chapter i the air corporations act, 1953 - Directorate General of Civil ...

1CHAPTER ITHE AIR CORPORATIONS ACT, 1953(27 OF 1953)

2THE AIR CORPORATIONS ACT, 1953CHAP. ICHAPTER ITHE AIR CORPORATIONS ACT, 1953TABLE OF CONTENTSCHAPTER IPRELIMINARYSECTIONSPAGES1. Short title and commencement. . . . . . . . 42. Definitions . . . . . . . . . . 4CHAPTER IICONSTITUTION AND AND FUNCTIONS OF THE CORPORATIONS3. Incorporation of the Corporations . . . . . . . 54. Constitution of the Corporations . . . . . . . 55. Conditions of Service of Directors . . . . . . . 66. Vacancy in Corporation not to invalidate proceedings . . . . 67. Functions of the Corporations . . . . . . . . 68. Appointment of officers and other employees of the Corporations . . 89. Corporations to act on Business Principles . . . . . . 8CHAPTER IIIFINANCE, ACCOUNTS AND AUDIT10. Capital of the Corporations . . . . . . . . 811. Vesting of Properties in the Corporations . . . . . . 912. Funds of the Corporations . . . . . . . . 913. Powers of the Corporations in regard to expenditure . . . . 914. Corporations to assume obligations of Central Governmentin respect of certain matters . . . . . . . . 915. Accounts and Audit . . . . . . . . . 915A. Audit of Accounts of Companies formed by Corporations . . . 10CHAPTER IVACQUISITION OF UNDERTAKINGS OF EXISTING AIR COMPANIES16. Undertakings of existing Air Companies to vest in the Corporations . . 1017. General effect of vesting of undertakings in the Corporations . . . 1018. Reservation of Scheduled Air Transport Services to the Corporations . . 1119. Licences to cease to be valid . . . . . . . . 1220. Provisions respecting Officers and Employees of existing Air Companies . 12

CHAP. I THE AIR CORPORATIONS ACT, 19533SECTIONSPAGES21. Duty to deliver up possession of property acquired anddocuments relating thereto . . . . . . . . 1322. Duty of existing Air Companies to supply particulars . . . . 1323. Right of Corporations to disclaim certain agreements . . . . 1424. Transactions resulting in dissipation of assets . . . . . 1425. Compensation to be given for compulsory acquisition of undertaking . . 1526. Constitution of Special Tribunal to determine Compensation . . . 1527. Mode of giving compensation . . . . . . . . 1628. Winding up of existing company whose undertaking has been acquired . . 1629. Authorisation under section 28 may contain certain directions . . . 17CHAPTER VAIR TRANSPORT COUNCIL30. Constitution of Air Transport Council . . . . . . 1731. Functions of the Air Transport Council . . . . . . 1732. Staff of the Council . . . . . . . . . 1833. Proceedings of the Council . . . . . . . . 18CHAPTER VICONTROL OF CENTRAL GOVERNMENT34. Power of Central Government to give directions . . . . . . 1835. Prior approval of Central Government necessary in certain cases . . . . 1936. Submission of Programme of Work for each year . . . . . 1937. Submission of Annual Reports to Parliament . . . . . . 19CHAPTER VIIMISCELLANEOUS38. Corporations to act in mutual consultation . . . . . . . 2039. Transfer of scheduled air transport services or assets from one Corporation to the other . 2040. Corporations may delegate their powers . . . . . . . 2041. Advisory and Labour Relations Committees . . . . . . 2042. Meetings of the Corporations . . . . . . . . 2043. Penalty for wrongful withholding of property . . . . . . 2144. Power to make rules . . . . . . . . . 2145. Power of Corporations to make regulations . . . . . . . 22THE SCHEDULE . . . . . . . . . . 23

4THE AIR CORPORATIONS ACT, 1953CHAP. ICHAPTER ITHE AIR CORPORATIONS ACT, 1953(27 OF 1953)An Act to provide for the establishment ofAir Corporations, to facilitate the acquisitionby the Air Corporations of undertakingsbelonging to certain existing Air companiesand generally to make further and betterprovisions for the operations of air transportservices.Be it enacted by Parliament as follows:-(a) For the Statement of Object and Reasons,see Gazette of India, 21-3-1953, Pt. II, S.2Extra, page 148CHAPTER IPRELIMINARY1. Short title and commencement.- (1)The Act may be called The Air CorporationsAct, 1953.(2) It shall come into force on such date asthe Central Government may, by notification ain the Official Gazette, appoint.(a)The Act came into force on 28-5-1953, see S.R.O.968A,Gaz. of Ind., 28-5-1953, Pt.II, S.3 Extra p.1762.The Act has been extended to UnionTerritories of Goa, Daman and Diu by the Goa,Daman and Diu (Laws) Regulation, 1962 (12 of1962), (w.e.f.1-2-1965), to Dadra and NagarHaveli by the Dadra and Nagar Haveli (Laws)Regulation, 1963 (6 of 1963), (w.e.f. 1-7-1965);and to Pondicherry by the Pondicherry (Laws)Regulation, 1963(7 of 1963), (w.e.f. 1-10-1963).- Goa is now a State - See Goa, Damanand Diu Reorganisation Act (18 of 1987),S.3(30-5-1987).2. Definitions.— In this Act, unless thecontext otherwise requires -(i) “aircraft” means any machine which canderive support in the atmosphere fromreactions of the air and includes balloons,whether fixed or free, airships, kites,gliders and flying machines;(ii) “air transport service” means a servicefor the transport by air of persons, mailsor any other thing, animate or inanimate,for any kind of remuneration whatsoever,whether such service consists of a singleflight or a series of flights;(iii) “associate” in relation to either of thecorporations means any subsidiary ofthe corporation or any person with whomthe corporation has made an agreementin accordance with clause(h) of subsection(2) of section 7;(iv) "Corporations" means "Indian Airlines"and "Air India International" establishedunder section 3, and “Corporation”means either of the Corporations;(v) the expression “existing air companies”means the Air India Ltd., the Air Servicesof India Ltd., the Airways (India) Ltd.,the Bharat Airways Ltd., the DeccanAirways Ltd., the Himalayan Aviation

CHAP. I THE AIR CORPORATIONS ACT, 19535Ltd., the Indian National Airways Ltd.,the Kalinga Airlines and the Air IndiaInternational Ltd. and “existing aircompany” means any of the existing aircompanies;(vi) “prescribe” means prescribed by rulesmade under this Act;(vii) “regulations” means regulations madeby either of the Corporations undersection 45;(viii) “Scheduled air transport service” meansan air transport service under-takenbetween the same two or more placesand operated according to a publishedtime table or with flights so regular orfrequent that they constitute arecognisably systematic series, eachflight being open to use by members ofpublic;(ix) “Tribunal” means the Tribunalconstituted under section 25.CHAPTER IICONSTITUTION AND FUNCTIONSOF THE CORPORATIONS3. Incorporation of the Corporations—(1) With effect from such date as the CentralGovernment may, by notification a in the OfficialGazette, appoint, there shall be established twoCorporations to be known as “Indian Airlines”and “Air India International” b .(2) Each of the Corporations aforesaid shallbe a body corporate having perpetual successionand a common seal with power, subject to theprovisions of this Act, to acquire and holdproperty, and may by its name sue and be sued.(a) The date appointed is 15-6-1953: see S.R.O. 1125-Gaz. of Ind. 12-6-1953,Pt. II.S.3, Ext, p.1935.(b)Re-named as ‘Air India’ w.e.f. 8-6-1962, see S.O.1676, Gaz. of Ind., 23-5-1962, Pt. II, S.3(ii), p.2019,as per S.7(I) of the Air Corporations (Amendment)Act, 1962 (17 of 1962), S.7(2) of the Amendment Act(17 of 1962) provides as under :-“(2) The change of name of “Air IndiaInternational” by sub-section (1)shall not affect any rights andobligations of that Corporation orrender defective any legalproceeding by or against it, and anylegal proceedings which might havebeen continued or commenced byor against that Corporation by itsformer name may be continued orcommenced by or against it, by itsnew name.”4. Constitution of the Corporation.—a [(1) The general superintendence, directionand management of the affairs and business ofeach of the Corporations shall vest in a Boardof directors which may exercise all such powersand do all such acts and things as may beexercised or done by the Corporation underthis Act.(1-A) The Board of directors shall consistof a Chairman to be appointed by the CentralGovernment, and not less than eight and notmore than fourteen other directors to beappointed by the Central Government and theChairman or any other director may be requiredto render whole time or part-time service as theCentral Government may direct.Provided that —(a) that same person may be appointed to bethe Chairman of both the Corporationsor Chairman of one and director of theother;(b) the same persons may be appointed to bedirectors of both the Corporations.](2) Before appointing a person to be ab [director] of either of the Corporations, theCentral Government shall satisfy itself thatperson will have no such financial or other

