THE INDUSTRIAL RECONSTRUCTION BANK (TRANSFER OF UNDERTAKINGS 
AND REPEAL) ACT, 1997 

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ARRANGEMENT OF SECTIONS 
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SECTIONS 

1.  Short title and commencement. 
2.  Definitions. 

CHAPTER I 

PRELIMINARY 

CHAPTER II 

TRANSFER AND VESTING OF THE UNDERTAKING OF RECONSTRUCTION BANK IN COMPANY 

3.  Undertakings of the Reconstruction Bank to vest in company. 
4.  General effect of vesting of undertaking in Company. 
5.  Provisions in respect of officers and other employees of Reconstruction Bank. 

CHAPTER III 

MISCELLANEOUS 

6.  Concession, etc., to be deemed to have been granted to Company. 
7.  Tax exemption or benefit to continue to have effect. 
8.  Guarantee to be operative. 
9.  Arrangement with Company on appointment of directors to prevail. 
10.  Act 18 of 1891 to apply to the books of Company. 
11.  Shares, bonds and debentures to be deemed to be approved securities. 
12.  Substitution in Act, rules or regulations of company in place of the Reconstruction Bank. 
13.  Repeal and saving of Act 62 of 1984. 

CHAPTER IV 
AMENDMENT TO THE INDUSTRIAL RECONSTRATION BANK  OF INDIA ACT, 1984 

14.  [Repealed.] 
15.  Repeal and Saving. 

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THE INDUSTRIAL RECONSTRUCTION BANK (TRANSFER OF UNDERTAKINGS 
AND REPEAL) ACT, 1997 

ACT NO. 7 OF 1997 

[19th March, 1997.] 

An  Act  to  provide  for  the  transfer  and  vesting  of  the  undertakings  of  the  Industrial 
Reconstruction Bank of India to and in the Company to be formed and registered as a Company 
under the Companies Act, 1956, and for matters connected therewith or incidental thereto and 
also to repeal the Industrial Reconstruction Bank of India Act, 1984. 

BE it enacted by Parliament in the Forty-eighth Year of the Republic of India as follows:-- 

CHAPTER I 

PRELIMINARY 

1.  Short  title  and  commencement.—(1)  This  Act  may  be  called  the  Industrial  Reconstruction 

Bank (Transfer of Undertakings and Repeal) Act, 1997. 

(2) It shall be deemed to have come into force on the 24th day of January, 1997. 

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

(a) “appointed day” means such date as the Central Government may, by notification in the 

Official Gazette, appoint under section 3; 

(b)  “Company”  means  the  Industrial  Investment  Bank  of  India  Limited  to  be  formed  and 

registered under the Companies Act, 1956 (1 of 1956); 

(c) “Reconstruction Bank” means the Industrial Reconstruction Bank of India established under 
sub-section (1) of section 3 of the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984). 

CHAPTER II 

TRANSFER AND VESTING OF THE UNDERTAKING OF RECONSTRUCTION BANK IN COMPANY 

3. Undertakings of the Reconstruction Bank to vest in company.—On such date1 as the Central 
Government may, by notification in the Official Gazette, appoint, there shall be transferred to, and vest 
in, the Company, the undertakings of Reconstruction Bank. 

4. General effect of vesting of undertaking in Company.—(1) The Central Government, being 
the shareholder of the Reconstruction Bank immediately before the appointed day, shall be deemed to 
be registered, on and from the appointed day, as a shareholder of the Company. 

(2) The undertakings of the Reconstruction Bank which are transferred to, and which vest in, the 
Company under section 3 shall be deemed to include all business, assets, rights, powers, authorities and 
privileges and all properties, movable and immovable, real and personal, corporeal and incorporeal, in 
possession or reservation, present or contingent of whatever nature and wheresoever situate including 
lands,  buildings,  vehicles,  cash  balances,  deposits,  foreign  currencies,  disclosed  and  undisclosed 
reserves,  reserve  fund,  special  reserve  fund,  benevolent  reserve  fund,  any  other  fund,  stocks, 
investments,  shares,  bonds,  debentures,  security,  management  of  any  industrial  concern,  loans, 
advances and guarantees given to industrial concerns, tenancies, leases and book debts and all other 
rights and interests arising out of such property as were immediately before the appointed day in the 
ownership, possession or power of the Reconstruction Bank in relation to its undertakings, within or 
without India, all books of account, registers, records and documents relating thereto and shall also be 
deemed to include all borrowings, liabilities and obligations of whatever kind within or without India 
then subsisting of the Reconstruction Bank in relation to its undertakings. 

