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NATIONAL DEVELOPMENT BANK OF SRI LANKA [Cap.308 CHAPTER 308 NATIONAL DEVELOPMENT BANK OF SRI LANKA Act AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF THE NATIONAL DEVELOPMENT No. 2 of 1979. BANK OF SRI LANKA, AND FOR MATTERS CONNECTED THEREWITH OR INCIDENTAL THERETO. Short title. Establishment of the National Development Bank of Sri Lanka. Bank to be a body corporate. Head office and branch offices of the Bank. Purposes of the Bank. 1. This Act may be cited as the National Development Bank of Sri Lanka Act. PART I CONSTITUTION AND POWERS OF THE NATIONAL DEVELOPMENT BANK OF SRI LANKA AND ITS BOARD OF DIRECTORS 2. There shall, on the appointed date or as soon as may be thereafter, be established a Bank which shall be called the " National Development Bank of Sri Lanka", hereinafter referred to as " the Bank ", and which shall consist of the persons who are for the time being shareholders of the Bank. 3. The Bank shall by the name assigned to it by section 2 be a body corporate and shall have perpetual succession and a common seal and may sue and be sued in such name. 4. The head office of the Bank shall be in Colombo. Such branch offices of the Bank as the Board of Directors may consider necessary may be established in places in Sri Lanka, other than in Colombo. 5. (1) The purposes of the Bank shall be to promote the industrial, agricultural, commercial and other development of the economy of Sri Lanka having regard inter alia to the development of the rural sector, in accordance with the provisions of this Act— (a) by providing medium-term and long- term credit and other forms of assistance to industrial, agricultural, commercial and other enterprises ; [24th January. 1979.] (b) by stimulating the further development of the investment, share and security markets of Sri Lanka; (c) by mobilizing internal and external capital for investment in industrial, agricultural, commercial and other enterprises; and (d) by engaging in the promotion of the industrial, agricultural, commercial and other development of the economy of Sri Lanka. (2) In carrying out its purposes, the Bank shall whenever it is feasible and desirable act in participation or co- operation with approved credit institutions. 6. Subject to the other provisions of this Act, in carrying out its purposes the Bank may exercise all or any of the following powers:— (a) to grant loans and advances to any enterprises engaged or about to engage in industry, agriculture or commerce; (b) to guarantee loans raised or to be raised by industrial, agricultural and commercial enterprises from approved credit institutions; (c) to guarantee obligations of financial institutions arising out of the underwriting of capital issues of industrial, agricultural and commercial enterprises; (d) to participate in the equity of industrial, agricultural and commercial enterprises, and to Powers of the Bank in carrying out its purposes. XII/91

NATIONAL DEVELOPMENT BANK OF SRI LANKA [Cap development bank of sri lanka [cap.308 chapter 308 national development bank of sri lanka act an act to provide for the establishment of

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Page 1: NATIONAL DEVELOPMENT BANK OF SRI LANKA [Cap development bank of sri lanka [cap.308 chapter 308 national development bank of sri lanka act an act to provide for the establishment of

NATIONAL DEVELOPMENT BANK OF SRI LANKA [Cap.308

CHAPTER 308

NATIONAL DEVELOPMENT BANK OF SRI LANKA

Act AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF THE NATIONAL DEVELOPMENTNo. 2 of 1979. BANK OF SRI LANKA, AND FOR MATTERS CONNECTED THEREWITH OR INCIDENTAL

THERETO.

Short title.

Establishmentof the NationalDevelopmentBank ofSri Lanka.

Bank to bea bodycorporate.

Head officeand branchoffices ofthe Bank.

Purposes ofthe Bank.

1. This Act may be cited as the NationalDevelopment Bank of Sri Lanka Act.

PART I

CONSTITUTION AND POWERS OF THENATIONAL DEVELOPMENT BANK OF SRI

LANKA AND ITS BOARD OF DIRECTORS

2. There shall, on the appointed date oras soon as may be thereafter, be establisheda Bank which shall be called the " NationalDeve lopmen t Bank of Sri Lanka" ,hereinafter referred to as " the Bank ", andwhich shall consist of the persons who arefor the time being shareholders of the Bank.

3. The Bank shall by the name assignedto it by section 2 be a body corporate andshall have perpetual succession and acommon seal and may sue and be sued insuch name.

4. The head office of the Bank shall bein Colombo. Such branch offices of theBank as the Board of Directors mayconsider necessary may be established inplaces in Sri Lanka, other than in Colombo.

5. (1) The purposes of the Bank shallbe to promote the industrial, agricultural,commercial and other development of theeconomy of Sri Lanka having regard interalia to the development of the rural sector,in accordance with the provisions of thisAct—

(a) by providing medium-term and long-term credit and other forms ofassistance to industrial, agricultural,commercial and other enterprises ;

[24th January. 1979.]

(b) by st imulat ing the furtherdevelopment of the investment,share and security markets of SriLanka;

(c) by mobilizing internal and externalcapital for investment in industrial,agricultural, commercial and otherenterprises; and

(d) by engaging in the promotion of theindustrial, agricultural, commercialand other development of theeconomy of Sri Lanka.

(2) In carrying out its purposes, theBank shall whenever it is feasible anddesirable act in participation or co-operation with approved credit institutions.

6. Subject to the other provisions of thisAct, in carrying out its purposes the Bankmay exercise all or any of the followingpowers:—

(a) to grant loans and advances to anyenterprises engaged or about toengage in industry, agriculture orcommerce;

(b) to guarantee loans raised or to beraised by industrial, agriculturaland commercial enterprises fromapproved credit institutions;

(c) to guarantee obligations of financialinstitutions arising out of theunderwriting of capital issues ofindust r ia l , agr icul tura l andcommercial enterprises;

(d) to participate in the equity ofindustr ial , agr icul tural andcommercial enterprises, and to

Powers of theBank incarrying out itspurposes.

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subscribe to, or to purchase orunderwrite, the issue of stocks,shares, bonds or debentures of anysuch enterprises, and to sell anddeal in such securities;

(e) to grant loans and advances by wayof re-finance of any loans oradvances granted by approvedcredit institutions, and otherinstitutions approved by the Bankto industrial, agricultural andcommercial enterprises, and for thatpurpose to fix the minimum andmaximum periods of maturity ofloans granted by such banks andinstitutions;

(f) to provide such services as technicaland administrative advice andassistance which serves its purposesand comes within its functions toindustrial, agricultural andcommercial enterprises;

(g) to incur, during the first five yearsafter the commencement of itsbusiness, expenditure up to anamount not exceeding two percentum of its paid-up capital infurnishing the services referred to inparagraph (f) on a non-reimbursable basis, and thereafterto charge to the funds of the Bankwith the expenditure incurred incontinuing to provide such serviceswhere necessary on a non-reimbursable basis;

(h) to establish subsidiary companies toassist it in carrying out its purposesand exercising and performing itspowers and duties;

(i) to promote the establishment ofindustrial, agricultural, commercialand other enterprises;

(j) to acquire or purchase any movableor immovable property, or anyindustrial, agricultural, commercialor other enterprise, and to manageor arrange for the management ofsuch property or enterprise, and tosell or otherwise dispose of suchproperty or enterprise;

(k) to invest temporarily the funds ofthe Bank in foreign securities;

(l) to participate in loans, equities,underwriting arrangements andguarantees with approved creditinstitutions;

