Chapter XI FINANCE, ACCOUNTS AND AUDIT

All moneys received by or on behalf of the corporation by or under this Act or any other law, all taxes, tolls and other imposts, fines, fees, penalties paid to or levied by it under this Act, all proceeds of land or other property sold by the corporation and all rents accruing from its land or property and all interests, profits and other moneys accruing by gifts or transfers from the Government or private individuals or otherwise shall constitute the corporation fund and shall be held, applied and disposed of in accordance with the provisions of this Act, the rules and the regulations made thereunder or any other law for the time being in force.

(1) There shall be constituted a Fund called the Urban Transport Fund which shall consist of,- (i) Urban Transport Cess collected under section 103C of this Act and section 94A of the Karnataka Municipalities Act, 1964 (Karnataka Act 22 of 1964); (ii) all grants received from the State Government and Central Government, if any; and (iii) any other receipts, interest or any other form of income to this fund. (2) The Urban Transport Fund shall be utilized for,- (i) co-ordinated planning, projects formulation and implementation relating to urban transport and their integrated management; (ii) conducting studies, research, promotion and compaign to encourage for use of public transport; (iii) capacity building in the urban local bodies, parastatal agencies and in the State Government; and (iv) any other purpose as may be prescribed by the State Government. (3) The Directorate of Urban Land Transport shall be the Secretariat to administer the fund constituted under sub-section (1). (4) The accounts of all receipts and expenditure arising out of the Urban Transport Fund shall be kept in such manner and in such form as may be prescribed. (5) The State Government shall appoint one of its officers as the auditor who shall subject to supervision and control of the Controller of State Accounts conduct audit of the Urban Transport Fund and he shall have access to all books of Accounts and to all receipts and expenditure relating to the Urban Transport Fund and the Director of Urban Land Transport or as the case may be the Director of Municipal Administration or Commissioner of the Corporation or any officer of Municipal Corporation, Municipality or Municipal Council shall furnish to him any information concerning any receipt of expenditure which may be required by him. (6) The Director of Urban Land Transport shall prepare Annual Report of the operation of the Fund and furnish the report to the State Government for laying before each House of the State Legislature. Audit report and compliance in this regard shall also be laid before each House of the Legislature.] 1. Section 149A Inserted by Act 31 of 2012 w.e.f. 7.10.2013 by notification No.UDD 99 PRJ 2013, dated:7.10.2013.

1. (i) Urban Transport Cess collected under section 103C of this Act and section 94A of the Karnataka Municipalities Act, 1964 (Karnataka Act 22 of 1964);
2. (ii) all grants received from the State Government and Central Government, if any; and
3. (iii) any other receipts, interest or any other form of income to this fund.

1. (2) The Urban Transport Fund shall be utilized for,-
   • (i) co-ordinated planning, projects formulation and implementation relating to urban transport and their integrated management;
   • (ii) conducting studies, research, promotion and compaign to encourage for use of public transport;
   • (iii) capacity building in the urban local bodies, parastatal agencies and in the State Government; and
   • (iv) any other purpose as may be prescribed by the State Government.
2. (3) The Directorate of Urban Land Transport shall be the Secretariat to administer the fund constituted under sub-section (1).
3. (4) The accounts of all receipts and expenditure arising out of the Urban Transport Fund shall be kept in such manner and in such form as may be prescribed.
4. (5) The State Government shall appoint one of its officers as the auditor who shall subject to supervision and control of the Controller of State Accounts conduct audit of the Urban Transport Fund and he shall have access to all books of Accounts and to all receipts and expenditure relating to the Urban Transport Fund and the Director of Urban Land Transport or as the case may be the Director of Municipal Administration or Commissioner of the Corporation or any officer of Municipal Corporation, Municipality or Municipal Council shall furnish to him any information concerning any receipt of expenditure which may be required by him.
5. (6) The Director of Urban Land Transport shall prepare Annual Report of the operation of the Fund and furnish the report to the State Government for laying before each House of the State Legislature. Audit report and compliance in this regard shall also be laid before each House of the Legislature.]

1. Section 149A Inserted by Act 31 of 2012 w.e.f. 7.10.2013 by notification No.UDD 99 PRJ 2013, dated:7.10.2013.

(1)The accounts of all receipts and expenditure of the corporation shall be kept in such manner and in such form as may be prescribed.

