 the unit trust of india bill, 1963 'i arrangement of clauses chapter i puldlinaily1 short title, exteat and commlllcem_t 2 deftditiodl  chapter ii e&taiillahmjlnt of tim unit trust of india aim '!'1m ilfitial capitalthbreof a 4 establishment and incorporation 01 uit truat gf india initial capital of trust i 8 maintenance of register of contributoriel issue of contribution certificatee 7 rlaht of transfer of ctontribution certificate in certain calm riahtl and liabilities of holder of contributioll certificate  ••  chapter iii"i ;  managdunt of thji tausii'9 management 10 board of trustees 11 term of office of trustees 12 disqualiflcation for beine a trustee 13 vacation and resignation of oftlce of trustee a chairman and executive trustee 15 casual vacancy in oftice of chairman 01' exentiye truame 16 fees and allowances of certain trusteea  " 17 meetings of board 18 executive committee and other committees  chapter iv powau and functions of tk trust11 busineas of trult 20 borrowing powers 21 unit scheme  chapter v allocatiok and distrmutiok of mcoke22 allocation of income, interest and other expenses 23 distr\bution of income 24 distribution of income aft£r refund of ,initial capital 25 definition of year  <fhapter vi accounts and audit!s: preparation of balance-sheet, etc, of trust 27 audit 28 publication of annual accounts and reports 29 furnishini of information to reserve bank  chapter vii miscellaneous30 power of reserve bank to give directions 31 staft of trust 32 income-tax and other taxes 33 act 18 of 1891 to apply in relation to trust 34 declaration of fidelity and secrecy 35 defects in appointments not to invalidatl! acts, etc 36 indemnity of trustees 37 protection of action taken under thiji act ," ,  38 delegation of powen 39 no trust to ,be taken notice of and protection from attachment 010 repayment of contribution in case of' winding up of contributinl inatitutton  chapter iv pow_ and functions of tka tltuitii businell of trut 20 borrowing powers 21 unit scheme  chal'ter v allocatiok akd distribtjtiok of mcome22 allocation of income, interest and other expensea 23 distr~bution of income 24 distribution of income aft~r refund of ,initial capital 25 definition of year  cfhapter vi accotjnts and a tjdit26 preparation of balance-sheet, etc, of trust 27 audit 28 publication of annual accounts and reports 29 furnishini of information to reserve bank  chapter vii miscellaneous30 power of reserve bank to give directiona 31 staff of trust 32 income-tax and other taxes 33 act 18 of 1891 to apply in relation to ttuit 34 declaration of fidelity and secrecy 35 defects in appointments not to invalidate acts, etc 36 indemnity of trustees 37 protection of action taken under thll act 38 delegation of powers 39 no trust to -be taken notice of and protection trom attachment -io repayment of contribution in case of winding up of contributin, institution  the unit trust of india bill, 1963 (to be/as introduced in lok sabha)1 page 3, lines 4 and 5,-!21: "official" ~ "official" 2 page 8, line 30,-for "atu re~  na8n 3 page 8, line 38,-!qr "trustee" read "member" 4 page 1_~, line 3~,­~':~, or nominated" 5 page 21, line 1~,-after "statell insert iibank" 6 page 23, line 19,-~ -~ for nc01'ltr~but1onsft ~ l~contributor1esll - '1,,_ 7 correct line numbers on pages 2, 3 and 4 new delhi novfijp,ber 21 ~ 963 kartika 30, 1885 (saka)  clausm41 power of central government to reconstitute board 42 liquidation of trust 43 regulations 44 amendment of certain enactment the first schedule-declaration 0, fldii:lity and secrecy the· second schedule-amzndmkn'l or certain enactmdri'i  billto pl'o'vide lor the establilhment of a corp01'ation with a view to encouraging saving and investment and pal'ticipation in the iftcome, yrofi,t3 and gaina accruing to the corporation from the acqui3ition, holding, maru:zgement and diapolal of 3ecuritie3 b it eaacted by parliament in the fourteenth year of the itpublic of india as follows:- chapter i preliminary1 (1) this act may be called the unit trust of india act, 1963 j (2) it extends to the whole of india short title exteat and coinmedea-(3) it shall come into force on such date as the central govern- meni ment may, by notification in the ofticial gazette, appoint ie 2 in this act, unless the context otherwise requires,-deftai- (a) "board" means the board of trustees constituted under tio •• section 10 or section 41; (b) "contributing institution" means an institution which is, for the dme being, a contributory to the initial capital of the trust under section 4; - (c) "contribution certificate" means a certificate issued under lection 6; (d) "initial capital" means the capital of the trust referred to in lection 4; 31ol1dsi (e) "life insurance corporation" means the life insurance corporation of india established under the life insurance corporation act, 1956; (1) "prescribed" means prescribed by regulations made under this act; (g) "reserve bank" means the reserve bank of india constituted under the reserve bank of india act, 1934; 2 of 1984 ' 1 (h) "scheduled bank" means a bank for the time being in-~ cluded in the second schedule to the reserve bank of india act, 1934; 10 2 of le34 (i) "securities" means shares, debentures, bonds and other stock of any company or other body corporate, whether incorporated in india or outside, and securities issued by any local authority in india, or by the government of, or a local authority in, any buch country outside india as may be approved is by the reserve bank and includes government security as defined in section2 of the public debt act, 1944, but does not in-18 of 1m4 elude mortgagee on immovable property; (n "state bank" means the state bank of india constituted under the state bank of india act, 1~; 20 23 of li5 • (k) "subsidiary bank" has the same meaning as in section 2 of the state bank of india (subsidiary banks) act, 1959; 38 of 195 • (l) "trust" means the unit trust of india established under tlection 3; (m) "trustee" means a trustee appointed, nominated or 2s elected ujider section 10 or section "i' , (n) "unit" means a unit issued under the unit sclteme' , (0) "unit capital" means the aggregate of the face value of the units sold under the unit scheme and outstanding for the time being; 30 ( ) " 't 6_ t" - p lint cel'uuca e means a certiftcate j!lc:u~i to the purchaser of a unit under the unit sch~e' ,  (q) "unit holder" meens a person for the time being" recognised by the trust as the holder of a unit certificate under the unit scheme; (r) "unit scheme" means a schemt made undi!r section 21 3s  chapter ii estiuilishmbnt 01' the unit trust of indla am> tile dfmal capital thereof3 (1) the central government shall, by notification in ~he om- estlabliah· 5 cial gazette establish a corporation by the name of the urut trust ment and ,  i' incorpo-of india which shall be a body corporate havmg perpet~~ successl~ ration of and a common seal with power, subject to the provlslons of this unit trust act, to acquire, hold or dispose of property and to contract, and may, of india by the said name, sue or be sued 10 (2) the head office of the trust shall be at bombay or at such other place as the