STATE MORTGAGE BANK



STATE MORTGAGE BANK
AN ORDINANCE FOR ESTABLISHING AND REGULATING THE CEYLON STATE MORTGAGE BANK.
Ordinance Nos,
16 of 1931
23 of 1934
1 of 1935
58 of 1935
24 of 1938
24 of 1939
14 of 1941
11 of 1944
10 of 1947
Act Nos,
50 of 1949
41 of 1950
21 of 1955
31 of 1956
33 of 1968
16 of 1973
[1st October
, 1931
]
CHAPTER I
PRELIMINARY
Short title.

1. This Ordinance may be cited as the Ceylon State Mortgage Bank Ordinance.

Interpretation.

2. In this Ordinance except in so far as anything in the subject or context otherwise implies the following expressions shall have the meanings respectively assigned to them : –


[ 2, 33 of 1968.]

” agriculture ” includes the raising of crops, horticulture, animal husbandry, poultry farming, dairy farming and bee-keeping;

” the bank” means the Ceylon State Mortgage Bank;

” board” means the board of directors appointed under this Ordinance ;


[ 2, 33 of 1968.]

” Central Bank ” means the Central Bank of Ceylon established under the Monetary Law Act;


[ 2, 33 of 1968.]

” director “, ” general manager “, and ” deputy general manager ” means the persons appointed to such offices under this Ordinance; and

” prescribed ” means prescribed by this Ordinance or by rules made thereunder.


[ 2, 33 of 1968.]

” loan ” means a loan of money, and includes any overdraft, or any other monetary accommodation by whatsoever name or designation called;

CHAPTER II
ESTABLISHMENT
Establishment of the bank.


[ 2, 10 of 1947.]

[ [ 3, 33 of 1968.]

3. A bank to be called ” The Ceylon State Mortgage Bank” shall be established to carry out the purposes of this Ordinance

Legal status of the bank.

4. The bank shall be a body corporate having perpetual succession and a common seal; it shall under the above-mentioned name be capable of suing and being sued ; and it shall subject to the provisions of this Ordinance be capable of acquiring, holding, and alienating property movable and immovable and of doing all such acts and things as bodies corporate may do and perform.

Head office of the bank.


[ 4, 33 of 1968.]

5. The head office of the bank shall be in Colombo. Such branch offices of the bank, as the board considers necessary, may, with the prior approval of the Minister, be established at places in Ceylon, other than Colombo. No branch office so established shall be closed except with like approval.

The law governing the bank.

6. The bank shall be conducted and managed , in accordance with the provisions of this Ordinance to the exclusion of the provisions of the Companies Ordinance and any other law specially governing banks.

Business of the bank.


[ 5, 33 of 1968.]

7. The bank is, subject to the provisions of this Ordinance, authorized to carry on and transact the several kinds of business specified in section 51.”.

CHAPTER III
MANAGEMENT
(I) BOARD OF DIRECTORS
The board of directors.

8. The general supervision, control, and administration of the affairs and business of the bank shall be entrusted to a board of directors consisting of five fit and proper persons appointed by the Minister.[1]

Powers of board.

9. The board may exercise all such powers and do all such acts and things as may be necessary for carrying on the business of the bank.

” Acts of the board not to be invalid by reason of any vacancy.

9A. No act or proceeding of the board shall be invalid by reason only of the existence of any vacancy among the directors, or any defect in the appointment of a director.”.

Directors’ term of office.

10. Every director shall ordinarily be appointed for a term of five years and he shall hold office for that period unless he dies, retires, or is removed or disqualified earlier.


Remuneration of directors.

11. Every director shall in accordance with the prescribed scale be paid a fee for each day or portion of a day upon which he is engaged upon the business of the bank.

Disqualification and removal of directors.

12.

(1) The Minister1 may, for incapacity or misbehaviour, remove a director from his office.

(2) No person shall be appointed to the office of director who-

(a) has been adjudicated an insolvent and has not received a certificate ; or

(b) is of unsound mind or has been convicted of an offence and sentenced to imprisonment without the option of a fine.

(3) A person appointed to the office of director shall become disqualified to retain his office and shall ipso facto cease to be a director if-

(a) he is adjudicated an insolvent, or assigns his estate for the benefit of his creditors, or enters into a deed of arrangement with his creditors or makes an assignment of his remuneration for their benefit; or

(b) he is of unsound mind or is convicted of an
offence and sentenced to imprisonment without the option of a fine ; or

(c) he is absent without leave from the Minister [1]
from all the meetings of the board during any two consecutive months.

(4) No Member of Parliament[1] shall be appointed to
or retain the office of director:

Vacancies on the board.

13.

(1) When a director ceases to hold office by reason of the expiry of the period for which he was appointed, the Minister[1] shall make a new appointment. The retiring director shall be eligible for reappointment if not otherwise disqualified.

(2) If a director ceases to hold office before the expiry of the period for which he was appointed, the Minister[1] shall make a new appointment for the remainder of the period for which such director would have held office.

(3) Where a director is granted leave of absence the Minister[1] may make a new appointment for the period for which such director is granted leave.

14.

(1) The Minister1 shall each year appoint from among the directors the chairman of the board for the year. The chairman shall preside at every meeting of the board at which he is present and shall have a second or casting vote in all cases of an equality of votes. In the absence of the chairman, the directors present at a meeting shall choose one of their number to preside who shall for that meeting have all the powers of the chairman including the right to a casting vote.


[ 2, 24 of 1938.]

(2) Where a director who has been appointed the chairman of the board for any year, is granted leave of absence for any period during that year, the Minister[1] shall make a new appointment, from among the directors, of a chairman for that period.


Meetings.

15.

(1) A meeting of the board shall be held at least once a month and oftener if the chairman thinks it necessary.

(2) The chairman shall upon a written requisition of 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 written or printed notice to every director.


[ 7, 33 of 1968.]

(3) If it appears to the Minister that any director is temporarily unable to discharge the duties of his office on account of ill health or absence from Ceylon or for any other cause, the Minister may appoint any other person to act in place of such director.


Quorum.


[ 8, 33 of 1968.]

16. Three members shall constitute a quorum at any meeting of the board and all acts authorized or required to be done by the board shall be decided by a majority of directors present and voting at a meeting at which a quorum is present:

Provided that when only three members are present no loan exceeding twenty-five thousand rupees shall be sanctioned except by a unanimous resolution.


Minutes.

17. Minutes of the proceedings of every meeting of the board shall be regularly drawn up and fairly entered in books to be kept for the purpose, and the books shall be so kept as to show properly tabulated details of the business transacted at each meeting. The minutes of the proceedings of each meeting shall be submitted at the next ensuing meeting, and if they are then passed as correct they shall be confirmed by the signature of the person presiding thereat, and shall thereafter be prima facie evidence of the proceedings of which they are a record.

(II) OFFICERS OF THE BANK

Appointment and salary of general manager and deputy general manager.


[ 9, 33 of 1968.]

18.


[ 9, 33 of 1968.]

(1) The board shall, subject to the approval of Minister,[1] appoint a person to be the general manager of bank, and may, subject to the approval of the Minister,[1] remove such person from office and appoint another person in his stead.


[ 9, 33 of 1968.]

(2) The board may, subject to the approval of the Minister,[1] also appoint a person to the office of deputy general manager of the bank, and subject to the approval of the Minister [1] remove such person from office and appoint another person in his stead.


[ 9, 33 of 1968.]

(3) The general manager and deputy general manager shall be full- time officers of the bank and shall receive such salary as may, with the approval of the Minister given with the concurrence of the Minister of Finance,[1] be fixed by the board.

Powers of general manager and deputy general manager.

19.


[ 10, 33 of 1968.]

(1) The general manager shall be the chief executive officer of the bank and all acts which are directed by this Ordinance to be done by the board may, unless the contrary intention appears from the context, be done by the general manager if ,1 he is specially or generally authorized in writing thereto by the board. He shall attend and take part in every meeting of the board, unless directed not to attend by the board, but he shall not have the right to vote.

(2) The deputy general manager may do all such acts as he is required or permitted to do by the general manager in writing, provided the general manager may himself have done them.

Subordinate officers.

20. For the purpose of carrying out the provisions of this Ordinance, the board may by resolution appoint and at its discretion remove such officers and servants other than those herein before mentioned as it may think necessary. It may also from time to time fix and alter the salaries and allowances attached to such offices.

Valuators.


[ 3, 24 of 1938.]

21. The board may from time to time appoint fit and proper persons to inspect and value properties for the purpose of this Ordinance, and prescribe by rules made under section 93 the scales for their remuneration and travelling charges :

Provided, however, that it shall be lawful-

(a) for the board to determine by resolution ; or


[ 11, 33 of 1968.]

(b) for the manager, if he is specially ,or generally authorized thereto by the board under section 19 (1), to determine,

the remuneration and travelling charges to be paid to any such person in respect of the valuation of any property.

Legal, & c. advisers.


[ 12, 33 of 1968.]

22. The board may, from time to time, appoint any duly qualified person or persons to act as legal, economic, financial or technical adviser to the bank, and any such person shall be remunerated in accordance with such scale of fees as may be prescribed.”.


Agents.

23. The board may appoint any bank or any person as its agent in Ceylon or elsewhere to do any act on its behalf which it is authorized to delegate to another and it may enter into an agreement with such agent as to the duties to be performed and the remuneration therefor.

Repealed

Repealed


[ 14, 33 of 1968.]

Repealed

Repealed


[ 14, 33 of 1968.]

