to ,,   j • ~ =r ',-d ~'h!~, 3?c: iti q {:ig jtjitlo ~~ 3 (ai",c, al l!h t) bllj, 1') ,j 1 (to b:/ j~!3 intm juccci in lok sabilel) 2 p:l6e! 4, lintls 27 nnci 28,-lor il~ st1 tu te '1 ii read "sol bsti tu ted ii 3 page 1o, line 2,-f'j£ "co !'po ratio nil read it('o rpo rations ii !t page 14-, line 2,-( 1) ,lor "extaactij read "e){trhc 1'8 ii ( 11) for iq) l1?0 jih'l'lo n " read 'iq) £ilo rl;:l·io n s 11 ne\-i dhhl;  ~!u~~1 :'~~~b3': (~~ a) bm no 187 of ll8j  'ai' the road transport corporations (amendment) bill, 1981 a billfurther to amend the road transport corporations act, 1950 be it enacted by parliament in the thirty-second year of the republic of india as follows:-1 (1) this act may be called the road transport corporations short (amendment) act, 1981 title and commencement 5 (2) it shall come into force on such date as the central government may, by notification in the oftlcial gazette, appoint  shf 19502 in sub-section (2) of section 1 of the road traaapert c-poratiodi ad, 1950 (hereinafter referred to as the principal ad), after the proviso, the following proviso shall be inserted, namely:-amendment of section 1 i "provided further that on and from the commencement of the road transport corporations (amendment) ad, 1981, thfs act,  amended by the said act, shall extend to the  union territory of mizoram" 3 for section 5 of the principal act, the following section shall be 15 rubstituted, namely:-subautution of new 8eetion fo netion 5 "5 (1) the general superintendence, direction and management of the affairs and business of a corporation shall vest in a board of directors which, with the assistance of its committees and ·managing director; may exercise all such powers and do all 8uch acta and things as may be exercised or done by the corporation 5 manage ment of corpora-\ion and board of directors (2) the board shall consist of a chairman and such other directors, being not less than five and not more than seventeen, as the state government may think fit to appoint i (3) the state government may, if it so thinks fit, appoint one of the other directors as the vice-chairman of the board 10 (4) rules made under this act shall provide for the repreaentation, both of the central government and cd the state government coneerned, on the board in such proportion as may be agreed to by both the governments and of appointment by each government of its own representatives thereto and where the capital of a i~ corporation is raised by the issue of shares to other parties under sub-section (3) of section 23, provision shall also be made for the representation of such shareholders on the board and the manner in which the representatives shall be elected by such shareholders (5) the term of office of and the manner of ftlling cuual 110 vacancies among the directors shall be such as may be prescribed" 4 in section 6 01 the principal act,-amendmentof aection 6 (a) in sub-section (1), in the opening portion, for the words umember of a corporation", the words "director of· a corporation" shall be substituted; 115 (b) in sub-section (2), for the words "chief executive officer or ~neral manager", the words "managing director" shall be substituted and for the word "member", the word "director'" shall be substituted; (c) after sub-sectioll (2), the following sub-section ahall be 30 inserted, namely:-"(3) nothing in clause (e) bf sub-section (1) shall be deemed to disqualify;-(a) any oftlcer or other employee of the government 'tor being chosen as, or for being, a director of a corporation; 31 (b) any officer or other employee of a corporation for being chosen as, or for being, a director ot ~oth  corporationpi i section 8 of the principal act shall be re-numbered as sub-section amedd-(1) thereof, andment of aeetion 8 (ia) in sub-section (1), as so re- numbered,-(i) in the opening portion, for the word "member", tlie word "director" shall be substituted; 5 (ii) in clause (b), for the w;rd "corporation", the word "board'" shall be substituted; (iii) in the proviso, for the words "member nominated", the words "director appointed" shall be substituted; 10 (b) after sub-section (1), as so re-nwnbered, the following mbsections shall be inserted, namely:-ii (2) the state government may remove trom offtce the chairman or any other director of the corporation who is guilty of misconduct (including abuse of power or corruption): 15 provided that no person shall be removed under this subsection except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges: provided further that the preceding proviso shall not apply-lito (i) where such person is removed on the ground of conduct which has led to his conviction on a criminal charge; or (ii) where the state government is satisfied for lome reasons to be recorded by that government in writing that it is not reasonably practicable to hold such inquiry; or (iii) where the state government is satisfied that in the interests of the security of the state it is not expediejl,t, to hold such inquiry explanation-h in respect of any s'llch person aforesaid a question arises whether it is reasonably practicable to hold sueh inquiry as is referred to in this subsection, the decision thereon of the state governm~nt shall be final: provided also that no director appointed by the central government shall be removed from office under this sub-section without the concurrence of that government 35 (3) nothing in sub-section (2) shall apply in relation to ~y director who is also the managing director, or an offtcer or employee of the government or of any corporation" 6 section 12 of the principal act shall be re-numbered as 8ub-6eetion ammd-<cd (i) thereof, andment of action 12 (a) in sub-section (1), as so re-numbere(j;-(i) in the opening