Financial Regulations

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Financial Regulations Part-I (Volume-I)

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SECTION I
CHAPTER-I INTRODUCTORY
INTRODUCTORY
1.
These regulations are essentially executive orders of the Central
Government and mainly describe the financial powers and responsibilities of
different authorities under them, on who devolves the responsibility for the
administration of the Defence Forces of the Union. They lay down the procedure
for the delegation and manner of exercise .of 'the powers by different authorities,
framing of Defence Services Estimates, control and spending of the funds placedat their disposal with due regard to economy and efficiency, and the manner of
entering into contracts etc., for the procurement of supplies and services required
for the Defence Services. Departmental authorities should follow these rules,
supplemented by the special rules and instructions, if any, contained in their
departmental regulations and other special orders applicable to them.
DEFINITIONS
2.
The terms included in this rule are used in these regulations in the sense
here explained.
Appropriation
Means the assignment to meet specified expenditure of funds at the disposal
of the assigning authority
Audit Officer
Means the internal audit officer, whatever his official designation, in whose
internal audit control a public servant is serving or, for purposes of
verification of service, has served, or transactions, of public money and
stores have taken place.
Brigade or Sub-area Commander
Includes the area commander in the case of units and stations directly under
area headquarters
Charged Expenditure
Means expenditure charged on the Consolidated Fund of India which does
not require submission for vote by Parliament and comprises items like
interest on specified items arid repayment of bans raised by the Government
and payments made in satisfaction of a Judgement, decree of Court or
awards by Arbitral Tribunal.
Compensatory Allowance
Means an allowance granted to mat personal expenditure necessitated by the
special circumstances in which duty is performed. It includes traveling
allowance, but does not include a sumptuary allowance or the grant of a
free passage by sea or air to or from any place outside India.
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Competent Authority
Means the Government or any other authority to which relevant " powers
may be delegated by the Government.
Competent Financial Authority
Is the authority within whose financial powers the amount at issue falls.
Consolidated Fund
Means the Consolidated Fund of India comprising of all revenues received
by the Central Government, loans raised by that Government by issue of
Treasury Bills, Loans or ways and means advances and also receipts by way
of re-payment of loans granted by the Government and from which the
expenditure of that Government when so authorised by Parliament is met.
Controlling Officer
Means an officer who is entrusted with the responsibility of controlling the
progress of expenditure under any appropriation.
Controller of Defence Accounts
Includes the Controller's of Defence Accounts of Central, Western, Nothern
and Southern Commands, the Controller of Defence Accounts, Patna, the
Controllers of Defence Accounts (Other Ranks), the Controller of Defence
Accounts (Officers), the Chief Controller of Defence Accounts (Pensions),
the Chief Controller of Finance & Accounts (Factories); All Controllers of
Finance & Accounts (Factories), the Controller of Defence Accounts (Air
Force) and) the Controller, of Defence Accounts (Navy), CDA (Training),
CDA (CSD), CDA (PD), CDA (HOs), CDA (R & D), CDA (Army), CDA
(Border Roads), CDA (Madras), CDA (Secunderabad), CDA (Jabalpur).
Disbursing Officer
Means a head of office or any other Gazetted Officer designated by a
Department of the Central Government, a Head of Department or an
Administrator, to draw bills and make payments on behalf of the Central
Government.
Emoluments
Means the pay and allowances, and all other .items of personal remuneration
drawn by an individual but do not include compensatory allowance, e.g.
house rent allowance.
Fee
Means a recurring or non-recurring payment to a Government servant from
a source other than the Consolidated Fund of India, whether made directly
to the Government servant or indirectly through the intermediary of
Government, but does not include:
(a) unearned income such as income from property, dividends and interest
on securities; and
(b) income from literary, cultural or artistic efforts if such efforts are not
aided by the knowledge acquired by the Government servant in the course
of his service.
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Financial year
Means the year beginning on the Ist of April and ending on the 31st of
March following.
Fresh expenditure
Means any expenditure which the budget cannot be held to cover. It does
not apply to expenditure contemplated by regulations but requiring sanction
of higher authority, or on account of services performed which has to be met
periodically, or to arrears of pay and allowances, or to recurring payments
which are recognised by regulations, or have been specially sanctioned by
Government, and which must be paid as they become due, irrespective of
budget provision.
Honorarium
Means a recurring or non-recurring payment made to a Government servant
from the revenue of the Government under whom he is employed, as
remuneration for special work of an occasional (or intermittent) character. It
also means payments made by one Govt. to the employees of another Govt.
in India for services rendered to that Govt.
Imprest
Means Cash assignment in the nature of a permanent advance placed at the
disposal of officers incurring expenditure such as local purchase of petty
stores, local repairs by civilian firms, Contingent or postal charges and
payments for casual labour on daily rates of pay paid through muster rolls
which is accounted for in contingent bills and reimbursed once a month or
more frequently if desired.
Local Fund
Means(a) revenues administered by bodies which by law or rule having the force
of law come under the control of the government, whether in regard to
proceedings generally, or to specific matters, such as the sanctioning of their
budgets, sanction to the creation or filling up of particular posts or the
enactment of leave, pension or similar rules; and
(b) revenues of any body which may be specially notified by the
Government of India as such India, whether made directly to the
Government servant or indirectly through the intermediary of Government,
but does not include
(a) unearned income such as income from property, dividends and interest
on securities; and
(b) income from literary, cultural or artistic efforts if such efforts are not
aided by the knowledge acquired by the Government servant in the course
of his service.
Financial year
Means the year beginning on the Ist of April and ending on the 31st of
March following.
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Fresh expenditure
Means any expenditure which the budget cannot be held to cover. It does
not apply to expenditure contemplated by regulations but requiring sanction
of higher authority, or on account of services performed which has to be met
periodically, or to arrears of pay and allowances, or to recurring payments
which are recognised by regulations, or have been specially sanctioned by
Government, and which must be paid as they become due, irrespective of
budget provision.
Honorarium
Means a recurring or non-recurring payment made to a Government servant
from the revenue of the Government under whom he is employed, as
remuneration for special work of an occasional (or intermittent) character.
It also means payments made by one Govt. to the employees of another
Govt. in India for services rendered to that Govt.
Imprest
Means Cash assignment in the nature of a permanent advance placed at the
disposal of officers incurring expenditure such as local purchase of petty
stores, local repairs by civilian firms, Contingent or postal charges and
payments for casual labour on daily rates of pay paid through muster rolls
which is accounted for in contingent bills and reimbursed once a month or
more frequently if desired.
Local Fund
Means(a) revenues administered by bodies which by law or rule having . the force
of law come under the control of the government, whether in regard to
proceedings generally, or to specific matters, such as the sanctioning of their
budgets, sanction to the creation or filling up of particular posts or the
enactment of leave, pension or similar rules; and
(b) revenues of any body which may be specially notified by the
Government of India as such.
Local Stores
Are articles of indigenous produce-or manufacture as distinct from
imported stores.
Ministerial appointment
Means an appointment held by an individual whether gazetted, or not,
whose duties are not of an administrative or executive character, but who is
employed as a member of an office establishment.
Miscellaneous Expenditure
Means all expenditure other than expenditure falling under the category of
pay and allowances of Government Servants, leave salary, pensions,
contingencies, grants-in-aid, contributions, works, tools and plants and the
like.
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Non-recurring Expenditure
Means expenditure which does not recur periodically.
Office Contingencies
Comprise those charges which are incidental to the management of an office
as an office and include the cost of postage, telegrams issued without prepayment, telephone charges, furniture, advertisements, office rent, books
and periodicals, charges on account of hot weather establishments, liveries
to office peons, repairs to furniture, local transport charges on duty
connected with the office and other similar petty charges.
Public Funds
Include all funds which are financed entirely from public money, the
unexpended balances of which are refundable to the Government in the
event of their not being devoted to the objects for which granted; and also
(i)
unissued pay and allowances;
(ii) office allowance fund;
(iii) the estates of deceased men and deserters.
The general position is that when a fund does not fulfill the conditions given
above, it is to be 'classified as a regimental fund (non-public fund), even
though it may be entirely financed from public money.
Re-appropriation
Means the transfer of funds from one unit of, appropriation to another such
unit.
Recurring Expenditure
Means expenditure which is incurred at periodical intervals.
Supplementary Grant
Means Parliamentary sanction for additional funds to supplement the
original sanctioned budget when re-appropriation of funds within a demand
is not adequate to finance the additional amount required under certain
heads of expenditure.
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CHAPTER-II GENERAL PRINCIPLES

ESSENTIAL CONDITIONS GOVERNING EXPENDITURE FROM
PUBLIC FUNDS
5.
As a general rule no authority may incur any expenditure or enter into any
liability involving expenditure from public funds until the expenditure has been
sanctioned by general or special orders of the Government of India or by an
authority to which power has been duly delegated in this behalf and the
expenditure has been provided for in the authorised grants and appropriations for
the year. Any amount provisionally included in the estimates is not available for
expenditure, until the proposals to which it relates, have been finally sanctioned.
STANDARDS OF FINANCIAL PROPRIETY
*6. Every Officer incurring or authorising expenditure from public money
should be guided by high standards of financial propriety. Every Officer should
also enforce financial order and strict economy, at every step and see that all
relevant financial rules and regulations are observed, by his own office and by
subordinate disbursing officers. Among the principles on which emphasis is
generally laid are the following:
(i) Every officer 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) Expenditure from public moneys should not be incurred for the benefit
of a particular person or section of the people, unless: (1) a claim for the amount could be enforced in a Court of Law, or
(2) the expenditure is in pursuance of a recognised policy or 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 recipient.
(vi) The responsibility and accountability of every authority delegated with
financial powers to procure any item or services on Government account is
total and indivisible. Government expects that the authority concerned will
have the public interest uppermost in its mind while making a procurement
decision. This responsibility is not discharged merely by the selection of the
cheapest offer but must conform to the following yardsticks of financial
propriety:
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(1)
Whether the offers have been invited in accordance with governing

rules and after following a fair and reasonable procedure in the
prevailing circumstances.
(2) Whether the authority is satisfied that the selected offer will
adequately meet the requirement for which it is being procured.
(3) Whether the price on offer is reasonable and consistent with the
quality required.
(4) Above all, whether the offer being accepted is the most appropriate
one taking all relevant factors into account and in keeping with the
standards of financial propriety.
(vii) Whenever called for, the concerned authority must place on record in
precise terms, the considerations which weighed with it while taking the
procurement decision.
Audit Officers shall also be responsible for watching that the above
principles are strictly observed.
*
Rule 6 recasted vide CS No 10/1/93
RECEIPT AND PAYMENT OF MONEYS

Realisation of receipts in legal tender coins or notes
7.
Government dues or other money receivable on Government account may
ordinarily be realised in legal tender coins or notes only.
Cheques tendered in payment of Government dues
8.
(i) (a) At places where the cash business of the treasury is conducted by the
Reserve Bank of India, or a branch of the State Bank of India, cheques on local
banks may be accepted in payment of Government dues, or in settlement of other
transactions with the Government if the cheques have been crossed by the drawer
or the acceptance of the uncrossed cheques in that class of transactions has been
permitted by the Government. Until, however, a cheque has been cleared the
Government cannot admit that payment has been received and consequently final
receipt shall not be granted when a cheque is tendered. A receipt for the actual
cheque only may be given in the first instance, but if a person making payment in
this manner so desires, a formal payment receipt shall be sent to his address after
the cheque has been cleared. Collection charges of the bank, if any, will be
recovered by or under instructions of the bank from the party presenting the
cheque.
The preliminary acknowledgement of the receipt of the cheque will be given
in the form below:
"Received cheque No ............... for Rupees ............... drawn on ...........
on account of ............... "
Note: The Reserve Bank and the State Bank of India reserve to themselves
the right to refuse, to accept cheques the collection of which, in their opinion,
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cannot reasonably be undertaken and which they would not accept on behalf of
their own constituents.
(b) In the event of cheque being dishonored by the bank on presentation, the
fact shall be reported at once to the tenderer with a demand for payment in cash
and dishonored cheque should be returned to the tenderer on surrendering the
preliminary acknowledgement of the receipt of the cheque previously granted. The
Government will not, however, be liable for any loss or damage which may occur
as a result of the delay in intimating that the cheque has been dishonoured.
(c) When Government dues which are payable by certain fixed dates are
paid by cheque, the person desiring to make such payment in this manner without
risk must take suitable precautions to ensure that his cheque reaches the receiving
office at the latest on the working day preceding the date on which payment is to
be made. Cheques received on the last day of payment of Government dues may
be refused at the discretion of the officer to whom they .are tendered and those
received later will not be accepted.
(ii) The Government may, in relation to any particular class of transactions
involving payment of Government dues, issue orders varying or relaxing any of
the conditions prescribed in this rule.
Note: The term "local banks, as used in this rule means banks (Including the
Reserve Bank and the State Bank of India), located in the station in which the
banks conducting the cash business of the treasury are situated.
Grant of receipts for money received
9.
Officers receiving money on behalf of Government shall give the payer a
receipt on a printed form and keep the counterfoil in the receipt book for,
accounting and audit purposes. (I.A. F.A. -175 for general use; I.A.F.D.-6 For
Farms Departments and I.A.F.S.119 for M.E.S.)
Inclusion of public funds in public account and the general treasury balance
10. Except in a case where a personal deposit account has been opened by an
officer in his official capacity under the provisions of Rule 300, public funds
pertaining a unit, formation or department should not be kept apart from the
general treasury balance, or received for safe custody and kept out of account, or
received at all except under ordinary rules.
Military receivable order for paying money into a Government treasury or
bank
11. (i) Any person paying money (except earnest money) into a Government
treasury or one of the branches of the State Bank of India doing Treasury business,
or the Reserve Bank of India in stations where it transacts all Government banking
business, shall present with it a military receivable order (I.A.F.A.-507) to be
issued by one of the persons mentioned in Rule 12, which shall show distinctly the
nature of the payment, the person or officer on whose account it is made and the
particular Controller of Defence Accounts by whom it is adjustable. On this
authority the Treasury or bank shall accept the money and credit it as, a Defence
Service receipt.
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All units and Formations maintaining Public Fund Accounts with any of the
authorised banks would not henceforth deposit moneys in cash direct to the
Treasury. Instead, they should deposit the money in their Public Fund Account and
simultaneously they should forward a cheque drawn in favour of their banks
together with the MRO to their bankers with the request that the amount may be
credited to the Treasury. Where Govt. transactions are conducted by R.B.I. and
where SBIs are not conducting Treasury functions in cities like Calcutta, cheques
in support of MRO will be issued in favour of R.B.I. only. The bank will return the
original copy of the MRO to the unit for forwarding it to the C.D.A. The
correctness of the money charged off from the cash book will be verified by the
OsC of Units from the equivalent amounts credited and debited in the monthly
statement of accounts issued by the bank.
Where Units/establishments do not maintain their Public Fund Accounts
with Banks, the existing procedure of crediting moneys into treasuries through
cash would continue.
(ii) Military Receivable Orders will be prepared in triplicate. The first two
copies will be presented to the Treasury/Bank who will deliver the original, duly
received, to the depositor who will, in turn, forward it to the C.D.A./P.A.O. (ORs)
concerned under a forwarding memo. The duplicate copy will be retained by the
bank for submission to the Controller of Defence Accounts concerned. The
triplicate copy will be retained by the depositor as office copy.
The first two copies presented to the bank/treasury will be branded "Central
(Defence)" on the top centre with a Rubber stamp.
The period of validity of MRO at places where the cash business of the
treasury is conducted by the Bank will be twenty one days from the date of issue
i.e. the date of signature of the departmental officers who are authorised to issue
such orders. A M R O. will be revalidated in case it is not presented at the Bank
within twenty one days of the date of signature of the authorised departmental
officers or the date of revalidation thereof.
(iii) In the case of payments made into a Government treasury receipts for
sums of Rs. 500 and above will be signed by the treasury officer, receipt for
smaller amounts being signed by the accountant and the treasurer, except receipts
for cash and cheques paid for service stamps which will be signed by the Treasury
Officer.
Persons authorised to sign Military Receivable Orders
12. The following is a list of persons authorised to sign military receivable
orders:
1.
All Commissioned Officers and Civilian Gazetted Officers of the Defence
Organisation serving under the control of the Ministry of Defence including
Department of Defence Production and Department of Defence Supply.
2.
All gazetted officers and SOs (A) in the Defence Accounts Department.
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3.
5.
6.
7.
Departmental Officers, Warrant and non-Commissioned Officers and JCOs

in supply and transport charge at outposts. 4. Remount and purchasing
agents.
JCOs-in-Charge of all Arms, Corps and Regiments.
Unit Accountants attached
to MES Officers.
Head Clerk employed in the
office of Garrison Engineers
or out-station Assistant and
For amounts due to

Government on account of
rent & charges for water
Electric energy only Garrison Engineer.
8.
9.
Representatives of Defence Estate Officers in Cantonments.

