PUNJAB STATE AID TO INDUSTRIES ACT, 1935

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THE PUNJAB STATE AID TO INDUSTRIES ACT, 1935 
(V of 1935) 
CONTENTS 
CHAPTER I 
PRELIMINARY 
1. Short title, extent and commencement. 
2. Definitions. 
CHAPTER II 
3. Establishment of a Board of Industries. 
4. [Omitted] 
5. Vice-Chairman. 
6. Elections and appointments to be notified in Official Gazette. 
7. Term of office. 
8. Removal of members. 
9. Casual vacancies. 
10. Allowances and fees. 
11. President at meetings. 
12. Interested members not to vote. 
13. Power of Board to make regulations. 
14. Supersession of Board. 
15. Duty of Board. 
16. Documents and reports to be furnished to the Provincial Government. 
CHAPTER III 
GENERAL PROVISIONS REGARDING THE GIVING OF STATE AID 
17. Forms of State aid. 
18. Industries to which several forms of State aid may be given. 
19. Application for State Aid. 
 
CHAPTER IV 
PROVISIONS REGULATING THE GIVING OF STATE AID  
OTHERWISE THAN BY THE SUPPLY OF MACHINERY  
ON THE HIRE-PURCHASE SYSTEM 
20. Power to grant loans. 
21. Security for repayment. 
22. Loan how repayable. 
23. Notice to pay. 
24. Effect of declaration. 
25. Execution of declaration. 
26. Inspection and returns. 
27. Penalty for default in applying the loan. 
28. Power to adjust security during currency of loan. 
29. Power to recovery loans. 
30. Appeal. 
31. Government guarantee of a minimum return. 
32. Subsidies. 
33. Disposal of profits when conditions on which State aid is given are not 
fulfilled. 
34. Government control of aided industry. 
35. Method of recovery of money due. 
CHAPTER V 
SUPPLY OF MACHINERY ON HIRE-PURCHASE SYSTEM 
36. Percentages of cost to be deposited by hirer. 
37. Particulars to be specified in order when application is allowed. 
38. Conditions of supply of machinery on hire-purchase system. 
39. Consequences of default by hirer. 
40. Option of hirer to purchase machinery seized for default. 
41. Liability of hirer on termination of hiring under sections 24 and 25. 
42. Termination of hiring on payment of cost of machinery. 
43. Penalty for non-removal of metal plate from machinery. 
44. Sums due under this recoverable as loans under Chapter IV. 
CHAPTER VI 
SUPPLEMENTAL 
45. Finality of decision of Prov incial Government and bar of suits and 
proceedings in Civil and Criminal Courts. 
46. Power to make rules. 
47. Repeal. 
 
 
TEXT 
1
THE PUNJAB STATE AID TO INDUSTRIES ACT, 1935 
(V of 1935) 
[31st January, 1935] 
An 
Act 
to encourage the development of industries in the Punjab by the grant of State aid. 
Preamble.– WHEREAS it is expedient further to improve and regulate the giving of 
State aid for industrial purposes; 
 AND WHE REAS the previous sancti on of the Governor-General required 
under sub -section (3) of section 80 -A of the Government of India Act and the 
previous sanction of the Governor required under section 80 -C of the said Act have 
been obtained: 
 It is hereby enacted as follows:– 
CHAPTER I 
PRELIMINARY 
1. Short title, extent and commencement .– (1) This Act may be called the 
Punjab State Aid to Industries Act, 1935. 
 (2) It extends to the Punjab. 
 (3) It shall come into force on such date as the  
2
[Provincial Government] 
may by notification, appoint in this behalf. 
2. Definitions.– In this Act, unless there is anything repugnant in the subject or 
context– 
(1) “Board” means the Board of Industries constituted under section 3 of 
this Act. 
(2) “Borrower” means an individual,  company or association or bod y o f 
individuals, whether incorporated or not, to whom or to which State aid 
has been granted under this Act. 
(3) “Company” means a company as defined in the  
3
[*] Companies 
 
1
This Act received the assent of the Governor of the Punjab on December  7, 1935; that of the Governor -General on January 
19, 1936; published in the Punjab  Gazette (Extraordinary), d ated January 25, 1936. For Statement of Objects and Reasons, 
see Punjab Gazette, 1935, Extraordinary, p. 54; for Report of the Select Committee, see Punjab Gazette, 1935, Part V, p p. 31-
33; for Proceedings in Council, see Punjab Legislative Council Debates, Volume XXVII, pp. 42-59, 922-939, 971-1003, 1233-
1238. This Act came into force on March  7, 1936, vide Punjab Government  Notification Nos. 1021-1 and L -1936/7815, dated 
March 6, 1936. 
2
Substituted for the words “Local Government” by the Government of Ind ia (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
3
Omitted the word “Indian” by the Punjab Laws (A daptation, Revision and Rep eal) Act, 1954 (XV of 1955), published in the 
Punjab Gazette (Extraordinary), dated January 21, 1955, pp. 87-108, s. 2 read with First Schedule.  
Act, 1913
1
. 
(4) “Director” means the Director of Industries, 
2
[*]. 
(5) “Industry” means any industrial business or enterprise conducted or 
undertaken either by an individual or by a company, association or 
body of individuals, whether incorporated or not. 
 
