THE OIL INDUSTRY (DEVELOPMENT) ACT, 1974                                                                                                                                        

Last Updated 17-3-2020 

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ARRANGEMENT OF SECTIONS                                                                                                            

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CHAPTER I 

PRELIMINARY 

SECTIONS 

1. Short title and extent. 

2. Definitions. 

CHAPTER II 

THE OIL INDUSTRY DEVELOPMENT BOARD 

3. Establishment and constitution of the Board. 

4. Conditions of service of members. 

5. Secretary, officers, consultants and employees of the Board. 

6. Functions of the Board. 

7. Principles and conditions of assistance. 

8. Power to call for repayment before agreed period. 

9. Special provisions for enforcement of claims by the Board. 

10. Power of Board to appoint Directors of oil industrial concern. 

11. Effect of notified order appointing Director. 

12. Powers and duties of the Directors. 

13. No right to compensation for loss of office. 

14. Application of Act 1 of 1956. 

CHAPTER III 

FINANCE, ACCOUNTS AND AUDIT 

15. Duties of excise. 

16. Crediting of proceeds of duty to Consolidated Fund of India. 

17. Grants and loans by the Central Government. 

18. Oil Industry Development Fund. 

19. Power to borrow. 

20. Accounts and audit. 

CHAPTER IV 

CONTROL BY THE CENTRAL GOVERNMENT 

21. Power to require persons engaged in oil industry to maintain and produce books, accounts and 

records relating to business and inspection thereof. 

22. Directions by the Central Government. 

22A. [Omitted.]. 

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CHAPTER V 

MISCELLANEOUS 

SECTIONS 

23. Penalties. 

24. Other penalties. 

25. Offences by companies. 

26. Jurisdiction of courts. 

27. Previous sanction of Central Government. 

28. Protection of action taken in good faith. 

29. Dissolution of the Board. 

30. Act to have overriding effect. 

31. Power to make rules. 

THE SCHEDULE. 

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THE OIL INDUSTRY (DEVELOPMENT) ACT, 1974 

ACT NO. 47 OF 1974 

An Act to provide for the establishment of a Board for the development of oil industry and for 
that purpose to levy a duty of excise on crude oil and natural gas and for matters connected 
therewith. 

BE it enacted by Parliament in the Twenty-fifth Year of the Republic of India as follows:— 

[26th September, 1974.] 

CHAPTER I 

PRELIMINARY 

1. Short title and extent.—(1) This Act may be called the Oil Industry (Development) Act, 1974. 

(2) It extends to the whole of India. 

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

(a) “assistance” means assistance rendered under section 6; 

(b) “Board” means the Oil Industry Development Board established under section 3; 

(c) “Chairman” means the Chairman of the Board; 

(d) “court” means the High Court or the Court of Judicial Commissioner within the local limits of 
whose  jurisdiction  the  defendant  or  respondent  carries  on  the  whole  or  a  substantial  part  of  his 
business, and where the Central Government has, by notification in the Official Gazette, and subject 
to  such  restrictions,  limitations  and  conditions,  as  it  thinks  fit,  empowered  any  court  of  civil 
jurisdiction  subordinate  to  the  High  Court  or,  as  the  case  may  be,  the  Court  of  the  Judicial 
Commissioner, to exercise all or any of the powers conferred by this Act, such court; 

(e) “crude oil”  means  petroleum  in its  natural state before  it is refined  or  otherwise treated  but 

from which water and foreign substances have been extracted; 

(f) “fertilisers” means such oil based chemical compounds which when employed in agriculture 
provide  either  single  or  multiple  plant  nutrients  in  any  one  or  more  of  the  forms  of  nitrogen, 
phosphorus and potash; 

(g) “member” means a member of the Board and includes the Chairman; 

(h) “mineral oil” includes petroleum and natural gas; 

(i) “natural gas” means gas consisting primarily of hydrocarbons obtained from oil wells or gas 

wells; 

(j)  “oil  industrial  concern”  means  any  company,  corporation  or  co-operative  society,  which  is 

engaged or which is to engage in any activity referred to in clause (k); 

(k) “oil industry” includes all activities by way of prospecting or exploring for or production of 
mineral  oil,  refining,  processing,  transportation,  storage,  handling  and  marketing,  of  mineral  oil, 
production  and  marketing  of  all  products,  down-stream  of  an  oil  refinery  and  the  production  of 
fertilisers and petro-chemicals and all activities directly or indirectly connected therewith; 

(l)  “petro-chemicals”  means  chemicals,  whether  organic  or  inorganic,  derived  from  petroleum 

including crude oil, natural gas, condensates, refined petroleum fractions and refinery gases; 

(m) “petroleum product” means any commodity made from petroleum or natural gas and includes 
refined  crude  oil,  processed  crude  petroleum,  residuum  from  crude  petroleum  cracking  stock, 
uncracked fuel oil, fuel  oil,  treated  crude  oil residuum, casing  head gasoline, natural gas  gasoline,  

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naphtha,  distillate  gasoline,  kerosene,  bitumen,  asphalt  and  tar,  waste  oil,  blended  gasoline, 
lubricating oil, blends or mixture of oil with one or more liquid products or by-products derived from 
oil  or  gas  and  blends  or  mixtures  of  two  or  more  liquid  products  or  by-products  derived  from  oil 
condensate and gas or petroleum hydrocarbons not specified hereinbefore; 

(n) “prescribed” means prescribed by rules made under this Act. 