reserve bank may, by notification in the oftlcial gazette, specify (3) the trust may establish local offices, branches or ajenciel at any places in or outside india r is 4 (1) subject to the provisions of this act, the initial capital of initial the trust shall be five crores of rupees divided in the form of certi- ctapital r  at fieates each of which shall be of such face value as may be prescribed and contributed in the manner hereinafter provided (2) before such date as the central gove,nment may, by notift-20 cation in the official gazette, specify in this behalf-(a) the reserve bank shall contribute two and a half crores of rupees; (b) the life insurance corporation shall contribute seventyfive lakhs of rupees; 2s (c) the state bank and the subsidiary banks shall contribute seventy-five lakhs of rupees, the amount which the state bank and each subsidiary bank shall contribute being determined by the state bank; (d) other instit?tions, namely, scheduled banks other than those referred to in clause (c) and such cklsses of financial institutions as may be notified by the central government in the official gazette in this behalf may contribute one crore of' rupe~ (3) if the aggregate of the contributions made by the institutions referred to in clause (d) of sub-section (2) exceeds one crore 3s of rupees, the board shall refund the excess amount to such institutiona, 80 however, that the amount to be refunded to each mca institution bears, as far as possible, the same proportion to tke contribution made by it as the excess amount bean to the li,re-,ate of the contributions made by iluch institutions (4) if the aggregate of the contributions made by the institu-s tions referred to in clause (d) of sub-section (2) is less than ooe crore of rupees, the reserve bank &hall contribute the deficiency within thirty days of the date specified under 8ub-eection (2): provided that the reserve bank may, thereafter, transfer the whole or any part of its contribution under this aub-section to iny ie institution referred to in clause (d) of lub-section (2) (5) if at any time the board is of opinion that th'e amount of the initial capital is in excess of the requirements of the trust, it may refund the whole or any part of such capital to the contributine institutions: is provided that where only a part is so refunded the amount to be refunded to each iuch institution shall bear, as far as possible, the same proportion to the contribution made by it as such part bears to the initial capital: provided further tha~ fof' the purpose of any refund, the valuat of 2 the initial capital shall be determined by the board on such basis as the central goverrunent may specify in this behalf, regard beine had to the real or exchangea,ble value thereof 5 the board shall maintain in such manner as may be prescribed a register containing the names of the contributing institutions, the 2s amount contributed by each uch institution and such other particulars as may be prescribed maintenance of reeilterot contributonal keue of contribu-'ion certiftoate • 8 (1) as soon as may be after the contribution has been made by any contributing institution under section ~, the board &hall issue to such contributing institution a contribution certificate or contribu- 1-tion certificates in such form and containing such particulars as may be prescribed (2) where the whole or any part of the contribution has been refunded to any institution under sub-section (5) of section 4, that institution shall, as &oon as may be after the refund has been made, is forward the contribution certificate or certificates to the board for cancellation or amendment, as the case may be, and the board shall cancel or amend the certificate or certificates accordingly 'i (1) any contributing institution referred to in clause (d) of rilhtof sub-section (2) of section 4 may, in the prescribed manner, transfer a tradlfer contribution certificate to any other institution referred to in that of eontriclause and thereupon such other institution shall ,be deemed to be a b~on 5 contributing institution for the purposes of this act :ca~ in (2) save as provided :in sub-section (1), a contribution certificate certaib shall not be transferred cases 8 every holder of a contribution certificate shall have all the ri'h~ rights and be subject to all the liabilities conferred or imposed on a :~18~i-10 contributing institution by or under this act holders  chapter iiiofcontributton certiftcatett  management of the trust9 (1) the general superinten~nce, direction and management of man  the affairs and ,business of the trust shall vest in a board of trustees ment is which may exercise all powers and do all acts and things which may be exercised or done by the trust (2) the board shall, in discharging its functions under this act, act on business principles, regard being had to the interest of the unit holders 20 10 the board of trustees shall consist of the following, namely:- board 01 trusteea (a) the chairman to be appointed by the reserve bank; (b) four trustees to be nominated by the reserve bank of whom not less than three shall be persons having special knowledge, of, or ex~ence ,in, commerce, industry, banking, finance or investment; , 30 (c) one trustee to be nominated by the life insurance corporation; (d) one trustee to be nominated by the state bank; (e) two trustees to be elected in the prescribed manner by the contributing institutions referred to in clause (d) of subsection (2) of section 4; and (/) an executive trustee to be appointed by the reserve bank: provided that if the appointment ef the chairman is whole-time, 35 it shall not be necessary to appoint an executive trustee: provided further that on the first constitution of the board, the trustees referred to in clause (e) shall be nominated by the reserve bank and shan hold office for a period of twelve months from the  dcite of their nomination or until two trustees are elected under the said clause, whichever may be earlier  term of ofttce'of trustees 11 (1) a trustee nominated under clause (b) of section 10, if he is an bft\cer of the 'reserve ban"k, or a trustee  nominated linder 5 clause (c) or clause (d) of that section shall hold office during the pleasure of the authority nominating him (2) a trustee noininated under clause (b) of sec:tion 10, if he is not an officer of the reserve bank, or a trustee elected 'under clause (e) of that section shall hold office for four years and there- 10 after until his successor is duly nominated or elected (3) a casual vacancy in the office of a trustee referred to in subsection (2) or in the office of a t~stee nominated under the second proviso to section 10 shall be filled by election or nomination, as the  case may be, and the trustee so elected or nominated shall hold office 15 for the unexpired portion of the term of his predecessor: provided that no such vacancy occurring within three months of the date of the expiry of the normal term of office of such trustee need be filled ~der this sub-section (4) a trustee nominated under the second proviso to section 10 or 20 a trustee nominated in his place under sub-section (3) of