Director General of Disposal, his regional representatives and agents and
any Gazetted Officer on his behalf.
10. Officers-(whole time and part time) Commissioned in the National Cadet
Corps.
11. Outstations MES Supdts. B/R Gde 1, Supdts, E/M Gde I and Supervisor B/S
Gde I Incharge Sub divisions.
Earnest money deposits
13. Earnest money deposits for intending tenderers of the Defence Services will
be received at treasuries/banks without any receivable order but the depositor must
state the designation of the officer in whose favour he makes the deposit; that
designation shall be entered on the receipt given by the treasury/bank.
For MES contracts the procedure is laid down in the Regulations for the
MES and relevant contract forms.
Government dues to be promptly credited into a treasury or the bank
14. All moneys received by or tendered to Government officers watch are due
to or are required to be deposited with Government, shall, without undue delay, be
paid in full into a Government treasury or into the bank to be credited to the
appropriate account or they shall be credited through the pay bill or other public
account, if it is so authorised.
The appropriation of receipt to meet expenditure, except when specially
authorised, is strictly, prohibited.
In the case of Navy however, ships and establishments may receive in their
cash accounts receipts on account of payment issues of items of
clothing/victualling stores and other small miscellaneous items of
refunds/recoveries and also appropriate the same towards departmental
expenditure. While drawing funds against Cash Assignments/Money Warrants the
amounts received will be taken into account and the amount of drawals restricted
accordingly.
In the case of Air Force, Units may receive in their Cash Accounts receipts
on account of payment issues and other miscellaneous items of
Refunds/Recoveries and re-appropriate the same towards expenditure. While
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demanding cash, the amounts so received will betaken into account and the
demands for funds by cash Requisitions will be restricted accordingly.
Note-The term, "the bank" used in this rule means the Reserve Bank of
India or any branch or agency of the Reserve Bank of India and includes any
branch of State Bank of India acting as the agent of the Reserve Bank of India.
INSTRUCTIONS FOR DEALING WITH PUBLIC FUNDS AND STORES
Responsibility for public funds and stores
15. A Government servant supplied with public funds and/or stores is
responsible for their safe custody, for keeping the stores 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 shall not apply them to any purpose other
than that for which they have been supplied. He shall see that they are expended in
conformity with regulations. He may at any time called upon to produce for
verification the balances of public money in his possession or the balances of
public stores in his charge. He shall not therefore, advance, lend or exchange
anything for which he is accountable unless authorised by regulations or cash
private cheques out of public funds. He shall be responsible for the funds and
stores entrusted to him until an account of them has been produced to the
satisfaction of the Controller of Defence Accounts concerned or his representative
for the purpose, or they have been accounted for' to his successor. In cases in
which the acquaintances of the actual payee are not sent for audit, the Government
servant shall be held personally responsible for seeing that the payments are made
to the persons entitled to receive them.
Responsibility for accounting of public transactions
16. All cash and store transactions to which an individual in his official capacity
is a party must be brought to account without delay.
17. Every officer should bear in mind that his account forms a unit entire
system of Defence Accounts, and that mistakes made by him do not effect his
accounts alone. It is, therefore, necessary that he should satisfy himself before
despatching his account that it is complete and correct m -all respects and that all
rules and orders issued for his guidance from time to time have been fully
complied with.
All monthly accounts will bear the date of the last day of the month to
which they relate. All accounts and returns will be endorsed on the back with the
date of despatch.
18. All receipts and charges should, as far as practicable, be brought into the
accounts of the financial year to which they pertain. It will be the duty of every
disbursing officer to pay all outstanding claims against Government, and all
payments due in the current year and chargeable to the accounts of that year,
before the end of March. Every administrative officer will at all times, and
specially when field operations are in progress, ascertain what liabilities are likely
to be incurred and get them settled with the least possible delay.
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If it is impossible to have any expenditure booked in the accounts of the

year to which it relates, owing to the fact that the actual incidence of the
expenditure is under dispute, it should be charged to the accounts of the year in
which the final decision is taken, though at the same time, all possible efforts
should be made to expedite the decision as far as possible.
INSTRUCTIONS REGARDING ACCOUNTS AND AUDIT
Internal check against irregularities, waste avid fraud
19. 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
departmental organisation for systematic internal checks calculated to prevent and
detect errors and irregularities in the financial transactions of his subordinate
officers and to guard against waste and loss of public money and stores, but also
that prescribed checks are effectively applied.
Responsibility for Control of Expenditure
20. Every administrative officer is responsible for enforcing financial control
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 officers.
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 Public Accounts
Committee, if necessary, complete responsibility for departmental expenditure and
to explain or to justify any instance of excess or financial irregularity that may be
brought to notice as a result of audit scrutiny or otherwise.
Audit and inspection of cash and store accounts
21. Controllers of Defence Accounts will control all the accounts, disbursement
or issue offices in their areas and will arrange for the prescribed periodical
inspection or local audit of the accounts of such units, formations, ships,
establishments etc., as they may select.
22. Defence Services disbursing officers shall submit their cash accounts to the
Controllers of Defence Accounts concerned whose duty is to check the receipts
and the expenditure in detail and to compile the accounts. The estimate and
regulations are the basis of their audit. They are required to check effectually all
outstanding balances of money due to Government.
23. Store accounts of units, formations, ships, establishments, including units of
the Territorial Army and MES, shall be audited locally monthly, quarterly or half
yearly by Local Audit Officers of the Defence Accounts Department according to
their programmes.
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Railway warrants, credit notes, sheet rolls and service books shall also, in
general, be checked at the time of monthly, quarterly or half yearly local audit of
store accounts.
24. Local Audit Officers shall also inspect as notified in their programmes the
accounts of public funds maintained by units, formations, ships, establishments,
including units of the Territorial Army and MES. They have full power and
authority to examine the treasure chest balance, the cheque and account books and
to call for any information, account, and voucher or document that they may
require in connection with the accounts of public funds which are examined by
them.
Officers commanding units, formations, ships and establishments shall
request their bankers a week or ten days before the Local Audit Officer's
inspection is due to commence, to furnish direct to the Local Audit Officer
concerned advances of the balance(s) in the public funds account(s) as at close of
business on the last day of the month immediately preceding that in which the
inspection is to take place. Local Audit Officers are not ordinarily required to
verify the cash balances of those units, formations, ships and Establishments
whose accounts are subject to audit by quarterly audit boards. In case, however,
where they consider that the state of accounts of a particular unit, formation, ship
or establishment is unsatisfactory, they may verify the cash balance by actual
counting.
RESPONSIBILITY FOR OVERCHARGE
25. . Subject to such special orders as the Government may issue many
individual case, the responsibility for an overcharge shall rest primarily with the
claimant, and it is only in the event of culpable negligence on the part of the
controlling officer, countersigning officer or the payers of the bill that the question
of recovery from them shall be considered.
Responsibility of Officers signing or countersigning certificates
26. An officer who signs or countersigns a certificate is personally responsible
for the 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 certificate is
printed is no justification for his signing it unless it represents the facts of 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 so to give the
authority concerned the opportunity of deciding whether the amendments cover
requirements.
Responsibility of Imprest Holders
27. An imprest holder will personally operate the imprest account. It is not
permissible for him to delegate the responsibility, for operation of funds to another
person- except in the case of Indian Navy where the imprest holder may authorise
his supply officer to operate the account.
He is personally responsible for amounts drawn by him until they have been
fully and correctly accounted for to the satisfaction of the Controller of Defence
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Accounts concerned or his representative. He will, therefore, ensure that the

imprest, account, duly supported by the prescribed vouchers, is promptly
submitted to the Controller of Defence Accounts or his representative on the
prescribed date and that no loss occurs through the non-submission or incorrect
preparation of the imprest account, acquaintance rolls or other vouchers: He is
liable to make good to Government any loss resulting from any lapse on his part in
these respects.
Imprest Holders will, in no circumstances, keep large cash balances in
excess of their actual and immediate requirements.
Note:-The term "imprest holder" Includes an A.F. Accountant Officer.
Responsibility of paying officers for disbursement of pay and advances
28. Paying officers will ensure that. (i)
entitlements of soldiers/sailors/airmen shown in their pay books are
correctly recorded initially and are reviewed periodically with reference to
statements of accounts received from the pay office;
(ii) as far as possible, regular monthly advances are paid within the first week of
each month. Payments thereafter will be made only in special cases, e.g.,
advances to men proceeding on leave, advances on account of ration money.
Acquittance rolls for "leave advances" will be clearly so-marked to avoid
unnecessary observations from the pay offices;
(iii) not more than one payment of advance of pay is made to any
soldier/sailor/airman on any date;
(iv) identity of individuals is established with reference to identity card or pay
book as the case may be before making any payment;
(v) advances are strictly within, the net entitlements as recorded in pay books
and not against any anticipated credits. In the case of men whose accounts
are in debt, the cash issues are restricted strictly in accordance with the
orders in force;
(vi) personnel numbers, ranks and names are correctly recorded m acquittance
rolls and correspond with those in pay books;
(vii) (a) all literate soldiers/sailors sign their names on acquittance rolls in
English and failing this in an Indian language. Thumb impressions are
permitted where they are not able to sign. Signatures in Indian languages
other than those in Hindi are to be transliterated into English and thumb
impressions are to be attested (applicable to Army and Navy).
(b) Sailors/airmen ate paid in the presence of a witnessing officer who signs
a certificate endorsed on the rolls to the effect "Paid in my presence". When
casual payments are made to .them and no independent witnessing officer is
present, signatures or thumb prints are taken. Signatures in Indian languages
other than those in Hindi are to be transliterated into English and thumb
impressions are to be attested (applicable to Air Force only);
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(viii) advances paid are recorded in pay books serially at the time of payment and
that each entry is signed personally by the disbursing officer or one of the
witnessing officers in a witnessed pay parade;
(ix) the total amount paid on each acquittance roll is entered in the appropriate
place by paying officer in his own handwriting, both in words and figures,
on the spot in such a way that any interpolation becomes impossible;
(x) acquittance rolls are sent to the Pay Accounts Officers/Naval Pay
Office/A.F., C.A.O. by the first working day following that of payment.
29. In the case of civilian establishment of the Army and Navy, head of an
office is personally responsible for every salary drawn on a bill signed by him until
he has paid it to the person entitled to receive it and has had the acquittance roll
signed by the payee with, if necessary, a revenue stamp. Pay may not under any
circumstances be placed in deposit in the unit/ship/establishment pending return of
an absentee to duty, but see NOTE (1) below. The leave allowances of a non
gazetted officer on leave in India shall be drawn on the establishment bills by the
head of the office and the official on leave must make his own arrangements for
getting it remitted to him.
The head of an office may authorise a commissioned/gazetted officer
serving under him to sign a salary bill, voucher or order, for him. The name and
the specimen signatures of the, officer shall be sent to the Controller of Defence
Accounts concerned. This will, not, however, relieve the head of the office, in any
way, from his responsibility for the accuracy of the bill, voucher or order or for the
disposal of the money received in payment. This will not apply in the case of
Military farms where the manager or the subordinate who functions as the
manager of a 'farm shall sign a bill, voucher or order personally.
Note 1. Unless it is certain that the amount can be paid at once, the salaries
of absentees shall not be Included In monthly establishment bills, but drawn in
arrears on their return. If a salary had been drawn, and it is not disbursed by the
close of the month or if any amount has been over drawn, It shall be deduced from
the next establishment bill, on which a note explaining the deduction shall be
entered.
Note 2.-In respect of civilians employed with the Air Force, Pay Accounts
are maintained under the "Individual Running Ledger Account" system, see
Financial Regulations Part II.
Note 3.-As an exception to the general Rule, the payment of pay and
allowances to the non-gazetted, non industrial and industrial employees of ERDE,
Bangalore will be made by crediting the bank accounts of such employees who
have opted to receive payment through their bank accounts. Under this system a
consolidated cheque will be issued by E.R.D.E. Bangalore in favour of the Bank
duly supported by a statement showing the particulars of the individuals concerned
and the amounts due in each case. The S.B.I. will return a copy of the statement
duly certifying on each page that the amounts have been credited in individual's
current/Saving Bank Accounts.
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Responsibility for physical verification of stores

30. The responsibility for carrying out physical verification of stores rests
primarily with the executive authorities concealed. The verification should be
carried out promptly as it falls due. Whenever possible, the staff employed on
stock verification should be independent of the staff responsible for the physical
custody of the stores, or for keeping accounts thereof, and should include persons
who are conversant with the classification, nomenclature and technique of the
particular classes of stores to be verified. The verification should never be
entrusted to low-paid subordinates (except in the case of A.O.C. establishment and
units, where the verification will not be carried out by personnel of lesser rank
than supervisor/storeman/leading hand) and must always be made in the presence
of the officer responsible for the custody of the stores or of a responsible person
deputed by him.
The results of stock verification and the ground balances, as verified, will be
recorded by a responsible officer of the stock-taking party in registers, ledger
folios,-etc., and/or other documents specially prescribed for the purpose.
Discrepancies found on stock-taking between ground and ledger balances will be
promptly investigated and adjusted.
Notwithstanding the fact that the responsibility for carrying out stockverification rests primarily and solely on the executive authorities concerned,
physical verification of stock may be carried out at any time by an officer of the
Defence Accounts Department whenever such verification is considered necessary
by that department. The Officer Commanding, the unit/ship/establishment will
provide full facilities to the officer of the Defence Accounts Department for this
purpose. The Defence Accounts Department will also see that stock verification, as
laid down in standing orders, has been duly carried out by the executive
authorities, that the instructions contained in the preceding sub-paragraph have
been fully observed and that the system of verification adopted by the executive
authorities is adequate and proper.
Responsibility for handing and taking over
31. Every officer in charge of Government money or stores will, on hading over
charge, check the cash or stores in his custody in company with the officer who
relieves him, to the extent and in the manner laid down in the departmental
regulations of the respective services. A transfer of charge will always take place
when an officer ceases to hold a lien on his appointment or when he proceeds on
leave and intends to retire on the termination of such leave. In other cases the
officer need not formally make over charge, provided he holds himself responsible
for the acts of his locum tenens and records that fact in writing before he leaves
the unit/ship/establishment.
In every case where cash or stores are handed over, the duty of verifying
cash or store balances devolves upon the relieving officer, who will record having
done so in the relevant account books. 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
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the relieved and the relieving officer, showing the cash and imprest balances, and
the number of unused cheques, if any, made over and received by them
respectively. The transfer certificate will be prepared on the prescribed form and
one copy of the transfer certificate together with the required copies of the
specimen signatures of the relieving officer will be forwarded to the Controller of
Defence Accounts concerned soon after taking over the appointment. Any
omission to furnish this certificate renders the relieving office responsible for his
predecessor's liabilities. Lists of all damaged property and discrepancies will be
made out and attached to the transfer certificates. Whenever cash or stores are
transferred from one charge to another, a temporary receipt is to be taken in
anticipation, if necessary, of the issue of formal receipt vouchers. The relieving
officer 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.
Note -The term "leave" includes casual leave. Handing and taking over of
cash and Government stores will take place even in cases of absence on temporary
duty exceeding 7 days duration but In the cases of absence not exceeding 7 days,
handing and taking over of cash would still be necessary. 32. If an officer in
charge of Government property dies or is admitted to hospital before being
relieved or in case an officer taking over command does not arrive before the
departure of the outgoing officer, the senior officer present will provide for the
security of the Government property and will at once take over the cash and/or
stores himself or detail a suitable officer to do so. If such an officer or his higher
executive authority considers it necessary, a board of officers will be assembled
for stock taking and the senior officer of the unit/ship/establishment will be
detailed to- take over and be responsible for all cash and stores until handed over
by him to the permanent incumbent of the appointment. In case a board of officers
is not assembled the officer concerned who took over temporarily will still be held
responsible for the cash and stores upto the time of handing over to the officer
assuming command. The successor officer will be held to have accepted the stores
and/or cash from the date he actually takes over. The permanent incumbent will
invariably hold a stock taking board before he takes over charge of his
appointment.
Interpretation of financial and accounts orders
33. Questions relating to the interpretation of the orders of the Government of
India involving financial or accounts considerations or the verification of the
services shall, in the first instance, be referred by the local authority to the
Controller of Defence Accounts concerned.
Every reference to Army HQ/Naval HQ/Air HQ , or to the Government 'of
India shall be accompanied by a report from the Controller of Defence Accounts
concerned when the nature of the question under reference indicates that such a
report is required.
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AUDIT AND OBJECTIONS