CHAPTER II 

THE OIL INDUSTRY DEVELOPMENT BOARD 

3.  Establishment  and  constitution  of  the  Board.—(1)  With  effect  from  such  date  as  the  Central 
Government may, by notification in the Official Gazette, appoint in this behalf, there shall be established 
for the purposes of this Act a Board to be called the Oil Industry Development Board. 

(2)  The  Board  shall  be  a  body  corporate  by  the  name  aforesaid  having  perpetual  succession  and  a 
common seal, with power to acquire, hold and dispose of property, both movable and immovable, and to 
contract, and shall by the said name sue and be sued. 

(3) The Board shall consist of the following members, namely:— 

(a)  not  more  than  three  members  to  be  appointed  by  the  Central  Government  to  represent  the 

Ministry or Ministries of the Central Government dealing with petroleum and chemicals; 

(b)  two  members  to  be  appointed  by  the  Central  Government  to  represent  the  Ministry  of  the 

Central Government dealing with finance; 

(c)  not  more  than  five  members  to  be  appointed  by  the  Central  Government  to  represent  the 
Corporations,  being  Corporations  owned  or  controlled  by  the  Central  Government,  engaged  in 
activities referred to in clause (k) of section 2; 

(d)  two  members  of  whom  one  shall  be  appointed  by  the  Central  Government  from  amongst 
persons who, in the opinion of that Government, have special knowledge or experience of oil industry 
and the other shall be appointed by that Government to represent labour employed in the oil industry; 

(e) the Secretary to the Board, ex officio. 

(4) The Central Government shall appoint the Chairman of the Board. 

(5) The term of office of the members of the Board (other than the members appointed by  virtue of 
office) and the manner of filling vacancies among, and the procedure to be followed in the discharge of 
their functions by, the members shall be such as may be prescribed. 

(6)  Subject  to  such  conditions  and  restrictions  as  may  be  prescribed,  the  Board  may  constitute 
Standing  Committees  or  ad  hoc  Committees  for  exercising  any  power  or  discharging  any  duty  of  the 
Board or for inquiring into, reporting and advising on, any matter which the Board may refer to them: 

Provided that a Standing Committee shall consist exclusively of members of the Board. 

(7) No act or proceeding of the Board or of any Committee constituted under sub-section (6) shall be 

invalidated merely by reason of— 

(a) any vacancy in, or any defect in the constitution of, the Board or such Committee; or 

(b)  any  defect  in  the  appointment  of  a  person  acting  as  a  member  of  the  Board  or  such 

Committee; or 

(c) any irregularity in the procedure of the Board or such Committee not  affecting the merits of 

the case. 

4.  Conditions  of  service  of  members.—Every  person  appointed  as  a  whole-time  member  of  the 
Board shall be entitled to such salary and allowances and such conditions of service in respect of leave, 
pension, provident fund and other matters as may, from time to time, be fixed by the Central Government 
and the other members of the Board and such of the members of any ad hoc Committee constituted under 

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sub-section (6) of section 3 as are not members of the Board shall be entitled to such allowances, if any, 
and such other conditions of service, as may be prescribed. 

5.  Secretary,  officers,  consultants  and  employees  of  the  Board.—(1)  The  Central  Government 

shall appoint a Secretary to the Board. 

(2) Subject to rules made in this  behalf, the Secretary shall exercise such powers and perform such 

duties as may be prescribed or as may be delegated to him by the Board. 

(3) The  Secretary  shall  be entitled  to  such  salary  and  allowances  and  such  conditions  of  service  in 
respect of  leave,  pension, provident  fund  and  other matters  as  may,  from  time  to  time,  be  fixed  by  the 
Central Government. 

(4)  Subject  to  such  conditions  and  restrictions  as  may  be  prescribed,  the  Board  may  appoint  such 
consultants as may be necessary for the performance of its functions on such terms and conditions as it 
may determine from time to time. 

(5)  Subject  to  such  conditions  and  restrictions  as  may  be  prescribed,  the  Board  may  appoint  such 
other officers and employees as may be necessary for the performance of its functions and pay them such 
salaries and allowances as it may determine from time to time. 

