THE FORWARD CONTRACTS (REGULATION) ACT, 1952
[Act, No. 74 of 1952]
[26th December, 1952]
An Act to provide for the regulation of certain matters relating to forward contracts, [the prohibition of options in goods] and for matters connected therewith.
BE it enacted by Parliament as follows :--
Section 1. Short title, extent and commencement
(1) This Act may he called The Forward Contracts (Regulation) Act, 1952.
(2) It extends to the whole of India;1[* * * * * *]
(3) Chapter I shall come into force at once, and the remaining provisions shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint2, and different dates may he appointed for different provisions of this Act, for different States or areas, and for different goods or classes of goods.
|1. Words "except the State of Jammu and Kashmir", omitted by Act 62 of 1960, Section 2.|
2. Chapters II to VI were brought into force in the whole of India except the State of Jammu and Kashmir on the 24th August, 1953
Section 2. Definitions
In this Act, unless the context otherwise requires,--
(a) "association" means any body of individuals, whether incorporated or not, constituted for the purpose of regulating and controlling the business of the sale or purchase of any goods;
(b) "Commission" means the Forward Markets Commission established under section 3;
(c) "forward contract" means a contract for the delivery of goods1[* * * *] and which is not a ready delivery contract ;
(d) "goods" means every kind of movable property other than actionable claims, money and securities;
(e) "Government security" means a Government security as defined in the Public Debt Act, 1944;
(f) "non-transferable specific delivery contract" means a specific delivery contract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are not transferable;
(g) "option in goods" means an agreement, by whatever name called, for the purchase or sale of a right to buy or sell, or a right to buy and sell, goods in future, and includes a teji, a mandi, a teji-mandi, a galli, a put, a call or a put and call in goods;
(h) "prescribed" means prescribed by rules made under this Act;
(i) "ready delivery contract" means a contract which provides for the delivery of goods and the payment of a price therefor, either immediately or within such period not exceeding [eleven] days after the date of the contract and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in respect of any goods, the period under such contract not being capable of extension by the mutual consent of the parties thereto or otherwise;
2[Provided that where any such contract is performed either wholly, or in part,--
(1) by tendering of the documents of title to the goods covered by the contract by any party thereto (not being a commission agent or a bank) who has acquired ownership of the said documents by purchase, exchange or otherwise, to any other person (including a commission agent but not including a bank); or
(2) by the realisation of any sum of money, being the difference between the contract rate and the settlement rate or clearing rate or the rate of any offsetting contract; or
(3) by any other means whatsoever,
and as a result of which the actual tendering of the goods covered by the contract or the payment of the full price therefor is dispensed with, then, such contract shall not be deemed to be a ready delivery contract.
Explanation.-- For the purpose of this clause,--
(i) "bank" includes any banking company as defined in the Banking Regulation Act, 1949, a co-operative bank as defined in the Reserve Bank of India Act, 1934, the Slate Bank of India and any of its subsidiaries and any corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 ;
(ii) "commission agent" means a person who, in the ordinary course of business, makes contract for the sale or purchase of goods for others for a remuneration (whether known as commission or otherwise) which is determined in the contract itself or determinate from the terms of the contract, in either case, only with reference to the quantity of goods or to the price therefor as stipulated in the contract.]
3[(i) "recognised association" means an association to which recognition for the time being has been granted by the Central Government, under Section 6 in respect of goods or classes of goods specified in such recognition;
(jj) "registered association" means an association to which for the time being a certificate of registration has been granted by the commission under section 14-B.]
(k) "rules" with reference to the rules relating in general to the constitution and management of an association, includes in the case of an incorporated association its memorandum and articles of association;
(l) "securities" includes shares, scrips, stocks, bonds, debentures, debenture-stocks or other marketable securities of a like nature in or of any incorporated company or other body corporate and also Government securities;
(m) "specific delivery contract" means a [forward contract which provides for] the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned;
(n) "transferable specific delivery contract" means a specific delivery contract which is not a non-transferable specific delivery contract,4[and which is subject to such conditions relating to its transferability as the Central Government may, by notification in the Official Gazette specify in this behalf.]
|1. Words "at a future date" omitted by Act 53 of 1971. Section 2 (11-10-71).|
2. Inserted by Act 53 of 1971. Section 2 (11-10-71).
3. Substituted for former clause (j) by Act 62 of 1960. Section 3 (28-12-1960).
4. Added by Act 62 of 1960. Section 3 (28-12-1960).
Section 3. Establishment and constitution of the Forward Markets Commission
3. Establishment1and constitution of the Forward Markets Commission
(1) The Central Government may, by notification in the Official Gazette establish a Commission to be called the Forward Markets Commission for the purpose of exercising such functions and discharging such duties as may be assigned to the Commission by or under this Act.
