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Section 32 – The State Bank of Hyderabad Act,1956

The State Bank of Hyderabad Act,1956

Section 32. Right of Reserve Bank to seek relief in respect of certain transactions

(1) Where the Hyderabad State Bank had at any time within two years before the appointed day,-

(a) Made any payment to any person without or for insufficient consideration;

(b) Made any loan or advance without adequate security or other safeguards;

(c) Sold or disposed of any property of the bank without consideration or for an inadequate consideration;

(d) Acquired any property or rights for an excessive consideration, in satisfaction of any loan or advance or other debt or otherwise;

(e) Entered into or varied any agreement so as to require the payment of excessive consideration, in satisfaction of any loan or advance or other debt or otherwise;

(f) Relinquished any claim or any part thereof or entered into any compromise or released any security or part thereof;

(g) Entered into any other transaction of such an onerous nature as to cause a loss to or impose a liability on the bank exceeding any benefit accrued to it;

And the payment, loan or advance, sale or disposal, acquisition, agreement or variation, relinquishment, compromise or release or other transaction was not proper or not reasonably necessary for the purpose of the business of the bank or was made with an unreasonable lack of prudence on the part of the bank, regard being had to the circumstances at the time, the Reserve Bank may apply for relief to the High Court for the State in which the Head Office of the bank for the time being is situated, in respect of such transaction, and all parties to the transaction (including the managing director, deputy managing director or any officer or other employee of the bank associated with the transaction) shall, unless the High Court otherwise directs, be made parties to the application.

(2) The High Court may make such order against any of the parties to the application as it thinks just, having regard to the extent to which those parties were respectively responsible for the transaction or benefited from it and to the circumstances of the case.

(3) Where an application is made to the High Court under this section in respect of any transaction and the application is determined in favour of the Reserve Bank, the High Court shall have exclusive jurisdiction to determine any claim outstanding in respect of the transaction.

(4) No application made by the Reserve Bank under this section shall be entertained after the expiry of one year from the appointed day.

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The State Bank of Hyderabad Act,1956

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