 the industrial finance corporation (amendment) bill, 1957(as introduced in loi{ sabra)  - the nmustrial finance corporation (amendment) bill, 1957 (as introduced in lok sabha)1 1, on the title page, for ''bill no 50 of 195" ~ "bill no 50 of 1957" 2 page 3,  in the marginal heading to clause 10, f2!: "amendmen" ~ "amendment" - 3 page 9, -:in the marginal heading to section 21, f2!: "borrwing" ~ "borrowing" 4 page 10, line 6, -for "tengible"~ "tangible ft new delhi, 'r' 29th july, 1957 ~  (amendment) bill, 1957 (to _ intllodvcbd in loe saliba)a bill further tg emend th~ ind1utrial fnncc c9rporetion act, 1148 -  1\ edacted by parliament in th~ eilhth year of th~ republic f ibdfa  follows:-j (i) tbja act may be called the industrial finance corpora- short rio ~um (amendment) act, 1957  cca-iii elu:cac at , (2) it shall come into force on such dat~ as the central government may, by notiftcation in the oftlclal gazette, appoint & in section 2 of qte industrial finance corporation act, ih8 amcdddlcat (hendaaftat reltfted· to as the pridoipal act), to clause (c), the of aetuod 2 fo1lowia ~lonation shall be added, namely:-je ~"~-the exprel8ion "procttllll'iq of 1foods" itm:ludes any art or pl!ociiii for producini, preparijli or malt· idi an article by lubjectin ady material to a manual, mechanical, ehemical, electrical or any other like operation;' 3 ba sectioft 17 of the principal aet, after sub-aec:ttoll (5) i the aac,mcdi is followtn, tub-seetion shail be inserted, namely:-oflcaiojl17,  (6) if, 1m any reason, a director nommatedunder clause (ag) or clause <,> of section 10 is unable to attend any meetinc ef the board, the ·central govenunent or the rejenre 8aiak, as die cue may be, may depute any other person t attend the &aid meetinl and such person shall, for au putpoh8 of the said meeting, be deemed to be a director nominated under clause (aa) or clause (b), as the ease may be, of the said section" amea4ideat 4 in the provilo to sub-aeetion (l) and the provillo to aub-' t1lcdu31, eeeuon (4) of seetion 21 of the principal act, for the words "1lve tim_", the words "ten times" shall be substituted ameadment s in llection 22 of the principal act, for the words "depolits atuc2~ from the pubuc", the worda "from the government, local authoritt_, or any person deposits" shall be substituted 10 • in eectton 23 of the principal act,-(i) in sulhection (1), after clause (g) , the followine claur shall be inserted, namely:-" (gg) auaranteeing on such terms and conditions as may be agreed upon, deferred payments due from any is industrial concern in connection with its import of capital eoocia from outside india: provided that no such guarantee shall be given without the prior approval of the central government;"; and (ii) in sub-aection (2), after the words "pre&eribed by 20 rejulatiods", the words "or, unless it is ju8l'anteed' as to the repayment of principal and the payment of interest by the central government, state government, a scheduled bank or a state eo-operative bank" shall be inserted 7 in sub4ection (2) of section 25 of the principal act,-25 (i) for the words, figures and brackets "the indian companiee act, 1913 (vii of 1913)", the words and ftiw'e& "the companiee act, 1956" shall be substituted; and i of 1956 (it) after the words "any instrument relatine to the induttrial concern", the words eland nothing in the said act or j in any ijuch law or instrument in so far as it makes, in rela-~n to a director, any provision for the holding of any share quall1lcation, age limit, restrictions on the number of directorships, retirement by rotation or removal from oftlce shall apply to any director appointed by the corporation in pur- 35 suane •• f'this section" shall be 1dierted i in section 27 of the principal act,-~=:; (i) in sub-section (1), for the words "or otherwise", the wom "or any bank or financial institution in india or in any foreign country" shall be substituted; and (it) for sub-section (4), the following sub-section shall be substituted, namely:-10 "(4) any loss or profit accruing in connection with any borrowing of foreign currency under sub-section (1) for the purpose of granting loans or advances to any industrw concern or concerns or its repayment on account of any luctuatiol18 in the rates of exchan,e shall be reimbursed by, or paid to, the industrial concern or concerns, as the case may be" 9 in section 28 of the principal act,-ameddmeat of section 21 15 (i) in sub-section (1) , after the words "default in repayment", the words "of any loan or advance or any instaknent thereof" shall be inserted; (ii) in sub-section (3a), for the words "properly incurred by it", the words "which, in the opinion of the corporation, have b'een properly incurred by it" shall be substituted; and (in) in sub-section (4), the words "of the owner" shall be omitted 10 for sub-section (j 3) of section 30 of the principal act, the ammd  ,a following sub-section shall be substituted, namely: -of aecdod 3-"(13) the functions of a district judge under this section shall be exercisabl~ (a) in a presidency-town, by the high court; and (b) elsewhere, also by an additional district judge" 11 in sub-section (1) of section 30a of the principal act, aimddmcdt 30 after the words "directors of that industrial concern", the follow- ~aectfon ing shall be inserted, namely:-' 35 "and nothing in the companies act, 1956, or in any such law or instrument relating to the industrial concern in so far as it makes, in relation to a director, any provision for the holding of any share qualification, age limit, restrictions on the number of directorships, retirement by