The Public Sector Iron and Steel Companies (Restructuring) and Miscellaneous Provisions Act, 1978

Preamble

No. 16 OF 1978

[30th April, 1978]

An Act provide for restricting of the iron and steel companies in the public sector so as to secure better management and greater efficiently in their working and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Twenty-ninth year of the Republic of India as follows;-

Section 1. Short title and commencement

(1) This Act may be called the Public Sector Iron and Steel Companies (Restructuring) and Miscellaneous Provisions Act, 1978.

(2) It shall come into force on such date¹ as the Central Government may, by notification in the official Gazette, appoint.

——————–

1. 1-5-1978: Notifin.No.S.O.291 (E), dated 30-4-1978, Gazette of India, Extraordinary, Part II, Section 3 (ii), Page 576.

Section 2. Definitions

(1) In this Act, unless the context otherwise requires;-

(a) “Appointed day;’ means the date on which this Act comes into force;

(b) “Companies Act’ means the Companies Act, 1956 (1 of 1956);

(c) “Corresponding unit” in relation to;-

(i) The Integral Company, means that unit of the Integral Company which corresponds to the unit of the dissolved company or the transferred company in which the concerned officer or other employee was holding office before the transfer of the said unit;

(ii) A transferee company, means that unit of a transferee company which corresponds to the unit of the dissolved company in which the concerned officer or other employee was holding office before the transfer of the said unit;

(d) “Dissolved company” means a company specified in the First Schedule;

(e) “Integral Company” means the Steel Authority of India Limited, a company formed and registered under the Companies Act having its registered office at New Delhi;

(f) ‘Transferee company’ means the company to which the undertakings of a dissolved company or of a transferred unit, as the case may be , stand transferred by virtue of the provisions of this Act;

(g) ‘Transferred company” means:-

(i) Metallurgical and Engineering Consultants(India ) Limited, a company formed and registered under the Companies Act having its registered office at Ranchi in the State of Bihar;

(ii) National Mineral Development Corporation Limited, a company formed and registered under the Companies Act having its registered office at Hyderabad in the State of Andhra Pradesh;

(iii) Hindustan Steel works Construction Limited , a Company formed and registered under the Companies Act having its registered office at Calcutta in the State of West Bengal;

(iv) Bharat Refractories limited, a company formed and registered under the Companies Act having its registered office at Bokaro Steel city in the State of Bihar , or

(v) India Firebricks and Insulation Company Limited, a company formed and registered under the Companies Act having its registered office at Bombay in the State of Maharashtra;

(h) Transferred unit means:-

(i) Kiriburu Iron Ore Mines, a unit of the National Mineral Development Corporation Limited or

(ii) Megahatuburu Iron Ore Project, a unit of the National mineral Development Corporation Limited.;

(iii) Ramgarh Refractory Plant, a unit of the Hindustan Steel Limited (situated near Ramgarh in the State of Bihar);

(iv) Refractory Project, a unit of the Hindustan Steel Limited (situated at Bhilai in the State of Madhya Pradesh); or

(v) Sillimanite Mines, a unit of the Hindustan Steel Limited (situated in the State of Meghalaya).

(2) Words and expressions used herein and not defined but defined in the Companies Act have the meanings respectively assigned to them in that Act.

Section 3. Under-taking meaning of

For the purposes of this Act, the undertaking of a dissolved company or of a transferred unit shall be deemed to include all assets, rights leaseholds(including mining leases, if any) industrial or other licences, powers, authorities and privileges and a property, moveable and immovable , including lands, buildings, works, mines, workshops, projects, smelters, stores, instruments, machinery, automobiles and other vehicles, cash or bank balances, cash in hand, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of the dissolved company or the transferred unit, as the case may be(whether within or without India), or all books of account registers maps drawings records of survey and all other documents of whatever nature relating thereto, and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind of the dissolved company or the transferred unit.

