The National Dairy Development Board Act, 1987

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THE NATIONAL DAIRY DEVELOPMENT BOARD ACT, 1987 

_________ 

ARRANGEMENT OF SECTIONS 

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CHAPTER I 

PRELIMINARY 

SECTIONS 

1. Short title and commencement. 
2. Declaration of National Dairy Development Board as an institution of national   importance. 

3. Definitions. 

CHAPTER II 

THE NATIONAL DAIRY DEVELOPMENT BOARD 

 

4. Incorporation of National Dairy Development Board. 

5. Vesting of undertakings of Indian Dairy Corporation in National Dairy Development Board and 

dissolution of Indian Dairy Corporation. 

6. Effect of incorporation of National Dairy Development Board. 

7. Saving of legal proceedings. 

CHAPTER III 

MANAGEMENT OF THE NATIONAL DAIRY DEVELOPMENT BOARD 

8. Management of National Dairy Development Board and composition of its Board of   Directors. 

9. Terms of office and conditions of service, etc., of Chairman and directors. 

10. Meetings of Board. 

11. Manner of transacting business of Board. 

12. Management committees. 

13. Allowances, etc., of members of management committees. 

14. Delegation of powers to management committees, etc. 

15. Delegation of powers to whole-time directors, etc. 

CHAPTER IV 

POWERS AND FUNCTIONS OF THE NATIONAL DAIRY DEVELOPMENT BOARD 

16. Powers and functions of National Dairy Development Board. 

CHAPTER V 

PROVISIONS RELATING TO DIRECTORS AND EMPLOYEES OF THE NATIONAL DAIRY                  

DEVELOPMENT BOARD 

17. Provisions regarding members of board of society and directors of dissolved company. 

18. Provisions relating to officers and other employees of society and of dissolved company. 

19. Power of Board to restructure and streamline organisational and functional set-up of National 

Dairy Development Board to secure utmost efficiency in functioning. 

20. Schemes regarding compensation to redundant employees, etc. 

21. Compensation for transfer of employees not payable. 

22. Provident fund, gratuity, welfare and other funds. 

 



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CHAPTER VI 

FINANCE, ACCOUNTS AND AUDIT 

SECTIONS 

23. Borrowing powers of Board. 

24. Grants and loans by Central Government. 

25. Grants, donations, etc. 

26. National Dairy Development Board Fund. 

27. Preparation of accounts and balance-sheet. 

28. Audit. 

29. Reports to be laid before Parliament. 

30. Power to call for repayment before agreed period. 

31. Special provisions for enforcement of claims by National Dairy Development Board. 

CHAPTER VII 

MISCELLANEOUS 

32. Defects in appointments not to invalidate acts, etc., of Board. 

33. Protection of acts done in good faith. 

34. Indemnity of directors. 

35. Obligation as to fidelity and secrecy. 

36. Recruitment of additional officers and other employees. 

37. Liquidation only under orders of Central Government. 

38. Delegation of certain powers by Central Government. 

39. Transitional provisions for auditors. 

40. Transitional provisions with regard to Chairman and Board. 

41. Management or assistance to others to continue. 

42. Mother Dairy to be a subsidiary unit of National Dairy Development Board. 

43. Formation of companies with previous approval of Central Government. 

44. [Omitted] 

45. Returns. 

46. Power to make schemes and regulations regarding service matters retrospectively. 

47. Act to have overriding effect. 

48. Power to make regulations. 

49. Power to remove difficulties. 

50. Schemes and regulations to be laid before Parliament. 

THE SCHEDULE 

 

 

  



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THE NATIONAL DAIRY DEVELOPMENT BOARD ACT, 1987 

ACT NO. 37 OF 1987 

[15th September, 1987.] 

An Act to declare the institution known as the National Dairy Development Board in the State of 

Gujarat to be an institution of national importance and to provide for its incorporation and for 

the vesting in that body corporate of the undertakings of the Indian Dairy Corporation with a 

view to provide for the administration and the carrying on of the functions to be performed 

by the body corporate more effectively throughout the country and for matters connected 

therewith and incidental thereto. 

WHEREAS the National Dairy Development Board, a society formed and registered under the 

Societies Registration Act, 1860 (21 of 1860) has been serving the country by the adoption of a             

co-operative strategy, being a strategy evolved at Anand (Gujarat), for the economic development of the 

rural masses and has been playing a vital role in improving the quality of life of the people through       

co-operative effort; 

AND WHEREAS the objects of the National Dairy Development Board are such as to make it an 

institution of national importance and to constitute it as a body corporate; 

AND WHEREAS the functions of the Indian Dairy Corporation, a company formed and registered under 

the Companies Act, 1956 (1 of 1956), and the functions of the National Dairy Development Board are 

complementary to each other and aimed at achieving common objectives; 

AND WHEREAS it is necessary that the freedom and flexibility of operation hitherto available to the 

National Dairy Development Board should continue to be available to it so as to enable it to perform its 

functions more effectively and to play a wider and increasingly important role in serving the nation; 

AND WHEREAS it is considered necessary to vest the undertakings of the Indian Dairy Corporation in 

the National Dairy Development Board and to dissolve the said Corporation with a view to provide for 

the administration and the carrying on of the functions to be performed by the body corporate more 

effectively. 

BE it enacted by Parliament in the Thirty-eighth Year of the Republic of India as follows:— 

CHAPTER I 

PRELIMINARY 

1. Short title and commencement.—(1) This Act may be called the National Dairy Development 

Board Act, 1987. 

(2) It shall come into force on such date
1 as the Central Government may, by notification in the 

Official Gazette, appoint. 