(m) subject to such conditions as may bedetermined by the Board ofDirectors, to accept, discount,rediscount, buy, sell and deal inbills of exchange, promissory notes,coupons, drafts, debentures,certificates, scrip and otherinstruments and securities whethertransferable or negotiable or not, ofindustrial, agricultural andcommercial enterprises;

(n) to undertake development projects,including pilot projects, in order toachieve the purposes of the Bank;

(o) to engage in the construction ofwarehouses, godowns, stores andbuildings required for agricultural.industr ial and commercialactivities;

(p) to lease, let on hire, sell outright, orsell on a hire-purchase basis

warehouses, godowns, stores andbuildings, machinery, equipmentand other goods;

(q) to guarantee loans raised by anyindust r ia l , agricultural orcommercial enterprise, being loanswhich are floated in the openmarket;

(r) to guarantee deferred payments duefrom any industrial, agricultural orcommercial enterprise;

(s) to convert a part or whole of itsloans to industrial, agricultural orcommercial enterprises, and itssubscriptions to bonds ordebentures issued by any suchenterprise into equity capital;

(t) to subscribe to, or to purchase, or tounderwrite the issue of, stocks,shares, bonds or debentures ofapproved credit institutions;

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(u) to receive, in consideration of thefunctions the Bank may beperforming, such commission,brokerage, interest, remunerationor fees, as the Board of Directors (f)may, from time to time, determine;

(v) to open deposit accounts in theCentral Bank, any commercial (g)bank, or any bank or financialinstitution outside Sri Lanka;

(w) to accept term deposits from anyperson in such amounts and forsuch periods as may be determinedby the Board of Directors;

(x) to grant and issue letters of creditand circular notes;

(y) to buy, sell and deal in bullion andspecie and engage in operations inexchange; and

(z) generally to do, directly or indirectly,all such acts or things as may beconnected w i t h , or are infu r the rance of, the exercise,discharge or performance of thepowers, functions or duties of theBank under this Act or any otherlaw.

7. The Bank may exercise all or any ofthe following powers:—

(a) to appoint a General Manager whoshall be the chief executive officerof the Bank;

(b) to appoint such other officers andservants as may be necessary forcarrying out the work of the Bank;

(c) to establish "a provident fund, andprovide welfare and recreationalfacilities, houses, hostels and otherlike accommodation for personsemployed by the Bank;

(d) to enter into and perform all suchcontracts, whether in or outside SriLanka, as may be necessary for theexercise of the powers and theperformance of the duties of theBank;

(e) to make rules in relation to itsofficers and servants, includingtheir appointment, promotion,

remuneration, disciplinary control,conduct and the grant of leave tothem;

to make rules in respect of theadministration of the affairs of theBank; and

to do all other things which, in theopinion of the Board of Directors,are necessary to facilitate the propercarrying on of the business of theBank.

8. (1) The Bank shall have a Board of Board ofDirectors consisting of— Directors.

(a) the person holding office for the timebeing as the Secretary to theMinistry charged with the subject ofFinance (in this Act referred to as" ex officio Director ");

(b) a Deputy Governor of the CentralBank appointed by the MonetaryBoard, with the concurrence of theMinister;

(c) a senior officer of the Bank ofCeylon appointed by its Board ofDirectors with the concurrence ofthe Minister;

(d) a senior officer of the Peopled Bankappointed by its Board of Directorswith the concurrence of theMinister;

(e) two persons nominated by theMinister;

(f) one other member elected by theshareholders (in this Act referred toas the " elected Director") otherthan the Government, CentralBank, Bank of Ceylon, People'sBank and participants, if any,provided their subscription to theshare capital is not less than ten percentum of the total paid-up capitalof the Bank:

Provided, however, that if theirsubscription to the share capital isless than ten per centum of the total

Special powersof the Bank inrelation toofficers,delegations,contracts, &c.

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Powers.functions, &c.,of the Board ofDirectors.

paid-up capital of the Bank theMinister shall nominate a Directorto represent the interests of theshareholders or of any otherinterests as he may deem necessary.

(2) In this Act, the persons appointed asDirectors under paragraphs (b) to (d} (bothinclusive) of subsection (1) are referred to as" appointed Directors" and the personsnominated as Directors under paragraph(e), and in the proviso to paragraph (/) ofsubsection (1) of this section as " nominatedDirectors ".

(3) In the absence of the ex officioDirector, the person holding office for thetime being as Deputy Secretary to theTreasury shall act as that member'salternate at Board meetings and have theright to vote thereat.

(4) Where an appointed Director or anominated Director is by reason of illness orother infirmity or absence from Sri Lanka,temporarily unable to perform the duties ofhis office, the appointing authority in thecase of appointed Directors and theMinister in the case of nominated Directorsmay appoint or nominate a suitable personto act as his alternate at Board meetings andsuch person shall have the right to votethereat.

(5) The Minister may, without assigningany reasons, remove a nominated Directorfrom office. Such removal shall not becalled in question in any court.

(6) A nominated Director may resign hisoffice by letter addressed to the Minister.

(7) Subject to the provisions ofsubsections (6) and (7), the term of office ofa nominated Director shall be four years.

9. (1) The general superintendence,direction and control of the affairs andbusiness of the Bank shall vest in the Boardof Directors.

(2) The Board of Directors mayexercise, discharge and perform all the

powers, functions and duties of the Bankunder this Act or any other law and do allacts and things which may be done by theBank under this Act or any other law.

(3) In the exercise, discharge andperformance of its powers, functions andduties, the Board of Directors shall, subjectto the provisions of this Act, act inaccordance with sound business principles,and shall have due regard to the interest ofindustry, agriculture and commerce and tothe public interest generally.

10. All or any of the Directors may be Remunerationpaid such remuneration out of the funds of of Directors.the Bank, as may be determined by theMinister.

11. A Director who is directly or Director toindirectly Interested in any loan or contract discloseproposed to be made by the Bank shalldisclose the nature of his interest at ameeting of the Board of Directors. Thedisclosure shall be recorded in the minutesof such meeting and such Director shall nottake part in any deliberation or decision ofsuch Board with respect to such loan orcontract.

interest incontractsproposed to bemade by theBank.

12. (1) Meetings of the Board ofDirectors shall be held at least once in everymonth and, in addition, as frequently as arenecessary for the purpose of discharging itsresponsibilities under this Act.

(2) At any meeting of the Board ofDirectors, four Directors shall constitute aquorum.

(3) Subject to the other provisions ofthis Act, the procedure to be followed inregard to the transaction of business atmeetings of the Board of Directors, shall beas determined by rules made by the Boardof Directors.

13. (1) The Board of Directors maydelegate to the General Manager or anyother employee of the Bank any of itspowers and duties.

(2) Every delegate appointed undersubsection (1) shall exercise or perform thepower or duty delegated to him subject tothe general or special directions of theBoard of Directors.

Meetings of theBoard ofDirectors,quorum andregulation ofprocedure.

Delegation ofpowers andduties of theBoard ofDirectors.

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Board ofDirectors mayact despite avacancy ordefect.

Chairman ofthe Board ofDirectors.

Seal of theBank.

14. No act or proceeding of the Boardof Directors shall be deemed to be invalidby reason only of a vacancy in the office ofa Director or any defect in the nominationof a Director.

15. (1) The Minister shall appoint aChairman from amongst the members of theBoard of Directors.

