Local Loans Fund (Amendment) Act, 1940
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Validation of borrowing in certain cases. |
4.—(1) This section does not apply in relation to any local loan made to a local authority within the meaning of the Local Authorities (Miscellaneous Provisions) Act, 1936 (No. 55 of 1936), and, accordingly, in this section the expression “corporate or other body” does not include a local authority within the meaning of the said Act. | |
(2) Whenever persons acting as or purporting to be a corporate or other body borrow by way of local loan in purported exercise of the powers of such body and the lender makes such loan in good faith and without notice that such persons are not lawfully constituted as such body, the following provisions shall have effect in favour of such lender or any person claiming through or under him as against such body, that is to say:— | ||
(a) such persons shall be deemed, for the purposes of the transaction consisting of such borrowing and lending, to have been lawfully constituted as such body, and accordingly such body shall be liable for the repayment of the money so borrowed and lent and the payment of interest thereon in accordance with the terms on which such money was so borrowed and lent to the same extent (if any) as such body would have been so liable if such persons had in fact been lawfully constituted as such body; | ||
(b) every mortgage or other security given by such persons and purporting to be given by such body to such lender for securing the repayment of such money and the payment of the interest thereon shall, in the hands of such lender or any person claiming through or under him, be valid and enforceable against such body to the same extent (if any) as such mortgage or other security would have been so valid and enforceable if such persons had in fact been lawfully constituted as such body; | ||
(c) no part of the transaction consisting of such borrowing and lending shall be invalid or capable of being questioned on the ground that such persons were not lawfully constituted as such body. | ||
(3) Whenever a corporate or other body borrows, or is deemed by the foregoing sub-section of this section to borrow, by way of local loan under or in purported exercise of the powers of such body and the lender makes such loan in good faith, the following provisions shall have effect in favour of such lender or any person claiming through or under him as against such body, that is to say:— | ||
(a) neither such borrowing and lending nor any mortgage or other security given or purported to be given by such body to such lender for securing the repayment of the money borrowed and the payment of the interest thereon shall be invalidated or questioned on account of any illegality or irregularity in the constitution of such body or the election of any of the members thereof; | ||
(b) such lender shall not be concerned to inquire whether the purpose for which such money is borrowed by such body is or is not a purpose for which such body is authorised by law to borrow money or whether such money does or does not exceed in amount any limit on borrowing by such body, and such lender shall not be prejudiced or affected by the fact (if it exists) that such purpose is, in whole or in part, not so authorised or that such money exceeds in amount any such limit; | ||
(c) such lender shall not be concerned to inquire whether any meeting of such body was or was not properly convened or constituted, or whether any particular notice to the members of such body was or was not duly given, or whether the proceedings at any meeting of such body were or were not legal and regular; | ||
(d) where such body could not lawfully borrow such money without the sanction or the consent of any Minister of State, and such sanction or consent (as the case may be) was given or purported to be given by such Minister, such lender shall not be concerned to inquire whether any statutory condition precedent to the giving of such sanction or consent was or was not duly complied with, and such lender shall not be prejudiced or affected by the fact (if it exists) that any such condition precedent was not complied with by the person (whether such Minister, such body, or any other person) charged with the duty of complying therewith; | ||
(e) such lender shall not be concerned to see to the application of such money by such body or be prejudiced or affected by any misapplication of such money or any part thereof by such body or any of its officers. | ||
(4) This section shall be deemed to have come into operation on and to have had effect as on and from the 6th day of December, 1922, and shall accordingly apply and be deemed always to have applied to transactions commenced after that date and before the passing of this Act (whether completed before or pending at such passing) as well as to transactions commenced after the passing of this Act. |