CHAPTER XI LOSSES OF PUBLIC MONEY OR PROPERTY Securities and general principles for fixing and enforcing responsibility General
283. The Government will hold a Government servant personally responsible for any loss sustained by the Government through fraud or negligence on his part, and also for any loss sustained through fraud or negligence on the part of any other Government servant to the extent to which it may be shown that he contributed to the loss by his own action or negligence (See also Article 8).
The cardinal principle governing the assessment of responsibility for such losses is that every Government servant should exercise the same diligence and care in respect of all expenditure from public funds under his control as a person of ordinary prudence would exercise in respect of the expenditure of his own money (See also Article 40).
An officer’s honest errors of judgement involving financial loss may be deserving of condonation if he can show that he has done his best upto the limits of his ability and experience. Where, however, an officer is dishonest, careless or negligent, in the duties entrusted to him, and causes loss to Government, the case is clearly one for punishment and enforcement of personal liability.
Rules to be observed in cashing bills or in remitting money
from one office to another
[Article 284]
284. A Government servant who has to arrange for public moneys to be carried from one place to another by a messenger should take all reasonable precautions to prevent any loss in transit due to misappropriation of the moneys by the messenger or any other cause. He should pay due regard to all relevant factors including the status of the messenger employed and the distance over which the moneys have to be carried. As far as possible, he should use for this purpose only permanent Government servants whom he knows to be reliable. When the amount to be carried is considerable, he should not entrust it to a single low-paid subordinate.
The following rules should be observed in cashing bills or in remitting money from one office to another.
(1) Generally only persons (peons, clerks, etc.) of proven reliability should be engaged in the transmission of Government moneys.(2) Peons may be permitted to carry amounts up to ₹1,00,000(3) Above † ₹1,00,000 up to ₹2,00,000 one class III employee and a peon may be engaged.(4) If the amount is above ₹2,00,000 one supervisory officer and a peon may be engaged.
Note 1:—
Officers may use their discretion as to the persons to be employed for the purpose. New recruits should not however be employed.
Note 2:—
Special arrangements should be made whenever necessary for the transmission of large amounts of cash involving ` 2,00,000 or more. Officers should use their discretion in the matter, taking into consideration the kind of vehicle engaged and the distance to be covered. If departmental vehicles are available they should be used for the purpose. If police escort is considered necessary, it may be obtained on requisition to the police authorities concerned.
Note 3:—
If more than one person is engaged for encashment of bills with reference to the above rules, the bill should be endorsed in favour of the person belonging to the higher/highest grades among the persons so engaged. The drawing officer may engage persons specified against a higher monetary limit for encashment of bills falling with in a lower monetary limit. They may engage persons falling within a lower monetary limit against a higher monetary limit, only when the sanctioned strength of the members of the staff of the office does not permit him to satisfy the above rules. In such cases, the necessity of such an endorsement should also be certified in the bill by the drawing officer. The services of the Executive Officers may also be utilised in office where there are no categories of employees mentioned in the previous sub-paragraph.
Note 4:—
@The above provision do not apply to remitting of cash and other valuables to and from the Treasuries which are always to be with police escort and for which the provisions of the rules in Part VI of Kerala Treasury Code Vol. I shall apply. However, the above provisions should be observed by the Treasury Officers for the drawal of imprests from the Bank and the remittance of imprest balance into the Bank, if no police escort is provided for such withdrawals and remittances.
285. One important method by which the Government endeavour to minimise the risk of losses and ensure that it shall be possible to recover the amount of any loss that may be sustained is (1) by taking of adequate Fidelity Insurance covers in respect of posts to which the custody or handling of Government cash or stores is assigned and (2)by taking adequate security from contractors who supply stores or executive works for the Government.
SECURITY DEPOSITS
Fidelity Insurance – Government Servants
(Article. 286)
286. The amount of security required for each security post to be covered by Fidelity Insurance should be fixed with due regard to the circumstances and local conditions in accordance with the rules contained in the departmental code or manual concerned and the relevant special orders of Government, if any. Where no definite orders or rules already exist Government servants in charge of offices will be responsible for reporting to their superior officers, and the latter to Government, as to the necessity or otherwise for security being taken in any particular case and the Government will determine the amount of the security to be obtained with due regard to the circumstances of each case.
The amount should be fixed at a sum equal to the maximum amount which the holder of the post ordinarily has in his hands at any one time. The Head of the Office should see that the amount of cash or valuables left in the hands of the Government Servant holding such post is not more than the amount fixed for that particular post to be covered by Fidelity Insurance.
All Heads of Departments will forward to the State Insurance Officer, the details of the posts for which Fidelity Insurance covers are necessary, the amounts of the policies etc. On receipt of such details the State Insurance Officer will issue policies in each case. The premium on such policies will be paid by the respective departments from their contingencies. The Head of the Department will see that the insurance policies are kept alive.
* Collective Fidelity Guarantee Insurance Policies will be issued covering all the employees in security posts in a department, if there are more than one such post in a department. In such cases the names of the employees, the names of the posts, the sum guaranteed for each post and the number of such posts in the department will be shown in the policy. Such policies will be for a period of 12 months and renewed from time to time.
A register for watch the timely remittance of premium towards the Fidelity policies taken collectively will be maintained in Form 43 (K.F.C Vol.II) by each department.
Security Deposits—Contractors
(Article. 287)
287. Whenever a private person or firm contracts with the Government to supply stores or execute a work, he or it should, unless exempted by a competent authority, be required to give security for the due fulfilment of the contract and suitable provisions regarding the security should be incorporated in the agreement executed with reference to Article 140 (ii) and 181 a reference to the agreement should be recorded in the Register of Security Deposits. This Register should be in Form 43 except when some other form is specially prescribed in the rules or orders applicable to any department.
In all contracts entered into on the part of Government under which sums of money are payable by contractors, adequate security should be taken for sums being paid as they fall due. Where the circumstances are such that security cannot conveniently be furnished the contractors should be required to pay the sums due on the contract quarterly in advance; and the instalments on account of each quarter should be paid at least a month before the beginning of the quarter for which the advance payment is required. In default the contract should at once be cancelled and new arrangements made so that as far as possible Government may be protected from loss.