Repealed

Repealed


[ 14, 33 of 1968.]

Repealed

Repealed


[ 14, 33 of 1968.]

Repealed

Repealed


[ 14, 33 of 1968.]

Repealed

Repealed


[ 14, 33 of 1968.]

Repealed

(IV) GENERAL

Security from officers.


[ 15, 33 of 1968.]

31. The board may require the general manager, deputy general manager, accountant, shroff, or any other officer of the bank to furnish security for the faithful discharge of his duties in such amount and in such manner as the board thinks proper.

Protection of
officers.

32. No director and no officer of the bank shall be liable, either civilly or criminally, in respect of anything which he may have done or may have omitted to do when acting in good faith in pursuance or in supposed pursuance of his powers under this Ordinance.


Disabilities of
directors, officers, and
servants.


[ 3, 10 of 1947.]

33. No officer or servant of the bank in receipt of a monthly salary and no director shall be granted a loan under this Ordinance or be entitled to purchase any immovable property sold under the provisions of this Ordinance.


Declaration of fidelity and secrecy.


[ 16, 33 of 1968.]

34. Every director, and every employee of the bank shall, before entering upon his duties or exercising any power under this Ordinance, make before a Justice of the Peace a declaration of fidelity and secrecy in the prescribed form.

CHAPTER IV
DEBENTURES
(I) ISSUE

Power to raise money on debentures.


[ 17, 33 of 1968.]

35. The board may raise from time to time by the issue of debentures funds necessary to carry on the
business of the bank :

(a) Provided that the total indebtedness of the bank on the principal of the debentures shall never exceed the total sum loaned by the bank and remaining unpaid nor shall such total indebtedness exceed twenty-five million rupees ;

(b) Provided further that moneys repaid to the bank on account of the principal of loans and retained by the bank for the purpose of redeeming debentures shall for the purposes of this section be calculated for a Period not exceeding six months as a part of the total sum loaned by the bank upon the security of mortgages and remaining unpaid.

Form of debentures, and exemption from stamp duty.


[ 2, 21 of 1955.]

36.

(1) Debentures shall be in the form prescribed and be authenticated by the seal of the bank.

(2) No stamp duty shall be payable in respect of
any debenture issued under this Ordinance or in respect of any instrument of transfer of any such debenture.


Certificate of Secretary to the Treasury to be conclusive proof of regularity of issue of debenture.


[ 4, 24 of 1938.]

37. Every debenture shall be inscribed with a certificate bearing the signature or the facsimile of the signature of the Secretary to the Treasury[1] in the form set out in Schedule D. Such certificate shall for all purposes be conclusive evidence of the fact that the debenture has been duly issued in conformity with the provisions of this Ordinance and that the payment of the principal of the debenture and of the interest thereon is a charge upon the Consolidated Fund1 under section 40.


Amount of each debenture, and rate of interest.


[ 3, 21 of 1955.]

38. Debentures shall be for a sum of fifty rupees each and shall bear interest at a rate to be fixed at the time of issue by the board with the approval of the Minister of Finance :

Provided that where any applicant for debentures elects to have such debentures issued to him in a denomination higher than fifty rupees, the directors may, if they think fit, issue debentures to that applicant in that higher denomination.


Issue of
debentures in the name of a minor.


[ 5, 24 of 1938.]

39.

(1) The board may issue debentures in the name of a minor upon application in that behalf made by the minor, or by either of his parents or by the person to whom a certificate of curator ship to the estate of the minor has been granted.

(2) Where any application is made under subsection (1) or where any debenture is issued upon such application, the provisions of this Chapter and of any rules made under section 93 (I) (d) shall, save as otherwise provided in this section or in section 42 but notwithstanding anything in any written or other law to the contrary, apply in like manner as if such application was made by or on behalf of, or such debenture was issued in the name of, a person who has attained the age of twenty-one years.

(II) PAYMENTS

Source for redemption of debentures.

40. The interest on and principal of debentures shall be paid as they fall due from the funds of the bank in the manner hereinafter provided. Should such funds be insufficient to make any such payments, such interest and principal shall be paid from the Consolidated Fund[1] upon which they are hereby constituted a charge.


Payment of
interest,

41. The interest due on a debenture shall run from the day named in the debenture and shall be paid half-yearly on the thirty-first day of March and the thirtieth day of September.


Payments in respect of debentures issued in the name of a minor.


[ 7, 24 of 1938.]

42.

(1) The interest on and principal of any debenture issued in the name of a minor shall be paid-

(a) if the debenture was issued upon the application of the minor, to the minor ;

(b) if the debenture was issued upon the application of his parent or of a person to whom a certificate of curatorship to the estate of the minor has been granted, to the parent or to such person or to the successor of such person, as the case may be :

Provided, however, that-

(i) where a debenture is issued in the name of a minor upon application made by his parent, the interest on and principal of the debenture may, if the parent so requires, be paid to the minor; and

(ii) every payment made in respect of any debenture issued in the name of any person who is not, on the date of payment, a minor, shall be made to that person.

(2) The receipt of any minor, parent or other person for any money paid to him in accordance with the pro-visions of subsection (1) shall, notwithstanding anything in any written or other law to the contrary, be a full and sufficient discharge therefor.

(III) REDEMPTION

Redemption of debentures.


[ 5, 21 of 1955.]

43. The board shall, prior to each issue of debentures, determine, with the approval of the Minister of Finance, the time or times at which and the manner in which debentures of that issue will be redeemed and the circumstances in which and the conditions and restrictions subject to which all or any of such debentures may be compulsorily redeemed.


Cesser of interest after repayment is available.

44. From and after the day appointed for the repayment of any debentures all interest on the principal moneys secured thereby shall cease and determine, whether payment of the principal is or is not

(IV) TRANSFER

Transfer of debentures.

45. A debenture holder may transfer all or any of his debentures in the manner prescribed by rules under this Ordinance.

(v) REGISTER

Register of debentures.

46. The bank shall keep a register in which all debentures shall be entered together with their dates of issue and the names of their holders.


Validity of
transfer.

47. No transfer of a debenture shall be legally valid until such transfer has been entered in the register and endorsed upon the debenture by an officer of the bank thereto authorized in writing by the board.


Transmission of debentures.

48. The executors or administrators or heirs of a deceased debenture holder shall be the only persons recognized by the bank as having any title to the debentures of such deceased holder.


The register evidence of title.

49. The register shall be conclusive evidence that the persons entered therein as the holders of debentures are entitled to such debentures, of the dates of issue, redemption, cancellation, transfer, or transmission of debentures and of all other matters entered therein.


Bank not to be affected with notice of trusts.


[ 4, 24 of 1939.]

50.

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

(2)

(a) 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.

(b) Where any request is made under paragraph (a) by a debenture holder or by a person to whom a debenture is to be transferred, the debenture shall be forwarded 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 or not he is so described in such instrument, power, or document and whether or not he purports 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 any 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 the instrument if any appointing him a trustee ; and
neither the Government of Ceylon, nor the bank, nor
any person holding or acquiring any interest in any debenture 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 holding 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.

CHAPTER V
LOANS
(I) GRANTING
Kinds of business the bank is authorized to carry on and transact.


[ 18, 33 of 1968.]

51.

(1) subject to the provisions of this Ordinance, the bank is authorized to carry on and transact the several kinds of business hereinafter specified, namely: –

(a) to grant loans, subject to interest, 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;

(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 connection with any agricultural or other prescribed undertaking not inconsistent with the objects of the bank;

(iii) the purchase or lease of any land for the construction of a dwelling house;

(IV) the construction, repair, renovation or extension of a dwelling house;

(v) the purchase or lease of a dwelling house;

(vi) the manufacture or preparation of any agricultural or other prescribed product or commodity for sale in the market;

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

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

(b) to grant loans of money, subject to interest, to any person for the purpose of conducting any agricultural business, or for the settlement of debts incurred under any mortgage provided such mortgage has been to secure a loan raised for a purpose falling within the purview of the bank;

(c) to finance, and to participate In, the share capital of corporations established or maintained with capital wholly or partly provided by the Government and engaged in agriculture ;

(d) 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;

(e) to carry on the business of hire-purchase in agricultural machinery, and equipment used in agriculture;

(f) 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 other prescribed undertaking of any client of the bank 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 bank in any loan granted by the bank;

(g) to act, with or without remuneration, as the technical adviser of any client of the bank, on any matter relating to any agricultural or other prescribed undertaking of such client;

(h) to set up the necessary organization for selling or marketing any product of any agricultural or other prescribed undertaking;

(i) to act as the agent of any client of the bank, or any other person, 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 other prescribed under-taking of such client, or other person, as the case may be;

(j) for the purpose of employing any surplus funds of the bank, to buy, sell, invest or deal in stocks, shares, debentures, mortgages, bonds or securities issued or guaranteed by the Government or the Central Bank;

(k) to make arrangements for the insurance of any property mortgaged to the bank by any client of the bank;

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

(m) with effect from such date as may be fixed by the Minister by Order published in the Gazette, to acquire the whole or any part or share of any agricultural, residential or business premises and dispose of such premises for the purpose of the administration of the provision of Chapter VA;

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

(o) 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 of the bank or the dependants of such employees;

(p) 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 bank, including any property, movable or immovable, on the security of which the bank may have made any loan, or over which the bank may have any power of disposal;

(q) to give any guarantee or indemnity and to enter into any agreements 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 bank to be conducive to any object of the bank;

(r) to issue debentures;

(s) to borrow or accept deposits from the Government, or the Central Bank, or other such institutions as are approved for the purpose by the Monetary Board of the Central Bank, on such terms and conditions as may be mutually agreed upon by them so however that the aggregate amount so borrowed and accepted as deposits at any time does not exceed the maximum limit imposed by the Minister, with the concurrence of the Minister of Finance;

(t) to accept a contribution, not exceeding five million rupees, from the Government towards the reserve fund of the bank, subject to such terms and conditions as may be mutually agreed upon by them;

(u) to establish and maintain any institute, or to participate in any scheme, for the provision of technical, financial and management services;

(v) to conduct economic surveys, studies and seminars;

(w) to train selected personnel of the bank and other persons in accountancy, banking and valuation, project and credit appraisal, and engineering and scientific skills;

(x) to give indemnities;

(y) to invest the funds of the bank in the shares, debentures or other appropriate securities of public or private companies engaged in agriculture;

(z) generally to take, or concur in taking, all such steps and proceedings as the bank may deem to be best calculated to uphold and support the credit of the bank, 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 or purpose mentioned in any paragraph of sub-section (1) of this section 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 sub-section, or the objects therein specified, or otherwise. And provided further that no loan exceeding twenty-five thousand rupees shall be granted by a resolution passed by the favourable votes of less than three directors.

