KARNATAKA STATE AID TO INDUSTRIES ACT, 1959
8 of 1960
An Act to consolidate and amend the laws regulating the giving of aid by the Government to industries in the State of Karnataka. Whereas, it is expedient to consolidate and amend the laws relating to the regulation of the giving of aid by the Government to industries in the State of Karnataka; Be it enacted by the Karnataka State Legislature in the Tenth Year of the Republic of India as follows.
Section 1 Short title, extent and commencement
(1) This Act may be called the Karnataka State Aid to Industries Act, 1959.
(2) It extends to the whole of the State of Karnataka.
(3) It shall come into force at once.
Section 2 Definitions
In this Act, unless the context otherwise requires.
(a) "Corporation" means the Karnataka State Financial Corporation established under the State Financial Corporations Act, 1951 (Central Act 63 of 1951);
(b) "Cottage Industry" means a Gazetted Officer of the Department of Industries and Commerce appointed by the Government to be in charge of one or more districts or division or divisions;
(c) "Government" means the State Government;
(d) "Industry" means any industrial business or enterprise conducted or undertaken either by an individual or by a company, association or body of individuals, whether incorporated or not;
(e) "Prescribed" means prescribed by rules made under this Act;
(f) "Small scale industry" means an industrial business or enterprise in which the capital invested does not exceed five lakhs of rupees;
(g) "Village industry" means any industry which forms the normal occupation, whether whole-time or part-time, of any class of the rural population of the State.
Section 3 No aid except in accordance with the provisions of this Act
No aid shall be given by the Government to any industrial business or enterprise except in accordance with the provisions of this Act.
Section 4 Industries to be aided
(1) The industries to which aid may be given under this Act shall be such as have an important bearing on the economic development of the country and shall be.
(a) new or nascent industries; or
(b) industries to be newly introduced into areas where such industries are undeveloped; or
(c) small-scale industries; or
(d) cottage industries; or
(e) village industries; or
(f) old or established industries:
Provided that aid shall not be given to any old or established industry unless the Government is satisfied that special reasons exist for giving such aid:
Provided further that aid shall not be given under this Act to.
(i) any industrial concern to which financial assistance may be given by the corporation to the extent to which such assistance can be given under the State Financial Corporations Act, 1951;
(ii) any industry which is a village industry as defined in the Karnataka Khadi and Village Industries Act, 1956, and for which assistance is provided for by the Khadi and Village Industries Commission constituted under the Khadi and Village Industries Commission Act, 1956 (Central Act 61 of 1956). I
(2) 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.
(3) The decision of the Government as to whether the conditions of this section are fulfilled shall be final and shall not be called in question in any Court of law.
Section 5 Method of giving State aid
Subject to the provisions of this Act and of the rules made thereunder, the Government shall have power to give aid to an industrial business or enterprise in one or more of the following ways.
(a) by granting a loan;
(b) by guaranteeing a cash credit, overdraft or fixed advance with a bank;
(c) by paying a subsidy, in the case of a cottage industry or village industry for any purpose, and in the case of any other industry for the conduct of research or the purchase of machinery;
(d) by subscribing for shares or debentures;
(e) by making a grant on favourable terms of land, material, firewood or water;
(f) by supplying at concessional rates any machinery or part of a machinery.
Section 6 Grant of aid through the Corporation
The Government may, subject to such terms and conditions, as the Government may deem fit, enter into contract with the Corporation for purposes of the Corporation acting as an agent of the Government in the transaction of any business with an industrial concern in respect of loans or advances granted, or debentures subscribed, by the Government.
Explanation.For purposes of Section 4 and this section "industrial concern" shall have the same meaning as in the State Financial Corporations Act, 1951 (Central Act 63 of 1951).
Section 7 Procedure relating to grant of State aid
Applications for grant of State aid shall be made to such authorities and shall be considered and dealt within such manner as may be prescribed.
Section 8 Grant of loans
No loan shall be granted of an amount exceeding seventy-five per cent of the net value of the assets of the industrial business or enterprise and of any other property offered as collateral security for the loan, after deducting in both cases existing encumbrances, such value to be ascertained by such person as may be appointed by the Government and in accordance with such rules as may be prescribed; for the purpose of this valuation the additional assets which may be created by the expenditure of the sums granted may be taken into account to such extent as may be prescribed.
Section 9 Loans how secured
Every loan granted under this Act shall be secured by a mortgage or floating charge upon the whole of the assets of the business or enterprise, subject to any encumbrances existing at the time of the grant, and by such collateral security, if any, as may be required by the Government, and shall bear interest payable on such dates and at such rates as the Government may determine.
Section 10 Inspection and returns
In any case in which a loan has been applied for under this Act, the applicant, and at any time during the 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 relative to the inspection of the premises, buildings, or plant or stock in hand of the industrial business or enterprise;
(b) to permit the inspection of all accounts relative to the industrial business or enterprise;
(c) to furnish full returns of all products manufactured or sold both as regards description and quantity and of all works in progress;
(d) to maintain such special accounts or to furnish such statement as the Government may, from time to time, require;
(e) to submit the accounts of the industrial business or enterprise to such audit as the Government may prescribe.
Section 11 Control of business assisted
Notwithstanding anything contained in any law, in any case in which a loan is granted under this Act, amounting to two lakhs of rupees or upwards, the Government may, by the appointment of Government directors or otherwise, take power to ensure such control over the conduct of the business or enterprise as shall suffice in its opinion to safeguard its interests.
Section 12 Repayment of loans
(1) Every loan granted under this Act shall be made repayable by instalments within such period from the date of the actual advance of the loan, or when the loan is advanced in instalments, from the date of payment of the last instalment, as may be fixed by the order granting the loan.
(2) The period fixed as aforesaid shall not exceed ten years unless the Government shall, by general or special order, extend the same.
Section 13 Guaranteeing of loans by banks
No guarantee of a cash credit, overdraft or fixed advance with a bank shall be given except under the conditions prescribed in Sections 8,9,10 and 11 in respect of loans.
Section 14 Exemption of small and cottage industries
Save as otherwise may be prescribed by rules made under this Act, nothing in Sections 8,9,10 and 13 shall apply to any industrial business or enterprise with a capital outlay not exceeding five thousand rupees or to cottage industries.
