THE BOMBAY COTTON CONTRACTS ACT, 1932

[28th October, 1937]

Adapted and modified by the Adaptation of Indian Laws Order in Council, Repealed in part by Bom. 17 of 1938.

An Act to provide for the better regulation and control of transactions in cotton in Bombay

WHEREAS it is expedient to provide for the better regulation and control of transactions in cotton and whereas the previous sanction of the Governor General required by sub-section (3) of section 80-A of the Government of India Act has been obtained for the passing of this Act; It is hereby enacted as follows :—-

SECTION 01: SHORT TITLE

This Act may be called the Bombay Cotton Contracts Act, 1932.

 

SECTION 02: EXTEND AND OPERATION

(1)   This Act shall apply to the City of Bombay and the Island of Salsette.

(2)   It shall come into operation on such date as the 3[Provincial Government] may, by notification in the Gazette], direct.

 

SECTION 03: DEFINITIONS

In this Act, unless there is anything repugnant in the subject or context,

(a) "Bombay" means the City of Bombay and the Island of Salsette ;

'X                                     X                X                X

(c)         "Board of  Directors"   means   a   board   of directors of a recognised cotton association constituted under section   5   and   acting   through   atleast   a   quorum of their members   at   a   meeting   of that  board  duly   called  and constituted ;

(d)         "Certified godown" means a godown main­tained  by   a   cotton   association for storing cotton certified under the bye-laws of the association ;

(e)         "Contract" means a contract made or to be performed in whole or in part in Bombay relating to the sale or purchase of cotton and includes options in cotton, but does

not   include   such   contracts as the ²[Provincial Government] may, by notification in the [Official Gazette], declare to be excluded from the provisions of this Act;

(f)          "Cotton Association" means any association, organisation or a body of individuals, whether incorporated or not, established or formed for the purpose of regulating

and  controlling  business   in   the   sale,   purchase   or other transactions in cotton ;

(g)         "Forward contract" means a contract for the delivery of cotton at some future date ;

(h) "Option in cotton" means a contract made or to be performed in whole or in part in Bombay for the purchase or sale of a right to buy, or a right to sell or a right to buy or sell cotton in future, and includes a teji, a mandi or a teji-mandi in cotton ;

1.       This clause was deleted, by Bom. 17 of 1938, S. 2 and First Sch.

2.       The words   "Provincial   Government"  were  substituted   for the

words "Governor in Council'' by the   Adaptation of  Indian Laws   Order in

Council.   

(i) "Ready contract" means a contract in which immediate delivery of cotton is contemplated ;

(j) "Recognised cotton association" means a cotton association which is for the time being recognised by the [Provincial Government], as provided in section 4.

 

SECTION 04: RECOGNITION

(1) A cotton association, desirous of being recognised for the purposes of this Act, shall make an application in writing to the [Provincial Government] for such recognition and shall submit bye-laws for the regulation and control of transactions in cotton and furnish such information in regard to such recognition as the *[Provincial Government] may from time to time require.

(2)          The  *[Provincial  Government] may give or refuse such recognition.

(3)          The *[Provincial Government] shall refuse recognition unless—

(a)         it is provided in the bye-laws submitted by the cotton   association   under   sub-section (1)   that not less than one-fourth of the total number of the Board of  Directors   of

the   cotton   association   applying   for   recognition   shall be growers of cotton to be appointed in the manner prescribed in the said bye-laws and approved by the   *[Provincial Government] ; and

(b)         the *[Provincial Government] is satisfied that the   sole   possession   and effective management, control and regulation of the markets of the  cotton association applying

for   recognition   and   of the market places of the said cotton association are vested in the said cotton association.

(4) The *[Provincial Government]   shall   also   refuse recognition   unless   the   bye-laws   submitted   by the   cotton association under sub-section (1) shall have been published in the 1[Official Gazette] at least one month before the  date of such recognition :

*The words "Provincial Government" were substituted for the words "Governor in Council" by the Adaptation of Indian Laws Order in Council.

Provided that when, in the opinion of the ²[Provincial Government], the conditions precedent to recognition specified in sub-clauses (a) and (b) of sub-section (3) are satisfied in the case of a cotton association applying for recognition under sub-section (1) and the bye-laws of the said cotton association are similar in all other material respects to the articles and bye-laws of the East India Cotton Association Limited, deemed or which have been deemed under the provisions of sub-section (7) to be bye-laws of a recognised cotton association the ²[Provincial Government] may dispense with the publication, required under this sub-section of the bye-laws of the cotton association applying for recognition and may give recognition to such association and the bye-laws of such association shall then be deemed to be bye-laws published under the provisions of this sub-section.

(5)          When the 2[Provincial Government] has dispensed with the publication of the bye-laws of a   cotton association and has   given   recognition  to   such   association   under the

provisions of the proviso   to   sub-section (4),  such  bye-laws shall be published in the 3[Official Gazette] next following the giving of recognition to such association.

