MISCELLANEOUSCentral

Section 51 of The State Bank of India Act, 1955

1[51. Requirements of foreign law to be complied within certain cases.--If, according to the laws of any country outside India, the provisions of this Act by themselves are not effective to transfer to and vest in the State Bank any asset or liability which forms part of the undertaking of the Imperial Bank and which is situate in that country, the Imperial Bank shall take all such steps as may be required by the laws of that country for the purpose of effecting or perfecting such transfer and vesting, and in connection therewith the Imperial Bank may realise any asset and discharge any liability and transfer the net proceeds thereof to the State Bank.]

Summary

This section applies when assets or liabilities of the Imperial Bank of India are located in foreign countries.
If Indian law is not enough to automatically transfer and vest foreign assets or liabilities in the State Bank, foreign laws must be complied with.
The Imperial Bank is required to take all legal steps necessary under foreign law to complete and perfect the transfer and vesting.
To facilitate this transfer, the Imperial Bank is permitted to realize (sell) assets and discharge (pay off) liabilities in that country.
After realizing assets and paying off liabilities, the Imperial Bank must transfer the net proceeds directly to the State Bank of India.

Practical examples

1In July 1955, a branch of the Imperial Bank of India in London holds a property valued at 10,000 pounds. Since local UK land registry laws do not recognize the automatic transfer under the Indian Act, the Imperial Bank executes a formal transfer deed under English law to vest the property in the State Bank of India.

2In October 1955, the Imperial Bank has an outstanding liability of 5,000 dollars in New York which cannot be transferred to the State Bank under US banking laws. The Imperial Bank settles this liability directly using foreign assets and transfers the remaining cash balance of 2,500 dollars to the State Bank of India.

FAQ

1. Why was Section 51 necessary if the Act automatically transferred all assets to the State Bank?

Indian laws do not automatically apply in foreign jurisdictions, so Section 51 ensures the transfer is recognized and completed under foreign laws.

2. What can the Imperial Bank do if a foreign country does not recognize the transfer of a specific asset?

The Imperial Bank can realize (sell) the asset, settle any connected liabilities in that country, and transfer the net proceeds to the State Bank of India.

3. Which bank is responsible for taking steps to comply with foreign laws under Section 51?

The Imperial Bank of India is responsible for taking all required steps under foreign law.

Test yourself

Q1.Under Section 51 of The State Bank of India Act, 1955, what must happen if the Act by itself is ineffective in transferring a foreign asset to the State Bank of India?

Q2.Under Section 51 of The State Bank of India Act, 1955, what is the Imperial Bank authorized to do with foreign assets and liabilities to facilitate the transfer?

Q3.Under Section 51 of The State Bank of India Act, 1955, which entity receives the net proceeds of any foreign assets realized by the Imperial Bank?

Q4.Under Section 51 of The State Bank of India Act, 1955, when does the obligation to comply with foreign laws arise?

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