The Industrial Reconstruction Bank (Transfer of Undertakings and Repeal) Act, 1997
# THE INDUSTRIAL RECONSTRUCTION BANK (TRANSFER OF UNDERTAKINGS
 AND REPEAL) ACT, 1997

 ______________

 ARRANGEMENT OF SECTIONS
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CHAPTER I

PRELIMINARY

# SECTIONS

1. Short title and commencement.
2. Definitions.

CHAPTER II

TRANSFER AND VESTING OF THE UNDERTAKING OF RECONSTRUCTION BANK IN COMPANY

3. Undertakings of the Reconstruction Bank to vest in company.
4. General effect of vesting of undertaking in Company.
5. Provisions in respect of officers and other employees of Reconstruction Bank.

CHAPTER III

MISCELLANEOUS

6. Concession, etc., to be deemed to have been granted to Company.
7. Tax exemption or benefit to continue to have effect.
8. Guarantee to be operative.
9. Arrangement with Company on appointment of directors to prevail.
10. Act 18 of 1891 to apply to the books of Company.
11. Shares, bonds and debentures to be deemed to be approved securities.
12. Substitution in Act, rules or regulations of company in place of the Reconstruction Bank.
13. Repeal and saving of Act 62 of 1984.

CHAPTER IV

AMENDMENT TO THE INDUSTRIAL RECONSTRATION BANK OF INDIA ACT, 1984

14. [Repealed.]
15. Repeal and Saving.

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# THE INDUSTRIAL RECONSTRUCTION BANK (TRANSFER OF UNDERTAKINGS
 AND REPEAL) ACT, 1997

 ACT NO. 7 OF 1997

[19th March, 1997.]

# An Act to provide for the transfer and vesting of the undertakings of the Industrial
 Reconstruction Bank of India to and in the Company to be formed and registered as a Company under the Companies Act, 1956, and for matters connected therewith or incidental thereto and also to repeal the Industrial Reconstruction Bank of India Act, 1984.

BE it enacted by Parliament in the Forty-eighth Year of the Republic of India as follows:-
CHAPTER I

PRELIMINARY

**1. Short title and commencement.—(1) This Act may be called the Industrial Reconstruction**

Bank (Transfer of Undertakings and Repeal) Act, 1997.

(2) It shall be deemed to have come into force on the 24th day of January, 1997.

**2. Definitions.—In this Act, unless the context otherwise requires—**

(a) “appointed day” means such date as the Central Government may, by notification in the

Official Gazette, appoint under section 3;

(b) “Company” means the Industrial Investment Bank of India Limited to be formed and

registered under the Companies Act, 1956 (1 of 1956);

(c) “Reconstruction Bank” means the Industrial Reconstruction Bank of India established under

sub-section (1) of section 3 of the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984).

CHAPTER II

TRANSFER AND VESTING OF THE UNDERTAKING OF RECONSTRUCTION BANK IN COMPANY

**3. Undertakings of the Reconstruction Bank to vest in company.—On such date[1] as the Central**

Government may, by notification in the Official Gazette, appoint, there shall be transferred to, and vest
in, the Company, the undertakings of Reconstruction Bank.

**4. General effect of vesting of undertaking in Company.—(1) The Central Government, being**

the shareholder of the Reconstruction Bank immediately before the appointed day, shall be deemed to
be registered, on and from the appointed day, as a shareholder of the Company.

(2) The undertakings of the Reconstruction Bank which are transferred to, and which vest in, the

Company under section 3 shall be deemed to include all business, assets, rights, powers, authorities and
privileges and all properties, movable and immovable, real and personal, corporeal and incorporeal, in
possession or reservation, present or contingent of whatever nature and wheresoever situate including
lands, buildings, vehicles, cash balances, deposits, foreign currencies, disclosed and undisclosed
reserves, reserve fund, special reserve fund, benevolent reserve fund, any other fund, stocks,
investments, shares, bonds, debentures, security, management of any industrial concern, loans,
advances and guarantees given to industrial concerns, tenancies, leases and book debts and all other
rights and interests arising out of such property as were immediately before the appointed day in the
ownership, possession or power of the Reconstruction Bank in relation to its undertakings, within or
without India, all books of account, registers, records and documents relating thereto and shall also be
deemed to include all borrowings, liabilities and obligations of whatever kind within or without India
then subsisting of the Reconstruction Bank in relation to its undertakings.