3
[(6) “cottage industry” means any industry carried  on by a worker in his 
home an d i ncludes dairy farming, bee -keeping, lac -making and 
keeping a poultry farm. 
(7) “village industry” means any industry which forms the normal 
occupation, whether whole time or part -time, of any class of the rural 
population of the Province.] 
 
4
[(8)] “Machinery” includes plant, apparatus, tools and other appliances 
required for the purpose of carrying on any industrial operation or 
process. 
 
5
[(9)] “Prescribed” means prescribed by rules made under this Act. 
CHAPTER II 
3. Establishment of a Board of In dustries.– (1) For carrying out the purposes 
of this Act, the  
6
[Provincial Government] shall, as soon as possible, after the 
commencement of this Act, establish a Board to be called the “Board of Industries” 
consisting of the following members, namely:– 
(a) Minister in charge of Industries, 
7
[*]; 
(b) the Director of Industries, 
8
[*]; 
(c) four members to be appointed by the  
9
[Provincial Government], one of 
whom shall be a banking expert; 
1
[(d) five members to be appointed by the Prov incial Government from 
among the residents of the Punjab as it existed before the coming into 
being of the Province of West Pakistan] 
2
[; and] 
 
1
VII of 1913. 
2
Omitted the word “Punjab” by the West Pakistan (Adaptation and Repea l of Laws) Act, 1957 (XVI o f 1957), published in the 
Gazette of West Pakistan (Extraordinary), dated July 25, 1957, pp. 709-789, s. 3 read with Schedule III. 
3
Inserted by the Punjab State Aid to Industries (Amendment) Act, 1940 (III of 1940), published in the Government Gazette 
(Extraordinary), Punjab, dated April 04, 1940, pp. 246-247, s. 2(1). 
4
Renumbered by the Act ibid., s. 2(2). 
5
Ibid. 
6
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
7
Omitted the word “Punjab” by the West Pakistan (Adaptation and Repeal of Laws) Act, 1957 (XVI of 1957), published in the 
Gazette of West Pakistan (Extraordinary), dated July 25, 1957, pp. 709-789, s. 3 read with Schedule III. 
8
Ibid. 
9
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
 
3
[(e) three members to be nominated as representatives of such Chambers 
as may be recognised by the Provincial Government for this purpose:] 
 Provided that the Board shall have power to invite, for consultation on any 
particular question before it, not more than three persons specially qualified to advise 
on the matter in question or having special knowledge of local  conditions in the area 
where the industry in question is situate. 
 And provided further that at any meeting of the Board the Minister shall have 
power to invite any person for consultation on any particular question. 
 Any person so invited whether by the Bo ard or by the Minister  shall not have 
the right to vote. 
 (2) The Minister in charge of Industries shall be ex-officio Chairman and 
the Director shall be ex-officio Secretary of the Board. 
 (3) Five members of the Board shall form a quorum. 
4
[4.
5
[* * * * * * * * * *  ]] 
5. Vice-Chairman.– The Board may from time to time elect, for such period as it 
thinks fit, one of its members to be Vice-Chairman. 
6. Elections an d appointments to be notified in  
6
[Official Gazette].– The 
names of the Vice-Chairman and of the appointed 
7
[* *] members of the Board shall be 
published by the 
8
[Provincial Government] in the 
9
[Official Gazette]. 
7. Term of office .– (1) The Vice -Chairman or any other appointed or elected 
member may resign his office by giving notice in writing to the Chairman. 
 (2)(a) Subject t o the provisions of this Act an appointed member shall hold 
office for 
10
[five] years unless the  
1
[Provincial Government] otherwise directs; and an 
 
