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Short title.
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1. This Act may be cited as the People’s Bank Act.
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Establishment of the People’s Bank.
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2.
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(1) There shall be established a bank which shall be called the People’s Bank (hereafter in this Act referred to as the Bank) and which shall consist of the persons who are for the time being shareholders of the Bank,
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(2) The Bank shall by the name assigned to it by subsection (1) be a body corporate and shall have perpetual succession and a common seal and may sue and be sued in such name.
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Seal of the Bank.
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3.
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(1) The seal of the Bank shall be judicially noticed and shall be in the custody of the Board of Directors of the Bank.
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(2) The seal of the Bank may be altered in such manner as may be determined by the Bank-
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4. The purposes of the Bank shall be
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(1) to develop and assist
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(a) the Co-operative Movement of Sri Lanka;
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(2) to carryon the business of a
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5.
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(1) In carrying out its purposes, “-he Bank may exercise, perform and do all or any of the following powers, acts and things, subject however to the restrictions, qualifications and limitations set out in subsection (3) and (4) of this section:
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(a) to establish, carry on, develop and extend in Sri Lanka and elsewhere the business of banking within all its branches and departments;
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(b) to grant short-term, medium-term and long-term loans, overdrafts, advance. and other accommodations;
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(c)
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(i) to open, maintain and manage current, deposit savings and other accounts;
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(ii) to discount, buy, sell and deal in bills of exchange, promissory notes, hoondies, poorjas, coupons, drafts, bills of lading warrants, debentures, certificates, scrip and other instruments and securities, whether transferable or negotiable or not transferable or not negotiable;
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(iii) to grant and issue letters of credit and circular notes;
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(iv) to buy, sell and deal in bullion and specie and engage in operations in exchange;
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(v) to negotiate loans and advances, to receive money, securities and valuables on deposit, or for safe custody, or otherwise;
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(vi) to collect and transmit money and securities;
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(d) to manage property and transact any kind of agency business which is normally transacted by bankers ;
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(e) to borrow or raise money in such manner as the Bank shall think fit, and to secure the repayment of any money borrowed, raised or owing by mortgage, charge or lien upon the whole or any part of the bank’s property or assets whether present or future including its uncalled capital, and also by a similar mortgage, charge or lien to secure and guarantee the performance by the bank of any obligation or liability it may undertake;
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(f) to lend and advance money, securities and property or give credit to such persons, firms or companies and on such terms as may seem expedient and either with or without security, and if with security, upon such security and with such conditions ;’.8 may from time to time be deemed to be advisable;
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(g) to buy, sell, invest, underwrite, deal in and dispose of stocks, shares, debentures, mortgages, bonds, or securities issued or guaranteed by the Government of Sri Lanka or by any company or corporation registered or having its principal place of business in Sri Lanka:
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Provided, however, that the Bank. shall not enter into any transaction affecting the stocks, shares, debentures, mortgages, bonds or securities issued or guaranteed by any such company or corporation except on the recommendation of the General Manager of the Bank and with the approval of the Directors of the Bank given by a resolution passed by not less than three-fifths of such Directors at a meeting of them at which anyone of them who, or whose wife or dependent child, is a director or shareholder of that company or corporation shall not be present during the consideration of the resolution and shall not vote on the resolution;
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(h) to purchase, take on lease or in exchange, hire, or otherwise acquire. any immovable or movable property and any rights or privileges;
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(i) to mortgage, pledge, sell, give on lease or otherwise dispose of an) immovable or movable property;
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(j) to enter into any arrangement for sharing profits, union of interest, co-operation, joint adventure, reciprocal concession or otherwise with any person or company carrying OD or engaged in any business or transaction which the Bank is authorized to carryon or engage in ;
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(k) to undertake and execute any trust. the undertaking whereof may seem desirable, and also to undertake the office of executor, administrator, receiver, treasurer, or registrar, and to keep for any company, Government, authority or body, any register relating to any stocks, funds, shares or securities, or to undertake any duties in relation to the registration of transfers, the issue of certificates, or otherwise;
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(l) to establish and support or aid in the establishment and support of associations, institutions, trusts, provident. funds, schemes for the providing of pensions and of guarantee and other funds and conveniences calculated to benefit employees or ex-employees of the Bank or the dependents,. heirs of such persons and to grant pensions and allowances, and to make payments towards insurance, and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public general or useful object;
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(m) to construct buildings, on any land belonging to or taken on lease by the bank, and to improve, manage. develop, exchange, lease, mortgage, dispose of, sell, turn to account or otherwise deal with all or any pan of the property and rights of the bank ;
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(n) to do all or any of the above things in Sri Lanka or outside Sri Lanka as principals, agents, contractors”, trustees or otherwise and by or through trustees, agents or otherwise either by itself or in conjunction with others;
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(o) to take or agree to take all such things and proceedings as may seem expedient for the purpose of upholding and supporting the credit of the bank, and to obtain and justify public confidence and to avert or minimize financial disturbances which might affect the bank;
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(p) to facilitate the registration or recognition of such Bank in any country outside Sri Lanka;
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(q) to give any guarantee or indemnity and to enter into any arrangements with any Government or any Inca! authority in order to obtain any rights, concessions and privileges which are necessary for the exercise of its powers by the Bank;
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(r) to form any company for carrying on any business the Bank is permitted to engage in, or for assisting or developing any business, or for enhancing the value of any property of the Bank, and to acquire and, undertake the business of, purchase any interest in, or acquire or hold shares of stock in, any company having objects similar to hose for which the bank is authorized to. form any company;
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(s) to employ such officers and servant. as may be necessary for carrying out the work of the Bank;
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(t) to make rules in respect of the conditions of service and for the disciplinary control of the officers and servants of the Bank;
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(u) to enter into contracts;
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(v) to carryon the business of a pawnbroker subject to such conditions as may be prescribed;
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(w) to provide technical assistance to any person to whom the Bank. grants any loan, overdraft, advance or other accommodation and to undertake or sponsor the training of persons in assessing the value of land and the creditworthiness of borrowers, in assaying gold, in banking and in finance;
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(x) to guarantee loans raised or to be raised by industrial, and agricultural enterprises from approved credit institutions;
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(y) to acquire and undertake the whole or any part of the banking and discount business of any person or company carrying on business which the Bank is authorized to carryon:
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Provided, however, that the above-mentioned powers shall be exercised subject to the approval of at least four Directors ‘of the Bank given after considering the written observations of the General Manager of the Bank, and with the prior written approval of the Minister ;
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(z) to sell, dispose of the entire undertaking of the Bank or any part thereof, for such consideration as the Bank may think fit, and in particular for shares, debentures or securities of any other bank or to amalgamate the Bank’s business with that of any other Bank :
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Provided, however, that the above-mentioned powers shall be exercised subject to the approval of at least four Directors of the Bank given after considering the written observations of the General Manager of the Bank and with the prior written approval of the Minister;
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(aa) to engage in hire-purchase business receive discounts, commissions and other remunerations; and
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(bb) to do all things incidental or conducive to achieve all or any of its objects, or necessary or for the exercise of its powers.