2. Declaration of National Dairy Development Board as an institution of national   

importance.—Whereas the objects of the National Dairy Development Board at Anand in the State of 

Gujarat are such as to make the institution one of national importance, it is hereby declared that the 

National Dairy Development Board is an institution of national importance. 

                                                           
1. 12th October, 1987, vide notification No. S.O. 898(E), dated 12th October, 1987, see Gazette of India, Extraordinary, Part II,   

sec. 3(i). 



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

(a) “appointed day” means the date of commencement of this Act; 

(b) “Board” means the Board of Directors of the National Dairy Development Board; 

(c) “Chairman” means the Chairman of the National Dairy Development Board; 

(d) “Companies Act” means the Companies Act, 1956 (1 of 1956); 

(e) “director” means a director of the National Dairy Development Board, and includes the 

Chairman; 

(f) “foodstuffs” means such of the foodstuffs as are included in the definition of                 

essential commodities as contained in clause (a) of section 2 of the Essential Commodities                   

Act, 1955 (10 of 1955); 

(g) “Indian Dairy Corporation” means the Indian Dairy Corporation, a company formed and 

registered under the Companies Act, and having its registered office at Baroda in the State of Gujarat. 

(h) “milk product” means— 

(i) sterilised, standardised, recombined, toned, double-toned, skimmed, flavoured or acidified 

milk; 

(ii) ice-cream; 

(iii) cream; 

(iv) cheese; 

(v) butter; 

(vi) milk powders; 

(vii) weaning foods with milk and infant milk foods; 

(viii) malted milk foods with or without cocoa powder; 

(ix) ghee; 

(x) anhydrous milk fat and butter oil; 

(xi) casein; 

(xii) any other product containing milk or all or any of the milk products specified above 

which the Central Government may, by notification in the Official Gazette, specify in this behalf; 

(i) “National Dairy Development Board” means the National Dairy Development Board 

incorporated under section 4; 

(j) “prescribed” means prescribed by regulations made under this Act; 

(k) “restructuring and streamlining”, in relation to the organisational and functional set-up of the 

National Dairy Development Board, includes— 

(i) opening or closing of units or offices; 

(ii) revision of the organisational and functional set-up; 

(iii) declaration of staff required; 

(iv) integration of posts, fixation of seniority and pay scales; 

(v) integration of required personnel in the revised set-up and issuance of appointment orders 

in that behalf; 

(vi) declaration or demarcation of duties and responsibilities attendant to posts; 

(vii) declaration of posts equivalent to one another; and 



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(viii) any other matter that may be necessary of incidental to meet the organisational or 

functional needs of the National Dairy Development Board; 

(l) “society” means the National Dairy Development Board, a society formed and registered 

under the Societies Registration Act, 1860 (21 of 1860) and functioning as such immediately before 

the appointed day; 

(m) words and expressions used herein and not defined, but defined in the Companies Act, have 

the meanings respectively assigned to them in that Act. 

CHAPTER II 

THE NATIONAL DAIRY DEVELOPMENT BOARD 

4. Incorporation of National Dairy Development Board.—(1) The National Dairy Development 

Board is hereby constituted a body corporate by the same name, and as such body corporate, it shall have 

perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold 

and dispose of property and to contract, and shall, by that name, sue and be sued. 

(2) The head office of the National Dairy Development Board shall be at Anand in the State of 

Gujarat. 

(3) The National Dairy Development Board may establish units, offices, branches or agencies at any 

such place in or outside India as it may consider necessary. 

5. Vesting of undertakings of Indian Dairy Corporation in National Dairy Development Board 

and dissolution of Indian Dairy Corporation.—(1) On and from the appointed day, subject to the other 

provisions of this Act, all the undertakings of the Indian Dairy Corporation shall stand transferred to and 

vest in the National Dairy Development Board. 

(2) Notwithstanding anything contained in the Companies Act, the Indian Dairy Corporation shall, on 

and from the appointed day, stand dissolved by virtue of the provisions of this Act. 

6. Effect of incorporation of National Dairy Development Board.—On and from the appointed 

day,— 

(a) all properties and assets, movable and immovable, of, or belonging to, the society and the 

Indian Dairy Corporation (hereinafter referred to as the dissolved company) shall vest in the National 

Dairy Development Board; 

(b) all the rights, debts, liabilities, interests, privileges and obligations of the society and the 

Indian Dairy Corporation shall stand transferred to, and be the rights, liabilities, interests, privileges 

and obligations of, the National Dairy Development Board; 

(c) without prejudice to the provisions of clause (b), all debts, liabilities and obligations incurred, 

all contracts entered into and all matters and things engaged to be done by, with or for, the society or 

the dissolved company, immediately before the appointed day for or in connection with their 

purposes, shall be deemed to have been incurred, entered into, or engaged to be done by, with or for, 

the National Dairy Development Board; 

(d) all sums of money due to the society and the dissolved company, immediately before the 

appointed day, shall be deemed to be due to the Board; 

(e) every subsidiary or the society and the dissolved company shall become the subsidiary of the 

National Dairy Development Board; 

(f) every organisation, which was being managed immediately before the appointed day by the 

society or, as the case may be, by the dissolved company, shall be managed by the National Dairy 

Development Board for such period to such extent and in such manner as the circumstances may 

require;  



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(g) every organisation which was getting financial, managerial or technical assistance from the 

society or the dissolved company, immediately before the appointed day, may continue to be given 

financial, managerial or technical assistance, as the case may be, by the National Dairy Development 

Board, for such period, to such extent and in such manner as the National Dairy Development Board 

may deem fit; 

(h) the amount representing the capital of the dissolved company shall form part of the funds of 

the National Dairy Development Board; 

(i) any reference to the society or, as the case may be, to the dissolved company, in any law other 

than this Act or in any contract or other instrument, shall be deemed to be reference to the National 

Dairy Development Board. 

