Chapter XIV FINANCIAL CONTROL AND AUDIT

(1) The Finance, Audit and Planning Committee shall cause to be prepared and laid before the municipality at a meeting, which shall be held between the first day of February and the tenth day of March, a complete account of the actual and expected receipts and expenditure for the official year ending on the thirty-first day of March next following together with a budget estimate of the income and expenditure of the municipality for the official year to commence on the first day of April next following. (2) The municipality shall thereupon decide upon the appropriation and the ways and means contained in the budget of the year to commence on the first day of April next following. The budget as passed by the municipality shall be sent, through the Deputy Commissioner to the Director, before such may be fixed by the Director. (3) In such budget estimate, the municipality shall among other things,- (a) make adequate and suitable provision for such service as may be required for the fulfilment of the several duties imposed on the municipality by this Act or any other law ; (b) provide for the payment, as they fall due, of all instalments of principal and interest for which the municipality may be liable in respect of loans contracted by it ; (c) allow for a balance at the end of said year of not less than such sum or percentage of income as may, from time to time, be fixed by the Director either generally for all municipality or specially for any municipality. (4) If such budget estimate is not in accordance with the provisions of this Act or the rules and orders issued thereunder, the Director may, within two months from the date of receipt of the budget, modify the same to secure compliance with the Act, the rules or the orders: Provided that the Director shall not have power to direct that total proposed expenditure shall exceed the total of the estimated income of the municipality for the following year and the opening balance. (5) If the municipality fails to approve the budget estimate on or before the date mentioned in sub-section (1), the Executive Officer or the Secretary of the municipality shall forward the budget estimate, through the Deputy Commissioner, to the Director who shall approve it with or without modification. The budget so approved by the Director shall be certified by the Director and thereupon shall be deemed to have been duly approved by the municipality.

Revision of budget. If, in the course of the official year the municipality finds it necessary to modify the provisions made in the budget with regard to the receipts or to the distribution of the amounts to be expended on the different services it undertakes, it may make such modifications : Provided that no diversion of grants transferred by the Government out of the Consolidated Fund of the State can be made for a purpose, programme or scheme not covered under such grants: Provided also that, without the approval of the Director,- (a) no reduction of over ten per cent is made in the grants approved for any developmental functions of the municipality ; and (b) the closing balance shall not be reduced below the sum fixed under clause (c) of sub-section (3) of section 249.

Supplementary budget may be prepared and submitted when necessary. The municipality may, at any time during the year for which a budget has been sanctioned by the Director, cause a supplementary budget to be prepared and submitted to the Director. Every such supplementary budget shall be considered and approved by the Municipality and submitted, through the Deputy Commissioner to the Director for approval.

Maintenance of accounts and restriction of expenditure. (1) Accounts of the income and expenditure of the municipality shall be kept in accordance with such rules as may be prescribed. (2) Expenditure from the municipality fund shall, save as otherwise expressly provided for in this Act, be incurred subject to such sanction, conditions and limitations as may be prescribed. (3) The municipality shall within a period not exceeding three months after the close of the official year pass the accounts of that year.

Transmission of accounts. The municipality shall, as soon as the annual accounts have been finally passed by it, transmit to the Director an account in the form prescribed in this behalf and shall furnish such details and vouchers relating to the same as the Director, may from time to time, direct.

Power to write off irrecoverable sums. Subject to such restrictions as may be prescribed a municipality may write off any sum due to it, if in its opinion, such sum is irrecoverable : Provided that no sum exceeding one thousand rupees shall be written off except with the previous sanction of the Director.

(1) The accounts of the municipality fund shall be audited by a separate and independent audit agency and audit agency shall, for the purpose of audit have access to all the accounts and other records of the municipality. (2) The audit agency shall within one month of the completion of the audit forward the copy of the audit note to the municipality and on receipt of the said report, the municipality shall, as soon as may be, remedy defects or irregularities, if any, pointed out in the report and shall forward without delay to the State Government through the Deputy Commissioner and the Director, so many copies of the said report as may be required by the State Government with a brief statement of the action, if any, taken or proposed to be taken thereon. (3) The State Government shall on receipt of the audit report of the municipalities, lay them before the State Legislature.

