The Small Industries Development Bank of India Act, 1989
Administered Ministry: Ministry of Finance / Department of Financial Services
Section
Section 28 Preparation of accounts and balance-sheet.
(1) The balance-sheet and accounts of the Small Industries Bank shall be prepared in such form and manner as may be prescribed.
(2) The Board shall cause the books and accounts of the Small Industries Bank to be closed and balanced as on the 31st day of March each year or such other date, as the 1[Board] may specify.
(2) The Board shall cause the books and accounts of the Small Industries Bank to be closed and balanced as on the 31st day of March each year or such other date, as the 1[Board] may specify.
1. Subs. by s. 17, ibid., for "Development Bank" (w.e.f. 27-3-2000).
Section 29 Disposal of profits accruing to Small Industries General Fund.
(1) The Small Industries Bank may establish a reserve fund to which may be transferred such sums as that Bank may deem fit out of the annual profits accruing to the Small Industries General Fund.
1[(2) After making provision for bad and doubtful debts, depreciation of assets and for all other matters for which provision is necessary or expedient or which is usually provided for by bankers and for the reserve fund referred to in sub-section (1), and after transferring a part of the profits to such other reserves or funds as may be considered appropriate, the Board may, out of its net profits, propose a dividend.]
1[(2) After making provision for bad and doubtful debts, depreciation of assets and for all other matters for which provision is necessary or expedient or which is usually provided for by bankers and for the reserve fund referred to in sub-section (1), and after transferring a part of the profits to such other reserves or funds as may be considered appropriate, the Board may, out of its net profits, propose a dividend.]
1. Subs. by s. 18, ibid., for sub-section (2) (w.e.f. 27-3-2000).
Section 30 Audit.
1[(1)The accounts of the Small Industries Banks shall be audited by auditors duly qualified to act as auditors under sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), who shall be appointed by the Small Industries Bank in general meeting of the shareholders out of the panel of auditors approved by the Reserve Bank for such term and on such remuneration as the Reserve Bank may fix.]
(2) The auditors shall be supplied with a copy of the annual balance-sheet of the Small Industries Bank and it shall be their duty to examine it together with the accounts and vouchers relating thereto and they shall have a list delivered to them of all books kept by the Small Industries Bank and shall at all reasonable times have access to the books, accounts, vouchers and other documents of the Small Industries Bank.
(3) The auditors may, in relation to such accounts, examine any Director or any officer or other employee of the Small Industries Bank and shall be entitled to require from the Board or officers or other employees of the Small Industries Bank such information and explanation as they may think necessary for the performance of their duties.
(4) The auditors shall make a report to the Small Industries Bank upon the annual balance-sheet and accounts examined by them and in every such report they shall state whether in their opinion the balance-sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and fair view of the state of affairs of the Small Industries Bank and in case they had called for any explanation or information from the Board or any officer or other employee of the Small Industries Bank whether it has been given and whether it is satisfactory.
(5) The Small Industries Bank shall furnish to the Central Government 1*** within four months from the date on which its accounts are closed and balanced, a copy of its balance-sheet and accounts together with a copy of the auditors report and a report of the working of the Small Industries Bank during the relevant year, and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament.
(2) The auditors shall be supplied with a copy of the annual balance-sheet of the Small Industries Bank and it shall be their duty to examine it together with the accounts and vouchers relating thereto and they shall have a list delivered to them of all books kept by the Small Industries Bank and shall at all reasonable times have access to the books, accounts, vouchers and other documents of the Small Industries Bank.
(3) The auditors may, in relation to such accounts, examine any Director or any officer or other employee of the Small Industries Bank and shall be entitled to require from the Board or officers or other employees of the Small Industries Bank such information and explanation as they may think necessary for the performance of their duties.
(4) The auditors shall make a report to the Small Industries Bank upon the annual balance-sheet and accounts examined by them and in every such report they shall state whether in their opinion the balance-sheet is a full and fair balance-sheet containing all necessary particulars and properly drawn up so as to exhibit a true and fair view of the state of affairs of the Small Industries Bank and in case they had called for any explanation or information from the Board or any officer or other employee of the Small Industries Bank whether it has been given and whether it is satisfactory.
(5) The Small Industries Bank shall furnish to the Central Government 1*** within four months from the date on which its accounts are closed and balanced, a copy of its balance-sheet and accounts together with a copy of the auditors report and a report of the working of the Small Industries Bank during the relevant year, and the Central Government shall, as soon as may be after they are received by it, cause the same to be laid before each House of Parliament.
