AGRICULTURAL AND INDUSTRIAL CREDIT CORPORATION<br />



AGRICULTURAL AND INDUSTRIAL CREDIT CORPORATION
AN ORDINANCE TO PROVIDE FOR THE ESTABLISHMENT AND REGULATION OF THE AGRICULTURAL AND INDUSTRIAL CREDIT CORPORATION OF CEYLON.

Ordinance Nos,
19 of 1943
20 of 1943
39 of 1946
46 of 1947
Act Nos,
23 of 1949
4 of 1950
22 of 1950
29 of 1953
[24th November
, 1943
]
Short title.

1. This Ordinance may be cited as the Agricultural and Industrial Credit Corporation Ordinance.

PART I
ESTABLISHMENT AND CONTROL OF THE CORPORATION
THE CORPORATION
Establishment of the corporation.

2.

(1) A corporation to be called the Agricultural and Industrial Credit Corporation of Ceylon is hereby established.

(2) The Agricultural and Industrial Credit Corporation of Ceylon shall be a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name. It shall, subject to the provisions of this Ordinance, be capable of acquiring, holding and alienating property, movable and immovable, and of doing and performing all such acts and things as bodies corporate may do and perform.

Head office and branch offices.

3.

(1) The head office of the corporation shall be at Colombo.

(2) Such branch offices of the corporation as the board may consider necessary may be established at places in Ceylon other than Colombo.

Law governing the corporation.

4. The corporation shall be conducted and managed in accordance with the provisions of this Ordinance to the exclusion of the provisions of the Companies Ordinance and of any other written law relating to companies.


General control of the
corporation.

5. The general supervision, control and administration of the affairs and business of the corporation shall be vested in the board of directors of the corporation.


Business of the corporation.

6. The corporation is, subject to the provisions of this Ordinance, authorized to carry on and transact the several kinds of businesses specified in section 51.

THE BOARD OF DIRECTORS

Constitution of the board.

7.

. (1) The persons for the time being lawfully discharging the functions of the Minister, the Minister of Agriculture and Food and the Minister of Industries and Fisheries shall ex officio be members of the board of directors of the corporation.


[ 2, 20 of 1943.]

(2) The Minister[3] may nominate not more than five other persons (hereinafter referred to as ” the nominated directors “) to be members of the board, in addition to the ex officio members, and may at any time remove any nominated director from office.

Chairman and deputy chairman of the board.

8.

(1) The chairman of the board shall be elected by , the members of the board from amongst their number.

(2) The members of the board may, if they think necessary, elect from amongst their number a deputy chairman.

(3) The chairman of the board shall preside at every meeting of the board at which he is present.

(4) In the absence of the chairman, the deputy chairman shall preside at meetings of the board ; and, in the absence of both the chairman and the deputy chairman, a director chosen by the majority of the directors present, shall preside at any meeting of the board.

Meetings of the board.

9.

(1) A meeting of the board shall be held as often as the chairman may deem necessary :

Provided that a meeting shall be held at least once in every month.

(2) The chairman shall upon a written requisition from any two directors call a special meeting. No such special meeting shall be held unless at least four days’ notice specifying the time of such meeting and the purpose for which it is to be held has been given by notice in writing to every director.


Quorum.

10. Four directors shall constitute a quorum at any meeting of the board.


Determination of questions at meetings.

11. Any question which arises at any meeting of the board shall be decided by a majority of votes of the directors present and, in the case of an equality of votes, the director presiding at the meeting shall have a second or casting vote.


Minutes of
meetings.

12.

(1) The board shall cause minutes to be made, in books provided for the purpose, of the proceedings of every meeting of the board.

(2) The minutes of the proceedings of any meeting, if signed by the director presiding at that meeting or at the next succeeding meeting, shall be prima facie evidence of the proceedings of the meeting to which the minutes relate.


Resolution without board meeting.

13.

(1) A resolution signed by all the directors of the corporation for the time being shall be as valid and effectual as if it had been passed at a meeting of the board.

(2) Every such resolution shall be recorded in the minutes book containing the proceedings of the board as if it had been passed at a meeting of the board.


Term of office of nominated director.

14. Every nominated director shall ordinarily be appointed and hold office for a term of three years, and shall be eligible for renomination at the end of that
Period.


Remuneration of directors.

15. Every nominated director shall be remunerated from the funds of the corporation for work done by him in his capacity as a director according to such scale as the Minister[1] may determine.


Qualifications of nominate& director.

16. No person shall be qualified to be a nominated director unless-

(a) he is a British subject and has been resident in Ceylon, whether continuously or otherwise, for a period or periods amounting in all to not less than five years out of the ten years immediately preceding the date of his nomination ;

(b) being a member of the House of Representatives1 he shall resign therefrom within one month of being nominated a director ;

(c) being a whole-time salaried officer of the Government, he shall resign from such post within one month of being nominated a director.


Vacation of office of nominated director.

17. The office of a nominated director shall be vacated if such director-

(a) accepts or holds any office or place of profit under the corporation ;

(b) becomes bankrupt or is adjudicated insolvent or compounds with his creditors ;

(c) becomes of unsound mind or is adjudged to be of unsound mind ;

(d) is convicted of an offence and sentenced to imprisonment ;

(e) is absent from meetings of the board for more than three consecutive months without the leave of the board ;

(f) being a member of the House of Representatives[1] at the time of his nomination as director, fails to resign his seat in the House of Representatives [1] within one month of such nomination ;

(g) becomes a member of the House of Representatives ;[1]

(h) becomes a whole-time salaried officer of the
Government;

(i) by letter addressed to the Minister [8] resigns his
office ;

(j) is removed from office by the Minister.


Certain officers deputising for Ministers at meetings.

18.

(1)[8] Subject as hereinafter provided, any officer of Government may, by name or by office, be authorized in writing by any Minister referred to in section 7 (1) either generally to attend all meetings of the board, or specially to attend any particular meeting of the board, on his behalf :

Provided that the same officer of Government shall not attend any such meeting on behalf of more than one such Minister.

