FORWARD CONTRACTS REGULATION ACT, 1952
(1) This Act may be called the Forward Contracts (Regulation) Act, 19521.
(2) It extends to the whole of India 2[***].
3) Chapter I shall come into force at once and the remaining provisions shall come into force on such date3 or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act, for different States or areas, and for different goods or classes of goods.
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1. For Statement of Objects and Reasons see Gazette of India, 1952, Pt. II, Sec. 2, pp. 347-349; and for the Report of the Select Committee, see Gazette of India, 1952, Pt. II, Sec. 2, pp. 444 and 445.
In this Act, unless the context otherwise requires,—
(a) “association” means any body of individuals, whether incorporated or not, constituted for the purpose of regulating and controlling the business of the sale or purchase of any goods:
(b) “Commission” means the Forward Markets Commission established under section 3;
(c) “forward contract” means a contract for the delivery of goods 1[***] and which is not a ready delivery contract;
(d) “goods” means every kind of movable property other than actionable claims, money and securities;
(e) “Government security” means a Government security as defined in the Public Debt Act, 1944 (18 of 1944);
(f) “non
(1) The Central Government may, by notification in the Official Gazette, establish a Commission to be called the Forward Markets Commission for the purpose of exercising such functions and discharging such duties as may be assigned to the Commission by or under this Act.
(2) The Commission shall consist of not less than two, 1[but not exceeding four], members appointed by the Central Government 2[one of them being nominated by the Central Government to be the Chairman thereof; and the Chairman and the other member or members shall be either whole-time or part-time as the Central Government may direct]:
3[Provided that the members to be so appointed shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to commerce or commodity markets, or in administration or who have special knowled
The functions of the Commission shall be—
(a) to advise the Central Government in respect of the recognition of, or the withdrawal of recognition from, any association or in respect of any other matter arising out of the administration of this Act;
1[(b) to keep forward markets under observation and to take such action in relation to them as it may consider necessary, in exercise of the powers assigned to it by or under this Act;]
(c) to collect and whenever the Commission thinks it necessary publish information regarding the trading conditions in respect of goods to which any of the provisions of this Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government periodical reports on the operation of this Act and on the workin
(1) The Commission shall, in the performance of its functions, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of any document;
(c) receiving evidence on affidavits;
(d) requisitioning any public record or copy thereof from any office;
(e) any other matter which may be prescribed.
(2) The Commission shall have the power to require any person, subject to any privilege which may be claimed by that person under any law for t
(1) Any association concerned with the regulation and control of forward contracts which is desirous of being recognised for the purposes of this Act may make an application in the prescribed manner to the Central Government.
(2) Every application made under sub-section (1) shall contain such particulars as may be prescribed and shall be accompanied by a copy of the bye-laws for the regulation and control of forward contracts and also a copy of the rules relating in general to the constitution of the association, and, in particular, to—
(a) the governing body of such association, its constitution and powers of management and the manner in which its business is to be transacted;
(b) the powers and duties of the office bearers of the association;
(1) If the Central Government, after making such inquiry as may be necessary in this behalf and after obtaining such further information, if any, as it may require, is satisfied that it would be in the interest of the trade and also in the public interest to grant recognition to the association which has made an application under section 5, it may grant recognition to the association in such form and subject to such conditions as may be prescribed or specified, and shall specify in such recognition the goods or classes of goods with respect to which forward contracts may be entered into between members of such association or through or with any such member.
(2) Before granting recognition under sub-section (1) the Central Government may, by order, direct,—
(a) that there shall be no limitation on the number of members of the associatio
If the Central Government is of opinion that any recognition granted to an association under the provisions of this Act should, in the interest of the trade or in the public interest, be withdrawn, the Central Government may, after giving a reasonable opportunity to the association to be heard in the matter, withdraw by notification in the Official Gazette, the recognition granted to the said association:
Provided that no such withdrawal shall affect the validity of any contract entered into or made before the date of the notification, and the Central Government may make such provision as it deems fit in the notification of withdrawal or in any subsequent notification similarly published for the due performance of any contracts outstanding on that date.
1[(1) Every recognised association and every member thereof shall furnish to the Central Government such periodical returns relating to its affairs, or the affairs of its members, or his affairs, as the case may be, as may be prescribed.]
