Chapter VII GRAM NIDHI

1. (1) There shall be in each Gramdan village a fund, which shall be called the Gram Nidhi. It shall be kept separate and distinct from the village fund constituted under the Panchayats Act.
2. (2) The following shall be paid into, and form part of, the Gram Nidhi, namely :-
   • (a) all sums and moneys received by the Gram Mandal including the profits of any cultivation or any enterprise undertaken by it; and the rent, fee or other charges, charged or imposed on persons to whom lands are leased under this Act ;
   • (b) all sums received by way of loans from any Government ;
   • (c) all sums received by way of grants, donations, gifts, bequests or contributions.

Subject to the provisions of this Act, the Gram Nidhi shall be applied by the Gram Mandal only for the purposes of this Act. The Gram Nidhi shall be kept in such custody as may be prescribed.

1[35. Accounts and audit.- (1) The manner in which payment from the Gram Nidhi shall be made, and the accounts shall be kept, shall be regulated in accordance with regulations made in that behalf.

1. (2) The audit of the accounts of a Gram Mandal shall be carried out by such authority and in such manner as may be prescribed and a copy of the audit note shall be forwarded to the Collector, the Tahsildar and the Gram Mandal within two months of the completion of the audit.
2. (3) On receipt of the audit note referred to in sub-section (2), the Gram Mandal shall either remedy any defects or irregularities which may have been pointed out in the audit note and send to the Tahsildar within three months an intimation of its having done so or shall, within the said period, supply to the Tahsildar any further explanation in regard to such defects or irregularities as it may wish to give.
3. (4) On receipt of such intimation or explanation, the Tahsildar may, in respect of all or any of the matters discussed in the audit note,-
   • (a) accept the intimation or explanation given by the Gram Mandal and recommend to the Collector to drop the objection ;
   • (b) suggest that the matter be re-investigated at the next audit or at any earlier date ; or
   • (c) hold that the defects or irregularities pointed out in the audit note or any of them, have not been removed or remedied.
4. (5) The Tahsildar shall send a report of his decision to the Collector within one month of the date of receipt by him of the intimation or explanation referred to in sub-section (3), or in the event of the Gram Mandal failing to give such intimation or explanation on the expiry of the period of three months referred to in the said sub-section (3) and shall forward a copy of such report to the auditor and Gram Mandal. If the Tahsildar holds that any defects or irregularities have not been removed or remedied, the Tahsildar shall state in the report whether in his opinion the defects or irregularities can be regularised and if so, by what method and if they do not admit of being regularised, whether they can be condoned, and if so, by what authority. The Tahsildar shall also state whether the amounts to which the defects or irregularities relate should in his opinion be surcharged or charged as hereinafter provided.
5. (6) The Collector may, after considering the report of the Tahsildar and after making such further inquiry as he considers necessary, disallow any item which appears to him contrary to law and surcharge the same on the person (including a member, making or authorizing the making of the illegal payment, and may charge against any person (including a member) responsible therefor the amount of any deficiency or loss caused by the gross negligence or misconduct of that person or member or any sum received which ought to have been, but is not, brought into account, by that person or member ; and may after taking his explanation, direct by order in writing that such person or member, shall pay to the Gram Mandal the amount so surcharged or charged and where the Collector considers it necessary, also an interest on the amount so surcharged or charged at such rate as may be determined by him. If such amount or interest directed to be paid by the Collector under his order is not paid by the person or member aforesaid within one month from the date of receipt of such order by him, the Collector shall recover it as an arrear of land revenue and credit it to the Gram Nidhi.
6. (7) Any person or member aggrieved by any order or surcharge or charge or interest thereon made by the Collector under this section may, within one month from the receipt by him of the decision of the Collector, apply to the District Court to modify or set aside such order, and that Court after taking such evidence as it thinks necessary, may confirm, modify or remit such surcharge or charge or interest thereon and make such order as to costs as it thinks proper in the circumstances.

1. (1) Every member of a Gram Mandal shall be personally liable for the loss, waste or mis-application of any money or other property of the Gram Mandal to which he has been a party or which has been caused or facilitated by his misconduct or gross neglect of his duty as a member.
2. (2) If after giving the member concerned a reasonable opportunity for showing cause to the contrary, the Collector is satisfied that the loss, waste or mis-application of any money or other property of the Gram Mandal is a direct consequence of misconduct or gross neglect on his part, the Collector shall by order in writing direct such member to pay the Gram Mandal before a fixed date, the amount required to reimburse for such loss, waste or mis-application. If the amount is not so paid, the Collector shall recover it as an arrear of land revenue and credit it to the Gram Nidhi.
3. (3) Any person aggrieved by the decision of the Collector may apply to the District Court as provided in sub-section (7) of section 35, within the like time for redress of his grievance, and that Court may pass any order thereon which it can pass under that section.]