#THE LOCAL AUTHORITIES LOANS ACT, 1914 
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##ARRANGEMENT OF SECTIONS 
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SECTIONS. 

1.  Short title and extent. 
2.  Definitions. 
3.  Borrowing powers of local authorities. 
4.  Power to Government to make rules. 
5.  Remedy by attachment if loan not repaid. 
6.  Issue of short term bills. 
7.  Loans not to be effected except under this Act. 
8.  Application of Act to loans existing previous to the fifth of September, 1871. 
9.  Repealed. 

SCHEDULE I 
SCHEDULE II 
 
 

#THE LOCAL AUTHORITIES LOANS ACT, 1914 

##ACT NO. 9 OF 1914

[28th February, 1914.] 

An Act to consolidate and amend the law relating to the grant of loans to Local Authorities.

Preamble.—WHEREAS  it  is  expedient  to  consolidate  and  amend  the  law  relating  to  the  borrowing 
powers of local authorities; It is hereby enacted as follows:— 

1. **Short title and extent.**—(1) This Act may be called the Local Authorities Loans Act, 1914.

(2) It extends to the whole of India except the territories which, immediately before 
the 1st November, 1956, were comprised in Part B States.

2. **Definitions.**—In  this  Act,  “local  authority” means any person legally entitled to the control or 
management of any local or municipal fund, or legally entitled to impose any cess, rate, duty or tax within 
any local area; 

“funds”,  used  with  reference  to  any  local  authority,  includes  any  local  or  municipal  fund  to  the 
control  or  management  of which  such authority  is  legally  entitled, and  any  cess  rate  duty  or tax  which 
such 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. 

“The  Government”  or “the  appropriate  Government”  means,  in  relation to  cantonment  authorities 
and in relation to port authorities in major ports, the Central Government, and in relation to other local 
authorities, the State Government.

3. **Borrowing powers of local authorities.**—(1)  A  local  authority  may,  subject  to  the  prescribed 
conditions, 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 or 
scarcity, 

  (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 for 
the repayment of any money borrowed thereunder which, when the period fixed for the repayment of 
the money previously borrowed is taken into account, will exceed the maximum period fixed for the 
repayment of a loan by or under any enactment for the time being in force: 

Provided  further  that,  in  the  case  of  loans  other  than  loans  made  by  the appropriate 
Government, 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 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 period 
not exceeding twelve months. 

4. **Power to Government to make rules.**—(1)  The appropriate  Government may make rules 
consistent 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  orders 
thereon, shall be published; 

  (vi) the cases in which the appropriate Government may make loans; 

  (vii) the cases in which local authorities may take loans from persons other than the 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 in 
effecting 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 of 
the 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. 

(3) All rules made under this Act shall be published in the Official Gazette; and on such 
publication, shall have effect as if enacted in this Act. 

(4) Every rule made by the Central Government under this Act shall be laid, as soon as may be after 
it is made, before each House of Parliament, while it is in session, for a total period of thirty days which 
may be comprised in one session or in two or more successive sessions, and if, before the expiry of the 
session  immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
making any modification in the rule or both Houses agree that the rule should not be made, the rule shall 
thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that 
any such modification or annulment shall be without prejudice to the validity of anything previously done 
under that rule.

5. **Remedy by attachment if loan not repaid.**—If  any  money  borrowed  in  accordance  with  the 
provisions of this Act, or any interest or costs due in respect thereof, is or are not repaid according to the 
conditions of the loan, the appropriate Government, if itself the lender, may  and, if the appropriate 
Government is not the lender, shall, on the application of the lender, attach the funds on the security of 
which the loan was made. After such attachment, no person, except an officer appointed in this behalf by 
the appropriate Government, shall in any way deal with the attached funds; but such officer may do all 
acts in respect thereof which the borrowers might have done if such attachment had not taken place, and 
may apply the proceeds in satisfaction of the loan and of all interests and costs due in respect thereof and 
of all expenses caused by the attachment and subsequent proceedings: 

Attachment  not  to  defeat  prior  charges  legally  made.—Provided  that  no  such  attachment  shall 
defeat  or  prejudice  any  debt  for  which  the  funds  attached  were  previously  pledged  in  accordance  with 
law;  but  all  such  prior  charges  shall  be  paid  out  of  the  proceeds  of  the  funds  before  any  part  of  the 
proceeds is applied to the satisfaction of the liability in respect of which such attachment is made. 

6. **Issue  of  short  term  bills.**—(1)  Subject  to  the  provisions  of  section  26  of  the  Indian  Paper 
Currency Act, 1910 (2 of 1910), the local authorities mentioned in Schedule I and any  other  local 
authority to which the appropriate Government may, by notification in the Official Gazette, extend the 
provisions  of  this  section,  may,  with  the  previous  sanction  of  the appropriate  Government, borrow 
money by means of the issue of bills or promissory notes payable within any period, not exceeding twelve 
months, for any purpose for which such local authority may lawfully borrow money under any law for the 
time being in force: 

Provided that the amount of the bills or promissory notes which may be so issued, shall not exceed, 
when the amount of the other moneys for the time being borrowed by such local authority is taken into 
account, the total amount which such local authority is empowered by law to borrow. 

(2) The appropriate Government may, by general or special order, regulate the conditions on which 
money may be borrowed or repaid under this section. 

7. **Loans not to be effected except under this Act.**—Except as provided by or under this Act, no 
local  authority  shall,  for  any  purpose,  borrow  money  upon,  or  otherwise  charge,  its  funds;  and  any 
contract otherwise made for that purpose after the passing of this Act shall be void: 

Provided that nothing herein contained shall be deemed— 

  (a) to preclude any local authority from exercising the borrowing powers conferred on it by any 
special enactment now or hereafter in force; or 

  (b) to affect the power conferred on any local authority by any such enactment to charge its funds, 
by guaranteeing the payment of interest on money to be applied to any purpose to which the 
funds of the local authority can legally be applied. 

8. **Application of Act to loans existing previous to the fifth of September, 1871.**—The remedy 
mentioned in section 5 shall be available for the recovery of any money lent by the Secretary of State in 
Council to any local authority before the fifth day of September, eighteen hundred and seventy-one, and 
the interest due on such money.

9. [Repealed by the Repealing Act, 1927 (12 of 1927), section 2 and the Schedule.]
 
 
 

##SCHEDULE I 

(See section 6) 

The Corporation of Calcutta. 

The Commissioners for the Port of Calcutta. 

The Municipal Corporation of the City of Bombay. 

The Trustees of the Port of Bombay. 

The Corporation of Madras. 

The Trustees for the Port of Madras. 

The Trustees for the Improvement of the City of Bombay. 

The Trustees for the Improvement of the City of Calcutta. 
 
 
 
 
##SCHEDULE II  

Enactments  repealed.—*[Repealed  by  the  Repealing  Act, 1927 (12  of  1927), section  2  and  the 
Schedule.]*