Explanation ;- Reference in this section to an undertaking of a transferred unit shall be deemed to be a reference to so much of the undertaking of the company of which that forms a unit as is relatable to it as if it were a separate company.

Section 4. Dissolution, transfer and vesting of undertakings of certain companies in Integral Company

On the appointed day, the companies specified in the First Schedule shall dissolved and subject to the provisions of section 6, and 7 all the undertakings of such companies shall stand transferred to, and vest in the Integral Company.

Section 5. Transfer and vesting of Kiriburu Iron Ore Mines, etc., in Integral Company

On the appointed day, the undertakings of the following transferred units shall stand transferred to, and vest in, the Integral Company, namely;-

(a) Kiriburu Iron Ore Mines, a unit of the National Mineral Development Corporation Limited, and

(b) Meghahatuburu Iron Ore Project, a unit of the National Mineral Development Corporation Limited.

Section 6. Transfer and vesting of Refractory Plant, etc., in the Bharat Refractories Limited

(1) On the appointed day, the undertakings of the following transferred units shall stand transferred to, and vest in, the Bharat Refractories Limited namely;-

(a) Ramgarh Refractory Plant of the Hindustan Steel Limited (situated near Ramgarh in the State of Bihar)

(b) Sillimanite Mines of the Hindustan Steel Limited (situated in the State of Meghalaya) , and

(c) Refractory Project of the Hindustan Steel Limited (situated at Bhilai

(2) Notwithstanding anything contained in the Companies Act, as from the appointed day, the registered office of the Bharat Refractories Limited may remain at Bokaro Steel City or be transferred to Ranchi.

Section 7. Transfer of immovable properties of Hindustan Steel Limited to Metallurgical and Engineering Consultants (India) Limited

On the appointed day , the right , title and interest of the Hindustan steel Limited in the immovable properties owned by it in Ranchi District of the State, of Bihar, together with liabilities and obligations in relation thereto, shall stand transferred to, and vest in, the Metallurgical and Engineering Consultants (India) Limited.

Section 8. Transfer of shares held by Bokaro Steel Limited to Central Government

On the appointed day, all the shares held by the Bokaro Steel Limited in the share capital of the Bharat Refractories Limited shall stand transferred to, and vest in, the Central Government.

Section 9. Transfer of shares held by Integral Company to Central Government

On the appointed day, all the shares held by the Integral Company in the share capital of each of the companies specified in the Second Schedule shall stand transferred to, and vest in, the Central Government.

Section 10. Transfer of shares held by Integral Company to Bharat Refractories Limited

On the appointed day, all the shares held by the Integral Company in the share capital of the India Firebricks and Insulation Company Limited(a company formed and registered under the Companies Act having its registered office at Bombay in the State of Maharashtra) shall stand transferred to, and vest in, the Bharat Refractories Limited.

Section 11. Transfer of shares held by Central Government to Integral Company

On the appointed day, all the shares held by the Central Government in the share capital of the Indian Iron and Steel Company Limited ( a company under the Companies Act having its registered office at Calcutta in the State of West Bengal) shall stand transferred to, and vest in , the Integral Company

Section 12. Central Government, etc., deemed to be registered in the register of members of companies

The Central Government , the Bharat Refractories Limited or the Integral Company, as the case may be, shall be deemed ,as from the appointed day, to have been registered in the register of members of the companies concerned as the holder of each share which stands transferred to , and vested in, each of them by virtue of the provisions of section 8,9,10 or 11 as the case may be.

Section 13. Power of Central Government to modify amount of paid-up share capital of Integral Company, etc., and issue of share

(1) The Central Government may, from time to time by order published in the Official Gazette, specify the amount by which the paid up share capital of the Integral Company, the Bharat Refractories Limited, the Metallurgical and Engineering Consultants (India) Limited, and the National Mineral Development Corporation Limited shall stand reduced or increased as a result of transfer of shares , undertakings or immovable properties, as the case may be, under the provisions of this Act.