this section shall be deemed to be a trustee elected under clause (e) of section 10 (5) a person who holds, or who has held, office as a trustee s~an, subject to the other provisions of this act, de eligible for re-nomma- 25 tion or re-election, as the case may be disqualification for being a trustee 12 a person shall not be capable of being nominated or elected as a trustee if-(a) he is, except in the case of the chairman or the executive trustee, an officer or other employee of the trust; or 30 (b) he is, or at any time has been, adjudicated as insolvent or has suspenaed payment of his debts or has compounded with his creditors; or - (c) he is of unsound mind and stands so declared by' a competent court; or 35 (d)' he has been convicted of an offence which, in the opinion of the reserve bank, involves moral turpitude 13 (1) if a trustee-vjlclwm>- (a) becomes subject to any of the disqualifications menu on- andti;~~  ' ' na on 01 ed m section 12; or oftlee of (b) is absent without leave of the board from more than trustee s three consecutive meetings thereof; or (c) being a trustee elected or deemed to be elected under clause (e) of section 10 becomes an officer or other employee of government or of the reserve bank, state bank, a subsidiary bank or the trust, 10 his office shall thereupon become vacant (2) a trustee nominated under clause (b) of section 10 who i$ not 811 officer of the reserve bank or a trustee elect~ or deemed to be elected under clause (e) of that section may by letter addressed to the board resign his office and on such resignation b~g accepted by is the board shall be deemed to have vacated his office 14 (1) the appointment of a chairman or of an executiv:e t~tee ~~ may be either whole-time or part-time:  ~~  provided that if the appointment of the chairman i!l part-time, trustef, the appointment of the executive trustee shall be whole-time zo (2) the chairman or the executive trustee shall-(a) hold office for such term not exceeding five years as the reserve bank may sp~ify; (b) receive such salary or allowances or both from the 1'ru,$t and be governed by such terms and conditions of service as the 2s reserve bank may determine; and (e) perform such functions as the board may entrust or delegate to him 15 if the chairman, or the executive trustee is by infirmity or casual otherwise rendefed incapable of carrying out his duties or i~ absent :c::,:: 30 on leave or otherwise, in circumstances not involving the vacation of of chairhis appointment, the reserve bank may nominate another person to man or act in his place until the date on which the chairman or the execu- executive tive trustee, as the case may be, resumes his duties trustee 16 'trustees, other than the chairman and the executive trustee, p'eesand  '  ,  allow-35 shall be paid such fees and allowances for attendin~ the meetings of ancell of the board or of any of its committees and for attending to any other cettaln work of the trust, as may be prescribed: trustees provided that no fees f:ih,all be payable to a trustee who is an o:(rcer of government or of any corporation established by any law 40 for the time being in force lleetinp of board 17 (1) the board shall meet not less than six times a year and at least once every two months and dhall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed (2) the chairman, or, if for any reason he is unable to attend any s meeting of the board, any other trustee nominated by him in this behalf or, jn the event of such nominated trustee also being unable to attend the meeting or no such nomination having been made by the chairman, any other trustee elected by the trustees present at the meeting from among themselves, shall preside at the meeting 10 (3) all questions which come up before any meeting of the board shall be decided by a majority of votes of the trustees present and voting, and, in the event of equality of votes, the chairman or, in his absence, the person presiding, shall have a second or casting vote 18 (1) there shall be an executive committee which shall con- is list ofbecutive committee add ether  coid-mltteel (a) the chairman of the board, (b) where an executive trustee has been appointed by the reserve bank, such executive trustee, and (c) two other trustees nominated in this behalf by the 20 reserve bank (2) the chairman of the board shall be the chairman of the executive committee (3) subject to such general or special directions as the board may,  from time to time, give the executive committee shall be competent 25 to deal with any matter within the competence of the board (4) the board may constitute such other committees whether consisting wholly of trustees or wholly of other ~sons or partly of trustees and partly of other persons as it thinks fit and for such purpose at it may decide 30 (5) the executive committee or any other committee constituted under this section shall meet at such times and places and shall observe such rules of procedure in regard to the transaction pf business at its meetings as may be prescribed (6) the members of a committee (other than the trustees) shall 35 be paid sucn fees and allowances for attending its meetings and for attending to any other work of the trust, as may be prescribed: provided that no fees shall be payable to a trustee who is an ofbcer of government or of any corporation established by any law for the time being in force 40  chapter iv powers and functions of the trustit (1) the trust may carry on ai,ld transact any of the follow- businell ing kinds of business, namely: _ of trust 5 (a) selling and purchasing units; , (b) investing in, acquiring, holding or disposing of, securities and exercising and enforcing all powers end rights incidental thereto;  (e) keeping money on deposit with scheduled banks or 10 with such other institutions as may be prescribed; (d) generally, doing all such matters and things as may be incidental to or consequential upon the discharge of its functions under this act (2) the trust shall not take on lease, purchase or otherwise - is acquire except for its own use any immovable property or any interest therein 20 (1) the trust may borrow from any authority or person, not borrowbeing government or the reserve bank, against such security and in, on such terms and conditions as may be agreed upon powers 20 (2) the trust may borrow money from the reserve bank repayable on demand or on the expiry of a fixed period not exceeding ninety days from the date on which the money is so borrowed against stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust m:oney by any law for 25 the time being in force in india (3) if the board is of opinion that a situation has arisen in which it is necessary or expedient for the trust to borrow money from the reserve bank against securities other thian those mentioned in subsection (2), the trust may borrow money from that bank repayable 30 on demand or within a period not exceedin~ eighteen months from the date on which the money is so borrowed against its own bonds which the trust may issue with the approval of the central governm~ ,  , (4) the bonds issued by the trust under sub-section (3) shall