1
Substituted by the West Pakistan (Adaptation and Repeal of Laws) Act, 1957 (XVI of 1957), published in the Gazette of West 
Pakistan (Extraordinary), dated July 25, 1957, pp. 709-789, s. 3 read with Schedule III. 
2
Substituted for the full stop by the Punjab State Aid to Industries (Amendment) Act, 1951 (VI of 1951), published in the Punjab 
Gazette (Extraordinary), dated January 26, 1951, s. 2(i). 
3
Substituted clauses (e), (f) and (g) by the Act ibid., s. 2(ii). 
4
Substituted by the Punjab Laws (Adaptation, Revision and Repeal) Act, 1954 (XV of 1955), published in the Punjab Gazette 
(Extraordinary), dated January 21, 1955, pp. 87-108, s. 2 read with First Schedule.  
5
Omitted by the West Pakistan (Adaptation and Repeal of Laws) Act, 1957 (XVI of 1957), published in the Gazette of West 
Pakistan (Extraordinary), dated July 25, 1957, pp. 709-789, s. 3 read with Schedule III. 
6
Substituted for the word “Gazette” by the Government of India (Adaptation of Indian Laws) Order, 1937, published in the 
Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
7
Omitted the words “and elected” by the Punjab Stat e Aid to Industries (Amendm ent) Ordinance, 1985 (XX of 1985),  (w.e.f. 
23.2.1985), published in the Gazette of Punjab (Extraordinary), s. 2. 
8
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
9
Substituted for the words “Punjab Gazette” by the Government of India (Adaptation of Indian Laws) Order, 1937, published  in 
the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
10
Substituted for the word “three” by the Punjab State Aid to Industries (Amendment) Act, 1938 (VI of 1938), published in the 
Government Gazette (Extraordinary), Punjab, dated November 28, 1938, p. 157, s. 2. 
elected member shall hold office for  
2
[five] years or until such time as he ceas es to 
be a member of the body electing him, whichever is shorter. 
 
3
[Provided that in the case of members elected under the provisions of section 
3 by bodies other than the Punjab Legislative Assembl y, the term of membership 
shall in any case, terminate automatically on the dissolution of the Punjab Legislative 
Assembly.] 
(b) An outgoing member may, if otherwise qualified, be re -elected or re -
appointed. 
 (3) Notwithstanding the expiration of the term mentioned in sub -section 
(2), an appointed or elected memb er shall continue t o hold office until the vacancy 
caused by the expiration of the said term has been filled, provided that no vacancy 
shall be allowed to remain unfilled for more than six months. 
8. Removal of members .– (1) The  
4
[Provincial Government] may, by 
notification, remove the Vice-Chairman or any member of a Board if he– 
(a) refuses to act or becomes incapable of acting as a member of the 
Board; 
(b) is declared insolvent; 
(c) is convicted of any such offence or is subjected by a criminal court to 
any such order as in the opinion of the 
5
[Provincial Government] implies 
a defect of character which unfits him to continue to be a Vice -
Chairman or member of the Board; provided that before the  
6
[Provincial 
Government] notifies the removal of a member und er this sub -section, 
the reason for his proposed removal shall be communicated to the 
member concerned and he shall be given an opportunity of tendering 
an explanation in writing; 
(d) without excuse sufficient in the opinion of the  
7
[Provincial Government], 
is absent, withou t the consent of the Board, from more than four 
consecutive meetings of the Board. 
 (2) The 
8
[Provincial Government] may fix a period during which any person 
so removed under clause (b) or (c) of sub -section (1) of this section shall not be 
eligible for re-appointment or re-election. 
 
1
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
2
Substituted for the word “three” by the Punjab State Aid to Industries (Amendment) Act, 1938 (VI of 1938), published in the 
Government Gazette (Extraordinary), Punjab, dated November 28, 1938, p. 157, s. 2. 
3
Added by the Act ibid. 
4
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
5
Ibid. 
6
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
7
Ibid. 
8
Ibid. 
9. Casual vacancies .– When the place of an  appointed  
1
[* * ] member of a 
Board becomes vacant by his removal, resignation or death, a new member shall be 
appointed 
2
[* *] in the manner provided in section 3: 
3
[  * * * * * * * * *   ] 
 Provided 
4
[*] that any person so appointed, elected or nominated under this 
section shall be subject to retirement at the same time as if he had become a 
member of the Board on the day on which the member of the Board in whose plac e 
he is appointed , elec ted or nominate d was last appointed, elected or nominated  a 
member of the Board. 
 Provided further that no act of the Board or of its officers shall be deemed to 
be invalid by reason only that the number of members of the Board at the  time of the 
performance of such act was less than the number provided by section 3.  
10. Allowances and fees .– The members of the Board and the members of 
Committees, which may be appointed by the Board  when necessary, shall be paid 
travelling allowances of the prescribe d amount and on the prescribed conditions for 
attending meetings of the Board, or for performing any duty assigned to them by the 
Board for the purposes of this Act. 
11. President at meetings .– (1) The Chairman or in his absence the Vice -
Chairman shall pre side at every meeting of the Board, and shall have a second or 
casting vote in all cases of equality of votes. 
 (2) In the absence of both the Chairman and the Vice -Chairman the 
members present at any meeting may elect one of their numbers to preside, who 
shall have a second or casting vote in all cases of equality of votes. 
12. Interested members not to vote .– No member of the Board shall vote on 
any question coming before the Board for consideration in which (otherwise than in 
its general application to a ll per sons and properties within the province) he has a 
pecuniary interest. 
Explanation.– In case of any question arising whether a member has or has not a 
pecuniary interest, the decision of the Chairman shall be final. 
13. Power of Board to make regulations.– (1) The Board may make regulations 
consistent with this Act and the rules thereunder for the carrying of all or any of its 
purposes. 
 (2) In particular and without prejudice to the generality of the foregoing 
power, the Board may make  regulations regulating or determining all or any of the 
following matters, namely:– 
 