portion, for the word "corporation", the -word "board" shall de substituted; (ii) in clause (a), for the words "of its memoers", the words "consisting of directors" shall be s'u!bstituted; (iii) in c1au~e (e), for the words "chief executive officer or 5 general manager", the words "managing director" shall be substituted; (b) after sub-section (1), as so re;numbered, the following sub-section shall be inserted, namely:-10 "(2) the chairman, vke-chairman or managing director may delegate anv of his powers and duties [lncludin~ powers and dutiec; delpgated to him under sub-section (i) 1 to any offie'er of the corporation, and the officer to whom such powers and duties are delegated, shall exercise and perform buch powers and duties under the control and supervision of the managing is director" 7 for section 13 of the principal act, the- following section shall be substituted, namely:-substitution of new section for section 13 authentication oforderaand other instruments "13 all orders and decisions of the board shall be authenticated by the signature at the secretary' or by any such other offtcer of the qo corporation as may be authorised in this behalf by the board or under the regulations made under section 45 and all other instruments issued by a board shall be authenticated by the signature df the managing director or any other officer of the corporation authorised in like manner in this behalf" ' 25  1 in section 14 of the principal act,-amendmentof miction 16 (4) for sub-section(l), the following s'ulhection shall be sustltuted, namely:-ie (1) every corporation shau have a managing director, a chief accounts officer and a financial adviser, appointed by the 30 state govemment: provided that the same person may be appointed &3 the chief accounts officer and the financial adviser"; '(b) in sub-section (2), for the words "such other officers and '" servants", the words "a secretary and such other officers and em- 35 ployees" shall be substituted; (c)  for sub-section (3), the following sub-seetion shall be substituted, nunely:--"(3) 'nle condition$ of appointment and service' and the scales of pay of the officers and employees of a corporation 40 hajl-(a) as respects the managing director, the chief accounts officer and the financial adviser, or, as the ease may be, the chief ac!eounte ofticer-cum-:rtmmcial ad't1serbe such, 4j as may be prescrilted' and (b) as respects the other officers and employees, be such as may, subject to the provisions of section 34, be detenninecl by regulations made under this act" t for section 15 of the principal act, the following section shall be 5 iuhstituted, namely:-substitution of new section for section 15 "16 (1) the mall"clging director shall be the executive head of the corporation and all other officers and employees of the corporation shall be subordinate to him managing director, chief accounts officer and financial adviser 10 (2) the managing director shall obtain tlie views of the chief accounts officer and the financial adviser or, as the case may be, the chief accounts officer-cum-financial adviser, on every proposal involving revenues, or expenditure from the fund, of the corporr>tion and shall cause such views to be placed before the board prior to the consideration of such propols1 by the board" 15 10 in the principal act, after chapter ii, the following chapter shall be inserted, namely:-' insertion of new chapter iia,  "chapter iia subsidiajiy corpobations20 establishment of subsidiary corporations 17 a (1) where a corporation (hereafter in this section referred to as the parent corporation) is satisfied that it is expediettf or neeessuy so to do for the more efficient discharge of its functions under this act, it may, with the concurrence of the state govemment aud the central government; frame by notification in the oftlcial gazette a iicheme or schemes providing for tbe establishment of ode or more subsidiary corporations 35 (2) a scheme framed under sub-section (1) shall specify the subsidiary corporation or corporations which shad become established thereunder, the date or dates with effect from which they shall ,be so established, the powers and funetions of the parent corporation which such subsidiary corporation or corporations may exercise and discharge, the conditions and limitations subject to which such powers may be exercised, the management of the aftairs of each such subslcjjllry corporation by a board of directors, the capital of ~h neb subsidiary corporation and an other matters relating to such subsidiary corporations corresponding to the various matters for which provisions have beett made in this act with respect to the parent corpo1'lltion: provided that-(a) no subsidiary corporation shall start operation ott any iiew route without the previous approval of the p~ corporatiol1; ootheftprtllehta1ivts of the central government on the board of directors of a subslcuary corporation shah be in propor don to its contribution to the capital of the paredt corporation; (c) the liability of the central government to provide contribution to the capital of the subsidiary corporation or to  the parent corporation shall not be increased without the approval of the central government; 5 (d) a subsidiary corporation shall have a managing director, a chief accounts ot1icer and a financial adviser or a chief accounts officer-cum-financial adviser, and such officers shall be appointed by the state government; (e) , the state government and the parent corporation shall ,10 have power to give directions to a subsidiary corporation in respect of any matter, including directions r~lating to recruitment, conditions of servi~ and training of the employees of the subsidiary corporation, wages to be paid to