LexThe KeralaState Aid toIndustriesAct,1963-34of1963
Kerala · state statute
Open in Lexace · Ask the AI about this act~
•
,J
+
t99
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.
...
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<lustucs which may be aided,
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.
~3.
/
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<l.
' Protection of m:tion taken um.kt the Act.
\
Pcr:.011:, .:1.<.l111g u11Jc1 lhi:. Act tu Le dcc111cJ public ~crva11ts.
l'endlry.
/\.'\.._,
200
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 machine ry seized for default.
29. Tcrmmatlon of hiring by hirer .
30. Liab11ity of hirer on termination of hirin g 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 consolida te and amend the
Jaws relating to the giving of State aid to indu stries 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.
• RLC< 1vcd lhc as'cnc of the Go' Ltno1 on th~· 29th day of 0Ltobc r; 1963 and
puLh~h<..J 111 LhL C..1.t:Lll 1,. L, u ao1<l11i.r1 y, t.IJtLd 1th No\1..lllULI, , •
. ~
•
I
I
I
j
' \
!
I
•
I~
201
(3) lt shall come into force on such date as the Government
rnay, by no tification m the Ga~ettc, app omt.
2. Difwilzo1zs.-In this Act, unle ss the context otherw1~e 1c·
qu1res,-
(l) ·Board' means the State A1d to Indu stries 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 Direct or of Industrie s 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 Indu stries and Commerce under this Act ;
( 4) 'industry means any indust11al busines s or enterprise con
ducted io the State by any ind1v1dual, institution, compan y, association
or body of individuals whethc1 mcot·porated or not and includes a
cottage industry, a small scale industr y, 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 • mean s 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 appl y , and includ es dair y 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 whi ch form!> the
normal occupation, whethe1 whole-time or part-time, of any class of
the rural popu lation of the State ;
{BJ 'machinery' includes plant, apparatu s, tools aud other appli
ance s required fo1 the purpose of carrymg on any tndust11al operation
or process;
(9) ' vwner' means the person who owm any 111dustnal unde1.
takrn g .md includes the s1.\cccssor-in-mtercl>t of such pcr:.011 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 Indu stries Board cons1st10g of the following
member s, namely.-
'
/ (a) 1 lic Director ol lu<lusl11c :. and Couun e1<.e, c.\ tdfni o j
'
202
(b) An officer of the Finan ce 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 memb ers of the Kcrala \.. ;
Legislative Assembly ft om among themselve s in accordance with 1 lic ..I\
system of p1op01 t1onal 1epresentauon by mean s of the <;ingJe transferable j
vote;
(e) Three member s rep1esenti11g industria l and comme rcial
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 Governme nt.
(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~e tte.
(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 member s 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 dire ct 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 othe1 thau the Government
or a local authorit y.
( 7) No proceeding:. of the Board :ihall be deemed lo be invc:th<l
on account of any defect 01 irregularity in the Constitu tion of the Board
or any vacancy thereof.
4. Term of office of membcrs.-Subjec t 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 nom inated under clau se (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; ,
\
t
I I
I
203
(ii) in the case of a memb er elected under clause (d) of sub
section ( 1) of section 3, when he ceases to be a member of the Legisla
tive Assemb ly ; and
(ttil in the case of a memb er nomm ated under clause (e) or clause
(f) or clause (g) of sub-section (I ) of sectio n 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 sha ll 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 tha n the ex ojf.icio
member may resign by tendering his resignation in wi·iting to the
Government and, on such resignati on bei ng 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 membe r of the Boa1 d other than the ex ojficio member if he-
( a) becomes subject to an y physical oi mental disability,
whic h, 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 an y :.uch order a:. lll the opmion of the Government
implie s a defect ol charactc1 which rend e1 ~ lrnn unlit to contmue as a
member of the Boai cl, 01
(c) without excuse suffk1ent in the op1111011 of the Board,
absents himself withou t the consent of the Board from more than tlu ec
consecutive meetings of the Board, or
(d) contravenes the provi s1oni. of sub-section (6) ol section 3 :
Provided that before removin g any mem ber from his office under
this sub-section he shall be given an oppoi tuni ty to c;how cause agamst
the action proposed to be taken.
