The Karnataka Khadi and Village Industries Act, 1956

1. Short title, extent, commencement and repeal. (1) This Act may be called the Karnataka Khadi and Village Industries Act, 1956. (2) It extends to the whole of the State of Karnataka. (3) It shall come into force in such areas from such dates as the State Government may by notification in the Karnataka Gazette specify. (4) On the coming into force of this Act in the Belgaum Area, the Bombay Village Industries Act, 1954 (Bombay Act No. XLI of 1954), shall stand repealed and on the coming into force of this Act in the Gulbarga Area, the Hyderabad Khadi and Village Industries Act, 1955 (Hyderabad Act No. X of 1955), shall stand repealed.

2. Definitions. In this Act, unless there is anything repugnant in the subject or context.— (i) “Board” means the Karnataka State Khadi and Village Industries Board constituted under section 4; (ii) “khadi” means any cloth woven on handlooms in India from cotton, silk or woollen yarn handspun in India, or from a mixture of any two or all of such yarns; (iii) “prescribed” means prescribed by rules made under this Act; (iv) “Regulations” means regulations made under this Act; (v) “village industry” means the Khadi Industry and any industry specified in the Schedule to this Act.

(1) With effect from such date as the State Government may, by notification in the Karnataka Gazette appoint in this behalf, there shall be established for the purposes of this Act, a Board by the name of the Karnataka State Khadi and Village Industries Board. (2) The Board shall be a body corporate having perpetual succession and a common seal and may sue and be sued in its corporate name and shall be competent to acquire and hold property both movable and immovable and to contract and do all things necessary for the purposes of this Act.

(1) (a) The Board shall consist of the following members, namely:— (i) one person from each district of the State, appointed by the State Government; (ii) the Additional Director of Industries and Commerce and ex-officio Additional Registrar of Co-operative Societies, Directorate of Industries and Commerce; (iii) an officer of the Finance Department not below the rank of a Deputy Secretary nominated by the State Government; (iv) an officer of the Department of Commerce and Industries not below the rank of a Deputy Secretary nominated by the State Government; (v) the State Director, Khadi and Village Industries Commission; (vi) the Financial Adviser and Chief Accounts Officer of the Board; and (vii) the Chief Executive Officer of the Board. (b) one of the members shall be appointed by the State Government as the Chairman of the Board. (2) The Chairman, or any other member of the Board may at any time resign his office by submitting his resignation to the State Government: Provided that the resignation shall not take effect until it is accepted. (3) The Chairman, and other members shall receive such allowances as may be prescribed and the allowances shall be paid from the funds of the Board. (4) Subject to the pleasure of the State Government and sub-section (4A), the term of office and the terms and conditions of service of the Chairman and other members of the Board shall be such as may be prescribed. (4A) The State Government may, from time to time grant to the Chairman such leave as may be prescribed and may appoint any other member to act for the Chairman during such leave and such member shall, while so acting, for the purposes of this Act, be deemed to be the Chairman. (5) The Chairman and other members shall be eligible for reappointment.

5. Disqualification for appointment on the Board. A person shall be disqualified for being appointed, or for continuing, as a non-official member of the Board, if he,— (a) does not wear khadi; or (b) holds any office of profit under the Board; or (c) is of unsound mind and stands so declared by a competent court; or (d) is an undischarged insolvent or has applied for being adjudged an insolvent; or (e) has been convicted of an offence, which involves, in the opinion of the State Government, moral turpitude; or (f) has directly or indirectly by himself, by his wife or son or by any partner, any share or interest in any subsisting contract or employment with, by, or on behalf of, the Board; or (g) is a secretary or manager or other salaried officer of any incorporated company or any co-operative society which has any share or interest in any contract or employment with, by, or on behalf of, the Board: Provided that a person shall not be disqualified under clauses (f) and (g), or be deemed to have any share or interest in any contract or employment with, by, or on behalf of, the Board, by reason only of,— (i) his, or of the incorporated company or of a co-operative society of which he is a secretary, manager or other salaried officer, having a share or interest in any newspaper in which any advertisement relating to any affairs of the Board is inserted, or (ii) his being a share-holder of such a company or society, if he has disclosed to the State Government the nature and extent of the share held by him from time to time.