(2) In Specifying the amount under sub-section (10, the Central Government shall have regard to the following factors namely;-

(i) The book value of shares referred to in section 8,9,10, or 11 as the case may be, of the concerned company , on the appointed day.

(ii) The net value of the undertakings of the dissolved company and transferred unit, as on the appointed day, and

(iii) The book value of the immovable properties owned by the Hindustan Steel Limited referred to in section 7, as on the appointed day, as are transferred to or from the companies referred to in sub-section (1).

(3) Every order made under sub-section (1) shall be made within a period of one year from the appointed day and any such order may take effect prospectively or retrospectively, but not with effect from a date earlier than the appointed day.

(4) Any order made by the Central Government under this Section may include a direction for the issue or cancellation of appropriate number of share so as to give effect to the provisions of this Act.

Section 14. Provisions relating to officers and other employees of dissolved companies

(1) Every officer ( not being a director) or other employee holding office immediately before the appointed day in a dissolved company in relation to any undertaking of such company, other than an officer or other employee holding such office in relation to transferred units referred to in section 6, shall, as from the appointed day, continue to hold office as such in the corresponding unit of the Integral Company by the same tenure and upon the same terms and conditions of service and with the same rights and privileges as to retirement benefits as would have been admissible to him if the company in which he was holding office had not been dissolved and shall continue to do so unless and until such tenure and terms and conditions are duly altered by the Integral Company.

(2) Notwithstanding anything contained in sub-section (1), rules relating to the conditions, of service and Standing Orders applicable to the officers or other employees referred to in sub-section (1), as immediately before the appointed day, shall continue to apply unless and until they are duly altered by the Integral Company or other authority as the case may be.

Section 15. Provisions relating to officers and employees of transferred units

(1) Every officer or other employee holding office immediately before the appointed day in the transferred unit shall, as from the appointed day, continue to be an officer or other employee of the corresponding unit of the transferee company by the same tenure and upon the same terms and conditions of service and with the same rights and privileges as to retirement benefits as would have been admissible to him if the transferred unit in which he was holding office had not been transferred and shall continue to do so unless and until such tenure and terms and conditions are duly altered by the transferee company.

(2) Notwithstanding anything contained in sub-section (1), rules relating to the conditions of service and Standing Orders applicable to the officers or other employees referred to in sub-section (1), as immediately before the appointed day, shall continue to apply unless and until they are duly altered by the transferee company or other authority , as the case may be.

Section 16. Provisions relating to directors

(1) Every person holding office as a director of a dissolved company immediately before the appointed day, shall, on that day, cease to hold office as such director.

(2) Every person, being a director in whole-time employment of a dissolved company, immediately before the appointed day, shall continue to be an employee of the corresponding unit of the Integral Company with such designation and on such terms and conditions as may be determined by the Integral Company.

Section 17. Provision relating to auditors

Every person appointed under section 619 of the Companies Act as an auditor of a dissolved company or of a transferred unit, holding office immediately before the appointed day, may continue to hold office as such auditor in the corresponding unit of the Integral Company or of any other transferee company, as the case may be, for the duration for which he was so appointed, on the same terms and conditions as were applicable to him immediately before the appointed day.

Section 18. Compensation for transfer not payable

Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any other law for the time being in force, the transfer of services of any officer or other employee shall not entitle such officer or other employee to any compensation under that Act or under any other law for the time being in force and no claim for such compensation shall be entertained by any court, tribunal or other authority.

Section 19. Provident Fund

Where a provident fund has been established by a dissolved company or any other company in respect of a transferred unit for the benefit of the employees and the same stands vested in a trust, the moneys and other assets standing to the credit of each provident fund shall continue to be held in trust with the same objects as were applicable before the appointed day and the trustees of such trusts immediately before the appointed day, shall, subject to the provisions of the trust deeds and the rules relating to such trusts, continue to function as trustees in respect of such provident fund of the corresponding unit of the Integral Company or of other transferee company, as the case may be, as if this Act had not been passed.:

Provided that the right to nominate trustees and other rights relating to the trusts vested in the dissolved company or other company in respect of the transferred unit, as the case may be, shall vest in the Integral Company or other transferee company, as the case may be.