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(2) The provisions of subsection (1) shall not, except where the context expressly so requires, be in any way limited or restricted by reference to, or inference from the provisions contained in any other paragraph or any power therein specified, and the powers thereby conferred shall not be deemed merely subsidiary or auxiliary to the powers mentioned in subsection (1) but the bank shall, except when the context expressly requires otherwise, have full powers to exercise all or any of the powers conferred by any paragraph of subsection (1) within Sri Lanka or in any country outside Sri Lanka.
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(3) The funds of the Bank shall not be carried on subject to the following restrictions and qualifications:
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(a) the funds of the Bank shall not be expended in the purchase of or dealing in its own shares, nor shall such funds be lent upon the security of its own shares.
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(b) no loan, overdraft, advance or other accommodation shall be granted by the Bank on the guarantee of an employee of the Bank to any person except to another employee of the Bank.
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(4) All the powers contained in subsections (1) and (2) shall be read and construed subject to the restrictions and qualifications set out in subsection (3), and in case of conflict or inconsistency the provisions of subsection (3) of this section shall prevail.
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(5) The Pawnbrokers Ordinance (Chapter 90) shall not apply to the Bank when the Bank carries on the business of a pawnbroker. “.
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Principal place of business and branches and agencies of the Bank.
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6. The bank shall have its principal place of business in Colombo and may have such branches and agencies as may be necessary for the proper conduct of the business of the Bank.
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Management of affairs and business of the Bank.
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7.
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(1) The general supervision, control and administration of the affairs and business of the Bank shall be vested in the Board of Directors of the Bank (hereafter in this Act referred to as the Board).
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(2) The Board may exercise all or any of the powers of the Bank.
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8.
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(1) The Board shall consist of ten directors appointed by the Minister, two of whom shall be nominated by the Minister in charge of the subject of Co-operatives.
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(2) A person shall be disqualified for being appointed or continuing as a director if he-
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(a) is a Member of Parliament; or
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(b) is under any law in force in Sri lanka, found or declared to be of unsound mind; or
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(c) is a person who, having been declared an insolvent or bankrupt under any law in force in Sri Lanka or in any other country, is an undischarged insolvent or bankrupt; or
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(d) is convicted of an offence involving moral turpitude and punishable with imprisonment for a term of not less than six months ; or
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(e) is a director or employee of a commercial bank other than the Bank.
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(3) Any director may resign from office by letter in that behalf addressed to the Minister.
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(4) The Minister may, by Order published in the Gazette, remove a director from office without assigning a reason therefor and such removal shall not be called in question in any court. A director in respect of whom an Order is made under this subsection shall be deemed to have vacated office on the date of publication of that Order in the Gazette.
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(5) A director shall, subject to the provisions of subsections (3) and (4), hold office for a period of three years from the date of his appointment to such office :
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Provided that a director appointed in place of a director who dies or resigns or otherwise vacates office, shall, unless he earlier vacates office, hold office for the unexpired part of the term of office of the director whom he succeeds.
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(6) Where any director becomes, by reason of illness, infirmity or absence from Sri Lanka, temporarily unable to discharge the functions of his office, the Minister may appoint another person to act as director in his place.
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(7) Any director other than a director who has been removed from office under subsection (4) shall be eligible for reappointment.
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(8) All or any of the directors may be paid such remuneration out of the funds of the Bank as may be determined by the Minister.
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(9) The quorum for any meeting of the Board shall be five.
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(10) Subject to the provisions of subsection (9), the Board may regulate the procedure in regard to the meetings of such Board and the transaction of business at such meetings.
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(11) No act or proceeding of the Board shall be invalid by reason only of the existence of a vacancy among the directors or any defect in the appointment of a director.
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General body of the Bank.
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9.
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(1) There shall be a general body of the Bank consisting of the Secretary to the Treasury, the members of the Board and the persons elected by co-operative societies which are shareholders of the Bank to represent such societies in that body.
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(2) Regulations may be made as to the number of persons who may be elected by co-operative societies which are shareholders of the Bank as their representatives in the general body of the Bank, the qualifications to be possessed by such persons and the procedure to be followed in the election of such persons.
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(3) The general body of the Bank shall not be disqualified from performing the functions vested in it by this Act by reason only of the existence of any vacancy among its members.
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The Chairman of the Board.
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10.
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(1) The Minister shall appoint a Chairman of the Board from among the Directors.
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(2) If the Chairman of the Board is by reason of illness, infirmity or absence from Sri Lanka, temporarily unable to perform the duties of his office, the Minister may appoint another director to act in his place.