7. Saving of legal proceedings.—If, on the appointed day, there is pending any suit, arbitration, 

appeal or other legal proceedings of whatever nature by or against the society or the dissolved company, 

the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the 

incorporation of the National Dairy Development Board under section 4 or dissolution of the Indian Dairy 

Corporation under section 5, as the case may be, but the suit, arbitration, appeal or other proceedings may 

be continued, prosecuted and enforced by or against the National Dairy Development Board in the same 

manner and to the same extent as it would or may have been continued, prosecuted and enforced by or 

against the society or the dissolved company, as the case may be, if this Act had not been passed. 

CHAPTER III      

   MANAGEMENT OF THE NATIONAL DAIRY DEVELOPMENT BOARD 

8. Management of National Dairy Development Board and composition of its Board of   

Directors.—(1) The general superintendence, direction, control and management of the affairs and 

business of the National Dairy Development Board shall vest in a Board of Directors, which shall 

exercise all powers and do all acts and things which may be exercised or done by the National Dairy 

Development Board. 

(2) The Board of Directors of the National Dairy Development Board shall consist of the following, 

namely:— 

(a) a Chairman; 

(b) one director from amongst the officials of the Central Government; 

(c) two directors from amongst the Chairmen of the State Co-operative Dairy Federations; 

(d) whole-time directors, not more than three in number, from amongst the executives of the 

highest grade of the National Dairy Development Board; 

(e) one director, being an expert, from outside the National Dairy Development Board. 

(3) The Chairman and the director referred to in clause (b) of sub-section (2) shall be nominated by 

the Central Government and the directors referred to in clauses (c), (d) and (e) of sub-section (2) shall be 

nominated by the Central Government after consultation with the Chairman: 

Provided that the Chairman and the director referred to in clause (e) of sub-section (2) shall be 

persons professionally qualified in one or more specialities, namely, dairying, animal husbandry, rural 

economics, rural development, business administration or banking. 

(4) The Board may associate with itself, in such manner, on such terms and for such purposes as it 

may deem fit, any person whose assistance or advice it may desire in complying with any of the 

provisions of this Act, and a person so associated shall have the right to take part in the discussions of the 

Board relevant to the purposes for which he has been associated but shall not have the right to vote. 

9. Terms of office and conditions of service, etc., of Chairman and directors.—(1) The Chairman 

shall be the Chief Executive of the National Dairy Development Board and shall hold office for such 

period as the Central Government may determine and any person so nominated shall be eligible for 

renomination.  



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(2) Notwithstanding anything contained in sub-section (1), the Central Government shall have the 

right to terminate the services of the Chairman, at any time before the expiry of the period determined 

under that sub-section, by giving him notice of not less than three months in writing or three months’ 

salary and allowances in lieu thereof, and the Chairman shall also have the right to relinquish his office, at 

any time before the expiry of the period specified under that sub-section, by giving to the Central 

Government notice of not less than three months in writing. 

(3) The Chairman shall receive such salary and allowances as may be determined by the Central 

Government. 

(4) Where an executive of the National Dairy Development Board has been nominated under section 

8 as a whole-time director thereof, such nomination shall be without prejudice to his continuance as an 

executive of the National Dairy Development Board and he may be continued as such executive on his 

ceasing to be a director. 

(5) The directors nominated under clause (c) of sub-section (2) of section 8 shall hold office for such 

period not exceeding one year at a time as the Central Government may determine, and the directors 

nominated under clauses (d) and (e) of sub-section (2) of section 8 shall hold office for such period as the 

Central Government may determine. 

(6) Every director, other than the Chairman, shall hold office during the pleasure of the Central 

Government. 

(7) The directors referred to in clauses (b), (c) and (e) of sub-section (2) of section 8 shall be paid 

such allowances as the Central Government may determine. 

10. Meetings of Board.—(1) The Board shall meet at the head office of the National Dairy 

Development Board or any of its offices at such times as the Chairman may direct, and shall observe such 

rules of procedure in regard to the transaction of business at its meetings (including the quorum at its 

meetings) as may be prescribed. 

(2) The Chairman or, if he is unable to attend a meeting of the Board, any other director nominated by 

the Chairman in this behalf and, in the absence of such nomination or where there is no Chairman, any 

director chosen by the directors present from among themselves, shall preside at the meeting. 

(3) All questions which come up before any meeting of the Board shall be decided by a majority of 

votes of the directors present and voting, and in the event of an equality of votes, the Chairman or the 

person presiding shall have the right to exercise a second or casting vote. 

(4) Save as otherwise provided in sub-section (3), every director of the Board shall have one vote. 

11. Manner of transacting business of Board.—(1) Subject to the provisions of this Act, the Board 

shall, in the discharge of its functions, act on sound business principles with due regard to public interest. 

(2) Save as otherwise prescribed, the Chairman shall have the powers of general superintendence, 

direction, control and management of the affairs and business of the National Dairy Development Board, 

and he may exercise all other powers and do all acts and things which may be exercised or done by the 

Board. 

(3) The Chairman may, when he is unable to discharge his functions by reason of his being away or 

otherwise, authorise any whole-time director to discharge all or any of his functions for a temporary 

period. 

(4) In the absence of the Chairman and of an authorised whole-time director as referred to in         

sub-section (3), for whatsoever reason, the powers of the Chairman may be exercised by the senior-most 

of the whole-time directors referred to in clause (d) of sub-section (2) of section 8. 