(2) Without prejudice to the provisions contained in sub-section (1) where the Central Government considers it expedient so to do, it may, by order in writing,—
(a) call upon a recognised association 2[or a member thereof] to furnish in writing such information or explanation relating to its affairs or the affairs of any of its members 2[or his affairs, as the case may be,] as the Central Government may require, or
(b) appoint one or more persons to make an inquiry in relation to the affairs of such association or the affairs of any of its members and sub
1[(1) Every recognised association shall furnish to the Commission three copies of its annual report.]
(2) Such annual report shall contain such particulars as may be prescribed.
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1. Subs. by Act 62 of 1960, sec. 8, for sub-section (1) (w.e.f. 28-12-1960).
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(1) A recognised association may make rules or amend any rules made by it to provide for all or any of the following matters, namely:—
2[(a) the admission of a firm or a Hindu undivided family as a member;]
3[(b)] the grouping of the members of the association according to functional or local interests, the reservation of seats on its governing body for members belonging to each group and appointment of members to such reserved seats—
(i) by election exclusively by the members of the association from among persons chosen by the members belonging to the group concerned;
(ii) by election by all the members of the association;
(iii) by election by all the members belonging to the group concerned fo
(1) Whenever the Central Government considers it expedient so to do, it may, by order in writing, direct any recognised association to make any rules or to amend any rules made by the recognised association within such period as it may specify in this behalf.
(2) If any recognised association, against whom an order is issued by the Central Government under sub-section (1), fails or neglects to comply with such order within the specified period, the Central Government may make the rules or amend the rules made by the recognised association, as the case may be, either in the form specified in the order or with such modification thereof as the Central Government may think fit.
1[(3) Where, in pursuance of sub-section (2), any rules have been made or amended, the rules so made or amended shall be published in the Gazette of India, and shall,
(1) Any recognised association may, subject to the previous approval of the Central Government, make bye-laws for the regulation and control of forward contracts.
(2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws may provide for—
(a) the opening and closing of markets and the regulation of the hours of trade;
(b) a clearing house for the periodical settlement of contracts and differences thereunder, the delivery of, and payment for goods, the passing on of delivery orders and for the regulation and maintenance of such clearing house;
(c) the number and classes of contracts in respect of which settlements shall be made or differences paid through the clearing house;
(1) The Central Government may, either on a request in writing received by it in this behalf from the governing body of a recognised association, or if in its opinion it is expedient so to do, make bye-laws for all or any of the matters specified in section 11 or amend any bye-laws made by such association under that section.
(2) Where, in pursuance of this section, any bye-laws have been made or amended, the bye-laws so made or amended shall be published in the Gazette of India 1[and shall thereupon have effect] as if they had been made or amended by the recognised association.
(3) Notwithstanding anything contained in this section, where the Governing body of a recognised association objects to any bye-laws made or amended under this section by the Central Government on its own motion, it may, within six months of the publication ther
(1) If, in the interest of trade or in the public interest, the Commission considers it necessary to suspend a member from his membership of any recognised association or to prohibit such members from entering into any forward contract for the sale or purchase in his own name or through another member of a recognised association of any goods or class of goods, then, notwithstanding anything contained in any law for the time being in force or in the rules or bye-laws of a recognised association, the Commission may, after giving an opportunity to the member concerned of being heard, by order suspend his membership of any association or prohibit him from entering into any such contract.
(2) An order made under sub-section (1) shall specify the period for which the suspension or prohibition is to have effect and such period may be extended from time to time but so as not to exceed thre
(1) Without prejudice to any other powers vested in the Central Government under this Act, where the Central Government is of opinion that the governing body of any recognised association should be superseded, then, notwithstanding anything contained in this Act or in any other law for the time being in force, the Central Government may, after giving a reasonable opportunity to the governing body of the recognised association concerned to show cause why it should not be superseded, by notification in the Official Gazette, declare the governing body of such association to be superseded for such period not exceeding six months as may be specified in the notification, and may appoint any person or persons to exercise and perform all the powers and duties of the governing body, and where more persons than one are appointed may appoint one of such persons to be the chairman and another of such persons to be the vice-chairman.
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If in the interest of the trade or in the public interest the Central Government considers it expedient so to do, it may, by notification in the Official Gazette, direct a recognised association to suspend such of its business for such period not exceeding seven days and subject to such conditions as may be specified in the notification, and may if, in the opinion of the Central Government, the interest of the trade or the public interest so requires by like notification extend the said period from time to time:
Provided that where the period of suspension is likely to exceed one month, no notification extending the suspension beyond such period shall be issued, unless the governing body of the recognised association has been given an opportunity of being heard in the matter.
