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THE KERALA STATE AID TO INDUSTRU,S ACT, 1863
(Ac.t 34 of J 963)
CONTENTS
Preamble. Sections CHAPTER£ Preliminary l. Short title, e\.tent and commencement.
2. Definitions.
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CHAPTER II
The State aid to Industries Board
3. Constitution of State Aid to Industries Board. 4 . Tei m of office of members.
5. Resignation.
6. Removal of members .
7. Filling up of vacancies.
8. Presidency at meetings.
9. D1:.~olution of the Boarc.1.
10. In
CHAPTER III
General provisions regarding the giving of State Aid
11. Forms of State aid.
12. Conditions for the guarantee and granl under section 11 (c)
13.
14.
15.
16.
17.
18.
19.
20.
21.
:22.
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and (f). Conditions for grant of loan. Loans how secured.
Application for State aid and authorittc~ by whom aid may be granted.
Supervision of assisted industry. _
Iiispection and returns.
Disposal of profits when condit1011 of State aid is not fulfilled. Power of Government to adjust security during cunency of loans.
Power of autho11ty ::.anct1oning the loan to terminate ai
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Pcr:.011:, .:1.<.l111g u11Jc1 lhi:. Act tu Le dcc111cJ public ~crva11ts. l'endlry.
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CHAPETR IV
~pecial Provisions ReL\ting to the Giving of State Aid b)' the Supply of Machinery on Hire Purchase Systern
24:. Percentage of value to be deposited by hirer.
25. Parhcula1s to be specified m the order when applicat ior. is allowed.
26. Cond1tions of supply of maclunery on hi1 c purchase system. ?.7. Consequences of default by lurer.
28. Option of hirer to purch,ue machinery seized for default.
29. Tcrmmatlon of hiring by hirer.
30. Liab11ity of hirer on termination of hiring under sections 27 and 29.
31. Termination of hiring on µayment of cost of maclunery.
32. Revision.
33. Review of orders l>y Government.
34. Fees. CHAPTER v
Miscellaneous
35. Mode of recovery of money due.
36. Power to make 1 ulcs. :37. Repeal.
Act 3i of 1963 •
THE KERALA STATE AID TO INDUSTRIES ACT, 1963
A1t Acl to co11solzdate and amend the laws rclatmg lo tltc gwing of Stale aid to industries tit the State of Kerala.
Preamblc.-WHEREA<::> 1t 1s expedient to consolidate and amend the Jaws relating to the giving of State a id to industries m the State of Kerala,
BL 1l euacled iu the Fourteenth Ye.:0 oi the Repuuhc of lml1a as follows:-
CHAl'TER I
Preliminary
l. Short tille, extent and comme11cemenl .-( 1) This Act may be called the Kerala State Aid to Industnes Act, J 963.
(2) It extends to the whole of the State of Kerala.
• R LC< 1vcd lhc as'cnc of the Go' Ltno1 on th~· 29th day of 0Ltobcr ; 1963 and puLh~h<..J 111 LhL C..1.t:Lll1,. L, u ao1
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(3) lt shall come into force on such date as the Government rnay, by no tification m the Ga~ettc, appomt.
2. Difwilzo1zs.-In this Act, unless the context otherw1~e 1c · qu1res,-
(l) ·Board' means the State A1d to Industries Board comututtd under section 3,
(2) 'comp.my' means a company as defined m section 3 of the Compames Act, 1956 (Central Act I of 1956) and includes a foreign company within the meaning of section 591 ol that Act;
(3) 'Director' means the Director of Industries and Commerce and includes any person appointed by the Government either by name or by virtue of his office to perform all or any of the functton$ of the Director of Industries and Commerce under this Act ;
( 4) 'industry means any indust11al business or enterprise con- ducted io the State by any ind1v1dual, institution, company, association or body of individuals whethc1 mcot·porated or not and includes a cottage industry, a small scale industry, and a village industry ; but shall not mclude an industry organised on co-operattve basis which is eligible for financial assistance from the Cemral or State Government or a Co-ope1ative Bank under any specific development programme i
(5) ' cottage mdustry • means an mdust11al business or entc1 pn~ c.imed on m any premise to which the Factone:. /\ct, 1948 (Central Act 63 of l 948) , do(!!, not apply , and includes dairy fanning, bce-keepmg and keepmg a poultry farm ;
(6) ' small :.cale indust1 y ' mean:. an 1 ndustnal business or en tel - pnse the capital mvested in which does not exceed five lakhs of rupees ;
(7) 'village industry' means any indu!.try which form!> the normal occupation, whethe1 whole-time or part-time, of any class of the rural population of the State ;
{BJ 'machinery' includes plant, apparatus, tools aud other appli- ances required fo1 the purpose of carrymg on any tndust11al operation or process;
(9) ' vwner' means the person who owm any 111dustnal unde1. takrng .md includes the s1.\cccssor-in-mtercl>t of such pcr:.0 11 in respect of :,uch undertaking;
Ac...t ;
(10) •prescribed' me.ins p1escnbcd by 1ules m.ide under this ( 1 l ' ~td.tc' mean:. the ~late of Ket ala ; ( 12) 'State aid' muns .rny aid g1ve11 b y 01 on behalf of the liovcrument unde1 the prov1s10n:. of th1l> Act and the 1 ules, ii any, made thereunde1.
