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ROAD TRANSPORT CORPORATIONS ACT, 1950
64 of 1950
4th December, 1950
STATEMENT OF OBJECTS AND REASONS
The Road Transport Corporation Act, 1948 (32 of 1948), was enacted with a view to enable the Provincial Governments, who may so desire, to establish Road Transport Corporations. This Act has been found defective because the provisions of sections 3(2),4 and 5 of the Act insofar as they require certain provisions to he made by a Provincial law are ultra vires of the Government of India Act 1935, as adapted. Under the latter Act, the power to lepislate in respect of trade and commerce is given lo the provincial Legislatures and the power lo legislate for the incorporation of trading corporations is given to the Central Legislature. The creation of statutory transport corporations has been held as amounting to incorporation of trading corporations and as such ultra vires of the Provincial Legislature. In order lo remove the abovementioned legal flaw, it is proposed to replace the existing Act, by a comprehensive Act enabling such of the Provincial Governments, who may so desire, to set up transport corporations, with the object of providing efficient adequate, economical and property co-ordinated system of road transport services."--Gaz.. of Ind., 1949, Pt. V, p. 559.
Amending Act 63 of 1982.- The Road Transport Corporations Act, 1950 was enacted to enable State Governments to set up Transport Corporations with the object of providing efficient, adequate, economical and properly co ordinated system of road transport services. In the light of (he chanced circumstances, the suggestions which have been received from the State Governments, different Ministcries of the Central Government and other agencies concerned, it is proposed to make certain amendments in the said Act with a view primarily lo secure the heller functioning of the Road Transport Corporations under the Act. 2. The more important amendments proposed in the Bill are the following (a)Section 1of the Act is being amended to provide for the extension of the Act to the Union territory of Mizoram (vide clause 2). (b) The organisational set up of the Road Transport Corporations under the Act is being modified to provide, for each corporation a Board of Directors consisting of a Chairman and other Directors in place of the Chairman and members of the Corporation. This approach would help in keeping the agency through which a Corporation has to function distinct from the Corporation itself, is also proposed lo provide that in addition to the Chairman. each Board may consist of not less than five and not more than seventeen other Directors (vide clause 3). (c)Section 8of the principal Act is being amended, inter alia, for including therein provisions for removal of the Chairman or any other Director on grounds of misconduct (including abuse of power and corruption vide clause 5(b).) (d) In the context of the growing activities of the
Corporations, it is felt that certain activities of a Corporation could be better attended to by subsidiary corporations. To facilitate this process, provision is being included to enable each Road Transport Corporation to frame, with the concurrence of the State Government concerned and the Central Government, scheme or schemes providing for the establishment of one or more subsidiary corporations (vide clause 10). (e) At present, a Road Transport Corporation cannot raise any share capital where loan capital has been provided to it by the Central Government and the State Government. With a view to augmenting the resources of the Corporation and lo enable the Corporations to undertake developmental schemes, section 23of the principal Act is being amended to enable a Corporation which has received a loan capital from the Central Government and the State Government to raise share capital. Opportunity is also being taken to enable the Central Government or the State Government to convert the whole or any part of the loan capital provided by it under the said section 23into share capital (vide clause 12). (f)Section 26of the principal Act relating to borrowing powers of Road Transport Corporations is being substituted by a new section to enable a Corporation, with the approval of the State Government, to borrow money not only in the open market, but also from the nationalised banks. State Financial Corporations, the Industrial Finance Corporation of India, the Industrial Development Bank of India, the Life Insurance Corporation of India, or any other financial institution providing credit which is subject to the control of the
Reserve Bank of India. Such borrowing may be either for the purpose of raising working capital or for meeting any expenditure of a capital nature (vide clause 13). 3. The Bill seeks to achieve the above objects.- Gaz.. of India. 24-12- 1981 1. Pt. ll-section 2. Exl., p. 1022.
An Act to provide for the incorporation and regulation of Road Transport Corporations. BE it enacted by Parliament as follows:--
CHAPTER 01 PRELIMINARY
SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT
(1) This Act may be called The Road Transport Corporations Act, 1950.