Section 15 Subscriptions for shares or debentures
The condition of subscription by the Government for shares and debentures of any industrial business or enterprise shall be that the business or enterprise shall be subject to the conditions of Section 10 in respect of inspections and returns as well as of the provisions of Section 11 in respect of Government control:
Provided that for all shares subscribed by the Government, there must be taken up and fully paid for not less than such number of shares as may be fixed by special or general order of the Government.
Section 16 Subsidy by the Government
The conditions of a grant of subsidy or of the grant of Government land, raw material, firewood or water on favourable terms, shall ordinarily 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 is made, shall be repaid to the Government at the close of a fixed term of years, if, within that term the industrial business or enterprise shall be shown to be paying interest or a dividend upon the capital invested in excess of such rate as the Government may fix:
Prpvided that no subsidy (to an industry other than a cottage industry or village industry) shall exceed forty per cent of the cost of the research or of the cost of the machinery, as the case may be.
Section 17 Disposal of profits when condition of State aid is not fulfilled
No recipient of State aid shall pay any dividend or distribute or take any profits in excess of such percentage rate upon the amount of the capital of the industrial business or enterprise as the Government may fix from time to time until the conditions on which the State aid has been; granted are fulfilled. The balance of the profits, after setting aside proper amounts for depreciation or obsolescence of plant and buildings, and for the payment of interest on debentures of loans, shall be carried to a reserve fund to be utilized in such manner as the Government may approve.
Section 18 Methods of recovery of money due
(1) All moneys payable under this Act, including any interest chargeable thereon and costs, if any, incurred, if not paid when due, may be recovered from the person aided and his surety, if any, as if they were arrears of land revenue.
(2) In the event of the borrower contravening any of the provisions of this Act, and in particular of Sections 10 and 17, the whole of the amount of aid and all moneys due from such person may be recovered from the person aided or his surety in one lumpsum as if they were arrears of land revenue.
Section 19 Power of Government to terminate aid
(1) The Government may for reasons to be recorded in writing by order terminate aid in respect of an industrial business or enterprise on any of the following grounds, namely.
(i) that any portion of the aid given has been misapplied; or
(ii) that there has been a breach by the person in receipt of the aid of the provisions of this Act or of any rule made thereunder or of any condition of the grant; or
(iii) that the application on which the aid has been granted contained, or was accompanied, by, any material statement by the applicant which he knew to be false, or 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 concealment was intentionally made in any inquiry made under this Act by or with the connivance of the applicant or in any return under this Act, or in reply to any requisition for information under this Act; or
(iv) that the industrial business or enterprise is being managed in such a manner as to endanger the repayment of the value of aid granted thereto repayable under this Act.
(2) Where an order terminating the aid is made under sub-section (1), then, notwithstanding anything contained in this Act or in any other law, the Government may proceed to recover from the grantee or the aid, as arrears of land revenue.
(a) the entire amount of any loan outstanding, together with such interest as may be due thereon; or
(b) in cases where the aid is given otherwise than by loan, the money value of the grant as fixed at the rime when it was made, together with interest at a rate not exceeding nine per cent, from the date of the grant till the date of realisation; and
(c) in the cases mentioned in clause (a) or clause (b), the cost of recovery, and, if the Government so directs, the cost of any inquiry made in connection therewith.
(3) An order made under this section, shall be final and shall not be called in question in any Court of law.
Section 20 Fees
The Government may charge in respect of applications, inquiries, inspections and audit by whomsoever made under this Act, such fees, as may be prescribed.
Section 21 State aid granted prior to commencement of Act
Any aid given by the Government to any industry prior to the commencement of this Act under the Bombay State Aid to Small-scale and Cottage Industries Rules, 1935, as applicable to the Bombay Area and the State Aid to Industries (Coorg) Rules, 1951, shall be deemed to be aid given under this Act and all the provisions of this Act and of any rules made thereunder shall apply to such aid and such industry as if such aid was given to such industry under this Act.
Section 22 Powers of Government as regards starting or carrying on industries and giving aid of certain kinds
Nothing in this Act shall be held to debar the Government.
(a) from starting or carrying on any industrial business or enterprise;
(b) from assisting an industrial business or enterprise by agreements to purchase on business terms the whole or a portion of the products of the same;
(c) from assisting an industrial business or enterprise by giving gratis or on favourable terms, the services of Government officials or experts either in the capacity of advisers or for a limited period for starting or carrying on such business or enterprise;
(d) from assisting an industrial business or enterprise in connection with industrial education or the training of apprentices;
(e) from assisting a village industry in any manner which may be determined by the Government.
Section 22A State aid in respect of generation of electrical energy
11. Section 22-A inserted by Act No. 3 of 1964 and shall be and shall always be deemed to have been inserted. Notwithstanding anything contained in this Act, the Government may, if in its opinion it is expedient so to do, by order, grant, whether prospectively or retrospectively, to any new or nascent industry, an annual subsidy for such period as may be specified in such order, of an amount not exceeding fifty per cent of the difference between the cost incurred by the industry during the year for the generation of the quantity of electrical energy consumed during that year and the price chargeable by the Karnataka State Electricity Board for the same quantity of electrical energy produced by hydroelectric project during the same year.
Explanation For purposes of this section the cost incurred by the industry, and the price chargeable by the Karnataka State Electricity Board,
Section 22B Delegation of powers
11. Section 22-B inserted by Act No. 20 of 1978, w.e.f. 15-9-1978 The Government may, subject to such conditions as may be prescribed, by notification, delegate all or any of its powers under this Act, other than the power to make rules, to any officer or authority subordinate to it.
Section 23 Power to make rules
(1) The Government may, subject to the condition of previous publication, by notification in the Official Gazette, make rules for carrying out the purposes of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, the Government may make rules regulating all or any of the following matters.
