38. Effect of vesting of assets and liabilities of the Board.—

(1) Unless otherwise expressly provided by or under this Act, all contracts and agreements and other instruments of whatever nature subsisting or having effect immediately before the date of coming into force of this section and to which the Board is a party or which are in favour of the Board shall be of as full force and effect against or in favour of the Government as the case may be and may be enforced or acted upon as fully and effectually as if, instead of the Board, the Government had been a party thereto or as if they had been entered in to or issued in favour of the Government. (2) If on the date of coming into force of this section any suit, appeal or other legal proceedings of whatever nature by or against the Board is pending, then, it shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to Government of the assets and liabilities of the Board but the suit, appeal or other legal proceedings may be continued, prosecuted and enforced by or against the Government. (3) Every whole time employee of the Board shall, on the date of coming into force of this section, become an employee of the Government with such designation as the Government may determine and shall hold his office therein by the same tenure, at the same remuneration and on the same terms and conditions of service and with the same rights and privileges as to pension and gratuity, if any, and other matters as he would have held the same if this Act had not been passed. (4) If any question arises as to whether any person was whole time employee of the Board, the question shall be decided by the Government and the decision of the Government shall be final; (5) Notwithstanding anything contained in section 37, the Government may, by order in writing,— (a) direct that the assets and liabilities of the Board vested in them under that section shall instead of continuing to vest in the . Government vest in a company to be constituted by the Government for arranging institutional finance to panchayats and municipalities; or (b) entrust to a panchayat or a municipality for management for such period and on such terms and conditions as may be specified in the order; and (c) direct that the whole time employees of the Board transferred to Government shall stand transferred to the company referred to in clause (a) with effect from such date as may be specified in the order.