6. Functions of the Board.—(1) Subject to the provisions of this Act and the rules made thereunder, 
the Board shall render, in such manner, to such extent and on such terms and conditions as it may deem 
fit, financial and other assistance for the promotion of all such measures as are, in its opinion, conducive 
to the development of oil industry. 

(2)  Without  prejudice  to  the  generality  of  the  provisions  of  sub-section  (1),  the  Board  may  render 

assistance under that sub-section by— 

(a) making grants or advancing loans to any oil industrial concern or other person who is engaged 

or is to engage in any activity referred to in clause (k) of section 2; 

(b)  guaranteeing  on  such  terms  and  conditions  as  may  be  agreed  upon  loans  raised  by  any  oil 
industrial  concern  or  other  person  which  are  repayable  within  a  period  not  exceeding  twenty-five 
years and are floated in the market or loans raised by an oil industrial concern or other person from 
any bank which is a scheduled bank, or a State co-operative bank, as defined in the Reserve Bank of 
India Act, 1934 (2 of 1934); 

(c)  guaranteeing  on  such  terms  and  conditions  as  may  be  agreed  upon  deferred  payments  due 
from  any  oil  industrial  concern  or  other  person  in  connection  with  import  of  capital  goods  from 
outside India or in connection with purchase of capital goods within India  by such concern or other 
person; 

(d) guaranteeing on such terms and conditions as may be agreed upon loans raised from, or credit 
arrangements  made  with,  any  bank  or  financial  institution  in  any  country  outside  India  by  any  oil 
industrial concern or other person in foreign currency: 

Provided  that  no  such  guarantee  shall  be  given  without  the  prior  approval  of  the  Central 

Government; 

(e) underwriting the issue of stock, shares, bonds or debentures by any oil industrial concern and 
retaining as part of its assets any stock, shares, bonds or debentures which it may have to take up in 
fulfilment of its obligations thereto; 

(f) acting  as  agent  for  the Central  Government  or,  with  its  approval,  for  any  overseas  financial 
organisation  or  credit  agency  in  the  transaction  of  any  business  with  any  oil  industrial  concern  in 
respect  of  loans  or  advances  granted,  or  debentures  subscribed  by  the  Central  Government  or  such 
organisation or agency; 

(g) subscribing to the stock or shares of any oil industrial concern; 

(h)  subscribing  to  the  debentures  of  any  oil  industrial  concern  repayable  within  a  period  not 

exceeding twenty-five years from the date on which they are subscribed to: 

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Provided  that  nothing  contained  in  this  clause  shall  be  deemed  to  preclude  the  Board  from 
subscribing to the debentures of any oil industrial concern, the amounts outstanding thereon may be 
convertible  at  the  option  of  the  Board  into  stock  or  shares  of  that  concern  within  the  period  the 
debentures are repayable. 

Explanation.—In  this  clause,  the  expression  “amounts  outstanding  thereon”  used  in  relation  to 
any  loan  or  advance  shall  mean  the  principal,  interest  and  other  charges  payable  on  such  loan  or 
advance as at the time when the amounts are sought to be converted into stock or shares. 

(3)  Without  prejudice  to  the  generality  of  the  provisions  of  sub-section  (1),  the  measures  for  the 
promotion of which the Board may render assistance under that sub-section may include measures for or 
by way of— 

(a)  prospecting  for  and  exploration  of  mineral  oil  within  India  (including  the  continental  shelf 

thereof) or outside India; 

(b) the establishment of facilities for production, handling, storage and transport of crude oil; 

(c) refining and marketing of petroleum and petroleum products; 

(d) the manufacture and marketing of petro-chemicals and fertilisers; 

(e) scientific, technological and economic research which could be, directly or indirectly, useful 

to oil industry; 

(f) experimental or pilot studies in any field of oil industry; 

(g) training of personnel, whether in India or outside, engaged or to be engaged in any field of oil 

industry, and 

such other measures as may be prescribed. 

(4) The Board may charge such fees or receive such commission as it may deem appropriate for any 

services rendered by it in the exercise of its functions. 

(5) The Board may transfer for consideration any instrument relating to loans or advances granted by 

it to any oil industrial concern or other person. 

(6) The Board may do all such things as may be incidental to or consequential upon the discharge of 

its functions under this Act. 

7. Principles and conditions of assistance.—(1) Before rendering any assistance to any oil industrial 
concern or other person, the Board shall have regard to such directions as the Central Government may 
issue in this behalf and shall satisfy itself that— 

(a) such assistance is not contrary to such directions; and 

(b) such assistance is necessary as a matter of priority in the interests of the development of oil 

industry. 