(2) It extends to the whole of India 2[* * *]3[* * *].4[Provided that on and from the commencement of the Delhi Road
Transport Laws (Amendment) Act. 1971, this Act, as amended by the said Act, shall extend to, and be in force in. the Union territory of Delhi.]5[Provided further that on and from the commencement of the Road Transport Corporations (Amendment)
Act, 1982, this Act as amended by the said Act, shall extend to the Union territory of Mizoram.]
(3) It shall come into force in a State on such date as the Central Government may, by notification in the Official Gazette 6appoint in this behalf for such State and different dates may be appointed for different States.
SECTION 02: DEFINITIONS
In this Act, unless the context otherwise requires.-
(a) "ancillary service" means any subsidiary service which provides amenities or facilities to per- sons making use of any road transport service of a Corporation;
7[(aa) "Board" means the Board of Directors of a Corporation;]
(b) "Corporation" means a Road Transport Corporation established under section 3-;
7[(bb) "Director" means a member of the Board;]
(c) "extended area" means any area or route to which the operation of any road transport service of a Corporation has been extended in the manner provided in section 20 -;
(d) "prescribed" means prescribed by rules made under this Act;
(e) "road transport service" means a service carrying passengers or goods or both by road in vehicles for hire or reward;
(f) "vehicle" means any mechanically propelled vehicle, used or capable of being used for the purpose of road transport, and includes a tram-car, a trolly-vehicle and a trailer;
(g) words and expressions used but not defined in this Act and defined in the Motor Vehicles Act, 1939-, have the meaning assigned to them in that Act;8[ * * * * * ]
CHAPTER 2 ROAD TRANSPORT CORPORATIONS
SECTION 03: ESTABLISHMENT OF ROAD TRANSPORT CORPORATIONS IN THE STATES
The State Government having regard to-
(a) the advantages offered to the public, trade and industry by the development of road transport;
(b) the desirability of co-ordinating any form of road transport with any other form of transport;
(c) the desirability of extending and improving the facilities for road transport in any are providing an efficient and economical system of road transport service therein, may, by notification in the Official Gazette, establish a Road Transport
Corporation for the whole or any part of the State under such name as may be specified in the notification.
SECTION 04: INCORPORATION
Every Corporation shall be a body corporate by the name notified under section 3-having perpetual succession and a common seal, and shall by the said name sue and be sued.
SECTION 05: MANAGEMENT OF CORPORATION AND BOARD OF DIRECTORS
(1) The general superintendence, direction and management of the affairs and business of a Corporation shall vest in a Board of Directors which, with the assistance of its committees and Managing Director, may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
(2) The Board shall consist of a Chairman and such other Directors, being not less than five and not more than seventeen, as the State Government may think fit to appoint.
(3) The State Government may, if it so thinks fit appoint one of the other Directors as the Vice- Chairman of the Board.
(4) Rules made under this Act shall provide for the representation, both of the Central Government and of the State Government concerned, on the Board in such proportion as may be agreed lo by both the Government and of appointment by each Government of its own representatives thereto and where the capital of a Corporation is raised by the issue of shares to other parties under sub-sec. (3) of section 23-, provision shall also be made for the representation of such shareholders on the Board and the manner in which the representatives shall be elected by such share-holders.
(5) The term of office of and the manner of filling casual vacancies among the Directors shall be such as may be prescribed.]
SECTION 06: DISQUALIFICATION FOR BEING CHOSEN AS, OR BEING, A MEMBER OF A CORPORATION
9[(1)] A person shall be disqualified for being chosen as, or for being, a10[Director of a Corporation]-
(a) if he is found to be a lunatic or a person of unsound mind; or
(b) if he has been adjudged insolvent; or
(c) if he has been convicted of an offence involving moral turpitude; or
(d) if he has, directly or indirectly, any interest in any subsisting contract made with, or in any work being done, for, the Corporation except as a shareholder (other than a director) in an incorporated company, provided that where he is a shareholder he shall disclose to the State Government the nature and extent of shares held by him in such company; or
(e) if he has any financial interest in any other road transport undertaking.
11[(2) Nothing in clause (d) of sub-section (1) shall be deemed to disqualify the 12[Managing Director of a Corporation for being chosen as, or for being, a13[Director] thereof.]]