12. Management committees.—(1) The Board may from time to time constitute such number of 

management committees as it may deem fit for the purpose of assisting the Board in the efficient 

discharge of its functions. 



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(2) A management committee shall consist of such number of persons (whether directors or 

otherwise) as its members as the Board may determine, subject to the condition that in every such 

committee either the Chairman or a whole-time director shall be a member thereof. 

(3) Every management committee shall function under the general control, direction and 

superintendence of the Board, and for such duration and in such manner as the Board may direct. 

(4) The minutes of every meeting of the management committees shall, as soon as may be, be laid 

before the Board. 

13. Allowances, etc., of members of management committees.—(1) The members of any 

management committee, other than the Chairman and whole-time directors, may be paid such allowances, 

if any, as may be prescribed, for attending the meetings of the management committee or for attending to 

any other work of the National Dairy Development Board. 

(2) All other matters pertaining to the conduct of proceedings of the management committees shall be 

such as may be prescribed. 

14. Delegation of powers to management committees, etc.—(1) The Board may delegate to any 

management committee or to any member thereof or to any officer of the National Dairy Development 

Board, subject to such conditions and limitations, if any, as may be specified by the Board, such of its 

powers and functions under this Act as it may deem necessary for the efficient discharge of its functions. 

(2) The Board may, if it considers it necessary so to do in the public interest, delegate any of its 

powers and functions, subject to such conditions and limitations, if any, as may be specified by it, to a  

co-operative federation at the National or State level, or to any organisation owned, managed, controlled 

or assisted by the National Dairy Development Board. 

15. Delegation of powers to whole-time directors, etc.—The Board may, from time to time, by 

order, delegate, subject to such general and special conditions as it may deem fit to impose, the powers of 

appointment, termination, suspension and dismissal from service of any employee of the National Dairy 

Development Board,— 

(a) who is drawing a salary in such higher grade as may be prescribed, to a whole-time director, 

and 

(b) who is drawing a salary in any grade, other than a higher grade prescribed under clause (a), to 

such officer of the National Dairy Development Board as it may deem fit: 

Provided that in relation to employees falling under clause (b), the Chairman may, if he considers it 

necessary or expedient so to do, perform the functions of the Board under this section. 

CHAPTER IV 

POWERS AND FUNCTIONS OF THE NATIONAL DAIRY DEVELOPMENT BOARD 

16. Powers and functions of National Dairy Development Board.—(1) Subject to the provisions of 

this Act,—  

(a) it shall be the duty and function of the National Dairy Development Board to promote plan 

and organise programmes for the purposes of development of dairy and other agriculture based and 

allied industries and biologicals on an intensive and nation-wide basis and to render assistance in the 

implementation of such programmes; 

(b) it shall be the responsibility of the National Dairy Development Board to adopt the              

co-operative strategy in a more effective manner on an intensive and nation-wide basis and to take 

such steps as may be necessary for the purposes aforesaid; and 

(c) the National Dairy Development Board may take such measures for carrying out the said 

purposes, and for the exercise of its powers and the performance of its functions and responsibilities 

under this Act, as it may consider necessary. 



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(2) In particular, and without prejudice to the generality of the foregoing provisions, the measures 

referred to therein may provide for— 

(a) facilitating research and promotional activities in the fields of dairying, immunology, animal 

husbandry, agriculture and horticulture; 

(b) imparting technological know-how to such organisations in the co-operative or public sector 

as are engaged in the production, procurement, preservation or marketing of milk and milk products; 

(c) facilitating the training of personnel for absorbing and utilising the technical know-how that 

may be imparted; 

(d) designing, planning, promoting developing, constructing, sponsoring and setting up of dairy 

industries and undertaking any other related promotional activity including the financing of the same; 

(e) providing consultancy and managerial services and the execution of any project on a turn-key 

basis or otherwise, furnishing integral services such as storage, transportation, processing, distribution 

of milk and milk products and to serve as a lead institution with reference to milk and milk products; 

(f) adopting such measures as may be practicable— 

(i) for the conservation of milk and milk products by avoidance of waste at all stages or 

otherwise; 

(ii) to assist primary producers of milk and milk products and persons in the co-operative and 

public sector to get incentive prices; and 

(iii) to build up a national milk grid; 

(g) recommending to Government, as and when necessary, the maximum and minimum prices to 

be fixed for the purchase or sale of milk and, if so required, assist in the enforcement of it; 

(h) functioning as a channelising agency in respect of import and export of milk and milk 

products and of milch animals or bulls; 

(i) providing financial, technical, administrative, managerial or other assistance or taking such 

measures as may be necessary— 

(A) for the development (if required by the import of quality semen) and preservation of high 

yielding cattle; 

(B) for adopting improved methods of cattle breeding; 

(C) for increasing production and supply of better and improved animal feed including 

fodder; and 

(D) generally for the enhancement of the cattle wealth of the country; 

(j) processing, promoting or financing technological, industrial or economic research in milk and 

milk products in such manner as the Board may deem fit by the utilisation of available institutions or 

otherwise; 

(k) financing, in such manner as the Board may deem appropriate (including contribution to 

capital), of co-operative federations, co-operative unions or co-operative enterprises or of any scheme 

in the co-operative or public sector intended to stimulate the production, preservation, distribution 

and consumption of milk and milk products nation-wide; 

(l) regulating the dairy and allied industries and functioning as regulatory authority therefor, as 

may be required by the Central Government; 

(m) adopting measures for the development and co-ordination of organisations in the production 

of milk and milk products so as to enable the primary producers thereof to become participants in, 

and beneficiaries of, the development and growth of dairy and allied industries; 