1. (2) The government shall appoint one of its officers as the Corporation Chief Auditor who shall 1[subject to the supervision and control of the Controller of State Accounts] conduct an audit of the corporation accounts and for this purpose, he shall have access to the corporation accounts and to all receipts and expenditure relating thereto and the Commissioner shall furnish to him any information concerning any receipt or expenditure which may be required by him. 3[ 2[(2-A) Subject to the provisions of any law for the time being in force, the audit of all transactions of receipts and expenditure of Municipal Corporations shall be subject to technical guidance and supervision of the Comptroller and Auditor General of India and he shall send the annual technical inspection report to State Government for being placed before both Houses of the State Legislature. (2-B) The Controller, State Accounts Department shall send Consolidated Annual Audited Report pertaining to all Municipal Corporations to the State Government for being placed before both Houses of the State Legislature.] 4[(2-C) XXX.] ] 4[ (2-D) XXX] ]
2. (3) The Corporation Chief Auditor shall report to the prescribed municipal authority any material impropriety or irregularity which he may at any time observe in the expenditure or in the recovery of moneys due to the corporation or in the corporation accounts and shall furnish information in respect of such matter as may be laid down in the rules.
3. (4) He shall be paid such salary and allowances as the Government may determine and shall be entitled to privileges in accordance with the rules and regulations of the branch of Government service to which he belongs and in force for the time being and the corporation shall make such contribution towards his leave, allowances, pension and provident fund as may be payable under such rules and regulations by him or on his behalf from the corporation fund.

¹ Inserted by Act 36 of 1986 w.e.f. 17.6.1986.

² Inserted by Act 24 of 2011 w.e.f. 10.6.2011.

³ Substituted by Act 20 of 2012 w.e.f. 14.3.2012.

⁴ Omitted by Act 20 of 2012 w.e.f. 14.3.2012.

Save as otherwise provided in this Act, the financial rules of the Corporation shall be as prescribed.

Notwithstanding anything contained in this Act, the

1[Bruhat Bangalore Mahanagara Palike] shall make such contribution to the Bangalore Water Supply and Sewerage Board for supply of water for the benefit of such class of inhabitants of the City of Bangalore in accordance with such arrangements as the said corporation has entered into with the said Board before the commencement of this Act.

1. Deemed to have been substituted by Act 22 of 2009 w.e.f.04.06.2009.

(1) If the expenditure incurred by the Government or by any local authority for any purpose authorised by rules is such as to benefit the inhabitants of the city, the corporation may make a contribution towards such expenditure. (2) The Government may direct the corporation to show cause, within a period fixed by the Government in this behalf not being less than one month after receipt of the order containing the direction, why any contribution referred to in sub-section (1) should not be made. (3) If the corporation fails to show cause within the said period to the satisfaction of the Government, the Government may direct it to make such contribution as it shall name and it shall be paid accordingly.

1. (2) The Government may direct the corporation to show cause, within a period fixed by the Government in this behalf not being less than one month after receipt of the order containing the direction, why any contribution referred to in sub-section (1) should not be made.
2. (3) If the corporation fails to show cause within the said period to the satisfaction of the Government, the Government may direct it to make such contribution as it shall name and it shall be paid accordingly.

(1) The corporation may, in pursuance of any resolution passed at a special meeting, barrow by way of debenture or otherwise, on the security of all or any of the taxes, duties, fees and dues authorised by or under this Act, any sums of money which may be required,-

1. (a) for the construction of works,
2. (b) for the acquisition of lands and buildings, or
3. (c) to pay off any debt due to Government, or
4. (d) to repay a loan previously raised under this Act or any other law previously in force: Provided that,-
   • (i) no loan shall be raised without the previous sanction of the Government, and
   • (ii) the amount of the loan, the rate of interest and the terms including the date of floating, the time and method of repayment and the like shall be subject to the approval of the Government.

1. (2) When any sum of money has been borrowed under sub-section (1),-
   • (a) no portion thereof shall, without the previous sanction of the Government, be applied to any purpose other than that for which it was borrowed, and
   • (b) no portion of any sum of money borrowed under clause (a) of sub- section (1) shall be applied to the payment of salaries or allowances to any corporation officers or servants other than those exclusively employed upon the works for the construction of which the money was borrowed.

