LexThe Telangana State Aid to Industries Act, 1976.
Telangana · state statute
Open in Lexace · Ask the AI about this actTHE TELANGANA STATE AID TO INDUSTRIES ACT, 1976.
(ACT NO. 53 OF 1976)
ARRANGEMENT OF SECTIONS
Sections
CHAPTER I.
PRELIMINARY.
1. Short title, extent, commencement and
application.
2. Definitions.
CHAPTER II.
BOARD OF INDUSTRIES.
3. Establishment and constitution of Board of
Industries and the term of office of its members, etc.
CHAPTER III.
GENERAL PROVISIONS REGARDING THE GRANT
OF AID.
4. Industries to which aid may be given.
5. Grant of aid by the Government.
6. Powers of the Director to grant aid.
7. Application for aid and procedure to be followed in
certain cases.
8. Security to be obtained for loan.
9. Prohibition of transfer of property without
permission of the sanctioning authority.
10. Courts not to attach, sell etc., without permission of
the sanctioning authority.
11. Inspection and returns.
2 [Act No. 53 of 1976]
12. Director to exercise powers of Government under
sections 8 and 11 in certain cases.
13. Control of business by Government in certain
cases.
14. Repayment of loans.
15. Training of Apprentices by recipient of aid.
16. Disposal of profits when condition of aid is not
fulfilled.
17. Power of Government to terminate aid on account
of default.
18. Fees.
19. Power of Government as regards starting or
conducting industries and giving aid of certain
kinds.
CHAPTER IV
MISCELLANEOUS.
20. Method of recovery of moneys due.
21. Protection of acts done in good faith.
22. Power to make rules.
23. Repeal and Savings.
THE TELANGANA STATE AID TO INDUSTRIES ACT, 1976.1
ACT No. 53 of 1976.
CHAPTER I.
PRELIMINARY.
1. (1) This Act may be called the 2Telangana State Aid to
Industries Act, 1976.
(2) It extends to the whole of the State of 2Telangana.
(3) It shall come into force on such date as the
Government may, by notification, appoint.
(4) It applies to cottage, Small -Scale and Village
Industries.
2. In this Act, unless the context otherwise requires:-
(a) “Board” means the Board of Industries established
under section 3;
(b) “cottage industry ” means in industrial business or
enterprise carried on in any premises to which the Factories
Act, 1948, does not apply;
(c) “Director” means the Director of Industries,
2Telangana and includes such other officer as may be
1. The Andhra Pradesh State Aid to Industries Act, 1976 received the
assent of the Governor on 18.08.1976. The said Act in force in the
combined State, as on 02.06.2014, has been adapted to the State of
Telangana, under section 101 of the Andhra Pradesh Reorganisation
Act, 2014 (Central Act 6 of 2014) vide. the Telangana Adaptation of Laws
Order, 2016, issued in G.O.Ms.No.45, Law (F ) Department, dated
01.06.2016.
2. Substituted by G.O.Ms.No.45, Law (F) Department, dated 01.06.2016.
Short title, extent,
commencement
and application.
Definitions.
Central Act 63 of 1948
2 [Act No.53 of 1976]
authorised by the Government to exercise the powers and
perform the functions of the Director under this Act;
(d) “Government” means the State Government;
(e) “industry” means any business or enterprise
relating to cottage small-scale or village industry conducted
or undertaken, by any individual, company or association or
body of individuals, whether i ncorporated or not, or by
Panchayat Samithi or Zilla Parish ad, and includes an
industry ancillary thereto;
(f) “notification” means a notification published in the
4Telangana Gazette and the word "notified" shall be
construed accordingly;
(g) “prescribed” means prescribed by rules made
under this Act;
(h) “small-scale industry ” means an industry with a
capital investment of an amount not exceeding rupees ten
lakhs, irrespective of the number of perso ns employed and
includes such ot her industrial business or enterprise with a
capital investment exceeding rupees ten lakhs but not
exceeding rupees fifteen lakhs as the Government may, by
notification, for reasons to be recorded therein, specify;
Explanation.- For the purpose of this clause the
expression “c apital investment ” means the inv estment on
plant and machinery only, calculated at the price paid by the
owner, irrespective of wheth er the plant and machinery are
new or second hand;
(i) “village industry” means an industrial business or
enterprise which forms the normal occupat ion, whether
whole-time or part-time of the rural population of the State.