Section 20. Gratuity, welfare and other funds

Where any gratuity, welfare or other fund has been established by a dissolved company or any other company in respect of a transferred unit for the benefit of its employees and is in existence immediately before the appointed day, all moneys and other assets standing to the credit of or relatable to such gratuity, welfare or other fund shall vest in the corresponding unit of the Integral Company or other transferee company, as the case may be.

Section 21. Provisions with respect to income-tax and surtax

(1) The Integral Company shall be liable to pay any sum under the provisions of the Income-tax Act or the Companies (Profits) Surtax Act which any dissolved company would have been liable to pay if the dissolution had not taken place in the like manner and to the same extent as the dissolved company.

(2) For the purpose of making an assessment of the income or , as the case may be, the chargeable profits of any dissolved company and for the purpose of levying any sum in accordance with the provisions of sub-section (1);-

(a) Any proceeding taken against any dissolved company before the appointed day shall be deemed to have been taken against the Integral Company and may be continued against the Integral Company from the stage at which it stood immediately before the appointed day;

(b) Any proceeding which could have been taken against any dissolved company if the dissolution had not taken place may be taken against the Integral Company ; and

(c) All the provisions of the Income-tax Act or, as the case may be , the Companies ( Profits ) Surtax Act shall apply accordingly.

(3) The assessment of the income, or as the case may be, the chargeable profits of the previous year of any dissolved company in which the dissolution took place up to the appointed day shall be made as if such dissolution had not taken place, and all the provisions of the Income Tax Act and the Companies (Profits ) Surtax Act shall, so far as may be apply accordingly.

(4) The transfer to, and vesting in, of the undertaking of any dissolved company in the Integral Company under the provisions of this Act shall be deemed to be an amalgamation in relation to such companies and the provisions of the Income -tax Act shall, so far as may be, apply accordingly as if reference in the said Act to the amalgamating company and amalgamated company were references to the dissolved company and the Integral Company respectively.

(5) Where any capital asset forming part of any undertaking belonging to the transferred unit or , as the case may be, the Hindustan Steel Limited is, in pursuance of section 5 or section 6 or section 7, transferred to, and vests in, the Integral Company or the Bharat Refractories Limited or, as the case may be, the Metallurgical and Engineering Consultants( India) Limited , such capital asset shall be deemed to have been transferred in a scheme of amalgamation and the provisions of the Income-tax Act shall, so far as may be apply accordingly as if references in the said Act to the amalgamating company were references to the transferred unit or, as the case may be, the Hindustan Steel Limited and the references to the amalgamated company, being an Indian company, Limited or, as the case may be, the Metallurgical and Engineering Consultants (India) Limited.

(6) The accumulated loss and the unabsorbed depreciation , if any of any dissolved company shall be deemed to be the loss or, as the case may be allowance for depreciation of the Integral Company for the previous year in which undertaking of the dissolved company vested in the Integral Company , and the provisions of the Income-tax Act relating to set off and carry forward of loss and allowances for depreciation shall apply accordingly.

(7) The provisions of sub-section (1) to (6) shall have effect notwithstanding anything to the contrary contained in the Income-tax Act or the Companies (Profits ) Surtax Act.

Explanation :- For the purposes of this section

(a) “Income -tax Act “ , means the Income -tax Act, 1961 (43 of 1961);

(b) “Companies ( Profits) Surtax Act” means the Companies (Profits ) Surtax Act, 1964 (7 of 1964);

(c) Words and expression used in this section and not defined in this Act but defined in the Income-tax Act or the Companies (Profits) Surtax Act shall have the meanings respectively assigned to them in the said Act.

