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UNIT TRUST OF INDIA ACT, 1963
(1) This Act may be called the Unit Trust of India Act, 1963.
(2) It extends to the whole of India.
(3) It shall come into force on such date1as the Central Government may, by notification In the official Gazette, appoint.
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1. 1st February, 1964; vide Notification No. G.S.R. 172, dated 31st January, 1964, published in the Gazette of India, Extraordinary, Part II, Section 3 (i), p. 47.
In this Act, unless the context otherwise requires,--
(a) "Board" means the Board of Trustees constituted under Section 10 or Section 41;
(b) "contributing Institutions" means an institution which is, for the time being, a contributory to the initial capital of the Trust under Section 4;
(c) "contribution certificate" means a certificate issued under Section6;
1[(ca) "Development Bank" means the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964)]:
2[(cb)] "first unit scheme" means the unit scheme made before the commencement of the Unit Trust of India (Amendment) Act, 1966];
3[(cc) "General Ins
(1) The Central Government shall, by notification in the official Gazette, establish a corporation by the name of the Unit Trust of India which shall be a body corporate having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold or dispose of property and to contract, and may, by the said name, sue or be sued.
(2) The head office of the Trust shall be at Bombay or at such other place as the 1 [Development Bank] may, by notification in the official Gazette, specify.
(3) The Trust may establish local offices, branches or agencies at any places in or outside India.
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1. Substituted by Act 52 of 1975, Section 45 (w.e.f. 16th February, 1976).
1[3A. Prohibition against the use of words "Unit Trust", "Unit" or "Units" as a part of the name of any person other than the Trust
(1) No individual or group of individuals, or company, other than the Trust, who or which accepts money by way of any loan, deposit, investment or similar other transaction, shall use the word or words "Unit Trust", "Unit" or "Units" as a part of his or its name.
Explanation.--For the removal of doubts it is hereby declared that nothing in this sub-section shall be deemed to prevent any individual or group of individuals, or company from describing any scrip or other security issued by him or it for any amount which has been received and repayable by him or it in the course of transaction of any business which is of the nature of a unit trust or mutual fund, as a unit certificate or units, as the case may be
(1) Subject to the provisions of this Act, the initial capital of the Trust shall be five crores of rupees divided in the form of certificates each of which shall be of such face value as may be prescribed and contributed in the manner hereinafter provided.
(2) Before such date as the Central Government may by notification in the official Gazette, specify in this behalf--
(a) the Reserve Bank shall contribute two and a half crores of rupees;
(b) the Life Insurance Corporation shall contribute seventy-five lakhs of rupees;
(c) the State Bank and the subsidiary banks shall contribute seventy-five lakhs of rupees, the amount which the State Bank and each subsidiary bank shall contribute being determined by the State Bank;
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1 [4-A. Transfer of initial capital to DevelopmentBank
On such date as the Central Government may, by notification in the official Gazette, appoint (hereinafter referred to as the notified date), all the contributions made by the Reserve Bank to the initial capital of the Trust, as on the date immediately preceding the notified date, shall stand transferred to, and vested in, the Development Bank.
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1. Inserted by Act 52 of 1975, Section 46 (w.e.f. 16th February, 1976).
The Reserve Bank shall be given by the Development Bank, in cash, for the transfer to, and vesting in, the Development Bank of the contributions made to the initial capital of the Trust by the Reserve Bank, an amount equal to contributions to the initial capital so transferred.]
The Board shall maintain in such manner as may be prescribed a register containing the name of the contributing institutions, the amount contributed by each such institution and such other particulars as may be prescribed.
(1) As soon as may be after the contribution has been made by any contributing institution under Section 4, the Board shall issue to such contributing institution a contribution certificate or contribution certificates in such form and containing such particulars as may be prescribed.
(2) Where the whole or any part of the contribution has been refunded to any institution under sub-section (5) of Section 4, that institution shall, as soon as may be after the refund has been made, forward the contribution certificate or certificates to the Board for cancellation or amendment, as the case may be, and the Board shall cancel or amend the certificate or certificates accordingly.
(1) Any contributing institution referred to in Cl. (d) of sub-section (2) of Section 4 may, in the prescribed manner, transfer a contribution certificate to any other institution referred to in that clause and thereupon such other institution shall be deemed to be a contributing institution for the purposes of this Act.
(2) Save as provided in sub-section (1), a contribution certificate shall not be transferred.