CHAPTfR 11
The State aid te Industries Board
3. -.Constrtution of State Aid lo lndusl1ies Board.-( l ) The1 e shall be constituted a State aid to Industries Board cons1st10g of the following members, namely.-
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/ (a) 1 lic Director ol lu
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(b) An officer of the Finance Department of the Government Sec1etdriat not below the r.mk of a Joint Secretary to be nominated by the Government ,
(c) An office1 of the Industi ies Department of the Government Secretariat not belov. the rank of a Deputy Secretary to be nominated by the Government ;
(d) Three members lo be elected by the members of the Kcrala \.. ; Legislative Assembly ft om among themselves in accordance with 1 lic ..I\ system of p1op01 t1onal 1epresentauon by means of the <;ingJe transferable j vote;
(e) Three members rep1esenti11g industrial and commercial interests to be nominated by the Gove1 nment ,
(f) Two members representmg organised trade unions to be nominated by the Government , and
(g) One member representing economtSts or statisticians to be nominated by the Government.
(2) The Director of Indust1 ies and Commerce shall be the Chair· man of the Board.
(3) The nomination> elect1on, resignation or 1emovcl of the members of the Board shall be notified by the Government in the G..L~ette.
(4) The Board shall assist the Gove111menl m dealing with c1.pphcations for the grant of !:>tc1.te aid unde1 this Act.
(5) All questions at a meetmg of the Boctrd shall Le decided by the vole:. of the m aJOl ity of the members prc::.cnt and voling.
(6) No member !>hall vote on or tc1.kc pa1 t in the discus:.ion of c1.ny questiou coming up fot con~idcration .it a meeting of the Board if the questJ011 is one in which he has any direct or i11direcl pecunia1 y interest by himi,clf or his partner 01 in wluch he i:. i11lc1csted profcss1onally on behalf of a chent 01 a:, agent for any person o the1 thau the Government or a local authority.
( 7) No proceeding:. of the Board :ihall be deemed lo be invc:th
4. Term of office of membcrs.-Subject to the provJStons of this Act every member of the Board other than the Ex ojf1c10 member shall hold office for a penod of three years from the date of the fin.t meeting of the Board but shall be eligible for re.nomination or re·electJon, as the case may be:
Provided that a member who~e term of office has expired shall contiuuc to hold office untll his successor assumes office :
Provided further that a member nominated or elected under sub section (1) of section 3 :ihall cease to be a member of the Board-
(t) in the case of a member nominated under clause (h) or· clause (c) of sub.section ( l) of section 3, when he ceases to be an officer of the Finance Department or the Industries Department as the ~..i.sc may be; ,
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(ii) in the case of a member elected under clause (d) of sub- section ( 1) of section 3, when he ceases to be a member of the Legisla- tive Assembly ; and
(ttil in the case of a member nommated under clause (e) or clause
(f) or clause (g) of sub-section (I ) of section 3, m the opinion of Llie Government, when he ceases to have the rep:esentativc capacity specified in the said respective clauses,
but the member shall continue to hold office until the vacancy is filled up :
Provided also that a member nominated or elected to fill a casual vacancy shall assume office forth\·V1th, but shall hold office so Jong only as the member in whose place he is nominated or elected as the case may be, would have been entitled to hold office if the vacancy had not occurred.