1
Omitted the words “or elected” by the Punjab State Aid to Industries (Amendment) Ordinance, 1985 (XX of 1985),  (w.e.f. 
23.2.1985), published in the Gazette of Punjab (Extraordinary), s. 2. 
2
Omitted the words “and elected” by the Ordinance ibid. 
3
Omitted the first proviso  by the West Pakistan (Adaptation and Repeal of Laws) Act, 1957 (XVI of 1957), published in the 
Gazette of West Pakistan (Extraordinary), dated July 25, 1957, pp. 709-789, s. 3 read with Schedule III. 
4
Omitted the word “further” by the Act ibid. 
(i) the time and place of its meetings; 
(ii) the manner in which notice of meeting shall be given; 
(iii) the conduct of proceedings at meetings; 
(iv) the division of duties among the members of the Board; and 
(v) the appointment, duties and procedure of special Committees 
consisting wholly of members of the Board of partly of such members 
and partly of other persons. 
14. Supersession of Board. – (1) If at any time it appears  to the 
1
[Provincial 
Government] that the Board is not properly performing the duties imposed upon it by 
or under this Act, the  
2
[Provincial Government] may, after considering any 
explanation offered by the Board, by an order in writing specifying the reas ons for so 
doing, dissolve the Board and direct that the vacancies shall thereupon be  filled by 
election in respect of elected members and by appointment  in respect of appointed 
members in the manner indicated above. 
 (2) From the date of an order under s ub-section (1) until the vacancies are 
filled, all powers and duties of the Board shall be exercised and performed by such 
person in such manner as the 
3
[Provincial Government] may direct. 
15. Duty of Board.– It shall be the duty of the Board– 
(a) to report to the 
4
[Provincial Government], after such enquiry, if any, as it 
deems necessary or as may be required by this Act, on application s for 
State aid that may be referred to it for advice by the  
5
[Provincial 
Government]; 
(b) to advise the  
6
[Provincial Government] on any m atters that may be 
referred to it: 
 Provided that the 
7
[Provincial Government] shall not sanction State aid without 
reference to the Board except in the case of a loan the amount of which does not 
exceed Rs. 5,000. 
16. Documents and reports to be furnished to the 
8
[Provincial Government].– 
If the 
9
[Provincial Government] so directs, the Secretary shall forward to the  
 
1
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
2
Ibid. 
3
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
4
Ibid. 
5
Ibid. 
6
Ibid. 
7
Ibid. 
8
Ibid. 
9
Ibid. 
1
[Provincial Government] any document and prepare and submit any report relating 
to the work of the Board. 
CHAPTER III 
GENERAL PROVISIONS REGARDING THE GIVING OF STATE AID 
17. Forms of State aid.– The forms of State aid which may be given may include 
the following, namely:– 
(a) the grant of a loan; 
(b) the grant, sale or lease of land, raw material, firewood, water or any 
other property 
2
[vested in 
3
[the Provincial Government]]; 
 
4
[(c) the payment of a subsidy, in the case of a cottage industry or village 
industry for any purpose; and in the case of any other industry for the 
conduct of research or the purchase of machinery;] 
(d) the supply of machinery on the hire-purchase system; 
(e) the guarantee of a minimum return on the whole or part of the capital of 
a joint stock company invested in an industry. 
18. Industries to which several forms of State aid may be given .– State aid 
may be given to– 
(a) a new or nascent industry; 
(b) an industry to be newly established in an area where such industries 
are undeveloped; 
(c) a cottage industry 
5
[or village industry]; or 
(d) an industry which needs revival, or development by modern methods. 
19. Application for State Aid.– Applications for State aid shall be made to the 
Director in such form, and shall contain such information, as may be prescribed. 
CHAPTER IV 
PROVISIONS REGULATING THE GIVING OF STATE AID  
OTHERWISE THAN BY THE SUPPLY OF MACHINERY ON THE HIRE-
PURCHASE SYSTEM 
20. Power to grant loans .– Loans granted under this chapter shall be subject to 
the sanction of the 
6
[Provincial Government] given after consultation with the Finance 
 