[Act No.53 of 1976] 3
CHAPTER II.
BOARD OF INDUSTRIES.
3. (1) There shall be established by the Government by
notification, a Board of Industries for the State consisting of
not less than seven and not more than nine members to
advise the Government in re gard to the grant of aid under
this Act.
(2) The Board shall consist of the following members,
namely:-
(i) two officers of the Government, not below the rank
of a Deputy Secretary, to be nominated by the Government,
out of whom on e shall be from the Finance and Planning
(Finance-Wing) Department and the other from the
Industries and Commerce Department;
(ii) the Director, of Indu stries or the Additional
Director of Industries;
(iii) the remaining to be nominated by the
Government from among persons who ar e not holding any
office under the Central or the State Government and who
have practical experience or special knowledge in matter s
connected with a cottage, small-scale or village industry.
(3) One of the non -official members shall be appointed
by the G overnment, by notification, as the Chairm an of the
Board.
(4) The term of office of the non -official members shall
be such as may be specified, by the Government, from time
to time.
(5) The procedure to be followed at the meetings of the
Board, the manner of filling of casual vacancies among its
Establishment
and constitution
of Board of
Industries and the
term of office of its
members, etc.
4 [Act No.53 of 1976]
members and the manner of removing a member for
misconduct for failure to attend the meetings of the Board or
for other reasons shall be such as may be prescribed.
CHAPTER III.
GENERAL PROVISIONS REGARDING THE GRANT OF AID.
4. (1) An industry to which aid may be giv en by th e
Government under this Act shall have an important bearing
on the economic development of the country and shall be –
(a) a new or nascent industry;
(b) an industry to be introduced in any ar ea where
such industry is undeveloped; or
(c) an old or established industry:
Provided that the Government may, by notification and
for re asons recorded therein, declare that aid shall not be
given under this Act to any Industry specified in such
notification.
(2) No aid shall be given by the Government to any
Company as defined in section 3 of 3the Companies Act,
1956 unless the same is registered in India.
(3) The decision of the Government on any question as
to the industry to which aid may be given by the
Government under this Act shall be final and shall not be
called in question in any Court of law.
5. (1) Subject to the provisions of this Act and in
accordance with the rules made thereunder, the
3. See the relevant provisions of the C ompanies Act, 2013 (Central Act
18 of 2013).
Industries to
which aid may be
given.
Central Act 1 of 1956.
Grant of aid by
the Government.
[Act No.53 of 1976] 5
Government may grant aid to a ny industry by way of a loan
for all or any of the following purposes:-
(i) purchase of land and erection of buildings;
(ii) purchase of plant and machinery;
(iii) purchase of raw materials;
(iv) working capital or other incidentals necessary for
the purpose of carrying on the industry;
(v) paying the cost of employment of technical
specialists or experts and of training of personnel;
(vi) paying the cost of employment of managerial staff
by industrial co-operatives;
(vii) repayment of debts contracted for the purpose of
acquiring fixed assets;
(viii) recoupment and reimbursement of capital
invested within one year prior to the date of application for
the acquisition of fixed assets;
(ix) discharge of mortgaged debts secured on fixed
assets, not more than one year prior to the date of
application;
(x) payment towards the sh are capital of an industrial
co-operative subject to a maximum of seventy five per cent
of the share value or rupees one hundred and fif ty per
artisan, whichever is less.
(2) The loan that may be granted by the Government
under this section shall not exceed,–
6 [Act No.53 of 1976]
(a) rupees twenty -five thousand in the ca se of an
applicant who is an individual; and
(b) rupees two lakhs in the case of an applicant which
is an industry, not being an individual.
6. (1) The Director on an application made to him and
subject to such conditions, restrictions and limitations as
may be laid down by the Government, grant aid to any
industry for all or any of the purposes specified in section 5
in accordan ce with such rules as may be made in this
behalf:
Provided that the loan that may b e granted by the
Director to an industry shall not exceed rupees ten
thousand:
Provided further that the Governme nt shall have power
to control and revise any act or proceeding of the Director.
(2) The decision of the Government or the Director to
grant or not to grant aid i n any case under sub -section (1)
shall not be called in question in any Court of law.
(3) Nothing in sections 3, 11 and 14 shall apply to any
application for the grant of aid und er sub -section ( 1) or to
any case where aid is granted under that sub-section.
