The Punjab Finance Commission for Panchayats and Municipalities Act, 1994

PUNJAB GOVT GAZ., (EXTRA.), APRIL 19, 1994 (CHTR. 29, 1915 SAKA, 
DEPARTMENT OF LEGAL AND LEGISLATIVE AFFARS PUNJAB 
Notification 
The 19th April, 1994 
No 8-Leg./94.-Ihe following Act of the Legislature of the State 
of Punjab receive! the assent of the Governor of Punjab on the 19th April, 1994, and is hereby published for general informotion :-
THE PUNJAB FINANCE COMMISSION FOR PANCHÁYATS AND 
MUNICIPALITIES ACT, 1994 
(Punjab Act No. 8 of 1994) 
AN 
ACT 
to provide for the constitution of the State Finance Commission 
to review the financial position of the Panchayats and 
Municipalities in the State and to make recommendations in 
terms of the provisions of Article 243-1 and Article 243-Y 
of the Constitution of India. 
25 
BE it enacted by the Legislature of the State of Punjab in the Forty 
fifth Year of the Republic of India as follows : 
1. () This Act may b called the Punjab Finance Commission 
for Panchayats and Municipalities Act, 1994. 
(2) It shall con: into force at once. 
2. In this Act, unless the context otherwise requires, 
(a) Fiaan CTmmission" means the Punjab Finance 
Com nission for Panchayats and Municipalities constituted 
under section 3 of this Act ; 
(b) Governor" means Goveraor of the State of Punjab; 
(c) "Member" means a member of the Finance Commission 
and includes its Chairman ; 
(d) the expressions "Municipality"" and "Panchayat" shall have 
the same meaning as assigned to them under article 243 
of the Constitution of India ; 
(e) *Prescribed" means prescribed by rules made under this 
Act ; 
(f) "State Government" means State Government of the State 
of Punjab. 
3. () As soon as may be within one year from the commence 
ment of the Constitution (Seventy-third Amendment) Act, 1992 and 
thereatter at the expiration of every fifth year, the Governor of Punjab 
Shall by Notification, constitute a Finance Commission to e called the 
Punjab Finance Commission for Panchayats and Municipalities for reviewing the financial position of Panchayats and Municipalities and 
1or making recommendations in terms of the provisions of Article 243-l 
and Article 243-Y of the Constitution of India. 
Short title and 
commencemen t. 
Definitions. 
COnstitution of 
Finance Com 
mjssion. 
PUNJAB GOVT GAZ. (EXTRA.), APRIL 19, 1994 25 
(CHTR. 29, 1915 SAKA, 
DEPARTMENT Ot LEGAL AND LEGISLATIVE AFFAIRS PUNJAB 
Notification 
The 19th April, 1994 
No  8-Leg./94. —The following Act of the Legislature of the State of Punjab receive ! the assent of the Governor of Punjab on the 19th 
April, 1994, and is hereby published for general informotion :—- 
THE PUNJAB FINANCE COMMISSION FOR PANCHAYATS AND 
MUNICIPALITIES ACT, 1994 
(Punjab Act No. § of 1994) 
AN 
ACT 
to provide for the constitution of the State Finance Commission 
to review the financial position of the Panchayats and 
Municipalities in the State and to make recommendations in 
terms of the provisions of Article 243-1 and Article 243-Y 
of the Constitution of India. 
BE it enacted by the Legislature of the State of Punjab in the Forty- 
fifth Year of the Republic of India as follows :— 
1. (I) This Act may bz called the Punjab Finance Commission 
for Panchayats and Municipalities Act, 1994. 
(2) Tt shall come into force at once. 
2. In this Act, unless the coatext otherwise requires,— 
(@) “Finance Commission” means the Punjab Finance 
Commission for Panchayats and Municipalities constituted 
uader section 3 of this Act ; 
(b) “Governor” means Governor of the State of Punjab ; 
(¢) “Member” means a member of the Finance Commission 
and includes its Chairman ; 
(d) the expressions “Municipality” and “Panchayat” shall have 
the same meaning as assigned to them under article 243 
of the Constitution of India ; 
(¢) “Prescribed” means prescribed by rules made under this 
Act ; 
(f) “State Government” means State Government of the State 
of Punjab. 