These orders apply not only to Government leases and contracts, but also to similar engagements on the part of local bodies, in cases which are not specifically provided for in the departmental rules. What has to be specially guarded against is the overlooking of the demand outstanding on account of contracts till the end of the year for which they are current, by which time heavy balances are liable to accrue and it may become impossible to effect full recovery and secure necessary adjustment.
Form of Security and Conditions
on which they are accepted
288. The Security taken from a contractor should be in one of the following forms subject to the conditions noted against each, or partly in one and partly in another of these forms when this is specially permitted by the departmental authority authorised to accept the security.
| FORMS | CONDITIONS |
| 1. Cash. | The Government will pay no interest of any deposit held by them in the form of cash. |
2. Government Promissory Notes, Municipal Debentures, PortTrust Bonds or Bonds and/orDebentures issued by the Kerala Financial Corporation and Jenmikaram Payment (Abolition)Bonds |
The securities should be accepted at 5 per cent below the market price or at the face value which ever is less, and hould be duly endorsed in favour of the prescribed authority in accordance with the rules the Government Securities Manual. Public Works and Forest Contractors who furnish security in this form should be required to endorse the securities in favour of the Executive Engineer in the Public Works Department and the Divisional Forest Officer in the Forest Department respectively. |
| Note:– Contractors who furnish security in the form of Government Promissory Notes may endorse the security in favour of Assistant Engineers also in the Public Works Department. | |
| 3. Stock Certificates of the Central or State Government. | These should be accepted at 5 per cent below the market price or at the face value whichever is less. The person who furnishes these certificates as security should transfer them to the prescribed authority (in the name of his office) by registration in the books of the Public Debt Office and produce evidence of such registration before the certificate are accepted as security deposits. Similarly when the certificate has to be returned to the person who has furnished it, the authority concerned should effect the retransfer by registration in the Public Debt Office. |
4. National Savings Certificates, Government of India 12 years National Plan Savings Certificates and 10 Year Treasury Savings Certificates |
These securities should be accepted at their surrender value. |
| 5. 12 Years National Defence Certificates and 10 Year Defence Deposit Certificates. | These Securities should be accepted at their surrender value. |
| 6.Treasury Savings Bank Deposits | Contractors and foremen of chitties may open accounts in the Treasury Savings Bank and pledge their pass books in the name of the departmental authority which takes the security, under the Treasury Savings Bank Rules, See Appendix 3 to the Kerala Treasury Code. The deposits may be in the name of the depositor, who should, however, sign a letter of agreement to the Savings Bank binding himself not to draw the money without the sanction of the Government Officer to whom the security is pledged and authorising the Savings Bank to pay the money to that Officer if required. |
| 7. Post Office Savings Bank Deposits | A pass book for a deposit made under Rule 45 (b) of the Post Office Savings Bank Rules may be accepted as security provided that the depositor has signed and delivered to the Postmaster a letter in the prescribed form, as required by Rule 45 (f) of these Rules. Alternatively the contractor who furnishes security may offer security in the form of cash with a request that it be deposited in the Post Office Savings Bank in the name of the pledgee (departmental authority which takes the security) in accordance with Rule 45 (g) of the Post Office Savings Bank Rules (See Article 290). |
| 8. Post Office Cash Certificates | The Certificates should be formally transferred to the pledgee with the sanction of the Head Post Master in accordance with Rule 5 of the Post Office Cash Certificate Rules, and should be accepted at their surrender value at the time of tender. |
| 9. Deposit Receipts of Recognised Banks and Co-operative Societies approved by Government for the purpose | (i) The deposit receipt should be made out in the name of the pledgee or if it is made out in the name of the pledgers the Bank should certify on if that the deposit can be withdrawn only on the demand or with the sanction of the pledgee ;(ii) The depositor should agree in writing to undertake any risks involved in the investment ;(iii)The Bank should agree that, on receiving a signed treasury chalan and a withdrawal order from the pledgee in respect of the deposit or any part of it, it will at once remit the amount specified into the nearest treasury along with the chalan and send the treasury receipt to the pledgee ;(iv) the responsibility of the pledgee in connection with the deposit and the interest on it ceases when he issues a final withdrawal order to the depositor and sends an intimation to the Bank that he has done so. |
Note 1:—
The Deposit Receipts of the following Co-operative Banks will be accepted as security and earnest money deposits of Government contractors, without any limit and without obtaining counter–securities from the Banks.
1 The Kerala State Co-operative Bank.2 The Thiruvananthapuram District Co-operative Bank.3 The Kollam District Co-operative Bank.4 The Alappuzha District Co-operative Bank.5 The Kottayam District Co-operative Bank.6 The Ernakulam District Co-operative Bank.7 The Thrissur District Co-operative Bank.8 The Palakkad Co-operative Central Bank, Limited.9 The Malabar Co-operative Central Bank, Limited.10 The Kannur District Co-operative Central Bank, Limited.11 Thiruvalla East Co-operative Bank Limited.12 Cranganore Town Co-operative Bank Limited.13 Ottappalam Co-operative Urban Bank Limited.14 Kottayam Co-operative Bank Limited.15 Tirur Co-operative Urban Bank Limited.16 Calicut Co-operative Urban Bank Limited.
Note 2:—
Deposit receipts of the following Banks produced by contractors for Departmental work and made out in the name of the pledgee will be accepted as valid only if the Bank concerned lodges with Government sufficient Government Securities to cover the amount of the receipts with a margin of 5 per cent on the market value.
(1) The Indian Overseas Bank(2) The South Indian Bank.(3) The Bank of India
In the case of deposit receipts of the Reserve Bank of India, the State Bank of India, the State Bank of Travancore, the Kerala State Co-operative Bank, the Cochin Central Co-operative Bank, Thrissur, the condition relating to 5 per cent margin is not applicable.