(6)          The  2[Provincial   Government] may,   at any time after having given to a   cotton association an opportunity to explain why recognition should  not be withdrawn, withdraw

the recognition given to the   said cotton association and such cotton association shall   thereupon   cease to be a recognised cotton association.

1.      The words "Official Gazette"   were   substituted   for   the   words

"Bombay Government Gazette",   by the  Adaptation of   Indian   Laws Order

in Council.

2.      The   words   "Provincial Government"   were   substituted   for the

words 'Governor in Council"   by   the Adaptation of Indian Laws Order in

Council.

 

(6) It is hereby declared that the East India Cotton Association Limited, is a recognised cotton association for the purposes and subject to the provisions of this Act and the articles and bye-laws of the said Association shall, so far as they relate to matters for which bye-laws may be made under the provisions of sections 5 and 6, be deemed to be bye-laws of a recognised cotton association :

Provided that, if, within such time after the coming into operation of this Act as the [Provincial Government] shall by order in writing specify, the said Association shall not have complied with the conditions precedent to recogni­tion specified in clauses (a) and (b) of sub-section (3), the said association shall cease to be a recognised cotton associa­tion and the said articles and bye-laws of the said association shall cease to be bye-laws of a recognised cotton association :

Explanation :—A grower of cotton shall not include a person who deals in forward contracts.

 

SECTION 05: RECOGNISED ASSOCIATION TO HAVE BOARD OF DIRECTORS

Power to make bye-laws :—(l)         ^:x                         x            x            x

In every recognised cotton association there shall be a Board of Directors. Subject to the sanction of the [Provincial Government], a recognised cotton association may make and may from time to time add to, vary or rescind bye-laws pro­viding for—

1.      The   words   "Provincial   Government"   were substituted for the

words "Government in Council" by the Adaptation of Indian Laws Order in

Council.

2.      The words  "subject to the   provisions of section 9"   were deleted

by Bom. 17 of 1938, S. 2 and First Schedule.

 

(a)         the constitution of the Board of Directors,

(b)         the powers and duties of the Board of Direc­tors and the manner in which its business shall be conducted.

(c)         the   number   and   constitution   of   electoral panels and the representation upon  such panels, and

(d)         the method   of  appointment   of members to the Board of Directors.

(2) Bye-laws made, added to, varied or rescinded under sub-section (1) shall be laid 1[before each of the Chambers of the Provincial Legislature] at the session ²[thereof] next following and shall be liable to be modified or rescinded by a resolution ³[in which both Chambers concur]. If any bye-law is so modified or rescinded, the ⁴[Provincial Government] may sanction such modified bye-law and re-publish the same accordingly or may sanction such rescission.

 

SECTION 06:   POWER OF BOARD OF DIRECTORS TO MAKE BYE-LAWS

(1) The Board of Directors may, subject to the sanction of the 4[Provincial Government], make and, from time to time, add to, vary or rescind bye-laws for the regulation and control of transactions in cotton.

(2) In particular and without prejudice to the generality of the foregoing provision such bye-laws may provide for—

(a)         the admission of various classes of members of a recognised cotton   association and the exclusion, suspen­sion, expulsion and re-admission of such members ;

(b)         the opening and   closing of markets in cotton and the times during which such markets   shall be opened or closed and regulating the hours of trade ;

1.        These words were substituted for the   words   "upon the  table of the Bombay Legislative Council" by Bom. 17 of 1938, s. 2 and First Sch.

2.        The   word   "thereof"   was substituted  for  the  words "of   the said Council", ibid.

3.        These words were substituted for the words "of the said Council",ibid.

4.        The words   "Provincial Government"   were   substituted   for the words "Governor in Council"   by   the  Adaptation of Indian Laws Order in Council.

 

(c)         a clearing house for the periodical settlement of contracts or differences   thereunder and for the passing on of delivery orders and for   any   purpose in connection with

options in cotton, and the regulation and maintenance of such clearing house ;

(d)         the number and classes of contracts of which settlements shall be made   or   differences  paid   through the clearing house ;

(e)         fixing, altering or postponing settling days ;

(f)          determining and declaring the market rates for cotton of any and every description ;

(g)         the terms, conditions and incidents of contracts and the forms of such contracts as are in writing ;

(h) regulating the making performance and cancellation of contracts, including contracts between a com­mission agent and his constituent, or between a broker and his constituent, or between a jethawala or muccadum and his constituent, or between a member and a non-member of a recognised cotton association, and the consequences of insol­vency on the part of a seller or buyer or intermediary, the consequences of a breach or omission by a seller or buyer and the responsibility of commission agents, muccadum and brokers not parties to such contracts ;

(i) the prohibition of specified classes or types of dealings in cotton by a member of a recognised cotton associa­tion ;

(j) the settlement of claims and disputes by arbitration and appeals against awards ;

(k) the levy and recovery of subscriptions, fees, fines and penalties ;

(1) disciplinary measures against members of a recognised cotton association, including suspension, expulsion, fines and non-monetary penalties, for breach of any bye-law made by the Board of Directors ;

(m) regulating the course of business between parties to contracts in any capacity;