The Road Transport Corporations Act, 1950

17A.Establishment of subsidiary Corporations.

1. Where a corporation (hereafter in this section referred to as the parent Corporation) is satisfied that it is expedient or necessary so to do for the more efficient discharge of its functions under this Act, it may, with the concurrence of the State Government and the Central Government, frame by notification in the Official Gazette a scheme or schemes providing for the establishment of one or more subsidiary corporations.
2. A scheme framed under sub-section (1) shall specify the subsidiary corporation or corporations which shall become established there under, the date or dates with effect from which they shall be so established, the powers and functions of the parent Corporation which such subsidiary corporation or corporations may exercise and discharge, the conditions and limitations subject to which such powers may be exercised, the management of the affairs of each such sub sidiary corporation by a Board of Directors, the capital of each such subsidiary corporation and all other matters relating to such subsidiary corporations corresponding to the various matters for which provisions have been made in this Act with respect to the parent Corporation:

Provided that-

1. no subsidiary corporation shall start operation on any new route without the previous approval of the parent Corporation;
2. the representatives of the Central Government on the Board of Directors of a subsidiary corporation shall be in proportion to its contribution to the capital of the parent Corporation;
3. the liability of the Central Government to provide contribution to the capital of the subsidiary corporation or to the parent Corporation shall not be increased without the approval of the Central Government;
4. a subsidiary corporation shall have a Managing Director, a Chief Accounts Officer and a Financial Adviser or a Chief Accounts Officer-cum-Financial Adviser, and, such officers shall be appointed by the State Government;
5. the State Government and the parent Corporation shall have power to give directions to a subsidiary corporation in respect of any matter, including directions relating to recruitment, conditions of service and training of the employees of the subsidiary corporation, wages to be paid to such employees, reserves to be maintained by the subsidiary corporation;
6. the capital budget, the revenue budget an development plans of a subsidiary corporation shall be submitted for approval to the parent Corporation and where such budget, or plan involves any deficit, also to the State Government.

3. Every subsidiary corporation established under a scheme framed under sub-section (1) shall be a body corporate, by the name specified in the scheme having perpetual succession and a common seal and shall by the said name sue and be sued.

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