(2) The term of office of the Chairmanshall, subject to the provisions of subsection(3), be for a period of four yearscommencing on the date of appointment,

(3) In the event of the vacation of officeby the Chairman before the expiration ofhis term of office, another person shall beappointed in his place to hold office duringthe unexpired part of the term of office ofthe Chairman so vacating office.

(4) Any person vacating office asChairman by effluxion of time shall beeligible for reappointment.

(5) The Minister may, without assigningany reason, remove the Chairman fromoffice. Such removal shall not be called inquestion in any court.

(6) In the absence of the Chairman, amember chosen by the majority of themembers present at any meeting of theBoard of Directors shall preside at suchmeeting.

(7) The Chairman or other member ofthe Board of Directors who presides at anymeeting of the Board shall have in additionto his vote, a casting vote,

16. (1) The seal of the Bank shall be inthe custody of the General Manager.

(2) The seal of the Bank may be alteredin such manner as may be determined by theBoard of Directors.

(3) The seal of the Bank shall not beaffixed to any instrument except in thepresence of the General Manager or theacting General Manager and two Directorsall of whom shall sign the instrument intoken of their presence.

Remunerationof members ofSpecialCommittees.

17. (1) The Board of Directors may Agency.appoint agents of the Bank in and outsideSri Lanka.

(2) The Bank may act as agent in andoutside Sri Lanka for other institutions.

18. (1) The Board of Directors mayappoint Special Committees consisting ofsuch number of persons as it may deemnecessary for the purpose of assisting andadvising such Board in the exercise andperformance of its powers and duties.

Appointmentof SpecialCommittees.

(2) The persons qual i f ied forappointment as members of any SpecialCommittee shall be the members of theBoard of Directors, employees of the Bank,and such other persons as the Board ofDirectors may deem to be qualified for suchappointment. The term of office of any suchmember shall be as determined by suchBoard.

19. The members of any SpecialCommittee other than any employee of theBank who is a member of such Committeemay be paid such remuneration out of thefunds of the Bank for their attendance atmeetings of any such Committee and thedischarge of their functions as may bedetermined by rules which are herebyauthorized to be made for that purposeunder this Act.

20. The Bank shall not commence Commence-business until the initial contributions ment of

. business.referred to in section 22 (1) have beenmade:

Provided, however, that nothing in thissection shall be deemed or construed topreclude the Minister from authorizing theBank to commence business on an earlierdate by Order published in the Gazette.

PART II

FINANCE

21. The authorized capital of the Bank Capital of theshall be two thousand million rupees Bank-divided into twenty million shares of onehundred rupees each.

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Contributionsto the capitalof the Bank.

Liability ofshareholders.

22. (1) The following shall, within oneyear after the appointed date, make aninitial contribution of six hundred millionrupees to the capital of the Bank in suchamounts and in such manner as hereinafterprovided and shall by virtue of suchcontributions be deemed to be shareholdersof the Bank:—

(a) the Government of Sri Lanka—fourhundred million rupees in cash;

(b) the Central Bank of Ceylon—twenty-five million rupees in cashand seventy-five million rupees inthe form of a promissory notepayable on demand;

(c) the Bank of Ceylon—twelve millionfive hundred thousand rupees incash and thirty-seven million fivehundred thousand rupees in theform of a promissory note payableon demand;

(d) the People's Bank—twelve millionfive hundred thousand rupees incash and thirty-seven million fivehundred thousand rupees in theform of a promissory note payableon demand.

(2) The Bank shall, after commencementof business, offer the shares referred to insection 2! to the public for subscription atsuch time or times, in such amount oramounts and in such manner as may bedetermined by the Board of Directors, andshall allot such shares.

(3) The Board of Directors may, fromtime to time, solicit and accept furthercontributions to the capital of the Bankfrom any or all of the shareholders.

(4) No contribution to the capital of theBank shall be made or accepted except inpursuance of the provisions of this sectionor section 57.

23. The liability of any shareholder shallbe limited to the amount, if any, unpaid onhis shares.

24. The Bank may, under and inaccordance with the succeeding provisionsof this Part of this Act, raise such sums ofmoney in or outside Sri Lanka, by way ofloan or otherwise, as may be necessary forcarrying out its purposes and exercising andperforming its powers and duties.

25. The Bank may, from time to time,borrow from the Government, and theGovernment may, from time to time, lend tothe Bank from the Consolidated Fund anysum of money, subject to such terms andconditions as may be determined by theGovernment.

26. (I) The Bank may, from time totime, borrow sums of money from theCentral Bank for periods not exceeding sixmonths, subject to such terms andconditions as to the interest thereon and therepayment thereof as may be determined bythe Monetary Board.

(2) Borrowings by the Bank undersubsection (1) shall at no time exceed a sumequivalent to ten per centum of the paid-upcapital and free reserves of the Bank.

27. The Bank may, with the approval ofthe Monetary Board from time to time,borrow from any foreign Government, orany other source whatsoever outside SriLanka, any sum of money on such termsand conditions as to the interest thereon andthe repayment thereof as may be determinedby agreement between the Bank, and suchGovernment or such other source, as thecase may be.

28. (1) The Board of Directors maycreate and issue debentures and stock, andthe debentures and stock so created andissued shall in this Act be referred to as" National Development Bank Debentures "and " National Development Bank Stock ",respectively.

(2) N a t i o n a l D e v e l o p m e n t BankDebentures and National DevelopmentBank Stock shall be issued, transferred,dealt with, redeemed and cancelled inaccordance with such terms and conditionsas may be determined by the Board ofDirectors.

Generalborrowingpowers of theBank.

Borrowingfrom theGovernment.

Temporaryborrowingsfrom theCentral Bank.

Borrowingfrom foreignGovernments,&c.

NationalDevelopmentBankDebenturesand Stock.

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Government toguaranteerepayments,&c.

Governmentguarantee onforeignborrowings.

29. (1) The Government mayguarantee the repayment of the principalsum, and the payment of the interest on—

(a) any National Development BankDebentures, and any NationalDevelopment Bank Stock, createdand issued by the Board ofDirectors; and

(b) any loan raised by the Bank fromany foreign Government, or anyother source under this Part of thisAct.

(2) Any sum required for the settlementof any guarantee provided under subsection(1) shall be charged on the ConsolidatedFund.

30. (1) The Government is herebyauthorized to guarantee, on such terms andconditions as the Government maydetermine, any loan raised by the Bankfrom any international or regional lendinginstitution, or from any other internationalor foreign organization approved by theGovernment. Any loan authorized to beguaranteed under this subsection may bedenominated in foreign currency.

(2) All sums payable by the Governmentunder any guarantee given under subsection(1) are hereby charged on the ConsolidatedFund.

(3) All sums payable by the Bank inrespect of principal, interest and othercharges on any loan to the Bank from anyinternational or regional lending institutionor from any other international or foreignorganization approved by the Government,under any guarantee given under subsection(1) shall, notwithstanding anything to thecontrary in any written or other law, bepaid—

(a) without deduction for, and freefrom, any taxes, duties or fees nowor hereafter imposed by or underany written or other law ; and

(b) free from all restrictions now orhereafter imposed by or under anywritten or other law ;

Provided, however, that the precedingprovisions of this subsection shall not applyto any taxes, duties, fees or restrictions

upon payments under any bond orpromissory note to a holder thereof otherthan any international or regional lendinginstitution or any other international orforeign organization approved by theGovernment when such bond or promissorynote is beneficially owned by an individualor a corporation resident in Sri Lanka.