(1) The municipality shall, on the report of the audit agency may on its own motion and after taking the explanation of the person concerned or making such further enquiry as it may consider necessary, charge any person responsible for irregular expenditure pointed out by the audit agency or the amount of any deficiency or loss caused by the negligence or misconduct of such person or any sum received which ought to have been, but is not brought into account by such person, and shall, in every such case certify the amount due from such person. (2) The municipality shall in writing state the reasons for its decision in respect of every charge and send a copy thereof to the person against whom it is made.

Recovery of amounts disallowed. (1) Every sum certified by the municipality to be due from any person under sub-section (1) of section 256 shall be paid by such person to the municipality within thirty days from the date of the receipt by him of a copy of the decision. (2) Such sum, if not duly paid alongwith interest at fifteen per cent per annum or the amount due from the date from which it became due shall be recoverable as an arrear of land revenue alongwith the necessary expenses of such recovery and shall be credited to the municipality fund.

(1) When any sum payable on demand - (a) which by or under the provisions of this Act is declared to be recoverable in the manner provided by this Chapter, or (b) which is claimable as a fee or other amount due to the municipality under this Act, or under any rules and regulations made thereunder, shall have become payable and remains un paid for fifteen days after the same is due, the Executive Officer or Secretary, as the case may be, or an Officer duly authorised by him in writing in this behalf (hereinafter referred to as the authorised Officer) may serve upon the person or persons liable to pay such sum a notice in writing in the prescribed form. (2) If such person does not, within fifteen days, from the service of such notice of demand upon him, pay the sum due, or show cause to the satisfaction of the Executive Officer or the Secretary why the same should not be paid, the Executive Officer or the Secretary may recover such sum, with all costs, by distraint and sale of the movable property of the defaulter. (3) In order to effect the distraint and sale of properly under sub-section (2), the Executive Officer or the Secretary, as the case may be, or the authorised officer shall issue a warrant in the prescribed form and a warrant fee of one rupee shall be leviable for each such warrant. (4) The Executive Officer or the Secretary, as the case may be, or the authorised officer shall make an inventory of the property distrained, a copy of which shall on demand be delivered to the defaulter or any person on his behalf, and if the amount due is not paid within fifteen days after distraint, the property may be sold. (5) The Executive Officer or the Secretary, as the case may be, or the authorised officer shall give or cause to be given to every person making payment of the amount due, a receipt therefor signed by him. Such receipts shall specify,- (a) the date of the payment thereof ; (b) the name of the person by whom it is paid ; (c) the amount due in respect of which the payment has been made ; (d) the period for which the payment has been made ; and (e) the amount in respect of which it is granted. (6) Any sum due to a municipality under this Act, shall without prejudice to any other mode of collection, be recoverable as an arrear of land revenue.

(1) Whenever, under section 258 any property is distrained, seized or sold in consequence of the non-payment of any amount due, such distraint, seizure and sale shall be effected subject to the provisions of the following sub-sections and of section 62 of the Code of Civil Procedure, 1908 (5 of 1908). (2) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908) exempt from attachment or sale in execution of the decree shall be exempt from distraint or sale under this section. (3) The distress shall not be excessive. The value of the property distrained shall be, as nearly as possible, proportionate to the amount due on account of the fee, rent or other amount due, and the distraint fee and the probable expenses incidental to the detention and sale of the said property. (4) When the property seized is subject to speedy and natural decay, or if in the opinion of the person seizing the property, the expenses of keeping it in custody together with amount due, exceeds the value of the property, the said person shall immediately after seizure of such property, give notice to the person from whose possession it was seized, to the effect that it will be sold at once and shall sell it accordingly unless the amount due is paid forthwith. (5) Any surplus amount that may remain after deduction of the amount due and of the said expenses, including the expenses of the same, shall be paid to the owner of the property. (6) If any claim be set up by a third person to moveable property distrained under section 258, the Executive Officer or the Secretary, as the case may be, shall, after a summary enquiry, held, after giving reasonable notice to the claimant admit or reject the claim. If the claim be admitted wholly or partly the property shall be dealt with accordingly. Except in so far as it is admitted, the property shall be sold and the title of the purchaser shall be good for all purposes, and the proceeds shall be disposed of as hereinbefore directed: Provided that nothing in this sub-section shall be deemed to bar the claimant or any person having any interest in the property distrained from seeking relief in a Civil Court having jurisdiction.