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(n) collecting and compiling relevant data and statistics necessary for the efficient management of 

the national milk grid and national milch herd and on any other matter relating to dairying and allied 

industries; 

(o) promoting publicity on the research and development of dairy and allied industries; 

(p) promoting and developing production, grading and marketing of milk and milk products in 

various parts of the country; 

(q) co-operating with international organisations and foreign experts and for functioning as the 

agent of the Central Government for the reception, utilisation and disbursement of any gift of milk 

and milk products and any other foodstuffs; 

(r) building up of a reserve of buffer stock of basic commodities; 

(s) promoting the export of milk and milk products where, in the opinion of the Board, it is so 

required to avoid waste or to otherwise serve the public interest and generally for exporting any 

article produced, processed or promoted by it; 

(t) acquiring, holding and disposing of any property for the purposes of its business; 

(u) transferring the whole or any part of its managerial, technical or other functions in relation to 

any organisations receiving assistance from the National Dairy Development Board to the recipient 

organisation; 

(v) advancing or lending money upon security of movable or immovable property or otherwise; 

(w) borrowing money in such manner and upon such security as the Board may deem fit; 

(x) carrying on, either by itself or through any other organisations, any other business or class of 

business, in a case where such business or class of business was being carried on by the society or the 

dissolved company immediately before the appointed day; 

(y) promoting and encouraging co-operative effort among those engaged in the production of 

milk and milk products and other foodstuffs; 

(z) levying fees or other charges for any assistance given or services rendered by the National 

Dairy Development Board; 

(za) carrying on any other business or doing any other act or thing as may be necessary, 

incidental or conducive to further the objectives of the National Dairy Development Board under this 

Act. 

(3) If, immediately before the appointed day, either the society or the dissolved company                

was engaged in the production, research and development, processing, marketing, import, export            

or other activities, or had been rendering any service or assistance, in relation to any article or        

product, other than milk and milk products or the dairy industry, then, notwithstanding anything 

contained in this Act or in any other law, the National Dairy Development Board may engage in the 

production, research and development, processing, marketing, import, export or other activities, or render 

such other services or assistance in relation to the said article or product as may be required, and the 

provisions of sub-sections (1) and (2) shall, so far as may be, apply in relation to that article or product, as 

if any reference therein to milk and milk products or to dairy and allied industries had been a reference to 

that article or product or service or activity. 

(4) Where the Central Government or the Government of any State considers that, having regard to 

the special expertise of the National Dairy Development Board and the needs of the public, it is necessary 

or advisable to entrust the National Dairy Development Board with any activity, other than that to which 

the foregoing sub-sections apply, it may, entrust such activity to the National Dairy Development Board, 

whereupon it shall be competent for the National Dairy Development Board to carry on such activity. 

(5) Without prejudice to the generality of the foregoing powers, it shall be competent for the National 

Dairy Development Board to participate, with the prior approval of the Central Government, in any other 

organisation, financially, managerially or in any other manner.  



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CHAPTER V 

PROVISIONS RELATING TO DIRECTORS AND EMPLOYEES OF THE NATIONAL DAIRY DEVELOPMENT BOARD  

17. Provisions regarding members of board of society and directors of dissolved         

company.—Every person holding office as a member of the board of the society, or as a director of the 

dissolved company, immediately before the appointed day, shall, on and from that day, cease to hold 

office as such member or director. 

18. Provisions relating to officers and other employees of society and of dissolved      

company.—Subject to the provisions of section 19, every full-time officer or other employee, holding 

office immediately before the appointed day, in the society or the dissolved company, shall, on and from 

the appointed day, become an officer or other employee, as the case may be, of the National Dairy 

Development Board and shall hold office or service in the National Dairy Development Board on the 

same terms and conditions of service as he would have had under the society or the dissolved company, 

as the case may be, and shall continue to do so unless and until his terms and conditions of service are 

duly altered by the Board. 

19. Power of Board to restructure and streamline organisational and functional set-up of 

National Dairy Development Board to secure utmost efficiency in functioning.—(1) Notwithstanding 

anything contained in this Chapter, the National Dairy Development Board may make such orders or take 

such action as may be necessary for restructuring and streamlining the organisational and functional     

set-up of the National Dairy Development Board to secure utmost efficiency in its functioning, and the 

Board shall, for achieving this object, be competent to declare any officer or other employee or any class 

of officers or other employees to be redundant if it finds them redundant by way of being surplus or 

otherwise due to duplication of posts of the same nature, or absence of the special expertise required for 

the post in the revised set-up, or the non-availability of posts in a particular office or unit of the National 

Dairy Development Board and it is not practicable to accommodate him in the type of post in the 

particular grade. 

(2) Nothing in this Chapter shall preclude the Board, if it is considered necessary for the purpose of 

rationalising the conditions of service of the officers and other employees so transferred to it, to change 

their designation, conditions of service or the scales of pay applicable to them or to reallocate their duties 

and functions. 

20. Schemes regarding compensation to redundant employees, etc.—(1) The officers or other 

employees declared as redundant in pursuance of section 19, shall be dealt with in accordance with such 

scheme or schemes as the Board may, with the previous approval of the Central Government, make in this 

behalf and different schemes may be made in relation to different classes or categories of officers and 

other employees. 

