Local Authorities Loans Act, 1914

The Local Authorities Loans Act, 1914 sets out the rules under which local authorities -- bodies like municipalities, cantonment boards and port authorities that control local funds or can levy local taxes -- may legally borrow money. Section 3 lists the purposes for which a local authority can borrow against the security of its own funds: carrying out works it is legally authorised to do, giving relief and running relief works during famine or scarcity, preventing the outbreak or spread of a dangerous epidemic disease, related measures, and repaying money it had previously and lawfully borrowed. A proviso caps borrowing other than from government itself at twenty-five lakh rupees unless the loan terms are approved by the appropriate government.

Section 4 gives the appropriate government (the Federal Government for cantonment and major-port authorities, Provincial Government for others, per Section 2) broad rule-making power over how such borrowing works in practice -- what funds can secure a loan, which works qualify, how applications and inquiries are handled, repayment instalments and interest, and how loan accounts must be kept. Section 5 gives a strong enforcement tool: if a loan (or its interest or costs) is not repaid on time, the government can attach the local authority's funds, taking over their management until the debt, interest and related costs are paid off -- though this attachment cannot override a prior legitimate charge already secured against those funds.

Section 6 allows certain listed local authorities (identified in Schedule I -- in this extract, the Karachi Municipal Corporation and the Trustees of the Port of Karachi) to raise short-term money by issuing bills or promissory notes repayable within twelve months, with prior government sanction, subject to the State Bank of Pakistan Act, 1956. Section 7 is the Act's core restriction: local authorities cannot borrow or otherwise charge their funds for any purpose except as allowed under this Act (or another specific enactment), and any contract that tries to do so is void.

This is an old, foundational municipal-finance law from 1914, and the extract shows it has been amended many times over the following decades (1920, 1937, 1949, 1955, 1965, 1975, 1981), including changes to which authorities are covered under Schedule I as cities and institutions were renamed or reorganised. Given its age and repeated amendment, current borrowing limits, covered authorities, and procedural details should be checked against the currently applicable rules and any updated schedule.