Note 3:—
Alternatively, security deposits given under the Bank Guarantee Scheme (details of which are given in Appendix 9) may also be accepted
Note 4:—
Individual Deposit Receipts or guarantees of approved scheduled Banks upto ` 5,000 (Rupees five thousand only) furnished as Earnest Money Deposits of contractors will be kept outside the purview of the Bank Guarantee Scheme and can be accepted by the Departments of the Government. The following Scheduled Banks have been approved for the purpose of accepting their individual Deposit Receipts or Guarantees upto ` 5,000 (Rupees five thousand only) as Earnest Money Deposits of contractors without obtaining any counter-security from the Banks subject to a limit of Rupees one lakh for each Bank at any time.
NAME OF BANKS
1 Bank of Madura.
2 Canara Bank.
3 Central Bank of India.
4 Indian Bank.
5 Indian Overseas Bank.
6 South Indian Bank.
7 State Bank of India.
8 State Bank of Travancore.
9 State Bank of Mysore.
10 Nedungadi Bank.
11 Syndicate Bank.
12 Bank of Baroda.
13 Bank of India, Bombay.
14 Canara Banking Corporation, Udipi.
15 Devkaran Nanjee Banking Company.
16 Punjab National Bank.
17 Union Bank of India, Bombay.
18 United Commercial Bank, Calcutta.
19 The Vijaya Bank Ltd., Mangalore.
20 The Catholic Syrian Bank Ltd., Trichur.
For the purpose of reviewing whether the ceiling limit has been exceeded, the Banks will send to the Finance Department, at the end of January every year consolidated lists of pending Fixed Deposit Receipts or Guarantees upto `5,000 issued by them towards Earnest Money Deposits of contractors during the previous year along with the certificates that the limit of ` 1 lakh was not exceeded at any time during the previous year.
The State Bank of India and the State Bank of Travancore are exempted from the ceiling limit of ` One lakh.
Forms Conditions
| 10. | Other forms of Security specifically approved by the Government for acceptance in any particular department, eg., Mortgages on real property and personal security in the Revenue Department. |
Security in any such form should be accepted in the particular department concerned only in accordance with the rules and conditions laid down in the relevant Departmental Code or Manual or in special orders of the Government. |
| 11 | Investment in the Bhadratha Social Security Scheme |
The Security coverage will be confined only to the actual amount initially invested by the depositor, as indicated in the Bhadratha certificate. |
Note 1:—
When a work is executed on the piece-work contract system, security may also be taken in the form of percentage deductions made from the contractor’s bills (See Article 179).
Note 2:—
Before accepting a Government Promissory Note as security, the officer accepting it should see that the Note is not torn or damaged or crowded with writing, as otherwise it requires to be renewed, that the transfer endorsements made thereon are in proper order, and that there is no reason to question the signature of the endorser. Ordinarily if the signature is in English, it should agree letter for letter with the endorser’s name as spelt in the transferring endorsement. He should also see that the chain of the endorsements on the Note is complete, that is, that the persons or officers who endorse the Note away are the same as those in whose name it already stood or to whom it has been endorsed. An endorsement signed “for” any other person is invalid unless it is supported by a Power of Attorney.
If there is any doubt about the regularity of endorsements, the depositor may be required to have the Note renewed in his own name.
Endorsements to or by any person “in trust for” any other, or as ‘trustee of’ anything are also invalid. All words relating to the trust must be expunged under the initials or signature of the person in whose endorsement they occur. Endorsements written upon a piece of paper attached to a Note are also invalid.
If all the transfer columns on the reverse of a Note are used up, the Note should not be accepted as it would not be possible to re-transfer the same in favour of the depositors when the security is released. The endorsement should be unconditional.
289. Security furnished in cash by a contractor may be converted at the cost of the depositor, into one (or when specially permitted, partly into one and partly into another) or the interest bearing forms of security mentioned in items (2) to (9) in the preceding article, provided—
(i) that the depositor has expressly requested in writing that this be done; and
(ii) that the acceptance of the new form or forms of security is permissible under the rules and under the terms of the agreement of bond.
Cash actually received or recovered may be converted into an interest bearing form of security in the manner described above, even when it forms part of a deposit which is being paid in instalments and has not yet been realised in full. Percentage deductions made from a contractor’s bill held as security for the due fulfilment of a contract should not, however, be converted into any other forms of security unless a departmental rule or order makes special provision for such conversion.
Post Office Savings Bank Deposits
290. The following procedure should be observed when cash tendered as security is to be deposited in the Post Office Savings Bank:—
(i) The Government servant who takes the security (the pledge) should send a letter to the Postmaster through the person who has to furnish the security explaining the nature of the security and requiring the Postmaster to receive the deposit and issue the pass book in his (the pledgee’s) name “On account of the security of A.B. (the person pledging)”. The person who is to furnish the security should present the letter at the Post Office with the requisite amount in cash and savings Bank index card in the prescribed form signed at the foot by the pledgee.
(ii) The Postmaster will deliver the Savings Bank pass book to the person pledging the security. The latter should transmit it without delay to the pledgee, and the pledgee should give him a receipt for it in the prescribed form.
Registration of Security Bonds
291. The registration of a security bond is compulsory if security is furnished in the form of immovable property. When security is furnished in any other form, registration of the security bond is optional and it need not be registered unless in any particular case the Head of the Department considers that the Government interest would be prejudiced by not registering it. In all cases where registration is considered necessary, it should be done at the expense of the Government.
Custody of Securities and Security Bonds
292. Treasury and post office savings bank pass books, fidelity bonds and security bonds or agreement should be kept in the safe custody of the departmental authority which takes the security.
All the treasury and post office saving bank pass books should be sent to the Treasury and Post Office respectively as soon as possible after the 15th June of each year, so that the necessary entries on account of interest may be made in them.
Government Promissory Notes, Stock Certificates, National Savings Certificates, National Plans Savings Certificates and Treasury Savings Certificates, Municipal Debentures and Port Trust Bonds deposited as security should be lodged for safe custody with the District Treasuries. The Government officer who receives the Notes, etc., will, after entering them in a register in Form 45, forward them in registered cover to the District Treasury Officer. With each despatch of the Notes, etc., a covering list in duplicate in Form 46 should be sent, one copy of which will be signed and returned to the Government Officer who forwarded the Notes, etc.