1
Ibid. 
2
Substituted by the Order ibid., Article 3 read with Schedule. 
3
Substituted for the words “His Majesty for the purposes of the Province” by th e West Pakistan Laws (Adaptation) Order, 1964, 
published in the Gazette of West Pakistan (Extraordinary), dated June 3, 1964, pp. 1805-1849, s. 2(1) read with Schedule. 
4
Substituted by the Punjab State Aid to Industries (Amendment) Act, 1940 (III of 1940),  published in the Government Gazette 
(Extraordinary), Punjab, dated April 04, 1940, pp. 246-247, s. 3. 
5
Inserted by the Act ibid., s. 3-A. 
6
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
Department, provided that in regard to loans not exceedin g a prescribed amount, the 
1
[Provincial Government] may make rules delegating their powers to such authority 
or officer as they deem fit. 
21. Security for repayment .– (1) When an application for  a loan has been 
accepted, the applicant shall execute a deed in the prescrib ed form undertaking to 
apply the money lent to the purpose or purposes for which and to fulfill the conditions 
on which the loan was granted, and rendering himself and such property as may 
have been specified in the deed as security, and , in the event of t hat property being 
found insufficient, the whole of his property liable for the repayment of the loan with 
interest and costs, if any, incurred in making or recovering the loan. 
 (2) When the application has been made by a firm or company th e deed 
shall be  executed by a duly authorised representative thereof, and the deed shall 
thereupon be deemed binding on the said firm or company and the property of the 
said firm or company shall be liable for the repayment of the loan in the same 
manner as if the loan had been granted to an individual. 
22. Loan how repayable.– The loan together with all interest due thereon, if any, 
shall be repayable either in a lump sum or by installments as may be provided for in 
the deed executed by the borrower under section 21. 
23. Notice to pay.– (1) When any loan or installment or interest thereon falls due 
and is not paid on or before the due date or when a loan has been declared 
immediately repayable under section 27, the officer empowered by the  
2
[Provincial 
Government] in this behalf may cause to be served on the borrower a notice in the 
prescribed manner calling upon him to pay the sums due within such time as may be 
fixed therein. 
 (2) Such notice shall contain an intimation that in case of default the said 
officer will issue a declaration in the prescribed form showing the amount of the debt 
due and the property mentioned in the deed as liable to satisfy the same. 
24. Effect of declaration .– (1) If within the time so fixed the sums due are not 
paid, the officer empowered under section 23 may issue the declaration as described 
in sub-section (2) of the same section, and such declaration shall be published in the 
3
[Official Gazette]. 
 (2) Such declaration shall be conclusive evidence of its contents, and shall 
not be called into  question in any court by the borrower, his heirs, legal 
representatives or assigns  
4
[or by any member of his family if he belongs to a joint 
Hindu family] 
5
[nor shall any right, principle or rule arising from or under the personal 
or customa ry law applica ble to  the said persons or any of them, nor anything 
 
1
Ibid. 
2
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
3
Substituted for the word “Gazette” by the Order ibid. 
4
Inserted by the Punjab State Aid to Industries (Amendment) Act, 1940 (III of 1940), published in the Government Gazette 
(Extraordinary), Punjab, dated April 04, 1940, pp. 246-247, s. 4(a). 
5
Ibid., s. 4(b). 
contained in the Punjab Alienation of Land Act, 1900, affect the validity or 
effectiveness of a mortgage executed or of a declaration published under this Act, or 
the procedure therein provided for enforcement thereof.] 
 (3) Such declaration may be produced by the said officer, or by such other 
person as he may either generally or specially appoint in this behalf before the 
principal civil court of original jurisdiction, within the local limi ts of whose j urisdiction 
any of the property liable for the debt due is situate in the same manner as a decree 
of which execution is sought. 
25. Execution of declaration.– When a declaration has been received by a civil 
court under section 24, the court sh all immediately attach the property mentioned in 
the declaration and shall pass an order directing  that, unless the amount mentioned 
in the decla ration is paid within such time not exceeding two months  as the court 
may consider reasonable, it may be recove red by sale o f the property mentioned in 
the declaration as if it were a decree for the payment of money passed by the said 
court in the exercise of its ordinary civil jurisdiction. 
26. Inspection and returns .– In any case in which an application for a loa n has 
been made under this Chapter the applicant, and at any time during the currency of 
a loan that has been granted the borrower, shall be bound– 
(a) to comply with any general or special order of the Director relating to 
the inspection of the premises, buildings, machinery and stock-in-hand 
of the industry; 
(b) to permit the inspection of all accounts relative to the industry; 
(c) to furnish full returns of all products manufactured or sold, both as 
regards description and quantity; 
(d) to maintain such special accou nts an d to furnish such statements as 
the Director may from time to time require; and 
(e) to submit the accounts of the industry to such audit as the Director may 
prescribe. 
27. Penalty for default in applying the loan .– If the Director, after  any 
inspection pro vided for in section 26, is not satisfied that the money lent is being 
applied to the purpose or purposes for which the loan was granted or that the 
conditions on which the loan was granted are being duly fulfilled, he may declare, 
notwithstanding anything contained in the deed executed under section 21 that the 
loan is immediately repayable and shall give notice of such declaration to the 
borrower. 
28. Power to adjust security during currency of loan.– If at any time during the 
currency of the loan, the value of the security falls below the outstanding balance of 
the loan, the Director may either proceed to recover in the manner laid down in 
sections 23, 24 and 25 so much of such balance as is not adequately covered by the 
then existing v alue of the s ecurity or accept such additional or collateral security as 
he may deem sufficient. 
29. Power to recovery loans.– If the borrower fails to comply with any order under 
clause (a) of section 26 or does not permit or obstructs the inspection of the accounts 
relative to the industry or makes default in respect of any of the particulars specified in 
clauses (c), (d) and (e) of the said section or if the borrower disposes of any profits in 
contravention of the provisions of section  33 the Director ma y, after considering any 
representation the borrower may make within such time as the  
1
[Provincial 
Government] may allow in this behalf, proceed to recover the loan in the manner laid 
down in sections 23, 24 and 25. 
30. Appeal.– Within 15 days of the recei pt of a notice under section 27, 28 or 29, 
the borrower may appeal against such order to the 
2
[Provincial Government] and the 
decision of the 
3
[Provincial Government] thereon shall be final: 
 
