Tamil nadu act 005 of 1923 : Tamil Nadu State Aid to Industries Act, 1922

Section 1. Short title

1. Short title.- (1) This Act may be called the ⁴[Tamil Nadu] State Aid to Industries Act, 1922.

(2) It extends to the whole of ⁵(the ²[State of Tamil Nadu]).

Section 1-A. Definitions

⁶1-A. Definitions.- In this Act-

⁷[(i) ‘cottage industry’ means an industrial business or enterprise carried on in any premises to which the Factories Act, 1948 (Central Act LXIII of 1948) does not apply and includes dairy-farming, bee-keeping and keeping a poultry-farm;]

⁸[(i-a) ‘sanctioning authority’ means any authority, officer or other person authorized to grant aid by or under this Act:]

⁹[(ii) ‘small-scale industry’ means an industrial business or enterprise the capital invested in which does not exceed five lakhs of rupees].

¹[(ii-a) ‘transfer’ with all its grammatical variations and cognate expressions includes sale, exchange, mortgage, charge, lease or gift;]

²[(iii] ‘village industry’ means any industry which forms the normal occupation, whether whole time or part time, of any class of the rural population of the ³(State)].

Section 2. Director of Industries and Commerce

2. Director of Industries and Commerce.- The ⁴[State Government] may appoint any officer or other person to perform all or any of the functions of the ⁵[Director of Industries and Commerce] under this Act.

Section 3. Board of Industries

3. Board of Industries.- (1)(a) There shall be constituted a Board of Industries consisting of ⁶[] not more than twelve members including the Chairman and the ex-officio members. Not more than three of the members shall be Government officials.

(b) One of the members shall be elected by the members for the time being of the Madras Chamber of Commerce; one by the members for the time being of the Southern India Chamber of Commerce; one by the members for the time being of the Madras Trades Association; ⁷[] two by the members of the ⁸[Tamil Nadu ⁹Legislative Assembly] ¹[and one by the members of the ²(Tamil Nadu Legislative Council)]. The election shall be conducted in such manner as may be prescribed. A return of the name of every person so elected shall be made to the ³[State Government] by the Chairman of the Chamber or Association concerned and by the Secretary to the ⁴(Legislative Assembly), ⁵(and the Secretary to the Legislative Council) respectively, and such return shall be published in the ⁶(Official Gazette).

(c) The ⁷[⁸(Director of Industries and Commerce), Tamil Nadu], and the Secretary to the ⁹(State Government) in the Finance Department shall be ex-officio members of the Board of Industries.

(2) The Chairman and the remaining members shall be appointed by the ³(State Government) by notification in the ⁶(Official Gazette), provided that if banking or mufassal interests and cottage industries are not represented by election, members so appointed shall include, as far as possible, persons who represent such interests or industries.

(3) The Board of Industries shall assist the ³(State Government) in dealing with applications for the grant of State aid under this Act.

(4) No member shall vote on or take part in the discussion of any question coming up for consideration at a meeting of the Board of Industries if the question is one in which he has any direct or indirect pecuniary interest by himself or his partner or in which he is interested professionally on behalf of a client or as agent for any person other than ¹[the Government or a local authority].

Section 4. No aid except is accordance with the provisions of the Act

4. No aid except is accordance with the provisions of the Act.- No aid shall be given by the ²[State Government] to any industrial business or enterprise except in accordance with the provisions of this Act.

Section 5. Industries to be aided

5. Industries to be aided.- (1) The industries to which aid may be given under this Act shall be such as have an important bearing on the economic development of the country and shall be:

(a) new or nascent industries, or

(b) industries to be newly introduced into areas where such industries are undeveloped, or

(c) cottage industries ³[, or

⁴[(cc) small-scale industries, or]

(d) old or established industries:

⁵[]

(2) No such aid shall be given to any joint-stock company unless:

(a) the same is registered in India on a rupee capital, and

(b) the company conforms to such rules as may be made by the ¹[State Government] from time to time requiring that a minimum number or a proportion of the members of its board of management shall be ²[citizens of India],

³[Every recipient] of aid under this Act shall make such provision for the training of apprentices as the ¹[State Government] may, from time to time, prescribe.

(3) The decision of the ¹[State Government] as to whether the conditions of this section are fulfilled shall be final ⁴[and shall not be called in question in any Court of law].