6. Removal or suspension of a member of the Board. (1) The State Government may, after such inquiry as may be necessary, remove from office the Chairman or any other non-official member, if he,— (a) refuses to act; or (b) has become incapable of acting; (c) has abused his position in the Board so as to render his continuance on the Board detrimental to its interest; or (d) fails, without such reason as may in the opinion of the State Government be sufficient, to attend three consecutive meetings of the Board; or (e) ceases to reside in the State of Karnataka; or (f) has since his appointment incurred any of the disqualifications specified in section 5; or (g) is otherwise unsuitable to continue on the Board. (2) No order of removal under sub-section (1) shall be made, unless the non-official member concerned has been given an opportunity to submit his explanation to the State Government: Provided that a non-official member may be suspended by the State Government pending an enquiry against him. (3) A non-official member who has been removed under clause (c) or (f) of sub-section (1) shall not be eligible for appointment to the Board as non-official member or in any other capacity.

7. Vacancy of Members. If a non-official member tenders his resignation in writing to the State Government, and if it is accepted by the State Government, he shall cease to be a non-official member from the date of such acceptance.

7A. Filling of a casual vacancy. Where a vacancy occurs on account of removal, resignation, death or otherwise of a person appointed as a non-official member, the vacancy shall be filled by the State Government by appointment of a new non-official member and the person so appointed shall hold office for the remainder of the term of the non-official member in whose place he is appointed.

8. Proceedings presumed to be good and valid. No act or proceeding of the Board shall be invalidated merely by reason of any vacancy in its membership on account of resignation, death or removal.

9. Appointment of members of staff of Board and conditions of their service. (1) The State Government shall appoint an officer not below the rank of a Deputy Commissioner of a District to be the Chief Executive Officer of the Board. (2) The State Government may, from among officers of the Central Government or the State Government appoint a Financial Adviser and Chief Accounts Officer to the Board. (3) The remuneration, allowances and conditions of service of the Chief Executive Officer and the Financial Adviser and Chief Accounts Officer shall be such as the State Government may specify, and their remuneration and allowances shall be paid from the funds of the Board. (4) Subject to such rules as may be prescribed, the Board may appoint such members of the staff as it may consider necessary. (5) The remuneration, allowances and other conditions of service of the members of the staff of the Board shall be such as may be prescribed.

10. Appointments of Committees. Subject to any rules made under section 31, the Board may from time to time appoint one or more Committees for the purpose of securing efficient discharge of its functions and in particular for the purpose of securing that the said functions are exercised with due regard to the circumstances and requirements of any particular village industry. Such Committees may be appointed for any particular area.

The Board shall meet and shall from time to time make arrangements with respect to the date, time, notice, management and adjournment of its meetings as it thinks fit. Such meeting shall be held at least once in every two months.

12. Power to make contracts. (1) The Board may enter into and perform all such contracts as it may consider necessary or expedient for carrying out any of the purposes of this Act and every contract shall be made on behalf of the Board by the Chairman: Provided that,— (a) no contract involving an expenditure of Rs. 1,00,000 and more shall be made without the previous sanction of the State Government, (b) (i) no contract involving an expenditure of Rs. 10,000 and more shall, subject to clause (a), be made without the previous sanction of the Board, (ii) no estimate or tender involving an expenditure of Rs. 10,000 and more shall, subject to clause (a), be sanctioned or accepted without the previous sanction of the Board. (2) Every contract made by the Chairman on behalf of the Board shall, subject to the provisions of this section, be entered into in such manner and form as may be prescribed. (3) A contract not executed in the manner provided in this section and the rules made thereunder shall not be binding on the Board.

(1) It shall be the duty of the Board to organise, develop and regulate village industries and perform such functions as the State Government may prescribe from time to time. (2) Without prejudice to the generality of the provisions of sub-section (1) the Board shall, subject to such regulations as may be made by it, discharge and perform all or any of the following duties and functions, namely:— (a) to start, encourage, assist and carry on village industries and to carry on trade or business in such industries and in matters incidental to such trade or business; (b) to render such assistance as may be necessary to any person engaged in any village industry; (c) to organise and aid co-operative societies for village industries; (d) to conduct training centres; (e) (i) to arrange for the manufacture of tools, implements and other equipment required for carrying on village industries; (ii) to arrange for the supply of raw materials, tools, implements and other equipment required for village industries; and (iii) to arrange for the sale of the products of the said industries; (f) to arrange for publicity and for popularising of finished products of the said industries by opening stores, shops, emporia or exhibitions; (g) to undertake and encourage research work in connection with village industries and to carry on such activities as are incidental and conducive to the objects of this Act; (h) to maintain or assist in the maintenance of institutions for the development of village industries; (i) to discharge such other duties and to perform such other functions as the State Government may direct for the purpose of carrying out the objects of this Act.