(3) In this section, the expression ” client of the bank ” means a person who is in receipt of assistance from the bank under this Ordinance.

Power to grant additional loans in certain circumstances.


[ 8, 24 of 1938.]

[[ 19, 33 of 1968.]

52. Where a loan has been granted by the bank and the property mortgaged as security for that loan is not encumbered by any mortgage to any person other than the bank, the bank may, subject to the other provisions of this Ordinance relating to loans, grant an additional loan the repayment of which shall be secured by a further mortgage of that property ; and such further mortgage shall, for the purposes of section 3 be deemed to be a primary mortgage.


Requisites to be satisfied before loan is granted.


[ 20, 33 of 1968.]

53. No loan shall be granted on the mortgage of property unless the board shall have first satisfied itself-

(a) that the security offered is adequate, regard being had to the market value of the property, to the annual income derived or likely to be derived from it in the future, to the possibility of its depreciation in the future and to the risks incidental to a forced sale ;


[ 3, 31 of 1956.]

(b) that the borrower has valid title to the property offered as security ;

(c) that the purpose for which the loan is required is one contemplated by section 51; and

(d) that there is no other good and satisfactory reason why the loan should not be granted.

Board’s power to grant loans.


[ 21, 33 of 1968.]

54.

(1) No loan shall be granted except by a resolution of the board:

Provided however, that the board may, under section 19, empower the general manager to grant loans up to any sum not exceeding twenty-five thousand rupees:

(2) All loans granted by the general manager under the provisions of this section shall be reported to the board at its next meeting.

Withdrawal of the grant of a loan.

55. At any time after the approval of a loan and before the actual payment of the money the board may at its discretion and without assigning any reason therefor cancel or modify such approval and withhold payment of the whole or a portion of the money.


Priority of charge created by loan.

56. Where a loan is granted by the bank, the property mortgaged as security for it shall from and after the date of the mortgage be charged with the payment of the loan with interest in priority to every other debt, mortgage, or charge affecting it, except an earlier duly registered mortgage debt due to a creditor who in good faith advanced the money before the loan was granted by the bank.

(II) APPLICATION

Board’s power to
investigate application of loan.

57.

(1) 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 any director, appointed in writing for the purpose, to prove that the loan has been or is being applied for such purpose.

(2) If the board is not satisfied that the loan has been or is being applied for the purpose for which it was granted it may by an order direct that within the time named therein either the loan be repaid in full with interest or a sum equal to the loan be applied to the said purpose.

(III) REPAYMENT


[ 22, 33 of 1968.]

58.


[ 22, 33 of 1968.]

(1) Repayment of loans shall be made-

(a) half-yearly, quarterly or monthly by instalments or equated payments; or

(b) in accordance with such terms as may be determined by the board.

(2) An instalment shall, consist of a fixed portion of the principal together with the interest due up to the date of payment.

(3) An equated payment shall consist partly of principal and partly of interest calculated in accordance with the prescribed tables which specify as to every one hundred rupees of the loan-

(a) the number of the instalments ;

(b) the portion of each instalment which constitutes interest and the portion which is appropriated on account of principal ;

(c) the balance of principal still owing after each instalment has been paid.


Recalling of loans.

59.

(1) If at any time after the granting of a loan the board is satisfied-


[ 6, 10 of 1947.]

(a) that the property given as security has depreciated in value to such an extent as to endanger the safety of the loan; or

(b) that the title of the borrower is such that it ought not to have been accepted as adequate ; or

(c) that owing to material misstatements by the borrower or misapprehension of the actual facts by the board the loan was granted in circumstances in which it would not have been granted if the true facts had been known ; or


[ 6, 10 of 1947.]

(d) in any case where the loan has been secured by a mortgage of the interest of the borrower under a lease from the Crown, that the Crown intends to cancel or otherwise determine the lease,


[ 6, 24 of 1939.]

the board shall, unless additional security which is adequate, in the opinion of the board, is offered in respect of that loan, issue an order requiring the loan to be repaid either in full or in part by a date to be specified in the order.


[ 6, 24 of 1939.]

(2) Where an order issued under subsection (1) is not complied with, 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 the provisions of part (IV) of this Chapter shall apply accordingly.


Anticipation of payments.


[ 7, 24 of 1939.]

60. The bank shall accept any payment in respect of a loan before the date on which such payment is due, if notice of three months is given to the board of the intention to make such payment.


Change of security.

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

Action by board where default is made.


[ 24, 33 of 1968.]

61A. 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 61B or in section 61D:

Provided, however, that where the board has in any case taken action, or commenced to take action, in accordance with section 61B, nothing shall be deemed to prevent the board at any time from subsequently taking action in that case by resolution under section 61D if the board deems it advisable or necessary to do so.

Authorization of manager to take possession of mortgaged property.


[ 24, 33 of 1968.]

61B. Subject to the provisions of section 61E, 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 bank 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.


[ 24, 33 of 1968.]

61C. (1) Any person authorized by resolution of the board under section 61B 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 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).

(2) Every person authorized by resolution of the board under section 61B 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 bank 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.


[ 24, 33 of 1968.]

61D. Subject to the provisions of section 61E, 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 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 63.

Where borrower is dead.


[ 24, 33 of 1968.]

61E.

(1) Save as otherwise provided in sub-section (2), the provisions of sections 61B and 61D 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 voluntary conveyance or operation of law to any other person.

(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 61B and 61D shall not apply in the case of any default made by such borrower unless and until a person is appointed under this sub-section to represent the estate of such borrower”.

(IV) RECOVERY

Special provisions relating to sale.


[ 8, 24 of 1939.]

[[ 25, 33 of 1968.]

62.


[ 7, 10 of 1947.]

(1)

(a) Notice of every resolution under subsection (1) authorizing the sale of any property shall be published in the Gazette and in a daily newspaper, and copies of such notice shall be despatched to the borrower, if he is alive, and to every person who has, in respect of that property, registered his address under the provisions of paragraphs (b) and (c) of section 105 (1), and, if that property consists of the interest of a lessee under a lease from the Crown, to the Land Commissioner.

(b) 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-

(i) despatched to the borrower if he is alive, and to every person to whom notice of any resolution is required to be despatched under paragraph (a);

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

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

(2)


[ 25, 33 of 1968.]

[[ 25, 33 of 1968.]

(a) If the amount of the whole of the unpaid portion of the loan together with interest, including any penal or other interest pay-able under the proviso to section 103 due thereon, and of the moneys and costs, if any, recoverable by the board under section 63, 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 subsection (1) for the sale of that property.

(b) If the amount of the instalment or ny penal or other interest payable under the proviso to section 103 in respect of which default has been made, together with any penal interest due thereon, and of the moneys and costs, if any, recoverable by the board under section 63 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 61D for the sale of that property,


[ 25, 33 of 1968.]

(3)

(a) The board may fix an upset price below which the property shall not be sold to any person other than the bank.

(b) In fixing an upset price the board shall have particular regard both to the outstanding amount of the loan granted on the security of the property and the current value of the property.

(4) 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 any one or more of such loans, the provisions of this section 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 subsection (1) authorize the sale of the property for the recovery of the total amount due to the bank in respect of both or all the loans, as the case may be, and the provisions of this part of this Chapter shall apply accordingly.


[ 25, 33 of 1968.]

(5) Nothing insections 61A to 68 (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.


Recovery of expenses and costs incurred by the bank.


[ 10, 24 of 1938.]

63. Besides the amount due on the loan, the board may recover from the debtor or any person acting on his behalf-


[ 8, 10 of 1947.]

(a) all moneys expended by the bank, in accordance with the covenants contained in the mortgage bond executed by the debtor, in the payment of premiums and other charges in respect of the 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 the mortgage bond executed by the debtor ; and


[ 8, 10 of 1947.]

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


[ 26, 33 of 1968.]

Provided, however, that the costs incurred under this paragraph shall not exceed such percentage of the loan as may, from time to time, be fixed by the bank; and


[ 8, 10 of 1947.]

(c) in any case where the property mortgaged as security for the loan consists of the interest of the debtor under a lease from the Crown, and such property has been surrendered to the Crown in accordance with the provisions of section 69, all moneys paid to the Crown by the board on such surrender as moneys due to the Crown by the debtor under the said lease.


Payment of excess.


[ 9, 10 of 1947.]