(2) In rendering any assistance to any oil industrial concern or other person, the Board shall impose 
such  conditions  as  may  be  prescribed  and  may  also  impose  such  additional  conditions  as  it  may  think 
necessary  or  expedient  for  protecting  the  interests  of  the  Board  and  for  securing  that  the  assistance 
rendered by it is put to the best use by such concern or other person. 

8. Power to call for repayment before agreed period.—Notwithstanding anything in any agreement 
to the contrary, the Board may, by notice in writing, require any oil industrial concern or other person to 
which or to whom it has rendered any assistance to discharge forthwith in full its or his liabilities to the 
Board— 

(a) if it appears to the Board that false or misleading information in any material particulars was 

given in the application for such assistance; or 

(b) if the concern or other person has failed to comply with the terms of its or his contract with 

the Board in the matter of such assistance; or 

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(c) if there is a reasonable apprehension that the concern or other person is unable to pay its or his 
debts  or  that  proceedings  for  liquidation  or  in  insolvency  may  be  commenced  in  respect  of  such 
concern or person; or 

(d) if the property pledged, mortgaged, hypothecated or assigned to the Board as security is not 
insured  and  kept  insured  by  the  concern  or  other  person  to  the  satisfaction  of  the  Board;  or 
depreciates  in  value  to  such  an  extent  that,  in  the  opinion  of  the  Board,  further  security  to  the 
satisfaction of the Board should be given and such security is not given; or 

(e) if, without the permission of the Board, any machinery, plant or other equipment (whether or 
not forming part of the security), is removed from the premises of the concern or other person without 
being replaced; or 

(f) if for any reason it is necessary to protect the interests of the Board. 

9.  Special  provisions  for  enforcement  of  claims  by  the  Board.—(1)  Where  an  oil  industrial 
concern  or  other  person,  in  breach  of  any  agreement,  makes  any  default  in  repayment  of  any  loan  or 
advance or any instalment thereof or in meeting its or his obligations in relation to any other assistance 
rendered  by  the  Board  or otherwise  fails to  comply  with the terms  of  the  agreement  with the  Board or 
where the Board requires an oil industrial concern or other person to make immediate repayment of any 
loan or advance and the concern or other person fails to make such repayment, then, without prejudice to 
the provisions of section 69 of the Transfer of Property Act, 1882 (4 of 1882), any officer of the Board 
generally or specially authorised by the Board in this behalf may apply to the court for one or more of the 
following reliefs, namely:— 

(a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the 

Board as security for the loan or advance; or 

(b) for an ad interim injunction where there is apprehension of the machinery or the equipment 
being removed from the premises of the oil industrial concern or other person without the permission 
of the Board; or 

(c) in the case of an oil industrial concern, for transferring the management of the concern to the 

Board. 

(2)  An  application  under  sub-section  (1)  shall  state  the  nature  and  extent  of  the  liability  of  the  oil 
industrial concern or other person to the Board, the ground on which it is made and such other particulars 
as may be prescribed. 

(3) When the application is for the relief mentioned in clause (a) or clause (b) of sub-section (1), the 
court shall pass an ad interim order attaching the property or so much of the property of the oil industrial 
concern or other person as would on being sold realise in the estimation of the court an amount equivalent 
in value to the outstanding liability of the concern or other person to the Board together with costs of the 
proceedings taken under this section with or without an ad interim injunction restraining the oil industrial 
concern or other person from transferring or removing any machinery or equipment. 

(4) Where the application is for the relief mentioned in clause (c) of sub-section (1), the court shall 
grant  an  ad  interim  injunction  restraining  the  oil  industrial  concern  from  transferring  or  removing  its 
machinery  and  equipment  and  issue  a  notice  calling  upon  the  concern  to  show  cause  on  a  date  to  be 
specified in the notice why the management of the concern should not be transferred to the Board. 

(5) Before passing any order under sub-section (3) or sub-section (4), the court may, if it thinks fit, 

examine the officer making the application. 

(6)  At  the  same  time  as  it  passed  an  order  under  sub-section  (3),  the  court  shall  issue  to  the  oil 
industrial concern or other person a notice accompanied by copies of the order, the application and the 
evidence, if any, recorded by it, calling upon the concern or other person to show  cause on a date to be 
specified  in  the  notice  why  the  ad  interim  order  of  attachment  should  not  be  made  absolute  or  the 
injunction confirmed. 

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(7)  If  no  cause  is  shown  before  the  date  specified  in  the  notice  under  sub-sections  (4)  and  (6),  the 
court  shall forthwith  make  the  ad interim  order  absolute and direct the sale  of the  attached  property  or 
transfer the management of the oil industrial concern to the Board or confirm the injunction. 

(8) If cause is shown, the court shall proceed to investigate the claim of the Board and the provisions 

of the Code of Civil Procedure, 1908 (5 of 1908) shall, so far as may be, apply to such proceedings. 

