THE FORWARD CONTRACTS (REGULATION) ACT, 1952 
______ 

ARRANGEMENT OF SECTIONS 
_____ 

CHAPTER I 

PPRELIMINARY 

SECTIONS 

1.  Short title, extent and commencement. 
2.  Definitions. 

CHAPTER II 

THE FORWARD MARKETS COMMISSION 

3.  Establishment and constitution of the Forward Markets Commission. 
4.  Functions of the Commission. 
4A. Powers of the Commission. 

CHAPTER III 

RECOGNISED ASSOCIATIONS 

5.  Application for recognition of associations. 
6.  Grant of recognition to association. 
7.  Withdrawal of recognition. 
8.  Power of Central Government to call for periodical returns or direct inquiries to be                

made. 

9.  Furnishing of annual reports to the Central Government by recognised associations. 
9A. Power of recognised association to make rules respecting grouping of members, restricting voting 

rights, etc., in special cases. 

10.  Power of Central Government to direct rules to be made or to make rules. 
11.  Power of recognised association to make bye-laws. 
12.  Power of Central Government to make or amend bye-laws of recognised associations. 
12A. Application of amendment of bye-laws to existing forward contracts. 
12B. Power of Commission to suspend member of recognised association or to prohibit him from 

trading. 

13.  Power of Central Government to supersede governing body of recognised association. 
14.  Power to suspend business of recognised association. 

CHAPTER IIIA 

REGISTERED ASSOCIATIONS 

14A. Certificate of registration to be obtained by all associations. 

14B. Grant or refusal of certificate of registration. 

14C. Application of sections 8 and 12B to registered associations. 

CHAPTER IV 

FORWARD CONTRACTS AND OPTIONS IN GOODS 

15.  Forward contracts in notified goods illegal or void in certain circumstances. 
16.  Consequences of notification under section 15. 
17.  Power to prohibit forward contracts in certain cases. 

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SECTIONS 

18.  Special provisions respecting certain kinds of forward contracts. 
19.  Prohibition of options in goods. 

CHAPTER V 

PENALTIES AND PROCEDURE 

20.  Penalties. 
21.  Penalty  for  owning  or  keeping  place  used  for  entering 

into  forward  contracts 

in                     

goods. 

21A. Power of court to order forfeiture of property. 
22.  Offences by companies. 
22A. Power to search and seize books of account or other documents. 
22B. Presumptions to be drawn in certain cases. 
23.  Certain offences to be cognizable. 
24.  Jurisdiction to try offences under this Act. 

CHAPTER VI 

MISCELLANEOUS 

25.  Advisory committee. 
26.  Power to delegate. 
27.  Power to exempt. 
27A. Protection of action taken in good faith . 
28.  Power to make rules. 
28A. Savings of recognised associations. 
29.  Repeals and savings. 
29A. Repeal and savings. 
29B. Transfer and vesting of undertaking of Commission. 

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THE FORWARD CONTRACTS (REGULATION) ACT, 1952 

ACT NO. 74 OF 1952 

An  Act  to  provide  for  the  regulation  of  certain  matters  relating  to  forward  contracts,  the 

prohibition of options in goods and for matters connected therewith. 

BE it enacted by Parliament as follows:— 

[26th December, 1952.] 

CHAPTER I 

PRELIMINARY 

1.  Short  title,  extent  and  commencement.—(1)  This  Act  may  he  called  The  Forward  Contracts 

(Regulation) Act, 19521. 

(2) It extends to the whole of India; 2*** 

(3)  Chapter  I  shall  come  into  force  at  once,  and  the  remaining  provisions  shall  come  into  force  on 
such date3 or dates as the Central Government may, by notification in the Official Gazette, appoint, and 
different dates may he appointed for different provisions of this Act, for different States or areas, and for 
different goods or classes of good. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “association” means any body of individuals, whether incorporated or not, constituted for the 

purpose of regulating and controlling the business of the sale or purchase of any goods; 

(b) “Commission” means the Forward Markets Commission established under section 3; 
(c) “forward contract” means a contract for the delivery of goods  4*** and which is not a ready 

delivery contract; 

(d)  “goods”  means  every  kind  of  movable  property  other  than  actionable  claims,  money  and 

securities; 

(e) “Government security” means a Government security as defined in the Public Debt Act, 1944 

(18 of 1944); 

(f) “non-transferable specific delivery contract” means a specific delivery contract, the rights or 
liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt 
or any other document of title relating thereto are not transferable; 

(g) “option in goods” means an agreement, by whatever name called, for the purchase or sale of a 

right  to  buy  or  sell,  or  a  right  to  buy  and  sell,  goods  in  future,  and  includes  a  teji,  a  mandi,  a                    
teji-mandi, a galli, a put, a call or a put and call in goods; 

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

(i) “ready delivery contract” means a contract which provides for the delivery of goods and  the 
payment of a price therefor, either immediately or within such period not exceeding eleven days after 

1. This Act has been extended to:— 

(i)  Pondicherry  (with  modification),  vide  notification  No.  S.O.  3865,  dated  29-12-1962,  see  Gazette  of  India,  Part  II,             

sec. 3(ii). 

(ii) Dadra and Nagar Haveli by Reg. 6 of 1963, s. 2 and First Schedule: and 
(iii) Goa, Daman and Diu (with modification), vide notification No. G.S.R. 962, dated 24-6-1967, see Gazette of India, Part II, 

sec. 3(i). 

2. The words “except the State of Jammu and Kashmir” omitted by Act 62 of 1960, s. 2 (w.e.f. 28-12-1960). 
3.  Chapters II and VI were brought into force in the whole of India except the State of Jammu and Kashmir on the 24th August, 

1953, vide notification No. S. R.O. 1618, dated the 24th August, 1953; see Gazette of India, Part II, sec. 3. 
Provisions of this Act except Chapter I came into force in the State of Jammu and Kashmir on the 22nd September, 1962, 
vide notification No. S.O. 2895, dated the 15th September, 1962, see Gazette of India, Part II, sec. 3(ii).  

4.  The words “at a future date” omitted by Act 53 of 1971, s. 2 (w.e.f. 11-10-1971). 

3 

 
                                                           
the date of the contract and subject to such conditions as the Central Government may, by notification 
in  the  Official  Gazette,  specify  in  respect  of  any  goods,  the  period  under  such  contract  not  being 
capable of extension by the mutual consent of the parties thereto or otherwise; 
1[Provided that where any such contract is performed either wholly, or in part,— 

(1) by tendering of the documents of title to the goods covered by the contract by any party thereto 
(not being a commission agent or a bank) who has acquired ownership of the said documents by purchase, 
exchange or otherwise, to any other person (including a commission agent but not including a bank); or 

(2)  by  the  realisation  of  any  sum  of  money,  being  the  difference  between  the  contract rate  and  the 

settlement rate or clearing rate or the rate of any offsetting contract; or 

(3) by any other means whatsoever, 

and as a result of which the actual tendering of the goods covered by the contract or the payment of the 
full  price  therefor  is  dispensed  with,  then,  such  contract  shall  not  be  deemed  to  be  a  ready  delivery 
contract. 

Explanation.—For the purpose of this clause,— 

(i)  “bank”  includes  any  banking  company  as  defined  in  the  Banking  Regulation  Act,  1949             

(10 of 1949), a co-operative bank as defined in the Reserve Bank of India Act, 1934 (2 of 1934), the 
Slate  Bank  of  India  and  any  of  its  subsidiaries  and  any  corresponding  new  bank  constituted  under 
section  3  of  the  Banking  Companies  (Acquisition  and  Transfer  of  Undertakings)  Act,  1970                  
(5 of 1970); 

(ii) “commission agent” means a person who, in the ordinary course of business, makes contract 
for  the  sale  or  purchase  of  goods  for  others  for  a  remuneration  (whether  known  as  commission  or 
otherwise) which is determined in the contract itself or determinate from the terms of the contract, in 
either case, only with reference to the quantity of goods or to the price therefor as stipulated in the 
contract.] 