Section 6. Method of giving State aid

6. Method of giving State aid.- Subject to the provisions of this Act and of the rules framed thereunder, the ¹[State Government] shall have power to give aid to an industrial business or enterprise in one or more of the following ways:-

(a) by granting a loan;

(b) by guaranteeing a cash credit, overdraft or fixed advance with a bank;

⁵[(c) by paying a subsidy for the conduct of research or for the purchase of implements or machinery or for any other specific purpose;]

(d) by subscribing for shares or debentures;

(e) for guaranteeing a minimum return on part of the capital of a joint-stock company;

(f) by making a grant on favourable terms of land, raw material, firewood or water, ¹[which is the property of the State];

²[(g) by supplying at concessional rates electric energy, from a source ¹(which is the property of the State.)]

Section 7. [Omitted]

7. [Omitted]- ³[* * *].

Section 8. Application for State aid and procedure in dealing with applications

8. Application for State aid and procedure in dealing with applications.- (1) Any person desiring to obtain a loan or other aid for any industrial business or enterprise shall make his application to the ⁴(Director of Industries and Commerce) in such form and shall furnish such information concerning his business as may be prescribed.

(2) If the extent of the aid applied for exceeds Rs. 50,000 and in any other case in which he considers this procedure necessary, the ⁴[Director of Industries and Commerce] shall publish a notice in the prescribed manner calling upon any person who objects to the grant of the aid applied for to state his objections at a time or place to be specified, and shall hear such objection and make such inquiry as may necessary.

⁵[(5) Every application for aid exceeding in amount or value twenty-five thousand rupees shall be placed before the Board of Industries for advice].

(4) The ¹[State Government] may constitute district committees for the purpose of advising on applications for aid.

(5) No aid shall be granted under this Act if the Board by a unanimous resolution at a meeting advises the rejection of the application.

Section 9. Grant of loans

9. Grant of loans.- No loan shall be granted of an amount exceeding ²[75 per cent] of the ³[net value of the assets of the industrial business or enterprise and of any other property offered as collateral security for the loan, after deducting in both cases easing encumbrances], such value to be ascertained by such person as may be appointed by the ¹[State Government] and in accordance with such rules as may be prescribed; for the purpose of this valuation the additional assets which may be created by the expenditure of the sums granted may be taken into account to such extent as may be prescribed⁴ …..

Section 10. Loans how secured

10. Loans how secured.- ⁵[(1)(a) Every loan granted under this Act shall be secured by a mortgage upon the whole or such portion of the assets of the business or enterprise as the sanctioning authority may consider sufficient and where the whole of the assets of the business or enterprise is in the opinion of the sanctioning authority insufficient, by such collateral security as may be required by the sanctioning authority and shall bear interest payable on such dates and at such rates as the State Government may determine.

(b) A mortgage executed under clause (a) after the commencement of the ¹[Tamil Nadu] State Aid to Industries (Second Amendment) Act, 1961, shall have priority over all other claims against the assets secured by such mortgage.].

²[(1-A) Notwithstanding anything contained in sub-section (1), but subject to such conditions, restrictions and limitations as may be prescribed, loans may be granted under this Act on the personal security of the applicant, and every such loan shall bear interest payable on such dates and at such rates as the State Government may determine].

³[(2) Notwithstanding anything contained in ⁴[sub-section (1) or sub-section (1-A)], the State Government may direct that any loan granted under this Act to any industrial business or enterprise shall not bear any interest,]

Section 10-A. Prohibition of transfer of property without permission of the sanctioning authority

⁵[10-A. Prohibition of transfer of property without permission of the sanctioning authority.- (1) Where, before or after the commencement of the Tamil Nadu State Aid to Industries (Amendment) Act, 1961, any property has been taken as security for any loan granted or any grant made under this Act, the, notwithstanding anything to the contrary in any other law for the time being in force or in the deed of transfer or other document relating to such property, such property shall not be transferred without the written permission of the sanctioning authority.

(2) The sanctioning authority may, in its discrete by order, permit the transfer of any such property, if the transfer is made in furtherance of the purposes for which the loan was granted or the grant was made, and the assets resulting from the transfer are to be wholly utilized in furtherance of the said purposes.

Explanation-When granting permission under this sub-section, the sanctioning authority may impose such conditions as it may deem fit to ensure that the assets resulting from the transfer are wholly utilized in furtherance of the purposes for which the loan was granted or the grant was made; but a contravention of any such condition imposed on the transferor shall not invalidate the transfer.