Section 22. Taxes, fees and other charges not payable

For the removal of doubts, it is hereby declared that no taxes, duties, fees or other charges of whatever nature ( including registration charges) shall be payable in respect of any transfer of shares or transfer of any undertakings or transfer of any immovable property under the provisions of this Act.

Section 23. Saving of contracts, etc

(1) All contracts, deeds bonds, agreements and other instruments of whatever nature to which the dissolved company is a party subsisting or having effect immediately before the appointed day, shall, as from that day, be of full force and effect against , or in favour of the Integral Company or other transferee company, as the case may be , and may be enforced as fully and effectually as if, instead of the dissolved company, the Integral Company or other transferee company had been a party thereto.

(2) All contracts, deeds bonds, agreements and other instruments of whatever nature of which the company in respect of a transferred unit is a party if and in so far as it relates to matters pertaining to the undertakings of the transferred unit, subsisting or having effect immediately before the appointed day, shall, as from that day, be of full force and effect against, or in favour of the Integral Company or other transferee company, as the case may be and may be enforced as fully and effectually as if , instead of such company, the Integral Company or other transferee company had been a party thereto.

Section 24. Saving of legal proceedings

If, on the appointed day, there is pending any suit, arbitration, appeal or other legal proceeding of whatever nature by or against a dissolved company , the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer under the provisions of this Act to the Integral Company or any other transferee company, as the case may be, of the undertakings of the dissolved company or of anything contained in this Act, but the suit, arbitration, appeal or other proceeding may be continued , prosecuted and enforced by or against the Integral Company or other transferee company, as the case may be , in the same manner and the same extend as it would or might have been continued , prosecuted and enforced by or against the dissolved company if this Act had not been passed.

Section 25. Power to remove difficulties

If any difficulty arises in giving effect to the provisions of this Act the Central Government , may by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act, as appears to it to be necessary, for the removal of the difficulty:

Provided that no such order shall be made after the expiry of a period of three years from the appointed day

Section 26. Act to override the provisions of other laws

The provisions of this Act or of any order made thereunder shall have effect notwithstanding anything contained in the Companies Act or in any other law for the time being in force or in any contract, express or implied, or in any rules or regulations having effect by virtue of any law other than this Act.

Section 27. Power to amend memorandum and articles of association

(1) For the purpose of giving effect to the provisions of this Act, the Central Government may , by notification in the Official Gazette, make amendments in the memorandum or articles of association, or both of the Integral Company or other transferee company.

(2) Any amendments in the memorandum or articles of association of the Integral Company or other transferee company made in pursuance of sub-section (1) shall have effect notwithstanding anything contained in the Companies Act.

Schedule 1

THE FIRST SCHEDULE

[See Section 2(1) (d) and 6]

1. Bhilai Ispat Limited, a company formed and registered under the Companies Act having its registered office at Bhilai in the State of Madhya Pradesh.

2. Bokaro Steel Limited, a company formed and registered under the Companies Act having its registered office at Bokaro Steel City in the State of Bihar.

3. Durgapur Mishra Ispat Limited, a company formed and registered under the Companies Act having its registered office at Durgapur in the State of West Bengal.

4. Hindustan Steel Limited, a company formed and registered under the Companies Act having its registered office at Ranchi in the State of Bihar

5. Rourkela Ispat Limited a company formed and registered under the Companies Act having its registered office at Rourkela in the State of Orissa.

6. SAIL international Limited, a company formed and registered under the Companies Act having its registered office at Calcutta in the State of West Bengal.

7. Salem Steel Limited, a company formed and registered under the Companies Act having its registered office at Salem in the State of Tamil Nadu.

Schedule 2

THE SECOND SCHEDULE

(See Section 9)

1. Metallurgical and Engineering Consultants( India ) Limited , a company formed and registered under the Companies Act having its registered office at Ranchi in the State of Bihar.