interest as is likely to affect prejudicially theexercise or performance by him of his functionsas a b [director] of the Corporation and theCentral Government shall also, satisfy itselffrom time to time with respect to everyb [director] of the Corporation that he has nosuch interest; and any person who is, or whomthe Central Government proposes to appointand who had consented to be a b [director] of theCorporation shall, whenever required by theCentral Government so to do, furnish to it suchinformation as the Central Governmentconsiders necessary for the performance of itsduties under this sub-section.(3) A b [director] of either of theCorporations who is in anyway directly orindirectly interested in a contract made orproposed to be made by the Corporation, or inany contract made or proposed to be made by anassociate of the Corporation which is broughtup for consideration by the Corporation, shall,as soon as possible after the relevantcircumstances have come to his knowledgedisclose the nature of his interest at a meetingof the Corporation; and the disclosure shall berecorded in the minutes of the Corporation andthe b [director] shall not take any part after thedisclosure in any deliberation or decision ofthe Corporation with respect to that contract.(4) During the temporary absence of theChairman of either of the Corporations, theCentral Government may appoint anotherperson, whether a b [director] of the Corporationor not, to act as the Chairman.(5) Save as otherwise provided in this section,nothing contained in this Act shall be deemed todisqualify the b [managing director] of either ofthe Corporations from being appointed to be ab [director] thereof.(a)Original sub-section (1) substituted by the AirCorporations (Amendment) Act (49 of 1971), S.2 (1-2-1972).(b) Word “member” in sub-sections (2), (3), (4) and (5)and the words “ General Manager” in sub-section6THE AIR CORPORATIONS ACT, 1953(5), substitued, Ibid.5. Conditions of service of members.—(1) The Chairman and other a [directors] of eachof the Corporations shall ordinarily be entitledto hold office for the period specified in theorder of appointment, unless the appointmentis terminated earlier by the Central Government.Provided that any a [director] may at anytime by notice in writing addressed to the CentralGovernment resign his office.(2) Subject to the previous approval of theCentral Government, each of the Corporationsshall pay to every a [director] thereof in respectof his office as such, b [such remuneration byway of salary, allowances,] fees or otherwise asmay be determined by the Corporation and tothe Chairman in respect of his office as such,such remuneration, whether in addition to theremuneration to which he may be entitled inrespect of his office as a a [directors] orotherwise, as it may similarly determine.(a)(b)CHAP. IWord “members” in sub-section (1) and word“member” in the proviso to sub-section (1) and subsection(2), substituted by Air Corporations(Amendment) Act (49 of 1971),S.3(1-2-1972).Substituted for words “such remuneration by way ofallowances”, ibid,S.3(ii)(b) (1-2-1972).6. Vacancy in Corporation not toinvalidate proceedings.— No act orproceeding of either of the Corporations shallbe deemed to be invalid by reason merely of anyvacancy in, or any defect in the Constitution of,the Corporation.7. Functions of the Corporation.- (1)Subject to the rules, if any, made by the CentralGovernment in this behalf, it shall be thefunction of each of the Corporations to providesafe, efficient, adequate, economical andproperly co-ordinated air transport services,whether internal or international or both, andthe Corporations shall so exercise their powers

CHAP. I THE AIR CORPORATIONS ACT, 19537as to secure that the air transport services aredeveloped to the best advantage and, in particular,so exercise those powers as to secure that theservices are provided at reasonable charges.(2) Without prejudice to the generality ofthe powers conferred by sub-section (1), eachof the Corporations shall, in particular, havepower-(a) to operate any air transport service, orany flight by aircraft for a commercialor other purpose, and to carry out allforms of aerial work;(b) to provide for the instruction and trainingin matters connected with aircraft orflight by aircraft of persons employed,or desirous of being employed, either bythe Corporation or by any other person;(c) with the previous approval of the CentralGovernment, to promote anyorganisation outside India for the purposeof engaging in any activity of a kindwhich the Corporation has power to carryon;(d) to acquire, hold or dispose of anyproperty, whether movable orimmovable, or any air transportundertaking;(e) to repair, overhaul, reconstruct,assemble or recondition aircraft, vehiclesor other machines and parts, accessoriesand instruments thereof or therefore andalso to manufacture such parts, accessoriesand instruments, whether the aircraft,vehicles or other machines are owned bythe Corporation or by any other person;(f) to enter into and perform all suchcontracts as are calculated to further theefficient performance of its duties andthe exercise of its powers under thisAct;(g) to perform any functions as agent orcontractor in relation to an air transportservice operated by any other person;(h) with the previous approval of the CentralGovernment, to enter into agreementswith any person engaged in airtransportation with a view to enablingsuch person to provide air transportservices on behalf of or in associationwith the Corporation;(i) with the previous approval of the CentralGovernment, to determine and levy faresand freight rates and other charges for orin respect of the carriage of passengersand goods on air transport servicesoperated by it;a [[ii] to make such grants as it thinks fit ascontribution or donation, in furtheranceof the interests of the Corporation, toany fund established for a benevolent orcharitable purpose:Provided that nothing in this clauseshall be construed as empoweringthe Corporation to make any suchgrant to any political party or forany political purpose to anyindividual or body;](j) to take such steps as are calculated toextend the air transport services providedby the Corporation, whether within orwithout India, including the developmentof feeder services and the improvementof the types of aircraft used in airtransport services;(k) to take such steps as are calculated topromote the interests of the Corporationor to improve the services theCorporation may provide, b [includingprovision of catering, hotels, restaurants,rest rooms,] goods-shed, ware-housesand transport by land or water inconnection with any air transport serviceor any other amenity or facility;

c [(kk) to form one or more companies underthe Companies Act, 1956 to further theefficient performance of its duties andthe exercise of its powers under thisAct:Provided that the paid up sharecapital of every company so formedshall be held exclusively by theCorporation;](l) to take all such steps as may be necessaryor convenient for , or may be incidentalto , the exercise of any power, or thedischarge of any function or dutyconferred or imposed on it by this Act.(3) Nothing contained in this section shallbe construed as —(a) authorising the disregard by theCorporation of any law for the time beingin force, or(b) authorising any person to institute anyproceeding in respect of a duty or liabilityto which either of Corporations or itsemployees would not otherwise besubject.(a)(b)(c)Clause (ii) inserted by the Air Corporations(Amendment) Act (49 of 1971), S.4(1-2-1972).Words “including provision of catering, rest rooms”in cl.(k) substituted, ibid.Clause (kk) inserted, ibid.8. Appointment of officers and otheremployees of the Corporation.— (1) For thepurpose of enabling it efficiently to dischargeits functions under this Act, each of theCorporations shall appoint a a [managingdirector] and, subject to such rules as may beprescribed in this behalf, may also appoint suchnumber of other officers and employees as itmay think necessary:Provided that the appointment of the a [managing director] and such other categoriesof officers as may be specified after8THE AIR CORPORATIONS ACT, 1953consultation with the Chairman in such rulesshall be subject to the approval of the CentralGovernment.(2) Subject to the provisions of section 20,every person employed by each of theCorporations shall be subject to such conditionsof service and shall be entitled to suchremuneration and privileges as may bedetermined by regulations made by theCorporation by which he is employed.(3) Neither the a [managing director] norsuch other employee of either of theCorporations as may be specified in this behalfby the Central Government shall, during hisservice in the Corporation, be employed in anycapacity whatsoever or directly or indirectlyhave any interest in any air transport undertakingother than an undertaking of either of theCorporations, or in any other undertaking whichis interested in any contract with either of theCorporations.(a)Substituted for the words ‘General Manager’ by theAir Corporation (Amendment) Act (49 of 1971), S.5(1-2-1972).9. Corporations to act on businessprinciples.— In carrying out any of dutiesvested in it by this Act, each of the Corporationsshall act so far as may be on business principles.CHAPTER IIICHAP. IFINANCE, ACCOUNTS AND AUDIT10.Capital of the Corporations.— (1) Allnon - recurring expenditure incurred by theCentral Government for, or in connection with,each of the Corporations up to the date ofestablishment of that Corporation and declaredto be capital expenditure by that Government,shall be treated as capital provided by the CentralGovernment to that Corporation.(2) The Central Government may provide anyfurther capital that may be required by either ofCorporations for the carrying on the business ofthe Corporation or for any purpose connected

