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The Shipping Development Fund Committee abolition Act, 1986

THE SHIPPING DEVELOPMENT FUND COMMITTEE (ABOLITION) ACT
ACT NO. 66 OF
24th December
An Act to abolish the Shipping Development Fund Committee constituted
under the Merchant Shipping Act 1958 and to provide for certain
matters incidental thereto.

BE it enacted by Parliament in the Thirty – seventh Year of the
Republic of India as follows:–

CHAP

PRELIMINARY

CHAPTER I

PRELIMINARY

1. Short title and commencement.

1. Short title and commencement. (1) This Act may be called the
Shipping Development Fund Committee (Abolition) Act 1986.

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

2. Definitions.

2. Definitions. In this Act unless the context otherwise
requires–

(a) Act means the Merchant Shipping Act 1958 (44 of
1958);

(b) appointed day means the date of commencement of this
Act;

(c) Committee means the Shipping Development Fund
Committee constituted under section 15 of the Act;

(d) desinated person means the person appointed as such
under section 16 of this Act;

(e) Fund means the Shipping Development Fund formed under
section 14 of the Act;

(f) notified order means an order notified in the Official
Gazette;

(g) shipowner means a person of the description mentioned
in section 21 of the Act or who had obtained loans or financial
assistance in any other form from the Committee;

(h) shipping concern means any concern engaged in the
business of shipping owned controlled or managed by a
shipowner.

3.4. 1987: Vide Notification No. S.O. 304 (E) dated 3.4.1987
Gazette of India Extraordinery 1987 Part.II Section 3 (ii).

CHAP

ABOLITION OF THE SHIPPING DEVELOPMENT FUND COMMITTEE AND VESTING OFASSETS
AND LIABILITIES OF THE COMMITTEE IN THE CENTRAL GOVERNMENT

CHAPTER II

ABOLITION OF THE SHIPPING DEVELOPMENT FUND COMMITTEE AND VESTING
OF ASSETS AND LIABILITIES OF THE COMMITTEE IN THE CENTRAL GOVERNMENT

3. Abolition of the Shipping Development Fund Committee and
consequentialamendments in the Act.

3. Abolition of the Shipping Development Fund Committee and
consequential amendments in the Act. On and from the appointed day
the Shipping Development Fund Committee constituted under section
of the Act shall stand abolished and accordingly the Act shall stand
amended as follows:–

(a) in the long title the words and a Shipping Development
Fund shall be omitted;

(b) Part IV shall be omitted.

4. Consequential provisions.

4. Consequential provisions. On the abolition of the Committee–

(a) all the rights and privileges of the Committee shall
become the rights and privileges of the Central Government;

(b) all properties movable and immovable including cash
balance reserve funds instruments and moneys lying to the
credit of the Committee and all rights and interests in or
arising out of such properties as were immediately before the
appointed day in the ownership possession power or control of
the Committee and all books of account registers records and
all other documents of whatever nature relating thereto shall
vest in the Central Government;

(c) all borrowings liabilities and obligations of the
Committee of whatever kind and subsisting immediately before the
appointed day shall be deemed on and from such day to be the
borrowings liabilities and obligations as the case may be of
the Central Government; and

(d) all contracts entered into and all matters and things
engaged to be done by with or for the Committee and subsisting
immediately before the appointed day shall be deemed on and from
such day to have been entered into or engaged to be done by
with or for the Central Government.

5. Continuation of suits etc.

against Central Government.

5. Continuation of suits etc. against Central Government. (1)
If on the appointed day any suit appeal or other proceeding of
whatever nature in relation to the Fund or the Committee is pending by
or against such Committee the same shall not abate be discontinued
or be in any way prejudicially affected by reason of the abolition of
the Committee; but such suit appeal or other proceeding may be
continued prosecuted and enforced by or against the Central
Government.