(2) Any officer authorized under subsection (1) shall, at any meeting which he is authorized to attend on behalf of any Minister referred to in section 7 (1),[6] be entitled to exercise the same privileges and rights as that Minister.[6]


Casual vacancies
among nominated directors.

19.

(1) If at any time a nominated director dies or vacates his office, the Minister[3] may nominate another person in place of the director so dying or vacating his office.

(2) The director so nominated shall hold office for the remainder of the period of office of the director in whose place he has been nominated and no longer, but shall be eligible for renomination.


Acting appointment in case nominated director unable to discharge his duties owing to illness, &c.

20. If it appears to the Minister[8] that a nominated director is unlikely to be able to discharge the duties of his office for a period of three months by reason of absence from Ceylon, illness, ill health, or any other cause whatsoever, he may appoint another person to act in the place of such director for such period as he may deem fit.


Register of directors.

21. A register showing the names, addresses and occupations of the directors for the time being of the corporation shall at all times be kept at the head office of the corporation.

FUNDS OF THE CORPORATION

Advances to corporation from
Consolidated Fund.


[ 2, 22 of 1950.]

[ [ 2, 4 of 1950.]

22.

(1) Sums not exceeding thirty million rupees in the aggregate may, at the request of the board and with the approval of the Minister of Finance,1 be advanced to the corporation out of the Consolidated Fund.1 In addition to the aforesaid sums, any sums voted for the purpose by Parliament may be advanced to the corporation out of the Consolidated Fund for carrying on and transacting the business specified in paragraph (n) of section 51 (1). All such sums shall be advanced on such terms and conditions as to the rate and payment of interest and the time and manner of repayment, as the Cabinet of Ministers may determine.

(2) The Deputy Secretary to the Treasury[1] is hereby authorized and empowered to pay or cause to be paid any sum required to be advanced under this section to the corporation out of the Consolidated Fund.[1]


Grant from Consolidated Fund towards preliminary expenses.

23.

(1) Such sums, not exceeding fifty thousand rupees in the aggregate, as may be required for the purpose of defraying the preliminary costs and expenses of the corporation may, at the request of the board, be granted to the corporation out of the Consolidated Fund.[1]

(2) The Deputy Secretary to the Treasury[1] is hereby authorized and empowered to pay or cause to be paid any sum required under this section to be granted to the corporation out of the Consolidated Fund.[1]

Power of board to raise money by debentures.

24.

(1) Subject to the provisions of section 26, the board may from time to time raise by means of debentures such sums, not exceeding fifty million rupees in the aggregate, as may be required for the purpose of carrying on the business of the corporation.

(2) In addition to the sums authorized to be raised under subsection (1), the board may, for the purpose of carrying on the business of the corporation and subject to the provisions of section 26, raise by means of debentures such further sums as may from time to time be authorized by resolution passed by the House of Representatives,1 upon motion made in that behalf by the Minister.

(3) The principal of, and interest due upon, all sums raised under this section shall be charged upon all the property and assets of the corporation.

Power of board to borrow from the public.


[ 2, 39 Of 1946.]

25.

(1) The board may, pending any issue of debentures, raise from any person, for the purpose of carrying on the business of the corporation, a loan, repayable within a period not exceeding twelve months, of such sum or sums of money and on such terms and conditions relating to the rate and payment of interest, as the Minister of Finance[1] may approve.

(2) The principal of, and interest due upon, every loan raised under subsection (1) shall, as they fall due, be paid out of the funds of the corporation, and the payment thereof shall be guaranteed by the Government of Ceylon in writing under the signature of the Deputy Secretary to the Treasury.[1]


Provisions applicable to issue of debentures.

26.

(1) The board shall, prior to each issue of debentures, with the approval of the Minister,[6] determine in respect of that issue of debentures-

(a) the maximum sum which may be raised by such debentures;

(b) the rate of interest payable upon such debentures ;

(c) the amount or amounts for which such debentures will be issued ;

(d) the time or times at which and the manner in which such debentures will be redeemed, including the circumstances in which and the conditions and restrictions subject to which all or any of such debentures may be compulsorily redeemed.

(2) Every determination under subsection (1) in respect of an issue of debentures shall be published in the Gazette prior to the date on which such issue commences.


Mode of payment of interest on and principal of debentures.

27.

(1) Subject to the provisions of subsections (2) and (3), the interest on and principal of all debentures shall be paid as they fall due from the funds of the corporation.

(2) Where the funds of the corporation are insufficient to pay the whole or any part of the interest on or the principal of any debentures, such interest and principal shall be paid from the Consolidated Fund,1 upon which they are hereby constituted a charge.


[ 2, 20 of 1943.]

(3) All sums paid out of the Consolidated Fund1 under subsection (2) shall be repaid by the corporation on such terms and conditions as to the rate and payment of interest, and the time and manner of repayment, as the Minister of Finance1 may determine.


Certificates on debentures.


[ 2, 20 of 1943.]

28. Every debenture shall be in the prescribed form and shall bear-

(a) a certificate, signed by the chairman, to the effect that the principal of, and the interest due upon, the debenture are charged upon all the property and assets of the corporation ; and

(b) a certificate, authenticated by the signature or the facsimile of the signature of the Deputy Secretary to the Treasury,1 to the effect that the payment of the principal of, and the interest due upon, the debenture is guaranteed by the Government of Ceylon.


Register of
debentures.

29. The corporation shall keep a register in which each debenture shall be entered, together with the date of issue and the name of the holder of that debenture.


Transfer of
debentures.

30. Any debenture may be transferred by the holder thereof in such manner as may be prescribed:

Provided, however, that no transfer of any debenture shall be valid until such transfer has been entered in the register and endorsed upon the debenture by an officer of the corporation thereto authorized in writing by the board.


Debentures of deceased holder.