[ [ 11, 24 of 1938.]

[[ 27, 33 of 1968.]

64. If the property is sold, the bank shall, after deducting from the sale proceeds the amount due on the mortgage and the moneys and costs recoverable under section 63, pay the overplus, if any, either to the debtor or any person legally entitled to accept the payments due to the debtor, or into the District Court having jurisdiction over the property sold in case the bank is in doubt as to whom the money is to be paid.


Certificate of
sale.


[10, 10 of 1947.]

65.

(1) If the property is sold the board shall sign a certificate of sale and thereupon all the right, title, and interest of the debtor to and in the property shall vest in the purchaser, nor shall any person claiming through or under any disposition whatsoever of the debtor’s right, title, or interest to and in the property made or registered subsequently to the mortgage of the property to the bank be able in any court of law 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.

Such certificate shall be conclusive proof with respect to the sale of any property that all provisions of this Ordinance have been observed.

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

(3) Every certificate of sale shall be liable to the stamp duty and charges fixed for conveyance of immovable property, and to any registration or other charges authorized by law, all of which shall be payable by the purchaser.

(4) Where the property sold consists of the interest of a lessee under a lease from the Crown, 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.

(5) Whenever the Land Commissioner refuses, under subsection (4), to approve any purchaser of the interest of a lessee under a lease from the Crown-

(a) all sums paid to the bank by the purchaser in respect of the sale shall be repaid to him by the board ;

(b) the costs of advertising and holding such sale shall be deemed to be costs recoverable by the board under section 63 (b) ; and

(c) the property shall be resold in accordance with the provisions of this Ordinance.


Order for delivery of
possession.


[ 9, 24 of 1939.]

[ [ 9, 10 of 1947.]

66.

(1) The purchaser of any property sold in pursuance of the provisions of section 62 shall, upon application made to the District Court of Colombo or the District Court having jurisdiction over the place where the property is situate, and upon production of the Certificate of sale issued in respect of the property under section 65, be entitled to obtain an order for Delivery of possession of the 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 purposes 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 proceedings connected with or incidental to, the execution of a decree of a District Court for the delivery of possession of a property of the same value as the property to which such application relates.


[ 28, 33 of 1968.]

(3) Where the 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 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.


[ 28, 33 of 1968.]

(4) Where the 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 the Sinhala, Tamil and English 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 section 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.


[ 9, 10 of 1947.]

[[ 29, 33 of 1968.]

67. If the property sold has been purchased on behalf of the bank the board may, at any time before it resells the property, cancel the sale by an endorsement to that effect on a certified copy of the certificate of sale, if the debtor or anyone on his behalf pays 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 proprietor as though the sale under this Ordinance had never been made.


Resale by bank.


[ 9, 10 of 1947.]

[ [ 11, 10 of 1947.]

68. If the property so sold has been purchased on behalf of the bank, and the sale is not cancelled under section 67, 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 65, all the right, title, and interest which would have been acquired by a purchaser at the original sale. The endorsement which shall be liable to the same stamp duty and charges as a certificate to a purchaser at the original sale, shall when it is registered in the office of the Registrar of Lands vest such right, title, and interest as aforesaid in the purchaser.


Limit of retention of property by the bank.


[ 30, 33 of 1968.]

69. If at any sale in pursuance of the preceding provisions of this Ordinance the bank has
Purchased any property sold for default in the repayment of a loan the bank shall not hold such property for a longer period than is necessary to enable the bank to resell the property for such a sum as will cover the total amount due to the bank on account of loan, interest, expenses and costs :


[ 12, 10 of 1947.]


Provided that where such property consists of the interest of a lessee under a lease from the Crown, the board may, instead of reselling such property, pay all sums of money due to the Crown by the lessee under the lease and surrender the lease to the Crown on such terms and conditions as may be agreed upon between the board, the Minister of Finance [1] and the Minister charged with the subject of Crown lands.[1]


Meaning of property.


[ 13, 10 of 1947.]

70. In this Chapter, 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 Crown, means the right, title and interest of the lessee under the lease.

CHAPTER VA
THE ACQUISITION OF CERTAIN PREMISES AND THE DISPOSAL OF SUCH PREMISES.
Administration of this Chapter.


[ 31, 33 of 1968.]

70A. The bank shall be responsible for and charged with the administration of the provisions of this Chapter and shall, in the exercise, performance or discharge of any power, duty or function conferred or imposed upon or assigned to the bank by or under this Chapter, be subject to the general direction and control of the Minister.

Acquisition of certain premises.


[ 31, 33 of 1968.]

70B.

(1) Subject to the provisions of sub-section (2), the bank is hereby authorized to acquire the whole or any part or share of any agricultural, residential or business premises, if the bank is satisfied that those premises were, at any time not earlier than the first day of January, 1952,-

(a) sold in execution of a mortgage decree entered by a court against the owner of such premises (hereafter in this Chapter referred to as the ” original owner “; or

(b) transferred by the owner of those premises (hereafter in this Chapter referred to as the ” original owner “) to any other person in satisfaction of a debt which was due from the original owner or his predecessor in title to that other person and which was secured by a mortgage of those premises subsisting immediately prior to the transfer; or

(c) transferred by the owner of those premises (hereafter in this Chapter referred to as the ” original owner “) to any other person, at the request of a mortgagee of those premises, in satisfaction or part satisfaction of a debt which was due from the original owner or his predecessor in title to that mortgagee and which was secured by a mortgage of those premises subsisting immediately prior to the transfer; or

(d) transferred by the owner of such premises to any other person after receiving from such other person a sum of money as consideration for such transfer and upon the condition that, on the repayment by the transferor (hereafter in this Chapter referred to as the ” original owner “) of that sum with or without interest thereon within a specified period, such other person will re-transfer those premises to the original owner.

(2) No premises shall be acquired under sub-section (1)-

(a) if an application in that behalf had earlier been made to the People’s Bank under Part VIII of the Finance Act, No. 11 of 1963, and such Bank had determined that such premises should not be acquired; or

(b) unless an application in that behalf has been made to the bank by the original owner of such premises or his spouse or children; or

(c) unless the bank is satisfied that the average statutory income of the original owner and of the other members of the family of which he is the head, computed under the provisions of the written law relating to the imposition of income tax, for the three years of assessment immediately preceding the date on which such application was made, does not exceed a sum of ; ten thousand rupees; or

(d) if the bank is satisfied that the premises to which the applica-tion relates are reasonably required for occupation as a residence for the original owner of those premises or any member of the family of such owner or for the purposes of any trade. business, profession, vocation or employment of such owner or any member of his family and that such owner or member of his family has no other premises which could be used for the purpose for which the premises to which the application relates are being used; or

(e) unless, in the case of an applica-tion relating to any agricultural premises, the bank is satisfied that the original owner is not the owner of any other agricultural premises exceeding ten acres in extent.

For the purposes of paragraph (d) of this sub-section, ” member of the family “, when used in relation to any person, means the spouse of that person or any son or daughter of that person over eighteen years of age.

(3) Where the bank entertains an application for the acquisition of any premises referred to in sub-section (1), the bank shall-

(a) cause notice of the fact to be sent by registered post to the owner of such premises;

(b) cause a copy of such notice to be delivered or transmitted to the proper Registrar of Lands for registration, setting out the prescribed particulars relating to such premises and stating that such premises may be acquired under this Chapter.

Every notice under paragraph (b) shall be registered by the Registrar of Lands in the manner provided in the Registration of Documents Ordinance for the registration of an instrument affecting or relating to land and shall be deemed for such purposes to be an instrument affecting or relating to premises the prescribed particulars of which are set out in such notice:

Provided that, if the bank determines that such premises shall not be acquired for the purposes of this Chapter, the bank shall forthwith cancel such notice and give written information of the cancellation to the Registrar of Lands, who shall register such cancellation.

(4)

(a) Where the owner of any premises receives a notice under subsection (3) relating to an application in respect of the premises, such owner shall not sell, gift, transfer, lease, mortgage or otherwise alienate the premises unless or until such application is dismissed by the bank.

(b) Any sale, gift, transfer, lease, mortgage or other alienation of any premises in contravention of the provisions of paragraph (a) of this sub-section shall be null and void.

(5) No civil court shall entertain any action-

(a) in respect of any matter which is pending before the bank relating to any acquisition to be made under this Chapter; or

(b) in respect of the validity of the procedure followed by the bank relating to such acquisition, or to the validity of such acquisition.

(6) The question whether any premises which the bank is authorized to acquire under this Chapter should or should not be acquired shall be determined by the bank and every such determination of the bank shall be final and conclusive and shall not be called in question in any court.

(7) Where the bank has determined that any premises shall be acquired for the purposes of this Chapter, the bank shall-

(a) notify such determination to the owner of such premises; and

(b) cause a notice to be delivered or transmitted to the proper Registrar of Lands for registration, setting out the prescribed particulars relating to those premises and stating that those premises are to be acquired under this Chapter.

Every notice under paragraph (b) shall be registered by the Registrar of Lands in the manner provided in the Registration of Documents Ordinance for the registration of an instrument affecting or relating to land and shall be deemed for such purposes to be an instrument affecting or relating to the premises the prescribed particulars of which are set out in such notice.

Acquisition procedure.


[ 31, 33 of 1968.]

70C.

(1) Where the bank has determined that any premises shall be acquired for the purposes of this Chapter, the chairman of the board shall cause such determination to be notified to the Minister.