The time for the repayment of any money borrowed under section 154 shall in no case exceed sixty years, and the time for the repayment of any money borrowed for the purpose of discharging any previous loan shall not, except with the express sanction of the Government, extend beyond the unexpired portion of the period for which such previous loan was sanctioned.

Notwithstanding anything hereinafter contained, the borrowing powers of the corporation shall be limited so that the sum payable annually for interest and for the maintenance of the sinking funds as hereinafter provided, and for interest and repayment of any sums borrowed otherwise shall not, except with the express sanction of the Government, exceed ten percent of the rateable value of buildings and lands as determined under Chapter X.

All debentures issued under this chapter shall be in such form as the corporation, with the previous sanction of the Government may determine, and shall be transferable in such manner as shall be therein expressed; and the right to sue in respect of the moneys secured by any of such debentures shall vest in the holders thereof for the time being without any preference by reason of some such debentures being prior in date to others.

When any debenture or security issued under this Act is payable to two or more persons jointly, and either or any of them dies, then, the debenture or security shall be payable to the survivor or survivors of such persons:

Receipt by joint holder for interest or dividend.- When two or more persons are joint holders of any debenture or security issued under this Act, any one of such persons may give an effectual receipt for any interest or dividend payable in respect of such debenture or security, unless notice to the contrary has been given to the corporation by any other of such persons.

(1) The corporation shall maintain sinking funds for the repayment of money borrowed on debentures issued and shall pay by quarterly instalments into such sinking funds such sum as will be sufficient for the repayment within the period fixed for the loan of all moneys borrowed on debentures issued. (2) All moneys paid into the sinking funds shall, as soon as possible, be invested by the Commissioner in,- (a) securities of the Government or the Government of India, or (b) securities guaranteed by the Government, and shall be invested in the joint names of the Commissioner and Secretary to Government, Finance Department and the Controller, State Accounts Department, to be held by them as trustees for the purpose of repaying at due date the debentures issued by the corporation. Every such investment shall be reported by the Commissioner to the corporation within fifteen days. (3) All dividends and other sums received in respect of any such investment shall, as soon as possible after receipt, be paid into the sinking fund and invested in the manner laid down in sub-section (2). (4) When any part of a sinking fund is invested in corporation debentures, or is applied in paying off any part of a loan before the period fixed for repayment, the interest which would otherwise have been payable on such debentures or on such part of the loan shall be paid into the sinking fund and invested in the manner laid down in sub-section (2). (5) Any investment made under this section may, subject to the provisions of sub-section (2), be varied or transposed.

1. (2) All moneys paid into the sinking funds shall, as soon as possible, be invested by the Commissioner in,-
   • (a) securities of the Government or the Government of India, or
   • (b) securities guaranteed by the Government, and shall be invested in the joint names of the Commissioner and Secretary to Government, Finance Department and the Controller, State Accounts Department, to be held by them as trustees for the purpose of repaying at due date the debentures issued by the corporation. Every such investment shall be reported by the Commissioner to the corporation within fifteen days.
2. (3) All dividends and other sums received in respect of any such investment shall, as soon as possible after receipt, be paid into the sinking fund and invested in the manner laid down in sub-section (2).
3. (4) When any part of a sinking fund is invested in corporation debentures, or is applied in paying off any part of a loan before the period fixed for repayment, the interest which would otherwise have been payable on such debentures or on such part of the loan shall be paid into the sinking fund and invested in the manner laid down in sub-section (2).
4. (5) Any investment made under this section may, subject to the provisions of sub-section (2), be varied or transposed.

The aforesaid trustees may apply a sinking fund or any part thereof, in or towards the discharge of the loan or part of a loan for which such fund was created, and until such loan or part is wholly discharged shall not apply the same for any other purpose: Provided that when any loan or parts thereof have been consolidated under section 163, the trustees shall transfer to the sinking fund of the consolidated loan so created such part of the sinking funds of the original loans as may be proportionate to the amount of the original loans incorporated in the consolidated loan.

(1) The aforesaid trustees shall, at the end of every year submit to the corporation a statement showing,- (a) the amount which has been invested during the year under section 160; (b) the date of the last investment made previous to the submission of the statement; (c) the aggregate amount of the securities then in their hands; and (d) the aggregate amount which has, up to the date of the statement, been applied under section 161 in or towards discharging loans. (2) Every such statement shall be laid before the corporation and published.

1. (a) the amount which has been invested during the year under section 160;
2. (b) the date of the last investment made previous to the submission of the statement;
3. (c) the aggregate amount of the securities then in their hands; and
4. (d) the aggregate amount which has, up to the date of the statement, been applied under section 161 in or towards discharging loans.

1. (2) Every such statement shall be laid before the corporation and published.

Notwithstanding anything to the contrary contained in this Chapter, the corporation may consolidate all or any of its loans and for that purpose may invite tenders for a new loan (to be called the "Corporation Consolidated Loan, 19.........") and invite the holders of corporation debenture to exchange their debentures for scrip of such loan.

1. (2) The terms of any such consolidated loan and the form of its scrip and the rates at which exchange into such consolidated loan shall be permitted, shall be subject to the prior approval of Government.
2. (3) The period for the extinction of any such consolidated loan shall not, without sanction of the Government extend beyond the farthest date within which any of the loans to be consolidated would be otherwise repayable.
3. (4) The corporation shall provide for the repayment of any such consolidated loan by a sinking fund in the manner laid down in section 160 having regard to the amount transferred to such sinking fund under section 161.

All payments due from the corporation for interest on and repayment of loans shall be made in priority to all other payments due from the corporation.

(1) If any money borrowed by the corporation from the Government, whether before or after the commencement of this Act, or any interest or costs due in respect thereof, be not repaid according to the conditions of the loan, the Government may attach the corporation fund or any part thereof.

1. (2) After such attachment, no person except an officer appointed in this behalf by the Government shall in any way deal with the attached fund; but such officer may do all acts in respect thereof which any municipal authority, officer or servant might have done if such attachment had not taken place, and may apply the proceeds in satisfaction of the arrears and of all interest and costs due in respect thereof and all expenses caused by the attachment and subsequent proceedings: Provided that no such attachment shall defeat or prejudice any debt for which the fund attached was previously charged in accordance with law; but all such prior charges shall be paid out of the proceeds of the fund before any part of the proceeds is applied to the satisfaction of the debt due to the

Estimates of expenditure and income to be prepared annually by the Commissioner.- The Commissioner shall, on or before the fifteenth day of January each year prepare and submit to the standing committee a budget containing a detailed estimate of income and expenditure for the ensuing year, and, if it is in his opinion necessary or expedient to vary taxation or to raise loans shall submit his proposals in regard thereto.

for

[or as the case may be, standing committee for taxation and finance] .- (1) The standing committee for

[in the case of corporations other than the

3[Bruhat Bangalore Mahanagara Palike]

and the standing committee for taxation and finance in the case of

3[Bruhat Bangalore] Mahanagara Palike] shall, on or as soon as may be, after the fifteenth day of January consider the estimates and proposals of the Commissioner and after having obtained proposals, if any, of other standing committees and such further detailed information, if any, as it shall think fit to require from the Commissioner and having regard to all the requirements of this Act, shall prepare therefrom, subject to such modifications and additions therein or thereto as it shall think

¹ Substituted by Act 35 of 1994 Notification bringing it into force not available.

² Inserted by Act 27 of 1998 w.e.f. 21.11.1998.

fit, a budget estimate of the income and expenditure of the corporation for the next year.

3. Deemed to have been substituted by Act 22 of 2009 w.e.f.04.06.2009.

1. (2) In such budget estimate, the standing committee shall,-
   • (a) provide for the payment, as they fall due of all instalments of principal and interest for which the corporation may be liable on account of loans;
   • (b) provide for the payment as it falls due, of any amount towards contributions, fees or such other amounts as may be payable by the corporation to the Government;
   • (c) allow for a cash balance at the end of the year of not less than one lakh of rupees under General Account Revenue.
2. (3) The Commissioner shall cause the budget estimate as finally approved by standing committee, to be printed and shall, not later than the first day of February, forward a printed copy thereof to each councillor.

At a meeting of the corporation which shall be called for some day in the first week of February the budget estimate prepared by the standing committee shall be laid before the corporation.

The corporation may refer the budget estimate back to the standing committee for further consideration and re- submission within a specified time or adopt the budget estimate or any revised budget estimate submitted to it either as it stands or subject to such alteration as it deems expedient: Provided that the budget finally adopted by the corporation shall make adequate and suitable provision for each of the matters referred to in clauses (a) and (b) of sub-section (2) of section 167.