2. Hindustan Steelworks Construction Limited, a company formed and registered under the Companies Act having its registered office at Calcutta in the State of West Bengal.

3. National Mineral Development Corporation Limited, a company formed and registered under the Companies Act having its registered office at Hyderabad in the State of Andhra Pradesh.

4. Manganese Ore (India) Limited, a company formed and registered under the Companies Act having its registered office at Nagpur in the State of Maharashtra.

5. Madovi Pellets Limited, a company formed and registered under the Companies Act having registered office at Mormugao Harbour in the Union territory of Goa , Daman and Diu.

The Prize Chits and Money Circulation Schemes (Banning) Act, 1978

Section 1. Short title and extent

(1) This Act may be called the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

(2) It extends to the whole of India except the State of Jammu and Kashmir.

Section 2. Definitions

In this Act, unless the context otherwise requires,-

(a) “Conventional chit” means a transaction whether called chit, chit fund, kuri or by any other name by or under which a person responsible for the conduct of the chit enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or certain quantity of grain instead) by way of periodical instalments for a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be provided for in the chit agreement, be entitled to a prize amount.]

Explanation. In this clause “prize amount” shall mean the amount, by whatever name called arrived at by deducting from out of the total amount paid or payable at each instalment by all the subscribers,

(i) The commission charged as service charges as a promoter or a foreman or an agent; and

(ii) Any sum which a subscriber agrees to forego, from out of the total subscriptions of each instalment, in consideration of the balance being paid to him;

(b) “Money” includes a cheque, postal order, demand draft, telegraphic transfer or money order;

(c) “Money circulation scheme” means any scheme, by whatever name called, for the making of quick or easy money, or for he receipt of any money or valuable thing as the conservation for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions;

(d) “Prescribed” means prescribed by rules made under this Act;

(e) “Prize chit” includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump sum or inn instalments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefits, thrift, or any other scheme or arrangement by whatever me called, and utilizes the monies so collected or any part thereof or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-

(i) Giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in nay other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize of gift is under a liability to make any further payment in respect of such scheme or arrangement;

(ii) Refunding to the subscribers or such or them as have not won any prize or gift, the whole or part of the subscriptions, contributions or other monies collected, with our without any bonus, premium, interest or other advantage by whatever name called, on the termination of the scheme or arrangement or on or after the expiry of the period stipulated therein,

But does not include a conventional chit;

(f) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India act, 1934 (2 of 1934).

Section 3. Banning of prize chits and money circulation schemes or enrolment as members or participation therein

No person shall promote or conduct any prize chit or money circulation scheme, or enrol as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme.

Section 4. Penalty for contravening the provisions of section 3

Whoever contravenes the provisions of section 3 shall be punishable with imprisonment for term which may extend to three years, to with fine which may extend to five thousand rupees, or with both:

Provided that in the absence of special and adequate reasons to the contrary to be mentioned din the judgement of the court, the imprisonment shall not be less than on e year and the fine shall not be less than one thousand rupees.

Section 5. Penalty for other offences in connection with prize chits or money circulation schemes

Whoever, with a view to the promotion or conduct of any prize chit or money circulation scheme in contravention of the provisions of this Act or in connection with any chit or scheme promoted or conducted as aforesaid,-

(a) Prints or publishes any ticket, coupon or other document for use in the prize chit or money circulation scheme; or

(b) Sells or distributes or offers or advertises for sale or distribution, or has in his possession for the purpose of sale or distribution any ticket, coupon or other document for use in the prize chit or money circulation scheme; or

(c) Prints, publishes or distributes, or has in his possession for the purpose of publication or distribution-

(i) Any advertisement of the prize chit or money circulation scheme; or

(ii) Any list, whether complete or not, of members in the prize chit or money circulation scheme; or