(2) Upon being notified of the determination of the bank in respect of any premises the Minister may, by Order (hereafter in this Chapter referred to as a ” vesting Order “) published in the Gazette, vest in the bank, with effect from such date as shall be specified in the Order, the premises to which such determination relates.

(3) Where a vesting Order under subsection (2) in regard to any premises is published in the Gazette, such premises shall, with effect from the date specified in the Order under that sub-section, vest absolutely in the bank free from all encumbrances.

(4) Any person specially or generally authorized in that behalf by the chairman of the board may take possession of any premises vested in the bank by a vesting Order.

(5) The person who, under sub-section (4), is authorized to take possession of any premises vested in the bank by a vesting Order shall, by notice given to the person in occupation or in possession of such premises or exhibited in some conspicuous place in, or in the vicinity of, such premises,-

(a) inform that such authorized officer intends to take possession of such premises for and on behalf of the bank on such date and at such time and place as shall be specified in the notice; and

(b)require any person interested or his authorized agent to be present on the date and at the time and place so specified, and to allow and assist such authorized officer to take possession of such premises for and on behalf of the bank.

(6) Any notice required to be given to any person under sub-section (5) shall be deemed to be given to him if such notice is sent to him by registered letter through the post.

(7) Every person-

(a) who contravenes any requirement of any notice given to him under sub-section (5); or

(b) who-

(i) prevents, obstructs or resists, or

(ii) directly or indirectly causes anyone to prevent, obstruct or resist,

any other person from or in taking possession under the preceding provisions of this section of any premises for and on behalf of the bank,

shall be guilty of an offence under this Chapter and shall, on conviction after summary trial before a Magistrate, be liable to imprisonment of either description for a period not exceeding one year or to a fine not exceeding one thousand rupees or to both such imprisonment and tine.

Revocation of vesting Order.


[ 31, 33 of 1968.]

70D.

(1) Notwithstanding that any premises have vested in the bank by virtue of a vesting Order, the Minister may at any time by a subsequent Order published in the Gazette (hereafter in this section referred to as a ” divesting Order “) revoke that vesting Order.

(2) The following provisions shall apply in any case where a vesting Order in respect of any premises is revoked by a divesting Order: –

(a) such premises shall be deemed never to have vested in the bank by virtue of that vesting Order, and any question which might arise as to any right, title or interest in or over such premises shall be determined accordingly; and

(b) all claims under this Chapter to the compensation payable in respect of such premises, and all proceedings taken under this Chapter in regard to such claims, before that vesting Order was revoked, shall be deemed to be null and void; and

(c) no compensation shall be payable under this Chapter in respect of the period prior to the revocation of that vesting Order during which such premises were vested in the bank.

(3) The preceding provisions of this section shall have effect notwithstanding anything in any other provision of this Ordinance or in any other written law.

Notice to persons entitled to make claims to the compensation payable under this Chapter in respect of any premises vested in the bank.


[ 31, 33 of 1968.]

70E. Where any premises are vested in the bank, the chairman of the board shall, by notice published in the Gazette and in such other manner as may be determined by him, direct every person who was interested in such premises immediately before the date on which such premises were so vested, to make, within a period of one month reckoned from the date specified in the notice, a written claim to the whole or any part of the compensation payable under this Chapter in respect of such premises, and to specify in the claim-

(a) his name and address;

(b) the nature of his interest in such premises;

(c) the particulars of his claim; and

(d) how much of such compensation is claimed by him.

Provisions to be complied with by the chairman of the board on receipt of claims to compensation.


[ 31, 33 of 1968.]

70F. Upon the receipt of any claim made under section 70E to the compensation payable under this Chapter in respect of any premises vested in the bank, the chairman of the board shall cause the following documents to be sent to the claimant by registered letter through the post-

(a) a copy of any such report in regard to the condition of the afore-said premises as has been made by or under the authority of the bank under any rule made under this Ordinance, if a copy of that report has not already been served on the claimant;

(b) a copy of any such assessment of the compensation payable under this Chapter in respect of the aforesaid premises as has been made by or under the authority of the bank;

(c) a notice requiring the claimant, within the time specified in the notice-

(i) to furnish to the bank a written statement setting out whether or not he agrees with the report referred to in the preceding paragraph (a) and the assessment referred to in the preceding paragraph (b) and, if he does not so agree, any objections that he may have to such report and assessment, and the grounds of such objections, and

(ii) to produce to the bank all documents, and in particular the documents in regard to the condition of the aforesaid premises, relied on by him in support of any such objection.

Reference to the compensation tribunal for an award as to compensation in respect of any premises vested in the bank under this Chapter.


[ 31, 33 of 1968.]

70G.

(1) The chairman of the board shall refer to the compensation tribunal for determination of the amount of the compensation payable in respect of any property vested in the bank under this Chapter and shall transmit to the tribunal all claims made to such compensation together with all documents furnished by the claimants in support of their claims, and all documents, copies of which have been served on or transmitted to the claimants by the bank.

(2) A reference made under sub-section (1) to the compensation tribunal is hereafter in this Chapter referred to as a ” reference for an award as to compensation “.

Compensation in respect of premises vested in the bank under this Chapter.


[ 31, 33 of 1968.]

70H. The amount of compensation to be paid under this Chapter in respect of any premises vested in the bank shall be either the actual amount for which such premises were purchased by, or transferred to, the owner thereof together with such interest thereon as may have been determined by the compensation tribunal, and an additional sum which is equal to the reasonable value of any subsequent additions and improvements made to such premises by any person who was interested in such premises before the publication of the vesting Order in regard to such premises or the market value of such premises, whichever is less.

When compensation in respect of any vested premises accrues due.


[ 31, 33 of 1968.]

70J. The compensation payable in respect of any premises vested in the bank under this Chapter shall be considered as accruing due from the date on which those premises were so vested.

Proportionate payment of compensation.


[ 31, 33 of 1968.]

70K.

(1) The amount of compensation to be paid to any person in respect of any premises vested in the bank under this Chapter shall be proportionate to the interest such person had in such premises on the date on which such premises were so vested.

(2) Where any premises are subject to a mortgage or lease at the time when those premises were vested in the bank under this Chapter, the rights of the mortgagee or of the lessee, shall, notwithstanding the provisions of sub-section (3) of section 70c, be limited to any sum paid under this Chapter as compensation in respect of those premises.

Interest on compensation.


[ 31, 33 of 1968.]

70L. Any compensation payable under this Chapter shall, from the date on which such compensation accrues due up to the date of payment, carry interest at such rate as may be determined by the bank with the concurrence of the Minister.

Right to compensation.


[ 31, 33 of 1968.]

70M. No compensation in respect of any premises vested in the bank under this Chapter shall be paid to any person under this Chapter unless such person is entitled to such compensation according to an award (hereafter in this Chapter referred to as an ” award as to compensation”) made by the compensation tribunal under this Chapter.

Provisions for cases where compensation is not accepted &c.


[ 31, 33 of 1968.]

70N. Where any compensation payable to any person under this Chapter in respect of premises vested in the bank is not accepted by him when it is tendered to him or where such person is dead, cannot be found after diligent search, or is not known, it shall be paid to the District Court or the Court of Requests having jurisdiction over the place where such premises are situated, according as the amount of that compensation exceeds or does not exceed seven hundred and fifty rupees, to be drawn by the person or persons entitled thereto.

Constitution of compensation tribunal.


[ 31, 33 of 1968.]

70P.

(1) There shall be established, for the purposes of this Chapter, a compensation tribunal consisting of ten members appointed by the Governor-General of whom at least five shall be persons with judicial or legal experience.

(2) A person shall be disqualified for appointment, or for continuing, as a member of the compensation tribunal if he is a Senator, a Member of Parliament, or a member of the board or an officer or an employee of the bank.

(3) A member of the compensation tribunal with judicial or legal experience shall be appointed to be the chairman. and another member with similar experience shall be appointed to be the vice-chairman, of the tribunal by the Governor-General on the recommendation of the Minister.

(4) Every member of the compensation tribunal shall, unless he earlier vacates office or is removed therefrom by the Governor-General, hold office for a period of three years. Any member of the tribunal who vacates office by effluxion of time shall be eligible for reappointment.

(5) There shall be appointed a secretary to the compensation tribunal (here-after in this Chapter referred to as the “secretary “) and such other officers and servants as may be necessary for the performance of the work of the tribunal.

(6) The members, officers and servants of the compensation tribunal shall be remunerated at such rates as may be determined by the board.

Meetings of the compensation tribunal.


[ 31, 33 of 1968.]

70Q.

(1) The secretary shall, under the direction of the chairman or in his absence the vice-chairman of the compensation tribunal, convene meetings of the tribunal for the consideration and determination of references for awards as to compensation.

(2) The chairman or vice-chairman and four other members of the compensation tribunal shall be summoned to a meeting of the tribunal. Such other members shall be chosen by lot by the secretary. The quorum for a meeting of the tribunal shall be three members.

(3) Two separate meetings of the compensation tribunal may be convened and held at the same time to consider and determine different references for awards as to compensation.

(4) Where the chairman or the vice-chairman is summoned to a meeting of the compensation tribunal, the chair-man or vice-chairman, as the case may be, shall preside at that meeting, and in the absence of the chairman or the vice-chairman the members of the tribunal summoned to and present at that meeting shall choose from themselves a chairman for the meeting.

(5) A member of the compensation tribunal who is interested in any matter which is the subject of a reference for an award as to compensation or who has been consulted as an advocate or proctor or in any other capacity in regard to that matter by or on behalf of any person interested therein shall not participate in any proceedings of a meeting of the tribunal on such reference.