(i) the classes of industrial businesses or enterprises to which and the purposes for which aid may be given;
(ii) the manner of making applications for State aid and the information to be given in such applications, provided that no such rules shall require any applicant or grantee of aid to divulge any information relating to the technical details of any process of any patent owned by him;
(iii) the manner of conducting inquiries and the matters to be specially inquired into in dealing with applications for State aid;
(iv) the mode of ascertaining the value of the assets of an industrial business or enterprise; or of any property offered as collateral security for a loan;
(v) the nature of the security to be taken for the due application of loans and grants and the rates of interest at which and the conditions under which loans or grants may be given, and the creation of a mortgagee, floating charge or collateral security under Section 9;
(vi) the inspection of the premises, buildings, plant and stock on hand and the accounts of any industrial business or enterprise for which State aid has been granted;
(vii) the mode of keeping and auditing the accounts and of furnishing returns of any industrial business or enterprise in respect of which State aid has been granted;
(viii) the appointment and functions of Government directors or the prescribing of other methods of control of industrial businesses or enterprises in respect of which State aid has been granted;
(ix) the application of profits in cases in which the conditions under which loans or grants have been made have not been fulfilled;
(x) the guaranteeing by the Government of cash credits, overdrafts or fixed advances by banks and the recognition of banks for this purpose;
(xi) the fixing of the period for the payment of loans and the condi- tions and dates of the repayment of subsidies and grants;
(xii) the recovery of any moneys due under this Act; 11. The word "and" omitted by Act No. 20 of 1978, w.e.f. 15-9-1978. [x x x x]
22. Clause (xii-a) inserted by Act No. 20 of 1978, w.e.f. 15-9-1978 Sub-section (3) inserted by Act No. 20 of 1978, w.e.f. 15-9-1978 [(xii-a) The conditions subject to which the Government may delegate its power under Section 22-B; and]
(xiii) the conditions under which and the security on which loans shall be granted or guarantees of a cash credit, overdraft or fixed advance with a bank given to the industries referred to in Section 14.
11. The word "and" omitted by Act No. 20 of 1978, w.e.f. 15-9-1978. [(3) A rule under this Act may be made to have retrospective effect and when such a rule is made the reasons for making the rule shall be specified in a statement which shall be laid before both Houses of the State Legislature. Subject to any modification made under sub-section (4), any rule made under this Act shall have effect as if enacted in this Act.]
44. Existing sub-section (3) renumbered as sub-section (4) thereof by Act No. 20 of 1978, w.e.f. 15-9-1978 [(4)] All rules made under this Act shall be laid as soon as may be after they are made before each House of the State Legislature while it is in session, for a total period of thirty days which may be comprised in one session or in two or more sessions and if before the expiry of that period, either House of the State Legislature makes any modification in any rule or directs that any rule shall not have effect, and if the modification or direction is agreed to by the other House such rule shall thereafter have effect only in such modified form or be of no effect, as the case may be.
Section 24 Repeal and savings
The Karnataka State Aid to Industries Act, 1951 (Karnataka Act XX of 1951) as in force in the Karnataka Area, the Madras State Aid to Industries Act, 1922 (Madras Act V of 1923) as in force in the Madras Area and the Hyderabad State Aid to Small-scale and Cottage Industries Act, 1956 (Hyderabad Act VII of 1956) as in force in the Hyderabad Area are hereby repealed:
Provided that the provisions of Section 6 of the Karnataka General Clauses Act, 1899 (Karnataka Act III of 1899) shall be applicable in respect of the repeal of the said enactments and Sections 8 and 24 of the said Act shall be applicable as if the said enactments had been repealed and re-enacted by this Act.
RULE:
KARNATAKA STATE AID TO INDUSTRIES RULES, 1961
In exercise of the powers conferred by Section 23 of the Karnataka State Aid to Industries Act, 1959 (Karnataka Act 8 of 1960), the Government of Karnataka hereby makes the following rules relating to the Karnataka State Aid to Industries.
Rule 1 Title
These rules may be called the Karnataka State Aid to Industries Rules, 1961.
Rule 2 Definitions
In these rules, unless the context otherwise requires.
(a) "Act" means the Karnataka State Aid to Industries Act, 1959;
[(b) "Assistant Director" means the Assistant Director of Industries and Commerce in charge of a district;
(b-1) "Deputy Director" means the Deputy Director of Industries and Commerce in charge of Loans;]
(c) "Director" means the Director of Industries and Commerce in Karnataka, Bangalore;
(d) "Form" means a form appended to these rules;
(e) "Government" means the Government of Karnataka;
[(e-1) "Joint Director" means the Joint Director of Industries and Commerce in charge of loans;]
(f) "Schedule" means a Schedule appended to these rules;
(g) "Section" means a section of the Act;
(h) "Sanctioning authority" means the authority specified in Rule 3.
Rule 3 Authorities competent to sanction loans
(1) The Assistant Director in his jurisdiction, shall be competent to sanction in each case loans for amount not exceeding Rs. 2,000 on securities as contemplated under Section 9 of the Act.
[(1-a) The Deputy Director shall be competent to sanction in each case loans of an amount exceeding Rs. 2,000 but not exceeding Rs. 5,000 on securities as contemplated under Section 9, subject to prescribed terms and conditions.
(1-b) The Joint Director shall be competent to sanction in each case loans of an amount exceeding Rs. 5,000 but not exceeding Rs. [24,999] on securities as contemplated under Section 9 subject to prescribed terms and conditions;.]
[(2) x x x x x.]
(3) The State Government shall be competent to sanction in each case loans for an amount of Rs. [25,000] and above to industries which are not entitled to assistance under the State Financial Corporations Act, 1951 (Central Act 63 of 1951).
Rule 3A Appeals
Any person aggrieved by an order rejecting an application for loan may, within ninety days from the date of communication of the order of rejection prefer an appeal, where the order is made, by.
(a) the Assistant Director, to the Deputy Director;
(b) the Deputy Director, to the Joint Director; [and]
(c) the Joint Director, to the Director; [x x x]
[(d) x x x x x.]
Rule 3B Revision
Notwithstanding anything in Rule 3-A, the Government, in respect of any order made by any authority under Rule 3 and each of the other appellate authorities in respect of any order made by officers subordinate to him, may, either suo motu or otherwise, call for the records and pass such orders as are considered necessary:
Provided that no order shall be passed to the detriment of any person, unless an opportunity is given to him of being heard.
