GOVERNMENT OF MADHYA PRADESH

FINANCE DEPARTMENT

THE

MADHYA PRADESH

FINANCIAL CODE

VOLUME I

Amended up to 31st December 1984

BHOPAL
Government Central Press
1987
,k
 PREFACE

The M. P. Financial Code Vol. I, was last published incorporating

the amendments upto 28th February, 1977. State Government have
issued several amendments in these rules, from time to time, during the
paLst 7 years. It has, therefore, been considered expedient to reprint
the corrected edition. Accordingly the M. P. Financial Code Vol. I, as
amended upto 31st December, 1984 is being published.

It is hoped that with the printing of this edition a long felt need
of the various offices for having an upto date amended version of the
M. P. Financial Code Vol. I would be fulfilled.

Dated the 1st February 1985.

M. R. SIVARAMAN
Secy. to Govt. of Madhya Pradesh,
Finance Department.
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 CONTENTS

Rules Pages
Section Subject

CHAPTER 1 — INTRODUCTORY
1
Introductory
1-3
Definitions
CHAPTER 2.—GENERAL SYSTEM OF
FINANCIAL MANAGEMENT AND
CONTROL
4
I Receipt of money ••
4-6
II Expenditure and payment of moneys
6-7
III Duties as regards accounts ..
7-8
IV Contracts
8-10
V Defalcations, losses etc.
10
VI Departmental Regulations ..

CHAPTER 3.—REVENUE AND RECEIPTS

11-12
I General
II Special rules for particular classes of receipts 12-14
III Remission of and abandonment of claims to'yevenue 14-15
15
IV Audit of receipts I•

CHAPTER 4.—POWER OF SANCTION

16
I General
11 Powers in regard to certain special matters 16-18
18-19
III Communication of sanction ..
IV Indication of the source of appropriations in the 20
sanction to expenditure.
V Date of effect of sanction 20
VI Retrospective sanction .. 20
VII Lapse of sanction 21
 CONTENTS

Section Subject Rules Pages

CHAPTER 5.--ESTABLISHMENT
I Alterations of establishment .. 22-23
II Variation in sanctioned pay of a post • • 23

III Transfer of office • • M • • 23-25

IV Date of birth SOO 11141 111. ••• OAP 25-26

V Leave applications .. •• 26
VI Annual returns of Government servants 26
VI Service Books 26

VIII Arrear claims 26-28

CHAPTER 6.—CONTINGENCIES
I Introductory •• 29
II Powers of subordinate authorities to sanction contingent 29 —31
charges.
III Permanent advances .. .• 31-33
IV Control of contingent expenditure 33-34
V Special rules relating to particular kinds of contingencies 34-35
VI Expenditure for other Government servants •• •• 35
VII Miscellaneous •• 35
CHAPTER 7.—STORES
I Introductory •z• Os* a • 111. 36
II Purchase and acquisition of stores •• •• ore 36-38
III Custody and accounts of stores •.0

CHAPTER 8.—WORKS

I Introductory •• 44
II General rules •• 44-45
III Works under the administrative control of the Public 45
Works Department.
IV Works under the administrative control of other civil departments. 45-46
V Special rules for sanitary, water-supply and electric installa- 46
tion to Government buildings, etc.
VI Miscellaneous rules .. 47-48
 CONTENTS

Section Subject Rules Pages

CHAPTER 9.—MISCELLANEOUS
EXPENDITURE
IGeneral ... •.• ... ... •• 49
II Refunds of revenue .... ... " „ „, 49-50
III Grants-in-aid, contributions, etc. •• 50-55
IV Compensation to civil officers for loss of property 55
V Miscellaneous ... •• •. 55-56

CHAPTER 10.—BUDGET 57

CHAPTER 11.—DEBT AND MISCEL LANE OU S

OBLIGATIONS OF GOVERNMENT

I Rupee Debt .... •• 58

II Providenffl Funds .. 58-59
III Service and other funds ... .... ... . 59-62

CHAPTER 12.—LOCAL FUNDS 63-64

CHAPTER 13.—LOANS AND ADVANCES
I Introductory 65-66
II General rules •• •• 66-70
III Advances to Government servants .. •• 70-71
IV Interest bearing advances •• ... 71-85
V Interest-free advances 85-94

CHAPTER 14.—MISCELLANEOUS
SUBJECTS
.1 Security deposits •• •• 95-98
II Transfer of Government land and buildings .. 98-99
III Insurance of Government property .. •• 99
IV Charitable endowments and other trusts .• 99
V Miscellaneous 99-100
 CONTENTS

Rules Pages
Section Subject

CHAPTER 15—GOVERNMENT ACCOUNTS

101-102
I General ••
102-109
II General principles of classification
110-111
III General Principal of account
111-112
Iv Allocation of Expenditure Between Captial and Revenue
113
V Proforma accounts
113
VI Annual accounts
113-117
VII Adjustment with other Governments departments etc.
VIII Exhibition of losses in Government account •• 117-118

IX Exhibition of recoveries of expenditure in Government 118-123

accounts.
X Accounting procedure of moneys paid or recoveries made
under the Indian Police Act.
 THE MADHYA PRADESH FINANCIAL CODE
VOLUME I
CHAPTER I.—INTRODUCTORY

1. The rules in this volume, which are essentially executive orders of the
Governor, describe primarily the financial powers of different authorities subordinate
to the State Government and the procedure prescribed, which should be followed
by them in the securing and spending of funds necessary for the discharge of the
functions entrusted to them. The rules and procedure relating to the payment
of moneys into and withdrawal of funds from the Consolidated Fund and Public
Account of the State and the control to be maintained at treasuries have been
provided in the Madhya Pradesh Treasury Code, Volume I. The rules and proce-
dure relating to the tr atment of moneys before their receipt into, or after their
withdrawal from the treasury or the Bank, and those for the control over receipts
and disbursements of moneys and their safe custody in offices other than treasuries
have been provided in these rules. In the matter of receipts, custody and disburse-
ment of Government moneys, these rules are supplementary to treasury rules and
should be applied in conjunction with them. Departmental authorities should
follow these rules, supplemented or modified by the special rules and instructions,
if any, contained in their departmental regulations and other special orders applicable
to them.

Definitions

2. In these rules unless there be anything repugnant in the subject or context,

the following terms and expressions shall have the meanings hereby assigned to
them:—

(1) Accountant General means the head of the office of audit or of accounts
and audit who is subordinate to the Comptroller and Auditor-General
of India and who keeps the accounts of the State and exercises audit
functions in relation to those accounts on behalf of the Comptroller
and Auditor-General of India.

(2) Appropriation means the assignment to meet specified expenditure of

funds at the disposal of the assigning authority.
NI a te.--It is intended to cover all the charges including the liabilities of past years to be
paid during a financial year or to be adjusted in the accounts of that year. It is
operative until the close of that year. Any unspent balances lapses and is not available
for utilisation in the following years.

(1) The Bank means the Reserve Bank of India or any office or agency of
the Reserve Bank of India and includes any branch of the State
Bank of India acting as the agent of the Reserve Bank of India in
accordance with the provisions of the Reserve Bank of India Act
1934 (Act II of 1934).
 INTRODUCTORY [CHAPTER 1

(4) Collector means the chief officer in charge of the revenue adimnistra-
'tion of a district.

(5) Competen t authority means Government or any other authority to

which the relevant powers may be delegated by Government.

(6) Consolidated Fund of the State means the Fund into which the
revenues received by the State Government, loans raised by that
Government by the issue of treasury bills, loans or ways and
means advances and money received by that Government in repay-
ment of loans are credited. and from which the expenditure of that
Government, when so authorized by the State Legislature is met.

(7) The Constitution means the Constitution of India.

(8) Controlling Officer means a head of a department, or other Depart-

mental officer who is entrusted with the responsibility of conti oiling the
incurring of expenditure and/or the collection of revenue by the
authorities subordinate to the department.

(9) Disbursing Of ficer means a Government servant who draws money

from the treasury on bills or cheques, but excludes a Government
servant who is not the head of an office and draws only his own pay
and allowances finance from treasury.
(10) Finance Department means the Finance Department of the Govern-
ment of Madhya Pradesh
(11) Financial year means the year beginning on the 1st of April and
ending on the 31st of March following.

(12) Government or State Government means the Government of Madhya

Pradesh.
(13) Governor means Governor of Madhya Pradesh.
(14) Head of a Department means an authority declared to be such by
Government.
Note.—A list of heads of departments is given in the Annexure to Chapter I of the Madhya
Pradesh Book of Financial Powers.

(15) Non-recurring expenditure means expenditure sanctioned as a lump

sum charge, whether the money be paid as a lump sum or by
instalments.

(16) Public Account of the State means the Account into which all moneys
other than those pertaining to the "Consolidated Fund of the State"
received by or on behalf of the State Government are credited, e. g.,.
State Provident Funds, Sinking, Funds, Reserve Funds, Deposits
and Remittances, etc., and from which disbursements are
made in accordance with the prescribed rules.

(17) Public works means Civil works and irrigation, navigation, embank-
ment and drainage works.
CHAPTER 1] INTRODUCTORY 3

(18) Reappropriation means transfer of funds from one unit of appropriation

to another such unit or from one standard object of expenditure to
another such object of expenditure.

(19) Recurring expenditure means all expenditure which is not non-recurring.

(20) Subordinate authority means a department of the Government, a head
of department or any authority subordinate to Government.

(21) Treasury includes a sub-treasury.

(22) Treasury officer means the officer in immediate executive charge of a

treasury.

(23) Head of office means a Gazetted officer incharge of a local office who
is declared as such by the Department of the Government and who
may be vested with powers of Disbursing officer.
4 GENERAL SYSTEM OF FINANCIAL MANAGEMENT [CHAPTER 2
AND CONTROL

CHAPTER 2.—GENERAL SYSTEM OF FINANCIAL

MANAGEMENT AND CONTROL
SECTION I.—RECEIPT OF MONEY
General
3. All transactions to which any officer of Government in his official capacity
is a party must be brought to account without delay
4. Moneys received as dues of Government or for deposit in the custody of
Government should be credited into the Treasury or the Bank, in accordance
with the rules in the Madhya Pradesh Treasury Code, Volume I.
5. (1) (a) Under Article 284 of the Constitution, all moneys received by or
deposited with any officer, employed in connection with the offices of the State
in his capacity as such, other than Revenues or Public money raised or received by
Government shall be paid into the Public Account.

(b) All moneys received by or deposited with any court, within the State
territory shall also be dealt with in accordance with clause (a) of sub-rule(I).

(2) The head of account to which such moneys shall be credited and the
withdrawals of moneys therefrom shall be governed by the relevant provisions of
the Madhya Pradesh Treasury Code or such other general or special orders as may
be issued in this behalf.

Withdrawal of Moneys from the Consolidated Fund and

Public Account of the State
6. Unless otherwise expressly authorised by any law or rule or order having
the force of law, moneys may not be removed from the Consolidated Fund and
Public Account for investment or deposit elsewhere without the consent of the
Finance Department.

Assessment, Collection and Check of Revenues

7. Subject to such general or specific instructions as may be issued by Govern-
ment in this behalf, it is the duty of the Revenue or Administrative Department
concerned to see that the dues of Government are correctly and promptly assessed,
collected and regularly paid into the treasury. It should maintain proper accounts
of the collections, watch the progress of collections against the total demand and
take prompt steps to collect all arrears. The detailed rules and procedure regarding
assessment, collection, remission, etc., of revenue of the different departments
are laid down in the departmental regulations of the revenue and collecting depart-
ments concerned.

SECTION II.—EXPENDITURE AND PAYMENT OF MONEYS

Essential Conditions Governing Expenditure from Public Funds
8. As a general rule, no Government servant may incur any item of expen-
diture from public funds unless the following two conditions are satisfied:—
(a) the expenditure must have been sanctioned by a general or special
order of the authority competent to sanction such expenditure; and
 CHAPTER 2] GENERAL SYSTEM OF FINANCIAL MANAGEMENT 5
AND CONTROL

(b) sufficient funds must have been provided for the expenditure in the
authorised grants and appropriations for the year or by a re-appropria-
tion of funds sanctioned by the authority competent to sanction such
a re-appropriation.

The two conditions are independent and it is not sufficient for only one of them
to be satisfied. A Government servant must always be sure that both of the condi-
tions are satisfied before he incurs, any expenditure from public funds.

Standards of Financial Propriety

9. Every Government servant who incurs or authorises the incurring of any
expenditure from public funds should see that it does not contravene the following
principles, which are known as the standards of financial propriety:—

(i) Every Government servant is expected to exercise the same vigilance

in respect of expenditure incurred from public moneys as a person of
ordinary prudence would exercise in respect of expenditure of his
own money.
(ii) The expenditure should not be prima facie more than the occasion
demands.

(iii) No authority should exercise its powers of sanctioning expenditure to

pass an order which will be directly or indirectly to its own advantage.
(iv) Public moneys should not be utilised for the benefit of a particular
person or section of the community unless—
(1) the amount of expenditure involved is insignificant, or
(2) a claim for the amount could be enforced in a court of law, or
(3) the expenditure is in pursuance of a recognised policy or a custom.
(v) The amount of allowances granted to meet expenditure of a particular
type should be so regulated that the allowances are not on the whole
a source of profit to the recipients.
Control of Expenditure
10. Each head of department is responsible for enforcing financial order and
strict economy at every step. He is responsible for observance of all relevant
financial rules and regulations both by his own office and by subordinate disbursing
officers.

11. A controlling officer must see not only that the total expenditure is kept
within the limits of the authorised appropriation but also that the funds allotted to
spending units are expended in the public interest and upon objects for which the
money was provided. In order to maintain a proper control, he should arrange
to be kept informed, not only of what has actually been spent from an appropriation
but also what commitments and liabilities have been and will be incurred against it.
He must be in a position to assume before Government and the Public Accounts
Committee, if necessary, complete responsibility for departmental expenditure
and to explain or justify any instance of excess or financial irregularity that may be
brought to notice as a result of audit scrutiny or otherwise.
 6 GENERAL SYSTEM OF FINANCIAL MANAGEMENT
[CHAPTER 2
AND CONTROL

Internal Check Against Irregularities, Waste and Fraud

12. In the discharge of his ultimate responsibilities for the administration of
an appropriation or part of an appropriation placed at his disposal, every controlling
officer must satisfy himself not only that adequate provisions exist within the depart-
mental organisation for systematic internal checks calculated to prevent and detect
errors and irregularities in the financial proceedings of his subordinate officers and
to guard against waste and loss of public money and stores, but also that the pre-
scribed checks are effectively applied.

Delays In Pay ment

13. Delay in the payment of money indisputably due by Government is
contrary to all rules and budgetary principles and should be avoided.
14. All charges incurred must be paid at once, and under no circumstances
may they be allowed to stand over to be paid from the appropriation of another
year. If possible, expenditure should be postponed till the preparation of a new
budget has given the opportunity for making provision, and till the sanction of that
budget has supplied means, but on no account may charge be actually incurred in
one year and thrown on the appropriation of another year.
15. It is an important financial principle that money 'indisputably payable
should not, as far as possible, be left unpaid and that money paid should under no
circumstances be kept out of accounts a day longer than is absolutely necessary
even though the payment is not covered by proper sanction. It is no economy to
postpone inevitable payments even for the purpose of avoiding an excess over a
grant or appropriation and it is very important to ascertain, liquidate and record
the payment of all actual obligations at the earliest possible date. It must be borne
in mind that if an inevitable payment is required to be made in the absence of funds
the error lies not so much in the payment as in the entering into of the relevant
liability.

16. A disbursing officer may not on his own authority authorise any paymen t
in excess of the funds placed at his disposal; but absence of funds should not
necessarily prevent the payment of any sums really due by Government. If the
disbursing officer is called upon to honour a claim which is certain to produce an
excess over the allotment or appropriation at his disposal, he should take the orders
of the administrative authority to which he is subordinate before authorising payment
of the claim in question.

SECTION III.—DUTIES AS REGARDS ACCOUNTS

Maintenance of Accounts
17. Every Government servant whose duty it is to prepare and render any
accounts or returns in respect of public money or stores is personally responsible
for their completeness and strict accuracy and their despatch within the prescribed
date.
18. A Government servant who signs or countersigns a certificate is personally
responsible for th facts certified to, so far as it is his duty to know or to the extent
to which he may reasonably be expected to be aware of them. The fact that a certi-
ficate is printed is no justification for his signing it unless it represents the facts of
 CHAPTER 2] GENERAL SYSTEM OF FINANCIAL MANAGEMENT 7
AND CONTROL
•INIMME.

the case. If in its printed form it does not represent the facts, it is his duty to make
any necessary amendment which will call attention to the deviation and to give
the authority concerned the opportunity of deciding whether the amendments
cover requirements.

Demand for Infor mation by Audit

19. It is the duty of every departmental and controlling officer to see tha
the Accountant-General is afforded all reasonable facilities in the discharge of his
functions and furnished with the fullest possible information for which he may
ask, for the preparation of any account or report, which it is his duty to prepare.
No such information nor any books or other documents to which the Auditor
General has a statutory right of access may be withheld from the Accountant-General.
SECTION IV, —CONTRACTS
General Principles
20. No contracts may be entered into by any authority which has not
empowered to do so by or under the orders of the State Government. been

The various classes of contracts and assurances of property authorised by the

Governor in exercise of powers conferred by Article 299 of the Constitution
of India, to be exercised by different authorities, are specified in paragraph 25 of
the Madhya Pradesh Book of Financial Powers.

Subsidiary orders of Government as to the limitation upon the powers of these

authorities, the conditions under which such powers should be exercised and the
general procedure prescribed with regard to
acceptance of tenders, etc., are laid down in such
the
contracts, such as calling for and
appropriate departmental regula-
tions.
2\1. The following general principles have been laid down for the guidance
authorities which have to enter into contracts or agreements involving expenditure of
from the Consolidated Fund of the State:—
(i) The terms of a contract must be precise and definite and there must be
no room for ambiguity or misconstruction therein.
(ii) As far as possible, legal and financial advice should be taken in the
drafting of contracts and before they are finally entered into.
(iii) Standard forms of contracts should be adopted, wherever possible, the
terms to be subject to adequate prior scrutiny.
(iv) The terms of a contract once entered into should not be materially
varied without the previous consent of the authority competent to
enter into the contracts as so varied. No payments to
way of compensation, or otherwise, outside the strictcontractors by
terms of the
contract or in excess of the contract rates may be authorised without
the previous approval of the Finance Department.
(v) No contract involving an uncertain or indefinite liability or any condition
of an unusual character should be entered into without the previous
consent of the Finance Department.
(vi) Whenever practicable and advantageous, contracts should be placed
only after tenders have been
lowest tender is not accepted,openly invited and, in cases where the
reasons should be recorded.
 8 GENERAL SYSTEM OF FINANCIAL MANAGEMENT [CHAPTER 2
AND CONTROL

(vii) In selecting the tender to be accepted, the financial status of the

individuals and firms tendering must be taken into consideration in
addition to all other relevant factors.
(viii) Even in cases where a formal written contract is not made, no order
for supplies, etc., should be placed without at least a written agreement
as to the price.
(ix) Provisiol must be made in contracts for safeguarding Government property
entrusted to a contractor.
(x) When a contract is likely to endure for a period of more than five years, it
should, where ver feasible, include a provision for an unconditional power of
revocation or cancellation by Government at any time on the expiry of six
months' notice to that effect.
(xi) A person who is a near relative of a contractor should not be accepted
as surety for the fulfilment of a contract by a contractor unless
the officer accepting security is fully satisfied that the near relative has
separate property of his own. In such a case the officer should,
at least, insist on the surety filing an affidavit to the effect that he
has separate property of his own.
(xii) The Comptroller and Auditor-General and under his direction'
other Audit authorities have power to examine contracts, and to bring
to the notice of the proper authority any cases where competitive
tenders have not been sought or where high tenders have been accepted,
or where other irregularities in procedure have come to light.
SECTION V.—DEFALCATIONS LOSSES, ETC.
Report of Losses
22. (1) With the exceptions noted below, any loss of public money, de-
partmental revenue or receipts, stamps, opium, stores or other property held by
or on behalf of Government, caused by defalcation or otherwise, which is dis-
covered in a treasury or other office or department, should be immediately re-
ported by the officer concerned to the head of the department through his imme-
diate official superior as well as to the Accountant-General even when such loss
has been made good by the party responsible for it. Such reports must be sub-
mitted as soon as a suspicion arises that there has been a loss; they must not be de-
layed while detailed enquiries are made. When the matter has been fully investi-
gated, further and complete report should be submitted of the nature and extent
of the loss, showing the errors or neglect of rules by which such loss was rendered
possible and the prospects of effecting a recovery. The submission of such a
report does not debar the local authorities from taking any further action
which may be deemed necessary.
(2) If the irregularity be detected by Audit in the first instance, the Accoun-
tant-General will report it immediately to the administrative authority concerned,
and if he considers necessary, to Government as well.
Exception.—Petty cases, that is, cases involving losses not exceeding Rs.
500 each, need not be reported to the Accountant-General unless there are, in
any case, important features which merit detailed investigation and considera-
t ion.
CHAPTER 2] GENERAL SYSTEM OF FINANCIAL MANAGEMENT 9
AND CONTROL

(3) All cases of losses in which there is a possibility of the Reserve Bank or
the State Bank of India being made liable to Government should be reported
to the Finance Department through the Accountant-General. If the Accountant
General becomes aware of any such loss, he should also make a full report to
Government.
Note 1. —See also Subsidiary Rule 4 of the Madhya Pradesh Treasury Codes. Volume I
Note. 2.—Any loss in respect of stores occurring otherwise than in the ordinary course
or on account of fair, wear and tear, should Abe treated as a loss to Government
within the meaning of this rule.]

23. The head of the department receiving a report submitted to him under
rule 22 must forward it forthwith to Government in the administrative depart-
ment and another copy to the Finance Department with such comments as may
be considered necessary. He should also submit a detailed report after completing
such departmental investigations as may be necessary or expedient, on the causes
or circumstances which led to the defalcation or loss, the steps taken to prevent
its recurrence and the disciplinary or any other action proposed as regards the
persons responsible.
Note.-1.—The final report on a loss or defalcation should be submitted to Government
through the Accountant General as expeditiously as possible without waiting for the delivery of
judgment by the court where criminal proceedings shave been launched against the persons
concerned.
(Finance Department endorsement No. 6115-1590.R-VI-III, dated the 3rd t July 1954.)
Note. 2.—Detailed instructions for regulating the enforcement of such responsibility are
embodied in Appendix I.
(Finance Department Memo. No. 2794-1805-IV-R-V, dated the 14th December 1960)
Losses due to Accidents
24. Any serious loss of immovable property, such as building, communication
or other works, caused by fire, flood, cyclone, earthquake or any other natural
cause, should be reported at once by the departmental officer to the head of the
Department and by the latter to Government. When a full enquiry as to
the cause and extent of the loss has been made, the detailed report should be sent
by the departmental officer concerned to the head of the department, a copy of
the report or an abstract thereof being simultaneously forwarded to the
Accountant-General.
Responsibility for Losses, etc.
25. Every Government servant should realise fully and clearly that he will
be held personally responsible for any loss sustained by Government through
fraud or negligence on his part and that he will also be held personally respon-
sible for any loss arising from fraud or negligence on the part of any other Govern-
ment servant to the extent to which it may be shown that he contributed to the
loss by his own action or negligance.
Note. 1.—Detailed instructions for regulating the enforcement of such resposibility are
embodied in Appendix I.
Note 2.—Detailed instructions inregard to recoveries from pensions of any loss caused
2.
to Government by a Government servant while in service. are contained in Appendix
Write off of Losses, etc.
26. The powers delegated to different authorities to write off the irrecover-
able value of public money or stores lost through fraud or negligence of indivi-
duals or other causes are indicated in Chapter 4.
10 GENERAL SYSTEM OF FINANCIAL MANAGEMENT [CHAPTER 2
AND CONTROL

Exhibition of Losses in Government Accounts

27. The method of showing the losses in accounts has been prescribed in
Section VIII of Chapter 15 relating to Government Accounts.

27-A. Detailed instruction to be followed in respect of expenditure which

has become infructuous due to abandonment of works, etc. are contained in
Appendix 15.
VI—DEPARTMENTAL REGULATIONS
SECTlONV
28. All departmental regulations in so far as they embody orders or instruc-
tions of a financial character or have important financial bearing should be made
by, or with the approval of the Finance Department.
 CHAPTER 31 REVENUE AND RECEIPTS 11

CHAPTER 3.—REVENUE AND RECEIPTS

SECTION I.—GENERAL

29. Subject to any special arrangement that may be authorised by competent

authority with respect to any particular class of receipts, it is the duty of the
departmental Controlling Officers to see that all sums due to Government are
regularly and promptly assessed, realised and duly credited in the Consolidated
Fund or the Public Account.

30. A separate departmental account must be maintained by the revenue

authorities concerned for the receipts under each of the major, minor and detailed
heads of account. At the close of the month, a tauzi or departmental return must
be prepared by the revenue authorities from the departmental registers giving
the total receipts of the month according to major, minor and detailed heads of
revenues. This return should be submitted to the controlling authority whose
duty it is to reconcile discrepancies between the departmental and treasury
accounts. Before the return is submitted to the Controlling Officer, it should be
verified by the Treasury Officer with the treasury registers and the result of ' his
verification noted at the foot of each return. If any mistake or erroneous credits;
are discovered in the treasury registers on comparison with the departmental
returns, the Treasury Officers should make no alteration in his registers but
should immediately report the discrepancy to the Accountant-General who
will issue the necessary instructions in regard to the corrections to be made in the
treasury accounts. The Treasury Officer should at the same time make a note
of the misclassification on the departmental return for the information of the
Controlling Officer.

Note 1.—It is essential that the departmental accounts of revenue should not
from the returns prepared by the treasury. be compiled

Note 2.—In order to minimise the differences between the treasury figures and the depart-
mental figures, it is essential that the chalans with which money is remitted to the treasury
should bear full and correct accounts cl assification.

31. The Accountant-General will send to the departmental Controlling

Officer a statement of receipts according to the major, minor and detailed heads
of revenue brought to credit in his accounts in each month. The departmental
returns submitted under the preceding rule should be consolidated by the Con-
trolling Officer in a register so as to show the total receipts for each month classified
according to the heads of account in the budget estimates. The two sets of
figures should then be compared . Any discrepancy which may be found should
be entered in Form No. M. P. F. C. T. and forwarded to the district officer for
explanation and return through the Accountant-General. When no discrepancies
are communicated to the Accountant-General in any month a certificate should
be sent to him by the Controlling Officer that the two sets of returns have been
compared and found correct.

32. The following dates have been fixed for the submission of departmental
returns and discrepancy statement :—

(1) Submission of departmental returns to Controlling Officers—At close

of the month to which they relate.
12 REVENUE AND RECEIPTS (CHAPTER 3

(2) Despatch of treasury figures by the Accountant-General to the Con-

trolling Officers-10th of the second month following that to which
they relate.

(3) Discrepancy statements to be forwarded by the Controlling Officers

to the District Officers-20th of the second month following that
to which they relate.
(4) Discrepancy statements with explanation of District Officer to reach
the Accountant-General's office-30th of the second month following
that to which they relate.

Note —The statement of treasury credits should be sent to the departmental Controlling
Officer (or a Gazetted Officer nominated by him) by name and he should watch for the same. The
departmental Controlling Officer should arrange to ensure that such letters are really opened
by himself or the officer nominated by him.

33. Detailed rules and procedure regarding assessment, collection, remission

etc., of revenue should be laid down in the departmental regulations of the revenue
and, collecting departments concerned.

Note —In departments in which officers are required to receive moneys on behalf of Govern-
ment and issue receipts therefor in Form M. P. T. C. 6, the departmental regulations hould
prescribe the procedure rules for the maintenance of a proper account of there receipt, and issue
of the receipt books the number of receipt books to be issued at a time to each officer and check
with the officer accounts of the used books when returned.

34. No amount due to Government should be left outstanding without

sufficient reason, and where any dues appear to be irrecoverable the orders of
competent authority for their adjustment must be sought.

35. Unless specially authorised by any rule or order made by competent

authority, no sums may be credited as revenue by debit to a suspense head, the
credit must follow and not precede actual realisation.

36. Heads of departments in charge of important sources of revenue should

keep the Finance Department fully informed of the progress of collection of re-
venue under their control and of all important variations in such collections as
compared with the budget estimates.

37. Forms of departmental registers and tauzis relating to the heads of re-
venue have been separately prescribed in the various departmental manuals
and the Revenue Book Circulars.

SECTION IL —SPECIAL RULES FOR PARTICULAR CLASSES

OF RECEIPTS

Rent of Government Buildings, Lands ,etc.

38. The detailed rules and procedure regarding the demand and recovery
of -rents of Government buildings and lands are contained in the departmental
regulations of the departments in charge of the buildings.
CHAPTER 3] REVENUE AND RECEIPTS 13

When the maintenance, of any rentable building is entrusted to a civil de-

partment other than the Public Works Department, the head of the department
concerned will be respnsible for the due recovery of the rents there of. The pro-
cedure for the assessment and recovery of the rents of such buildings will be
regulated generally by the rules applicable to residences under the direct charge
of the Public Works Department.
Recoveries of Rents on Buildings and Lands
39. (a) When a public building, land or other property is let to a person
not in the services of Government, the full assessed rent must be recovered in
advance.
(b) The recovery of rents from Government servants occupying rentable
buildings should ordinarily be made by deduction from their pay bills through
the Treasury Officer or other Disbursing Officer concerned. In special circums-
tances, the recovery may be made in cash.
40. A tenant who is in receipt of a pension from Government should be
treated as a private individual for the purpose of these rules. But if he desires
to make payments by deduction from his pension, recoveries from him may be
made through the Treasury Officer or other Disbursing Officer concerned on the
pensioner furnishing the Departmental Officer concerned with a written request
authorising such deduction. This authority should be transmitted to the Treasury
or disbursing Officer with the first demand.

41. If a Government servant vacates his quarters before the last day of
a month owing to his departure on transfer, leave or retirement, the
demand for the rent for the broken period should be made at once in order that
the amount may be recovered before his departure.
42. Pending orders on a representation against the Departmental Officer's
assessment, the amount assessed must be paid by tenants on demand. Should the
representation prove successful, the excess amount charged should be adjusted
by a reduction in the assessement of a subsequent month, or, if this is not practi-
cable, by an actual payment.
Fines
43. It is the duty of every court or authority having the power to fine to
see that the money realised reaches the treasury and that adequate precautions
are taken against double refunds of a fines or refund of fines not actually
paid into the treasury. Every court maintains a register giving particulars of every
fine imposed by it and no fine should be written off this register as realised until
it is paid into the treasury.

44. The duty of realizing fines and of checking the receipts and refunds,
rests with the departmental officers. Each court, civil or criminal, is required,
to submit to the District Judge or to the District Magistrate, as the case may be
on the last working day of each calendar month, a statement showing the demand
collection and balance of fines levied and written off by it as well as of the refunds
therefrom, the statement being made up for the account month of the treasury
or sub-treasury with which the court deals. The District Judge and the District
Magistrate should each consolidate these returns into a monthly fines statement
for the courts under him and/for his own and forward it to the Treasury Officer
 REVENUE AND RECEIPTS [CHAPTER 3
14

as soon as possible after the beginning of the month, for verification of the amounts
shown as remitted into the treasury with the credit appearing in the treasury
account. The Treasury Officer should certify to the correctness or otherwise of
these amounts. Where there is any discrepancy between a consolidated state-
ment and the treasury account, the Treasury Officer may, if necessary, before
giving his certificate, request the District Judge or the District Magistrate, as
the case may be, to explain the discrepancy.
statement should exhibit the amounts under each head of accounts,e.g Magisteria
Note I.—The
fines, fines under the Prevention of Cruelty to Animals Act, etc., separately.
Compensation fines due to an injured party which are cerditable to deposits and fines which are
the orders of competent authority are creditable to a municipal or local fund should be
under
excluded from this statement.
Note 2.—Fines imposed in one districts and realised in another should be credited to the
proper head of account in thethdistrict of realisation. An inti motion of the realisation should be given
offi cer to Court by which the fine was inflicted so as to enable it to make the
e
by the recovering
requisite entries in itsregister of fines and monthly fine statement.

Miscellaneous Demands
Convict charges recoverable from other States

45. The cost of maintenance of prisoners from other States, who are acco-
mmodated in the Jails of Madhya Pradesh, is recoverable from the Government
of the States concerned. To enable the Accountant-General to pass on the
debits on this account to the Governments concerned, the Inspector-General of
Prisons should furnish him before the 10th of April each year with the following
nformation in respect of charges incurred in the past financial year

(1) Name of State from which the prisoner came.

(2) Authority for admission.
(3) Date of admission.
(4) Name of prisoner.
(5) Period for which charged (months and days).
(6) Rate at which charged.
(7) Total amount charged.
46. Realisation of miscellaneous demands of Government not falling under
the Accountant-General,
the ordinary revenue administration will be watched by
Such are payments due from other States, local funds, contractors and others
towards establishment charges, etc.
SECTION III.—REMISSION OF AND ABANDONMENT OF CLAIMS TO
REVENUE

47. The sanction of the competent authority is necessary for the remission
of, and abandonment of claims to revenue.
are
Note —The powers of subordinate authorites to sanction the write off of loss of revenue
ndicated in the Madhya Pradesh Book of Financial Powers.
CHAPTER 3] REVENUE AND RECEIPTS 15

48. Head of Departments and Controlling Officers should furnish annually,

by the 1st August each year, to the Accountant-General statements showing the
remissions of revenue and abandonments of claims to revenue sanctioned during
the preceding financial year by the competent authorities in exercise of the discre-
tionary powers vested in them otherwise than by law or rule having the force of
law. For inclusion in these statements, remissions and abandonments should be
classified broadly with reference to the grounds on which they were sanctioned and
the satatements should give (i) total for each broad class including the amount of
all cases, however, small, and (ii) brief particulars of all individual cases exceeding
Rs. 1,000. Land revenue remissions need not be included in the statements.