Note:—
A receipt should invariably be furnished to the depositor when the Notes, etc., are received and brought on this register. The receipt may be in the same form as the register but with the first four columns only. The receipt should be surrendered by the depositor when the Notes etc., are returned to him. The return of the Notes, etc., should at once be noted in the register which should be kept in the personal custody of the departmental authority who accepts the security.
A departmental authority which accepts a deposit receipt of a bank mentioned in item (9) of Article 288 as security should retain the receipts in its safe custody.
The depositor should receive the interest, when due direct from the bank on a letter from the pledgee authorising the bank to pay it to him.
Periodical Verification of all Securities
293 Every departmental authority should verify periodically, and at least once a year in May all securities which it has taken in various forms in respect of certain posts and from contractors and report the result to the immediate superior authority.
This rule applies to all forms of security, including personal security or security in the form of immovable property. In verifying personal security, a departmental authority should satisfy itself as the solvency of the surety, and in verifying security in the form of immovable property, it should see that the actual market value of the property is not less than the amount of security required.
The articles deposited in the Treasuries for safe custody should be verified at least once a year by the Officer who deposited them. For this purpose the articles deposited in Treasuries should be taken back, their contents verified and re-deposited (if necessary) once in a year. Verification should also be made whenever there is a change of incumbent or change of designation or change of jurisdiction of the Officer who deposited the articles for safe custody.
Annual Valuation of Government Promissory Notes, etc.
- When a contractor has furnished any security in the form of Government Promissory Notes or Government Stock Certificates or Municipal Debentures of Port Trust Bonds, the departmental authority which received the securities and sent them for safe custody should ascertain in May of each year whether their value, who valued at the market price of May 1st of that year or the face value whichever is less in each case, is still sufficient to cover the amount of security required. If the total value of the securities deposited by a contractor, as ascertained at this annual valuation, falls short of the amount of securityrequired plus 5 per cent by ` 100 or more, the departmental authority should at once call on the depositor to furnish additional security to the extent of shortage. No securities should be returned to any depositor on account of an increase in their value as ascertained at this annual valuation unless (i) the securities have appreciated so considerably that securities of the face value of ` 100 or more could be withdrawn and the remaining securities (valued as prescribed above) would still be sufficient to cover the amount of security required plus 5 per cent to provide against fluctuations, and (ii) the depositor submits a written request for the return of the securities that could be so withdrawn.
295.(a) Repayment of Security Deposits.—
(Article. 295(a)
Without the special orders of the competent authority, no security deposit should be repaid or re-transferred to the depositor or otherwise disposed of, except in accordance with the terms of his security bond or agreement. A departmental authority on returning any security to a depositor should invariably obtain his acknowledgement duly signed and witnessed. When an interest bearing security is returned or retransferred, the acknowledgement should set-forth the full particulars of the security.
The percentage deduction from bills which are held as additional security, will be released by the officer competent to pass the final bill at his discretion, after the successful completion of the work, retaining only such amounts as he may consider necessary to cover the liabilities, if any, of the contractor.
(b) Repayment of cash deposited in the Post Office Savings Bank.— When an amount lodged in the Post Office Savings Bank as a security deposit under Article 288 is no longer required, the departmental authority to which it is pledged (pledgee) should obtain from the person who pledged the security the receipt originally granted to him for the pass book or a fresh receipt duly signed and witnessed. Such receipts should be duly numbered and filed, and the numbers should be entered in the Register of Security Deposits.
After obtaining a proper receipt, the pledgee should deliver the Post Office Savings Bank pass book to the person who pledged the security and furnish him with an application in the form prescribed by the Postal Department for the withdrawal of the balance at the credit of the account together with the interest due on it. The pledgee should sign the application and enter the name of person who pledged the security as that of the messenger or agent entitled to receive payment. The person who pledged the security will then be able to withdraw the amount due to him from the Post Office Savings Bank.
(c) Adjustment of a claim against a Security Deposit lodged in the Post Office Savings Bank.— When the pledgee has a claim on behalf of the Government against a security deposit account pledged to him in the Post Office Savings Bank [in accordance with Rule 45(f) or (g) of the Post Office Savings Bank Rules] at a Post Office which has direct transactions with the treasury and the amount of the claim is to be credited to the Government, he should send the pass book to the Post Office with the usual application for withdrawal duly signed by him and with the words “To be adjusted by transfer in the Government accounts to the credit of the……………… Department (State)” written in red ink across it. The Post Office will make the necessary entries in the pass book and send the pledgee a treasury voucher for the amount withdrawn. When the pledgee has more than one security deposit account pledged to him at the Post Office Savings Bank and applies for the withdrawal of moneys from more than one such account on the same day, the Post Office will issue only a single treasury voucher covering all the withdrawals. If the pledgee does not receive the treasury voucher by the next day after that on which he sends the application, he should call for it from the Post Office. On receipt of the treasury voucher, the departmental authority which applied for the withdrawal should verify the entries, countersign it and forward it to the Treasury or Sub-treasury Officer as soon as possible in accordance with the procedure prescribed in this connection in the Kerala Treasury Code (See Rule 110 of the Kerala Treasury Code).
If the Post Office at which the security deposit account in the Post Office Savings Bank has been opened has no direct transactions with the Treasury, the pledgee should apply to the Post Office for the withdrawal of the amount required in the ordinary manner and on receipt of the amount should remit it into the treasury like any other departmental receipt.
When, after a transfer or payment, a pass book shows any balance in favour of the depositor the Postmaster will return it to the pledgee. When the account is closed by a transfer or payment, the Postmaster will not return the pass book to the pledgee, but will deal with it in accordance with the Post Office Savings Bank Rules.
Note 1:—
Government officers should see, before releasing or returning securities, that all claims of Government against the depositor are completely satisfied. It is not advisable to keep securities for a longer period than is absolutely necessary; all claims should as a rule be settled within one year from the expiry of the period of deposit. Release notices should be issued as soon as the liabilities of depositors are settled even if the security accounts are at that time under attachment by civil courts.
Note 2:—
Where the security consists of the title deeds of immovable property and the bond has been registered, a reconveyance of the property may be executed at the end of one year and registered in due course.
