Chapter III GENERAL PROVISION REGARDING THE GRANT OF AID

(1) An industry to which aid may be given by the 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 area where such industry is undeveloped; or (c) an old or established industry: Provided that the Government may, by notification and for reasons 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 1[the Companies Act, 1956 (Central Act 1 of 1956)] unless the same is registered in India. . See the relevant provisions of the Companies Act, 2013 (Central Act 18 of 2013). (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.

1. (a) a new or nascent industry;
2. (b) an industry to be introduced in any area where such industry is undeveloped; or
3. (c) an old or established industry: Provided that the Government may, by notification and for reasons recorded therein, declare that aid shall not be given under this Act to any industry specified in such notification.

1. (2) No aid shall be given by the Government to any Company as defined in section 3 of 1[the Companies Act, 1956 (Central Act 1 of 1956)] unless the same is registered in India. . See the relevant provisions of the Companies Act, 2013 (Central Act 18 of 2013).
2. (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.

and in accordance with the rules made thereunder, the Government may grant aid to any industry by way of a loan for all or any of the following purposes:-

1. (i) purchase of land and erection of buildings;
2. (ii) purchase of plant and machinery;
3. (iii) purchase of raw materials;
4. (iv) working capital or other incidentals necessary for the purpose of carrying on the industry;
5. (v) paying the cost of employment of technical specialists or experts and of training of personnel;
6. (vi) paying the cost of employment of managerial staff by industrial co-operatives;
7. (vii) repayment of debts contracted for the purpose of acquiring fixed assets;
8. (viii) recoupment and reimbursement of capital invested within one year prior to the date of application for the acquisition of fixed assets;
9. (ix) discharge of mortgaged debts secured, on fixed assets, not more than one year prior to the date of application;
10. (x) payment towards the share capital of an industrial co- operative subject to a maximum of seventy-five per cent of the share value or rupees one hundred and fifty per artisan, whichever is less.

1. (2) The loan that may be granted by the Government under this section shall not exceed—
   • (a) rupees twenty-five thousand in the case 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.

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 accordance with such rules as may be made in this behalf: Provided that the loan that may be granted by the Director to an industry shall not exceed rupees ten thousand: Provided further that the Government shall have power to control and revise any act or proceeding of the Director.

1. (2) The decision of the Government or the Director to, grant or not to grant aid in any case under sub-section (1) shall not be called in question in any Court of law.
2. (3) Nothing in sections 3, 11 and 14 shall apply to any application for the grant of aid under sub-section (1) or to any case where aid is granted under that sub-section.

1. (1) Every application for aid of an amount exceeding ten thousand rupees shall be made to the Director in the prescribed form.
2. (2) As soon as may be after an application is made to him under sub- section (1), the Director shall make such enquiry as may be prescribed in regard to such application and shall place the application together with this report of inquiry before the Board. The Board shall consider the same 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.

Act, where the amount of the loan exceeds rupees two hundred, without obtaining,-

1. (a) security of immovable property owned by the applicant or two sureties therefor or of the plant and machinery of the indentity 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 case may be, being taken as the value thereof for the said purpose; or
2. (b) security by way of mortgage 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 certificates.

1. (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.
2. (3) Notwithstanding anything in sub-section (1), the Government may, in the case of any industrial co-operative society, grant loan which may extend to an amount equivalent to ten times the paid-up share capital of such Industrial

Prohibition of transfer of property without permission of the sanctioning authority- (1) Where, before or after the commencement of this Act, any property has been taken as security 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 of the Government or Director as the case may be, (thereafter in this section and section 10 referred to as the “sanctioning authority”).

1. (2) The sanctioning authority may, in its discretion, by order, permit the transfer or any such property, after satisfying itself that 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 transfer is in furtherance of the purposes for which the aid was granted and the assets resulting from the transfer are to be wholly utilised in furtherance of the said purposes. Explanation - When granting permission under this sub-section, the sanctioning authority may impose such condition as it may deem fit to ensure that the assets resulting from the 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.
2. (3) Where any such property is transferred without such permission the transfer shall be null and void.

(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 the Court has obtained the written permission of the sanctioning authority to do so and files such permission in Court.

1. (2) When granting the permission 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.
2. (3) Where any such property is attached or sold or a charge is created thereon by any Court without the permission of the sanctioning authority having been obtained and filed as aforesaid or where any condition imposed by the sanctioning authority when granting such permission is contravened, the attachment, sale or charge, as the case may be, shall be null and void.

Act, the applicant, and at any time during the currency of a loan that has been granted under it, the grantee, shall be bound,-

1. (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;
2. (b) to submit the accounts of the industry to such audit as may be prescribed.

The power exercisable by the Government under sub-section

1. (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.

case, the amount of the loan given under this Act amounts to or exceeds one lakh of rupees, the Government shall, and in any other case may, by the appointment of Directors 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.

interest from such date and at such rate as the Government may, 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 the loan is advanced in installments, from the date of payment of the last installment, as may be fixed by the order granting the loan:

Training of Apprentices by recipient of aid -Every recipient of aid under this Act shall make such provision for the training of apprentices as the

Disposal of profits when condition of aid is not fulfilled -No recipient of aid to any industry, other than a cottage industry, shall pay any dividend or distribute or take any profits in excess 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 for depreciation or obsolescence of plant, machinery or buildings and for payment of interest on debentures or loans, shall be carried to a reserve fund to be utilised in such manner as the Government may approve.

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:-

1. (i) that any portion of the aid granted has been misapplied;
2. (ii) that there has been a breach by the recipient of aid of the provisions of this Act, or of any rules made thereunder or of any condition of the grant of aid;
3. (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 under this Act, by or with connivance of the applicant or in any return under the Act, or in reply to any requisition for information under this Act;
4. (iv) that the industry is being managed in such manner as to endanger the repayment of the amount of the aid granted thereto repayable under this Act, or make it impossible to return the money value of the aid under this Act: Provided that no such order shall be passed unless the recipient is given an opportunity of making his representation.

1. (2) Notwithstanding anything in this Act, the Government may, on the termination of aid under sub-section (1), proceed to recover from the grantee:-
   • (a) the whole of amount of any loan outstanding together with such interest as may be due thereon;
   • (b) the cost of recovery, if any, and where the Government to direct, the cost of any inquiry in connection therewith.
2. (3) Any order passed by the Government under sub-section (1) or sub- section (2) shall be final.

inspection or audit made under this Act, charge such fees as may be prescribed.

Nothing in this Act shall preclude the Government from –

1. (a) assisting an industry by agreement to purchase on business terms the whole or portion of its products;
2. (b) starting or conducting an industry for experimental purposes or with a view to stimulate industrial development;
3. (c) assisting an industry by giving gratis/or on favourable terms the services of Government officials, experts, or others, either in the capacity of advisers or otherwise for such periods, as the Government may deem necessary for starting or conducting such industry;
4. (d) assisting an industry in connection with industrial education or the training of apprentice;
5. (e) assisting an industry in any manner which may be determined by the Government;
6. (f) establishing a company for the purpose of giving financial or other assistance to any industry or subscribing for shares in such company, on such terms and conditions as the Government may, by general order, lay down;
7. (g) subscribing for shares in, or in any manner aiding any industry on such terms and conditions as the Government may, by general or special order, lay down;
8. (h) assisting an industry in the purchase of implements or machinery;
   • (i) assisting in the marketing of products in the possession of any industry;