Note.—Losses in revenue due to under assessment should also be included in the report to
the Audit Officer.

SECTION IV.—AUDIT OF RECEIPTS

49. When the audit of the receipts of any department of Government is
entrusted to the Comptroller and Auditor-General under the provisions of paragraph
13(2) of the Government of India (Audit and Accounts) Order, 1936, it will be
conducted in accordance with the regulations reproduced in Appendix 3.
16 POWER OF SANCTION [CHAPTER 4

CHAPTER 4.—POWER OF SANCTION

SECTION 1.—GENERAL

50. The more important of the financial powers exercised by subordinate

authorities in relation to expenditure from the Consolidated Fund of the State are
detailed in the Madhya Pradesh Book of Financial Powers. The financial powers
exercised by subordinate authorities under the service rules are contained in the
compilation of those rules.

51. The financial powers of the State Government which have not been
delegated to any other department or authority vest in the Finance Department.
52. Unless otherwise provided by any special rule or order of Government,
a higher authority may exercise the powers delegated to an authority subordinate
to it.

SECTION IL—POWERS IN REGARD TO CERTAIN SPECIAL MATTERS

Grants of Land, Assignments of Revenue and other Concessions, etc.
53. No department or authority may, without previous consent of the Finance
Department, issue any orders (other than orders in pursuance of general delegation
made by or with the approval of the Finance Department) which—
(i) involve any grant of land, or assignment of revenue, or concession, grant,
lease or licence of mineral or forest rights, or right to water power, or
any easement or privilege in respect of such concessions; or

(ii) in any way involve any relinquishment of revenue.

(See also rule 8 of the Madhya Pradesh Business Rules, and paragraph 28
of the Madhya Pradesh Book of Financial Powers.)
Note.—The powers to execute instruments are governed by the orders given in Chapter IV
of the Madhya Pradesh Book of Financial Powers and other departmental and local orders on the
subject.

Write off of Losses

54. The irrecoverable value of stores or public money lost by fraud or negli-
gence of individuals or other causes may be written off finally by Government.

Where public money or stores are lost through culpable negligence of any
Government servant, Government will not agree to write off the loss without a
definite expression of the opinion of the departmental authorities concerned regarding
the desirability of recovering the whole or part of the loss from the Government
servant or Government servants through whose negligence the loss occurred. Any
proposal to remit part or whole of the sum lost in such cases must he supported by
full reasons and will require the special orders of the State Government.

55. (a) Heads of Departments or other subordinate authorities have power

to write off losses in accordance with the orders of delegation passed in this behalf
and contained in the Madhya Pradesh Book of Financial Powers, subject to the
CHAPTER 4] POWER OF SANCTION 17

conditions—
(1) that the lois does not disclose a defect of system, the amendment of
which requires the orders of Government, and

(2) that there has not been any serious negligence on the part of some in-
dividual Government servant or Government servants which might
possibly call for disciplinary action requiring the orders of any higher
authority.
These orders apply also to the writing off of losses of revenue, irrecoverable
loans and advances and of deficiencies, depreciation, etc.,•in the value of stores
included in the stock and other accounts (see also rule 140).
Note.—The expression, "value of stores" used in this sub-paragraph should be interpreted
as meaning "Book value" where priced accounts are maintained and "Replacement value" in
other cases.

(b) All sanctions to write off should be communicated to the Accountant-

General for scrutiny in each case and for bringing to notice any defect of system
which appears to require attention.

56. The orders contained in the preceding rule do not apply to loss of cash
in treasuries, whether in the course of remittance or out of treasury balance, small
coin depot or currency chest. Individual cases of such losses should be reported
to the Finance Department and its specific approval obtained before any item can
be written off in the accounts of the State Government.

Note.—The Government of India have decided with the concurrence of the State Government
and the Comptroller and Auditor-General, that, in general, loss sustained by the Union Government
through the negligence or culpability of the staff paid for by State Government and vise versa
should be borne as they occur, i.e., by the Union Government, if the loss occurs in connection with
Central transactions and by the State Government, if it is on account of a State transaction.

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 he communicated by the
former to the latter.

Remission of Disallowances by Au.lit and Writing off of Overpayments

made to Government Servants

57. As a general rule, every overpayment made to a public servant should be

regarded as a debt owned to the public, and all possible action should be taken to
recover it with despatch. The State Government may, however, waive the recovery
of an amount placed under objection by the Accountant-General or otherwise
found to have been overpaid to a Government servant, if the enforcement of the
recovery will, in the opinion of the State Government, cause undue hardship, or
it will be physically impossible to effect the recovery. All sanctions to forego re-
covery should be communicated to the Accountant-General.
18 POWER OF SANCTION [CHAPTER 4

5S. The powers delegated to Audit Officers to waive objection to, or to forego
recovery of, irregular expenditure in individual cases,are laid down in paragraphs
248 to 250 of the Audit Code.

59. The waiving of the recovery of an overpayment would not be justified

merely for the reasons that it was made by tlh, disbursing officer in good faith and
was drawn by the Government Servant under the reasonable belief that he was
entitled to it and that the recovery would cause hardship. Before any waiver is
considered, it should be established that substantial factors other than good faith
or reasonable belief exist, the most important of these factors being the physical
impossibility or undue hardship to the Government Servant concerned.

SECTION OMMUNICATION OF SANCTION

60. Financial sanctions and orders will be communicated to the Accountant-
General in accordance with the following procedure :—

(i) All financial sanctions and orders issued by a department within its
own financial powers as a department of the State Government will
be communicated direct to the Accountant-General by the depart-
ment concerned. All other orders involving financial sanctions
which may be issued by departments of the State Government after
consultation with the Finance Department, i. e., sanction beyond
their financial powers, will be communicated to the Accountant-
General through the Finance Department.

(ii) Sanctions and orders of any other authority to which the power of sanction
has been delegated will be communicated to the Accountant-General
by that authority.

(iii) In cases referred to in clause (i) above, if an order sanctioning expendi-

ture is sent to the Accountant-General direct by a Department of
Government and that Department is not competent to sanction the
expenditure, the Accountant-General will not act upon it but will
report to the Finance Department, that such an order has been issued
and will simultaneously request the Administrative Department
concerned that the order may be communicated to him through the
Finance Department as soon as possible.

(iv) In all orders conveying sanctions to expenditure of a definite amount

or up to a specified limit, the amount of sanction should always be
expressed both in words and in figures.
(v) All letters or orders conveying sanctions to expenditure, appointments,
etc., must be signed by an authorised gazetted Government Servant.
Note 1.—All Financial sanctions should be prepared under the signatures of the gazetted
Government servants concerned in ink and not over cyclostyled signatures and also communicated
to audit with the signatures in ink.

(Finance Department endorsement No. 9412-25-36-R-VI-III- dated the 14th October 1954)
Note 2.—In cases in which the documents relating to any sanction or order are deemed secret,
the Accountant-General will accept a statement of frets signed by a Secretary to Government in
lieu of those documents, the signature being expressed to be made by order of the Governor.
CHAPTER 4] POWER OF SANCTION 19

61. All orders conveying sanction to the grant of additions to pay, such as
special pay and compensatory allowance, should contain a brief but clear summary
of the reasons for the grant of the addition so as to enable the Accountant-General
to see that it is correctly classified as special pay or compensatory allowance, as the
case may be. In cases in which an official record in an open letter is considered
undesirable, the reasons for the grant of such additions to pay should be communi.
cated confidentially to the Accountant-General. A similar procedure should also
be followed in all other cases in which the rules require that the reasons for the grant
of special concessions or allowances should be recorded.
62. Sanctions involving any grant of land or assignment of revenue or con-
cession, grant, lease or licence of mineral or forest rights or a right to water power
or any easement or privilage in respect of such concession, or any relinquishment of
revenue accorded by Government or by authorities subordinate to Government
under any delegated power, should be communicated to the Accoutant-General
for scrutiny.
Note.—In respect of mineral concession granted by the Deputy Commissioner, he should
instead of communicating each sanction, furnish to the Accountant-General a monthly statement in
the appended forrn so as to reach him by the 10th of the month following that to which the grant
relates.

Serial Nature of concession

i. e. prospecting lease, Name of
Name of Period of licensee Area
No. mining lease with date mineral concession
of grant or lessee granted

(1) (2) ( 3) (4) (5) (6)

Tahsil Rate Rata of Rate Rate Rata of

Locality and half yearly rent Rata of
district , surface rent or * Remarks
per acre per royalty acreage fee per
annum acre per
annum
(7) (8) (9 ) (10) (11) `1,
477.,NIF
( 12 )

1
Any departure frorn,the standard rates of rents and royalties, etc. should be explained in the
remarks column.

Supply of Copies of Letters, etc. to the Accountant-General

63. (i) A requisition from the Accountant-General to quote the number and
date of any letter should be complied with.

(ii) When an officer is requested by the Accountant-General to supply a

document for inspection or a copy of document and he is in doubt, for any reason,
as to whether the request should be complied with, he should take the orders of the
officer to whom he is subordinate who will, if necessary, consult the State Govern-
ment. In general, however, he should supply on demand, under the signature of a
responsible officer A copy of any sanction or order issued by himself which has a
financial bearing.
20 POWER OF SANCTION [CHAPTER 4

SECTION IV.—INDICATION OF THE SOURCE OF APPROPRIATIONS

IN THE SANCTION TO EXPENDITURE
64. In all applications for sanction to expenditure it should be distinctly
stated whether provision for the proposed charge has, or has not, been made in the
budget estimates of the year, and, if it has not been made, whether the funds can
be found by valid re-appropriation.
65. Authorities, which sanction new expenditure after funds have been com-
municated, should be careful to indicate the source of appropriation.
Where it is desired to sanction expenditure before funds have been communi-
cated as may be necessary in order to avoid delay in starting work at the beginning
of a new financial year or to prevent duplication of orders, the authority which does
so should be careful to add the words "subject to funds being communicated in
the budget of the year".
Note I. Vague expressions such as, "Subject to budget provision" should be carefully
avoided in conveying sanctions to expenditure.

SECTION V.—DATE OF EFFECT OF SANCTION

66. Unless otherwise specially provided in the orders or rules themselve
the executive orders of G wernment should take effect from the date of issue of the
letter, memorandum or telegram in which sanction is conveyed, and statutory rules
from the date on which they were passed. Similarly, sanctions of subordinate •
authorities will have effect from the date of the orders conveying them.
67. The general principle in all such cases should be—
Sanction to any given expenditure becomes operative as soon as funds have
been appropriated to meet the expenditure, and does not become
operative until funds have been so appropriated. Sanction to re-
curring expenditure covering a specified term of years becomes
operative when funds are appropriated to meet the expenditure of
the first year, and remains in operation for each year of the specified
term subject to appropriation in such year.
Note.1—Orders sanctioning the creation of temporary posts should, in addition to the
sanctioned duration of the post, invariably specify the date from which it is to run, whether it be
the date of entertainment or otherwise.

Note 2.—See also paragraphs 13 (a) and 20 of the Madhya Pradesh Book of Financial Powers.

SECTION VI.—RETROSPECTIVE SANCTION

68. All authorities which are competent to sanction revision of pay or the
grant of concessions to Government servants should bear in mind that retrospective
effect should not be given to financial sanctions, except in exceptional circumstances
and without the special approval of Government.
69. The State Government are averse from revising the pay of a post or
granting an increase in pay to an incumbent of a post with retrospective effect and
will not entertain any proposal so to revise or increase the pay except in very
special cases.
Note.—The refixation of the pay of an incumbent of a post when it is discovered that the pay
as originally fixed wrongly can be sanctioned by the competent authority, even if such remotion
is to have retrospective effect, without reference to the State Government.
CHAPTER 4] POWER OF SANCTION 21

SECTION VIT.—LAPSE OF SANCTION

70. A sanction for any fresh charge which has not been acted on for a year
must be held to have lapsed unless it is specifically renewed.
Note 1.—This rule does not apply to a case where an allowance sanctioned for a post or a
class of Governmnet servants have not been drawn by a particular incumbent or incumbents,
nor does it apply to additions made gradually from year to year to a permanent establishment under
general scheme which has been sanctioned by proper authority.

Note 2.—Sanction for a Provident Fund advance will remain operative for a period of three
months only, This will apply equally to non-refundable part withdrawals from Provident Funds.

71. An order of the Government of India, in the absence of any indication

to the contrary in the order itself, will lapse only if and when it is superseded by an
order of a later date.
 22 ESTABLISHMENT *ICHAPTER 5

CHAPTER 5.—ESTABLISHMENT

SECTION I.—AL TERA TI ONS OF ESTABLISHMENT

72. No permanent post under Government can be created without the sanc-
tion of Government. In respect of temporary posts powers have been delegated
to Departments of Government and certain Heads of Departments and other sub-
ordinate authorities within specified limits. These powers are generally embodied
in the Madhya Pradesh Book of Financial Powers.

73. All proposals for additions to establishment, whether permanent or

temporary, or for any increase in the emoluments of existing posts should be
scrutinised with the greatest care by Heads of Departments and other authorities
concerned. In submitting such proposals, the instructions contained in the following
rules should be carefully observed.

74. The scale of pay for a new post should ordinarily be the same time-scale
as that already in force for post of the same class or category. When a new post
proposed to be created will form an addition to a cadre, which is divided into grades,
the pay of the post should ordinarily be that of the lowest grade; if a higher pay is
proposed the special reasons for proposing the higher rate should invariably be stated.
If there is no post in existence similar to the one proposed, the following principles
should be observed in proposing a rate of pay for the new post :—
(1) If the post is to be filled by a person not already in Government service,
the pay proposed should be the minimum necessary, to secure the
services of a person capable of discharging efficiently the duties of
the post.
(2) If the post is to be filled by a person who is already a Government servant
the pay proposed should be appropriate to the nature and responsi -
bility of the work to be done and the existing pay of Government
servants whose status is such that they are considered likely to be
suitable for selection for the post.

75. When the entertainment of a new establishment or a change, temporary

or permanent, is proposed in an office, a letter fully explaining the proposals and
the conditions which have given rise to them, together with the proposition statement,
if necessary, under rule 77 should be submitted to the sanctioning authority.
In this letter should be set out inter alia.
(i) the present cost, either of the section or sections affected, or of the total
establishment as the circumstances of the case may indicate to be
necessary;
(ii) details of the pay of the post or posts and the number of posts which it
is proposed to add or modify; and
'(iii) as accurate an estimate as possible of the extra cost involved.
Note 1.—ln determining the extra cost, allowance, whether fixed or variable, should be
included.
Note 2.—The authorities submitting the proposals should take into account any claims to
pensions that may arise in consequence of their proposals with reference to Aricle 429 of the
Civil Service Regulations and certify to their having done so in their proposals.
 CHAPTER IR ESTABLISHMENT 23

76. If the expenditure is proposed to be incurred in the current year, the pro-
posals should show clearly whether it can be met within the grant or appropriation
of the year. If the expenditure can be met by re-appropriation, a re-appropriation
statement should be submitted with the proposals.

77. Whenever any large scale or complicated proposals are made for the
revision of existing or the creation of new establishments, the letter explaining the
proposals should be accompanied by a proposition statement in duplicate in Form
No. M. P. F. C. 2 and submitted through the Accountant-General who will verify
the correctness of the statement.

78. The details to be shown in proposition statements should be determined

by the following principles :—
(i) The proposition statement should relate strictly to the section or part
of the office affected by the proposals. As regards the other parts
or sections of the office, neither details not figures of total cost
need be included.
(ii) Where a section consists of both Class III and Class IV servants, details
need be given only of the class affected, if a saving of labour will
result from the adoption of this procedure.
(iii) Where the pay of any post, existing or proposed, rises frcm a minimum
to a maximum by periodical increments, the average monthly cost
and not the actual or commencing cost must be given. The average
monthly cost for the purpose of this rule should be calculated in
accordance with one or other of the formulae prescribed in the G.
I. 0. below Fundamental Rules 9. (31).
(iv) The fixed allowances referred to in Note 1 below Rule 75 should be
entered in the proposition statement but the variable allowances
need not be included therein.

SECTION IL—VARIATION IN SANCTIONED PAY OF A POST

79. The head of an office is not at liberty to readjust the pay of Government
servants by giving one Government servant more and another less than the sanctioned
pay of his post, nor may he distribute the pay of an absentee otherwise than as pro-
vided in the rules governing the service to which the Government servant belongs.
But in the case of non-gazetted establishments divided into separate units or cadres
carrying different scales of pay, there is no objection to excess appointments being
made in a lower unit or cadre against an equal or greater number of vacancies left
unfilled in the higher. The liberty must, however, not be used for the purpose of
increasing the numerical strength of an office. For each vacancy in a higher grade
only one and not more than one extra appointment in a lower grade is admissible.
Note.—When assistance is required to complete the work of any circle on account of the
incompetence or failure of the patwari to perform it, the Deputy Commissioner or Sub- Divisional
Officer may appoint a gomashta and pay him such portion of the remuneration fixed for the patwari
as, having regard to the period for which the gomashta was employed, he may think, necessary.

SECTION III.—TRANSFER OF OFFICE

80. Every transfer of charge of a gazetted Government servant should be
reported by post on the same day to the Accountant-General. When holidays
24 ESTABLISHMENT [CHAPTER 5

are prefixed to leave or affixed to leave or joining time, the charge report should,
unless the permission to so prefix or affix holidays has been notified in the order
sanctioning the leave or of posting, be sent to the Accountant-General through
the Head of the Department who should note thereon whether the conditions of
Supplementary Rule 1 below Fundamental Rule 68 are fulfilled in any particular
case. The report should be made in Form M. P. F. C. 3 unless any other form
has been duly authorised, and should be signed both by the relieved and the relieving
Government servant. A copy of the report should simultaneously be sent to the
Treasury Officer and the Secretary to Government in the department concerned
through the Head of office in the case of officers subordinate to him. Except in
the case of first appointments, the charge reports of the members of the Madhya
Pradesh Civil Service (Judicial Branch) may remain in the High Court.
In the case of those Gazetted Govenment servants whose pay and allowance are
drawn on the establishment pay bill form the submission of charge
report by them while proceeding on or returning from leave should
bedispensed with. However, a gazetted officer may submit a joining
report in Form M. P. F. C. 4 (in duplicate) to the concerned autho-
rity, one copy of which should be forwarded to drawing and disburs-
ing officer duly countersigned by the said authority for regulating
his salary bill. Where the transfer of charge involves assumption
of ponsibility for cash, valuables, Stores, Secret docnmets etc., a
Statement regarding items of charge should be prepared and
submited to the controlling officer duly signed by both the
relieving and the relieved officer.
Note.1.—The condition imposed by this rule that both the relieving and the relived Government
servants must be present is not enforced (a) in the case of sub-Judges transferred from one station
to another, and (b) in the case of Government servants who are permitted to combine vaca-
tion with leave. In the latter class of cases, the following procedure has been laid down:—
(a) When vacation is prefixed to leave the outgoing•Government servant will report before
leaving headquarters, or if for urgent reasons the leave is granted during vacation
as soon as it is granted, that he makes over charge with effect from the end of
the vacation. The relieving Government servant will then take over charge at the
end of the vacation in the ordinary way.
(b) When vacation is affixed to leave the-Government servant to be relieved will make over
charge in the ordinary way before the vacation, the incoming Government servant
on return at the end of the vacation taking over charge with effect from the begining
of the vacation.
Note 2.—Government servants combining vacation with leave may certify to the making
over or taking over charge of the permanent advance to or from the officer who has been ordered
to be on duty at the Station during the vacation.
Note 3.—The copies of the charge report sent to the Accountant-General and the Secretary
to Government or the High Court should contain an endorsement to the effect that a copy of
the charge report has been sent to the Treasury Officer concerned.

Note 4.—In the case of transfer of charge cosisting of serveral scattered works which the
relieved and the releiving Government servants in the Public Works Department are required to
inspect together by the orders of a superior officer, a copy of the charge report meant for the
Accountant-General should be sent through the Super inten ding Engineer who will record on the
charge report itself his certificate of reasonableness or otherwise of the period spent in transfer of
charge.
Note 5.—Whenever there is a head of office for any particular officer, his charge report with
the requisite endorsement thereon will be sent through such head of office. If there is no head of
office or the officer concerned is the head of office himself he will forward the charge report
with the requisite endorsement thereon himself.
 CHAPTER 5] ESTABLISHMENT 25

81. In cases in which the transfer of charge involves assumption of responsi-

bility for cash, stores, etc., the following instructions should be observed :—
(i) The cash book or imprest account should be closed on the date of transfer
and a note recorded in it over the signature of both the relieved and
the relieving Government servants, showing the cash and imprest
balances, and the number of unused cheques, if any, made over and
received by them, respectively.
(ii) The relieving Government servant in reporting that the transfer has been
completed should bring to notice anything irregular or objectionable
in the conduct of business that may have come officially to his notice.
He should examine the accounts, count the cash inspect the stores
count, weigh and measure certain selected articles in order to test the
accuracy of the returns. He should also describe the state of the
account records.
In the case of any sudden casualty occuring or any emergent necessity
arising for a Government servant to quit his charge, the next senior
Government servant of the department present will take charge.
When the person who takes charge is not a gazetted Government
servant, he must atonce report the circumstances to his nearest depart-
mental superior, and obtain orders as to the cash in hand, if any.
Note.—The Special procedure to be followed when there is a change in the incumbency of
independent charge of a treasury is laid down in Subsidiary Rule 10 of the
Madhya Pradesh Treasury Code, Volume I.

82. The procedure laid down in clauses (i) & (ii) of rule 81 should also be
followed in the case of Tahsildars, Naib-Tahsildars and Superintendents of Land
Records (see also Subsidiary Rule 31 of the Madhya Pradesh Treasury Code,
Volume I).
83. The special orders for tranrsfer of charge between officers of the Public
Works Department are contained in rules 229 to 241 of the Public Works Depart-
ment Manual, Volume L

SECTION IV.—DATE OF BIRTH

MI 84. Every person newly appointed to a service or a post under Government
should at the time of the appointment declare the date of his birth by the Christian
era with as far as possible confirmatory documentary evidence, such as, a matri-
culation certificate, municipal birth certificate and so on. If the exact date is
not known, an approximate date may be given. The actual date or the assumed
date determined under Rule 85 should be recorded in the history of service, service
book or any other record that may be kept in respect of the Government servant's
service under Government. The date of birth, once recorded in this manner,
must be deemed to be absolutely conclusive, and except in the case of a clerical error
no revision of such a declaration shall be allowed to be made at a later period for
any purpose whatever.

85. (1) If a Government servant is unable to state his exact date of birth,
but can state the year, or year and month of birth the 1st July or the 16th of the
month, respectively, may be treated as the date of his birth.
(2) If he is only able to state his approximate age, his date of birth may be
ssumed to be the corresponding date after deducting the number of years repro.
tating his age from his date of appointment.
 26 ESTABLISHMENT [CHAPTER 5

(3) When a person who first entered military employ, is subsequently employed
in a Civil Department, the date of birth for the purpose of the civil employment
should be the date stated by him at the time of attestation. In cases where the
documents referring to the previous military service do not give the exact date of
birth but only the age stated at the time of attestation, the date of his birth should
be deduced with reference to that age according to the method indicated in sub-
rule (2) above.
Note.—Cases in which the date of birth has already been deduced by any other method need
not be reopened.

SECTION V.—LEAVE APPLICATIONS

86. Deleted.
SECTION1VI—ANNUAL RETURNS OF GOVERNMENT SERVANTS
87. Early in April each year, all heads of offices should review the service
books of all the employees under them. In all cases, where the service books
of the Government servants due to retire from service within the next two
years, have not been checked during the last three years by the Accountant-
General in his office or during local audit, these service books should be sent
to the office of the Accountant-General under registered cover for necessary
check.
88. In April each year, each ' head of office should prepare a list of
Government servants *subject to numerical audit who are due to retire before the
31st March of the second following year and enter in it the date of compulsory
retirement againts the name of each individual. The list should be submitted to
the appropriate authorities who will take necessary action to retire the Government
servants from service on the due date or obtain sanction for their retention in ser-
vice beyond that date if considered expedient in the interest of the public service.
SECTION VII—SERVICE BOOKS
89. The detailed rules regarding the maintenance of service books are con-
tained in Supplementary Rules below Fundamental Rule 74.
SECTION VIII.—ARREAR CLAIMS
90. (1) Detailed rules regarding arrear cliums are given in Subsidiary Rules
115 to 120 of the Madhya Pradesh Treasury Code, Volume I. Save as provided
in those rules, no claims to pay and allowances of a Government servant which are
not preferred within one year of their becoming due can be paid without a sanction
from the Head of the Department.
(2) A claim for travelling allowance should be considered as falling due for
payment on the date succeeding the date of completion of the journey in respect
of which the claim is made and in the case of a journey undertaken to attend an
obligatory examination where admissibility or otherwise of travelling allowance is
conditional and can be determinel after the result of the examination is declared,
the time limit should be counted from the date of announcement of the result.
Note I.—The right of a Government servant to travelling allowance, including daily
allowance, is forfeited or deemed to have been relinquished if the claim for i is not preferred to
the head of office or the controlling officer within one year lima the date on which it became due.

*Vide F. D. Memo No. 137 1/1652/RV/IV, Dt. 31-12-84.

 CHAPTER 5] ESTABLISHMENT 27

Note 2.—If the travelling allowance claim is not preferred by the administrative authority
concerned for payment within one year from the date of its becoming due, it rshall not be paid
unless the reasons for delay are investigated in detail by the authority competent to sanction in-
avestigation of the claims under rule 91 and a specific sanction issued by it. If the investigatian-
shows that the claim could not be preferred in time due to administrative delay without
adequate and cogent reasons, suitable action may be taken against the officer (s) concerned
so that such delays do not recur in future.

91. Claims of officers, whether gazetted or not, to arrears of pay or allowances

or to increments or in respect of any other payments, which have been allowed to
remain in abeyance for a period exceeding one but not exceeding six years, cannot
be paid except under the special orthrs of the Head of the Department concerned
who will exercise these powers, subject to the restrictions laid down in rules 92 and
93 of the Madhya Pradesh Financial Code Volume I. The Heads of Departments
can, further, delegate these powers to their subordinate authorities. In exercising
the powers delegated to the authorities, they should bear in mind that the investi-
gation of such claims often involves a large amount of labour out of all proportion
so the amount or importance of the claims preferred. They should, therefore,
exercise the power with caution rejecting petty and ancient claims only.

Note I.—For the purpose of this rule, the date on which the claim is presented at the
treasury should be considered to be the date on which it is preferred.
Note 2.—Delays in payment are opposed to all rules and are highly inconvenient and
objectionable, and when not satisfactorily explained should be brought to the notice of the
Head of the Department concerned.

Note 3.--Claims to arrears of pay occasioned by a revision or a refixation of the pay of a post
with retrospective effect require the sanction of the State Government.

92. Claims against Government, which are barred by time under the provi-
sions contained in Section 3 read with the First Schedule of the Indian Limitation
Act of 1908 or under any other provisions of law relating to limitation, should ordi-
narily be refused and no claim or account of such a time-barred item should be
paid without the sanction of Governme it. The onus is upon the claimant to esta-
blish a claim to special treatment for a time-barred item, and it is the duty of the
authority against which suchA claim is made to refuse the claim until a case for other
treatment is made out. All petty time barred claims are to be rejected forthwith
and only important claims of this nature considered.

It is the duty of the authority against which a claim is made to consider in the
first instance the question of a time-bar before submitting it to the Head of the Deptt.
for the issue of authority for payment. The Head of the Deptt. will refuse payment
of all claims found to be time-barred until the sanction of Government has been
obtained.

93. All petty claims of a Government servant more than six years old, other
than those that affect his pension, and all such claims for whose delayed submission
an adequate explanation is not forthcoming, should be rejected forthwith. In
considering old claims recommended for sanction, the authority concerned will also
take into account the fact that it is normally not possible owing t o the limited period
of preservation of records to examine claims more than six year s old.

94. The authority competent to sanction a belated claim should be told why
he claim was not submitted when it became du.e
28

In respect of * Government servants whose pay and allowances are drawn on

establishment bills by the Heads of Offices, the responsibility for making claims
rests on the latter and they should invariably see that all claims are pr esented within
one year of their falling due.

The time limits prescribed in these instructions should be calculated from the
date on which the charge becomes payable. In the case of sanction accorded with
retrospective effect, the charge does not become payable before it is sanctioned
The time limits should, therefore, be calculated from the date of sanction and not
from the date from which the sanction takes effect.

*Vide F.D. Memo No. 1371-1652—RVIV. Dt. 31.12-84.

CHAPTER 6] CONTINGENCIES 29

CHAPTER 6.—CONTINGENCIES
SECTION L—INTRODUCTORY
95. The rules in this Chapter are supplementary to the general rules of proce-
dure prescribed in Section V of Chapter IV of the Madhya Pradesh Treasury Code,
Volume I, and have to be applied, where necessary, in conjunction with them.
96. The orders relating to the supply of articles for the public service are
contained in the Store Rules in Appendix 5; and miscellaneous rules regarding
contingent expenditure on certain other objects are given in Appendix 6.
97. Special rules applicable to particular departments are contained in the
Manuals, Codes, etc., of the departments concerned.
98. The term 'Contingencies' covers all incidental or other expenses which
are incurred for the management of an office as an office or for the technical working
of the department. Expenditure on contingencies is classified in the budget mainly
under the following standard objects of expenditure or units of appropriation :—

(i) Wages.
(ii) Office expenses.
(iii) Payment for professional services.
(iv) Rents, Rates and Taxes.
(v) Publications.
(vi) Advertising, Sales and Publicity expenses.
(vii) Hospitality expenses.
(viii) Secret service expenditure.
(ix) Maintenance.
(x) Motor vehicles.
(xi) Other charges.
The different classes into which the contingent charges classified under the
above units are further divided, incurred on public service and conditions governing
them are laid down in Section V of Chapter IV of the M. P. Treasury Code, Volume
I. The classification to be adopted in each department or office is regulated by
general or special orders of Government. Appendix 7 contains a list of classification
of contingent charges of various departments.
99. Contingent charges are to be recorded and treated in the accounts as
charges of the month in which they are actually disbursed from treasury.

SECTION II. — POWERS OF SUBORDINATE AUTHORITIES

TO SANCTION CONTINGENT CHARGES
100. (1) The Financial powers of subordinate authorities to sanction
contingent expenditure are regulated generally by the orders embodied in Book of
Financial Powers 1983 Vol. I and by such other general or special orders as may be
issued by Government in this behalf.
 30 CONTINGENCIES [CHAPTER 6

(2) With the exception of the charges mentioned in sub-paragraph (3) below
all contingent charges may be incurred on the authority of the head of the department.
Note 1.—Such authorities as have not been delegated separately greater powers, on any
part icular item or items of contingent expenditure by special orders of Governmnet will exercise
only those powers which have been vested in them under sub- rule 100 (1) of the Madhya Pradesh
Financial Code, Volume I.

Note 2.—In the ease of the Madhya Pradesh Secretariat the Chief Secretary is declared as
Head of the Department with the Chief Accounts Officer as the drawing and disbursing officer in
respect of pay and allowances of the Secretariat establishment (both class III & class IV Government
servants) and contingent expenditure in respect of both 'Secretariat' and 'Ministers' Subject to
budget provision, the powers of the Chief Secretary to sanction contingent expenditure on the
itmes given below have further been delegated as under :—

(a) The Chief Accounts Officer, Madhya (i) Service postage stamps.
Pradesh Secretariat. (ii) Charges for electricity and water.
(iii) Charges on account of telephones.
(iv) Municipal taxes.
(v) Charges for postage, telegrams phonograms
M. 0. commission, bank draft, commission.
(vi) On items other than those mentioned above
but not exceeding Rs. 500 on any single
item.
(b) The Under Secretary, G. A. D. On items other than those mentioned in (a)
(Superintendence). above but not exceeding Rs. 1,000 on any single
item.

(c) The Deputy Secretary, G. A. D. On items other than those mentioned in (a)
Incharge Secretariat establishment. above exceeding Rs. 500 but not exceeding
Rs. 10,000 on any single item.
(d) The Secretary/ Special Secretary, On items other than those mentioned in (a)
G. A. D. Incharge Secretariat establish- above exceeding Rs. 10,000 but not exceed-
ment. ing Rs. 25,000 on any singlei tern.

The Chief Accounts Officer will be the drawing and disbursing officer for all this expenditure
and a certificate to the effect that neecssary sanction for incurring the same has been duly ob-
tained will be furnished by him on all such bills claiming the charges. The charges of special
or unusual nature will be incurred after they are duly sanctioned by the State Government.

(3) (a) The following charges in all cases require the previous sanction of the
Government :—

(1) Charges on account of installation of telephone and telephone rent.

(2) Creation of posts of class IV servants paid from contingencies.

(b) The following charges require the previous sanction of the Govern ment
except in so far as power has been delegated to sub-ordinate authorities in the rules
quoted against each:—

( 1) Purchase of furniture, instruments Paragraph 28 Appendix 6. Madhya Pradesh Financial

and survey appliances exceeding Code, Volume II.
Rs. 500 in value far each article.
 CHAPTER 6] CONTINGENCIES 31

(2) Rent of buildings occupied for public Paragraph 60 Appendix 6, Madhya Pradesh
purposes. Financial Code, Volumn II.
(3) Purchase of tents. Paragraph 7 (ii) Appendix 6. Madhya Pradesh
Financial Code. Volume II.