14[(3) Nothing in clause (e) of sub-section ( 1 ) shall be deemed to disqualify, -
(a) any officer or other employee of the Government for being chosen as, or for being, a Director of a Corporation.
(b) any officer or other employee of a Corporation for being chosen as, or for being, a Director of another Corporation.]
SECTION 07: RESIGNATION OF OFFICE BY THE CHAIRMAN OR A 15[DIRECTOR]
The Chairman or any other 15[Director] of a Corporation may resign his office by giving notice in writing to the State Government and, on such resignation being accepted by that Government, shall be deemed to have vacated his office.
SECTION 08: REMOVAL OF CHAIRMAN AND MEMBERS FROM OFFICE
16[1] The State Government may remove from office the Chairman or any other a[Director] of the Corporation who -
(a) is or becomes subject to any of the disqualifications mentioned in section 6-; or
(b) without excuse sufficient in the opinion of the State Government, is absent for more than four consecutive meetings of the17 [Board]. Provided that no18[Director appointed] by the Central Government shall be removed from office Without the concurrence of that Government.
19[(2) The State Government may terminate the appointment of any Director after giving him notice for such period (being not less than one month) as maybe prescribed : Provided that the appointment of a Director appointed by the Central Government shall not be terminated under this sub-section without the concurrence of that Government."]
SECTION 09: VACANCIES AMONGST MEMBERS OR DEFECT IN THE CONSTITUTION NOT TO INVALIDATE ACTS OR PROCEEDINGS OF A 20CORPORATION OR ITS BOARD.]
No act or proceeding of a Corporation shall be invalid by reason only of the existence of any vacancy21 [in its Board] or any defect in the constitution thereof.
SECTION 10: TEMPORARY ASSOCIATION OF PERSONS WITH A 22[BOARD] FOR PARTICULAR PURPOSES-
(1) A22[Board] may associate with itself for any particular purpose in such manner as may be determined by regulations made under this Act any person whose assistance or advice it may desire.
(2) A person associated with it by the 22[Board] under sub-section ( 1 ) for any purpose shall have a right to take part in the discussions of the 22[Board] relevant to that purpose, but shall not have a right to vote at a meeting of the 22[Board].
SECTION 11: MEETINGS OF CORPORATIONS
(1) A 23[Board] shall meet at such times and places and shall, subject to the provisions of sub-sections (2) and (3), observe such rules of procedure in regard to trans- action of business at its meetings as may be provided by regulations made under this Act : Provided that the23[Board] shall meet at least once in every three months.
(2) The person to preside at a meeting of a23[Board shall be the chairman thereof, or in his absence from any meeting the Vice-Chairman, if any, or in the absence of both the Chairman and the Vice- Chairman,24[such Director as may be chosen by the Directors present] from among themselves to pre- side.
(3) All questions at a meeting of a23[Board] shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman or, in his absence, any other person presiding shall have a second or casting vote.
SECTION 12: POWER TO APPOINT COMMITTEES AND DELEGATE FUNCTIONS
25[( 1 )] A25[Board] may from to time, by resolution passed at a meeting-
(a) appoint committees 26[consisting of Directors] for performing such functions as may be specified in the resolution;
(b) delegate to any such committee or to the Chairman or Vice-Chairman, subject to such conditions and limitations, if any, as may be specified in the resolution, such of its powers and duties as it may think fit;
(c) authorised the27 [Managing Director]28or any other officer of the Corporation] subject to such conditions and limitations, if any, as may be specified in the resolution to exercise such powers and perform such duties as it may deem necessary for the efficient day to-day administration of its business.
29[(2) The Chairman, Vice-Chairman or Managing Director may delegate any of his powers and duties [including powers and duties delegated to him under sub-section (1)] to any officer of the Corporation, and the officer to whom such powers and duties are delegated, shall exercise and perform such powers and duties under the control and supervision of the Managing Director."]
SECTION 13: AUTHENTICATION OF ORDERS AND OTHER INSTRUMENTS
All orders and decisions of the Board shall be authenticated by the signature of the Secretary or by any such other officer of the Corporation as may be authorised in this behalf by the Board or under the regulations made under section 45 -and all other instruments issued by a Board shall be authenticated by the signature of the Managing Director or any other officer of the Corporation authorized in like manner in this behalf.]
