 chapter iii special powers of the central government| power    | of    ||----------|-------|| central  |       || govern-  |       || ment     | to    |8 notwithstanding anything contained in any other law for the time being in force or any thing in any agreement to the contrary, the central government may, by notice in writing, require a shipowner to whom the 5 committee had granted any financial assistance at any time before the appointed day, to discharge forthwith in full his entire dues and also discharge his other liabilities to the central government if— (a) it appears to the central government that false or mis- | call    ||---------|| repay-  || ment    || before  || agreed  || period |jjeading information in any material particular was given by the 10 shipowner for the purpose of procuring or for continuing to procure the benefit of such financial assistance; or (b) the shipowner has failed to comply with the terms of his agreement with the committee; or (c) there is a reasonable apprehension that the shipowner is unable to pay his debts or, that proceedings for liquidation have been or may be commenced against the shipowner; or (d) the central government has reason to believe that the shipowner has not used or applied the financial assistance granted by the committee strictly for the purpose for which it was granted or has otherwise misapplied or misappropriated the same for wrongful gain; or (e) the property assigned, charged, hypothecated, mortgaged or pledged to the committee as security for financial assistance is not insured or kept insured by the shipowner to the satisfaction of the central government, or if such property has depreciated in 3m value to such an extent that, in the opinion of the central government, further security to the satisfaction of the central government should be given and such security is not given; or (f) without the permission of the central government any 30 ship, machinery, plant or other property, whether forming part of the security or otherwise, is removed by such shipowner without being replaced; or (g) for any other reason, it is necessary so to do to protect the interests of the central government "financial assistance" explanation—for the purposes of this act, shall include any loan, advance or monetary assistance including any guarantee or counter-guarantee given to the shipowner by the committee at any time before the appointed day 9 (1) where the central government issues a notice under section 8 and the shipowner fails to comply with such notice, the central gov- 4° ernment may notwithstanding anything contained in any other law for appointment of receiver without interventhe time being in force or anything contrary contained in any agreement, deed or other instrument in the nature of any guarantee or counterguarantee, may appoint without intervention of the court, a receiver to tion of court, detain and take possession of any ship or other assets belonging to the shipowner whether mortgaged, hypothecated or charged with power to— (%) sell such ship or other assets by public auction notwithstanding anytning to the contrary contained in section 51 of the act; (4) demana and recover ali the income in respect of which he 4s appointed receiver of any such sup or oiler assets and to approptiate the same in the discnarge of rents, taxes and other dues and outgoing afiecting the same and in payment of the liabilities of tne ship owner under any mortgage, hypothecation or charge to the central government; or 10 (iti) use, operate, charter or lease such ship or other assets to generate incomes, rents or protits to meet the liabilities of the a5 ship owner to the central government under the mortgage, hypothecation or charge, and pay the residue, if any, of the money received by him to the person who, but for the appointment of the receiver, would have been entitled to receive the income of which he is appointed receiver, or who is otherwise entitled to such property (2) a receiver appointed under this section shall be deemed to be the agent of the shipowner and the shipowner shall be solely responsible for the receiver's acts or defaults unless such acts or defaults are due to any improper intervention on the part of the central government 10 (1) where the central government requires a shipowner to make immediate repayment of any financial assistance pursuant to a ® a appointment of directors and administrators,go notice issued under section 8 and the shipowner fails to make any such repayment, the central government may, notwithstanding anything contained in any other law for the time being in force, or anything contrary contained in any agreement, deed or other instrument in the nature of any guarantee or counter-guarantee, and without prejudice to anything contained in section 9, by notified order, appoint as many persons as it thinks fit,— (a) to be directors ot the company if the shipowner is a company, as defined in the companies act, 1956, or (b) in any other case, to be the administrators of the shipping concern 35 {2} the power to appoint directors or administrators under this section includes the power to appoint any individual, firm or body corporate to be the directors or, as the case may be, administrators on such terms and conditions as the central government may think fit 49 (3) for the removal of doubts, it is hereby declared that the power to appoint direciors or administrators include the power to remove or repiace the persons so appointed a (4) nothing in the companies act, 1956, or in any other law for the lime being in force or in any instrument relating to the shipowner if 45 it is a company shall, in so far as it makes, in relation to a director, any provision for the holding of any share qualification, age limit, restriction