The Board shall, for the purposes of carrying out its functions under this Act have the following powers:— (i) to acquire and hold such movable and immovable property as it deems necessary and to lease, sell or otherwise transfer any such property: Provided that in the case of immovable property the aforesaid powers shall be exercised with the previous sanctions of the State Government; (ii) to incur expenditure and undertake works in any area in the State for the framing and execution of such scheme as it may consider necessary for the purpose of carrying out the provisions of this Act or as may be entrusted to it by the State Government and the Khadi and Village Industries Commission, subject to the provisions of this Act and the rules made thereunder; (iii) to sanction loans, grants and subventions, subject to such rules as may be prescribed.

15. Preparation and submission of annual programme. (1) In each year, the Board shall prepare and forward to the State Government a programme of work in such form and before such date as the State Government may determine. (2) The programme shall contain,— (a) such particulars of the scheme which the Board proposes to execute whether in part or in whole during the next year; (b) particulars of any work or undertaking which the Board proposes to organise during the next year for the purposes of carrying out its functions under this Act; and (c) such other particulars as may be prescribed.

The State Government may approve and sanction the programme in whole or with such modifications as it deems fit.

The Board may prepare and forward a supplementary programme for the sanction of the State Government in such form and before such date as the State Government may prescribe and the provisions of section 15 shall apply to such supplementary programme.

The State Government may transfer to the Board, buildings, land or any other property whether movable or immovable, for use and management by the Board on such conditions as the State Government may deem fit, for the purposes of this Act.

All debts and expenditure incurred, all contracts entered into and all matters and things engaged to be done by, with or for the State Government, in connection with or for the purposes of this Act before and up to the date of the establishment of the Board shall be deemed to have been respectively incurred, entered into or engaged to be done by, with or for the Board, and all suits, and other legal proceedings instituted by or against the State Government in respect thereof shall be deemed to be instituted and continued as such by or against the Board, as the case may be.

(1) The Government may, from time to time, make subventions and grants to the Board for the purposes of this Act on such terms and conditions as the State Government may determine in each case. (2) The Board may, from time to time, with the previous sanction of the State Government and subject to the provisions of this Act and such conditions as the State Government may determine, borrow any sum required for the purposes of this Act.

(1) The Board shall have its own fund and all receipts of the Board shall be credited thereto and all payments by the Board shall be met therefrom. (2) The Board may accept grants, subventions, donations and gifts from State and Central Governments or the Khadi and Village Industries Commission or a local authority or any body or association, whether incorporated or not, or an individual for all or any of the purpose of this Act. (3) The Board may receive loans from State and Central Governments or the Khadi and Village Industries Commission or a local authority or a co-operative bank registered under any law governing co-operative societies in the State or a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 or the State Bank of India constituted under the State Bank of India Act, 1955 or a subsidiary bank as defined in the State Bank of India (Subsidiary Banks), Act, 1959, or a corresponding new bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. (4) All money belonging to the fund of the Board shall be deposited in such manner as the State Government may, by special or general order, direct. (5) The accounts of the Board shall be operated upon by such officers jointly or individually as may be authorised by the Board.

All property, fund and other assets of the Board shall be held and applied by it subject to the provisions and for the purposes of this Act.

22A. Recovery of moneys due to the Board as arrears of land revenue (1) Where any sum of Rs. 1,00,000 and above is payable to the Board under any agreement, express or implied or otherwise, however, by any person, is not paid on or before the due date and remaining in arrears after fifteen days from the date of service of a notice of demand on such person by the Chief Executive Officer or any other officer

The Board shall, on such date as may be fixed by the State Government, prepare and submit to the State Government the budget for the next financial year showing estimated receipts and expenditure on capital and revenue accounts according to the programme.