rotation or removal from oftlce shall apply to any director appointed by the corporation under this section" 12 in sections 308 and 30e of the prinoi,al act for the  308 add 302 ftiurea and brac:ketl "indian companies act, 1111 (vii f!ji 111)u, wherever they occur in than sections the werdl add iiw'- "com  panln act, i956" shall be sub8t1tuted i" ", :;':=-~ 13 in sub-section (j) of section :m of the priddpal act,-j (i) for the words, ftlw'h and braekets "eeetion 1" ,,1 tim indian companies aet, 1913 (vii ef 111)" the words and fllufe8 "eecuon 226 of the compuiiea act, iter shall be aub-1 iii ",,-sututed; and (it) for the words "the other", tke werds '~ otaer "cit  ig:' tor or auditors" shall be subltituted ameddmcdt 14 in sub-section (3) of section 35 of the principal act ier the ohectiod 3, words "three months", the words "four montlu" iiltau lie iuwtttute4  statement of objects and reasonsas - sequel to rapid industrialisation of the country under the 8eeond plan heavy impo!1 of capital i00ds by industrial concems is necessary in the present foreian exchange situation of the country, it is not possible for the government to find all the forej&n excl1anle required for large scale purchases of capital goods from abroad hporters are inclined to arree to deferred payments but 1ns1st on auarantee from government or semi-government institutions in respect of such payments accordinily, it is proposed to empowet' the industrial finance corporation to undertake this type of business 2 the cei'p<)ration is at present empowered ta borrow from the" public i\elerve bank and the central government up to five times its paid-up share capital and the reserve fund with the increasing tempo of industrialisation, the business of the corporation has increased considerably durin, the last two years to enable the corporation to cope with the increasing demands on it, it is proposed to authorise the corporation to borrow up to ten times its paidup share capital plus the reserve fund 3 under the existing 8ub-aection (4) of section 27 of the act, tlte entire risk ariain out of ftuctuations in the rate of exchange in respect of foretan currency borrowing and repayment thereof is to be borne by the central government in view of the large scale forefp exchange operations that wul be required during the next few years, it is eonsidered that these risks should more appropriately be home by the industrial concerns on whose accounts these forelen ez:chanae transaetions take place a suitable provision to this deet is aceordinlly proposed to be made 4 in onier to enable a larae number of industries to avail them-elves of the loanuliatance from the industrial finance corporatiod, it is propoaed to define the upression "processing of goods" on the jjnee f the amendment made in 1955 in the state financial corporations act, 1831 it is also proposed to enable the corporation to provide  credit to new industrial concerns when they are -not in a position to offer adequate securities but deserve eneourllement from the point of view of national economy by an ameftdment to sub-bection (2) of section 23 of the act 5 the bill seeks to achieve these objects opportunity has also een taken to incorporate some other amendments which are either found necessary in the light of experience gained in the working of the act or are of a consequential or procedural nature the notes on clauses appended to the bill explain the provisions thereof new delhi; t t krishnamachari the 18th ju4( 1957 claulfl 2-an explanation defining the expression "processing of goods" iii being added to section 2 (c) of the act on the lines of the amendment made last year in the state financial corporations act, 1951 this will enable a larger variety of industrial concerns to avail themselves of the loan assistance from the corporation claul8 8-this clause seeka to enable the central government and the reserve bank to nominate substitute directors for attending the meetings of the board of industrial finance corporation a similar provision was made last year in the state financial corporations act, 1951 clause 4-the industrial finance corporation is at present empowered by section 21 of the act to borrow from the public, reserve bank and the central government up to five times its paidup capital plul reserves its present paid-up capital is rs 5 crores and reserves stand at rs 24 lakhs the industrial finance corporation has already borrowed to the extent of rs 17' 3 crores from these sources and the central government is to lend rs 7' 5 crores more to the corporation during the remaining period of the second plan with the increasing tempo of industrialisation, the business of the corporation has increased considerably during the last two years to enable the corporation to cope with increasing demands on it, it is proposed to amend section 21 of the act so that the corporation may be able to borrow up to ten times its paid-up capital plus reserves clause 5-section 22 of the act empowers the corporation to accept deposits only from the public a!j it is felt doubtful whether the existing provision would enable acceptance of deposits from state governments, local authorities, etc, it has become necessary to amend it, clause 6-(i) ajj a sequel to rapid industrialisation, heavy imports of capital goods by the industrial concerns are necessary in the difficult foreign exchange situation of the country, it is not possible for govern~ent to find all the foreign exchange required for large scale purchases of capital goods from abroad exporters are inclined to agree to deferred payments but insist on guarantees from