such employees, reserves to be maintained by the subsidiary corporation; 15 (f) the capital budget the revenue budget and the annual development plans of a subsidiary corporation shall be submitted for approval to the parent corporation and where such budget or plan involves any deficit, also to the state government (3) every subsidiary corporation cstabl~ed under a scheme ~o framed under sub-section (1) shall be a body corporate, by the name specified in the scheme having perpetual succession and a common seal and shall by the said name sue and be sued"   11 in section 19 of the principal act,-amendment of section 19 (a) in clause (e) of sub-section (2), for the words "or any other 25 stores of scrap value", the words "any other stores of scrap value, or s'uch other stores as may be declared to be obsolete in the prescribed manner" shall be substituted; (b) in sub-section (5), for the words "officers and servants", the words "officers and other employees" shall be substituted 30  12 in section 23 of the principal act- amendment of section 23 <a> for sub-section (2), the following sub-sections shan ite subltituted, namely:-"(2) the corporation may, whether or not any capita) is provided to it under sub-section (1), raise by the issue of sh~ 35 such  capital  (bereafter in  this  section  referred  tou  the "authorised share capital") as may be authorised in this behalf 'tty the state government: provided that where any capital is provided to the corporation under 8ub~section (1), no capital may be railed under this 40 sub-sedion without the prcviott~ approval of the centnl government~ ~, i (za) any capital raised under sud-section (2) with the previous approval of the central government may be,-5 (e) in addition to the capital provided to the corporation udder sub-section (1); (b) subscribed to by the central government or the state government, as the case may be, by convertin, the whole or any part of the capital provided [whether before or after the  commencement of the road transport corporatiodl 10 (am~ndment) act, l981] to the corporation by that govemment under sub-section (1)"; (b) in sub-section (3), for the words llauthorised capital", the words "authorised share capital" shall be substituted 13 for section 26 of the principal a<:t, the following section shall be sub8titusubstituted, 'namely:-tion of new | section    |   for  ||------------|--------|| section    |     26 || borrow-    |        || ing        |        || powers    |        |20 ;) of 1970 40 of 1980 sa of 18111 111 of ins 25 18 of 196 • ~l of 1956 "26 a corporation may, with the previous approval of the state government, borrow money for the purpose of -raising its working capital or meeting any expenditure of a capital nature in the open market or from a corresponding new bank constituted under section 3 of the banking companies (acquisition and transfer of undertakings) act, 1970, or section 3 of the banking companies (acquisition and 'l'ransfer of undertakings) act, 1980, a state finance corporation, established under section 3 of the state financial corporat,ons act, 1951, the industrial finance corporation of india, established under section 3 of industrial finance corporation act, 1948, the industrial development bank of india, established under section 3 of the industrial development bank of india act, 1964, the life insurance corporation of india, established under section 3 of the life insurance corporation act, 1956, or any other financial institution providing credit which is subject to the control of the reserve bank of india" so amendment of section 21  14 in sub-section (2) of section 27 of the principal act, after the words "or with the agents of the reserve bank of india,", the words, figures  ·and brackets "or with the corresponding new banks constituted under section 3 of the banking companies (acquisition and transfer of under-ii 1970 takings) act, 1970, or section 3 of the banking companies (acquisition 40 ~f 1980 35 and transfer of undertakings) act, 1980," shall be inserted continuance of existing members of corporations 15 every person holding office immediately before the commencement of this act as the chairmat:l, vice-chairman or other member of a road transport corporation, established under section 3 of the p:incipal act 40 shall, on such commencement, be deemed to have been 3ppomted as the chairman vicechairman or other director (as the case may be) of the board of 'directors of the said corporation under the principal act, as amended by this act, for the remainder of the term for which such person would have continued to hold office as the chairman, vice-chamnan or 45 other member of such corporation, if this act had not been enacted 1 • the amendments directed in the schedule (being of consequential nature) shall be made in the principal act consequential amendmenta  consequential ambndmbmtssection 2-(a) after clause (a), insert the following:-'(<14) "board" means the board of directors of a cerp,oration;'; 5 (b) after clause (b), insert the following:-'(bb) "director" means a member of the board;' sectio1f 7-for "member", substitute "director" section 9-for "corporation"', substitute "corporation or its board" and for "amongst its members", substitute "in its board" to section io-for "corporation", wherever it occurs, substitute "board" section ll-(a) for "cprporatiod", wherever it occw's, substitute "board"; (b) in sub-section (2), for "such member as may be chosen by the members present", substitute "such director as may be chosen by the 15 directors present" section i6-for "officer or servant", substitute "officer or other employee" section 24-after "(2),", insert "(2a)" section 28-(a) in sub-section (1), for "the capital of a corporation", 20 