(9) On an investigation made under sub-section (8), the court shall pass an order— 

(a) confirming the order of attachment and directing the sale of the attached property, or 

(b) varying the order of attachment so as to release a portion of the property from attachment and 

directing the sale of the remainder of the attached property, or 

(c) releasing the property from attachment, if it is satisfied that it is not necessary in the interests 

of the Board, or 

(d) confirming or dissolving the injunction, or 

(e) transferring the management of the oil industrial concern to the Board or rejecting the claim 

made in this behalf: 

Provided that when making any order under clause (c), the court may  make such other orders as it 
thinks necessary to protect the interests of the Board, and, may apportion the costs of the proceedings in 
such manner as it thinks fit: 

Provided  further  that  unless  the  Board  intimates  the  court  that  it  will  not  appeal  against  any  order 
releasing  any  property  from  attachment,  such  order  shall  not  be  given  effect  to  until  the  expiry  of  the 
period fixed under sub-section (12) within which an appeal may be preferred, or if an appeal is preferred, 
unless the court empowered to hear appeals from the decisions of the said court otherwise directs, until 
the appeal is disposed of. 

(10)  An  order  of  attachment  or  sale  of  property  shall  be  carried  into  effect,  as  far  as  may  be 
practicable, in the manner provided in the Code of Civil Procedure, 1908 (5 of 1908) for the attachment 
or sale of property in execution of a decree, as if the Board were the decree-holder. 

(11) An order under this section transferring the management of an oil industrial concern to the Board 
shall  be  carried  into  effect,  as  far  as  may  be  practicable,  in  the  manner  provided  in  the  Code  of  Civil 
Procedure,  1908  (5  of  1908)  for  the  possession  of  immovable  property  or  the  delivery  of  movable 
property in execution of a decree, as if the Board were the decree-holder. 

(12) Any party aggrieved by an order under sub-section (7) or sub-section (9) may, within thirty days 
from the date of the order, appeal to the court empowered to hear appeals from the decisions of the court 
which passed the order and the appellate court may after hearing the parties pass such orders as it thinks 
proper. 

(13) Nothing in this section shall be construed, where proceedings for liquidation or in insolvency in 
respect of the oil industrial concern or other person have commenced before an application is made under 
sub-section  (1)  as  giving  to  the  Board  any  preference  over  the  other  creditors  of  the  concern  or  other 
person not conferred on it by any other law. 

(14) For the removal of doubts, it is hereby declared that any court competent to grant an ad interim 
injunction  under  this  section  shall  also  have  the  power  to  appoint  a  receiver  and  to  exercise  all  other 
powers incidental thereto. 

10. Power of Board to appoint Directors of oil industrial concern.—When the management of an 
oil industrial concern is taken over by the Board, the Board may, by order notified in the Official Gazette, 
appoint as many persons as it thinks fit to be the Directors of that concern and nothing in the Companies 
Act, 1956 (1 of 1956) or in any law or instrument relating to the concern, in so far as it makes, in relation 
to  a  Director,  any  provision  for  the  holding  of  any  share  qualification,  age  limit,  restrictions  on  the 
number  of  directorships,  retirement  by  rotation  or  removal  from  office  shall  apply  to  any  Director 
appointed by the Board under this section. 

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11.  Effect  of  notified  order  appointing  Director.—On  the  issue  of  a  notified  order  under        

section 10— 

(a)  all  persons  holding  office  as  Director  of  the  oil  industrial  concern  or  in  charge  of  the 
management of such concern immediately before the issue of the notified order shall be deemed to 
have vacated their offices as such; 

(b) the Directors appointed under section 10 shall take such steps as may be necessary to take into 
their  custody  or  under  their  control  the  property,  effects  and  actionable  claims  to  which  the  oil 
industrial concern is, or appears to be, entitled and all the property and effects of the concern shall be 
deemed to be in the custody of the Directors as from the date of the notified order; 

(c)  the  Directors  appointed  under  section  10  shall  for  all  purposes  be  the  Directors  of  the  oil 
industrial  concern  duly  constituted  under  the  Companies  Act,  1956  (1  of  1956)  and  shall  alone  be 
entitled to exercise all the powers of the Directors of the concern, whether such powers are derived 
from the said Act or from the memorandum or articles of association of the concern or from any other 
source. 

12.  Powers  and  duties  of  the  Directors.—(1)  Subject  to  the  control  of  the  Board,  the  Directors 
appointed  under  section  10  shall  take  such  steps  as  may  be  necessary  for  the  purpose  of  efficiently 
managing  the  business  of  the  oil  industrial  concern  and  shall  exercise  such  powers  and  perform  such 
duties as may be prescribed. 