2[(j) “recognised association” means an association to which recognition for the time being has 
been  granted  by  the  Central  Government  under  section  6  in  respect  of  goods  or  classes  of  goods 
specified in such recognition; 

(jj)  “registered  association”  means  an  association  to  which  for  the  time  being  a  certificate  of 

registration has been granted by the Commission under section 14B;] 

(k) “rules”, with reference to the rules relating in general to the constitution and management of 
an  association,  includes  in  the  case  of  an  incorporated  association  its  memorandum  and  articles  of 
association; 

(l)  “securities”  includes  shares,  scrips,  stocks,  bonds,  debentures,  debenture-stocks  or  other 
marketable securities of a like nature in or of any incorporated company or other body corporate and 
also Government securities; 

(m) “specific delivery contract” means a forward contract which provides for the actual delivery 
of specific qualities or types of goods during a specified future period at a price fixed thereby or to be 
fixed  in  the  manner  thereby  agreed  and  in  which  the  names  of  both  the  buyer  and  the  seller  are 
mentioned; 

(n)  “transferable  specific  delivery  contract”  means  a  specific  delivery  contract  which  is  not  a  
non-transferable  specific  delivery  contract,  3[and  which  is  subject  to  such  conditions  relating  to  its 
transferability as the Central Government may, by notification in the Official Gazette, specify in this 
behalf.] 

1. Added by Act 53 of 1971, s. 2 (w.e.f. 11-10-1971). 
2. Subs. by Act 62 of 1960, s. 3, for Clause (j) (w.e.f. 28-12-1960). 
3. Added by s. 3, ibid. (w.e.f. 28-12-1960). 

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CHAPTER II 

THE FORWARD MARKETS COMMISSION 

3.  Establishment  and  constitution  of  the  Forward  Markets  Commission.—(1)  The  Central 
Government may, by notification in the Official Gazette establish a Commission to be called the Forward 
Markets Commission for the purpose of exercising such functions and discharging such duties as may be 
assigned to the Commission by or under this Act. 

(2) The Commission shall consist of not less than two, 1[but not exceeding four], members appointed 
by  the  Central  Government  2[one  of  them  being  nominated  by  the  Central  Government  to  be  the 
Chairman  thereof;  and  the  Chairman  and  the  other  member  or  members  shall  be  either  whole-time  or  
part-time as the Central Government may direct]: 

3[Provided that the members to be so appointed shall be persons of ability, integrity and standing who 
have  shown  capacity  in  dealing  with  problems  relating  to  commerce  or  commodity  markets,  or  in 
administration or who have special knowledge or practical experience in any matter which renders them 
suitable for appointment on the Commission.] 

(3)  No  person  shall  be  qualified  for  appointment  as,  or  for  continuing  to  be,  a  member  of  the 
Commission  if  he  has,  directly  or  indirectly,  any  such  financial  or  other  interest  as  is  likely  to  affect 
prejudicially his functions as a member of the Commission, and every member shall, whenever required 
by the Central Government so to do, furnish to it such information as it may require for the purpose of 
securing compliance with the provisions of this sub-section. 

(4) No member of the Commission shall hold office for a period of more than three years from the 
date of his appointment, and a member relinquishing his office on the expiry of his term shall be eligible 
for reappointment. 

(5) The other terms and conditions of service of members of the Commission shall be such as may be 

prescribed. 

 4. Functions of the Commission.—The functions of the Commission shall be— 

(a)  to  advise  the  Central  Government  in  respect  of  the  recognition  of,  or  the  withdrawal  of 
recognition from, any association or in respect of any other matter arising out of the administration of 
this Act; 

4[(b) to keep forward markets under observation and to take such action in relation to them as it 

may consider necessary, in exercise of the powers assigned to it by or under this Act;] 

(c) to collect and whenever the Commission thinks it necessary publish information regarding the 
trading conditions in respect of goods to which any of the provisions of this Act is made applicable, 
including information regarding supply, demand and prices, and to submit to the Central Government 
periodical reports on the operation of this Act and on the working of forward markets relating to such 
goods; 

(d) to make recommendations generally with a view to improving the organisation and working 

of forward markets; 

(e)  to  undertake  the  inspection  of  the  accounts  and  other  documents  of 5[any  recognised 
association  or  registered  association  or  any  member  of  such  association]  whenever  it  considers  it 
necessary; and 

(f)  to  perform  such  other  duties  and  exercise  such  other  powers  as  may  be  assigned  to  the 

Commission by or under this Act, or as may be prescribed. 

1. Subs. by Act 62 of 1960, s. 4, for “but not exceeding three” (w.e.f. 28-12-1960). 
2. Subs. by Act 46 of 1953, s. 2, for certain words (w.e.f. 23-12-1953). 
3. The proviso subs. by Act 62 of 1960, s. 4 (w.e.f. 28-12-1960). 
4. Subs. by s. 5, ibid., for clause (b) (w.e.f. 28-12-1960). 
5. Subs. by s. 5, ibid., for “any recognised association” (w.e.f. 28-12-1960). 

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1[4A. Powers of the Commission.—(1) The Commission shall in the performance of its functions, 
have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a 
suit in respect of the following matters, namely:— 

(a) summoning and enforcing the attendance of any person and examining him on oath; 

(b) requiring the discovery and production of any document; 

(c) receiving evidence on affidavits; 

(d) requisitioning any public record or copy thereof from any office; 

(e) any matter which may be prescribed. 

(2) The Commission shall have the power to require any person, subject to any privilege which may 
be claimed by that person under any law for the time being in force, to furnish information on such points 
or matters as, in the opinion of the Commission, may be useful for, or relevant to, any matter under the 
consideration  of  the  Commission  and  any  person  so  required  shall  be  deemed  to  be  legally  bound  to 
furnish such information within the meaning of section 176 of the Indian Penal Code (45 of 1860). 

(3)  The  Commission  shall  be  deemed  to  be  a  Civil  Court  and  when  any  offence  described  in             

section 175, section 178, section 179, section 180 or section 228 of the Indian Penal Code (45 of 1860) is 
committed  in  the  view  or  presence  of  the  Commission,  the  Commission  may,  after  recording  the  facts 
constituting  the  offence  and  the  statement  of  the  accused  as  provided  for  in  the  Code  of  Criminal 
Procedure, 1898 (5 of 1898), forward the case to a magistrate having jurisdiction to try the same and the 
magistrate to whom any such case is forwarded shall proceed to hear the complaint against the accused as 
if the case has been forwarded to him under section 482 of the said Code. 

(4)  Any  proceeding  before  the  Commission  shall  be deemed  to  be  a judicial  proceeding  within  the 

meaning of sections 193 and 228 of the Indian Penal Code (45 of 1860). 

Explanation.—For  the  purposes  of  enforcing  attendance  of  witnesses,  the  local  limits  of  the 

Commission’s jurisdiction shall be the limits of the territory of India.] 

CHAPTER III 

RECOGNISED ASSOCIATIONS 

5. Application for recognition of associations.—(1) Any association concerned with the regulation 
and control of forward contracts which is desirous of being recognised for the purposes of this Act may 
make an application in the prescribed manner to the Central Government. 

(2) Every application made under sub-section (1) shall contain such particulars as may be prescribed 
and shall be accompanied by a copy of the bye-laws for the regulation and control of forward contracts 
and also a copy of the rules relating in general to the constitution of the association, and in particular, to— 

(a) the governing body of such association, its constitution and powers of management and the 

manner in which its business is to be transacted; 

(b) the powers and duties of the office-bearers of the association; 

(c)  the  admission  into  the  association  of  various  classes  of  members,  the  qualifications  of 
members, and the exclusion, suspension, expulsion and readmission of members therefrom or there 
into; 

(d)  the  procedure  for  registration  of  partnerships  as  members  of  the  association  and  the 

nomination and appointment of authorised representatives and clerks. 

6. Grant of recognition to association.—(1) If the Central Government, after making such inquiry as 
may be necessary in this behalf and after obtaining such further information, if any, as it may require, is 
satisfied that it would be in the interest of the trade and also in the public interest to grant recognition to 
the association which has made an application under section 5, it may grant recognition to the association 

1.  Ins. by Act 62 of 1960, s. 6 (w.e.f. 28-12-1960). 

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in such form and subject to such conditions as may be prescribed or specified, and shall specify in such 
recognition the  goods  or  classes  of  goods  with respect  to  which  forward  contracts  may  be  entered  into 
between members of such association or through or with any such member. 