The State Government may sanction the budget submitted to it with such modifications as it deems proper.

The Board may submit a supplementary budget for the sanction of the State Government in such form and before such date as the State Government may prescribe and the provisions of section 23 shall apply to such supplementary budget.

The Board shall prepare and forward to the State Government in such manner as may be prescribed, an annual report within three months from the end of the financial year giving a complete account of its activities during the previous financial year. Every such report shall be laid before each House of the State Legislature as soon as may be after it is received by the State Government.

The Board shall, before such date and at such intervals and in such manner as the State Government may from time to time direct, submit to the State Government a report on such matters and such statistics and such returns as the State Government may direct.

The accounts of the Board shall be maintained and an annual statement of accounts shall be prepared in such manner as may be prescribed. Such accounts shall be audited by an Auditor appointed by the State Government.

Members of the Board and members of the staff of the Board shall be deemed when acting or purporting to act in pursuance of any of the provisions of this Act to be public servants within the meaning of section 21 of the Indian Penal Code, 1860 (Central Act XLV of 1860).

30. Protection of action taken under this Act. No suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or purported to be done under this Act.

(1) The State Government may, by notification in the official Gazette, declare that with effect from such date as may be specified in the notification, the Board shall be dissolved and thereupon the Board shall be deemed to be dissolved and accordingly the Board and any committee constituted by the Board shall cease to function. (2) On and from the said date,— (a) all properties and funds which immediately before the said date were in possession of the Board for the purpose of this Act shall vest in the State Government; (b) all members shall vacate office as members of the Board; and (c) all rights, obligations and liabilities (including any liabilities under any contract) of the Board shall become the rights, obligations and liabilities of the State Government.

(1) The State Government may, by notification in the Karnataka Gazette, make rules for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing powers such rules may provide for all or any of the following matters, namely:— (a) the term of office and the terms and conditions of service of the Chairman and other members of the Board under section 4; (b) the manner and form in which contracts shall be entered into under section 12; (c) the functions of the Board under section 13; (d) the other particulars of the programme under section 15; (e) the form in which and the date before which the supplementary programme shall be submitted under section 17; (f) the form in which and the date before which the supplementary budget shall be submitted under section 25; (g) the manner in which the annual report shall be prepared and forwarded to the State Government under section 26; (h) the manner of maintenance of accounts and preparation of annual statement of accounts under section 28; (i) remuneration, allowances and other conditions of service of members of the staff of the Board and the functions of the Chief Executive Officer and the Financial Adviser and Chief Accounts Officer of the Board; (j) any other matter which is or may be prescribed under this Act. (2A) A rule under this Act may be made with retrospective effect and when such a rule is made the reasons for making the rule shall be specified in a statement laid before both the Houses of the State Legislature. Subject to any modification made under sub-section (3), every rule made under this Act shall have effect as if enacted in this Act. (3) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of the State Legislature while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if before the expiry of the session in which it is so laid or the session immediately following, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

(1) The Board may, with the previous sanction of the State Government, make regulations by notification in the Karnataka Gazette, consistent with this Act and the rules made thereunder. (2) In particular and without prejudice to the generality of the foregoing power the Board may make regulations providing for:— (a) the procedure and disposal of its business; (b) functions and duties of the members of the staff of the Board; (c) functions of the committees and the procedure to be followed by such committees in the discharge of their functions; (d) conditions subject to which the Board may discharge or perform duties under sub-section (2) of section 13.

33. Amendment of Schedule. (1) The State Government may, by notification in the Karnataka Gazette, modify the Schedule to this Act by addition thereto or omission therefrom of any industry. (2) Every notification under sub-section (1) shall be laid as soon as may be after it is issued before each House of the State Legislature while it is in session, for a total period of one month which may be comprised in one session or in two or more sessions and if before the expiry of that period, either House of the State Legislature makes any modification in the notification or directs that the notification shall not have effect and if the modification or direction is agreed to by the other House, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be.

34. Saving. Nothing in this Act shall be deemed to apply to any industry declared to be scheduled industry under the Industries (Development and Regulation) Act, 1951 (Central Act LXV of 1951) or to affect any of the provisions of the said Act.

35. Omitted. None