3. (I) As soon as may be within one year from the commence 
ment of the Constitution (Seventy-third Amendment) Act, 1992 and 
thereafter at the expiration of every fifth year, the Governor of Punjab 
shall by Notification, constitute a Finance ‘Commission to be called the 
Punjab Finance Commission for Panchayats and Municipalities for 
reviewing the financial position of Panchayats and Municipalities and 
for making recommendations in terms of the provisions of Article 243-1 
and Article 243-Y ofthe Constitution of India. 
Short title and 
commencement, 
Definitions. 
Constitution of 
Finance Com- 
mission.
Qualifications 
for appointment 
as Chajrman 
and Members 
of Finance 
Commission. 
Persons haying 
financial Or 
other interests 
not to be appoin 
ted as Members 
of Finance 
Commission. 
Disqualifications for being mem 
ber of Finance 
Commission. 
26 PUNJAB GOVT GAZ.. (EXTRA.), APRIL 19, 1994 
(CHTR. 29, 1916 SAKA) 
(2) The Finance Commission constituted under 
shall consist of a Chairman and four other Members lo be appointcá 
by the Governor of Punjab. 
(3) The Finance Commission shall have its headquarters at Chandi garh or at such other place as imay be notified by the State GOVer 
ment from time to time. 
sub-section () 
4. The person to be appointed as Chairman of the Finance 
Commission shall have an experience in public affairs and the persons to be appointed as Members thereof shall 
(a) have special knowledge and experience in economic and 
financial matters relating to Panchayats ; or 
(b) have special knowledge and experience in economic and 
financial matters reating to Municipalities ; or 
(c) have wide experience in financial matters and in adminis 
tration ; or 
(d) have special knowledge of economics. 
5. () Before appointing a prson as a Chairnan or Member of 
the Finance Connission, tha Goverao: shallsitisfy himself that the 
pYrson to be so appointe 1 h1s nT finansial o: any othsr iaterest as is ikely to affect prejudicialiy his fuaztio13 as Cairnan or Mnber of 
the Finance Commission. 
(2) After the appointment of Chairman and Members of the Finance Commission, the Govet nor shall also satisfy himself from time to time with respect to the Chairman and Members of the Finance Commission that they may have no financial or any other interest as 
is likely to affect prejudicially their functions as Chairman or Members of the Finance Commission and for that purpose the Governor may 
require the Chairman and the Members to furnish to him such infor mation as he considers necessary with a view to satisfy himself as to 
whether the Chairman or the Members have any such interests. 
6. A person shall be disqualified for being appointed as, or for 
being a Member, of the Finance Commission, 
(a) if he is of unsound mind ; 
(6) if he is an undischarged insolvent ; 
(C) if he has been convicted of an offence involving moral 
turpitude ; or 
(a) if he has such financial or any other interest as is likely to 
a Member of the 
affect prejudicially his functions as 
Finance Commission. 
Qualifications 
for appointment 
as Chairman 
and Members 
of Finance 
Commission. 
Persons having 
financial or 
other interests 
not to be appoin- 
ted as Members 
of Finance 
Commission. 
Disqualifications 
for being mem- 
ber of Finance 
Commission. 
26 PUNJAB GOVT GAZ. (EXTRA), APRIL 19, 1994 
(CHTR. 20, 1916 SAKA) 
(2) The Finance Commission constituled under sub-section (n 
shall consist of a Chairman and four other Members (0 be appointeq 
by the Governor of Punjab. 
(3) The Finance Commission shall have its headquarters at Chand;. 
garh or at such other place as may be notified by the State Govern. 
ment from time to time. 
4. The person to be appointed as Chairman of the Finance 
Commission shall have an experience in public affairs and the persons tq 
be appointed as Members thereof shall— 
(a) have special knowledge and experience in economic and 
financial matters relating to Panchayats ; or 
(b) have special knowledge and experience in economic and 
financial matters relating to Municipalities ; or 
(¢) have wide experience in financial matters and in adminis- 
tration ; or 
(d) have special knowledge of economics. 
5. (I) Before appointing a p:rson as a Cnairman or Member of 
the Finance Commission, th: Goveraor shall sitisfy himself that the 
parson to be so appointed his no financial or any other interest as is 
likely to affect prejudicially his fuactioas as Carman or Mamber of 
the Finance Commission. 
(2) After the appomntmeat of Chairman and Members of the 
Finance Commission, the Governor shall also satisfy himself from time 
to time with respect to the Chairman and Members of the Finance 
Commission that they may have no financial or any other interest as 
is likely to affect prejudicially their functions as Chairman or Members 
of the Finance Commission and for that purpose the Governor may 
require the Chairman and the Members to furnish to him such infor- 
mation as he considers necessary with a view to satisfy himself as to 
whether the Chairman or the Members have any such interests. 