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(3) The Minister may, without assigning any reason, terminate the appointment of the Chairman of the Board, and such termination shall not be called in question in any court.
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(4) The Chairman of the Board may resign from the office of Chairman by a letter in that behalf addressed to the Minister.
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(5) The Chairman of the Board shall, unless he earlier vacates the office of Chairman by resignation or removal, hold that office as long as he is a director.
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Director to disclose his interest in any loan or other accommodation to be considered by the Board.
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11. A director who is directly or indirectly interested in any loan or other accommodation to be considered by the Board shall disclose the nature of his interest to the Board and shall not be present while the Board is considering such loan or other accommodation.
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12.
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(1) The authorized capital of the bank shall be one thousand million rupees divided into twenty million shares of fifty rupees each.
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(2) The paid-up capital of the bank shall be such amount as may be determined from time to time by the Minister by Order published in the Gazette.
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Sale of shares.
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13.
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(1) No shareholder of the Bank shall sell his shares to any person other than a co-operative society or the Secretary to the Treasury in his official capacity.
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(2) The Secretary to the Treasury on being authorized in that behalf by the Minister in charge of the subject of Finance may sell to any co-operative society any shares held by him for and on behalf of the State at not less than the par value of those shares, and the proceeds of the sale shall be paid to the Consolidated Fund.
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(3) The Secretary to the Treasury may, with the approval of the Minister in charge of the subject of Finance, purchase any shares offered to him for purchase under subsection (1), and the purchase price shall be paid out of the Consolidated Fund. All shares purchased by the Secretary to the Treasury shall be held by him for and on behalf of the State.
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Liability of a shareholder.
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14. The liability of a shareholder shall be limited to any sum due from him to the Bank in respect of any shares allotted to him.
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Sums to be granted or lent by Government to the Bank.
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15.
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(1) The Government shall-
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(a) grant to the Bank out of top Consolidated Fund-
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(i) a sum of five hundred thousand rupees out of which the preliminary expenses connected with the establishment of the Bank, other than any expenses relating to the construction of buildings, shall be defrayed and any balance of which after such preliminary expenses are defrayed shall be disposed of as provided by subsection (4) of section 22;
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(ii) two million rupees which shall be disposed of as provided by subsection (2) and subsection (5) of section 22; and
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(iii) such sums as may be authorized by resolution of Parliament to be granted out of the Consolidated Fund for the settlement of the bad and doubtful debts in excess of the assets of any co-operative bank which is dissolved under the provisions of this Act; and
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(b) lend to the Bank such sums as may be authorized by resolution passed by Parliament to be lent to the Bank out of the Consolidated Fund for the granting of long-term or medium-term loans by the Bank.
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(2) Every sum lent out of the Consolidated Fund to the Bank under paragraph (b) of subsection (1) shall be repaid by the Bank in accordance with such terms and conditions as may be determined by the Minister with the concurrence of the Minister in charge of the subject of Finance.
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Commencement of business by the Bank.
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16. The Bank shall not commence business until a certificate signed by the Minister authorizing the Bank to commence business has been given. (* Authorized to commence business on the 1st day of July, 1961-Vide Gazette Extraordinary No. 12,498 of 26th June, 1961.)
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Powers of the Permanent Secretary until commencement of business by the Bank.
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17. The Permanent Secretary to the Ministry may, upon the enactment of this Act and until the commencement of business by the Bank-
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(a) invite and receive applications for shares;
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(c) do any of the acts which the Board is by this Act empowered to do ; and
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(d) do all other acts whatsoever as he may deem necessary for the formation of the Bank.
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Acts commenced by the Permanent Secretary may be continued by the Board.
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18.
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(1) Any act done by the Permanent Secretary to the Ministry under section 17 shall, for all purposes, have the same effect as if such act had been done by the Board.
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(2) The Board may continue any action or thing commenced by the Permanent Secretary to the Ministry and remaining unfinished or incomplete at the date of commencement of business by the Bank, as if such action or thing had been commenced by the Board.
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Building Fund.
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19.
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(1) There shall be established for the purposes of this Act a fund to be known as the Building Fund.
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(2) The Government shall grant to the Bank out of the Consolidated Fund one million rupees to be credited by the Bank to the Building Fund.
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(3) The moneys in the Building Fund shall be utilized for the purchase of lands and buildings, and the construction of buildings, for the Bank and for the maintenance and repair of such buildings.
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The Bank to raise money the issue of debentures for granting medium-term and long-term loans.
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20.
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(1) In addition to the sums lent by the Government under section 15 (1) (b) to by the Bank for the purpose of granting long- term or medium-term loans, the Bank may, subject to the provisions of subsection (2) and such regulations as may be made under this Act from time to time, raise, or with the approval of the Minister given with the concurrence of the Minister in charge of the subject of Finance request the Monetary Board of the Central Bank of Ceylon to raise on its behalf, any sums by the issue of debentures.
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(2) No debentures shall be issued under subsection (1) without the approval of the Minister in charge of the subject of Finance given after consultation with the Monetary Board of the Central Bank of Ceylon.
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(3) The Monetary Board of the Central Bank of Ceylon shall comply with a request made under subsection (1) if the issue of the debentures necessary for compliance with that request is approved by the Minister in charge of the subject of Finance.
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Government guarantee.
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21.
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(1) The Minister in charge of the subject of Finance shall guarantee-
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(a) the repayment of any sum due to the Bank on any loan, overdraft or other accommodation granted by the Bank with the approval of such Minister under the proviso to section 26; and
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(b) the repayment of any sum due on debentures issued under this Act.
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(2) Any sum required for the fulfillment of a guarantee provided under subsection (1) may, with the approval of Parliament, be paid out of the Consolidated Fund.
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(3) Any sum paid out of the Consolidated Fund in fulfillment of a guarantee provided under subsection (1) (6) shall be repaid, together with interest thereon at such rate as the Minister in charge of the subject of Finance may determine with the concurrence of the Minister, by the Bank in such manner and over such period as the Minister in charge of the subject of Finance may, with such concurrence, determine.