(2)  Before  granting  recognition  under  sub-section  (1),  the  Central  Government  may,  by  order 

direct,— 

(a)  that  there  shall  be  no  limitation  on  the  number  of  members  of  the  association  or  that  there 

shall be such limitation on the number of members as may be specified; 

(b) that the association shall provide for the appointment by the Central Government of a person, 
whether  a  member  of  the  association  or  not,  as  its  representative  on,  and  of  not  more  than  three 
persons  representing  interests  not  directly  represented  through  membership  of  the  association  as 
member or members of, the governing body of such association, and may require the association to 
incorporate in its rules any such direction and the conditions, if any, accompanying it. 

(3)  No  rules  of  a  recognised  association  shall  be  amended  except  with  the  approval  of  the  Central 

Government. 

(4) Every grant of recognition under this section shall be published in the Gazette of India and also in 
the Official Gazette of the State in which the principal office of the recognised association is situate, and 
such recognition shall have effect as from the date of its publication in the Gazette of India. 

7.  Withdrawal  of  recognition.—If  the  Central  Government  is  of  opinion  that  any  recognition 
granted  to  an  association  under  the  provisions  of  this  Act  should,  in  the  interest  of  the  trade  or  in  the 
public interest, be withdrawn, the Central Government may, after giving a reasonable opportunity to the 
association  to  be  heard  in  the  matter  withdraw,  by  notification  in  the  Official  Gazette,  the  recognition 
granted to the said association: 

Provided that no such withdrawal shall affect the validity of any contract entered into or made before 
the date of the notification, and the Central Government may make such provision as it deems fit in the 
notification of withdrawal or in any subsequent notification similarly published for the due performance 
of any contracts outstanding on that date. 

8.  Power  of  Central  Government  to  call  for  periodical  returns  or  direct  inquiries  to  be                

made.—1[(1)  Every  recognised  association  and  every  member  thereof  shall  furnish  to  the  Central 
Government such periodical returns relating to its affairs, or the affairs of its members, as the case may 
be, as may be prescribed.] 

(2) Without prejudice to the provisions contained in sub-section (1), where the Central Government 

considers it expedient so to do, it may, by order in writing,— 

(a)  call  upon  a  recognised  association  2[or  a  member  thereof]  to  furnish  in  writing  such 
information or explanation relating to its affairs or the affairs of any of its members 2[or his affairs, as 
the case may be] as the Central Government may require, or 

(b) appoint one or more persons to make an inquiry in relation to the affairs of such association or 
the  affairs  of  any  of  its  members  and  submit  a  report  of  the  result  of  such  inquiry  to  the  Central 
Government within such time as may be specified in the order or, in the alternative, direct the inquiry 
to be made, and the report to be submitted, by the governing body of such association acting jointly 
with one or more representatives of the Central Government; and 

(c)  direct  the  Commission  to  inspect  the  accounts  and  other  documents  of  any  recognised 

association or of any of its members and submit its report thereon to the Central Government. 

(3) Where an inquiry in relation to the affairs of a recognised association or the affairs of any of its 

members has been undertaken under sub-section (2)— 

(a) every director, manager, secretary or other officer of such association, 

1. Subs. by Act 62 of 1960, s. 7, for sub-section (1) (w.e.f. 28-12-1960). 
2. Ins. by s. 7, ibid. (w.e.f. 28-12-1960). 

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(b) every member of such association, 

(c) if the member of the association is a firm, every partner, manager, secretary or other officer of 

the firm, and 

(d) every other person or body of persons who had dealings in the course of business with any of 

the persons mentioned in clauses (a), (b) and (c), 

shall  be  bound  to  produce  before  the  authority  making  the  inquiry,  all  such  books,  accounts, 
correspondence  and  other  documents  in  his  custody  or  power  relating  to,  or  having  a  bearing  on  the 
subject-matter of, such inquiry and also to furnish the authority with any such statement or information 
relating thereto as may be required of him, within such time as may be specified. 

1[(4) Every recognised association and every  member  thereof shall maintain such books of account 
and other documents as the Commission may specify and the books of account and other documents so 
specified shall be preserved for such period not exceeding three years as the Commission may specify and 
shall be subject to inspection at all reasonable times by the Commission.] 

 9. Furnishing of annual reports to the Central Government by recognised associations.—2[(1) 

Every recognised association shall furnish to the Commission three copies of its annual report.] 

(2) Such annual report shall contain such particulars as may be prescribed. 
3[9A.  Power  of  recognised  association  to  make  rules  respecting  grouping  of  members, 
restricting voting rights, etc., in special cases.—(1) A recognised association may make rules or amend 
any rules made by it to provide for all or any of the following matters namely,— 
4[(a) the admission of a firm or a Hindu undivided family as a member,] 
5[(b)] the grouping of the members of the association according to functional or local interests, 
the reservation of seats on its governing body for members belonging to each group and appointment 
of members to such reserved seats— 

(i) by election exclusively by the members of the association from among persons chosen by 

the members belonging to the group concerned; 

(ii) by election by all the members of the association; 
(iii) by election by all the members belonging to the group concerned for the purpose; 

5[(c)] the restriction of voting rights in respect of any matter placed before the association at any 
meeting  to  those  members  only  who,  by  reason  of  their  functional  or  local  interests,  are  actually 
interested in such matter, 

5[(d)] the regulation of voting rights in respect of any matter placed before the association at any 
meeting so that each member may be entitled to have one vote only, irrespective of his share of the 
paid-up equity capital of the association; 

5[(e)] the restriction on the right of a member to appoint another person as his proxy to attend and 

vote at a meeting of the association; 

6[(f)] the retirement at every annual general meeting of all directors or such number or proportion 

of their total number as may be specified in the rules;] 

5[(g)]  such  incidental,  consequential  and  supplementary  matters  as  may  be  necessary  to  give 

effect to any of the matters specified in 7[clauses (a) to (f).] 

(2)  No  rules  of  a  recognised  association  made  or  amended  in  relation  to  any  matter  referred  to  in 
8[clauses   (a)  to  (g)]  of  sub-section  (1)  shall  have  effect  until  they  have  been  approved  by  the  Central 
Government  and  published  by  that  Government  in  the  Official  Gazette  and,  in  approving  the  rules  so 

1. Ins. by Act 62 of 1960, s. 7 (w.e.f. 28-12-1960). 
2. Subs. by s. 8, ibid., for sub-section (1) (w.e.f. 28-12-1960). 
3. Ins. by Act 32 of 1957, s. 2, for section 9A (w.e.f. 17-9-1957) 
4. Ins. by s. 2, ibid. (w.e.f. 17-9-1957). 
5. Clauses (a), (b), (c), (d) and  (e) re-lettered as clauses (b), (c), (d), (e) and (g) Act by 62 of 1960, s. 9 (w.e.f. 28-12-1960). 
6.  Ins. by s. 9, ibid. (we.f. 28-12-1960). 
7. Subs. by s. 9, ibid., for “clauses (a), (b), (c) and (d)” (w.e.f. 28-12-1960). 
8. Subs. by s. 9, ibid., for “clauses (a) to (e)” (w.e.f. 28-12-1960). 

8 

 
                                                           
made or amended, the Central Government may make such modifications therein as it thinks fit, and on 
such publication, the rules as approved by the Central Government shall be deemed to have been validly 
made, notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956). 

(3) Where, before the commencement of the Forward Contracts (Regulation) Amendment Act, 1957 
(3 of 1957), any rules have been made or amended in relation to any matter referred to in 1[clauses (b) to 
(e) and (g)] of sub-section (1), the rules so made or amended shall not be deemed to be invalid or ever to 
have been invalid merely by reason of the fact that the rules so made or amended are repugnant to any of 
the provisions of the Companies Act, 1956 (1 of 1956).] 

10. Power of Central Government to direct rules to be made or to make rules.—(1) Whenever 
the Central Government considers it expedient so to do, it may, by order in writing, direct any recognised 
association  to  make  any  rules  or  to  amend  any  rules  made  by  the  recognised  association  within  such 
period as it may specify in this behalf. 

(2) If any recognised association, against whom an order is issued by the Central Government under 
sub-section  (1),  fails  or  neglects  to  comply  with  such  order  within  the  specified  period,  the  Central 
Government may make the rules or amend the rules made by the recognised association, as the case may 
be, either in the form specified in the order or with such modification thereof as the Central Government 
may think fit. 