5. Resignation.-Any membe1 of the Board other than the ex ojf.icio member may resign by tendering his resignation in wi·iting to the Government and, on such resignation being accepted by the Govern- ment, shall be deemed to have vacated office.
6. Removal of mcmbe1s.-(I) The Government may 1emove from office a ny member of the Boa1 d other than the ex ojficio member if he- ( a) becomes subject to any physical oi mental disability, which, in the opinion uf the Government rendeis him unfit to he d member of the Board, 01
(b) is convlcted of any l>uch ollem.e or is ~ul>jected by any Criminal Cou1 t to any :.uch order a:. lll the opmion of the Government implies a defect ol charactc1 which rende1 ~ lrnn unlit to contmue as a member of the Boai cl, 01
(c) without excuse suffk1ent in the op1111011 of the Board, absents himself without the consent of the Board from more than tlu ec consecutive meetings of the Board, or
(d) contravenes the provis1oni. of sub-section (6) ol section 3 :
Provided that before removing any member from his office under this sub-section he shall be given an oppoi tunity to c;how cause agamst the action proposed to be taken.
(2) The Govetnmcnt may, by nollficatiou in t i1e Gatatte, h>.. ct pe11od dt.mng which any peison so iemoved i.hall not IJe eligible for re- nomination or re-election, as the case may be.
7. Filling up of vaca11cies:-Whcn the office of any member of the Board becomes vacant by the expiration of his term, i·csignation, 1 emoval oi death, a new member :>hall ue nominated or elected, as the case may be, to fill the vacancy.
8. Presulcncy al meetmgs.- (1) The Cha irman !>hall p1eside at tltc ~etings of the Board and·:-hall have and exercise a second oi castmg ' otc in the case of au equality of votes.
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(2) In the absence of the Chairman, an officer of the Govc1n- ment 1n the Board, shall preside and he shall while so pt es1ding, have all the po,-ve1s of the Chairman.
(3) No business shall be transacted at any mectmg of the Board unless one-half of the sancuoned number of membe1s of the Board are present a t the meeting.
9. l)tmolut1on of the Board.- lf, 111 t he opinion of the Gove111- rr.ent, the Board persistently makes default m the performance of the duties imposed on it, or exceeds or abuseq its powers, the Govern- ment may, b y nottficat1on rn the Gazette, dissolve the Boa1 d and there- upon the Chauman and the other members of the Board shall be deemed to have vacated their offices and all the functions of the Board shall thereafter be exercised by such person or persons as may be appointed m that behalf by the Government until a new Board 1s constituted by the Government :
Provided that no order of d1ssolut1on shall be passed unless the lloard is given an op pot tunity to show cause against the action prop . sed to be taken.
I 0. l ndustnes whzclt may be aided.-( I) The 111dustnes to wluch aid may be g1ve11 under this Act :,hall be such as havean impo1 tant beating on the cco11omic development of the country and :,hall be-
(z) a new or na'icent industry; (u ) an industry to be newly establtshed m an a rea where such mdustnes are undeveloped or ate hkely to be successful ;
(m) an industry which 1s hkcly to become more profitable by an investment ot more capital ;
(iu) small scale industnes ;
(v) cottage mdustnes ; (ui) old or established industt ies ; or (vtt) such other mdustnal concerns, as ;n the opi111on of the Government, deserve State aid to be given m conformity with the provisions of this Act :
Provided that no State aid shall be given to any joint stock l..ompany unless-
(i) the company is registered u1 India with a rupee c·ap1la1 , and
(u) the company agrees to maintain the p1escriued propo1 tM1 of Indians a:s members of its Board of Duec tor!> :
Provided further that every recipient of State a id shall mclJ..c such provision for the training of apprentices as may be pre~cribed.
(2) The decision of the Government after consulting the Board as to whether the conditions of this section .ire fulfil/eel shall be fiua:"'- and ~h
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CHAPTI:R III
General provisions regarding the giving of State Aid
11. Forms of Stale azd.-Subject to the provisions of this Act and of the 1 ulcs made thereunder, the Government shall have power to give State aH.l to an industry 111 one or more of the follovmig ways:-
(a) by granting a Joan;
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(b) by ~uaranteeing of cash credit, overdraft or a fixed advance with a bank ; .