Written consent of the Controller of Defence Accounts required for
expenditure challenged by Unit Accountant or Local Audit Officer
34. In cases where the regularity of an item of expenditure, including t e issue of
Government stores, has been challenged by a unit accountant or other audit
authority, no expenditure shall be incurred by the Commanding Officer, of the
Unit/ship/establishment or formation concerned without the previous written
consent of the Controller of Defence Accounts concerned on the same item.
Statistics of Expenditure
35. The duty of preparing all statistical returns of expenditure rests with the
Defence Accounts Department but the Controller of Defence Accounts is at liberty
to call on executive officers for any statistics or assistance he requires when the
necesary information is not available in his own office.
Demand for information by audit
36. It is the duty of every unit/formation commander or Commanding Officer,
ship to see that the Controller of Defence Accounts is afforded all reasonable
facilities in the discharge of his functions and is furnished with the fullest possible
information which he may ask for the preparation of any account or report which it
is his duty to prepare.
The vouchers, documents and information required in support of cash and
store transactions are specified in the regulations relating '` thereto in the
instructional notes to the IA forms, AF forms and IN forms prescribed therefor,
and pamphlet containing the list of recognised claims showing how and. when
cash should be preferred by units, formations and, individuals. An audit officer
should not call for any information, account, document or voucher which the
Defence Services Regulations do not justify, but any information, account,
document or voucher required must be furnished without challenge.
In the case of Army, should an officer consider any demand made on hi to
by an audit officer, other than a Local Audit Officer, to be unnecessary, he should
represent the matter through the Brigadier or Sub-Area Commander to the
Controller of Defence Accounts who will, if he is unable to reverse the decision,
record his opinion thereon and forward it to the Area Commander. The Area
Commander will refer the matter to the higher authority if he is unable to concur
with the Controller of Defence Accounts. In the case of such a demand from a
Local Audit Officer, the officer concerned will first refer the matter to the
Controller of Defence Accounts concerned and if he concurs with the Local Audit
Officer's demand the procedure referred to above will then be followed.
In the case of military farms the procedure as stated above will be generally
followed with the modification that the reference to the Controller of Defence
Accounts will be made through the Deputy Director of Military Farms at
Command Headquarters and if the latter is unable to concur with the Controller of
Defence Accounts, he will take up the matter with the Director of Military Farms
at Army Headquarters.
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In the case of Navy, should an officer consider any demand made on him by
the Controller of Defence Accounts (Navy) to meet audit requirements to be
unnecessary, he is at liberty to represent the matter to Naval Headquarters. Such
reference will only be made to Government when the Chief of the Naval Staff is
not satisfied with the decision of the Controller of Defence Accounts (Navy).
In the case of Air Force the procedure as stated above for the Army will be
generally followed with the modification that the reference to the Controller of
Defence Accounts (Air Force) will be made through the Command Controller and
if the latter are unable to concur with the Controller of Defence Accounts (Air
Force), they will take up the matter with Air Headquarters.
Responsibility for Losses
37. Every Government officer 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 also for any loss arising from fraud or negligence on
the part of any other Government servant to the extent to which it may be shown
that he contributed to the loss by his own action or negligence. Detailed
instructions of such responsibility are embodied in Appendix I, of Vol. II of these
Regulations.
Questions involving write off of losses shall be dealt with promptly by all
concerned, and it is of the greatest importance that delay in dealing with any loss
due to fraud, negligence, financial irregularity, etc., be avoided. Every important
case shall be brought to the notice of superior authority as soon as possible, the
administrative authority shall report to his superior and the audit authority to his
superior.
Financial irregularities including losses as indicated below should be
reported to the Controllers of Defence Accounts immediately they are detected : (a) All losses of public money and stores due to theft, fraud or neglect, if the
value exceeds Rs. 500/-.
(b) All losses of public money and stores due to other causes, if value, exceeds,
Rs.1,000 except in case of loss of immovable property due to flood,
earthquake or other natural calamities which should be reported only, if the
value exceeds Rs. 5,000- .
(c) All losses of aircraft, helicopters etc.
(d) All losses of Naval aircraft, ships, submarines etc.
(e) Case of unauthorised issues of cash (including over issues of pay and
allowances) and stores and unauthorised issue of railway warrants, credit
notes, concession vouchers etc. or loss of these documents.
(f)
Irregularities in the maintenance of cash and store accounts e.g., nonmaintenance/ improper maintenance and malpractice in maintenance of
accounts.
(g) Any irregularity/loss, irrespective of the type, monetary value or cause as.
mentioned above presenting unusual features or disclosing defects in rules
of procedure.
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2.
The reports should contain the following information and should be
furnished in duplicate:(a) Nature of irregularity/loss.
(b) Period involved.
(c) Accounting documents affected.
(d) Modus operandi of the fraud, if it is a case of suspected fraud.
(e) How detected?
(f) Whether an enquiry has been ordered and if so, with what results; or
whether sanction of the competent authority has been obtained for not
holding a Court/Board of Inquiry.
(g) Whether any disciplinary action has been/is proposed to be taken and if
disciplinary action has already been taken the nature of it and names and
designations of the individuals affected.
(h) Remedial measures taken to avoid recurrence of the irregularity.
(i) Any other useful details.
A copy of the report received by the Controller of Defence Accounts will be
furnished by him to the Local Stationery Audit authorities also.
Financial Irregularities- Disciplinary Action in Connection with
38. The responsibility for disciplinary action in cases of financial irregularities
rests with the administrative authorities and ultimately with the Government of
India. These authorities will inform the audit officers concerned of the exact nature
of disciplinary action taken by them. If in any particular case it has not been
possible to take adequate action, the reasons why this has not been possible be
indicated. In other words, sufficient facts should be given to satisfy audit that
whatever action was reasonable or possible has been taken.
RATES OF EXCHANGE
Official Rate of Exchange
39. Consequent of the passing of the Currency Act of 1927, the conventional
rate of exchange is also called the official rate of exchange, for the Government
accounts. This rate will be adopted for the conversion of all sterling transactions
(except those for which special or privileged rates have been prescribed) into
rupees and vice versa.
Average Rate of Exchange
40. This is a monthly rate advised by the Ministry of Finance, the calculation
being based on the average of the daily Calcutta Telegraphic Transfer Rates on
London during the month. This rate is adopted for the calculation and adjustment
of gain or loss by exchange on English transactions appearing in the monthly
accounts of the High Commissioner for India and also for the conversion of the
sterling transactions appearing in the inward London Accounts which are
adjustable under Revenue, Service or Capital heads in the Government accounts.
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Incidence of Pay and Allowances

41. An officer must draw his total pay and allowances from the department in
which he is serving or from which he is absent on leave. But the pay and
allowances of an officer permanently transferred from Defence Services to civil
duty. will be paid by the civil department (Centre or State) from the date on which
he gives over charge of Defence Services duty; when transferred from civil to
,Defence Services duty, his pay and allowances will cease to be payable in the civil
department (Centre or State) from the date on which he relinquishes charge of his
civil duty. This rule is also applicable to the case of an officer transferred from one
branch, of the Defence Services to another, viz, Navy, Army and Air Force.
The transit pay and allowances both ways of an officer whose services are lent by
the Defence Services to the civil department (Centre or State) and vice versa
should be charged to the borrowing department. This principle will apply to
traveling allowances even in cases' where the officer lent, takes leave either, before
joining the borrowing department or before joining the lending department.
The incidence of transit pay and allowances and transfer travelling
allowance of a Govt. servant who proceeds on transfer from one foreign employer
toy another without reverting to Government service shall be borne by the; foreign
employer to whom the employee proceeds on transfer.
Note:-The word "allowances" in this rule includes travelling allowances. It
is to be understood that the pay of an officer who relinquishes Defence Services
duty for permanent civil duty in the forenoon will be chargeable to the civil
department (Centre a State) for that day; if on the other hand, the officer
relinquishes Defence Services duty in the afternoon, his pay for that day will be
chargeable to the Defence Services Estimates and vice versa in the case of an
officer transferred from civil to permanent Defence Services duty.
Leave and Pension Contributions
42. The leave and pension contributions and their recovery in respect of the
military officers and other ranks lent on Foreign Service shall be regulated by the
Fundamental Rules.
The rates of contributions prescribed by Government are given in Appendix
V to Vol. 11 of these Regulations.
Distribution of Salaries
43. No increase in the fixed rates of pay of office or executive establishments
will be made without previous sanction of Government, nor is the head of an
office at liberty to readjust salaries by giving one person more and another less
than the sanctioned pay of his appointment, or' to distribute the pay of, an absentee
otherwise than as provided in the Civil Services Regulations.
But an excess appointment in a lower rank, grade, or class may be made
against a vacancy left unfilled in a higher rank, grade or class. For each vacancy in
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a higher rank, grade or, class only one extra appointment in a lower rank grade or
class is admissible.
The competent authority to make an excess appointment in a lower rank,
grade or-class against a vacancy left unfilled in a higher rank, grade or class will
be the authority competent to make appointments in both higher and lower ranks,
grades or classes as the case may be.
44 to 50
Blank.
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CHAPTER-III SANCTION OF EXPENDITURE

CONSTITUTIONAL EXECUTIVE AUTHORITY
51. The executive power of the Government of India is vested in the President
and in the case of Defence Services it is of exercised by him through the Ministry
of Defence in accordance with the Constitution of India. .
52. All executive action of the Government of India shall be expressed to be
taken in the name of the President.
CONDITIONS UNDER WHICH DEFENCE EXPENDITURE MAY BE
SANCTIONED
53. Expenditure from the Defence Services Estimates may be sanctioned by the
Ministry of Defence and by the authorities subordinate to it on the, following
conditions -,
(a) The expenditure must pertain to the Defence Services.
(b) The exercise of delegated power is subject to the observance of any general
or special directions which the authority delegating power may issue at any
time, whether generally or with reference to a particular case.
(c) No expenditure which has not been provided for in the budget or, if
provided in the budget, has not been duly sanctioned, shall be authorised
without the concurrence of the financial advisor concerned.
PROPOSALS INVOLVING ABANDONMENT OF REVENUE
54. No order invoking abandonment of revenue shall be issued without the
concurrence of the financial adviser concerned.
POWERS OF THE MINISTRY OF DEFENCE AND OTHER
AUTHORITIES AT HEADQUARTERS OF THE DEFENCE SERVICES
55. Every sanction for fresh expenditure and every order, having a financial
bearing, which it if, proposed to issue from (a) the Ministry of Defence (b) Army
Headquarters, (c) Naval Headquarters,
(d) Air Headquarters, (e) the DG, AFMS, (f) DG.OF, (g) Scientific Adviser to the
Minisrty of.Defence, (h) CGDP, (i) DGDE (j) ISS and A Board' shall receive the
concurrence of the Financial Adviser, Defence Services, or of an officer having the
power' to act for him, unless otherwise provided for in the regulations. The
sanctions having financial bearing and not covered by existing rules will in all
cases issue-in the forrrl of a Government of India letter or Army/Navy/Air Force
Instruction.
Ministry of Defence have powers to create posts of civilians (not
interchangeable with those for service personnel) on pay of less than Rs. 2750/- in
the prescribed scale for a period not exceeding two years only. In case extension of
such posts is considered necessary, the proposals should be submitted to
ISEC/ASEC/AFSEC/NSEC for examination in the usual manner and approval of
Government obtained.
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CLASSES OF EXPENDITURE THAT MAY NOT BE SANCTIONED

56. No sanction may be given by an officer possessing financial powers under
these rules which will involve expenditure from the budget grant of any future
year, except as separately provided for in the Regulations for the M.E.S. and in
respect, of the temporary establishments or labour in excess of fixed scales,
workmen and temporary establishments or labour referred to in Appendix II, to
Vol. II of these Regulations.
Nothing in these rules shall be held to authorise an officer possessing
financial powers: (a) to sanction a temporary increase to the clerical establishment of his own
office or -that of any member of his staff. Such temporary increase requires
the sanction of the next higher competent financial authority;
(b) to sanction temporary establishment required for more than six months/one
year in the case of financial authorities specified in clause (1) of Schedule 1-Appendix II-Part I -Army, sub schedule À' Schedule I -Appendix II-Part II- Navy and Schedule I -Appendix 11-Part III-Air Force. This requires the
sanction of the next higher competent financial authority;, but the
entertainment of temporary establishment for a period of more than two
years or the creation of a temporary post an more than Rs. 250 per mensum
requires the sanction of the Government of India (except as provided for in
the Regulations for the MES and Appendix II to Vol. II of these
Regulations).
Further, nothing in these rules shall be held to authorise an officer to:(c) sanction expenditure in excess of fixed annual allotments;
(d) sanction expenditure which is liable to involve a permanent alteration of an
existing rule or establish a new rule or practice involving further
expenditure in the future e.g., admit unauthorised persons to treatment in a
military hospital, transfer an office, from the plains to the hills;
(e) sanction a pension in excess of the amount admissible under rule;
(f)
sanction an advance or loan not authorised by rule;\
(g) authorirse the payment to Government servants of any remuneration or
allowance to which they are not entitled under ordinary rule;
(h) sanction the provision of new kinds and patterns of furniture.
Note: The expression "Involve expenditure from the budget grant of any
future year" is not intended to include petty Incidental charges on materials or
labour which could be purchased or paid for from an officer's contingent grant
without any special sanction.
DELEGATION OF POWERS BY THE PRESIDENT
57. Power to sanction expenditure from the sanctioned grants upon subjects
pertaining to the Defence Services may be delegated by the President, upon such
conditions as he may think fit, either to any officer subordinate to him or to a state
government acting as his agent in relation to a Defence Services subject. Any
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sanction given under this rule shall remain valid for the specified period for which
it is given.
Orders of delegation passed under this rule may contain a provision for redelegation by the authority to which the powers are delegated.
OBJECTS ON WHICH EXPENDITURE MAY BE SANCTIONED
58. The objects on which expenditure may be sanctioned under the financial
powers laid down in Schedule I of Appendix II (Pt. 1, II and III ) to Vol, II of these
Regulations are : A-ARMY
(i)
Each item of contingent expenditure on account of any workshop, including
ordnance and clothing factories, bakery, store depot, hospital, Military
Farms or Remount Unit and Army Postal Services, other units/formations
and category À' establishments.
(ii) Temporary establishments or labour in excess of fixed scales.
(iii) Manufacture or issue of special tools and equipment or other articles for
experimental purposes or for expediting production.
(iv) Rewards for information leading to the, conviction of incendiaries or for the
recovery of stray cattle.
(v) Rewards for specially prompt and meritorious action in connection with the
extinguishing of fires and the saving of life and property from damages
arising therefrom.
(vi) Rewards for information leading to the conviction of personnel accused of
bribery and corruption.
Note 1.-Rewards under clause (v) and (vi) above not exceeding Rs. 500 in
any individual case will be sanctioned by the C.F.A. concerned, cases involving
payment of rewards exceeding Rs. 500, but not exceeding Rs. 1,000 will be
sanctioned by the GOC-in-C of Command; those involving payment of rewards
exceeding Re. 1,000 will be submitted for orders of the Government of India.
Government servants shall also be eligible for the above rewards In respect
of acts other than those performed in their official capacity.
Note 2.-In addition to the objects on which expenditure may be sanctioned
under Rule 58(A), the officers of the Army Postal Services may incur contingent
expenditure on account of any Army Postal Service establishment upto the
amounts shown in Schedule 1, Appendix II-Part I-Army to Vol. II of these
Regulations.
(vii) Rewards for information leading to the prevention of thefts from
departments of supply and EME Units/Establishments.
(viii) Expenditure on tests, trials and experiments
within
the
annual
appropriations placed at the disposal of the Director of Ordnance Services,
Director of Mechanical Engineering and the Director of Technical Development,
or within the monetary limit fixed for these purposes, without reference to the
financial limits prescribed in Appendix II to Vol. II of these Regulations, provided
that the prior concurrence of the financial adviser in obtained.
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(ix)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Expenditure on tests, trials and experiments by the Commandant, Armed

