THE LOCAL AUTHORITIES LOANS (BOMBAY AMENDMENT) ACT, 1942

An Act to append the Local Authorities Loans Act, 1914 in its application to the province of Bombay

AND WHEREAS the Governor of Bombay has assumed to himself under the proclamation dated 4th November, 1939, issued by him under Section 93 of the Government of India Act, 1935, all powers vested by or under the said Act in the Provincial Legislature;

SECTION 01: SHORT TITLE

This Act may be called the Local Authorities Loans (Bombay Amendment) Act, 1942

SECTION 02: AMENDMENT OF SECTION 7 OF ACT IX OF 1914

After clause(b)of the proviso to section 7 of the Province of Bombay the following shall be inserted, namely:-

(c)to produce any district local board established under Section 4of the Bombay Local Boards Act, 1923, from receiving an advance from the Government of Bombay equivalent to the amount of the cess, levied under sub-section(1) of Section 93 of the said Act, which has not been collected or the collection of which has been suspended under sub-section(2)of the said Section 93."

Rules

RULE 01: SHORT TITLE, COMMENCEMENT CANCELLATION OF FORMER RULES:

These rules may be called the Bombay Local Authorities loan Rules, 1923

They shall come into force on the 1st January 1923

The Local Authorities Loans Rules 1915, published with the Government of India Notification in the Finance Department No-1020-A dated the 10th November 1914 and republished with Government Notification in the Financial Department, No 4868, dated 17th November, 1914, as subsequently amended are hereby cancelled except as regards money borrowed before these rules come into force.

RULE 02: IN THESE RULES

(1)"the Act" means the Local Authorities Loans Act, 1914(IX of 1914)

(2) "Government Loan: means a loan taken from funds of the State Government;

(3) "Loan" means a loan made, taken or raised, under the Act and includes a loan for the payment of the cost of the carrying out of a work under sub-section(1)(i)of section 3 of the Act, or a loan for the reco-opment of any expenditure incurred by a local Authority with the sanction of the State Government for the carrying out of any such work;

(4) "Non-Government Loan" means a loan raised, with the sanction of the State Government, otherwise than from the funds of the State Government and

(5) "term" of a loan means the period elapsing between the date on which the loan is completely repaid.

Rule 3 Limitation of borrowing power: A local authority shall not borrow money for any of the purposes specified in clause (i)(ii)(iii) or(iv)of sub-section 3 unless the work to be carried out in either

(a) within the local limits of the area subject to the control of the local Authority, or

(b) for the benefit of the inhabitants within those limits.

Rule 04: application

When a local authority desires to obtain a loan, it shall submit an application to the State Government through the collector showing-

(2) The purpose for which the loan is required, and where the loan is required for any of the purposes specified in clause (i)(ii)(iv)of the sub-section(1)of Section 3 an estimate of the cost of the entire work or such part of it as it is proposed to carry out from loan funds;

(3) The fund on the security of which it is proposed to borrow;

(4) The law under which the said fund is levied, received, or held

(5) The dates within which the money is to borrowed, and when it is proposed to raise a loan in instalments, the amount of each instalments, the dates within which the first instalment is to be taken or raised and the years in which the first it is intended to take or raise the other instalments

(6)The rate of interest at which it is proposed to borrow;

(7) The term of years for which the money is to be borrowed, and the method by which it is to be repaid. If it is proposed to repay the loan by means of a Sinking Fund, the rate of interest at which the improvement of such Sinking Fund is to be calculated, shall also be stated:

(8) An account of the financial position of the local Authority including a statement of all existing prior charges on its Funds:

(a) The receipt side of the account should show only ordinary revenue. Receipts from loans or deposits, or the investments of Sinking Funds should be excluded as well as items of abnormal character which should be indicated separately when required.

(b) On the expenditure side interest on debt and payments to a Sinking Fund should be included and all expenditure from loan funds and repayment of advances or deposits should be excluded.

(c) Explanations should be given of important variations in the accounts of revenue and expenditure;

(9) The extraordinary terms of receipts and expenditure with full description of the nature of receipt or expenditure for the past three years in a separate statement;

(10) The balance of each loan taken either from the State Government or open market together with the amount of installment, if any to be set aside annually for the Sinking Fund should be distinctly shown is a separate statement.

