An Act being the legislation of the Central Government was enacted as an Act no. 52 of the year 1963 under the short title as ‘the Unit Trust of India Act, 1963’. The Act was enacted with the aim and object to make provisions as to establish a corporation for encouraging the savings and investments and also participation in the accrued incomes, profits, etc. of the Corporation by reason of acquisition, holding, management and finally disposing of the Securities. The Act was assented by the honourable President of India on 30th day of December, 1963. And the same was enacted in the year 1963 as aforesaid, i.e. in the 14th year of the republic of India and was brought into operation on 1st February, 1964 by the Notification of Central Government published in the Official Gazette. The provisions of this Act were extended to the entire Indian territories.
The Act under its first Chapter dealing with the preliminary provisions, provides for short title, extension, enforcement and also the several important definitions of the terms which are specifically, used in the various provisions of this Act.
Further, the most important provisions relating to the main purpose of the Act, are contemplated under second chapter of the Act. Section 3 thereof, deals with the establishment of a body corporate which is named under this Act as Unit Trust of India by the Central Government by notifying in the Official Gazette. Such Unit Trust is to be established with all features of the Company. The location for the head office of the Unit Trust is provided under the Act at Bombay (now Mumbai), and the provision is also made to opt for the location other than Bombay, by the Development Bank which should specify the same in the notification. Such Unit Trust is empowered under this Act to provide for its local offices, branches, etc. which can be located at any places either inland or outside India. The new provision of section 3A was inserted in the present Act by the Trust Laws (Amendment) Act, 1975 (Act no. 16 of 1975), which is providing that the words ‘Unit Trust’, Unit, Units as a part of the name their name, should not be used by any individual, group of individuals or company, engaged in the similar transactions. And if such use is found by such categories of persons as aforesaid, then there is a punishment in the provision in the form of fine extending to the 2000 rupees and in case of continuation of use, then further fine extending to 1000 rupees for each day of such use will be inflicted. For taking cognizance of said offence, the previous written complaint from the authorized officer of the Unit Trust is necessary, and the Court which can take such cognizance under this provision should not be inferior to the Metropolitan Magistrate or a Judicial Magistrate of the first class. The initial capital of the Trust was provided, as 5 crores of rupees dividends in the form of Certificate, the face value of each of which was required to prescribed. The Contribution to the same was sought from Reserve Bank of India of Rupees 2.5 Crores, from Life Insurance Corporation of Rupees 75 lakhs, from State Bank and subsidiary banks of Rupees 75 lakhs and rupees one crores from the other institutions including Scheduled Banks which will be notified by the Central Government. The Central Government can provide for transfer and vesting of such initial capital of the Unit Trust with the Development Bank and for such transfer and vesting the Development Bank is required to pay a cash amount to the Reserve Bank of India which should be equal to the contributions to the initial capital. The Board under this Act is required to maintain the register which is containing the names of contributing entity or institutions, amounts contributed and other relevant particulars, in the prescribed manner.
Further, the next Chapter makes provisions as to management of the Unit Trust, which is required to vest in the Board of Trustees, constituted under section 10 of the Act and other relevant aspects relating to the appointment, terms, and other conditions thereof including powers and functions of trustees, are contemplated under subsequent provisions of the Act. Also an appointment of Executive Committee and other committees of the Unit Trust, provided under the Act.
Moreover, chapter IV of the Act enumerates the powers and functions of the Unit Trust, including to carry on the business of selling and purchasing of units, investments, etc. businesses in India. Even the Trust can borrow under this Act from RBI, Government, authorities, persons, etc. And Chapter V of the Act speaks of distribution and allocation of the Funds kept reserved by the Trust amongst the contributing institutions. Further the accounting and auditing thereof, is given under another chapter i.e. Chapter VI of the Act. And under the final chapter i.e. dealing with the miscellaneous provisions, the Act requires the Reserve Bank to give directions to the Trust, which should be followed by it while doing its business and performing its functions under this Act. And the same chapter is providing along with the other provisions, for liquidation of the trust also. As such the Act makes very comprehensive provisions so far as near all the matters of the Trust is concerned.
by Faim Khalilkhan Pathan.