(2)  Without  prejudice  to  the  generality  of  the  powers  vested  in  them  under  sub-section  (1),  the 
Directors appointed under section 10 may, with the previous approval of the Board, make an application 
to  a  court  for  the  purpose of  cancelling  or  varying  any  contract  or  agreement  entered  into,  at  any  time 
before the issue of the notified order under section 10, between the oil industrial concern and any other 
person and the court may, if satisfied after due inquiry that such contract or agreement had been entered 
into in bad faith and is detrimental to the interests of the concern, make an order cancelling or varying 
(either  unconditionally  or  subject  to  such  conditions  as  it  may  think  fit  to  impose)  that  contract  or 
agreement and the contract or agreement shall accordingly stand cancelled or, as the case may be, have 
effect as so varied. 

13.  No  right  to  compensation  for  loss  of  office.—(1)  Notwithstanding  anything  contained  in  any 
law  for  the  time  being  in  force,  no  Director  or  other  person  in  charge  of  the  management  of  an  oil 
industrial  concern  immediately  before  the  issue  of  a  notified  order  under  section  10  in  respect  of  such 
concern shall be entitled to any compensation for the loss of office or for the premature termination under 
this Act of the contract entitling him to be in charge of such management. 

(2) Nothing contained in sub-section (1) shall affect the right of any Director or other person referred 
to therein to recover from the oil industrial concern moneys  recoverable otherwise than by way of such 
compensation. 

14. Application of Act 1 of 1956.—(1) Where the management of an oil industrial concern, being a 
company  as  defined  in  the  Companies  Act,  1956,  is  taken  over  by  the  Board,  then,  notwithstanding 
anything contained in the said Act or in the memorandum or articles of association of such concern,— 

(a) it shall not be lawful for the shareholders of such concern or any other person to nominate or 

appoint any person to be a Director of such concern; 

(b) no resolution passed at any meeting of the shareholders of such concern shall be given effect 

to unless approved by the Board; 

(c)  no  proceeding  for  the  winding  up  of  such  concern  or  for  the  appointment  of  a  receiver  in 

respect thereof shall lie in any court, except with the consent of the Board. 

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

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CHAPTER III 

FINANCE, ACCOUNTS AND AUDIT 

15. Duties of excise.—(1) There shall be levied and collected, as a cess for the purposes of this Act, 
on  every  item  specified  in  column  2  of  the  Schedule,  which  is  produced  in  India  (including  the 
continental shelf thereof) and— 

(a) removed to a refinery or factory; or 

(b) transferred by the person by whom such item is produced to another person, 

a duty of excise at such rate not exceeding the rate set forth in the corresponding entry in column 3 of the 
Schedule, as the Central Government may, by notification in the Official Gazette, specify: 

Provided  that  until  the  Central  Government  specifies  by  such  notification  the  rate  of  the  duty  of 
excise in  respect  of  crude oil (being  an  item  specified  in  the  Schedule)  the  duty  of  excise  on crude  oil 
under this sub-section shall be levied and collected at the rate of rupees sixty per tonne. 

(2) Every duty of excise leviable under sub-section (1) on any item shall be payable by the person by 
whom  such  item  is  produced,  and  in  the  case  of  crude  oil,  the  duty  of  excise  shall  be  collected  on the 
quantity received in a refinery. 

(3)  The  duties  of  excise  under  sub-section  (1)  on  the  items  specified  in  the  Schedule  shall  be  in 

addition to any cess or duty leviable on those items under any other law for the time being in force. 

(4)  The  provisions  of  the  Central  Excises  and  Salt  Act,  1944  (1  of  1944)  and  the  rules  made 
thereunder, including those relating to refunds and exemptions from duties shall, as far as may be, apply 
in relation to the levy and collection of duties of excise leviable under this section and for this purpose the 
provisions of that Act shall have effect as if that Act provided for the levy of duties of excise on all items 
specified in the Schedule. 

16. Crediting of proceeds of duty to Consolidated Fund of India.—The proceeds of the duties of 
excise levied under section 15 shall first be credited to the Consolidated Fund of India and the Central 
Government  may,  if  Parliament  by  appropriation  made  by  law  in  this  behalf,  so  provides,  pay  to  the 
Board from time to time, from out of such proceeds, after deducting the expenses of collection, such sums 
of money as it may think fit for being utilised exclusively for the purposes of this Act. 

17. Grants and loans by the Central Government.—The Central Government may also, after due 
appropriation made by Parliament by law in this behalf, pay to the Board by way of grants or loans such 
sums of money as the Central Government may consider necessary. 

18.  Oil  Industry  Development  Fund.—(1)  There  shall  be  formed  a  Fund  to  be  called  the  Oil 

Industry Development Fund and there shall be credited thereto— 

(a) any sums of money paid under section 16 or section 17; 

(b) any grants that may be made by any person or institution for the purposes of this Act; 

(c) any borrowings by the Board; 

(d) the sums, if any, realised by the Board in carrying out its functions or in the administration of 

this Act. 