2[(3) Where, in pursuance of sub-section (2), any rules have been made or amended, the rules so made 
or amended shall be published in the Gazette of India, and shall, thereupon, have effect notwithstanding 
anything  to the contrary  contained  in the  Companies  Act,  1956,  or  any  other law  for the time  being  in 
force, as if they had been made or amended by the recognised association concerned.] 

11.  Power  of  recognised  association  to  make  bye-laws.—(1)  Any  recognised  association  may, 
subject to the previous approval of the Central Government, make bye-laws for the regulation and control 
of forward contracts. 

(2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws may 

provide for— 

(a) the opening and closing of markets and the regulation of the hours of trade; 

(b)  a  clearing  house  for  the  periodical  settlement  of  contracts  and  differences  thereunder,  the 
delivery  of,  and  payment  for,  goods,  the  passing  on  of  delivery  orders  and  for  the  regulation  and 
maintenance of such clearing house; 

(c)  the  number  and  classes  of  contracts  in  respect  of  which  settlements  shall  be  made  or 

differences paid through the clearing house; 

(d) fixing, altering or postponing days for settlement; 

(e) determining and declaring market rates, including opening, closing, highest and lowest rates 

for goods; 

(f)  the  terms,  conditions  and  incidents  of  contracts  including  the  prescription  of  margin 

requirements, if any, and conditions relating thereto, and the forms of contracts in writing; 

(g)  regulating  the  entering  into,  making,  performance,  rescission  and  termination  of  contracts, 
including contracts between members or between a commission agent and his constituent, or between 
a broker and his constituent, or between a member of the recognised association and a person who is 
not  a  member,  and  the  consequences  of  default  or  insolvency  on  the  part  of  a  seller  or  buyer  or 
intermediary, the consequences of a breach or omission by a seller or buyer and the responsibility of 
commission agents and brokers who are not parties to such contracts; 

(h) the admission and prohibition of specified classes or types of goods or of dealings in goods by 

a member of the recognised association; 

1.  Subs. by Act 62 of 1960, s. 9, for “clauses (a) to (e)” (w.e.f. 281-12-1960). 
2.  Subs. by s. 10, ibid., for sub-section (3) (w.e.f. 28-12-1960). 

9 

 
                                                           
(i)  the  method  and  procedure  for  the  settlement  of  claims  or  disputes  including  the  settlement 

thereof by arbitration; 

(j) the levy and recovery of fees, fines and penalties; 

(k) the regulation of the course of business between parties to contracts in any capacity; 

(l) the fixing of a scale of brokerage and other charges; 

(m) the making, comparing, settling and closing of bargains; 

(n) the regulation of fluctuations in rates and prices; 

(o)  the  emergencies  in  trade  which  may  arise  and  the  exercise  of  powers  in  such  emergencies 

including the power to fix maximum and minimum prices; 

(p) the regulation of dealings by members for their own account; 

(q) the limitations on the volume of trade done by any individual member; 

(r)  the  obligation  of  members  to  supply  such  information  or  explanation  and  to  produce  such 

books relating to their business as the governing body may require. 

(3) The bye-laws made under this section may— 

(a)  specify  the  bye-laws  the  contravention  of  any  of  which  shall  make  a  contract  entered  into 

otherwise than in accordance with the bye-laws void under sub-section (2) of section 15; 

1[(aa)  specify  the  bye-laws  the  contravention  of  any  of  which  shall  make  a  forward  contract 
entered into otherwise than in accordance with bye-laws illegal under sub-section (3A) of section 15;] 

(b) provide that the contravention of any of the bye-laws shall— 

(i) render the member concerned liable to fine; or 

(ii)  render  the  member  concerned  liable  to  expulsion  or  suspension  from  the  recognised 

association or to any other penalty of a like nature not involving the payment of money. 

(4)  Any  bye-laws  made  under this section  shall  be  subject to such  conditions in  regard  to  previous 
publication as may be prescribed, and when approved by the Central Government, shall be published in 
the Gazette of India 2***: 

Provided  that the  Central Government  may,  in  the  interest  of the  trade  or in  the  public interest,  by 

order in writing, dispense with the condition of previous publication, in any case. 

12. Power of Central Government to make or amend bye-laws of recognised associations.—(1) 
The  Central  Government  may,  either  on  a  request  in  writing  received  by  it  in  this  behalf  from  the 
governing body of a recognised association, or if in its opinion it is expedient so to do, make bye-laws for 
all or any of the matters specified in section 11 or amend any bye-laws made by such association under 
that section. 

(2) Where, in pursuance of this section, any bye-laws have been made or amended, the bye-laws so 

made or amended shall be published in the Gazette of India 3[and shall thereupon have effect]. 

(3)  Notwithstanding  anything  contained  in  this  section,  where  the  governing  body  of  a  recognised 
association objects to any bye-laws made or amended under this section by the Central Government on its 
own  motion,  it  may,  within  six  months  of  the  publication  thereof  under  sub-section  (2),  apply  to  the 
Central  Government for  a revision  thereof,  and the  Central  Government  may,  after  giving  a  reasonable 
opportunity  to  the  governing  body  of  the  association  to  be  heard  in  the  matter,  revise  the  bye-laws  so 
made or amended, and where any bye-laws so made or amended are revised as a result of any action taken 

1. Ins. by Act 62 of 1960, s. 11 (w.e.f. 28-12-1960). 
2. The words “and also in the Official Gazette of the State in which the principal office of the recognised association is situate”  

omitted by s. 12, ibid. (w.e.f. 28-12-1960). 

3. Subs. by s. 12, ibid., for “subject to the condition of previous publication” (w.e.f. 28-12-1960). 

10 

 
                                                           
under this sub-section the bye-laws so revised shall be published and shall become effective as provided 
in sub-section (2). 

(4) The making or the amendment or revision of any bye-laws under this section shall in all cases be 

1[subject to such conditions in regard to previous publication as may be prescribed.] 

Provided  that the  Central Government  may,  in  the  interest  of the  trade  or in  the  public interest,  by 

order in writing, dispense with the condition of previous publication in any case. 

2[12A. Application of amendment of bye-laws to existing forward contracts.—Any amendment of 

a bye-law under section 11 other than an amendment made in pursuance of clause (a) or clause (aa) of              
sub-section (3) of that section or under section 12 also apply to all forward contracts entered into before 
the date of its approval by the Central Government or before the date of its publication in the Gazette of 
India, as the case may be, and remaining to be performed on or after the said date. 

12B.  Power  of  Commission  to  suspend  member  of  recognised  association  or  to  prohibit  him 
from  trading.—(1)  If,  in  the  interest  of  trade  or  in  the  public  interest,  the  Commission  considers  it 
necessary to suspend a member from his membership of any recognised association  or to prohibit such 
members  from  entering  into  any  forward  contract  for  the  sale  or  purchase in  his  own  name  or  through 
another  member  of  a  recognised  association  of  any  goods  or  class  of  goods,  then,  notwithstanding 
anything  contained  in  any  law  for  the  time  being  in  force  or  in  the  rules  or  bye-laws  of  a  recognised 
association,  the  Commission  may,  after  giving  an  opportunity  of  being  heard,  by  order  suspend  his 
membership of any association or prohibit him from entering into any such contract. 

(2) An order under sub-section (1) shall specify the period for which the suspension or prohibition is 
to have effect and such period may be extended from time to time but so as not to exceed three years in 
the aggregate. 

(3) No order made under sub-section (1) in respect of any member of a recognised association shall 
affect the validity of anyforward contract entered into or made by, with or through such member on or 
before the date of such order and remaining to be performed on or after the said date; but the Commission 
may make such provision as it deems fit in such order or in any subsequent order for the closing out of 
any such forward contract.] 

 13. Power of Central Government to supersede governing body of recognised association.—(1) 
Without  prejudice  to  any  other  powers  vested  in  the  Central  Government  under  this  Act,  where  the 
Central  Government  is  of  opinion  that  the  governing  body  of  any  recognised  association  should  be 
superseded, then, notwithstanding anything contained in this Act or in any other law for the time being in 
force, the Central Government  may, after giving a reasonable opportunity to the governing body of the 
recognised association concerned to show cause why it should not be superseded, by notification in the 
Official  Gazette,  declare  the  governing  body  of  such  association  to  be  superseded  for  such  period  not 
exceeding six months as may be specified in the notification, and may appoint any person or  persons to 
exercise and perform all the powers and duties of the governing body, and where more persons than one 
are appointed may appoint one of such persons to be the chairman and another of such persons to be the 
vice-chairman. 