1. Subs. by s. 19, ibid., for sub-section (1) (w.e.f. 27-3-2000).
2. The words "and the Development Bank" omitted by Act 7 of 2000, s. 19 (w.e.f. 27-3-2000).
2. The words "and the Development Bank" omitted by Act 7 of 2000, s. 19 (w.e.f. 27-3-2000).
Section 31 Saving.
Save as otherwise provided in sub-section (4) of section 25, nothing contained in this Chapter shall apply to the Small Industries Development Assistance Fund.
Section 32 Transfer of part of business of Development Bank.
(1) On such date as the Central Government may, by notification, appoint, the business, assets and liabilities, rights, interests, privileges and obligations of the Development Bank relating to the Small Industries Development Fund and the National Equity Fund (hereinafter in this section referred to as Fund) shall stand transferred to, and vest in, the Small Industries Bank.
Explanation.--"Small Industries Development Fund" and "National Equity Fund" mean the Small Industries Development Fund and National Equity Fund referred to as such in the books and accounts of the Development Bank on the day immediately preceding the date appointed in this sub-section.
(2) For the transfer to, and vesting in, the Small Industries Bank under sub-section (1) of the Funds, that Bank shall pay to the Development Bank such amount and on such terms and conditions as the Development Bank may determine.
(3) All contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature which relate to the Funds and which are subsisting or having effect immediately before the date referred to in sub-section (1) and to which the Development Bank is a party or which are in favour of the Development Bank shall,--
(a) if they relate exclusively to the Funds, be of full force and effect against or in favour of the Small Industries Bank and may be enforced and acted upon as fully and effectively as if, instead of the Development Bank, the Small Industries Bank had been a party thereto or as if they had been issued in favour of the Small Industries Bank; and
(b) if they relate not only to the Funds but also to any of the other business or functions of the Development Bank, be of full force and effect against or in favour of both the Development Bank and the Small Industries Bank and may be enforced or acted upon as fully and effectively as if, in addition to the Development Bank, the Small Industries Bank had also been a party thereto or as if they had been issued in favour of the Development Bank and also the Small Industries Bank.
(4) If, on the date referred to in sub-section (1), any suit, appeal or other legal proceeding of whatever nature relating to the Funds is pending, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the Small Industries Bank of the business of the Development Bank or of anything contained in this Act, but the suit, appeal or other proceeding may,--
(a) where it relates exclusively to the Funds, be continued prosecuted and enforced by or against the Small Industries Bank; and
(b) where it relates not only to the Funds but also to any of the other business or functions of the Development Bank be continued, prosecuted and enforced by or against the Development Bank and the Small Industries Bank or, if the Central Government by order in writing so directs, by or against such one of them, as may be specified in such order.
(5) If any question arises as to whether any contract, deed, bond, agreement, power of attorney, grant of legal representation or other instrument referred to in sub-section (3) or any suit, appeal or other legal proceeding referred to in sub-section (4) relates or relate exclusively to the Funds it shall be referred to the Development Bank for decision and the decision of the Development Bank thereon shall be final.
(6) The provisions of this section shall have effect notwithstanding anything contained in the Industrial Development Bank of India Act, 1964 (18 of 1964), or any other law or any instrument having force by virtue of the said Act or other law.
Explanation.--"Small Industries Development Fund" and "National Equity Fund" mean the Small Industries Development Fund and National Equity Fund referred to as such in the books and accounts of the Development Bank on the day immediately preceding the date appointed in this sub-section.
(2) For the transfer to, and vesting in, the Small Industries Bank under sub-section (1) of the Funds, that Bank shall pay to the Development Bank such amount and on such terms and conditions as the Development Bank may determine.
(3) All contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature which relate to the Funds and which are subsisting or having effect immediately before the date referred to in sub-section (1) and to which the Development Bank is a party or which are in favour of the Development Bank shall,--
(a) if they relate exclusively to the Funds, be of full force and effect against or in favour of the Small Industries Bank and may be enforced and acted upon as fully and effectively as if, instead of the Development Bank, the Small Industries Bank had been a party thereto or as if they had been issued in favour of the Small Industries Bank; and
(b) if they relate not only to the Funds but also to any of the other business or functions of the Development Bank, be of full force and effect against or in favour of both the Development Bank and the Small Industries Bank and may be enforced or acted upon as fully and effectively as if, in addition to the Development Bank, the Small Industries Bank had also been a party thereto or as if they had been issued in favour of the Development Bank and also the Small Industries Bank.