Rule 4 Administration of the Act
Subject to the provisions of Sections 7 and 8, the [Assistant Director, Deputy Director, Joint Director and the Director] will be in charge of the administration of the Act. The [Assistant Director, Deputy Director, Joint Director and the Director] shall.
(a) conduct or cause detailed enquiries to be conducted in regard to the application for State Aid;
(b) assess or cause to be assessed the value of the assets of the industrial business or enterprise in accordance with the Rule 9;
(c) obtain by a written request, wherever necessary, from the Deputy Commissioner or the Executive Engineer of the Public Works Department, as the case may be, the valuation certificates pertaining to the lands and/or buildings offered as security for the aid;
(d) examine the adequacy or otherwise of the security for the aid and obtain from the applicant collateral security in the event of the primary security being found inadequate;
(e) obtain a deed of mortgage, floating charge or collateral security from the applicant and/or his surety/sureties in respect of all properties offered as security before the aid is actually given;
(f) arrange for insuring the properties secured for the aid, against loss or damage by fire, accident, theft or pilferage;
(g) maintain a register of all loans granted and to be recovered under the Act, in Form 'C';
(h) have the right to inspect or cause to be inspected the premises, buildings, plant and equipment, stock on hand, and the accounts and books of any industrial business or enterprise for which State aid applied for, has been granted;
(i) watch recoveries and repayment of loans and grants;
(j) report to Government or to the Director as the case may be, cases of breach of any of the terms and conditions subject to which aid is given to an industrial business or enterprise; and
(k) execute all orders of the Government or of the Director, as the case may be relating to the grant or termination of the aid save as otherwise expressly prescribed by rules.
Rule 4A Classes of industrial business or enterprises to which aid may be given
Subject to the provisions of Section 4 aid may be given to any of the industrial business or enterprises specified in Schedule H.
Rule 5 Purposes for which aid may be given
(a) Subject to the provisions of Section 4, aid may be given in one lumpsum or in instalments as the sanctioning authority may lay down in the order sanctioning the loan, for all or any of the following purposes, namely.
(i) construction of buildings, godowns, warehouses, wells, tanks and other works necessary for industrial operation and for purchase of land for the purpose;
(ii) purchase and erection of machinery, plant and appliances;
(iii) purchase of raw materials;
[(iv) for providing money to be used as working capital;
Explanation In this item 'Working Capital' means money set apart by an industry for meeting expenses for purchasing raw materials, payment of wages, transportation, repairs to buildings or machinery, payment of rent, fees or taxes, advertisement and meeting other charges incidental to running the Industry.;]
(v) for repayment of other prior loans or loans incurred by the loanee in connection with the Industry provided that the total amount to be repaid does not exceed 50 per cent of the loan granted under the Act.
(b) A joint stock company shall not be given aid under the Act unless the majority of the members of its Board of Directors are citizens of India.
Rule 6 Application for loan
[(1) Every application for a loan shall be made.
(a) where the amount does not exceed Rs. 2,000 to the Assistant Director;
(b) where the amount exceeds Rs. 2,000 but does not exceed Rs. 5,000 to the Deputy Director;
(c) where the amount exceeds Rs. 5,000 but does not exceed Rs. [24,999] to the Joint Director; [x x x]
[(d) x x x x x;]
(e) in all other cases to the Government.]
(2) Every application shall be accompanied by such other documents or information as the sanctioning authority may by general or special order require in addition to those mentioned in Form 'A' or 'B'.
Rule 7 Fees in respect of applications for loans
(1) Fees payable in respect of applications for aid under the Act shall be as follows.
(i) per cent of the amount of aid applied for or Rs. 250, whichever is less subject to a minimum of Rs. 250;
[1-A) Fees payable for legal scrutiny of title and documents relating to properties offered as security shall be Rs. 25.]
(2) The fees paid under this rule are not refundable on any account.
Rule 8 Enquiry on application
(1) On receipt of an application for aid under the Act, the sanctioning authority or an officer authorised by the sanctioning authority shall conduct a detailed enquiry after giving previous notice in writing to the applicant. The Deputy Commissioner of the District in which the applicant resides or has his place of industrial business or enterprise shall render such facilities as may be required by the sanctioning authority or the officer authorised by the sanctioning authority to verify the correctness of the particulars furnished in the application, to assess the general feasibility of the undertaking the experience, the capacity and the reliability of the applicant for carrying on the business of the undertaking successfully and to obtain, such other particulars as may be necessary to decide on the reasonableness and suitability of the aid applied for.
(2) The sanctioning authority or the officer authorised by the sanctioning authority in this behalf shall have power to call upon the applicant to furnish any information or produce any document that may be required concerning his industrial business or enterprise and the applicant shall furnish the same.
(3) 2[The Assistant Director of Industries and Commerce in the District], shall, on a written request from the authority sanctioning the loan or officer authorised by the sanctioning authority, furnish a valuation certificate in respect of the lands and/or, buildings offered as security, free of cost.
Rule 9 Mode of valuation
(1) The value of the assets of an industrial business or enterprise or the value of any property offered as collateral security shall be calculated as follows, namely.
(i) in the case of fixed assets acquired by purchase for cash, such as land, buildings, leaseholds, railway sidings, plant and machinery, and additions and improvements thereto, trade mark and designs, etc., the price at which these assets were acquired subject to deduction on account of wear and tear; such deduction shall be calculated in the case of buildings, machinery and plant,
11. Clause (ii) substituted by GSR 528, dated 23-11-1967, w.e.f. 7-12-1967 [(ii) in the case of fixed assets acquired otherwise than by purchase for cash, the present value of the assets taking into account their nature, present condition, location, utility and other like matters;]
(iii) in the case of stores, spare parts, and tools not taken into use, the cost price or the price of replacement, whichever is less;
(iv) in the case of stores, spare parts, and tools which have been used, but are still in stock, the cost price less a proper deduction due to wear and tear;
(v) in the case of stock-in-trade or manufactured stock, the cost of manufacture or the market price, whichever is less; and in the case of purchased stock, the cost price or the price of replacement, whichever is less;
(vi) in the case of book debts, the nominal amount of those debts:
provided that the debts shall be classed as good and no account shall be taken of doubtful debts. All debts which are due for over two years and recoverable shall be classed as doubtful;
(vii) in the case of investments, the market value of such investments on the date of the valuation;
(viii)
(a) in the case of any other assets not acquired by purchase, the value of the assets at the time when they became assets of the business subject to proper deductions for wear and tear:
provided that no value shall be placed on the goodwill, patents or secret processes of any business;
(b) the value of the assets so far as they consist of money shall be all cash with bankers or on hand, the value of cash in other countries being taken at the rate of exchange ruling on the day on which the valuation is made;
(c) the value of the additional assets that will be created by the application of the loan granted by the State Government, shall be money spent on the acquisition of immoveable property and machinery of a permanent nature and on the liquidation of encumbrances on existing fixed assets which contribute to the enhancement of the capital value of the concern.