government or semi-government institutions it is, therefore, proposed to unend sub-section (1) of section of the act so as to enable the industrial finance corporation to guarantee such deferred payments by industrial concerns (ii) the amendment proposed to sub-section (2) of section 28 of the act is similar to that made in the state financial corporations act, 1951, last year it seeks to enable the industrial fin~ce corporation to provide credit particularly to new industrial concerns when they are not in a position to ofter adequate security but deserve encouragement from the point of view of national economy clause 7-this clause seeks to 'exempt directors appointed by the corporation on the boards of the borrower concerns from certain provisions of the companies act, 1956, eg retirement by rotation, disability on account of share qualifications, age limit, etc clause 8- (i) the amendment proposed is to make the intention clear (ii) under the existing provision in section 27(4), the· entire risk arising out of fluctuations in the rate of exchange in respect of foreign currency borrowing and repayment thereof are to be :home by the central government these risks should be more'appropriately borne by the industrial concerns on whose account these foreign exchange transactions take place clause g-the amendments are mainly clarificatory in nature claufe 10-tbe amendment aims at expeditious disposal of court c8s8ii clauses 11 to a-the amendments are of a minor and consequential nature (15 of 1948) 2 - • - • - - - • - • (c) "industrial concern" means any public limited company or co-operative society incorporated by a central act or an act of the legislature of a state or under -any law for the time being in force and registered in india which is engaged or is to be engaged in the manufacture or processing of goods or in shipping or in mining or in the generation or distribution of electricity or any other form of power; - - - - - - 21 (1) the corporation may issue and sell bonds and debentures borrwida carrying interest for the purpose of raising its wor}ting capital: powers • provided that the total amount of bonds and debentures issued and outstanding and of the contingent liabilities of the -corporation in the form of guarantees given by it or underwriting agreements entered into by it shall not at any time exceed five times the amount of the paid-up share capital and the reserve fund of the corporation  - - - - - - (4) the corporation may also, for the purpose of carrying out its functions under this act, borrow money from the central government on such terms and conditions as may be agreed upon: provided that the total amount borrowed by the corporation from the central government under this sub-section and from the reserve bank under clause (b) of sub-section (3) together with the "r  amount of bonds and debentures issued under sub-section (1) and outstanding shall not at any time in the aggregate exceed five times the amount of the paid-up share capital and the reserve fund of the corporation 22 the corporation may accept deposits from the public repsy,'- deposits able after the expiry of a period which shall not be less than fiv~ c;:~~~:tiod years from the date of the making of the deposit, and on such other terms as it thinks fit: provided that the total amount of such deposits shall not at any time exceed ten crores of rupees buaineu 23 (1) - - - - •• which the (2) no accommodation shall be given under clauses (<<) and (e) corporation of sub-section (1) unless it is secured by a suftlcient pledge, mort-~~' i gage, hypothecation or assignment of government or other seeur· ties, stocks, shares or secured debentures, bullion, movable or, immovable property or other tenpble asse in the muller prescribed by rei'llationa - - - power to impoae coilditions for accommodatien loans in foreign currency 25 (1)· - - - (2) where one of the conditions impoled is that one or more directors shall be appointed by the corporation on the board of directors of the industrial concern to protect the interests of the corporation, such condition shall be valid notwithstanding anything contained in the indian companies act, 1913, or any other law for the 7 of time being in force or in any instrument relat1ne to the industrial concern - - - - - 27 (1) notwithstanding anything contained in the foreign exchange regulation act, 1947 or in any other enactment for the time 1 at 1947 being in force relating to foreign exchange, the corporation may, for the purpose of granting loans or advances to industrial concerns, borrow, with the previous consent of the central government, foreign currency from the international bank for reconstruction and development or otherwise - - - - -  riahtlof corporation is c8ie of cfault (4) a:sly loss or profit accruing to the corporation in connection with any borrowing of foreign currency under sub-aection (1), or its repayment on account of any fluctuations in the rates of exchange shall be re-imbursed by, or paid to, the central government, as the ease may be 1 28 (1) where any industrial concern which is wlder a liability to the corporation wlder an agreement makes any default in repayment or otherwise fails to comply with the terms of its agreement with the corporation, the corporation shall have the right to take over the management of the concern" as well as the right to kanafer by way of lease or sale and realise the property pledeed mort gaged, hypothecated or assigned to the corporation  - - - - - - (3a) where the management of an industrial concern is taken over by the corporation or any property is transferred and