31. Where any debenture holder has died, no person other than an executor, administrator or heir of such holder shall be recognized by the corporation as having any title to any debenture of such holder.


Evidence of title to debenture.

32. The register of debentures shall be conclusive evidence that the person entered therein as the holder of any debenture is entitled to such debenture, and of the date of issue, redemption, cancellation, transfer, or transmission of any debenture, and of all other matters entered in such register.


Cesser of interest after repayment of debenture is available.

33. With effect from the day determined in the prescribed manner for the repayment of any debenture, all interest on the principal amount secured by that debenture shall cease, whether payment of such amount is or is not demanded.


Corporation not affected with notice of trusts.

34.

(1) Save as is otherwise provided in this section, no notice of any trust in respect of any debenture shall be receivable by the corporation.

(2) Any debenture holder or any person who is an applicant for any debenture or to whom any debenture is to be transferred may, by request made in writing to the board, require that he be described in the register of debentures as a trustee, whether under a specified instrument of trust or otherwise ; and on such request being made, the board shall make such entries, in the register of debentures and in any debenture issued to such person, as the board may consider necessary for the purpose of complying with the request.

Where any request is made under this section by a debenture holder or by a person to whom a debenture is to be transferred, the debenture shall be transmitted to the board at the time when such request is made.

(3) Where any instrument of transfer of a debenture or any power of attorney or other document purporting to be executed by a debenture holder, who is described in the register of debentures as a trustee, is produced to the board, the board shall not be concerned to inquire whether the debenture holder is entitled in law to execute such instrument or other document or to give any such power ; and the board may act upon such instrument or power of attorney or document in like manner as though the debenture holder had not been described in the register as a trustee, whether he is or is not so described in such instrument, power of attorney or document, and whether he does or does not purport to execute such instrument, power of attorney or document in his capacity as a trustee.

(4) Nothing in subsection (2) or subsection (3) shall, as between trustees or as between any trustee and any beneficiary, be deemed to authorize a trustee to act otherwise than in accordance with the rules of law applicable in the case of that trustee and the terms of any instrument appointing him a trustee ; and neither the Government nor the corporation nor any person holding or acquiring any interest in any debentures shall, by reason only of any entry in the register of debentures, or of anything in any debenture or in any document or instrument relating thereto, be affected with notice of any trust or the fiduciary character of any debenture holder or of any fiduciary obligation attaching to the holder of any debenture.

(5) In this section ” trustee ” includes the executor of the last will or the administrator of the estate of a deceased person, the curator of the property of a minor, the manager of the estate of a person of unsound mind and any person holding or intending to hold any debenture on behalf or for the benefit of any other person or body of persons.

OFFICERS OF THE CORPORATION

Appointment of officers.

35.

(1) Subject as hereinafter provided, the board shall have power to appoint all such officers of the corporation (including the subordinate staff) as may from time to time be necessary for carrying on the business of the corporation :

Provided that the appointment of the general manager, assistant general manager, secretary and accountant of the corporation shall not be made without the previous approval in writing of the Minister.[3]

(2) For the purposes of subsection (I) and of sections 36 to 38, the expression ” subordinate staff ” includes only such officers of the corporation, as are by the board deemed to be members of the subordinate staff.

Certain officers to furnish security.

36. Every officer of the corporation (not being a member of the subordinate staff) shall, if called upon to do so by the board, give security to the satisfaction of the board for the due and faithful performance of his duties.


Dismissal of officers.

37. No officer of the corporation (other than a member of the subordinate staff) shall be dismissed except on a resolution of the board passed by a majo-rity of the directors for the time being and approved
by the Minister.[8]


Delegation by board of powers, &c, to officers of corporation.


[ 2, 20 of 1943.]

[ [ 3, 39 of 1946.]

38. Subject to the approval of the Minister,3 the board may in writing authorize the general manager other officer of the corporation (not being a member of the subordinate staff) to exercise, perform, or dis-charge any power, duty or function conferred or imposed upon or assigned to the board under any provision of this Ordinance other than a provision contained in any of the sections 22, 23, 24, 25, 26 or 56.


Provisions relating to losses caused to corporation or incurred by officers of corporation.

39.

(1) No director or other officer of the corporation shall be liable for any damage or loss suffered by the corporation unless such damage or loss was caused by his misconduct or wilful default.

(2) Every director, auditor, manager, secretary or other officer of the corporation shall be indemnified by the corporation for all losses and expenses incurred by him in or about the discharge of his duties except such as the board may deem to have been occasioned by his misconduct or wilful default.


Declaration of secrecy.

40. Every director, manager, auditor, officer, servant, agent, accountant, or other person employed in the business of the corporation shall, before entering upon his duties, sign a declaration pledging himself to observe strict secrecy respecting all transactions of the corporation, its clients, and all matters relating to such transactions and shall by such declaration pledge himself not to reveal any other matters which may come to his knowledge in the discharge of his duties, except-

(a) when required so to do-

(i) by the directors, or

(ii) by a court of law, or

(iii) by the person to whom such matters relate ;

(b) in the performance of his duties ; and

(c) in order to comply with any of the provisions of this Ordinance or any other law.


Right to refuse to answer
questions.

41. Every director, auditor, manager, secretary, or other officer of the corporation shall, except when required to do so by a court or by any law, decline to answer any question concerning the business of the corporation which may be put to him on any occasion
whatsoever, if he considers that the answer to such question would disclose or tend to disclose any secret of the corporation or the business or affairs of any client of the corporation.

ACCOUNTS AND AUDIT

Accounts of the corporation.

42.

(1) The board shall cause the accounts of the corporation to be kept in such form and in such manner as may be prescribed.

(2) The books of account of the corporation shall be kept at the head office of the corporation or at such other place or places as the board may determine.


Profit and loss account and balance sheet for each year.

43.

(1) The board shall cause the books of the corporation to be balanced on the thirtieth day of September in each year, and shall, as soon as may be thereafter, cause to be prepared a profit and loss account and a balance sheet containing a summary of the assets and liabilities of the corporation made up to the date aforesaid.