(2) The scheme or schemes referred to in sub-section (1) may provide for— 

(a) the quantum of compensation payable to any officer or other employee referred to in          

sub-section (1) and the mode of payment thereof: 

Provided that the compensation so payable shall in no case be less than that payable to him under 

the service conditions applicable to him if his services were dispensed with; 

(b) the quantum of arrears of salary or other emoluments, provident fund, gratuity or any other 

amount that may be payable in accordance with the service conditions applicable to them; 

(c) the provision for appeal for the aggrieved redundant officers and other employees and for the 

appellate authority, being an officer not below the rank of a Joint Secretary to the Government of 

India in the Ministry dealing with Agriculture; 

(d) any other matter pertaining to the termination of service consequent on their being declared 

redundant. 



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21. Compensation for transfer of employees not payable.—The transfer of the services of any 

officer or other employee of the society or of the dissolved company to the National Dairy Development 

Board shall not entitle any such officer or other employee to any compensation under the Industrial 

Disputes Act, 1947 (14 of 1947) or any other law for the time being in force, and no such claim shall be 

entertained by any court, tribunal or other authority. 

22. Provident fund, gratuity, welfare and other funds.—(1) Where a provident fund has been 

established by the society or the dissolved company in respect of either of them for the benefit of the 

officers or other employees and the same stands vested in a trust, the moneys and other assets standing to 

the credit of each provident fund shall continue to be held in trust with the same objects as were 

applicable before the appointed day and the trustees of such trusts immediately before the appointed day 

shall, subject to the provisions of the trust deeds and the rules relating to the respective trusts, continue to 

function as trustees in respect of the respective provident fund until and unless otherwise directed by the 

National Dairy Development Board, and the rights relating to the said trusts shall, as from the appointed 

day, vest in the National Dairy Development Board. 

(2) Where any gratuity, welfare or other fund had been established by the society or the dissolved 

company for the benefit of its officers or other employees and is in existence immediately before the 

appointed day, all moneys and other assets standing to the credit of or relatable to such gratuity, welfare 

or other fund shall vest in the National Dairy Development Board. 

(3) Notwithstanding anything contained in sub-sections (1) and (2), the Board may give such 

directions relating to the trusts or funds or take such other action as it may deem fit so as to bring about 

uniformity or to effect integration in part or in whole in such trusts or funds. 

(4) The Board may, having regard to the welfare of the officers and other employees or their families, 

take such steps for the advancement of their health, education or other interests as may be prescribed and 

create such institutions as may be required for the purpose. 

(5) Nothing in the foregoing provisions of this section shall derogate the power of the Board to make 

regulations for establishing or maintaining any provident fund, welfare fund, gratuity fund or other fund 

for any of its officers or other employees. 

CHAPTER VI              

FINANCE, ACCOUNTS AND AUDIT 

23. Borrowing powers of Board.—The Board may, with the previous approval of the Central 

Government or in accordance with the terms of any general or special authority given to it by the Central 

Government, borrow money from any source as it may deem fit for discharging all or any of its functions 

under this Act. 

24. Grants and loans by Central Government.—The Central Government may, after due 

appropriation made by Parliament by law in this behalf, pay to the National Dairy Development Board by 

way of grants or loans such sums of money as the Central Government may think fit for being utilised for 

the purposes of this Act. 

25. Grants, donations, etc.—The National Dairy Development Board may receive gifts, grants, 

donations or benefactions from Government or any other source in or outside India and the same shall be 

used by the Board for exercising its functions and discharging its responsibilities under this Act. 

(2) The National Dairy Development Board shall not receive any gifts, grants, donations or 

benefactions from a foreign government or any other source outside India except with the previous 

approval of the Central Government. 

26. National Dairy Development Board Fund.—(1) The National Dairy Development Board shall 

maintain a Fund to be called the National Dairy Development Board Fund to which shall be credited— 

(a) all sums of money vested in the National Dairy Development Board under Chapter II; 

(b) all sums of money that may be provided by Government;  



13 
 

(c) all fees and other charges received by the National Dairy Development Board; 

(d) all sums of money generated from gift commodities by the National Dairy Development 

Board or received by it by way of grants, donations, benefactions, bequests or transfers; and 

(e) all sums of money received by the National Dairy Development Board in any other manner or 

from any other source. 

(2) All sums of money credited to the said Fund shall, subject to the regulations, if any, made in this 

behalf, be deposited with the State Bank of India or any other nationalised bank. 

Explanation.—In sub-section “nationalised bank” means a corresponding new bank as defined in the 

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) and the Banking 

Companies (Acquisition and Transfer of Undertakings) Act, 1980 (44 of  1980). 

(3) The said Fund shall be applied towards meeting the administrative and other expenses of the 

National Dairy Development Board, including expenses incurred in the exercise of the powers and the 

discharge of its functions and responsibilities under section 16 or in relation to any of the activities 

referred to therein or for anything relatable thereto. 

27. Preparation of accounts and balance-sheet.—(1) The balance-sheet and accounts of the 

National Dairy Development Board shall be prepared in such form and in such manner as may be 

prescribed. 

(2) The Board shall cause the books and accounts of the National Dairy Development Board to be 

closed and balanced as on the 31st day of March each year or such other date as the Board may, with the 

concurrence of the Central Government, decide. 

28. Audit.—(1) The accounts of the National Dairy Development Board shall be audited by auditors 

duly qualified to act as auditors of companies under the Companies Act, and the appointment of auditors 

and remuneration payable to them shall be subject to the approval of the Central Government. 

(2) Every auditor in the performance of his duties shall have at all reasonable times access to books, 

accounts and other documents of the National Dairy Development Board. 

(3) The auditors shall submit their report to the Board which shall forward a copy of their report to 

the Central Government. 

29. Reports to be laid before Parliament.—The Central Government shall cause the report of the 

auditors under section 28 to be laid before both the Houses of Parliament as soon as may be after such 

report is received by the Central Government. 