(4) Subject as aforesaid, the head of an office may incur or sanction expenditure
on contingencies within the amount of appropriation placed at his disposal for t he
purposes, provided that—
(i) in cases where any special rule, restriction, limit or scale has been pres-
cribed by competent authority regarding particular item or class of
contingent expenditure, it should be strictly observed.
Note.—Special rules, restrictions, etc., prescribed by Government regarding individual
items of contingencies are laid down in Appendix 6.
(ii) Contingent expenditure of an unusual character or involving departure
from any general or special rule or order made by Government
should not be incurred, nor should any liability be undertaken in
connection therewith, without the previous sanction of Government.
(5) In respect of contract contingent charges for which a lump sum is placed
annually at the disposal of a disbursing officer, no formal sanction will be required
for expenditure incurred within the annual allotment, except in so far as the authority
fixing the contract allotment issues direction to the contrary.
(6) The head of an office may authorise any gazetted Government servant
serving under him to incur expenditure under sub-paragraph (1) above, subject to
the conditions specified in Subsidiary Rule 125 of the Madhya Pradesh Treasury
Code, Volume I.

101. In the case of special contingent charges for which the sanction of supe-
rior authority is necessary for incuring them, if the sanctioning authority finds it
more convenient to accord his sanction by countersigning the bill in which the
charge in question is included instead of forwarding a copy of his orders sanctioning
the expenditure to the Accountant-General, there is no objection to his doing so,
and a separate sanction, will not, in such cases, be insisted upon by the Accountant-
General.

SECTION III.—PERMANENT ADVANCES

102. Permanent advances may be granted to officers who may have to make
payments before they can place themselves in funds by drawing on the treasury.
Examination of the account of these advances should be made by the controlling
authorities whenever an office is inspected. They are subject to the following rules :—
(i) The amount of the advance will be fixed by Government except in cases
falling under clause (ii).
(ii) Heads of departments may sanction the grant of permanent advances
for offices subordinate to them, up to the amount advised by the
Accountant-General as appropriate. The permanent advances for
offices of heads of departments must, however, be sanctioned by the
next superior administrative authority or the State Government.
Note.—Permanent Advance should be drawn from the head "872-Permanent Cash Imprest".
 32 CONTINGENCIES [CHAPTER 6

(iii) Applications for the grant or revision of a permanent advance must be

submitted to the sanctioning authority through the Accountant-
General who will advise as to the appropriate amount of the advance.
In cases falling under clause (ii) above, if there is any difference
of opinion between the Accountant-General and the sanctioning
authority on this point, the matter should be referred for the orders
of Government.

Note. —The applications for permanent advances should be accompained by a statemen t

showing month by month for the preceding twelve months the amounts of contingent bill
cashed with classified details of items of expenditure.

(iv) As these advances involve the permanent retention of money outside

the treasury they must not be larger than is absolutely essential.

(v) These advances should not be multiplied unnecessarily. An officer's

advance should meet the needs of every branch of his office. If he
has subordinates who require petty sums he should rather spare a
small portion of his own advance for their use than apply for separate
advances for them, taking acknowledgments from them in the same
way as he himself furnishes acknowledgments to the Accountant-
General and retaining them in his office.

(vi) The advance is intended to provide, on the responsibility of the officer

entrusted with it, for emergent petty advances of all kinds, though it
is seldom that they will be needed for other than contingent charges;
thus, if a Class IV servant is required to travel by rail, his fare must
sometimes necessarily be advanced from this amount.

(vii) In the case of transfer of charges and yearly on the 15th April, each
officer holding a permanent advance must send an acknowledgment
to the Accountant-General of the amount due from and accountable
for by himself as on the 31st March preceding. If this be not received,
the Accountant-General must demand it immediately. The acknow-
ledgment should be sent in Form M. P. F. C. 8.

(viii) The holder of a permanent advance or an imprest is responsible

for the safe custody of the money placed in his hands, and he must
at all times be ready to produce the total amount of the money in
vouchers or in cash.

Note 1—The cost of service books required for office establishment should be met, in the
firstinstance,from the permanent advance of the office concerned the permanent advance being.
subsequently recouped from the amount realized by the sale of the books to Govenment servants.

Note 2.—Advances of travelling allowance on tour may be given to class IV servants employed
in Divisional and Sub- divisional offices of the Public Works Depattment from the drawing account
of the offices and treated as temporary advances.

Note 3.—Advances of travelling allowance on tour may be given to all the Government
servants of the Madhya Pradesh Secretariat and Vidhan Sabha Secretariat out of the perma nent
advance in those cases only in which the officials whose pay is drawn on establishment pay bile
are required to proceed on tour on a short notice and it is not possible to draw the advance
in time from the treasury.
 CONTINGENCIES 33
CHAPTER 6]

103. In the case of a district officer, whose permanent advance has to meet
the disbursements of several departments, the contingent abstract of one depart-
ment will not be as large as the total permanent advance; but on the last day of
the month, and whenever charge of the office is transferred in the course of the
month, the contingent abstracts of all the departments, should be submitted at
the same time in accordance with Subsidiary Rule 301 of the Madhya Pradesh
Treasury Code, Volume I. Except under these circumstaces it is not desirable
that contingent abstracts should be made out for those departments in which
there has been but little expenditure every time the permanent advance runs low.

Retrenchments should not, under any circumstances, be made good from

the permanent advance, pending appeal or further reference as to their validity.

SECTION IV.—CONTROL OF CONTINGENT

EXPENDITURE

104. For purposes of contro and audit, Government will issue orders spe-
cifying the nature or object of contingent charges of particular disbursing officers
which should be classed as countersigned contingent charges to be drawn and
accounted for in accordance with the procedure prescribed in Subsidiary Rule
313 et seq of the Madhya Pradesh Treasury Code, Volume I.

Expenditure incurred by a disbursing officer on objects classed as counter-

signed contingencies must come under the direct supervision and scrutiny of the
head of the department or the controlling officer who will sign the detailed bills
relating to them. Monthly detailed bills in respect of conuter signed contingent
charges incurred by each officer should be submitted to the controlling authority
concerned, for detailed scrutiny an transmission after countersignature to the
Accountant-General. Full details of such charges need not be entered in the
abstract bills present for payment at the treasury.

A competent authority may in respect of specified items of countersigned

contigent charges require the abstract contingent bills to be sent to the control-
ling authority for scrutiny and countersignature before it is presented for payment
at the treasury.
Note.—The provisions of this rule do not apply to contingent charges of the offices of heads
of departm?nts and those of other offices mentioned in note below SUbsidiary Rule 308 of the
Madhya Pradesh Treasury Code, Volume I, which will be drawn and accounted for in accoraance
with the pr oced ure laid down in the following rules.

105. No detailed bills need be submitted to a higher authority for contin"

gent charges which are not classed as countersigned contingencies, each bill pre-
sented at a treasury should, therefore, contain full details of the expenditure, sup-
ported by necessary sub-vouchers for individual payments included in the bill

106. The duties and responsibilities of disbursing and controlling officers

with regard to contingent expenditure incurred on the public service are defined
in Subsidiary Rules 290 to 293 of the Madhya Pradesh Treasury Code, Volume
I. The head of each department should issue such subsidiary instructions as
may be necessary for the guidance of controlling and disbursing officers subordi-
nate to him.
 34 CONTINGENCIES [CHAPTER 6

107. Detailed instructions as to the general procedure for the control of

expenditure against appropriation are contained in Chapter 15. The following
special instructions are laid down for the control of contingent expenditure :—
(i) Where the appropriation for contingent charges covers expenditure
on a number of distinct and individually important objects or class
of expenditure, such appropriation should be distributed by the
controlling authority among the important items comprised in it.
If some of the items are not important; those items taken as a whole
may be treated as a single important item for this purpose. The
expenditure on each important item should be watched and con-
trolled separately against the allotment for it, especially when the
charges are of a fluctuating nature. The contingent register Pres-
• cribed in Subsidiary Rule 297 of the Madhya Pradesh Treasury
c ode, Volume 1, should be so desinged that this can be done
conveniently.
(ii) For countersigned contingencies, the monthly detailed bills provide
all the imformation required by the controlling authority for checking
the expenditrue against the appropriation. If in any month, the
expenditure exceeds the monthly proportion of the appropriation
for the year, the disbursing officer should send a report to the con-
trolling authority along with the detailed bill, furnishing special
reasons for incurring the excess expenditure.
(iii) For non-countersigned "contingencies, the controlling authority should
get monthly statements from each disbursing officer of the progres-
sive expenditure compared with the allotment under each item for
which there is a specific appropriation or allotment. If the expen-
diture is progressing too rapidly, he should instruct the disbursing
officer to curtail it to the neceesary extent. He should, also during
his local inspections, scrutinize the contingent registers of the offices
under his control and satisfy himself generally that the charges are
necessary and not excessive, the rates correct, the sanction ob-
tained adequate, etc.

Note.—The controlling officer will be presonally responsible for seeing that the subordinate
officers submit the Detailed Contingent Bills on the prescribed dates.

SECTION V.—SPECIAL RULES RELATING TO PARTICULAR

KINDS OF CONTINGENCIES •

Contract f-Contingencies
108. When under any special order of competent authority a lump sum is
placed annually at the disposal of a disbursing officer for expenditure on specified
items of contingencies without further restrictions, the officer incurring exp enditure
against the lump sum allotment should be held entirely responsible for the r egu-
larity of such expenditure, and for any expenditure in excess of such allotment
until the excess is sanctioned by competent authority.

Contingencies regulated by Scales

109. Contingencies regulated by scales include such charges as liveries to
Class IV servants, rewards for destruction of wild animals, batta to witnesses and
the like. The State Government may lay down conditions precedent to the
 'CHAPTER 6 I CONTINGENCIES 35
•••■•

application of the scale making it clear whether the bill must be countersigned
before or after payment and what certificates, if any, should support the bills. It
should be the duty of the controlling officer to see that the charges incurred are
in accordance with the prescribed scales and the conditions which govern them.
SECTION VI.— EXPENDITURE FOR OTHER GOVERNMENT
SERVANTS
110. The conditions under which a department of Government may make
charges for services rendered or articles supplied by it and the procedure to be
observed in dealing with such charges are laid down in Chapter 15 of these rules
and Appendix 14 of the Madhya Pradesh Financial Code, Volume II, and in
Subsidiary Rules 332 to 336 of the Madhya Pradesh Treasury Code, Volum e I
When a Government servant makes purchases or incures expenditure through
an officer in another district and the amount to be paid on account of contingent
expenditure incurred in this way is not less than Rs. 50, payment may be made
by Government Drafts, but otherwise every Government servant who incurs ex-
penditure in this way must treat it as expenditure of his own office, and not demand
recoupment from the Government servant at whose request he, as. an agent, incurs
the expenditure. The charge must, however, be taken as expenditure of the de-
partment to which the Government servant requiring the expenditure is attached
and, therefore, a Government servant should address his applications for any,
service to the principal' officer of his department in the district indented on, e. g.,
a police officer should ask the District Superintendent, not the Magistrate, to
purchase blankets for him. The Magistrate in such a case would pass on .the
indent, or the voucher if he has supplied any articles, to the Police Officer,who would
deal with the charge if it is less than Rs 50 as a final one of his own office, applying
to the proper authority for an extra appropriation, if his own should fall short
before the end of the year. The responsibility for obtaining proper sanction
should always rest with the originating Government servant.
Note 1.—This rule is not applicable when purchases a.;e effected in the capital town of a State
the cost may in such cases be sent by Government drafts if it is not less than Rs. 25, and by Postal
Money Order if it is less than Rs. 25.
Note.2.—The rule does not also apply to expenditure chargeable to local funds which should
always be recovered.

SECTION VII —MISCELLANEOUS

111. In any bill drawn against a sanction, the sanction should be quoted,
and in the case of expenditure requiring the previous sanction of controlling
Officer, the latter are required to see, at the time of countersigning the monthly
bill, that the quotations of sanction where necessary have been duly made.
112. The sanction required by these rules are quite independent of any
sanctions to budget estimates, or of any budget allotments. The budget esti-
mates and allotments are merely the calulations (made and approved at the be-
ginning of the year) of the probable amount of expenditure to be sanctioned and
incurred during the year under the above or any other prescribed rules.
113. It is to be understood that the amount stated in the sanction is the limit
within which expenditure is to be incurred. Officers should save as much as
possible in spending money against a sanction, but the amount saved should remain
undrawn and should not be considered as at the disposal of the ditburshing officer
for other unsanctioned purposes.
36 STORES [CHAPTER ,

CHAPTER 7—STORES
SECTION I —INTRODUCTORY
114. This Chapter contains the general rules applicable to all departments,
regarding stores required for use in the public service. Detailed rules and instruc-
tions relating to the various departments responsible for or concerned in large
purchases, manufactures or consumptions of stores, are contained in the depart-
mental regulations relating to the departments concerned.
Note.—The term 'Stores' used in this Chapter applies generally to all articles and material
purchased or otherwise acquired for the use of Government, including not only expendable and
issuable articles in use or accoummulated for specific purposes, but also articles of dead stock of the
nature of plant, machinery, instruments furniture, equipment, fixtures etc.

115. Expenditure on stores is included under contingent expenditure (except

when it is treated otherwise, e. g., stores relating to works) and subject to what
is provided in the following rules, is governed generally by the rules which apply
to such expenditure. The rules in this Chapter should be observed also in con-
junction with those contained in Section VII of Chapter IV of the Madhya
Pradesh Treasury Code, Volume I.

SECTION II —PURCHASE AND ACQUISITION OF STORES

Authorities Competent to Purchase Stores

116. Subject to any special rules or order applying to any particular depart-
ment, an authority which is competent to incur contigent expenditure may sanction
the purchase of stores required for use in the public service in accordance with the
provisions contained in the following rules. Such purchases are also subject to the
usual restrictions regarding the existence of necessary appropriation and to any
monetary limits and other conditions prescribed generally or in regard to specific
articles or classes of articles.

Rules and Instructions Governing the Purchase of Stores

111. (1) All purchases of stores for use in the public service should be
regulated in strict conformity with the Stores Rules and subsidiary instructions
issued thereunder, as contained in Appendix 5.
(2) A Government servant who buys any stores for use in the public service
without calling for t enders, when he ought, according to rule and instructions
contained in Appendix 5, to call for tenders is liable to be called upon by a superior
authority or the Accountant-General to justify the method of purchase which he
has adopted.
(3) No tenderer has any right to be told of the reasons for rejecting his tender,
and the reasons for rejection should not be communicated to any tenderer.

118. Purchases must be made in the most economical manner in accordance

with the definite requirements of the public service. Requirements of the year
should be estimated as far as they can be foreseen and as far as possible sufficient
stock should be purchased during the cheapest season, unless the articles are such
CEIAPTER ,STORES 37

that they are likely to depreciate or deteriorate during storage. Stores should not
be purchased in small quantities periodical indents should be prepared and as
many &tides as possible obtained by means of such indents. At the same time
care should be taken not to purchase stores much in advance of actual requirements,
if such purchase is likely to prove unprofitable to Government.
Where scales of consumption or limits of stores have been laid down by compe-
tent authority, the Government servant ordering a supply should certify on the
purchase order that the prescribed scales or limits are not exceeded.
119. Purhcase orders should not be split up to avoid the necessity for obtaining
the sanction of higher authority required with reference to the total amount of the
orders.
120. (1) All indents sent out to the Director-General, India Store Department,
London (whether by formal indent, letter or telegram), should state clearly and
accurately the grant number and the head of account to which the cost of the stores
is debitable the amount of appropriation provided and an estimate of cost of each
item.
The indents should be prepared in such form and in accordance with such
general or special instructions as may be issued by Government in this behalf.

(2) Indents should not be sent out so late in the financial year that they cannot
possibly be complied with and paid for within that year. If the Director-General
receives any indent which he cannot possibly comply with before the end of the
financial year, he will carry it over to the following financial year under intimation
to Government.
(3) If it is essential to send out an indent to London before the sanctioned
appropriation has been communicated to the authority concerned, the consent of
the Finance Department should be obtained. In such cases the words, "The
Finance Department has agreed to indent being executed" should be written
on the indent.
(4) The purchasing officer should distingtuish very carefully between stores to
be bought through the agency of the Director-General, India Store Department
and stores merely to be delivered to him for despatch and shipment through his
agency. See also Subsidiary Rule 400 of the Madhya Pradesh Treasury Code
Volume I.
Receipts of Stores
121. All materials received should be iexaminaed, counted, measured, or
weighed as the case may be, when delivery is taken, and they should be taken in
charge by a responsible Government servant who should see that the quantities
are correct and their quality good, and record a certificate to that effect. The
Government servant receiving the stores should also be required to give a certificate
that he has actually received the materials and recorded them in the appropriate
stock register.
Issue of Stores
122. When materials are issued from stock for departmental use, manufacture,
sale, etc., the officer-in-charge of the store should see that an indent in the prescribed
form has been made by a properly authorised person, examine it carefully with
 38 ER'24E§, [c PTE, 7

reference to any orders or instructions for the issue of stores, and sign it after making
suitable alterations under his dated initials in the description and quality of materials
if he is unable to comply with the requisition in full. He should then prepare and
sign the form of the invoice attached to the indent according to the supply actually
made. The indent should be returned at once to the requisitioning officer for
signature. When materials are issued, a written acknowledgment should be
obtained from the person to whom they are ordered to be delivered or despatched,
or from his duly authorised agent. Every issue should be recorded in the stock
account at the time when it is made.
In case of store issued to a contractor, the cost of which is recoverable from
him, the acknowledgment should give full particulars of the materials issued, includ-
ing the recovery rates and the total value chargeable to the contractor.

Transfer of Charge of Stores

123. In cases of transfers, the officer-in-charge of stores should see that the
stores in his custody are made over correctly to his successor and a proper receipt
taken from him.

Every departmental Government servant is bound to take over charge

of departmental stores which, from the death or departure of the person lately in
charge or from any other cause, may be left at or near his station without adequate
protection. For detailed instruction see rule 81.

SECTION III.—CUSTODY AND ACCOUNTS OF STORES

General

124. The head of an office or any other Government servant entrusted with
stores of any kind should take special care for arranging for their safe custody, for
keeping them in good and efficient condition and for protecting them from loss,
damage or deterioration. Suitable accommodation should be provided more
particularly for valuable and combustible stores. He should maintain suitable
accounts in respect of the stores in his charge with a view to preventing losses
through theft, accident, fraud or otherwise, and to making it possible at any time
to check the actual balances with the book balance and the payment to suppliers, etc.

125. The form of stock account mentioned in the preceding rule should be
determined with reference to the nature of the stores, the frequency of the transac-
tion and the special requirements of each department or office in which they are
used. The same form of stock account would not be suitable both for consumable
articles, such as dietary stores kept for use in a hospital or jail, and also for ordinary
office furniture. Ordinarily each office should keep its stock accounts in the form
and according to the instructions laid down in the departmental regulations, or by
any general or special orders of the Government which apply to that particular
department. If no such form and instructions have been prescribed, or even if
prescribed, a competent authority has held that they are defective, then the stock
accounts should be maintained in accordance with the general principles laid down
in the following rules. Where audit of the accounts of stores and stock has been
undertaken by the Accountant-General, he will bring to notice cases in which
there is a hiatus to be filled up by the application of these rules or in which losses to
Government could have been avoided by the use of these. rules.
CHAPTER 7] - STORES 39

126. Separate stock accounts should be kept of—

(a) Dead stock, such as plant, machinery, furniture, equipment, fixtures; and
(b) Other stores.

Dead Stock
127. An inventory of the dead stock should be maintained in all Government
offices in a form prescribed by the head of department concerned, showing the
number received, the number disposed of (by transfer, sale or loss, etc.) and the
balance in hand for each kind of article. A model form will be found in Form
M. P. F. C. 9.

128. The instructions given below should be carefully observed by all

concerned :—

(i) The inventory should be priced whenever the items have to enter into
the block account maintained for a Government commercial under-
taking or the value of the item is necessary in order to enable Govern-
ment to calculate the charge to be levied upon private persons or
bodies. As regards other items, a numerical inventory would suffice.
except for articles costing above Rs. 25.
Note.—For the purpose of numerical inventory, articles of similar description such as
tables durries, carpets etc., should be put into separate categories, each category
comprising articles of the same measurement and make and manufacture with the
same metal or wood or other material.

The inventory should ordinarily be maintained at the site of the de ad

stock. For example, where an office is large and the furniture, etc.,
is kept in several rooms, the head of the office should have an inven-
tory of the furniture, etc., kept in each room hung up in the room and
kept up to date in order to facilitate the annual verification an d fix
the responsibility for any loss that may occur. Whether it is desirable,
in any particular case to depart from this general principle or to
maintain additional consolidated inventories elsewhere should be
decided on the merits of each case.
(iii) The inventory should be checked by the controlling authority or any
officer nominated by him once a year and a certificate of the result
of check recorded.
(iv) Articles of dead stock should be verified at least once a year and the
result of verification recorded on the inventory. All discrepancies
noticed must be properly investigated and brought to account
immediately so that the inventory may represent the true account.
(v) When articles of dead stock, e.g., tools and plant are lent to local bodies,
contractors and others, the hire and other charges as determined
under rules prescribed by competent authority should be recovered
regularly.
vi) Government libraries and museums should maintain up to date catalo-
gues as well as prescribed stock accounts and inventories.
40 STORES [CHAPTER 7

Other stores
129. A reliable list, inventory or account of all stores in the custody of Govern-
ment servants should be maintained, in a form prescribed by the head of department
concerned, to enable a ready verification of stores and check of accounts at any
time, and transactions must be recorded in it as they occur.
130. Priced lists, recording both quantities and values, should be maintained
in cases where the stores are intended to be converted into money, or where it is
desired to distribute their cost over the works, items or objects on which they are
actually used.

In such cases, the expenditure on stores must be charged to stores suspense,

head in the first instance.
131. Purely numerical inventories, i.e., recording quantities only will suffice
for articles costing up to Rs. 25 when the articles are intended solely for the service
of the department keeping them and it is not desired to distribute their cost. In-
such cases the expenditure on stores must be charged off finally to the service con-
cerned.
Note.—In some cases it may be found necessary to show prices and measurements, etc., vide
note below rule 128(i) against, some articles say, when for facility for identification or other
reason, it is desirable to distinguish costly articles from cheap articles bearing the same gene-
al description otherwise.

132. The lists, inventories or accounts of stores should in all cases be subject to
such internal check as may be prescribed by State Government whether or not they
are subject to any check by the Accountant-General. The procedure and extent
of internal check should be laid down in the departmental manuals concerned.
133. A physical verification of all stores should be made at least once in
every year under rules prescribed by heads of departments concerned and subject
to the condition that the verification is not entrusted to a person—
(i) who is the custodian, the ledger-keeper or the accountant of the stores;
to be verified, or who is a nominee of, or is employed under, the custo-
dian, the ledger-keeper or the accountant; or
(ii) who is not conversant with the classification nomenclature and tech•
nique of the particular classes of stores to be verified.

The verification should never be left to low-paid subordinates and in the case
of large and important stores, it should be, as far as possible, entrusted to a respon-
sible Government servant who is independent of the superior executive officer in
charge of the stores.

134. A certificate of verification of stores with its results should be recorded

on the list, inventory or account, as the case may be, where such a verification is
carried out.

135. In making a physical verification, the following instructions should

invariably be observed :—

(i) verification must always be made in the presence of the officer res-
ponsible for the custody of the stores or of a responsible person deputed
by him;
CHAPTER 7] STORES 41

(ii) all discrepancies noticed should be brought to account immediately in

the manner indicated below so that the book balance may be set
right and the account may exhibit the true state of the stores :—

(a) Any excess detected during verification should be entered in the stock
account as "Receipt" with the remark "excess found on stock
verification".
(b) Any deficit notice should be noted in the stock accounts in the column
"Particulars of Issues" and described as "shortage found on stock
verification". No entry should be made in the "Quantity" column
so that the articles found short may continue to be borne on the stock
accounts until the loss is adjusted either by a recovery or a sanctioned
write-off;
(iii) shortages, and damages, as well as unserviceable stores should be
reported immediately to the authority competent to write-off the
loss.

136. Balance of stores should not be held in excess of the requirements of

a reasonable period or in excess of any prescribed maximum limit. In order to
ensure the observance of this rule, a periodical inspection should be made by
a responsible Government servant, who must submit a report of surplus and obsolete
stores to the authority competent to issue orders for their disposal (See Rule 140).
The inspection should, unless there be good reason to the contrary, be made six-
monthly in the case of perishable stores and once a year in the case of other stores.
Stores remaining in stock for over a year should be considered surplus unless there
is any good reason to treat them otherwise.

137. Where a priced inventory is maintained, it is essential that the values

recorded therein shall not be materially in excess of the market value of the stores.
The head of the department concerned must issue instructions to govern—

(i) the fixation of prices with reasonable accuracy ;

(ii) the periodical review and revision of rates ; and
(iii) the agency to be employed in periodical revaluation.
Note.—The "market value•• of an article, for this purpose, means the cost per unit at
which the article or an article of a similar description can be procured at a given time
A the Stores Godown, from some suitable public markets.

138. All profits and losses due to revaluation, stock-taking or other causes
should be duly recorded and adjusted where necessary. Formal sanction of compe-
tent authority should be obtained in respect of losses, even though no formal correc-
tion or adjustment in the accounts is involved.

139. (1) Losses due to depreciation should be analysed, and recorded under
following heads, according as they are due to—

(i) normal fluctuation. of market prices;

(ii) fair wear and tear ;
42 STORES [CHAPTER 7

(iii) lack of foresight in regulating purchases ;

(iv) neglect after purchase .

(2) Losses not due to depreciation should be grouped under the following
heads :—
(i) losses due to theft or fraud;
(ii) losses due to neglect;
(iii) losses due to an act of God and other calamities, such as fire, enemy
action, etc.;
(iv) anticipated losses on account of surplus age of obsolete stores or of
purchases in excess of requirements;
(v) other losses due to damage, etc.

Sale and disposal of stores and writes off of Stores

140. The previous sanction of competent authority should be obtained to the

writing off of all losses, deficiencies or depreciation in the value of stores.

141. (1) Subject to any special rules or orders applicable to any particular
department, stores which are reported to be obsolete, surplus or unserviceable may
be disposed of by sale or otherwise, under the orders of the authority competent to
sanction the writing off of a loss caused by deficiencies and depreciation equivalent
to their value.
(2) Each order declaring stores as unserviceable should record the full reasons
for condemning them and how the condemned stores are to be disposed of, i.e.,
whether by sale, public auction or otherwise. The head of the office should record
full particulars regarding all condemned stores in suitable lists from which their
disposal can be watched.
(3) When any stores become unserviceable otherwise than in the ordinary
course or by fair wear and tear, (e.g., by avoidable carelessness, neglect or misuse)
their value should be treated as loss to Government and in such cases the procedure
for reporting and dealing with losses as contained in rules 22 to 26 should be
followed.

142. Sales to private persons of stores other than those which a refound to
have become obsolete o unserviceable are regulated by special rules and orders
applicable to particular departments. When stock materials are sold to the public
or any other department or authority at their full value, a suitable percentage as
determined by competent authority should be added to the book value to cover
charges o account of supervision storage and contingencies. This addition may,
however, be waived by the Government servant empowered to sanction the sale in
the case of surplus stock which in his opinion woull otherwis be unsaleable.

Opium Stock in the Custody of Treasury Officers

143. The opium in store must be kept in the treasury stron7 room and not
elsewhere and all receipts into and issues from stock should be entered in a store
register maintained for the nurpose over the initials of the Treasury Officer. The
CHAPTER 7] STORES 43

Treasury Officer should give out opium to the Treasurer as required for sale to the
public, an account of opium so issued to and sold by him being kept by theTreasurer
in a sub-register in suitable form to be determined by the Treasury Officer. The
Treasury Officer should see that all issues to the Treasurer are entered up in the
register and the proceeds of opium sold are duly credited into the treasury account.
The balance of opium in the hands of the Treasurer should be checked by the Treasury
Officer at least once every mcnt .. No more opium should be issued to the Treasurer
than is necessary to meet current demands.

Audit of Stores and Stock Accounts

144. Whet audit of the accounts of stores and stock kept in any office or
department is undertaken by the C3m7troller and Auditor-General it will be
conducted in accordance with the regulatio ls embodied in Appendix S.
44 • WORKS CHAPTER 8]

CHAPTER 8 —WORKS

SECTION I—INTRODUCTORY
145. (1) The term "work" when used by itself in this chapter in a compre-
hensive sense applies not only to works of construction or repair, but also to other
individual objects of expenditure connected with the supply, repair and carriage
of tools and plant, the supply or manufacture of other stores or the operations
of a workshop.
Note.—The general rules regarding the acquisition, custody and accounts of s tores are
included in Chapter 7 for the sake of convenience.

(2) Subject to any general or special rule or order of Government to the

contrary, the term "administrative control" as applied to works implies inter alia the
assumption of full responsibility for the construction, maintenance and upkeep of
buildings and other works and the provision of funds for the execution of those
functions (See Article 33 of the Account Code, Volume I).
146. Subject to the observance of the following general rules which are
supplementary to the rules of procedure prescribed in Section VIII of Chapter IV
of the Madhya Pradesh Treasury Cede, Volume I, and have therefore, to be applied,
where necessary, in conjunction with them, the initiation, authorisation and execu-
tion of works allotted to particular' departments should be regulated by detailed
rules and orders contained in the respective departmental regulations and by
other special orders applicable to them.

SECTION II —GENERAL RULES

147. Except in cases covered by any special rules or orders of Government,
no work should be commence or liability incurred in connection with it until—
(i) ad ministrative approval has been obtained from the authority appropriate
in each case;
(ii) sanction, either special or general, of competent authority has been
obtained authorising the expenditure;
(iii) a properly detailed design and estimate has been sanctioned; and
(iv) funds to cover the charge during the year have been provided by
competent authority.
If, in any case, whether on grounds of urgency or otherwise an executive officer
is required by superior authority to carry out a work or incur a liability which
i nvolves an infringement of these fundamental rules, the orders of such authority
should be conveyed in writing. On receipt of such written orders or, in cases of
emergency on his own responsibility, the officer may proceed to carry out the
necessary work, subject to the condition that he immediately intimates to the
Accountant-General that he is incurring an unauthorised liability and states approxi-
m ately the amount of the liability which he is likely to incur.
148. (1) The powers delegated to various subordinate authorities to accord
administrative approval and to sanction expenditure upon works are regulated by
the orders contained in the Madhya Pradesh Book of Financial Powers and other
S pecific orders of delegation.
CHAPTER a] WORKS 45

(2) For purposes of approval and sanctions, a group of works which forms one
project should be considered as one work, and the necessity for obtaining the
approval or sanction of higher authority to a project which consists of such a group
of work is not avoided by the fact that the cost of each particular work in the project
is within the powers of approval or sanction of any authority subordinate thereto.
Note.—While no officer may sanction any estimate for a work which cannot be fully efficient
unless other works are also sanctioned if the cost of all such works collectively exceeds his
powers of sanction, it is not the intention that two or more works should be regarded as
forming part of a group of works merely because they are of the same nature, if they are
otherwise mutually independent.

149. The authority granted by a sanction to an estimate must on all occasions

be looked upon as strictly limited by the precise objects for which the estimate was
intended to provide. Accordingly, any anticipated or actual savings on a sanctioned
estimate for a definite project should not, without special authority, be applied to
carry out additional work not contemplated in the original project or fairly
contingent on its actual execution.
150. Any development of a project though necessary while a work is in
progress, which is not fairly contingent on the proper execution of the work as first
sanctioned, should be covered by a supplementary estimate.
151. To facilitate the preparation of estimates, as also to serve as a guide in
settling rates in connection with contract agreements, a schedule of rates for each
kind of work commonly executed should be maintained for each locality and kept
up to date. It should be prepared on the basis of the rate Frevailing in each locality
and necessary analysis of the rates for each description of work and for the varying
conditions thereof should, as far as may be practicable, be recorded.
The rates entered in estimates should generally agree with the scheduled rates
but where, from any cause, the latter are not considered sufficient, the deviation
should be explained in detail in the report on the estimate.
When works are given out on contract, the general principles laid down in
rules 20 and 21 should be carefully borne in mind.
SECTION III.—WORKS UNDER THE ADMINISTRATIVE
CONTROL OF THE PUBLIC WORKS DEPARTMENT
152. Provision for expenditure on all buildings, communications and othe
works required by civil departments, which Government have not specially allotted
to such departments, should be included in the grant for "Public Works" to be
administered and accounted for by Public Works Department. No such work
may be financed partly from funds provided in a departmental budget and partly
from the budget for Public Works.
Note.—Separate grants are abtained for expenditure on Irrigation, Embanment and Drainage
works in charge of the Public Works Department.

SECTION IV.—WORKS UNDER THE ADMINISTRATIVE

CONTROL OF OTHER CIVIL DEPARTMENTS
153. Save where any particular department (e. g. the Forest Department)
has been authorised by Government to execute all or specified classes of depart-
mental works without reference to the Public Works Department and subject to
46 [CHAPTER 8

any special rule or order issued by Government to apply to special classes of works,
all original works, and special repairs costing more than Rs. 2,500 relating to
building and other works, the administrative control of which vests in other depart-
ments should be executed through the agency of the Public Works Department.
In exceptional cases in which the Public Works Department is not employed for
the execution of such works or repairs, the Accountant-General should invariably be
consulted at the initial stage, i.e., prior to an agreement being entered into with an
architect or contractor so that suitable provision may be made as far as possible for
normal audit and financial control.