(4) If, on the date referred to in sub-section (1), any suit, appeal or other legal proceeding of whatever nature relating to the Funds is pending, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the Small Industries Bank of the business of the Development Bank or of anything contained in this Act, but the suit, appeal or other proceeding may,--
(a) where it relates exclusively to the Funds, be continued prosecuted and enforced by or against the Small Industries Bank; and
(b) where it relates not only to the Funds but also to any of the other business or functions of the Development Bank be continued, prosecuted and enforced by or against the Development Bank and the Small Industries Bank or, if the Central Government by order in writing so directs, by or against such one of them, as may be specified in such order.
(5) If any question arises as to whether any contract, deed, bond, agreement, power of attorney, grant of legal representation or other instrument referred to in sub-section (3) or any suit, appeal or other legal proceeding referred to in sub-section (4) relates or relate exclusively to the Funds it shall be referred to the Development Bank for decision and the decision of the Development Bank thereon shall be final.
(6) The provisions of this section shall have effect notwithstanding anything contained in the Industrial Development Bank of India Act, 1964 (18 of 1964), or any other law or any instrument having force by virtue of the said Act or other law.
Section 33 Staff of Small Industries Bank.
(1) The Small Industries Bank may appoint such number of officers and other employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service.
(2) At any time before the expiry of six months from the appointed day, the Development Bank may, in public interest, transfer to the Small Industries Bank such members of its staff whom the Development Bank considers as relevant to, or suitable for, the functions of the Small Industries Bank, as on deputation with the Small Industries Bank, but such members shall hold office by the same tenure and upon the same terms and conditions of service as respects remuneration, leave, provident fund, retirement or other terminal benefits as they would have held such office if the Small Industries Bank had not been established and shall continue to do so until the Development Bank either on its own motion or at the request of the Small Industries Bank recalls such member of staff to its service:
Provided that every member of the staff so transferred may elect to go back to the Development Bank by exercising an option in writing to that effect before the expiry of a period of nine months from the appointed day and on the exercise of such option, the Development Bank shall, before the expiration of a period of eighteen months from the appointed day, take back such member of the staff and he shall be deemed to have been on deputation to the Small Industries Bank during the period he was a member of the staff of the Small Industries Bank.
(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 absorption of any member of the staff by the Small Industries Bank in its regular service under this section shall not entitle such employee to any compensation under that Act or other law and no such claim shall be entertained by any court, tribunal or other authority.
Explanation.--For the purposes of this section, "appointed day" means the date of establishment of the Small Industries Bank under section 3.
(2) At any time before the expiry of six months from the appointed day, the Development Bank may, in public interest, transfer to the Small Industries Bank such members of its staff whom the Development Bank considers as relevant to, or suitable for, the functions of the Small Industries Bank, as on deputation with the Small Industries Bank, but such members shall hold office by the same tenure and upon the same terms and conditions of service as respects remuneration, leave, provident fund, retirement or other terminal benefits as they would have held such office if the Small Industries Bank had not been established and shall continue to do so until the Development Bank either on its own motion or at the request of the Small Industries Bank recalls such member of staff to its service:
Provided that every member of the staff so transferred may elect to go back to the Development Bank by exercising an option in writing to that effect before the expiry of a period of nine months from the appointed day and on the exercise of such option, the Development Bank shall, before the expiration of a period of eighteen months from the appointed day, take back such member of the staff and he shall be deemed to have been on deputation to the Small Industries Bank during the period he was a member of the staff of the Small Industries Bank.
(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 absorption of any member of the staff by the Small Industries Bank in its regular service under this section shall not entitle such employee to any compensation under that Act or other law and no such claim shall be entertained by any court, tribunal or other authority.
Explanation.--For the purposes of this section, "appointed day" means the date of establishment of the Small Industries Bank under section 3.
Section 34 Delegation of powers.
The Board may, by general or special order, delegate to any Director or committee constituted under section 12 or to any officer or other employee of the Small Industries Bank, subject to such conditions and limitations, if any, as may be specified in the order, such of its powers and duties under this Act as it may deem necessary.
Section 35 Returns.
The Small Industries Bank shall furnish from time to time to 1[the Central Government and the Reserve Bank] such returns as they may require.