(2)  On the  publication  of a  notification  in  the  Official  Gazette  under sub-section  (1),  the  following 

consequences shall ensue, namely:— 

(a) the members of the governing body which has been superseded shall, as from the date of the 

notification of supersession cease to hold office as such members; 

(b)  the  person  or  persons  appointed  under  sub-section  (1)  may  exercise  and  perform  all  the 

powers and duties of the governing body which has been superseded; 

(c)  all  such  property  of  the  recognised  association  as  the  person  or  persons  appointed  under             

sub-section (1) may, by order in writing, specify in this behalf as being necessary for the purpose of 
enabling him or them to carry out the purposes of this Act, shall vest in such person or persons. 

1. Subs. by Act 62 of 1960, s. 12, for “subject to the condition of previous publication” (w.e.f. 28-12-1960). 
2. Ins. by s. 13, ibid. (w.e.f. 28-12-1960). 

11 

 
                                                           
(3)  Notwithstanding  anything  to  the  contrary  contained  in  any  law  or  the  rules  or  bye-laws  of  the 
association whose governing body is superseded under sub-section (1), the person or persons appointed 
under that sub-section shall hold office for such period as may be specified in the notification published 
under that sub-section, and the Central Government may, from time to time, by like notification vary such 
period. 

(4) On the determination of the period of office of any person or persons appointed under this section 

the recognised association shall forthwith reconstitute a governing body in accordance with its rules: 

Provided  that  until  a  governing  body  is  so  reconstituted,  the  person  or  persons  appointed  under                  

sub-section  (1)  shall,  notwithstanding  anything  contained  in  sub-section  (1),  continue  to  exercise  and 
perform their powers and duties. 

(5) On the reconstitution of a governing body under sub-section (4), all the property of the recognised 

association  which  had  vested  in,  or  was  in  the  possession  of,  the  person  or  persons  appointed  under              
sub-section (1) shall vest or revest, as the case may be, in the governing body so reconstituted. 

14. Power to suspend business of recognised associations.—If in the interest of the trade or in the 
public  interest  the  Central  Government  considers  it  expedient  so  to  do,  it  may,  by  notification  in  the 
Official  Gazette,  direct  a  recognise  association  to  suspend  such  of  its  business  for  such  period  not 
exceeding seven days and subject to such conditions as may be specified in the notification, and may if, in 
the opinion of the Central Government, the interest of the trade or the public interest to requires by like 
notification extend the said period from time to time: 

Provided that where the period of suspension is likely to exceed one month, no notification extending 
the  suspension  beyond  such  period  shall  be  issued,  unless  the  governing  body  of  the  recognised 
association has been given an opportunity of being heard in the matter. 

1[CHAPTER IIIA 

REGISTERED ASSOCIATIONS 

14A. Certificate of registration to be obtained by all associations.—(1) No association concerned 
with regulation and control of business relating to forward contracts shall, after the commencement of the 
Forward  Contracts  (Regulation)  Amendment  Act,  1960  (62  of  1960)  (hereinafter  referred  to  as  such 
commencement)  carry  on  such  business  except  under,  and  in  accordance  with,  the  conditions  of  a 
certificate of registration granted under this Act by the Commission. 

(2)  Every  association  referred  to  in  sub-section  (1)  which  is  in  existence  at  such  commencement, 

before  the  expiry  of  six  months  from  such  commencement,  and  every  association  referred  to  in                  
sub-section (1) which is not in existence at such commencement, before commencing such business, shall 
make an application for a certificate of registration to the Commission in such form and containing such 
particulars as may be prescribed: 

Provided that the Commission may in its discretion extend from time to time the period of six months 

aforesaid up to one year in the aggregate. 

(3) Nothing in this section shall be deemed— 

(a) to prohibit an association in existence at such commencement from carrying on its business 

until the disposal of the application made by it under sub-section (2); or 

(b) to require a recognised association in existence at such commencement to make an application 
under sub-section (2); and every such association shall, as soon as may he after such commencement, 
be granted free of cost by the Commission a certificate of registration. 

14B.  Grant  or  refusal  of  certificate  of  registration.—On  receipt  of  an  application  under  section  
14A, the Commission, after making such inquiry as it considers necessary in this behalf, may by order in 
writing grant a certificate of registration or refuse to grant it: 

1. Ins. by Act 62 of 1960, s. 14 (w.e.f. 281-12-1960). 

12 

 
                                                           
Provided that before refusing to grant such certificate, the association shall be given an opportunity of 

being heard in the matter. 

14C. Application of section 8 and 12B to registered association.—The provisions of sections 8 and 
12B shall apply in relation to a registered association as they apply in relation to a recognised association 
with the substitution of— 

(i) references to the registered association, for references to the recognised association; and 

(ii) the words “two years” for the words “three years” in sub-section (2) of section 12B.] 

CHAPTER IV 

FORWARD CONTRACTS AND OPTIONS IN GOODS 

15.  Forward  contracts  in  notified  goods  illegal  or  void  in  certain  circumstances.—(1)  The 
Central  Government  may,  by  notification  in  the  Official  Gazette,  declare  this  section  to  apply  to  such 
goods or class of goods and in such areas as may be specified in the notification, and thereupon, subject to 
the  provisions  contained  in  section  18,  every  forward  contract  for  the  sale  or  purchase  of  any  goods 
specified  in  the  notification  which  is  entered  into  in  the  area  specified  therein  otherwise  than  between 
members of a recognised association or through or with any such member shall be illegal. 

(2)  Any  forward  contract  in  goods  entered  into  in  pursuance  of  sub-section  (1)  which  is  in 
contravention of any of the bye-laws specified in this behalf under clause (a) of sub-section (3) of section 
11 shall be void— 

(i) as respects the rights of any member of the recognised association who has entered into such 

contract in contravention of any, such bye-law, and also 

(ii) as respects the rights of any other person who has knowingly participated in the transaction 

entailing such contravention. 

(3)  Nothing  in  sub-section  (2)  shall  affect  the  right  of  any  person  other  than  a  member  of  the 
recognised  association  to  enforce  any  such  contract  or  to  recover  any  sum  under  or  in  respect  of  such 
contract: 

Provided that such person had no knowledge that such transaction was in contravention of any of the 

bye-laws specified under clause (a) of sub-section (3) of section 11. 

1[(3A) Any forward contract in goods entered into in pursuance of sub-section (1) which at the date of 
the  contract  is  in  contravention  of  any  of  the  bye-laws  specified  in  this  behalf  under  clause  (aa)  of           
sub-section (3) of section 11 shall be illegal.] 

(4) No member of a recognised association shall, in respect of any goods specified in the notification 
under sub-section (1), enter into any contract on his own account with any person other than a member of 
the recognised association, unless he has secured the consent or authority of such person and discloses in 
the note, memorandum or agreement of sale or purchase that he has bought or sold the goods, as the case 
may be, on his own account: 

Provided that where the member has secured the consent or authority of such person otherwise than in 
writing he shall secure a written confirmation by such person of such consent or authority within three 
days from the date of such contract : 

Provided further that in respect of any outstanding contract entered into by a member with a person 
other  than  a  member  of  the  recognised  association,  no  consent  or  authority  of  such  person  shall  be 
necessary  for  closing  out  in  accordance  with  the  bye-laws  the  outstanding  contract,  if  the  member 
discloses in the note, memorandum or agreement of sale or purchase in respect of such closing out that he 
has bought or sold the goods, as the case may be, on his own account. 

16.  Consequences  of  notification  under  section  15.—Where  a  notification  has  been  issued  under 
section 15, then notwithstanding anything contained in any other law for the time being in force or in any 

1. Ins. by Act 62 of 1960, s. 15 (w.e.f. 28-12-1960). 

13 

 
                                                           
custom,  usage  or  practice  of  the  trade  or  the  terms  of  any  contract  or  the  bye-laws  of  any  association 
concerned relating to any contract,— 

(a)  every  forward  contract  for  the  sale  or  purchase  of  any  goods  specified  in  the  notification, 
1[entered into on or before the date of the notification] and remaining to be performed after the said 
date and which is not in conformity with the provisions of section 15, shall be deemed to be closed 
out at such rate as the Central Government may fix in this behalf, and different rates may be fixed for 
different classes of such contracts; 

(b) all differences arising out of any contract so deemed to be closed out shall be payable on the 
basis of the rate fixed under clause (a) and the seller shall not be bound to give and the buyer shall not 
be bound to take delivery of the goods. 