CHAP. I THE AIR CORPORATIONS ACT, 19539therewith on such terms and conditions as theCentral Government may determine.(3) Each of Corporations may, with theconsent of the Central Government, or inaccordance with the terms of any generalauthority given to it by the Central Government-(a) borrow money for all or any of thepurposes of the Corporation, and(b) secure the payment of money borrowedby it or any interest thereon by the issueof bonds, debentures, debenture-stockor any mortgage or charge or other securityon the undertaking of the Corporationor any part of it or on any of its properties.11.Vesting of properties in theCorporation.— All properties, assets and fundsowned or acquired by the Central Government forthe purpose of Indian Airlines or, as the case maybe, Air India International before the establishmentof those Corporations shall, on such establishment,vest in the Corporation concerned.12.Funds of the Corporation.— (1) Eachof the Corporations shall have its own funds andall receipts of the Corporations shall be carriedthereto and all payments for the Corporationsshall be made therefrom.(2) Each of the Corporations may keep ina [account] with any scheduled bank as definedin section 2 of the Reserve Bank of India, Act,1934 or in any other bank approved by theCentral Government in this behalf a sum ofmoney not exceeding such amount as may beprescribed, but any moneys in excess of thesaid sum shall be deposited in the Reserve Bankof India or with the agents of the Reserve Bankof India or invested in such manner as may beapproved by the Central Government.(a)Substituted for the words “current account” by the AirCorporations (Amendment) Act (49 of 1971), Section6 (1-2-1972).13.Powers of the Corporations in regardto expenditure.— Each of the Corporationsshall have power, subject to the provisions ofthis Act, to spend such sums as it thinks fit onobjects or for purposes authorised by this Act andsuch sum shall be treated as expenditure out of thefunds of that Corporation.14.Corporations to assume obligations ofCentral Government in respect of certainmatters.— (1) All obligations incurred, allcontracts entered into and all matters and thingsengaged to be done by, with, or for the CentralGovernment for any of the purposes of this Actbefore the establishment of either of theCorporations shall be deemed to have beenincurred, entered into or engaged to be done by,with or for Indian Airlines or, as the case may be,Air India International according as the obligationscontracts, matters and things relate to the purposesof the former Corporation or the latter.15.Accounts and audit.— (1) TheCorporations shall maintain proper accounts andother relevant records and prepare annualstatement of accounts including the profit andloss account and the balance sheet in such form asmay be prescribed by the Central Government inconsultation with the Comptroller and AuditorGeneral of India.(2) The accounts of the Corporations shall beaudited annually be the Comptroller and AuditorGeneral of India and any expenditure incurred byhim in connection with such audit shall be payableby the Corporations to the Comptroller andAuditor General of India.(3) The Comptroller and Auditor General ofIndia and any person appointed by him in connectionwith the audit of the accounts of the Corporationsshall have the same rights and privileges andauthority in connection with such audit as theComptroller and Auditor-General has inconnection with the audit of Government accountsand in particular, shall have the right to demand theproduction of books, accounts, connectedvouchers and other documents and papers and toinspect any of the officers of the corporations.

(4) The accounts of the Corporations ascertified by the Comptroller and Auditor Generalof India or any other person appointed by him inthis behalf together with the audit report thereonshall be forwarded annually to the CentralGovernment and the Government shall cause thesame to be laid before both Houses of Parliament.a [15A. Audit of accounts of companiesformed by Corporations. — (1)Notwithstanding anything contained in theCompanies Act, 1956, the auditor of anycompany formed by either of the Corporationsunder clause (kk) of sub-section (2) of section7 shall be appointed or re-appointed by theCorporation concerned on the advice of theComptroller and Auditor General of India.(2) Save as otherwise provided in subsection(1), in addition to the provisionscontained in the Companies Act, 1956, relatingto the audit of the accounts of any company, thefollowing provisions shall apply to the audit ofthe accounts of any company referred to in subsection(1), namely:—(i) the Comptroller and Auditor General ofIndia shall have power to conduct asupplementary or test audit of thecompany’s accounts by such person orpersons as he may authorise in thisbehalf: and for the purposes so authorised,on such matters by such person or personsand in such form as the Comptroller andAuditor General may, by general orspecial order, direct;(ii) the author appointed or re-appointedunder sub-section (1) shall submit a copyof his audit report to the Comptrollerand Auditor General of India who shallhave the right to comment upon, orsupplement, the audit report in suchmanner as he may think fit;(iii) any such comments upon, or supplementto, the audit report shall be placed before10THE AIR CORPORATIONS ACT, 1953the annual general meeting of thecompany at the same time and in thesame manner as the audit report.](a) Inserted by the Air Corporation (Amendment) Act (49of 1971), S.7(1-2-1972).CHAPTER IVACQUISITION OFUNDERTAKINGS OF EXISTINGAIR COMPANIES16.Undertakings of existing aircompanies to vest in the Corporations.—On such date as the Central Government may,by notification a in the Official Gazette, appoint(hereinafter referred to as “the appointed date”),there shall be transferred to and vest in -(a) Indian Airlines, the undertaking of allthe existing air companies (other thanAir India International Ltd.), and(b) Air India International, the undertakingof the Air India International Ltd.(a)CHAP. IThe day appointed is 1-8-1953; see S.R.O. 1262 inGaz. Ind., 1953, Pt. II, S.3, page 931.17.General effect of vesting ofundertakings in the Corporations.— (1) Theundertaking of each of the existing aircompanies which is transferred to and whichvests in either of the Corporations under Section16 shall, subject to the provisions of section22, be deemed to include all assets, rights,powers, authorities and privileges and allproperty, movable and immovable, includinglands, works, workshops, aircraft, cash balances,reserve funds, investment and book debts andall other rights and interests arising out of suchproperty as were immediately before theappointed date in the ownership, possession orpower of the existing air company in relation tothe undertaking, whether within or without India,and all books of account and documents relatingthereto, and subject to the provisions containedin Section 22, shall also be deemed to include

CHAP. I THE AIR CORPORATIONS ACT, 195311all borrowings, liabilities and obligations ofwhatever kind then subsisting of the existing aircompany in relation to the undertaking.(2) Any lands works, aircraft, assets or otherproperty vesting in the Corporation under subsection(1) shall by force of such vesting befreed and discharged from all trusts, obligations,mortgages, charges, liens and otherencumbrances affecting it, and any attachment,injunction or any other order of a Courtrestricting the use of such property in any mannershall be deemed to have been withdrawn.(3) Subject to the other provisions containedin this Act all contracts and workingarrangements which are subsisting immediatelybefore the appointed date and affecting any ofthe existing air companies shall, in so far asthey relate to the undertaking of that company,cease to have effect or be enforceable againstthat company or any person who was surety orhad guaranteed the performance thereof, andshall be of as full force and effect against or infavour of the Corporation in which theundertaking has vested by virtue of this Act andenforceable as fully and effectually as if, insteadof the company, the Corporation had beennamed therein or had been a party thereto.(4) Subject to the other provisions containedin this Act, any proceeding or cause of actionpending or existing immediately before theappointed date by or against any of the existingair companies in relation to its undertaking mayas from that date be continued and enforced byor against the Corporation in which it has vestedby virtue of this Act as it might have beenenforced by or against that company if this Acthad not been passed, and shall cease to beenforceable by or against that company, itssurety or guarantor.18.Reservation of scheduled air transportservices to the Corporations.— (1)After the appointed date, it shall not be lawfulfor any person other than the Corporations ortheir associates to operate any scheduled airtransport service from to, in or across India:Provided that nothing in this section shallrestrict the right of any person,-(a) for the purpose of any air transportundertaking of which the principal placeof business is in any country outsideIndia, to operate an air transport servicein accordance with the terms of anyagreement for the time being in forcebetween the Government of India andthe Government of that country; or(b) to carry passengers for the sole purposeof instructing them in flying or on dutiesof air-crews; or(c) to carry passengers or goods for thesole purpose of providing an airambulance service or a rescue or reliefservice during any natural calamity; or(d) to carry passengers or goods for thesole purpose of providing joy ridesconsisting of flights operated from andto the same aerodrome or place withoutany intermediate landing or for thepurpose of aerial survey, fire fighting,crop-dusting, locust control or any otheraerial work of a similar nature; a [or(e) to operate, with the previous permissionof the Central Government for suchperiod and subject to such terms andconditions as that Government maydetermine, any scheduled air transportservice as aforesaid which is not providedby either of the Corporations or theirassociates.](2) Any person who operates a scheduled airtransport service in contravention of theprovisions of this section shall be liable inrespect of each offence to a fine which mayextend to one thousand rupees, or toimprisonment which may extend to threemonths, or to both.

