The Local Authorities Loans Act, 1914

(1) This Act may be called the Local Authorities Loans Act, 1914. 1[(2) It extends to the whole of India except 2[the territories which, immediately beforethe 1st November, 1956, were comprised in Part B States.]]

In this Act, “local authority” means any person legally entitled to the control ormanagement of any local or municipal fund, or legally entitled to impose any cess, rate, duty or tax withinany local area; “funds”, used with reference to any local authority, includes any local or municipal fund to thecontrol or management of which such authority is legally entitled, and any cess rate duty or tax whichsuch authority is legally entitled to impose, and any property vested in such authority; “prescribed” means prescribed by rules made under this Act; and “work” includes a survey, whether incidental to any other work or not 1[“The Government” or “the appropriate Government” means, in relation to cantonment authoritiesand in relation to port authorities in major ports, the Central Government, and in relation to other localauthorities, the State Government.]

(1) A local authority may, subject to the prescribedconditions, borrow on the security of its funds or any portion thereof for any of the following purposes,namely:- (i) the carrying out of any works which it is legally authorized to carry out, (ii) the giving of relief and the establishment and maintenance of relief works in times of famine orscarcity, (iii) the prevention of the outbreak or spread of any dangerous epidemic disease, (iv) any measures which may be connected with or ancillary to any purposes specified in clauses(ii) and (iii), (v) the repayment of money previously borrowed in accordance with law: Provided that nothing in clause (v) shall be deemed to empower a local authority to fix a period forthe repayment of any money borrowed thereunder which, when the period fixed for the repayment ofthe money previously borrowed is taken into account, will exceed the maximum period fixed for therepayment of a loan by or under any enactment for the time being in force: 1[Provided further that, in the case of loans other than loans made by the 2[appropriateGovernment], no amount exceeding twenty-five lakhs of rupees shall be borrowed unless the terms,including the date of flotation, of such loan have been approved by the 3[appropriate Government].] (2) Nothing in this section shall be deemed to authorize any local authority- (a) to borrow or spend money for any purpose for which, under the law for the time being in force,it is not authorized to apply its funds, or (b) to borrow money by means of the issue of bills or promissory notes payable within any periodnot exceeding twelve months.

(1) The1[appropriate Government] may makelesconsistent with this Act as to- (i) the nature of the funds on the security of which money may be borrowed; (ii) the works for which money may be borrowed; (iii) the manner of making applications for permission to borrow money; (iv) the inquiries to be made in relation to such loans, and the manner of conducting such inquiries; (v) the cases and the forms in which particulars of applications and proceedings, and ordersthereon, shall be published; (vi) the cases in which the 1[appropriate Government] may make loans 2* * *; 3[(vii) the cases in which local authorities may take loans from persons other than the 1[appropriate Government];] (viii) the manner of recording and enforcing the conditions on which money is to be borrowed; (ix) the manner and time of making or raising loans; (x) the inspection of any works carried out by means of loans; (xi) the installments, if any, by which loans shall be repaid, the interest to be charged on loans, and the manner and time of repaying loans and of paying the interest thereon; (xii) the sum to be charged against the funds which are to form the security for the loan, as costs ineffecting the loan; (xiii) the attachment of such funds, and the manner of disposing of or collecting them; (xiv) the accounts to be kept in respect of loans; (xv) the utilization of unexpended balances of loans either in the reduction in any way of the debt ofthe local authority, or in carrying out any works which that authority is legally authorized to carry out; and the sanction necessary to such utilization; and as to all other matters incidental to carrying this Act into effect 4* *** (3) All rules made under this Act shall be published 5[* * *] in the Official Gazette; and on suchpublication, shall have effect as if enacted in this Act. 6[(4) Every rule made by the Central Government under this Act shall be laid, as soon as may be afterit is made, before each House of Parliament, while it is in session, for a total period of thirty days whichmay be comprised in one session or in two or more successive sessions, and if, before the expiry of thesession immediately following the session or the successive sessions aforesaid, both Houses agree inmaking any modification in the rule or both Houses agree that the rule should not be made, the rule shallthereafter have effect only in such modified form or be of no effect, as the case may be; so, however, thatany such modification or annulment shall be without prejudice to the validity of anything previously doneunder that rule.]

If any money borrowed in accordance with theprovisions of this Act, or any interest or costs due in respect thereof, is or are not repaid according to theconditions of the loan, the41[appropriate Government], if itself the lender, may and, if the 1[appropriateGovernment] is not the lender, shall, on the application of the lender, attach the funds on the security ofwhich the loan was made. After such attachment, no person, except an officer appointed in this behalf bythe 1[appropriate Government], shall in any way deal with the attached funds; but such officer may do allacts in respect thereof which the borrowers might have done if such attachment had not taken place, andmay apply the proceeds in satisfaction of the loan and of all interests and costs due in respect thereof andof all expenses caused by the attachment and subsequent proceedings: Attachment not to defeat prior charges legally made.Provided that no such attachment shalldefeat or prejudice any debt for which the funds attached were previously pledged in accordance withlaw; but all such prior charges shall be paid out of the proceeds of the funds before any part of theproceeds is applied to the satisfaction of the liability in respect of which such attachment is made.