Forces Medical College, Poona, from the annual appropriation placed at the
disposal of the Director General, Armed Forces Medical Services, within
the monetary limits of Rs. 200/-.
B-Navy
Employment of temporary establishment or labour in excess of fixed scales.
The incumbents of such appointments should be restricted to the scales of
pay and allowances laid own by Government for similar appointments
already sanctioned.
Manufacture or issue of equipment or other articles for experimental
purposes covering essential applied research on tools, equipment, etc.,
which are of interest to or are in use in Navy, or for expediting production.
Rewards for information leading to the conviction of incendiaries or for
information leading to prevention of thefts from the Dockyard.
Rewards for specially prompt and meritorious action in connection with the
extinguishing of fires and saving of life and property from damage arising
therefrom.
Rewards for information leading to the conviction of personnel accused of
Monthly Contingent Expenditure.
C -Air Force
(i)
Monthly Contingent Expenditure (Refer Appendix II-Part III-Air Force
General Notes, to Vol. I of these Regulations).
(ii) Reward for information leading to the location of incendiaries.
(iii) Reward for specially prompt and meritorious action in connection with the
extinguishing of fires and the saving of life and public property from
damages arising therefrom
(iv) Rewards for information leading to the conviction of personnel accused of
(v) Temporary establishment or labour in excess of fixed scales/establishment.
Establishment can be created for a maximum period of one year subject to
availability of funds in the Budget.
(vi) (a) Sanction of proposals for experiments and trials of equipment for
projects, measures and trials.
(b) Manufacture or issue of special tools and equipment or other articles
for experiments or for expediting production including trials of
equipment for essential applied research on tools, equipment etc.
(vii) Modification of equipment, vehicles, aircraft etc.
(viii) Airlifting of Non-A O G stores in respect of operationally urgent cases by
civil aircraft.
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FINANCIAL POWERS OF SUBORDINATE AUTHORITIES

59. Financial powers of different authorities subordinate to the Government of
India in respect of the objects of expenditure enumerated in Rule 58 and other
matters are laid down in Appendix 11 to Vol. II of these Regulations.
The financial powers in respect of MES expenditure and grant of pensions
are laid down in MES Regulations and Pension Regulations respectively.
60. A sum of Rupees 60,000 per financial year is placed at the disposal of the
Ministry of Defence to enable non-recurring payments to be made by the
authorities specified below on the following objects : (a) Donations when visiting Training Establishments, Boy's Training Units,
etc.
(b) Provision of trophies; flags etc., for presenting to Training Establishments.
(c) Provision of amenity articles when visiting hospitals, welfare centres etc.
(d) Similar grants.
(e) Miscellaneous expenditure incurred by the Chief of the Army Staff/the
Chief of the Naval Staff/the Chief of the Air Staff while on tour for which
no specific provision exists in the Regulations, e.g., gratuities to servants,
coolie hire, etc. This expenditure in a Financial Year should not exceed 15%
of the amount allocated to the Chief of the Army Staff and 10% of the
amount allocated to the Chief of the Naval Staff and the Chief of the Air
Staff.
The various authorities and the maximum limits upto which each of them
may accord sanction will be as follows: 1.
2.
3.
The Chief of the Arm Staff

The Chief of the Naval Staff
The Chief of the Air Staff
Rs. 30,000 per financial year

No sanction accorded by the above authorities should involve an express,

contravention of any existing rules contained in the authorised Codes of
Regulations nor should grants be made for services or individual projects on which
the, Government of India have definitely refused previously to incur expenditure.
The unspent balance at the end of the financial year will lapse to Government.
POWERS TO DISPOSE OF TRAVELLING ALLOWANCE CLAIMS OF A
PETTY NATURE
61. Competent authorities as defined in Travel Regulations may sanction in
consultation with their financial advisers, travelling claims, including use of
warrants and conveyance of stores on credit notes for amounts not exceeding
rupees two hundreds in any case, which in their opinion would ordinarily be
sanctioned by the Government of India.
The above powers shall not be exercised in the following cases:____________________________________________________________________________________________________________________
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(a)
(b)
(d)
Over issue of travelling allowance and erroneous issue of warrants and

credit notes due to culpable negligence, which fall to be dealt with under the
rules in Chapter VII,
Travel by a class higher than that allowed by the rules. (c) Conveyance of
baggage in excess of manudage authorised (as distinct from conveyance of
the authorised quantity by passenger train instead of goods train).
Grant of daily allowance in excess of daily rates authorised.
Note 1.The Monetary limits prescribed in this rule should not be taken as
applying to the total amount of TA claim, etc. In question but to such portion of the
claims as would otherwise have been submitted to Government for sanction had
delegation of powers not been made.
Note 2.For the purposes of the above rule the DDGOF is also a competent
authority.
EXERCISING OF FINANCIAL POWERS
Provision of funds necessary before financial powers can be exercised
62. To financial powers conferred on authorities subordinate to the Government
of India shall be exercised subject always to the condition that funds can be made
available from the sanctioned budget provision, either from the provision made for
the purpose, or from the provision made for unforeseen expenditure or by reappropriation. Powers are personal
63. The powers authorised in these regulations are personal and cannot be
delegated to any subordinate officer; but see Rule 65.
When lower authority cannot sanction a measure in installments
64. The monetary limit, which has been set in each case, extends to each
separate sanction, the criterion in every case is the total cost of a measure and no
measure which requires the sanction of higher authority shall be sanctioned by a
lower authority in instalments.
Other officers may be authorised to sign for an officer possessing financial
Powers
65. (a) In every case the officer possessing financial powers is persona y and
unreservedly responsible for any orders purporting to be issued in accordance with
the degree of relaxation permitted by this rule, whether the communication
conveying the orders is signed by himself or by an officer subordinate to him.
(b) On the strict understanding that the sole responsibility rests on him, an
officer possessing financial powers may authorise a staff officer to, sign is
communications and documents of a financial character on his behalf, provided
that the name of the officer who is authorised to sign is communicated to the audit
officer concerned and that concurrent authorisation to several officers to the full
limit of powers, is not made. Subject to this condition, Chief of the Air Staff,
GOC-in-C, Commands and E-in-C may, however, authorise one or more selected
staff officers concurrently to sign on their behalf, communication and documents
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of a financial character. In such cases it shall not be necessary for the officer
possessing financial powers him to sanction each item personally. This applies also
in the case of special powers to sanction expenditure not precisely covered by rule.
In relaxation of the provisions of clause (b) above and subject to the other
conditions laid down therein, the Director General, Armed Forces Medical
Services, may authorise DDG (E&S) and ADG (Prov) to sign on his behalf, papers
of financial character regarding local purchase of Medical Stores under his
financial powers.
Note 1.-The Officer Supervisors in the Armed Forces Headquarters and
Inter-Service Organisations may be treated as 'Staff Officers for the purpose of
signing communications of a financial character on behalf of the competent
financial authority in terms of pare (b) above.
(c) Provided that the above conditions are observed, claims for minor
allowances which should ordinarily be countersigned by an Area
Commander/AOC may be countersigned "for an Area Commander/AOC" by a
brigade or Sub-Area Commander/Staff Officer empowered to sign for him.
In the case of Navy, claims for minor allowances which should ordinarily be
countersigned by the Chief of the Naval Staff, or the Naval Administrative
Authorities may be countersigned by a selected officer empowered to sign for him.
(d) When an officer possessing financial powers is absent on leave and no
officer has been formally appointed in his place, financial responsibility will rest
on the officer actually performing his duties that will for the time being exercise
the full powers of the absentee. The subordinate officer's signatures in these cases
should however indicate that he signs "for . . . .
. . . absent on. . .."
(e) When an officer possessing financial powers is absent on tour or temporary
duty, he may permit in writing another officer to sign letters on his behalf. An
audit officer will accept the subordinate officer's signature as implying that the
orders have been approved by the superior officer, provided that the signing officer
signs "for. . . . . .absent on tour/temporary duty".
(f)
When an Officer possessing financial powers has been posted out and no
officer has been formally appointed in his place, financial responsibility will rest
on the officer actually performing his duties that will for the time being exercise
the full powers of the appointment.
Manner of exercising financial Powers
66. (i) Whenever a competent financial authority desires to re- appropriate
savings in order to meet expenditure which he is competent to sanction under these
rules, he shall, if the amount exceeds Rs. 500 forward TAFA-497 to the Controller
of Defence Accounts for report. If the Controller of Defence accounts reports that
funds can be made available by re-appropriation, orders of the authority competent
to sanction the re- appropriation will be -obtained for incurring the expenditure
proposed. If the Controller of Defence Accounts reports that funds cannot be made
available by re-appropriation the expenditure shall not be incurred without the
previous sanction of the Government of India ; in case of urgent necessity,
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however, the CFA may incur the expenditure and report his action with a full
explanation of his reasons to the government of India.
(ii) If the amount which it is desired to re-appropriate does not exceed RS. 500
and if the Controller of Defence Accounts had not already reported that no savings
are available, the expenditure may be incurred without reference to the Controller
of Defence Accounts on the question of re-appropriation, notwithstanding the
provisions of Rule 62.
(iii) If objection is taken in audit to any item of expenditure sanctioned by the
competent financial authority in exercise of the powers conferred by these rules,
and the objection is not withdrawn as the result of any representation or
explanation made by the competent financial authority to the Controller of
Defence Accounts, it shall be incumbent on the former to report the transaction to
the next higher financial authority for orders. The report will be submitted through
the Controller of Defence Accounts who shall state full the grounds of his
objection. Pending a final ruling on the audit objection, further sanctions of that
nature should not be accorded.
Controllers of Defence Accounts function as Financial Advisers to
Commanders
67. The Financial Adviser, Defence Services or officers authorise to act on his
behalf are responsible for the scrutiny of all proposals for expenditure from public
funds pertaining to the Defence Services.
Controllers of Defence Accounts are invested with the duty of affording
financial advice to local commanders and the staff and subordinate officers, and
the fullest use shall be made by them of the assistance of controllers in
investigating all branches of expenditure with a view to restricting expenditure as
far as possible, consistent with efficiency.
Communication of sanctions to Controllers of Defence Accounts
68. Sanction and orders of the Government of India Service Headquarters,
DGOF and DGAFMS are communicated direct to Controllers by the Financial
Adviser, Defence Services. Sanctions and orders by lower authorities are
communicated direct to the Controllers of Defence Accounts by, such authorities.
Sanctions and orders of :(i)
the Chief of the Army Staff are communicated by the Principal Staff
Officers and Head of Branches concerned;
(ii) the Chief of the Naval Staff by those authorities, who are authorised to sign
"for" the Chief of the Naval Staff;
(iii) the Chief of the Air Staff are communicated by those authorities who have
been delegated powers to sign on behalf of the Chief of the Air Staff.
Copies of letter issued by the Government/Service Headquarters etc. which
authorise payment or have any financial implication and which are intended for
communication to the Controller(s) of Defence Accounts who has (have) to act
upon the sanction, should be signed in ink. Other copies viz. those going to lower
formations, other Controllers of Defence Accounts, audit officers may be issued
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under cyclostyled signature. The above does not, however, apply to the sanctions
of a general nature including those involving delegation of financial powers but
only in respect of sanctions to expenditure for particular item of expenditure/for an
appointment/regularisation of loss, with a, definite monetary implications.
Date of effect of sanction
69. Orders of the Government of India take effect from the date t ey bear, unless
otherwise specified.
Lapse of Sanction
70. A sanction for any fresh expenditure which has not been acted on for a year
lapses unless it is specifically renewed, except in the case of:
(a) an allowance, sanctioned for an appointment or a class of officers, not
drawn by a particular incumbent of the appointment or by a particular set of
officers;
(b) additions made gradually from year to year to a permanent establishment
under a general scheme;
(c) an approved MES work. Fresh sanction is necessary however, if work is not
commenced within 5 years of the date of administrative approval.
Note 1-The period of one year referred to in the above rule- should be
calculated from the date of issue of the sanction and the sanction should be
considered to have been acted on If payment in whole or in part has been made in
pursuance of the sanction within twelve months from the date of its issue. In cases
in which part payment has been made within the stipulated period, the subsequent
payment of the balance may, subject to the existence of budget provision, be made
without a fresh expenditure sanction. The bill for the subsequent payment, besides
containing a reference to the expenditure sanction, should also contain a reference
to the number and date of the voucher under which the first payment was made.
Note 2-When there is specific provision in a sanction for any fresh charge
that the expenditure would be met from the budget provision of a specified
financial year, such sanction will lapse on the expiry .of the specified financial
year.
Note 3-In the case of purchase of stores a sanction shall be deemed to have
been acted upon if tenders have been accepted (in the case of local to direct
purchase of stores) or the Indent has been placed on the Central Purchase
Organisation (in the case of Central Purchases) within the prescribed period of one
year from the date of issue of the sanction, even if the actual payment in whole or
in part has not been made during the said period.
71. In case the period of validity of a Government sanction already issued is to
be extended, a separate Government sanction is required to be issued with the
approval of the competent authority and concurrence of the [Integrated] finance,
where necessary.
72. to 80 Blank.
CHAPTER-IV BUDGET ESTIMATES
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INTRODUCTORY
81. The budget estimates dealt with in this chapter refer to the estimates of
receipts and expenditure relating to Defence Services arising in India and abroad
during the financial year. They are submitted along with the main budget of the
Central Government to the Parliament each year and the provision for gross
expenditure is included in the Demands for Grants for obtaining the vote of the
Parliament. Within the sums so voted, Ministry of Defence has to arrange for
financing of services for which that Ministry is responsible.
ESTIMATFS-BY WHOM PREPARED
82. The expenditure for which provision is made in the Defence Services
Estimates falls broadly into the following categories.
(1) Pay and allowances of regular personnel of the Armed Forces.
(2) Payments to Industrial Establishment employed in store depots, factories,
etc.,
(3) Transportation charges.
(4) Miscellaneous expenses.
(5) Payment for stores.
(6) Works expenditure and
(7) Pensions.
Expenditure falling under categories (1) and (7), above represents, for the
most part, obligatory charges and unavoidable commitments dependent on the
strength and composition of Armed Forces and various other factors which are
governed by the policy decisions of the Government of India, and is, therefore,
controlled centrally by the Armed Forces Headquarters. The accounting heads,
under which the expenditure of this nature is compliable, are called "centrally
controlled heads".
Expenditure falling under categories (2) to (6) above is, in general
susceptible to control against budget provision by authorities concerned. The
accounting heads under which the expenditure of this nature is compilable are
called "locally controlled heads". These heads are laid down by the Ministry of
Defence (Finance) and notified from time to all, controlling authorities.
83. The estimates in respect of locally controlled heads in the case of the Army
will be prepared by Headquarters Commands or Independent Areas and
Commanders of- Units and Formations which are directly administered by Army
Headquarters. In the case of Air Force, these will be prepared by Commands and
Independent, Stations/Units. In the case of Navy, these will be prepared by the
local administrative authorities concerned subordinate to Naval Headquarters.
These estimates will be submitted through the Controller of Defence Accounts
concerned so as to reach the respective branches at the Armed Forces
Headquarters by the dates shown below:
Sl
Details of the Estimates
For the
For the Navy
For the Air
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No.
Army
1.
Preliminary Report for the 10th August 25th July
current financial year.
2.
(a) Preliminary Revised 30th October 15th October
Estimates for the
current financial
year.
3.
25th October
(b)
Forecast Estimates
For the ensuing
financial year.
30th October
15th October
25th October
(a)
Revised Estimates
for the current
financial year.
10th
December
10th
December
10th
December
(b)
4.
Force
10th August
Budget Estimates
10th
10th
for the ensuing
December
December
financial year
(correction to item 2
above).
Modified Appropriations 28th February 20th February
for the current financial
year.
10th
December
5th March
Note-It should be borne in mind that the estimates at Serial No. 3 constitute
the principal estimates particularly for the current year, since the requirement of
funds indicated therein forms the basis of the Supplementary Demands, which are
normally required to be finalised by about the middle of January. The estimates at
Serial No. 3 should, therefore, be framed taking all foreseeable factors into
account.
The authorities at Armed Forces Headquarters will, after scrutiny, forward
these estimates to the Ministry of Defence (Finance) and the Ministry of Defence
along with the estimates in respect of the centrally controlled head (See Rule 87).
84. The various estimates in respect of Ordnance and Clothing factories will be
prepared by the General Manager of Factories and, after scrutiny by local accounts
officer, transmitted to the Director General of Ordnance Factories. The Director
General of Ordnance Factories will consolidate the various estimates and submit
the consolidated estimates in the final form to the Ministry of Defence (Finance).
[through Deputy Financial Adviser (Factories)].These estimates will not be routed
through the Chief Controller of Finance and Accounts (Factories).
85. The various budget estimates (Schedules of Demands) in respect of the
MES expenditure are not routed through the Controllers of Defence Accounts but
are submitted by Chief Engineers at Command Headquarters direct to the E-in.Cs
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Branch at Army Headquarters. The detailed rules and procedure for the preparation
of Schedules of Demands, etc., are laid down in Appendix B of "Regulations for
the MES" and any special instructions that may be issued on -the subject from
time to time.
86. Blank.
87. The estimates of receipts and charges in respect of centrally controlled
heads will be prepared by the Directorates, etc., concerned at the Armed Forces
Headquarters and submitted together with the estimates 'in respect of locally
controlled heads (See Rule 83), to the Ministry of Defence (Finance) and Ministry
of Defence on the following dates :
Sl
No.
Details of the Estimates
Due dates
1.
Preliminary Report for the current financial