1. Subs. by Act 7 of 2000, s. 20, for "the Central Government, the Reserve Bank and the Development Bank" (w.e.f. 27-3-2000).
Section 36 Obligations as to fidelity and secrecy.
(1) The Small Industries Bank shall not, except as otherwise required by this Act or any other law, divulge any information relating to, or to the affairs of, its constituents except in circumstances in which it is, in accordance with the law or practice and usage customary among bankers necessary or appropriate for the Small Industries Bank to divulge such information.
(2) The Small Industries Bank may, for the purpose of the efficient discharge of the functions under this Act, collect from or furnish to the Central Government, Reserve Bank, Development Bank, State Bank, any subsidiary bank, nationalised bank or other scheduled bank, State Cooperative Bank, State Financial Corporation, State Industrial Development Corporation, State Small Industries Corporation or the National Small Industries Corporation or such other institutions 1[as may be specified by the Board], credit information or other information as it may consider useful for the purpose, in such manner and at such times, as it may think fit.
Explanation.--For the purpose of this sub-section, the expression "credit information" shall have the same meaning as in clause (c) of section 45A of the Reserve Bank of India Act, 1934 (2 of 1934), subject to the modification that "banking company" referred to therein shall mean a bank, corporation or other institution referred to in this sub-section.
(3) Every Director, member of a committee, auditor, officer or other employee of the Small Industries Bank 2*** whose services are utilised by the Small Industries Bank under the provisions of this Act, shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the First Schedule to this Act.
(2) The Small Industries Bank may, for the purpose of the efficient discharge of the functions under this Act, collect from or furnish to the Central Government, Reserve Bank, Development Bank, State Bank, any subsidiary bank, nationalised bank or other scheduled bank, State Cooperative Bank, State Financial Corporation, State Industrial Development Corporation, State Small Industries Corporation or the National Small Industries Corporation or such other institutions 1[as may be specified by the Board], credit information or other information as it may consider useful for the purpose, in such manner and at such times, as it may think fit.
Explanation.--For the purpose of this sub-section, the expression "credit information" shall have the same meaning as in clause (c) of section 45A of the Reserve Bank of India Act, 1934 (2 of 1934), subject to the modification that "banking company" referred to therein shall mean a bank, corporation or other institution referred to in this sub-section.
(3) Every Director, member of a committee, auditor, officer or other employee of the Small Industries Bank 2*** whose services are utilised by the Small Industries Bank under the provisions of this Act, shall, before entering upon his duties, make a declaration of fidelity and secrecy in the form set out in the First Schedule to this Act.
1. Subs. by Act 7 of 2000, s. 21, for as "may be specified by the Development Bank" (w.e.f. 27-3-2000).
2. The words "or the Development Bank" omitted by s. 21, ibid., (w.e.f. 27-3-2000).
2. The words "or the Development Bank" omitted by s. 21, ibid., (w.e.f. 27-3-2000).
Section 37 Defects in appointment not to invalidate acts, etc.
(1) No act or proceeding of the Board or of any committee of the Small Industries Bank shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or the committee, as the case may be.
(2) No act done by any person acting in good faith as a Director shall be deemed to be invalid merely on the ground that he was disqualified to be a Director or that there was any other defect in his appointment.
(2) No act done by any person acting in good faith as a Director shall be deemed to be invalid merely on the ground that he was disqualified to be a Director or that there was any other defect in his appointment.
Section 37A Amounts and securities to be held in trust.
1[37A. Amounts and securities to be held in trust.--(1) Any sums received by a borrowing institution in repayment or realisation of loans and advances refinanced either wholly or partly by the Small Industries Bank shall, to the extent of the accommodation granted by the Small Industries Bank and remaining outstanding, be deemed to have been received by the borrowing institution in trust for the Small Industries Bank, and shall accordingly be paid by such institution to the Small Industries Bank, as per the repayment schedule fixed by the Small Industries Bank.
(2) Where an accommodation has been granted to a borrowing institution, all securities held, or which may be held, by such borrowing institution, on account of any transaction in respect of which such accommodation has been granted by the Small Industries Bank, shall be held by such institution in trust for the Small Industries Bank.]
(2) Where an accommodation has been granted to a borrowing institution, all securities held, or which may be held, by such borrowing institution, on account of any transaction in respect of which such accommodation has been granted by the Small Industries Bank, shall be held by such institution in trust for the Small Industries Bank.]
