Chapter VI FINANCE

Definition of municipal fund

Audit of accounts

Financial rules

Contributions to expenditure by other local authorities

Power of Corporation to borrow money

Time for repayment of money borrowed under section 174

Limit of borrowing powers

All debentures issued under this Chapter shall be in such form as the council, 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, notwithstanding anything in section 45 of the Indian Contract Act, 1872 (Central Act IX of 1872) 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. (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. (2) All money paid into the sinking funds shall, as soon as possible, be invested by the commissioner in—
   • (a) securities of the Government or the Central Government, or
   • (b) securities guaranteed by the Government or the Central Government,
   • (c) any municipal debenture of Tamil Nadu, and shall be invested in the joint names of the Secretary to the Government of Tamil Nadu, Finance Department and the Examiner of Local Fund Accounts, Tamil Nadu 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 council within fifteen days.
3. (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 funds and invested in the manner laid down in sub-section (2).
4. (4) When any part of a sinking fund is invested in Tamil Nadu municipal 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. (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 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 loans or parts thereof have been consolidated under section 183, the trustees shall transfer to the sinking fund of the consolidated loan so much 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. (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 180,
   • (b) the date of the last investment made previous to the submission of the statement,
   • (c) the aggregate amount of the securities in their hands, and
   • (d) the aggregate amount which has up to the date of the statement been applied under section 181 in or towards discharging loans.
2. (2) Every such statement shall be laid before the council and published.

1. (1) Notwithstanding anything to the contrary contained in this Chapter, the corporation may consolidate all or any of their loans and for that purpose may invite tenders for a new loan (to be called the municipal consolidated loan) and invite the holders of municipal debentures to exchange their debentures for scrip of such loan.
2. (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 previous approval of the Government.
3. (3) The period for the extinction of any such consolidated loan shall not, without the sanction of the Government extend beyond the farthest date within which any of the loans to be consolidated would be otherwise repayable.
4. (4) The corporation shall provide for the repayment of any such consolidated loan by a sinking fund in the manner laid down in section 180 having regard to the amount transferred to such sinking fund under section 181.

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

1. (1) The commissioner shall, in consultation with the heads of departments of the corporation prepare and submit to the standing committee on taxation and finance on or before the 1st January each year, 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; and the standing committee on taxation and finance shall in consultation with the other standing committees consider and finalise the budget estimate and submit the same with its recommendations, if any, to the council on or before 20th January of the year.
2. (2) In such budget estimate the commissioner 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) allow for a cash balance, at the end of the year, of not less than one lakh and fifty thousand rupees under General Account-Revenue ;

Consideration of the budget estimate by the council

Procedure of council

The council shall finally pass the budget estimate before 15th day of March of the year to which it relates and forthwith submit a copy thereof to the Government. If the budget as submitted to the Government fails to make adequate and suitable provisions for each of the matters referred to in clauses (a) to (c) of sub-section (2) of section 186, the Government may modify any part of the budget so as to ensure that such provisions are made.

Notwithstanding anything contained in this Act, if the council in any case fails to adopt finally the budget before the due date referred to in section 189 and if such failure, is in the opinion of the Government, not due to any valid reason, then, the Government may direct the commissioner to forward the budget as prepared by him and as finalised by the standing committee on taxation and finance, to them for approval; and the commissioner shall forthwith forward the budget as prepared by him and as finalised by the said standing committee to the Government who shall scrutinise the budget and intimate their approval to the commissioner on or before the 1st day of April of the year.

The council may, on the recommendation of the standing committee on taxation and finance from time to time, during any year pass a supplemental budget for the purpose of meeting any special or unforeseen requirements :

Reduction or transfer of budget grants Reduction or transfer of budget grants

1. (1) If it shall at any time during any year appear to the council, upon the representation of the standing committee on taxation and finance that, notwithstanding any reduction of budget grants that may have been made under section 192, the income of the municipal fund during the official year will not suffice to meet the expenditure in the budget estimate of the said year, and at the close of the year a cash balance of not less than one lakh and fifty thousand rupees under General Account-Revenue is not likely to be secured, it shall be incumbent on the council to diminish the sanctioned expenditure of the year as far as it is possible so to do with due regard to all provisions of this Act, or to have recourse to supplementary taxation, or to adopt both of these expedients as may be necessary to secure an estimated cash balance of not less than one lakh and fifty thousand rupees under General Account-Revenue at the close of the year.
2. (2) Whenever the council 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 which any tax or duty is being levied, subject to the conditions, limitations and restrictions laid down in Chapter V.