6. A person shall be disqualified for being appointed as, or for 
being a Member, of the Finance Commission,— 
(a) if he is of unsound mind ; 
(6) if he is an undischarged insolvent ; 
(©) if he has been convicted of an offence involving moral 
turpitude ; or 
nterest as is likely to d) i i i ther i X (d) if he has such financial or any oth BR or of ther 
affect prejudicially his functions as 
Financz Commission.
PUNJAB GOVT GAZ., (EXTRA.), APRIL 19, 1994 
(CHTR. 29, 1916 SAKA) 
7. Every nember of the Finance Gommission shall hold ofricc for such period as may be specilied in the order of the Governor appoint ing him as such but shall be eligible for reappointment : 
Provided that he may, by a letter addressed to the Governor, 
resign his office, at any time prior to the period specified in his 
8. The Chairman and Members of the Finance Commission shall 
render whole time or part time service to the Finance Commission as 
the Governor may in each case specify and there shall be paid to the Chairman and Members of the Finance Commission such foes or 
salaries and such allowances as the State Government may, prescribe 
from time to time. 
27 
9 The Finance Commission shall review the financial position of 
the Panchayats and Municipalities and make recommendations to the 
Governor 
(A) in the case of Panchayats as to 
(a) the principles which shall govern 
(i) the distribution betw3en the State and the Panchayats of the net procecds of the taxes, duties, tolls and fees 
leviable by the State, which may be divided between 
them and the allo cation between the Panchayats at 
all levels of their respective shares of such proceeds : 
(i) the determination of the taxcs, duties, tolls and fees which 
may be assigned to, or appropriated by the Panchayats ; 
and 
(iii) the grants-in-aid to the Panchayats from the Consoli 
dated Fund of the State ; 
(B) in respect of Municipalities as to 
Term of office 
Members. 
(6) the measures needed to improve the financial position of 
the Panchayats ; and 
(a) the principles which shall govern 
of 
(c) any other matter referred to the Finance Commission by 
the Governor in the interests of sound finance of the 
Panchayats ; 
Conditions of 
service and 
salaries and 
allowançes of 
Functions of the 
Finance Co m 
mission. 
(i) the distribution between the State and the Municipalities 
of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them under this Act and the allocation between the 
Municipalities at all levels of their respective shares of 
such proceeds; 
appointment letter. 
Members. 
PUNJAB GOVT GAZ., (EXTRA), APRIL 19, 1994 
(CHTR. 29, 1916 SAKA) 
7. Every member of the Finance Commission shall hold office for 
such period as may be specified inthe order of the Governor appoint- 
ing him as such but shall be eligible for reappointment : 
Provided that he may, by a letter addressed to 
resign his office, at any time prior to the period 
appointment letter. 
the Governor, 
specified in his 
8. The Chairman and Members of the Finance Commission shall 
render whole time or part time service to the Finance Commission as 
the Governor may in each case specify and there shall be paid to the 
Chairman and Members of the Finance Commission such fees or 
salaries and such allowances as the State Government may, prescribe 
from time to time. 
9. The Finance Commission shall review the financial position of 
the Panchayats and Municipalities and make recommendations to the 
Governor— 
(A) inthe case of Panchayats as to— 
(a) the principles which shall govern— 
(i) the distcibution betweza the State and the Panchayats 
of the net procesds ofthe taxes, duties, tolls and fees 
leviable by the State, which may be divided between 
them and the allocation between the Panchayats at 
all levels of their respective shares of such proceeds ; 
(ii) the determination of the taxes, duties, tolls and fees which 
may be assigned to, or appropriated by the Panchayats ; 
and 
(iti) the grants-in-aid to the Panchayats from the Consoli- 
dated Fund of the State ; 
(b) the measures needed to improve the financial position of 
the Panchayats ; and 
(¢) any other matter referred to the Finance Commission by 
the Governor in the interests of sound finance of the 
Panchayats ; 
(B) in respect of Municipalities as to— 
(¢) the principles which shall govern— 
(i) the distribution between the State and the Municipalities 
of the net proceeds of the taxes, duties, tolls and fees 
leviable by the State, which may be divided between 
them under this Act and the allocation between the 
Municipalities at all levels of their respective shares of 
such proceeds ; ’ 
Term of office 
of Mcmbers. 
