LexThe Gujarat Local Fund Audit Act, 1963
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Open in Lexace · Ask the AI about this act1963 : Guj. XLIX] Gujarat Local Fund Audit Act, 1963
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GOVERNMENT OF GUJARAT
LEGISLATIVE AND PARLIAMENTARY AFFAIRS DEPARTMENT
Gujarat Act No. XLIX of 1963
Gujarat Local Fund Audit Act, 1963
(As modified up to the 31st October, 2012)
[1963 : Guj. XLIX Gujarat Local Fund Audit Act, 1963
THE GUJARAT LOCAL FUND AUDIT ACT, 1963.
CONTENTS.
PREAMBLE
SECTIONS PAGE NO.
1. Short title, extent and commencement.
2. Definitions.
3. Liabilities of local authorities to submit their accounts for audit.
4. Accounts to be submitted for audit at such period or periods as may be required.
5. Power of auditor to require production of documents and attendence of persons
concerned etc.
6. Penalty for disobeying requisition under section 5.
7. Audit report to be sent to certain officers and bodies as State Government may
direct.
8. Contents of audit report.
9. Local authority to remedy defects: Procedure to be followed after report of the
Examiner under section 7
10. Commissioner to surcharge or charge illegal payment or loss caused by gross
negligence or misconduct.
11. Recovery of surcharges and charges how made.
12. Application against order of surcharge or charge.
13. Expenses in respect of requisitions of auditors to be payable out of local fund.
14. Rules.
15. Repeal and Savings.
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1963 : Guj. XLIX] Gujarat Local Fund Audit Act, 1963
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GUJARAT ACT No. XLIX OF 1963.
[THE GUJARAT LOCAL FUND AUDIT ACT, 1963.] 1 ๏ช
[13th November, 1963. ]
Amended by Guj. 7 of 1968.
An Act to consolidate and amend the law, to provide for and regulate the audit of
local funds under the management or control of certain local authorities in the State of
Gujarat.
It is hereby enacted in the Fourteenth Year of the Republic of India as follows :-
1. (1) This Act may be called the Gujarat Local Fund Audit Act, 1963.
(2) It extends to the whole of the State of Gujarat.
(3) It shall come into force on such date as the State Government may, by
notification in the Official Gazette, appoint.
2. In this Act, unless the context otherwise requires,-
(a) "auditor" means the Examiner or any other person empowered by the State
Government to perform the functions of an auditor under this Act;
(b) "Chairman" means the president or chairman of the local authority and in cludes
in the case of a dissolved or superseded local authority, the person or persons
lawfully appointed to exercise the powers and perform the duties of such local
authority 2[and where such local authority is a gram panchayat, the expression
"Chairman" includes the Sarpanch of such panchayat];
(c) "detailed audit" means an audit of accounts for whole year;
(d) "Examiner" means an officer appointed by the State Government to be the
Examiner of Local Fund Accounts 3[and includes any officer appointed by the State
Government to perform all or any of the functions of the Examiner under this Act
generally or in respect of any class of local authorities].
(e) "local authority" means a local authority as defined in clause (26) of section 3 of
the Bombay General Clauses Act, 1904 includes a school board constituted under
the Bombay Primary Education Act, 1947;
(f) "local fund" means any fund to the control or mana gement of which a local
authority is legally entitled and in cludes the proceeds of any cess, rate, duty or tax
which such authority is legally entitled to impose, and any property vested in such
authority;
(g) "prescribed" means prescribed by rules made under this Act;
(h) "special audit" means an audit of accounts pertaining to a specified item or series
of items requiring through examination.
3. The accounts of any local authority whose accounts are declared by the State
Government, by a notifi cation in the Official Gazette, to be subject to audit under this Act
shall, notwithstanding anything contained in any enactment by which such local authority is
constituted or in any rules made there under, be subject to audit in all respects in the mann er
provided by or under this Act.
4. The Chairman of every local authority, whose accounts are declared under section 3 to be
subject to audit under this Act, shall present o r cause to be presented for audit all account of
its local fund in such manner and form as may be pre scribed to the auditor yearly or at such
period or periods as may be required by the Commissioner.
5. (1) For the purpose of any audit under this Act, an auditor may-
(a) require in writing the production at the head office of the local authority
of such vouchers, statements, returns, correspondence, notes or other
documents in relation to the accounts as he may think fit;
Short title,
extent and
commencement.
definitions.