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(4) Immediately after a guarantee is given under subsection (1), the Minister in charge of the subject of Finance shall lay a statement of the guarantee before Parliament.
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(5) Where any sum is paid out of the Consolidated Fund in fulfillment of a guarantee provided under subsection (1), the Minister in charge of the subject of Finance shall forthwith lay before Parliament a statement that such sum has been paid.
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General Reserve and Special Reserve.
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22.
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(1) The Bank shall establish a General Reserve.
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(2) The Bank shall credit to its General Reserve one-half of the two million rupees referred to in section 15 (1) (a) (ii).
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(3) The Bank shall establish a Special Reserve for bad and doubtful debts.
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(4) Where any sum out of the five hundred thousand rupees referred to in section 15 (1) (a) (i) is left after the preliminary expenses mentioned in that section are defrayed, the Bank shall credit that sum to its Special Reserve.
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(5) The Bank shall credit to its Special Reserve one-half of the two million rupees referred to in section 15 (1) (a) (ii).
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Dissolution of the Co operative Federal bank of Ceylon, Limited.
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23.
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(1) With effect from such date (hereafter in this section referred to as the appointed date) as may be appointed by the Minister by Order published in the Gazette*-
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(a) the Co-operative Federal Bank of Ceylon, Limited, shall be deemed to have been dissolved, and
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(b) the assets and liabilities of the Co- operative Federal Bank of Ceylon, Limited, shall be the assets and liabilities of the Bank.
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(2) On and after the appointed date-
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(a) all contracts, deeds, bonds, agreements and other instruments which subsist or have effect on the day immediately preceding that date and to which the Co-operative Federal Bank of Ceylon, Limited, is a party shall have effect against or in favour of the Bank, as the case may be, and may be enforced as fully and effectually as if, instead of the Co-operative Federal Bank of Ceylon, Limited, the Bank had been a party thereto; and
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(b) all suits, appeals or other legal proceedings instituted by or against the Co-operative Federal Bank of Ceylon, Limited, and pending on the day immediately preceding that date shall not abate or be discontinued or be in any way prejudicially affected by reason of the dissolution of the Co-operative Federal Bank of Ceylon, Limited, and may be continued and enforced by or against the Bank, as the case may be:
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Provided that nothing in paragraph (a) of this subsection shall be construed as curtailing in any manner the right of the Bank to terminate the services of, or to vary the conditions of service of, any officer or servant of the Bank who, on the day immediately preceding the appointed date, was an employee of the Co-operative Federal Bank of Ceylon, Limited.
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Power of Minister to dissolve a co-operative bank.
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24.
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(1) Where the Minister is satisfied-
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(a) on written information received from the Commissioner of Co-operative Development, that a co-operative bank-
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(i) has been conducting its affairs continually in an unsatisfactory or inefficient manner, or
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(ii) desires that it should be dissolved and that its business should be taken over by the Bank. and
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(b) that the Bank agrees to take over the business of such co-operative bank, he may, by Order published in the Gazette, declare that, with effect from the date specified in that Order,-
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(i) such co-operative bank shall be deemed to have been dissolved, and
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(ii) the assets and liabilities of such cooperative bank shall be the assets and liabilities of the Bank.
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(2) On and after the date on which an Order under subsection (1) relating to a cooperative bank takes effect-
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(a) all contracts, deeds, bonds, agreements and other instruments which subsist or have effect on the day immediately preceding that date and to which such co-operative bank is a party shall have effect against or in favour of the Bank, as the case may be, as fully and effectually as if, instead of such cooperative bank, the Bank had been a party thereto ; and
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(b) all suits, appeals or other legal proceedings instituted by or against such co-operative bank and pending on the day immediately preceding that date shall not abate, or be discontinued or be in any way prejudicially affected by reason of the dissolution of such co-operative bank, and may be continued and enforced by or against the Bank, as the case may be.
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Deposit of money and obtaining of long-term or medium-term loans by co-operative societies.
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25. After the commencement of business by the Bank-
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(a) no co-operative society shall, unless exempted in writing by the Commissioner of Co-operative Development, deposit its funds in, or maintain any current or deposit account with, any commercial bank other than the Bank, and
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(b) no co-operative society shall, except with the written approval of the Commissioner of Co-operative Development, obtain a medium-term or long-term loan from any commercial bank other than the Bank.
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Loans, overdrafts and other accommodation to be granted only in certain circumstances.
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26. No loan, overdraft or other accommodation shall be granted by the Bank to any person unless the Board is satisfied that he is worthy of credit up to the amount of such loan, overdraft or other accommodation or that such amount is secured by adequate security, or that the project or scheme to which such amount is to be applied is financially sound :
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Provided that the Bank may grant any loan, overdraft or other accommodation to any co-operative society, approved society or Cultivation Committee* which is unable to satisfy the Board as to the requirements contained in the preceding provisions of this section if the grant of such loan, overdraft or other accommodation is approved by the Minister in consultation with the Minister in charge of the subject of Finance and if the Minister in charge of the subject of Finance guarantees under section 21 (1) (a) the repayment of such loan, overdraft or other accommodation.
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Power of the Board to inspect valuation rolls of local rating or taxing authority.
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27. For the purpose of deciding whether any immovable property tendered as security for any loan, overdraft or other accommodation should or should not be accepted by the Bank, 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 has power under the provisions of any law to levy any rate or tax.
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Registered address of borrower, & c.
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28.
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(1) Every person-
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(a) to whom any loan, overdraft or other accommodation is granted by the Bank, or
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(b) who has obtained probate of the will or letters of administration to the estate of a person to whom any loan, overdraft or other accommodation has been granted by the Bank, or who, upon application made in that behalf by the Board, has been appointed by court to represent such estate, or
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(c) to whom any right, title or interest whatsoever in any immovable property mortgaged to that Bank as security for any loan, overdraft or other accommodation has passed, whether by voluntary conveyance or by operation of law, shall register with the Bank an address to which all notices to him may be addressed.