154. The Forest Department's works are usually executed in out of the way
localities and under special circumstances with which the Forest Officers are better
acquainted than the Public Works Officers. Accordingly that department executes
all its own works departmentally, irrespective of cost. If the Chief Conservator of
Forests wishes to intrust any work, for the execution of which the agency of the
Public Works Department is considered more suitable, he should address the Chief
Engineer, Public Works Department, in the matter. In the case of a difference of
opinion between the two officers, the Chief Conservator of Forests should obtain
the orders of Goverment

155. When works allotted to a civil department other than the Public Works
Department are executed departmentally, whether direct or through contractors
the form and procedure relating to expenditure on such works should be prescribed
by departmental regulations framed, in consultation with the Accountant-General
generally on the principles underlying the financial and accounting rules prescribed
for similar works carried out by the Public Works Department.

156. Expenditure on works of petty constructions and repairs costing Rs. 5000
or less, relating to buildings under the administrative control of a civil department,
other than the Public Works Departn. ent, may be drawn and charged as contingent
expenditure of the department concerned, provided that where any individual item
of such petty works costing Rs. 2,500 or less forms part of a bigger programme,
the expenditure should be treated as "works expenditure" of the department carrying
out the work.

SECTION V.—SPECIAL RULES FOR SANITARY, WATER-

SUPPLY AND ELECTRIC INSTALLATION TO GOVERNMENT
BUILDINGS ETC.

157. Except as ordered by Government in special cases, all works and repais
in connection with sanitary, water-supply and electric instalations to Government
buildings should be carried out by or through the agency of the Public Works
Department.
Note.—The rules relating to the provision of these installations in Government buildings
occupied as residences are laid down in rules 45-A and 45-B of the Fundamental Rules
and the Supplementary Rules issued thereunder.

158. Expenditure incurred by civil department in connection with these

installations, where it does not exceed Rs. 2,500 may be oharged as contingent
expenditure of the department carrying out the work.
 WORKS 47
CHAPTER 8]

SECTION VI.—MISCELLANEOUS RULES

159. In respect of buildings available for occupation as residences capatial

and revenue accounts are prepared periodically by the Accountant-General in
accordance with the directions given in the Account Code, Volume IV, and any
further orders that Government may issue in this behalf. The capital and revenue
accounts are designed to check the expenditure on and realisation of rent from
residential buildings and to show the financial result of the undertaking by the
Government to maintain residences for their officers. All officers concerned should
furnish the Accountant-General annually with the necessary data in respect of such
buildings in such form as may be prescribed by the Accountant-General.

Government may sanction expenditure on ceremonies connected with

160.
the inauguration of important public works, e.g., the laying of foundation stones of
public buildings, the opening of canals, the opening of bridges, etc.

Note 1.—The expenditutre on such functions should be limited to the minimum abso-
lutely necessary and the Finance Department should be afforded full justification for any such
contemplated outlay before any commitments are entered into with regard to it. .

Note 2.—The expenditure on such functions should be debited:—

(a) in the case of Irrigation projects for which separate capital accounts are main-
tained, to the revenue account of the project ;
(b) in the case of "other works under the administrative control of the Public Works
Department to the contingencies of the sanctioned estimate.

Note 3.—The expenditure on the inauguration ceremony of a building or project after

completion should be debited to "office expenses" under the concenred departmental budget.

161. The preparatory stages of a major work may take anything from three
months to a year and attempts to expedite the execution of works contrary to Code
rules lead to bad estimating and computing and, to actual losses of money. It is
desirable that any tendency to rush the preparatory stages for works should be
checked. The Chief Engineer and his subordinate, officers should accordingly take,
in all cases, such time as is considered necessary, for the preparation of proper
estimates, the grant of technical sanction, and the invitation and examination of
tenders and refrain from entertaining request from administrative departments for
special treatment. In emergent cases, however, where circumstances warrant a
departure from methods laid down by the Codes, the Public Works Department
may issue special instructions .on a 'reference received from the administrative
department concerned.

162. No building may be purchased for a public purpose without the orders
of Government. In such cases the proposals should be submitted to Government
by or through the Head of the Department concerned. The valuation of the sites
and buildings should be made by the Revenue Department in consultation with
cers on any point requiring technical advice.
the Public Works Department offi
48 WORKS [CHAPTER 8

163. No public building which is under the administrative control of civil

department other than the Public Works Department may be sold or dismantled
without the previous sanction of Government in General Administration Department.

Note.—The power to sell public buildings constructed and maintained from provision
made in the Police budget, and whose book value is not grater than Rs. 2,500 has been delegated
to the Inspector-General of Police. Before the building is sold. the Deputy Commission should
certify that he has ascertained, after due enquiry, that the Government building for sale is not
wanted by another department and could not be conveniently utilized for ny public purpose.

V.P
 CHAPTER 9] MISCELLANEOUS EXPENDITURE 49

CHAPTER 9.—MISCELLANEOUS EXPENDITURE

SECTION I.—GENERAL
164. The term "miscellaneous expenditure" applies generally to all expendi-
ture in the civil departments, which does not fall under the category of pay and
allowances of Government servants, pensions, contingencies, grants-in-aid, contri-
butions, stores or works.
Note.—Grants-in-aid and contributions have, however, been dealt with in this chapter for
the sake of convenience.

165. Miscellaneous expenditure is subject generally to the rules of procedure

which apply to contingent expenditure, except in so far as it may be governed by
any special rules or orders made by competent authority.
SECTION 11.—REFUNDS OF REVENUE
166. Refunds of revenue are broadly classified as—
(i) refunds to which the claimants are legally entitled, and
(ii) refunds which are made ex-gratia, Government being under no legal
obligation to make them.
Note.1.—Refunds of revenues are not regarded as expenditure for purposes of grants os
appropriations.

• Note 2.—Remissions of revenue allowed before collection are to be treated as reduction of

demands and not as refunds.

167. (a) A refund of revenue of the kind mentioned in clause (i) of the pre-
ceding rule should be sanctioned on application, provided that the claim is not
barred by limitation under the Indian Limitation Act, 1908, or any other law or
rule having the force of law.
(b) An application for a refund of revenue of the kind mentioned in clause
(ii) of the preceding rule, should be rejected if it is received—.
(i) when a notice has been issued to the party concerned, after 3 months
from the date when the party received the notice.
Note.—The notice mentioned above should contain a clause specifying that the application for
refund if not received within a period of three months from the date of its receipt by
the party, will not be considered.
(ii) in other cases, after one year from the date of credit of the revenue to
the Government.
168. Subject to the provisions of the relevant Acts and rules made thereunder,
the sanction necessary for refunds of revenue will be regulated by the orders of the
State Government and by departmental rules and orders contained in the depart-
mental mannuals, etc.
The sanction may either be given on the voucher itself or quoted in it, a
certified copy being attached when such orders are not separately communicated
to the Accountant-General.
Note.—The general procedure for refunds of revenue are given in Subsidiary Rules 417 to
421 of the Madhya Pradesh Treasury Code, Volume I.

169. Before a refund of any kind, otherwise in order, is allowed, the original
demand or realisation, as the case may be, must be traced and a reference to the
 50 MISCELLANEOUS EXPENDITURE [CHAPTER 9

refund should be so recorded against the original entry in the cash book or other
documents as to make the entertainment of a double or erroneous claim impossible.
Any acknowedgement previously granted should, if possible, be taken back and
destroyed and a note of the repayment recorded on the counterfoil of the receipt.
(See Subsidiary Rule 418 of the Madhya Pradesh Treasury Code, Volume I).

SECTION III.— GRANTS-IN-AID, CONTRIBUTIONS, ETC.

170. Grants are of two kinds, viz., (1) conditional, and (2) un-conditional.
A grant is conditional when it is given for a specific purpose and special conditions
are imposed at the time of the grant, regulating the manner in which the grant
may be expended.

A grant is unconditional when no conditions are attached to the utilisation of

the grant in the form of specification of the particular objects of expenditure or the
time within which the money must be spent or otherwise.

171. The sanction necessary for payment of grants-in-aid or contributions to

educational and other institutions, local bodies and co-operative societies and of
educational scholarships is regulated by departmental rules or orders. The follow-
ing rules contain instructions for the general guidance of subordinate authorities in
the matter of according sanctions for grants-in-aid.
Num.—For procedure reg.:.-rduig disbursement of grants-in-aid, contributions, scholarship
etc., at the treasury, lee Subsidiary Rules, 423-428 of the Madhya Pradesh Treasury Code. Volume_

172. Unless in any case Government, direct otherwise, every order sanctioning
a grant should specify clearly the object for which it is given and the conditions, if
any, attached to the grant. In the case of non-recurring grants for specified objects,
the order should also specify the time-limit within which the grant or each instalment
of it is to be spent.

173. Unless it is otherwise ordered by Government, every grant made for a

specific object is subject to the implied conditions—
(i) that the grant will be spent upon the object within a reasonable time, if
no time-limit has been fixed by the sanctioning authority; and
(ii) that any portion of the amount which is not ultimately required for
expenditure upon that object should be duly surrendered to
Government.

174. Only so much of the grant should be paid during any financial year as
is likely to be expended during that year. In the case of grants for specific works •
or services such as buildings, water supply schemes and the like, the sanctioning
authority should use its discretion in authorising payments according to the needs
of the work. The authority signing or countersigning a bill for grant-in-aid under
Subsidiary Rule 426 of the Madhya Pradesh Treasury Code, Volume I, should see
that money is not drawn in advance of requirements. There should be no occasion
for a rush for payment of these grants in the month of March.

175. Before a grant is paid to any public body or institution, the departmental
officer on whose signature or counter signature the grant-in-aid bill was drawn
should, as far as, possible, insist on obtaining an audited statement of the account of
 CHAPTER 9] MISCELLANEOUS EXPENDITURE 51

body or institution concerned in order to see that the grant-in-aid is justified by

the financial position of the grantee and to ensure that any' previous .grant was
spent for the purpose for which it was intended. It is notessential for this purpose,
however, that account should be audited in every case by the Indian Audit Depart-
ment and it will be suffi3ient, therefore, if the accounts are certified as correct by a
registered accountant or other recognised body of auditors. In the case of small
institutions, which cannot afford to obtain the services of a registered accountant
or other registered body of auditors, the sanctioning authority may exercise its
discretion of exempting any such institution from the submission of accounts audited
in this fashion.
Note 1.---The bodies or institutions which are in receipt of an annual recur-
ring grant of Rs. 50,000 or more should in addition to the audited statement of
Account, submit the following statement also to the sanctioning anthorities :—
(i) The receipt and payment accounts of the body as a whole for the finan-
cial year.
(ii) The income and expenditure accounts of the body las a whole for the
financial year.
(iii) The balance sheet as at the end of the financial year for the body as
a whole; and
(iv) Profit and loss accounts with auditors' report thereon (applicable only
j.
to Trading or *Commercial 'organisations).
Note 2.—Provisions of Note-1 above would' not he applicable to autonomous
organisations who have their own statutory provisions regarding preparation and
submission of accounts.

176. The authority sanctioning a grant, while communicating the sanction

to the Aceountant-General should state whether: the audited statement of accounts
has been received when required, or whether the grantee' has been exempted from
submitting th.e statement.
order applies 1poth to non-official ..,.....titudons and to semi-official ones, such
as public clubs, ets. "

177. (a) Every conditional recurring grant will require, a _fresh sanction
every year.,
(13) In the case of 'unconditiOnal recurring grants—
(i) if the amount of a grant is fixed for a definite term in thc first sanction:.
ing order, sanction need not be renewed until the amount is varied
or the term ends,'
'where a definite term; is not assigned to. the continuance of ,a grant
of a lied Anionnt;,the. sanctioning authority Should as soon as
funds
_ have been: provided for the purpo6e intimate the fact to the
A.ccountant-Qeneral,
in 'all other Cases, fresh' ' Sanction should be''accorded e's,iery year to, ,
the"'contintiance of a grant
I78. In the case of conaiticinafgarits, it is the duty:of the dh artinentia officer
on whose signature or Counter signature'the ,see (1)r-
 52 MISCELLANEOUS EXPENDITURE [CHAPTER Ci

at tiie conditions attaching to the grant are satisfied, and (2) in case the conditions
are n -yt fully satisfied to take steps to have the grant refunded to Government
either in whole or in part, as the case may require.. In the case of unconditional
grants, the sanctioning authority should watch that the local body or institution
receiving the grant continues to function actively as such.
179. On or before June 1 of the year, following that to which a grant relates,
every local body or private institution which has received a conditional grant
shall furnish the departmental officer on whose signature or counter signature the
grant-in-aid bill was drawn a statement showing how the grant has been expended
what amount, if any, is refundable to Government and how far the conditions
attaching to the grant have been satisfied. The above requirement should be
mentioned in the sanction for the grant.
180. The authority making the grant shall then decide what amount, if any,
must be refunded by the recipient of the grant and take steps to have the amount
so refunded.
181. Where a grant is an annual one or is paid in instalments, the amount
adjudged refundable to Government (Rule 180) shall be adjusted by short pay-
ment of the next instalment or grant.
Note.—Overdue instalments on account of repayments of loans taken by local bodies may
also be recovered by adujustment from the grants payable to them.

182. Where a grant is annual or a non-recurring grant, has been given for
one year only, the departmental officer on whose signature or counter signature
the grant-in-aid bill was drawn, shall on or before September 30, of the year follow-
ing that to which the grant related, furnish the following certificates to the Accoun-
t ant-Gener al, namely :—
(a) in the case of an unconditional grant that the local body or private
iastitutuion to which the grant was given, did continue to function
actively in the year to which the grant related ;
(b) in the case of a conditional grant, that the garnt was utilized in accor-
dance with the conditions of the grant. If the conditions of the
grant were not fully satisfied the authority making the grant shall
state which conditions were not satisfied and what steps he has taken
or proposes to take either to have the conditions satisfied or to have
any part or the whole of the grant refunded to Government.
183. Where a conditional or unconditional grant is given in instalments
spread over a number of years, the departmental officer on whose signature or
counter signature the grant-in-aid bill was drawn, shall give a certificate, as pre-
scribed in the foregoing rule. in respect of the instalment paid within the year
to which it related.
184. In cases in which conditions are attached to• the utilisation of a grant
in the form of specification of particular objects of expenditure or the time within
which the money must be spent or otherwise, the departmental officer on whose
signature or counter signature the grant-in-aid bill was drawn should be primarily
responsible for certifying to the Accountant-General, where necessary, the fulfil-
ment of the conditions attaching to the grant, unless there is any special
rule or order to the contrary. Before recording the certificate, the certifying
officer should take steps to satisfy himself that the conditions on which the grant
was sanctioned have been or are being fulfilled. For this purpose, he may
require die submission to him at suitable intervals of such reports, statements,
etc, in respect of the expenditure from the grant, as may be considered necessary.
CHAPTER 9] MISCELLANEOUS EXPENDITURE 53

Special Additional Rules for the Control of

Grants to Loca 1 Bodies

185. (1) Government grants to local bodies may be either for general pur-
poses, or for specific objects. The former are an addition to the resources of the
local body, and no action is necessary to discover whether they are expended on
the object for which they are intended. The object of these instructions is to
ensure that grants for special purposes are expended within a reasonable time on
the object for which they were given.

(2) Form of sanction.—The order sanctioning a grant should state clearly the
object for which it is given and the period within which it is to be expended.
Only so much of the grant should be paid during any financial year as is
expected to be expended during that year, or where the grant is dependent on
similar expenditure by a local body, only so much of the grant should be given
which bears the same proportion to the total grant as the expenditure expected
to be incurred during the year does to the total expenditure.

(3) Time of payment of grants.—Grants for or in aid of recurring expediture

such as the salary of teachers should be paid in two equal portions. The first should
be made as soon as possible after the opening of the financial year and the second,
half way through the year. Grants for specific works, as such buildings should
-
be paid as soon as the local body, or the agency entrusted with the execution of
the work is ready to start operations. It is not necessary, however, particularly in
cases where the project is a large one, e.g., water works schemes, that the whole
grant should be paid at the start. The head of the department concerned should
use his discretion in regulating payments according to the needs of the work.
Heads of departments should review all grants which have not been expended
by the end of August, and if there is reason to believe that the full grant cannot
be utilised by the end of the financial year, the grant should be reduced accordingly
and budget provision proposed for the balance in the budget of the following year.
There should be no occasion for a rush of payments of these grants in the month
of March.

(4) Pig fedure for watching expenditure of grants.—The responsibility for seeing that
grants are expended on objects for which they were given devolves upon the head
of the department in which the grant was sanctioned. Ledger accounts are already
maintained by heads of departments for works entrusted to janapada sabhas in
the Form appended to Finance Department letter No. 3431-2664-X of 17th Sep-
tember 1926. Similar ledger accounts should also be opened for other local
bodies to whom Government grants are given. As soon as work is com-
pleted, or at any time during the progress of the work if, as a result of the scrutiny
of the ledger accounts or for any other reason he thinks fit, he shall ask the Deputy
Commissioner, under the powers conferred by section 60 of the Local Self-Govern-
ment Act and section 52 of the Central Provinces and Berar Municipalities Act.
to inspect the accounts appertaining to the work. The Deputy Commissioner,
who may for this purpose apply to the Accountant-General for assistance from
a member of the local audit staff, or the Executive Engineer for technical advice,
shall report the total of the expenditure actually debited to the work in the accounts
of the local body and shall bring to the notice of the head of the department con-
cerned any items which appear to be wronlgy debited to the work and any other
matters that he may think fit. If the work has been completed any balance of
the grant remaining over should be refunded to Government, or deducted from
the next grant made to the local body. Ordinarily, it is not expected that the
Deputy Commissioner will enter into a detailed scrutiny of the accounts such as
54 MISCELLANEOUS EXPENDITURE [CHAPTER 9

occurs at audit, but he will satisfy himself that sums debited to the work have
prima facie been correctly debited. The necessity of asking for assistance from a
member of the local audit staff will, therefore, be the exception rather than the
rule.
(5) Grants are sometimes given for recurring expenditure, e.g., on salaries
in such cases the head of the department concerned shall forward to Finance
Department a certificate after the close of each financial year that the staff main-
taied has been not less than that on which the grant has been calculated, or that
if it has been less, steps are being taken to adjust the difference.
(6) The function of audit.—It is not suggested that the scrutiny by the Deputy
Commissioner prescribed above shall take the place of the investigation of the local
fund audit staff. The local fund auditor, after auditing the accounts of any local
body will, when that body is in receipt of a Government grant, report wh.ethe
the grant has been spent according to the terms attached to it or on the particular
purpose for which it was given. In addition to this, he will send an annual
certificate to the Accountant-General to the effect that he is satisfied, solar as test
audits show, that grants made to local bodies, where accounts come under investi-
gation are being expended on the purpose and in accordance with the conditions
of the grants. This certificate will be forwarded by the Accountant-General to
Finance Department. In order to enable the local audit staff to carry out these
duties, copies of all orders sanctioning grants to local bodies will be sent to the
Accountant-General.

(7) Failure to spend grants and diversion to other purposes.—Grants that have not
been spent or savings accruing from grants should be refunded to Government.
All budgets of local bodies should show in their estimated opening and closing
balances the amount of any Government grants unexpended at the beginninig and
end of the financial year. Such amounts shall not be taken into consideration in
determining whether the closing balance exceeds the minimum alances pres-
cribed. All such budgets shall be forwarded by the Local Self-Government to
Finance Department for scrutiny. When Government grant has been diverted
to a purpose other than that for which it is given, a report should be made, to Govern-
ment by the head of the department concerned as soon as the diversion is discovered,
and all such reports shall be examined in Finance Department. The sum diverted
will be recovered by refund, or by reduction of future grants, and in cases which
appear to call for special action, future grants may be reduced to a greater
extent than the amount of grant so diverted. It will not, however, be necessary
for the head of a department to report to Finance Department cases, in which recur-
ring grants have not been fully expended, provided that action is taken to adjust
the account.
(8) These rules do not apply to transferred works executed on behalf
of the Public Works Department by local bodi•.:s.

Grants to Local Bodies in aid of Works designed for the Benefit of

the Inhabitants of Local Areas

186. The following are the gener•aI principles laid down in the matter of
grants to local bodies in aid of works designed for the benefit of the inhabitants
of local areas:—

(i) As a general rule the entire c:st of local undertakings should be borne by
. the rate-payers who benefit thereby;
CHAPTER 9] MISCELLANEOUS EXPENDITURE 55

(ii) The assistance of Governmn.et, when required. will usually, he given

in the form of loans; and
(iii) When the cost is too heavy to be wholly borne by the local body ever
with the assistance of a loan and the work is nevertheless so important
and useful that it ought not to be postponed, a grant-in-aid
of a portion of the cost will be given by Government from its
accumulated surplus, if it has such a surplus.

Whether the conditions indicated in (iii) above are in any given case fulfilled
is a question of fact for the determiation of the state Government. In considering
thefinancial position of a local body, special regard should be paid to the existing
condition of local taxation within the area. If such taxation is not at or near,its
maximum, that fact should in itself suggest the inference that a grant may not
actually be necessary or, If necessary, that it should be limited amount. The
possibility of increasing existing taxation to its full reasonable extent should, there
fore, always be carefully considered before assistance is asked for from Government.

Expenditure fro m Discretionary Grants

187. When under orders of competent authority, an allotment for discretionary
grants is placed at the disposal of a particular officer, of the expenditure from such
grants will be regulated by general or special orders of the State Government,
specifiying the objects for which the grants can be made and any other condition
that should apply to them. Such grants must be non- recurring. i. e. not involving
any future commitments. See paragraphs 46 and 47 of the Madhya Pradesh
Book of Financial Powers.

Other Grants
188. Grants, subventions, etc., other than those dealt with in the foregoing rules
can be made under only special orders of Government.

SECTION IV.—COMPENSATION TO CIVIL OFFICERS FOR LOSS OF

PROPERTY
189. (1) All cases in which it is proposed to grant compensaticr to any civil
officers for the accidental loss of his property shculd be referred to Governmen
for orders through the administrative department concerned.

(2) Compensation will not ordinarily be granted to a Government servant

for any loss to his property which is caused by an act of God, as earthguake,
floods, etc. or which is due to an ordinary avident, which may occur to any citizen
e. g. loss by theft or as the result of railway accident,fire, etc. The mere fact that
it the time, of the accident, the Government servant is techincally on duty or is
living in Government quarters in which he is forced to reside for the performance
of his daties will not be considered as a sufficient ground for the grant of compen-
sation. These points should be borne in mind while submitting proposals to
Government.

SECTION V.—MISCELLANEOUS

Disbursement on behalf of the Defence Department

190. Disbursements for the purchase of, anp compensation for, lands taken
for military purposes, and for compensation for loss of crops and damage to lands,
66 MISCELLANEOUS EXPENDITURE [CHAPTER 9

require to be vouched by the bills and receipts of the payees and the orignal
authorities (or certified extacts therefrom) under which the exnenditure is incurred.
•
191. A civil officer required to supply carriage to troops on the marcn wii
advance to the owners half the hire for the whole iourney, and on making over
the carriage to the military authorities will recover from the requisitianing Supply
and Transport Officer the amount so advaned. If the advance cannot conveni-
ently be drawn from the permanent advance of the civil officer, an abstract
bill may be drawn on the treasury, the amount of the bill and the subsequent
"recovery being taken to the head"Advances Recoverable'.

Note.—Similarly, when a civil officer is required to supply articles troops on the march
in case where the articles are perichable, i.e. sheep, fowls, eggs, milk or where shops cannot be
opened at the encamping ground, he will himself purchase the provisions intented for meetting
the cost from his permanent advance or drawing it on an abstract bill.
[ CHAPTER 10 ] BUDGET 57

CHAPTER 10.—BUDGET
Responsibility for the Preparation of the Budget Estimates

192. The responsibility for the preparation of the statement of estimated

revenue and expenditure under Article 202 of the Constitution of India which is
laid before the Vidhan Sabha in each year, as well as any supplementary estimates
or demands for extra grants, lies with the Finance Department. The material
on which such estimates are based is obtained by that department from the depart-
ments concerned, which are responsible for the correctness of the material itself.
The Accountant-General is, however, responsible for rendering such assistance in
the preparation of the budget estimates as may be settled in consultation with
the Finance Department, and is bound to supply any information in connection
with the budget estimates which he is in a position to furnish, and to offer any opi-
nion or advice in connection therewith which may be required by Government.

The heads of depatments and other subordinate authorities are responsible

for the submission of correct detailed estimates punctually on the dates fixed
by the Finance Department.

193. Detailed rule regulating the procedure for preparation of budget

estimates and also the rules for control of expenditure and for sanction of re-
appropriations are contained in the' Madh ya Pradesh Budget Manual (under
preparation).

•
 58 DEBT AND MISCELLANEOUS OBLIGATIONS [ CHAPTER 11 ]
OF GOVERNMENT

CHAPTER 11.—DEBT AND MISCELLANEOUS OBLIGATIONS OF

GO VERNMNE T

SECTION I.—RUPEE DEBT

194. The management of the Public Debt of the State and the maintenance
of accounts relating there to are vested in the Central Public Debt Office, which
is managed on behalf of Government by the Reserve Bank. Certain functions of
the Central Public Debt Office are entrusted to the Public Debt Office at Madras,
Bombay and Delhi which are managed by the local offices of the Reserve Bank.
A substantial part of the work, however, falls on treasuries and sub-treasuries.

195. The procedure to be followed in treasuries and other Government

offices in dealing with securities of rupee loans issued by Government and in
making payment of interest in respect thereof is regulated by the provisions of
the Indian Securities Act (Act X of 1920), as amended from time to time, and the
Statutory Rules (Indian Securities Rules), issued thereunder. Detailed rules,
based mostly on the Statutory Rules referred to above, and the supplementary
orders issed by Government from time to time are to be found in the Government
Securities Manual issued by the Reserve Bank under the authority of the Government
of India.

Note.—Unless there be anything repugnant in the subject or context, and without prejudice
to the proviisons of the law, and the statutory rules mentioned above, the rules in the Government
Securities Manual in so for as they deal with the procedure relating to disbursement of money
from, and payment of money into, the Consolidated Fund are to be regarded as rules framed
under Article 283 of the Constitution of India Likewise. the rules in the Manual which prescribed
the form of initial accounts to be kept at treasuries in recpect of payment of interest on Government
Securities, repayment of principal of terminable loans, receipt of subscriptions to new loans and
of other allied transactions and the form in which the account of such transactions are to be rendered
to be the Accountant-General, should be regarded as directions given by the Comptroller and
Auditor-Genral of India with the approval of the President of India and will be subject to any
directions contained in this behalf in Volum II of the Account Code.

196. Tresury bills are special forms of Government securities, which are
issued and repaid under special rules and orders made by Government in this
behalf. (See also Subsidiary Rules 517 and 518 of the Madhya Pradesh Treasury
Code. Volume I).

SECTION II.—PROVIDENT FUNDS

197. The term "Provident Funds" is strictly applicable to all "Provident
Funds" within the meaning of the Provident Funds, Act, 1925 (XIX of 1925),
as amended, which have been consitituted for the benefit of Government servants.
The procedure relating to the recovery of subscriptions to, and withdrawals
from, such funds will be regulated strictiy in accordance with the provisions of the
respective Provident Funds Rules and the subsidiary instructions contained in
Section III of Chapter VII of the Madhya Pradesh Treasury Code, Volume I .

198. The legal aspect of the provisions in the Provident Fund Rules has been
dealt with in the "Memorandum Explanatory of Government Provident Fund
Rules vis-a-vis the law on the subject" which has been prepared by the Govern-
ment of India in consultation with their legal advisers and reproduced in Appendix A
CHAPTER 11] DEBT AND MISCELLANEOUS OBLIGATIONS 59
OF GOVERNMENT

Part II of the Madhya Pradesh General Provident Fund Rules. The memo-
randum, as stated in the preface thereto, is not exhaustive and exceptional cases
may arise which are not covered by the instructions in the memorandum but it
will be found useful in dealing with the generality of cases arising under the various
Provident Fund Rules.
199. The following instructions should be carefully observed by heads of
offices with a view to the correct preparation of the Fund Schedules referred to
in Subsidiary Rule 526 of the Madhya Pradesh Treasury Code, Volume I :—
(i) A complete list of subscribers to each fund should be maintained in
each disbursing office in the form of the schedule.
(ii) Each new subscriber should be brought on this list and any subse-
quent changes resulting from his transfer or in the rate of subscription
etc., clearly indicated.
(iii) Except where it is otheriwse provided in the rules of the fund con -
cerned or by special orders of Government, changes in the monthly
rates of subscription will be permissible only from the first of April
each year, i. e., with effect from the pay for March drawn in
April.
(iv) When a subscriber dies, quits the service or is transferred to another
office, full particulars should be duly recorded in the list.
(v) In the case of the transfer of a subscriber to another office, the
necessary note of transfer should be made in the list of both
the offices.
(vi) From this list the monthly schedule to be appended to the pay
bill should be prepared and agreed with the recoveries made before
the submission of the bill to the treasury for payment.
(vii) The list of subscribers to Postal Life Insurance Fund should be
maintained in a register and not in the Form M. P. T. C. 61.
The proforma of the register and instructions for its maintenance
and preparation of the monthly Schedules to be attached to the pay
bills, are given in the Annexure to this chapter for the guidance
of drawing and disbursing officers. The register should be
preserved for a period of ten years after the close of the year
to which it relates.
SECTION III. —SERVICE AND OTHER FUNDS

Indian Civil Service Fa mily Pension Fund

Superior Services (Indian) Fa mily Pension Fund
Indian Civil Service (Non-European Member) Provident
Fund Postal Insurance Fund
200. Contributions, donations, etc., recoverable, and pensions and other
benefits payable, in respect of the funds specified above will be regulated in accor-
dance with the rules of the respective funds and the subsidiary instructions con-
tained in Section III, Chapter VII of the Madhya Pradesh Treasury Code
Volume I.
60 DEBT AND MISCELLANEOUS OBLIGATIONS [CHAPTER 11
OF GOVERNMENT

201. Subscriptions to family Pensions or other fund not under Govern-

ment management may not be received in cash or by deduction from pay or pension
hills except under special orders of Government. (See Subsidiary Rule 525
of Madhya Pradesh Treasury Code, Volume I).
Note—It must be distinctly understood that in the case of the General Family Pesnion Fund
the Hindu Family Annuity Fund and the Bengal Chr stian Family Pension Fund, Government
exercises no supervision over the managment of the funds and is in no way responsible for their
s olvency.

202. A detailed list of the subscriptions realised in cash on behalf of each

fund showing the date and amount of each receipt and the name of the person on
whose behalf it is paid in, should be submitted by the Treasury Officer to the
Accountant-General with the cash account of each month. This list will be a copy
of a register maintained in the tresaury.

203. The deposit accounts of these funds on the Government book will be
credited with interest at such rates and at such intervals as may be pres-
cribed by Government in each case.
Note.—Except in the case of the Bengal Uncovenanted Service Family Pension Fund. an
important difference with regard to interest is made between subscridption paid by deductions
from pay bill and subscript; ns paid in cash, no interest being allowed for the month of payment
on leash subscriptions received after the 4th of the month, whereas subscriptions deducted from a
bill bear interest as though they had been received on the 1st of the month.

ANNE XURE
Procedure for recovery and accounting of P. L. I. Pre mia
All the drawing officers should maintain in the form enclosed a corrected and
up to date register of policy holders under their control. The name of the policy
holders should be noted in alphabetical order according to sur-names, leaving
sufficient space between two entries to enable new comers' name being inserted
in the right place. A separate entry should be made in the register for each policy
in the case of policy holder having more than one policy. On receipt of an in-
timation from the Director, Postal Life Insurance, Calcutta, about the issue
of a policy in favour of subscriber authorising the drawing officer to commence
recovery from pay or on receipt of a last Pay Certificate in respect of the subs-
criber. transferred from another office, the drawing officer should make a note
of the particulars of the policy in the register. The name of the office from
which the subscriber has been transferred should invariably be noted in the
remarks column, whenever a subscriber is transferred to another office or his policy
is discharged, his name should be scored out from the register, giving necessary
remarks regarding discharge of policy or indicating the office to which the
insurant has ben transferred as the case may be.
2. After the preparation of the monthly bill but before its incashment the
bill clerk should check up the recoveries shown in the bills on account of Postal
Life Insurance with the register, to see that the recovery has been made from all
the subscribers and the correct amount has been recovered. This check will dis-
cover the cases of omissions to make recovery as well as cases of nothing of P. L.
I. re:;)veries in a wrong column of the pay bill. The amonts of the recovery
shown in the bills should be posted in the monthly column in the register with
proper reference to the bills or the vouchers, reasons for short, excess or non-re-
covery being briefly noted in the remarks column. Extracts of this register should
CHAPTER 11] DEBT AND MISCELLANEOUS OBLIGATIONS 61
OF GOVERNMENT

then be made out in the schedules. The schedule should be attached to the
relevant bills in support of the recoveries.

3. While taking extracts it should be seen that the names of those insurants
from whom recoveries were made in the previous months, but no recoveries have
been made during the current month either on account of transfer or discharge
of that policy or on account of leave salary being not drawn or the official being
on leave without pay, should be included in the current month's schedule with
necessary remarks noted against their names. Similarly, the remark 'New Policy'
or 'Transferred from office' should be given in the
schedule against the names of insurants entered for the first time in current month.
Reasons for short or excess recovery should be noted briefly in the Remarks column.
In short schedule of Postal Life Insurnce recoveries to be attached to the bills,
would be a record not only of those from whom the recovery has actually been
effected but also of those from whom recovery was being effected previouly
but has not now been effected.

4. In case of double recoveries or late recoveries, the reasons for late drawal
of pay or pension together with an indication of the month of pay or pension
from which premium has been recovered, should be recorded in the Remarks
Column. This information is absolutely necessary to determine the liability of
the insurant to pay fine or interest and the currency of the policy.