1. Ins. by s. 22, ibid. (w.e.f. 27-3-2000).
Section 38 Rights of Small Industries Bank in case of default.
(1) Where any industrial concern in the small-scale sector, which is under a liability to the Small Industries Bank under an agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Small Industries Bank or otherwise fails to comply with the terms of its agreement, with the Small Industries Bank, the Small Industries Bank shall have the right to take over the management, or possession, or both of such industrial concern in the small-scale sector, as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the Small Industries Bank.
(2) Any transfer of property made by the Small Industries Bank, in exercise of its powers under sub-section (1), shall vest in the transferee all rights in or to the property transferred as if the transfer had been made by the owner of the property.
(3) The Small Industries Bank shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods.
(4) Where any action has been taken against an industrial concern in the small-scale sector under the provisions of sub-section (1), all costs, charges and expenses which in the opinion of the Small Industries Bank have been properly incurred by it as incidental thereto shall be recoverable from the industrial concern in the small-scale sector and the money which is received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Small Industries Bank, and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.
(5) Where the Small Industries Bank takes over the management or possession of an industrial concern in the small-scale sector under the provisions of sub-section (1), the Small Industries Bank shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of the concern.
(2) Any transfer of property made by the Small Industries Bank, in exercise of its powers under sub-section (1), shall vest in the transferee all rights in or to the property transferred as if the transfer had been made by the owner of the property.
(3) The Small Industries Bank shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods.
(4) Where any action has been taken against an industrial concern in the small-scale sector under the provisions of sub-section (1), all costs, charges and expenses which in the opinion of the Small Industries Bank have been properly incurred by it as incidental thereto shall be recoverable from the industrial concern in the small-scale sector and the money which is received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Small Industries Bank, and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.
(5) Where the Small Industries Bank takes over the management or possession of an industrial concern in the small-scale sector under the provisions of sub-section (1), the Small Industries Bank shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of the concern.
Section 39 Power to seek assistance of Chief Metropolitan Magistrate or District Magistrate.
(1) Where any property, effects or actionable claims are sold or leased in pursuance of any power conferred by section 38, the Small Industries Bank or any other person authorised by it may, for the purpose of taking into custody or under control any such property, effects or actionable claims, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such property, effects, actionable claims, books of account or other documents relating thereto may be situated or found, to take possession thereof, and the Chief Metropolitan Magistrate or the District Magistrate shall, on such request being made to him,--
(a) take possession of such property, effects, actionable claims, or books of account or other documents relating thereto; and
(b) forward them to the Small Industries Bank or such other person, as the case may be.
(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority.
(a) take possession of such property, effects, actionable claims, or books of account or other documents relating thereto; and
(b) forward them to the Small Industries Bank or such other person, as the case may be.
(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force as may, in his opinion, be necessary.
(3) No act of the Chief Metropolitan Magistrate or the District Magistrate done in pursuance of this section shall be called in question in any court or before any authority.
Section 40 Power to call for repayment before agreed period.
Notwithstanding anything in any agreement to the contrary, the Small Industries Bank may, by notice in writing, require any industrial concern in the small-scale sector to which it has granted any loan or advance to discharge forthwith in full its liabilities to the Small Industries Bank,--
(a) if it appears to the Board that false or misleading information in any material particular was given in the application for the loan or advance; or
(b) if the industrial concern in the small-scale sector has failed to comply with the terms of its contract with the Small Industries Bank in the matter of the loan or advance; or
(c) if there is a reasonable apprehension that the industrial concern in the small-scale sector is unable to pay its debt or that proceedings for liquidation may be commenced in respect thereof; or
(d) if the property pledged, mortgaged, hypothecated or assigned to the Small Industries Bank as security for the loan or advance is not insured and kept insured by the industrial concern in the smallscale sector to the satisfaction of the Small Industries Bank; or depreciates in value to such an extent that, in the opinion of the Board, further security to the satisfaction of the Board should be given and such security is not given; or
(e) if, without the permission of the Board, any machinery, plant or other equipment, whether forming part of the security or otherwise, is removed from the premises of the industrial concern in the small-scale sector without being replaced; or
(f) if for any reason it is necessary to protect the interests of the Small Industries Bank.