Security Deposit of a Private Employer of
a Government Servant on Foreign Service
(Article. 296)
296. When a Government servant is to be transferred to foreign service under a private employer, the Government may require the employer to deposit before the transfer is sanctioned, security equivalent to three months’ pay of the Government servant in foreign service.
The security should consist of either.
(i) cash paid into the nearest Government Treasury as a “Revenue Deposit” (See Article 269) or(ii) securities of the Central Government or the State Governments in the form of promissory Notes or Stock Certificates endorsed or transferred in favour of the Government, or(iii) A Treasury Savings Bank Deposit, the pass book for which is deposited with and pledged to the head of the office of the Government servant concerned.
A Treasury Savings Bank pass book so pledged should be kept, in the safe custody of the authority to which it is pledged; securities of the Central or the State Governments in the forms of Promissory Notes and Stock Certificates should be lodged for safe custody with the District Treasury. The security deposit should be returned to the private employer after the Government servant’s period of foreign service expires and the claims of the Government and the Government servant against the private employer have been settled.
Note:— The term “Private employer” used in this Article will not include within its scope the Central Government, other State Government, Municipalities, Universities and other Local Bodies, in the State.
LOSSES
Report of Losses
Article. 297
297.When any fact indicating that defalcation or loss of public moneys, *[erroneous or irregular issue of cheques] stamps, opium, stores or other property has occurred or that a serious account, irregularity has been committed come to the notice of any Government servant, he should inform the head of the office immediately. If it appears to the head of the office prima facie that there has been any such occurrence which concerns his office or in which a Government servant subordinate to him is involved, he should send a preliminary report immediately to the Accountant General and through the proper channel, to the Head of the Department. The Head of the Office should simultaneously take necessary action to ensure the safety of the relevant documents. On receipt of the information the Head of the Department should report the matter to the Government without delay. These reports should be sent even when the person responsible for a loss has made it good. Reports regarding a loss by way or damage to immovable property belonging to the Government should be sent in accordance with the special provisions of Article 302.
The preliminary report to the Accountant General may be either a copy of the report to the Head of the Department or relevant extracts from it showing, so far as information is available at the time, the exact nature of the defalcation or loss and the circumstances which made it possible.
After sending the preliminary reports, the Head of the Office should investigate the matter fully without delay and take all necessary further action—See Article 303 and 305. As soon as the investigation is complete, he should send a complete and detailed final report to the Accountant General and through the proper channel, to the Head of the Department, describing the nature and extent of the loss or account irregularity and the circumstances (including any breach or neglect of an existing rule) which made it possible, and stating whether any amount lost has been recovered and, if not whether it is possible to recover it in any way. The report should also state what disciplinary action has been taken, or is recommended, against the Government servants responsible and what steps have been taken, or are recommended with a view to prevent the recurrence of any such loss or account irregularity. The Head of the Department should submit a final report to the Government giving full information on all these points and, when necessary, making his recommendations.
When a petty loss not exceeding ` 300 does not appear to involve an embezzlement, a serious account irregularity or any other important feature requiring detailed investigation and consideration, or concern the Reserve Bank, the preliminary and final reports prescribed in this Article need only be sent to the authority competent to write off the loss or deal with it otherwise.
Note :— Any loss in respect of stores occurring otherwise than in the ordinary course or an accounts of fair wear and tear should be treated as a loss to the Government within the meaning of this Article— See also Article 155 and 301.
Losses with which the Reserve Bank, etc., are concerned
298.If the Accountant General becomes aware, in any manner of any loss to the Government which the Reserve Bank of India may possibly be held to be liable to make good the Government whether it relates to operations conducted by the Reserve Bank or its agents on Government account or to any other matter, he will immediately call for such further information as he may require regarding it. On receipt of this further information, which must be obtained without delay, he will, at once make a full report to the Government. If there is any doubt or dispute as to the facts of the liability, the Government will arrange with the authorities concerned for a Government Servant and an officer of the Reserve Bank (and an officer of the State Bank of India if the loss relates to an operation effected through its agency) to be appointed as soon as possible to carry out a joint investigation of the facts, while they are fresh, and make a full report together with, if possible a recommendation for an amicable settlement. If they are unable to make any such joint recommendation, their report should at least clear the ground as far as possible, so that a stated case may be referred, if necessary, to an arbitrator or a legal authority. This investigation will be under taken at once and independently of any departmental or police enquiry.
Losses of Cash due to acceptance of Counterfeit Coins
299. Losses of cash due to acceptance of counterfeit coins in State treasuries should not be debited to Government in any case without their specific approval.
300. Write off is the relinquishment of claims after exhausting all possible means of recovery.
Irrecoverable losses of stores and removal of the value of obsolete stores and stock from the accounts are also finally disposed of through write off (See Articles 81 and 82 of the Kerala Account Code Vol.I). The power to write off irrecoverable value of stores delegated to certain Heads of Departments is subject to the condition that the loss does not disclose a defect of system, the amendment of which requires the orders of Government. The order of the competent authority should also be obtained for writing off from any relevant value of commercial accounts that are maintained, any irrecoverable amount relating to a loss connected with a building, land or equipment or to unprofitable outlay on a work. The Government have empowered the authorities mentioned in the Book of Financial Powers to sanction such writes off subject to the limits and conditions mentioned therein.
Every Head of Department should submit annually on or before the first of June to the Accountant General, a statement showing all the amounts written off which were sanctioned by himself or any other competent authority under his control during the preceding financial year. The statement should show the total amount written off under each class and should include a brief explanation of the circumstances leading, to the write off.
Note:— In general losses sustained by the Central Government in State treasuries through the negligence or culpability of the staff paid for by a Government in any State and vice versa should be borne as they occur i.e. by the Central Government if the loss occurs, in connection with Central transactions and, by the State Government, if it is on account of State Transactions.
In cases where recoveries are made in cash, e.g., by deductions from pay or otherwise, from the persons responsible for a loss, the entire amount recovered should be credited to the Government which under the above arrangement would bear the loss for this purpose. Recoveries made indirectly, e.g., by stoppage of increment or promotion as a measure of punishment, should not be treated as recoveries made in cash. Where the staff is paid for by one Government and the loss is borne by another Government a copy of the orders regarding the action taken against the persons responsible for the loss should be communicated by the former to the latter.