17. Power to prohibit forward contracts in certain cases.—(1) The Central Government may, by 
notification in the Official Gazette, declare that no person shall, save with the permission of the Central 
Government,  enter  into  any  forward  contract  for  the  sale  or  purchase  of  any  goods  or  class  of  goods 
specified  in  the  notification  and  to  which  the  provisions  of  section  15  have  not  been  made  applicable, 
except to the extent and in the manner, if any, as may be specified in the notification. 

(2) All forward contracts in contravention of the provisions of  sub-section (1) entered into after the 

date of publication of the notification thereunder shall be illegal. 

(3) Where a notification has been issued under sub-section (1), the provisions of Section 16 shall, in 
the absence of anything to the contrary in the notification, apply to all forward contracts for the sale or 
purchase of any goods specified in the notification 1[entered into on or before the date of the notification] 
and remaining to be performed after the said date as they apply to all forward contracts for the sale: or 
purchase of any goods specified in the notification under section 15. 

18. Special provisions respecting certain kinds of forward  contracts.—(1) Nothing contained in 
Chapter  III  or  Chapter  IV  shall  apply  to  non-transferable  specific  delivery  contracts  for  the  sale  or 
purchase of any goods: 

Provided that no person shall organise or assist in organising or be a member of any association in 
any  area  to  which  the  provisions  of  section  15  have  been  made  applicable  (other  than  a  recognised 
association)  which  provides  facilities  for  the  performance  of  any  non-transferable  specific  delivery 
contract by any party thereto without having to make or to receive actual delivery to or from the other 
party to the contract or to or from any other party named in the contract. 

(2) Where in respect of any area the provisions of section 15 have been made applicable in relation to 
forward contracts for the sale or purchase of any goods or class of goods, the Central Government may, 
by  a  like  notification,  declare  that  in  the  said  area  or  any  part  thereof  as  may  be  specified  in  the 
notification  all  or  any  of  the  provisions  of  Chapter  III  or  Chapter  IV  shall  not  apply  to  transferable 
specific delivery contracts for the sale or purchase of the said goods or class of goods either generally, or 
to any class of such contracts in particular. 

(3)  Notwithstanding  anything  contained  in  sub-section  (1), if  the  Central  Government  is  of  opinion 
that  in  the  interest  of  the  trade  or  in  the  public  interest  it  is  expedient  to  regulate  and  control  non-
transferable specific delivery contracts in any area, it may, by notification in the Official Gazette, declare 
that  all  or  any  of  the  provisions  of  Chapters  III  and  IV  shall  apply  to  such  class  or  classes  of  non-
transferable specific delivery contracts in such area and in respect of such goods or class of goods as may 
be specified in the notification, and may also specify the manner in which and the extent to which all or 
any of the said provisions shall so apply. 

19. Prohibition of options in goods.—(1) Notwithstanding anything contained in this Act or in any 
other law for the time being in force, all options in goods entered into after the date on which this section 
comes into force shall be illegal. 

1. Subs. by Act 62 of 1960, s. 16, for “entered into before the date of the notification” (w.e.f. 28-12-1960). 

14 

 
                                                           
(2) Any option in goods which has been entered into before the date on which this section comes into 
force  and  which  remains  to  be  performed,  whether  wholly  or  in  part,  after  the  said  date,  shall,  to  that 
extent, become void. 

CHAPTER V 

PENALTIES AND PROCEDURE 

1[20. Penalties.—Any person who— 

(a)  (i)  in  any  return,  statement  or  other  document  required  by  or  under  this  Act,  makes  a 
statement which is false in any material particular, knowing it to be false, or willfully omits to make a 
material statement; or 

(ii) without reasonable excuse (the burden of proving which shall be on him) fails to furnish any 
return, statement or other document or any information or to answer any question or to comply with 
any requisition made under this Act or any rules made thereunder; or 

(iii) enters into any forward contract during the period of suspension of business of a recognised 

association in pursuance of a notification under section 14; or 

(b) is a member of any association, other than a recognised association, to which a certificate of 

registration has not been granted under this Act; or 

(c) publishes or circulates information relating to the rate at which any forward contract has been 

entered into in contravention of any of the bye-laws of a recognised association; or 

(d) organises, or assists in organising, or is a member of, any association in contravention of the 

provisions contained in the proviso to sub-section (1) of section 18; or 

(e)  enters  into  any  forward  contract  or  any  option  in  goods  in  contravention  of  any  of  the 
provisions contained in sub-section (1) or sub-section (3A) or sub-section (4) of section 15, section 17 
or section 19,  

shall, on conviction, be punishable— 

(i) for a first offence, with imprisonment which may extend to one year, or with a fine of not less 

than one thousand rupees, or with both; 

(ii) for a second or subsequent offence under clause (d), or under clause (e) [other than an offence 
in respect of a contravention of the provisions of sub-section (4) of section 15], with imprisonment 
which may extend to one year and also with fine: Provided that in the absence of special and adequate 
reasons to the contrary to be mentioned in the judgment of the  court, the imprisonment shall not be 
less than one month and the fine shall not be less than one thousand rupees.] 

 21.  Penalty  for  owning  or  keeping  place  used  for  entering  into  forward  contracts  in                     

goods.—Any person who— 

(a)  owns  or  keeps  a  place  other  man  that  of  a  recognised  association,  which  is  used  for  the 
purpose of entering into or making or performing, whether wholly or in part, any forward contracts in 
contravention of any of the provisions of this Act and knowingly permits such place to be used for 
such purposes, or 

(b) without the permission of Central Government, organises, or assists in organising, or becomes 
a  member  of,  any  association,  other  than  a  recognised  association,  for  the  purpose  of  assisting  in 
entering  into  or  making  or  performing,  whether  wholly  or  in  part,  any  forward  contracts  in 
contravention of any of the provisions of this Act, or 

(c) manages, controls or assists in keeping any place other man that of a recognised association, 
which is used for the purpose of entering into or making or performing,  whether wholly or in part, 
any forward contracts in contravention of any of the provisions of this Act or at which such forward 

1. Subs. by Act 62 of 1960, s. 17, for section 20 (w.e.f. 28-12-1960). 

15 

 
                                                           
contracts  are  recorded  or  adjusted,  or  rights  or  liabilities  arising  out  of  such  forward  contracts  are 
adjusted, regulated or enforced in any manner whatsoever, or 

(d) not being a member of a recognised association, willfully represents to, or induces, any person 
to believe that he is a member of a recognised association or that forward contracts can be entered 
into or made or performed, whether wholly or in part, under this Act through him, or 

(e) not being a member of a recognised association or his agent authorised as such under the rules 
or by-laws of such association, canvasses, advertises or touts in any manner, either for himself or on 
behalf of any other person, for any business connected with forward contracts in contravention of any 
of the provisions of this Act, or 

(f) joins, gathers, or assists in gathering at any place, other than the place of business specified in 
the  bye-laws  of  a  recognised  association,  any  person  or  persons  for  making  bids  or  offers  or  for 
entering  into  or  making  or  performing,  whether  wholly  or  in  part,  any  forward  contracts  in 
contravention of any of the provisions of this Act, or 

(g) makes, publishes or circulates any statement or information which is false and which he either 
knows or believes to be false, affecting or tending to affect the course of business in forward contracts 
in respect of goods to which the provisions of section 15 have been made applicable,  1[or] 

1[(h) manipulates or attempts to manipulate prices in respect of forward contracts for the sale or 
purchase  of  any  goods  specified  in  any  notification  under  section  15,  in  any  area  specified  in  that 
notification,] 

2[shall, on conviction, be punishable— 

(i) for a first offence, with imprisonment which may extend to two years, or with fine of not less 

than one thousand rupees, or with both; 

(ii) for a second or subsequent offence, with imprisonment which may extend to two years and 
also  with  fine:  provided  that  in  the  absence  of  special  and  adequate  reasons  to  the  contrary  to  be 
entioned in the judgment of the court, the imprisonment shall not be less than one month and the fine 
shall not be less than one thousand rupees.] 
3[21A.  Power  of  court  to  order  forfeiture  of  property.—Any  court  trying  an  offence  punishable 
under section 20 or section 21 may, if it thinks fit and in addition to any sentence which it may impose for 
such  offence,  direct  that  any  money,  goods  or  other  property  in  respect  of  which  the  offence  has  been 
committed, shall be forfeited to the Central Government. 