7. (1) Every application for aid of an amount exceeding
ten thousand rupees shall be made to the Director in the
prescribed form.
(2) As soon as m ay be after an application is made to
him under sub -section (1 ), the Di rector shall make such
enquiry as may be prescribed in regard to such application
and shall p lace the application together with this report of
inquiry before the Board. The Board shall consider the same
Powers of the
Director to grant
aid.
Application for aid
and procedure to
be followed in
certain cases.
[Act No.53 of 1976] 7
and make such recommendations to the Government as it
considers necessary and the Government may, after
consideration of the report of the Director and the
recommendation of the Board, grant aid to any industry.
8. (1) No loan shall be granted unde r this Act, where the
amount of the loan exceeds rupees two hundred, without
obtaining,-
(a) security of immovable property owned by the
applicant or two sureties therefor or of the plant and
machinery of the industry or of the immovable property as
well as the plant and machinery as aforesaid to the extent of
the aid granted, seventy five per cent of the market value of
the immovable property or the plant and machinery or the
immovable property as well as the plant and machinery , as
the c ase may be, being taken as the value thereof for the
said purpose; or
(b) security by way of mort gage or floating charge
upon the whole of the assets of the industry subject to any
encumbrance existing at the time when the loan is granted
and by such collateral security, if any, as may be required
by the Government:
Provided that where it is not possible to give security of
the immovable property as aforesaid the loan may be
granted on the personal security of two sureties on
production of their solvency certificate.
(2) The Government may, if considered necessary,
bind the applicant to invest such portion of the loan as
determined by them on permanent improvement to the
industry.
(3) Notwithstanding anything in sub -section (1 ), the
Government may, in the case of any indu strial co-operative
Security to be
obtained for loan.
8 [Act No.53 of 1976]
society, gr ant loan which may extend to an amount
equivalent to ten times the paid -up share capital of such
Industrial Co-operative Society subject to such condition as
may be prescribed.
9. (1) Where, before or after the commencement of this
Act, a ny property has been taken as se curity towards any
aid granted under this Act, then, 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 the
property, such property shall not be transferred without the
written permission o f the Government or Dir ector a s the
case may be, (hereafter in this section and section 10
referred to as the sanctioning authority).
(2) The sanctioning authority may, in it s discretion, by
order, permit th e transfer or any such property, after
satisfying it self th at the property remaining, after such
transfer, as security for the aid, is sufficient to secure the
proper repayment of the outstanding loan due to the
Government under this Act together with interest chargeable
thereon and the costs, if any, incurred and that the transf er
is in furtherance of the purpos es for which the aid was
granted and the a ssets resulting from the transfer are to be
wholly utilised in furtherance of the said purposes.
Explanation.- When granting p ermission under this
sub-section, the sanctioning authority may impose such
condition as it may deem fit to ensure that the assets
resulting from th e transfer are wholly utilised in furtherance
of the purpose for which the aid was granted, but a
contravention of any such condition imposed on the transfer
or shall not invalidate the transfer.
(3) Where any such property i s transferred without
such permission the transfer shall be null and void.
Prohibition of
transfer of
property without
permission of the
sanctioning
authority.
[Act No.53 of 1976] 9
10. (1) No property referred to in section 9 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 th e Court ha s
obtained the written permission of the sanctioning authority
to do so and files such permission in Court.
(2) When granting the permissio n the sanctioning
authority may impose such condition as it may deem fit to
secure the proper repayment of the loan together with any
interest chargeable thereon and costs, if any, incurred.
(3) Where any such property is attached or sold or a
charge i s created thereon by any Court without the
permission of the sa nctioning authority having been
obtained and filed as aforesaid or w here any condition
imposed by the sanctioning authority when granting such
permission is contravened, the attachm ent, sale or charge,
as the case may be, shall be null and void.
11. Where a loan has been applied for under this Act, the
applicant, and at any time during th e 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
Government, relating to the inspection of the premises,
building or plant or stock on hand of the industry;
(b) to submit the accounts of the industry to such audit
as may be prescribed.
12. The power exercisable by th e Government under sub -
section (2) of section 8 and under section 11, may also be
exercised by the Director in cases where aid is granted by
him under section 6.
Courts not to
attach, sell, etc.,
without
permission of the
sanctioning
authority.