(3) ff any such property is transferred without such permission, the transfer shall be null and void.

Section 10-B. Court not to each, sell, without permission the actioning authority

10-B. Court not to each, sell, without permission the actioning authority.- (1) No property referred to in section 10-A shall be liable to be attached, sold, or made subject to a charge by any court, whether in execution of a decree or order or otherwise, unless the person seeking such relief from the court has obtained the written permission of the sanctioning authority to do so and files such permission in court.

(2) When granting such permission, the sanctioning authority may impose such conditions as it may deem fit to secure the proper repayment of the loan or grant together with any interest chargeable thereon and cost, if any, incurred.

(3) If any such property is attached or sold, or a charge is created thereon by any court without the permission of the sanctioning authority having been obtained and filed as aforesaid, or if any condition imposed by the sanctioning authority when granting such permission is contravened, then, the attachment, sale or charge, as the case may be, shall be null and void.

Section 11. Inspection and returns

11. Inspection and returns.- In any case in which a loan has been applied for under this Act, the applicant, and at any time during the currency of a loan that has been granted under it, the grantee, shall be bound-

(a) to comply with any general or special order of the ¹[State Government] relative to the inspection of the premises, buildings, or plant or stock in hand of the industrial business or enterprise;

(b) to permit the inspection of all accounts relative to the industrial business or enterprise;

(c) to furnish full returns of all products manufactured or sold both as regards description and quantity;

(d) to maintain such special accounts or to furnish such statements as the ¹[State Government] may from time to time require;

(e) to submit the accounts of the industrial business or enterprise to such audit as the ¹[State Government] may prescribe.

Section 12. Control of business assisted

12. Control of business assisted.- In any case in which a loan or loans is or are granted under this Act amounting to two lakhs of rupees or upwards, the ¹[State Government) shall, and in any other case may, by the appointment of Government directors or otherwise take power to ensure such control over the conduct of the business or enterprise as shall suffice in their opinion to safeguard their interests.

Section 13. Repayment of loans

13. Repayment of loans.- (1) Every loan granted under this Act shall be made repayable by instalments within such, period from the date of the actual advance of the loan, on when the loan is advanced in instalments from the date of payment of the last instalment, as may be fixed by the order granting the loan.

(2) The period fixed as aforesaid shall not exceed twenty years unless the ¹[State Government] shall, by general or by special order, extend the same.

Section 14. Guaranteeing of loans by banks

14. Guaranteeing of loans by banks.- No guarantee of a cash credit, overdraft or fixed advance with a bank shall be given except under the conditions prescribed in sections 9 to 12 in respect of loans.

Section 14-A. [Omitted]

14-A. [Omitted]- ²[* * *].

Section 15. Subscriptions for shares or debentures or guarantee of a minimum return on capital

15. Subscriptions for shares or debentures or guarantee of a minimum return on capital.- The condition of subscription for shares and debentures by the ¹[State Government] or the guarantee of a minimum return on the capital of any industrial business or enterprise shall be that the business or enterprise shall be subject to the conditions of section 11 in respect of inspections and returns as well as of the provisions of section 12 in respect of Government control:

³[]

Section 16. Subsidy by the State Government

16. Subsidy by the State Government.- The condition ⁴[] of any payment under guarantee of a minimum return on the paid-up capital or of the grant of Government land, raw material, firewood or water on favourable terms, ⁵[or of the supply from a Government source of electric energy at concessional rates] shall ordinarily be that an amount equal to the sum paid or to the value of the grant ¹[or concession] as fixed at the time when it is made shall be repaid to the ²[State Government] at the close of a fixed term of years if within that term the industrial business or enterprise shall be shown to be paying interest or a dividend upon the capital invested in excess of such rate as the ²[State Government] may fix.

³[].

Section 17. Disposal of profits when condition of State aid is not fulfilled

17. Disposal of profits when condition of State aid is not fulfilled.- No recipient of State aid shall pay any dividend or distribute or take any profits in excess of such percentage rate upon the amount of the capital of the industrial business or enterprise as ⁴[the State Government] may fix from time to time until the conditions on which the State aid has been granted are fulfilled. The balance of the profits, after setting aside proper amounts for depreciation or obsolescence of plant and buildings, and for the payment of interest on debentures of loans, shall be carried to a reserve fund to be utilized in such manner as ⁴[the State Government] may approve.