(6) A meeting of the compensation tribunal may from time to time be postponed or adjourned.

Proceedings before compensation tribunal.


[ 31, 33 of 1968.]

70R.

(1) Every reference for an award as to compensation shall be considered and determined at a meeting of the compensation tribunal.

(2) The secretary shall fix a date, time and place for the consideration and determination by the compensation tribunal of each reference for an award as to compensation.

(3) The secretary shall, in respect of every reference for an award as to compensation, keep a record of all such proceedings before the compensation tribunal as relate to that reference.

Power to summon witnesses, & c.


[ 31, 33 of 1968.]

70S.

(1) The chairman or vice-chairman of the compensation tribunal and, if the chairman or the vice-chairman is not presiding at any meeting of the tribunal, the chairman of that meeting shall, for the purposes of the consideration and determination of any reference for an award as to compensation, have all the powers of a District Court-

(a) to summon and compel the attendance of witnesses;

(b) to compel the production of documents; and

(c) to administer any oath or affirmation to witnesses.

(2) Every person giving evidence on any matter before a meeting of the compensation tribunal shall be bound to state the truth on such matter.

(3) Every person who attends a meeting of the compensation tribunal as a witness shall be paid as travelling and other expenses such sum as may be determined by the chairman of the meeting.

Determination of the compensation tribunal.


[ 31, 33 of 1968.]

70T.

(1) The determination made at a meeting of the compensation tribunal on any matter considered at that meeting shall be deemed to be the determination of the tribunal on that matter.

(2) Where the members of the compensation tribunal who consider any matter disagree with regard to the determination of that matter, the determination of the majority of them shall be the determination of the tribunal on that matter, and, where the members are equally divided in their opinion, the determination supported by the chairman of the meeting by which that matter is considered shall be the determination of the tribunal on that matter.

(3) Every determination of the compensation tribunal shall contain the reasons therefor.

Compensation tribunal may regulate its procedure at meetings.


[ 31, 33 of 1968.]

70U. Subject to the provisions contained in this Chapter in respect of procedure, the compensation tribunal may lay down the procedure to be observed at meetings of the tribunal. The bank and claimants to

compensation to be given an opportunity of being heard before the making of an award.


[ 31, 33 of 1968.]

70V. Where a reference for an award as to compensation is made to the compensation tribunal, the tribunal shall, before making an award, give the bank and every person who has made a claim to compensation an opportunity of being heard either in person or by an agent authorized in that behalf.

Provisions in regard to evidence.


[ 31, 33 of 1968.]

70W.

(1) Where a copy of any report made by or under the authority of the bank in regard to the condition of any premises vested in the bank under this Chapter is served on any claimant to compensation in respect of such premises, then, in so far as that claimant is concerned, that report shall, in any proceedings relating to the claim of the claimant before the compensation tribunal, be prima facie evidence of the facts stated therein until the contrary is proved.

(2) Where a copy of the bank’s assessment of compensation in respect of any premises is served on any claimant to such compensation, that assessment shall, in any proceedings relating to the claim of the claimant before the compensation tribunal, be prima facie evidence of the facts stated therein until the contrary is proved.

(3) Where a report in regard to the condition of any premises vested in the bank, or the bank’s assessment of any compensation, is prima facie evidence of the facts stated therein under the preceding provisions of this section in any proceedings relating to a claim to compensation before the compensation tribunal, then, the claimant shall not be entitled to produce in those proceedings any document in support of any objection to such report or assessment unless that document had been produced to the bank as required by or under this Chapter.

An award as to compensation by the compensation tribunal on a reference.


[ 31, 33 of 1968.]

70X.

(1) Where a reference for an award as to compensation is made to the compensation tribunal in respect of any premises vested in the bank, the tribunal shall, after considering all such matters and hearing all such witnesses as may be necessary for the purpose and after complying with the provisions of section 70v and section 70w make, save as otherwise provided in sub-section (2), an award determining-

(a) whether or not each person who has made a claim to compensation is a person entitled to compensation, and if so, the capacity in which he is so entitled;

(b) the amount of the compensation payable in respect of such premises in accordance with the provisions of this Chapter; and

(c) the apportionment of the compensation among the persons entitled to compensation:

Provided that, where there is a dispute as to the persons entitled to such compensation or as to the apportionment of such compensation among the persons entitled to such compensation, the tribunal shall defer the making of an award and shall refer the dispute for decision to the District Court within whose jurisdiction such premises are situated and shall, after such Court or. in the event of an appeal, the Supreme Court makes its decision on such dispute, make an award in accordance with such decision.

(2) Any person who is dissatisfied with the decision of the District Court on a reference made to such Court under the proviso to sub-section (1) may appeal against such decision to the Supreme Court within the time and in the manner provided in the Civil Procedure Code for appeals against decrees in civil suits. The decision of the Supreme Court on any appeal to such Court under this sub-section shall be final.

(3) Where no person makes a claim to compensation in respect of any premises vested in the bank, it shall not be necessary to determine in the award under this section the matters specified in paragraphs (a) and (c) of sub-section (1) and to comply with the provisions of sub-section (4) relating to the giving of notice of the award to claimants to compensation.

(4) The compensation tribunal shall cause written notice of awards to be given to the bank and the claimants to compensation.

(5) An award of the compensation tribunal shall be final and shall not be called in question in any court.

Disposal of premises acquired by the bank under the preceding provisions of this Chapter.


[ 31, 33 of 1968.]

70Y. Any premises vested in the bank in consequence of an application made to the bank for the acquisition of such premises by any person entitled to make such application under the preceding provisions of this Chapter may be let by the bank to such person or where such person is dead, to the surviving spouse, if any, or any descendant of such person upon such terms as will enable the person to whom such premises are let to become the owner thereof after making a certain number of half-yearly payments as rent.

Powers of entry, survey, & c.


[ 31, 33 of 1968.]

70Z. Where the bank considers it necessary that an inspection, examina-tion or survey should be made of any premises which the bank is authorized under this Chapter to acquire, it shall be lawful for any person authorized in that behalf by the chairman of the board, together with such persons, implements, materials, vehicles and animals as may be necessary, to enter upon and to take levels of such premises, and to do all such other acts as may be necessary for the purpose of such inspection, examination or survey :

Provided, however, that no person shall enter or do any act upon any premises in pursuance of the powers conferred on him by the preceding provisions of this section unless he has given the owner or occupier of such premises at least seven days’ written notice of his intention to enter such premises or to do such act thereon.

Power of bank to call for returns.


[ 31, 33 of 1968.]

70AA.

(1) The chairman of the board or any other person authorized in that behalf by such chairman may, by notice in writing, direct any person to furnish before a specified date to the bank or to such officer thereof as may be specified in the notice-

(a) a return in the prescribed form containing the prescribed particulars relating to any such premises as are referred to in section 70B of which that person is, or was at any time, the owner; or

(b) such information or explanation as the bank may require in respect of any particulars stated in any return furnished by that person; or

(c) such documentary or other evidence as the bank may require for the purpose of verifying any particulars stated in any return or any information furnished by that person.

(2) Where any person has a plan of any premises referred to in section 70B, the chairman of the board or any other person authorized in that behalf by such chairman may by written notice direct that person to produce the plan before a specified date to such officer of the bank as is specified in the notice in order that the bank may verify the boundaries and extent of those premises.

(3) Any notice required to be given to any person under the preceding provisions of this section shall be deemed to be given to him if such notice-

(a) has been sent through the post by registered letter to his residence or place of business or to his agent; or

(b) has been affixed to a conspicuous part of such residence or place; or

(c) in a case where such person is on the date of issue of such notice the owner of the premises to which such notice relates, has been sent through the post by registered letter to the occupier of such premises or has been affixed in a conspicuous part of a building, or to a tree or post in a conspicuous place, on such premises.

(4) Any person-

(a) who contravenes any requirement of any notice given to him under this section; or

(b) who, when required to furnish a return or any information or explanation, or evidence, knowingly furnishes a return con-taining any particulars which are false or any information, explanation or evidence which is false,

shall be guilty of an offence and shall, on conviction after summary trial before a Magistrate, be liable to a fine not exceeding five hundred rupees.

Prohibition of act which diminishes the value of any premises to be rested in the bank under this Chapter.


[ 31, 33 of 1968.]

70BB.

(1) Where any premises have been inspected by any person authorized in that behalf by the chairman of the board for the purpose of assessing the value of such premises with a view to acquiring such premises under the provisions of this Chapter, such chairman may by written notice given in the same manner as a notice under section 70AA prohibit the owner or occupier of such premises from committing or permitting the commission of any damage to those premises or to any plantation, building or other structure on those premises, of any other act which will diminish the value of those premises.

(2) Where it is decided not to vest in the bank by vesting Order made under the provisions of this Chapter any premises in respect of which a notice has been given to any person under subsection (1), the chairman of the board shall forthwith cancel that notice and give written information of the cancellation to that person.

(3) A person who contravenes a notice issued to him under sub-section (1) shall be guilty of an offence and shall, on conviction after summary trial before a Magistrate, be liable to a fine not exceeding five hundred rupees.

Informality or irregularity.


[ 31, 33 of 1968.]

70CC. No informality or irregularity occurring in any matter or proceeding under this Chapter shall invalidate or affect the title to any land vested in the bank under this Chapter.

Financial provisions.


[ 31, 33 of 1968.]