Explanation.—For  the  purposes  of  this  section,  property  in  respect  of  which  an  offence  has  been 

committed, shall include deposits in a bank where the said property is converted into such deposits.] 

22. Offences by companies.—(1) Where an offence 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 for 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 he 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 gross negligence on the part of, any director, manager, secretary or 
other officer of the company, such director, manager, secretary or other officer shall also be deemed to be 
guilty of that offence and shall be liable to be proceeded against and punished accordingly. 

1. Ins. by Act 62 of 1960, s. 18 (w.e.f. 28-12-1960). 
2. Subs. by s. 18, ibid., for certain words (w.e.f. 28-12-1960). 
3. Ins. by s. 19, ibid. (w.e.f. 28-12-1960). 

16 

 
 
 
                                                           
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. 

1[22A.  Power  to  search  and  seize  books  of  account  or  other  documents.—(1)  Any  presidency 
magistrate or a magistrate of the first class may, by warrant, authorise any police officer not below the 
rank  of  sub-inspector  to  enter  upon  and  search  any  place  where  books  of  account  or  other  documents 
relating to forward contracts or options in goods entered into contravention of the provisions of this Act, 
may  be  or  may  be  reasonably  suspected  to  be,  and  such  police  officer  may  seize  any  such  book  or 
document, if in his opinion, it relates to any such forward contract or option in goods. 

(2) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), shall, so far as may be, apply 
to any search or seizure made under sub-section (1) as they apply to any search or seizure made under the 
authority of a warrant issued under section 98 of the said Code. 

22B.  Presumptions  to  be  drawn  in  certain  cases.—(1)  Where  any  books  of  account  or  other 
documents  are  seized  from  any  place  and  there  are  entries  therein  making  reference  to  quantity, 
quotations, rates, months of delivery, receipt or payment of differences or sale or purchase of goods or 
option  in  goods,  such  books  of  account  or  other  documents  shall  be  admitted  in  evidence  without 
witnesses  having  to  appear  to  prove  the  same;  and  such  entries  shall  be  prima  facie  evidence  of  the 
matters, transactions and accounts purported to be therein recorded. 

(2) In any trial for an offence punishable under section 21, it shall be presumed, until the contrary is 
proved,  that  the  place  in  which  the  books  of  account  or  other  documents  referred  to  in  sub-section  (1) 
were seized, was used, and that the persons found therein were present, for the purpose of committing the 
said offence.] 

23.  Certain  offences  to  be  cognizable.—Notwithstanding  anything  contained  in  the  Code  of 
Criminal Procedure, 1898 (5 of 1898), 2[the following offences shall be deemed to be cognizable within 
the meaning of that Code, namely:— 

(a) an offence falling under sub-clause (ii) of clause (a) of section 20 in so far as it relates to the 

failure to comply with any requisition made under sub-section (3) of section 8; 

(b) an offence falling under clause (d) of section 20; 

(c) an offence falling under clause (e) of section 20 other than a contravention of the provisions of 

sub-section (3A) or sub-section (4) of section 15; 

(d) an offence falling under section 21.] 

24. Jurisdiction to try offences under this Act.—No court inferior to that of a presidency magistrate 

or a magistrate of the first class shall take cognizance of or try any offence punishable under this Act. 

CHAPTER VI 

MISCELLANEOUS 

25.  Advisory  committee.—For  the  purpose  of  advising  the  Central  Government  in  relation  to  any 
matter concerning the operation of this Act, the Central Government may establish an advisory committee 
consisting of such number of persons as may be prescribed. 

26. Power to delegate.—The Central Government may, by notification in the Official Gazette, direct 
that any power exercisable by it under this Act may, in such circumstances and subject to such conditions, 
if any, as may be specified, be exercised by such officer or authority, including any State Government or 
officers or authorities thereof as may be specified in the direction. 

1. Ins. by Act 62 of 1960, s. 20 (w.e.f. 28-12-1960). 
2. Subs. by s. 21, ibid., for certain words (w.e.f. 28-12-1960). 

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27.  Power  to  exempt.—The  Central  Government  may,  by  notification  in  the  Official  Gazette, 
exempt, subject to such conditions and in such circumstances and in such areas as may be specified in the 
notification, any contract or class of contracts from the operation of all or any of the provisions of this 
Act. 

1[27A. Protection of action taken in good faith.—(1)  No  suit  or  other  legal  proceeding  shall  lie  in 
any  court  against  the  Central  Government  or  any  member,  officer  or  servant  of  the  Commission  for 
anything which is in good faith done or intended to be done under this Act, or any rule or bye-law made 
thereunder. 

(2)  No  suit  or  other  legal  proceeding  shall  lie  in  any  court  against  the  government  body  or  any 
member,  office-bearer  or  servant  of  any  recognised  association  or  against  any  person  appointed  under 
sub-section (1)  of  section 13  for  anything  which  is  in  good  faith  done  or intended  to  be  done  with  the 
approval, or at the instance, of the Commission and in pursuance of this Act, or  of any rule or bye-law 
made thereunder.] 

28. Power to make rules.—(1) The Central Government may, by notification in the Official Gazette, 

make rules for the purpose of carrying into effect, the objects of this Act. 

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

provide for— 

(a) the terms and conditions of service of members of the Commission; 

(b) the manner in which applications for recognition may be made under section 5 and the levy of 

fees in respect thereof; 

(c) the manner in which any inquiry for the purpose of recognising any association may be made 

and the form in which recognition shall be granted; 

2[(cc)  the  manner  in  which  applications  for  certificates  of  registration  may  be  made  under           

section 14A and the levy of fees in respect of such applications;] 

(d) the particulars to be contained in the annual reports of recognised associations; 

(e) the manner in which the bye-laws to be made, amended or revised under this Act shall, before 

being so made, amended or revised be published for criticism; 

(f) the constitution of the advisory committee established under section 25, the terms of office of 
and  the  manner  of  filling  vacancies  among  members  of  the  committee;  the  interval  within  which 
meetings of the advisory committee may be held and the procedure to be followed at such meetings; 
and  the  matters  which  may  be  referred  by  the  Central  Government  to  the  advisory  committee  for 
advice; 

(g) any other matter which is to be or may be prescribed. 

3[(3)  Every  rule  made  under  this  Act shall  be  laid,  as soon  as  may  be  after it is made,  before  each 
House of Parliament, while it is in session, for a total period of thirty days which may be comprised in 
one session or in two or more successive sessions, and if, before the expiry of the session immediately 
following the session or the successive sessions aforesaid, both Houses agree in making any modification 
in the rule or both Houses agree that the rule should not be made, the rule thereafter have effect only in 
such  modified  form  or  be of  no  effect,  as  the  case  may  be; so,  however, that  any  such  modification  or 
annulment shall be without prejudice to the validity of anything previously done under that rule.] 

4[28A.  Savings  of  recognised  associations.—(1)  All  recognised  associations  under  the  Forward 
Contracts  Regulation  Act,  shall  be  deemed  to  be  recognised  stock  exchanges  under  the  Securities 
Contracts (Regulation) Act, 1956 (42 of 1956) (herein referred to as the Securities Contracts Act): 

1. Ins. by act 62 of 1960, s. 22 (w.e.f. 28-12-1960). 
2. Ins. by s. 23, ibid. (w.e.f. 28-12-1960). 
3. Ins. by Act 4 of 1986, s. 2 and the Schedule (w.e.f. 15-5-1986). 
4. Ins. by Act 20 of 2015, s. 131 (w.e.f. 28-9-2015). 