on the number of directors or directorships, retirement by rotation or removal from office, apply to any director appointed by the central government under this section,  11 (1) on the issue of a notified order under section 10—effect of notified order (a) if the shipowner is a company as defined in the companies act, 1956, all persons holding office as, directors of the shipowner and in any other case, all persons holding any office having the powers of superintendence, direction and control immediately before the issue of the notified order, shall be deemed to have vacated their offices as such; (b) any contract of management between the shipowner and director or person referred to in clause (a) and 10 holding office as such immediately before the issue of the notified order shall be deemed to have been terminated (2) the directors or administrators, appointed under section 10, shall take such steps as may be necessary to take into their custody or under their control, the property, effects and actionable claims to which the shipowner is, or appears to be, entitled, and all the property and effects of the shipowner shall be deemed to be in the custody of the directors or administrators, as the case may be, as from the date of the notified order 20 (3) subject to the other provisions of this act, the directors appointed under section 10, shall, for all purposes, be the directors of such company duly constituted under the companies act, 1956, and such directors, shall alone be entitled to exercise all the powers of such director  |12 subject to the control of the cent: tal government, the directors, or, as the case ma: y be, the administrators appointed under section 10, 25 powers and duties of directors and administrators, 'cise such powers 'y be exercisable by persons in charge of shall take such steps as may be necessary for the purpose of efficiently managing the business of the shipowner and shail exer and discharge such duties as ma) managing the said business, | no        | right    ||-----------|----------|| go        |          || to        | com-     || pensation |          |13 (1) notwithstanding anything to the contrary contained in any contract or in any law for the time being in force, no managing or wholetime director or any other director or a manager or any person in charge for termination of contract of management of a shipowner which is a company shall be entitled to any compensation for the loss of office or for the premature termination, under this act, of any contract of management entered into by him with 35 such company, of managing director, ete | (2) nothing contained in sub-section (1) shall affect the right of any such managing or whole-time director, or any other director or manager or any such person in charge of management to recover from the ship owner moneys recoverable otherwise than by way of such compensation 490 applica- 14 (1) where directors have been appointed under section 10 in tion of act 1 of 1956 in the memorandum or articles of association of - relation to a company, then, notwithstanding anything contained in the companies act, 1956 or such company,— (a) it shall not be lawful for the share holders of such company 45 or any other person to nominate or appoint any person to be a director of the company; (&) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the central government; (c) no proceeding for the winding up of such company or for 5 the appointment of a receiver in respect thereof shall lie or be continued in any court, except with the consent of the central government (2) subject to the other provisions of this act and subject to such other exceptions, restrictions and limitations, if any, as the central 10 governmeni may, by notification in the official gazette, specify in this behalf, the companies act, 1956, shall continue to apply to a shipowner which is a company in the same manner as it applied thereto before the issue of the notified order under section 10 recovery 15 (1) any amount payable to the central government by the ship- of dues as arrears 15 owner pursuant to a notice issued under section 8 may be recovered in the same nianner as an arrear of land revenue of land revenue, (2) the central government may, for purposes of sub-section (1), appoint an officer to prepare a certificate specifying the amount due from such shipowner and send it to the collector of fhe district in which 20 the shipowner owns any property or carries on business provided that the officer so appointed shall, before sending the certificate to the collector, give an opportunity of being heard to the shipowner (3) the' collector shall on receipt of such certificate, proceed to recover from such shipowner the amount specified in the certificate delegation of powers 25 16, (1) the central government may, by notification in the official gazette, and subject to such conditions, restrictions and limitations as may be specified therein -or otherwise, delegate all or any of its powers and functions under this chapter to a designated person (2) where any notification has been issued under sub-section (1), | to       ||----------|| designa || ted      |3° the provisions of this act shall apply in relation to the designated per- person, son as they apply in relation to the central government in respect of any matter in relation to which the powers and functtons of the central government have been delegated to the designated person  chapter iv 35 miscellaneouseffect of ordinance : 17 the provisions of this act shall have effect notwithstanding anvthing inconsistent therewith contained in anv other law for the time being in force or in the memorandum or articles of association of 40 anv company which is a shipowner or in anv agreement deed or other instrument having