5. Thougth each policy of the insurant will be entered seprately in, the
register and the schedule, the total amont recoverable monthly from each policy
holder on account of all policies should be shown in the register by bracketing all
he policies. This will serve as a guide for preparation of monthly bills, where
tecoveries, in respect of each policy cannot be shown separately. This total in
he register should be kept corrected up-to-date on additions of new policies
and exit of old ones.
 Nameof
holder
policy
(3)
Z tj
42, ,t-
■—■ •CD
21.
o 0,
z ,
0
'71
0

Monthlo
Premi um
7:1

rate
0

ON '0

i 4 Pci
...<
4■1 1-4
00
N
trl
CD

<-..-i
0
g '-
, ‘Z*
0
r
I -. ›-
04.2
g
F

(1) ;
4
.••••■
.■• CA 0
1■s CD '
"0 (
C tri
.••■•, i
0
NI 0
s....., I"-

L4j 1 0
I
CHAPTER 12] LOCAL FUNDS 63

CHAPTER 12.—LOCAL FUNDS

Introductory

204. (a) The transactions of local funds (as defined in Subsidiary Rule
600 of the Madhya Pradesh Treasury Code, Volume I) are not included as such
in the Public Account, except in so far as their cash balances may be deposited with
Government under Subsidiary Rule 602 of the Madhya Pradesh Treasury Code
Volume I, and accounted for under the deposit head "Deposits of Local Funds".
The function of Government in regard to such deposits is that of a bank. (See
Subsidiary Rule 604 of Madhya Pradesh Treasury Code, Volume I).

(b) The rutin classes of local funds in the State have been enumerated in
Subsidiary Rule 691 of the Madhya Pradesh Treasury Code, Volume I.

205. The Financial transactions between Government and local bodies

are governed by the following rules, by Subsidiary Rules, 602 to 614 of the
Madhya Pradesh Treasury Code, Volumne I, and by such other general and
special orders as may be issued by Government in this behalf.

Grants to Local Bodies

206. The payment of various classes of grants to local bodies will be governed
by the general instructions contained in rules 170 to 186 and by such special
orders as may be issued by Government in regard to each class of grant.

Loans to Local Bodies

207. The detailed procedure to be followed in connection with the grant

of loans to local bodies will be regulated by the provisions of the Local Authorities
Loans Act and other special Acts and by rules made thereunder (see also
Rule 217).

Charges recoverable from Local Bodies

208. Unless any of the following arrangements have been authoriesd by
Government, a local fund should be required to pay in advance the estimated
amount of charges to be incurred or cost of services to be rendered by Govern-
ment on account of the Fund :—
(i) Payments as made by Government may be debited to the balances
of the deposits of the local fund in Government books;
(ii) recovery from the local fund may be postponed till the time when
Government has to make payment for the charges;
(iii) payments may be made as advances from Government funds in the
first instance, pending recovery from the local fund.
Note.—In cases where a local fund hIs to pay for medicines supplied, but its liability cannot
be accurately known within the year owing to the account of supplies not being available from the
Supplying Department by the 31st March, the local fund concerned should be required to pay
during March a sum roughly estimated as the value of the medicines, any short or excess recovery
being readjusted in the the following year. (See also paragraph 434 of the Medical Manual).
 64 LOCAL FUNDS [CHAPTER 12

209. Any amount due to Government by a local body, including any

amount overdue for payment in respect of a loan, is subject to recovery by adjust-
ment from any non-statutory grant sanctioned for payment to it. The authority
signing or countersigning a bill for such a grant should see that this rule is observed
as far as practicable.

Revenue Collected on behalf of Local Bodies

210. Proceeds of taxes, fines or other revenues levied or collected by Govern-
ment may not be appropriated direct to a local fund without passing them
through the accounts of payments into and withdrawals from the Consolidated
Fund of the State, whether or not such taxes, fines, etc., are earmarked from the
start for the purposes of the fund.

211. Subject to the provisions of relevant Acts and Rules made thereunder
adjustments with local bodies in respect of revenue and other moneys raised
or received by Government on their behalf will be made in such manner and on
such dates as may be authorised by general or special orders of Government.

Use of Service Postage Stamps

212. Service Postage Stamps may not be used by a local fund officer
or any Government officer acting in a capacity connected with a local fund
(such as, President or Secretary of a local fund committee), but they may
be used on the correspondence of a public officer acting as such, even though the
correspondence relates to the affairs of a local body.
Note.—Telegraphic messages, the charges for which are to be borne by local funds, should
be classified as "private" and not as "State".

Audit of Accounts
213. Subject to the provisions of any law or rule having the force of law, the
accounts of local bodies will be audited by the Indian Audit Department under
general agreement reached between Government and the Comptroller and
Auditor General. The agreement extends also to the accounts of other non-
Government bodies or institutions, which, under any general or special order of
Government, have to be audited through Government agency.

Elimination of Paisa
214. Except in respect of dues fixed by or under any law or under any special
order of Government, financial transactions between Government and local bodies
should be rounded off to the nearest five paisa, 3 paisa and over being treated as
five paisa and amounts less than that being omitted.
 LOANS AND ADVANCES 65
CHAPTER 13]

CHAPTER 13.—LOANS AND ADVANCES

SECTION I.--INTRODUCTORY
215. Broadly, the receipients of loans and advances made by the State
Government fall under the following categories :—
(i) Municipalities, 'Municipal Corporations and other local bodies,
Panchayati Raj Institutions;
(iii) Public Sector and other Undertakings;
(iv) Co-operative Institutions;
(v) Cultivators; r
(vi) Port Trusts;
(vii) Other parties; and
(viii) Miscellaneous loans.
The different categories of receipients mentioned above are assigned distinct
sub-heads so as to identify the schemes for which loans are made.

A.—Loans and Advances bearing Interest

(i) Loans to Local Funds, Private individuals, etc. These comprise—

(1) Loans to Municipalities;

(2) Loans to Tanapada Sabhas and other Local Funds Committees;
(3) Loans to Land holders and other Notabilities;

(4) Advances to cultivators under the Land Improvement Loans

Act, the Agriculturist Loans Act or any other Act; and Loans
under the Co-operative Credit Societies Act;
Advances under special laws (e. g. Loans granted under the State-
(5)
Aid to Industries Act);
(6) Miscellaneous Loans and Advances.
(ii) Advances to Government servants. These comprise—

(1) Advances for construction, purchase or repairs of house;

(2) Advances for the purchase of motor conveyances;
(3) Advances for the purchase of other conveyances.
B.—Interest free Advances
(i) Advances repayable-comprising mostly miscellaneous advances to
Government servants for various public purposes:
(i1) Permanent advances.
 66 LOANS AND ADVANCES ICHAPTEll 13

216. The rules in this Chapter should be observed generally by all departments,
etc., in making loans and adva , es of public money, unless there be any special
rule or order of Government to the contrary.
SECTION II.—GENERAL RULES
Sanction
217. Except as otherwise provided in any departmental rules or orders, loans
and advances to loc .) funds and private individuals, etc., under 215 require the
sanction of Government. Advances to Government servants are regulated by rules
i n Sections III to V of this Chapter. Detailed rules relating to permanent advances
are contained in rule 102.
Esti mates
218. Provision should be made in the Budget for all loans and advances
which can be foreseen. Estimating and controlling officers should make timely
estimates both of the gross advances and recoveries of the coming year and include
them in their annual estimates for submission to the proper authorities concerned.
Conditions of Repayments
219. Recovery of amounts advanced to Government servants is governed by
the detailed instructions laid down in rules, 235, 240, 256, 264 and 265, et. seq.
220. The following general instructions apply to all loans and advances to
local bodies, etc., other than advances to cultivators, etc., which are governed by
Special rules, and subject to the Provisins of relevant Acts or rules made there
under the conditions under which the loans are granted should be regulated
accordingly;--
(i) A specific term should be fixed which should be as short as possible
within which each loan or advance should be fully repaid with interest
due. The term may in very special cases extend to 30 years.

(ii) The term is to be calculated from the date on which the loan is completely
taken up or declared by Government to be closed.
(iii) The repayment of loans should be effected by instalments, which should
ordinarily be fixed on a half-yearly basis, due dates for payment
being specially prescribed.
(iv) Instalments paid before the due date will be taken entirely to
principal unless, of course, any interest for a preceding period is
overdue.
221. When a loan of public money is taken out in instalments, the first half
yearly repayment should not be demanded until six months afterthe last instalment
is taken; meanwhile simple interest only should be realised. But should it appear
that there is an undue delay on the part of the debto,7in taking out the last instalment
of a loan, the authority sanctioning the loan may at any time declare the loan
closed, and order repayment of capital to begin. The Accountant-General will
bring to notice any delay that appears to him to require this remedy and he will
take this step whether there are any dates fixed for taking of instalments or not.
Note 1.—If, in any case particular dates have been fixed for the payment of interest orhalf-
the
repayment of instalments of a loan,then such repayments should not begin until the second
only ofbeing
yearly dates so fixed, after the loan has been completely taken up simple interest
CHAPTER 13] LOANS AND ADVANCES 67

recovered on the first half-yearly date after the completion of the loan. For example, supposing
a loan, the interest on which is recoverable half-yearly, to be completely-taken up on the 31st
March and the interest to be payable on the 30th June and 31st December, the first half-yearly
1nstalement in repayemnt of principal will not be due ureil 31st December following; simple
interest only will be due on the intermediate 30th June.
Note 2.—The instructions are applicable tnutatis mutandis, to loans the repayments of
which are made by other than half—yearly instalments.
Note 3.—It must be remembered that the calculation fixing the amount of equal periodical
instalements, by which an advance is repaid with interest, pre-supposes punctual payment of the
instalments, and that, if any insttalment is not punctually repaid, the fixed instalment will not in
the end discharge the loan.

222. Borrowers should be required to adhere strictly to the terms settled for
the loans made to them. Modifications of these terms in their favour can be made
subsequently only for very special reasons.

Interest
223. A loan bears interest for the day of advance, but not for the day of
repayment. Interest for any shorter period than a complete half-year should be
calculated as number of days x yearly rate of interest unless any other mathod
365
of Calculation is prescribed in any particular case or class of cases.

224. Interest will be charged yearly or half-yearly or as the Government

may determine and be calculated on each instalment of the loan from the date on
which the loan was actually disbursed. The rate of interest to be charged on loans or
instalments of loans granted will be fixed each year with due regard to the rate at
which the Government borrows or can borrow in open market; or the rate at which
the loans• are received from Government of India or other financial institutions
allowing for a service charge of up to one per cent. above the rate of interest at
which the loan was taken if so decided to be fixed; or in relation to bank rate of
lending or adhoc rate so negotiated.

Note.—The interest should be calculated and recovered in whole rupees

Accordingly, the amount of 50 paise or above may be treated as one rupee and the
amount less than that omitted.

225. Interest received on loans and advance s should be credited to consol

dated fund of the State.

Default in Payment
226. (1) Any default in the payment of interest upon a loan or advance, or
in the repayment of the principal, will be promptly reported by the Accountant
General to the authority which sanctioned the loan or the advance. On receipt of
such a report, the authority concerned should immediately take steps to get the
default remedied.
Note.—The responsiblity of the Accountants General under this rule refers only to the loans
the detailed accounts far which are kept up by him.

(2) The authority which sanctions a loan may in so far as the law allows,
enforce a penal rate of compound interest upon all over due instalments of interest
or principal and interest or on the whole amount advanced or on such portion
68 LOANS AND ADVANCES [CHAPTER 13

thereof as the Government may decide. If a penal rate is enforced, it should not
except under special orders of Government be less than 2i. % of the rate of
interest axed for the loan advanced.

Irrecoverable Loans and Advances

227. Government or any subordinate authority to whom power has been

delegated can remit advances which are found to be irrecoverable. (See Rule 55).

Note.—Irrecoverable loans and advances written off under the orders of the competent
authority should be debited to the minor head 'Irrecoverable Loans—Written Off" under the
various Major/Sub-Major heads depending on the purpose for which the loans and advances were
granted. Where the function or purpose cannot be identified with any major head itshould be
debited to the above minor head under "268-Miscelaneous General Services".

228. In respect of Revenue and other advances, for the detailed control,
accounting and supervision of which departmental officers are responsible it is the
duty of the departmental authorities concerned, as soon as any such advance is
ascertained to be irrecoverable, to take the necessary steps to get it wi itten off' the
accounts under the sanction of competent authority, and to advise the Accountant-
General, in order that he may make the necessary adjustment in the accounts, and
direct its being written off the treasury plus and minus memorandum. Irrecoverable
advances written off should nevertheless be registered by the departmental authori-
ties in a separate account or record, in order that any possible eventual recovery may
be made. Such eventual recovery should be treated as revenue without affecting
the plus and minus memorandum.

Accounts and Control

229. (1) Subject to such general or specific directions as may be given by

the Comptroller and Auditor-General in this behalf, detailed accounts of individual
loans and advances other than those mentioned below will be maintained by the
Accountant-General who will watch their recovery and see that the conditions
attached to each loan or advance are fulfilled.

In the case of revenue and other advances mentioned in Subsidiary Rules, 621
and 629 of the Madhya Pradesh Treasury Code, Volume I, the responsibility for
supervision, accounting and control devolves upon the departmental authorities
and detailed rules and instructions governing them are contained in the departmental
regulations.

Note 1.—In the case of loans to private individuals under any schemes , the detailed
accounts of such loans shall be maintained by the departmental authorities instead of by the
Accountant-General. The departmental authorities will also be responsible to watch their recovery
and to see that the conditions attached to each loan or advance are fulfilled. The Accountant-
General will continue to maintain detailed accounts and watch recovery and fulfilment of the
conditions in case of loans to institutions and organisations, etc.

Note 2.—The Departmental officers shall intimate to their respective Head of Department,
Government in administrative department by the 30th June each Year, the position of arrears
in respect of all third party loans and advances referred to in this rule with interest due thereon
except departmental loans and advances granted to departmental offices under paragraph 1 of
Subsidiary Rule 629 of the Madhya Pradesh Treasury Code, Volume I in Form M.P.F.C. 10-A.
The Head of Department on receipt of the information from each of the subordinate departmental
officers, shall compile and consolidate the information in the aforesaid form and forward the same
to the Accountant-General not later than 31st July each year.
 LOANS AND ADVANCES 69
CHAPTER 131

(2) (a) In respect of loans, the detailed accounts of which are maintained Si n
the Audit Office, the sanctioning authorities should furnish to the Audit the util a-
tion certificates in respect of each individual case. Where the accounts or the
loanees are audited by the Departmental Auditors, e.g., Examiner of Local Fund
Accounts as in the case of loans to local bodies or by the Registrar of Cooperativ e
Socities in respect of loans to co-operative institutions, the sanctioning auth oritie s
should furnish the utilisation certificates to Audit for the total amount of loans
disbursed to these bodies/institutions for the various purposes duri ng each year.

(b) In respect of loans, the detailed accounts of which are maintained by the
departmental offices, consolidated utilisation certificates except in respect of loans
to individuals should be furnished to Audit by the Heads of the Departments or
the Chief Controlling Officer administering the loan, for the total amount of
loans disbursed each year. The certificate so furnished should specifically indicate
the year-wise break up of the loans dibursed and loans for which utilisation certifi-
cates are furnished. The consolidated certificates so furnished by the heads of
Departments/ Chief Controlling Authorities to Audit should also cover the loans
sanctioned by their subordinate officers under the powers delegated to them.

(c) The authority competent to sanction the loan shall be primarily responsibl e
for certifying to the Audit the fulfilment of the conditions attached to the loan,
unless there is any special rule or order to the contrary.

(d) The certificate referred to above should be furnished in such form as may
be prescribed by the Audit. Before recording the certifying officer should take
steps to satisfy himself that the conditions, on which the loan was sanctioned, have
been or are being fulfilled and the loans, have been utilised for the purpose for which
they are given. For this purpose, he may require submission to him at s uit abe
intervals, of such reports, statements, etc. as will establish the utilisation of the loan
for purposes for which it was sanctioned. The loanees institution may also be
required to furnish a certificate from its auditors to the authority which sanctione d
the loan that the conditions attached to the loan have been or are being, fulfille d.
The certificate should give details of the breaches, if any, of those conditions.

(e) The certificate of utilisation of the loan should be furnished to the Audit
in every case of loan made for specific purpose, even if conditions are not specific ally
attached to the loan. The utilisataion certificates are not, however, necessar y in
cases where loans are sanctioned not for any specific purpose or subject but take
the shape of a temporary financial aid as in the case of assistance to public bodies or
private institutions to tide over a temporary financial crisis.

(f) The utilisation certificates should be furnished within a reasonable time

after the loan is paid to the institution. The target dates, for submission of utili-
sation certificates should, as for as possible, be not later than 18 months from the
date of sanction of the loan. In respect of loans, the detailed accounts of which
are maintained by the Departmental Officers and where consolidated utilisation
certificates are to be furnished to the Audit, the period of 18 months should be
reckoned from the expiry of the financial year in which the loans are disbursed.
The consolidated utilisation certificates in respect of such loans paid each year
should therefore be furnished not later than September of the second succeeding
financial year. The target dates as specified should be rigidly enforced and ex-
tension should be allowed in very exceptional circumstances. No further loans
should be sanctioned unless the sanctioning authorities are satisfied about the
proper utilisation of the earlier loan sanctioned to an institution, etc.
 70 LOAN,S. AND ADVANCES [C.1:-I.AWER.. 13

Returns
230. (1) The Accountant-General will submit for review by Government
an annual statement showing the details of outstanding loans and advances borne
on his books under the head "Loans. and Advances by the Government". The
statement will be submitted in Form M. P. F. C. 10 not later than the 30th
September of the following year.

(2) In the case of advances written off against Consolidated Fund of the
State a monthly statement should be submitted by the sanctioning authority to
the Finance Department to watch the progress of expe'iditure against the grant
voted by the Vidhan Sabha.

SECTION III.—ADVANCES TO GOVERNMENT SERVANTS

General
231. The following rules 'regulate the grant of advances to Government
servants and others. In cases not covered by these rules or by rules in sections I
and II of this Chapter, advances cannot be made except under the special orders
of the State Government.

Note.—Before sanctioning an interest bearing optional advance to a Government servant

a certificate regarding the availability of funds should be obtained from the Finance Department
and the order sanctioning the advance should specifically state the date on which the Finance
Department certified the availability of funds. It should also be specifically mentioned in the
sanction that an advance should be drawn within the financial year in which the sanction is
issued, and that the sanction would otherwise lapse with the close of the financial year.

232. It is not permissible to sanction an advance which involves a breach

of any of the basic principles laid down in rule 9.

233. Simple interest will be charged on advances granted to Government

servants for house building, purchase of motor cars, motor cycles or other convey-
ances. The rate of interest is fixed from time to time with reference to the borrow- .
ng rate of the State Government. (The interest will be calculated on balances
utstanding on the last day of each month).
Note 1.—In case where the pay bills for a month are disbursed before the end of the month, an
instalment in payment of an advance received through the pay bill will be taken as having been
refunded on the, first of the following month, the normal date for the disbursement of pay.
Note 2.—When an advance is drawn in more than one instalment, the rate of interest
recoverable will be determined with reference to the date on which the first instalment is drawn.
Note 3.—In cases where the amount of outstanding advance is to be adjuasted from the death
cum-retirement gratuity of a Government servant, the interest should be calculated only up to the
date of his retirement or of death of the Government servant, whichever be earlier.
234. Rule 236 to 272 do not ordinarily apply to Government servants who
are not in permanent Governmnet employ. As the pay of such Government
servants does not constitute adequate security for a loan, advances should not
ordinarily be granted to them. In special cases, however, if the circumstances admit
of the provision of adequate security, advances may be granted in accordance
with the terms of these rules to officiating or termporary Government servants
without any substantive appointment under general or special sanction of the Finance
Department.
 CHAPTER. 13] LOANS AND ADVANCES 71

235. All advances are subject to adjustment by the Government servants

receiving them, in accordance with the rules applicable to each case. When an
advance is adjustable, by recovery, the, amount to be recovered monthly should not
be affected by the fact of the borrowing Government servant going on leave of
any kind with leave salary or his drawing subsistence grant. The sanctioning
authority may, in exceptional cases order a reduction in the amount of the monthly
instalment provided that in the case of interest bearing advances to GovernMent
servants the whole amount due should be completely recovered within the period
originally fixed.

Note.—The register of advances and recoveries made should be maintained in Form M. P. F.

C. 30.

SECTION IV. — INTEREST BEARING ADVANCES

Note.—Adminsitrative departments of Government may sanction advances under sub-sections

(1), (2), (3) and (5) of this section to Government servants under their administrative control, in
accordance with these rules.

Sub-section (1)—House Building Advances

236. (a) Advance may be granted to permanent Government servants if appli-

cant, his wife/husband/minor children do not own a house in the town/urban agglo-
meration where the house is proposed to be constructed or acquired with the advance
from the Government and who have rendered at least five years service and who
desire to build houses for occupation by themselves, at any place within the State
where no houses are available, or whore house rent is exceptionally high.

236. (b) Advances may also be grained to such temporary Govt. servants who
have rendered at least eight years service and who submit surety in form MPFC-2 of
of such two permane nt Government servants from whom a recovery can be made
if occasion arises.

Note 1.—In the case of All India Service Officers, advances are permissible for house building
for occupation by themselves even out side the State anywhere in India.
(Finance Department Memo. No. 2411-CR-229-IV-R-7-61, dated the 3rd October 1961).
Note 2.--(i) The Government servants who will be sanctioned house building advances will
be required to give an assurance to the effect that Government would have a right to inspect the
house during its construction.
(ii) The Government servants will have . to be inform the Government at the time of cons-
truction and completion of the house or when any alteration is carried out therein.

Note 3.—Advance may be granted only once in whole service for the purchase
of plot and construction/purchase of house, even if the previous advance with
interest is repaid in full.

237. (a) All such advances must be boha fide required for the purpose of
building suitable houses for the personal residence of the Government servants
concerned, and if more is advanced than shall be actually expended for the purpose
the surplus shall be 'refunded to Government.
 [CHAPTER 13
72 LOANS AND ADVANCES

(b) Utilisation of advance for a purpose other than that for which it is
sanctioned shall render the Government servant liable to disciplinary action under
the Madhy,L Pradesh Civil Services (Classification, Control and Appeal)
Rules, 1965 apart f.- om his being called upon to refund to Government forthwith
the entire advance drawn by him together with interest accrued thereon.
(c) If the loanee fails to repay the whole amount together with interest
the outstanding balance shall be recoverable as "arrears of land revenue".

238. The advance should be drawn by instalments, the amount of each

instalment being such as is likely to be required for expenditure in the next three
months. Satisfactory evidence should be produced le show that the amount of
the instalment has been actually utlized for the purpose for which it was drawn
before the next instalment is paid.
Note 1.—The controlling authority will be held repsonsible for seeing that satisfactroy
evidence is furnished timely.
Note 2.—House building advance should not be allowed to be drawn by or paid to Govern-
ment servants in full in one instalement. It shall be payable in three instalments in the manner
indicated below—
(a) An amount not exceeding 30 per cent. of the advance sanctioned to a Governmnet
servant for construction of a house will be payable to him on his mortgaging
in favour of Government the land purchased by him along with the house to be
built thereon.
(b) An amount not exceeding 40 per cent. of the advance will be payable when the cons-
truction of the house reaches plinth level.
(c) The balance of the sun Aimed advance will be payable when the construction of the
house has reached roof level, provided the sanctioning authority is satisfied
that the development of the area in which the house is built is complete in respect of
amenities such as water supply, street lighting, road, drainage and sewerage.

Note 3.—Bills for second and subsequent instalments should be supported by certificates to the
effect that the previous instalment of the advance has • been actually utilized for the purpose for
which it was d rawn. At the end of three months from the date of drawal of the last instal-
ment a further certificate should be sent to the Accountant-General to the effect that the
amount of the last instalment of the advance has been actually utilized for the purpose
for which it was drawn. The controlling authority referred to in Note 1 shall be responsible for
giving the certificate prescribed herein.

239. (a) An advance shall not exceed sixty month's pay (ninety months' pay
in old scales) of the Government servant to whom it is made or Rs. 1,25,000 which-
ever is less. Not more than one advance shall be made.

239 (b) An advance up to ten months' pay or Rs. 25,000 whichever is less,
may also be given, where considered necessary, for the purchase of land on which to
construct the house if the other conditions laid down in rule 236 are satisfied. The
Government servant should sign an agreement in form M. P. F. C. 11 at the time of
taking an advance for the purchase of land and the amount should not exceed what
is required for the purpose. A mortgage deed in form M. P. F. C. 12 should be exe-
cuted before any further advance is drawn for the purpose of constructing the house.
The mortgage deed must be registered within four months of its execution. If a Gov-
ernment servant, after obtaining an advance for the purpose of land, does not ask
for additional amount for construction of a house thereon, he should be asked to
mortgage the piece of land purchased as a securety to the Governor within one
month from the date of execution of an agreement in form MPFC-11.
CHAPTER 13] LOANS AND ADVANCES 73

In order to save Government from loss, the applicant's title to the property
should be carefully examined by the sanctioning authority and the instructions laid
down in appendix-9 should be followed.

239. (c) The advance granted to the Government servant on a plot purchased
by taking advance from Government for construction of a house shall not exceed
his sixty months' pay (ninety months' pay in old scales) or rupess 1,25,000/- which-
ever is less after deducting the actual amount so granted to the Government
servant for purchase of the plot.
or for purchas
Note 1.—Every Government servant applying for advances for house building
of site should furnish a certificate with his application stating that no previous advance has been
drawn from Government for building a house or purchasing a site, and this certificate shall be
countersigned by the sanctioning authority in token of his acceptance of the statement and forwarded
to the Accountant-General alongwith the order sanctioning the advance.

Note 2.—In case the amount of loan originally sanctioned is ?enhanced or the mode of
repayment is changed consquent upon the age of superannuation being raised from '.55 to 58 year
the mortgage deed will be executed in Supplementary Mortgage Deed Form as contained in
Madhya Pradesh Financial Code, Volume II.

240. (a) (i).—The advance will be recovered •by deduction of monthly instal-
ments from the pay of the GoverMen.t servant as under :—
If the applicant is due to superannuate—
(a) After 20 years 33 1/3 % of the basic pay at the time
of application.
(b) After 10 years but not Up to 50% of the basic pay.
more than 20 years.
(c) within 10 years Up to 60 % of the basic pay.

The repayment shall commence from the month following the completion of
the house or 12 months from the date on which the first instalment of the advance
was paid to the Government servant, whicihever is earlier. The advance together
with interest thereon be repaid in full by equal monthly instalments within a period
not exceeding 25 years. The principal amount of advance shall firstly be recovered
in not more than 216 monthly instalments and then interest in not more than 84
monthly instalments.
(ii) The Government in administrative department may permit a Government
servant, who is due to retire within 20 years of the date of application for the grant
of an advance and who is eligible for the grant of gratuity or death- cum-
retirement gratuity, to repay the advance with interest in convenient monthly
instalments during the remaining period of service provided he agrees to the
incorporation of suitable clause in the prescribed Agreement and Mortgage Deed
Forms to the effect that the Government shall be entitled to revcover the balance
of the said advances with interest remaining unpaid at the time of his retire-
ment or death preceding retirement from the gratuity that may be sanctioned to
him. The amount of instalment shall not be less than the amount of monthly
instalments on the basis of repayment within a period of 20 years.
74 LOANS AND ADVANCES [CHAPTER 13

(b) An advance taken for the purchase of a site will be recovered in monthly
instalments equal to "One seventy second" part of the total advance from the
pay bills of the Government servants concerned.

(c) The authority sanctioning an advance may, however, permit recovery

to be made in a smaller number of instalments if the Government servant
receiving the advance so desires.
(d) The amount of interest calculated in accordance with rule 233 will
be recovered in one or more instalments, each such instalment not being appreciably
greater than the instalments by which the principal was recovered. The recovery
of the interest will commence from the month following that in which the whole
of the principal has been repaid.
Note 1.—The amount of the advance to be recovered monthly should be fixed in whole rupees
When the amount of an advance is not exactly divisible in equal monthly instalments the fraction
should be adjusted in the first instalment, for example, "a house building advance" of Rs. 20, 000
to be repaid in 180 instalments should be recovered as follows:—

"First instalment of Rs. 131 and the remaining 179 in stalments of Rs. 111 each."
Note 2.—The whole of the principal of an advance and interest which remain unpaid at the
time a Government servant leaves the service, whether voluntarily of involuntarily, become due at
once, and should as far as possible be recovered in one instalment from the Government servant's
pay, allowances or other dues. The balance must be paid by the Government servant in cash
at once and if this is impracticalbe, a consent should be obtained from him before retirement for
recovery being effected by deduction from pension at the usual rate.

Note 3.—If a Government servant dies while in service, the balance of the amount of advance
will be recovered in the same monthly instalments, from members of his family in which it
was being paid by the Government servant prior to his death. In the case of a gazetted officer
it will be the responsibility of the Head of Department to obtain information of balance of advance
and interest thereon from the Accountant-General. Madhya Pradesh and arrange for recovery
of monthly instalments from the family of the deceased Government servant. The amount of
instalments should be arranged to be credited directly in the treasury by challan to be prepared in
triplicate every month and information of such recovery should be furnished quarterly to the
administrative department which sanctioned the advance. Till information of balance of
advance is received from Accountant-General , Madhya Pradesh, the Head of Department will
arrange for recovery on the basis of information available in his office. In the case of non-gazetted
Governmnet servants this action shall be taken by the Head of office who will furnish the
information quarterly to the administrative department concerned through his Head of Department.
If the instalment of advance is not paid by any family continuously for 6 months then the
balance of advance together with interest thereon shall become payable 'kin one lumpsum and
administrative department should arrange immediately for its recovery.

241. In order to secure Government from loss consequent on a

Government servant dying or quitting the service before complete repaymnt
of the advance with interest accrued thereon in accordance with rule 233 the
house so built, together with the land it stands, upon, must be mortgaged to
Government, by whom the mortgage will be released on liquidation of the full
amount of the advance and the interest accrued thereon.
Note.—The mortgage bond will be prepared in Form M. P. F. C. 13 and the reconveyance '
in Form M. P. F. C. 14. The mortgage deeds executed in connection with these advances should
remain in the custody of the sanctioning authority.

Mortagage deeds executed for securing repayments of house-building advances made to

Government servants are exempted from stamp duty.

242. The GOvernment servant must satisfy the sanctioning authority regard-
ing his title to the land upon which the house is or is proposed to be built.
CHAPTER 13] LOANS AND ADVANCES 75

Note 1.—This rule does not preclude the grant of an advance to a person who does not
possess full proprietary rights in the land upon which he intends to build provided the sanctioning
authority is satisfied that the applicant has a lease of which the unexpired portion is of a term and
value sufficent to justify the grant of the advance and that there is no danger of the lease lapsing or
of Government being unable to dispose of it should it become necessary to foreclose the mortgage.
In examining the mortgagor's title care should be taken to see that the lease does not prevent any
subdemise by the lessee (the mortgagor). The mortgage bond in such cases will be prepared
in form M.P. F. C. 15..
Note 2.—In cases in which ground rent, municipal taxes and similar dues are payable to local
authorities on account of land taken on lease, the sanctioning authority may, at its discretion,
ask the Government servant taking the advance to produce for inspection receipts for these payments,
within fifteen days of their falling due. if the sanctioning authority finds that such dues have
not been paid by the borrower, steps may be taken to recover the said dues including interest
thereon, if any, from the pay of the Government servant concerned for payment to the parties
concerned.

Note 3.—The applicant's title to property should be examined by the Law Department of
Government before the advance is actually paid. It should be seen that , in the case of a house-
building advance, he had undisputed title to the land on which it is proposed to build and that,
in, the case of an advance for the purchase of a house, he will obtain such title as soon as the pur-
chase price is paid; that there will be no legal obstacle in either case to the property being mortaged to
Government and that Government will have the right of foreclosing on the conditions mentioned
in the mortgage bond.

Note 4.—The head of the office should send to the Accountant-Genera. - cerZitzatc either
in the bill in which the advance is drawn, or separately, to ale _fect that the mortgage
bond in Form M. P. F. C. 13 has been executed by the Govemmeit servant and that it has been
duly registered.

243. A Government servant quitting or removed from the station where he has
built a house, before the whole amount, due has been liquidated will continue liable
to the deductions of his monthly instalment until the adaance with interest accrued
thereon in accordance with rule 233 has been repaid; but, with the special sanction
of the State Government, he may be allowed to dispose of the house, provided he
is thereby enabled to clear off at once the whole amount due; or to transfer it to
any Government servant of his own or higher rank, the future deductions being
made from the pay of such Government servant
244. In circumstances other tn.i muse mentioned in rule 240, a .iovernment
servant may not, without the previous sanction of Government, transfer a house
for which he holds an advance from Government. If he makes such a transfer,
Government may order the recovery of the whole outstanding advance with interest.

245. Applications for advances should be made, through the applicant's

departmental superior, who will record his opinion as to the necessity for the assis-
tance solicited. The applicant must certify that the sum is to be expended in
building only,. and pledge himself that, should there be any surplus funds after the
house is completed, they will be at once refunded to Government.
Note 1.—Applications for an advance for building purposes should in all cases be accomp-
anied by a report from the departmental superior of the applicant which should state clearly
besides his opinion as to the necessity for the assistance solicited:—
(1) Whether any previous advance has been made to the applicant, and if so, when,
and whether such advance has been fully liquidated or not;
(2) whether the applicant holds a permanent post under Government or is merely on
probation ; and
(3) Whether the advance, if sanctioned , should be made in one or more instalments.
Note 2.--The departmental officer should certify that either no houses are atailtUe !really ,
or that house rent is exceptionally high.
 76 LOANS AND ADVANCES [CHAPTER 13

246. The last-pay certificate granted to a Government servant in receipt

of an advance must specify the original amount of such advance, the amount
repaid and the balance together with interest accrued thereon in accordanc
with rule 233 remaining due.