substitute "the whole or part of the capital of a corporation"; (b) in sub-section (2), for "raises its capital", substitute "raises the whole or any part of its capital" section 37-in sub-section (1), for "ofticers or servants", substitute "officers or other employees" section 38-in clause (a) of sub-section (2), for "members", wherever it occurs substitute "directors" section 4a-y"r "officer or servant'\ substitute "officer or otber employee" section 43-for "members", substitute "directors" and for "officers 30 and rvants", substitute "officers and other employees" section 44-in bub-section (2) ,-(a) tor clause (a), substitute the following:-"(a) the conditions and manner of appointment of directors of a corporation, the representation in the board of the central 35 and state governments, and where shares are issued to other parties under sub-sectio'n (3) of se<:tion 23 of such shareholders and generally all matters relating to the constitution of the board"; (b) for clause (b), substitute the following:-"(b) remuneration, allowance:; or fees paid to the directors of the corporation or other persons associated with the board under section 10;"; 5 (c) in clause (c), for "members", substitute "directors"; (d) in clause (d), for "members", substitute "directors" and for "corporation", substitute "board"; io (e) hi clause (e), for "chief execu~ive officer or general manager and the chief accounts officer", substitute "managing director, the chief accounts officer, the financial adviser or, as the case may be, the chief accounts officer-cum-financial adviser"; (f) after clause (f), insert the following:-"<ff> the procedure in accordance with which any stores may be declared obsolete under sub-section (2), of sectiun 19;", 15 section 45-in sub-section (2) ,-(a) in clauses (a) and (b), for "corporation", substitute "board"; (b) in clause (c), 'for "servants of "the corporation, other than the chief executive officer or general manager and the chief accounts officer", substitute "other employees of the corporation 20 other than the managing director, the chief accounts officer and the financial adviser or, as the case may be, the chief accounts officer-cum-financial adviser",  statement of objects and reasonsthe road transport corporation act, 19150 was enacted to enable state governments to set up transport corporations with the object of providing efficient, adequate, economical and properly coordinated system of road transport services in the light of the changed circumstances the suggestions which have been received from the state governments, different ministries of the central government 'and other agencies concerned, it is proposed to make certain amendments in the said act with a view primarily to secure the better functioning of the road transport corpor-ations under the act 2 the more important amendments propos~d in the bill are the following: -(a) section 1 of the act is being amended to provide for the extension of the act to the union territory of mizoram (vide clause 2) (b) the organizational set up of the road tl'an>port corporations under the act is being modified to provide for each corporation a board of directors consisting of a chairman and other directors in place of the chairman and members of the corporation this approach would help in keeping the agency through which a corporation has to function distinct from the corporation itself it is also proposed to provide that in addition to the chairman, each board may consist of not less than five and not more than seventeen other directors (l,ide cl&use 3) (c) section 8 of the principal act is being' amended, inter aha, for including therein provisions for removal of the chairman or any other director on grounds of misconduct (including abuse of power and corruption) [vide clause 5 (b) ] (d) l'n the context of the growing 'bctivities of the corporations it is felt that certain activities of a corporation could be better attended to by subsidiary corporations to facilitate this process, provision is being included to enable each road transport corporation to frame, with the concurrence of the state government concerned 'bnd the central governme-nt, scheme or schemes providing for the establish· ment of one or more subsidiary corporations (11idc clause 10) (e) at present a road transport corporation cannot raise any share capital where loan capital has been provided to it by the central government and the state government with a view to augmenting the resources of the corporation and to enable the corporations to undertake developmental schemes, section 23 df the principal act is being amended to enable a corpor'btion which has received a loan capital from the central government and the state government to raise, share capital opportunity is also' being taken to enable the central government or the state government to convert the whole or any part of the loan capital provided by it under the said section 23 into share capital (vide clause 12) (f) section 26 of the principal act relating to borrowing powers of road transport corporations is being substituted by a new section to enable a corporation, with the approval of the state government, to borrow money not only in the open market, but also from the nationalised banks, state fi'nancial corporations, the industrial finance corporation of india, the industrial development bank ot india, the life insurance corporation of india, or any other financial institution providing credit which is subject to the control of the reserve bank of india such borrowing may be either for the purpose of raising working capital or for meeting any expenditure of a capitd nature (vide chmse 13) 3 the bill seeks to achiev~ the above objects new delhi; the 16th