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(2) Any notice which is required to be served on any person to whom subsection (1) applies 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 subsection 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:
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Provided that, where any such person fails to register his address under subsection (I), the Bank 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 him on the day on which such notice is last published.
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Default of payment and penal Interest in case of default.
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29.
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(1) Where default is made in the payment of any sum due on any loan, overdraft, advance or other accommodation granted by the Bank on the mortgage of movable or immovable property, whether that sum is due on account of principal or interest or both, default shall be deemed to have been made in respect of the portion that remains unpaid of that loan, overdraft, advance or other accommodation and the interest due thereon upto date of default.
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(2) Any instrument to secure a loan by the Bank may provide that if the borrower fails or neglects to pay, on the due date, the instalment and interest or to make the equated or other payment, as the case may be, then due in respect of the loan, then interest shall be payable on the loan at such rate in excess of that at which the loan has been granted as may be prescribed:
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Provided, however, that the Board may, in its absolute discretion, waive the payment of interest at the prescribed rate referred to in the preceding provisions of this section, and may, in lieu thereof, determine that interest up to double the agreed rate shall be payable on the instalment in default, for the period commencing on the date on which the instalment was due and ending on the date on which the instalment was paid. ” .
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Action by Board here default is made.
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29A. Whenever default is made in the payment of any sum due on any loan, whether on account of principal or of interest or of both, default shall be deemed to have been made in respect of the whole of the unpaid portion of the loan and the interest due thereon up to date; and the Board may, in its discretion, take action as specified either in section 29B or in section 29D :
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Provided, however, that where the Board has in any case taken action, or commenced to take action, in accordance with section 29B, nothing shall be deemed to prevent the Board at any time from subsequently taking action in that case by resolution under section 29D if the Board deems it advisable or necessary to do so.
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Authorization of Manager to take possession of mortgaged property.
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29B.
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(1) Subject to the provisions of section 29E the Board may by resolution to be recorded in writing authorize ,my person specified in the resolution to enter upon any immovable property mortgaged to the Bank as security for any loan in respect of which default has been made 0;:’ where the terms of any ban agreements are contravened in respect of such property to take possession of and to manage and maintain such property, and to exercise the same powers in the control and management of such proper y as might have been exercised by the mortgager if he had not made default, or contravened the terms of such agreement.
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(2) Whenever any sum of money due on any loan granted for any agricultural or Industrial undertaking on the security of any plant, machinery or other movable property to the Bank is in default, or where the terms of any loan agreements are contravened in respect of such property, the Board may authorize any person specified in writing to enter and take possession of such agricultural or industrial undertaking in which such plant, machinery or other movable property is situate, and exercise the Procedure where manager is appointed same power in the control and management of such undertaking as might have been exercised if such immovable property had been pledged or mortgaged.
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Procedure where manager is appointed.
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29C.
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(1) Any person authorized by resolution of the Board under section 2911 in respect of any property shall be entitled generally to take action in terms of the resolution and in particular
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(a) to sell the produce of such property;
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(b) to sell the goods manufactured wholly or partly from any plant or machinery, on the security of which any loan was granted, if default has been made in respect of such loan ;
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(c) to receive the rents, profits or other income from such property;
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(d) to pay the expenses incurred in the control and management of such property; out of the income from such property;
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(e) 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;
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(f) to remain in possession of such property until all moneys due to the bank 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).
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(2) Every person authorized by resolution of the Board under section 29B in respect of any property shall
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(a) pay monthly, out of the income of such property such sum (if any) as the Board may in its discretion fix, to the mortgager for his maintenance;
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(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;
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(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;
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(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,
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(3) The Board shall when all sums due to the Bank under the mortgage have been fully paid surrender possession of the mortgaged property to the mortgager and return to him. any balance remaining of the income from such property.
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Authorization of sale of mortgaged property.
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29D. Subject to the provisions of section 29E, the Board may by resolution to 00 recorded in writing authorize any person specified in the resolution to sell by public auction any immovable or movable property mortgaged to the Bank 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 291″ and thereafter it shall not be competent for the borrower or any person claiming through or under any disposition whatsoever of the right, title o:!” interest of the borrower to and in the property made or registered subsequent to the date of the mortgage to the Bank, in any court to move to invalidate the said resolution for any cause whatsoever, and no court shall entertain any such application.
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29E.
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(1) Save as otherwise provided in subsection (2), the provisions of section 29B and 29D 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 to the Bank as security for the loan may have passed by the voluntary conveyance or operation of law to any other person.
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(2) Where a borrower is dead and probate of his will or letters of administration to his estate have not been issued to any person, the District Court of Colombo or the District Court of the district in which the property, mortgaged to the Bank by the borrower, 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 29B and 29D shall not apply in the case of any default made by such borrower unless and until a person is appointed under this subsection to represent the estate of such borrower.
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29F. Notice of every resolution under section 29D authorizing the sale of any property shall be published in the Gazette and in a daily newspaper, and copies of such notice shall be dispatched to the borrower, if he is alive, and to every person who has, in respect of that property, registered his address as required by law and, if that property consists of the interest of a lessee under a lease from the State, to the Land Commissioner.
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29G. 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-
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(a) dispatched to the borrower, if he is alive, and to every person to whom notice of any resolution is required to be dispatched under section 29F ;
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(b) posted on or near the property which is to be sold.
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29H.
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(1) If the amount of the whole of the unpaid portion of the loan, together with interest including any penal or other interest payable, (under the proviso to subsection (2) of section 29 due thereon) and of the moneys and costs if any, recoverable by the Board under section 29L is tendered to the ..3oard 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 29D for the sale of that property.