(2) The Commission shall consist of not less than two,2[but not exceeding [four]], members appointed by the Central Government3[one of them being nominated by the Central Government to be the Chairman thereof; and the Chairman and the other member or members shall be either whole-lime or part-time as the Central Government may direct]:
4[Provided that the members to be so appointed shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to commerce or commodity markets, or in administration or who have special knowledge or practical experience in any matter, which renders them suitable for appointment on the Commission.]
(3) No person shall be qualified for appointment as, or for continuing to be, a member of the Commission if he has, directly or indirectly, any such financial or other interest as is likely to affect prejudicially his functions as a member of the Commission, and every member shall, whenever required by the Central Government so to do, furnish to it such information as it may require for the purpose of securing compliance with the provisions of this sub-section.
(4) No member of the Commission shall hold office for a period of more than three years from the date of his appointment, and a member relinquishing his office on the expiry of his term shall be eligible for reappointment.
(5) The other terms and conditions of service of members of the Commission shall be such as may be prescribed.
|1. The Commission wax established by S.R.O. 1944, dated 2-9-1953,|
2. Substituted for 'but not exceeding three' by the Forward Contracts (Regulation) Amendment Act, 1960 (62 of 1960), Section 4 (28-12-1960).
3. Substituted for certain words by the Forward Contracts (Regulation) Amendment Act. 1953 (46 of 1953). Section 2 (23-12-1953).
4. Substituted for original proviso, by the Forward Contracts (Regulation) Amendment Act. 1953 (46 of 1953). Section 2 (23-12-1953).
Section 4. Functions of the Commission
The functions of the Commission shall be-
(a) to advise the Central Government in respect of the recognition of, or the withdrawal of recognition from, any association or in respect of any other matter arising out of the administration of this Act;
1 [(b)to keep forward markets under observation and to take such action in relation to them as it may consider necessary, in exercise of the powers assigned to it by or under this Act;]
(c) to collect and whenever the Commission thinks it necessary publish information regarding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government periodical reports on the operation of this Act and on the working of forward markets relating to such goods;
(d) to make recommendations generally with a view to improving the organisation and working of forward markets;
(e) to undertake the inspection of the accounts and father documents of 2 [any recognised association or registered association or any member of such association] whenever it considers it necessary; and
(f) to perform such other duties and exercise such other powers as may be assigned to the Commission by or under this Act, or as may be prescribed.
|1. Substituted for former clause (b) by the Forward Contracts (Regulation) Amendment Act, 1960 (62 of 1960), Section 5 (28-12-1960).|
2. Substituted for 'any recognised association', by the Forward Contracts (Regulation) Amendment Act, 1960 (62 of 1960), Section 5 (28-12-1960).
Section 4A. Powers of the Commission
1 [4A. Powers of the Commission
(1) The Commission shall in the performance of its functions, have all the powers of a Civil Court under the Code of Civil Procedure, 1908, while trying a suit in respect of the following matters, namely :--
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of any documents;
(c) receiving evidence on affidavits;
(d) requisitioning any public record or copy thereof from any office;
(e) any matter which may be prescribed.
(2) The Commission shall have the power to require any person, subject to any privilege which may be claimed by that person under any law for the time being in force, to furnish information on such points or matters as, in the opinion of the Commission, may be useful for, or relevant to, any matter under the consideration of the Commission and any person so required shall be deemed to be legally bound to furnish such information within the meaning of section 176 of the Indian Penal Code.
(3) The Commission shall be deemed to be a Civil Court and when any offence described in section 175, section 178, section 179, section 180 or section 228 of the Indian Penal Code is committed in the view or presence of the Commission, the Commission may, after recording the facts constituting the offence and the statement of the accused as provided for in the Code of Criminal Procedure, 1898, forward the case to a Magistrate having jurisdiction to try the same and the Magistrate to whom any such case is forwarded shall proceed to hear the complaint against the accused as if the case has been forwarded to him under section 482 of the said Code.