Bom. I of
1904.
Bom. LXI of
1947.
Liability of
local
authorities to
submit their
accounts for
audit
Accounts to be
submitted for
audit at such
period or periods
as may be
required.
Power of auditor
to require pro-
duction of
documents and
attendance of
persons
concerned ect.
[1963 : Guj. XLIX Gujarat Local Fund Audit Act, 1963
(b) require in writing any salaried servant of the local authority accountable
for, or having the custody or control of such vouchers, statements, returns,
correspondence, notes or other doc uments or any person having directly or
indirectly, by himself or his partner, any share or interest in any contract
with or under the local authority to appear in person before him at the head
office of the local authority, and answer any question;
(c) in the event of an explanation being required from the Chairman or other
honorary officer or member of a local authority, in writing, invite such
person to meet him at the head office of the local authority and shall in
writing specify the point on which his explanation is required;
(d) exercise all or any such other powers as may be prescribed.
(2) The auditor may, in any requisition or invitation made under sub-section (1) fix a
reasonable period, not being less than three days, within which the said re quisition
or invitation shall be complied with.
(3) The auditor shall give to the local authority not less than two weeks' notice in
writing of the date on which he proposes to commence the audit.
(4) Notwithstanding anything contained in sub -section (3), the auditor may, for
special reasons recorded in writing, give a notice of period lesser than two weeks or
if the Government, the Commissioner or the Examiner so directs, commence a
special or detailed audit without giving any notice.
6. (1) Any person who wilfully neglects or refuses to Comply with any requisition
lawfully made upon him under clause (a) or clause (b) of sub-section (1) of section 5
shall be liable, on conviction before a Magistrate, to a fine which may extend to one
hundred rupees.
(2) No proceedings under this section shall be instituted except on the written
sanction of the Commissioner.
(3) Before giving sanction under sub -section (2), the Commi ssioner shall call upon
the person to show cause why the sanction should not be given.
(4) No court inferior to that of a Magistrate of the first class shall try any offence
against this Act.
7. As soon as practicable after the completion of the audit, but not later than three months
thereafter, the Examiner shall prepare a report on the accounts audited and examined and
shall send such report to the local authority concerned and copies thereof to such officers
and bodies as the State Government may direct.
8. The Examiner shall include in his report a statement ofโ
(a) every payment which appears to him to be contrary to law,
(b) the amount of any deficiency or loss which appears to have been caused by the
gross negligence or misconduct of any person.
(c) the amount of any sum received which ought to have been but is not brought into
account by any person, and
(d) any other mate rial impropriety or irregularity which he may observe in the
accounts.
9. (1) On receipt of a report under section 7, the Chairman shall remedy any defects or
irregularities which may have been pointed out in the report, and shall place the
report, together with a statement of the action taken or proposed to be taken thereon
and an explanation in regard thereto before a meeting of the local authority. He shall
also, within four months of the receipt of the report, send to the Examiner intimation
of his having remedied the defects or irregularities, if any, pointed out in the report,
or shall, within the said period, supply the Examiner any further explanation in
regard to such defects or irregularities as the local authority may wish to give.
Penalty for
disobeying
requisition under
section 5.
Audit report to be
sent to certain
officers and
bodies as State
Government may
direct.
Contents of
audit report.
Local Authority
to remedy
defects :
Procedure to be
followed after
report of the
Examiner under
section 7.
1963 : Guj. XLIX] Gujarat Local Fund Audit Act, 1963
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(2) On receipt of such intimation or explanation the Examiner may, in respect of all
or any of the matters discussed in his report,
(a) accept the intimation or explanation given by the Chairman and withdraw
the objection, or
(b) direct that the matter be re -investigated at the next audit or at any earlier
date, or
(c) hold that the defects o r irregularities pointed out in the report or any of
them have not been removed or remedied.