247. House-building advances are admissible to more than one Government

servant of a joint Hindu family for building one and the same house, but each of
those Government servants should execute a mortgage bond separately, mort-
gaging his own interest in the house and in the land it stands upon. Each bond
should, mreover, be attested by the remaining lessees and the attestation clause
should show that the attesting person has due knowledge of the contents of the
document.

Advance for the purchase of a house

248. An advance may be made to a Government servant for the purchase

of a house including the cost of effecting repairs and improvements to it; the
general principles of the preceding rules being applicable, and the officer being
required, in addition to a mortgage-deed, to deposit with Government satisfactory
evidence of a clear title to the house :

Provided that advance may be sanctioned to a Government servant for purchas-

ing a house from a Development Authority, Town Improvement Bord, Housing
Board or any other local authority on hire purchase basis, subject to the condition
that the authority or board concerned agrees that the State Government shall have
rights of first mortgage on the house.

The form of certificate prescribed vide M. P. F. D. memo No. D-227-CR

284-76-R-1V, dated 12-2-76. replaced by following certificate :—

FORM OF CERTIFICATE

Housing Board.

Certified that Shri --has been regi-

stered in Housing Board for allotment of — ..type
house under Higher-purchase scheme or land required under the land Acquisition
Act or allotted by Government of for 000000 • . . • ...Housing
Board.

It is further certified that the land on which the house is prop osed to be built
at together with the house so built are free from all encum-
beranoes. The house is being purchesod under Hire purchase scheme and agreed
that the Board shall have no objection in mortgaging the said property to the
Government of Madhya Pradesh and the Government shall have rights of first
mortgagee in the property.
 'LOANS AND ADVANCES 77
CHAPTER 13]

The details of the house proposed for sale are as below :—

1. Area of plot.
2. Cost of Land.
3. Probable cost of construction.
4. Total probable amount to be paid by the purchaser.
5. Plinth Area.
6. Location.

If it is any other scheme indicate the name of the scheme.

•-• • •-•
• • *AA • • • • .• • . 0000000000

Signature and seal of the Competent

authority of the Housing Board.

Note.—If house is purchased not from the Housing Board, but from a Develop-
ment Authority, Town Improvement Board or any other local authority, the name
of that organisation should be substituted in place of the Housing Board.
advance may be drawn in full at once, but satisfactory evidence must be
Note 1.—The
produced before the Accountant-General to show that the amount advanced for the purchase bas
been spent within three months of its drawal and the amount advanced for repairs or improvements
within a further period of two months. A certificate to this efect from the head of the office in
the case of non- gazetted Government servant and the controlling officer in the case of gazetted
Government servant will or dinarily suffice. The repayment in this case shall commence with thet
first issue of pay after the advance is taken.

Note 2.—The head of the office should record on the bill a certificate to the effect that
he has secured and retained with him an agreement in Form M. P. F. C. 11 signed by the applicant
pending executipn of the final mortgage bond in Form M. P. F.C. 13 after the house is actually
purchased. Thi facts of execution and registration of the latter bond should also be intimated to
the Accountant-General as soon as possible.

Advance for liquidating a private loan taken for purchase of land for building
a house or purchase of a house.

249. An advance may also be given for the purpose of repaying a private
loan taken by a Government servant expressly (i) for the purchase of land for
building a house or (ii) for the purchase of a house, provided—

(1) that the usual conditions specified in rules 236. to 248 are satisfied;

(2) that the applicant has through his private loan acquired an unencum-
bered title to the land or the house purchased; and
 78 LOANS AND ADVANCES CHAPTER 13]

(3) that the original loan for the purchase of the land or the house, as the
case may be, was taken not more than 12 months before the date
of receipt of the application for an advance to discharge the private
debt.

Advance for repairs to houses

250. An advance may be made under the following rules to a Government
servant to enable him to effect repairs to his house:--
(1) An advance may be made only if (i) the repairs are required to make
the house habitable, (ii) they are not in the nature of ordinary repairs,
and (iii) they involve an outlay large in comparison with the value
of the house.
(2) Not more than one advance is admissible in respect of the same house.

(3) No advance shall exceed fifteen months pay of the Government

servant to whom it is made, and it will be drawn as laid down in
rule 238.

(4) An advance may be made to a Government servant to repair a house-

who has not taken advance for purchase/construction of house in the
past.

(5) Subject to the above, the general principles of rules 236 to 248 shall
apply, the maximum period for repayment of such advances
being five years.

(6) An advance may also be made to a Government servant for the pur-
poses of additions and alterations to his house who has not availed of
facilities of advance for purchase of land or house or Constuction of "
a house from the Government, subject to entitlement. The maximum
amount ofadvance amount, subject to entitlement. shall be rupees
50,000 (Fifty thousand).
Note.—The detailed procedure to be foilwed in dealing with applications for advances for
the construction, purchase or repair of houses is given in Appendix 9.

Sub-section (2).—Advances for the Purchases of Motor ears.

251. An advance may be granted to a Government servant whether perma-

. nent or temporary and who has completed three. years of service for the purchase
Of a motor car if considered that it is in the interest of the public service and that
•the Government servant should use a car in the discharge of his duties.

Note 1—No advance will be granted to a low paid Government servant dra-
wing pay of less than Rs. 1,750 per rnensum (inclusive of dearness allowance) for
whom the keeping of a car is considered to be an extravagance. This restriction
will not apply to officers who are required in the interest of public service to main-
tain a motor car for the maintenance of which a conveyance allowana) is granted
to them under the wesckibed rules. Also no advance-
will be granted to one who.
 CHAPTER 13] LOANS AND ADVANCES-
79

requires the car as a means of locomotion and not for performance of specific
Government duties.

Note 2.—The grant of an advance for the purchase of a second hand motor car is also pertnissible,.

Note 3.—Before recommending the grant of an advance for the purchase of a motor car there
should be an assurance on record that the conveyance has not been purchased already and paid
for in full. The Government servant to whom an advance is sanctioned, or, in the case of a non-
gazetted Government servant the head of the office concerned, should certify on the bill on which
the advance is drawn either that the advance is not being drawn for a conveyance which has
already been purchased and paid for or that the advance claimed in the bill is not more than the
minimum amount required to meet the balance of the price of the conveyance; if the convcyance
has been paid in only in part. A Government servant who purchases a motor car after he applied
for an advance and arranges to pay for it by raising a temporary loan, may also be permitted to
draw the advance subject to other conditions being satisfied provided the conveyance has been
purchased within three months of applying for an advance.

(Finance Department Memoranda. Nos. 2823-2042-R-VI-IV- and 8756-1632-R-VI, III

dated the 6th April 1950 and 12th August 1955, respectively).

252. The total amount to be advanced to a Government servant shall not

exceed Rs. 32,000 or twenty months' pay, or the anticipated price of the Car,
whichever is less. If the actual price paid is less than the advance taken, the
balnace should forthwith be refunded to Government.

253. The grant of an advance to a Government servant who proceeds on

deputation or leave out of India and desires to purchase a car abroad, either for
use during deputation or for bringing it over to India, is not permissible.,
254. A Government servant who is or is about to proceed on leave for whom
an advance has been approved will not be allowed to draw the advance earlier
than a week before the expiry of the leave.

255. A fresh advance shall not be sanctioned until after the lapse of five
years from the date on which the last advance was drawn.

256: Recovery of the advance shall be effected from the pay bill of the Govern-
ment Servant concerned by deducting in one hundred twenty monthly instalments.
It will commence from the first issue of pay after the advance is drawn. A Govern-
ment servant may, however, if he so desires, be permitted to repay the advance in
a smaller number of instalments, or, he may pay more than one instalment at a time.
The amount of interest calculated in accordance with rule 233 will be recovered in
one or more instalments, each such instalment being not appreciably greater than
the instalments by which the principal was recovered. The recovery of interst
will commence from the month following that in which the repayment of the prin-
cipal has been completed.

Note I.—The
amount of the advance to be recovered monthly should be fixed in whole
rupees in the manner indicated in note I
and 3 of that rule will also apply. below rule 240 (d). The provisions of Note 2

Note 2.—If it is not possible to recover the whole amount of advance and the interest thereon
before retirement of a Government servant, the balance and the interest be recovered from the
amount of his Death-cum-retirement Gratuity provided the Government servant gives his consent
in writing at the time of application for the advance.
80 LOANS AND ADVANCES [CHAPTER 13

257. Except when a Government servant proceeds on leave not being leave
on average pay not exceeding four months (or privilege leave, earned leave not
exceeding 120 days or any other leave which is treated as equivalent to leave on
average pay not exceeding four months) or retires from service, or is transferred
to an appointment the duties of which do not render the possession of a motor
car necessary, the previous sanction of the State Government is necessary to the
sale by him of a car purchased with the aid of an advance with which interest
accrued has not been fully repaid. If a GOvern.ment servant wishes to transfer such
a car to another Government servant who performs the duties, of a kind that
renders the possession of a motor car necessary, the State Government may
permit the transfer of the liability attaching to the car to the latter Government
servant provided that he records a declaration that he is aware that the car
transferred to him remains subject to the mortgage bond and that he is bound by
its terms and provisions.
258. In all cases in which a car is sold before the advance received for its,
purchase from Government with interest accrued thereon has been fully repaid-
the sale-proceeds must be applied, so far as may be necessary, towards the repay-
ment of such outstanding balance. Provided that when the car is sold only
order that another car may be purchased the State Government may permit a
Government servant to apply the sale proceeds towards such purchases, subject
to the following conditions :—
(a) the amount outstanding shall not be permitted to exceed the cost of
the new car;
(b) the amount outstanding shall continue to be repaid at the rate previ-
ously fixed;
(c) the new car must be insured and mortgaged to Government as required
by these rules.
259. A Government servant who draws an advance for the purchase of a
motor car is expected to complete his negotiations for the purchase of, and pay
finally for the car ,within one month of the date on which he draws the advance;
failing such completion and payment, the full amount of the advance drawn,
with interest thereon for one month, must be refunded to Government: This
condition should always be mentioned in letters sanctioning such advances.
260. At the time of drawing the advance, the Government servant should
be required to execute an agreement in Form M. P. F. C. 16 and, on completing
the purchase, he should further be required to execute a mortgage bond in Form
M. P. F. C. 17 hypothecating the car to the Governor as security for the advance.
The cost price of the car should be entered in the schedule of specifications attached
to the mortgage bond.
Note.—Mortgage deeds executed by Government servants for securing the repayment
of advances received from Government for the purpose of purchasing a motor car or a motor cycle
or heir own use are exempted from stamp duty chargeable under the Indian Stamp Act.

261. When an advance is drawn, the sanctioning authority should furnish

to the Accountant-General a certificate that the agreement in Form M. P. F. C.
16 has been signed by the Government servant drawing the advance and that
it has been examined and found to be in order. The sanctioning. authority should
see that the conveyance is purchased within one month form the date on which
the advance is drawn and should submit every mortgage bond promptly to the
Accountant-General for examination before final record.
 LOANS AND ADVANCES 81
CHAPTER 13]

The agreement as well as the mortgage bonds should be kept in the sfae
custody of the sanctioning authority. If after comple to recovery of the advance
together with interest, the mortgagor asks for the return of the mortgage bond
it should not be returned to him but retained in the custody of the sanctioning
authority and only a certificate in the following form may be issued;—
Certificate
"Certified that the advance of Rs.
drawn by Shri •
f or the purchase of motor car/cycle has been fully repaid by him together with an
interest thereon and the mortgage bond executed by him has been discharged."
262. (1) The car must be insured against full loss by fire; theft or accident.
Insurance on owner- driven or other similar qualified terms is not sufficent for
the purpose of this rule. Insurance policies at a .reduced rate of pi emium may,
however, be accepted as adequate in the case of motor cars where
(i) the owner of the car undertakes to meet the first Rs. 50 or so of a claim
preferred against an insurance company in the event of an accident, or
(ii) the car is not insured against accident for any season of the year during
which. it is not in use but is stored in a garage:

(2) Such insurance should be effected within one month from the date o
purchase of the car. The insurance cover Note(and not the insurance policy)shouldf
be sent to the Audit Office for reference and return.
(3) On receipt of the certificate prescribed in rule 261, the Accountant
General will obtain from the Government servant drawing the advance, a letter
in Form M. P. F. C. 18 to the 'Motor Insurance Company with which the
moter car is insured to notify to them the fact that Government is interested in
the insurance policy secured. He will himself forward the letter to the Company
and obtain their acknowledgment. In the case of insurances effected on annnal
basis, this process should be repeated every year untill the advance has been fully
repaid to Government.
(4) Contravention of these orders will render the Government servant
liable to refund the whole of the amount advanced with interest accrued unless,
good reason is shown to the contrary. The amount for which the car is insured
during any period should not be less than the outstanding balance of the advance
with interest accrued at the "beginning of that period and the insurance should
he renewed from time to time until the amount due is completely repaid. If at
any time and for any reason, the amount insured under a current policy is less than
the outstanding balance of the advance, including interest already accrued, the
Government servant should refund the difference to Government. The
amount to be refunded must be recovered in not more than three monthly
instalments.
263. Advances to Government servants in foreign employ should be granted
from the funds of the foreign employer, and when the latter desires to make such
an advance, he, should apply to Government for the necessary sanction. If, the
sanction is accorded, it will be subject to the proviso that the advance by the
foreign employer shall be regulated by the same conditions as would apply if the
Government servant were serving directly under Government. In special cases,
however, where a Government servant's services have been lent to a Municipality
whose financial position will not permit of the advance, the advance may, under
pecial orders of Government, be met from Government funds, provided that the
 82 LOANS AND ADVANCES CHAPTER 13

Government servant's duties are such as to render the possession of a motor car
practically a necessity.
Sub-section (3)—Advances for the Purchase of Motor Cycles.

Rule 264. An advance may be granted to a Government servant for the pur-
chase of a motor cycle subject mutatis mutandis to the conditions laid down in rules
251 to 263, provided that—
(1) the pay of the Government servant is not less than rupees 750. This
minimum limit of pay does not apply to Govenment servants who are
required in the interest of the public service. to maintain a motor
cycle and are granted a conveyance allowance for this purpose under
the prescribed rules.
(2) the amount of the advance does not exceed Rs. 8,000 or ten months
pay of the Government servant or the anticipated price of the motor
cycle, whichever is less.
(3) the recovery is made by deducting monthly instalments equal to
1/80th part of advance from the pay bill of the Government servant
concerned.

Sub-section (4)—Advances for the Purchase of Bicycles

265. Heads of the Departments and Collectors are authorised to sanction
advance for purchase of new bicycles to Government servants under their control
subject to the following conditions:—
(1) An advance may be granted to permanent Government servants
drawing pay not more than Rs. 1300 p.m. (exclusive of dearness
allowance) when the Head of the depattment or the collector, as the
case may be, is satisfied that the possession of a bicycle will add to the
efficiency of the Government servant concerned.
(2) The total amount of the advance will be limited to Rs. 500 or four/Six
months' pay of the class IL/III/IV Government servant, respectively,
or the anticipated price of the bicycle, whichever is less. If the
ectual price of the bicycle is less than the advance taken, the balance
should forthwith be refunded to Government.
(3) Within one month after drawing the advance, the Government servan t
should furnish the sanctioning authority with a certificate giving
full particulars of the bicycle and the cash receipt obtained for the
amount actually paid for it, failing which the full amount drawn
together with interest thereon for one month shall be refunded
forthwith.
(4) Recovery of the advance shall be effected in twenty-four monthly
instalments commencing from the first issue of pay after the
advance is drawn.
Note 1.—The amount of the advance to be recovered monthly should be fixed in whole
rupees in the manner indicated in Note 1 below rule 240 (d).
 CHAPTER 18] LOANS AND ADVANCES 83

Note 2.—If a Government servant dies while in service the balance of the amount of advance
together with interest will be recovered in the same monthly instalments, from
members of his family, in which it was being paid by the Government servant prior
to his death. If the instalment of advance is not paid by any family continuously
for six months then the balance of advance together with interest thereon shall become
payable in one lumpsum and the Head of Office should arrange immediately for
its recovery.

(5) A second or a subsequent advance should not be granted until

aft& the lapse of three years from the date on which the last
advance was drawn.

Note.—In order to enable the Accountant-General to watch in audit that this requirement
is complied with, the sanctioning authority should furnish a certificate to the
effect that no advance for the purchase of a bicycle was granted to the Government
servant concerned during last three years either in the sanction itself or on the bill
while drawing the advance.

(6) The advance will bear interest at the rate prescribed by Government
from time to time.

(7) The bicycle purchased with the advance will be considered to be the
property of Government until! the advance with the interest accrued
thereon in accordance with Rule 233 is fully repaid.

(8) In making an application for an advance the Government servant

wilt state what means of conveyance he possesses. In sanctioning
the advance the sanctioning authority should satisfy himself that the
applicant does not already possess a serviceable bicycle.

The sanctioning authority should scrutinise all applications properly and

consolidate their requirements of funds for cycle advances for a month and then
send to the Finance Department a monthly list of cases for earmarking funds in
Form M. P. F. C. 19. A certificate to the effect that for all bicycle advances
sanctioned one month ago proper cash receipt have been obtained examined and
found in order should also be recorded at the foot of this statement.

266. Advances for the purchase of bicycles may also be granted to temporary
Government servants inclusive of Class IV service subject to the conditions laid
down in rule 265 and further subject to the following additional conditions:—
•
(1) The temporary Government servant must have put in at least three
year's continuous service.
(2) The sanctioning authority must, satisfy itself that the temporary
Government servant is likely to continue in service till such time,
as the advance is completely recovered with interest.
(3) In the event of the temporary Government servant being discharged
before the advance is fully recovered the balance of the advance
together with interest must be recovered in one lump sum before
discharge.
(4) Before the advance is drawn , the surety of a permanent Government
servant must be produced who should execute a surety bond in
Form M. P. F. C. 20 and it should be deposited with the sanctioning
authority.

•
 [CHAPTER 13
LOANS AND ADVANCES

Sub-section (5)—Advances for the purchase of other conveyances.

267. An advance ma, be granted to a Permanent Government servant
for the purchase of a means of conveyance, other than a motor car or a motor
cycle or a bicycle, subject to the following conditions:—
(1) An advance will be allowed only when the post held e nt ails duties
involving touring.
(2) The total amount to be advanced 'should not exceed two month-
pay or Rs. 250 whichever is greater and should be li mited to the
anticipated price of the conveyance. If the actual p rice paid is
less than the advance taken the balance should forth with be re-
funded to Government.
(3) Other conditions laid down in rule 265 will also apply.

Sub-section (6)— Advances for the. purchase of grains.

267-A. Advances may be granted to Class III and Class IV Government
servants as also to gazetted officers in receipt of basic pay not exceeding Rs. 1100,
per month (exclusive if special pay, personal pay) from the Consolidated Fund of
the State for the purchase of foodgrains. Advances shall be granted on the following
terms and conditions:—

(i) The amount of advanee in each case shall be Rs. 250._ The advance
shall be granted.on the security in Form No. M. P. F. C. 20 of a
permanent Government servant in the cases of temporary and
quasi-permanent Governinent servants. Heads of the Offices
may grant the advances out of the allotment placed with them for
the purpose. In case of Gazetted Officers who are themselves.
Heads of Offices and are also eligible for grant of advances, the
advances may be granted by the Heads of the Departments. An ad-
vance may be granted once in a year and may not be
granted untill entire balance of previous advance alongwith in-
terest due, had been repaid.
(ii) The advance shall be recovered in ten equal monthly instalments.
The recovery of the instalments shall commence from the pay
of the month following that in which the advance was received. The
amounts of instalments to be recovered monthly should be fixed in
whole rupees. The recovery of the interest shall be made in one
instalment in the month following that in which principal was
recovered.
(iii ) The advance may be drawn from the following head of account:—

"Demand for Grant No. 6—Expenditure pertaining to Fina rice Depart-

ment-Major Head-766-Loans to Government servant, etc.-e-Other
advances-Grain Advances".
(iv) Each Head of the Department will send his demand• to the Finance
Department for allotment of funds required for his Department.
All such demands foi- the ensuing year should reach in the Finance
Department by 15th of March in each year. Finance Department
would allot necessary funds from the relevant budget head for the
purpose of grain advance to each Department. Heads of the
 CHAPTER 13] LOANS AND ADVANCES 85

Departments will allot funds out of this allotment to the Heads of

offices under their control to enable them to sanction and make
payment of advances to the Government servants according to their
demands. The allotment will lapse with the close of the financial
year and the sanctions would also be deemed to have been lapsed
with it. In the new sanctioning grain advances, each . Head of
the Office/Head of the Department must certify that complete
recovery of the previous advancewith interest accrued thereon, has been
made from the Government servant to whom grain advances are
being sanctioned now.
(v) The amount of advance shall lx.s disbursed by the Head of the Office
after drawing the same on the Form No. M . P. T. C. 76. In case
of Gazetted Officers to whom such advances will be sanctioned,
the amount may be drawn from the treasury on this form in enclo-
sing therewith a copy of such sanction.
(vi) After grain advances are sanctioned, it will be the respon sibility
of the Heads of the Offi ces to keep a special watch on the regular
recovery of the advances and to effect reeovery of the amounts of
interest in time after computation of the same in accorance with
the rules. It will also be their responsibility to ensure that
drawals from this head are not exceeded than the amount of allotment
made to them and that a detailed account of advances and recoveries
in respect of each Government servant is maintained in a subsidiary
register in Form M. P. F. C. 31.
(vii) The application be made by Government Servent in Form
No. M. P. F. C. 32.
In order to enable the Finance Department to exercise proper
control on this head of account, the Accountant General, Madhya
Pradesh will communicate the figures of expenditure and recoveries
to the Finance Department in the second week of each quarter of
July, October and January respectively".
SECTION-V-INTEREST-FREE-AD VANCES
Sub-section (1)—Advances on Transfer
1268. Advances may be made to a Government servant including o ne
officiating in a higher post under orders of transfer (including transfer for the
purpose of deputation for tranining) to the extent of pay that he is in receipt of
immediately before transfer or the pay that he will be entitled to after transfer ,
whichever is less, plus the travelling allowance to which he may be entitled under
the rules in consequence of the transfer. Such advances may be sanctioned by
the Principal District Officer in the department concerned or by any other
subordinate officer to whom the power may be delegated.
The advances should be recorded on the Government servant's last pay
certificate. The advance of pay should be recovered from the pay of the Govern-
ment servant in not more than three monthly, instalments, the recovery commencing
from the month in which the Government servant concerned draws a full months
pay or / and leave salary on joining his new post. The advance of travelling
allowance should be recovered in full on submission of the Government sarvant's
travelling allowance bill.
86 LOANS AND ADVANCES [CHAPTER 13

Note 1.—No advance of pay is admissible in case of mutual transfers.

Note 2.—Authorities competent to sanction advances under this rule may sanction such
advances for themselves also.

Note 3.—An advance under this rule is also admiissible to a government servant who
receives orders of transfer during leave.

Note 4.—This rule does not preclude the grant of a second advance to a Government servant to
cover the travelling expenses of any member of his family who follows him within six months from
the date of his transfer and in repect of whom an advance of travelling allowance has not already
been drawn.

Note 5.—When a single lump sum advance is drawn to cover the travelling expenses
both of the Government servant himself and of his family, it may be adjusted by the submissionof
more than one bill if it so happens that the members of the Government servant's family do not
actually make or complete the journey with him. In such a case the Government servant should
certify on each adjustment bill submitted by him that a further bill in respect of travilling allowance
of the members of his family (to be specified) who have not yet completed the journey will be
submitted in due course and is expected to include an amount not less than the balance of the
advance left unadjusted in this bill. in case a Government servant has in drawn an advance in
excess of the probable amount of travelling allowance claim (i. for family and personal effects
when these are not being moved along with him to the new station), the difference should be
recovered from him immediately from his pay bill as laid down in S. R. 205 of Madhya Pradesh,
Treasury Code. Volume I, instead of the recovery being postponed for adjustment from subsequent
travelling allowance claims. Drawing Officers and Controlling Officers should particularly bear
in mind that they should neither draw nor sanction advances in excess of the probable transfer
travelling allowance claims and should not also delay the submission cf such claims.

(F. D. Endt. No. 11424-1603-R-VI-III, dated, the 31st August, 1956).

Note 6.—The advance of pay under this rule may be allowed to be drawn at the new station
soon after the arrival of the Government servant there on production of the last pay certificates
showing that no advance was drawn at the old station.

Note 7.—The amount of the advance, to be recovered monthly should be fixed in whole rupees,
the balance being recovered in the last instalements.

Note 8.—In a case where an advance is sanctioned to a termporary Government servant

grant of the advance will be subject to the further condition that—

(a) the Government servant concerned furnishes suitable personal security from a permanent
Government servant in the Form M. P. F. C. 20 before the advance is sanctioned, and

(b) the sanctioning authority satisfies himself before granting an advance that the
Government servant concerned is not likely to be discharged or likely to leave service
suddenly, before the advance is fully recovered.

(Finance Deptt. Memo. No. 1271-R-2160-R-VI-III-55, dated the 13th February, 1956).

Note 9.—An advance of travelling allowance under this rule may be made by the competent
authority to a temporary Government servant without insisting on a surety from a permanent
Government servant provided it is restricted only to cover conveyance charges on account of the
Government servant concerned, his family and his baggage to the new station. The competent
authority to do so will be the sanctioning authority in respect of a gazetted Government servant
and Head of the Department concerned in respect of a non-gazetted or Class IV servant provided
In the latter case of the government servant concerned has completed one year's service and is not
likely, in the opinion of the Head of the Department to be discharged within three months of the
receipt of the advance. This does not preclude sanctioning of the advance of pay and travelling
allowance to a temporary Government servant on the same basis as for a permanent Government
servant provided surety from a permanent government servant is obtained.

Note 10.—Advances of pay and travelling allowance may be made from Government treasuries
under the above rule to the Aesistant Medical officers on their reversion form foreign service
CHAPTER 13] LOANS AND ADVANCES 87

Note 11.—(i) A Superintending Engineer or a Divisional Officer of the Public Works

Department (including an officer of the rank of Divisional officer not actually holding charge of
a division) may, grant advances under this clause to any officer under his jurisdiction including
himself.

(ii) Heads of Goverment educational institutions who are also drawing officers are authori-
sed to grant such advances for themselves and for other Government servants under their control.

Note 12.—An advance of pay equal to half a month's pay may be granted to non-gazetted
establishments of the Ministers, Deputy Ministers and the Miltary Secretary to the Government
Governor proceeding to or returnig from Pachmarhi, provided that no advance may be granted
to a person who has drawn pay fifteen days or less prior to the date of his departure. This advance
will be recovered in one instalment from the next pay bill.

Note 13.—Advances to Government servants on transfer to foreign service may be sanctioned

by the authorities that are competent to sanction the transfer. The reimbursement of the advance
to Government by the foreign employer should be made in a lump by sending a cheque or De-
mand Draft in favour of the Accounts Officer on whose books the advance is originally booked.

Note14.—In the case of Government servant and the members of his family completing the
journey on two different dates, T. A. claims in respect of the journeys performed by the Government
servant and/or is his family members should be considered as falling due for payment on the date
suceeding the date of completion of each individual journey. Similarly, the T. A. claims in respect
of the transportation of personal effects should be considered as falling due on the date succeeding
the date on which the personal effects are actually delivered to him.

268-A. The procedure to be followed for accountal of advances on account

of pay and travelling allowances granted to a Government servant on transfer
and adjustments thereof is indicated below :—

(i) Transfers from one service Department to another within the same
Government :—

(a) The advances on account of pay and (transfer) travelling allowances

paid to a Government servant on transfer will be borne by the
Department making the payments (which will be the Department
from which he is transferred) and debited by that Department to
the, final head of account under which its pay and travel expenses
are ordinarily classified.

(b) In the case of advance of pay the recovery will be effected by the
Department to which the Government servant is transferred, and
accounted for as minus-debit under the relevant expenditure head
for pay of that department, irrespective of the year in which the
recovery/adjustment is made.

(c) As regards travelling allowances, the amount actually payable to

the Government servant normally will be more than the advance
on this account drawn by him earlier. In such a case the net
amount only paid to him on account cf (transfer) travelling allow-
ance, will be debited to the relevant head for travel expenses of
the Department to which he is transferred. Where, however, the
advance of transfer travelling allowance drawn turns out to be
more than the amount actually due to him on this account, the
recovery of the excess amount when effected will be adjusted by
minus-debit to the expenditure head by the same Department, just
as for advance of pay.
88 LOANS AND ADVANCES [CHAPTER 13

(d) Thus, while the payment of the advances, will be adjustable by the
Department from which the Government servant is transferred,
all subsequent transactions connected with the recovery/adjustment
of these advances will be accounted for by the Department to which
he is transferred. The latter Department will also watch as well as
ensure timely adjustment/recovery of the advances.
(ii) Transfers to and from a Commercial Department (Railway or Posts
and Telegraphs)/Defence Department, or a departmental Com-
mercial undertaking and from one Government to another—
Such transfers can be either from the parent (lending) Government/
Department to another (borrowing) Government/Department or
transfers to parent (lending) Government/Department. In these
cases the transactions will be accounted for as follows :—
(a) In the case of transfer of a Government servant from his parent
(lending) Government/Department, the debits on account of ad-
vances of pay and transfer travelling allowances will be passed on
to the Government/Department to which he is transferred for
adjustment under the appropriate final head of account in its books
The recovery of advances of pay effected by the Department will be
adjusted as minus-debit under the same head under which the
advance of pay was classified, irrespective of the year in which the
recovery is made. As regards transfer travelling allowance, the
net amount paid, if any, after adjustment of the advance will be
debited to the head under which the advance was classified. Re-
covery, if any, effected out of the advance will be adjusted as minus
debit under the same- expenditure head, just as for pay.
(b) In the case of retransfer of the Government servant to his parent
Government/Department, the debit on account of advance of pay
paid to him will be passed on to the parent Government/Department
for adjustment in its books in the manner indicated in the preceding
paragraph (a). As regards transfer travelling allowance, the
borrowing Government/Department on making payment of the
advance will adjust the debit under the relevant final head of account
in its books. The further payment made or recovery, if any,
effected by the lending Government/Department, on receipt of the
final claims relating to the journey made on transfer will be remitted
by it for being debited or minus debited, as the case may be, in the
books of the borrowing Government/Department in the manner
indicated in the preceding paragraph (a) in regard to transfer
travelling allowance.

Sub-section (2).—Advance on proceeding on Deputation outside India

269. An advance may be granted to Government servants proceeding on

deputation outside India, subject to the following conditions :—

(1) The period of deputation is not less than one month.

(2) The amount of advance is limited to a month's pay of the officer and
is recovered in not more than three monthly instalments, and
CHAPTER 13] LOANS AND ADVANCES 89

(3) In the case of temporary Government servants, surety from a permanent

Government servant is obtained in Form M.P.F.C.20 before the
advance is sanctioned.
(Finance Department Memorandum No. 3260-R-2264-R-VI-III, dated the 12th March, 1966),

Sub-section (3).—Advances on Return from Leave or Deputation

out of India
270. An advance may be granted to a Government servant on return, from
leave or deputation elsewhere than in India, Ceylon, Nepal, Burma, Aden,
Pakistan and foreign possessions in India, of an amount not exceeding two months
substantive pay or Rs. 5,000 whichever is less, provided that the leave was not
leave on average pay not exceeding four months or any other leave equivalent
thereto (e.g., privilege leave, earned leave not exceeding 120 days or any other
leave which is treated as equivalent to leave on average pay not exceeding fout
months) and that no advance was drawn under rule 268.
Note.—The advance under this rule may be drawn on the authority of the Principal
District Officer from any treasury in Madhya Pradesh specified by him. Such advances are
recoverable in monthly instalments of one-third of pay fixed in whole rupees.

Sub-section (4).—Advances for Journeys on Tour

271. Advances for journeys on tour may be made under the rules specified
below
(1) To a Government servant, other than an inspecting officer, for himself
or an Assistant or Deputy, proceeding on tour, up to an amount
sufficient to cover for a month his contingent charges, such as those
for the hire of conveyances or animals for the carriage of records,
tents or other Government property, subject to adjustment upon the
Government servant's return to headquarters or 31st March, which-
ever is earlier.
Note .—Advances under this sub-clause may be granted by heads of offices, but they should
not be applied to the expenditure of any gazetted Government servant, except that
of a Government servant of the Forest Department, which is meant to be covered
by his travelling allowance.

(2) To non-gazetted Government servants proceeding on tour or to class IV

servants accompanying officers on tour, by the head of their office,
of an amount sufficient to cover their personal travelling expenses
for a month, subject to adjustment on return to headquarters or 31st
March, whichever is earlier.
(3) (a) To any gazetted Government servant on his countersignature if
he himself is the controlling officer or in other cases on the counter
signature of his controlling officer of an advance sufficient to cove-
his travelling expenses for journeys on duty outside his district, sub-
ject to adjustme'nt in the travelling allowance bill on return to head-
quarters or 31st March, whichever is earlier.
(b) To any gazetted Government servant, on' the countersignature of his
controlling officer, of an advance sufficient to cover his travelling
expenses for journeys on duty outside the State, subject to adjustment
in the travelling allowance bill on return to headquarters or 31st
March whichever is earlier.
90 1,041113 AND ADVANCES [CHAPTER 13

Note 1.—A second advance cannot be granted to a Government servant under this rule untill
an account has been given of the first.

A Government servant who has taken an advance under this rule for any particular journey
may not take payment on travelling allowance or other bills drawn in respect of the same
Journey while the advance or any portion of it still remained unadjusted.

Note 2.—Subject to the restrictions specified above, advances under this rule may be granted in
all cases of journeys in respect of which travelling allowance is admissible as for a journey on tour.