Every holder of a contribution certificate shall have all the rights and be subject to all the liabilities conferred or imposed on a contributing institution by or under this Act.
(1) The general superintendence, direction and management of the affairs and business of the Trust shall vest in a Board of Trustees which may exercise all powers and do all acts and things which may be exercised or done by the Trust.
(2) The Board shall, in discharging its functions under this Act, act on business principles, regard being had to the interest of the unit holders.
The Board of Trustees shall consist of the following, namely:
(a) the Chairman to be appointed by the 1 [Central Government in consultation with the Development Bank];
2 [(aa) one trustee to be nominated by the Reserve Bank];
(b) four trustees to be nominated by the 1 [Development Bank], of whom not less than three shall be persons having special knowledge of, or experience in, commerce, industry, banking finance or investment;
(c) one trustee to be nominated by the Life Insurance Corporation;
(d) one trustee to be nominated by the State Bank;
(e) two trustees to be elected in the prescribed manner by the contributing institutions referred to in Cl. (d) of sub-
1 [10A. Transitional provision for continuance of Chairman and certain trustees of the Board
Every person holding office, immediately before the notified date, as Chairman under Cl. (a) of Section 10 or as trustee, not being an officer of the Reserve Bank, nominated under Cl. (b) of that section or as executive trustee appointed under Cl. (f) thereof shall, notwithstanding the amendment of this Act by the Public Financial Institutions Laws (Amendment) Act, 1975, continue, subject to the same conditions, to hold office for the unexpired portion of his term.]
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1. Inserted by Act 52 of 1975, Section 48 (w.e.f. 16th February, 1976).
(1) A trustee nominated1[under Cl. (aa) or] under Cl. (b) of Section 10, if he is an officer of the Reserve Bank2[or the Development Bank] or a trustee nominated under Cl. (c) or Cl. (d) of that section shall hold office during the pleasure of the authority nominating him.
(2) A trustee nominated1[under Cl. (aa) or] under Cl. (b) of Section 10, if he is not an officer of the Reserve Bank1[or the Development Bank] or a trustee elected under Cl. (e) of that section shall hold office for four years and thereafter until his successor is duly nominated or elected.
(3) A casual vacancy in the office of a trustee referred to in sub-section (2) or in the office of a trustee nominated under the second proviso to Section 10 shall be filled by election or nomination, as the case may be, and the trustee so elected or nominated shall hold office for
A person shall not be capable of being nominated or elected as a trustee if--
(a) he is, except in the case of the Chairman or the executive trustee, an officer or other employee of the Trust; or
(b) he is, or at any time has been, adjudicated as insolvent or has suspended payment of his debts or has compounded with his creditors; or
(c) he is of unsound mind and stand so declared by a competent Court; or
(d) he has been convicted of an offence which, in the opinion of the1[Development Bank] involves moral turpitude.
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1. Substituted by Act 52 of 1975, Section 50 (16th February, 1976).
(1) If a trustee--
(a) becomes subject to any of the disqualifications mentioned in Section 12; or
(b) is absent without leave of the Board from more than three consecutive meetings thereof; or
(c) being a trustee elected or deemed to be elected under Cl. (e) of Section 90 becomes an officer or other employee of Government or of the Reserve Bank,1[or of the Development Bank] State Bank, a subsidiary bank or the Trust;
his office shall thereupon become vacant.
(2) A trustee nominated under Cl. (b) of Section 10 who is not an officer of the Reserve Bank2[or of the Development Bank] or a trustee elected or deemed to be elected under Cl. (e) of that section may by letter addressed to the Board resign his offi
(1) The appointment of a Chairman or of an executive trustee may be either whole-time or part-time:
Provided that if the appointment of the Chairman is part-time, the appointment of the executive trustee shall be whole-time.
(2) Chairman or the executive trustee shall--
(a) hold office for such term not exceeding five years as the1[Development Bank] may specify2[and shall be eligible for re-appointment];
(b) receive such salary or allowances or both from the Trust and be governed by such terms and conditions of service as the1[Development Bank] may determine; and
(c) perform such functions as the Board may entrust or delegate to him.