(2) The profit and loss account and the balance sheet shall be signed by a majority of the directors for the time being and by the general manager and the accountant of the corporation.


Contents of profit and loss account.

44.

(1) The profit and loss account shall show,
arranged under the most convenient heads, the amount of gross income, distinguishing the several sources from Which it has been derived, and the amount of gross expenditure distinguishing the expenses of establish-ment, remuneration of directors, salaries and other matters.

(2) Every item of expenditure fairly chargeable against the year’s income shall be brought to account, and, in cases where any item of expenditure which may fairly be distributed over several years has been incurred in any one year, the whole amount of such item shall be shown and, where only a portion of such amount is charged against the income of the year, the reasons for not charging the whole of such amount shall be stated.


Report of directors.

45. Every profit and loss account and balance sheet shall be accompanied by a report, signed by a majority of the directors, as to the state and condition of the affairs of the corporation.


Audit of accounts.


[ 2, 20 of 1943.]

46. The accounts of the corporation shall be audited each year by the Auditor-General (hereinafter referred to as ” the auditor “).


Auditor’s report.

47.

(1) The auditor shall examine the accounts of the corporation and ascertain the correctness of the balance sheet and report-

(a) whether he has or has not obtained all informa-tion and explanations required by him ; and

(b) whether, in his opinion, the accounts referred to in the report are properly drawn up so as to exhibit a true and correct view of the corporation’s affairs according to the best of his information and the explanations given to him and as shown by the books of the corporation.

(2) The report of the auditor shall be transmitted by him to the board.


Powers of auditor.


[ 2, 20 of 1943.]

48. For the purpose of performing his functions under section 47, the auditor shall have the same powers as a District Court-

(a) to enforce the attendance of any person and to examine any person on oath ;

(b) to enforce the production of any document ; and

(c) to issue commissions for the examination of any person on interrogatories or otherwise ;


Annual
accounts with reports of directors and auditor to be transmitted to Minister.

49. The board shall, on receipt of the auditor’s report in each year, transmit such report together with the profit and loss account and the balance sheet to which such report relates, and the report of the directors under section 45, to the Minister. [8]


Publication of accounts.

50. The profit and loss account and the balance sheet shall, together with the whole or such portions (if any) of the reports transmitted to the Minister[3] under section 49, as the Minister[3] may determine, be published in the Gazette.

PART II
BUSINESS OF THE CORPORATION
GENERAL

51.

(1) Subject to the provisions of this Ordinance, the corporation is authorized to carry on and transact the several kinds of business hereinafter specified, namely-

(a) to grant loans of money to any person for the
purpose of-

(i) the purchase or lease, or the cultivation, development or improvement of any land used or to be used for any purpose of agriculture or for the exploitation of the mineral resources thereof ;

(ii) the purchase or lease, or the construction, repair or renewal of any building, factory, mill, mine, machinery or equipment used or to be used in connexion with any agricultural or industrial undertaking ;

(iii) the manufacture or preparation of any agricultural or industrial product or commodity for sale in the market;

(iv) any purpose incidental, accessary or
ancillary to any purpose mentioned in any of the foregoing sub-paragraphs;

(v) the liquidation of any debt already incurred for any purpose mentioned in any of the foregoing sub-paragraphs ;

(b) to grant loans of money to any co-operative society for the purpose of conducting any agricultural or industrial business ;


[ 2, 20 of 1943.]

(c) to manage, supervise or control, with or without remuneration, or to participate in the management, supervision or control, with or without remuneration, of any agricultural or industrial undertaking of any client of the corporation, where such management, supervision or control, or such participation therein, appears to the board to be necessary in order to protect the interests of the corporation in any loan granted by the corporation ;

(d) to act, with or without remuneration, as the technical advisers of any client of the corporation, on any matter relating to any agricultural or industrial undertaking of such client;

(e) to set up the necessary organization for selling or marketing any product or commodity of any agricultural or industrial undertaking of any client of the corporation ;

(f) to act as the agent of any client of the corporation for the purpose of the purchase of any machinery or equipment or of any material of any description, required for the purpose of any agricultural or industrial undertaking of such client;


[ 2, 20 of 1943.]

(g) for the purpose of employing any surplus funds of the corporation, to buy, sell, invest or deal in stocks, shares, debentures, mortgages, bonds or securities issued or guaranteed by the Government of Ceylon or by the Government of any other country which is a member of the Commonwealth or any public authority registered or having its principal place of business in Ceylon ;

(h) to make arrangements for the insurance of any property mortgaged to the corporation by any
client of the corporation ;


[ 2, 20 of 1943.]

(i) to acquire and undertake the whole or any part of any business carried on in Ceylon by any person, being a business which the corporation is authorized to carry on ;

(j) to purchase, take on lease or in exchange, hire or otherwise acquire any movable or immovable property and any rights or privileges which the corporation may think necessary or convenient with reference to any business which the corporation is authorized to carry on, or the acquisition of which the corporation may deem to be necessary or advisable in order to facilitate the realization of any securities held by the corporation, or to prevent or diminish any apprehended loss or liability ;

(k) to establish and support or aid in the establishment and support of associations, institutions, trusts or schemes for the providing of pensions and of gratuities and other funds and conveniences calculated to benefit employees or ex-employees of the corporation or the dependants or connexions of such employees or ex-employees ;

(l) to improve, manage, develop, exchange, lease, mortgage, dispose of, sell, turn to account or otherwise deal with all or any part of the property and rights of the corporation, including any property, movable or immovable, on the security of which the corporation may have made any loan or over which the corporation may have any power of disposal;

(m) to give any guarantee or indemnity and to enter into any arrangements with the Government or any local authority or with any body corporate or other person, in order to obtain any rights, concessions and privileges that may seem to the corporation to be conducive to any object of the corporation ;


[ 3, 4 of 1950.]