(1) No association concerned with the regulation and control of business relating to forward contracts shall, after the commencent of the Forward Contracts (Regulation) Amendment Act, 1960 (62 of 1960) (hereinafter referred to as such commencement), carry on such business except under, and in accordance with, the conditions of a certificate of registration granted under this Act by the Commission.
(2) Every association referred to in sub-section (1) which is in existence at such commencement, before the expiry of six months from such commencement, and every association referred to in sub-section (1) which is not in existence at such commencement, before commencing such business, shall make an application for a certificate of registration to the Commission in such form and containing such particulars as may be prescribed:
Provided that th
On receipt of an application under section 14A, the Commission, after making such enquiry as it considers necessary in this behalf, may by order in writing grant a certificate of registration or refuse to grant it:
Provided that before refusing to grant such certificate, the association shall be given an opportunity of being heard in the matter.]
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1. Ins. by Act 62 of 1960, sec. 14 (w.e.f. 28-12-1960).
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The provisions of sections 8 and 12B shall apply in relation to a registered association as they apply in relation to a recognised association with the substitution of—
(i) references to the registered association, for references to the recognised association; and
(ii) the words “two years”, for the words “three years” in sub-section (2) of section 12B.]
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1. Ins. by Act 62 of 1960, sec. 14 (w.e.f. 28-12-1960).
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(1) The Central Government may, by notification in the Official Gazette, declare this section to apply to such goods or class of goods and in such areas as may be specified in the notification, and thereupon, subject to the provisions contained in Section 18, every forward contract for the sale or purchase of any goods specified in the notification which is entered into in the area specified therein otherwise than [between members of a recognised association or through or with any such member] shall be illegal.
(2) Any forward contract in goods entered into in pursuance of sub-section (1) which is in contravention of any of the bye-laws specified in this behalf under clause (a) of sub-section (3) of section 11 shall be void--
(i) as respects the rights of any member of the recognised association who has entered into contract in contraven
Where a notification has been issued under section 15, then notwithstanding anything contained in any other law for the time being in force or in any custom, usage or practice of the trade or the terms of any contract or the bye-laws of any association concerned relating to any contract,—
(a) every forward contract for the sale or purchase of any goods specified in the notification 1[entered into on or before the date of the notification] and remaining to be performed after the said date and which is not in conformity with the provisions of section 15, shall be deemed to be closed out at such rate as the Central Government may fix in this behalf, and different rates may be fixed for different classes of such contracts;
(b) all differences arising out of any contract so deemed to be closed out shall be payable on the basis of the rate
(1) The Central Government may, by notification in the Official Gazette, declare that no person shall, save with the permission of the Central Government, enter into any forward contract for the sale or purchase of any goods or class of goods specified in the notification and to which the provisions of section 15 have not been made applicable, except to the extent and in the manner, if any, as may be specified in the notification.
(2) All forward contracts in contravention of the provisions of sub-section (1) entered into after the date of publication of the notification thereunder shall be illegal.
(3) Where a notification has been issued under sub-section (1), the provisions of Section 16 shall, in the absence of anything to the contrary in the notification, apply to all forward contracts for the sale or purchase of any goods specified
(1) Nothing contained in Chapter III or Chapter IV shall apply to non-transferable specific delivery contracts for the sale or purchase of any goods;
Provided that no person shall organise or assist in organising or be a member of any association in any area to which the provisions of section 15 have been made applicable (other than a recognised association) which provides facilities for the performance of any non-transferable specific delivery contract by any party thereto without having to make or to receive actual delivery to or from the other party to the contract or to or from any other party named in the contract.
(2) Where in respect of any area the provisions of Section 15 have been made applicable in relation to forward contracts for the sale or purchase of any goods or class of goods, the Central Government may, by a like notif
(1) Notwithstanding anything contained in this Act or in any other law for the time being in force, all options in goods entered into after the date on which this section comes into force shall be illegal.
(2) Any option in goods which has been entered into before the date on which this section comes into force and which remains to be performed, whether wholly or in part, after the said date shall, to that extent, become void.