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1 [14-A. Emergency powers of the whole-time Chairman
If the Chairman, whose appointment is whole-time is of opinion that circumstances exist which render it necessary for him to take immediate action in respect of any matter which is within the competence of the Board and that the interests of the Trust may be prejudicially affected if such action is deferred until after the next meeting of the Board, then, notwithstanding anything contained in Cl. (c) of sub-section (2) of Section 14, the Chairman may take such action in respect of that matter as he deems necessary and for such purpose, he may exercise all powers and do all acts and things which may be exercised or done by the Board, but in every such case, he shall, as soon as may be after the action is taken, make a written report to the Board containing a statement of the action taken and the circumstances under which it was ta
If the Chairman or the executive trustee is by infirmity or otherwise rendered incapable of carrying out his duties or is absent on leave or otherwise, in circumstances not involving the vacation of his appointment, the1[Development Bank] may nominate another person to act in his place until the date on which the Chairman or the executive trustee, as the case may be, resumes his duties.
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1. Substituted by Act 52 of 1975, Section 52.
Trustees, other than the Chairman and the executive trustee, shall be paid such fees and allowances for attending the meetings of the Board or of any of its committees and for attending to any other work of the Trust, as may be prescribed:
Provided that no fees shall be payable to a trustee who is an officer of Government or of any corporation established by law for the time being in force.
(1) The Board shall meet not less than six times a year and at least once in every two months and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.
(2) The Chairman, or, if for any reason he is unable to attend any meeting of the Board, any other trustee nominated by him in this behalf or, in the event of such nominated trustee also being unable to attend the meeting or no such nomination having been made by the Chairman, any other trustee elected by the trustees present at the meeting from among themselves, shall preside at the meeting.
(3) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the trustees present and voting, and, in the event of equality of votes the Chairman, or in his absence, the person presiding, shal
(1) There shall be an Executive Committee which shall consist of--
(a) the Chairman of the Board,
(b) where an executive trustee has been appointed by the1[Development Bank], such executive trustee, and
(c) two other trustees nominated in this behalf by the1[Development Bank].
(2) The Chairman of the Board shall be the Chairman of the Executive Committee.
(3) Subject to such general or special directions as the Board may from time to time give, the Executive Committee shall be competent to deal with the matter within the competence of the Board.
(4) The Board may constitute such other committees whether consisting wholly of trustees or wholly of other persons o
1 [19. Business of Trust
(1) Subject to the provisions of the Act and the regulations made under Section 43, the Trust may carry on and transact any of the following kinds of business in India, namely:
(1) selling and purchasing units;
(2) investing in, and acquiring, holding or disposing of, securities and exercising and enforcing, all powers and rights incidental thereto including protection or realisation of such investment and the taking over of the administration of any property offered as security for such investment;
(3) granting of loans and advances upon the security of any moveable or immoveable property or otherwise;
(4) accepting, collecting, discounting, re-discounting, purchasing, selling or
1[19A. Power to impose conditions, etc.
(1) In entering into any arrangement, under Section 19, with any concern, the Trust may impose such conditions as it may think necessary or expedient for protecting the interest of the Trust and for securing that the accommodation granted by it is put to the best use by the industrial concern.
(2) Where any arrangement entered into by the Trust under Section 19 with any concern provides for the appointment by the Trust of one or more directors of such concern, such provision and any appointment of directors made in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), or in any other law for the time being in force or in the memorandum, articles of association or any other instrument relating to the concern, and any
1[19B. Special provision for enforcement of claim by the Trust
(1) Where a company or other body corporate, in breach of any agreement makes any default in re-payment of any loan or advance or any instalment thereof, or in meeting its obligation or otherwise fails to comply, with the terms of its agreement with the Trust, then, without prejudice to the provisions of Section 69 of the Transfer of Property Act, 1882 (4 of 1882), any officer of the Trust generally or specially authorised by the Trust in this behalf may apply to the Court for one or more of the following reliefs, namely:
(a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Trust as security for the loan or advance, or
(b) for transferring the management of the company or other body corp
(1)1[The Trust may borrow, whether in India or outside India] from any authority or person, not being Government or the Reserve Bank, against such security and on such terms and conditions as-may be agreed upon.
2[(2) The Trust may borrow money from the Reserve Bank--
(i) repayable on demand or on the expiry of fixed period not exceeding ninety days from the date on which the money so borrowed against stocks, funds and securities (other than immoveable property) in which a trustee is authorized to invest trust money by any law for the time being in force in India;
(ii) repayable on demand or within a period of eighteen months from the date on which the money is so borrowed, against the security of the bonds which the trust may issue with the approval of the Central Government;
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1[20A. Special contribution by Reserve Bank
2[The Reserve Bank or the Development Bank may], from time to time, in its discretion pay to the Trust from out of the amount2[payable to the Reserve Bank or, as the case may be, the Development Bank] under sub-section (1) of Section 25-A any sum to be utilized by the Trust solely for meeting the losses arising out of or any additional amount required in connection with any variation made by the Trust in the sale or re-purchase price of a unit.
