Chapter VIII BORROWING POWERS OF BOARD

Power to raise loans.—(1) The Board may raise loans, with the previous sanction of the Government on such terms and conditions as may be prescribed by Government for the purposes of this Act.

1. (2) Loans may be raised by the Board in the open market on the securities issued by it or may be obtained from the Government or a Bank approved by the Government.

Securities.—(1) The Board may, with the sanction of the Government, provide by regulations, the form in which the securities of the Board shall be issued by the Board and the mode in which, and the conditions subject to which, they may be transferred.

1. (2) The holder of any security in any form may obtain in exchange thereof, upon such terms as the Board may, from time to time, determine, a security on other form provided by the regulations.
2. (3) The right to sue in respect of money secured by the securities shall be exercisable by the holders thereof for the time being without preference in respect of priority of date.

Endorsement of a security.—Endorsement of a security of the Board which is transferable by endorsement shall be valid when the maker or the holder of such security signs it in accordance with the provisions of section 15 of the Negotiable Instruments Act, 1881 (Central Act 26 of 1881).

Liability of endorser of security.—A person shall, by reason of his having endorsed any security of the Board, be liable to pay any money due either as principal or as interest thereunder, unless the liability is excluded or made conditional in accordance with the provisions of the Negotiable Instruments Act, 1881 (Central Act 26 of 1881).

Impression of signature on securities.—(1) The signature of the person authorised to sign the securities on behalf of the Board, may be printed, engraved or lithographed or impressed by such mechanical process as the Board may direct.

1. (2) A signature so printed, engraved, lithographed, impressed or otherwise shall be valid as if it had been inscribed in the proper handwriting of the person so authorised.

Issue of duplicate security.—(1) When any security is alleged to have been lost, stolen or destroyed either wholly or in part and a person claims to be the person to whom but for the loss, theft or destruction it would be payable, he may, on application to the Board and on producing proof to its satisfaction of the loss, theft or destruction and justness of the claim, and on payment of such fee, if any, as may be provided by regulations, obtain from the Board an order for,—

1. (a) the issue of duplicate security payable to the applicant; and
2. (b) the payment of interest in respect of the security said to be lost, stolen or destroyed pending the issue of a duplicate security.

1. (2) An order shall not be passed under sub-section (1) until after the issue by the Board of the notification of the loss, theft or destruction in the manner provided by regulations.
2. (3) A list of securities in respect of which an order is passed under sub-section (1) shall be published in such manner as the Board may provide in the regulations.
3. (4) If at any time before the Board becomes discharged under the provisions of this Act from liability in respect of any security the whole of which is alleged to have been lost, stolen or destroyed, such security is found, any order passed in respect thereof under this section shall be cancelled.

Conversion of securities.—(1) The Board may, subject to such conditions as may be provided by regulations, on the application of a person claiming to be entitled to security or securities issued by it, on being satisfied of the justness of the claim and on delivery of the security or securities receipted in such manner and on payment of such fee, if any, as may be provided by regulations, convert, consolidate or subdivide the security or securities, and issue to the applicant a new security or securities, accordingly.

1. (2) The conversion, consolidation or subdivision referred to in sub-section (1) may be into a security or securities of the same or different classes or of the same or different loans.

Discharge in certain cases.—Notwithstanding anything contained in the Limitation Act, 1963 (Central Act 36 of 1963),—

1. (i) on payment of the amount due on a security on or after the date on which payment becomes due; or
2. (ii) when a duplicate security has been issued under section 58; or
3. (iii) when a new security or securities has or have been issued upon conversion, consolidation or subdivision under section 59, the Board shall be discharged from all liabilities in respect of the security or securities so paid or in place of which a duplicate or new security or securities has or have been issued,—

1. (a) in the case of payment, after the lapse of six years from the date on which payment was due;
2. (b) in the case of duplicate security after the lapse of six years from the date of the publication under sub-section (3) of section 58 of the list in which the security is first mentioned or from the date of the last payment or interest on the original security, whichever, is later;
3. (c) in the case of new security issued upon conversion, consolidation or subdivision after the lapse of six years from the date of the issue thereof.

Security for loans taken by the Board.—All loans raised by the Board under this Act shall be a first charge on,—

1. (1) the property vested or which may hereafter during the currency of the loans become vested in the Board other than,—
   • (i) any sum set apart by the Board as sinking fund for the purpose of paying off any loan or for the payment of pension to its employees; or
   • (ii) the provident or pension fund established by the Board; and
2. (2) the rates leviable by the Board under this Act.