70DD. All expenses incurred in the administration of this Chapter, including the remuneration to be paid to the members, officers and servants of the compensation tribunal and the sums to be paid as travelling and other expenses to persons attending a meeting of the tribunal as witnesses shall be met by the bank.

Interpretation.


[ 31, 33 of 1968.]

70EE. In this Chapter unless the con-text otherwise requires-

” agricultural premises ” means any property or premises which is used or capable of being used wholly or mainly for the pur-pose of agriculture or horticulture or for any purpose of husbandry including the keeping or breeding of livestock, poultry, or bees and the cultivation of fruits, vegetables and the like;

” business premises ” means any premises other than agricultural premises or residential premises;

” compensation tribunal ” means the compensation tribunal established under this Chapter;

” market value “, with reference to any premises vested in the bank, means the price which those premises would have fetched in the open market on the date on which such premises were vested in the bank;

” person who was interested “, in relation to any premises vested in the bank, means a person who, immediately before the date on which such premises were vested, has an interest in such premises as owner, co-owner, mortgagee, lessee or otherwise, whether absolutely for himself or in trust for any other person;

” residential premises ” means any premises for the time being occupied wholly or mainly for the purposes of residence;

” spouse “, when used with reference to any person, means the husband or wife, as the case may be, of that person and includes, in the case of a marriage by habit and repute or according to custom, any contracting party to such marriage;

” year of assessment ” has the same meaning as in the Inland Revenue Act, No. 4 of 1963.

No application tinder section 70B (2) to be entertained on or after the date appointed by the Minister.


[ 9, 16 of 1973.]

70FF. Notwithstanding anything to the contrary in any other provisions of this Chapter, no application under section 70B(2) of this Chapter shall be made to, or entertained by, the bank, on or after such date as may be fixed in that behalf by the Minister by Order published in the Gazette.

CHAPTER VI
ACCOUNTS AND AUDIT
(I) ACCOUNTS
Accounts of the board.


[ 32, 33 of 1968.]

71. The board shall cause the accounts of the bank to be kept in such form and manner as may be determined by the board.


Repealed.


[ 33, 33 of 1968.]

Repealed.

Limitation on overdrawing of accounts.


[ 34, 33 of 1968.]

73. No accounts of the bank shall be overdrawn to the extent of a greater sum than is authorized by the Minister with the concurrence of the Minister of Finance and the repayment of which is guaranteed by the Ceylon Government under the signature of the Minister of Finance.

Repealed.


[ 35, 33 of 1968.]

74. Repealed.

Repealed.


[ 35, 33 of 1968.]

75. Repealed.

Repealed.


[ 35, 33 of 1968.]

76. Repealed.

Repealed.


[ 35, 33 of 1968.]

77. Repealed.

Repealed.


[ 35, 33 of 1968.]

78. Repealed.

Repealed.


[ 35, 33 of 1968.]

79. Repealed.

Repealed.


[ 35, 33 of 1968.]

80. Repealed.


Restriction on investment of reserve fund in mortgage loans.

81. Until the total to the credit of the reserve fund equals one-tenth of the total of the outstanding debentures no portion of the reserve fund shall be invested in mortgage loans except for such short period as may be necessary to raise money upon debentures to cover such loans.

Repealed.


[ 36, 33 of 1968.]

82. Repealed.

Repealed.


[ 36, 33 of 1968.]

83. Repealed.

Repealed.


[ 36, 33 of 1968.]

84.Repealed.

Repealed.


[ 36, 33 of 1968.]

85.Repealed.


Keeping of books and
registers and safekeeping of securities.

86. The books of the bank shall be kept, the debentures and mortgages shall be registered, and measures taken for the safekeeping of mortgages and other securities in accordance with the prescribed rules.

Repealed.


[ 37, 33 of 1968.]

87. Repealed.

(II) AUDIT

Audit of accounts.

88. The accounts of the bank shall be audited in the prescribed manner by the Auditor-General or other person specially appointed for the purpose by the Minister with the concurrence of the Minister of Finance.[1]


Auditor’s rights and duties.


[ 39, 33 of 1968.]

89. Every auditor shall be supplied with a copy of the annual statement of accounts, and he shall examine such statement and the accounts and the documents relating thereto. He shall at all reasonable times have access to all books, registers, and documents kept by the bank. And he may in relation to such accounts examine any director or any officer of the bank.


Auditor’s statement, report, and
certificate.

90. The auditor shall examine the books, registers, and documents of the bank and shall forward to the board a statement of the accounts in the prescribed form, together with a report thereon and a certificate signed by him, showing-

(a) whether the accounts contained a full and true account of everything which ought to be contained therein ; and

(b) whether the books which by any rules made under this Ordinance are directed to be kept by the bank have been duly and regularly kept; and

(c) whether the funds have been invested and securities have been kept in the manner prescribed by the Ordinance and any rules made thereunder ; and

(d) whether all loans granted by the bank have been granted in accordance with the requirements of the Ordinance and rules made thereunder ; and

(e) whether the instalments on the loans have been paid when they fell due and, if not, the extent of overdue instalments ; and

(f) whether, in his opinion, the statement of accounts is a full and fair statement containing the prescribed particulars and is properly drawn up so as to exhibit a true and correct view of the state of the bank’s affairs, and in case he has called for any explanation or information from the board, whether It has been given and whether it is satisfactory ; and

(g) whether the accounts are deficient, and whether the board or the officers of the bank have failed to comply with this Ordinance or the rules made thereunder.


Auditor’s power to summon witnesses and call for documents.

91.

(1) Every auditor shall have the powers of a civil court under the Civil Procedure Code-

(a) to summon any person whose presence he may think necessary to attend him from time to time ; and

(b) to examine any person on oath to be by him administered ; and

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

(d) to summon any person to produce any document or thing, the production of which appears to be necessary for the purposes of such audit or examination.

(2) Any person who when summoned refuses or. without reasonable cause, neglects to attend, or to produce any document or thing, or attends and refuses to be sworn or to be examined, shall be deemed to have committed an offence within the meaning of sections 172 and 173 of the Penal Code.

CHAPTER VII
RULES AND OFFENCES
(I) RULES
Rules made
by the board.


[ 40, 33 of 1968.]

92.

(1) The board may make rules not inconsistent with the provisions of this Ordinance for the following purposes : –

(a) prescribing the subordinate staff to be employed by the bank, their salaries, allowances, conditions of service, duties, rights, and privileges, the payment of bonuses to them and any other matters connected therewith ;


[ 14, 10 of 1947]

(b) prescribing the fees to be paid by applicants for loans in respect of the valuation of property offered as security, the examination of their title thereto, the preparation, perfection, and registration of mortgage bonds and any other matters, in respect of which services are performed by any persons acting for or in the employ of the bank in connexion with the consideration or granting of loans to the said applicants ;

(c) prescribing the forms upon which and the manner in which applications shall be made for loans and any other matters connected therewith ;

(d) prescribing the principles upon which the valuation of property offered or accepted as security is to be carried out ;

(e) prescribing any forms to be used for the purpose of this Ordinance ;

(f) for all other matters connected with the business of the bank for which the board may properly prescribe or for the information and guidance of the public dealing with the bank or of its own officers, employees, or agents.

(2) All rules made under this section shall be entered in a special book kept for the purpose in the office of the board.

(3) Copies of all rules under paragraph (a) of subsection (1) and such rules under paragraph (f) of subsection (1) as the board shall decide shall be kept in some place on the bank premises where they may be inspected by any officer, employee, or agent of the bank whom they may concern.

(4) All rules under paragraphs (b), (c), and (e) of subsection (1) and such rules under paragraph (f) of subsection (1) as the board shall decide shall be published in the Gazette for general information.

Rules made by the board with the approval of the Minister.

93.

(1) The board may, subject to the approval of the Minister given with the concurrence of the Minister of Finance,[1] make rules not inconsistent with the provisions of this Ordinance for the following purposes : –


[ 41, 33 of 1968.]

(a) prescribing the powers and duties of the general manager and deputy general manager of the bank, their salaries and allowances and conditions of service, the payment of bonuses to them and any other matters connected therewith ;


[ 41, 33 of 1968.]

(b) prescribing scales of remuneration for the various services performed by valuators, inspectors, legal and other advisers , and agents employed by the bank and the scales of travelling charges which may be paid to such persons ;

(c) prescribing the scale of travelling allowances to be paid to the manager and assistant manager ;

(d) prescribing the forms of debentures and the procedure to be followed in their issue, registration, transfer, redemption, and cancellation ; providing for the issue of certificates representing given numbers of debentures, for the cancellation of such certificates and the issue of fresh certificates representing different numbers of debentures and for the replacement of debentures lost, destroyed, worn out, or defaced ; prescribing the fees to be charged in respect of any of the aforesaid operations and consistently with the provisions of this Ordinance for regulating in all matters not specifically dealt with in this Ordinance the manner in which debentures may be dealt with in respect of anything to be done by the bank or the purchasers, sellers, or holders of debentures ;

(e) prescribing the rates of penal interest, the cir-
cumstances in which the same shall be charged, and other matters connected therewith ;

(f) prescribing the costs that may be recovered under
section 63 ;

(g) prescribing the books, registers, and records to
be kept and the manner and form in which they are to be kept;

(h) prescribing the form of declaration to be made
under section 34 ;

(i) for establishing branch boards and defining their powers and the areas in respect of which they may act;

(j) for establishing agencies and providing for their management;

(k) prescribing the manner in which the accounts are to be audited ;

(l) prescribing the remuneration payable to agents
of the bank ;

(m) for providing for every other matter not herein specially provided for but necessary for the conduct of the business of the bank, the regulation of its funds and generally for fully and efficiently carrying out and giving effect to its objects and purposes and guarding against violation of this Ordinance.