be 35 lluaranteed by the central governinent as to the repayment of principal and the payment of interest atsuch rate as may be fixed by the central government at the time the bonds are issued : 21 (1) for the purpose of providing facilities for participation lfnit :i! in the income, profits and gains arising out of the acquisition, holding, scheme management or disposal of securities by the trust, the board shan make a unit scheme (2) subject to the provisions of this act, and the reguletions made under section 43, a scheme made under sub-section (1) may provide for-s (0) the issue of units and the face value of each unit, which shall not be less than ten rupees or more than one hundred rupees; (b) the fonn and manner in ~hich an  application may be made for the- purahese of a unit from the trust; 10 (c) the manner in which payment may be made for purchasing a unit from the trust; (d) the issue of unit certificates and the fonn and manner in which such certiftcates may be issued; (e) the issue of duplicate of any unit certificate in the evejlt is of loss or destruction of the original and the fee on the payment of which such duplicate may be issued; (f> the procedure for determining the value at which the units may be sold or purchased, from time to time, by the trust; 20 (g) the recognition of persons as unit holders; (h) the persons to whom, the time at which and the manner in which any payments in respect of a unit shall be made by the trust; (i) the preparation and maintenance of a register, if eny, of unit holders; 2s (;) the conditions, if any, subject to which a unit holder may transfer the unit; (k) any ather matter which the trust -may aonsider to be necessary or proper for the effective implementation of the scheme  30 (8) the board may, from time to time, add to or otherwise amend the scheme made under sub-section (1) , (4) the scheme made under sub-section (1) and every amendment thereof under sub-section (3) shall be notified in the amelal ~e 3s  chapi'er v allocation and distribution of income22 (1) the total gross income of ·the trust in any year shallbe allocaallocated to the initial capital and the unit capital in thesamepro- tionof 5 portion as the iformer bears' to the latter at the end of toot year :~;::i (2) the interest payable for any year for any borrowings made :!:: by the trust and the total amount of other expenses incurred by  the trust in that year shall 'be allocated and charged to the initiel capital and the unit capital in the same proportion as' is referred to 10 in sub-section (1): provided that if the amount of expenses other than interest allocated to the unit capi1w is more than five per cent of the gross income allocated to the unit capital in that year, only an amount equal to such five per cent shall be charged to the unit capital and is the rest of the total amount of expenses other than interest shall be charged to the initial capital 23 (1) the gross income allocated to the initial capital in any distrlbuyear reduced by the interest and the amount of other expenses tion of charged for that year to the initial capital maybe distributed in income the prescribed manner among the contributing institutions in pro-20 portion to their contributions to the initial capital (2) the gross income allocated to the unit capital in any year reduced by the interest and the amount of other expenses charged for that year to the unit capital may, but not less than ninety per 2s cent of the gross income so reduced shall, be distributed to the unit holders in respect of that year 24 notwithstanding anything contained in section 22 or se!lion23, distribuwhere the wj101e of the initiw capital has ,been refunded to the con- tion of tributing institutions, the gross income in any year reduced by the income 30 interest payable for that year for any 'borrowings made by the trust after and the total amount of other expenses incurred by the trust in that ~~~ 1 year may, but not less than ninety per cent of the gross income ~apit':~ so reduced shall, be distributed to the unit holders in respect of that year 3s 25 in this chapter "year" memls the period in respect of which deftnition the books and accounts of the trust are balanced and closed under of ,ear sub-section(2) of section 26  chapter vi accounts and audit26 (1) the balance-sheet and accounts of the trust shall be prepared and maintained in such form and manner as may be prescribed preparation of balance-heet, etc, of trust (2) the board shall cause the books and accounts of the trust s to 'be balanced and closed each year as on such date as may be prescribed audit 27 (1) thi affairs of the trust shall be audited by an auditor  duly qualified to act as an auditor under sub-section (1) of section 226 of the companies act, 1956, who shell be appointed by the trust 10 1 of 1958 and shall receive such remuneration as the trust may fix (2) the auditor shall be supplied with a copy of the annual balance-sheet of the trust and it shall be his duty to examine it together with the accounts and vouchers relating theretoand he sball have a list delivered to him of all ,books kept by the trust and shall is at all reasonable times have access to the books, accounts, vouchers and other docwnents of the trust (3) the auditor may, in relation to such accounts, examine any trustee or any officer -or other employee of the trust and shall be entitled to require from the board or officers or other employees of 20 the trust such information and explanation as he may think necessary for the performance of his duties (4) the auditor shall make a report to the trust upon the annubl balance-sheet and accounts examined by him and in every such report he shall state whether in his opinion the balance-sheet is a 25 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 affait's of the trust and in case he had called for any information or explanation from the board or any officer or other employee of the trust, whether it has been given and whether it is· satisfactory 30 publication 28 the trust shall furnish to each of the contributing institutions ~:f:d~:land within four months from the date on which its accounts are balanced ~ parta and closed in respect of any year a copy of the balance-sheet and accounts together with a copy of the auditor's report and shall pub-lish the same in the official gazette 35 29 the trust shall furnish, from time to time, to the reserve bank such information as the reserve bank may require fumish~ of information to reaerve bank  chapter vii  miscellaneous·30 in the discharge of its functions under this mt, the trust powerof  shall ·be guided by such directions in matters of policy involving reserve s public interest as the reserve bank may give to it in writing, and if :ank to a~y i q1,le&tion "rises whether the direction relates to tel mat~er ,of policy c:ti;:niods inyqlvipg, public, interest, the decision of the r~erve &mktbereon shall be final 81 (1) the trust may appoint such nwnber of officers and other staft of 10 employe~ as it considers necessary or desirahle for the efficient per- truit formance of its functions and determine the ~erms ,and conditions of their ,apppintment ,and service (2) without prejudice to the provisions of sub-section (1), it shall be lawful for the trust to utilise, and for the reserve bank to is ~e available, the services of such staff of the reserve bank on such terms and conditions as may be agreed upon between ~he ~ and the reserve bank a oumt 32 (1) notwithstanding anything contained in the income-tax income-14 of 1983 act, 1961, the super profits tax act, 1963, or in any other enactm,cnt  tax add 20 for, ~he time being in force relating to income-tax, super-tax or super' other profits tax, or any other tax on income, profits or gains-'taxes   (a) the trust shall not be liable to pay income-tax, super- tax, super profits tax or any other tax in respect of any income, ,profits or gains derived by it from any source;   25 (b) where the income received by a unit holder, being an individual, from the trust in respect of units does not exceed one thousand rupees, such income, and where such income exceeds one thousand rupees, a sum of one thousand rupees, shall be excluded in computing the total income of the unit holder for 30  ,purposes of income-tax but not of super-tax; and 14 of 1963 35 (c) where a contributing institution is liable to be ~essed to super profits tax under the super profits tax act, 1963, in respect of its own income, profits or gains and receives i;llly :>um from the trust under this act in respect of its contribution to the initial capital, such sum as reduced by the amount of any income-tax and super-tax payable ,in respect thereof shall be exc~uded from the total income of the said institution in computing its chargeable profits far the purposes of super profits tax (2) notwithstanding anything contained in section 193 or section 194 of the iqcome-tax act, 1961-(a) no deduction of income-tax or super-tax shan be made on any interest or dividend payable to the trust in respect of any securities or shares owned by it or in which it has full bene-s ftcial interest; and (b) no deduction of income-tax shall be made by the trust from the income distributed by it to a unit holder being an individual (3) su·bject to the foregoing sub-sections, for the purposes of the 10 income-tax act, 1961,-(a) any distribution of income received by a unit holder from the trust shall be deemed to be his income by way of dividends; and (b) the trust ish all be deemed to be a company is 33 the  bankers' books evidence act, 1891 shall apply in relation to the trust as if it were a hank as defined in section 2 of the said act act 18 of 1881 to apply in relation to trust declaration of fidelity and secrecy 34 every trustee, auditor, officer or other employee of the trust or any employee of the reserve bank whose services are utilised by 20 the trust under section 31 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 35 (1) no act or proceeding of the board or of any committee of  the trust shall be questioned on the ground merely of the existence 25 ot any vacancy in, or defect in the constitution 'of, the board or committee ' defects in appointmenta not to invalidate acts, etc indemnityof trustees (2) no act done by any person acting in good faith as a trustee ; shall be deemed to be invalid merely on the ground that he was disqualified to be a trustee or that there was any other defect in his 30 appointment 36 (1) every trustee shall be indemnified by the trust 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 3s (2) a trustee of the board shall not be responsible for any other trustee, or for any officer or other employee of the trust, or for any loss or expenses resulting to the trust, from the insufficiency or deficiency of value of or title to any property or security acquired or taken on behalf of the trust or the insolvency or wrongful act of any 40 debtor or any person under obligation to the trustor anything done in good faith in the execution of the duties of his office or in relation thereto 37 no suit or other legal proceeding shall lie against the trust or protecthe reserve bank or any trustee or any officer or other employee of tiod of s the trust or the reserve bank or any other person authorised by the :c:on trust to discharge any functions under this act for any damage u~d:~ caused or likely to be caused by anything which is in good faith done this act or intended to be done in pursuance of this act 38 the board may, by general or special order, delegate to any delega-10 officer of the trust, subject to such conditions and limitations, if any, tion of as may be specified in the order, such of its powers and duties under powers this act as it may deem necessary  39 (1) no notice of a trust, express, implied or constructive, shall no trust be receivable by the trust to be ta'ken  is (2) the amount standing to the credit of a contributing institu- notice of tion shall not be liable to attachment under any decree or order of andproany court in respect of any debt or liability incurred by the contribu- ;:~o~t_ ting institution tachment 40 (1) in the event of a contributing institution referred to in iwpay-20 clause (d) of sub-section (2) of section 4 being wound up, the trust ment shall, on a demand in that behalf made by the authorit! in charge of ~~:~1~ the winding up, pay to such authority an amount equivalent to the case of value of the contribution to the initial capital made by that institu- winding tion ' up of ceiltributin, 2s (2) the value of the contribution shall de de~erlllij'rd by the institu-board on such basis as the central government lilay specify, re~ard tie being had to the real or exchangeable value of 8uh centributiml 41 (1) notwithstanding anything contained in section 10 or sec- powerof tion 11, where the whole of the initial capital has been refunded to central 30 the contributing institutions, the central government may, after governconsultation with the reserve bank, by order, provide for the ment tti~  reams -reconstitution of the board tute (2) an order made under sub-section (1) may provide for all or board any of the following matters, namely;-3s (a) the number of trustees that will constitute the board; (b) the manner in which they shall be cho~en, or nominated; (c) their term of office; (d) filling of casu~t ~acancies; j (e) such incidental, consequential and supplementary mat  ters as may be necessary to give effect to the order including the reconstitution of the executive committee or other committees (3) every order made under this section shall be published in the official gazette and a copy thereof shall be laid before each s house of parliament as soon as may be after it is made u (1) the trust shall not be plac'ed in liquidation save by order of the central government and in such manner as it may direct; liquidation of trust (2) in making such order, the central government shall, if the initial capital has not been wholly refunded, direct, among other 10 things, that-(i) the value of the net assets of the trust after paying oft all its liabilities, other than those in :respect of the initial capital and the unit capital shall be divided into two parts in the same proportion as the aggregate face value of all the units immediate- is ly