(n) to grant loans of money to any person for the purpose of carrying out any scheme approved
by the Minister of Finance for the development of agriculture or industry ;


[ 2, 20 of 1943.]

(o) generally to take or concur in taking all such steps and proceedings as the corporation may deem to be best calculated to uphold and support the credit of the corporation and to obtain and justify public confidence, and to do all things incidental or conducive to the attainment of the objects, or the exercise of the powers, set out in the preceding paragraphs.

(2) Any object mentioned in any paragraph of subsection (1) shall not, except where the context expressly so requires or where any limitation or restriction has been prescribed, be in any way limited or restricted by reference to or inference from the terms of any other paragraph of that subsection or the objects therein specified, or otherwise.


[ 2, 20 of 1943.]

(3) In this section, ” client of the corporation” means a person to whom the corporation has lent any money in accordance with the provisions of this Ordinance.

PROVISIONS RELATING TO ALL LOANS BY THE CORPORATION

Refusal to consider applications in certain cases.

52. Where any person has applied to the corporation for a loan of money and it appears to the board that the case is one in which the application should more appropriately be made to the Ceylon State Mortgage Bank, the board shall refuse to consider the application:

Provided that the refusal by the board to consider any application made by any person shall not be deemed or construed to prevent the making of a fresh application to the corporation by that person.


No loans to
be given except on certain
securities.

53. Subject as hereinafter provided, no loan of money shall be granted unless its repayment is secured-

(a) by a primary mortgage of immovable property in Ceylon ; or

(b) by a primary mortgage of movable property in Ceylon ; or

(c) by a mortgage of the crops or farming stock of any agricultural land in Ceylon, in accordance with any written law now in force or hereafter to be enacted which is applicable to the corporation,

Provided that where a loan has been granted by the corporation on the primary mortgage of any property, movable or immovable, and that property is not encumbered by any mortgage to any person other than the corporation, an additional loan may, subject to the other provisions of this Ordinance relating to loans, be granted on the security of a secondary mortgage of that property.


Further restrictions regarding security for loans, &c.

54. No loan shall be granted unless the board shall first-

(a) have estimated the value of the property offered as security for the loan, due regard being had to the market value of each property, the income derived from it at the time the value is estimated and the income likely to be derived from it in the future, the possibility of its depreciation in value in the future, the risks incidental to a forced sale, and any other circumstances which in the opinion of the board may affect the value of such property ;

(b) have satisfied itself that the amount of the loan to be granted on the security of such property, together with such amount, if any, as may be outstanding in respect of any earlier loan on the security of the same property, does not exceed such proportion of the value of the property as so estimated as the board may from time to time prescribe ;

(c) have satisfied itself that the borrower has a valid title to the property offered as security ;

(d) have satisfied itself that the purpose for which the loan is required is one for which loans may be made under this Ordinance by the corporation ; and

(e) have satisfied itself that there is no other good or valid reason why the loan should not be granted.


Rate of interest on loans.

55. No loan of any amount or for any purpose shall
be granted at a rate of interest lower than such rate as may from time to time be fixed by the board and approved by the Minister[3] for loans of that amount, or for loans for that purpose or a similar kind or class of purpose, as the case may be.


Loan not to be granted except upon resolution.

56. No loan shall be granted except upon a resolution by the board, and no loan exceeding ten thousand rupees shall be granted except upon a resolution passed by the favourable votes of at least four directors.


Loan not to be granted to certain classes of persons.

57. No loan shall be granted to any director, or to any parent, wife, brother, sister, child or stepchild of any director, nor, except with the approval of a two-thirds majority of the directors for the time being, to any firm, company, or corporation of which a director or the wife of a director is a partner, director or shareholder or in which a director or the wife of a director is in any way directly interested.


Withdrawal of grant of a loan.

58. At any time after the grant of a loan has been approved by the board and before the actual payment of the money, the board may, in its discretion and without assigning any reason therefor, cancel the grant of the loan or modify the conditions on which the loan is to be made or withhold payment of the whale or any portion of the money.


Power of board to investigate purpose to which loan is applied.

59. The board may call upon any person to whom a loan has been granted to satisfy the board that the loan has been or is being applied to the purpose for which it was granted, and the person so called upon may adduce evidence before the board or any director authorized by the board to take such evidence, to prove that the loan has been or is being applied for such purpose.


Power of board to require additional security or recall loan.

60.

(1) The board may at any time, in its discretion and without assigning any reason therefor, by written order direct-

(a) that additional security to the satisfaction of the board be provided in respect of any loan before a date fixed by the board,

(b) that any loan be repaid, either in full or in part, before a date fixed by the board.

(2) Where an order issued under subsection (1) is not complied with before the date fixed, by the board, default shall be deemed to be made in respect of the whole of the unpaid portion of the loan and the interest due thereon up to date and, where the loan was granted on the mortgage of any immovable property, the pro-visions of sections 68 to 84 shall apply accordingly.


Change of
security.

61. The board may accept new security in lieu of the whole or any part of any security it has already accepted for any loan, if the security tendered in substitution is such that the board would be entitled to accept it, either alone or together with any portion of the original security which is to remain, as security for a new loan of an amount equal to the total principal and interest still outstanding on account of the original loan.

62. Every loan shall be repaid by instalments or equated payments of such amounts, and made at such intervals, as the board may direct or in such other manner as the board may determine.


Registered address of borrower, &c.

63. Every person-

(a) to whom a loan is granted by the corporation ;
or

(b) who has obtained probate of the will or letters of administration to the estate of a person to whom a loan has been granted by the corporation or who has, under the provisions of section 72, been appointed to represent the estate of a deceased borrower ; or

(c) to whom any right, title or interest whatsoever in any property, or in any part of any property, movable or immovable, mortgaged to the corporation as security for any loan has passed, whether by voluntary conveyance or by operation of law,


Service of notice on borrower, &c.