(2) Where before the appointed day no cause of action for any
suit or proceeding or any right to appeal arose in favour of or
against the Committee and the institution of any suit or proceeding on
such cause of action or the filing of such appeal was not barred
before the appointed day such suit or proceeding may be instituted or
appeal may be filed by or against the Central Government.

6. Moneys etc.

of the Committee to be credited to the Consolidated Fundof India.

6. Moneys etc. of the Committee to be credited to the
Consolidated Fund of India. On the appointed day all moneys and cash
balances lying in the credit of the Committee shall become part of
and be credited to the Consolidated Fund of India.

7. Transfer of services of existing employees of the Committee.

7. Transfer of services of existing employees of the Committee.
(1) Every person who has been immediately before the appointed day
employed under the Committee shall become on and from the appointed
day an employee of the Central Government and shall hold office under
the Central Government with the same rights and privileges as to
pension gratuity and other matters as would have been admissible to
him if there had been no such vesting and shall continue to do so
unless and until his employment under the Central Government is duly
terminated or until his remuneration and other conditions of service
are duly altered by the Central Government.

(2) 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 the services of any officer or other person
employed under the Committee shall not entitle such officer or other
employee to any compensation under this Act or under any other law for
the time being in force and no such claim shall be entertained by any
court tribunal or other authority.

(3) Where under the terms of any contract of service or
otherwise any person whose services stand transferred to the Central
Government by reason of the provisions of this Act is entitled to any
arrears of salary or wages or any payments for any leave not availed
of or to any other payment not being payment by way of gratuity or
pension such person may enforce his claim against the Central
Government.

CHAP

SPECIAL POWERS OF THE CENTRAL GOVERNMENT

CHAPTER III

SPECIAL POWERS OF THE CENTRAL GOVERNMENT

8. Power of Central Government to call for repayment before agreedperiod.

8. Power of Central Government to call for repayment before
agreed period. Notwithstanding anything contained in any other law for
the time being in force or anything in any agreement to the contrary
the Central Government may by notice in writing require a shipowner
to whom the Committee had granted any financial assistance at any time
before the appointed day to discharge forthwith in full his entire
dues and also discharge his other liabilities to the Central
Government if–

(a) it appears to the Central Government that false or
misleading information in any material particular was given by
the shipowner for the purpose of procuring or for continuing to
procure the benefit of such financial assistance; or

(b) the shipowner has failed to comply with the terms of his
agreement with the Committee; or

(c) there is a reasonable apprehension that the shipowner is
unable to pay his debts or that proceedings for liquidation have
been or may be commenced against the shipowner; or

(d) the Central Government has reason to believe that the
shipowner has not used or applied the financial assistance
granted by the Committee strictly for the purpose for which it
was granted or has otherwise misapplied or misappropriated the
same for wrongful gain; or

(e) the property assigned charged hypothecated mortgaged
or pledged to the Committee as security for financial assistance
is not insured or kept insured by the shipowner to the
satisfaction of the Central Government or if such property has
depreciated in value to such an extent that in the opinion of
the Central Government further security to the satisfaction of
the Central Government should be given and such security is not
given; or

(f) without the permission of the Central Government any
ship machinery plant or other property whether forming part of
the security or otherwise is removed by such shipowner without
being replaced; or

(g) for any other reason it is necessary so to do to
protect the interests of the Central Government.

Explanation: — For the purposes of this Act financial
assistance shall include any loan advance or monetary assistance
including any guarantee or counter – guarantee given to the shipowner by
the Committee at any time before the appointed day.