(3) The Examiner shall send a report of his decision to the Commissioner within one
month of the date of the receipt by him of the intimation or explanation of th e
Chairman referred to in sub -section (1) or in the event of the Chairman failing to
give such intimation or explanation, on the expiry of the period of four months
mentioned in the said sub -section and shall forward to the Chairman a copy of such
report specifying therein in particular the portions thereof to be published under sub-
section (4). If the Examiner holds that any defects or irregularities have not been
removed or remedied he shall state in the report whether, in his opinion, the defects
or irre gularities can be regularised and if so, by what method; and if they do not
admit of being regularised, whether they can be condoned and, if so, by what
authority, He shall also state whether the amounts to which the defects or
irregularities relate should, in his opinion, be surcharged or charged :
Provided that in the case of report on the accounts of such local authorities
as are specially notified by the State Government in this behalf the report referred to
in this sub-section shall be sent by the Exa miner to such officer, being the head of a
department, as the state Government may direct specifying therein in particular the
portions thereof to be published under sub section (4). Such officer shall take such
action as may be necessary regarding any de fects or irregularities falling under
clause (c) of sub-section (2) which may have been brought to notice in the report. If
he is of the opinion that the amounts to which any such defects or irregularities
relate should be sur charged or charged, he shall forward the report to the Commi -
ssioner together with his recommendation in that behalf.
(4) The local authority concerned shall publish in its next administration report, such
portions of the report under sec tion 7 as deal with defects and irregularitie s falling
under clause (c) of sub -section (2) together with the explanation thereof, if any,
given under sub-section (1) and the final report of the Examiner thereon under sub -
section ( 3), such report of defects and irregularities, explanation and final re port
shall be open to the inspection of the public at the office of the local authority for a
period of one month from the date of their receipt and shall also be published in the
Gujarati language in any newspaper circulating in the district selected by the local
authority within one month of the receipt by it of the copy of the report sent to the
Commissioner under sub-section (3) ;
Provided that-
(i) a local authority, whose annual income is less than Rs. 1,00,000 but
exceeds Rs. 50,000 may, instead of so publishing the whole of such report of
defects and irregularities, explanation and final report in such newspaper,
publish in such newspaper a summary thereof in the Gujarati Language and
(ii) a local authority, whose annual income is Rs. 50,000 or les s, may,
instead of so publishing such report of defects and, irregularities, explanation
and final report in the newspaper, publish the fame by affixing a copy
thereof at its office and at such other conspicuous places within its limits as
it may think fit and simultaneously notify in the Gujarati language in a
newspaper circulating in the district selected by the local authority the fact of
such publication.
(5) If the Chairman fails to give the intimation or explanation referred to in sub -
section (1) within the period therein mentioned the Commissioner may, at the
instance of the Examiner, publish in the Gujarati language the whole of the
Examiner's report under section 7, or such portions thereof as are specified by the
Examiner under sub -section (3), together with any ob servations which the
Commissioner may make thereon in any newspaper circulating in the district which
[1963 : Guj. XLIX Gujarat Local Fund Audit Act, 1963
the Commissioner may select and the cost of such publication shall be forthwith paid
by the local authority concerned. If such cost is not so paid, the Commissioner may
make an order directing any person, who for the time being has custody of any
moneys on behalf of the local authority, as its officer, treasurer, banker or otherwise,
to pay the amount of such cost from such moneys as he may have in his hands or
may from time to time receive, and such person shall be bound to obey such order.
Every payment made pursuant to such order shall be sufficient discharge to such
person from all liability to the local authority in respect of any amount paid by him
out to the money of the local authority so held by him.
(6) Nothing in this section or in section 8 shall preclude the Examiner at any time
from bringing to the notice of the Commissioner, for such action as the
Commissioner may consid er necessary, any information which appears to the
Examiner to support a presumption of criminal misappropriation or fraud or which
in his opinion deserves special attention or immediate investigation.
10. (1) The Commissioner may, after considering the reco mmendation of the Examiner,
or, as the case may be, of any head of a department, under sub -section (3) of section
9 and after taking the explanation of the person concerned, or making such further
inquiry, as he may consider necessary, disallow any item which appears to him to be
contrary to law and surcharge the same on the person making, or authorizing the
making of, the illegal payment; and may char ge against any person responsible
therefor the amount of any deficiency or loss caused by the gross negligence or
misconduct of that person, or, any sum received which ought to have been but is not
brought into account by that person and shall, in every s uch case, certify the amount
due from such person.
(2) The Commissioner shall state in writing the reasons for his decision in respect of
every surcharge or charge and shall send by registered post a copy thereof to the
person against whom it is made.
(3) If a person to whom a copy of the Commissioner's decision is sent under sub -
section (2) refuses to take delivery thereof he shall be deemed to have duly received
it on the day on which it was refused by him.