Explanation.— The operation of each flightshall constitute a separate offence for thepurposes of this section.(a) Inserted by the Air Corporations (Amendment) Act,1962 (17 of 1962), S.2 (30-3-1962).19.Licences to cease to be valid.— Witheffect from the appointed date, all licencesgranted under the Indian Aircraft Act, 1934 (22of 1934) or under the rules made thereunderfor the operation of scheduled air transportservices shall cease to be valid.20.Provisions respecting officers andemployees of existing air companies.— (1)Every officer or other employee of an existingair company (except a director, managing agent,manager or any other person entitled to managethe whole or a substantial part of the businessand affairs of the company under a specialagreement, employed by that company prior tothe first day of July, 1952, and still in itsemployment immediately before the appointeddate shall, in so far as such officer or otheremployee is employed in connection with theundertaking which has vested in either of theCorporations by virtue of this Act, become asfrom the appointed date an officer or otheremployee, as the case may be, of the Corporationin which the undertaking has vested and shallhold his office or service therein by the sametenures, at the same remuneration and upon thesame terms and conditions and with the samerights and privileges as to pension and gratuityand other matters as he would have held thesame under the existing air company if itsundertaking had not vested in the Corporationand shall continue to do so unless and until hisemployment in the Corporation is terminatedor until his remuneration, terms or conditionsare duly altered by the Corporation:Provided that nothing contained in thissection shall apply to any officer or otheremployee who has, by notice in writing given tothe Corporation concerned prior to such date as12THE AIR CORPORATIONS ACT, 1953CHAP. Imay be fixed a by the Central Government bynotification in the Official Gazette, intimatedhis intention of not becoming an officer orother employee of the Corporation.(2) Notwithstanding anything contained insub-section (1), the Central Government maydirect either of the Corporations in which theundertaking of any existing air company hasvested to take into its employment any officeror other employee who was employed by theexisting air company prior to the first day ofJuly, 1952, and who has been discharged fromservice in the company on or after the said datefor reasons which, in the opinion of the CentralGovernment appear to be inadequate for thepurpose, and where the Central Governmentissues any such direction, the provisions ofsub-section (1) shall apply to such officer orother employee as they apply to any officer orother employee referred to therein.(3) As from the appointed date the trusteesof the provident funds and pension funds orpension schemes of each of existing aircompanies shall transfer to the Corporationconcerned the balances lying to the credit ofeach of the employees whose services havebeen transferred to that Corporation by virtueof this Act and also all other balances of thefunds or schemes as shall remain after satisfyingall demands and liabilities, and thereupon thetrustees shall be discharged of the trusts byvirtue of this Act.(4) Notwithstanding anything contained inthis Act or in the Indian Companies Act, 1913or in any other law for the time being in force orin any agreement entered into by an existing aircompany or in the articles of association of anysuch company, no director, managing agent,manager or any other person entitled to managethe whole or a substantial part of the businessand affairs of the company shall be entitled toany compensation against any existing aircompany or against either of the Corporations

CHAP. I THE AIR CORPORATIONS ACT, 195313for the loss of office or for the prematuretermination of any contract of managemententered into by him with any existing air companyand where any existing air company has, afterthe first day of July, 1952 , and before thecommencement of this Act, paid to any suchperson as is referred to in this sub-section anysum by way of compensation to which the personreceiving such compensation would not havebeen entitled if this sub-section were in forceat the time of such payment, the existing aircompany shall be entitled to claim refund ofany sum so paid.(a)10th of July 1953 was fixed as the date prior towhich the notice referred to in the Proviso mightbe given: see S.R.O. 1170 in Gaz. Ind., 1953,Pt. II-S.3,p.882.21. Duty to deliver up possession ofproperty acquired and documents relatingthereto.— (1) Where any property has vestedin either of the Corporations under section 16,every person in whose possession or custodyor under whose control the property may be,shall deliver up the property to the Corporationconcerned forthwith.(2) Any person who on the appointed datehas in his possession or under his control anybooks, documents or papers relating to anyundertaking which has vested in either of theCorporations under this Act and which belongto an existing air company or would have sobelonged if its undertaking had not so vestedshall be liable to account for the said books,documents and papers to the Corporation inwhich the undertaking has vested and shall deliverthem up to the Corporation or to such person asthe Corporation may direct:Provided that the Corporation shall producefor inspection by such companies or theirauthorized representatives the books of accountand documents as relate to the affairs of thecompany for any period prior to the appointeddate.(3) Without prejudice to the other provisionscontained in the section, it shall be lawful forthe Corporation and the Central Government totake all necessary steps for securing possessionof all properties which have vested in theCorporation under section 16.22.Duty of existing air companies tosupply particulars — (1) Where theundertaking of an existing air company vests ineither of the Corporations under this Act, theexisting air company shall within thirty daysfrom the appointed date of within such furthertime as the Corporation concerned may allowin any case, supply to the Corporation particularsof book debts and investments belonging to andall liabilities and obligations of the companysubsisting immediately before any appointeddate, and also of all agreements entered into bythe existing air company and in force on theappointed date, including agreements, whetherexpress or implied, relating to leave, pension,gratuity and other terms of service of any officeror other employees of the existing air company,under which by virtue of this Act theCorporations have or will or may have liabilitiesexcept such agreements as the Corporationmay exclude either generally or in any particularcase from the operation of this sub-section.(2) If any existing air company fails to supplyto the Corporation concerned particulars ofsuch book debts, liabilities and agreementswithin the time allowed to it for the purposeunder sub-section (1), nothing contained in thisAct shall have effect so as to transfer any suchbook debts, liabilities and agreements to, or tovest the same in, the Corporation.(3) Either Corporation may be notice inwriting within a period of a [six months] aftersubmission of the particulars referred to insub-section (1) intimate to the existing aircompany submitting the particulars that such ofthe book debts and investments as are specified

in the notice are not included in the propertiesvesting in the Corporation whereupon thecompensation provided by section 25 of thisAct and the Schedule thereto shall be reducedby the amount of such excluded book debts andinvestments but the right of such existing aircompany to recover and retain such excludedbook debts shall remain unaffected by this Act.[a] Substituted for the words “ninety days” by the AirCorporations (Amendment) Act, 1954 (10 of 1954), S.2 (w.r.e.f. 30-1-1954)23.Right of Corporations to disclaimcertain agreements— (1) Where it appears toeither of the Corporations that the making ofany such agreements as is referred to in section22 under which the Corporation has or will haveor may have liabilities was not reasonablynecessary for the purposes of the activities ofthe existing air company or has not been enteredinto in good faith, the Corporation may, withina [one year] from the appointed date, apply to theTribunal for relief from such agreement, andthe Tribunal, if satisfied after making suchinquiry into the matter as it thinks fit that theagreement was not reasonably necessary forthe purposes of the activities of the existing aircompany or has not been entered into in goodfaith, may make an order cancelling or varyingthe agreement on such terms as it may think fitto impose and the agreement shall thereuponhave effect accordingly.(2) All the parties to the agreement which issought to be cancelled or varied under thissection shall be made parties to the proceeding.[a] Substituted for the words” six months” by the AirCorporations (Amendment) Act, 1954 (10 of 1954) S.4 (w.r.e.f. 30-1-1954).24.Transactions resulting in dissipationof assets— (1) This section shall apply whereany existing air company has, after the first dayof July, 1952 and before the appointed date,—(a) made any payment to any person without14THE AIR CORPORATIONS ACT, 1953CHAP. Iconsideration or for an inadequateconsideration;(b) sold or disposed of any of its propertiesor right without consideration or for aninadequate consideration;(c) acquired any property or right for anyexcessive consideration;(d) entered into or varied any agreement soas to require an excessive considerationto be paid or given by the company;(e) entered into any other transaction ofsuch an onerous nature as to cause a lossto or impose a liability on the companyexceeding any benefit accruing to thecompany; or(f) sold or otherwise transferred any aircraft,equipment, machinery or other propertyof book value exceeding rupees tenthousand;and the payment, sale, disposal, acquisitionagreement or variation there of, or othertransaction or transfer was not reasonablynecessary for the purposes of the company orwas made with an unreasonable lack of prudenceon the part of the company regard being had ineither case to the circumstances at the time.(2) Either of the Corporations may, in thecase of any such existing air company as isreferred to in sub-section (1) the undertakingof which was vested in the Corporation underthis Act, at any time within a [one year] from theappointed date, apply for relief to the Tribunalin respect of any transaction to which in theopinion of the Corporation this section applies,and all parties to the transaction shall, unlessthe Tribunal otherwise directs, be made partiesto the application.(3) Where the Tribunal is satisfied that atransaction in respect of which an application is