(2) All rules made under this section shall be entered in a special book kept for the purpose in the office of
the board.

(3) Copies of all rules made under paragraphs (a), (b), (c), (g), (j), (l) of subsection (1), and such, rules under paragraph (m) of subsection (1), as the board with the approval of the Minister1 shall decide, shall be kept in some place on the bank premises where they may be inspected by any officer, employee, or agent of the bank whom they may concern.

(4) All rules made under paragraphs (d), (e), (f), (h), (i), (k) of subsection (1) and such rules under paragraph (m) of subsection (1), as the board with the approval of the Minister1 shall decide, shall be published in the Gazette.

Rules
made by the Minister.

94.

(1) The Minister with the concurrence of the Minister of Finance[1] may, after consulting the board, make rules not inconsistent with the provisions of this Ordinance for the following purposes : –

(a) prescribing the fees payable to auditors and the fees and travelling allowances payable to the directors and members of branch boards ;

(b) for regulating the meetings, proceedings, and business, of the board ;


[ 2, 11 of 1944.]

[ [ 2, 50 of 1949.]

(c) for regulating the institution and management of pensions and provident funds for, and the payment of gratuities to, the officers and servants of the bank, and for the payment of gratuities to the nominees and heirs of such officers and servants who die while in the service of the bank ;

(d) prescribing-

(i) the sum which the amount on loan to any person at any time may not exceed,


[ 42, 33 of 1968.]

(ii) the minimum rate of the interest to be charged on loans and the matters stated or required to be prescribed under section 51;

(e) prescribing the terms and conditions on which loans may be made to societies registered under the Co-operative Societies Ordinance ;


[ 15, 10 of 1947.]

(f) prescribing the terms and conditions on which loans may be made on the security of the interest of a lessee under a lease from the Crown and prescribing special rates of interest to be charged on such loans;


[ 42, 33 of 1968.]

(g) for carrying out or giving effect to the principles and provisions of Chapter VA, and for regulating any matter regarding the assessment and payment of any compensation, or any matter stated or required to be prescribed, under Chapter VA.


[ 2, 11 of 1944.]

(2) The power to make rules under paragraph (c) of subsection (1) shall be deemed to include power to make a rule for the payment of a gratuity to any officer or servant of the bank who has retired from the service of the bank before the date on which such rule is made.

(3) All rules made under this section shall be entered in a special book kept for the purpose in the office of
the board.

(4) Copies of all rules made under this section shall be kept in some place on the bank premises where they may be inspected by any officer, employee, or agent of the bank whom they may concern.

(5) All rules made under this section shall be laid, as soon as conveniently may be, on, the table of the Senate and the House of Representatives[1] at two successive meetings of the Senate and the House of Representatives,[1] and shall be brought before the Senate and the House of Representatives [1] at the next subsequent meeting held thereafter by a motion that the said rules shall not be disapproved ; and if upon the introduction of any such motion, or upon any adjournment thereof, the said rules are disapproved by the Senate or the House of Representatives,[1] such rules shall be deemed to be rescinded as from the date of such disapproval but without prejudice to anything already done thereunder ; and such rules if not so disapproved, shall continue to be of full force and effect. Every such disapproval shall be published in the Gazette.

(II) OFFENCES
Liability as public servants of directors, members of branch boards, and employees.

95. Every director, every member of a branch board, and all officers and servants of the bank, including agents, valuators, and inspectors shall, when acting in any such capacity, be deemed to be public servants within the meaning of the Penal Code.

Forgery of debentures and interest coupons.

96. Sections 21, 22, and 23 of the Ceylon Paper Currency Ordinance, 1884, * shall apply to debentures as if there were substituted in this section-

(a) the word ” debenture ” for the words ” currency note ” or ” note ” ; and

(b) the word ” directors ” for the word ” Commissioners “.

False evidence.

97.

(1) Whoever, during any examination authorized by this Ordinance, makes upon oath a statement which is false, and which he either knows or believes to be false or does not believe to be true, shall be deemed to have intentionally given false evidence in a stage of a judicial proceeding and shall be punished therefor in accordance with the Penal Code.

(2) Whoever makes a declaration required by this Ordinance or rules thereunder knowing it to be untrue in any particular shall be guilty of giving false evidence and shall be punished therefor in accordance with the Penal Code.

Liability of directors and valuators for participating in the sanctioning of certain loans.


[ 9, 10 of 1947.]

[ [ 43, 33 of 1968.]

98.


[ 43, 33 of 1968.]

(1) A director who participates in the discussion on, or who votes upon, any resolution for the granting of a loan-

(a) to a person who is a debtor or creditor of his or is in partnership with him or is in his employ ; or

(b) on the security of any property in which he has a pecuniary interest,

shall be liable on conviction to a fine not exceeding five thousand rupees or, in default of payment, to imprisonment of either description for a period not exceeding three months.

(2) A person who acts as valuator in respect of the application for a loan-

(a) by a person to whom he stands in any of the relationships set out in subsection (1) ; or

(b) on security in which he has a pecuniary interest, shall be liable to a fine of five hundred rupees.

CHAPTER VIII
GOVERNMENT CONTROL AND MISCELLANEOUS
Repealed.


[ 44, 33 of 1968.]

99. Repealed.

Minister’s powers in case of mismanagement.

100.

(1) If at any time it appears to the Minister[1]-

(a) that the board has failed to comply with any duty imposed on it either by this Ordinance or rules thereunder; or

(b) that the board is conducting the business of the bank in a manner that is likely to endanger the solvency, safety, or credit of the bank,

the Minister[1] may take any of the following steps :-

(i) by an order addressed to the board issue directions for the proper management of the bank and require compliance therewith within a time to be specified in the order ;

(ii) appoint new directors to carry on the business of the bank ;


[ 45, 33 of 1968.]

(iii) direct the general manager or any other person whom he may appoint to carry on the business of the bank ;

(iv) appoint an officer or officers to inquire and report upon the constitution, working, and financial condition of the bank ;

(v) make an order for the winding up of the bank ; or

(vi) take any other steps which to him may appear necessary.

(2) An officer or officers appointed under section 99 shall for the purpose of the inquiry have the same powers to require attendance of persons and the production of accounts and other documents as a District Judge has in relation to matters within his jurisdiction.

Cost of proceedings.

101. The remuneration to be paid to any person appointed under this Chapter and the cost of carrying out the order shall be defrayed out of the funds of the bank.

MISCELLANEOUS
Custody and affixing of common seal.


[ 46, 33 of 1968.]

102.

(1) The common seal of the bank shall be in the custody of the general manager, and shall not be affixed to any instrument, except in the presence of the general manager or, in his absence, of the deputy general manager, and two directors, all of whom shall sign the instrument in token of their presence.

(2) The common seal of the bank may be altered in such manner as may be determined by the bank.”.

Penal interest in case of default.


[ 47, 33 of 1968.]

103. 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 by the rules under section 93 (1) (e).

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, deter-mine 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.

Power to inspect valuation rolls of local rating authorities.


[ 48, 33 of 1968.]

104. The bank shall have access without fee or charge to the valuation roll of any local rating authority, and the officers of every such authority shall upon application supply to the bank full particulars as to any valuation of rateable property in respect of which such local authority has power to levy rates.

Registered address and notices.


[10, 24 of 1939.]

105.

(1) Every debenture holder and every person-

(a) to whom a loan is granted by the bank; 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 bank, or who has, under the provisions of paragraph (b) of section 62 (2), 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, mortgaged to the bank as security for any loan, 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.

(2) In any case where any debenture holder or other
person fails to register his address under subsection (1), the bank shall be absolved from all responsibility in respect of the service of any notice required under this Ordinance to be served upon such debenture holder or person :

Provided, however, that in the case of any such failure on the part of any person who is a debenture holder or a person to whom a loan has been granted by the bank, the bank shall publish a notice addressed to him in the Gazette and in a daily newspaper, and such notice shall be deemed to be duly given to that debenture holder or person on the day on which such notice is published.

(3) A notice shall be deemed to have been duly served on any person for the purposes of this Ordinance if the notice is sent by post in a registered letter to the address registered by that person under this 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.

Loans to co-operative societies.

106. In accordance with such terms and conditions
as the Minister[1] may in consultation with the board from time to time prescribe, the bank may notwithstanding anything to the contrary in this Ordinance make loans to any society registered under the Cooperative Societies Ordinance, whose object is the granting of long-term loans for purposes substantially the same as those specified in section 51.

Chapter 81 and Act No. 10 of 1958, not to apply to the bank.


[ 49, 33 of 1968.]

106A. The provisions of the Debt Conciliation Ordinance and the Conciliation Boards Act, No. 10 of 1958, shall not apply to, and in relation to, the bank; and accordingly such provisions shall be read and construed subject to the preceding provisions of this section”.

CHAPTER IX
Temporary Provisions
Date of establishment of bank.

107. The bank shall be deemed to be established as from the 6th day of December, 1931.

Directors first appointed.

108.

(1) The five directors first appointed shall retire one annually in any order that they may agree to or in the order that they may determine by drawing lots.

(2) The vacancy caused by each successive retirement shall be filled by a new appointment by the Governor, the retiring director remaining eligible for reappointment, unless otherwise disqualified.

(3) The date for retirement shall be the thirty-first day of December in every year, provided that the first retirement shall not occur earlier than one year after appointment.


Schedules