1. 27th March, 1997, vide notification No. S.O. 242(E), dated 25th March, 1997, see Gazette of India, Extraordinary, Part II, 
sec. 3(ii).   

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(3)  All  contracts,  deeds,  bonds,  guarantees,  powers  of  attorney,  other  instruments  and  working 
arrangements subsisting immediately before the appointed day and affecting the Reconstruction Bank 
shall cease to have effect or to be enforceable against the Reconstruction Bank and shall be of as full 
force and effect against or in favour of the Company in which the undertakings of the Reconstruction 
Bank  have  vested  by  virtue  of  this  Act  and  enforceable  as  fully  and  effectually  as  if  instead  of the 
Reconstruction Bank, the Company had been named therein or had been a party thereto. 

(4) Any proceeding or cause of action pending or existing immediately before the appointed day by 
or against the Reconstruction Bank in relation to its undertakings may, as from the appointed day, be 
continued and enforced by or against the Company in which the undertakings of the Reconstruction 
Bank have vested by virtue of this Act as it might have been enforced by or against the Reconstruction 
Bank if this Act had not been enacted and shall cease to be enforceable by or against the Reconstruction 
Bank. 

5. Provisions in respect of officers and other employees of Reconstruction Bank.—(1) Every 
officer or other employee of the Reconstruction Bank (except a Director of the Board or the Chairman 
and Managing Director) serving in the employment immediately before the appointed day shall, in so 
far  as  such  officer  or  other  employee  is  employed  in  connection  with  the  undertakings  which  have 
vested in the Company by virtue of this Act, become, as from the appointed day, an officer or, as the 
case may be, other employee of the Company and shall hold his office or service therein by the same 
tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and 
with the same rights and privileges as to leave, leave fare concession, welfare scheme, medical benefit 
scheme,  insurance,  provident  fund,  other  funds,  retirement,  voluntary  retirement,  gratuity  and  other 
benefits as he would have held under the Reconstruction Bank if its undertakings had not vested in the 
Company  and  shall  continue  to  do  so  as  an  officer  or,  as  the  case  may  be,  other  employee  of  the 
Company or until the expiry of a period of six months from the appointed day if such officer or other 
employee opts not to continue to be the officer or other employee of the Company within such period. 

(2) Where an officer or other employee of the Reconstruction Bank opts under sub-section (1) not 
to be in employment or service of the Company, such officer or other employee shall be deemed to have 
resigned. 

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) in any 
other law for the lime being in force, the transfer of the services of any officer or other employee of the 
Reconstruction  Bank  to  the  Company  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. 

(4) The officers and other employees who have retired before the appointed day from the service of 
the Reconstruction Bank and are entitled to any benefits, rights or privileges shall be entitled to receive 
the same benefits, rights or privileges from the Company. 

(5) The trust of the provident fund or the gratuity fund of the Reconstruction Bank and any other 
bodies created for the welfare of officers or employees would continue to discharge their functions in 
the Company as was being done hitherto in the Reconstruction Bank and any tax exemption granted to 
the provident fund or the gratuity fund would continue to be applied to the Company. 

(6) Notwithstanding anything contained in this Act or in the Companies Act, 1956 (1 of 1956) or 
in any other law for the time being in force or in the regulations of the Reconstruction Bank, no Director 
of the Board, Chairman and Managing Director or any other person entitled to manage the whole or 
substantial  part  of  the  business  and  affairs  of  the  Reconstruction  Bank  shall  be  entitled  to  any 
compensation  against  the  Reconstruction  Bank  or  the  Company  for  the  toss  of  office  or  for  the 
premature  termination  of  any  contract  of  management  entered  into  by  him  with  the  Reconstruction 
Bank. 

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CHAPTER III 

MISCELLANEOUS 

6. Concession, etc., to be deemed to have been granted to Company.—With effect from the 
appointed day, all fiscal and other concessions, licences, benefits, privileges and exemptions granted to 
the Reconstruction Bank in connection with the affairs and business of the Reconstruction Bank under 
any law for the time being in force shall be deemed to have been granted to the Company. 

7. Tax exemption or benefit to continue to have effect.—(1) Notwithstanding anything contained 
in the Income-tax Act, 1961 (43 of 1961) or any other enactment for the time being in force relating to 
tax or income, profits or gains, the Company shall not be liable to pay income-tax or any other tax for 
a  period  of  five  years  computed  from  the  appointed  day  in  respect  of  any  income,  profits  or  gains 
derived, or any amount received by the Company. 