(c) by taking folly paid up shares or debentures:
Provided that the amount paid by the Government for such ~hares an
(e) by guaranteeing a minimu.n return on the whole or part of the capital of a joint stock company,
(j) by the granting on favourable terms of land, raw materials, firewood, water or any other property of the Government subject to such terms and com'1tions as respects the repayment of the value of the aid granted, as may be prescribed;
(g) by paying a subsidy for the conduct of research or the purchase of machinery subject to such terms and conditions as respects the repayment of the value of the aid granted, as may be prescribed;
(h) by supplying machinery on hire purchase system.
12 Conditions for the guarantee and grant under section I! (e) and (f).- The condition for any payment under ~uarantce of a minimum return on the whole or part of the capital of a Joint stock .company or for the grant by the Government of land, raw materials, fit ewood, wate1· or any other p1 operty on favourable terms shall ordmanly be that an amount equal to the sum paid or to the value of the grant or concession as fixed at the time when it 1s paid, shall be repaid to th<" Government at the close of a fixed term of yea1 s if within that term the industry shall be shown to be pay mg inte1 est or a d1v1dend upon the capital mvested n excess of such !'ates as the Government may fix.
13. Conditions for 1.Jra11! of lom1.-(l) No loan shall exceed the pt esc1 ibcd perccntagr of the value of the assets of the industry to which it 1s gr,mtrd and of otlrcr prope1 ty, if any, offered as collateral security without cJeductmg the encumb1ances, 1f any, existing thereon at the time whe11 the appl1cat1on for the Joan 1s made, the value bcmg a~certaincd by the sam.tionmg authority ill the p~escnbcd manner.
(2) No loan shall be g1,rnted if the encumbrances on the assets of the industry an
-isting industry and tlurty-three and one third per cent m the case of a new industry.
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(3) The authority granting the loan shall, from out of the loan discha rge a ll encumbtanccs on the assets o f the industry and othet pro- perty, 1J any, offered as collate1al security existing at the time when the apphcatton for the loan is made, and shall secure a firc;t charge on the as<>et:. and other property aforesaid.
(4) Every lc,an sha ll be repayable in mstalments within a period not exc:eedmg twenty years a fte1 the date of advance of the loan, or where the loan is advapced in instalments, after the date of the advance of the last instalment.
(5) In spec1~l cases the Government, for reasons to be recorded in wntmg, ma} , on the application of the owner of an industry to which such loan has been g1anted, vary the terms fixed by the order granting the loan.
(fi) All the 1ns111able assets of the applicant offered as security shall be msured against loc;c; or damage with the State In'iurancc Depart- ment and the polac:y assigned II\ favo111 of the Direct<>r of Tnclustrics and Commerce.
14. Loanr how secured.-Every loan granted under this Act shaJI 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 1s in the opinion of the sanctioning authority msuffic1ent, 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 Go- vernment may determine.
15. Appltcatio11for State aid and authorities by whom aid may be granted.-( l } All applications for State aid sha ll be made in the prescri- bed form to the District Industries Officer of the concerned district. The District Industries Officer shall make such enquiries as may be prescribed and su«;h other enqumes as he deems fit on every such appli- cation. In the case of an appl1cat1on in which the sanctioning authority under sub·'lection (4) is the Regional j oint Director of Industries and Commerce, the Director 01 the Government, the District Industries Officer sha ll forward the application to the sanctioning authority together wit h the report of the enquiry conducted by him. Where the sanction mg authority is the Director, the application shall be forwarded to him through the Regional J oint Director of Industries and Commerce and where the '5anctionmg authority ts the Govern1T.ent , the application shall be forwarded to the Government through the Regional joint Director of Indust11es and Commerce and the Director.
(2) If the extent of the State aid applied for exceeds fifty thousand rupees and in an y other case in which he so considers the D1rccto1 c;ball publish a notice in the pre~cnbed manner , callmg upon any pe1son who objects to the grant of t he State aid applied for co state his objections at a time and p lace to be specified by the Director and shall hear such objections and make such enquiry as may be necessary.
(3) Every application for State aid exceeding Rs, 15,000 shall be placed before the Board a nd shall be granted only with its concur- rencf",
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(4) Subject to the provisions of sub-section (3) the following authorities ~hall be competent to grant as State aid the amount or value specified against each :-
District Industries Officer
Regional Jomt Dnector of
I nduscries and Com-
merce
Director
Government
Not exceeding five thouc;and
rupees,
Exceeding five thousand, but
not exceeding ten thousand
rupees.