(2) The assets having been valued as above, all debts and liabilities of the business shall be deducted other than accumulated profits and reserves and the balance shall represent the net value of the surplus of assets and shall be the value of the business for the purpose of the Act.
Rule 10 Enquiry into sufficiency of security offered
The bona fides and the solvency of the applicant or the surety, as the case may be and the sufficiency of the security offered shall be carefully ascertained before sanctioning a loan/aid or subsidy to him.
Rule 11 Nature of security
(1) Every loan, guarantee of a cash credit, overdraft or fixed advance with a Bank, may be sanctioned to the extent of seventy-five per cent of the security offered in any one or more of the following kinds, namely.
(i) mortgage of lands and/or buildings, etc., of the recipient of State aid;
(ii) mortgage of machinery, plant, etc., of the recipient of State aid;
(iii) mortgage of land or buildings or both to be purchased with the loan amount sanctioned;
(iv) mortgage of machinery, plant, etc., to be purchased with the loan amount sanctioned;
(v) a floating charge on all the assets of the recipient of State aid;
[(vi) hypothecation of the property, movable or immovable of a surety for the loan sanctioned.]
(2) No loan shall be disbursed unless the applicant or his surety executes the necessary bond to the satisfaction of the sanctioning authority.
Rule 12 Interest on loans
(1) The rate of interest on loans, grants, advances, cash credits, overdrafts on banks shall be [10] per cent per annum subject to a rebate of [4] per cent per annum for prompt payment of the instalments on or before the due date. The rebate due will be adjusted to the credit of the loanee and will be taken into account at the time of payment of the last instalment. No rebate shall be admissible for payment of stipulated instalments in parts on or before the due date.
[Provided that in the case of an unemployed engineer, the rate of interest shall be five per cent per annum and the rebate shall be two per cent per annum.
Explanation.In this sub-rule "unemployed Engineer" means a person who is holder of a degree or a diploma in any branch of engineering and
(2) Interest shall accrue from the date of the disbursement of the loan amount: provided that when the loan is disbursed in instalments, interest on each instalment shall accrue from the date of disbursement of each such instalment.
Rule 12A Commission on guarantees
[(1) A person to whom aid under clause (b) of Section 5 is given, shall pay commission at one per cent per annum on the amount guaranteed.
(2) The commission referred to in sub-rule (1) shall be paid in the following manner, namely.
(i) it shall be paid so long as the guarantee is in force;
(ii) it shall be calculated with reference to the actual balances of the principal and interest outstanding at the end of each month;
(iii) it shall be paid once in six months commencing from the date six months after the date of guarantee;
(iv) it shall be credited to a Government Treasury on or before the due date provided that if the due date happens to fall on a Treasury holiday, the day previous to such day shall be deemed to be the due date;
(v) if the commission is not credited on the due date, interest at the rate of 7%per annum accruing from that date on the amount of guarantee commission due on that date shall also be paid to Government;
(vi) an agreement incorporating these terms shall be executed.]
Rule 13 Repayment in instalments
Every loan granted shall be payable in such number of instalments as may be fixed in the order granting the loan.
Rule 14 Period of repayment
Every loan shall be repayable within such period as may be fixed in the order granting the loan:
Provided that the period so fixed shall in no case exceed ten years from the date of the disbursement of the loan or when the loan is paid in instalments, from the date of disbursement of the last instalment unless the State Government by general or special order extends the period:
Provided further that the repayment shall not commence at a date earlier than two full years from the date of disbursement of the loan or last instalment of the loan; but a borrower may repay a loan on earlier date or in instalments larger than those stipulated.
Rule 15 Mode of repayment of loan
All repayments of loans and interest under these rules shall be made in [cash] at any Government Treasury in the State to the credit of State Government. It is not obligatory on the part of the authority sanctioning the loan to issue a demand notice for the repayment of instalments. Non-receipt of such notice is not a valid excuse for default to pay any instalment on the due date.
Rule 16 Recovery as arrears of land revenue
Subject to the provisions of Section 18.
(1) In the event of the borrower contravening any of the provisions of the Act, and in particular Sections 10 and 17, the whole of the amount of aid and all moneys due from such person including interest, costs and other charges, shall forthwith be repaid by such person, and if not so repaid, the same may be recovered from the person aided or his surety as arrears of land revenue.
(2) If any instalment or part thereof and/or interest accrued remains unpaid after the due date, such moneys together with costs, if any, or if so directed by the State Government, the entire balance of loan with interest accrued thereon, together with costs, if any shall be recovered as arrears of land revenue.
Rule 17 Insurance and repairs, etc
(1) The recipient of State aid shall maintain at his own expense in good and efficient repairs the premises, buildings, machinery, plant and all other properties mortgaged to the State Government, as security for the aid. He shall unless exempted by the State Government, insure such mortgaged properties against loss or damage by fire, riots, civil commotion, theft, accident or pilferage either for the full insurable value or for such amount as may be determined by the Director with an insurance company 11. The words "to be approved by the Director in consultation with the State Government" omitted by GSR GSR 528, dated 23-11-1967, w.e.f. 7-12- 1967 [x x x x x] and shall duly and punctually pay the premium payable in respect thereof as and when they become due and payable. In the event of failure to carry out any repairs or to effect the insurance or to pay the premium due the Director or the authority sanctioning the loan may do so or cause them to be done and incur necessary expenditure on account of the same. The expenditure so incurred shall be recovered in accordance with the provision of Section 18.