64. Any notice which is required under this Ordinance to be served on any person to whom the provisions of section 63 apply shall be deemed to have been duly served on that person if it is sent by post in a registered letter directed to that person at the address registered by him under that section, and the service shall be deemed to have been effected at the time at which the letter would be delivered in the ordinary course of post:

Provided that where any such person fails to register his address under that section, the corporation shall publish, in the Gazette and in a daily newspaper, a notice addressed to him and such notice shall be deemed to be duly given to that person on the day on which such notice is published.

PROVISIONS RELATING TO LOANS BY THE CORPORATION ON
THE SECURITY OF IMMOVABLE PROPERTY

Priority of charge created by loan made by corporation.

65. Where a loan is granted by the corporation on
the mortgage of any immovable property, that property shall from and after the date of the registration of such mortgage be charged with the payment of the loan with interest in priority to every other debt, mortgage or charge affecting it, except a debt which is secured by a mortgage duly registered prior to such date and which is due to a creditor who in good faith advanced the money before the loan was granted by the corporation.


Form of
mortgage of immovable property.

66.

(1) Every mortgage of immovable property executed in favour of the corporation as security for any loan of money shall be substantially in the form A in the Schedule.

(2) Any such mortgage may include a covenant that a higher rate of interest than that on which the loan was granted shall be paid if the borrower fails or neglects to make any payment due on account of interest, principal or otherwise under the mortgage, in full and on the due date.


Default of payment.

67. Where default is made in the payment of any sum due on any loan granted on the mortgage of immovable property, whether that sum is due on account of Principal or interest or of both, default shall be deemed to have been made in respect of the whole of the unpaid Portion of that loan and the interest due thereon up to date.


Action by board where default is made.

68. Where under the provisions of this Ordinance, default is made or deemed to have been made in respect of the whole of the unpaid portion of any loan and the interest due thereon, the board may, in its discretion, take action as specified either in section 69 or in section 71 :


Provided that where the board has in any case taken action, or commenced to take action, in accordance with section 69, nothing shall be deemed to prevent the board at any time from subsequently taking action in that case by resolution under section 71 if the board deems it necessary or advisable to do so.


Authorization of manager to take possession of mortgaged property.

69. Subject to the provisions of section 72, the board may by resolution to be recorded in writing authorize any person specified in the resolution to enter upon any immovable property mortgaged to the corporation as security for any loan in respect of which default has been made, to take possession of and to manage and maintain such property, and to exercise the same powers in the control and management of such property as might have been exercised by the mortgagor if he had not made default.


Procedure where manager is appointed.

70.

(1) Any person authorized by resolution of the board under section 69 in respect of any property shall be entitled generally to take action in terms of the resolution and in particular-

(a) to sell the produce of such property ;

(b) to receive the rents, profits or other income from such property ;

(c) to pay the expenses incurred in the control and management of such property out of the income from such property ;

(d) to appropriate to himself out of such income such sum (if any) as the board may deem fit to fix as remuneration for his services ;

(e) to remain in possession of such property until all moneys due to the corporation under the mortgage on such property have been fully paid or until he is directed by the board to yield possession of such property under subsection (2).

(2) Every person authorized by resolution of the board under section 69 in respect of any property shall-

(a) pay monthly, out of the income of such property such sum (if any) as the board may in its discretion fix, to the mortgagor for his maintenance ;

(b) pay quarterly or as otherwise directed by the board to such person or persons and in such manner as the board may direct the balance of the income from such property remaining after the payments herein before authorized have been made ;

(c) keep and render to the board at such intervals as the board may determine, clear and accurate records of all sums received or paid out by him in respect of such property;

(d) yield possession of such property to the mortgagor or some other person as directed by the board and pay to the board any balance of the income from such property remaining in his hands after the payments herein before authorized have been made.

(3) The board shall when all sums due to the corporation under the mortgage have been fully paid surrender possession of the mortgaged property to the mortgagor and return to him any balance remaining of the income from such property.


Authorization of sale of mortgaged property.

71. Subject to the provisions of section 72 the board may by resolution to be recorded in writing authorize any person specified in the resolution to sell by public auction any immovable property mortgaged to the corporation as security for any loan in respect of which default has been made in order to recover the whole of the unpaid portion of such loan, and the interest due thereon up to the date of the sale, together with the moneys and costs recoverable under section 78.


Where
borrower is dead.

72.

(1) Save as otherwise provided in subsection (2), the provisions of sections 69 and 71 shall apply in the case of any default notwithstanding that the borrower may have died or that any right, title or interest whatsoever in the property mortgaged as security for the loan may have passed by voluntary conveyance or by operation of law to any other person.

(2) Where the borrower is dead and probate of his will or letters of administration to his estate have not been issued, the District Court of Colombo or the District Court of the district in which that property is situate may, upon application made in that behalf by the board and after service of notice of the application on such persons, if any, as the court may order, and if satisfied that the grant of probate or the issue of letters of administration is likely to be unduly delayed, appoint a person to represent the estate of the borrower for the purposes of this section ; and the provisions of sections 69 and 71 shall not apply in the case of any default made by the borrower unless and until a representative of his estate is appointed under this section.


Notice of resolution of board to sell
mortgaged property.

73. Notice of every resolution under section 71 authorizing the sale of any property shall be published in the Gazette and in a daily newspaper printed in ‘ English and copies of such notice shall be served on the borrower, if he is alive, and on every person who has, in respect of that property, registered his address under section 63.


Notice of sale.

74. Notice of the date, time and place of every sale shall, not less than fourteen days before the date fixed for the sale, be published in the Gazette and copies of such notice shall be-

(a) served on the borrower, if he is alive, and on every person on whom notice of any resolution is required to be served under section 73 ;

(b) posted on or near the property which is to be sold ; and

(c) affixed to the walls of the kachcheri and the several District Courts and Magistrates’ Courts within the jurisdiction of which the property is situate.


Payment before sale.

75.