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1. Inserted by Act 17 of l966, Section 6 (w.e.f. 10th June, 1966).
2. Substituted by Act 52 of 1975, Section 54 (w.e.f. 16th February, 1976).
The Trust may receive gifts, donations or benefactions from Government or any other source and such gifts, grants, donations or benefaction shall be treated by the Board as capital or income of the first unit scheme or, as the case may be, of any subsequent unit scheme according to the purposes for which they are made and in the absence of any indication of such purposes, they shall be treated as capital or income of such units scheme or schemes and to such extent as the Board thinks fit.
1[20C. Power to transfer rights
The rights and interests of the Trust (including any other rights incidental thereto) in relation to any loan or advance granted, or any amount recoverable, by it may be transferred by the Trust, either in whole or in part, by the execution or issue of any instrument, or by the transfer of any instrument by endorsement or in any other manner in which the rights and interests in relation to such loan or advance may be lawfully transferred, and the Trust may notwithstanding such transfer, act as the trustee within the meaning of Section 3 of the Indian Trusts Act, 1882 (2 of 1882), for the transferee.]
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1. Inserted by Act 63 of 1985, Section 8 (w.e.f. 23rd April, 1985).
(1) For the purpose of providing facilities for participation in the income, profits and gains arising out of the acquisition, holding management or disposal of securities by the Trust, the Board1[may make one or more2[unit schemes], including one or more unit schemes for issuing units to persons residing outside India in such foreign currencies, as the Trust may deem fit.]
(2) Subject to the provisions of this Act and the regulation made under Section 43, a scheme made under sub-section (1) may provide for--
3[(a) the issue of units and the face value of each unit:
Provided that the face value of each unit shall, where such value is in Indian currency, be not less than ten rupees or more than one hundred rupees and where such value is in any foreign currency, be in multiples of ten;]
(1) The capital of the Trust in relation to the first unit scheme shall consist of-
(i) the initial capital,
(ii) the unit capital of the said scheme,
(iii) any reserves created for that scheme,
(iv) any amount borrowed for the purposes of that scheme,
(v) any amount received for the purposes of that scheme by way of gifts, grants, donations or benefactions from the Government or any other source and treated as the capital of that scheme under Sec. 20-B.
(vi) any other capital allocated to that scheme by the Board having regard to the nature of such capital and other relevant factors.
(2) The capital of the Trust in
The income of the Trust shall consist of--
(i) in relation to the first unit scheme,--
(a) the income arising out of the capital referred to in sub-section (1) of Sec. 22,
(b) any gifts, grants, donations or benefactions treated as the income of that scheme under Sec. 20-B, and
(c) any other income allocated to that scheme by the Board having regard to the income and other relevant factors;
(ii) in relation to any subsequent unit scheme,--
(a) the income arising out of the capital referred to in sub-section (2) of Sec. 22,
(b) any gifts, grants, donations or benefactions treated as the income of that scheme under Sec
The income of the Trust in any year arising out of the capital of the Trust relating to the first unit scheme shall be allocated to the initial capital and the unit capital thereof in the same proportion as the former bears to the latter at the end of that year.
(1) The interest payable for any year for any borrowings by the Trust and the total amount of other expenses incurred by the Trust for that year for the purposes of the first unit scheme shall be allocated and charged to the initial capital and the unit capital thereof in the same proportion as is referred to in Sec. 24.
(2) Notwithstanding anything contained in sub-section (1), if in any year the amount of expenses, other than interest allocated to the unit capital relating to the first unit scheme, is more than five per cent, of the income allocated in that year to that scheme, only an amount equal to such five per cent, shall be charged to that unit capital and the rest of the total amount of expenses other than interest shall be charged to the initial capital.
(3) The interest payable for any year for any borrowings by the Trust and
(1) The income allocated to the initial capital in any year reduced by the interest and the amount of other expenses charged for that year to the initial capital may be distributed in the prescribed manner among the contributing institutions in each case in proportion to their respective contributions.