SECTION 14: OFFICERS AND SERVANTS OF THE CORPORATION
31[(1) Every Corporation shall have a Managing Director, a Chief Accounts Officer and a Financial Adviser, appointed by the State Government : Provided that the same person may be appointed as the Chief Accounts Officer and the Financial Adviser.]
(2) A Corporation may appoint 32[a Secretary and such other officers and employees] as it considers necessary for the efficient performance of its functions,
33[(3) The conditions of appointment and service and the scales of pay of the officers and employees of a Corporation shall-
(a) as respects the Managing Director, the Chief Accounts Officer and the Financial Adviser, or, as the case may be; the Chief Accounts Officer-cum-Financial Adviser, be such, as may be prescribed, and
(b) as respects the other officers and employees, be such, as may, subject to the provisions of section 34-, be determined by regulations made under this Act.]
SECTION 15: MANAGING DIRECTOR, CHIEF ACCOUNTS OFFICER AND FINANCIAL ADVISER
(1) The Man, Director shall be the executive head of the Corporation and all other officers and employees c Corporation shall be subordinate to him.
(2) The Managing Director shall obtain the views of the Chief Accounts Officer and the Final Adviser or, as the case may be, the Chief Accounts Officer-cum-Financial Adviser, on every pro involving revenues, or expenditure from the fund, of the Corporation and shall cause such views placed before the Board prior to the consideration of such proposal by the Board.]
SECTION 16: GENERAL DISQUALIFICATION OF ALL OFFICERS AND SERVANTS
No person who has direct; indirectly, by himself or his partner or agent, any share or interest in any contract, by or on behalf Corporation, or in any other road transport undertaking shall become or remain an35[officer or employee] of the Corporation.
SECTION 17: APPOINTMENT OF ADVISORY COUNCIL
The State Government may, after ascertaining views of the Corporation, by notification in the Official Gazette, constitute one or more Advisory Councils consisting of such number of persons, on such terms, and for the purpose of advising the Corporation on such matters, as may be specified in that notification.
CHAPTER 2A SUBSIDIARY CORPORATIONS
SECTION 17A: ESTABLISHMENT OF SUBSIDIARY CORPORATIONS
(1) Where a Corporation (hereinafter in the section referred to as the parent Corporation) is satisfied that it is expedient or necessary so to do for t .more efficient discharge of its functions under this Act, it may, with the concurrence of the State Government and the Central Government, frame by notification in the Official Gazette a scheme providing for the establishment of one or more subsidiary corporations.
(2) A scheme framed under sub-section (1) shall specify the subsidiary corporation or corporations which shall become established thereunder, the date or dates with effect from which they shall so established, the powers and functions of the parent Corporation which such subsidiary corporation corporations may exercise and discharge, the conditions and limitations subject to which such powers may be exercised, the management of the affairs of each such subsidiary corporation by a Board
Directors, the capital of each such subsidiary corporation and all other matters relating to such subsidised corporations corresponding to the various matters for which provisions have been made in this Act w respect to the parent Corporation :
Provided that-
(a) no subsidiary corporation shall start operation on any new route without the previous approval of the parent Corporation; (b) the representatives of the Central Government on the Board of Directors of a subsidiary coq ration shall be in proportionate its contribution to the capital of the parent Corporation;
(c) the liability of the Central Government to provide contribution to the capital of the subsidiary corporation to the parent Corporation shall not be increased without the approval of the Cem Government;'
(d) a subsidiary corporation shall have a Managing Director, a Chief Accounts Officer and a Financial Adviser or a Chief Accounts Officer-cum-Financial Adviser, and such officers shall appointed by the State Government;
(e) the State Government and the parent Corporation shall have power to give directions t subsidiary corporation in respect of any matter, including directions relating to recruitment conditions of service and training of the employees of the subsidiary corporation, wages to paid to such employees, reserves to be maintained by the subsidiary corporation;
(f) the capital budget, the revenue budget and the annual development plans of a subsidiary corporation shall be submitted for approval to the parent Corporation and where such budget or { involves any deficit, also to the State Government.
(3) Every subsidiary corporation established under a scheme framed under sub-section (1) s be a body corporate, by the name specified in the scheme having perpetual succession and a common seal and shall by the said name sue and be sued."
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