(2) All properties to be mortgaged to Government as security shall be insured as required by sub-rule (1) before the aid is actually given in cases of aid exceeding Rs. 5,000 unless specifically exempted by the State Government. Insurance policies so obtained shall be assigned in favour of the Governor of Karnataka.
Rule 18 Inspection
The recipient of State aid shall permit the Director or any person deputed by him by general or special order in writing or any other person authorised in this behalf by the State Government, to inspect the premises, buildings, plant and equipment, stock on hand, accounts and books of the industrial business or enterprise in respect of which the aid has been granted and shall provide necessary facilities for such inspection.
Rule 19 Audit of accounts and submission of reports
(A) Except as otherwise specifically exempted by the sanctioning officer or authority, the accounts of an industrial business or enterprise in respect of which State aid has been granted shall be examined and audited once in every year by an auditor approved by the Government. The recipient of State Aid shall furnish to the sanctioning officers or authority once in a year, an annual statement of accounts of the industrial business or enterprise, certified by the auditor containing the following particulars:
(a) A full and complete statement of the assets and liabilities;
(b) a valuation of all the assets;
(c) a manufacturing account showing the outturn by the industrial business or enterprise with the cost per unit of such outturn;
(d) a trading account;
(e) a profit and loss account.
(B) The accounts of the industrial business or enterprise to which the State aid has been granted shall be open to test check by the Comptroller and Auditor General at his discretion.
Rule 20 Appropriation of profits
In case where the conditions under which loans or grants given have not been fulfilled by the recipients, the gross profits of the concern shall not be appropriated in any manner without the prior sanction of the authority sanctioning the loan.
Rule 21 Cash credits, overdraft etc
Subject to the provisions of Sections 8 and 11, the State Government shall give guarantee of a cash credit, overdrafts, or fixed advance with a bank, and the following banks and corporations are recognised for this purpose, namely.
(i) The State Bank of Mysore;
(ii) The State Bank of India;
(iii) The Central Bank of India Limited;
(iv) The Indian Bank Limited;
(v) The Industrial Finance Corporation constituted under the Industrial Finance Corporation Act, 1948;
(vi) The Canara Bank Limited;
(vii) The Karnataka State Financial Corporation.
[(viii) The State Bank of Hyderabad;
(ix) The Punjab National Bank Limited.]
[(x) Allahabad Bank;
(xi) Andhra Bank Limited;
(xii) Bank of Baroda;
(xiii) Bank of India;
(xiv) Belgaum Bank;
(xv) Canara Banking Corporation;
(xvi) Devakarn Nanjee Banking Company;
(xvii) Indian Overseas Bank;
(xviii) Jayalaxmi Bank;
(xix) Karnataka Bank;
(xx) National and Grindlays Bank;
(xxi) Pangal Nayak Bank;
(xxii) Syndicate Bank;
(xxiii) Union Bank of India;
(xxiv) United Commercial Bank;
(xxv) Vijaya Bank;
(xxvi) Vysya Bank
(xxvii) Life Insurance Corporation of India.]
[(xviii) Film Finance Corporation Limited (A Government of India Un- dertaking).]
[(xxix) U.S. AID, Washington, U.S.A.;
(xxx) Messrs. Chemtex Inc. of New York, U.S.A.;
(xxxi) Industrial Development Bank of India Limited (IDBI);
(xxxii) The Industrial Credit and Investment Corporation of India Limited (ICICI), Bombay.]
Rule 22 Provision for training apprentices
The recipient of State aid shall provide facilities for training such number of apprentices in the industrial business or enterprise for which aid has been given, as may be laid down by the sanctioning authority in the order sanctioning the aid.
Rule 23 Miscellaneous
(1) Where the recipient of State aid has failed to fulfill the terms and conditions of such aid, the authority sanctioning the aid shall have the accounts and books and/or auditing of the accounts of the business or enterprise, inspected for which fees payable by the recipients of the loan or aid shall be as under.
(i) In the case of an industrial
(i) Business having a capital outlay of one lakh of rupees and below
Rs. 100;
(ii) in the case of an industrial
(ii) Business having a capital outlay exceeding one lakh of rupees
Rs. 100 for the first one lakh of rupees;
and Rs. 25 for every additional outlay one lakh of rupees or part thereof.
(2) Whenever State aid is granted to a person in respect of any industrial business or enterprise and is secured by a mortgage or a floating charge upon the assets of such business or enterprise, the recipient of the State aid shall put up at his place or places of business or enterprise, a prominent sign post containing the name of such business or enterprise with the addition of 'State aided' within brackets.
APPENDIX A FORM
2.
3.
(b)
The present actual production P.A./P.M.
1.
(c)
Estimated production p.a./p.m. after the utilization of the aid
1.
2.
3.
Unskilled
Skilled
Supervisory
Others
(1)
(2)
(3)
(4)
(d)
Present employment in the factory
1.
2.
3.
(e)
Proposed employment after the utilization of the aid
1.
2.
3.
(0
What arrangements have been made to obtain.
(i) The present requirements of power and /or fuel
(ii) The future requirements of power and/or fuel
(iii) The present requirements of raw materials
(iv) The future requirements of raw materials and how the same are proposed to be obtained
(g)
Plant and machinery installed (indicate in each case the cost, date of purchase, and whether purchased new or old)
(h)
Plant and machinery proposed to be installed (indicate the cost and mode of obtaining the same in each case)
(i)
Present and proposed process or processes of manufacture in detail together with the special advantages, if any.
8. State whether licence and /or permission (attaching a copy thereof) has been obtained under the.
(a) Industries (Development and Regulation) Act, 1951 (as amended);
(b) Factories Act, 1948;
(c) Municipal or Corporation Act or any other, from the local authority.
9. State how you propose to repay the loan/aid.
10. Please state the particulars of.
(a) The loan(s)/aid already obtained from this Department
(b) The loan(s) already obtained from. (i) other Government departments; (ii) any other sources.