CHAP. I THE AIR CORPORATIONS ACT, 195315made is a transaction to which this sectionapplies, then, unless the Tribunal is also satisfiedthat the transaction was a proper transactionmade in the ordinary course of business regardbeing had to the circumstances at the time andwas not in any way connected with any provisionmade by this Act or with any anticipation of themaking of any such provision, the Tribunal shallmake much order against any of the parties tothe application as the Tribunal thinks just havingregard to the extent to which those partieswhere respectively responsible for thetransaction of benefited from it and all thecircumstances of the case.(4) Where an application is made to theTribunal under this section in respect of anytransaction and the application is determined infavour of the Corporation the Tribunal shallhave exclusive jurisdiction to determine anyclaims outstanding in respect of the transaction.[a] Substituted for the words “six months” by the AirCorporations (Amendment) Act, 1954 (10 of 1954.) S.4 (w.r.e.f. 30-1-1954).25.Compensation to be given compulsoryacquisition of undertaking— (1) Where theundertaking of any of the existing air companieshas vested in either of the Corporations underthis Act, compensation shall be given by theCorporation to that company in the mannerspecified in section 27 and the amount of suchcompensation shall be determined in accordancewith the principles specified in the Schedule tothis Act.(2) Not with standing that separate valuationsare calculated under the principles specified inthe Schedule in respect of the several mattersreferred to therein, the amount of compensationto be given shall be deemed to be a singlecompensation to be given for the undertaking asa whole.(3) The amount of the compensation to begiven in accordance with the aforesaid principlesshall be determined by the Corporation and ifthe amount so determined is approved by theCentral Government, it shall be offered to theexisting air company in full satisfaction of thecompensation payable under this Act, and if theamount so offered is not acceptable to theexisting air company, it may within such time asmay be prescribed for the purpose have thematter referred to a Tribunal constituted forthis purpose by the Central Government fordecision.26.Constitution of special Tribunal todetermine compensation.— (1) The Tribunalto be constituted under section 25 shall consistof three members appointed by the Centralgovernment, one of whom shall be a person whois or has been a Judge of a High Court or hasbeen a Judge of the Supreme Court.(2) The Tribunal may for the purpose ofdeciding any matter under this Act choose oneor more persons possessing special knowledgeof any matter relating to the case under inquiryto assist it in determining any compensationwhich is to be given under this Act.(3) The Tribunal shall have the powers of acivil court while trying a suit under the Code ofCivil Procedure, 1908 in respect of thefollowing matters:(a) summoning and enforcing the attendanceof any person and examining him onoath;(b) requiring the discovery and productionof documents;(c) receiving evidence on affidavits;(d) issuing commissions for the examinationof witnesses or documents.(4) The Tribunal shall by a majority of itsnumber regulate its own procedure and decideany matter within its competence and may reviewits decision in the event of there being a mistake

on the face of the record or correct anyarithmetical or clerical error therein but subjectthere to the decision of the Tribunal on anymatter within its jurisdiction shall be final andshall not be called in question in any court.27.Mode of giving compensation— (1)When the amount of compensation to be givenunder this Act to an existing air company hasbeen determined under section 25, theCorporation shall give to the company one ormore bonds of the face value of the amount ofcompensation so determined less such portionthere of as is payable in cash under this section.(2) Out of the compensation to be given toeach of the existing air companies under thisAct, there shall be paid in cash—(a) ten per cent. of the amount ofcompensation payable to each of suchcompanies (Which percentage shall beuniformly applicable to all existing aircompanies); or(b) the amount borrowed by any suchcompany from any bank and outstandingon the 31st day of December, 1952 oron the appointed date, whichever amountis less; or(c) an amount equal to the cash of any suchcompany, including cash in deposit witha bank, which has vested in theCorporation under this Act;whichever of the amount specified in clauses(a), (b) and (c) is the greatest.(3) The bonds aforesaid shall be issued bythe Corporation with the previous approval ofthe Central Government and shall be negotiableand shall be redeemed at their face value by theCorporation concerned on the demand of theholder within one hundred and eighty days afterthe expiry of five years from the date of theirissue and the redemption of the bonds andpayment of all interest there on shall beguaranteed by the Central Government.16THE AIR CORPORATIONS ACT, 1953(4) If within the expiry of the said period ofone hundred and eighty days, the holder of anybond fails to require payment of its face valuefrom the Corporation concerned, the bond shallcease to the redeemable at the option of theholder:Provided that in any case the Corporationmay by notice require the holder of the bond toaccept its face value in cash at any time whetherbefore of after the expiry of the period of fiveyears aforementioned.(5) The holder of the bond shall be entitledto receive from the Corporation interest on thebond at three-and-a-half per cent per annum atsuch intervals as may be prescribed, with effectfrom the appointed date and until the bond isduly redeemed.(6) Bonds issued under this section shall,for the purpose of redemption and of computinginterest, be deemed to have been issued on theappointed date.[7] Any bond issued under the provisions ofthis section shall be deemed to be a security inwhich a trustee may invest trust monies withinthe meaning of section 20 of the Indian TrustsAct, 1882.28.Winding up of existing companywhose undertaking has been acquired— (1)The Central Government may, on the applicationof any existing air company or on the applicationof a majority in number representing threefourthsin value of its members holding ordinaryshares, by order in writing, authorise the existingair company the undertaking of which has vestedin either of the Corporations to be wound upvoluntarily in accordance with the provisionsof the Indian Companies Act, 1913 relating tovoluntary winding up:Provided that—CHAP. I(a) the winding up of the company shallcommence on the day on which the Central

CHAP. I THE AIR CORPORATIONS ACT, 195317Government authorises the winding upwithout the passing by the company ofany special or other resolution forwinding up; and(b) the directors of the existing companyshall not be under an obligation to makeany such statutory declaration as isrequired by section 207 of the IndianCompanies Act, 1913 and(c) the winding up of the company shall becontinued by the directors of the existingcompany in office at the time the CentralGovernment authorises its winding upand they shall be deemed to be jointliquidators for the purpose of the saidwinding up with power to act by a majorityof their number.(2) For the purposes of winding up the affairsof any existing air company or for any otherpurpose necessary for enabling it to give effectto the provisions of this Act, the CentralGovernment may, notwithstanding anythingcontained in this Act, permit the existing aircompany to occupy, keep in its custody, orutilise, as the case may be, for such period as itmay allow any office, books, accounts and otherdocuments and the services of any officers orother employees, which have been transferredto either of the Corporations under this Act, onsuch terms and conditions as may be agreedbetween the Corporation in which the undertakinghas vested and the existing air company, orfailing agreement, as may be determined by theCentral Government.29.Authorisation under section 28 maycontain certain directions— Anyauthorisation granted under section 28 mayinclude a direction requiring an existing aircompany the voluntary winding up of which hasbeen authorised under that section to distributeits net assets among the various classes ofmembers of the company in such proportion asthe Central Government may, having regard tothe amount subscribed by each class of suchmembers or having regard to the circumstancesrelating to the issue of the shares to the variousclasses of members, specify in the direction,and any such direction shall have effect not withstanding anything contained in the IndianCompanies Act, 1913 or in the articles ofassociation or resolution of the company or inany agreement, and every such company shallbe bound to comply with any such direction.CHAPTER VAIR TRANSPORT COUNCIL30.Constitution of Air TransportCouncil— a [(1) The Central Government may,from time to time, by notification in the OfficialGazette constitute] an Air Transport Councilconsisting of a Chairman and such other numberof members not exceeding eleven as the Centralgovernment may appoint there to:Provided that amongst the members to be soappointed there shall at least be one person withexperience in financial metters and one personwho is an employee of either of the Corporationswith experience in labour matters.b [(2) If at any time the Central Governmentis of opinion that the continued existence of anAir Transport Council is not necessary, it may,by notification in the Official Gazette, declarethat the Air Transport Council shall be dissolvedwith effect from such date as may be specifiedin the notification, and thereupon the AirTransport Council shall be deemed to bedissolved, accordingly.][a] Section renumbered as sub-section (1) and in the subsectionso renumbered the words “As soon as may beafter the commencement of this Act, the CentralGovernment may cause to be constituted” substitutedby the Air Corporations (Amendment) Act, 1962 (17 of1962), S. 3 (30-3-1962).[b] Inserted, ibid, S. 3 (30-3-1962).31.Functions of the Air TransportCouncil. — (1) It shall be the duty of the AirTransport Council to consider—