(1) If the amount of the whole of the unpaid portion of the loan (together with all interest due thereon according to the terms of the mortgage), and of the moneys and costs, if any, recoverable by the board under section 78 is tendered to the board at any time before the date fixed for the sale, the property shall not be sold and no further steps shall be taken in pursuance of the resolution under section 71 for the sale of that property.

(2) If the amount of the instalment or other payment in respect of which default has been made, together with any interest due thereon according to the terms of the mortgage, and of the moneys and costs, if any, recoverable by the board under section 78, is tendered to the board at any time before the date fixed for the sale, the board may, in its discretion, direct that the property shall not be sold, and that no further steps shall be taken in pursuance of the resolution under section 71 for the sale of that property.


Upset price.

76. The board may fix an upset price below which the property shall not be sold to any person other than the corporation.


Default in respect of one of several loans on same property.

77. In any case where two or more loans have been granted by the corporation on the security of the same property and default is made in the payment of any sum due upon any one or more of such loans, the foregoing Provisions of this Ordinance shall apply notwithstanding that default may not have been made in respect of the other loan or any of the other loans, and the board may, in any such case, by resolution under section 71 authorize the sale of the property for the recovery of the total amount due to the corporation in respect of both or all the loans, as the case may be, and the provisions of this Ordinance shall apply accordingly.


Recovery of expenses and costs incurred by the corporation.

78. In addition to the amount due on any loan, the board may recover from the borrower, or any person acting on his behalf-

(a) all moneys expended by the corporation in accordance with the covenants contained in the mortgage bond executed by the person to whom the loan was made, in the payment of premiums and other charges in respect of any policy of insurance effected on the property mortgaged to the corporation, and in the payment of all other costs and charges authorized to be incurred by the corporation, under the covenants contained in such mortgage bond ; and

(b) the costs of advertising the sale and of selling the mortgaged property :


[ 2, 20 of 1943.]

Provided that the costs incurred under this paragraph shall not exceed such percentage of the loan as may from time to time be fixed by resolution of the board.


Payment of excess balance.

79. If the mortgaged property is sold, the board shall, after deducting from the proceeds of the sale the amount due on the mortgage and the money and costs recoverable under section 78, pay the balance remaining, if any, either to the borrower or any person legally entitled to accept the payments due to the borrower, or, where the board is in doubt as to whom the money should be paid, into the District Court of the district in which the mortgaged property is situate.


Certificate of sale.

80.

(1) If the mortgaged property is sold, the board shall sign a certificate of sale and thereupon all the right, title and interest of the borrower to and in the property shall vest in the purchaser ; and thereafter it shall not be competent for any person claiming through or under any disposition whatsoever of the right, title or interest of the borrower to and in the property, made or registered after the date of the mortgage of the property to the corporation, in any court to move to invalidate the sale for any cause whatsoever or to maintain any right, title or interest to or in the property as against the purchaser.

(2) A certificate signed by the board under subsection (1) shall be conclusive proof, with respect to the sale of any property, that all the provisions of this Ordinance relating to the sale of that property have been complied with.

(3) If the purchaser is some person other than the corporation, the certificate shall be substantially in the form B in the Schedule and, if the purchaser is the corporation, the certificate shall be substantially in the form C in that Schedule.

(4) Every certificate of sale shall be liable to stamp duty and charges as if it were a conveyance of immovable property and to any registration and other charges authorized by law, all of which shall be payable by the purchaser.


Order for
delivery of possession.

81.

(1) The purchaser of any immovable property sold in pursuance of the preceding provisions of this Ordinance shall, upon application made to the District Court of Colombo or the District Court having jurisdiction over the place where that property is situate, and upon production of the certificate of sale issued in respect of that property under section 80 be entitled to obtain an order for delivery of possession of that property.

(2) Every application under subsection (1) shall be made, and shall be disposed of, by way of summary Procedure in accordance with the provisions of Chapter XXIV of the Civil Procedure Code; and on all documents filed for the purpose of each such application and on all proceedings held thereupon, stamp duties and other charges shall be payable at the respective rates payable under any written law for the time being in force, on applications for, and proceed-ings connected with or incidental to, the execution of a decree of a District Court for the delivery of possession of any immovable property of the same value as the land to which such application relates,

(3) Where any immovable property sold in pursuance of the preceding provisions of this Ordinance is in the occupancy of the debtor or of some person on his behalf or of some person claiming under a title created by the debtor subsequently to the mortgage of the property to the corporation, the District Court shall order delivery to be made by putting the purchaser, or any person whom he may appoint to receive possession on his behalf, in possession of the property.

(4) Where any immovable property sold in pursuance of the preceding provisions of this Ordinance is in the occupancy of a tenant or other person entitled to occupy the same, the District Court shall order delivery to be made by affixing a notice that the sale has taken place, in English and in the Sinhalese and Tamil languages, in some conspicuous place on the property, and proclaiming to the occupant by beat of tom-tom, or in such other mode as may be customary, at some convenient place, that the interest of the debtor has been transferred to the purchaser. The cost of such proclamation shall be fixed by the court and shall in every case be prepaid by the purchaser.

(5) Every order under subsection (3) or subsection (4) shall be deemed, as the case may be, to be an order for delivery of possession made under section 287 or 288 of the Civil Procedure Code, and may be enforced in like manner as an order so made, the debtor and’ the purchaser being deemed, for the purpose of the application of any provision of that Code, to be the judgment-debtor and judgment-creditor, respectively.


Cancellation of sale.

82. Where the property sold has been purchased on behalf of the corporation, the board may at any time before it resells that property, cancel the sale by an endorsement to that effect on a certified copy of the certificate of sale, upon the debtor or any person on his behalf paying the amount due in respect of the loan for which the property was sold (including the costs of seizure and sale) and interest on the aggregate sum at a rate not exceeding the prescribed rate Such an endorsement shall, upon registration in the office of the Registrar of Lands, revest the property in the debtor as though the sale under this Ordinance had not been made.


Resale by corporation.