(iii) Any such matter descriptive or, or otherwise relating to the prize chit or money circulation scheme, as is calculated to act as an inducement to persons to participate in that prize chit or money circulation scheme or any other prize chit or money circulation scheme; or

(d) Brings, or inverts any person to send, for the purpose of sale or distribution, any ticket, coupon or other document for use in a prize chit or money circulation scheme or any advertisement of such prize chit or money circulation scheme; or

(e) Uses any premises, or causes or knowingly permits any premises to be used, for purposes connected with the promotion or conduct of the prize chit or money circulation scheme; or

(f) Causes or procures or attempts to procure any person to do any of the above-mentioned acts,

Shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to three thousand rupees, or with both:

Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgement of the court, the imprisonment shall not be lees than one year and there fine shall not be less than one thousand rupees.

Section 6. Offences by companies

(1) Where an offence under this act has been committed by a company, every person who. At the time the offence was committed, was in charge of, and was responsible to, the company fort the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this act, if he proves that the offence was committed without his knowledge or that the exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary of other officer of the company, such director, manager, secretary of other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against the punished accordingly.

Explanation. For the purposes of this section-

(a) “Company” means any body corporate and includes a firm or other association of individuals; and

(b) “Director” in relation to a firm, means a partner in the firm.

Section 7. Power to enter, search and seize

(1) It shall be lawful for any police officer not below the tank of an officer in charge of a police station,-

(a) To enter, if necessary be force, whether by day or night with such assistance as he considers necessary, any premises which he has reason to suspect, are being used for purposes connected with the promotion or conduct of any prize chit or money circulation scheme in contravention of the provisions of this act;

(b) To search the said premises and the persons whom he may find therein;

(c) To take into custody and produce before any Judicial magistrate all such persons s are concerned or against whom a complaint has been made or credible information has been received or a reasonable suspicion exists of their having a been concerned with the use of the said premises for purposes connected with, or with the promotion or conduct of, any such prize chit or money circulation scheme as aforesaid;

(d) To seize, all things found in the said premises which are intended to be used, or reasonably suspected to have been used, in connection with any such prize chit or money circulation scheme as aforesaid.

(2) Any officer authorised by the State Government in this behalf may-

(a) At all reasonable times, enter into and search any premises which he has reason to suspect, are being used for the purposes connected with, or conduct of, any prize chit or money circulation scheme in contravention of the provisions of this act;

(b) Examine any person having the control of, or employed in connection with, any such prize chit or money circulation scheme;

(c) Order the production of any documents, books a or records in the possession or power to any person having the control of, or employed in connection with, any such prize chit or money circulation scheme; and

(d) Inspect and seize and reregister, books of accounts, documents or any other literature found in the said premises.

(3) All searches under this section shall be made in accordance with the provisions of the code of Criminal Procedure, 1973 (2 of 1974).

Section 8. Forfeiture of newspaper and publication containing prize chit or money circulation scheme

Where any newspaper of other publication contains any material connected with any prize chit or money circulation scheme promoted or conducted in contravention of the provisions of this act or any advertisement, in relation there to the state Government may, by notification in the Official Gazette, declare every copy of the newspaper and every copy of the publication containing such material or the advertisement to be forfeited to the state Government.

Section 9. Power to try offences

No court inferior to that of a Chief Metropolitan Magistrate, or as the case may be, Chief Magistrate, shall try any offence punishable under this Act.

Section 10. Offences under this Act to be cognizable

All offences punishable under this act shall be cognizable.