30. Power to call for repayment before agreed period.—Notwithstanding anything contained in 

any agreement to the contrary, the Board may, by notice in writing, require any person to which the 

National Dairy Development Board or the society or the dissolved company has granted any loan or 

advance, to discharge forthwith in full, its liabilities to the Board,— 

(a) if it appears to the Board that any false or misleading information in any material particular 

was given in the application for the loan or advance; or 

(b) if the person has failed to comply with the terms of its contract in the matter of the loan or 

advance; or 

(c) if there is a reasonable apprehension that the person is unable to pay his debts or that 

proceedings for liquidation may be commenced in respect thereof; or 

(d) if the property pledged, mortgaged, hypothecated or assigned as security for the loan or 

advance is not insured and kept insured by the person to the satisfaction of the Board (or depreciates 

in value to such an extent that, in the opinion of the Board, further security to the satisfaction of the 

Board should be given and such security is not given after demand); or 

(e) if, without due permission, any machinery, plant or other equipment (whether forming part of 

security or not) is removed from the concerned premises without being replaced; or 



14 
 

(f) if it appears to the Board that any condition in the loan agreement relating to the supply of 

goods or implementation of the project is being substantially violated; or 

(g) if, for any other reason, the Board considers it necessary so to do for protecting the interests of 

the National Dairy Development Board. 

31. Special provisions for enforcement of claims by National Dairy Development            

Board.—(1) Where any person, in breach of any agreement, makes any default in the repayment of any 

loan or advance or any instalment thereof (or in meeting its obligations in relation to the guarantee given 

by the National Dairy Development Board) or otherwise fails to comply with the terms of agreement with 

the Board or where the Board requires any person to make immediate repayment of any loan or advance 

under section 30 and the person fails to make such repayment, then, without prejudice to the provisions of 

section 69 of the Transfer of Property Act, 1882 (4 of 1882), any officer of the National Dairy 

Development Board, generally or specially authorised by the Board in this behalf, may apply to the court 

for one or more of the following reliefs, namely:— 

(a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the 

National Dairy Development Board as security for the loan or advance; or 

(b) for transferring the management of any organisation to the National Dairy Development    

Board; or 

(c) for an ad interim injunction where there is apprehension that the machinery or other 

equipment is being removed from the premises of the organisation without due permission. 

(2) The procedure for making an application under sub-section (1) and for the disposal thereof shall 

be such as may be prescribed. 

CHAPTER VII 

MISCELLANEOUS 

32. Defects in appointments not to invalidate acts, etc., of Board.—No act or proceeding of the 

Board or of any committee of the National Dairy Development Board shall be questioned on the ground 

merely of the existence of any vacancy in, or defect in the constitution of, the Board or the committee, as 

the case may be. 

33. Protection of acts done in good faith.—No suit or other legal proceeding shall lie against the 

National Dairy Development Board or any director or any officer or other employee of the Board or any 

other person authorised by the Board to discharge any functions under this Act, for any loss or damage 

caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance 

of this Act or of any other law or provision having the force of law. 

34. Indemnity of directors.—Every director shall be indemnified by the National Dairy 

Development Board against all losses and expenses incurred by him, in, or in relation to, the discharge of 

his duties, except such as are caused by his own wilful act or default. 

35. Obligation as to fidelity and secrecy.—(1) The Board shall not, except as otherwise required by 

this Act or any other law, divulge any information relating to, or to the affairs of, the National Dairy 

Development Board or of the society or of the dissolved company except in circumstances in which it is 

in accordance with the law or practice and usage customary among financial institutions, necessary or 

appropriate for the Board to divulge such information. 

(2) Every director, member of a committee, auditor or officer or other employee of the National Dairy 

Development Board shall, before entering upon his duties, make a declaration of fidelity and secrecy in 

the form set out in the Schedule. 

36. Recruitment of additional officers and other employees.—Nothing contained in Chapter V 

shall be deemed to prejudice the right of the National Dairy Development Board to create such number of 

additional posts or to appoint such number of additional officers or other employees as it may consider 

necessary or desirable for the efficient discharge of the functions of the National Dairy Development 

Board and where any such officer or other employee is appointed, the terms and conditions of service, 

including inter se seniority, may also be determined by the Board. 



15 
 

37. Liquidation only under orders of Central Government.—No provision of any law relating to 

the winding up of companies or corporations shall apply to the National Dairy Development Board and it 

shall not be placed in liquidation save by an order of the Central Government and in such manner as it 

may direct. 

38. Delegation of certain powers by Central Government.—(1) The Central Government may, on 

the recommendation of the National Dairy Development Board, if satisfied that it is necessary so to do in 

the public interest, make any scheme for the purpose of enabling the National Dairy Development Board 

to undertake and perform any of the activities or functions of the Central Government relatable to dairy, 

foodstuffs and connected industries, particularly with reference to matters related to the development of 

the national milk grid by the regulation of the production, procurement, marketing, export-import, 

maintenance of standards or such like activities (including the collection and compilation of statistics and 

relevant data). 

(2) Every scheme made under sub-section (1) shall be published in the Official Gazette and may 

contain such conditions, restrictions or limitations as the Central Government may deem fit to impose. 

39. Transitional provisions for auditors.—Any auditor appointed in relation to the society or the 

dissolved company, functioning immediately before the appointed day, may, notwithstanding anything 

contained in this Act, be continued by the National Dairy Development Board for such period and on 

such terms as may be considered necessary. 