(a) if it appears to the Board that false or misleading information in any material particular was given in the application for the loan or advance; or
(b) if the industrial concern in the small-scale sector has failed to comply with the terms of its contract with the Small Industries Bank in the matter of the loan or advance; or
(c) if there is a reasonable apprehension that the industrial concern in the small-scale sector is unable to pay its debt or that proceedings for liquidation may be commenced in respect thereof; or
(d) if the property pledged, mortgaged, hypothecated or assigned to the Small Industries Bank as security for the loan or advance is not insured and kept insured by the industrial concern in the smallscale sector to the satisfaction of the Small Industries Bank; or depreciates in value to such an extent that, in the opinion of the Board, further security to the satisfaction of the Board should be given and such security is not given; or
(e) if, without the permission of the Board, any machinery, plant or other equipment, whether forming part of the security or otherwise, is removed from the premises of the industrial concern in the small-scale sector without being replaced; or
(f) if for any reason it is necessary to protect the interests of the Small Industries Bank.
Section 41 Special provisions for enforcement of claims by Small Industries Bank.
(1) Where an industrial concern in the small-scale sector, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Small Industries Bank or otherwise fails to comply with the terms of its agreement with that Bank, or where the Small Industries Bank requires any industrial concern in the small-scale sector to make repayment of any loan or advance under section 40 and such industrial concern fails to make such repayment, then, without prejudice to the provisions of section 38 of this Act and section 69 of the Transfer of Property Act, 1882 (4 of 1882), any officer of that Bank, generally or specially authorised by that Bank in this behalf, may apply, to the Court for one or more of the following reliefs, namely:--
(a) for an order for the sale of the property assigned, charged, hypothecated, mortgaged or pledged to that Bank as security for the loan or advance; or
(b) for enforcing the liability of any surety; or
(c) for an ad interim injunction restraining the industrial concern in the small-scale sector from transferring or removing its machinery, plant or equipment from the premises of such industrial concern without the permission of the Small Industries Bank, where such transfer or removal is apprehended.
(2) An application under sub-section (1) shall state the nature and extent of the liability of the industrial concern in the small-scale sector to the Small Industries Bank, the ground on which it is made and such other particulars as may be necessary for obtaining the relief prayed for.
(3) Where the application is for the reliefs mentioned in clause (a) and clause (c) of sub-section (1), the Court shall pass an ad interim order attaching the security, or so much of the property of the industrial concern in the small-scale sector as would on being sold realise in its estimation an amount equivalent in value to the outstanding liability of such industrial concern to the Small Industries Bank together with costs of the proceedings taken under this section with or without an ad interim injunction restraining such industrial concern from transferring or removing its machinery, plant or equipment.
(4) Where the application is for the relief mentioned in clause (b) of sub-section (1), the Court shall issue a notice calling upon the surety to show cause on a date to be specified in the notice as to why the liability should not be enforced.
(5) Before passing any order under sub-section (3) or issuing a notice under sub-section (4), the Court may, if it thinks fit, examine the officer making the application.
(6) At the same time as it passes an order under sub-section (3), the Court shall issue to the industrial concern in the small-scale sector or to the owner of the security attached, a notice accompanied by copies of the order, the application and the evidence, if any, recorded by the Court calling upon such industrial concern or owner, to show cause on a date to be specified in the notice, as to why the ad interim order of attachment should not be made absolute or the injunction confirmed.
(7) If no cause is shown, on or before the date specified in the notice under sub-section (4), the Court shall forthwith order the enforcement of the liability of the surety.
(8) If no cause is shown on or before the date specified in the notice under sub-section (6), the Court shall forthwith make the ad interim order absolute and direct the sale of the attached property or confirm the injunction.
(9) If cause is shown, the Court shall proceed to investigate the claim of the Small Industries Bank in accordance with the provisions contained in the Code of Civil Procedure, 1908 (5 of 1908), in so far as such provisions may be applied thereto.
(10) After making an investigation under sub-section (9), the Court may--
(a) confirm the order of attachment and direct the sale of the attached property;
(b) vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property;
(c) release the property from attachment;
(d) confirm or dissolve the injunction; or
(e) direct the enforcement of the liability of the surety or reject the claim made in this behalf:
Provided that when making an order under clause (c) or making an order rejecting the claim to enforce the liability of the surety under clause (e), the Court may make such further order as it thinks necessary to protect the interests of the Small Industries Bank and may apportion the cost of the proceedings in such manner as it thinks fit:
Provided further that unless the Small Industries Bank intimates to the Court that it will not appeal against any order releasing any property from attachment or rejecting the claim to enforce the liability of the surety, such order shall not be given effect to, until the expiry of the period fixed under sub-section (12) within which an appeal may be preferred or, if an appeal is preferred, unless the Court empowered to hear appeals from the decisions of the said Court otherwise directs, until the appeal is disposed of.