11. (1) Every sum certified by the Commissioner to be due from any person under sub -
section (1) of section 10 shall be paid by such person into the treasury or bank in
which the funds of the local authority concerned are lodged, within one month from
the receipt by him of the decision of the Commissioner, unless within that time such
person has applied to the Court or to the State Government as provided in section 12.
(2) The said sum, if not duly paid or, if an application has been made to the Court or
to the State Government against the decision of the Commissioner as provided in
sub-section (1) of section 12, then,-
(i) such sum as the Court shall declare to be due, shall be recoverable, on an
application made by the Collector to the Court, in the same w ay as an
amount decreed by the Court in favour of the Collector.
(ii) such sum as the State Government shall declare to be due, shall be
recoverable as arrears of land revenue under the law relating to collection of
land revenue in force in the area.
12. (1) Any person aggrieved by any order of surcharge or charge made by the
Commissioner under sub -section (1) of section 10 may, within one month from the
receipt by him of the decision of the Commissioner, either-
(a) apply to the District Court to set aside such order; and the Court, after
taking such evidence as it thinks nece ssary, may confirm, modify or remit
such surcharge or charge and make such order as to costs as it thinks proper
in the circumstances; or
(b) in lieu of such application apply to the State Govern ment which shall
pass such orders thereon as it thinks fit.
(2) Pending disposal of the application all proceedings on the certificate shall be
stayed if the person aggrieved makes out a prima facie case for a stay order.
Commissioner to
surcharge or
charge illegal
payment or loss
caused by cross
negligence or
misconduct.
Recovery of
surcharges and
charges how
made.
Application
against order
of surcharge or
charge
1963 : Guj. XLIX] Gujarat Local Fund Audit Act, 1963
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13. All expenses incurred by a local aut hority in complying with any requisition of an
auditor under sub-section (1) of section 5 shall be payable out of its local fund.
14. (1) The State Government may make rules, not in consistent with this Act, for the
purpose of carrying into effect the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power,
such rules may provide for all or any of the following matters, namely:-
(a) the manner and form in which the accounts of a local authority, whose
accounts are subject to audit under this Act, shall be kept and presented ;
(b) the powers and duties of auditors and the procedure to be followed by
them for conducting an audit and t he times at which such audit may be
conducted;
(c) the manner in which all matters required to be published under this Act
shall be published; and
(d) any other matter which is expressly required or allowed by this Act to be
prescribed by rules.
(3) The power to make rules conferred by this section is subject to the condition of
the rules being made after previous publication.
(4) All rules made under this section shall be laid for not less than thirty days before
the State Legislature as soon as possi ble after they are made, and shall be subject to
rescission by the State Legislature or such modification as the State Legislature may
make during the session in which they are so laid, or the session immediately
following.
(5) Any rescission or modificat ion so made by the State Legislature shall be
published in the Official Gazette and shall thereupon take effect.
15. (1) On the commencement of this Act the Bombay Local Fund Audit Act, 1930, that
Act as applied to the Kutch area of the State and the Saurashtra Local Fund Audit
Act, 1952 shall stand repealed.
(2) The provisions of the Bombay General Clauses Act, 1904, apply to such repeal :
Provided that anything done or any action taken under the provisions of the
Acts hereby repealed shall be deemed to have been done or taken under the
corresponding provisions of this Act and shall continue in force until superseded by
anything done or any action taken under the provisions of this Act :
Provided further that the repeal of the Bombay Local Fund Audit Act, 1930
shall not affect the continuance of amendments made section 16 thereof in the
Bombay District Municipal Act, 1901 and the Bombay Municipal Boroughs Act,
1925.
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1 For Statements of Objects and Reasons, see Gujarat Government" Gazette, Part V, September 1963, p. 321.
๏ช This Act was assented to by the Governor on the 8th November, 1963.
2 These words were inserted by Guj. 7 of 1968, s. (2) (i).
3 These words were substituted for the words "and includes the Assistant Examiner of Local Fund Accounts if appointed by the State Government " ibid., s. 2
(ii).
Expenses in
respect of
requisitions of
auditors to be
parable out of
local fund.
Rules.
Repeal and
Savings.
Bom. XXV of
1930 Sau. Act
VII of 1952.
Bom. I of 1904.
Bom. XXV of
1930 Bom. III
of 1901. Bom.
XV-III of
1925.