The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002

The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (Act no. 58 of 2002) was enacted by the Indian Parliament as an Act of Central Government for providing for the transfer and vesting of the Undertaking of the Unit Trust of India to the company specified under this Act and also to provide for transferring and vesting of the Undertaking being specified under Undertaking of the Unit Trust of India. Such transfer and vesting is required to be with the Administrator, under this Act. And also the Act sought to repeal the Unit Trust of India Act, 1963. The Act has received the assent of the President of India on 17th December, 2002. The Act provides for its date on which the provisions of this Act to start operating, is 29th day of October, 2002, which has been given under its chapter containing preliminary provisions. Also the same chapter provides for various important definition of the terms used under the different provisions of this Act.

The Second Chapter of the Act, makes provisions dealing with such transfer and vesting of Undertaking of the Trust as aforesaid. The provisions are to be understood in detail, as the said are closely connected with the main purpose of the Act. Section 3 of the Act says that the initial capital of the Trust, which was contributed by the Development Bank, Life Insurance Corporation, and State Bank and Subsidiary Banks, etc. within the provisions of the Unit Trust of India Act, 1963, are required to transfer and vest in the Central Government. The same is required to be refunded by the Central Government. Further, section 4 of the Act specifies that, such Undertaking of the Unit Trust which is not specified should be transferred and vest in the Specified Company, by the Central Government’s notification for mutually agreed consideration and on such mutually agreed terms and conditions. Similarly, the Specified Undertaking of the Unit Trust of India should be transferred and vested with the Administrator. Further, the Section 5 of the Act says that such transfer and vesting of the aforesaid Undertakings of the Unit Trust should also include the transfer of every businesses, assets, rights, powers, etc. and also all properties, reserve fund, other funds, stocks, investments, shares, etc. along with the books of account, registers, etc. thereof. Moreover, the provisions of section 6 of the Act says that, all employees and officers of the Unit Trust who were serving under the employment which was before such transfer made, should be treated as the employees and officers of the Specified company after the such transfer. However the provision is not applicable to the trustees of the Board, Chairman and executive trustees.

Further, the next chapter is making provisions as to management of such specified Undertaking, where section 7 provides that the persons to be appointed by the Central Government as Administrator of the specified Undertaking of the Unit Trust of India for taking over administration and carrying on the Management of the said, on behalf of the Central Government, under the directions of such Government, which can be issued by it.

The Next chapter being Chapter IV of the Act describes various powers and functions of the Administrator and section 9 thereof provides for appointment of the Board of Advisers by the Central Government for advising and assisting the Administrator while he carry on the management of aforesaid Specified Undertaking. And the Central Government is to make scheme providing for composition of the Board, term of office of the Advisers, their fees and allowances and other terms and conditions as to their appointment, etc. Section 10 of the Act enlists all the functions which the Administrator to perform and the powers he should exercise, including the transaction of business in India as to selling and purchasing of units of the schemes specified in the Schedule- I annexed with the Act, investing in and acquiring, holding or even disposing of securities and exercising and enforcing, etc. The Administrator is further, required to maintain separate accounts in respect of every specified undertaking asset possession whereof was taken by him.

Finally, Chapter V of the Act provides for miscellaneous provisions wherein the important is in relation to exemption from payment of income tax by the Administrator in relation to the specified Undertaking for the initial period of five years in respect of any income, profits or gains derived, or any amount received in relation to the specified undertaking. Even for such transfer and vesting of the Undertaking and specified undertaking under this Act should not be liable for payment of any stamp duty under that Act. Similarly, protection is given to the Central Government and Administrator, Board of Adviser or any of the Officers, or Employees thereof against the legal actions for any damage caused in good faith or under this Act. The Central Government is empowered finally to make Scheme under this Act and on the matters provided under this Act. The Act provided with overriding effect. The Central Government is further provided with the power to make order for removing difficulties which can arise in giving effect to the provisions of this Act. The Act as aforesaid also deals with repealing of Act of 1963. Lastly, the Act sought to repeal the ordinance i.e. the Unit Trust of India (Transfer of Undertaking and Repeal) Ordinance, 2002, without affecting the things done or action taken thereof.

by Faim Khalilkhan Pathan.