Section 11. Act not to apply to certain prize chits or money circulation schemes

Nothing contained in this act shall apply to any prize chit or money circulation scheme promoted by-

(a) A state Government or any officer or authority on its behalf;

(b) A company wholly owned by a State Government which does not carry on any business s other than the conducting of a prize chit or money circulation scheme whether it is in the nature of a conventional chit or otherwise; or

(c) A banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949, or a banking institution 10 of 1949 (10 of 1949) notified by the central Government under section 51 of that act or the state Bank of India constituted under section 3 of the state Bank of India Act, 1955 (23 of 1955), or a subsidiary bank constituted under section 3 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and transfer to Undertakings) Act, 1970 (5 of 1970), or a Regional Rural Bank established under section 3 of the regional Rural Banks act, 1976 (21 of 1976), or a co-operative bank as define din clause (bii) of section 2 of the Reserve Bank of India act, 1934 (2 of 1934); or

(d) Any charitable or educational institution notified in this behalf by the State Government, in consultation with the Reserve bank.

Section 12. Transitional provisions

(1) Notwithstanding anything contained in this act, a person conducting a prize chit or money circulation scheme at the commencement of this act may continue to conduct such s chit or scheme for such period as may be necessary for the winding up of the business relating to such chit or scheme, so however that such period shall not in any case extend beyond a period of two years from such commencement:

Provided that the said person shall furnish to the state Government or to such officer as may be authorised by it in this behalf and to such office of the Reserve Bank as may be prescribed in such form and within such period as may be prescribed, full information regarding the chit or scheme along with a winding up plan prepared in accordance with the provisions of any rules that may be made by the state government in this behalf under this act:

Provided further that if the state government is satisfied, on an application made by the person conducting the prize chit or money circulation scheme, the that chit or scheme cannot be wound up within the period fixed in the winding up plan furnished to the state Government under the foregoing provisos, it may, in consultation with the Reserve Bank, permit such person to continue to conduct the business relating to the said chit or scheme for such further period as may be considered necessary having regard to the circumstances of the case and the interests of the members of the said chit or scheme.

(2) The State Government may, in consultation with the Reserve Bank, approve the winding up plan furnished under sub-section (1) with to without modifications or reject the same and may grant or refuse to grant permission to continue to conduct that chit or scheme;

Provided that no such winding up plan shall be modified or rejected without giving an opportunity of being heard to the person who conducts such prized chit or money circulation scheme.

(3) If any person fails to furnish full information regarding the said chit or scheme along with its winding up plain in the form and within the period prescribed, he shall forfeit his right to continue the business relating to the said chit or scheme on the expiry of such period.

(4) Notwithstanding anything to the contrary contained in any agreement or arrangement entered into between, any person conducting any such chit or scheme and the subscriber, the person conducting the chit or scheme shall, within such period as may be prescribed refund the monies or he subscriptions collected till the date of default referred to in sub-section (3).

(5) If any person fails to comply with the provisions of sub-section (4), he shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to three thousand rupees, or with both:

Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgement of the court, the imprisonment shall not be less than one year and the fine shall not be less than one thousand rupees.

Section 13. Power to make rules

(1) The State Government may, by notification in the Official Gazette and in consultation with the Reserve Bank make rules for the purpose of carrying out the provisions of this act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for-

(a) The office of the Reserve Bank of to whom full information regarding any prize chit or money circulation scheme may be furnished under the first proviso to sub-section 91) and of section 12, and the form in which and the period within which such information may be furnished;

(b) The particulars relating to the winding up plan of the business relating to prize chits or money circulation schemes.

Section 14. Repeal and saving

(1) The Andhra Pradesh Money Circulation Scheme (Prohibition) Act, 1965 (Andhra Pradesh Act 30 of 1965), as in force in the State of Andhra Pradesh, and in the Union territory of Chandigarh and the Madhya Pradesh Dhan Parichalan Skeem (Pratishedh) Adhiniyam, 1975 (Madhya Pradesh Act 19 of 1975), are hereby repealed.

(2) Notwithstanding the repeal of any Act referred to in sub-section (1), anything done or any action taken under the provisions of any such of Act shall, in so far as such thing or action is not inconsistent with the provision so this act, be deemed to have been done to taken under the provisions of this act as if the said provisions were in force when such thing was done or such action was taken and shall continue in force accordingly until superseded by anything done or any action taken under this act.