year:
(a) Preliminary Revised Estimates for the
current financial year.
(b) Forecast Estimates For the ensuing
financial year.
(a) Revised Estimates for the current financial
year.
(b) Budget Estimates for the ensuing financial
year (correction to item 2 above).
Modified Appropriations for the current
financial year.
20th August
2.
3.
4.
10th
November
10th
November
20th
December
20th
December
10th March
Note-The provisions of the note under Rule 83 will apply mutalis mutandis.
88. When the estimates are forwarded through the Controllers of Defence
Accounts or superior administrative officers, they will exercise a check on the
estimates and record necessary corrections reference to sanctions of competent
authorities or progress of expenditure, giving full reasons in support of all
corrections.
GENERAL RULES FOR THE PREPARATION AND CHECK OF BUDGET
ESTIMATES
89. A reasonably correct initial estimate of the sums required to finance the
Defence Services for any particular financial year is of paramount importance, as
on the correctness of this initial budget estimate depends the whole financial
administration of the year.
No precise rules can be laid down for determining the amounts to be
included in budget estimates, or for checking the amounts included in them, but an
intelligent discretion and utmost foresight must be exercised with reference to the
effect that events, occurring or impending at the time the estimates are under
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preparation, are likely to have on- the receipts or expenditure. In all cases, account
should be taken of factors such as the expenditure in previous years, changes of
policy and the probable trend of prices etc.
The following general principles will, however, be observed in the
preparation of these estimates:
(i)
Only sanctioned expenditure may be included in the budget,," but at the end
of the estimate any fresh charge requiring sanction that is likely to be
incurred during the year should be noted. While it is desirable that provision
be made for all items of fresh expenditure requiring sanction that can be
foreseen, it is essential that no provision is made for such expenditure
without due justification and that when such provision is made; the amount
provided for is restricted to the absolute minimum necessary. The estimates
should be prepared on the basis of what is expected to be actually received
or paid (under proper sanction) during-the ensuing year, including arrears of
previous year and not only for, the demand or the liability falling due within
the year. A, statement of case will be submitted in the usual manner for such
fresh charges/'as explained in Rule 93 of these Regulations.
(ii) All variations between the provision for the ensuing financial year and that
for the current year must be explained, and when such variations are due to
the orders of the Government the number and date of the order should be
quoted.
(iii) Fixed charges and those for supplies and services for which scales etc., are
laid down will be based on those data with due regard to past experience. In
making estimates in respect of fixed charges, it must be borne in mind that
what are called fixed establishments are not irrevocably fixed for all times
and should be brought under the formal review of controlling officers from
time to time. Even when there is no thought or intention of making any
change in establishments, controlling officers should review the entire
estimate of the requirements of their departments or services.
(iv) The estimates, so far as they relate to establishments and salaries, will be
based on the existing orders of the Government of India applicable in each
case, no deviation from such orders being permitted without the previous
sanction of that authority. In cases however, where the existing strength of
personnel happens to be less than their authorised establishment due mainly
to the non-availability of suitable delay in training etc., the estimate should
be based on the existing strength suitably increased to provide for further
recruitment and availability of such personnel. In the case of progressive
salaries, the rate of pay which will be due on the Ist September of the year
to which the budget relates should be adopted.
(v) Fluctuating charges, such as travelling allowances, contingent and
miscellaneous charges etc., for which no scales are laid down, will be
calculated with reference to the average normal expenditure of the previous
three years. The estimate of such varying charges should not be merely an
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arithmetical average of three year's figures. The average is a guide but it

should not be taken absolutely, and the budget provision should take into
account all orders affecting the expenditure and other factors such as
changes in strength, progress of supplies, etc. Sanctions to recurring charges
will be reviewed by the estimating authorities and large variations in the
budget provision and the average expenditure of the previous years should
be explained.
(vi) All temporary and supernumerary office and other establishments should be
shown separately from permanent establishments.
(vi) In respect of pay and other charges which are payable in arrears after the
close of the month to which they relate, provision should be made for the
amount due for the period Ist March to 28-29th February. In respect of other
charges which are payable as soon as incurred, provision should be made for
charges likely to be incurred during the period Ist April to 31st March. Pay
and Allowances which are fixed at the daily rates should be calculated for
365 days (366 days in the case of a leap year) and not on a monthly basis.
(viii) No lump provision should be made in the budget estimates, except under
definite orders.
(ix) Provision for losses should not be made in the estimates unless otherwise,
authorised in the regulations or special sanction is obtained.
Revised Estimates
90. As will be seen from Rules 83 and 87 the process of estimating does not end
with the preparation of the original budget estimates for the year, but continues
throughout the year and at intervals, the budget figures are reviewed ìn the light
of the progress of the actual expenditure and other factors affecting the budget
estimates for the year. The manner of preparing the other estimates for the year is
explained in the succeeding rule.
91. (a) Preliminary Report This estimate which should take into account the
progress of actual and other relevant factors, will show the extent to which the
sanctioned budget estimates for the year are affected by circumstances known or
orders promulgated either before of after Ist April which may necessitate
modifications in those estimates. The original budget estimates will then be
reviewed by the Ministry of Defence (Finance) and Ministry of Defence and
decision taken with regard to any special action considered necessary, e.g., the
issue of orders requiring restriction of expenditure under any particular head
during the remainder of the year of submission of supplementary demands for
Grants to the Parliament if it is apparent that expenditure during the year is likely
to exceed the Grant originally sanctioned by the Parliament.
(b) Preliminary Revised Estimates This estimate is a forecast as, accurate
as possible of what the actual results-for the year is likely to be. All important
changes tending to increase or decrease the budget estimates as indicated by actual
figures available, or by other circumstances, which have come to notice, will be
taken into account in the preparation of this estimate. This estimate will then be
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reviewed by the Ministry of Defence and the Ministry of Defence (Finance) for
taking similar action as in the ease of the Preliminary Report. . `
(c) Revised Estimates This is a more accurate estimate of what the results
of the year are likely to be and is based mainly on actual expenditure known to
date.
If the Revised Estimate shows an unavoidable increase over the sanctioned
Grant (including the Supplementary Grant, if any) under any of the Demands for
Grants, further action is taken by the Ministry of Defence to obtain additional
Grants from the Parliament.
(d) Modified Appropriation This is a final estimate for the year and will be
based on the latest known actual and the likely expenditure during the remaining
period of the year. The closeness with which this estimate should- correspond in
total and in detail to the actual expenditure for the year is of paramount importance
as it is on the basis of this estimate that necessary re-appropriations and/or
surrenders are formally sanctioned by the Ministry of Defence (Finance).
92. The Ministry of Defence jointly with the Ministry of Defence (Finance) are
responsible for the sufficiency and moderation of the Defence Services Estimates.
The responsibility Ministry of Defence in regard to framing the estimates is
exercised mainly through the heads of Branches at Armed Forces Head-quarters or
of either organisations cinder the Ministry of Defence whose duly it is to scrutnise
and, where necessary, amend dent before transmission to the Ministry of Defence
(Finance).
ESTIMATES FOR FRESH EXPENDITURE
93. Every application for sanction to fresh expenditure shall be accompanied by
a clear estimate of its financial effect. This authority with whom the proposal
originates shall frame the estimate as accurately as possible and shall be
responsible for its scope and for furnishing the financial authorities concerned
(Controller of Defence Accounts concerned in the case of proposals initiated by
authorities lower :than Armed Forces Headquarters) with such data as will enable
the tatter /to check it. If, in the opinion of the financial authorities or the Controller
of Defence Accounts, the estimate is defective, the initiating authority will be
called upon to furnish such further information as will enable them to place before
the sanctioning authority a reliable estimate of the cost involved. The financial
scrutiny of these proposals is intended to secure that they are in accordance both
with general financial principles and with any particular regulations that may be
applicable and that they are not open to criticism on the-ground of extravagance.
The administrative authorities cannot call upon the Defence Accounts
Department to furnish statistics which are available in their own offices or which
necessitate the recompilation of accounts.
ESTIMATES OF FRESH EXPENDITURE DUE TO OPERATIONS

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94. When operations or important special services involving expenditure of

large amounts of money are to take place, the Ministry of Defence shall at once
report the matter to the Financial Adviser, Defence :services, together with a
forecast of the probable duration of the operations, and shall supply that authority
as promptly as possible with a scheme giving in detail the composition and
strength of the force, the conditions of service and concessions applicable to the
troops, non-combatants (enrolled) and non-combatants (unenrolled) to be
employed, and such other particulars as may be necessary. Copies of the Scheme
as soon as it has received the sanction of the Government of India shall be
furnished by the Ministry of Defence to the Financial Adviser, Defence Services
for communication to all Controllers of Defence Accounts and it will form the
recognised basis of estimates and audit by the Ministry of Finance and its officers.
All subsequent changes which may materially affect expenditure shall be
communicated promptly to the Financial Adviser, Defence Services, the
Controllers and others concerned.
It is to be clearly understood in questions of this nature that the primary
responsibility for expenditure on field operations and similar service rests with the
Defence authorities. It is for them to see that the utmost economy is observed in
expenditure in the field, at the base, and in the supplies required by the forces
concerned.
Subject to the above considerations, the general rules in these regulations as
to the exercise of financial powers during peace apply equally during war or when
special operations are undertaken.
PROPOSALS INVOLVING EXTRA EXPENDITURE
95. The annual budget estimates are closed on the 31st December of the
preceding year, and only those proposals involving extra expenditure which are
sanctioned by the Government of India prior to that date are provided for therein.
Such sanctions will not, unless specially allowed, have effect until the following
financial year. No provision will ordinarily be made in the budget estimates of the
ensuing year for proposals which are not received in sufficient time to admit of
their full consideration by the Government of India before the 31st December.
96. Except in urgent cases proposals which require the sanction o the
Government of India must reach them by the 15th November. An application for
the renewal of sanction to a temporary establishment shall be made in time to
admit of orders being passed by the authority competent to sanction its retention
before the existing sanction expires.
PROVISION OF FUNDS FOR SEVERAL CLASSES OF ADVANCES BY
THE CENTRAL GOVERNMENTACCOUNTED FOR UNDER CIVIL
ESTIMATES
97. The detailed heads under which budget provision, is made and charges
incurred are:
SECTOR F- LOANS AND ADVANCES
(i)
Major Head 7610-Loans to Governments Servants etc.
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201 House Building Advance

202 Advance for purchase of Motor Conveyance
203 Advance for purchase of other Motor Conveyances 800 Other
Advances.
(ii) Major Head 767 -Miscellaneous Loans Regimental and other loans
(Defence)
Miscellaneous Loans/Advances to other parties.
The estimates in respect of the above will be obtained from the subordinate
authorities, consolidated and sent to the Ministry of Defence (Finance) and
Ministry of Defence by the Army Headquarters, Director General of Ordnance
Factories, Air Headquarters, Naval Headquarters and the CGDA for their
respective services, on the dates mentioned below: Sl. No.
1.
3.
Details of Estimates
(a) Preliminary Revised Estimates for the
current financial year
(b) Forecast Estimates for the ensuing
financial year
(a) Revised Estimates for the current
financial year
(b) Budget Estimates for the ensuing
financial year (correction to item (1)
Above).
Modified Appropriations for the current
financial year (i.e. corrections to the Revised
Estimates for the current financial year).
Due Date
20th October
20th October
20th December
20th December
1st March
Soon after the Demands for grants are presented to the Parliament, the
Ministry of Defence (Finance) will notify the allotments under the various classes
of advances to the authorities mentioned, above who will then make necessary
sub-allotments to the subordinate authorities. These allotments will be treated as
`provisional' and no expenditure against them can be incurred until Demands for
Grants are voted by the Parliament and the connected Appropriation Bill is
assented to by the President. Expenditure in the first instsance will be retricted to
the extent authorised to be incurred on "Vote on Account" which is sanctioned by
the Parliament - pending the detailed examination of the Demands for Grants. The
provisional allotments will be confirmed soon after the Demands for Grants are
finally voted by the Parliament and the connected Appropriation Bill is assented to
by the President.
98. to 100 Blank
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CHAPTER-V BUDGETARY CONTROL AND RE-APPROPRIATIONS