Loss of Stores
301. All losses in respect of stores should be duly recorded in the stock accounts and the formal sanction of the competent authority should be obtained for writing them off or dealing with them otherwise, even when no formal correction or adjustment in the accounts is necessary. Losses due to depreciation should be analysed and recorded under the following heads, according as they are due to:—
(1) normal fluctuation of market prices;
(2) fair wear and tear ;
(3) lack of foresight in regulating purchases, or
(4) neglect after purchase.
Losses not due to depreciation should be grouped and recorded under the following heads:—
(1) losses due to theft ;(2) losses due to neglect, and(3) losses due to calamities such as fire or flood.
The provisions of Article 297 apply to all losses mentioned in this Article except items (1) and (2) under losses due to depreciation. The rules regarding the disposal of obsolete, surplus and unserviceable stores are contained in Articles 153 to 157.
Note:– When a contractor or a departmental employee fails to return any Government tools, their value, including the appropriate centage charges, should be recovered from him.
Damage to Immovable Government Property
302. When a loss occurs by way of damage to any immovable property belonging to the Government (including buildings, communications and irrigation works) due to any calamity such as fire or flood or to any cause other than fair wear and tear, the Government servant in immediate charge of the property should report the matter at once to his immediate superior and a preliminary report should be sent through the proper channel without delay to the Head of the Department, who will report the loss to the Government. When the cause of the loss has been fully investigated and it has been decided whether or not the property should be restored, the Head of the Office concerned should send a final detailed report to the Head of the Department and at the same time an abstract of it in Form 47 to Accountant General.
The Head of the Department should send a final detailed report to the Government when he proposes that the Government should write off the loss, recommends that the Government should take disciplinary action or applies for funds to be specially provided to meet the cost of restoration of the property.
When a petty loss not exceeding ` 300 does not appear to involve any important feature requiring detailed investigation and consideration, the preliminary and final reports prescribed in this Article need only be sent to the authority competent to write off the loss or deal with it otherwise.
In cases of loss by way of damage to any immovable property belonging to the Government, the value of the damaged portion need not be written off the accounts, if the restoration of the damaged portion is commenced within the period of two years from the date of damage.
All river conservancy works are treated as repair works and consequently losses by way of damage to such works will not reduce the capital value of any Government property and so need not be formally written off the accounts. The preliminary and final reports prescribed in this Article should, however, be sent in respect of any such loss when it exceeds ` 1000. Any such loss not exceeding ` 1000 need only be reported to the authority competent to sanction the restoration of the damaged work.
General Principles and Procedure for Fixing and
Enforcing Responsibility for Losses
(Article. 303A)
303A.The following general principles should be followed in enforcing the personal responsibility of the Government servant or servants concerned for a loss sustained by the Government through fraud or negligence on his part or on the part of any other Government servant to the extent be contributed to the loss by his own action or negligence and of any person for a loss sustained by the Government on account of a criminal offence committed by him:—
(1) Whenever there is reason to suspect that the Government have sustained a loss on account of fraud or any other criminal offence on the part of any person or negligence (which includes a financial irregularity) on the part of any Government servant, the Head of the office or other appropriate administrative authority should investigate the matter full without avoidable delay. In order to avoid the relevant documents being tampered with by the time an enquiry is instituted, the Head of the Office, should take immediate steps to ensure the safety, of those documents. When necessary, the administrative authority may ask the Accountant General to furnish all vouchers and other documents in his possession that may be relevant to the investigation. If the investigation is so complex as to require the assistance of an expert audit officer, the administrative authority should report the facts to the Government and request them to obtain the services of an audit officer to assist in the investigation. If the Government depute an audit officer for the purpose, the administrative authority and the audit officer will be personally responsible, within their respective spheres, for completing the investigation expeditiously.
🆀 If the liability of gazetted officer is not estimated and who is in charge of cash or store ……………… of his DCRG is to be withheld.
(A) Full
(B) 50%
(C) 25%
(D) 75%
(2) Whenever it appears likely that recourse may be had to judicial proceedings in connection with a loss sustained by the Government, the administrative authority should take competent legal advice at once. If there is a reasonable suspicion that a loss sustained by the Government is due to the commission of a criminal offence, the procedure prescribed in Articles 304 and 305 should be followed.
(3) (a) Whenever an administrative authority holds that a Government servant is responsible for a loss sustained by the Government, it should always consider both whether the whole or any part of the loss should be recovered from him in money and whether any other form of disciplinary action should be taken. In deciding the amount to be recovered, it should consider not only the circumstances of the loss but also the Government servant’s financial position, since the penalty should not be such as to impair his future efficiency.(b) Whenever a loss is held to be due to fraud on the part of a Government servant or servants, every endeavour should be made to recover the whole amount lost from the guilty persons. If the failure of a superior officer to exercise proper supervision and control has facilitated the fraud, he should be called strictly to account and suitably dealt with after carefully assessing his personal responsibility in the matter, e.g., by recovering from him in money a suitable proportion of the loss, or by stopping his increments or reducing the pay.(c) Whenever any Government property or equipment is lost, damaged or destroyed on account of the carelessness of a Government servant to whom it is entrusted (e.g., a police-man’s rifle, a factory motor, lorry or an Engineer’s instruments), the appropriate administrative authority should always consider whether the amount of the loss sustained by the Government should not be recovered in full up to the limit of the Government servant’s capacity to pay.
🆀 If disciplinary proceedings are being continued against an officer on the date of retirement, which pensionary benefit can be withheld ?
(A) Entire DCRG
(B) Pension
(C) Terminal surrender leave salary
(D) Group Insurance
🆀 A non-gazetted officer in charge of stores is due to retire on 30-4-2018. An enquiry is pending against him for a loss sustained to Government and the actual liability could not be estimated before his retirement. What are the retirement benefits that can be provisionally granted to him before settlement of liabilities ?
(A) Pension only
(B) Pension and DCRG
(C) DCRG only
(D) None of the above
303A(c)
Note:—
Interest at ! 18 per cent per annum or at such rate as fixed by Government from time to time should be charged after the liabilities are determined and from the time a written demand is made, on the amount of liability fixed against delinquent officers involved in defalcation cases, the interest so charged being not lower than !15 per cent per annum in any event.