(4) For the purposes of subsection (3),the question whether an individual or aCorporation is or is not resident in SriLanka shall be determined in accordancewith the provisions of section 67 of theInland Revenue Act (No. 28 of 1979).

(5) Every guarantee agreement betweenthe Government and any international orregional lending institution, or any otherinternational or foreign organizationapproved by the Government pursuant tothis Act and every guarantee given by theGovernment pursuant to any such guaranteeagreement shall, notwithstanding anythingto the contrary in any law, be valid andenforceable in accordance with theirrespective terms.

(6) In the case of any loan made to theBank, by any international or regionalinstitution or any other international orforeign organization approved by theGovernment, and guaranteed by theGovernment, the Government shall bear anyloss, and be entitled to any profit, resultingfrom any revaluation of the Sri Lanka rupeein relation to the currency or currencies inwhich that loan is expressed or repayable inwhole or in part.

The amount of every such loss is herebycharged on the Consolidated Fund.

(7) Notwithstanding anything in anyother written law, no agreement, bond orother document executed by the Bank inrespect of any loan which may be raised bythe Bank from any international or regionallending institution, or from any otherinternational or foreign organizationapproved by the Government, shall besubject to, or be charged with, any stampduty or duties whatsoever.

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AdministeredResourcesFund.

31. (I) The Bank shall establish afund which shall be known as the" Administered Resources Fund ", in thisAct referred to as " the Fund " The Fundshall not form part of the general funds ofthe Bank, but shall be a special fund whichshall be administered by the Bankseparately from the general funds of theBank for and on behalf of the Government,or of any such foreign Government,foreign or international organization orperson or persons as may be approved bythe Government.

(2) The purposes of the Fund shall beto enable loans, advances, or otheraccommodation or grants to be made orgiven, under and in accordance with theprovisions of this Act, from the Fund toindustrial, agricultural, commercial orOther enterprises.

(3) The Bank, in terms of anyagreement entered into between the donorand the Bank, is hereby authorized tomake or give from the Fund any loan,advance, grant, or other accommodationto any industrial, agricultural, commercialor other enterprise.

(4) There shall be credited to the Fundby the Bank the amount of all donationsand grants made, for the purposes of theFund, by the Government, any foreignGovernment and any other source, whetherin or outside Sri Lanka. In addition theFund shall be credited with the net incomeor interest arising from the operations ofthe Fund.

(5) All financial commitments orliabilities of the Bank arising from, orincurred in connexion with, any act orthing done by the Bank with the object ofcarrying out the purposes of the Fund shallbe charged on the Fund.

(6) The Board of Directors may investtemporarily the excess resources of theFund which cannot be utilized immediatelyin pursuance of the objectives of the Fundin such securities as it may deemappropriate, without prejudice to the longterm interests of the Fund.

(7) Rules may be made under this Actin respect of all or any of the followingmatters :—

(a) the manner in which the accountsof the Fund shall be kep t ;

(b) the establishment of reserves in theFund for bad and doubtful debts.the depreciation of assets, and forsuch other contingencies as mayaccord with normal bankingpractice;

(c) the closure or winding up of theFund; and

(d) any other matters connected withor incidental to any of the mattersaforesaid.

(8) Notwithstanding anything in anyother written law, the Bank shall beexempt from the payment of income taxupon the profits and income of the Fund,

32. (1) All sums of money received by Funds of thethe Bank or the Board of Directors— Bank-

(a) as contributions towards the capitalof the Bank;

(b) in carrying out the purposes of theBank ;

(c) in exercising and performing thepowers and duties of the Bank orsuch Board; and

(d) in conducting the business andadministration of the Bank,

shall be credited to the funds of the Bank.

(2) All financial commitments orliabilities of the Bank or the Board ofDirectors arising from, or incurred inconnexion with—

(a) the carrying out of the objects andpurposes of the Bank;

(b) the exercise and performance of thepowers and duties of the Bank orsuch Board ; and

(c) the conduct of the business andadministration of the Bank,

shall be charged on the funds of the bank.

33. The profits of the Bank shall be Utilization ofutilized for the purpose of— the profilts of

the Bank;(a) the establishment and maintenance

of a General Reserve;

(b) the establishment and maintenanceof a special reserve for bad ordoubtful debts;

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(c) the establishment and maintenanceof such other reserve funds as maybe necessary for specific purposes;and

the payment of dividends.(d)

34. The Bank shall be exempt from thepayment of income tax upon the profits andincome of the Bank, for a period of tenyears after the date of the commencement ofits business.

35. (1) Every person—

(a) to whom any loan, advance or otheraccommodation is granted by theBank, or

(b) who has obtained probate of the willor letters of administration to theestate of a person to whom anyloan, advance or otheraccommodation has been grantedby the B a n k , or who, uponapplication made in that behalf bythe Board of Directors, has beenappointed by court to representsuch estate, or

(c) to whom any right, title or interestwhatsoever in any immovableproperty mortgaged to that Bank assecurity for any loan, advance orother accommodation has passed,whether by voluntary conveyanceor by operation of law,

shall register with the Bank an address towhich all notices to him may be addressed.

(2) Any notice which is required to beserved on any person to whom subsection(1) applies shall be deemed to have beenduly served on that person if it is sent bypost in a registered letter directed to thatperson at the address registered by himunder that subsection, and service shall bedeemed to have been effected at the time atwhich the letter would be delivered in theordinary course of post:

Provided that, where any such personfails to register bis address under subsection

(1), the Bank shall publish, in the Gazetteand in at least three daily newspapers in theSinhala, Tamil and English languages, anotice addressed to him, and such noticeshall be deemed to be duly given to him onthe day on which such notice is lastpublished.

36. Any loan, advance or otheraccommodation may be granted by theBank on the security of—

(a) a mortgage of any movable orimmovable property;

(b) any stocks, bonds, debentures,shares, assignments of mortgages orother securities, other than NationalDevelopment Bank Debentures andNa t iona l Deve lopmen t BankStock;

(c) any warehouse receipts, billsof lading, or such other instrumentsas may be approved, from time totime, by the Board of Directors forthe purpose of such security;

(d) any goods, wares or merchandise; or

(e) any guarantee given by anyenterprise or individual andaccepted by the Board or Directors.

37. Where default is made in thepayment of any sum payable as aninstalment in repayment of the amount ofany loan, advance or other accommodationgranted by the Bank on the mortgage of anyimmovable property or as interest on thatloan, advance or other accommodation,default shall be deemed to have been madein respect of the whole of such portion ofthe amount of that loan, advance or otheraccommodation as has not been repaid tothe Bank and the interest due thereon.

38. (1) Where under the provisions ofthis Act, default is made or is deemed tohave been made in respect of the whole ofthe unpaid portion of any loan and theinterest due thereon, the Board of Directors

Security onwhich loans,&c; may begranted by theBank.

Default ofpayment.

Action byBoard ofDirectorswhere defaultis made.

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Exemption of Bank from income tax.
Pramod N Hettihewa
Regisrered address of borrower,&c.
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Authorizationof manager totake possessionof mortgagedproperty.

Procedurewhere manageris appointed.

may, in its discretion, take action asspecified either in section 39 or insection 41:

Provided that where the Board has in anycase taken action, or commenced to takeaction, in accordance with section 39,nothing shall be deemed to prevent theBoard at any time from subsequently takingaction in that case by resolution undersection 41 if the Board deems it necessary oradvisable to do so.