4
[Provided that no order under this section shall be passed unles s an 
opportunity of being heard is provided to the person to be affected thereby.] 
31. Government guarantee of a minimum return .– The conditions of a 
guarantee by the 
5
[Provincial Government] of a minimum return on the whole or part 
of the capital of a joint stock company shall be– 
(a) that the industry shall be subject to the conditions of section 26 in 
respect of inspection, returns and accounts; 
(b) that a minimum portion of the authorized capital of the industry to be 
fixed according to the circumstance s of each ca se has  been 
subscribed and paid in cash; 
(c) that no such guarantee shall in any case extend beyond a period of 5 
years; 
(d) that during the period to which the guarantee extends, the 
6
[Provincial 
Government] may impose on such persons as it co nsiders to b e 
directly concerned in the promotion of the company, a condition that if 
they transfer any of their shares without the consent of the  
7
[Provincial 
Government], they shall be liable jointly and severally to refund to the  
8
[Provincial Government] any sums paid to the company in fulfillment of 
the guarantee; 
(e) that the 
9
[Provincial Government] shall be entitled to recover the whole 
or any part of the sum paid by the  
1
[Provincial Government] on account 
 
1
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
2
Ibid. 
3
Ibid. 
4
Added by the Punjab State Aid to Industries (Amendment) Ordinance, 1985 (XX of 1985),  (w.e.f. 23.2.1985), published in the 
Gazette of Punjab (Extraordinary), s.3. 
5
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
6
Ibid. 
7
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
8
Ibid. 
9
Ibid. 
of such guarantee with interest at the rate in force on the date of the 
agreement for loans granted under the Land Improvement Loans Act, 
1883
2
, at any time after such period as may have been laid down in the 
agreement, provided that the  
3
[Provincial Government] is satisfied that 
the company is paying  or is able to pay interest or a dividend upon the 
capital shown as paid up in excess of such rate as may be fixed in the 
agreement and such recovery shall be made in the manner laid down 
in sections 23, 24 and 25: 
 Provided that the sum recoverable by t he 
4
[Provincial Government] in 
any one year shall not exceed a sum equal to half the net profits made by the 
company in the preceding year in excess of the sum required for the payment 
of interest or dividend at the rate fixed in the agreement. 
5
[32. Subsidies.– A su bsidy to a cottage industry or a village industry for any 
purpose and a subsidy to any other industry for the conduct of research or for 
purchase of machinery may be granted by the Provincial Government on such 
conditions as may be prescribed in this behalf.] 
33. Disposal of profits when conditions on which State aid is given are not 
fulfilled.– No borrower shall pay any dividend or distribute or take any profits in 
excess of such percentage rate upon the amount of the capital of the industry as the 
6
[Provincial Government] may from time to time fix, until the conditions on which the 
State aid has been granted are fulfilled. 
34. Government control of aided industry .– Notwithstanding anything 
contained elsewhere in this Chapter, the  
7
[Provincial Government] may, by  the 
appointment of its own directors or otherwise exercise such control over the conduct 
of the industry to which State aid has been given as shall suffice in its opinion to 
safeguard its interests, provided that such right has been expre ssly reserv ed by 
agreement at the time the aid was granted. 
35. Method of recovery of money due .– Notwithstanding anything contained in 
sections 23, 24 and 25, all arrears of money payable to the  
8
[Provincial Government] 
under this Act including interest s chargeable thereon a nd costs, if any, incurred, 
 