Note 3.—An advance of travelling allowance under this rule may be sanctioned to a temporary-
Government servant without insisting on a surety from a permanent Government
servant by the sanctioning authority in respect of a gazetted Government servants (for journeys
on duty outside the State) and by the Head of the Department concerned in respect of non
gazeted or Class IV servants. The advance should be restricted to cover travelling expense
for journeys on duty outside the State of the Government servant concerned and in regard to non
gazetted and Class IV servants the condition laid down vide Note-9 under rule 268 will also apply
This does not preclude sanctioning of an advance on the same basis as for a permanent Govern
ment servant provided surety from a permanent Government servant is obtained.

Note4.—Where after drawal of an advance under rule 271 of the Madhya Pradesh Financial
Code, Volume I, a Government servant has not submitted, the adjustment bill in due time
and consequently his right to T. A. claim stands forfeited under Note 1 of rule 90 of the Madhya
Pradesh Financial Code, Volume I. the advance so drawn shall be recovered from his pay bill
or any other dues in one instalment by the authority competent to sanction such an advance.

In the case of Gazetted Officers who draw pay and allowances on the authori-
ty of Accountant-General, Madhya Pradesh departmental authorities can not
effect such recoveries, unless the retrenchment slip is issued by the Accduntant-
General. The Accountant-General can not issue retrenchment slips even if the
wanting T. A. adjustment bills are not received by him within one year of the
date of the completion of journey because the Accountant- General will not be in
a position to know which T. A. bills are pending with the heads of offices or the
controlling officers for adjustment. In order to overcome this difficulty all controll-
ing officers or heads of offices should maintain a register indicating:—

(1) S. No.
(2) Name of the Officer to whom the T. A.
advance has been sanctioned.
(3) The quantum of advance.
(4) Number and date of orders sanctioning
the advance.
(5) The date on which the adjustment bill
has been submitted.
(6) The reasons for not submitting the bill
immediately on completion of journey
or by 31st March whichever is earlier.
(7) Whether the time limit has expired and
if so, whether audit has been request-
ed to issue retrenchment slips.
(8) Remarks, if any.

This 'register should be chOcked every month by the, Controlling Officer/

Head of Office -as the case may and in cases, where, their opinion
 CHAPTER 13] LOANS AND ADVANCES 9$
......11.110.O.1■•••■••

the provision of Note I under rule 90 of the M. P. Financial Code, Vol.I

becomes applicable i.e., T. A. advances remain pending adjustment for more than
,one year, the Accountant-General should be asked to issue the necessary
retrenchment slips to the Treasury Officer concerned.
272. The controlling officer, while sanctioning tour advance will keep in
mind that the advance requested is just sufficient to meet the travelling expenses
and this facility is not being abused by drawing advances in excess of actual
requirement.
273. Advances may be granted by the Deputy Commissioner to a Treasury
Officer, or District Superintendent of Police, for expenses connected with a
remittance of treasure, to be adjusted when the duty is completed.
Advances for remittance of treasure should be charged in the cash book and
list of payments and should not be entered in the register of advances. They
are drawn on abstract contingent bills and are adjusted by submission to the
Accountant-General of detailed bills. No countersignature is necessary. If
the total of the final bill be more than the advance, it should be presented, supported
by the requisite sub-vouchers, at the treasury for payment of the net amount due
after deducting the advance. If the total be less than the amount of the advance,
the excess should be refunded into the treasury at once, and the fact noted in
the bill, which should also be submitted to the Accountant-General with the
necessary sub-vouchers for audit. These charges are borne either by the State
Government or the Reserve Bank of India according as the remittance is of the
kind mentioned in Note 1 or Note 2 below S. R. 661 of the Madhya Pradesh
Treasury Code, Volume I.
Sub-section (5),—Other Advances
274. Advances are permissible for expenditure on law suits to which the
Government is a party. Such advances may be sanctioned by the Deputy Commis-
sioner or by the head of the department i it consulation with the Law Department
of Government.
275. The advances mentioned in rules 271, 272 and 274 are treated as final
charges, not as advances recoverable, and are to be drawn and accounted for a
travelling expenses or contingent charges of establishments.
276. * DEL E TED
Sub-section (6).—Tour Charges
277. The procedure detailed below should be followed by all Government
servants incurring tour expenditure in the drawing and accounting of tour
charges :—
(1) Expenditure on contingencies to be incurred by Government servants
while on tour. should ordinarily be met out of the permanent advance of the head
of the office. If the balance in the permanent advance is insufficient, at the time,
or if the permanent advance is not large enough to meet the demand the. amount
required may be drawn on an abstract bill from along with other contingent charges,
z. i. e., as an additional item in the bill for recoupment of the permanent ad-Vance
of -separately as may be found necessary.
(2) the amount required for tour charges is paid from the, head of the
offices permanent advance, it should subsequently be recouped by .drawing a con-
tingent from the treasury, in the usual manner.
*Vide '1Viemo'No. 579/RV/IV/84 dated 1-6-31'
 92 LOANS AND ADVANCES [CHAPTER 13

(3) At the end of each month, or if a Government servant returns to head-

quarters earlier, on his return to headquarters, the touring Government servant
should furnish to the office for incorporation in the monthly detailed contingent
bill a statement of expenditure incurred out of the advance with supporting
vouchers.
(4) Any balance remaining out of the amount drawn from the treasury
for expenditure on tour should either be refunded in cash in to the treasury and
the refund shown in the monthly detailed bill or short drawn in the next contin-
gent bill. If the touring Government servant does not return to headquarters by 3
the end of the month in which the tour charges are drawn, and the tour is con-
tinued over the following month, a supplementary detailed contingent bill should
be submitted in respect of the balance in hand either by the end of the next month
or on his return to headquarters, whichever is earlier.
(5) When the amount for tour charges is paid out of the permanent advance,
the balance, if any, left at the end of the tour should be returned
to office.
(6) In the case of tour charges drawn from the treasury by heads of depart-
ments or other Government servants, who are themselves controlling officers in
respect of their contingent expenditure, no monthly detailed contingent bill is
necessary. It is sufficient if the necessary vouchers and details are furnished to
the audit office as soon as possible after the amount is drawn. If any balance
left after expenditure is refunded in cash into the treasury, the fact should be intima-
ted to the Accountant-General in forwarding the vouchers and sub-vouchers to him.
(7) Advances for travelling expenses (which should not except as provided
in clause (vi) of Rule 102 be allowed to be met out of the permanent advance)
should be drawn on travelling allowance bill forms as hitherto, showing the amount
drawn for each individual separately.
(8) The charges drawn for contingent expenditure should be clearly des-
cribed in the bill as "tour charges" and the advance for travelling allowance as
an "advance for travelling allowance" and a certificate recorded that the pre-
vious advance drawn on (here enter date) has been accounted for as required by
Note 1 to rule 271 (3).
(9) The advance for travelling allowance should be adjusted by travelling
allowance bills duly countersigned by controlling officers, so as to enable the Accoun-
tant-General to see that the advance originally drawn for each individual was not
in excess of requirements and that it was not drawn from the treasury when
it was not required for immediate disbursement.
(10) The amounts drawn as tour charges for contingent expenditure on
tour or as advances of travelling allowance must be accounted for on return of
the Government servants to headquarters, or on the 31st the March, whichever
!S earlier.

Note 1.—For the purpose of the above rule, a Government servant should not be held to
have returned to headquarters if the interval between any two journeys during the same touring
season is less than a week.

Note 2.—Taur charges paid to Inspector of Excise on special duty in the Jabalpur district
for detection of charas smuggling may be adjusted once a year on the 31st March.
Nate 3.---This rule has beer relaxed in the case of Government servants of the Settlement
Department who have been permitted to adjust their tour charges on their return to headquarters
or the 30th June whichever is earlier.
CHAPTER 13] LOANS AND ADVANCES 93

(11) All contingent expenditure on tour charges will be entered in the

contingent register and that on account of travelling allowance in the travelling
allowance register.
Note 1 .—In cases in which the above procedure is likely to cause delay in payment, the
Deputy Commissioner may authorise bills, of tahsildars and naib-tabsildars for tour charges to
be paid at a sub-treasury without being first endorsed for payment by the district treasury officer.
The district treasury officer, should however, see that the bills in question are countersigned by the
Deputy Commissioner (or by one of his authorised gazetted assistants) before the bills are
incorporated in the district treasury accounts.

Note 2.—Sub-divisional officers in the Public Works Department are declared as drawing
and disbursing officers for the purpose of drawing from the treasury advances of travelling allowance
for their subordinate staff.

278. Advances connected with the tour expenses of the Governor are drawn
by the Military Secretary from any district treasury or sub-treasury. Trea-
sury officers have no concern with the adjustment of these advances; they should
be charged separately in the cash book and list of payments.
278-A. The bill for tour advance should be endorsed by the Military
Secretary to the Governor in favour of the Tahsildar concerned who should
draw the amount and should pay for everything as it is collected for Rasad. The
proper market prices being fixed and duly paid for all that is used what is not
used should be sold and proceeds credited against the advance alongwith the
money realised in payment for what is bought by the camp people. Precaution
should be taken to see that not more than what is reasonably necessary for Gover-
nor's Camp supplies is purchased so that there is no waste and occassions fot
writing off losses do not normally arise.
Sub-section (1).—Other Miscellaneous Items of Advances
Advances for the erection of plague huts

279. Rules governing the grant of these advances are given in

Appendix 6.
Advances to patients proceeding to Centres for anti-rabic treatment.

280. %METED
Sub-section (8).—Advances on account of travel concessions
during regular leave to the All India Service
Officers serving in the State
280-A. (1) An advance may be granted to the officer concerned to enable
him to avail himself of the travel concessions. The amount of such advance in
each case will be limited to four-fifths of the estimated amount which the officer
concerned would have to be reimbursed in respect of the cost of the journeys both
ways to the home town and back.
(2) Where an officer concerned and/or members of his family avail them-
selves of leave travel concessions separately i. e., at different times, the advance
should be drawn separately to the extent admissible.
(3) The advance may be drawn for both the forward and return journeys
of the officer concerned and/or the members of his family at the time of the comme-
encement of the forward journey, provided that the period of leave taken by the
officer concerned or the period of anticipated absence of the members of his family
does not exceed three months or 90 days.
94 1.00AW AND ADVANCES 101-1:413TE4.R 13

(4) Where the period of leave or period of anticipated absence exceeds three
months or 90 days, the advance can be drawn for the forward journey only.
(5) Where an advance has been drawn for both the forward and return
journeys and latter it became clear that the period of absence of officer or his family
from headquarters is likely to exceed three months or 90 days, one-half of the
advance should be refunded to the Government forthwith.
(6) Officers who are their own controlling officers for travelling allowance
purpose may sanction the advance for themselves. In the case of others, the san-
ction of the Controlling Officer concerned would be required.
(7) The account of the advance drawn for leave travel journeys will be
rendered after completion of the journeys in the same way as for an advance of
travelling allowance on tour.
(8) The advance will have to be refunded forthwith if the out-ward journey
is not commenced within 15 days of the grant of the advance.
(9) The travelling allowance claim in adjustment of the advance drawn
should be prepared within one month of the completion of the return journey.
 CHAPT-E;B, .14] lvdISMALANEOUS SUBJECTS 95

CHAPTER 14.—MISCELLANEOUS SUBJECTS

SECTION I.—SECURITY DEPOSITS

281. Rules regarding the security of treasurers in district treasuries and sub-
treasuries and the form of security bond to be executed by treasurers are given in
Subsidiary Rules 20 to 23 of the Madhya Pradesh Treasury Code, Volume I.
The following instructions apply generally to securities to be taken from other
officials entrusted with the custody of cash or stores.

282. Except where exemption may be made by special or general orders of

Government, every cashier, store-keeper and other subordinate who is entrusted
with the custody of cash, stores or other valuables should be required to furnish
security, the amount being regulated acording to circumstances and to local
conditions in each case under the orders of the head of the department, and to
execute a security bond setting forth the conditions under which Government
will hold the security and may ultimately refund or appropriate it.

283. (a) The security of a Government servant should ordinarily be furnished

in the form of cash payments, yvhicli should be credited to the Public Account of
the State. (See Treasury Rule 8 of the Madhya Pradesh Treasury Code,
Volume I).
(b) A Post Office SO* g Bank Pass gook for a &Posit made may also be
accepted as security, provided that the depositor has signed and delimered to the
Postmaster a letter in the prescribed form as required by the Post Office Saving
Bank Rules.

(c) The Security may also be accepted in form of the f011oiving---

(i) Post Office Cash Certificates;
(ii) National Sayings Certificates;
(iii) 10-year Treasury Savings Deposit Certificates;
(iv) 12-year Natiofial Plan Savings certificates;
(v) 10-year Defence Deposit Certificates; and
(vi) 12-year National Defence Certificates.

In such cases, the certificat es should be formally transferred to the depart-

mental authority hich takes the deposit with the sanction of the Head Postmaster
and should be accepted at thei r surrender value at the time of tender.

(d) Promissory notes and stock certificates of the Central Government or a

State Government may also be accepted as a form of security. This security,
should be accepted at 5 per cent. below the market price, or at the face-value
whichever is less, and should be de'ilt with in accordance with the rules in Chapter
IX of the Government Securities Manual.
Nilte.—Investments in the National Plan Loan in the form of Government Promissory Notes.
come within the purvie4 of this rule and can, therefore, be accepted as security.
 96 MISCELLANEOUS SUBJECTS [CHAPTER 14

283. (e) A fidelity Guarantee policy of the Life Insurance Corporation of

India may be accepted as security provided that

(1) the Employees take fidelity Insurance Poilcies at their own expense;
(ii) this form of security is not accepted from a private party.
(iii) when the Security is furnished in the form of fidelity Guarantee Policy
the authority who accepts Security under Rule 282, shall see that the
Government servant pays the premia necessary to keep the policy
alive on the due dates. If the Government servant fails to deliver
the premium receipt to the departmental authority in time, he should
be removed from his post atonce.

284. (a) When a Government servant who has furnished security takes
regular leave or is deputed to other duty, the Government servant who is appointed
to officiate for him for a period not exceeding four months may be permitted by
the head of the department or the Deputy Commissioner, as the case may be, to
furnish personal security instead of cash or other kinds of securities. The amount
of personal security should be fixed with due regard to the amount of cash likely
to be handled by the officiating incumbent.
(b) Government servants drawing pay of less than Rs. 380* per mensem may
be permitted, in cases where they are required to furnish security, to give personal
instead of cash security. [Pay means "pay" as defined in T. R. 9 (21) (a) and
excludes "dearness pay."]
(c) In cases where personal security is furnished, the solvency of the surety
should be verified before its acceptance by the head of the . department or the
Depaty C Dmmission.er, as the case may be. They should be responsible for verify-
ing the continued solvency of the sureties once a year.
(d) When a security bond is taken which binds a party or his surety for
payment of compensation to Government in the event of the party's failure to
fulfil the terms of the bond, it should be verified before the surety is accepted that
the person offering surety has sufficient property in India.
Note 1.—The form of the cash security bond is contained in Form M.P.F.C. 21.
Note 2.—The form of personal security bond , is contained in Form M. P. F. C. 23.
Note 3.—Rules regarding the security to be furnished by the Nazarat and Court officials.
e.g. nazirs, naib nazirs, bailiffs, sale amins, process-servers and process-writers are given in Part
VI-1 of Rules and Orde rs (d (Civil).
Note 4.—Judicial moharrirs of courts where there is no nazir or naib-nazir and who are
holding charge of small contingent advances and of fines, are exempted 'from furnishing
security.

285. Ordinarily a Government servant is required to furnish the whole of

the security at once on appointment but the head of the department may, at his
discretion permit the security to be furnished in instalments by monthly deduc-
tions at the rate of 10 per cent. of the Government servant's salary. The deduction
so made shall be credited to the Public Account of the State [see rule 283 (a)]
or in the Post Office Savings Bank Accounts to be opened for this purpose, which

vide F. D. memo No. 579/RV/IV Dt. 1-6-84.

CHAPTER 14] MISCELLANEOUS SUBJECTS 97

should be pledged to the departmental authority who takes the security (accor-
ding to the Post Office Savings Bank Rules). The pass book should be kept
in the Safe custody of the departmental authority as per rule 286 (a). Until
the full amount of the required security is thus made up, the Government servant
shall bind himself personally and furnish a solvent surety.
Note.1.—The form of temporary Security Bond with surety when the security money is
to be recovered in monthly instalments from pay is contained in Form M. P. F. C. 22.
Note 2.—The provisions of clauses (c) and (d) of the preceding rule apply to the security
bond prescribed in the rules.

286. (a) The personal security bonds, deposit receipts of the State Bank
and the Post Office Savings Bank Pass Book taken as security should be kept in
the safe custody of the departmental authority who takes the security.
(b) Post Office Cash Certificates, Government Promissory Notes and
National Savings Certificates deposited as security should be, lodged for Safe
custody with the district treasury.
Note 1.—All Part office Savings Bank,Pass Books should be sent to the post office as soon as
possible after the 15th June of each year, so that the necessary entries on account of interest may
be made on them.

NOTE-2.—In respect of the deposit receipt of the State Bank, the depositor
should received the interest, when due, direct from the Bank on a
letter from the pledgee authorising the Bank to pay it.

287. A security deposit taken from a Government servant should be re -

tained for at least six months from the date when he vacates his post, but a security
bond should be retained permanently or until it is certain that there is no further
necessity for keeping it.

288. Without the special orders of the head of the department, or

the Deputy Commissioner, as the case may be, no security deposit should be
repaid or retransferred to the depositor, or otherwise disposed of, except in accor-
dance with the terms of his security bond or agreement. A departmental autho-
rity on returning any security to the depositor should invariably obtain his
acknowledgment duly signed and witnessed. When an interest bearing security
is returned or retransferred, the acknowledgment should set forth full particulars
of the security.

289. When a private person or firm contracts with Government to supply

stores or execute a work, he or it should, unless exempted by special orders of
Government , be required to give security for the due fulfilment of the contract
and suitable provisons regarding the security should be incorporated in the agree-
ment..

290. (a) In all contracts entered into on the part of Government,

under which sums of money are payable by contractors, adequate security should,
wherever possible, be taken for sums being paid as soon as they fall due, and
where personal security is accepted, the continued solvency of the surety should
be verified at least once a year. Where the circumstances are such that surety
cannot conveniently be furnished, the contractor should be required to pay the
sums due on the contract quarterly in advance; and the instalment on account
of each quarter should be paid at le•ast a math before the beginning of that
98 MISCELLANEOUS SUBJECTS [CHAPTER 14

quarter for which the advance payment is required. In default, the contrac t
should at once be cancelled and new arrangements be made, so that, as far as
possible Government may be protected from loss.
(b) 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
specially provided for in the departmental rules. What has to be specially guarded
against is overlooking the demand outstanding on account of contracts till the
end of the year for which they are current, by which time heavy balance are
liable to accrue and it may become impossible to secure an adjustment.

Note L.—Debentures of the M. P. Housing Board should be accepted as earnest money

deposit by all Government Departments when it is required of a third party for the performance
of any contract.
Note.2 .—The units of Unit Trust of India' which have been made a "trustee security',
under section 20 of the Indian Trusts Act, 1882, may be accepted as a form of security which
contractors and others can furnish to Government departments for fulfilling the terms of their
contracts with the Government.

Nom.3.—Guarantees and fixed deposit receipts etc. tendered by banks

under the 'Bank Guarantee Schemes' adoptedby the State Government
vide Finance department circular memo Number 2171-545-IV-R-V,
dated 6-9-62 and other instructions issued from time to time in the
matter, may also be accepted as security which contractors and
others oan furnish in lieu of cash deposit or Government securities
as cover to Government departments for fulfilling the terms of theit
contracts with the Government. The interest accrued on these
deposit receipts etc. shall be received by the depositors direct from
the bank on aletter fiom the pledgee authorising the bank to pay it.

SECTION IL—TRANSFER OF GOVERNMENT LAND,

AND BUILDINGS

291. Except as expressly provided otherwise in any rule or order made by

Government, no land belonging to Government may be sold or made over to a
local authority, private party or institution for public; educational or any other
purpose, except with the previous sanction of Government.

292. When any land or building is transferred from one department of

Government to another, the transfer should be free of all charges. When , however,
the property is transferred to or from a commercial department, the transfer shall
be effected on the following basis :
(a) no charge when the property is borne in the books at no value,
and
(b) book value or market value, whichever is less, when the property
is valued in the books.

293.. When any immovable public property is made over to a local authority
for public, educational or any other purposes, the grant should be made expressly
on the conditions, in addition to any others that may be settled that the property
shall be liable to be resumed by Government if used for other than the specific
 MISCELLANEOUS SUBJECTS 99

purposes for which it is granted and that should the property be at any time
resumed by Government, the compensation payable therefor shall in no case
exceed the amount (if any) paid to Government for the grant, together with the
cost, or their present value at the time of resumption, whichever may be less, to
any buildings erected or other works executed on the land by the local authority.

Note 1.—Transfer or gift of Government property, of a value exceeding Rs. one latch to
outside parties. institutions , etc. should be made only after it is brought to the notice of the Vidhan
Sabha by a suitable mention of it in the Explanatory Memorandum of the Budget.

Note 2.—In case of urgeney, where it may not be possible to wait till the matter is brought to
the notice of Vidhan Sabha through the Explanatory Memorandum on the annual Budget,
arrangements may be made for entrusting the management of the property to the body or institution
but the formal transfer of the title to the property should be effected only after mention is made
in the Explanatory Memorandum as stated above.
Note 3.—When Government property is transferred to an authonomous organisation suitable
safeguards should be imposed to provide that it should not be encumbered or eliminated by the
receipient of the property without prior approval of the Government.

294. The transfer of land and buildings between the Central Government
and the State Government is regulated by the provisions of Articles 256, 257
and 298 of the Constitution of India and subsidiary instructions issued in this
behalf by the Central Government which have been reproduced in Appendix 10.

SECTION III.—INSURANCE OF GOVERNMENT

PROPERTY
295. (1) The normal policy of Government is not to insure their properties,
and no expenditure should be, incurred without the prior consent of the Finance
Department on the insurance of any Government property.

(2) It is only in respect of the property which is exposed to damage on

account of its inflammable nature or its being easily exposed to damage or des-
truction (each case being examined on its merits in consultation with Commerce
and Industry Department), that insurance should be taken up.

(3) Whenever it is decided to insure Government propery, it should

be insured with the Indian Insurance Company's Association Pool, Bombay.

SECTION IV.—CHARITABLE ENDOWMENTS AND

OTHER TRUSTS
296. Detailed instructions relating to charitable endowments and other
trusts are embodied in Appendix 11.

SECTION V.--MISCELLANEOUS
Payment of Arrear Claim to Persons not in
Government Service

297. The provisions of rule 91 apply Mutatis-mutandis to old claims pre-

ferred against Government by persons not in Government service.
100 MISCELLANEOUS SUBJECTS [CHAPTBR 14

Note.—Regarding claims of Government against Railways for over charges and claims
of Railways against Government for under charges, see S. R. 120 of the Madhya Pradesh Treasury
Code, Volume I.

Supply of Forms
298. The Controller, Govt. Printing and Stationery, M. P., Bhopal main-
tains stocks of standard forms which are prescribed for use by Government offices,
and which are to be printed and supplied by Government. Heads of offices and
other Government officers should send their indents to him subject to the obser-
vance of the procedure prescribed in the Stationery and Forms Rules.

Destruction of Official Records connected with

Accounts
299. The general rules on the subject are contained in Appendix 12.
Special rules applicable to particular departments are prescribed in the respective
departmental manuals.

Erasures

300. Erasures and over-writing in any account, register, schedule or cash

book are absolutely forbidden, if any correction is necessary the incorrect entry
should be cancelled neatly in red ink, and the correct entry inserted. Each such
correction, or any interpolation deemed necessary should be authenticated by
the head of the office setting his dated initials against each. For instructions
regarding corrections and alterations in a bill or a cheque see S. R. 121 (iii)
and S. R. 146 of the Madhya Pradesh Treasury Code Volume I.
 GOVERNMENT ACCOUNTS
101
CHAPTER 15]

CHAPTER 15—GOVERNMENT ACCOUNTS

SECTION I.—GENERAL

For m of Accounts

301. The form in which and the general principles and methods according
to which the accounts of Government should be kept have been prescribed by
the Comptroller and Auditor-Generalof India with the approval of the President
of India and the main directions in respect thereof are contained in Volume I of
the Account Code. Volumes II and III of that code embody the directions of
the Comptroller and Auditor-General of India regarding the form of initial and
subsidiary accounts to be kept in treasuries and by officers of the Public Works and
Forest Departments. Detrdled rules and instructions relating to the forms of
the initial and subsidiary accounts to be kept and rendered by officers of the
technical departments such as the Public Works and Forest Departments, whose
accounts are not finally settled through the treasury accounts, are laid down in
the departmental regulations relating to the departments concerned.

Major, Minor and other Heads of Accounts

302. The structure of the accounts consists mainly of the following units
of classification:—
(a) Major heads.
(b) Minor heads.
(c) Sub-heads.
(d) Detailed heads or objects of expenditure.

Intermediate heads of accounts known as sub-major heads are sometimes

introduced between a major head and a minor head under it when the minor heads
are numerous and can conveniently be grouped together under such intermedinate
heads. In similar circumstances minor heads are divided into sub-heads (group
heads).

303. A list of authorised major and minor heads of account is given in a sepa-
rate publication named "List of Major and Minor Heads of Accounts of Central
and State Receipts and Disbursements" issued by the Comptroller and Auditor-
General of India. The introduction of any new major or minor head as well as
the abolition or changes of nomenclature of any of the existing heads requires
the approval of the Comptroller and Auditor-General.

The opening of a new sub-head or a detailed head in the demands for grants
will be sanctioned by the Finance Department according to administrative re-
quirements after consultation with the Accountant-General. As regards heads
of expenditure, the sub-divisions of minor heads will follow as far as possible the
sub-heads and other units of appropriation selected by the Finance Department
for demands, for grants and appropriation accounts.
 102 GOVERNMENT ACCOUNTS CHAPTER 15

304. In the matter of accounting and for control of expenditure the nomen-
clature of the budget-cum-accounts heads should be strictly followed by derail-
mental officers. Whenever provision made in the budget estimate or in any order
of appropriation does not conform to the prescribed head or unit, the correspon-
ding receipt or expenditure should be accounted for against the particular head
or unit under which the provision has been made or the appropriation has been
communicated by competent authority unless there be stiong reasons for a con-
trary course, e.g., when such accounting woud be contrary to law. All such
cases should be brought to the notice of the Finance Department, so that in the
estimates of the following year the error may be rectified, unless the Finance
Department agrees to give effect to the correct classification in the accounts of
the current year because of the magnitude of the amounts involved, or because the
misclassification affects the accounts of commercial departments or allocation
between Capital and Revenue heads.

305. Changes in nomenclature of accounts or budget heads or in the classi-

fication of receipts or expenditure will not be introduced except; under special
orders of the Finance Department.

'306. Expenditure which under the provisions of the Constituticn is sub-

ject to the vote of the Legislature shall be shown in the accounts separately frcm
expenditure which is "charged" on the Consolidated Fund of the State.The
expression "charged" or "voted" shall be appended to the heads concerned to
distinguish the two categories of expenditure.

Responsibility of Depart mental Officers

307. Every officer responsible for the collection of Government dues or

expenditure of Government money should see that proper accounts are main-
tained in such form as may have been prescribed for all financial transactions o'
Government with which he is concerned and render accurately and promptly all
such accounts and returns relating to them as may be required by Government:
the Accountant-General or the Controlling Authority concerned. It is essential
that all accounts should be so kept and the details so fully recorded and that the
initial records of payments, measurement and transactions in general are so clear,
explicit and self-contained as to be producea ble, where necessary, as satisfactory
and convincing evidence of facts.
Note 1.—The classification on bills should be recorded by the drawing officer, similarly
the classification on challans should be recorded by the officers responsible for the collection of
Government dues and making the remittance to the treasuries. The classification in the accounts
may at the outset follow the budget, but the matter should be referred to Government for orders
in any case of doubt.

Note 2.—The responsibilities of disbursing officers, controlling officers and heads of depart-
ments, in regard to the control over expenditure incurred against the grants allotted to them are
laid down in the Budget Mannual.

SECTION II.—GENERAL PRINCIPLES OF CLASSIFICATION

308. As a general rule, the classification of transactions in Government

accounts, shall have closer reference to the function, programme and activity of
the Government and the object of the revenue or expenditure, rather than the
department in which the revenue or expenditure occurs. For example, expendi-
ture incurred by the Public Works Department on the construction of a Hospital
shall be debited as expenditure uadcr the major head "280-Medical" or "480-
 CHAPTER 15 GOVERNMENT ACCOUNTS
103

Capital Outlay on Medical" as the case may be, and not to the major head for
"Public Works". This principle is however subject to such exceptions as may be
authorised specially in any individual case or a class of cases e. g., receipts re-
presenting "Interest" are shown under "049—Interest Receipts" and expenditure
on the maintenance and repairs of non-residential Buildings under tEe adminis-
trative control of the P. W. D. are shown under the Major Head „259—Public
Works" irrespective of the functions to which they relate.

I mportant General Orders governing Classification

Pay and allowances (other than Travelling Allowance) of
Government servants.
309. Following the principles in Article 308, the pay and allowances of
Government servants shall be classified in accounts as part of the scheme, activity
or organisations (sub-head) under a programme (Minor head) below a function
(major/sub-major head) to which the service of the Government servant closely
relate. Where, however, it is not possible to classify alinitio the pay and allowance
of Government servant or servants under a single sub-head, because of the over-
lapping nature of the duties of such Government servants which extend to several
activity programme, functions, etc., the charges may be classified intially as part
of the scheme or activity or organisation to which the major portion of the work
ofthe Government servants relate. A suitable prorate allocation of such expenditure
should however be made in all such cases as far as possible.
(2) The transit pay and allowances of a Government servan proceeding
to join an office whether on first appointment, or on transfer, either permanently
or as temporary measure, or on reversion from one department to another,
should, in the absence of special orders to coentrary be debited to the office to
which he is proceeding.
Note.—The transit pay and allowances, both ways, of a Government servant transferred
from
one Government to another or to foreign service will be adjusted in such manner as may be mutually
agreed upon by Governments concerned or as may be laid down in the appropriate Service Rules.

Travelling Allowances
310. The travelling alloivance of a Government servant shall be classified
in the accounts in accordance with the following rules—
Save as provided below and subject also to the Directions given by the Comp-
troller and Auditor-General to regulate adjustment between different departments
of Government, the travelling allowance of a Government servant on whatever
duty he may be employed shall be debited to the same head as his pay,—
In the following cases, the travelling allowance of a Government servant may
be debited Ito a head different from that to which his pay is debited,—
(1) in case where a Government servant is required to travel on duty
connected with an outside body or fund;
(2) when Government considers it necessary to show separately the cost
of a special service; and
(3) in cases covered by general or special orders of Government authorising
a deviation from the general rule.
 , (CHAPTER 15
104 GOVERNMENT ACCOUNTS

Expenditure of Public Works

3 Expenditure on public works where the works are under the adminis-
311.
trative control of the P. W. D. shall be classified in accounts, according to the
following principles

(i) Expenditure on the construction of Government non-residential

building, for administrative and office purpose was distinct from that
on the construction of buildings for functional purposes like schools,
colleges, hospitals etc., will be accounted for under the major head
"259 —Public Works" or "459—Capital Outlay on Public Works"
as the case may be.
(ii) Expenditure on the construction of building for purely functional
purposes, such as those for schools, colleges, hospitals etc., will be
accounted for under the major head closely connected with the
functions, such as "277--Education /477—Capital outlay on Education
Art and Culture", "280—Medical/480—Capital Outlay on Medical"
etc., as the case may be.
(iii) Expenditure on maintenance and repairs of all Government non-
residential buildings whether for administrative, office or functional
purpose-will however,,be accounted for under the major head"259—
Public Works" and other buildings which exclusively relate to
functions under "General Service".

(iv) Expenditure on Government residential buildings will be accounted for

under the major head "283-Housing" "483-Capital Outlay on Housing"
in the Revenue or Capital section as the case may be, in the sector
"Social and Community Service".

(v) Expenditure on roads and bridges, being in the nature of communi-

cations services, will be accounted for under the major head "337—
Roads and Bridges/537—Capital Outlay on Roads and Bridges"
in the revenue or capital sections as the case may be in the sub-sector
"Transport and Communications" of the sector "Economic Services".

Note 1.—Where the building etc., are not under the administrative control of the P. W. D
it is open to Government to prescribe that expenditure on construction and repairs upto certain.
monetary limits, may be incurred by the Civil Departments (i. e. department other than the Public
Works Department) concerned in such cases where the expenditure can be identified with the
programme (Minor Head) relating to the function (Major Head) it should be accounted for under
the detailed head 'work' below the minor head. Where the minor head is not identifiable it should
be classified under the residuary minor head "other expenditure" of the relevant major head.

Note 2.—Expenditure on the staff quarters (construction as well as maintenance) forming

part of a scheme or project such as those of Doctors or Nurses in a hospital will normally be
accounted for as expenditure of the programme under the relevant functional head 'Medical' in the
example cited above and not under the Major Head 'Housing'. If however, Government finds it
difficult for administrative reasons, to follow this principle, in the case of maintenance
expenditure, the expenditure on maintenance may be debited to 259-Public Works. As a corroll
the rent receipt will go to 073—Housing in such cases.