(2) The Fund shall be applied— 

(a)  for  meeting  the  salaries,  allowances,  honoraria  and  other  remuneration  of  the  officers  and 
other employees of the Board and of the advisers, consultants or other agencies whose services are 
availed of by the Board; 

(b) for meeting the other administrative expenses of the Board; 

(c) for rendering assistance under section 6; 

(d) for repayment of any loans taken by the Board or for meeting other liabilities under this Act. 

10 

 
1[(e)  for  meeting  any  expenditure incurred  by  any  Central  Public  Sector  Undertaking  in  the  oil 

and gas sector, on behalf of the Central Government; 

(f) for meeting expenditure on any scheme or activity by the Central Government relating to oil 

and gas sector.] 

19. Power to borrow.—Subject to such rules as may be made in this behalf, the Board shall have the 
power to borrow on the security of the Oil Industry Development Fund or any other asset for carrying out 
the purposes of this Act. 

20. Accounts and audit.—(1) The Board shall maintain proper accounts and other relevant records 
and prepare an annual statement of accounts, including the profit and loss account and the balance-sheet 
in such form as may be prescribed by the Central Government in consultation with the  Comptroller and 
Auditor-General of India. 

(2) The accounts of the Board shall be audited by the Comptroller and Auditor-General of India at 
such  intervals  as  may  be  specified  by  him  and  any  expenditure  incurred  in  connection  with  such  audit 
shall be payable by the Board to the Comptroller and Auditor-General. 

(3)  The  Comptroller  and  Auditor-General  of  India  and  any  person  appointed  by  him  in  connection 
with  the  audit  of  the  accounts  of  the  Board  shall  have  the  same  rights  and  privileges  and  authority  in 
connection with such audit as the Comptroller and Auditor-General has in connection with the audit of 
Government accounts and, in particular, shall have the right to demand the production of books, accounts, 
connected vouchers and other documents and papers and to inspect any of the offices of the Board. 

(4) The accounts  of the  Board as  certified  by  the  Comptroller and  Auditor-General  of  India  or  any 
other  person  appointed  by  him  in  this  behalf  together  with  the  audit  report  thereon  shall  be  forwarded 
annually  to  the  Central  Government  and  that  Government  shall  cause  the  same  to  be  laid  before  each 
House of Parliament. 

CHAPTER IV 

CONTROL BY THE CENTRAL GOVERNMENT 

21. Power to require persons engaged in oil industry to maintain and produce books, accounts 
and  records  relating  to  business  and  inspection  thereof.—The  Central  Government  may,  by  order 
notified in the Official Gazette, require all persons engaged in oil industry or any class of such persons— 

(a) to maintain such books, accounts and records relating to their business as may be specified in 

the order; 

(b) to produce such books, accounts and records for inspection and to furnish such information 
relating  thereto  to  such  officer  or  authority  and  at  such  times  or  in  such  circumstances  as  may  be 
specified in the order. 

22. Directions by the Central Government.—The Board shall carry out such directions as may be 

issued to it from time to time by the Central Government for the efficient administration of this Act. 

22A. [Exemption from liability to pay income-tax.] Omitted by the Finance Act, 2002 (20 of 2002),     

s. 159 (w.e.f. 11-5-2002).  

CHAPTER V 

MISCELLANEOUS 

23. Penalties.—Any person who,— 

(a)  being  required  under  this  Act  to  produce  any  books,  accounts  or  records  or  furnish  any 
information, fails to produce such books, accounts or records or fails to furnish such information or 
furnishes information which is false, and which he either knows or believes to be false, or does not 
believe to be true; or 

1. Ins. by Act 7 of 2017, s. 140 (w.e.f. 1-4-2017). 

11 

 
                                                           
(b) obstructs any member or any officer or other employee of the Board or any person authorized 
in this behalf by the Central Government or by the Board in the exercise of any power conferred or in 
the  discharge  of  any  duty  imposed  on  him  by  or  under  this  Act,  shall  be  punishable  with 
imprisonment which may extend to one year, or with fine which may extend to five thousand rupees, 
or with both. 

24. Other penalties.—Whoever contravenes or attempts to contravene or abets the contravention of 
any  of  the  provisions  of  this  Act  or  of  any  rule  made  thereunder  (other  than  the  provisions  for  the 
contravention of which section 23 applies), shall be punishable with imprisonment for a term which may 
extend to three months, or with fine which may extend to five hundred rupees, or with both. 

25.  Offences  by  companies.—(1)  Where  an  offence  under  this  Act  has  been  committed  by  a 
company,  every  person  who,  at  the  time  the  offence  was  committed,  was  in  charge  of,  and  was 
responsible to, the company 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, 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 neglect 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. 