Section 17-A. Grant of aid to cottage industries by the Director of Industries and Commerce

²[17-A. Grant of aid to cottage industries by the ¹[Director of Industries and Commerce].- ³[(1) The Director of Industries and Commerce may, subject to such conditions, restriction and limitations, if any, as may be laid down by the State Government, grant aid, in accordance with such rules as may be made under this Act for the purpose, to any cottage or small-scale industry up to an amount or value not exceeding twenty-five thousand rupees:

Provided that the Director of Industries and Commerce may, on the recommendation of the Board of Industries and subject to such conditions, restrictions, limitations and rules, as aforesaid, grant aid to any small-scale industry up to an amount or value not exceeding fifty thousand rupees,

(2) The decision of the ¹[Director of Industries and Commerce] to grant or not to grant aid in any case under sub-section (1) shall not be called in question in any Court of law.

(3) The powers conferred on the ¹[State] Government by section 12 may also be exercised by the ⁴[Director of Industries and Commerce] in cases where aid is ⁵[granted by the Director] under sub-section (1).

(4) Nothing contained in sections 3 and 8, and save as otherwise may be prescribed by rules made under this Act, nothing contained in sections 9, 10, 11, 14 ¹[] and 17 shall apply to any application for the giant of aid under sub-section (1) or to any case where aid is granted under that sub-section].

Section 17-B. Grant of aid to cottager small-scale industries by authorized officers

²[17-B. Grant of aid to cottager small-scale industries by authorized officers.- ³[*] The State Government may, by general or special order, authorize any officer or other person, subject to such conditions, restrictions and limitations, if any, as may be laid down by the State Government, to grant aid, in accordance with such rules as may be made under this Act for the purpose, to any cottage or small-scale industry up to an amount or value not exceeding ten thousand rupees in each case; and may by general or special order withdraw such authority.

⁴[(2) [* * *]]]

Section 17-C. Appeal

⁵17-C. Appeal.- (1) Any person who is aggrieved by a decision granting or refusing to grant aid under this Act may, within such time as may be prescribed, appeal-

(a) where the decision is that of the Director of Industries and Commerce, to the Suite Government;

(b) where the decision is that of any other authority, officer or person, to the prescribed authority or officer.

(2) The appellate authority may make such order in the case as it may think fit:

Provided that the appellate authority shall not pass any order prejudicial to any party unless he has had a reasonable opportunity of making his representations.

(3) Every order passed in appeal under this section shall, subject to the provisions of section 17-D, be final.

Section 17-D. Power of Government to call for records and pass orders

¹17-D. Power of Government to call for records and pass orders.- (1) The State Government may call for and examine the record of any officer or authority subordinate to them in respect of any proceeding to satisfy themselves as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order passed therein; and, if, in any case, it appears to the State Government that any such decision or order should be modified, annulled, reversed or remitted for reconsideration, they may pass orders accordingly:

Provided that the State Government shall not pass any order prejudicial to any party unless he has had a reasonable opportunity of making his representations.

(2) No application to the State Government for the exercise of their power under sub-section (1) shall be made in respect of any proceeding of any officer or authority other than the Director of Industries and Commerce or of any decision or order passed in any such proceeding unless an appeal had already been preferred in respect of such proceeding, decision or order under section 17-C and such appeal had been disposed of.

Section 18. Methods of recovery of money due

18. Methods of recovery of money due.- (1) All moneys payable under this Act, including any interest chargeable thereon and cost, if any, incurred, if not paid when due, may be recovered from the person added and his surety, if any, under the law for the time being in force as if they were arrears of land revenue.

(2) When any sum due as aforesaid is paid by the surety or is recovered from him or out of his property under sub-section (1) the Collector shall, on the application of the surety, so far as possible, recover the same from the person aided and pay the same to the surety.

Section 18-A. Exemptions

¹[18-A. Exemptions.- The State Government may, having regard to the value of the assets of any industrial business or enterprise or to the desirability of the State Government themselves granting aid directly to any industrial business or enterprise or if they consider that it would not be in the public interest to apply all or any of the provisions of this Act thereto, by order, exempt, subject to such conditions as they may think fit to impose, any industrial business or enterprise or class of industrial businesses or enterprises as they may specify in the order, from all or any of the provisions of this Act or of any rule or order made thereunder].

