The Assam Aid to Industries (Small and Cottage Industries) Act, 1955
# ASSAM ACT II OF 1956

F THE ASSAM AID TO INDUSTRIES (SMALL AND COTTAGE

INDUSTRIES) ACT, 1955

(Passed by the Assembly)

**(Received the assent o f the Governor on the 7th January 1956)**

[Published in the _Assam Gazette, dated the 11th January 1956]_

_An_

_Act_

_to provide for the grant of loan for the development of Small and Cottage_

_Industries in Assam._

**Pream ble.—** Whereas it is expedient to provide for the grant of loan

for the development of Small and Cottage Industries in Assam.

It is hereby enacted in the Sixth Year of the Republic of India as

follows:—

**1. Short title, extent and com m encem ent.—(I) This Act may be**

called the Assam Aid to Industries (Small and Cottage Industries) **Act,**
1955.

(2) It extends to the whole of Assam.
_(3) It shall come into force at once._

**2. D e fin itio n s .In this Act unless there is anything repugnant in the**

subject or context ;

(а) ‘Borrower’ means a person to whom a loan has oeen granted

under this Act and includes the heirs, successors, assigns and sureties of a
borrower.

(б) ‘Director of Cottage Industries’ means the Director of Cottage

Industries, Assam.

_(c) ‘Government’ means the Government of the State of Assam._
(rf) ‘Loan’ means a loan granted under this Act.

(«) ‘Prescribed’ means prescribed by rules made under this Act.

(y) ‘Sanctioning Authority’ means the authority who sanctions a

loan.

(g) ‘Small Industry’ means an industrial unit employing less than 50

workers if using power, and less than 100 workers if not using power, and

having capital assets of less than Rs.5 lakhs.

(A) ‘Cottage Industry’ means an industry conducted by the members

of a family or groups or organisations of artisans with or without the aid of
hired labour.

(i) ‘Security’ means property mortgaged by the borrower against

the loan taken from Government in shape of land, buildings, the assets of
the industry and personal security and surety.

3. **Constitution o f Cottage Industries Board.—The State Govern**

ment shall constitute a Board for advising the Cottage Industries Depart­
ment for considering loan applications for amounts exceeding Rs.5,000 and
for reviewing generally the work relating to industrial loans. The Board

shall have representatives of the Cottage Industries Department, Finance
Department and the Financial Corporations amongst others.

**4. Grant o f loan.— (1) The Director of Cottage Industries, Assam or**

any officer authorised in this behalf by the Government may sanction
loans not exceeding such limit as may be prescribed and any loan bevond

the competence of the aforesaid officers shall be sanctioned by the Govern­
ment. Loans upto Rs.20,000 only may be issued by the Cottage Industries

Department. Applications for loans exceeding Rs.20,000 should ordinarily

_[Price 2 as. or 2 d.]_


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be passed on to the State Financial Corporation for consideration. In cases,

however, where the industrial concern is not found eligible for accommoda­
tion from the Corporation, the Cottage Industries Department may consider
such applications upto a limit of Rs.50,000.

(2) Loan may be granted for all or any of the following purposes,

_viz:—_

(i) For the purchase of a Small or Cottage industrial undertaking.

_(ii) For the erection of additional machinery or for replacing old_

machinery of a Small or Cottage Industry.

(tw) For the development of a new or nascent Small or Cottage

Industry, and

(tt>) For providing the working capital such as the cost of raw mate­

rials, pay of operating staff, etc., of a Small or Cottage In­
dustry for a specified time.

**5. Application for loan.—** (1) Any person may submit in the pres­

cribed form and in the prescribed manner an application for loan to the
Director of Cottage Industries, Assam or to any other officer empowered in
this behalf by the Government.

(2) The officer receiving such application shall within such time as

may be prescribed, conduct an enquiry on the particulars furnished with the
application and forward the same if he is not competent to sanction the
loan, with his report to the Government.

**6. The Governm ent or the authorities em pow ered to sanction**

**the loan m ay grant loan to a Sm all or Cottage Industry on the fol­**
**low ing term s.—The grant of a loan is to be secured and repaid in the**
prescribed manner and upon such terms as may be fixed by the order
granting i t :

Provided that no such loan shall exceed upto a maximum of 75 per

cent of the total value of the security as prescribed. Security may also

include personal security:

Provided also that notwithstanding anything contained in this Act, and

subject to such rules as may be prescribed, the Director of Cottage Indus­
tries may in cases of loans not exceeding Rs.1,000 issue the loan only on the
personal security of the borrower, with or without a surety or sureties.

Government or the authority empowered to issue loan may lease machi­

neries and equipments necessary for the purpose of the industry to the ap­
plicant on hire purchase system, on execution of the bond in the prescribed

form.

**7. Security.—** Notwithstanding anything in the Section 5 all assets pur­

chased with or created from the loan shall be deemed to be mortgaged or
hypothecated, as the case may be, to the Government for the repayment of
the loan with interest due thereon and the amount of the loan and the inte­
rest thereon shall be the first charge on such assets.