83. If the property so sold has been purchased on behalf of the corporation, and the sale is not cancelled under section 82, the board may, at any time, resell the property and transfer to the purchaser by endorsement on a certified copy of the certificate referred to in subsection (3) of section 80, all the right, title and interest which would have been acquired by the purchaser at the original sale. The endorsement shall be liable to the same stamp duty and charges as a certificate to a purchaser at the original sale, and shall, when it is registered in the office of the Registrar of Lands, vest such right, title and interest as aforesaid in the purchaser.


Board not precluded from other methods of recovery.

84. Nothing in sections 68 to 83 shall be deemed to preclude the board from recovering the amount due on any mortgage bond in accordance with the provisions of any other written law.


Power of board to inspect valuation rolls of local rating or taxing authority.

85. For the purpose of deciding whether any immovable property tendered as security for a loan should or should not be accepted, the board shall have access without fee or charge to the valuation roll of any local rating or taxing authority, and the officers of every such authority shall upon application supply to the board full particulars as to any valuation of property in respect of which such authority is empowered under the provisions of any law to levy any rate or tax.

PART III
GENERAL
RULES

Rules made by the board.

86.

(1) The board may make rules for or in respect
of all or any one or more of the following matters :-

(a) all matters stated or required by this Ordinance to be prescribed ;

(b) the payment and recovery of fees to be paid by
applicants for loans in respect of the valuation of property offered as security, the examination of the applicant’s title to any such property, the preparation, perfection and registration of mortgage bonds and other instruments and of any other service performed by any person acting on behalf of the corporation in connexion with applications for loans ;

(c) the payment and recovery of fees and other char-
ges in respect of any work done or any service rendered by or on behalf of the corporation in the transaction of any business under this Ordinance ;

(d) the forms to be used by the corporation, or by
any person transacting business with the corporation under this Ordinance ;

(e) the powers, duties and functions of the various
officers and employees of the corporation ;

(f) the payment from the funds of the corporation of
remuneration (including allowances for travelling) to officers and employees of the corporation or to other persons performing services for the corporation in the transaction of any business under this Ordinance, and the scales in accordance with which such payment shall be made ;

(g) the issue, registration, transfer, redemption,
(including compulsory redemption) and cancellation of debentures, and all matters incidental to or consequential upon such issue, registration, transfer, redemption or cancellation ;

(h) the mode and manner of payment of interest on debentures ;

(i) the issue of debentures in the names of minors or to any particular classes of persons, and the mode and manner of payment of interest on debentures so issued ;

(j) the payment of a higher rate of interest than that on which any loan is granted in cases where the borrower has failed or neglected to make any payment due to the corporation on account of interest, principal or otherwise, in full and on the due date ;

(k) all other matters not herein specially mentioned which may be necessary for the conduct of business by the corporation, the regulation of its funds, the prevention of the evasion or violation by any person of any provision of this Ordinance, and generally for fully and efficiently carrying out or giving effect to the objects and purposes of the corporation.


[ 2, 20 of 1943.]

(2) All rules made under subsection (1), (other than a rule made under paragraph (e) or paragraph (f) of that subsection), shall be submitted to the Minister[3] for ratification and, when ratified, shall be published in the Gazette together with a notification of such ratification.


[ 2, 20 of 1943.]

(3) Every rule made under subsection (1), (other than a rule made under paragraph (e) or paragraph (f) of that subsection), shall, upon notification in the Gazette of the ratification of such rule by the Minister,3 be as valid and effectual as if it were herein enacted.


[2, 20 of 1943]

(4) Every rule made under paragraph (e) or paragraph (f) of subsection (1) shall be submitted to the Minister[3] for ratification and, when ratified, shall be as valid and effectual as if it were herein enacted.

MISCELLANEOUS

Contracts, &c, on behalf of the corporation.

87. No person other than the directors and persons thereunto expressly authorized by the board and acting within the limits of the authority so conferred on them shall have any authority to enter into any contract so as to impose thereby any liability on the corporation or otherwise to pledge the credit of the corporation, or to make, draw, accept or indorse any promissory note, bill of exchange, cheque or order for the payment of money in the name or on behalf of the corporation.


Execution of deeds abroad.

88.

(1) The corporation may, by writing under its common seal, empower any person either generally or in respect of any specific matter, as its attorney, to execute deeds on its behalf in any place not situate in Ceylon.

(2) A deed signed by such an attorney on behalf of the corporation and under his signature or seal shall bind the corporation and have the same effect as if it were under its common seal.


Receipts on behalf of corporation.

89. A receipt signed by two directors or by any person expressly authorized by the board to give receipts shall be an effectual discharge for moneys paid to the corporation.


Common seal of corporation.

90.

(1) The board shall from the funds of the corporation provide a common seal for the purposes of the corporation and may from time to time change such seal.

(2) The common seal shall be kept by such person and in such manner as the board may from time to time determine, and shall not be used except by the authority of the board and in the presence of at least two directors, who shall sign the document to which the seal is affixed.


Minister’s powers to order investigation, winding up, &c.

91. The Minister[1] may at any time if it appears to him expedient so to do-

(a) direct any person or persons to inquire into and report to him upon the working and financial condition of the corporation ;

(b) direct that the affairs of the corporation be wound up ;

(c) issue such incidental, consequential or supplemental directions as may appear to him to be necessary for the purpose of giving effect to any direction issued by him under paragraph (a) or paragraph (b).

Interpretation.

92 In this Ordinance, unless the context otherwise
requires-

” agriculture ” includes the breeding, rearing or keeping of animals of any kind (including birds and insects), dairying and the pasturing of animals, and cognate words shall be construed accordingly ;

” board ” means the board of directors of the corporation ;

” corporation ” means the Agricultural and Industrial Credit Corporation of Ceylon established under this Ordinance ;

” director ” means a person holding the office of a director of the corporation ;

” prescribed ” means prescribed by rules made under this Ordinance ;

” rule ” means a rule made by the board under this Ordinance.


Schedules

Chapter 402, Volume No. 12 Page No.155.