effect by virtue of any law other than this act of the act in other jaws, protec tion of 18 no suit or other legal proceeding shall lie against the central government or anv director er administrator annainted hv the central government or the designated nerson or anv officer or other emnlovee action taken in good faith, of the central government or the designated person for anv lose or 4 damage caused or likely to be esused bv anvthins which is in a good faith done or intended to he done in vursuance of this act or any other law 'or provision having the force of law 19 every director or administrator appointed under section 10 and indemnification of directors, ete, the designated person appointed under section 16 shall be indemnified by the central government against all losses and expenses incurred by him in relation to the discharge of his duties, except such as are caused by his own wilful act or default directors, ete, 20 every director or administrator appointed under section 10 and the designated person appointed under section 16 shall be deemed to be a public servant within the meaning of section 21 of the indian penal code to be public servants  statement of objects and reasonsthe shipping development fund committee (sdfc) was established by the government in 1959, under section 15 of the merchant shipping act, 1958 the main function of the sdfc is to administer the shipping development fund, formed with grants and loans from the government, which is utilized for granting loans and extending different types of financial assistance for purposes of acquisition and maintenance of ships the current fall in freight rates and the recession in the international shipping industry have placed a considerable financial burden on the sdfc and affected its ability to finance new ship acquisitions although the sdfc performed well its role as a developmental body, its record in respect of enforcing recovery of loans extended by it has been well below expectations the government has since decided to establish a new financing agency under the companies act in the place of the sdfc which would be endowed with wider financial responsibilities and greater flexibility of operations 2 it is, therefore, considered necessary through legislation to abolish the shipping development fund and the sdfc and provide, among other things, for the vesting of the assets and liabilities thereof in the government, transfer of the employees of the sdfc to the government, special powers of recovery of outstanding dues of the committee including appointment of receiver without intervention of courts, appointment of directors and administrators, recovery of dues as arrears of land revenue and a power to recall loans before the agreed period to government these powers could be exercised by the government directly or through a designated person 3 the bill seeks to achieve the above objects new detu; the 26th november, 1986 : vishwanath pratap singh  president's recommendation under article 117 of the constitution of india[copy of letter no 10|65|$4-cie-1, dated 28th november, 1986 from shri vishwanath pratap singh, minister of finance to the secretary- general, lok sabha] the president, having been informed of the subject matter of the proposed bill to 'abolish the shipping development fund committee constituted under the merchant shipping act, 1958, and to provide for certain matters incidental thereto, reeommends under clauses (1) and (3) of article 117 of the constitution of india, the introduction and consideration of the bill in lok sabha  financial memorandumclauses 4, 5 and 7 of the proposed legislation dealing with consequential provisions and continuation of suits against the central governernment and transfer of services of the existing employees of the sdfc may involve expenditure out of the consolidated fund of india it has not been possible at this stage to correctly estimate such expenditure however, as on date, sdfc's guarantees and counter-guarantees amount to a total value of about rs 626 crores the transfer of the employees ~ of the sdfc to the government would entail a recurring yearly expenditure of approximately rs 18 lakhs  annexure extracts from the merchant shipping act, 1958 (44 or 1958)an act to foster the development and ensure the efficient maintenance of an indian mercantile marine in a manner best suited to serve the national interests and for that purpose to establish a national shipping board and a shipping development fund, to provide for the registration of indian ships and generally to amend and consolidate the law relating to merchant shipping       part iv suippinc development fundforma- 14 there shall be formed a fund to be called the shipping development fund (hereinafter in this part referred to as the fund) there shall be credited thereto— tion of shipping development fund, (a) the amount of such grants as the central government may make for being credited to the fund; (b) the amount: of any loans advanced by the central government to the committee constituted under section 15 for carrying out the objects of the fund; (bb) the amounts received by the said committee on the issue and sale of bonds and debentures; (c) such sums of money as may, from time to time, be realised out of repayment of loans made from the fund or from interest on loans or dividends from investments made from the fund; (d) such other sums as may be received for being credited to the fund 15, (1) the central government shall constitute a committee to be called the shipping development fund committee (hereinafter in this part referred to as the committee) consisting of a chairman and such number of other members, not exceeding twelve as the central government may think fit to appoint thereto shipping development fund