prior to the date on which the trust is placed in liquidation bears to the initial capital as on that date; and (ii) the first part shall be distributed among the contributing institutions in proportion to their respective contributions to, the initial capital as on that date and the second part shall 20 be distributed among the unit holders in proportion to the face value of the units he~d by them as on that date relula-uolll 43 (1) the board may, with the previous approval of the reserve bank, make regulations not inconsistent with this act to provide for all matters for which provision is necessary or expedient for the 2$ purpose of giving effect to the provisions of this act (2) in particular and without prejudice to the generality of the foregoing po~r, such regulations may provide for-(a) the form and manner of maintenance of the register of contributing institutions and the particulars to be contained 30 ~~; , (b) the face value of a contribution certificate, its form ahd" the particulars to be contained therein; (e) the manner of transfer of a contribution certificate; (d) the rights and liabilities of a contributing institution; 3s  (e) the holding and conduct of elections under this act, including the final decision on doubts or disputes regarding the validity of elections; (f) the fees and allowances that may be paid to the trustees; (9) the times and places of the meetings of the board or of any committee constituted under this act and the procedure to be followed at such meetings including the quorum necessary for the transaction of business; s (h) the fees and allowances that may be paid to the members of a committee, other than trustees; (i) the institutions with which money may be kept on deposit; (;) the manner of distribution of income to the' contributing 10 institutions; (k) the form and manner in which the balance-sheet and the accounts of the trust shall be prepared and maintained; (1) the date on which the books of ae-counts of the trust shall be balanced and closed' each year; is ,(m) the duties and conduct, salaries and allowances, and other conditions of service of officers a,nd other employees of the trust; (n) the establishment andmainrenance of provident or other benefit funds for officers and other employees of the trust; llnd 20 (0) any other matter which is to be, or may be, prescribed (3) any regulation which may be made by th~ board under this act may be made by the reserve bank within three months of the -establishment of the trust/and any regulation so made may be altered or rescinded by the 'b'oard in the exercise of its powers under this act 2, 44 ,~he enactments specified in the second schedule to this act amendshall be amended in the manner provided therein ment of certain enactments (see section 34)  declaration of fidelity and secrecyi do hereby declare that i will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as 5 trustee, auditor, officer or other employee (as the case may be) of the unit trust of india and which properly relate to the office or position held by me in the said trust i further declare that i will not communicate or allow to be com· municated to any person not legally entitled thereto any information 10 relating to the affairs of the unit trust of india or to the affairs of any person having any dealing with the said trust; nor will i allow any such person to inspect or have access to any books or documents belonging to or in the possession of the unit trust of india and relat ing to the business of the said trust or the business of any person 15 having any dealing with the said trust signed before me: (signature) the second schedule (see section 44)  20  amendment of certain enactments part i amendments to '11ie reserve bank of india act, 1934 (2 of 1934) amendments1 in section 2, after clause (1), insert the following clause, namely:-amend mentol section 2 " (g) "unit trust" means the unit trust of india established under section 3 of the unit trust of india act, 1963' z in section 17,-30 amend· mentof lection 17 (a) after clause (4bb) , insert the following clause, namely:-"(4bbb) the making to the unit trust of loans and advancer-(i) repayable on demand or on the expiry of a fixed period not exceeding ninety days from the date of 35 !such loan or advance against the security of stocks, (unds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in india, or 5 (ii) repayable on demand or within a period of eighteen months from the date of such loan or advance against the security of the bonds of the unit trust issued with t~ approval of and guaranteed by the central government;"; 10 (b) aft~r clause (4e), insert the following clause, namely:-" (4f) contributing to the initial capital of the unit trust"  part iiis amendment to the industrial disputes act, 1947 (14 of 1947) amendment in section 2, in sub-clause (i) of clause (a), after "deposit insur- amendance corporation act, 1961 or" insert the following, namely: -ment of "the unit trust of india established under section 3 of the unit section 2 20 trust of india act, 1963, or"  part iii| amendment    | to the industrial    | finance    | corporation    ||--------------|----------------------|------------|----------------|| 1948         |                      |            |                || (15          |                      |            |                || of           |                      |            |                || 1948)        |                      |            |                || substitu--   |                      |            |                || tion         | of                   |            |                || amendment    |                      |            |                || new          | sec-                 |            |                || tion         | for                  |            |                || 25           | for                  | section    |                || 20,          |                      |            |                || substitute   | the                  | following, | namely:-       || section      |                      |            |                || 20          |                      |            |                |"20 the corporation may invest its funds in the securities of the investment central government or of any state government and may, with the of funds approval of the central government, contribute to the initial capital of th~ unit trust of india established under the unit trust of india 30 act, 1963"  part iv amendment to the state bank of india act, 1955 (23 of 1955) amendmentin section 33, after clause (xix a), insert the following clause, amend-- 35 namely:-' ment of "(' ) t:r'b t' t th    1  section 33 xtx aa con' 1 u mg 0 e lrutla capltal of the unit trust of india established under the unit trust of india act, 1963;" the question of establishing an institution in the public sector for earryingon the business which is transacted by unit trusts or mutual funds in other countries has been under consideration for some time it is now proposed to establish such an institution, to be known as the' unit 'l'rust of india, w:th an initial capital of five crores of rupees the