Chapter IV PROVISIONS REGULATING THE GIVING OF STATE AID

OTHERWISE THAN BY THE SUPPLY OF MACHINERY OF THE HIRE-PURCIIAE SYSTEM

to the sanction of the State Government given after consultation with the

Finance Department, provided that in regard to loans not exceeding a pres- cribed amount, the State Government may make rules delegating its powers to such authority or officers as it deems fit.

(1) (a) On the acceptance of an application for a loan, the applicant shall execute a deed in the prescribedform, undertaking to apply the loan to the purpose for which, and to fulfil the conditions on which, the loan was granted, rendering himself and such property as may have been specified in the deed as security, including machinery or any building constructed, with aid of the loan and in the event of

such property being found insufficient, rendering the hole of his property

liable for the repayment of the loan with interest and costs, if any, incurred by the State Government in making or recovering the loan.

1. (b) No transfer, assignment or charge made or created after the execution of the deed, in relation to the property specified therein or machinery purchased or building constructed with the aid of a loan, shall be valid against the State Government unless it has been made or created with the previous consent in writing of the authority sanctioning the loan.

1. (2) When the application has been made by a firm or company, the deed shall be executed by a duly authorised representative thereof, and the deed shall thereupon be deemed binding on the said firm or company and the property of the said firm or company shall be liable for the repayment of the loan in the same manner as if the loan had been granted to an individual.

The loan together with all interest thereof, if any, shall be repayable either in a lump sum or by instalments as may be provided for in the deed executed by the borrower under section 21.

(1) When any loan or instalment or interest thereon falls due and is not paid on or before the due date or when a loan has been declared immediately repayable under section 27, the officer empowered by the State Government in this behalf may cause to be served on the borrower, a notice, in the prescribed manner, calling upon him to pay the sums due or to show cause within such time as may be fixed therein. (2) Such notice shall contain an intimation that in case of default the said officer will issue a declaration in a prescribed form showing the amount of the debt due and the property mentioned in the deed as liable to satisfy the same.

1. (2) Such notice shall contain an intimation that in case of default the said officer will issue a declaration in a prescribed form showing the amount of the debt due and the property mentioned in the deed as liable to satisfy the same.

(1) If, within the time so fixed, the sums due are not paid or no cause is shown to the satisfaction of the officer empowered under section 23, the said officer may issue the declaration as described in sub-section (2) of the same section, and such declaration shall be published in the Official Gazette. (2) Such declaration shall be conclusive evidence of its contents, and shall not be called in question in any court by the borrower, his heirs, legal representatives or assigns, or by any member of his family if he belongs to a Joint Hindu Family nor shall any right, principle or rule arising from or under the personal or customary law applicable to the said persons or any of them affect the validity or effectiveness of a mortgage executed or of a declaration published under this Act, or the procedure therein provided for enforcement thereof. (3) Such declaration may be produced by the said officer, or by such otherperson as he may either generally or specially appoint in this behalf, before theprincipal civil court of original jurisdiction within the locallimits of whose jurisdiction any of the property liable for the debt due is situated, in the same manner as a decree of which execution is sought.

1. (2) Such declaration shall be conclusive evidence of its contents, and shall not be called in question in any court by the borrower, his heirs, legal representatives or assigns, or by any member of his family if he belongs to a Joint Hindu Family nor shall any right, principle or rule arising from or under the personal or customary law applicable to the said persons or any of them affect the validity or effectiveness of a mortgage executed or of a declaration published under this Act, or the procedure therein provided for enforcement thereof.
2. (3) Such declaration may be produced by the said officer, or by such otherperson as he may either generally or specially appoint in this behalf, before theprincipal civil court of original jurisdiction within the locallimits of whose jurisdiction any of the property liable for the debt due is situated, in the same manner as a decree of which execution is sought.

When declaration has been received by a civil court under section 24, the court shall immediately attach the property mentioned in the declaration and shall pass an order directing that, unless the amount mentioned in the declaration is paid within such time, not exceeding two months, as the court may consider reasonable, it may be recovered by sale of the property mentioned in the declaration as ifit were a decree for the payment of money passed by the said court in the exerciseof its ordinary civiljurisdiction.

ordinary civiljurisdiction.