december, 1981 veerendra pam, clause 2 of the bill seeks to insert a proviso in 8ub·section (2) of section 1 of the principal act for the purpose of providing for the extension of the act to the union territory of mizoram when a road transport corporation is established in the union territory of mizoram, the central government may have to l'ontribute to the capital of the corporation at this stage, it is difficult to make any estimate of the expenditure which may be involved 2 clause 8 of the bill seeks to amend section 14 of the principal act to provide for a financial adviser and a secretary for each of the cor· poration", the expenses with respect to salary etc of persons who may be appointed to these posts will be met out of the fu'nds of the corporations concerned it does not involve any expenditure from the consolidated fund of india, - 3 clause 10 of the bill seeks to insert a new chapter iia in the principal act to authorise each road transport corporation to establish one 01' more subsidiary corporations when a road transport corporatio'n establishes sul?sidiary corporations, the central government may have to (though it is not obligatory so to do) incur expenditure by way of providing additional capital to the road transport corporation or by way of contributing to the capital of the subsidiary corporations it is not possible to give ~ny estimate of the expenditure which may be involved as that will depend upon the number of road transport corporations which may set up subsidiary corporations, the number of subsidiary corporations which would be set up, the extent to which such road trans· port corporations and the subsidiary corporations require ass'stance from the central government and other co'ntingencies 4 clause 12 of the bill seeks to amend section 23 of the principal act to provide, inter alia, for the issue of share capital by a corporation even when such corporation has been provided loan capital by the central government and the state government to the extent the central government may choose to contribute to any such share capital of a corporation, expenditure will be involved from the consolidated fund of india the amendment" proposed by the clause in section 23 of the principal act a1::;0 enable the central government to convert the whole or any part of the loan capital provided by it to any corporation into share capital this by itself does not involve any expenditure but there would be some loss if the dividend income from the capltal converted into share capital turns out to be less in any year than the income which would have been earned by way of interest if the loan capital had not been so converted conversely, there would be a gain if the dividend income turns out to be more than what would have been earned by way of interest it is not possible to make any estimate of such loss or gain at this stage as the same will depend upon how the corporations would function 5 the bill does not involve any other expenditure of a recurring or non-recurring nature  memorandum regarding delegated legislationclause 7 seeks to amend section 13 of the act to make provision as to t?e persons who may authenticate the orders and decisions of a corporation the amendment provides that in addition to the secretary to the board of directors of a corporation, such other persons as may be authorised in this behalf by regulations may also authenticate the orders and decisions of the corporation clause 11 seeks to amend section 19 of the act to provide, inter alia, that the disposal of the obsolete stores may be in accordance with special· procedure as may be specified by rules made by the state government thus while the· delegation of power under the amendment to section 13 of the act pertains to a matter of detail, the delegation of, power under the amendment to section 19 of the act pertains to' a matter of procedure the delegation involved is, theref,ore, of a normal character 2 clause 10 of the bill seeks to insert a new chapter iia containing a single section, namely, section 17a to enable a road transport corporation to frame a scheme or schemes fur the establishment of one or more subsidi'ary corporations such a scheme can be framed only with the concurrence of the state government concerned and also of the central government in sub-section (2) of the said section 17a, it has been provided that the powers and functions which a subsidiary corporation may exercise and discharge would be only such of the powers and functions of the road transport corporation establishing such subsidiary corporations as may be specified in the scheme further, though more important matters which &hould be provided for in such a scheme have been listed in the said sub-section (2), it has also been made clear that the otber matters for which provisions may be made in such a scheme would be those corresponding to the various matters for which provisions have been made in the act with respect to road transport corporations the prov'so to the said sub-section (2) specifies suitable safeguardf'; and guidelines with respect to the powers of the subsidiary corporations, composition of the subsidiary corporations, liabilitv of central government to provide contribution to the capital of 1'1 subsidiary corporation and the composition of the executive agenov through which a subsidiary corporation may function further, provisions have also been made· in the proviso with' regard to the control by the state government and 'also the road transport corporation establishing the subsidiary corporatio-n over the subsidiary corporation in view of the afore-mentioned circumstances and considerations the delegation of legislative power under clause 10 is also of a normal character 