Any person who—
(a) (i) in any return, statement or other document required by or under this Act, makes a statement which is false in any material particular, knowing it to be false, or wilfully omits to make a material statement; or
(ii) without reasonable excuse (the burden of proving which shall be on him) fails to furnish any return, statement or other document or any information or to answer any question or to comply with any requisition made under this Act or any rules made thereunder; or
(iii) enters into any forward contract during the period of suspension of business of a recognised association in pursuance of a notification under section 14; or
(b) is a member of any association, other than a recognised association, to which a cer
Any person who--
(a) owns or keeps a place other man that of a recognised association, which is used for the purpose of entering into or making or performing, whether wholly or in part, any [forward contracts] in contravention of any of the provisions of this Act and knowingly permits such place to be used for such purposes, or
(b) without the permission of Central Government, organises, or assists in organising, or becomes a member of, any association, other than a recognised association, for the purpose of assisting in entering into or making or performing, whether wholly or in part, any [forward contracts] in contravention of any of the provisions of this Act, or
(c) manages, controls or assists in keeping any place other man that of a recognised association, which is used for the purpose o
Any court trying an offence punishable under section 20 or section 21 may, if it thinks fit and in addition to any sentence which it may impose for such offence, direct that any money, goods or other property in respect of which the offence has been committed, shall be forfeited to the Central Government.
Explanation.—For the purposes of this section, property in respect of which an offence has been committed, shall include deposits in a bank where the said property is converted into such deposits.]
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1. Ins. by Act 62 of 1960, sec. 19 (w.e.f. 28-12-1960).
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(1) Where an offence has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of, the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attri
(1) Any presidency magistrate or a magistrate of the first class may, by warrant, authorise any police officer not below the rank of sub-inspector to enter upon and search any place where books of account or other documents relating to forward contracts or options in goods entered into in contravention of the provisions of this Act, may be or may be reasonably suspected to be, and such police officer may seize any such book or document, if in his opinion, it relates to any such forward contract or option in goods.
(2) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), shall, so far as may be, apply to any search or seizure made under sub-section (1) as they apply to any search or seizure made under the authority of a warrant issued under section 98 of the said Code.]
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(1) Where any books of account or other documents are seized from any place and there are entries therein making reference to quantity, quotations, rates, months of delivery, receipt or payment of differences or sale or purchase of goods or option in goods, such books of account or other documents shall be admitted in evidence without witnesses having to appear to prove the same; and such entries shall be prima facie evidence of the matters, transactions and accounts purported to be therein recorded.
(2) In any trial for an offence punishable under section 21, it shall be presumed, until the contrary is proved, that the place in which the books of account or other documents referred to in sub-section (1) were seized, was used, and that the persons found therein were present, for the purpose of committing the said offence.]
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Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898), 1[the following offences shall be deemed to be cognizable within the meaning of that Code namely:—
(a) an offence falling under sub-clause (ii) of clause (a) of section 20 in so far as it relates to the failure to comply with any requisition made under sub-section (3) of section 8;
(b) an offence falling under clause (d) of section 20;
(c) an offence falling under clause (e) of section 20 other than a contravention of the provisions of sub-section (3A) or sub-section (4) of section 15;
(d) an offence falling under section 21.]
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No Court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall take cognizance of or try any offence punishable under this Act.
For the purpose of advising the Central Government in relation to any matter concerning the operation of this Act, the Central Government may establish an advisory committee consisting of such number of persons as may be prescribed.
The Central Government may, by notification in the Official Gazette, direct that any power exercisable by it under this Act may, in such circumstances and subject to such conditions, if any, as may be specified, be exercised by such officer or authority, including any State Government or officers or authorities thereof as may be specified in the direction.
The Central Government may, by notification in the Official Gazette, exempt, subject to such conditions and in such circumstances and in such areas as may be specified in the notification, any contract or class of contracts from the operation of all or any of the provisions of this Act.
(1) The Central Government may, by notification in the Official Gazette, make rules for the purpose of carrying into effect, the objects of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for—
(a) the terms and conditions of service of members of the Commission;
(b) the manner in which applications for recognition may be made under section 5 and the levy of fees in respect thereof;
(c) the manner in which any inquiry for the purpose of recognising any association may be made and the form in which recognition shall be granted;
1[(cc) the manner in which applications for certificates of registration may be made under section 14A and
If immediately before the date on which this Act or any provision contained therein is made applicable to any goods or classes of goods in any State, there is in force in that State any law corresponding to this Act or, as the case may be, to any provision contained therein which is applicable to those goods or classes of goods, that law shall stand repealed on the said date:
Provided that the repeal shall not affect—
(a) the previous operation of any law so repealed or anything duly done or suffered thereunder; or
(b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed; or
(c) any penalty, forfeiture or punishment incurred in respect of any offence committed against any law so repealed; or
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