(2) For the purposes of this section andsections 39 to 53, the term " loan " means aloan or an advance or any otheraccommodation granted by the Bank.

39. Subject to the provisions of section42, the Board of Directors may byresolution to be recorded in writingauthorize any person specified in theresolution to enter upon any immovableproperty mortgaged to the Bank as securityfor any loan in respect of which default hasbeen made, to take possession of and tomanage and maintain such property, and toexercise the same powers in the control andmanagement of such property as might havebeen exercised by the mortgagor if he hadnot made default.

40. (1) Any person authorized byresolution of the Board of Directors undersection 39 in respect of any property shall beentitled generally to take action in terms ofthe resolution and in particular—

(a) to sell the produce of such property;

(b) to receive the rents, profits, or otherincome from such property;

(c) to pay the expenses incurred in thecontrol and management of suchproperty out of the income fromsuch property;

(d) to appropriate to himself out of suchincome such sum (if any) as theBoard may deem fit to fix asremuneration for his services;

(e) to remain in possession of suchproperty until all moneys due to theBank under the mortgage on suchproperty have been fully paid oruntil he is directed by the Board toyield possession of such propertyunder subsection (2).

(2) Every person authorized byresolution of the Board of Directors undersection 39 in respect of any property shall—

(a) pay monthly, out of the income ofsuch property, such sum (if any) asthe Board may in its discretion fix,to the mortgagor for hismaintenance;

(b) pay quarterly or as otherwisedirected by the Board to suchperson or persons and in suchmanner as the Board may direct thebalance of the income from suchproperty remaining after thepayments hereinbefore authorizedhave been made;

(c) keep and render to the Board at suchintervals as the Board maydetermine clear and accuraterecords of all sums received or paidout by him in respect of suchproperty;

(d) yield possession of such property tothe mortgagor or some other personas directed by the Board and pay tothe Board any balance of theincome from such propertyremaining in his hands after thepayments hereinbefore authorizedhave been made.

(3) The Board shall, when all sums dueto the Bank under the mortgage have beenfully paid, surrender possession of themortgaged property to the mortgagor andreturn to him any balance remaining of theincome from such property.

41. Subject to the provisions of section42, the Board of Directors may byresolution to be recorded in writingauthorize any person specified in theresolution to sell by public auction anyimmovable property mortgaged to the Bankas security for any loan in respect of whichdefault has been made in order to recoverthe whole of the unpaid portion of suchloan, and the interest due thereon up to thedate of the sale, together with the moneysand costs recoverable under section 48.

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Authorisation of sale of mortagaged property.
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Whereborrower isdead.

Notice ofresolution ofBoard ofDirectors tosell mortgagedproperty,

Notice of sale.

42. (1) Save as otherwise provided insubsection (2), the provisions of sections 39and 41 shall apply in the case of any defaultnotwithstanding that the borrower mayhave died or that any right, title or interestwhatsoever in the property mortgaged assecurity for the loan may have passed byvoluntary conveyance or by operation oflaw to any other person.

(2) Where the borrower is dead andprobate of his will or letters ofadministration to his estate have not beenissued, the District Court of Colombo or theDistrict Court having jurisdiction over theplace where that property is situate may,upon application made in that behalf by theBoard of Directors and after service ofnotice of the application on such persons, ifany, as the court may order, and if satisfiedthat the grant of probate or the issue ofletters of administration is likely to beunduly delayed, appoint a person torepresent the estate of the borrower for thepurposes of this section ; and the provisionsof sections 39 and 41 shall not apply in thecase of any default made by the borrowerunless and until a representative of his estateis appointed under this section.

43. Notice of every resolution undersection 41 authorizing the sale of anyproperty shall be published in the Gazetteand in at least three daily newspapers in theSinhala, Tamil and English languages andcopies of such notice shall be served on theborrower, if he is alive, and on every personwho has, in respect of that property,registered his address under section 35.

44. Notice of the date, time and place ofevery sale shall, not less than fourteen daysbefore the date fixed for the sale, bepublished in the Gazette and copies of suchnotice shall be—

(a) served on the borrower, if he is aliveand on every person on whomnotice of any resolution is requiredto be served under section 43 ;

(b) posted on or near the propertywhich is to be sold ; and

(c) affixed to the walls of the Kachcheriand the several District Courts,

Magistrate's Courts and PrimaryCourts within the jurisdiction ofwhich the property is situate.

45. (1) If the amount of the whole of Paymentthe unpaid portion of the loan (together before sale.with all interest due thereon according tothe terms of the mortgage), and of themoneys and costs, if any, recoverable bythe Board of Directors under section 48 istendered to the Board at any time beforethe date fixed for the sale, the propertyshall not be sold and no further steps shallbe taken in pursuance of the resolutionunder section 41 for the sale of thatproperty.

(2) If the amount of the instalment orother payment in respect of which defaulthas been made, together with any interestdue thereon according to the terms of themortgage, and of the moneys and costs, ifany, recoverable by the Board of Directorsunder section 48, is tendered to the Boardat any time before the date fixed for thesale, the Board may, in its discretion,direct that the property shall not be sold,and that no futher steps shall be taken inpursuance of the resolution under section41 for the sale of that property.

46. The Board of Directors may fix an Upset price.upset price below which the property shallnot be sold to any person other than theBank-

47. In any case where two or more Default inloans have been granted by the Bank on respect of one

- . . . , of severalthe security of the same property and loans on samedefault is made in the payment of any sum property.due upon any one or more of such loans,the foregoing provisions of this Act shallapply notwithstanding that default maynot have been made in respect of the otherloan or any of the other loans, and theBoard of Directors may, in any such case,by resolution under section 41 authorizethe sale of the property for the recovery ofthe total amount due to the Bank inrespect of both or all the loans, as the casemay be, and the provisions of this Act shallapply accordingly.

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Recovery ofexpenses andcosts incurredby the Bank.

Payment ofexcess balance.

Certificate ofsate.

48. In addition to the amount due onany loan, the Board of Directors mayrecover from the borrower, or any personacting on his behalf—

(a) all moneys expended by the Bank inaccordance with the covenantscontained in the mortgage bondexecuted by the person to whom theloan was made, in the payment ofpremia and other charges in respectof any policy of insurance effectedon the property mortgaged to theBank, and in the payment of allother costs and charges authorizedto be incurred by the Bank, underthe covenants contained in suchmortgage bond; and

(b) the costs of advertising the sale andof selling the mortgaged property:

Provided that the costs incurred underthis paragraph shall not exceed suchpercentage of the loan as may from time totime be fixed by resolution of the Board.

49. If the mortgaged property is sold,the Board of Directors shall, after deductingfrom the proceeds of the sale the amountdue on the mortgage and the money andcosts recoverable under section 48, pay thebalance remaining, if any, either to theborrower or any person legally entitled toaccept the payments due to the borrower,or, where the Board is in doubt as to whomthe money should be paid, into the DistrictCourt having jurisdiction over the placewhere the mortgaged property is situate.

50. (1) If the mortgaged property issold, the General Manager on a specificauthorization by the Board of Directors,shall issue a certificate of sale and thereuponall the right, title and interest of theborrower to and in the property shall vest inthe purchaser; and thereafter it shall not becompetent for any person claiming throughor under any disposition whatsoever of theright, title or interest of the borrower to andin the property, made or registered after thedate of the mortgage of the property to theBank, in any court to move to invalidate thesale for any cause whatsoever or to maintainany right, title or interest to or in theproperty as against the purchaser.