Inspection and
returns.
Director to
exercise powers
of Government
under sections 8
and 11 in certain
cases.
10 [Act No.53 of 1976]
13. Where in any case, the amount of the loan given under
this Act amounts to or exceeds one lakh of rup ees, the
Government shall, and in any other case may, by the
appointment of Directo rs on their behalf or otherwise, take
steps, to ensure such control and supervision over the
conduct of the industry as shall suffice in their opinion to
safeguard their interests, and to satisfy themselves that the
loan is utilised for the purpose and the object for which it
was granted.
14. Every loan granted under this Act shall bear interest
from such date and at such rate as the Government ma y, in
each case or class of cases, determine and shall be payable
in installments within such period from the date of the actual
advance of the loan, or where t he loan is advanced in
installments, from the date of payment of the last
installment, as may be fixed by the order granting the loan:
Provided that the period so fixed shall not exceed ten
years unless the Government, by gen eral or special order,
extend the said period.
15. Every recipient of aid under this Act shall make such
provision for the training of apprentices as the Government
may, from time to time, prescribe.
16. No recipient of aid to any industry, other than a cottage
industry, shall p ay any dividend or distribute or take any
profits in exce ss of such rate of percentage upon the
amount of the capital of the industry as the Government
may, from time to time, fix until the conditions on which the
aid has been granted are fulfilled. The balance of the profits,
after proper amounts have been set aside fo r depreciation
or obsolescence of plant, machinery or buildings and for
payment of interest o n debentures or loans, shall be carried
to a reserve fund to be utilised in such manner a s th e
Government may approve.
Control of
business by
Government in
certain cases.
Repayment of
loans.
Training of
Apprentices by
recipient of aid.
Disposal of profits
when condition of
aid is not fulfilled.
[Act No.53 of 1976] 11
17. (1) The Government may, by order and for reasons to
be recorded therein , terminate aid in respect of an industry
on all or any of the following grounds,-
(i) that any portion of the aid granted has been
misapplied;
(ii) that there has been a breach by th e recipient of
aid of the provisions of this Act, or of any rules made
thereunder or, of any condition of the grant of aid;
(iii) that the application on which th e aid has been
granted contained o r was acc ompanied by any material
statement by the applicant which he knew to be false o r any
intentional concealment by him of any material fact, which in
the opinion of the Government, it was his duty to disclose or
that any such false statement or co ncealment was
intentionally made in any inquiry under this Act, by or with
connivance of the applicant o r in any return under the Act,
or in reply to any requisition for information under this Act;
(iv) that the industry is being managed in such
manner as to endanger the repayment o f the amount of the
aid granted the reto repayable under this Act, o r make i t
impossible to return the money value o f the aid under this
Act:
Provided that no such order shall be passed unless the
recipient is given an opportunity o f making his
representation.
(2) Notwithstanding anything in this Act, the
Government may, o n the terminati on of aid under
sub-section (1), proceed to recover from the grantee;
(a) the whole o f am ount of any loan o utstanding
together with such interest as may be due thereon;
Power of
Government to
terminate aid on
account of
default.
12 [Act No.53 of 1976]
(b) the cost of reco very, if any, and where the
Government so direct, the cost of any inquiry in c onnection
therewith.
(3) Any o rder passed by the Go vernment under sub -
section (1) or sub-section (2) shall be final.
18. The Government may, in respect o f an applicati on,
inquiry, inspection o r audit made under this Act, charge
such fees as may be prescribed.
19. Nothing in this Act sh all preclude the Go vernment
from –
(a) assisting an industry by agreement to purchase on
business terms the whole or portion of its products;
(b) starting o r conducting an industry f or experimental
purposes or with a view to stimulate industrial development;
(c) assisting an industry by giving gratis/ or on
favourable terms the services of Government o fficials,
experts, or others, either in the capacity of advisers o r
otherwise fo r such periods, as t he Government m ay deem
necessary for starting or conducting such industry;
(d) assisting an industry in connection with industrial
education or the training of apprentice;
(e) assisting an industry in any manner which may be
determined by the Government;
(f) establishing a company for the purpose of giving
financial or other assistance to any industry or subscribi ng
for shares in such company, on such terms and conditions
as the Government may, by general order, lay down;
Fees.
Power of
Government as
regards starting or
conducting
industries and
giving aid of
certain kinds.