Provided that nothing in this sub-section shall affect the borrower’s

right to sell such articles of his stock-in-trade as are meant for sale to custo­
mers in the normal course of business.

**8. Inspection o f assets.—Any person authorised in this behalf by the**

Director of Cottage Industries may enter any place, or premises for
inspecting any land, constructions, machineries, appliances, materials or
stock-in-trade purchased, hired or created or proposed to be purchased,
hired or created by the borrower with the loan granted to him.

**9. Power to require repaym ent before the due dates.—Notwith­**

standing anything contained in this Act or the Rules made hereunder,
the Government or the Director of Cottage Industries, if the loan is

sanctioned by an authority other than the Government, may for’ reasons


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to be recorded in writing, terminate the agreement for loan and direct the
borrower **to** repay all the amounts due thereunder within such time- as
may be fixed on any of the following grounds:—

(i) that any portion of the loan given has been misapplied, or

(zz) that there has been a breach by the borrower of the provisions

of this Act or of any rule made thereunder or of any condition
of the grant, or

(iti) that the application on which the loan has been granted

contained or was accompanied by, any material statement by
the borrower which he knew to be false or any intentional
concealment by him of any material fact, which in the opinion
of the Government or the Director of Cottage Industries, as
the case may be, it was his duty to disclose or that any such
false statement or concealment was intentionally made in any
enquiry made under this Act or in reply to any requisition for
information under this Act, or

(tt>) That the Small or Cottage Industry in question is being managed

in such a manner as to endanger the repayment of the loan

granted thereto and repayable under this Act, and in default
of payment within the specified date proceed to recover from
the borrower as an arrear of land revenue the whole amount
of the outstanding loan, together with such interest as may

be due thereon.

**10. Power to postpoue** **or to** **extend tim e for realisation.—**

Notwithstanding anything contained in this Act or in the Rules made
thereunder, the Government, where the Government is the sanctioning

Authority, and the Director of Cottage Industries in other cases, may
postpone the realisation of any instalment of a loan or may extend the
period of repayment of the loan in the manner it deems proper. However,

the reasons for doing so will be stated in writing.

**11. Inspection and returns.—The owner of any Small or Cottage**

Industry:—

(z) when an application has been made for State loan to such

industry, or

(zz) during the continuance of the State loan to such industry shall:—

(zz) comply with any general or special orders of the Government

relating to the inspection of the premises, buildings or plant
or stock-in-trade, employed or to be employed for the
purposes of the industry ;

(i) permit the inspection by the prescribed person of all accounts

relating to the industry ;

(c) submit the account relating to the industry to such audit as

may be prescribed ;

_(d) furnish in the prescribed manner to all prescribed person full_

returns of all products manufactured and sold both as

regards description and quantity ;

(s) maintain such special account as may be prescribed, and

_( J ) furnish such statements as the Government may require._

**12. Fees.—The Government may charge in respect of application**

enquiries, inspections and audit by whomsoever made under this Act, such

fees/if any, as may be prescribed -

**13. Supervision o f assisted industry.—During the continuance of**

the State loan to a Small or Cottage Industry, the Government may, by


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appointing Directors or Inspectors take such steps as it deems advisable so
to control the conduct ol’the Industry as to safeguard the interest of the
Government therein.

**14. Power to recover or to take over assets.—All arrears of**

monies payable to the Government under this Act, including any interest
chargeable thereon and cost, if any, incurred, shall be recoverable as an
arrear of land revenue.

**15. Exem ption from legal proceedings.—No suit, prosecution, or**

other legal proceedings shall be instituted against any person for anything
in good faith done, or intended to be done in pursuance of this Act or any
Rule made thereunder.

**16. Finality o f decision o f State G overnm ent.—The decision of the**

Government as to whether the conditions imposed by or under any of the
provisions of this Act have been satisfied shall be final.

**17. Power to m ake rules.—** (1) The Government may make rules for

carrying out the purposes of this Act.

(2) In particular and without prejudice to the generality of the

foregoing provisions, such rules may provide for all or any
of the following matter, namely :—■

_(а) The forms of application for loan, order of the_ sanctioning

Authority, the bond, or any other instrument to be executed
by the borrowers and notices and directions by the sanction­
ing Authority and other authorities.

(б) The terms and conditions of the loans and fixation of instal­

ments.

(c) The fixation of the rate of interest.

_(d) The extent, the manner of issue of loans and the procedure for_

realisation.

(e) The form and manner in which accounts and registers are to be

maintained.

(y ) The manner in which the grant of extension of time for repay­

ment of the principal or interest may be granted.

(g) The manner and machinery for investigation into applications

for loans and into proper utilisation of the loan money.

(A) The provision of audit and inspection, and maintenance of account

and submissions of returns, etc., under section 10.

(i) The fees referred to in Section 11, and

( j ) Generally all matters which are required by the Act to be

prescribed.

A. G *P. (Leg.) No.9/56—lOuO—5-3-1956.


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