Conditions of 
service and 
salaries and 
allowances of 
Members. 
Functions of the 
Finance Co me= 
mission.
RawmttendatiuN 
Stale Legislaturz. 
ules. 
UNAOV UNZ,NLA) ArL , 1994 
ooted d ofhe Nate : 
popit y thc 
Mnleipalities frou the 
() o0e e0ded (o improvo Iho mncial position 
(it) Nmmoning nd onlorcing tho 
() egjuiring the produotion of any 
() amy othor ntter rofored to the Finance Commission by (he owomor in he mterost of sond nance of the Muniepalitie., 
Toes 
0 The lanwo (ommiaion slhall detormine its proccdurc in the |oemanco ot' it umwtions and shall have al! (ho powers of a civil 
attendanco of witnesses 
document : and 
(e) toquisitioning auy public rocord from any court or office. 
SS 59 LR () Govt. I'ress, UT, Chd, 
11, The Governor slall cuse every recommendation made by the Financo Commission undor this Aet together with xplanatory memoran dum as (o the action taken theroon to be laid belore the Legislature of the Salc, 
12. () The Stato Govotmont muy by Inotification make rules for carrying out tho purposs oths Act 
(2) Bvery rule made undor this section shall be laid as soon as may be, after it is made, before the House of the State Legislature, while it is in sess on for a total poriod ol ten days, which may be comprised in one session or in two or moro sucCessiVe sessions, and if, before the expiry of the sessio 1 in which it is so laid or ho successive sessions aforessaid, the House agres in making any modiication in the ru'c or the House agrees, that the rule should not be made, the rule shall thereatter have cilet only in such modified form or be of o ctteet, as (he case may be, so, Ihowever, that any such moditicat on or uuulment slhall be without prejudice to the validity of nything preiously done or onmitted to be done under that rule. 
GURDEV SINGH, 
Additional Secretury to Goverument of Punjab, Deparnent of Legal and Legislaive Affains. 
out under ho codo o (vl Procedure, 19038 while trying a suit in oet ot the ollowing attor, nanicly : 
Pande and 
owas ob inane 
RUIN ETIN 
Raovoum mendations 
of Fame La 
mission We we 
and betwee the 
Ntate Lopistanay 
Power 
© oules 
Womake 
‘ 0H, 
lL VUMIA TR COVE GN (ERI) ALIEEE 1904 
Corben HAKAN) 
Gov he detention ol We Cen, dation, tals on ul 7 
Whey ny Te asin dao appropriated hy gg 
Ate patitenid 
iY te pant ead fe tHe Noidcipatitics Tron (he 
Conrrolinted nd of the Sete 
WD he eines needed to dmprove (he Linancinl 
of the Maicipaditien and 
fronsition 
matter colerred to the mance Commission by 
finance of the WY any whe 
the Clovernor in the mterests ol qotind 
NMundvipandition 
0 the Diane Commission shall determime its procedure in the 
performance of i functions and shall have al’ the powers of a cil 
cot under the code of Civ Procedure, 1908 while trying a suit in 
respect ol the following matters, namely 
GO) summoning and onloreing the attendance of witnesses ; 
WY requiring the production of any document; and 
(@) requisitioning any public record fron any court or office. 
1, The Governor shall cause every recommendation made by the 
Finance Commission under (his: Act topether with explanatory memoran- 
dum as to the achion taken thereon to be laid before the Legislature of 
the State, 
12. (I The State Government may by 
for carrying out the purposs of ths Act 
notification make rules 
(2) Every rule made under this section shall be laid as soon as 
may be, after it is made, before the House of the State Legislature, while 
it 1s in sess on for a total period of ten days, which may be comprised in 
one session or in two or more successive sessions, and il, before the expiry 
of the session in which it is so Laid or the successive sessions atoressaid, 
the House agrees in making any modification in the ru'e or the House 
agrees, that the rule should not be made, (he rule shall thereatter have 
cttect only wesuch modified form or be of no effect, as (he case may be, 
so, however, that any such moditicat on or noulnent shall be without 
prejudice to the validity of anything previously done or omitted to be 
done under that rule. 
GURDEV SINGH, 
Additional Secretary to Government of Punjab, 
Department of 1 egal and Legislative Affairs. 
SRO TR (IY Govt Press, UT, Chd,

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