(a) at the request of either of theCorporations any matter of the kindreferred to in section 38; and(a) any matter of importance which may bereferred to it by the Director-General of CivilAviation or the Director-General of Posts andTelegraphs relating to matters of commoninterest, between either of the Corporationsand the Director-General of Posts andTelegraphs, including rates for the carriage ofpostal articles by air, and to makerecommendations there on to the CentralGovernment.2. At the request of the CentralGovernment, the Air Transport Council shallinvestigate any matter relating to the fares,freight rates or other charges levied by eitherCorporation in respect of any service or facilityprovided by the Corporation and of the adequacyor efficiency of such service or facility andshall make recommendations there on to theCentral Government.(3) The Council shall, if so required by theCentral Government, tender advice to thatGovernment in regard to financial and economicanalysis, accounting, costing and statisticaltechniques and financial reporting relating toair transport and, in particular, advise in regardto the matter specified in the proviso to subsection(2) of section 34.(4) The Central Government, after takingany recommendation made by the Air TransportCouncil under this section into consideration,may issue such directions in the matter as itthinks fit and such directions shall be bindingon the Corporation concerned.32.Staff of the Council— The council shallhave a Secretary and such other employees asthe Central Government may appoint, and theexpenditure on the staff and other charges ofthe Council shall be borne by the CentralGovernment.18THE AIR CORPORATIONS ACT, 195333.Proceedings of the Council— (1) TheCouncil shall regulate its own procedure.(2) No proceedings of the Council shall bedeemed to be invalid by reason merely of anyvacancy in, or any defect in the constitution of,the Council.CHAPTER VICONTROL OF CENTRALGOVERNMENTCHAP. I34.Power of Central Government to givedirections.— (1) The Central Government maygive to either of the Corporations directions asto the exercise and performance by theCorporation of its functions, and theCorporation shall be bound to give effect to anysuch directions.(2) The Central Government may, if it is ofopinion that it is expedient in the national interestso to do, after consultation with the Corporationconcerned, direct either of the Corporations-(a) to undertake any air transport service orother activity which the Corporation haspower to undertake;(b) to discontinue or make any change in anyscheduled air transport service or otheractivity which it is operating or carryingon;(c) not to undertake any activity which itproposes to do:Provided that, if, at the direction of theCentral Government, the Corporationestablishes, alters or continues to maintain anair transport service or other activity andsatisfies the Central Government that duringthe relevant financial year the Corporation hassuffered an over-all loss in respect of theoperation of all its air transport services and ofall its other activities and also that the serviceor activity so established, altered or continuedto be maintained in compliance with the

CHAP. I THE AIR CORPORATIONS ACT, 195319directions of the Central Government asaforesaid has been operated at a loss in anyfinancial year, then the Central Governmentshall reimburse the Corporation to the extentof the loss relatable to the operation of thatparticular service or activity.35.Prior approval of CentralGovernment necessary in certain cases.—Neither Corporation shall, without the previousapproval of the Central Government-(a) undertake any capital expenditure forthe purchase or acquisition of anyimmovable property or aircraft or anyother thing at a cost exceeding a [ suchamount as the Central Government may,from time to time, by order, fix in thisbehalf.](b) enter into a lease of any immovableproperty for a period exceeding b [ tenyears] or(c) in any manner dispose of any property,right or privilege having an original orbook value exceeding a [ such amount asthe Central Government may, from timeto time, by order, fix in this behalf].[a] Substituted for the words “rupees forty lakhs” in cl.(a)and the words “rupees ten lakhs” in cl. (c) by the AirCorporations (Amendment) Act (24 of 1982), S.2)(i)and (ii) (21-5-1982).[b] Substituted for the words “five years” by the AirCorporations (Amendment) Act (49 of 1971), S.8(1-2-1972).36.Submission of programme of workfor each year.- (1) Each of the corporationsshall prepare and submit to the CentralGovernment, not less than a [two months] beforethe commencement of the financial year of theCorporation a statement showing the programmeof operation and development of air transportservices to be operated by the Corporation andits associates during the forthcoming financialyear and its other activities as well as its financialestimate in respect thereof, including anyproposed investment of capital and increase inthe strength of its total staff.(2) If, during any financial year, either of theCorporations engages or proposes to engage inany air transport service or ancillary activity inaddition to those specified in the prgrammepreviously submitted under sub-section (1) anda substantial alteration of the financial estimatesis likely to be involved thereby, the Corporationshall submit to the Central Government forapproval a supplementary programme of suchservice activity and a supplementary estimateof the expenditure and revenue to be incurredand received by the Corporation in respectthereof during the remainder of that period:Provided that, to meet any unexpected trafficdemand or other special situation either of theCorporation may undertake any additionalservice or other ancillary activity not specifiedin the programme submitted under sub-section(1) or sub-section (2) and subsequently submita report on the matter to the Central Governmentin the prescribed manner.(a) Substituted for the words ‘three months’ by the AirCorporations (Amendment) Act, 1962(17 of 1962),S.4 (30-3-1962).37.Submission of Annual Report toParliament.— (1) Each of the Corporationsshall, as soon as may be after the end financialyear, prepare and submit to the CentralGovernment, in such form as may be prescribeda report giving an account of its activities duringthe previous financial year, and the report shallalso give an account of the activities, if any,which are likely to be undertaken by theCorporation during the next financial year.(2) The Central Government shall causeevery report to be laid before both Houses ofParliament as soon as may be after it issubmitted.

CHAPTER VIIMISCELLANEOUS38.Corporations to act in mutualconsultation.— It shall be the duty of each ofthe Corporations to enter into consultationswith the other in matters of common interest tothe two Corporations including, in particular,the operation of scheduled air transport services,the routes on which such services should beoperated by each of the Corporations, thefrequency of such services, the passenger faresand freight rates to be charged, the measures ofeconomy to be adopted, the provision of anyservices in regard to over-haul and maintenanceof aircraft or any other matter falling within thescope of the functions of either of theCorporations, and, generally, in regard toensuring the fullest co-operation and coordinationin respect of all such matters.39.Transfer of scheduled air transportservices or assets from one Corporation tothe other— The Central Government may, forthe purpose of improving the air transportservices provided by either of the Corporationsor for effecting better co-ordination in respectof such services, direct that with effect fromsuch date as may be specified in the directionand subject to such conditions as may be similarlyspecified,—(a) any scheduled air transport serviceoperated by one Corporation shall nolonger be operated by that Corporationbut shall be operated by the otherCorporation, and(b) any property belonging to oneCorporation shall be transferred to theother Corporation.40.Corporation may delegate theirpowers— (1) Each of the Corporations mayappoint a Committee or Committees consistingof some or any of its a [directors] with or withoutthe addition of any officer or employee of the20THE AIR CORPORATIONS ACT, 1953CHAP. ICorporation and delegate any of the functionsand powers of the Corporation to suchCommittee or Committees and may limit theexercise of such delegated authority to anyspecified area.(2) Either of the Corporations may, inrelation to any particular matter or class ofmatters or to any particular area, by general orspecial order, direct that any of its officers orother employees may also exercise all or any ofits powers under this Act (except the powersgiven to it by this section) to the extent to whichthe Corporation deems it necessary for theefficient running of its day to day administration.[a] Substituted for the word “member” by the AirCorporations (Amendment) Act (49 of 1971), S. 9 (1-2-1972).41.Advisory and Labour RelationsCommittees— a [* * *] Each of the Corporationsshall constitute in the prescribed manner aLabour Relations Committee consisting ofrepresentatives of the Corporation and of itsemployees, so however, that the number ofrepresentatives of the employees on theCommittee shall not be less than the number ofrepresentatives of the Corporation, and it shallbe the duty of Labour Relations Committee toadvise the Corporation on matters which relateto the welfare of the employees or which arelikely to promote and secure amity and goodrelations between the two.[a] Sub-section "(1)" and the brackets and figure "(2)"omitted by the Air Corporations (Amendment) Act (49of 1971), S. 10(1-2-1972)42. Meetings of the Corporation.— (1)Meetings of the Corporation shall be held atsuch times and places and, subject to subsections(2) and (3), the proceedings of theCorporation shall be conducted in such manneras may be provided by the regulations.(2) The Chairman or in his absence anyperson chosen by the a [directors] present fromamongst themselves shall preside at the meeting.