GENERAL
101. The fundamental rule on which the whole system of budgetary control rests
is that no item of public expenditure may be incurred unless provision exists to
meet it in the sanctioned budget estimates of the year concerned. This rule applies
to the nature of expenditure as well as the amounts; in other words the provision in
the budget must have been made for the purpose of meeting the particular kind of
expenditure involved. Certain authorities are vested with limited powers of "reappropriations" i.e., transfer of funds from one budget head to another, but with
this exception, the rule referred to above is absolute. It follows that each individual
officer to whom any portion of a- grant, provided in the budget to meet a specified
class of expenditure, is allotted, is responsible far seeing that the allotment is
utilised solely for that class of expenditure and is not overspent and that prior
sanction of the Government of India is applied for,, whenever, in exceptional
circumstances, expenditure, which cannot be met from the sanctioned grant, has to
be incurred. When application is made for such sanction, it should be specifically
stated to what extent the original grant will fall short of what is required and
whether the expenditure can be met from savings in the sanctioned grant.
Explanation should also be given why the expenditure is immediately necessary
and why the necessity for it was not foreseen.
Note 1.-The term sanctioned budget estimates as used in this rule K held to
refer to the Demands for Grants relating to the Defence Services as voted by the
Parliament in respect of which an appropriation bill has been passed by the
Parliament and assented to by the President.
Note 2.-Pending detailed consideration and voting of the demands far grants
for the full year by 4he parliament expenditure (other than on new services) may
be incurred to the extent provided for In the 'Vote on Account' after It has been
passed by Parliament and connected appropriation bill enacted.
102. It is of great importance that all concerned should exercise t e most careful
supervision over expenditure and on no account should money be spent simply
because it is available.
103. Even sanctioned expenditure shall not be incurred until funds have been
provided except as, provided for in Note 2, below rule 101.
104. The allotment under a head is intended to cover all the charges including the
liabilities of any past years which are payable during the year or which are to be
adjusted in the accounts of that year. The unexpended portion of any allotment
lapses on the 31st March of each year and is not available for utilization m the
following years, except in so far as it has been anticipated and reincluded in the
estimates. It is irregular to draw a sum of money for any purpose during the
currency of one financial year and expend or bring it to account in a subsequent
year. It is contrary to the interest of the state that money should be spent hastily or
in an ill-considered manner, merely to avoid lapse of a grant. In the public interest,
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grants that cannot be profitably utilised should be surrendered. The existence of

likely savings should not be seized as an opportunity for introducing fresh items of
expenditure which might wait till next year. A rush of expenditure particularly in
the closing months of the financial year will ordinarily be regarded as a breach of
financial regularity.
CONTROL AND REGULATION OF EXPENDITURE BY THE MINISTRY
OF DEFENCE
106. (i) The Ministry of Defence jointly with the Ministry of Defence (Finance)
is responsible for securing that expenditure shall not proceed at a rate unwarranted
by the sanctioned estimates: It is, through the heads of Directorates, Commands,
Area Headquarters and other subordinate controlling authorities that the Defence
Ministry more directly watches and control expenditure against budget provision,
with which that Ministry is concerned.
(ii) It if should appear that the total sanctioned provision (modified to date)
under any defence expenditure head is likely to be exceeded, prompt information
shall be given to the Ministry of Defend (finance) and application shall be made
for a further appropriation to meet the probable excess.. It is the duty of the
Defence Ministry to keep itself informed of the expenditure actually or likely to be
incurred and to communicate to the Ministry of Defence (Finance) any
circumstances tending to material modifications in the estimates of expenditure
and cash requirements.
(iii) The principles upon which the control, internal audit and account of defence
expenditure are conducted are minute scrutiny of the estimates, a careful
examination of all demands for money or stores before supply, a strict control over
the application of funds and - stores to the service for which they are supplied, a
concurrent -check and internal audit of the account of such expenditure when
rendered.
(iv) To ensure the correct appropriation of money and stores, definite limits, are
previously assigned to the aggregate as well as to the details of defence
expenditure. The duty of enforcing these limits rests with (a) controlling
authorities, (b) Controllers of Defence Accounts, and lastly with (c) Ministry of
Defence in conjunction with the Ministry of Defence (Finance). .
CONTROL AND REGULATION OF EXPENDITURE BY AUTHORITIES
OTHER THAN THE MINISTRY OF DEFENCE
107. Subordinate authorities will not be required or in fact be in a position) to
exercise any control over expenditure which represents obligatory charges and
unavoidable commitments and is compiled under `Centrally Controlled Heads'.
Accordingly, no distribution of the budget provision for such expenditure is made
for purposes of budgetary control.
108. Expenditure compilable under the `Locally controlled Heads' is m general,
susceptible to control against budget provision by various administrative and
executive authorities subordinate to the Government of India. This control is
exercised as stated in the following rules.
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109. The ultimate responsibility for watching the progress of expenditure and for
seeing that the expenditure does not exceed the corresponding budget allotment
rests on the senior officer at Armed Forces Headquarters or the Ministry of
Defence within whose general administrative control the relative activities fall.
This responsibility is usually undertaken on his behalf by the Director or other
officer of corresponding status who directly administers the activities concerned.
Thus the Director of Military Training is responsible, under the Deputy Chief of
the Army staff, for controlling expenditure of specialized training institutions and
schools, Director General of Ordnance Factories under the Ministry of Defence for
controlling that on various factories, and so on. The amounts provided for in the
budget estimates under the Locally Controlled Heads, are allotted to Commands
and lower formations by these officers.
Soon after the Demands for Grants 'are presented in the Parliament, the
authorities at Armed Forces Headquarters and other central controlling authorities
will notify to lower formations, the allotments under the various locally controlled
heads. These allotments will be treated as "Provisional" and no expenditure.
against them can be incurred until the Demands for Grants are voted by the
Parliament and the connected Appropriation Bills are assented to by the President.
Expenditure in the first instance will be restricted to the extent authorised to be
incurred on 'Vote on Account' which is sanctioned, by the Parliament, pending the
detailed' examination of the Demands for Grants. Intimation regarding the 'Vote on
Account' and the President's assent to the Appropriation Bill will be sent to lower
formations by the Central Controlling authorities. The provisional allotment will
be confirmed soon after the Demands for Grants are finally voted by the
Parliament and the connected Appropriation Bill is assented to try the President.
Note.- The 'Vote on Account' normally covers the requirements for the
month of April only. The purpose of a 'Vote on Account' is to keep the Government
functioning pending the voting of the Demands for Grants for the full year.
Expenditure on 'new services' should not, therefore, be incurred before the grants
for, the full year are voted end the connected Appropriation Bills enacted.
110. The authorities responsible for distributing funds to lower formations
will in the first instance keep back a certain amount as a reserve to meet any
unforeseen calls from formations. But the actual: amount so withheld initially in
each particular case will be settled by the Armed Forces Headquarters controlling
officer in consultation with the Ministry o Defence (Finance).
It is left to authorities at lower stages in the chain of control to decide
whether they in their turn should also keep a portion of the allotments as an
undistributed reserve at their disposal.
111. All communications of initial allotments will issue with the concurrence of
the Ministry of Defence (Finance) and copies of Communications will be endorsed
to the Accounts and the Audit Officers concerned. Sub-allotments by command or
formation Headquarters, will also be notified to these Officers.
WATCHING EXPENDITURE AGAINST ALLOTMENT
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112. It is the responsibility of the authorities to whom allotments are made to

watch the progress of expenditure and to see that expenditure does not exceed the'
allotments. In order to help the controlling authorities to exercise proper control
over expenditure against allotments, the Controllers of Defence Accounts will,
excepting in the case of Military Engineering Services, render; to the allottees
monthly statements showing the serial numbers of claims admitted in audit and the
amounts debited against the allotment by the 25th of the month following that to
which they relate. Bills, etc., sent to the Controllers of Defence Accounts for
payment or adjustment against a particular allotment should be, therefore, serially
numbered for easy reference. In the case of Military Engineer Services, the
instructions laid down in the Regulations for the MES will be followed.
Controlling Officers will also arrange to be furnished by spending officers with
periodical reports showing actual expenditure (including liabilities incurred but not
paid) against allotment for the control of which they are responsible. These figures
of expenditure collected departmentally will be reconciled by them with those
intimated by the Controllers of Defence Accounts.
113. To enable the administrative branches of Armed Forces Headquarters and
the Ministry of Defence (Finance) to watch the progress of expenditure against
allotments, the Officer-in-Charge E. D. P. Centre, CDA (R. & D) New Delhi will
furnish to them relevant extracts of compiled actual from the printed All India
Compilation for Service Heads in the third week after the end of the month to
which the actual relate.
114. The Controllers of Defence Accounts are also entrusted with the duty of
keeping a watch on the progress of expenditure against sanctioned allotments and
to bring to the notice of the allottees and the immediate higher authorities, cases in
which the progress of expenditure is, in the opinion of the Accounts authorities,
abnormally heavy or unusually low. However, the administrative authority
controlling an allotment and not the Controller of Defence Accounts is primarily
responsible for the control of expenditure against the allotment, but whenever
cases of abnormally heavy or unusually low expenditure are brought to the notice
of the controlling authorities, they will take immediate action as indicated below: (i)
Where expenditure in the past has been heavy they should regulate their
future expenditure so as to be within the allotment or, obtain from the higher
authorities additional allotment explaining fully their reasons for asking for
an additional allotment. Where additional allotment is required, action to
obtain it should be taken sufficiently early in order to avoid delay in the
settlement of claims, as Controllers of Defence Accounts may have to refuse
payments in excess of the sanctioned allotment save in exceptional cases
where in the opinion of the Controllers of Defence Accounts provisional
payment in excess of the allotment is justified.
(ii) Where savings can be foreseen, they should immediately surrender such
portion of the allotment as is not likely to be necessary for the rest of the
year.
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115. Where additional allotment is asked for the authorities competent to

sanction this additional allotment will do so either from the reserve held by them
or from the surrenders reported to them. In cases where the reserve is not sufficient
for the purpose and no surrenders have been reported to them by the lower
authorities, the additional allotment may be sanctioned with the concurrence of the
Controllers of Defence Accounts concerned in anticipation of provision of funds.
All such sanctions should be reported to their next higher authorities. When
additional allotments are required to be sanctioned by the Armed Forces
Headquarters such sanctions should issue with the concurrence of the Ministry of
Defence (Finance).
Applications for additional allotment and reports of surrenders required to
be sent to the Central Controlling authorities should be routed through the
Controllers of Defence Accounts, except in the case of MES expenditure. In the
case of the latter, such applications and reports are not required to be routed
through the Controllers of Defence Accounts.
RE-APPROPRIATION OF FUNDS
116. Re-appropriation, which implies the transfer of funds from one primary unit
of appropriation to another such unit within a grant, can be sanctioned under
formal orders of a competent authority, only when it is known or anticipated that
the appropriation for the unit from which funds are to be diverted will not be
utilized -in full, or that savings can be affected in the appropriation for that unit. In
no case is it permissible to re-appropriate from a unit with the intention of
restoring the diverted appropriation to that unit when savings become available
under other units in the year. Any allotment or re-appropriation within a grant or
appropriation may be authorised at any time before but not after the expiry of the
financial year to which such grant or appropriation relates.
117. Powers of re-appropriation are exercised only by the Government of India
and by officers of: (a) Central Controlling authorities.
(b) Command Headquarters.,
(c) Independent Area Headquarters;
(d) I. A. F. Commands, and
(e) Independent Stations.
118. (i)
An authority can only re-appropriate in respect of "savings arising out
of allotments, placed at his disposal.
(ii) In respect of direct controlling officers of Headquarters referred to at items
(a) to (e) of rule 117, re-appropriations are applicable only between control heads
falling under the same sub-head. In the case of Navy, powers of re-appropriation
between different detailed heads of a minor head and between minor heads falling
under the same sub-head will be exercised by Naval Headquarters. In -the case of
Air Force, the controlling officers at Commands and Independent stations can reappropriate between detailed heads falling under the same minor head under Sub
Head 'D'- upto a limit of Rs. 500 in each case under intimation to CDA (AF) and
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Air Headquarters and in the case of Controlling Officers at Air Headquarters; reappropriation is permissible only between detailed minor heads falling under the
same sub-head.
(iii) Powers to re-appropriate expenditure not exceeding ten per cent of the
original budget provision between different sub-heads failing within the same
Minor Head will be confined to the DSD, DMT, DDSD (FP), AG, QMG and DOS,
and DGAFMS in respect of the Minor Heads Controlled by each except in the case
of Military Engineer Services which are governed by separate orders on the
subject. Similarly in respect of Navy and Air Force, these powers are vested in
VCNS and D. Fin. P. respectively.
(iv) Full powers of re-appropriation between the Sub Heads within the Minor
Heads under each Demand are vested in the Ministry of Defence.
(v) Re-appropriation between different Minor Heads or in cases in which more
than one Principal -Staff Officer is concerned will be made by the Government of
India.
(vi) No formal re-appropriation should he carried out by controlling authorities
at Armed Forces Headquarters, in respect of, normal- excesses under ordinary
charges, as such excesses will be taken into account in the modified appropriations
which will be sanctioned by the Financial Adviser, Defence Services at the close
of the year.
(vii) Re-appropriations are permissible only between the 'expenditure heads'.
Thus, excess receipts and recoveries which are required to be accounted for as
such cannot be utilised to meet, expenditure in excess of the sanctioned grant.
(viii) No re-appropriations are permissible between funds allotted for "charged"
items of expenditure in terms of Articles 112(3), of the constitution and `voted'
items of expenditure.
(ix) Any excess or savings, anticipated, after re-appropriation between the
detailed heads of the same minor head have been carried out will be reported to the
authorities controlling the expenditure at Armed Forces Headquarters through the
preliminary estimates, which, if accepted should be viewed as modified
appropriation for limiting expenditure. Any major changes to the Preliminary
Revised Estimates will be reported through the Revised Estimates. The acceptance
of the Preliminary Revised Estimates and Revised Estimates, submitted by lower
formations, together with the changes, if any, made by central controlling
authorities, will be communicated to the local controlling authorities so as to reach
them by the 15th December arid 15th February respectively of each year. If any
expenditure is to be incurred in the meantime, the procedure laid down in Rule 115
should be followed.
(x) No formal re-appropriation is necessary for transferring funds under the
same control head between Commands, Areas, Sub-Areas, Institutions, Depots etc.
Such transfers are affected by first withdrawing savings surrendered by one
commands etc. and then re-allotting as required.
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(xi) The sanction of the Government of India is' required to any re-appropriation
which affect the following:
(a) Savings due to non-expenditure of provision for a specific measure.
(b) An error in estimates.
(c) Re-appropriations to meet expenditure one any new activity.
(xii) For powers regarding allotments of funds for works expenditure and reappropriation thereof; see Regulations for the MES and any special instructions
that may be issued on the subject from time to time.
RE-APPROPRIATION STATEMENTS
119. All re-appropriations will, be formally sanctioned as indicate below:Sanctioning authority
(a) Controlling officer
at
Command, Independent
area IAF Command or
Independent Station.
(b) Central
Controlling;
authority.
Forms of sanction
IAFA-786 or IAFWt1832 suitably modified a
copy of which will be forwarded to the central
controlling authority. In the case of Air Force a
copy will also be endorsed to CDA (AF).
Monthly consolidated re-appropriation statement
in I. A. F. A.-786 or I. A. F. W.-1832 suitably
modified which will also incorporate all reappropriations for the month reported by the
command authorities as indicated against (a)
above. In the case of Air Force it will be
submitted in triplicate to Air Headquarters
through the C.D.A. (A.F) and after sanction a
copy will be returned to the originator, a copy to
the Controller and copy retained at Air
Headquarters.
(c) Principal Staff Officers.
Branch Memorandum endorsed to the Ministry of
Defence (Finance) .
(d) Govt. of India, Ministry Office Memorandum endorsed to the Ministry of
of Defence.
Defence (Finance).
EXCESS OVER ESTIMATES
120. In cases where excesses over modified allotments under locally controlled
heads are noticed after the close of the year they should be brought to the notice of
the local authorities by the Controller of Defence Accounts concerned. Local
authorities will report all such messes with full explanations for the excesses to the
controlling authority at Armed Forces Headquarters through the Controller of
Defence Accounts concerned. When this has been done, the Controller of Defence
Accounts can remove his objection to the excesses.
SUPPLEMENTARY GRANTS
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121. If the amount provided for in the sanctioned Budget for any service in a
financial year is found to be insufficient for the purpose or when a need has arisen
during that year for supplementary or additional expenditure on some `new
service' not contemplated in ` the ' original budget for that year, and which cannot
be met by re-appropriation of savings a demand for Supplementary Grants has to
be presented to the Parliament for specific sanction.
122 to 124 Blank.
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CHAPTER-VI
PROCUREMENT AND DISPOSAL OF STORES
INTRODUCTORY
125. The term "stores" applies generally to all articles and materials purchased or
otherwise acquired for the use of Government, including not only expendable,
consumable and issuable articles in use or accumulated for specific purposes, but
also articles of dead stock of the nature of plant, machinery, instruments furniture,
equipment, fixtures etc.
CHANNELS OF PROCUREMENT
126. Procurement of stores will- in general be done by one or more of the
following methods: (i)
Placing demands or, the Director General of Ordnance Factories for
manufacture of stores in Ordnance factories;
(ii) Placing demands on
(a) Other Ministries of the Government of India, (b) State
Governments, for supply from factories,/workshops./other procurement
agencies under them,
(iii) Placing demands on the Industries/Factory/Statutory Corporations whether
wholly or partly financed by the State set up for the manufacture of specific
ranges of items in the country:
(iv) Placing, demands on the Ministry of Food (Chief Director of Purchase) for
indigenous items of Food stuffs;
(v) Placing demands on the Director General of Supplies and Disposals
including Textile Commissioner, Bombay for procurement from the trade
in India;
(vi) Placing demands on Service Advisers attached to the High Commissioner
for India in the United Kingdom for procurement of stores from the United
Kingdom or the continent of Europe, through the Director General, India
Supply Mission, London;
(vii) Placing demands on the Service Attaches in the United States of America
for procurement of stores from the Governments or trade in the North
American continent countries through India Supply Mission, Washington;
(viii) Local purchase in respect of items, periodical requirements of which are
below the minimum limit prescribed by the Ministry of Commerce
(Department of Supply), other authorized local purchase items and stores
emergently required; and
(ix) Placing demands on M/S Hindustan Aircraft Ltd., Bangalore, for
purchase/repair/manufacture/fabrication of Indian Air Force requirements:
127. All demands will be placed only with the concurrence of the
ministry of
Defence (Finance) except in case covered by specific 'authority. In such cases, on
the factory side, however, the amount involved should be communicated to the
Accounts Officers by the St6perintendents for purposes of budgetary control.
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PURCHASE OF STORES
128. The policy of Government is to make their purchases .of store the public
service in such a way as to encourage the development of the industries of the
country to the utmost possible extent consistent with economy and efficiency. In
particular it is necessary to ensure that indigenous capacity is established for all
items of, defence requirements as far as possible and care should be taken,
therefore, when placing demands for procurement of stores from abroad to ensure
that only such items and quantities are demanded as cannot be met from within the
country.
In order to give effect to the above mentioned policy, preference in making
purchases will be given in the following order, other things being equal: Firstly, to articles which are produced in India in the form of raw materials,
or are manufactured in India from raw materials produced in India, provided that
the quality is sufficiently good for the purpose;
Secondly, to articles wholly or partially manufactured in India from
imported materials provided that the quality is sufficiently good for the purpose;
Thirdly, to articles of foreign manufacture held in stock in India provided
that they are of suitable type and requisite quality; fourthly, to articles
manufactured abroad which need to be specially imported.
129. In respect of stores purchased for the Defence services, the Ministry of
Defence and also the Heads of Branches; Organisations personally, may, when
they are satisfied that such a measure is justified, allow with the concurrence of the
Ministry of Defence (Finance) a limited degree of preference in respect of price to
articles produced or manufactured in India either wholly or in part, in accordance
wit u the principles laid down in Appendix IV of. Vol. II of these Regulations.
These authorities are, however, expected to refer to- the Government of India an
case which they regard as of special importance.
130. I. Save as provided in clause VII below,- all articles require purchased for
the public service shall be purchased on the condition that delivery shall be made
in India for payment in rupees in India.
II. Tenders shall be invited in India and abroad also, when considered
desirable, for the supply of all articles which are purchased under clauses I to IV
unless the value of the order to be placed is small or sufficient reasons, to be
recorded, exist which indicate that it is not in the public interest to call for tenders.
No tender which fails to comply with the condition as to delivery and payment
prescribed in clause I shall be accepted.
III. All articles, whether manufactured in India or aborad, shall be subject to
inspection before "acceptance, and articles - for which specification and/or tests
have been prescribed by competent authority shall be required to conform to such
specification and/or to satisfy the prescribed test or tests which may be carried out
during manufacture or before or after despatch from the supplier's premises.
IV. Important plant, machinery and iron and steel work shall be obtained
only from firms approved by the Director General, India Supply Mission,
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London/Director General of Supplies and Disposals and specified in the lists

