Constitution of Salary Reserve Fund

Every Council shall build up a “Salary Reserve Fund” within a period of three financial years by transferring annually on or before the 31st day of December a sum equal to the total of one month’s salary and allowances of all the officers and servants of the Council. Neither during the period of three years aforesaid nor thereafter, shall it be competent for the Council to incur any expenditure from this fund, except with the previous sanction of the Director. The Director may give his sanction if he is satisfied that the proposed expenditure is for the payment of salaries and allowances, and cannot be incurred from the unreserved funds of the Council. Such sanction shall further be subject to the condition that no expenditure from the municipal fund shall be incurred thereafter except for the purposes specified below in order of priority, till the Salary Reserve Fund is fully recouped:— (a) recoupment of the Salary Reserve Fund’, (b) payment of salaries and allowances. The Director shall also prescribe the period and the monthly instalment by which the said fund shall be recouped, which period in no case shall exceed six months.