CHAP. I THE AIR CORPORATIONS ACT, 195321(3) At a meeting of the Corporation allquestions shall be decided by a majority votesof the a [directors] present, and for this purpose,each a [director] shall have one vote and in thecase of equality of votes the Chairman or; in hisabsence, the person presiding at the meetingshall have a second or casting vote.[a] Substituted for the word “members” in Cls. (2) and(3) and “members” in Cl. (3) by the Air Corporations(Amendment) Act 49 of 1971, S. ll (1-2-1972).43.Penalty for wrongful withholding ofproperty— If a director, managing agent,manager or other officer or employee of anexisting air company who wilfully withholds orfails to deliver to the Corporation as requiredby sub-section (2) of section 21 any books,documents or papers which may be in hispossession or who wrongfully obtainspossession of any property of any such companywhich has vested in either of the Corporationsunder this Act or having any such property in hispossession wrongfully withholds it from theCorporation or wilfully applies it to purposesother than those expressed in, or authorised by,this Act shall on the complaint of theCorporation concerned, be punishable with finewhich may extend to one thousand rupees andmay be ordered by the Court trying the offenceto deliver up or refund within a time to be fixedby the Court any such property improperlyobtained or wrongfully withheld or wilfullymisapplied or in default to suffer imprisonmentwhich may extend to one year.44.Power to make rules— The CentralGovernment may, by notification in the officialGazette, make rules to give effect to theprovisions of this Act.(2) In particular, and without prejudice tothe generality of the foregoing power, suchrules may provide for all or any of the followingmatters, namely:—(a) the terms and conditions of service ofthe a [managing directors] of the twoCorporations; and such other categoriesof officers as may be specified fromtime to time under sub-section (1) ofsection 8;(b) the form in which the budget of the twoCorporations shall be prepared andsubmitted to the Central Government;and the form and the manner in which theaccounts of the two Corporations shallbe maintained and in which any returnsor statistics shall be furnished orsubmitted;(c) the reports which should be submittedby the Corporations and the intervalswithin which they should be so submitted;(d) the maintenance of books of accounts;(e) the establishment and maintenance of afund by each of the Corporations formeeting any liability arising out of anyact or omission in respect of which theCorporation may incur any liability toany third party;(f) the provision of b [* *] reserve and otherfunds;(g) the prohibition of persons who aredirectly or indirectly interested in anysubsisting contract with either of theCorporations from becoming or beingemployees of the Corporation;(h) the powers which may be exercised byeither of the Corporations to facilitatethe acquisition of any undertaking;(i) the issue of bonds by either of theCorporations to meet any compensationpayable by it under this Act;(j) the training of the employees of eitherof the Corporations or other personsand fees which may in its discretion becharged therefor;

(k) the term of office and other conditionsof service of members of the AirTransport Council constituted undersection 30;(l) the prohibition of any interference withany air transport services or with anyproperty of the Corporation or of anyinterference with or obstruction of anyofficer or employee of the Corporationin the performance of his duty;(m) the punishment which shall not exceedimprisonment for three months or fineof rupees one thousand but which mayconsist of both such imprisonment andfine, in respect of any contravention ofthe provisions of any rules made underthis section.c [(3) Every rule made under this sectionshall be laid, as soon as may be after it is made,before each House of Parliament while it is insession for a total period of thirty days whichmay be comprised in one session or in d [two ormore successive sessions, and if, before theexpiry of the session immediately followingthe session or the successive sessions] bothHouses agree in making any modification in therule or both Houses agree that the rule shouldnot made, the rule shall thereafter have effectonly in such modified form or be of no effect,as the case may be, so however that any suchmodification or annulment shall be withoutprejudice to the validity of anything previouslydone under that rule.][a] Substituted for the words “General Managers” by theAir Corporations (Amendment) Act (49 of 1971), S.12(1-2-1972).(b)[c]Word “depreciation” omitted, Ibid.Substituted for the original by the Air Corporations(Amendment) Act, 1962 (17 of 1962), S. 5 (30-3-1962).[d] Substituted for the words “two successive sessions,and if before the expiry of the session in which it is solaid or the session immediately following” by the AirCorporation (Amendment) Act (24 of 1982), S.3 (21-5-1982)22THE AIR CORPORATIONS ACT, 1953CHAP. I45.Power of Corporations to makeregulations— (1) a [Subject to the provisionsof sub-section (3), each of the Corporationsmay] by notification in the Official Gazette,make regulations not inconsistent with this Actor the rules made thereunder for theadministration of the affairs of the Corporationand for carrying out its functions.(2) In particular and without prejudice to thegenerality of the foregoing power, any suchregulations b may provide for all or any of thefollowing matters, namely:—(a) the time and place of the meetings of theCorporation and the procedure to befollowed for the transaction of businessat such meetings;(b) the terms and conditions of service ofofficers and other employees of theCorporation other than the c [managingdirector] and officers of any othercategories referred to in section 44;(c) the issue of passes by the Corporation toits officers and other employees eitherfree of cost or at concessional rates fortravel on its air services and theconditions relating thereto;(d) the authentication of orders and decisionsof the Corporation and the instrumentsexecuted by, it;d [(e) the grant of refund in respect of anyunused tickets and the issue of passesfree of cost or at concessional rates;](f) the period after the expiry of whichunclaimed goods may be disposed ofand the manner of their disposal;(g) the conditions governing the carriage ofpersons or goods on its services.e [(3) No regulation under clause (b) of subsection(2) shall be made except with the previousapproval of the Central Government.]

CHAP. I THE AIR CORPORATIONS ACT, 195323f [(4) Every regulation made under thissection shall be laid, as soon as may be after itis made, before each House of Parliament,while it is in session, for a total period of thirtydays which may be comprised in one session orin two or more successive sessions, and if,before the expiry of the session immediatelyfollowing the session or the successive sessionsaforesaid, both Houses agree in making anymodification in the regulation or both Housesagree that the regulation should not be made,the regulation shall thereafter have effect onlyin such modified form or be of no effect, as thecase may be; so, however, that any suchmodification or annulment shall be withoutprejudice to the validity of anything previouslydone under that regulation.(a) Substituted by the Air Corporations (Amendment) Act49 of 1971, S.13(1-2-1972).(b) For some such Regulations, see S. R. O. 2462 to 2464in Gaz. Ind., Extra., 29-7-1954, Pt. II, Section 3, pages1169 to 1171; for International Carriage of Cargo(other than Baggage and Mail) Regulations, 1973 andInternational Carriages (Passenger and Baggage)Regulations, 1973, see Gaz. of India, 1973, Pt. II,Section 4, pp. 1674-1675; (these Regulations supersedeIndian Airlines (Conditions of Carriage) Regulations,1967).(c) Substituted for the words “ General Manager” by theAir Corporations (Amendment) Act (49 of 1971) Section13(1-2-1972).(d) Substituted for the original clause (e) by the AirCorporations (Amendment) Act 1962 (17 of 1962).S.6(30-3-1962).(e) Inserted by the Air Corporations (Amendment) Act(49 of 1971), S.13(1-2-1972).(f) Inserted by the Air Corporations (Amendment) Act(24 of 1982), S.4(21-5-1982).THE SCHEDULE(See section 25)PRINCIPLES FOR DETERMININGCOMPENSATION UNDER THIS ACTParagraph I. - The compensation whichshall be given by Indian Airlines or Air IndiaInternational, as the case may be, to any existingair company in respect of the vesting, inaccordance with the provisions of this Act, ofthe undertaking of such company in thatCorporation shall be the sum of the amountcomputed in accordance with the provisions ofparagraph II, less the sum of the amountscomputed in accordance with the provisions ofparagraph III.Paragraph II. — The aggregate writtendown value of all airframes of aircraft in respectof which there are certificates of airworthinessin force or, which can be rendered fit forcertificates of airworthiness if the Corporationconcerned were to incur expenditure withinthe normal rates for rendering the airframesairworthy, plus-A sum of Rs. 12,000 in respect of eachairframe of a Dakota aircraft and a sum Rs.24,000 in respect of each airframe of a Vikingaircraft in any case where the existing aircompany had obtained a certificate ofairworthiness in respect of it within ninety daysimmediately proceeding the appointed date orif a certificate of airworthiness had not actuallybeen obtained within that period but the existingair company had incurred expenditure withinthat period for the purpose of rendering thatairframe airworthy, the value, of the spare partsused for the purpose subject to a maximum ofRs. 12,000 in case of each airframe of a Dakotaaircraft and Rs.24,000 in the case of eachairframe of a Viking aircraft.NOTE.- In this Schedule, the expression “airframe” includes also the equipmentof the aircraft, whether fixed or removable;(b) the aggregate written down value of allsuch power plants, aeroengines, air screws,spare aeroengines and spare air screws (all ofwhich are in this Schedule collectively referredto as power plants) as are suitable for use in theairframes mentioned in sub-clause (a) and asare of an approved standard or can be renderedfit to be of an approved standard if theCorporation concerned were to incur