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. 

26. Jurisdiction of courts.—No court inferior to that of a Metropolitan Magistrate or a Magistrate of 

the first class shall try any offence punishable under this Act. 

27. Previous sanction of Central Government.—No prosecution for any offence punishable under 

this Act shall be instituted except with the previous sanction of the Central Government. 

28. Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall 
lie  against  the  Central  Government  or  the  Board  or  any  committee  constituted  by  the  Board  or  any 
member of the Board or of such committee or any officer or other employee of the Central Government 
or of the Board or any agent of or any other person authorised by the Central Government or the Board, 
for  anything  which  is  in  good  faith  done  or  intended  to  be  done  under  this  Act  or  the  rules  made 
thereunder. 

29. Dissolution of the Board.—(1) The Central Government may, if satisfied that it is necessary so 
to do in the public interest, direct by notification in the Official Gazette that the Board shall be dissolved 
from such date and for such period as may be specified in the notification. 

(2) When the Board is dissolved under the provisions of sub-section (1),— 

(a) all members, notwithstanding that their term of office has not expired, shall, from the date of 

dissolution, vacate their offices as such members; 

(b) all  powers and  duties of  the  Board shall,  during  the  period  of  dissolution, be  exercised  and 

performed by such person or persons as the Central Government may appoint in this behalf; 

(c) all funds and other properties vested in the Board shall, during the period of dissolution, vest 

in the Central Government. 

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(3) As soon as the period of dissolution expires, the Board shall be re-constituted in accordance with 

the provisions of this Act. 

30.  Act  to  have  overriding  effect.—The  provisions  of  this  Act  shall  have  effect,  notwithstanding 

anything inconsistent therewith contained in any enactment other than this Act. 

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

make rules to carry out the purposes of this Act. 

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

provide for all or any of the following matters, namely:— 

(a) the term of office and other conditions of service of members, the manner of filling vacancies 

among and the procedure to be followed in the discharge of their functions; 

(b) the powers which may be exercised and the duties which shall be performed by the Secretary 

to the Board; 

(c) the circumstances in which and the authority by which a member may be removed; 

(d) the holding of minimum number of meetings of the Board every year; 

(e) the convening of meetings of the Board and of its committees, the procedure to be followed at 
the  meetings  of  the  Board  and  of  its  committees  for  the  conduct  of  business  and  the  number  of 
members which shall form quorum at a meeting; 

(f)  the  maintenance  by  the  Board  of  records  of  business  transacted  by  the  Board  and  the 

submission of copies thereof to the Central Government; 

(g) the powers of the Board, its Chairman and other members, Secretary and committees of the 

Board with respect to the incurring of expenditure; 

(h) the conditions subject to which the Board may incur expenditure outside India; 

(i) the preparation of budget estimates of receipts and expenditure of the Board and the authority 

by which the estimates are to be sanctioned; 

(j) the form and manner in which the accounts should be kept by the Board; 

(k) the custody and investment of the funds of the Board; 

(l) the conditions to be observed by the Board in borrowing money; 

(m) the conditions subject to which and the manner in which contracts may be entered into by or 

on behalf of the Board; 

(n) the delegation to the Chairman, Secretary or members or officers of the Board of any of the 

powers and duties of the Board under this Act; 

(o) the additional measures for the promotion of which the Board may render assistance; 

(p)  the  remuneration  and  other  allowances  payable  to  the  person  or  persons  referred  to  in      

clause (b) of sub-section (2) of section 29; 

(q) the fees which the Board may charge for any assistance or services rendered by it under this 

Act; 

(r)  the  staff  which  may  be  employed  by  the  Board  and  the  pay  and  allowances  and  leave  and 
other  conditions  of  service  of  officers  (other than those  appointed by  the  Central  Government)  and 
other employees of the Board; 

(s) any other matter which is to be or may be prescribed or provided for by rules under this Act. 

(3) Every rule made by the Central Government under this section 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 

13 

 
making any modification in the rule or both Houses agree that the rule should not be made, the rule shall 
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. 

14 

 
  
 
 
THE SCHEDULE 

[See section 15 (1)] 

Sl. No. 

Name of item 

The  maximum  rate  at  which  duty  of  excise  may  be 

1. 

2 

3 

collected 

1. Crude oil 

 .     .      .      .      .       .      .       

1[Rupees two thousand five hundred per tonne.] 

2. Natural gas 

 .     .      .      .       .      .      .       

2[Rupees three hundred per thousand cubic maters.] 

1. Subs. by Act 21 of 2006, s. 73, for “Rupees two thousand per tonne” (w.e.f. 18-4-2006). 
2. Subs. by Act 11 of 1987, s. 106, for “Rupees fifty per thousand cubic metres” (w.e.f. 12-5-1987). 

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