(4) (a) In cases where a competent authority holds that a Government servant is responsible for a loss sustained by the Government and orders that any amount should be recovered from him and he is about to retire from service, the amount should be recovered as far as possible by deduction from the last pay and allowances or leave salary due to him. If the amount due to Government exceeds the amount payable to the Government servant, the excess shall be recovered from his claim for death-cum¬retirement-gratuity after giving the officer a reasonable opportunity to explain. If the amount proposed to be recovered exceeds the death-cum¬retirement-gratuity, the excess over death-cum-retirement-gratuity can be recovered from the arrears of pension, if any, due to the officer if written consent is obtained from him as pension (as distinct from death-cum-retirement-gratuity) enjoys the protection of the ‘Pension Act’. A written consent is valid only to the extent it covers the amount of pension earned by him till the date of such written consent.
🆀 Is it permissible to recover the loss sustained by Government from a Government Servant who is about to retire
(A) Permissible, from the last pay and allowances due to him
(B) If written consent is given by the party, recovery can be made
(C) Not permissible
(D) Recovery can be effected if loss sustained by the Government is more than 1 lakh
(b) If, however, the liabilities could not be finalised but could be estimated at the time of retirement, either the estimated amount of the outstanding dues plus 25 per cent thereof should be withheld from death-cum-retirement-gratuity or a surety bond or cash deposit not exceeding the estimated amount of the outstanding dues plus 25 per cent thereof should be accepted before releasing pension and death-cum-retirement gratuity
(c) If disciplinary proceedings are being continued against an officer under the Service Rules on the date of retirement, only a provisional pension should be sanctioned to him withholding however, the entire death-cum¬retirement-gratuity due to him.
(d) In cases where the liabilities could not be estimated the pension and death-cum-retirement-gratuity will be released provisionally after withholding from the death-cum-retirement gratuity the amount noted below:
| (1) Officers in charge of cash or stores | The full amount of death-cum-retirement gratuity. |
| (2) Gazetted Officers other than those in (1) above |
10per cent of the death-cum-retirement gratuity or ` 2,000 whichever is higher. |
| (3) Non-Gazetted Officers other than | 10 per cent of the death-cum- retirement (1)gratuity or ` 600 whichever is higher. |
In all cases where the liabilities could not be assessed and fixed before retirement of the Government servants, efforts should be made to assess and adjust the recoverable dues within a period of one year from the date of retirement of the Government servant concerned. If in any case, the liability could not be assessed and adjusted within one year, the amount withheld from the death-cum-retirement gratuity or the surety bond or cash deposit accepted under paragraph (c) or (d) above will be released. Disciplinary action shall be taken against the officers responsible for the failure to assess and adjust the liabilities within the prescribed period.
(e) If in any case the amount withheld from the death-cum-retirement gratuity or the cash deposit, or the surety bond taken from the officer is not adequate to cover the liabilities finally fixed, action should be taken against him under the Service Rules to make up the loss by withholding, withdrawing or effecting recoveries fromthe pensions sanctioned. If action under the Service Rules is not possible due to the expiry of the time limit prescribed for such action or due to any other reason, the retired officer will be proceeded against through a Civil Court for recovering the pecuniary loss caused to Government.
(f) When a retired Government servant whose pension has already been sanctioned is held to have caused a loss to the Government by fraud or negligence while in service and it appears likely that the amount could be recovered by bringing a suit against him, the matter should be reported to the Government for orders. If in any particular case, it is not found feasible to take action against a retired Government servant in regard to a loss sustained by the Government on account of any fraud or negligence found to have been committed by him while in service, this should not be made an excuse for absolving any other Government servants who are also responsible for the loss and are still in service. Similarly, the fact that it is not possible to fix responsibility on the officials who initiated or acquiesced in the initiation of any irregularity resulting in loss to Government will not exonerate those who subsequently acquiesced in the continuation of the irregularity. It is the duty of all Government officials to look after the financial interests of Government and Government will hold their officers responsible for such irregularities, not only those who originated them but also those who subsequently permitted their continuance.
303B. The following general principles should be followed in fixing monetary liabilities so far as the Government servants are concerned :
(i) It should be carefully noted that personal monetary liability would arise only when pecuniary loss is sustained by Government. Irregularities in the maintenance of accounts or in the sanction of expenditure would not involve monetary liability as long as no loss to Government is caused.
Distinction should be drawn between objections involving loss to Government and other objections in an audit report. The latter will not constitute monetary liability and will call for other forms of disciplinary action wherever justified.
(ii) For the purpose of fixing liability, losses may be grouped under the following categories:—
(a) Personal dues e.g., excess pay and allowance drawn, arrears of house rent payable, balance of advances repayable such as Motor Car Advance, House Building Advance, Mosquito Net Advance, etc.(b) Physical loss of cash or stores.(c) Loss or extra expenditure arising out of administrative lapses e.g., payment of demurrage charges, payment of surcharge (Final) on electricity bills and Radio Licence fees, expenditure incurred in excess of one’s powers not ratified by the competent authority, purchases effected in violation of Stores Purchase Rules resulting in extra expenditure, printing charges to private firms in excess of approved rates, sanctioning posts in schools in excess of the limits prescribed, irregular grant of fee concessions, stipends, etc., loss of revenue due to wrong assessment of claims becoming time-barred, etc.
Recovery in cash is called for in respect of categories (a) and (b). In regard to category (c), cash recovery should ordinarily arise only if mala fides are proved. The term “malafides” may be defined in this context as a state of mind where the Officer may be deemed to have acted with the intention to be benefited directly or indirectly by such action. In other cases falling under category (c), it should be seen whether the types of irregularities previously pointed out have been repeated. If the irregularities have been repeated or are of a serious nature or magnitude, the question of taking other forms of disciplinary action if the officer concerned is still in service or of reducing pension under the Service Rules if already retired, should be considered.