9. Appointment of receiver without intervention of court.

9. Appointment of receiver without intervention of court. (1)
Where the Central Government issues a notice under section 8 and the
shipowner fails to company with such notice the Central Government
may notwithstanding anything contained in any other law for the time
being in force or anything contrary contained in any agreement deed
or other instrument in the nature of any guarantee or
counterguarantee appoint without intervention of the court a
receiver to detain and take possession of any ship or other assets
belonging to the shipowner whether mortgaged hypothecated or charged
with power to–

(i) sell such ship or other assets by public auction
notwithstanding anything to the contrary contained in section
of the Act;

(ii) demand and recover all the income in respect of which
he is appointed receiver of any such ship or other assets and to
appropriate the same in the discharge of rents taxes and other
dues and outgoings affecting the same and in payment of the
liabilities of the shipowner under any mortgage hypothecation or
charge to the Central Government; or

(iii) use operate charter or lease such ship or other
assets to generate incomes rents or profits to meet the
liabilities of the shipowner to the Central Government under the
mortgage hypothecation or charge and pay the residue if any
of the money received by him to the person who but for the
appointment of the

receiver would have been entitled to receive the income of which
he is appointed receiver or who is otherwise entitled to such
property.

(2) A receiver appointed under this section shall be deemed to be
the agent of the shipowner and the shipowner shall be solely
responsible for the receiver’s acts or defaults unless such acts or
defaults are due to any improper intervention on the part of the
Central Government.

10. Appointment of directors and administrators.

10. Appointment of directors and administrators. (1) Where the
Central Government requires a shipowner to discharge his dues and
liabilities pursuant to a notice issued under section 8 and the
shipowner fails to comply with such notice the Central Government
may notwithstanding anything contained in any other law for the time
being in force or anything contrary contained in any agreement deed
or other instrument in the nature of any guarantee or
counterguarantee and without prejudice to anything contained in
section 9 by notified order appoint as many persons as it thinks
fit–

(a) to be directors of the company if the shipowner is a
company as defined in the Companies Act 1956 (1 of 1956) or

(b) in any other case to be the administrators of the
shipping concern.

(2) The power to appoint directors or administrators under this
section includes the power to appoint any individual firm or body
corporate to be the directors or as the case may be administrators
on such terms and conditions as the Central Government may think fit.

(3) For the removal of doubts it is hereby declared that the
power to appoint directors or administrators include the power to
remove or replace the persons so appointed.

(4) Nothing in the Companies Act 1956 (1 of 1956) or in any
other law for the time being in force or in any instrument relating
to the shipowner if it is a company shall in so far as it makes in
relation to a director any provision for the holding of any share
qualification age limit restriction on the number of directors or
directorships retirement by rotation or removal from office apply to
any director appointed by the Central Government under this section.

11. Effect of notified order.

11. Effect of notified order. (1) On the issue of a notified
order under section 10–

(a) if the shipowner is a company as defined in the
Companies Act 1956 (1 of 1956) all persons holding office as
directors of the shipowner and in any other case all persons
holding any office having the powers of superintendence
direction and control immediately before the issue of the
notified order shall be deemed to have vacated their offices as
such;

(b) any contract of management between the shipowner and any
director or person referred to in clause (a) holding office as
such immediately before the issue of the notified order shall be
deemed to have been terminated.

(2) The directors or administrators appointed under section
shall take such steps as may be necessary to take into their custody
or under their control the property effects and actionable claims to
which the

shipowner is or appears to be entitled and all the property and
effects of the shipowner shall be deemed to be in the custody of the
directors or administrators as the case may be as from the date of
the notified order.

(3) Subject to the other provisions of this Act the directors
appointed under section 10 shall for all purposes be the directors
of such company duly constituted under the Companies Act 1956 (1 of
1956) and such directors shall alone be entitled to exercise all the
powers of such directors.

12. Powers and duties of directors and administrators.

12. Powers and duties of directors and administrators. Subject to
the control of the Central Government the directors or as the case
may be the administrators appointed under section 10 shall take such
steps as may be necessary for the purpose of efficiently managing the
business of the shipowner and shall exercise such powers and discharge
such duties as may be exercisable by persons in charge of managing the
said business.

