Section 126: Power of Council to borrow

(1) The Council may, in pursuance of any resolution passed by it, borrow by way of debenture or otherwise on the security of all or any of the taxes, rates, cesses, fees and charges authorised by or under this Act, any sums of money which may be required—

(a) for acquiring any land which it has power to acquire;

(b) for erecting any building which it has power to erect;

(c) for the execution of any permanent work, the provision of any plant, or the doing of any other thing which it has power to execute, provide or do, if the cost of carrying out the purpose in question ought to be spread over a term of years;

(d) to pay off any debt due to the Central Government or the Government;

(e) to repay a loan previously raised under this Act or any other Act previously in force; or

(f) for any other purpose for which the Council is, by virtue of this Act or any other law for the time being in force, authorised to borrow:

Provided that—

(i) no loan shall be raised without the previous sanction of the Central Government or without previous publication of the application for sanction under the Local Authorities Loans Act, 1914 (9 of 1914), and the rules made thereunder; and

(ii) the amount of loan, the rate of interest and the terms including the date of floatation, the time and method of the repayment and the like shall be subject to the approval of the Central Government.

(2) When any sum of money has been borrowed under sub-section (1), no portion of any sum of money borrowed for any of the purposes referred to in clause (c) of sub-section (1) shall be applied to the payment of salaries and allowances to any officers or other employees other than those exclusively employed in connection with the carrying out of that purpose.