(11) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 (5 of 1908), for the attachment or sale of property in execution of a decree as if the Small Industries Bank were the decree holder.
(12) Any party aggrieved by an order under sub-section (7), sub-section (8) or sub-section (10) may, within thirty days from the date of the order, appeal to the Court empowered to hear appeals from the decisions of the Court which passed the order and upon such appeal the appellate Court may, after hearing the parties, pass such orders as it thinks proper.
(13) Where proceedings for liquidation in respect of an industrial concern in the small-scale sector have commenced before an application is made under sub-section (1), nothing in this section shall be construed as giving to the Small Industries Bank any preference over the other creditors of such industrial concern not conferred on it by any other law.
(14) For the removal of doubts, it is hereby declared that any Court competent to grant an ad interim injunction under this section shall also have the power to appoint a receiver and to exercise all the other powers incidental thereto.
(a) for an order for the sale of the property assigned, charged, hypothecated, mortgaged or pledged to that Bank as security for the loan or advance; or
(b) for enforcing the liability of any surety; or
(c) for an ad interim injunction restraining the industrial concern in the small-scale sector from transferring or removing its machinery, plant or equipment from the premises of such industrial concern without the permission of the Small Industries Bank, where such transfer or removal is apprehended.
(2) An application under sub-section (1) shall state the nature and extent of the liability of the industrial concern in the small-scale sector to the Small Industries Bank, the ground on which it is made and such other particulars as may be necessary for obtaining the relief prayed for.
(3) Where the application is for the reliefs mentioned in clause (a) and clause (c) of sub-section (1), the Court shall pass an ad interim order attaching the security, or so much of the property of the industrial concern in the small-scale sector as would on being sold realise in its estimation an amount equivalent in value to the outstanding liability of such industrial concern to the Small Industries Bank together with costs of the proceedings taken under this section with or without an ad interim injunction restraining such industrial concern from transferring or removing its machinery, plant or equipment.
(4) Where the application is for the relief mentioned in clause (b) of sub-section (1), the Court shall issue a notice calling upon the surety to show cause on a date to be specified in the notice as to why the liability should not be enforced.
(5) Before passing any order under sub-section (3) or issuing a notice under sub-section (4), the Court may, if it thinks fit, examine the officer making the application.
(6) At the same time as it passes an order under sub-section (3), the Court shall issue to the industrial concern in the small-scale sector or to the owner of the security attached, a notice accompanied by copies of the order, the application and the evidence, if any, recorded by the Court calling upon such industrial concern or owner, to show cause on a date to be specified in the notice, as to why the ad interim order of attachment should not be made absolute or the injunction confirmed.
(7) If no cause is shown, on or before the date specified in the notice under sub-section (4), the Court shall forthwith order the enforcement of the liability of the surety.
(8) If no cause is shown on or before the date specified in the notice under sub-section (6), the Court shall forthwith make the ad interim order absolute and direct the sale of the attached property or confirm the injunction.
(9) If cause is shown, the Court shall proceed to investigate the claim of the Small Industries Bank in accordance with the provisions contained in the Code of Civil Procedure, 1908 (5 of 1908), in so far as such provisions may be applied thereto.
(10) After making an investigation under sub-section (9), the Court may--
(a) confirm the order of attachment and direct the sale of the attached property;
(b) vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property;
(c) release the property from attachment;
(d) confirm or dissolve the injunction; or
(e) direct the enforcement of the liability of the surety or reject the claim made in this behalf:
Provided that when making an order under clause (c) or making an order rejecting the claim to enforce the liability of the surety under clause (e), the Court may make such further order as it thinks necessary to protect the interests of the Small Industries Bank and may apportion the cost of the proceedings in such manner as it thinks fit:
Provided further that unless the Small Industries Bank intimates to the Court that it will not appeal against any order releasing any property from attachment or rejecting the claim to enforce the liability of the surety, such order shall not be given effect to, until the expiry of the period fixed under sub-section (12) within which an appeal may be preferred or, if an appeal is preferred, unless the Court empowered to hear appeals from the decisions of the said Court otherwise directs, until the appeal is disposed of.