committee(2) the committee so constituted shall be a body corporate by the name aforesaid having perpectual succession and a common seal with power to acquire, hold and dispose of property) and may by that name sue and be sued , (3) the committee shall have power to regulate its own procedure sts applica- 16 (1) the fund shall vest in the committee and shall be applied towards meeting the expenses of the committee and for granting loans and financial assistance in any other form,— (a) to persons of the description mentioned in section 21— (i) for the acquisition and maintenance of ships, including modification, reconstruction and renovation thereof; and (i) for meeting any short-term financial requirements; (b) to indian ship-yards for the construction of new ships (2) the committee shall not grant any loan or give any financial assistance under sub-section (1) except on such terms and conditions as the central government may from time to time specify, and any such term may, if the loan or financial assistance is granted or given to a company, provide for the appointment by the committee of one or more directors of such company and 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, or in any other law for the time being in force or the memorandum, articles of asociation or any other instrument relating to the company and any provision regarding share qualification, age limit, number of directorships, removal from office of director and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the committee in pursuance of the term as aforesaid (24) any director appointed in pursuance of sub-section (2) shall,— (a) hold office during the pleasure of the committee and may be removed or substituted by any person by order in writing by the committee; t (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 cf 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 (2b) every director appointed by the committee shall be indemnified by the committee 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 (2c) no suit or other legal proceeding shall lie against any director appointed by the committee 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 (3) the committee shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as the centra] government may, in consultation wit the comptroller and auditor-general of india, prescribe (4) the accounts of the committee shall be audited by the comptroller and auditor-general of india or a person authorised by him in this behalf at such intervals as the comptroller and auditor-general of india may specify and any expenditure incurred in connection with such audit shall be payable by the committee (5) the comptroller and auditor-general of india and any person authorised by him in connection with the audit of the accounts of the committee shall have the same rights, privileges and authority in connection with such audit as'the comptroller and auditor-general of india has in connection with the audit of government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect any office of the committee (6) the accounts of the committee as certified by the comptroller and auditor-general of india or any person authorised by him in this behalf, together with the audit report thereon, shall be forwarded to the central government and that government shall cause the same to be jaid before each house of parliament borrow- 16a (1) the committee may issue and sell bonds and debentures, with or without interest, for the purpose of carrying out the objects of the fund ing powers, (2) the honds and debentures of the committee shall be guaranteed by the central government as to the repayment of the principal and the payment of interest, at such rate as may be fixed by the central government on the recommendation of the committee at the time the bonds and debentures are issued acts and proceed 17 no act done or proceeding taken by the commiffee shall be questioned on the ground merely of the existence of any vacancy in or defect in the constitution of, the committee | ings    ||---------|| commit- |17a notwithstanding anything contained in any enactment for the time being in force relating to income-tax or wealth-tax, the committee shall not be liable to pay— tee not to be invalid, exemption from liability (a) income-tax in respect of its income, profits or gains; and to pay income- (b) wealth-tax in respect of its net wealth tax and wealthtax 18 the central government may, by notification in the official gazette, declare that with effect from such date as may be specified in the notification, the committee shall be dissolved, and thereupon— dissolution of the committee(a) all the property vested in the committee shall vest in the central government; and (6) all the liabilities of the committee shall become the liabilities of the central government" 19 (1) the central government may make rules to carry out the purposes of this part make rules in respect to matters in this part (2) in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: - (a) the term of office of members of the committee and the manner of filling casual vacancies in the committee; (b) powers of the chairman of the committee; (c) the travelling and other allowances payable to members of the committee; (d) the appointment of officers and other employees of the committee and the terms and conditions of their service; (e) the custody and investment of the fund; (f) the execution of instruments and the mode of entering into contracts by or on behalf of the committee and the proof of documents purporting to be executed, issued or sfgnéd by or on behalf of the committee; (ff) the manner and terms of issue, sale and redemption of bonds and debentures by the committee; (g) any other matter which may be or is to be prescribed,  a   ®