Section 19. Power to make rules

19. Power to make rules.- (a) The ²[State Government] may ³[by notification] make rules to carry out all or any of the purposes of this Act not inconsistent therewith.

(b) In particular and without prejudice to the generality of the foregoing power, they may make rules regulating all or any of the following matters:-

(1) the classes of industrial businesses or enterprises to which and the purposes for which aid may be given;

(2) the constitution of the Board of Industries, the term of office of its members, the quorum at the Board's meetings, the method of arriving at its decisions, the appointment of its staff, the remuneration of its members and all other matters relative to the conduct of its business; and the constitution and functions of district committees;

¹[(3) [* * *]]

(4) the manner of making applications for State aid and the information to be given in such applications, provided that no such rules shall require any applicant or grantee of aid to divulge any information relating to the technical details of any process or any patent owned by him;

(5) the manner of conducting inquiries and the matters to be specially inquired into in dealing with applications for State aid and the powers to be exercised by the ²[sanctioning authority] conducting such inquiries;

(6) the mode of ascertaining the value of the assets of an industrial business or enterprise; ³[or of any property offered as collateral security for a loan;]

(7) the nature of the security to be taken for the due application of loans and grants and the rates of interest at which and the conditions under which loans or grants may be given, and the creation of a mortgage, floating charge or collateral security under section 10;

(8) the inspection of the premises, buildings, plant and stock on hand and the accounts of any industrial business or enterprise for which State aid has been granted;

(9) the mode of keeping and auditing the accounts and of furnishing returns of any industrial business or enterprise in respect of which State aid has been granted;

(10) the appointment and functions of Government directors or the prescribing of other methods of control of industrial businesses or enterprises in respect of which State aid has been granted;

(11) the application of profits in cases in which the conditions under which loans or grants have been made have not been fulfilled;

(12) the guaranteeing by the¹ State Government of cash credits, overdrafts or fixed advances by banks and the recognition of banks for this purpose;

(13) the fixing of the period for the repayment of loans and the conditions and dates of the repayment of subsidies and grants;²[]

(14) the recovery of any moneys due under this Act,³[]

⁴[(15) the conditions under which and the security on which loans shall be granted or guarantees of a cash credit, overdraft or fixed advance with a bank given to any industrial business or enterprise under this Act;]

¹[and

(16) all matters connected with, or relating to, the grant of aid by the ²[Director of Industries and Commerce] under section 17-A, including all matters referred to in the foregoing clauses which are applicable to such grant].

³(c) All rules made under this Act shall be published in the Fort St. George Gazette and, unless they are expressed to come into force on a particular day, shall come into force on the day on which they are so published.

(d) Every rule made under this Act shall, as soon as possible, after it is made, be placed on the table of both Houses of the Legislature, and if, before the expiry of the session, in which it is so placed or the next session, both Houses agree in making any modification in any such rule or both Houses agree that the rule should not be made, the rule 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 rule.

Section 20. Powers of the State Government as regards starting or conducting industries and giving aid of certain kinds

20. Powers of the State Government as regards starting or conducting industries and giving aid of certain kinds.- Nothing in this Act shall be held to debar ⁴[the State Government]

(a) from starting or conducting industrial enterprise for experimental purposes or with a view to stimulate industrial development;

(b) from assisting an industrial business or enterprise by agreements to purchase on business terms the whole or a portion of the products of the same;

(c) from assisting an industrial business or enterprise by giving gratis or on favourable terms, the services of ¹[Government officials, experts or others] either in the capacity of advisers or for a limited period not exceeding one year for starting or conducting such business or enterprise;

(d) from assisting an industrial business or enterprise in connexion with industrial education or the training of apprentices;

²[(dd) from assisting any industrial business or enterprise in any other manner which may be determined by the State Government];

³[(e) from assisting a village industry in any manner which may be determined by the ⁴(State) Government];

⁵[(f) from establishing a company for the purpose of giving financial assistance to industrial concerns and enterprises or from subscribing for shares in, or in any manner aiding such company, on such terms and conditions as the ¹[State] Government may by general or special order lay down;

(g) from subscribing for shares in, or in any manner aiding, any industrial concern or enterprise, the paid-up capital of which exceeds thirty lakh; of rupees, on such terms and conditions as the ¹[State] Government may by general or special order lay down].

²[(h) from assisting any industrial business on enterprise in the purchase of implements or ???:

(i) from assisting in the marketing of product or the possession of any industrial business or enterprise.