1. 27th March, 1997, vide notification No. S.O. 242(E), dated 25th March, 1997, see Gazette of India, Extraordinary, Part II,
sec. 3(ii).

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(3) All contracts, deeds, bonds, guarantees, powers of attorney, other instruments and working

arrangements subsisting immediately before the appointed day and affecting the Reconstruction Bank
shall cease to have effect or to be enforceable against the Reconstruction Bank and shall be of as full
force and effect against or in favour of the Company in which the undertakings of the Reconstruction
Bank have vested by virtue of this Act and enforceable as fully and effectually as if instead of the
Reconstruction Bank, the Company had been named therein or had been a party thereto.

(4) Any proceeding or cause of action pending or existing immediately before the appointed day by

or against the Reconstruction Bank in relation to its undertakings may, as from the appointed day, be
continued and enforced by or against the Company in which the undertakings of the Reconstruction
Bank have vested by virtue of this Act as it might have been enforced by or against the Reconstruction
Bank if this Act had not been enacted and shall cease to be enforceable by or against the Reconstruction
Bank.

**5. Provisions in respect of officers and other employees of Reconstruction Bank.—(1) Every**

officer or other employee of the Reconstruction Bank (except a Director of the Board or the Chairman
and Managing Director) serving in the employment immediately before the appointed day shall, in so
far as such officer or other employee is employed in connection with the undertakings which have
vested in the Company by virtue of this Act, become, as from the appointed day, an officer or, as the
case may be, other employee of the Company and shall hold his office or service therein by the same
tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and
with the same rights and privileges as to leave, leave fare concession, welfare scheme, medical benefit
scheme, insurance, provident fund, other funds, retirement, voluntary retirement, gratuity and other
benefits as he would have held under the Reconstruction Bank if its undertakings had not vested in the
Company and shall continue to do so as an officer or, as the case may be, other employee of the
Company or until the expiry of a period of six months from the appointed day if such officer or other
employee opts not to continue to be the officer or other employee of the Company within such period.

(2) Where an officer or other employee of the Reconstruction Bank opts under sub-section (1) not

to be in employment or service of the Company, such officer or other employee shall be deemed to have
resigned.

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) in any

other law for the lime being in force, the transfer of the services of any officer or other employee of the
Reconstruction Bank to the Company shall not entitle such officer or other employee to any
compensation under this Act or under any other law for the time being in force and no such claim shall
be entertained by any court, tribunal or other authority.

(4) The officers and other employees who have retired before the appointed day from the service of

the Reconstruction Bank and are entitled to any benefits, rights or privileges shall be entitled to receive
the same benefits, rights or privileges from the Company.

(5) The trust of the provident fund or the gratuity fund of the Reconstruction Bank and any other

bodies created for the welfare of officers or employees would continue to discharge their functions in
the Company as was being done hitherto in the Reconstruction Bank and any tax exemption granted to
the provident fund or the gratuity fund would continue to be applied to the Company.

(6) Notwithstanding anything contained in this Act or in the Companies Act, 1956 (1 of 1956) or

in any other law for the time being in force or in the regulations of the Reconstruction Bank, no Director
of the Board, Chairman and Managing Director or any other person entitled to manage the whole or
substantial part of the business and affairs of the Reconstruction Bank shall be entitled to any
compensation against the Reconstruction Bank or the Company for the toss of office or for the
premature termination of any contract of management entered into by him with the Reconstruction
Bank.

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CHAPTER III

MISCELLANEOUS

**6. Concession, etc., to be deemed to have been granted to Company.—With effect from the**

appointed day, all fiscal and other concessions, licences, benefits, privileges and exemptions granted to
the Reconstruction Bank in connection with the affairs and business of the Reconstruction Bank under
any law for the time being in force shall be deemed to have been granted to the Company.