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(2) If the amount of the instalment or equated payment or other payment n respect of which default has been made. together with any penal or other interest payable, (under the proviso to subsection (2) of section 29 due thereon) and of the moneys and costs, if any recoverable by the 30ard under section 29L is tendered to the Board at any time before the date fixed for the sale, the Bank 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 29D for the sale of that property.
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29J. The Board may fix an upset price below which the property shall not be sold to any person other than the Bank.
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Default in respect of one of several loans on same property.
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29K.
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(1) In any case where two or more loans have been granted by the Bank on the security of the same property and default is made in the payment of any sum due upon anyone or more of such loans, the foregoing provisions of this Act 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 290 authorize the sale of the property for the recovery of the total amount due to the 3ank in respect of both or all of the loans, as the case may be, and the provisions of this Part . of this Act shall apply accordingly.
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(2) Nothing in sections 29A to 29K (both sections inclusive) shall preclude the Board from recovering the amount due on a mortgage bond in accordance with the provisions of any other written Law.
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Recovery of expenses and costs incurred by the bank.
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29L. Besides the amount due on any loan, the Board may recover from the debtor, or any person acting on his behalf
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(a) all moneys expended by the Bank, in accordance with the covenants contained in the mortgage bond executed by the person to whom the loan was granted, in the payment of premiums and other charges in respect of any policy of insurance effected on the property mortgaged to the Bank, and in the payment of all other costs and charges authorized to be incurred by the Bank, under the covenants contained in such mortgage bond and executed by the debtor;
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(b) the costs of advertising the sale and of selling the mortgaged property; and
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(c) in any case where the property mortgaged as security for the loan consists of the interest of the de for under a lease from the State, and such property has been surrendered to the State in accordance with the provisions of section 29s, all moneys paid to the State by the Board on such surrender as moneys due to the State by the Board on such surrender as moneys due to the State by the debtor under the said lease: Provided that the costs incurred under paragraph (b) shall not exceed such percentage of the loan as may, from time to time, be fixed by resolution of the Board.
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29M. If the mortgaged property is sold, tile Bank shall, after deducting from the proceeds of the sale the amount due on the mortgage and the moneys and costs recoverable under section 29L, pay the balance remaining, if any, either to the debtor or any person legally entitled to accept the payments due to the debtor 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.
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29N.
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(1) If the mortgaged property is sold, the Board shall issue a certificate of sale and thereupon all the rights, title, and interest of the debtor 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 debtor to and in the property made or registered subsequent to the date of the mortgage of the property to the Bank, in any court to move or invalidate the sale for any cause whatsoever, or to maintain any right title or interest to or in the property as against the purchaser.
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(2) A certificate signed by the Board under subsection (1) shall be conclusive proof, with respect of the sale of any property, that all the provisions of this Act relating to the sale of that property have been complied with.
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(3) If the purchaser is some person other than the Bank, the certificate shall be substantially in the prescribed form and, if the purchaser is the Bank, the certificate shall be: substantially in such other form as may be prescribed.
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(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.
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(5) Where the property sold consists of the interest of a lessee under a lease from the State, then, if the purchaser of the property is some person other than the Bank, the certificate of sale shall not be signed by the Board unless the Land Commissioner, in the exercise of his discretion, has approved the purchaser.
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(6) Whenever the Land Commissioner refuses, under subsection (5), to approve any purchaser of the interest of a lessee under a lease from the State
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(a) all sums paid to the Bank by the purchaser in respect of the sale shall be repaid to him by the Board;
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(b) the costs of advertising and holding such sale shall be deemed to be costs recoverable by the Board under section 29L ; and
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(c) the property shall be resold in accordance with the provisions of this Act.
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Order for delivery of possession.
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29P.
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(1) The purchaser of any immovable property sold in pursuance of the preceding provisions of this Act 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 29 N, be entitled to obtain an order for delivery of possession of that property.
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(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 field 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 application for, and proceedings 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 property to which such application relates.
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(3) Where any immovable property sold in pursuance of the preceding provision:; of this Act 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 Bank, 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.
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(4) Where any immovable property sold in pursuance of the preceding provisions of this Act is in the occupancy of a tenant or other person entitled to occupancy same, the District Court, shall order delivery to be made by affixing a notice that the sale has taken place, in the Sinhala, Tamil and English languages, in some conspicuous place on the property, and proclaiming to the occupant in the customary mode or in such manner as the court may direct, 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.
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(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 section 288 of the Civil Procedure Code, and may be enforced in like manner as :m 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.
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29Q. Where the property sold has been purchased on behalf of the Bank, 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 per annum. Such an endorsement shall, upon registration in the office of the Registrar of Lands, revest the said property in the debtor as though the sale under this Act had never been made.
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29R. If t he property so sold has been purchased on behalf of the Bank, and the sale is not cancelled under section 29Q, the Board may, at any time, re-sell the. property and transfer to the purchaser by endorsement on a certified copy of the certificate referred to in subsection (3) of section 29N, 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.
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Limit of retention of property by the Bank.
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29S. If at any sale in pursuance of the preceding provisions of this Act, the Bank has purchased any property sold !or default in the payment of a loan, the Bank shall not hold such property for a longer period than it is necessary to enable the Bank to re-sell the property for such a sum as will cover the total amount due to the Bank on account of loan, interest, expenses and costs:
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Provided that where such property consists of the interest of a lessee under a lease from the State, the Board may, instead of reselling such property, surrender the lease to the State on such terms and conditions as may be agreed upon between the Board, the Minister and the Minister in charge of the subject of State lands.
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29T. In this Part, unless the context otherwise requires, .. property” in any case where a loan is secured by a mortgage of the interest of a lessee under a lease from the State, means the right. title and interest of the lessee under the lease.
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Delegation of powers and duties of the board.
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32.