18 

 
                                                           
Provided that such deemed recognised stock exchanges shall not carry out any activity other than the 
activities of assisting, regulating or controlling the business of buying, selling or dealing in commodity 
derivatives  till the  said deemed  recognised stock  exchanges  are specifically  permitted  by  the  Securities 
and Exchange Board of India: 

Provided further that a person buying or selling or otherwise dealing in commodity derivatives as a 
commodity  derivatives  broker,  or  such  other  intermediary  who  may  be  associated  with  the  commodity 
derivatives market, immediately before the transfer and vesting of rights and assets to the Securities and 
Exchange Board of India for which no registration certificate was necessary prior to such transfer, may 
continue to do so for a period of three months from such transfer or, if he has made an application for 
such registration within the said period of three months, till the disposal of such application. 

(2)  The  Securities  and  Exchange  Board  of  India  (herein  referred  to  as  the  Security  Board)  may 
provide  such  deemed  exchanges,  adequate  time  to  comply  with  the  Securities  Contracts  Act  and  any 
regulations, rules, guidelines or like instruments made under the said Act. 

(3)  The  bye-laws,  circulars,  or  any  like  instrument  made  by  a  recognised  association  under  the 
Forward Contracts Act shall continue to be applicable for a period of one year from the date on which that 
Act is repealed, or till such time as notified by the Security Board, as if the Forward Contracts Act had not 
been repealed, whichever is earlier. 

(4)  All  rules,  directions,  guidelines,  instructions,  circulars,  or  any  like  instruments,  made  by  the 
Commission  or  the  Central  Government  applicable  to  recognised  associations  under  the  Forward 
Contracts Act shall continue to remain in force for a period of one year from the date on which that Act is 
repealed,  or  till  such  time  as  notified  by  the  Security  Board,  whichever  is  earlier,  as  if  the  Forward 
Contracts Act had not been repealed. 

(5) In addition to the powers under the Securities Contracts Regulation Act, the Security Board and 
the Central Government shall exercise all powers of the Commission and the Central Government with 
respect to recognised associations, respectively, on such deemed exchanges, for a period of one year as if 
the Forward Contracts Act had not been repealed.] 

1[29. Repeals and savings.—If  immediately  before  the  date  on  which  this  Act  or  any  provision 
contained therein is made applicable to any goods or classes of goods in any State, there is in force in that 
State any law corresponding to this Act or, as the case may be, to any provision contained therein which 
is applicable to those goods or classes of goods, that law shall stand repealed on the said date: 

Provided that the repeal shall not affect— 

(a) the previous operation of any law so repealed or anything duly done or suffered thereunder; or 
(b)  any  right,  privilege,  obligation  or  liability  acquired,  accrued  or  incurred  under  any  law  so 

repealed; or 

(c)  any  penalty,  forfeiture  or  punishment  incurred  in  respect  of  any  offence  committed  against 

any law so repealed; or 

(d)  any  investigation,  legal  proceeding  or  remedy  in  respect  of  any  such  right,  privilege, 

obligation, liability, penalty, forfeiture or punishment as aforesaid; 

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced: and any 
such penalty, forfeiture or punishment may be imposed as if this Act had not been passed: 

Provided further that, subject to the preceding proviso, anything done or any action taken (including 
any  appointment  made,  notification  or  order  issued,  rule,  regulation,  form  or  bye-law  framed,  or 
recognition  granted)  under  any  such  law  shall  be  deemed  to  have  been  done  or  taken  under  the 
corresponding  provision  of  this  Act,  and  shall  continue  to  be  in  force  accordingly  unless  and  until 
superseded by anything done or any action taken under this Act.] 

2[29A.  Repeal  and  savings.—(1)  The  Forward  Contracts  (Regulation)  Act,  1952  (74  of  1952)  is 

hereby repealed.  

(2) On and from the date of repeal of Forward Contracts Act— 

1. Ins. by Act 46 of 1953, s. 3 (w.e.f. 23-12-1953). 
2.  Sections 29A or 29B shall stand by ins. (date to be notified) by Act 20 of 2015, s. 132  

19 

 
                                                           
(a) the rules and regulations framed by the  Central Government and the Commission under the 

Forward Contracts Act, shall stand repealed; 

(b)  all  authorities  and  entities  established  by  the  Central  Government  under  the  Forward 
Contracts Act, including the Commission and the Advisory Council established under section 25 of 
that Act, shall stand dissolved; 

(c)  anything  done  or  any  action  taken  or  purported  to  have  been  done  or  taken  including  any 
inspection,  order,  penalty,  proceeding  or  notice  made,  initiated  or  issued  or  any  confirmation  or 
declaration  made  or  any  licence,  permission,  authorisation  or  exemption  granted,  modified  or 
revoked, or any document or instrument executed, or any direction given under the Act repealed in 
sub-section  (1),  shall  be  continued  or  enforced  by  the  Security  Board,  as  if  that  Act  had  not  been 
repealed; 

(d)  all  offences  committed,  and  existing  proceedings  with  respect  to  offences  which  may  have 
been committed under the Forward Contracts Act, shall continue to be governed by the provisions of 
that Act, as if that Act had not been repealed; 

(e) a fresh proceeding related to an offence under the Forward Contracts Act, may be initiated by 
the Security Board under that Act within a period of three years from the date on which that Act is 
repealed and be proceeded with as if that Act had not been repealed; 

(f) no court shall take cognizance of any offence under the Forward Contracts Act from the date 

on which that Act is repealed, except as provided in clauses (d) and (e); 

(g) clauses (d), (e) and (f) shall not be held to or affect the general application of section 6 of the 
General  Clauses  Act,  1897  (10  of  1897)  with  regard  to  the  effect  of  repeal  to  matters  not  covered 
under these sub-sections.] 

29B. Transfer and vesting of undertaking of Commission.—(1) On the date on which the Forward 
Contracts Act is repealed, the undertaking shall be transferred, and vest with the Securities and Exchange 
Board of India. 

(2)  If  there is any  existing  proceeding  or  cause  of action  against the  Commission  in relation  to the 
undertaking  on  the  date  on  which  the  Forward  Contracts  Act  is  repealed,  such  proceeding  or  cause  of 
action may be continued and enforced by or against the Security Board. 

(3) The concessions, privileges, benefits and exemptions including any benefits and exemptions with 
regard to the payment of any tax, duty and cess granted to the Commission with respect to its undertaking 
shall be transferred to the Security Board on the date on which the Forward Contracts Act is repealed. 

(4)  Every  employee  holding  any  office  (excluding  members  of  the  Commission)  under  the 
Commission immediately before the date on which the Forward Contracts Act is repealed, will hold office 
in the Central Government or the Security Board, as the Central Government may notify in the Official 
Gazette,  for the  same  tenure and on the  same  terms and  conditions  of  service  as  such employee  would 
have held such office if the Commission had not been dissolved: 

Provided  that  where  the  Central  Government  notifies  that  an  employee  of  the  Commission  shall 
continue  as  an  employee  of  the  Central  Government  under  the  foregoing  provision,  the  Central 
Government may, at the request of the Security Board, depute such employee to the Security Board, for a 
period not exceeding two years from the date on which the Forward Contracts Act is repealed. 

(5) Within six months from the date on which the Forward Contracts Act is repealed, an employee of 
the Commission opting not to be an employee of the Central Government or the Security Board, as the 
case  may  be,  shall  communicate  such  decision  to  the  Central  Government  or  Security  Board,  as 
applicable. 

(6) Nothing contained in any other law in force shall entitle any employee to any compensation for 
the loss  of office  due to the  repeal  of the  Forward  Contracts  Act and the  consequent  dissolution  of  the 
Commission, and no such claim shall be entertained by any court, tribunal or other authority. 

20 

 
(7)  The  members  of  the  Commission  appointed  by  the  Central  Government  under  section  3  of  the 

Forward Contracts Act, shall cease to hold office from the date the Forward Contracts Act is repealed. 

(8) The members of the Commission shall not be entitled to any compensation for the loss of office 
due to the repeal of the Forward Contracts Act and the consequent dissolution of the Commission or for 
the  premature  termination  of  any  contract  of  management  entered  into  by  such  member  with  the 
Commission, and no such claim shall be entertained by any court, tribunal or other authority. 

(9) The transfer and vesting of the undertaking shall not be liable to the payment of any stamp duty 

under the Indian Stamp Act, 1899 (2 of 1899) or any applicable stamp duties under state laws.] 

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