(2) The income allocated in any year to the unit capital relating to the unit scheme reduced by the interest and the amount of other expenses charged for that year to such unit capital may, but not less than ninety per cent, of such income so reduced, shall be distributed in respect of that year to the unit holders under that unit scheme :
1[Provided that in relation to any year in which the Trust has declared a dividend of not less than ten per cent, on the unit capital the requirement as to distribution of not less than ninety per cent,
(1) The Trust may establish one or more reserve funds by transferring such sums as it may deem fit out of the income of the Trust not distributed to institution or unit holders under the provisions of this Chapter.
(2) Subject to the provisions of this Act, the amount in any reserve fund created specifically for the purposes of any unit scheme shall be applied or utilized only for the benefit of the unit holders under that unit scheme and for such purposes and in such manner as the Board may determine.
In this Chapter, "year" means the period in respect of which the books and accounts of the Trust are balanced and closed under sub-section (2) of Sec. 26.]
(1) The balance-sheet and accounts of the Trust shall be prepared and maintained in such form and manner as may be prescribed.
(2) The Board shall cause the books and accounts of the Trust to be balanced and closed each year as on such date as may be prescribed.
1 [(1) The affairs of the Trust shall be audited by one or more auditors duly qualified to act as auditor under sub-section (1) of Sec. 226 of the Companies Act, 1956 (1 of 1956) (hereinafter referred to as the auditor) who shall be appointed by the Trust with the previous approval of the2 [Development Bank] and shall receive such remuneration as the Trust may fix.]
(2) The auditor shall be supplied with a copy of the annual balance-sheet of the Trust and it shall be his duty to examine it together with the accounts and vouchers relating thereto and he shall have a list delivered to him, of all books, kept by the Trust and shall at all reasonable times have access to the books, accounts, vouchers and other documents of the Trust.
(3) The auditor may, in relation to such accounts, examine any trustee or any officer or other employee of th
The Trust shall furnish to each of the contributing institutions within four months from the date on which its accounts are balanced and closed in respect of any year a copy of balance-sheet and amounts together with a copy of the auditor's report and shall publish the same in the Official Gazette.
1[29. Furnishing of information
The Reserve Bank or the Development Bank may, from time to time, call upon the Trust to furnish such information as either of the said banks may require, and the Trust shall be bound to furnish the same.]
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1. Substituted by Act 52 of 1975, Section 55 (w.e.f. 16th February, 1976).
In the discharge of its functions under this Act, the Trust shall be guided by such directions in matters of policy involving public interest as the1[Development Bank] may give to it in writing, and if any question arises whether the direction relates to a matter of policy involving public interest, the decision of Reserve Bank thereon shall be final.
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1. Substituted by Act 52 of 1975, Section 55 (w.e.f. 16th February, 1976).
(1) The Trust may appoint such number of officers and other employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service.
(2) Without prejudice to the provisions of sub-section (1), it shall be lawful for the Trust to utilize, and for the Reserve Bank to make available the services of such staff of the Reserve Bank on such terms and conditions as may be agreed upon between the Trust and the Reserve Bank.
1[(3) Every member of the staff of the Reserve Bank,--
(a) whose services are being, immediately before the notified date, being utilized by the Trust under sub-section (2), or
(b) whose services having been made available to the Trust, stand,
(1) Notwithstanding anything contained in 1 [the Wealth- tax Act, 1957 (27 of 1957)], the Income-tax Act, 1961 (43 of 1961), the Super Profits-tax Act, 1963 (14 of 1963),2 [the Companies (Profit) Surtax Act, 1964 (7 of 1964)] or in any other enactment for the time being in force relating to income-tax, super-tax 3 [super profits-tax, surtax] or any other tax on income, profits or gains--
(a) the Trust shall not be liable to pay income-tax, super-tax, super profits-tax, 2 [surtax] or any other tax in respect of any income, profits or gains derived by it from any source;
3 [(aa) in the case of an assessee who is not resident in India, being--
(i) an individual who is an Indian or a person of Indian origin, or
(ii) a Hindu undivided family,
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The Bankers', Books Evidence Act, 1891, shall apply in relation to the Trust as if it were a bank as defined in Sec. 2 of the said Act.
Every trustee, auditors, officer or other employee of the Trust or any employee of the Reserve Bank whose services are utilized by the Trust under Sec. 31 shall, before entering upon his duties make a declaration of fidelity and secrecy in the form set out in the First Schedule to this Act.
(1) No act or proceeding of the Board or of any committee of the Trust shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or committee.
(2) No act done by any person acting in good faith as a trustee shall be deemed to be invalid merely on the ground that he was disqualified to be a trustee or there was any other defect in his appointment.
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