each.

(2) The Board may, from time to time, increase the issued equity share capital of the Development Bank by allotment of shares to such persons and on such terms and conditions as the Board may determine:

Provided that no increase in the issued equity capital shall be made in such a manner that the Central Government holds at any time less than fifty-one per cent of the issued equity capital of the Development Bank. ]

_
1 . Inserted by Act 5 of 1995, sec. 5 (w.r.e.f. 12-10-1994).


Section 4D. Reduction of share capital

1[4D. Reduction of share capital

(1)The Development Bank may, by a resolution passed in a general meeting of the shareholders to, reduce its share capital in any way.

(2) Without prejudice to the generality of the foregoing power, the share capital may be reduced by:--

(a) extinguishing or reducing the liability on any of its equity shares in respect of share capital not paid-up;

(b) either with or without extinguishing or reducing liability on any of its equity shares, cancelling any paid-up share capital which is lost, or is unrepresented by available assets; or

(c) either with or without extinguishing or reducing liability on any of its equity shares,-paying off any paid-up share capital which is in excess of the wants of the Development Bank.

(3) In any general meeting referred to in sub-section (1), the resolution for reduction of share capital shall be passed by shareholders entitled to vote, voting in person, or, where proxies are allowed by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if any, cast against the resolution by shareholders so entitled and voting. ]

_
1. Inserted by Act 5 of 1995, sec. 5 (w.r.e.f. 12-10-1994).


Section 4E. Conversion of equity shares into redeemable preference shares



1[ 4E. Conversion of equity shares into redeemable preference shares

(1) The Central Government may, at any time after the commencement of the Industrial Development Bank of India (Amendment) Act, 1995 and by notification in the Official Gazette, convert such number of equity shares held by it not exceeding fifty crores as it may decide into redeemable preference shares.

(2) The redeemable preference shares referred to in sub-section (1) shall--

(a) carry such fixed rate of dividend as the Central Government may specify at the time of such conversion, and

(b) neither be transferable nor carry any voting rights.

(3) The redeemable preference shares referred to in sub-section (1) shall be redeemable by the Development Bank within three years from the date of such conversion in such instalments and in such manner as the Board may determine. ]

_
1. Inserted by Act 5 of 1995, sec. 5 (w.r.e.f. 12-10-1994).


Chapter 3

Section 5. Management

1 [(1) The general superintendence, direction and management of the affairs and business of the Development Bank shall vest in a Board of Directors which may exercise all powers and do all such acts and things, as may be exercised or done by the Development Bank and are not by this Act expressly directed or required to be done by the Development Bank in general meeting.

(2) The Board may direct that any power exercisable by it under this Act shall also be exercisable in such cases and subject to such conditions, if any, as may be specified by it, by the chairman, managing director or the whole-time director]

(3) Subject to the provisions of this Act, the Board in discharging its functions shall act on business principles with due regard to public interest.

2 [***]

1. Substituted by Act 5 of 1995, sec. 6, for sub-sections (1) and (2) (w.r.e.f. 12-10-1994). Earlier sub-section (2) was Substituted by Act 52 of 1975, sec. 6.

2. Sub-section (4) Inserted by Act 52 of 1975, sec. 6 and omitted by Act 5 of 1995, sec. 6 (w.r.e.f. 12-10-1994).


Section 6. Constitution of Board





1 [6.Constitution of Board

2 [(1) TheBoard shall consist of the following, namely:--

(a) a chairman and a managingdirector appointed by the Central Government:

Provided thatthe same person may be appointed to function both as chairman and as managingdirector;

(b) one whole-time director appointed by the CentralGovernment on the recommendation of the Board;

(c) two directors who shall be officials of theCentral Government nominated by the Central Government;

(d) three directors from amongst persons havingspecial knowledge of, and professional experience in science, technology,economics, industry, banking, industrial cooperatives, law, industrial finance,investment, accountancy, marketing or any other matter, the special knowledgeof, and professional experience in, which would, in the opinion of the CentralGovernment, be useful to the Development Bank, nominated by the CentralGovernment; and

(e) such number of directors elected, in theprescribed manner, by shareholders other than the Central Government, whosenames are entered on the register of shareholders of the Development Bankninety days before the date of the meeting in which such election takes placeon the following basis, namely:--

(i) where the total amount of equity share capitalissued to such shareholders is ten per cent or less of the total issued equitycapital, two directors;

(ii) where the total amount of equity share capitalissued to such shareholders is more than ten per cent but less than twenty-fiveper cent of the total issued equity capital, three directors; and

(iii) where the total equity share capital issued tosuch shareholders is twenty-five per cent or more of the total issued equitycapital, four directors:

Provided thatuntil the assumption of charge by the elected directors under this clause, the CentralGovernment may at any time nominate such number of directors, not exceedingfour, from amongst persons having special knowledge of, and professionalexperience in science, technology, economics, industry, banking, industrialco-operatives, law, industrial finance, investment accountancy, marketing orany other matter, the special knowledge of, and professional experience in,which would, in the opinion of the Central Government, be useful to theDevelopment Bank for carrying out its functions.]