Remedies of Government in respect of loans made to the Board.—The Government shall have in respect of loans made by it to the Board the same remedies as holders of securities issued by the Board and Government shall not be deemed to possess any prior or greater rights in respect of such loans than holders of such securities: Provided that when the terms of any such loan made before the appointed day expressly provide that the loan shall have priority over all other loans in the matter of repayment by the Board, such loan shall have priority.

Power of the Board to repay loans before due date.—The Board may with the previous sanction of the Government, apply any sums out of the amounts which may come into its hands under the provisions of this Act and which can be so applied without prejudicing the security of other holders of the securities, in repaying to Government any sum which may remain due in respect of the principal of any loan although the time fixed for the repayment of the same may not have arrived: Provided that no such repayment shall be made of any sum less than ten thousand rupees and that if such repayment is made, the amount of interest in each succeeding instalment shall be so adjusted as to represent exactly the interest due on the outstanding principal.

Establishment of sinking fund.—(1) If in respect of a loan raised by the Board under this Act, which is not repayable before the expiration of one year from the date of the loan, the Government by an order in writing so directs, the Board shall set apart half yearly, out of its income, as a sinking fund, a sum sufficient to liquidate the loan within a period which shall not in any case, unless the previous consent of the Government has been obtained, exceed twenty five years but the maximum period shall not in any case exceed forty years: Provided that a sinking fund need not in the absence of any stipulation to that effect be established in the case of loans taken by the Board from the Central Government or any State Government.

1. (2) Where any sinking fund has, before the appointed day, been established by any authority in respect of a loan raised by it, for which the Board is liable under this Act, the sinking fund so established by that authority shall be deemed to have been established by the Board under this section.

Investment and application of sinking fund.—(1) The sums so set apart by the Board under sub-section (1) of section 64 and the sums forming part of any sinking fund referred to in sub-section (2) of that section shall be invested in public securities or in such other securities as the Government may approve in this behalf and shall be held by the Board in trust for the purposes of this Act.

1. (2) The Board may apply the whole or any part of the sums accumulated in any sinking fund in or towards the discharge of the amounts for the repayment of which the fund has been established: Provided that it pays into the fund in each year and accumulates, until the whole of the amounts borrowed are discharged, a sum equivalent to the interest which would have been produced by the sinking fund or the part of the sinking fund so applied.

Annual examination of sinking fund.—(1) A sinking fund established for the liquidation of any loan shall be subject to annual examination by such person as may be appointed by the Government in this behalf and the persons so appointed shall ascertain whether the cash and the current market value of the securities at the credit of the fund are actually equal to the amount which would have been accumulated if, investment had been regularly made and the rate of interest as originally estimated had been obtained thereon.

1. (2) The Board shall pay forthwith into the sinking fund any amount which the person appointed under sub-section (1) to conduct the annual examination of the fund may certify to be deficient unless the Government specifically sanctions a gradual re-adjustment.
2. (3) If the cash and current market value of the securities at the credit of a sinking fund are in excess of the amount which should be at its credit, the person appointed under sub-section (1) shall certify the amount of the excess and the Board may, with the previous sanction of the Government, reduce or discontinue the half yearly contributions to the sinking fund required under section 64.

Power of the Board to take temporary loans or overdrafts.—Notwithstanding anything contained in this Act, the Board may,—

1. (i) borrow amounts by means of temporary overdraft or otherwise by placing the securities held by the Board in its reserve funds or on security of the fixed deposits of the Board in its banks;
2. (ii) obtain advances from such banks on pledge or hypothecation of its current assets without the previous sanction of the Government: Provided that such temporary overdrafts or other loans,—

1. (a) shall not at any time have a longer currency than six months; and
2. (b) shall not be taken without the previous sanction of the Government, if at any time in any year the amount of such overdrafts, or other loans exceeds such amount not exceeding ten lakhs of rupees, as the Government may fix in this behalf:

Power of the Board to borrow money from International Bank for Reconstruction and Development or from other foreign institutions Power of the Board to borrow money from International Bank for Reconstruction and Development or from other foreign institutions.—Notwithstanding anything contained in this Act, but subject to any other law for the time being in force in this behalf, the Board may, with the previous sanction of the Government and on such term and conditions as may be approved by the Government, raise for the purposes of this Act, loans in any currency or currencies from the International Bank for Reconstruction and Development or from any other Bank or Institution in any country outside India, and no other provision of this Chapter shall apply to or in relation to any such loan unless the terms and conditions of the loan or the approval thereof by the Government or otherwise provided so.