(4) Any proceeding before the Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code.
Explanation.-- For the purposes of enforcing attendance of witnesses, the local limits of the Commission's jurisdiction shall be the limits of the territory of India.]
|1. Inserted by the Forward Contracts (Regulation) Amendment Act, 1060 (62 of 1960), Section 6 (28-12-1960).|
Section 5. Application for recognition of associations
Any association concerned with the regulation and control of [forward contracts] which is desirous of being recognised for the purposes of this Act may make an application in the prescribed manner to the Central Government.
(2) Every application made under sub-section (1) shall contain such particulars as may be prescribed and shall be accompanied by a copy of the bye-laws for the regulation and control of [forward contracts] and also a copy of the rules relating in general to the constitution of the association, and in particular, to--
(a) the governing body of such association, its constitution and powers of management and the manner in which its business is to be transacted;
(b) the powers and duties of the office-bearers of the association;
(c) the admission into the association of various classes of members, the qualifications of members, and the exclusion, suspension, expulsion and readmission of members therefrom or thereinto;
(d) the procedure for registration of partnerships as members of the association and the nomination and appointment of authorised representatives and clerks.
Section 6. Grant of recognition to association
(1) If the Central Government, after milking such inquiry as may he necessary in this behalf and alter obtaining such further information, if any, as it may require, is satisfied that it would be in the interest of the trade and also in the public interest to grant recognition to the association which has made an application under Section 5, it may grant recognition to the association in such form and subject to such conditions as may be prescribed or specified, and shall specify in such recognition the goods or classes of goods with respect to which [forward contracts] may be entered into between members of such association or through or with any such member.
(2) Before granting recognition under sub-section (1), the Central Government may, by order direct,--
(a) that there shall be no limitation on the number of members of the association or that there shall be such limitation on the number of members as may be specified;
(b) that the association shall provide for the appointment by the Central Government of a person, whether a member of the association or not, as its representative on, and of not more than three persons representing interests not directly represented through membership of the association as member or members of, the governing body of such association, and may require the association to incorporate in its rules any such direction and the conditions, if any, accompanying it.
(3) No rules of a recognised association shall he amended except with the approval of the Central Government.
(4) Every grant of recognition1under this section shall he published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the recognised association is situated, and such recognition shall have effect as from the date of its publication in the Gazette of India.
|1. For recognised Associations see footnote to Section 5.|
Section 7. Withdrawal of recognition
If the Central Government is of opinion that any recognition granted to an association under the provisions of this Act should in the interest of the trade or in the public interest, be withdrawn, the Central Government may, alter giving a reasonable opportunity to the association to be heard in the matter withdraw, by notification in the Official Gazette, the recognition granted to the said association :
Provided that no such withdrawal shall affect the validity of any contract entered into or made before the date of the notification, and the Central Government may make such provision as it deems fit in the notification of withdrawal or in any subsequent notification similarly published for the due performance of any contracts outstanding on that date.
Section 8. Power of Central Government to call for periodical returns or direct inquiries to he made
1[(1) Every recognised association and every member thereof shall furnish to the Central Government such periodical returns relating to its affairs, or the affairs of its members, as the case may be, as may be prescribed.]
(2) Without prejudice to the provisions contained in sub-section (1), where the Central Government considers it expedient so to do, it may, by order in writing,--
(a) call upon a recognised association2[or a member thereof] to furnish in writing such information or explanation relating to its affairs or the affairs of any of its members2[or his affairs, as the case may be] as the Central Government may require, or
(b) appoint one or more persons to make an inquiry in relation to the affairs of such association or the affairs of any of its members and submit a report of the result of such inquiry to the Central Government within such time as may be specified in the order or, in the alternative, direct the inquiry to be made, and the report to be submitted, by the governing body of such association acting jointly with one or more representatives of the Central Government.
(c) direct the Commission to inspect the accounts and other documents of any recognised association or of any of its members and submit its report thereon to the Central Government.
