Forward Contracts (Regulation) Act, 1952

For regulation of certain matters relating to forward contracts, the prohibition of options in goods.

Forward Contracts (Regulation) Act, 1952

Act No. 74 of 1952

[26th December, 1952]

An Act to provide for the regulation of certain matters relating to forward contracts, the prohibition of options in goods and for matters connected therewith

Be it enacted by Parliament as follows:—

Chapter 1

Preliminary

1. Short title, extent and commencement.

1. Short title, extent and commencement.—(1) This Act may be called the Forward Contracts (Regulation) Act, 1952.

(2) It extends to the whole of India [i][* * *].

(3) Chapter I shall come into force at once, and the remaining provisions shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act, for different States or areas, and for different goods or classes of goods.

2. Definitions.

2. Definitions.—In this Act, unless the context otherwise requires,—

(a) “association” means any body of individuals, whether incorporated or not, constituted for the purpose of regulating and controlling the business of the sale or purchase of any goods;

(b) “Commission” means the Forward Markets Commission established under Section 3;

(c) “forward contract” means a contract for the delivery of goods [ii][* * *] and which is not a ready delivery contract;

(d) “goods” means every kind of movable property other than actionable claims, money and securities;

(e) “Government security” means a Government security as defined in the Public Debt Act, 1944 (18 of 1944);

(f) “non-transferable specific delivery contract” means a specific delivery contract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are not transferable;

(g) “option in goods” means an agreement, by whatever name called, for the purchase or sale of a right to buy or sell, or a right to buy and sell, goods in future, and includes a teji, a mandi, a teji–mandi, a galli, a put, a call or a put and call in goods;

(h) “prescribed” means prescribed by rules made under this Act;

(i) “ready delivery contract” means a contract which provides for the delivery of goods and the payment of a price therefor, either immediately or within such period not exceeding eleven days after the date of the contract and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in respect of any goods, the period under such contract not being capable of extension by the mutual consent of the parties thereto or otherwise:

[iii][Provided that where any such contract is performed either wholly or in part,—

(1) by tendering of the documents of title to the goods covered by the contract by any party thereto (not being a commission agent or a bank) who has acquired ownership of the said documents by purchase, exchange or otherwise, to any other person (including a commission agent but not including a bank); or

(2) by the realisation of any sum of money, being the difference between the contract rate and the settlement rate or clearing rate or the rate of any offsetting contract; or

(3) by any other means whatsoever,

and as a result of which the actual tendering of the goods covered by the contract or the payment of the full price therefor is dispensed with, then, such contract shall not be deemed to be a ready delivery contract.

Explanation.—For the purpose of this clause,—

(i) “bank” includes any banking company as defined in the Banking Regulation Act, 1949 (10 of 1949), a co-operative bank as defined in the Reserve Bank of India Act, 1934 (2 of 1934), the State Bank of India and any of its subsidiaries and any corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970);

(ii) “commission agent” means a person who, in the ordinary course of business, makes contract for the sale or purchase of goods for others for a remuneration (whether known as commission or otherwise) which is determined in the contract itself or determinable from the terms of the contract, in either case, only with reference to the quantity of goods or to the price therefor as stipulated in the contract.]

[iv][(j) “recognised association” means an association to which recognition for the time being has been granted by the Central Government under Section 6 in respect of goods or classes of goods specified in such recognition;

(jj) “registered association” means an association to which for the time being a certificate of registration has been granted by the Commission under Section 14-B;]

(k) “rules”, with reference to the rules relating in general to the constitution and management of an association, includes in the case of an incorporated association its memorandum and articles of association;

(l) “securities” includes shares, scrips, stocks, bonds, debentures, debenture-stocks, or other marketable securities of a like nature in or of any incorporated company or other body corporate and also Government securities;

(m) “specific delivery contract” means a forward contract which provides for the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned;

(n) “transferable specific delivery contract” means a specific delivery contract which is not a non-transferable specific delivery contract [v][and which is subject to such conditions relating to its transferability as the Central Government may, by notification in the Official Gazette, specify in this behalf].

References

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