(2) 3 [The chairman, the managing director and the whole-timedirector] shall hold office for such term not exceeding five years as theCentral Government may specify in this behalf and any person so appointed shallbe eligible for re-appointment.

3 [(2A) Notwithstandinganything contained in sub-section (1), the Central Government shall have theright to terminate the term of office of 4 [the chairman, managing director or the whole-timedirector], as the case may be, at any timebefore the expiry of the term specified under sub-section (2) by giving himnotice of not less than three months in writing or three months' salary andallowances in lieu of such notice; and 4 [the chairman, managing director or the whole-timedirector] as the case may be, shall also havethe right to relinquish his office at any time before the expiry of the termspecified under sub-section (2) by giving to the Central Government notice ofnot less than three months in writing.]

(3) 5 [The chairman, managing director and the whole-timedirector] shall receive such salary andallowances as may be determine by the Central Government.

3 [(3A) The Central Governmentmay, at any time, remove 4 [the chairman, managing director or the whole timedirector], as the case may be, from office:

Provided thatno person shall be removed from his office, under this sub-section, unless thehas been given an opportunity of showing cause against his removal.]

(4) A nominated director shall hold office during thepleasure of the authority nominating him.

6 [(4A) Subject to theprovisions of sub-section (4)--

(a) every director nominated underclause (d) ofsub-section (1) shall hold office for such term not exceeding three years asthe Central Government may specify in this behalf and thereafter until his successorassumes office, and shall be eligible for re-nomination:

Provided thatno such director shall hold office continuously for a period exceeding sixyears; and

(b) every director elected under clause (e) of sub-section (1) shallhold office for three years and thereafter until his successor assumes office,and shall be eligible for re-election:

Provided thatno such director shall hold office continuously for a period exceeding sixyears.]

7 [(4B) Theshareholders, other than the Central Government, may, after giving to thedirector a reasonable opportunity of being heard in the manner as may beprescribed, by resolution passed by majority of the votes of such shareholdersholding in the aggregate not less than one-half of the share capital held bysuch shareholders, remove any director elected under clause (e) of sub-section(1) and elect another director in his place to fill the vacancy so caused.]

8 [(5)(i) A meeting ofthe Board shall be held at least once every three months and at least fourmeetings shall be held every year and the meetings may be held at such placesas may be prescribed.

(ii) Notice of every meeting of the Board shall begiven in writing to every director for the time being in India, and at hisusual address in India to every other director.

(5A) Subject to the provisions contained in thisChapter, the Board may meet at such times and places and shall observe suchrules of procedure in regard to transaction of its business including the mannerof adoption of resolutions as may be prescribed.]

(6) The chairman, or, if for any reason he is unableto attend a meeting of the Board, the managing director or, in the event ofboth the chairman and the managing director being unable to attend a meeting,any other director nominated by the chairman in this behalf and in the absenceof such nomination any director elected by the directors from among themselves,shall preside at the meeting.

(7) All questions which come up before any meeting ofthe Board shall be decided by a majority of votes of the directors present andvoting, and in the event of an equality of votes, the chairman, or in hisabsence, the managing director, or in the absence of both the chairman and themanaging director, the person presiding, shall have a second or casting vote.

(8) Save as provided in sub-section (7), everydirector of the Board shall have one vote.]

1. Substituted by Act 52 of 1995, sec. 7, for section 6.

2. Substituted by Act 5 of 1995, sec. 7, for sub-section(1) (w.r.e.f. 12-10-1994).

3. Inserted by Act 73 of 1976, sec. 5.

4. Substituted by Act 5 of 1995, sec. 7, for "the chairman or the managing director"(w.r.e.f. 12-10-1994).

5. Substituted by Act 5 of 1995, sec. 7 for "The chairman and the managing director"(w.r.e.f 12-10-1994).

6. Sub-section (4A) Inserted by Act 35 of 1986, sec. 5, Substituted by Act 66 of 1988, sec. 27 and again Substituted by Act 5 of 1995, sec. 7(w.r.e.f. 12-10-1994).

7. Inserted by Act 5 of 1995, sec. 7(w.r.e.f. 12-10-1994).

8. Substituted by Act 5 of 1995, sec. 7, for sub-section(5) (w.r.e.f. 12-10-1994).