realised by it under the provisions of sub-section (1), all costs, charges and expenses properly incurred by it as incidental to such management, er transfer and realisation hall be rec9t8i'alale "gill the intitrw eoncem, and the money which is received by it from iuch management, or transfer and realisation shall, in the absence of any contract to the contrary, be held by it in trust to be applied, firstly, in payment of such costs, charges and expenses and, secondly, in di8chars of the debt due to the corporation, and the residue of the monrlo received shall be paid to the person entitled thereto (4) where the corporation takes ,over the management ot a concern under the provisioil8 of sub-section (1), it llhall be d~med to be the owner of such co~cern for purposes of suits by or against such concern and shall sue and be sued in the name of the owner of the concern - - - - 30 (1) - - - - special provlsiona for enforcement of claims by the corporatied (13) the functioil8 of a district judge under this section ihall, in a presidency-town, be exercised by the high court 30a (1) when the management of an industrial concern is power of, taken over by the corporation, the corporation may, by order noti- ~!g;,~~~n fled in the official gazette, appoint as many persons as it thinks fit dir~cton <?f to be the directors of that industrialconc(!rn ~n~~·tnal - - - ' ' when mana-sob on the issue of a notified order under section 30a,-gement ia taken over (a) all persons holding office as directors of theinduatrial ;!~~~rdel' concf!rn immediately before the issue of the notified order shall appointina be deemed to have" vacated their offices as such; directors (b) any contract of management between the industrial concern and any managing agent or any director thereof holding oftice as such immediately before the issue of the notified order shall be deemed to have terminated; 7f 1,13· (c) the managing agent, if any, appointed under section loa shall be deemed to have been duly appointed in pursuance of the indian companies act, llh3 and the memorandum and articles of association of the industrial concern and the provisions of the said act and of the memorandum and articles shall, subject to the other provisions contained in this act, apply accordingly, but no such managing agent shall be removed from oftice except with the previous consent of the corporation; (d) the directors appointed under section 30a shall take such steps as may be necessary to take into their custody or under their control all the property, effects and actionable claiymb, ,,' te wwch the industrial concern is, or appears to be, entitled, and ' :>,' " -,"' , all the property and effects of the tndustrialeoncem mall be deemed to pe in the custody of the directors as from the date of the notffted order; (e) the directors appointed under section 30ashall be, tor all purposes, the directors of the industrial concern duly constituted under the indian companies act, 1913 and shall alone be 7 ef isu3· entiuedto exercise all the powers of the directors of the 'industrial concern, whether such powers are derived from th'8 said act or from the memorandum or articles 01 association of the industrial concern or from any other source - - - - - - soe (1) where the management 'of an industrial concern, being a company as defined in the indian companies act, 1913, is taken 7 of 1913 over by the corporation, then, notwithstanding anything contained in the said act or in the memorandum or articles of association of such concem,-(a) it shall not be lawful for th~ shareholders of such e~ cern or any other person to nominate or appoint any person to be a director of the concern; (b) no resolution passed at any meeting of the shareholders of such concern shall be givene1fect to unleu approved,by the corporation; audit (c) no proceeding for the winding' up of such concern or for the appointment of a receiver iii respect thereof shall lie in any court, except with the consent of the corporation (2) subject to the provisions contained'in sub-section (u and to the other provisions contained in this act and subject to such other exceptions, restrictions and limitations, if any, as the central government may, by notification in the official gazette, specify in this behalf, the indian companies act, 1913 shall continue to apply, of 1,13 to such concern in the same manner as it applied thereto before the issue of the notified order under section loa - ' - - - - 34 (1) the affairs of the corporation shall be audited by not less than two auditors duly qualified to act as auditors of companies under sub-section(l) of section 144 of the indian companies act, 1913, one of whom shall be appointed by the central government 7 of 1913 in coasultation with the~ comptroller and auditor-general of india and the other elected in the prescribed manner by the parties mentioned in sub-section (3) of section 4, and such remuneration as the central government may fix shall' be paid to the au&t6rs by the corporation - - - - - (3) the corporation shall furnish to the central government and the reserve bank within three months of the close of the financial year a statement in the prescribed form of its assets and liabilities as at the close of that year together with a profit and loss account for the year and a report of the working of the corporation during the year, and copies of the said statement, account and report shall be published in the official gazette and shan be laid before parliarrumt - - - - - - , 1 bill funher to llmend the industrial finance corporation act, 198 (shri t t krisltnamachari,  m mister of finance) 