Rule 4A: Transmission of a duplicate copy of the application to the Examiner Local Fund Accounts

In the case of an application for loan by a local Authority other than a village panchayat a duplicate copy of the application together with the Statement giving the full particulars required by Rule 4 should be sent direct to the Examiner, Local Fund Accounts, Bombay at the same time that the application is submitted to the state Government through the Collector.

Rule 4B: Submission of report by Collector in the case of applications made by village Panchayats: In the case of an application for loan made by a village Panchayat, the Collector shall at the time of forwarding the application to the State Government, submit in consultation with the District Local Board, a report on the financial position of the village panchayat.

Rule 5: Inquiry by the State Government: The State Government shall cause such inquiry as it thinks fit to be made into the statements contained in the application and into the utility of purpose for which the loan is proposed.

Rule 6: Rejection of application: If it appears to the State Government that the money not to be borrowed it shall reject the application.   

7. publication of application, etc: If it appears to the State Government that the money ought to be borrowed, it shall cause to be published in the Bombay Government Gazette, and in such other manner as it may deem fit within the local Limits of the Area subject to the control or the Local Authority, a copy of the application and such particulars in regard to any inquiry made under Rule 5 as it may think necessary

8.Dispossal of application after publication: After the expiry of one month from such publication, and after calling for any further information which it may require and considering any calling for any further information which it may require and considering any objections which may be preferred, the State Government may-

(1)reject the application, or

(2)if so empowered grant the loan, or sanction the raising of the loan, as the case may be,2[with or without modification]

[(2) Where under the modification made under sub-rule(1) the quorum of the loan to be granted by the State Government or to be raised by a local Authority is increased, the modification shall be punished again for inviting objections which shall be disposed of in the manner provided i sub-rule(1). The other modifications made under sub-rule(1)shall be published for information in the Official Gazette, and in such other manner as the State Government may deem fit within the local Limits of the area subject to the control of the Local authority.]

8A. Urgent loans:-Where the local authority in its application desires the immediate grant or sanction to the raising of a loan on the ground that funds are urgently needed for any of the purposes mentioned in clause(ii)(iii)(iv)of sub-section (1) of section 3 of the Act, the State Government, if it is satisfied that the loan is urgently needed for any such purpose may notwithstanding anything contained in Rules 5, 7 and 8 after such inquiry, if any as it thinks fit to make grant or sanction the raising of such loans at any time after the receipt of the application.

9. Government Loans:-When a local authority submits an application for a government loan, the State Government may grant the loan provided that the following conditions are fulfilled, namely:

(a) the terms of the loan does not ordinarily exceed the maximum period of 30 years. Every loan should usually run for as short a period as possible. This rule may however be relaxed in very special cases;

(b) funds are available from the grant voted by the Legislative Assembly for the purpose; and

(c)the rate of interest payable on the loan to be such as the State Government shall determine

10.Non Government loans: When a local Authority submits an application for a non-Government Loan the State Government may sanction the application provided the term of the loan does not ordinarily exceed the maximum period of 30 years. Every loan should usually run for as short a period as possible. This rule may, however be relaxed in very special cases.

11.Prescribed conditions: (1) In granting or sanctioning a loan the state government may prescribe any further conditions not inconsistent with the Act and with these rules, as it may think fit.

(2)In particular and without prejudice to the generality of sub-rule

(1) In the case of every loan the State Government shall determine and the Local Authority shall pay the cost-

(a) of any inquiry made under Rule 5.

(b) of advertisements published under rule 7

(c) of inspection made and other measures of control taken under Rule 12 and

(d)of any other proceeding taken by order of the state Government under these rules.

(ii) In the case of every loan that the local authority shall furnish to the Accountant General, Bombay and to the State Government any information which they may require regarding its funds and regarding the expenditure of the Loan.

(iii) In the case of Government loan, the State Government it considers that the local Authority has failed to comply with any of the conditions prescribed in respect of the loan or with any of the requirements of these rules, may at any time in order that no further payments shall be made on account of such loan, and that any amount advanced with interest thereon shall be repaid immediately.

(iv) in the case of a non-government loan that the local authority shall not, without the previous approval of the state Government vary the dates within the raising of the loan or of the first instalments the local Authority shall report for the previous approval of the State Government, the dates within each further instalment is to be raised.

12 Control and inspection of works and accounts: The following provisions are made for the control and inspection of works to be constructed by the local bodies wholly or partly by raising money in the open market or by taking a loan from the State Government: