Chapter III Chapter III

PROVISIONS REGULATING THE GIVING OF STATE-AID OTHERWISE THAN BY THE SUPPLY OF MACHINERY ON HIRE PURCHASE SYSTEM

1. (1) No loan shall be granted to any industry, other than a small scale industry, of an amount exceeding seventy per cent or to any small scale industry of an amount exceeding ninety per cent of the net value of the assets of the industry after deduction of the value of all encumbrances existing at the time the application is made: Provided that in the case of a new or nascent scale industry, the State Government may grant a loan equal to the value of the security offered including collateral security, if—
   • (i) the State Government is satisfied that it is necessary in the interest of the State to promote the development of such industry and the industry can not be established without the grant of assistance; and
   • (ii) the applicant agrees to associate a nominee of the State Government with the management of the industry and to regulate expenditure out of such loan in the prescribed manner: Provided further that subject to such other conditions as may be prescribed, a loan for a period not exceeding two years may be given to a small scale industry on the security of movable property including stock in trade.
2. (2) Notwithstanding anything contained in sub-section (1), a loan of an amount not exceeding five hundred rupees may be given in the case of an industry owned or managed by an artisan on the personal bond of the applicant or on the security of one or more personal sureties.
3. (3) The valuation of the assets or the security, as the case may be, under sub-section
4. (1) shall be made in the prescribed manner by the Director or any other person authorised by him in that behalf.

Loan how to be secured Every loan granted to an industry shall, subject to the provisions of section 8, be secured by a mortgage or a floating charge upon the property of the industry subject to any oncambrances existing at the time when the loan is granted and of such collateral security, if any, as the State Government may require. Explanation-For the purposes of this section the "property of an industry" shall not include raw materials acquired for the purposes of finished goods produced by or the stock in trade or other floating assets of the industry.

In any case in wbich an application for a loan has boen made under section 7, the applicant, and at any time during tbe currency of the loan that has beon granted, tho grantee, shaU be bound-

1. (a) to comply with any general or special order of the State Govsrnrnent or the Director of Industries relating to tlm inspection of the promises, buildings, rnachinery and stock-in-hand of the industry ;
2. (b) to pormit the inspection of all accounts relating to the industry;
3. (c) to furnish in the prescribed manner fd returns of all products manufactured or sold both as regards des~ription and quantily;
4. (d) to maintain such spccIa1 acc~unts and to furnish such statements as the State Government may, from time to time, rzquire; and
5. (e) to submit the accounts of the industry to such audit as the State Goverment may prescribe:

Power of State Government to adjust security during the currency of loan If at any time the outstanding balance of the loan granted under this Act is found to exceed the percentage specified in section 8, the State Government may either recover so much of such balance as is in excess of such percentage or accept such additional or collateral security as it may deem sufficient.

1. (1) The provisions of sections 8 to 11 in respect of loans shall, subject to any rules that may be made under this Act, apply, so far as may be, to guarantees of loan, cash credit, overdraft and fixed advances with a scheduled Bank and to debentures issued to the public.
2. (2) Nothing in sub-section
3. (1) shall apply to any cottage industry for which State-aid granted does not exceed one thousand rupees in value or to a small-scale industry other than a cottage industry for which the State-aid granted does not exceed five thousand rupees in value or to an individual to whom the State-aid granted for investment in the share capital of a Co-operative society or a joint-stock company does not exceed five hundred rupees.

1. (1) The State Government or the authority who has sanctioned the State-aid may, after considering the explanation, if any, offered by the owner of any industry, order termination of State-aid sanctioned to such industry on any of the following grounds, namely:-
   • (b) that there has been breach by the owner of the industry of the provisions of this Act or of any rule made thereunder or of any condition of the grant;
   • (c) that the application on which the State-aid has been granted contained or was accompanied by any material statement by the owner which he knew to be false, or that there has been any intentional concealment by him of any material fact which, in the opinion of the State Government or the said authority it was his duty to disclose or that any such false statement or concealment was intentionally made in any enquiry held under this Act or in any return furnished under this Act or in any reply to any requisition for information issued under this Act or with the connivance of the owner or person in charge of the management of the industry;
   • (d) that the grantee has failed to comply with any order under clause
   • (a) of section 10 or does not permit or objects to the inspection of the accounts of the industry or makes default in complying with the provisions of any of the clauses (c),
   • (d) and
   • (e) of section 10 ; or
   • (e) that the industry is being managed in such a manner as to impair the repayment of the value of the State-aid granted thereto.
2. (2) Subject to such conditions or restrictions as may be prescribed, the State Government may delegate to such authority as may be prescribed, its power under sub-section
3. (1) to terminate the State-aid of an amount or value not exceeding thirty thousand rupees in respect of any one industry.
4. (3) Any person aggrieved by an order, other than an order passed by the State Government, terminating the State-aid may prefer an appeal to such authority and within such period as may be prescribed.
5. (4) The appellate authority may, after hearing the parties concerned and after holding such enquiry as may be prescribed, pass such orders as it may deem fit.

1. (1) Every loan granted under this Chapter shall be made repayable by instalments within such period from the date of actual advance of the loan or, when the loan is advanced in instalments, from the date of payment of the last instalment, and shall bear interest at such rate and payable in such manner as may be fixed by the order granting the loan.
2. (2) The period fixed as aforesaid shall not exceed twenty years unless the State Government, by general or special order, otherwise directs.

After an order under section 13 has been passed terminating the Stato-aid in respect of any indus~ry, the State Government may, notwithstandint anything to the contrary contained in any other provision of this Act br in any other law for the time being in force, proceed to recover from the owner of the industry as an arrear of publrc demand-

1. (a) the whole amount of the Ioan outstanding together with such interest as may be due thereon ; ,or
2. (b) in case where the aid is given otherwise than by the grant of a loan, &e money value of the grant or concession asked at the. time the loai was made together with interest at such rate as may be prescribed, from the date of the grant or concession, as the caso may be, till the date of realisation ; and
3. (c) tbe cost of recovery.

The conditiclns of taking of shares or debea- brdl=csor t~re~ by the State Government or the guarantee leben~urcs or of a minimum return on the whole or part of the luinlmrrm capital of any industry shall be- ; durn of r apital.

1. (a) that the industry shall be subject to the conditions laid down in section 10 in respect of inspection and returns ; and
2. (b) that for all shares and debentures takeri by the State Government, there shall be taken by the other pexson shares or debentures of an amount which shaU be1 at least fifty percenturn of tho amount paid by the State Government.

1. (1) Except in the case of co-operative societies and persons trained in particular trades at Government cost, no subsidy shall exceed the prescribed percentage of the cost involved in the purposes for which the subsidy has been granted.
2. (2) The condition of grant of subsidy to industries, other than small-scale or cottage industries, for the conduct of research or the purchase of machinery or of any other payment under guarantee of minimum return on the paid-up capital or the grant, on favourable terms, of land, raw materials, firewood, water or other property of the State Government or of the supply of electrical energy at concessional rates from a source which is the property of the State Government, shall ordinarily be that such State-aid shall be discontinued if the industry be shown to the satisfaction of the State Government to be earning profit in excess of such rate as may be prescribed.

No recipient of State-aid shall pay any dividend or distribute or take any profits in excess of such percentage of the capital of the industry as the State Government may, from time to time, fix until the conditions on which State-aid has been granted are fulfilled. The balance of the profits after necessary amounts have been set aside for depreciation or obsolescence of plant, machinery and buildings and for the payment of interest on debentures or loans, shall be carried to a reserve fund to be utilised in such manner as the State Government may approve:

Provided that the State Government may relax the provisions of this section in the case of any industry aided by the grant on favourable terms, of loan or raw materials, fuel, water or any other property or right of the State Government or the grant, free of charge or on favorable terms, of services of experts or person in the service of the State Government or by the payment of a subsidy for the conduct of research.

Notwithstanding anything contained in any other provision of this Chapter, if in any case the amount or value of the State-aid given thereunder amounts to or exceeds two lakhs of rupees, or the face value of the shares held by the State Government exceeds twenty-five per cent of the value of the authorised share capital, the State Government shall, and in any other case may, by appointment of Government directors or otherwise, take power to ensure such control over the industries as shall be sufficient in its opinion to safe-guard its interest.

1. (1) All moneys recoverable under this Chapter including any interest chargeable thereon and costs, if any, incurred, if not paid when they are due, may, on a requisition made by the Director, be recovered from the person aided and his surety, if any, as if they were arrears of public demand.
2. (2) Where any money is paid to the State Government by a surety, the Director shall, on the request of the surety, as far as possible, recover the same from the person aided for the benefit of the surety.
3. (3) Where any industrial concern under liability to the State Government makes any default in the matter of its payment of any loan or advance, or instalment thereof or otherwise fails to comply with the terms of the agreement, the Director, with a view to safeguarding the interest of the Government and security of the Government dues, and after giving reasonable notice to the parties in default, shall, subject to the control of the State Government, have the right to take possession of the assets or take over the management of the industrial concern as also the right to transfer by way of lease or sale the property pledged, mortgaged, hypothecated or assigned to the State Government and to realise the dues of the State Government: Provided that where the management of any industrial concern is taken over by the Director, he shall be deemed to be the owner of the concern for the purposes of suit by or against the concern and shall sue and be sued in the name of the concern.
4. (4) Any transfer of property made by the Director in exercise of his powers under sub-section
5. (3) shall vest in the transferee all rights in or to the property transferred as if the transfer had been made by the owner of the property.

1. (1) The Government may charge in respect of applications, enquiries, inspections and audit by whomsoever made under the provisions of this Act, such fee as may be prescribed.
2. (2) The State Government may charge such fee as may be prescribed for any guarantee given by it under the provisions of this Act.