expenditure within the normal rates for suchpurposes, plus the following, namely:-(i) a sum of Rs. 6,000 in respect of eachengine of a Dakota aircraft and a sum of Rs.12,000 in respect of each engine of a Vikingaircraft in any case where the existing aircompany had made it an approved engine withina period of ninety days immediately proceedingthe appointed date or if the engine had not beenmade completely fit to be an approved enginewithin that period but the existing air companyhad incurred expenditure within the said periodfor the purpose of making that engine an approvedengine, then, the value of the spare parts usedfor that purpose subject to a maximum of Rs.6,000 in the case of each engine of a Dakotaaircraft and Rs. 12,000 in the case of eachengine of a Viking aircraft; and(ii) a sum of Rs. 2,000 in respect of the airscrews and accessories of the power plant of aDakota aircraft and a sum of Rs. 4,000 in respectof the air screws and accessories of the powerplant of a Viking aircraft in any case where theair screws and accessories had been renderedcompletely fit for the approved standard withina period of ninety days immediately precedingthe appointed date or if the same had not beenrendered completely fit for that standard withinthat period but the existing air company hadincurred expenditure within that period for thepurpose of rendering the same fit for theapproved standard, then the value of the spareparts used for that purpose subject to a maximumof Rs. 2,000 in the case of air screws andaccessories of a Dacota aircraft and Rs. 4,000in the case of air screws and accessories of aViking aircraft.NOTE.- In this Schedule, the expression” approvedstandard” means such conditionof efficiency of the power plantas satisfies the requirements laid downin Section E of Schedule III to theIndian Aircraft Rules, 1937;24THE AIR CORPORATIONS ACT, 1953(c) the cost or purchase of all serviceablegeneral stores and all such other serviceablestores and spares parts (all of which are in thisSchedule collectively referred to as stores andspare parts) belonging to the existing aircompany as are suitable for use in respect ofthe aircraft or power plants referred to in subclauses(a) and (b), reduced in each case by 20per cent, of such case of purchase:Provided that the reduction shall be 10 percent, in the case of stores and spare partspertaining to Constellation and Skymasteraircraft.NOTE- In this Schedule-CHAP. I(a) stores shall be deemed to be serviceableif they are such as to satisfy the requirementslaid down in Section E of Schedule III to theIndian Aircraft Rules, 1937;(b) without prejudice to the clauseimmediately proceeding stores (other thangeneral stores) and spare parts shall also bedeemed to be serviceable if by incurringexpenditure of an amount not exceeding halfthe costs of purchase of such stores and spareparts, they can be rendered suitable for use inrespect of the aircraft or power plants;(d) the aggregate actual cost to the existingair company of all lands other than lease-holds;(e) the total amount of the premiums paid bythe company in respect of all lease-holdsreduced in the case of each such premium by anamount which bears to such premium the sameproportion as the expired term on the appointeddate of the lease in respect of which suchpremium shall have been paid bears to the totalterm of the lease;(f) the scrap value of all such aircraft, powerplants, propellers and the accessories, spareparts and stores, not falling within any of thepreceding sub-clauses and all properties as havebecome obsolete on the appointed date, thescrap value for the purposes of this Act being

CHAP. I THE AIR CORPORATIONS ACT, 1953one per cent of the book value of the relevantitem of property;(g) the price paid by the existing air companyfor any trustee security held by it;(h) the value of any shares held by anyexisting air company in any other existing aircompany the value being calculated on thebasis of the valuation of the air transportundertaking of that other company in accordancewith the provisions of this Schedule;(i) the market value on the appointed date orthe purchase price, whichever is less, of anyother investments held by any existing aircompany in any concern other than anotherexisting air company which subject to theprovisions of Section 22, have vested in theCorporation;(j) the amount of cash held by any existingair company on the appointed date whether indeposit with a bank or otherwise;(k) the amount of debts other than bad debtsdue to any existing air company, to the extent towhich they are reasonable considered to berecoverable, less the amount of the debts, ifany, excluded from the transfer to theCorporation concerned under the provisions ofSection 22;(l) the aggregate cost of all licence feespaid by the company under clause (c) of subrule(1) of Rule 154 of the Indian Aircraft,1937, in respect of the licences granted to it forthe operation of any scheduled air transportservices and held by it on the appointed date andwhich but for the provisions of section 19would continue to remain valid plus a sum ofRs. 100 for each such licence; provided that thefees paid for each such licence shall be reducedby an amount which bears to such fees the sameproportion as the period of the licence whichshall have expired on the appointed date bearsto the total period of the licence;25(m) the aggregate written down value of alltangible assets other than those falling withinthe preceding clauses;(n) an aggregate amount not exceeding tenthousand rupees as may be agreed upon betweenthe Corporation and the existing air companyconcerned or, failing agreement, which may beassessed by the Tribunal, in respect of all suchassets, intangible or otherwise, as do not fallwithin any of the preceding sub-clauses and inrespect of the loss of any future profits whichthe existing air company might have earned butfor the passing of this Act:Provided that in assessing any amount underthis clause regard shall be had to the followingcircumstances, namely:-(i) the profits, if any, earned by it annuallyduring the six years immediatelyproceeding the appointed date on whichincome-tax has been paid,(ii) the subsidies, if any, given to thatcompany by the Central Governmentduring such period, and(iii) the probability or otherwise of thecompany earning future profits if it wereallowed to continue its scheduled airtransport services for the remainingperiod of the licence held by it afterhaving due regard to the fact that thelicence held by it did not confer anymonopoly upon it in respect of the routesconcerned and the fact that no subsidywould have been payable by the CentralGovernment after the 31st day ofDecember, 1952.Explanation A.— For the purpose of thisSchedule, the written down value in respect ofeach class of assets means the actual cost to theexisting air company of such assets respectively,less the total depreciation calculated at therates and in manner following, namely:-

(i) in respect of each airframe, depreciationshall be calculated at 15 percent per annum forconstellation and Skymaster aircraft and 18percent per annum for other aircraft from thedate on which the aircraft concerned was firstused in revenue operations by the company tillthe 31st day of December, 1952, the ratesbeing applied as follows :-for the first year, on the actual cost ofacquisition;for the second year, on an amountobtained by reducing from the actualcost of acquisition the amount ofdepreciation calculated as aforesaid forthe first year;26THE AIR CORPORATIONS ACT, 1953acquisition the aggregate amount ofdepreciation calculated as aforesaid forthe preceding two years;and so on;CHAP. I(iii) in respect of all tangible assets fallingwithin clause (m) of paragraph II,depreciation shall be calculated at thenormal annual rates for which provisionis made in the Indian Income-tax Act,1922, and in the manner provided therein,but excluding initial or other specialdepreciation, from the date such assetswere acquired or created by the existingair company until the 31st day ofDecember, 1952:for the third year, on an amount obtainedby reducing from the actual cost ofacquisition the aggregate amount ofdepreciation calculated as aforesaid forthe preceding two years ;and so on;(ii) in respect of power plants, thedepreciation shall be calculated at 20per cent. per annum for Constellationand Skymaster aircraft and at 24 percent. per annum for other aircraft fromthe date on which the power plantconcerned was first used in revenueoperations by the company till the 31stday of December, 1952, the rates beingapplied as follows:-for the first year, on the actual cost ofacquisition;for the second year, on an amountobtained by reducing from the actualcost of acquisition the amount ofdepreciation calculated as aforesaid forthe first year;for the third year on an amount obtainedby reducing from the actual cost ofProvided that in respect of any such assetfor which no provision has been made in theIndian Income-tax Act, 1922, the rate ofdepreciation shall be 10 per cent, per annum:Provided further that in respect of any suchasset situate on the leasehold land other thanland rented from Government, the depreciationshall be either -(a) as provided in the proceeding provisionsof this clause, or(b) equivalent to an amount which bears thesame ratio to the total cost of acquisitionor creation of the asset (situate onleasehold land) as the expired portion ofthe lease on the appointed date bears tothe total period of the lease currentlyrunning,whichever is greater.Explanation B.— For the purpose of thisSchedule, the actual cost shall include, in thecase of airframes, in addition to the cost ofpurchase or acquisition-(i) the actual expenditure, if any, incurredby the existing air company for

CHAP. I THE AIR CORPORATIONS ACT, 195327reconversion or reconstruction of theairframe in order to render it fit for civilair transport before it was first used inrevenue operations by the company, plus,(ii) the actual expenditure incurred in makingthe airframes airworthy before its firstuse in revenue operations.Explanation C.— In the case of powerplants, the actual cost shall include, in additionto the cost of purchase or acquisition, the costincurred by the company for conversion orreconditioning, repairing or overhauling thepower plant, in order to render its fit for thepurposes of a certificate under paragraph 4 ofsection E of Schedule III to the Indian AircraftRules, 1937, before the date of its first use inrevenue operations.Paragraph III.— Subject to the provisionsof sections 22 and 23, all such liabilities ashave been declared by the existing air companyunder the provisions of section 22:Provided that if any liability so declared hasbeen understated, the Corporation may recoverthe additional amount from the company.