11. Please state the names and addresses of your Bankers.
12. Please state whether your assets have been insured; if so, state the value and name(s) of the insurance companies; if not, whether you intend to insure.
I/We hereby certify that the particulars given above are furnished for the express purpose of securing the loan or financial accommodation from the Government of Karnataka, and to the best of my/our knowledge and belief are true and correct and no material fact has been concealed or withheld.
Yours faithfully,
Place............
Dated..............196.......... Signature of the applicant/s
APPENDIX B FORM
SCHEDULE A Amendments to the Betting Tax Act, 1932 (IX of 1932)
Borrowings shown secured with (state names)
Rs.
Stocks and Shares
Rs.
At ..... per cent against (state security)
Rs.
Book Debts and Advances
Rs.
Borrowing shown partly secured
Rs.
Other Assets
Rs.
At ..... per cent against (state security) Borrowing shown unsecured with
Rs.
Nominal Assets which should include inter alia preliminary
Rs.
(State names)
Rs.
Expenses, goodwill, and losses, if any, to be shown separately
At ............ percent
Rs.
Block Account
Other liabilities
Rs.
Land
Rs.
Profit and Loss Account
Buildings
Rs.
To be reserved
Rs.
Less Depreciation
Rs.
To be disbursed
Rs.
Plant and Machinery
Less Depreciation
Rs.
Others
Rs.
Less Depreciation
Rs.
Total
Rs.
Total
Rs.
1. Contingent Liability, if any.
2. Please state if there is any pending litigation either by or against the concern.
3. Please state if the Karta/Proprietor/Partners have given any guarantee for any other financial accommodation secured by the concern.
Signature of Applicant/s.
TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING ......
To Stock at commencement
Rs.
By sales realization
Rs.
To Raw Materials purchased
Rs.
By Stock in Trade
Rs.
To Wages and Salaries
Rs.
By Stock of Stores
Rs.
To Coolie, cartage and traveling etc.
Rs.
By Stock of unfinished goods in process
Rs.
To Electricity
Rs.
To Rent and taxes
Rs.
To Commission
Rs.
To Sundry expenses
Rs.
To Interest on loans and deposits
Rs.
To Depreciation:
Rs.
On Machinery
Rs.
On Building and Shed
Rs.
To net profit transferred to Proprietor's/ Partner's Capital account or Balance-sheet
Rs.
Total
Rs.
Total
Rs.
Checked and Certified by
Signature ................
Designation .................
SCHEDULE B1 Amendments to the Betting Tax Act, 1932 (IX of 1932)
Existing land.
(1)
Location
(2)
Area of land
(a) Survey and Hissa No.
(3)
Whether freehold or leasehold:
(a) Whether encumbered; if so state particulars.
(b) If owned, whether singly or in partnership.
(c) Names and addresses of other partners.
(4)
Purchase price of land if owned
Rs ..................
(5)
Rent in case of leased land
Rs ..............
(6)
Terms of lease (State period of lease and due date) Ground rent per year payable
Rs ...............
SCHEDULE B2 Amendments to the Betting Tax Act, 1932 (IX of 1932)
Proposed land.
(1)
Location
(2)
Area of land
(3)
Whether proposed to be purchased or leased
(4)
Purchase price of land if proposed to be purchased and owned
Rs ................
(a) If proposed to be leased, the rate and terms
(5)
Terms of lease, if proposed to be leased (State period of lease)
Ground rent payable per year
Rs ................
SCHEDULE C1 Amendments to the Betting Tax Act, 1932 (IX of 1932)
Existing Buildings.
(1)
Location.
(2)
Whether owned or leased.
(a) Whether encumbered; if so, state particulars.
(b) If owned, whether singly or jointly.
(c) Names and addresses of other partners.
(3)
Purchase price of building if owned
Rs .................
(4)
Rent in case of leased premises
Rs .................
(5)
Terms of lease (State period of lease and due date)
Rs .................
Details of Buildings
Structure
Type of Structure (Whether pucca or temporary)
Dimensions
Area Sq. ft.
Actual cost
Date of erection
(1)
(2)
(3)
(4)
(5)
(6)
Rs.
Workshop
Godowns
Administrative Offices
Other Buildings
SCHEDULE C2 Amendments to the Betting Tax Act, 1932 (IX of 1932)
Proposed Buildings.
(1)
Location.
(2)
Whether proposed to be purchased or constructed.
(3)
State purchase value or estimated cost
Rs
(4)
If proposed to be leased, state rent and period of lease proposed
Details of Buildings
Structure
Type of structure
(whether pucca or temporary)
Dimensions
Area Sq. ft.
Estimated cost
(1)
(2)
(3)
(4)
(5)
Rs.
SCHEDULE D Existing Plant and Machinery
SCHEDULE SCHEDULE D
Existing Plant and Machinery
Name of machine
Number
Specifications
Production capacity per hour
Cost of purchase
Date of acquisition
Source of supply (state if purchased secondhand)
Present condition of the machinery
Whether encumbered, if so, state particulars
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
..Rs.
. Total
SCHEDULE E Proposed Plant and Machinery
SCHEDULE SCHEDULE E
Proposed Plant and Machinery
Name of machine and country of origin
No.
Specifications
Production capacity per hour
Estimated age of machinery
Purchase price
(1)
(2)
(3)
(4)
(5)
(6)
..Rs.
_______.
Total
SCHEDULE F SCHEDULE
Total
196 ............
1.
2.
3.
4.
Others
Total
SCHEDULE G Estimate of Probable Profits
SCHEDULE SCHEDULE G
Estimate of Probable Profits
The following table should cover a normal year of working after completion of the project.
(a)
Gross Sales 1. Units at Rs........
Rs .................
2. Units at Rs........
Rs ................
3. Units at Rs
Rs .................
Total
Rs.
(b)
Less. Cost of sales broken down by main headings
Rs .................
(c)
Gross Profit on sales
Rs .................
(d)
Administrative and selling expenses
Rs .................
(e)
Interest
Rs .................
(f)
Taxation
Rs ................
(g)
Net Profit
Rs .................
(h)
Add back Depreciation if included under (b)
Rs .................
(i)
Cash available for liquidation of loan
Rs ................