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(1) There shall be a General Manager of the bank who shall be the Bank’s chief executive officer and who shall conduct the business of the Bank under the general supervision and control of the Board.
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(2) The Board may delegate any of its powers or duties to any officer of the Bank and may revoke any such delegation either wholly or in part and either as to persons or purposes.
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(3) An officer to whom any power or duty of the Board is delegated under this section shall, in the exercise or performance of that power or duty, conform to all such directions as may be given by the Board. All acts done by such officer in conformity with such directions and in fulfillment of the purposes of the delegation made to him, but not otherwise, shall have the like force and effect as if done by the Board.(+f Section 31 is repealed by Act No. 11 of 1963.)
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Accounts.
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33. The Board shall cause the accounts of the Bank to be kept in such form and manner as may be determined by the Board.
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Audit.
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34.
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(1) The accounts of the Bank for each financial year shall be submitted to the Auditor-General for audit before the thirtieth day of June of the succeeding year. For the purposes of assisting him in the audit of such accounts, the Auditor-General may employ the services of any qualified auditor or auditors who shall act under his direction and control.
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(2) For the purpose of meeting the expenses incurred by him in the audit of the accounts of the Bank, the Auditor-General shall be paid by the Bank such remuneration as the Minister may determine with the concurrence of the Minister in charge of the subject of Finance. Any remuneration received from the Bank by the Auditor-General shall, after deducting any sums paid by him to any qualified auditor employed by him for the purposes of such audit, be credited to the Consolidated Fund.
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(3) The Auditor-General and any person assisting the Auditor-General in the audit of the accounts of the Bank shall have access to all such books, deeds, contracts, accounts, vouchers and other documents of the Bank as the Auditor-General may consider necessary for the purposes of the audit, and shall be furnished by the Board and the Bank with such information within their knowledge as may be required for such purposes.
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(4) The Auditor-General shall examine the accounts of the Bank and furnish a report-
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(a) stating whether he has or has not obtained all the information and explanations required by him,
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(b) stating whether the accounts referred to in the report are properly drawn up so as to exhibit a true and fair view of the affairs of the Bank, and
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(c) drawing attention to any item in the accounts which in his opinion may be of interest to Parliament in any examination of the activities and accounts of the Bank.
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(5) The Auditor-General shall transmit his report to the Board.
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(6) For the purposes of this section, the expression ” qualified auditor ” means-
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(a) an individual who, being a member of the Institute of Chartered Accountants of Sri Lanka, or of any other Institute established by law, possesses a certificate to practice as an Accountant issued by the Council of such Institute; or
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(b) a firm of Accountants each of the resident partners of which, being a member of the Institute of Chartered Accountants of Sri Lanka or of any other Institute established by law, possesses a certificate to practice as an Accountant issued by the Council of such Institute.
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Documents to be transmitted to the Minister and the Minister in charge of the subject of Finance to be laid before Parliament.
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35.
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(1) The Board shall, on receipt of the Auditor-General’s report in respect of any year, cause a copy of each of the following documents relating to that year to be transmitted to the Minister and the Minister in charge of the subject of Finance:-
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(a) Auditor-General’s report.
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(c) Report of the Board on the work of the Bank.
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(2) The Minister shall lay copies of the documents transmitted to him under subsection (1) of this section before Parliament.
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(3) On receipt by the Board of the Auditor-General’s report for any financial year, the Chairman of the board shall without delay convene a meeting of the general body of the Bank and shall submit that report together with the documents referred to in items (b) and (c) of subsection (1) for consideration at that meeting,
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Power of certain officers of the Bank to examine the books and accounts of any cooperative society to which, and of any other person to whom, a loan has been granted by the Bank.
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36.
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(1) The General Manager of the Bank, or an accountant or other officer of the Bank authorized in that behalf by such General Manager, may-
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(a) examine the books and accounts of any co-operative society to which, or other person to whom, any loan, overdraft or other accommodation has been granted by the Bank or by any other co-operative society to which the Bank has granted any loan, overdraft or other accommodation;
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(b) examine any office-bearer, member or employee of any such co-operative society or other person as is first mentioned in paragraph (a) of this subsection for the purpose of ascertaining the true condition of the affairs of that co-operative society or other person;
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(c) direct any such office-bearer, member or employee as is referred to in paragraph (b) of this subsection to furnish to the officer of the Bank giving the direction any such information as that officer may require for the purpose mentioned in that paragraph ; and
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(d) direct any such office-bearer, member or employee as is referred to in paragraph (A) of this subsection to produce for inspection by the officer of the Bank giving the direction any books, records or other documents in the possession of that office-bearer, member or employee and containing or likely to contain any such information as may be required by that officer for the purpose mentioned in that paragraph.
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(2) Every officer of the Bank exercising the powers conferred by subsection (1) shall, for the purposes of the Oaths Ordinance, be deemed to be a person having by law authority to receive evidence in regard to the affairs of the co-operative society in respect of which such powers are exercised.
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(3) No person shall, without reasonable cause, fail or refuse to be examined or to answer any question when examined, or to comply with any direction given, under subsection (I).
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(4) No person shall, in furnishing any information or producing any books, records or other documents under subsection (I), furnish any information which he knows to be false or incorrect or produce any books, records or other documents which contain statements which he knows to be false or incorrect.
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(5) No person shall obstruct any officer of the Bank in the exercise of powers conferred by subsection (1).
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The Board’s powers to recommend to the Commissioner of Cooperative Development the dissolution and liquidation of a co-operative society which, on the examination of its affairs under section 36, is found to be insolvent, & c.
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37. Where the General Manager of the Bank is satisfied, after an examination of the affairs of a co-operative society under section 36, that such co-operative society is insolvent or that its continuance in business is likely to result in loss to its creditors, he shall make a report on the affairs of such co-operative society to the Board, and if the Board, after considering such report, is of the opinion that action should be taken to dissolve and liquidate such co-operative society, the Board shall recommend such action to the Commissioner of Co-operative Development.