1. (a) and (b) of sub-section (2) of section 167.

(1)The corporation shall finally pass the budget estimate at least three weeks before the beginning of the year to which it relates and shall forthwith submit a copy thereof to the Government.

1. (2) The Government may sanction the budget in its entirety or subject to such modification as it thinks fit: Provided however that if within two months of the date of receipt of the budget, the Government does not communicate any orders thereon, the budget shall be deemed to have been sanctioned by the Government.

The Corporation may, on the recommendation of the standing committee for 1[taxation, finance and appeals] 1 2 [in the case of corporations other than the 3[Bruhat Bangalore Mahanagara Palike] and the standing committee for taxation and finance in the case of 3[Bruhat Bangalore] ,Mahanagara Palike] 2. Inserted by Act 27 of 1998 w.e.f. 21.11.1998. during the year pass a supplemental budget estimate for the purpose of meeting any special or unforeseen requirements, arising during that year; so however that the estimated cash balance under General Account-Revenue at the close of the year shall not be reduced to less than one lakh of rupees: Provided that no item shall be included in the supplemental budget which had been disallowed by the Government while sanctioning the Budget. 1..Substituted by Act 35 of 1994 Notification bringing it into force not available. 3.Deemed to have been substituted by Act 22 of 2009 w.e.f.04.06.2009.

1[taxation, finance and appeals] 1 2 [in the case of corporations other than the

and the standing committee for taxation and finance in the case of

² Inserted by Act 27 of 1998 w.e.f. 21.11.1998.

during the year pass a supplemental budget estimate for the purpose of meeting any special or unforeseen requirements, arising during that year; so however that the estimated cash balance under General Account-Revenue at the close of the year shall not be reduced to less than one lakh of rupees: Provided that no item shall be included in the supplemental budget which had been disallowed by the Government while sanctioning the Budget. 1..Substituted by Act 35 of 1994 Notification bringing it into force not available.

3.Deemed to have been substituted by Act 22 of 2009 w.e.f.04.06.2009.

(1) The standing committee for

1[taxation, finance and appeals]

2[or as the case may be, standing committee for taxation and finance] may, if it thinks necessary at any time during the year,-

1. (a) reduce the amount of a budget grant; or
2. (b) transfer and add the amount or a portion of the amount of one budget grant to the amount of any other budget grant: Provided that,-
   • (i) due regard shall be had, when making any such reduction or transfer, to all the requirements of this Act;
   • (ii) the aggregate sum of the budget grants contained in the budget estimate adopted by the corporation shall not be increased except by the corporation under section 171;
   • (iii) every such reduction or transfer shall be brought to the notice of the corporation at its next meeting.

¹ Substituted by Act 35 of 1994 Notification bringing it into force not available.

² Inserted by Act 27 of 1998 w.e.f. 21.11.1998.

1. (2) If any such reduction or transfer is of an amount exceeding rupees five hundred, the corporation may pass with regard thereto such order as it thinks fit, and it shall be incumbent on the standing committee and the

Re-adjustment of income and expenditure to be made by the corporation during the course of the official year whenever necessary.-

1. (1) If it shall at any time during any year appear to the corporation upon the representation of the standing committee for 1[taxation, finance and appeals] 2[or as the case may be, standing committee for taxation and finance] , that, notwithstanding any reduction of budget grants that may have been made under section 172, the income of the corporation fund during the said year will not suffice to meet the expenditure sanctioned in the budget estimate of the said year and to leave at the close of the year a cash balance of not less than one lakh of rupees under General Account-Revenue, it shall be incumbent on the corporation either to diminish the sanctioned expenditure of the year, so far as it may be possible so to do with due regard to all the requirements of this Act, or to have recourse to supplementary taxation, or to adopt both of these expedients in such measure as may be necessary to secure an estimated cash balance of not less than one lakh of rupees under General Account - Revenue at the close of the year.
2. (2) Whenever the corporation determines to have recourse to supplementary taxation in any year, it shall do so by increasing for the unexpired portion of the year the rate at which any tax or duty is being levied subject to the conditions, limitations and restrictions laid down in Chapter X.

¹ Substituted by Act 35 of 1994 Notification bringing it into force not available.

² Inserted by Act 27 of 1998 w.e.f. 21.11.1998.