unit trust of india will encourage savings by providing for various classes of investors the facility of jnvest,ing their money in units of the trust the trust will invest the, initial capital and the capital obtained by the sale of units in shares "and other securities and will distribute every year not less than ninety per cent of the net income accruing to, the unit-holders it is expected that the risk of losses or of depr~ci&tion on accqunt of the inv~tillents will be reduced or eliminated, as a result, of the proposed arrangement the trust will also be in a position to contribute, through its operations, to the growth and diversification of the country's economy 2 the variqus provisions of the bill are explained in detail in the  notes on clauses new delhi; t t krishnamachari the 14th november, 1963  pr~ident's recommendation uni?er -artj<fles 1l7~d 274 of the constitution of india[copy of letter no f7/8oj~i,aated the 19th november, 1963 from shri t t krishnamachari, minister of finance to the secretary, lok sabba] the president having been informed of the subject matter of the proposed unit trust of india bill, 1963, recommends the introduction of the bill in the lok sabha under clause (1) of article 117 and clause (1) of article 274 and its consideration under clause (8) of article 117 of the constitution clause 3 provides for the establishment of the trwit its head oflice will be at bombay, but provision bas been made in ~e bill for the transfer of the head office to any other place, if this is later on found to be convenient, and also for the establishment of such branch oflicea or agencies as may be necessary clause 4 provides for the obligations of the reserve bank and other institutions which will be contributing to the initial capital of the trust the reserve bank will be required to contribute rs 2' 5 crores, the life insurance corporation rs 75 lakhs and the state of india and its subsidiaries a further sum of rs 75 lakhs a sum of rs 4 crores out of the total initial capital of rs 5 crores will thus be contributed by institutions in the public sector the balance of rs 1 crore will be offered to scheduled banks in the private sector or other financial institutions, which may be willing to become contributories, but if the actual contributions fall short of the sum of rs 1 crore earmarked for this purpose, the deficiency will be made good by the reserve bank the· special contribution, if any, which may be made by the reserve bank in the first instance, for making up any deficiency in the contributions by the institutions in the residuary category, may, if necessary, be transferred to these institutions at any later stage the initial contributions in all cases can be refunded at the option of the trust, but the trust will be requirej to arrange for such refunds, if any, on a pro rata basis, in the proportion in which the contributions have been made by the various institutions clauses 5 and 6 provide for the maintenance of a register of contributories and the issue of certificates to the contributing institutions indicating the extent of their contributions clause 7 and 8 provide for the transfer of the certificates of contribution the reserve bank, the life insurance corporation and the state bank and its subsidiaries will not be able to transfer their contributions to other institutions the other contributories wm however be able to do 10 amone themselves clause 9 to 16 provide for the management of the trust the board of trustees will ordinarily consist of nine members the chairman and four other members will be nominated by the reserve bank, one trustee each will be nominated by the life insurance corporation and the state bank, and two trustees will be elected by scheduled banks in the private sector and other financial institutions, which may become contributories if the chairman is appointed ona part-~ime basis or if it is otherwise considered necessary or desirable a whole-time executive trustee will be appointed, in addition to the nine other members the chairman and the executive trustee will be appointed for such periods, not exceeding five years, as may be determined by, the reserve bank the nominees of the reserve bank, if they are officials and the nominees of the life insurance corporation an4 the state bank will hold office at the pleasure of the authorities nominating them the nominees of the reserve bank, if they are non-officials, and the two elected trustees will hold office for a period of four years in each case clauses 17 and 18 provide for the procedure to be followed at meetings of the board of trustees and the constitution of executive and other committees clause 19 deals with the business which the trust is expected to transact the trust will buy and sell securities, including bonds, shares or other stock of statutory corporations, companies or other bodies corporate the trust will not acquire any immovable property except for its own use clause 20 provides for the grant of temporary ways and means assistance to the trust by the reserve bank of india or by other lending institutions the trust will be in a position to obtain normal banking accommodation from the reserve bank for periods not exceeding ninety days, and will, in an emergency, be able to borrow from that bank for periods up to six months against its own bonds, issued for this purpose with the approval and guarantee of the central government the trust will be able to borrow from other banks or financial institutions, on terms and conditions which may be agreed upon, but it will not· be in a position to borrow any money directly from the central government clause 21 provides for the framing' and publication of the scheme, in accordance with which units will be sold by the trust the scheme will provide for the sale of units, representing and backed by, all the investments made by the trust the face value of the unit will, not be less than· rs 10 or more than rs 100 the units will be sold at prices determined by the trust, having regard to the dividends declared by it on the face value of 'the units the trust will be prepared to purchase back the units, if necessary, at prices announced by the trust from time to time there will be no limit to the number of units which can be purchased and held by unitholders transfers of units will be recognised under prescribed conditions dividends will be declared and distributed by the trust to the unit-holders once every year, after the accounts for'that year have been closed and audited clauses 22 to 24 deal with the allocation and disposal of the trust's annual income the total gross income and expenses in any year will be allocated, as between the initial capital and' the capital representing tile face value of the units sold and outstanding at the end of that year management expenses will be limited to five per cent of the gross income allocated to the units, the actual expenditure, if any, in excess of this ceiling being charged to the contributions to the initial capital at least ninety per cent of the gross income less the management and other expenses al1bcated to the units will be distributed to the unit holders