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Offences.
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38. Every person who contravenes or fails to comply with any of the provisions of this Act shall be guilty of an offence.
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Punishment for offences.
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39. Every person who is guilty of an offence under this Act shall be liable, on conviction after summary trial before a Magistrate, to a fine not exceeding five hundred rupees or to imprisonment of either description for a term not exceeding one month or to both such fine and imprisonment.
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Offences by body of persons.
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40. Where any offence under this Act is committed by a body of persons, then-
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(a) if the body of persons is a body corporate, every director and officer of that body corporate, and
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(b) if the body of persons is a firm, every partner of that firm, shall be deemed to be guilty of such offence:
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Provided that no such director, officer or partner shall be deemed to be guilty of such offence if he proves that such offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
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Exemption from income tax and stamp duty.
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41. Notwithstanding anything in any other written law the Board and the Bank shall be exempt from the payment of stamp duty on any instrument executed by, on behalf of, or in favour of the Board or the Bank in cases where, but for the exemption, the Board or Bank would be liable to pay the duty chargeable in respect of such instrument.
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The Bank to be deemed to be a suitable person to manage and administer the affairs of certain co-operative societies.
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42. Where the Bank grants any loan, overdraft or other accommodation to a co operative society and thereafter the committee of that co-operative society is dissolved under section 48 of the Co operative Societies Law, the Bank shall be deemed-
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(a) for the purposes of subsection (1) of that section, to be a suitable person, and
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(b) for the purposes of subsection (3) of that section, to be a fit and proper person, to manage and administer the affairs of that co-operative society.
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Minister to give directions.
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42A. The Minister may from time to time give general or special directions in writing to the Board as to the performance of the duties and the exercise of the powers of the bank and it shall be the duty of the Board to comply with such directions.
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Regulations.
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43.
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(1) The Minister may make regulations for the purpose of carrying out or giving effect to the principles and provisions of this Act.
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(2) In particular and without prejudice to the generality of the powers conferred by subsection (1), the Minister may make regulations in respect of the following matters:-
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(a) any matter required by this Act to be prescribed or in respect of which regulations are authorized or required by this Act to be made;
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(b) the manner of application for shares of the Bank, the registration of holders of such shares, the issue and renewal of share certificates, the transfer of such shares and any other matter connected with, or incidental to, the aforesaid matters relating to shares;
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(c) the form of debentures, the rate of interest payable thereon, the time or times at which and the manner in which debentures are to be redeemed, the transfer of debentures and any other matter connected with, or incidental to, the aforesaid matters relating to debentures; and
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(d) the charges payable by persons for services rendered by the bank.
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(3) No regulation made by the Minister under this section shall take effect unless it is approved by Parliament and notification of such approval is published in the Gazette.
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This Act to have effect notwithstanding the provisions of the Co-operative Societies Law.
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44. The provisions of this Act shall have effect notwithstanding anything to the contrary contained in the Co-operative Societies Law.
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The provisions of the Companies Ordinance* only to apply to the Bank if they are made applicable by Order of the Minister.
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45.
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(1) The provisions of the Companies Ordinance* shall not apply to the Bank.
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(2) Notwithstanding the provisions of subsection (1), the Minister may, whenever it may seem expedient for him to do so, by Order declare that any such provision of the Companies Ordinance* as is specified in the Order shall apply to the Bank. Every Order made under this subsection shall have the force of law.(*Repealed and replaced by the Companies Act, No. 17 of 1982.)
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48. In this Act, unless the context otherwise requires-
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“approved societies” means societies approved for the purposes of this Act by the Minister by Order published in the Gazette;
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” agriculture” includes the raising of crops, medicinal plants and herbs. horticulture, sericulture, bee-keeping, forestry, animal husbandry, poultry farming, dairy farming including livestock rearing and breeding and growing pasture and fodder and marketing of produce;
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“agricultural undertaking” means an undertaking for the purpose of the production of any agricultural, horticultural or any animal produce and includes an undertaking for the purpose of rearing livestock or poultry; , ;
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” approved credit institution” shall have the same meaning as ” credit institution ” in section S8F of the Monetary Law Act, (Chapter 422) and includes such other institutions as the Board of Directors may, from time to time determine, to be approved credit institutions for the purposes of this Act;
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“commercial bank” shall have the same meaning as in the Monetary Law Act;
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” co-operative bank ” means a cooperative bank being a society registered or deemed to be registered under the Co-operative Societies Law;
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co-operative society ” means a cooperative society registered or deemed to be registered as a society under the Co-operative Societies Law:
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” enterprise ” means a body of persons whether corporate or unincorporate identified by any name or designation whatsoever and includes a corporation sole or a sole proprietorship; , ;
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” general body of the Bank ” means the general body of the Bank constituted in accordance with the provisions of section 9 of this Act;
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” industry” includes fishing, gemming, tourism, transport and the manufacture or preparation of any produce or commodity for sale in the market “industrial undertaking” means
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(a) an undertaking for the manufacture or production by mechanical means, of any articles, goods or materials, or for the subjection, by mechanical means, of any articles, goods or materials to any process, or for mining, or for printing, or for repairing machinery or vehicles or vessels
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(b) an undertaking for transporting persons or goods; “loan” means a loan of money and includes any -overdraft or advance or any other monetary accommodation by whatsoever name or designation called;
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” long-term loan ” means a loan repayable not earlier than ten years after the date of the grant of that loan;
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” medium-term loan ” means a loan repayable not earlier than five years, and not later than ten years, after the date of the grant of that loan;
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” prescribed” means prescribed by rules made under this Act.
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“share” means shares in the capital of the Bank;
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“short-term loan” means a loan repayable not later than five years after the date of the grant of that loan.(* Sections 46 and 47 are omitted, as they are repealing and amending provisions.)
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