18A. Validity of loan
or advance not to be questioned.- Notwithstanding
anything to the contrary contained in any other law for the
time being in force, –
(a) the validity of any loan or advance granted by the Bank
in pursuance of the provisions of this Act shall not be called
in question merely on the ground of non-compliance with the
requirements of such other law as aforesaid or of any resolution,
contract, memorandum, articles of association or other instrument:
Provided, that nothing in this clause shall render valid
any loan or advance obtained by any company or co-operative
society where such company or co-operative society is not
empowered by its memorandum to obtain loans or advances;
(b) where a loan or advance has been granted under clause
(3A) or under clause (3B) of section 17 or a loan or advance
granted under clause (3) of section 18 by the Bank to any
person has been applied by such person, received –
(i) by the borrowing bank on account of bills of exchange
in respect of which the declaration under clause (i) of the
proviso to clause (3A) of section 17 has been furnished or
in repayment or realisation of the outstanding loans and advances
referred to in clause (ii) of the said proviso or in the proviso
to clause (3B) of the said section, or
(ii) by the borrowing bank or any other person in repayment
or realisation of loans and advances granted to a borrower
out of funds obtained by it or by him from the Bank under
section 18, shall be utilised only for the repayment by the
borrowing bank or other person, as the case may be, of the
amounts due to be repaid by it or by him to the Bank, and
shall be held by it or by him in trust for the Bank, until
such
time as the amounts are so repaid.
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