(2) The Govetnm cnt may, by nollficatiou in ti1e Gatatte , h>.. ct
pe11od dt.mng which any peison so iemoved i.hall not IJe eligible for re
nominat ion 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 exe rcise a secon d oi castm g
' otc in the case of au equality of vote s.
r. -
' _/
204
(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 mectm g of the Board
unle ss one-half of the sancuoned number of membe1s of the Board are
present at 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 performa nce of the
dutie s imposed on it, or exceeds or abu seq its power s, 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 functi ons 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 orde r 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 ndustn es 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 o r na'icent indu stry;
(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 provisi ons 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 provi sion for the training of apprenti ces as may be pre~c ribed.
(2) The decision of the Government after cons ultin g the Board
as to whe ther the condi tion s of this section .ire fulfil/eel shall be fiua:"'
and ~h<lll 11ot IJe called in qucst1011 111 ,my 1..ou1 t of l..1w. .
l
~
I
I
I ' I
i
~
205
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;
• (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<l debentures shall not exceed the amount already paid by
other persons for sha1 es and debentures in the same industry ;
(d~ by gua1 an teeing interest on preference shares or debentures,
(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 cap ital 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<l on othe1 property offe1 cd as collateral secut ity
cxeed 50 per cent of the value of such assets and collateral securities m
the c~se of an e>-isting industry and tlurty-three and one third per cent
m the case of a new industry.
206
(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 apphca tton for the loan is made, and shall secure a firc;t charge on
the as<>et:. and other property aforesa id.
(4) Every lc,an sha ll be repayable in mstalments within a period
not exc:eedmg twenty years a fte1 the date of adva nce of the loan, or
where the loan is ad vapced in instalment s, after the date of the advance
of the last instalment.
(5) In spec1~l cases the Government, for reasons to be recorded
in wntm g, 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 asse ts of the app licant offered as secur ity
shall be msured against loc;c; or damage with the State In'iura ncc Depart
ment and the polac:y assigned II\ favo111 of the Direct<>r of Tnclustrics and
Commerce.
14. Loanr how secured.-Every loan granted und er this Act shaJI
be secu red by a mortgag e upon the whole or such portion of the assets
of the business or enterprise as the sanctioning authority may conside r
sufficient and where the whole of the assets of the business or enterpri se
1s in the opinion of the sanc tionin g aut horit y msuffic1ent, by such
collate ral security as may be req uired by the sanc tioni ng 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 Indu stries Officer of the concerned district.
The District Indu stries Offi cer sha ll make such enquiries as may be
prescribed and su«;h other enqum es as he deems fit on every such appli
cation. In the case of an appl1cat1on in which the sanction ing authority
under sub·'lect ion (4) is the Regional j oint Director of Indu stries and
Commerce, the Director 01 the Government, the District Industrie s
Officer sha ll forward the app lication to the sanct ioning authority
togethe r 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 Industrie s and Commerce
and where the '5anctionmg autho rity ts the Govern1T.ent , t he applica tion
shall be forwarde d to the Government th rough the Regio nal joint
Dire ctor of Indust11es and Commerce and the Director .
(2) If the extent of the State aid ap plied for exceeds fifty
thousand rupees and in an y other case in which he so consi ders the
D1rccto1 c;ball publish a notice in the pre~cnbed man ner, callmg upon
any pe1son who objects to the grant of t he State aid applied for co state
his objections at a time and place to be spec ified by the Director and
shall hear such objections and make such enqui ry as may be necessary.
(3) Every application for State aid exceeding Rs, 15,000 shall
be placed before the Board a nd shall be gra nted only with its concur
ren cf",
.
I
l\. I
t:. f
I
I
J
l
I
,{
I
t
207
(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 Inspector s, or otherwi se,
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 product s 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
208
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 percenta ge 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 him 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 concea lme nt was
intentionally made in any inquiry made unde r this Act by or with the
connivance of the owner or in any return under this Act or in 1·eply to
any requisiti on for informati o 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 au thority may by order in writing terminate the State a id
spec ifying the rea son or reasons therefor.
(2 ) No such order as men tioned in sub-section ( 1) shall be
passed w ithout giving the grantee an oppo rtunit y 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 to1eco ver
from the giantee of the aid, as arrea1s of la nd revenue, -
(a) the entire amount of any loan outstanding together with
interest a'> may be due there on, 01
(b) in ca<;es where th e a id is g1ven otherwise than by loan, th e
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 clau se (a) orclause (b), the cost
of reco very, 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.
.
J
n . '
';