🆀 For the purposes of fixing liability losses may be grouped under three categories; they are :
(A) Personal dues, arrears of house rent payable, stores
(B) Physical loss of cash or stores, personal dues, excess pay drawn
(C) Loss of extra expenditure arising out of administrative lapses, personal dues and physical loss of cash or stores
(D) Loss arising out of administrative lapses
🆀 For the purpose of fixing liability of Government Servants, losses is grouped under there categories. Which of the following do not come under these categories ?
(A) Loss arising out of implementation of illegal orders of superior officers
(B) Personal dues
(C) Physical loss of cash or stores
(D) Loss or extra-expenditure arising out of administrative lapses.
(iii) In cases of loss/infructuous expenditure, where more than one person is involved e.g., in the case of loss of stores, apart from the direct responsibility of the store-keeper the question of responsibility of the supervising officer/ officers having control over stores will also arise. In such cases the degree/ extent of personal responsibility of each individual should first be fixed strictly with reference to his duties and responsibilities and the extent to which he neglected them. The fact that a Government servant has been misled or deceived by a subordinate will, in no way mitigate his personal responsibility since every government servant should be familiar with the financial rules laid down by the Government and exercise a specially strict and close control over his subordinates in regard to the use of Public Funds and the maintenance of proper accounts. Having fixed the personal responsibility of each individual in the above manner, cash recovery/other forms of disciplinary action should be ordered with reference to such responsibility. In ordering cash recovery, the Government servant’s financial position should also be taken into consideration. In cases where it is not possible to recover the share so fixed from one or more individuals due to their death or for other reasons the question may be taken up for obtaining sanction from the competent authority for the loss to be written off. It should however, be ensured that the necessity for a write off should not arise for want of timely and adequate action to fix personal responsibility and the amount to be recovered from each individual.
Departmental enquiries regarding frauds, etc.
in which Government Servants are Involved
[Article 304]
304. The general rule is that departmental proceedings should be instituted at the earliest possible moment against all the Government servants involved in any loss sustained by the Government on account of fraud, embezzlement or any similar offence, and conducted with strict adherence to the rules upto the point at which prosecution of any one of them begins. At that stage it should be specifically considered whether it is practicable to carry on the departmental proceedings against any of the others any further without waiting for the result of the prosecution; if it is, they should be carried as far as possible but not, as a rule, to the stage of finding and sentence in the criminal proceedings. If the accused is convicted, the departmental proceedings against him should be resumed and formally completed. If the accused is not convicted, the departmental proceedings against him should be dropped unless the authority competent to take disciplinary action is of the opinion that the facts of the case disclose adequate ground for taking departmental action against him. In either case, the proceedings against the remaining delinquents should be resumed and completed as soon as possible after the termination of the proceedings in court.
The departmental proceedings contemplated in the preceding paragraph are those regulated by the Kerala Civil Services (Classification, Control and Appeal) Rules, 1960. When action is taken under the Kerala Public Servants (Inquiries) Act, 1963 (Act 31 of 1963), this ordinarily takes the place of a criminal prosecution as regards the person or persons accused, but the procedure as regards other persons involved against whom the Act is not employed should be in accordance with the instructions given in the preceding paragraph.
Notwithstanding anything contained in Article 301 to 303 and in the foregoing paragraphs, recovery proceedings as contemplated in the Kerala Public Accountants Act, 1963 (Act 37 of 1963) should invariably be taken against the persons involved in any loss sustained by Government on account of fraud, embezzlement or any similar offence and conducted with strict adherence to rules till the loss involved is realised completely.
Prosecution for Embezzlements of
Public Moneys or Property
(Article. 305)
305.(a) Whenever the Head of an Office finds that there is a reasonable suspicion that a criminal offence has been committed in respect of any public moneys or properties belonging to Government or institutions under the control of the Government (including moneys or properties of co-operative societies), he should as a general rule report the matter at once to the Police and simultaneously inform the District Collector and Additional District Magistrate and the Head of his department that he has laid an information before the Police.
However, in cases, of defalcation/embezzlement of public money or properties in which Government servants or public servants are involved and where the amount or the value of the properties involved is ` 10,000 (Rupees ten thousand only) or more belonging to State Government (including moneys or properties of co-operative societies) they should be reported immediately to the Local X-Branch Vigilance Division instead of to the ordinary Police.
The Police/Local X-Branch Vigilance Division should then keep the Government servant who laid the information and the District Collector and Additional District Magistrate informed of the action take in the matter.
For the purpose of this rule the term ‘Public Servant’ will have the meaning assigned to it under the explanation to Section 161 of the Indian Penal Code as amended by the Kerala Criminal Law Amendment Act, 1962 (27 of 1962).
🆀In the case of defalcation/embezzlement of public money in which Government Servant are involved and the amount involved is Rs. …………. or more the same should be reported to the local X branch of Vigilance Division, in addition to Heads of Departments etc.
(A) 10,000
(B) 20,000
(C) 5,000
(D) 25,000
(b) When the case is heard by the court, the Head of the Office concerned should see that all the witnesses serving in his department and all documentary evidence in the control of his department are punctually produced. He should also appoint a Government servant of the department to attend the proceedings in court and assist the prosecuting staff.
(c) If prosecution for an offense of this kind results in the discharge or acquittal of any person, or in the imposition of any sentence which appears to be inadequate, the Head of the Office concerned should at once send a full statement of the facts of the case to the District Collector and Additional District Magistrate; if the District Collector and Additional District Magistrate consider that further proceedings should be taken in revision or appeal, he should proceed as he would in any other case and should keep the Head of the Office concerned informed regarding the further proceedings. A special order of the Government is necessary for filing an appeal against an acquittal.
(d) The Head of the Office concerned should submit, in addition to the reports prescribed in Articles 297, 303A and 303B prompt reports to the Government through the proper channel at each stage regarding:—
(i) the commencement of the investigation by the Police/Local X-Branch Vigilance Division;(ii) the decision to prosecute in any particular case ;(iii) the result of any prosecution;(iv) the decision to proceed further in revision or appeal in any case; and(v) the result of any proceedings in revision or appeal.
(e) Notwithstanding anything contained in the preceding portion of this Article, the Head of the Office concerned may, when he considers it to be desirable refer any matter through the proper channel for the orders of the Government before taking action.