(2) A certificate signed by the GeneralManager under subsection (1) shall beconclusive proof, with respect to the sale ofany property, that all the provisions of thisAct relating to the sale of that property havebeen complied with.

(3) If the purchaser is some person otherthan the Bank, the certificate shall besubstantially in the Form A in the Scheduleto this Act; if the purchaser is the Bank, thecertificate shall be substantially in the FormB in the Schedule to this Act.

(4) Every certificate of sale shall beliable to stamp duty and charges as if it werea conveyance of immovable property andto any registration and other chargesauthorized by law, all of which shall bepayable by the purchaser.

51. (1) The purchaser of anyimmovable property sold in pursuance ofthe preceding provisions of this Act shall,upon application made to the District Courtof Colombo or the District Court havingjurisdiction over the place where thatproperty is situate, and upon production ofthe certificate of sale issued in respect ofthat property under section 50, be entitledto obtain an order for delivery of possessionof that property.

(2) Every application under subsection(1) shall be made, and shall be disposed of,by way of s u m m a r y p rocedu re inaccordance with the provisions of ChapterXXIV of the Civil Procedure Code ; and onall documents filed for the purpose of eachapplication and on all proceedings heldthereupon, stamp duties and other chargesshall be payable at the respective ratespayable under any written law for the timebeing in force, on applications for, andproceedings connected with or incidental to,the execution of a decree of a District Courtfor the delivery of possession of anyimmovable property of the same value asthe land to which such application relates.

(3) Where any immovable property soldin pursuance of the preceding provisions ofthis Act is in the occupancy of the debtor orof some person on his behalf or of someperson claiming under a title created by thedebtor subsequently to the mortgage of the

Order fordelivery ofpossession.

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property to the Bank, the District Courtshall order delivery to be made by puttingthe purchaser, or any person whom he mayappoint to receive possession on his behalf,in possession of the property.

(4) Where any immovable property soldin pursuance of the preceding provisions ofthis Act is in the occupancy of a tenant orother person entitled to occupy the same,the District Court shall order delivery to bemade by affixing a notice that the sale hastaken place, in the Sinhala, Tamil andEnglish languages, in some conspicuousplace on the property, and proclaiming tothe occupant by beat of tom-tom, or in suchother mode as may be customary, at someconvenient place, that the interest of thedebtor has been transferred to thepurchaser. The cost of such proclamationshall be fixed by the court and shall in everycase be prepaid by the purchaser,

(5) Every order under subsection (3) orsubsection (4) shall be deemed, as the casemay be, to be an order for delivery ofpossession made under section 287 or 288 ofthe Civil Procedure Code, and may beenforced in like manner as an order somade, the debtor and the purchaser beingdeemed, for the purpose of the applicationof any provision of that Code, to be thejudgment-debtor and judgment-creditor,respectively.

52. Where the property sold has beenpurchased on behalf of the Bank, the Boardof Directors may at any time before it re-sells that property, cause the cancellation ofthe sale by an endorsement to that effectmade by the General Manager on a certifiedcopy of the certificate of sale, upon thedebtor or any person on his behalf payingthe amount due in respect of the loan forwhich the property was sold (including thecosts of seizure and sale) and interest on theaggregate sum at a rate not exceeding theprescribed rate. Such an endorsement shall,upon registration in the office of theRegistrar of Lands, revest the property inthe debtor as though the sale under this Acthad not been made.

53. If the property so sold has beenpurchased on behalf of the Bank, and thesale is not cancelled under section 52, the

Board of Directors may, at any time, re-sellthe property and transfer to the purchaserby causing an endorsement to be made bythe General Manager on a certified copy ofthe certificate referred to in subsection (3) ofsection 50, all the right, title and interestwhich would have been acquired by thepurchaser at the original sale. Theendorsement shall be liable to the samestamp duty and charges as a certificate to apurchaser at the original sale, and shall,when it is registered in the office of theRegistrar of Lands, vest such right, title andinterest as aforesaid in the purchaser.

PART III

AUDIT AND ACCOUNTS

54. The financial year of the Bank shall Financial yearbe the calendar year. of the Bank-

55. (1) The Auditor-General shall Audit.audit the accounts of the Bank at suchintervals not exceeding a period of twelvemonths as the Board of Directors maydecide.

(2) Notwithstanding the provisions ofsubsection (1), the Minister may, inconsultation with the Auditor-Generalappoint a qualified auditor or auditors toaudit the accounts of the Bank, where suchappointment has been made by theMinister, the Auditor-General may, inwriting inform such auditor or auditors thathe proposes to utilize his or their servicesfor the performance and discharge of theAuditor-General's duties and functions inrelation to the Bank and thereupon suchauditor or auditors shall act under thed i r e c t i o n a n d c o n t r o l of t h eAuditor-General.

(3) Every qualified auditor appointedunder the provisions of subsection (2) shallsubmit his report to the Minister and alsosubmi t a copy thereof to theAuditor-General.

(4) The Auditor-General shall examinethe accounts of the Bank and ascertain thecorrectness of the balance sheet and reportto the Board of Directors—

(a) whether or not he has obtained allthe information and explanationshe has required ; and

Cancellation ofsale.

Re-sale by theBank.

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Documents tobe transmittedto the Ministerto be laidbeforeParliament.

(b) whether in his opinion the balancesheet referred to in the report isproperly drawn up so as to exhibita true and correct view of theBank's affairs according to the bestof his information and explanationsgiven to him and as shown by thebooks of the Bank.

(5) For the purpose of ascertaining thecorrectness of the balance sheet the Auditor-General may, with the sanction of the Boardof Directors and the Minister, accept, inrespect of any branch of the Bank, anycopies or abstracts from the books andaccounts of such branch which have beentransmitted to the head office of the Bankand which have been certified to be correctby an officer of the Bank authorized in thatbehalf by the Board of Directors.

(6) In this section "qualified auditor"means—

(a) an individual who being a memberof the Institute of CharteredAccountants of Sri Lanka, or ofany other institute established bylaw, possesses a certificate topractise as an accountant issued bythe Council of such Institute ; or

(b) a firm of accountants, each of theresident partners of which, being amember of the Institute ofChartered Accountants of SriLanka or of any other instituteestablished by law, possesses acertificate to practise as anaccountant issued by the Council ofsuch Institute.

56. (1) The Board of Directors shall,on receipt of the Auditor-General's report inrespect of any year, cause a copy of each ofthe following documents relating to thatyear to be transmitted to the Minister andto all the shareholders:—

(a) Auditor-General's report;

(b) balance sheet;

(c) profit and loss account; and

(d) report of the Chairman of suchBoard giving an account of thework of the Bank.

(2) The Minister shall lay copies of thedocuments transmitted to him undersubsection (1) before Parliament.

PART IV

AGREEMENT FOR PARTICIPATION INUNDERTAKING OF BANK

57. (I) The Board of Directors is Agreement forhereby authorized to conclude an Participaiion,Agreement with any international orregional f inancial ins t i tu t ion forparticipation by such institution in thebusiness of the Bank; and where suchAgreement is concluded, such institutionshall become a Participant for the purposesof this Act with effect from such date asmay be specified in that behalf in theAgreement.