issued by him from time to time.
V. In the case of important construction works let out on contract, articles
required for the construction of, such work may be supplied by the contracting
from provided that when specifications and/or tests have been prescribed for such
articles they shall conform to such specifications and/or shall satisfy such tests.
VI. Nothing in these rules shall be deemed to prohibit the purchase of
articles by one department or railway from another.
VII. The articles enumerated in the note below or any other articles of a
special or unusual character may, when suitable and economical purchase cannot
be made in accordance with the preceding rules, be obtained without reference to
those rules subject to the following conditions: (a) Where the value of the purchase exceeds Rs. 5,000, the purchasing
officer shall place on record his reasons for not effecting the purchase in
accordance with the preceding rules.
(b) The purchasing officer may at his discretion either obtain the article that
he requires by indent on the India Supply Mission, London or the India Supply
Mission, Washington.
(c) When articles are purchased abroad under this rule through the agency of
the India Supply, Mission, London, payment shall be made by that department.
(d) In the case of purchases made through the India Supply Mission,
Washington, payments will be made by that agency.
Note-(i) , Seeds (ii) Cinchona bark (iii) Articles for experimental, purposes
(iv) China glass cutlery, plate, crockery and perishable fabrics including linen, for
residences which are furnished by Government (v) Copper, wino and other nonferrous metals produced in Australia or America (vi) Timber produced in Australia
or Northern America (vii) Drugs, chemicals, surgical Instruments and appliances,
and scientific instruments, (viii) preserved and tinned foodstuffs.
131. Purchases of stores must be made in the most economical manner and in
accordance: with the definite requirements of the Defence Services. Stores should
not be purchased in small quantities. Periodical indents; should be prepared.
covering a year's or more requirements except where for reasons of short life or for
other recorded reasons it is necessary to procure lesser quantities. Care should also
be taken not to purchase, stores much in advance of actual requirements, if such
purchase is likely to prove unprofitable to the, Government, and thus locking up of
capital in stock should be minimized.
132. Where scales of consumption or limits of stores have been laid down by
competent authority, the officer ordering a supply should certify on the purchase
order/demands that the prescribed scales or limits are not exceeded.
133. Purchase order 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.
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134. When stores are purchased from contractors, the system of open competitive
tender should be adopted and the purchase- should be made from the lowest
tenderer unless there are recorded reasons to the contrary.
135. In cases in which higher rates had been accepted on ground of urgency,
special attention should be paid to see that the expectation in consideration of
which higher price was accepted is actually fulfilled and that delivery dates in such
cases have not been extended beyond the date by which the lowest tenderer
offered to complete the supply unless there are recorded reasons to the contrary.
136. Detailed instructions regarding preparation of indents, submission to
competent authority and the Ministry of Defence (Finance) and placement on the
appropriate
channel
of
procurement
will
be
issued
by
Services/Branches/Organisations with the approval of the Government of India.
GENERAL AVERAGE
137. (i) General average is the adjustment made among owners of vessel and of
cargo in, the event of loss or damage occurring to the vessel and/or Cargo. Itay be
explained that, where under the presence of a common danger an extraordinary
expenditure or sacrifice becomes necessary for the salvation of both the ship and
its cargo, the burden thus incurred is proportionately distribute upon all the
interests that have been benefited by the sacrifice. A familiar example is throwing
overboard a cargo for safety. In such circumstances, a ship declares a "General
average".
(ii) Claims for contribution to "General average" in respect of vessels carrying
Government stores between the United Kingdom, United States of America and
India are to be referred to the High Commissioner for India/Embassy in the United
States for settlement. Such claims give no lien on the stores which are to be
delivered in accordance with the conditions for freight notwithstanding: any
claims for contribution to average.
REPORT REGARDING FOREIGN, MANUFACTURED STORES TO THE
DIRECTOR GENERAL, INDIA SUPPLY MISSION, LONDON/INDIA
SUPPLY
MISSION,
WASHINGTON
BY
LETTER
WHERE
REPLACEMENT OR RECOVERY REQUIRED
138. In order that effective action may be taken by the Director General, India
Supply Mission, London or the India Supply Mission, Washington, against
contractors who are responsible for losses in connection with the transit of their
supplies the consignee shall in all cases where replacement or recovery of value
from suppliers is required, communicate the fact by letter to the Director General,
India Supply Mission London, or the India Supply Mission, Washington as soon as
he aware of the damage or shortage, instead of merely noting his request on the
copy of the packing account to be returned to England/Washington eventually. The
letter shall contain full particulars of the damage or loss indicating as far as
possible where the responsibility lies and whether free replacement, free repair, or
refund of value of stores by contractor is expected. When such a letter is sent to
England or Washington, its number and date shall be quoted in the packing
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account. Trivial discrepancies, however, shall not be reported to the Director

General, India Supply Mission, London, or the India Supply Mission, Washington.
For this purpose, discrepancies shall be considered as trivial when the total value
of the loss on one consignment does not exceed 5 pounds in respect of stores
imported through the. India Supply Mission, London and 15 dollars in the case of
imports through the India Supply Mission, Washington.
CHARGES FOR LANDING, DELIVERY AND SHIPMENT OF
GOVERNMENT STORES
139. The following scale of charges shall be made for landing, delivery and
shipment of stores: (a) Calcutta-In accordance with the rates laid down in the publication entitled
"the Port Commissioners for the Port of Calcutta: Scale of charges on goods
at docks, jetties and inland vessels wharves and on vessels ; from the 1st
November, 1933 (Revised Edition)".
(b) Bombay-Contract rates and also the scale of rates published by the Port
Trust.
(c) Madras-Rates decided by the Principal Officer, Mercantile Marine
Department and also the scale of rates published by the Port Trust.
(d) At other, ports at the rates prescribed by the Port Trust authorities
concerned. .
CHARGES ON IMPORT OF STORES BY AIR
140. When the Defence Stores are imported by Air from abroad under specific
Govt. sanction, the charges as levied under the following rules shall be payable(a) Customs duty and allied charges as applicable in accordance with the
rules laid down in the Customs Act 1962, Indian Tarrif Act 1934 as
amended from time to time and Special Government Notifications issued by
Ministry of Finance (Department of Revenue) from time to time.
(b) Warehousing and other allied charges as applicable in accordance with
the rules laid down in international Air-ports Authority Act 1971,
Warehousing Corporation Act, 1962, as amended fro& time to time and
Special Government Notifications issued from time to time.
Note- All payments on the above account will be made by the nomination
CDA/their Sub-officers, on receipt of proper claims from the consignee:
141. Blank.
DISPOSAL OF SALVAGE, SCRAP, OBSOLETE, OBSOLESCENT-AND
SURPLUS STORES
142. (i) The products and by-products of the Military Farms Department, which
are not required for Government use, shall be sold to the best advantage of the
State under the orders of the Assistant , Directors. In the case, however, of sales to
farms employees, the products or by-products shall, if the articles are obtained
from the other Corps or departments be charged for at the payment issue rate of
such supplying corps or departments.
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If, however, the prices at which the particular surplus products of by

products are sold, are lower than the payment issue rates of the supply corps or
department, the former rate may also be charged to the farms employees.
(ii) Hides and skins of Government animals will be disposed of locally to
the best advantage of the State by the Army services Corps/Remounts and
Veterinary Corps/Military Farms at station where the number of such hides and
skins is very small and does not warrant conclusion of contract for their disposal
by the Army Service Corps.
(iii) The Director General of Supplies and Disposals records particulars of
the sales of damaged corps, animals living or dead, timber- of felled trees, etc. The
control of the disposal of such waste products is exercised by the Director of
Remount and Veterinary Services and Director of Military Farms and copies of the
Sale Accounts (IAFA-58) of such transactions should not be forwarded to the
Director 3eneral of Supplies and Disposals.
143. The Director General of Supplies and Disposals is authorised to order the
issue of samples of all articles declared for , disposal to him either free or on loan
or at a price to be determined by him and as may be most expedient.
Articles issued as samples will be struck off from store ledgers and returned
under the usual procedure supported by issue` vouchers or certificate issue
vouchers (in the case of Indian Air Force).
144. Expenditure incurred, on account of packing and freight, when not
recoverable from the consignee, will be borne by the establishment issuing the
samples.
145. Articles provided out of office allowance for the purchase of petty stores
(unit allowances and miscellaneous. expenses grant in the case of AF) shall not be
returned to the department of supply, but when unserviceable and beyond repair,
shall be disposed of by the Officer Commanding, to the best advantage of the state
and, if sold, the sale proceeds shall be credited to the unit's office allowance
fund/petty stores allowance fund/unit allowances and miscellaneous expenses, as
the case may be.
DESPATCH OF STORES BY A ROUTE OTHER THAN THE CHEAPEST
ROUTE
146. In case of emergency, officers responsible for the dispatch of stores may,
within the limits of their financial powers laid down in Schedule I of Appendix IIPart I-Army/Schedule XVI of Appendix II-Part II-Navy/Schedule I of Appendix
II-Part III-Air Force of Vol. II of these Regulations, incur extra expenditure on the
despatch of stores by other than the cheapest route or mode of carriage.
FINANCIAL POWERS IN RESPECT OF THE PURCHASE OF STORES
147. An officer's financial powers in the matter of the purchase of stores
ordinarily extend to the limits to which he is empowered to enter into contracts,
but in the case of (i) special purchases made from abroad under clause VII of the
rules contained in Rule 130 and (ii) local purchase of stores, the limits upto which
power to purchase any one article, or any number or similar articles purchased at
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one time, extends, are laid down in Schedule XII of Appendix II-Part I
-Army/Schedule III of Appendix II-Part II-Navy/Schedule VIII of Appendix IIPart III-Air Force (List of Financial Powers) of Vol. II of these Regulations.
The financial powers of MES Officers in respect of local purchase of stores,
are laid down in the Regulations for the MES.
Note-(I) Articles of different sizes of specification will be treated as different
articles provided they do not serve the same purpose, and
(ii) Article of different makes and pattern serving the same purpose should be
treated as similar articles.
148 to 154 Blank.
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CHAPTER-VII LOSSES, WASTAGE AND DAMAGE TO PUBLIC