13. No right to compensation for termination of contract of managementetc.

13. No right to compensation for termination of contract of
management etc. (1) Notwithstanding anything to the contrary
contained in any contract or in any law for the time being in force
no managing or whole – time director or any other director or a manager
or any person in charge of management of a shipowner which is a
company shall be entitled to any compensation for the loss of office
or for the premature termination under this Act of any contract of
management entered into by him with such company.

(2) Nothing contained in sub – section (1) shall affect the right
of any such managing or whole – time director or any other director or
manager or any such person in charge of management to recover from the
shipowner moneys recoverable otherwise than by way of such
compensation.

14. Application of Act 1 of 1956.

14. Application of Act 1 of 1956. (1) Where directors have been
appointed under section
in relation to a company then
notwithstanding anything contained in the Companies Act 1956 or in
the memorandum or articles of association of such company–

(a) it shall not be lawful for the shareholders of such
company or any other person to nominate or appoint any person to
be a director of the company;

(b) no resolution passed at any meeting of the shareholders
of such company shall be given effect to unless approved by the
Central Government;

(c) no proceeding for the winding up of such company or for
the appointment of a receiver in respect thereof shall lie or be
continued in any court except with the consent of the Central
Government.

(2) Subject to the other provisions of this Act and subject to
such other exceptions restrictions and limitations if any as the
Central Government may by notification in the Official Gazette
specify in this behalf the Companies Act 1956 (1 of 1956) shall
continue to apply to a shipowner which is a company in the same manner
as it applied thereto before the issue of the notified order under
section 10.

15. Recovery of dues as arrear of land revenue.

15. Recovery of dues as arrear of land revenue. (1) Any amount
payable to the Central Government by the shipowner pursuant to a
notice issued under section 8 may be recovered in the same manner as
an arrear of land revenue.

(2) The Central Government may for purposes of sub – section (1)
appoint an officer to prepare a certificate specifying the amount due
from such shipowner and send it to the Collector of the district in
which the shipowner owns any property or carries on business provided
that the officer so appointed shall before sending the certificate to
the Collector give an opportunity of being heard to the shipowner.

(3) The Collector shall on receipt of such certificate proceed
to recover from such shipowner the amount specified in the
certificate.

16. Delegation of powers to the designated person.

16. Delegation of powers to the designated person. (1) The
Central Government may by notification in the Official Gazette and
subject to such conditions restrictions and limitations as may be
specified therein or otherwise delegate all or any of its powers and
functions under this Act to a designated person.

(2) Where any notification has been issued under sub – section (1)
the provisions of this Act shall apply in relation to the designated
person as they apply in relation to the Central Government in respect
of any matter in relation to which the powers and functions of the
Central Government have been delegated to the designated person.

CHAP

MISCELLANEOUS

CHAPTER IV

MISCELLANEOUS

17. Effect of the Act on other laws.

17. Effect of the Act on other laws. The provisions of this Act
shall have effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or in the
memorandum or articles of association of any company which is a
shipowner or in any agreement deed or other instrument having effect
by virtue of any law other than this Act.

18. Protection of action taken in good faith.

18. Protection of action taken in good faith. No suit or other
legal proceeding shall lie against the Central Government or any
director or administrator appointed by the Central Government or the
designated person or any officer or other employee of the Central
Government or the designated person for any loss or damage caused or
likely to be caused by anything which is in good faith done or
intended to be done in pursuance of this Act or any other law or
provision having the force of law.

19. Indemnification of directors etc.

19. Indemnification of directors etc. Every director or
administrator appointed under section 10 and the designated person
appointed under section 16 shall be indemnified by the Central
Government against all losses and expenses incurred by him in relation
to the discharge of his duties except such as are caused by his own
wilful act or default.

20. Directors etc.

to be public servants.

20. Directors etc. to be public servants. Every director or
administrator appointed under section 10 and the designated person
appointed under section 16 shall be deemed to be a public servant
within the meaning of section 21 of the Indian Penal Code (45 of
1860).

Subs. by Act 41 of 1987 s. 2.

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