APPENDIX C Loan Ledger
'>Name of Treasury or Bank
Initials of the entering clerk with date
Initials of the attesting officer with date
No.
Date
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
.Rs. np. Rs.nP.
Interest on Principal loans
Number of the installment
Due date
Amount due
Amount Paid
Challan
Name
Treasury or Bank
Amount of admissible rebate due if paid on or before due date vide Rule 12(7)
Initials of the entering clerk with date
Initials of the attesting officer with date
No.
Date
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
Rs. np. Rs. nP.
Particulars of any other monies due and recovered from the recipient of the loan
Principal
Particulars of money due
Amount due
Date from which the amount in col. (21) is due
Amount paid
Challan
Name of Treasury or Bank
Initials of the entering clerk with date
Initials of the attesting officer with date
No.
Date
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
Rs. np. .Rs. nP,
Interest
Amount
Due
Date up to which the amount in col. (29) is due
Amount paid
Challan
Name of Treasury or Bank
Initials of the entering clerk with date
Initials of the attesting officer with date
Remarks
No.
Date
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
(37)
Rs. np. Rs. nP.
The Karnataka State Aid to Industries Rules, 1961 Schedule of Repayment of Installments
(Vide Item 5 of Form 'C')
[See Rule 4(g)]
1. Name and Address of the recipient of loan:
2. Amount of loan sanctioned: Rs.
3. Date/s of disbursement/s:
4. Number of installments of repayments fixed:
5. Particulars of recoveries to be made and amount of admissible rebate under Rule 12(1).
Number of the installments of Repayment
Due date
Particulars of the amounts due
Amount of admissible rebate for adjustment in last installment
[vide Rule 12(1)]
Remarks
Towards principal
Towards Interest
(1)
(2)
(3)
(4)
(5)
(6)
Rs. np. Rs. nP. Rs. nP.
Head of Account for crediting.
(i) Principal.P Loans and Advances by State Government: Loans to Local Bodies and Private Parties, etc.: Advances under Special LawsState Aid to Industries (j) other Institutions.
(ii) Interest.XX Interest (a) Interest on Loans and Advances by State Government; (b) Miscellaneous Loans and Advances; (c) Other Loans and Advances.
--------------------------------------------------------------------------------
SCHEDULE H Classes of industrial business or enterprises to which aid may be given
SCHEDULE [See Rule 4-A] SCHEDULE H
[See Rule 4-A]
Classes of industrial business or enterprises to which aid may be given.
I. Food, Beverages and Tobacco.
(1) Sugar Factories and Refineries (Sugar and Gur)
(2) Bakery and Confectionary
(3) Fruit and Vegetable processing
(4) Vegetable oils
(5) Aerated waters, Cold storage and ice
(6) Fish canning
(7) Tea and Coffee
(8) Breweries
(9) Cashew Processing.
II. Textiles.
(1) Cotton
(2) Woollen
(3) Silk and Art Silk
(4) Synthetic fibre
(5) Hosiery goods
(6) Handloom products
(7) Ready-made garments
(8) Printing and dyeing of cloth and calendering
(9) Others (Hold all, waterproof goods, mats).
III. Leather and Rubber products.
(1) Leather products (footwear, surgical goods)
(2) Tanneries
(3) Remoulding and retreading of tyres and tubes
(4) Rubber goods
IV. Wood products.
(1) Saw Mill
(2) Furniture
(3) Others (Corks, Plywood, Mateh splints)
(4) Plywood
(5) Wood seasoning
(6) Laminating
(7) Curing and Seasoning
(8) Chemical treatment
V. Paper and Pulp and Allied products.
(1) Paper
(2) Pulp
(3) Cardboard Boxes, Corrugated sheets, paper bags.
VI. Printing.
(1) Printing presses and binding works
(2) Others (stationery) including.
VII. Chemicals.
(1) Chemicals and Fertilisers
(2) Plastics, Polystyrene, acrylic sheets, celluloid bangles, etc.
(3) Pharmaceuticals and Drugs (ointments)
(4) Matches and fireworks
(5) Soaps (toilet, washing, chips)
(6) Agarbathies
(7) Camphor tableting
(8) Dyes
(9) Paints and Varnish
(10) Starch
(11) Inks
(12) Others (silicate of soda gases)
(13) Pesticides and Aeromatic chemicals
(14) Insecticides and Agro chemicals.
VIII. Ceramics and Glass products.
(1) Bricks, Tiles and Potteries
(2) Refractories
(3) Glassware (Optical, Laboratory, Sheet glass)
(4) Cement, Asbestos products
(5) Limekilns
(6) Enamel ware
(7) Mosaic tiles
(8) R.C.C. works and cement pipes
(9) Brick and tile.
IX. Ferrous and non-ferrous.
(1) Ferrous casting and forgings
(2) Non-ferrous metal products (stainless steel, copper and brass, aluminium)
(3) Sheet metal works (GP and BP sheet articles, furniture, press button, agricultural implements)
(4) Wire nails, panel pins, gem clips, barbed wire
(5) Tin containers
(6) Structurals (gates, grills, others).
X. Electrical Appliances.
(1) Fans and Radios
(2) Air Conditioners and Refrigerators
(3) Lamps
(4) Electrical equipment and accessories
(5) Manufacture of Motors with or without pumps
XI. Manufacture of Machinery.
(1) Agricultural machinery
(2) Textile machinery
(3) Machine tools
(4) Prime motors and boilers
(5) Paper machinery
(6) Chemicals machinery
(7) Rice, oil and floor mill machinery
(8) Automobiles (job works, body-building)
(9) Bicycles and Bicycle parts
(10) Rail Road equipment
(11) Watches, clocks
(12) Other transport equipment
(13) Professional and scientific instruments
(14) General Engineering Workshop
(15) Diesel Engines for Pumpsets.
XII. Miscellaneous Industries.
(1) Gold and Jewellery
(2) Photographic and Optical goods
(3) Musical instruments
(4) Ordnance factories
(5) Brushes, buttons and other than plastics (nylon etc.)
(6) Games and sports goods
(7) Cotton ginning and pressing
(8) Thread and thread ball making
(9) Stone polishing.
XIII. Production of films. |