**7. Tax exemption or benefit to continue to have effect.—(1) Notwithstanding anything contained**

in the Income-tax Act, 1961 (43 of 1961) or any other enactment for the time being in force relating to
tax or income, profits or gains, the Company shall not be liable to pay income-tax or any other tax for
a period of five years computed from the appointed day in respect of any income, profits or gains
derived, or any amount received by the Company.

(2) The transfer and vesting of the undertakings or any part thereof in terms of section 3 shall not

be construed as a transfer within the meaning of the Income-tax At, 1961 (43 of 1961) for the purposes
of capital gains.

**8. Guarantee to be operative.—Any guarantee given for or in favour of the Reconstruction Bank**

with respect to any loan, lease finance or other assistance shall continue to be operative in relation to
the Company.

**9. Arrangement with Company on appointment of directors to prevail.—(1) Where any**

arrangement entered into by the company with an industrial or other concern provides for the
appointment by the company of one or more directors of such concern, such provision and any
appointment of directors made in pursuance thereof shall be valid and effective notwithstanding
anything to the contrary contained in the Companies Act, 1956 (1 of 1956) or in any other law for the
time being in force or in the memorandum, articles of association or any other instrument relating to
such concern, and any provision regarding share qualification, age limit, number of directorships,
removal from office of directors and such like conditions contained in any such law or instrument
aforesaid, shall not apply to any director appointed by the company in pursuance of the arrangement as
aforesaid.

(2) Any director appointed in pursuance of sub-section (7) shall—

(a) hold office during the pleasure of the company and may be removed or substituted by any

person by order in writing by the company;

(b) not incur any obligation or liability by reason only of his being a director or for anything

done or omitted to be done in good faith in the discharge of his duties as a director or anything in
relation thereto;

(c) not be liable to retirement by rotation and shall not be taken into account for computing the

number of directors liable to such retirement.

**10. Act 18 of 1891 to apply to the books of Company.—The Company shall be deemed to be a**

bank for the purposes of the Bankers' Books Evidence Act, 1891.

**11. Shares, bonds and debentures to be deemed to be approved securities.—Notwithstanding**

anything contained in any other law for the time being in force, the shares, bonds and debentures of the
Company shall be deemed to be approved securities for the purposes of the Indian, Trusts Act, 1882 (2
of 1882), the Insurance Act, 1938 (4 of 1938) [2]***.

**12. Substitution in Act, rules or regulations of company in place of the Reconstruction Bank.-**

**—In every Act, rule or regulation in force on the appointed day,—**

1. The words and figures "and the Banking Regulation Act, 1949(10 of 1949)" shall be omitted by Act 4 of 2013, s. 17 and
the Schedule (w.e.f. 18-1-2013).

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(a) for the words “Industrial Reconstruction Bank of India”, wherever they occur, the words

“Industrial Investment Bank of India Limited” shall be substituted;

(b) for the words “Reconstruction Bank”, wherever they occur, the words “Industrial

Investment Bank” shall be substituted.

**13. Repeal and saving of Act 62 of 1984.---(1) On the appointed day, the Industrial Reconstruction**

Bank of India Act, 1984 shall stand repealed.

(2) Notwithstanding the repeal of the Industrial Reconstruction Bank of India Act, 1984,-
(a) the Company shall, so far as may be, comply with the provisions of Chapter VII of the Act

so repealed for any of the purposes related to the annual accounts and audit of the Reconstruction
Bank;

(b) the provisions of Chapter VIII of the Act so repealed will continue to be applicable in respect

of the arrangements entered into by the Reconstruction Bank with an industrial concern under
section 18 thereof up to the appointed day and the Company will be entitled to act upon and enforce
the same as fully and effectually as if this Act had not been enacted.

CHAPTER IV

AMENDMENT TO THE INDUSTRIAL RECONSTRATION BANK OF INDIA ACT, 1984

**14. [Insertion of new section 4A].—Rep. by the Repealing and Amending Act, 2001 (30 of 2001),**

_s. 2 and the First schedule (w.e.f. 2-9-2001)._

**15. Repeal and Saving.—(1) The Industrial Reconstruction Bank (Transfer of Undertakings and**

Repeal) Ordinance, 1997 (Ord. 7 of 1997) is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so

repealed, shall tie deemed to have been done or taken under the corresponding provisions of this Act.

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