40. Transitional provisions with regard to Chairman and Board.—The Chairman of the society, 

holding office immediately before the appointed day, shall be the Chairman of the National Dairy 

Development Board until a Chairman is nominated in accordance with the provisions of this Act and he 

shall be competent to perform the functions of the Board until the constitution of the Board under this 

Act. 

41. Management or assistance to others to continue.—For the removal of doubts, it is hereby 

declared that where, before the appointed day, either the society or the dissolved company was managing 

any other organisation or rendering any technical or other assistance to any organisation or person, the 

National Dairy Development Board may continue to render the same or similar service to such extent, for 

such period and with such modifications as the Board may deem fit. 

42. Mother Dairy to be a subsidiary unit of National Dairy Development Board.—The 

undertaking known as the Mother Dairy, Delhi, shall, on and from the appointed day, become a 

subsidiary unit of the National Dairy Development Board but shall retain its separate character, unless 

otherwise decided by the Board. 

43. Formation of companies with previous approval of Central Government.—(1) Where the 

Board considers it necessary so to do, for the implementation of any of its objectives, it may, subject to 

the previous approval of the Central Government form one or more companies either by itself or in 

conjunction with any of its subsidiaries or with any other undertaking. 

(2) Where any company has been formed in pursuance of sub-section (1),— 

(a) in the case of a company formed by the Board by itself or along with its subsidiaries, it may 

contribute such capital, transfer such of its assets or render such assistance, as may be required, so as 

to enable the company so formed to function; and 

(b) in any other case, it may contribute capital, transfer assets or render assistance in such manner 

and to such extent as the Board may deem fit subject to specific previous approval of the Central 

Government in that regard. 

44. [Exemption from tax on income] Omitted by Act 20 of 2002 (20 of 2002) s.162  

(w.e.f. 1-4-2003). 

45. Returns.—The National Dairy Development Board shall furnish, from time to time, to the 

Central Government such returns as the Central Government may require. 



16 
 

46. Power to make schemes and regulations regarding service matters retrospectively.—Any 

scheme or regulation made under this Act in relation to conditions of service or like matters of officers or 

other employees of the National Dairy Development Board, may be made retrospectively from any date 

not earlier than the appointed day. 

47. Act to have overriding effect.—The provisions of this Act shall have effect notwithstanding 

anything inconsistent therewith contained in the Companies Act, the Industrial Disputes                       

Act, 1947 (14 of 1947) or any other law for the time being in force or in any instrument having effect by 

virtue of any law other than this Act, or in any decree or order of any court, tribunal or other authority. 

48. Power to make regulations.—(1) The Board may, by notification in the Gazette of India, make 

regulations not inconsistent with the provisions of this Act and the schemes made thereunder, to provide 

for all matters for which provision is necessary or expedient for the purpose of giving effect to the 

provisions of this Act. 

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may 

provide for all or any of the following matters, namely:— 

(a) the procedure to be followed for the transaction of business at the meetings of the Board and 

the number of members which shall form quorum at a meeting under sub-section (1) of section 10; 

(b) the allowances to be paid to the members of any management committee, other than the 

Chairman and whole-time directors, for attending the meetings of the management committee or for 

attending to any other work of the National Dairy Development Board under sub-section (1) of 

section 13 and the other matters pertaining to the conduct of proceedings of the management 

committees under sub-section (2) of that section; 

(c) the higher grade for the purposes of clause (a) of section 15; 

(d) the particulars of the steps for the advancement of the health, education or other interests of 

the officers and other employees or their families as referred to in sub-section (4) of section 22; 

(e) the matters of detail regarding establishment or maintenance of funds referred to in            

sub-section (5) of section 22; 

(f) the conditions subject to which sums of money are to be deposited under sub-section (2) of 

section 26; 

(g) the form and manner in which the balance-sheet and accounts of the National Dairy 

Development Board shall be prepared under sub-section (1) of section 27; 

(h) the procedure for making an application under sub-section (1) of section 31 and for the 

disposal thereof under sub-section (2) of that section; 

(i) conditions of service of officers and other employees;  

(j) any other matter which is to be, or may be, prescribed. 

49. Power to remove difficulties.—(1) If any difficulty arises in giving effect to the provisions of 

this Act, the Central Government may, by order, published in the Official Gazette, make such provisions 

not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty: 

Provided that no such order shall be made after the expiry of five years from the appointed day. 

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each 

House of Parliament. 

50. Schemes and regulations to be laid before Parliament.—Every scheme and every regulation 

made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, 

while it is in session, for a total period of thirty days which may be comprised in one session or in two or 

more successive sessions, and, if, before the expiry of the session immediately following the session or 

the successive sessions aforesaid, both Houses agree in making any modification in the scheme or 

regulation or both Houses agree that the scheme or regulation should not be made, the scheme or 

regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; 

so, however, that any such modification or annulment shall be without prejudice to the validity of 

anything previously done under that scheme or regulation.  



17 
 

THE SCHEDULE 

[See section 35 (2)] 

Declaration of fidelity and secrecy 

I, ................. do hereby declare that I will faithfully, truly, and to the best of my skill and ability 

execute and perform the duties required of me as Chairman, director, member of committee, auditor, 

officer or other employee (as the case may be) of the National Dairy Development Board and which 

properly relate to the office or position held by me in or in relation to the National Dairy Development 

Board. 

I further declare that I will not communicate or allow to be communicated to any person not legally 

entitled thereto any information relating to the affairs of any person having any dealing with the National 

Dairy Development Board nor will I allow any such person to inspect or have access to any books or 

documents belonging to or in the possession of the National Dairy Development Board and relating to the 

business of the National Dairy Development Board or the business of any person having any dealing with 

the National Dairy Development Board.