clauses 26 to 28 provide for the preparation, audit and publication of balance-sheets and accounts clause 30 provides that the reserve bank may give to the trust, from time to time, such directions as may be necessary clause 31 and clauses 33 to 38 provide for the recruitment of itaft', the utilisation by the trust, where necessary, of the services of the ~mployees of the reserve bank, the appucation' of the provisions of the bankers' books evidence act, 1891, in relation to the trust, declarations of fide,lity and secrecy· by the' trustees and employees, the indemnity of trustees, protection of any action taken in good faith and the delegation of powers clause 32 provides for the grant of relief from certain provisions of the income tax act, 1961 and other enactments, in order to facilitate the operations of the trust and to encourage savings by individuals in the form of units the trust, as an institution acting far and in the interests of the unit-holders, will be exempted from the ~ayment of income-tax, super-tax, and other taxes on its income the contributories to the initial capital will be exempted from the payment of super profits tax on the income accruing to them in respect of their contributions the unit-holders will be exempted from the payment of income-tax, but not of super-tax, on the dividend income obtained from the units the trust, in so far as the income accruing to it is concerned and the unit-holders in respect of the diyidenda accruing to them from the truat, will be entitled to receive the 'amount due to them, without deduction of income-tax at source (super-tax deductions will, however, be made in the cue of nonresident unit-holders, if any) clauae 39 provides inter-alia that the sums representing the contributions shall not be attachable under any order or decree, passed on account of any debts or liabilities incurred by the contributing institutions clauae, 40 and 41 provide for the return by the trust of the contributions towards the initial capital, when it is no longer required as in the case of partial refunds, the value of the contributions will be determined in accordance with directions issued by the central government the board of trustees will be reconstituted after the initial capital has been completely refunded, in the manner prescribed by the central government, in consultation with the reserve bank ;' clause 42 provides for the liquidation of the trust, if necessary, and for the distribution of the- assets of the trust in that event as between the unit-holders and the contributories, if any, to the inltial capital at that time clauae 43 provides for regulations to be made by the trust with the approval of the reserve bank to give effect to the provisions of the bill clauae 44 seeks to amend certain enactmenta, for the purposes of enabling the reserve bank, the state bank (and the industrial finance corporation in case it is interested) to contribute to the initial capital of the trust, for providing for the grant of loans to the trust by the reserve bank, and for enabling the central government to discharge, in relation to the trust, the functions of an appropriate government in the event of industrial disputes clause 20 provides that the central government may in eertain contingencies, guarantee the bonds issued by the trust lor the purpose of enabling it to borrow from the reserve bank of india the bonds are intended to be issued only in an emergency and it is not possible at this stage to indicate whether or when they will be issued or the extent of the central government's contiftgent liability it is anticipated, however, that the guarantees, if any, will not ultimately involve any expenditure from the consolidated fund of india the provision proposed to be made is also on the lines of similar provisions in regard to the industrial finance corporation and other financial institutions  -clause 21 confers power on the board to make a unit scheme which will inter alia provide for the issue of units, their face value, the form and manner in which an application for the purchase ot a unit from the trust may be made, the issue of unit certificates and the recognition of persons as unit holders 2 clause 41 empowers the central government to provide by an order for the reconstitution of the board when the initial capital has been refunded in full to the contributing institutions it is not possible to say at this stage what will be the shape of the reconstituted board an order made under the said clause will provide for the number of trustees that will constitute the board, the manner in which they shall be chosen their term of office, filling of casual vacancies and such supplementary matters as may be necessary to give effect to the order 3 clause 43 of the bill empowers the board to make regulations, with the previous approval of the reserve bank, to provide for all matters for which provision is necessary or expedient fot' the purpose of giving effect to the provisions of the bill these matter in:er alia relate to the form and manner of maintenance of the register of contributing institutions, the form of the certificate of contribution, the manner of transfer of certificate of contribution, the rights and liabilities of a contributing institution, the holding and conduct of elections, the fees and allowances that may be paid to the maes of the board, the times and places of meetings of the board, the institutions with which money may be kept on deposit, the date on which the books of accounts of the trust shan be balanced and closed each year 4 the matter in respect of which power il conferred on the central government under clause 41 or on the board under clause 21 or clause 43 are matters of detail or of routine nature and the delegation of legislative power is of a normal character  extract from the hmustrial disputes act, 1947 (14 of 1947) -     - chapter ipre:limdi'ary -     2 in this act, unless there is anything repugnant in the subject de1in1tiodl or context,-(0) "appropriate government" means-- (i) in relation to any industrial dispute concerning the agricultural refinance corporation established under sec tion 3 of the agricultural reanance corporation act, 1963, or any industry carried on by or unde~ the authority of th~ central government or by a railway company or concerning any such controlled industry as may be specified in this behalf by the central gov'enlment or in relation to an indllstrial dispute conce~g the deposit insurance coj;poratj,on established under secti()n 3 of th~ deposit: insur~ld~ eotporation act, 1961, or a banking or an insurance company, a mine, an oil-field, or a major port, the central gowrnment, and     extract from the industriai fmancb corporation act, 1948 (15 of 1948)   - - - - 20 the corporation may invest its funds in the securities of the inycatmeds central government or of any state government of fuiidi -  - - - a blll to provide for th~ establishment of a corporation with a view to enoouraging saving and investment and participation in the income, profits and gains accruing to the corporation from the acquisition, holding, management and disposal of securities 