(2) Any Agreement referred to insubsection (1) may contain such covenantsand conditions as the Board of Directorsmay consider necessary, in addition to theprovisions required or authorized by thisAct to be contained therein.

(3) All rights or powers exercisableunder or for the purposes of this Act by aParticipant may be exercised on behalf ofthe Participant by such person or persons,and in such manner, as may be specified inthat behalf in the Agreement, and if soexercised, shall be deemed for the purposesof this Act to have been duly exercised bythe Participant.

58. The provisions of sections 59 to 63(both inclusive) shall apply only so long asthere is at least one Participant.

59. (1) Subject to the provisions ofsubsection (3), a Participant shall make aninitial contribution to the capital of theBank of such amount as may be specified inthe Agreement referred to in section 57 (1)to which he is a party or, if it is not sospecified, as may be determined by theBoard of Directors.

(2) Subject to the provisions ofsubsection (3), where any further amount iscontributed by the shareholders to thecapital of the Bank, a Participant may makea further contribution to the capital of theBank of such amount as may be determinedby the Board of Directors.

Application ofthis Part.

A Participant'scontribution tothe capital ofthe Bank.

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Participants tobe shareholdersin Bank.

Liquidation.

Restriction ofsale of sharesof Participant.

(3) The provisions of subsections (1)and (2) shall be subject to the followinglimitations and conditions, namely—

(a) that, where there is only oneParticipant, his initial contributionunder subsection (1), or the totalsum of his contributions undersubsections (1) and (2), to thecapital of the Bank, shall notexceed forty-nine per centum of thecapital for the time being of theBank; or

(b) that, where there are two or moreParticipants, the total sum of theirinitial contributions undersubsection (1), or the total sumof their contributions undersubsections (1) and (2), to thecapital of the Bank shall not exceedforty-nine per centum of the capitalfor the time being of the Bank.

60. (1) A Participant shall, by virtue ofhis contribution to the capital of the Bank,be a shareholder in the Bank andaccordingly certificates for shares, each of anominal value of one hundred rupees shallbe issued by the Bank to the Participant, upto an amount equal to the contributionmade by the Participant.

(2) The right of a Participant to transferor dispose of any shares held by him shallbe subject to the provisions contained inthat behalf in this Act and in the Agreementconcluded under section 57 (1) to which heis a party; and if any such shares are dulytransferred to any other person, such sharesshall be held by such other person in allrespects in like manner and subject to thesame provisions (whether contained in thisAct or in the Agreement) as though suchperson were the Participant.

61. The shares held by the shareholdersin the Bank shall entitle them in the event ofthe dissolution of the Bank to participatepro rala, according to the nominal value ofthe shares held, in the amount realized bythe sale of the assets of the Bank, afterpayment of liabilities to other persons, ifany.

62. (1) A Participant shall not beentitled to sell, assign, charge or otherwisein any manner whatsoever to alienate or

encumber any shares in the Bank, exceptwith the prior consent in writing of theBoard of Directors and except to or infavour of a person approved by such Boardfor the purpose.

(2) If any Agreement concluded undersection 57 contains provision specifying thecircumstances in which the consent of theBoard of Directors to any proposed sale oralienation of the shares of a Participant whois a party to such Agreement shall not bewithheld, such provision shall have effect asthough it were herein enacted.

(3) No shares of a Participant in theBank shall, except with the prior consent ofthe Board of Directors conveyed in writingto the Participant by the General Manager,be or be liable to be sold in execution of anyorder or decree of any court or by anyassignee in insolvency of the Participant, orif the Participant is a company, by anyliquidator or otherwise in the course of anyproceedings for the winding-up of thecompany.

(4) Where application is made to theBoard of Directors for such prior consent asis required by subsection (1) or subsection(3), the Board may, in lieu of granting suchconsent, determine that the shares to whichthe application relates shall be acquired byany of the other shareholders.

(5) The preceding provisions of thissection shall have effect notwithstandinganything in any written or other law, and inthe event of any conflict or inconsistencybetween such preceding provisions andanything in any written or other law, suchprovisions shall prevail.

63. Where the shares or any of theshares of a Participant are to be acquired bya shareholder in pursuance of adeterminat ion under subsection (4) ofsection 62, the value of the shares which areto be so acquired shall be determined insuch manner and upon such terms andconditions as shall be contained in thatbehalf in the Agreement under section 57 towhich he is a party.

Valuation ofParticipant'sshares.

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Payment for 64. Payment for the shares or any of theshares acquired shares in the Bank of a Participant whichshareholder are acquired or purchased by a shareholder

under the preceding provisions of this Actshall be paid by the shareholder.

PART V

GENERAL

Certain written 65. The provisions of the followinglaws not to written laws shall not apply to the Bank-apply to theBank. (a) the Money Lending Ordinance; and

(b) the Debt Conciliation Ordinance.

66. The Bank shall be deemed to be acredit institution for the purposes of theMonetary Law Act and accordingly theBank may borrow from the Medium andLong Term Credit Fund of the CentralBank such sums as the Board of Directorsmay from time to time determine.

The Bankdeemed to bea creditinstitution.

67. The Board of Directors mayOfficers of theBank tofurnishsecurity.

determine which classes of officers of theBank shall give security to the satisfactionof such Board for the due and faithfulperformance of their duties. Every officer ofthe Bank belonging to any class sodetermined shall give such security.

68. No Director or officer of the Bankshall be liable for any damage or losssuffered by the Bank, unless such damage orloss was caused by his misconduct or wilfuldefault.

No liability fordamage or losscausedotherwise thanby misconductor wilfuldefault.

(ii) by a court of law, or

(iii) by the persons to whom suchmatters relate;

(b) in the performance of his duties;and

(c) in order to comply with any of theprovisions of this Act.

70. Every Director, auditor, manager. Right to refusesecretary or other officer of the Bank shall, to answerexcept when required to do so by a court orby any law, decline to answer any questionconcerning the business of the Bank whichmay be put to him on any occasionwhatsoever, if he considers that the answerto such question would disclose or tend todisclose the secrets of the Bank or thebusiness or affairs of -any customer of theBank.

questions.

71. A receipt signed by the General Receipts whenManager or by any person expressly valid-authorized by the General Manager of theBank to give receipts, shall be an effectualdischarge for moneys paid to the Bank.

72. (1) Contracts on behalf of the Contracts,Bank may be made as follows:—

(a) a contract which if made betweenprivate persons would be by lawrequired to be in writing, may bemade on behalf of the Bank inwriting under the common seal ofthe Bank,

Declaration of 69. Every Director, manager, auditor,secrecy, officer, servant, agent, accountant, or other

person employed in the business of theBank, shall before entering upon his dutiessign a declaration pledging himself toobserve strict secrecy respecting alltransactions of the Bank, its customers, andthe state of accounts with any person and allmatters relating thereto and shall by suchdeclaration pledge himself not to reveal anyother matters which may come to hisknowledge in the discharge of his dutiesexcept—

(a) when required so to do—

(i) by the Board of Directors, or

(b) a contract which if made betweenprivate persons is by law requiredto be in writing, signed by theparties to be charged therewith,may be made on behalf of the Bankin writing signed by any person orpersons duly authorized thereto ashereinafter provided; and

(c) a contract which if made betweenprivate persons would by law bevalid although made by parol onlyand not reduced into writing, maybe made by parol on behalf of theBank by any person or persons dulyauthorized thereto as hereinafterprovided.