Exceeding ten thousand, but
not exceeding twenty-five
thousand rupees
Exceeding twenty-five thousand
rupees.
(5) Nothing in sub-section (4) shall be deemed to empower the District Industries Officer or Regional Joint Director of Industriec; and Commerce or the Director to grant State aid on different occasions in respect of the same mdustry, if the aggi·egate amount or value of such aid exceeds five thousand rupees or ten tbousand rupees or twenty-five thousand rupees, as the case may be.
16. Supervision of assisted industry.-During the continuance of State aid to any industry which has received aid under the Act, the Government may, by appoint!ng directors or Inspectors, or otherwise, take such steps as they deem advisable so to supervise the conduct of the industry as to safeguard the intersts of the Government therem. l 7. lnspeclton and retums.-In any case m which State aid has been applled for under this Act. the applicant and at any time during the currency of State aid that has been granted under it, the grantee, shall be bound-
(a) to comply with any general or special order of the Govern- ment relating to the 111spection of the premises, building, or plant or stock 11l hand of the industrial business or enterprise ;
(b) to permit the inspection of all accounts relating to the indus· t1 ial business or enterprises ;
(c) to furnish full returns of all products manufactured or sold both as regards descnpt1on and quantity ;
(d) to maintain such special accounts or to furnish such state· ments as the Government may from time to time require ,
(e) to subm 1t the accounts of the industrial bus111e5s or enterprise to such aud1t as the Govc1 nment may p1cscnbe.
18. Disposal of profits when condtlwn of State aid 1s 11ot fufjtlled.-( 1) During the continuance of State aid to any industry the profits of such industry shall, if d1stnbuted, be d1suibutcd only after intere-.t due on debentuies and loans has been paid and a 1 easonablc amount has been set aside for depreciation 01 obsolescence of machinery and buildings and a further reasonable amount has been carried to reserve fund to be utilised in the prescnbed manner.
(2) No dividend shall be paid to shareholders and no profit shall he taken by the owner in exce:,s of such percentage rate upon the
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amount of the capital of the industt y as the Government may fix from time to time during the continuance of State aid to any industry.
19. Powc1 of Govmnne11t lo ad1ust security during cwre11cy ef loans.- If at any time the amount of any loan oumandmg together with such interest as may be due thereon on account of any State aid given i<> found to exceed the percentage fixed under sub-section ( I ) of c;ecuon 13, the Government may either recove1 so much of such balance as is in excess of such percentage or take <;;uch additional or collateral security as they may deem sufficient.
' 20. Powe1 of authonty sa11ctw11ing the loan to terminate azd.-( I ) If the authority sanctronmg the loan is sati fied-
(i) that the whole or any portion of the State aid given has Leen misapplied, or
(u) that there has been a breach by the grantee of the aid of the provisions of this Act, or of any rule made thereunder or of any con- ditions of the grant, or
(zit) that the application on which the State aid has been granted contained or was accompanied by, any material statement by the g rantee of the aid which he knew to be false or d1d not believe to be true or any intentional concealment by h im of any material fact, which in the opinion of the authority sanctioning the loan 1t was his duty to disclose, or that any such false statement or concealment was intentionally made in any inquiry made under this Act by or with the connivance of the owner or in any return under this Act or in 1·eply to any requisition for informatio n under this Act, or
(w) that the industry is being managed in such manner as to endanger the repayment of the value of State aid g1anted thereto rep.t- yable under thi:. Act,
the authority may by order in writing terminate the State a id specifying the reason or reasons therefor.
(2 ) No such order as mentioned in sub-section ( 1) shall be passed w ithout giving the grantee an opportunity to show cause within a specified time why action should not be taken under this section.
(3) Where an order terminating the aid is made under sub. section (I), then, notwithstanding any th mg contained in this Act or m any other law, the authority sanctioning the aid may proceed to1ecover from the giantee of the aid, as arrea1s of land revenue,-
(a) the entire amount of any loan outstanding together with interest a'> may be due thereon, 01
(b) in ca<;es where the a id is g1ven otherwise than by loan, the money value of the aid as fixed at the time when it was made, together with interest due the1 con, and
(c) 1n the case mentioned in clause (a) orclause (b), the cost of recovery, and, if the Government so direct the cost of any inquiry made in connectjon therewith .
(4) An order made under this section shall be final and shaJI not be called in question in any court of law.
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