In any ease in which an application for a loan has been made under this Chapter, the applicant and, at any time during the currency of a loan that has been granted, the borrower shall be bound:- (a) to comply with any general or special order of the Director relating to the inspection of the premises, building, machinery and stock-in-hand of the industry; (b) to permit the inspection of all accounts relative to the industry; (c) to furnish full returns of all products manufactured or sold, bothas regards description and quantity; (d) to maintain such special accounts and to furnish such statementsas the Director may, from time to time, require; and (e) to submit the accounts of the industry to such audit as the

1. (a) to comply with any general or special order of the Director relating to the inspection of the premises, building, machinery and stock-in-hand of the industry;
2. (b) to permit the inspection of all accounts relative to the industry;
3. (c) to furnish full returns of all products manufactured or sold, bothas regards description and quantity;
4. (d) to maintain such special accounts and to furnish such statementsas the Director may, from time to time, require; and
5. (e) to submit the accounts of the industry to such audit as the

Penalty for default in applying the loan.-If the Director, after any inspection provided for in section 26, is not satisfied that the money lent is being applied to the purpose or purposes for which the loan was granted or that the conditions on which the loan was granted are being duly fulfilled, he may declare, notwithstanding anything contained in the deed executed under section 21, that the loan is immediately repayable and shall give notice of suchdeclaration to the borrower.

Ifat any time during the currency of the loan, the value of the securityfalls below the out- standing balance of the loan, the Director may either proceed to recover in the manner laid down in sections 23, 24 and 25 so much of such balance as is not adequately covered by the then existing value of the security or accept such additional or collateral security as he may deem sufficient.

Ifthe borrower fails to comply with any order under clause (a) of section 26 or does not permit or obstructs the inspec- tion of the accounts relative to the industry or makes default in respect of anyof the particulars specified in clauses (c), (d) and (e) of the said section, or if the borrower disposes of profits in contravention of the provisions of section 33, the Director may, after considering any representation the borrower may make within such time as the State Government may allow in this behalf, proceed to recover the loan in the manner laid down in sections 23, 24 and 25.

27, 28 and 29, the borrower may appeal against such order to the State

Government guarantee or a minimum return.- The conditions of a guarantee by the State Government of a minimum return on the whole or part of the capital of joint stock company shall be-

1. (a) that the industry shall be subject to the conditions of section 26 inrespect of inspection, returns and accounts;
2. (b) that a minimum portion of the authorised capital of the industryto be fixed according to the circumstances of each case has been subscribed and paid in cash;
3. (c) that no such guarantee shall, in any case, extend beyond a periodof 5 years;
4. (d) that during the period to which the guarantee extends, the State Government may impose on such persons as it considers to be directly concerned in the promotion of the company, a condition that if they transfer any of their shares without the consent of the State Government, they shall be liable jointly and severally to refund to the State Government any sums paid to the company in fulfilment of the guarantee;
5. (e) That the State Government shall be entitled to recover the whole or any part of the sum paid by the State Government on account of such guarantee with interest at the rate in force on the date of the agreement forloans granted under the Land Improvement Loans Act, 1883, (19 of 1883) at any time after such period as

may have been laid down in the agreement, provided that the

State Government is satisfied that the company is paying or is able to pay interest or a dividend upon the capital shown as paid up in excess of such rate as may be fixed in the agreement and such recovery shall be made in the manner laid down in sections 23, 24 and 25: Provided that the sum recoverable by the State Government in anyone year shall not exceed a sum equal to half the net profits made by the company in the preceding year in excess of the sum required for the payment of interest or dividend at the rate fixed in the agreement.

A subsidy to an industry as per clause (i) of section 17 may be granted by the State Government on such conditions as may be prescribed in this behalf.

No borrower shall pay any dividend or distribute or take any profits in excess of such percentage rate upon the amount of the capital of the industry as the State Government may,form time to time, fix, until the conditions on which the State aid has been granted are fulfilled.

Notwithstanding anythingcontained elsewhere in this Chapter, the State Government may, by the appointment of its own directors or otherwise, exercise such conduct of the industry to which the State aid has been given as shall suffice, in its opinion, to safeguard its interests, provided that such right has been expressly reserved by agreement at the time the aid was granted.

Notwithstanding anything contained in sections 23, 24 and 25, any amount payable to the State Government under this Act including interest chargeable thereon and costs, if any, incurred, may, with the previous sanction of the State Government, be recovered as arrears of land revenue.