(2) The transfer and vesting of the undertakings or any part thereof in terms of section 3 shall not 
be construed as a transfer within the meaning of the Income-tax At, 1961 (43 of 1961) for the purposes 
of capital gains. 

8. Guarantee to be operative.—Any guarantee given for or in favour of the Reconstruction Bank 
with respect to any loan, lease finance or other assistance shall continue to be operative in relation to 
the Company. 

9.  Arrangement  with  Company  on  appointment  of  directors  to  prevail.—(1)  Where  any 
arrangement  entered  into  by  the  company  with  an  industrial  or  other  concern  provides  for  the 
appointment  by  the  company  of  one  or  more  directors  of  such  concern,  such  provision  and  any 
appointment  of  directors  made  in  pursuance  thereof  shall  be  valid  and  effective  notwithstanding 
anything to the contrary contained in the Companies Act, 1956 (1 of 1956) or in any other law for the 
time being in force or in the memorandum, articles of association or any other instrument relating to 
such  concern,  and  any  provision  regarding  share  qualification,  age  limit,  number  of  directorships, 
removal  from  office  of  directors  and  such  like  conditions  contained  in  any  such  law  or  instrument 
aforesaid, shall not apply to any director appointed by the company in pursuance of the arrangement as 
aforesaid. 

(2) Any director appointed in pursuance of sub-section (7) shall— 

(a) hold office during the pleasure of the company and may be removed or substituted by any 

person by order in writing by the company; 

(b) not incur any obligation or liability by reason only of his being a director or for anything 
done or omitted to be done in good faith in the discharge of his duties as a director or anything in 
relation thereto; 

(c) not be liable to retirement by rotation and shall not be taken into account for computing the 

number of directors liable to such retirement. 

10.  Act 18 of 1891 to apply to the books of Company.—The Company shall be deemed to be a 

bank for the purposes of the Bankers' Books Evidence Act, 1891. 

11. Shares, bonds and debentures to be deemed to be approved securities.—Notwithstanding 
anything contained in any other law for the time being in force, the shares, bonds and debentures of the 
Company shall be deemed to be approved securities for the purposes of the Indian, Trusts Act, 1882 (2 
of 1882) , the Insurance Act, 1938 (4 of 1938) 2***. 

12. Substitution in Act, rules or regulations of company in place of the Reconstruction Bank.- 

—In every Act, rule or regulation in force on the appointed day,— 

1. The words and figures "and the Banking Regulation Act, 1949(10 of 1949)" shall be omitted by Act 4 of 2013, s. 17 and 
the Schedule (w.e.f. 18-1-2013). 

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(a) for the words “Industrial Reconstruction Bank of India”, wherever they occur, the words 

“Industrial Investment Bank of India Limited” shall be substituted; 

(b)  for  the  words  “Reconstruction  Bank”,  wherever  they  occur,  the  words  “Industrial 

Investment Bank” shall be substituted. 

13. Repeal and saving of Act 62 of 1984.---(1) On the appointed day, the Industrial Reconstruction 

Bank of India Act, 1984 shall stand repealed. 

(2) Notwithstanding the repeal of the Industrial Reconstruction Bank of India Act, 1984,-- 

(a) the Company shall, so far as may be, comply with the provisions of Chapter VII of the Act 
so repealed for any of the purposes related to the annual accounts and audit of the Reconstruction 
Bank; 

(b) the provisions of Chapter VIII of the Act so repealed will continue to be applicable in respect 
of  the  arrangements  entered  into  by  the  Reconstruction  Bank  with  an  industrial  concern  under 
section 18 thereof up to the appointed day and the Company will be entitled to act upon and enforce 
the same as fully and effectually as if this Act had not been enacted. 

CHAPTER IV 

AMENDMENT TO THE INDUSTRIAL RECONSTRATION BANK  OF INDIA ACT, 1984 

14. [Insertion of new section 4A].—Rep. by the Repealing and Amending Act, 2001 (30 of 2001),   

s. 2 and the First schedule (w.e.f. 2-9-2001). 

15. Repeal and Saving.—(1) The Industrial Reconstruction Bank (Transfer of Undertakings and 

Repeal) Ordinance, 1997 (Ord. 7 of 1997) is hereby repealed. 

(2)  Notwithstanding  such  repeal,  anything  done  or  any  action  taken  under  the  Ordinance  so 

repealed, shall tie deemed to have been done or taken under the corresponding provisions of this Act. 

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