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. (2) A contract made according to thissection shall be effectual in law and shallbind the Bank and all other parties theretoand their legal representatives.

(3) A contract made according to thissection may be varied or discharged in thesame manner in which it is authorized bythis section to be made.

73. A bill of exchange or promissorynote shall be deemed to have been made,executed, or endorsed on behalf of theBank, if made, executed, or endorsed in thename of, or by or on behalf of or onaccount of the Bank by any person orpersons duly authorized thereto ashereinafter provided.

74. No person, other than the GeneralManager and the persons thereto expresslyauthorized by the Board of Directors andacting within the limits of the authority soconferred on them, shall have any authorityto make, draw, accept or endorse anypromissory note, bill of exchange, cheque ororder for the payment of money in the nameor on behalf of the Bank or to enter intiany contract so as to impose thereby anyliability on the Bank or otherwise to pledgethe credit of the Bank.

75. (1) The Bank may, by writingunder its common seal, empower any persongenerally or in respect of any specificmatter, as its attorney, to execute deeds onits behalf in any place outside Sri Lanka.

(2) A deed signed by such attorney onbehalf of the Bank and under his signatureor seal shall bind the Bank and have thesame effect as if it were under its commonseal.

76. The Board of Directors may makerules, which are not inconsistent with theprovisions of this Act or with soundbanking principles in respect of—

(a) any matter required by this Act to beprescribed;

(b) any matter for which rules arerequired or authorized to be madeunder this Act, and

(c) any matter necessary to enable theBank to effectively carry out itspurposes, exercise and perform itspowers and duties, and carry on itsbusiness.

77. (1) Any person who contravenes or Offences.fails to comply with any provision of thisAct shall be guilty of an offence and shall,on conviction after summary trial before aMagistrate, be liable to a fine not exceedingfive thousand rupees or to imprisonment ofeither description for a term not exceedingone year, or to both such fine andimprisonment.

(2) Where an offence under this Act iscommitted by a body of persons, then,—

(a) if that body of persons is a bodycorporate, every director and officerof that body corporate; or

(b) if that body of persons is a firm,every partner of that firm,

shall be deemed to be guilty of that offence :

Provided, however, that a director orofficer of such body corporate, or a partnerof such firm, shall not be deemed to beguilty of such offence if he proves that suchoffence was committed without hisknowledge or that he exercised all duediligence to prevent the commission of suchoffence.

78. (1) Notwithstanding the provisionsof sections 117 and 118 of the MonetaryLaw Act, Central Bank is hereby tosubscribe to the capital of, and to purchase,guarantee or accept as security, any shares,stock, debentures, promissory notes or othersecurities issued by the Bank.

(2) Notwithstanding anything to thecontrary in any other written law the Bankof Ceylon and the People's Bank are herebyauthorized to subscribe to the capital of theBank.

Specialprovisionsrelating to theshareholders.

79. The Minister may from time to time Minister togive general or special directions in writing give directions.as to the performance of the duties and theexercise of the powers of the Bank and itshall be the duty of the Bank to comply withsuch directions.

Bills ofexchange andpromissorynotes.

Personsauthorized toact on behalfof the Bank.

Execution ofdeeds abroad.

Rules.

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Interpretation. 80. In this Act, unless the contextotherwise requires—

" appointed date " means the 24th day ofJanuary 1979;

" approved credit institution" has thesame meaning as " creditinstitution " in section 88F of theMonetary Law Act, and includessuch other institutions as the Boardof Directors may, from time totime, determine to be approvedcredit institutions for the purposesof this Act;

" Board of Directors " means the Board ofDirectors of the Bank;

" Central Bank " means the Central Bankof Ceylon established under theMonetary Law Act;

" Monetary Board " means the MonetaryBoard of the Central Bank ofCeylon constituted under section 8of the Monetary Law Act;

" Bank of Ceylon " means the Bank ofCeylon established under the Bankof Ceylon Ordinance;

" People's Bank" means the People'sBank established under the People'sBank Act;

" Director" means a member of theBoard of Directors;

" enterprise " means any body of persons,w h e t h e r co rpo ra t e orunincorporate, by whatsoever nameor designation called, and includesa corporation sole or a soleproprietorship;

" industry '* includes tourism, and touristservices within the meaning of theCeylon Tourist Board Act, miningand fisheries; and the expression" industrial" shall be construedaccordingly;

" shareholder " means a shareholder ofthe Bank.

[Section 50(3).]

SCHEDULE

FORM A

FORM OF CERTIFICATE OF SALE

WHEREAS the sum of,and the land called . . .on bond No. . . . . . . . . .

. . . . . . . . rupees is due to the National Development Bank of Sri Lanka from. . . . . hereinafter more fully described, has been mortgaged by the said ....as security for its payment in the manner provided by the said bond ;

And whereas a sum due in respect of the said bond has not been paid by the said

And whereas the said land was sold in conformity with the National Development Bank of Sri Lanka Act(Chapter 308) on the . . . . . . . . . . . day of . . . . . . . . . . . and the same was purchased by . . . . . . . . . . . of .....for the sum of . . . . . . . . . . . rupees, which has been duly paid by the said . . . . . . . :

Now know Ye that I, . . . . . . . . . . . (the General Manager of the National Development Bank of Sri Lanka), byvirtue and in the exercise of the power vested in me in this behalf by the said Act and rules made thereunder, dohereby certify that the following property, to wit, (here describe the property with accuracy by metes and bounds),has been sold to . . . . . . . . . . . and purchased by the said . . . . - - - , . . . for the sum of . . . . . . . . . . . rupees,which he has duly paid, and that the said property is and shall henceforth be vested in the said . . . . . . . . . . . . hisheirs, executors, administrators, and assigns.

Given under the Seal of the Bank at Colombo on this. . . . . . . . . . the General Manager of the Bank.

day of in the presence of

General Manager.

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NATIONAL DEVELOPMENT BANK OF SRI LANKA [Cap. 308

FORM B [Section 50(3).]

FORM OF CERTIFICATE OF SALE

WHEREAS Ihc sum o f . . . . . . . . . rupees is due to the National Development Bank of Sri Lanka from . . . . . . . .as the land called . . . . . . . . . . hereinafter more fully described, has been mortgaged by the said . . . . . . . . . onbond No . . . . . . . . . as security for its payment in the manner provided by the said bond :

And whereas a sum due in respect of the said bond has not been paid by the said . . . . . . . . . :

And whereas the said land was sold in conformity with the National Development Bank of Sri Lanka Act(Chapter 308) on the . . - - , . . . . day of . . . . . . . . . . and the same was purchased for and on behalf of theNational Development Bank of Sri Lanka by , , . . . . . . . for the sum of . . . , - . . . . rupees, which has been dulycredited to the said Bank in part (or full. as the case may be) satisfaction of the sum due as aforesaid :

Now know Ye that I, . . . . . . . . . (the General Manager of the National Development Bank of Sri Lanka), byvirtue and in exercise of the power vested in me in this behalf by the said Act and rules made thereunder, dohereby certify that the following property, to wit, (here describe the property with special accuracy by metes andbounds) has been sold and purchased by the said . . . . . . . . . for and on behalf of the said Bank for the sum of. . . . . rupees, and that the said premises arc and shall henceforth be absolutely vested in the said Bank.

Given under the Seal of the Bank at Colombo on this . . . . . . . . . day of . . . . . . . . . in the presence of. . . . . . . . . . the General Manager of the Bank.

General Manager.

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