(3) Where an inquiry in relation to the affairs of a recognised association or the affairs of any of its members has been undertaken under sub-section (2)--
(a) every director, manager, secretary or other officer of such association,
(b) every member of such association,
(c) if the member of the association is a firm, every partner, manager, secretary or other officer of the firm, and
(d) every other person or body of persons who has dealings in the course of business with any of the persons mentioned in clauses (a), (b) and (c),
shall be bound to produce before the authority making the inquiry, all such books, accounts, correspondence and other documents his custody or power relating to, or having a bearing on the subject-matter of, such inquiry and also to furnish the authority with any such statement or information relating thereto as may be required of him within such time as may be specified.
2[(4) Every recognised association and every member thereof shall maintain such books of account and other documents as the Commission may specify and the books of account and other documents so specified shall be preserved for such period not exceeding three years as the Commission may specify and shall be subject to inspection at all reasonable times by the Commission.]
|1. Substituted for former sub-section (1) by the Forward Contracts (Regulation) Amendment Act 1960 (62 of 1960), Section 7 (28-12-1960).|
2. Inserted by the Forward Contracts (Regulation) Amendment Act 1960 (62 of 1960), Section 7 (28-12-1960).
Section 9. Furnishing of annual reports to the Central Government by recognised associations
1[(1) Every recognised association shall furnish to the Commission three copies of its annual report.]
(2) Such annual report shall contain such particulars as may be prescribed.
|1. Substituted for former sub-section (1) by Act 62 of 1960, Section 8 (28-12-1960).|
Section 9A. Power of recognised association to make rules respecting grouping of members, restricting voting rights, etc., in special cases
1 [9A. Power of recognised association to make rules respecting grouping of members, restricting voting rights, etc., in special cases
(1) A recognised association may make rules or amend any rules made by it to provide for all or any of the following matters namely,--
2 [(a) the admission of a firm or a Hindu undivided family as a member,]
2 [(b)] the grouping of the members of the association according to functional or local interests, the reservation of seats on its governing body for members belonging to each group and appointment of members to such reserved seats-
(i) by election exclusively by the members of the association from among persons chosen by the members belonging to the group concerned;
(ii) by election by all the members of the association;
(iii) by election by all the members belonging to the group concerned for the purpose;
2 [(c)] the restriction of voting rights in respect of any matter placed before the association at any meeting to those members only who, by reason of their functional or local interests, are actually interested in such matter,
2 [(d)] the regulation of voting rights in respect of any matter placed before the association at any meeting so that each member may be entitled to have one vote only, irrespective of his share of the paid-up equity capital of the association;
2 [(e)] the restriction on the right of a member to appoint another person as his proxy to attend and vote at a meeting of the association;
3 [(f)] the retirement at every annual general meeting of all directors or such number or proportion of their total number as may be specified in the rules;]
2 [(g)] such incidental, consequential and supplementary matters as may be necessary to give effect to any of the matters specified in 4 [clauses (a) to (f).]
(2) No rules of a recognised association made or amended in relation to any matter referred to in cls. 5 [(a) to (g)] of sub-section (1) shall have effect until they have been approved by the Central Government and published by that Government in the Official Gazette and, in approving the rules so made or amended, the Central Government may make such modifications therein as it thinks fit, and on such publication, the rules as approved by the Central Government shall be deemed to have been validly made, notwithstanding anything to the contrary contained in the Companies Act, 1956.
(3) Where, before the commencement of the Forward Contracts (Regulation) Amendment Act, 1957, any rules have been made or amended in relation to any matter referred to in 5 [clauses (b) to (e) and (g)] of sub-section (1), the rules so made or amended shall not be deemed to be invalid or ever to have been invalid merely by reason of the fact that the rules so made or amended are repugnant to any of the provisions of the Companies Act, 1956.]
|1. Inserted by the Forward Contracts (Regulation) Amendment Act, 1957 (32 of 1957), Section 2 (17-9-1957).|
2. New clause (a) inserted and original clauses (a) to (e), relettered as (b), (c) (d), (e) and (g) respectively by Act 62 of 1960, Section 9 (28-12-1960).
3. Inserted by Act 62 of 1960, Section 9 (28-12-1960).
4. Substituted for clauses (a), (b), (c) and (d), by Act 62 of 1960, Section 9 (28-12-1960).
5. Substituted for "clauses (a) to (e)" by Act 62 of 1960, Section 9 (28-12-1960).