Contributions made by or to Government

3t1
312. (a) Contributions made by the Central or the State Governments to
District Boards, Municipalities, etc., or vice versa shall be debited as expenditure
or shown as receipts (as the case may be) under the head of account most closely
CHAPTER 15] GOVERNMENT ACCOUNTS 105

connected with the object for which the contributions are made. Thus, a grant
for the construction of a school shall be debited to "277—Education" grant
for construction of a drainage system to "282 Public Health, Sanitation and Water
Supply" and a grant for the construction of a road to "337" Roads and Bridges
and a grant given for general purposes, such as a grant to make good a dificit
or as compensation for revenue resumes, shall be classified under "363 Compen-
sation and assignments to Local Bodies and Panchyati Raj Institution".
Note 1.—If the financial assistance given by the Central or State Government to a local body
does not take the form of a grant of cash, but of expenditure in the Public works Department
equivalent to the whole or a part of the cost of work constructed by the department on behalf of
the local body concerned, the contribution thus made should be debited as expenditure under the
detailed head "Contributions" below therelevant minor/major head corresponding to the
programme/function closely conneected with the object of the assistance.
Note 2.—A contribution paid by a Icoal body or private party with the express objectof
meeting the whole or a part of the cost construction by the Public Works Department of a specified
work which is eventually to be the property of Government should be credited as revenue receipt
of the Government relevant to the function/programme closely connected with the object for
which the contribution is made.

(b) Article 282 of the Constitution Provides that the Union or a State may
make any grants for any public purpose, notwithstanding that the purpose is
not now with respect to which Parliament or the Legislature of the State, as the
case may be, may make law, the word 'Grant' used here should be taken to mean
not merely 'Grant-in-aid' but also other dirct expenditure.

Refunds of Revenue
3 S-
313. Refunds of revenue shall, as a general rule, be taken in reduction of the
revenue receipts. In so far as the sector "Tax Revenue" is concerned the refunds
shall be accounted for under a distinct sub- head below the relevant minor heads
under the major/ sub- major beads in that sector, so that the net collection of each
tax /duty (accounted for under the minor heads) can be readily as certained from
the accounts.

The refunds of revenue relating to the Sectors "Non-Tax Revenue" and

"Grants-in-aid and contributions" "shall however be accounted for under ina
separate minor head "Deduct Refunds" under the major/sub- major heads falling
these sectors, unless it is not practicable to exhibit such refunds as sub- heads below
the programme minor heads themselves.

Classification of transactions under "Civil Advance"

13‘
314. (a) Money advanced for miscellaneous purposes under special authority
and recoverable in such and sums overpaid on vouchers other than those for
service payments shall be adjusted under the head "850-Civil Advances". Pay-
ments made on account of Government expenditure should not be held under
"Civil-Advances" on the ground that further proceedings in audit are necessary
for their final admission. This head shall cover items which are from their in
ception debts due to Government recoverable either in cash or by deduction
from pay and allowances. Pay and allowances of any kind in respect of an
assignable period paid before they are due, shall be debited to the same head as and
when paid after they are due.
 106 GOVERNMENT ACCOUNTS [CHAPTER 15

(b) (i) Advances of pay and travelling allowance in transfer should be

debited to the final head of account and not to "Civil-Advances". The debit
should be borne by the department which makes advances. The recovery of
pay and tranvellin.g allowance advances on transfer will, irrespective of the year
of recovery, be treated as minus expenditure. The recoveries will be accounted
for under the head of account to which the expenditure of the department to which
the Government. servant is transferred is debited.

(ii) However, in the case of transfer of Government servant from one

Government to another or whithin the Central Government to or from the
Railways, P. &. T. Defence Departments the advice of debit representing the
advance of pay and travelling allowance on transfer should be passed on to the
Government Department to which the Government servant proceeds for classi-
fication in accordance with (i) above.

Advances for law suits shall be debited to the functional expenditure head
concerned, Refunds of amounts remaining unspent out of these advance shall be
dealt with as cash recoveries, and adjusted in accounts, in accoordance with
provisions of Article 22 of Account Code, Vol. IV.

Classification of transactions under "suspense"

315. Items of receipts and payments which cannot at once be taken to a
final head of receipt or charge owing to lack of information as to their nature or
for any other reason may be held temp orarily under the heat,W8Suspetise Account' S6S
in the sector"L" suspense and Miscellaneous" of the accounts.
A service receipt of which full particulars are not given must not be taken to
the head "Suspense Account" but should be credited to the minor head" Other
Receipts" under the revenue head to which it appears to belong pending eventual
transfer to the credit of a proper head on receipt of detailed particulars. The
charger under the head "Suspense Account" will consist not only of items for which
full Particulars have not been given which will enable the audit Office properly
to class ify them, but also charges written back on disallowance from Exchange
Acoouni.s or charges disallowed from the Inward Settlement Accounts, which are
not susceptible to official adjustment against some other head. If however, the
only point of doubt in respect of any charge is whether it should be treated as
Central charge or as pertaining a State, it should not be treated as Central charge
or as pertaining a State, it should not be debited to "Suspense" but should be taken
to a proper service head of account, and shown as pertaining to the Government
which actually incurred the expenditure pending final decision of the question of
which Government should bear the charge.
Note —No sum shall ordinarily be credited to Government by debit to a suspense head ;
credit must follow and not precede actual realisation

IMPORTANT SPECIAL ORDERS GOVERNING CLASSIFICATION OF

CERTAIN INDIVIDUAL TRANSACTIONS

Cost of acquisition of land.

316. Cost of land acquired for any specific work or a project shall be recorded
as part of the cost of the works or of the project under the relevant functiona
major/minor head. The expenditure on acquisition of land by the Public wcrk
CHAPTER 15] GOVERNMENT ACCOUNTS 107

Department for general purposes shall be recorded under the head "259-Public-
Works-Other Expenditure/459-Capital outlay on Public Works-Acquisition of
Land", as the case may be.

Sale-proceeds of Government land and buildings

317. The classification of the sale-proceeds of Government land and building
shall be regulated in accordance with schedule given below:—

I. SCHEDULE
Sale-proceeds of land, etc.

Heads to which creditable

(i) when the cost of the land was The Capital or Revenue Account
originally debited to, or remains at the project , as the case may be
the debit of the capital account of according to the allocation rule
any project, or under-taking for applicable to the Department con
which regular Capital and Revenue cerned.
accounts are kept or was originally
met from the revenue account of
such projects or undertaking.
(ii) When the cost was originally The Capital expenditure head origin-
debited to a Capital expenditure ally debited.
head outside the Revenue Accounts,
even though no regular Capital and
Revenue accounts are kept for the
work covered by the Capital Expen-
diture.
(iii) When the cost was originally The receipt head relating to the
debited, within the Revenue section Department concerned, or, in the
of the accounts, to any service or case of department not having a
revenue department for which no corresponding receipt head "068-
Capital and Revenue accounts are Miscellaneous General Services-
kept. Sale of land and property".
(iv) When the cost was not so debited:—
(a) the rights of the Government in "105--Agriculture -Other receipts".
agriculture land not covered by
clause (b) ;
(b) Nazul lands in the Uttar "068–Miscellaneous General Services-
Pradesh, the Punjab and the Sales of land and Property".
Madhya Pradesh or elsewhere the
lands in the Punjab equipped at
the cost of State revenue for resale
for building purposes;

*In the case of land acquired by Government on payment for Companies. Railways, or of
Government land made over to such Railways by other Government Departments or Railways
where the cost was origina!ly debited to "350- subsidised Companies Land" the sale proceeds
are creditable to "150-Subsidised Companies" on the receipt.
10$ GOVERNMENT ACCOUNTS [CHAPTER 15

Heads to which Creditable

(c) In all other cases:—

(i) If sold in the Public Works The functional receipt major head
Department; concerned or the head "059-
Public Works".
(ii) if sold in the Defence Depart- The major heads "069—Defence—
ments ; Services—Army", "070— Defence
Services—Navy" or "071—Defence
Services—Air Force" as the case
may be.
(iii) If sold by Civil Agency. The functional receipt major head
concerned or "068--Miscellaneous
General Services".

II SCHEDULE

Sale proceeds of buildings (including the actual areas occupied by or auxiliary

to a bidding).

Heads to which creditable

(i) When the cost of the building was The Capital or Revenue Account of the
originally debited, to, or remains at project, as the case may be, accord-
the debit of, the Capital Account of ing to the allocation rules applicable
a project undertaking for which to the Department concerned.
regular Capital and Revenue
Accounts are kept or was originally
met from the Revenue Account of
such project or undertaking.

(ii) When the cast of the buildihg was The Capital expenditure head
originally debited to a Capital originally debited.
expenditure head outside the Revenue
account, even though no regular
Capital raid Revenue Accounts are
kept for the work covered by the
Capital expenditure.

(iii) When the sale affects Irrigation, "133. Irrigation, Navig ation, Drain-
Navigation Embankment and nage and Flood Control Project B .
Drainage works for which Capital Irrigation Projects(Non-Commercial
Accounts are not kept. or D. Navigation) Projects (Non-
Commercial) or F. Drainage projects
(non- commercial) or G. Flood -
Control and antisea erosion projects"
as the case may be.
CHAPTER II] GOVERNMENT ACCOUNTS 109

Heads to which creditable

(iv) Whet( the sale is of buildings the "The receipt head relating to the
cost of which was originally function to which the cost of the
debited, within the revenue section building was initially debited" or in
of the accounts, to any service or cases where there is no correspond-
revenue department for which no ing receipt head to the head "068—
capital and revenue accounts are Miscellaneous General Services--
kept. Sale of land and property".

(v) In all other cases :—

(i) If sold in the Public Works, The functional receipt major head
Department; concerned or the head "059-Public
Works".
(ii) if sold by Civil Agency. The functional receipt major head
concerned or "068 Miscellaneous
General Services."

Municipal rates and taxes.

4b
318. Municipal rates and taxes on Government buildings shall be adjusted
as follows:—
(a) As a general rules, municipal rates and taxes on a non-residential
building utilized for functional purposes, such as for schools, colleges
or hospital if paid by the relevant departments dealing with those
functions, would be adjusted in accounts as part of the sub- heads
minor heads concerned relating to the function, under the detailed
head "Rent, Rates and Taxes". Where, however, the whole or a part
of the tax is paid by the Public Works Department in administrative
control of the building the payments may be debited to the main-
tenance estimates of the building concerned viz, "259 Public Works—
Maintenance and Repairs" in terms of Rule 31) (3) .
(b) Taxes on non residential buildings occupied by Departments other than
the Defence Department, if paid by a department nominated by
Government in this behalf and not passed on to the occupying
departments shall be debited to "265. Other Administrative Services -
Other expenditure".

(3) Taxes on residential buildings, if payable by Government shale be debited

to the maintenance estimates of the buildings under the head
"283. Housing-C---Government Residential Buildings-Maintenance
and repairs or 259 Public Works," in the case the Government has
decided to debit maintenance expenditure to this head.
Note .—In cases where the whole or any portion of the taxes which by local rule or custom
are ordinarily leviable fromthe tenant, is paid by a Department of the Government such payments
are treated as part of Contingent expenditure of the department.

(d) Taxes both on residential or non-residential buldings owned or occupied

by the Defence Departments shall be debited to ithe Defence Services
Estimates.
110 GOVERNMENT ACCOUNTS [CHAPTER 13

SECTION HI.—GENERAL METHODS OF ACCOUNTING

Accounting for Transactions Pertaining to more than One Major Head

of Account

319. For the sake of conveniance or for other special reasions, recipts or
charges pertaining to more than one head of account may be booked in the first
instance tinder one of heads concerned but the portion creditable or debitable to
the other head or heads involved should be transferred from the former head to
the latter before the accounts of the year are closed. A few cases in which this
procedure is authorised are cited below:—

(1) Where the charges for the supply of water from Irrigation canals are
consolidated with the Laid Revenue demand, the consolidated
rates are in the first instance credited to the head 4'029-Land
Revenue" and an approximate amount calculatedas the share due to
Irrigation is transferred to Irrigation Revenue head.

(2) Interest paid by Government on loans is taken initially under the head
"249—Interest on Debt and Other Obligations and necessary
transfers from this head are made subsequently in respect of amounts
debitable to Commercial Departments.

(3) The Establishement and Tools and Plant charges of Public Works
Divisions are in the first place booked under a single major head
subject to final apportionment among the several major heads concer-
ned by credit to 049—Interest Receipts".

Record of Capital Expenditure in accounts

320. The following principles shall govern the record of capital expenditure
in accounts:—

The Central Government and the State Governments should prescribed

definite criteria for classifying an item of expenditure as pertaining
to 'Revenue' or 'Capital' taking into account the nature and the
magnitude of the expenditure involved. The source of financing
(whether revenue budget or capital budget ) should follow this
classification.
(ii) All items of expenditure to be met from revenue according to the
criteria indicated in (i) above should be initially and finally debited
to Revenue (and it is not permissible to debit such expenditure
temporarily to a capital head) pending its write back to revenue over
a period of years.
(iii) The detailed rules by which allocation of expenditure between Capite
and Revenue in Commercial departments and undertakings should
be determined, shall be such as may be made by Government, after
consultation with the Comptroller and Auditor General.
CHAPTER 15] GOVERNMENT ACCOUNTS 111

Accounting for Transactions reieieting to Schedule Areas

321. Receipts and expenditure pertaining to Scheduled Areas in a State,
vide article 244 (1) of the Constitution shall be accounted for under the same
major and minor heads under which corresponding receipts and expenditure
pertaining to other areas of the State are accounted for, but the receipts and
expenditure of the former kind may be shown in the accounts separately from
the latter if Government so desires.

Accounting of Commercial Undertakings

322. Where any undertakings of Government are conducted on commer cial
lines, the essential formalities of commercial accounts should, if Government so
desires, be strictly observed. In such cases, separate commercial accounts of
the undertakings shall be kept outside the regular Government account. Gross
receipts and expenditure of commercial undertakings shall be accounted for
under the, appropriate major and minor heads in the same way as ordinary
receipts and expenditure of Government. The heads of accounts should, as
far as possible, be common to the Government accounts and the General Ledger
maintained at the undertaking and should be selected with due regard to the
principles of Governmental and commercial accounting so that the monthly
classified account of income and expenditure of the undertaking may be prepared
readily from the General Ledger maintained at the undertaking.

Workings Expenses of Commercial Departments

323. As a general rule all expenditure pertaining to a department should
be recorded on the expenditure side of the account. In the case of recognised
commercial departments, however, it is permissible to take "Working Expenses"
on the receipt side as deductions from gross receipts.

SECTION IV.—GENERAL PRINCIPLES OF ALLOCATION OF

EXPENDITURE BETWEEN CAPITAL AND REVENUE
324. The guiding principles of allocation of expenditure between Capital
and Revenue are as under :—
(1) Expenditure of a capital nature shall broadly by defined as expenditure
incurred with the object of either increasing concrete assests of a
material and permanent character or of extinguishing or reducing
recurring liabilities.
(2) It is inherent in the definition of capital expenditure that the assets
produced should belong to the authority incurring the expenditure .
Expenditure by Government on Grants-in-aid to local bodies or
institutions for the purpo3e of creating assests which will belong to
these local bodies or institutions cannot legitimately be considered
as capital expenditure.
(3) Expenditure on a temporary asset cannot ordinarily be considered as
expenditure of a capital nature.
(4) Expenditure of a capital nature shall be distinguished from Revenue
expenditure both in the Budget Estimates and in Government
accounts, subject to the principles laid down in Rule 320
 112 GOVERNMENT ACCOUNTS [CHAPTER 15

(5) Capital should bear all charges for the first construction and equipment
of a project as well as charges for intermediate maintenance of the
work while not yet opened for service. It should also bear charges
for such further additions, and improvements as may be sanctioned
under rules made by competent authority.

(6) Subject to (7) below, revenue should bear all subsequent charges for
maintenance and all working expenses These embrace all expen-
diture on the working and upkeep of the project and also on such
renewals and replacements and such additions, improvements or
extensions as under rules made by Government are debitable to the
revenue account.

(7) In the case of works of renewal and replacement which partake both
of a capital and revenue nature, the allocation of expenditure should
be regulated by the broad principle that Revenue should pay or
provide a fund for the adquate replacement of all wastage or
capital grants and that only the cost of genuine improvements,
whether determined by prescribed rules or formulas or under special
orders of Government may be debited to Capital.
325. Deleted.
326. Deleted.
327, Deleted.
Interest on Capital
328. Except in special cases regulated by special orders of Government,
interest at the rates specified below should be charged in the accounts of all
commercial departments or undertakings for which Separate capital and revenue
accounts are maintained within the Government accounts. The charge should
be calculated on the direct capital outlay to end of the previous year plus half the
outlay of the year itself. irrespective of whether such outlay has been met from
ordinary revenues or from other sources—

(i) For capital outlay met out of specific loans raised by Government, at
such rate of interest as may be prescribed by Government having
regard to the rate of interest actually paid on such loans and the
incidental charges incurred in raising and managing them.
Note —By specific Loans are meant loans that are raised in the open market for ane specific
purpose which is clearly specified in the prospectus and in regard to which dcfinite
intimation is given at the time of the raisin of the loans that for the purpose accounts
they are to be regarded as specifice loans.

(ii) For capital outlay provided otherwise interest should be charged at

the average rate of interest to be determined each year by the
Accountant General with the apprcval of the Government,

329. When under any special order of Governm,2,t, charges for interest
during the process of construction of a project are temporarily met from capital,
the writing back of capitalised interest should form the first charge on any capital
receipts or surplus revenue derived from the project when opened for working.
CHAPTER 153 GOVERNMENT ACCOUNTS 118

SECTION V.—PROFORMA ACCOUNTS

Subsidiary Accounts of Government Commercial Undertakings

330. When the operations of a department include. undertakings of a

commercial or quasi-commercial character, and the nature and scope of the
activities of the undertaking are such as can not suitably be brought within the
normal system of Government account, the head of the undertaking should be
required to maintain such subsidiary and pro forma accounts in commercial form
as may be agreed between Government and the Comptroller and Auditor-General.
The methods and principles in accordance with which such accounts are to be
kept, including inter alia the basis to be adopted for valuation of assets and for
allocation of expenditure between capital and revenue accounts and the extent
to which provision should be made in these accounts for bad debts, depreciation
and other forms of indirect charges, e.g., cost of management and supervision
audit charges, interest on capital expenditure, etc. will be regulated by orders
and instructions issued by Government in each case. Where the commercial
accounts are maintained for the purpose of assessment of the cost of an article or
service, the head of the undertaking should see that adequate regulations are
framed with the approval of Government in order to ensure that the cost deduced
from the accounts is the accurate and true cost. He should also arrange to obtain
the orders of Government regarding the nature and form of subsidiary accounts
and statements, if any, which should be appended to the Appropriation Accounts
of each year, and submit such Accounts and statements to the Accountant- General
on such date as may be required by him.

Other Pro Forma Accounts

331. Pro forma accounts of regular Government Workshops and Factories
will be kept in accordance with the detailed rules and procedure prescribed in
the departmental regulations. Pro forma accounts of Irrigation, Navigation,
Embankment and Drainage works and of Government residential buildings will
be prepared by the Accountant-General in accordance with the instructions
contained in Chapter 21 of the Account Code, Volume IV.
SECTION VI. ANNUAL ACCOUNTS
332. The annual accounts of receipts and disbursements of the State
Government are submitted to Government by the Comptroller and Auditor
General of India in the form of the Finance Accounts, Appropriation Accounts
and Report thereon. These constitute the published account of Go vernment
The Finance Accounts deal with the accounts of Government as a whole
including transactions relating to debt, deposits, advances, suspense and remit-
tance accounts which do not strictly fall within the scope of the Appropriation
Accounts.
333.. Deleted.
SECTION VLF—ADJUSTMENTS WITH OTHER GOVERNMENTS,
DEPARTMENTS, ETC.
Adjustments with the Government of India and Other State
Govern ments
334. Subject to the relevant provisions of the constitution of India, the
principles and procedure set out in the following paragraphs will be followed for
114 GOVERNMENT ACCOUNTS [CHAPTER 15

settlement of inter-Governmental transactions on account of supplies made or

services rendered by one Government to,,anotherdi:—

(1) In all cases of claims for an amount not exceeding Rs . 1,000 in each
case, no monetary settlement will be resorted to. However in
respect of the following claims monetary settlement should be made
irrespective of the amount :—
(i) claims relating to commercial departments/undertakings of a Govern-
ment, which are required to work to a financial result, for service
rendered or supplies made to or by them; and
(ii) incidence of charges, viz., leave salary, pension, etc., arising out
of inter-Governmental deputations of individual Government
servants which will continue to be regulated by the rules laid
down in Appendix 3-B to Account Code, Volume I.

(2) For transactions above the limit of Rs. 1,000 and where the supplies/
services are to be paid for irrespective of any monetary limit, the
settlement will be made through cheques/bank drafts by the supplied
Government. The procedure to be followed for making the-
monetary settlement in these cases (i) between the State Government
inter-se and (ii) in respect of supplies/services to a Central Govern-
ment Department will be as indicated below :—

(i) Between the State Government inter-se:

The concerned officer of the Government in receipt of the supplies or

services will present a bill at the Treasury for the cost of services
or supplies, alongwith the accepted invoice and a requisition for
a bank draft in favour of the officer concerned in the supplying
Government and remit the bank draft so obtained to the later
who will present it at the Treasury for encashment and crediting
to the proper head of account.
(ii) Between a State Government and a Central Government Depart-
ment (including Defence, Railways and Posts and Telegraphs
Departments, besides Civil) :

The Department of the Central Government which received the supplies

services will present a bill alongwith the accepted invoice to it
own Accounts Officer concerned who will make the payment by
cheques/bank drafts drawn in favour of the officer concerned of
the supplying Government, in settlement of its claims.

In the reverse case of supplies/services rendered by a Central Government

Department the cheques/bank drafts received by it from the
supplied Government will be presented by it to its Accounts
Officer for encashment and credit to the proper head of account.
In case the departmental Officer is himself in account with a
branch of the bank, the cheque/bank draft will be remitted by
him to the bank with challan showing particulars of the Head of
account for credit to Government account.
 CHAPTER-15j GOVERNMENT ACCOUNTS 1.15

(3) These instructions will not apply to payments to be made to suppliers

arranged by the Department of supply in the Ministry of Supply
and Rehabilitation, for purchases made by the State Governments
etc., through the D irectorate General of Supplies and Disposals
or for the settlement of claims relating to the supplies made to
the various Governments/Departments by the Medical Stores
Depots."

335. A period of three years has been accepted by the Central Government
and other State Governments and the State Government of Madhya Pradesh for
re-audit of past transactions involving errors in classification.

This limitation should be regarded as a convention rather than a rigid

accounting rule.

336. Payment made by the Government of India on account of the cost of

functions entrusted to the State Government under Article 258 of the Constitution
are treated as contribution from the Government of India and credits to the State
revenues as grant-in-aid from the Central Government. Expenditure incurred by
the departments of the State Government on functions entrusted to them for
execution under Article 258 (i) of the Constitution would be included direct in
the State Budget.
Note.—This does not apply to the expenditure on National High Ways.

337. No inter-Governmental adjustments can be carried out after the

15th April on which date the books of the Bank are closed for the month of March,
Every endeavour must, therefore, be made to settle as far as possible all transactions
with the Govenment of India or other State Government before the close of
the year.

Adjustments with Foreign Governments Outside Bodies, etc.

338. Payment must be required in all cases in respect of services rendered
to any Foreign Government, or non-Government body or institution, or to a
separate fund constituted as such either inside or outside the Public Account,
unless Government by general or special order gives directions to the contrary.
Relief in respect of payment for services rendered or supplies made to any outside
body or fund should ordinarily be given through a grant-in-aid rather than by
remission of dues. See Paragraph 3 below Direction II of Appendix 14].
Inter-Departmental Adjustments
339. The inter-departmental adjustments will be done as indicated below:—

(a) The commercial departments or undertakings as are authorised to

draw cheques should settle the bills in respect of services
rendered or supplies made to it through cheques and conversly the
amount due to such commercial departments or undertakings from
other departments should be settled through bank drafts.

(b) The commercial departments or undertakings which are not vested

with cheque drawing powers should settle the payments for servies
and supplies or the amounts due by them through bank drafts.
116 GOVERNMENT ACCOUNTS [CHA.P'rER. 15

(c) In cases of transactions between two service departments of the same

Government which do not involve manufacturing or production or
supply of articles, there will not be any monetary or accounting
settlement except where fees are levied under a particular enactment.
In the case where such fees are levied, these should be settled in
cash or through bank draft.

(d) In cases of transactions between two service departments of the same

Government where manufacturing or production or supply of article
or repairs operation are involved and the existing principles require
settlement, and adjustments may be done away with, if the cost
of service or supplies is Rs. 250 or less in each cases. In respect of
transactions above the said limit, the present rule of adjustment
should continue. The adjustments should not, however, be made
by book transfer through the agency of the Accountant-General
but by cash-settlement as indicated below :—

(i) As soon as the supplies are made, the supplying officer will send the
invoice (indicating the head of account to which the amount
should be credited) to the supplied officer. Immediately on
receipt of invoice the supplied officer should verify the supplies
and present a bill at the treasury with the invoice and challan in
quadruplicate for payment by transfer credit to the head indicated
in challan. The Treasury Officer will retain the original copy
of the challan, return the duplicate and triplicate copies to the
supplied officer who will keep one for his record and send the
other to the supplying officer. The 4th copy will be attached to
the relevent schedule of receipts as a supporting document
and sent to the Accountant-General to enable him to verify and
take the recovery to the proper head of account.

(ii) The Public Works, Forest and other departments vested with cheque
drawing powers should settle the claims through cheques.

(iii) The system of book adjustment by the Accountant General of cus-

toms duty assessed and levied by the Customs Department on goods
imported by the Central and State Government departments o n
the basis of monthly statement of bills of entry by crediting the
"Customs" Receipt and debiting the amount to Consignee De -
partmen.t is dispensed with and the Customs duty assessed and
levied by the Customs Department is to be settled as below

(1) In case the consignees are State Government Departments,

the duty is to be settled either by bank drafts or by cheque if the
Department has got the cheque drawing powers.

(2) To avoid delay in the matter of settlement of customs duty, the

consignee Department is to settle the 90 % of the total claim
immediately on receipt of bill of entries from the customs autho-
rities subject to the adjustment of the balance in due course.
 GOVERNMENT ACCOUNTS 117
CHAPTER 15]

Adjustment of Pensionary Charges of Certain Commercial

Depart ments

340. The pensionary liability of commercial departments and undertakings,

for which pro forma commercial accounts are maintained outside the regular Govern-
ment accounts, is assessed on a contribution basis at rates fixed by Government, the
actual method of adjustment in the regular Government accounts being determined
in consultation with the Accountant-General. As regards other departments and
undertakings, for which no regular commercial accounts are maintained either
within or outside the regular Government accounts but which are allowed to charge
for their products or services rendered, the pensionary liability is taken into account
in the estimate of overhead charges and manufacturing costs for the purpose of cal-
culating the issue price of goods manufactured or fees for services rendered, the cal-
culation being made at rates prescribed for the purpose by Government.

SECTION VIII.—EXHIBITION OF LOSSES IN GOVERNMENT

ACCOUNTS
Receipts

341. (a) If a claim be relinquished, the value of the claim shall not be re-
corded on the expenditure side as a specific loss.
(b) If mqney due to Government has actually reached a Government ser-
vant and is then embezzled, stolen or lost, even though it may not have reached the
treasury and thus have passed into the Consolidated Fund or the Public Account,
it should be brought as a receipt into the Consolidated Fund or the Public Account,
as the case may be, and then shown on the expenditure side by record under a sepa-
rate head as a loss.
Note (—Where losses of public money are wholly or partially met by non-issue of pay or
pension and the Account Department authorizedly applies the unissued amount to meet the
public claim, the resultant balance of the claim alone should be treated as a loss, the emoluments
due being debited to the pertinent head of account as if they had been drawn and used by the
Government servant concerned in paying the public claim.
Note 2.—The term "Government servant" used in this rule includes persons -who, thoi gh not
technically borne on a regular Government establishment are duly authorised to receive money
on behalf of Government.

Buildings, Lands, Stores and Equip ments

342. Losses or deficiencies need not be recorded under a separate head in the
accounts, though they should be written off any value or commercial account that
may be m untained. If any transactions under these categories are recorded under
.a Suspense head in the Government accounts, losses or deficiencies relating thereto
must be written off the Suspense heads also.

Cash in Hand, whether in Treasu'ry or Depart mental charge

343. All losses or deficiencies should be recorded under separate heads in the
accounts.
Note 1.—The acceptance of counterfeit coins or notes is regarded as a loss of cash.

Note 2.---Any recovery made in the course of the year in which the losses are brought Any
to account shall be shown by deduction form the head under which the loss is recorded.
recovery made after the accounts of the year are closed shall be shown as an item of receipt.
 118 GOVERNMENT ACCOUNTS [CHAPTER 15

Irregular or Unusual Payments

344. Irregular or unusual payments should be recorded in the accounts with
general reference to the ordinary rules of classification according to the nature of
the expenditure; for example, an overpayment of pay shall be debited to the head
"pay". Similarly, an excess payment for bricks manufactured shall be debited to
the work for which the bricks are used. It is only when special heads exist in the
accounts for recording such charges as compensation for damages, irrecoverable
temporary loans written off and the like, that unusual'or extraordinary payments
shall be separately recorded.
Inevitable Losses
345. Where losses are an inevitable feature of the working of a particular de-
partment, the major head of account under which the expenditure of that depart-
ment is 'recorded shall contain separate descriptive heads under which such losses
may be recorded.
346. When a loss occurs, whether of money due to Government referred to
in rule 341 (b) or of cash in hand referred to in rule 343, a bill showing the nature of
the loss should be prepared at once and presented at the treasury. In the case of
loss of revenue receipts, the bill shall be paid by transfer credit to the relevant reve-
nue head of account, while in the case of other losses of cash the bill may be cashed
for recouping the loss. Loss of money due to Government, or of cash in hand should
be debited in the Accounts as "contingent charge" of the department or office con-
cerned. Only losses of Government money shall be debited to State Revenue and
no part of the losses of revenues of local or other funds, collected through
the agency of Government servants shall be so debited.
347. All losses in respect of stores should be duly recorded in stock accounts
and the formal sanction of the competent authority should be obtained for writing
them off or dealing with them other wise, even when no formal correction or, ad-
justment in the accounts is necessary.
348. If after incorporation in the accounts of the amount of a loss in the man-
ner described above, a partial or full recovery of the amount is made from the
party at fault it shall be credited into the treasury and be adjusted in the accounts
by the Accountant-General by reduction of expenditure or as departmental reve-
nue according as the recovery is made in the same financial year or subsequent years.
For this purpose , the amount of the recovery should be shown, as an unclassified
item in the relevant schedule by the Treasury Officers.
349. The procedure shall also apply to the Forest and Public Works Depart-
ments with the exception that instead of the adjustment being made at the trea-
sury it shall be carried out in the departmental accounts.
SECTION IX.—EXHIBITION OF RECOVERIES OF EXPEN-
DITURE IN GOVERNMENT ACCOUNTS
350. The rules in this section are directions relating to Accounts classification
issued by the Comptroller and Auditor-General and are, therefore, binding on the .
State Government.
351. In these rules, the term "recovery" means repayment by another
Government department or an outside body or person of expenditure initially. borne
by -a Government department and recorded as such in its accounts.
 CHAPTER 15] GOVERNMENT ACCOUNTS 119

Recoveries from Private Persons or Bodies and Governments

Outside India
352. Recoveries from private persons or bodies (including local funds and
Government outside India) should, as a general rule, be treated as revenue and not
as deduction from expenditure.

Exceptions

(i) Recoveries of expenditure on works in progress and transactions of stock

and other suspense accounts—

The technical estimates take cognizance of all anticipated receipts from sale
proceeds of materials, plant, etc., received from the old, structure, while the receipts
under "Stock and Suspense" are by their very nature inseparable from the expen-
diture recorded under the main head. The recoveries falling under these two
categories should therefore be treated as reduction of gross expenditure.

Recoveries by One Government from Another

353. The recovery of expenditure for services or supplies made to other

Governments should be treated as revenue receipts of the State Government.

Recoveries by One Department from Another Department of the

Same Government

354. As between different departments of the same Government the recoveries

should be treated as deduction from the gross expenditure, except such recoveries
as are made by a Commercial department, which should be treated as receipts of
that department.
Note 1.—The term "recoveries by a commerical department" for the purpose of this direction
shall apply to recoveries in respect of services rendere to other departments in pursuance of
the proper functions for which the department is constituted that is to say in the case
of Posts and Telegraphs Department. recoveries shall be treated as receipts only when they are
made in respect of Postal, Telegraph or Telephone sevices rendered to the other departments.
Where, however, a commercial department acts as an agent of another department for the entry
discharge of functions, not german to the essential purpose cf the department, the recoveries
shall be taken in reduction of expenditure.

Note 2.—Recoveries made from another department if not affected within the accounts of
the year in which the expenditure was incurred, should be treated as revenue and not as deduction
from expenditure, unless the, latter course is authorised by provision in the budge estimates.

Receipts and Recoveries on Capital Accounts

355. Notwithstanding anything to the contrary that may be provided by or
under the directions in this chapter, receipts and recoveries on Capital Account in
so far as they represent recoveries of expenditure previously debited to a Capital
major head shall be taken in reduction of expenditure under the major head
concerned except where under the rules of allocation applicable to a particular
department, such receipts have to be taken to revenue.
120 GOVERNMENT ACCOUNTS [CHAPTER 15

Settlement of doubts or disputes

356. In case of doubt or dispute, the question whether any particular

recovery is classificable as revenue or as deduction from expenditure under the
Directions in this Chapter will be. decided by the Finance Department in consul-
tation with Accountant-General.

357. Deleted.
358„ Deteled.

4`3BPS--2496---FD- –14-7-87— 10,000.