[Act No.53 of 1976] 13
(g) subscribing for shares in, or in any manner aiding
any industry on such terms and condit ions as the
Government may, by general or special order, lay down;
(h) assisting an industry in the purchase of implements
or machinery;
(i) assisting in the ma rketing of products in the
possession or any industry;
CHAPTER IV
MISCELLANEOUS.
20. (1) All moneys pay able under this Act, including any
interest chargeable thereon and the costs if any, incurred, if
not paid when they are due, may be recovered from the
recipient of the aid and his sureties, if any, as i f they were
arrears of land revenue.
(2) When any su m due as aforesaid is paid by the
surety or is recovered from him or out of his property under
sub-section (1), the Collector may on the application of the
surety, so far as possible recover th e same fr om the
recipient of the aid as if it were an arrear of land revenue and
pay the amount so recovered to the surety.
21. No suit, prosecution or other legal proceeding shall be
instituted against any person for any thing which is in good
faith done or intended to be done under this Act.
22. (1) The Government may by notification, make rules for
carrying out all or any of the purposes of this Act.
(2) In particular and without prejudice to th e generality
of the foregoing power, such rules may provide for all or any
of the following matters, namely:-
Method of
recovery of
moneys due.
Protection of acts
done in good
faith.
Power to make
rules.
14 [Act No.53 of 1976]
(i) the quorum at the Board's meetings, the method of
arriving at its decisions, the appointment of the staff, th e
remuneration of its memb ers and all other matters relating
to the m embers of th e Board and the conduct of its
business;
(ii) the form of application for aid, the manner of
making the applications and th e information to be given in
such applica tions, provided that no such rule shall require
any applicant or recipient of aid to divulge any information
relating to the technical detail of any process or any patent
owned by him;
(iii) the mann er of conducting inquiries a nd the
matters to be specially inquir ed into in dealing with
applications for a id and the powers to be exer cised by the
Director for conducting such inquiries;
(iv) the mode of ascertaining the value of the assets
of an industry, or of any property offered as collate ral
security for a loan;
(v) the nature of the security to be taken for the due
application o f loans and the rates of interest at which and
the condition under which loans may be given and the
creation of a mortgage, floating charge or collateral security
under section 8;
(vi) the inspection of the premises, buildings, plant
and stock on hand and the accounts of any industry f or
which aid has been granted;
(vii) the mode of keeping and auditing the account s
and of furnishing returns of any industry in respect of which
aid has been granted;
[Act No.53 of 1976] 15
(viii) the appointment and functions of directors
appointed on behalf of th e Government of the specifying of
methods of cont rol of industry in respect of whi ch aid has
been granted;
(ix) the mode of application of profits in cases in
which the condition under which loans have been made
have not been, fulfilled;
(x) the fixing of the per iod for the repayment, of
loans; and
(xi) the recovery of any moneys due under this Act
and the penal interest payable therefor.
(3) Every rule made under this Act shall, immediately
after it is made, be laid before each House of the State
Legislature if it is in session and if it is not in session, in the
session immediately following for a total perio d of fourteen
days which may be comprised in one session or in two
successive sessions, and if, before the expiration of the
session in which it is so lai d or the session immediately
following, both Houses agree in making any modific ation in
the rule or in the annulment of the rule, the rule shall from
the date on which the modification or annulment is notified ,
have effect in such modified form or shall stand annulled, as
the case m ay be, so h owever that any such modification or
annulment shall be without prejudice to the validity of
anything previously done under that rule.
23. (1) The Andhra Pradesh (Andhra Area) State Aid to
Industries Act, 1922 and the Andhra Pradesh (Telangana
Area) State Aid to (Small Scale and Cottage) Industries Act,
1956 are hereby repealed and upon such repeal, the
Repeal and
savings.
Act 5 of 1922.
Act 7 of 1956.
Act 1 of 1891.
16 [Act No.53 of 1976]
provisions of section s 8 and 18 of the 4Telangana General
Clauses Act, 1891 shall apply.
(2) Notwithstanding such repeal, anything done or any
action taken under the repealed Act, shall be deemed to
have been done or taken in the exercise of the powers
conferred by or under this Act, as if this Act was in force on
the date on which such thing was done or action was taken.
* * *
4. Adapted by G.O.Ms.No.45, Law (F) Department, dated 01.06.2016.