1
Ibid. 
2
XIX of 1883. 
3
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
4
Ibid. 
5
Substituted by the Punjab State Aid to Industries (Amendment) Act, 1940 (III of 1940), published in the Government Gazette 
(Extraordinary), Punjab, dated April 04, 1940, pp. 246-247, s. 5. 
6
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
7
Ibid. 
8
Ibid. 
may, with the previous sanction of the  
1
[Provincial Government], be recovered as 
arrears of land revenue. 
CHAPTER V 
SUPPLY OF MACHINERY ON HIRE-PURCHASE SYSTEM 
36. Percentages of cost to be deposited by hirer .– No machi nery s hall be 
supplied by the  
2
[Provincial Government] on the hire -purchase system unless the 
applicant therefor deposits with the Director such percentage of the cost thereof as 
may be prescribed, and furnishes security for the unpaid portion o f such cost  in the 
same manner as for a loan granted under the provisions of Chapter IV. 
37. Particulars to be specified in order when application is allowed .– When 
an application is allowed, the Director shall, subject to and in accordance with any 
rules that may be  made under this Act, make an order specifying the following 
particulars, namely:– 
(a) the amount of each installment of , rent to be paid for the hire of the 
machinery and the number of such installments to be paid before the 
machinery shall become the property of the hirer; 
(b) the amount of interest, if any, to be paid with each installment of rent 
on the remaining unpaid installments; 
(c) the dates on which and the manner in which the aforesaid payments 
shall be made; and 
(d) such other particulars as may be prescribed. 
38. Conditions of supply of machinery on hire -purchase system .– Until the 
hiring is terminated in the manner hereinafter provided, the following provisions shall 
apply, namely:– 
(a) The hirer shall pay punctually and without dem and the ins tallments of 
rent and amount of interest specified in the order referred to in section 
37. 
(b) The hirer shall retain the machinery in his own possession in good and 
serviceable order and condition and shall not, without the previous 
written consent of the  Director, make any addition thereto or alteration 
therein, nor remove the machinery or any part thereof from the premise 
specified in the application for the supply thereof. 
(c) The machinery shall remain the sole and absolute 
3
[property of the  
4
[Provincial Gov ernment], and any transfer thereof or assignment of 
any right, title or interest therein or the creation of any mortgage, 
encumbrance or any other charge thereon by the hirer shall be void as 
 
1
Ibid. 
2
Ibid. 
3
Substituted by the Government of India (Adaptation of Indian Laws) Order, 1937, published in the Gazette of India 
(Extraordinary), dated April 1, 1937, pp. 75-344, Article 3 read with Schedule. 
4
Substituted for the words “Crown” by the West Pakistan Laws (Adaptation) Order, 1964, published in the Gazette of West 
Pakistan (Extraordinary), dated June 3, 1964, pp. 1805-1849, s. 2(1) read with Schedule. 
against the 
1
[Provincial Government] unless it has been ma de with the 
previous written consent of the Director. 
(d) The machinery shall not be liable to distraint, attachment or sale by any 
process under any law for the time being in force, otherwise than under 
this Act. 
(e) The machinery shall bear a metal plate in the prescribed form, and any 
person who wilfully removes or defaces such plate shall be liable to a 
fine not exceeding five hundred rupees. It shall be presumed until the 
contrary is proved that machinery bearing such metal plate is the  
2
[property of the 
3
[Provincial Government]] hired out under this Chapter. 
(f) The hirer shall permit the Director or any person authorized by the 
Director in this behalf to inspect the machinery at all reasonable times, 
and the Director or such other person sh all have al l such  powers of 
entry as may be necessary for the purpose of making an inspection. 
(g) In addition to the foregoing conditions the hirer shall be bound by such 
other conditions consistent therewith as may be prescribed by rules 
made under this Act, or may  be im posed by the Director in any 
particular case. 
39. Consequences of default by hirer .– If the hirer makes default in paying the 
rent of the machinery or any sum payable as interest or any other charges due from 
him under this Chapter or fail s to comply  with any of the conditions which are 
contained in, or may be imposed under section 38, the Director may, after giving him 
16 days’ notice, terminate the hiring and he or any other officer authorized by him in 
this behalf may thereupon enter the  premises in which the machinery is for the time 
being kept, whether such premises belong to the hirer or not and seize and take 
away the same. 
40. Option of hirer to purchase machinery seized for default .– (1) If the 
machinery is seized and taken away und er section 39 the hirer shall have the option 
to be exercised within one month after such a seizure or such longer period as may 
be allowed by the Director in this behalf, of purchasing the same by payment to the 
Director of the unpaid balance of the cost thereof, together with such other amounts 
as may be due, and the cost of and expenses incidental to such seizure and 
removal. 
 (2) If within the period specified in sub -section (1) the hirer does not 
exercise the option of purchase, the Director shall proce ed to disp ose of  the 
machinery. 
41. Liability of hirer on termination of hiring under sections 24 and 25.– If the 
Director terminates the hiring under section 39  and the hirer does not purchase the 
machinery under section 40, the hirer shall not be entitle d to the r efund of the sum 
 