(11) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 (5 of 1908), for the attachment or sale of property in execution of a decree as if the Small Industries Bank were the decree holder.
(12) Any party aggrieved by an order under sub-section (7), sub-section (8) or sub-section (10) may, within thirty days from the date of the order, appeal to the Court empowered to hear appeals from the decisions of the Court which passed the order and upon such appeal the appellate Court may, after hearing the parties, pass such orders as it thinks proper.
(13) Where proceedings for liquidation in respect of an industrial concern in the small-scale sector have commenced before an application is made under sub-section (1), nothing in this section shall be construed as giving to the Small Industries Bank any preference over the other creditors of such industrial concern not conferred on it by any other law.
(14) For the removal of doubts, it is hereby declared that any Court competent to grant an ad interim injunction under this section shall also have the power to appoint a receiver and to exercise all the other powers incidental thereto.
Section 42 Small Industries Bank to have access to records. 1 docs
(1) The Small Industries Bank shall have free access to all such records of any institution which seeks to avail of any credit facilities from the Small Industries Bank and to all such records of any such person who seeks to avail of any credit facilities from such institution, perusal whereof may appear to the Small Industries Bank to be necessary in connection with the providing of finance or other assistance to such institution or the refinancing of any loan or advance made to such person by the borrowing institution.
(2) The Small Industries Bank may require any institution or person referred to in sub-section (1) to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition.
(2) The Small Industries Bank may require any institution or person referred to in sub-section (1) to furnish to it copies of any of the records referred to in that sub-section and the institution or the person, as the case may be, shall be bound to comply with such requisition.
Section 43 Validity of loan or advance not to be questioned.
Notwithstanding anything to the contrary contained in any other law for the time being in force, the validity of any loan or advance granted by the Small Industries Bank in pursuance of the provisions of this Act shall not be called in question merely on the ground of non-compliance with the requirements of such other law as aforesaid or of any resolution, contract, memorandum, articles of association or other instrument:
Provided that nothing in this section shall render valid any loan or advance obtained by any company or co-operative society where such company or co-operative society is not empowered by its memorandum to obtain loans or advances.
Provided that nothing in this section shall render valid any loan or advance obtained by any company or co-operative society where such company or co-operative society is not empowered by its memorandum to obtain loans or advances.
Section 44 Indemnity of Directors.
(1) Every Director shall be indemnified by the Small Industries Bank against all losses and expenses incurred by him in, or in relation to, the discharge of his duties, except such as are caused by his own wilful act or default.
(2) A Director shall not be responsible for any other Director or for any officer or other employee of the Small Industries Bank or for any loss or expenses resulting to the Small Industries Bank or from the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the Small Industries Bank or the insolvency or wrongful act of any debtor or any person under obligation to the Small Industries Bank or anything done in good faith in the execution of the duties of his office or in relation thereto.
(2) A Director shall not be responsible for any other Director or for any officer or other employee of the Small Industries Bank or for any loss or expenses resulting to the Small Industries Bank or from the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the Small Industries Bank or the insolvency or wrongful act of any debtor or any person under obligation to the Small Industries Bank or anything done in good faith in the execution of the duties of his office or in relation thereto.
Section 45 Protection of action taken under this Act.
No suit or other legal proceeding shall lie against the Small Industries Bank, 1[chairman and managing director, the whole-time director] or any Director or any officer or other employee of such Bank or any other person authorised by that Bank to discharge any functions under this Act for any loss or damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act or any other law or provision having the force of law.
1. Subs. by Act 7 of 2000, s. 23, for "chairman" (w.e.f. 27-3-2000).
Section 46 Nomination by depositors or holders of bonds or other securities.
(1) Notwithstanding anything contained in any other law, where a nomination in respect of any deposits, bonds or other securities kept with or issued by the Small Industries Bank is made in the prescribed manner, the amount due on such deposits, bonds or other securities shall, on the death of the depositor or holder thereof, vest in, and be payable to, the nominee subject to any right, title, interest or claim of any other person, in relation to such deposits, bonds or other securities.
(2) Any payment by the Small Industries Bank in accordance with the provisions of sub-section (1) shall be a full discharge of its liability in respect of such deposits, bonds or securities.
(2) Any payment by the Small Industries Bank in accordance with the provisions of sub-section (1) shall be a full discharge of its liability in respect of such deposits, bonds or securities.