1
Substituted for the words “Local Government” by the Gover nment of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
2
Substituted for the words “property of the Local Government” by the Order ibid. 
3
Substituted fo r t he word  “Crown” by the West Pakistan Laws (Adaptation) Order, 1964, published in the Gazette of West 
Pakistan (Extraordinary), dated June 3, 1964, pp. 1805-1849, s. 2(1) read with Schedule. 
deposited by him under section 36 or to the refund or remission of any payment 
made by or due from him during the hiring, and shall be liable to pay such amount, if 
any, as the Director may determine in respect of any loss caused  by the disposal of 
the machinery under sub-section (2) of section 40. 
42. Termination of hiring on payment of cost of machinery .– When, after 
credit has been given for the amount deposited under section 36, the hirer has paid 
in full all the installments of rent me ntioned i n clause (a) of section 37 and the 
amount of interest, costs and other charges payable by him under this Chapter, he 
shall become the owner of the machinery and shall thereupon remove from the same 
the metal plate mentioned in clause (e) of section 38: 
 Provided that if at any time during the hiring the hirer pays in advance the 
remaining installments of rent the interest payable in respect thereof shall be 
remitted. 
43. Penalty for non -removal of metal plate from machinery .– If the hirer 
wilfully omits, after receiving due notice, to remove the metal plate from any 
machinery which has become his property under section 42, he shall be liable to a 
fine not exceeding fifty rupees. 
44. Sums due under this  recoverable as loans under Chapter IV .– All sums 
payable under this Chapter shall be recoverable in the same way as loans under 
Chapter IV. 
CHAPTER VI 
SUPPLEMENTAL 
45. Finality of decision of  
1
[Provincial Government] and bar of suits and 
proceedings in Civil and Criminal Courts .– (1) The decis ion of th e 
2
[Provincial 
Government] as to whether the conditions laid down in or under any of the provisions 
of this Act have been satisfied shall be final, and no suit shall be brought in any civil 
court to set aside or modify any order made thereunder. 
 (2) No pr osecution, suit or other proceeding shall lie against any 
Government officer or other authority vested with powers under this Act for anything 
in good faith done or intended to be done thereunder. 
46. Power to make rules .– (1) The 
3
[Provincial Government] may, after previous 
publication, make rules consistent with this Act for the carrying out of all or any of its 
purposes. 
 (2) In particular and without prejudice to the generality of the foregoing 
power, the 
4
[Provincial Government] may make rules regulating or determining all or 
any of the following matters, namely:– 
 
1
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
2
Ibid. 
3
Ibid. 
4
Ibid. 
1
[(a) nomination of three members of the Board under clause (e) of sub -
section (1) of section 3;]  
(b) regulating the travelling allowance under section 10; 
(c) the manner of making application for State aid under section 19; 
(d) the delegation of power to give loans under section 20; 
(e) the form of deed to be executed under section 21; 
(f) the nature and amount of the security to be taken under sections 21 
and 36 for the due applicati on and repayment of the State aid or rents 
together with all interest due thereon, if any, and the rate of interest at 
which and the conditions under which State aid may be granted: 
  Provided that where the security consists wholly or in part of the 
premises, mac hinery, s tock, stores or other property, present or future, 
movable or immovable of the industry concerned, then the whole of such 
property present and future, movable and immovable, may be made liable for 
the recovery of the loan and all interest due thereon, if any; 
(g) the inspection under section 26 of the premises, buildings, machinery 
and stock-in-hand and the mode of keeping and auditing the account 
and of furnishing returns of any industry in respect of which State aid 
has been given; 
(h) the manner in and the place at which notices or orders may be served 
on any borrower; 
(i) the form of the declaration to be used under section 24; 
(j) the fixing of the period for the repayment of loans; 
(k) the application under section 33 of profits in the case in  which the 
conditions on which State aid has been given, have not been fulfilled; 
(l) the appointment and functions of directors appointed by the  
2
[Provincial 
Government] under section 34 and the prescribing of other methods of 
control of industries to which State aid has been given; 
(m) the percentage of the cost of machinery to be deposited under section 
36; 
(n) the additional particulars to be specified in the order referred to in 
section 37 and the condition s on which machinery may be supplied on  
the hire-purchase system; 
(o) the form of the metal plate referred to in clause (e) of section 38; 
(p) the form of notice under section 39; 
(q) the recovery of any sums payable under this Act; and 
(r) all other matters pertaining to the working of this Act. 
 
1
Substituted by the Punjab Laws (Adaptati on, Revision and Repeal) Act, 1954 (XV of 1955), published in the Punjab Gazette 
(Extraordinary), dated January 21, 1955, pp. 87-108, s. 2 read with First Schedule. 
2
Substituted for the words “Local Government” by the Government of India (Adaptation of Indian Laws) Order, 1937, published 
in the Gazette of India (Extraordinary), dated April 1, 1937, pp. 75-344, Article 4(1) read with Table of General Adaptations. 
47. Repeal.– The Punjab Industrial Loans Act, 1923
1
, is hereby repealed. 
 
 
 
 
 
 
 
1
I of 1923.