PROPERTY
GENERAL CONDITIONS TO BE OBSERVED
155. In dealing with cases of losses, promptitude of action is of paramount
importance. Every case of loss shall be pursued vigorously to finality so that
adequate action, both remedial and disciplinary, can be taken as early as possible
and delinquents do not escape punishment by mere lapse of time. In this
connection also refer to Rule 37 of these Regulations and Appendix I of Vol. II.
156. All losses, whether of public money or of stores, shall be subjected to a
preliminary investigation by the officer in whose charge they were, to fix the cause
of the loss and amount involved.
As regards the procedure of investigation to be followed thereafter, losses are
classified as under
(i)
losses of stores,
(ii) losses of public money.
Courts of Enquiry should invariably be convened, to investigate all losses
which, under existing rules and regulations, require the sanction 4 the Government
of India to write off. The holding of a Court of Inquiry may, at the discretion of the
competent financial authority, be dispensed with in cases of loss of stores where
the loss is not due to theft, fraud -or neglect or where the reported loss due to theft
fraud or neglect is less than Rs. 10,000.
157. When an investigation into a case of loss due to theft, fraud or gross neglect
discloses a defect of procedure or system and when irrecoverable debts of units are
attributable to that cause, a report shall be made to the Government of India
through the usual channels and the Controller of Defence Accounts concerned
together with a recommendation for rectifying the defect. Petty defalcations or
petty thefts need not be reported.
158. The monetary limits specified for the sanction of losses refer to each
separate case of loss and it shall not -be permissible to sub-divide a case of loss
with the object of bringing the amount within the financial powers of the authority
dealing with it (see also Rule 64).
Losses shall not be written off without the specific approval of the
competent financial authority.
159. Where audit authorities wish to satisfy themselves about the adequacy of
disciplinary action in `cases of loss, sufficient facts shall be given to satisfy them
that whatever action was reasonable or possible has been taken. If in any particular
case audit authorities consider it essential to see the actual court of inquiry
proceedings, the senior audit officer of the Command concerned shall make a
request to that effect. The proceedings shall then be sent to him personally.
LOSSES OF STORES
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160. All cases of losses shall be reported and investigated in accordance with the
procedure laid down in the administrative regulations and instructions of the
respective services and the results of investigation shall be communicated to the
competent financial authority through the usual channels for further action as laid
down in clauses (a) and (b) below:
(a) If the investigation shows that the loss is not due to theft, fraud or gross
neglect, it shall be written off by the competent financial authority after
obtaining audit reports from the financial adviser concerned.
(b) If it is decided that the loss is due to theft, fraud or gross neglect, the
competent financial authority shall in consultation with his financial adviser,
take action as under according to the circumstances of the case, with the
object of making recovery of the amount lost to the extent possible from the
guilty persons and also from the supervising officers if laxity of supervision
has facilitated the theft, fraud or gross neglect:
(i)
If the persons responsible are subject to Army/Navy/Air Force Act (aa) He may allow, but cannot compel, the individual(s) concerned to
make good the loss in whole or in part.
(bb) He may initiate action to effect recovery in whole or in part from the
pay and allowances of the individual(s) concerned as penal or authorised
deductions under the Service Act or Rules applicable.
(cc) He may take disciplinary action against the individual(s) concerned,
or, in cases where such action requires the orders of a higher authority, may
submit such cases for orders together with his recommendations.
(dd) Alter he has taken action or has decided not to take action under (aa),
(bb) or (cc) above, he may write off the loss in whole or in part as the case
may be for reasons to be recorded in writing.
Note:-The courses of action at (i) (as) and (bb) above are without prejudice
to the rights of the competent authority to disciplinary action against the
Individual(s) concerned, if considered necessary.
(ii) If the persons responsible are civilian Government servants(aa) He may allow, but cannot compel, the individual(s) concerned to
make good the loss in whole or in part.
(bb) He may initiate, suitable departmental action (including panel
recoveries, if any) to be taken against the individual (s) responsible under
the Central Civil Services (Classification, Control and Appeal) Rules, 1965.
(cc) After he has taken action or has decided not to take action under (aa)
and (bb) above, he may write off the loss either in whole or in part, as the
case may be, for reasons to be recorded in writing.
(dd) He may institute legal proceedings against the person(s) responsible
in a Court, of Law with the sanction of the competent authority.
(iii) If the persons responsible are not Government servants-
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(aa) He may allow, but cannot compel the individual(s) concerned to make
good the loss in whole or in part. If the loss is made good in part, he may
sanction the write off of the balance for reasons to be recorded in writing.
(bb) He may write off the entire loss for reasons to be recorded in writing.
(cc) He may institute legal proceedings against the persons responsible in
a Court of Law with the sanction of the competent authority in accordance
with the recognised procedure (as laid down in the Administrative
Regulations/Orders.)
Any one or more of the above courses of action may at the discretion of the
competent authority be taken against the persons responsible.
Note-For the purpose of the above rule(i) the competent financial authority will be determined with reference to the
gross loss ;
(ii) the net value of the loss in a loss statement to be actually written off by
the competent financial authority will be arrived at after deducting recovery, if any,
made from the Individual(s) concerned whether such recovery Is in the nature of a
penal deduction or otherwise.
Exception (i)
In. cases of loss of stores during transit by rail or on sea or air
or road or from the custody of Railway/Sea Port/Air Port/Transport
authorities, when claim preferred against Railway/carrying
agency/Sea Port/Air Port/transport authorities has been accented in
full, no formal write off , will be required.
(ii) In cases of loss of stores during transit by rail or on sea or air or
road or from the Custody of Railway/Sea Port/Air Port/Transport
authorities, where the carrying agency admits the claim in part, the
residual loss will be regularised, on loss statement by the competent
financial authority competent to sanction the net amount of loss.
[In the case of loss of stores pertaining, to M.T. accidents, where a large
number of loss statements are held up for an indefinite period pending settlement
of the litigations in the civil courts awaiting awards/compensation to arrive at the
net loss after deducting from gross loss, the following action will be taken for their
finalisation
(a) In the case of M.T. accidents irrespective of whether the downgradation
of vehicle is involved or not, the loss will be written off by the Competent
Financial Authority (to be determined with reference to the gross loss)
independently of any liability for the loss attaching to the concerned
unit/individual/other party. However, whenever any amount to make good the loss
has been recovered as a penal deduction or otherwise prior to finalisation/
regularisation of the loss, the same will not be taken into account to arrive at the
net loss to be actually written off. No loss statement/audit report thereon wilt,
however, be pended on account of such recoveries/finalisation of impending Court
Judgements to avoid withholding of finalisation of loss cases for indefinite period.
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(b) If any compensation is awarded by a evil Court/Tribunal in favour of the

Govt. after regularisation of any loss, the amount so awarded, will be deposited
with the Govt. and the onus for watching recovery/finalisation of the claim would
rest on administrative authorities and local audit. In cases where the court
judgement in contrary to the findings of the Court of Inquiry based on which
regularisation was taken e.g., where the loss categorised by the Court of Inquiry as
not due to theft, fraud or neglect, is later on viewed as a loss due to theft, fraud or
neglect by the civil court/motor accident claim tribunal or vice-versa, the loss
statements already finalised will not be re-opened for regularisation of the loss.]
The various provisions in the Services Acts or Rules under which the loss
can be recovered are laid down in Appendix I to Vol. II of this Regulation.
FINANCIAL POWERS FOR WRITE-OFF OF LOSSES OF STORES
161. The financial powers of officers in respect of write off of losses o stores are
laid down in Appendix II to Vol. II of these Regulations.
LOSS OF IMMOVABLE PROPERTY
162. Losses of, or damage to Defence Services buildings or other mimov4ble
property (e.g. bridges) by fire or any other cause shall be dealt with under the
above rules. For this purpose the value of the- loss or damage shall be the total
amount irrespective of any amount received from the insurance company in the
case of an insured building.
Note-Preparation of loss statements and their sanction by the CFA are not
necessary in cases of losses/damages to buildings, roads, installations etc., whether
inside or outside the area of active operations, caused entirely by enemy action. In
cases of losses in the area of active operations a certificate from the O.C.,
Formations, stating the circumstances of the loss would be sufficient. Doubtful
cases are required to be referred to Force Commander (if the Force comprises of
less than a Division) or the Divisional Commander whose orders in the matter will
be treated as final.
In cases of losses outside the area of active operations a board will be
convened under the orders of Station Commander/Commander under whose
jurisdiction the area is located. The board will assess the value of the loss/damage
and retrievable stores, If any, based on the data available at the time and to an
accuracy possible under the prevailing circumstances. The board- proceedings will
be signed in token of acceptance by the convening authority and a certificate
issued.
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PROCEDURE REGARDING PRICING OF LOSS STATEMENTS

163. Loss statements for losses chargeable to the State will be price as under:
Depots/unit
Nature of stores
(i)
Ordnance/Inspection
M.T. Depots.
(ii)
Supply (ASC) Base Depots,

Medical Store Sub-Depots,
Medical Stores and Veterinary
and other units.
All units and formations
(iii)
(iv)
(v)
and
Base Depots Medical Stores,

Sub-Depots Stores Medical
Stores; and Veterinary units.
All other units and formations.
Pricing
Authority
Executive
Ordnance,
Clothing and M.T.
Stores.
Ordnance, clothing LAOs/CsDA
and
M.T. Stores
Supply (ASC)
Stores
Medical and
Veterinary
Executive
Medical and
Veterinary Stores
LAOs/CsDA
Executive
Pricing done by the Executive at, (i), (iii) and (iv) above will, however, besubject to a post scrutiny by the LAOS/CsDA.,
Loss statements for losses in respect of which penal recoveries from
individuals are involved, will be priced by LAOS/CsDA.
In the case of Navy, all loss statements will be priced by, Indian Navy Ships
and. establishments concerned and forwarded to their respective Navy
LAOS/SNLA for check and audit before being regularized by the CFA.
In the case of Air Force, all loss statements will be priced by the executive
officers in accordance with the procedure contained in IAP-1501. Loss statements
in ordnance and clothing factories will be priced by the Accounts Officers attached
to those factories:
LOSS OF PUBLIC MONEY
Definition of the term 'Public Money'
164. The term `Public Money' includes, in addition to cash proper:
(a) irrecoverable personal advances made to individuals no longer in
Government Service;
(b) overpayments of pay and allowances made to individuals no longer in
Government Service;
(c) all other irrecoverable cash claims including the value of issues on payment
to units or individuals the recovery of which would entail considerable
hardship or present special difficulty
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(d)
value of stores issued to contractors which, for any cause, there has been
a failure to recover and the recovery of which would present special
difficulty;
(e) Mosses due to expenditure on freight in respect of stores despatched in error
(f)
losses resulting from the despatch of stores by other than the authorised
procedure;
(g) irrecoverable debts of units disbanded in accordance with demobilization
orders ;
(h) irrecoverable losses due to thefts and fraudulent use of railway warrants,
credit notes or railway concession vouchers;
(i)
demurrage charges incurred due to negligence on the part of
consignor/consignee.
PROCEDURE OF DEALING WITH LOSS OF PUBLIC MONEY
165. All losses shall be reported to the Sub-Area Commander, or the C in the Air
Staff, or in the case of departments to the authority prescribed below,
Ordnance Factories
Clothing Factories
Leather Factories
DGOF
Defence Production Establishments Directors of Defence Production

and Research and Development
and, Research and Developments.
Establishments.
Ordnance Depots E.M.E.
GOC-in-C
of
Command,
Establishments excluding E.M.E. Commander Ind. Area
Centre.
Remount Units
Military Farms
Base Supply and Station Supply
A.S.C. Units under AHO Control
Armed
Depots
Forces
Medical
Director
of
Remount
Veterinary Services
Director of Military Farms
O.C. Station
Director
of
Supplies
Transport
and
and
Stores DGAFMS
In the case of Navy, all losses shall be reported to the Senior Naval Officer
on the station or the FOsC in C or Fleet Commanders or the Chief of the Naval,
Staff, whoever is immediately Superior to the establishment in which the loss
occurred. The authorities stated above shall arrange for the assembly of a
Court/Board of Enquiry to investigate the loss. The convening of a court of inquiry
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may be dispensed with by the competent financial authority in cases where the loss
is estimated to be less than Rs. 1000/- unless there are any circumstances
connected with the loss which are not clear or which demand special investigation.
If the Court/Board finds that the loss is not due to theft, fraud or gross neglect it
may be written off by the Competent Financial Authority, in consultation with his
Financial Adviser. Should however, it be found that the. loss is due to theft, fraud
or gross neglect, the Competent Financial Authority shall (in consultation with his
Financial Adviser), take action according to the , circumstances of the case, as laid
down in Rule 160.
In cases of losses of or damages to the Defence Stores which may occur
while the stores are in transit by Sea or while these are lying in the custody of Port
authorities prior to their delivery being taken by the Defence authorities, holding
of a Court of Inquiry may net normally be necessary either at the Embarkation
Headquarters end or at the consignee's end in the following circumstances also,
even if the value of the loss/damage exceeds Rs. 1,000/- (Rupees One thousand
only)
(a) where the stores are short-landed;
(b) where the stores are lost after landing from the ship while in the
custody of the carriers or the port authorities ;
(c) where a package or its contents are found damaged or pilfered either
on landing from the ship or while lying in the custody of the port
authorities ; and
(d) where a claim is accepted by the carriers/port authorities to their
maximum liability or where such a claim is settled at a lesser amount
with the prior approval of the Government.
Provided that:
(i)
Appropriate action in each case has been taken by Embarkation
Headquarters for purposes of making necessary Claims : (ii) Prompt action has been taken to make a report to the police for
investigation regarding (b) and (c) above, where loss or pilferage has
been noticed;
(iii) A marine survey has been demanded and held within the prescribed
period in the presence of the carriers, pore authorities and consignee's
representatives, as regards damage to packages and their contents and
shortages, before the stores are taken over by the Defence authorities
or if marine survey could not be held, the cargo is removed and taken
into custody of the Defence authorities after carrying; out a
departmental survey by a Board of Officers in the presence of a
representative of the Port authority.
Losses on account of withdrawals of money from treasuries connected with
Defence Services payments.
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166. As soon as a loss on account of withdrawal of money from a treasury

connected with the Defence Services payments comes to light, the civil authorities
will carry out the necessary investigation under their own procedure and
communicate the results thereof together with their En dings, and orders regarding
action taken' against the officials responsible for the loss to the administrative
authority concerned of the Defence Services (under intimation to the Controller of
Defence Accounts concerned) for the preparation of a loss statement' and its
submission to the competent authority for regularisation. Such cases will be
classified, by the said administrative authority and dealt with as below:
(a) where the responsibility for the loss has been fixed entirely on the
treasury authorities. The loss will be written off by the competent financial
authority in consultation with his financial adviser without any further
investigation. The entire amount recovered from the officers responsible
will be credited to the Central Government.
(b) Where the responsibility for the loss has been partially/totally alleged
by the civil authorities on the Defence authorities. Further investigation will
be carried out and the procedure laid down in Rule 165 of these Regulations
will be followed before the loss is finally sanctioned by the Competent
Financial Authority.
FINANCIAL POWERS FOR WRITE-OFF OF LOSSES OF "PUBLIC
MONEY"
167. The financial powers of officers in regard to losses of public money are laid
down in Appendix II of Vol. II of these Regulations.
LOSSES IN OFFICES AT ARMED FORCES HEADOUARTERS
168. The procedure detailed ab9ve shall not apply to losses (whether o public
money or stores) in the offices of Army, Naval, Air Headquarters, or DGOF. All
cases of losses in these offices shall be investigated by the head of the office and
submitted for orders to the Ministry of Defence irrespective of the amount and the
cause of the loss.
EXCEPTION TO GENERAL RULES REGARDING LOSSES
169. The foregoing rules do not apply to certain unavoidable losses regarding
which gee Chapter VI-"Losses", of Store Accounting Instructions and Chapter 22,
IAP-1501.
170 to 174 Blank.
CHAPTER-VIII AUDIT OBJECTION AND RECOVERIES

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AUDIT, HOW REGULATED, AND RETRENCHMENTS BY AUDIT

OFFICERS
175. Controllers of Defence Accounts are required to retrench or object to any
charge which is not duly authorised or is unsupported by proper vouchers, but if
such retrenchment would disturb a long existing practice or where the amount is
considerable, they will take the orders of the Government of India.
The final decision of an independent audit officer" in regard to a charge on
the ground that it is inadmissible, or that the sanctioning authority was, not
competent to order it, must be accepted but an appeal against such decision may
be made through the proper channel (see Rule 180).
THE CONTROLLER GENERAL OF DEFENCE ACCOUNTS CANNOT BE
OVER-RULED WITHOUT REFERENCES TO COMPTROLLER AND
AUDITOR GENERAL AND MINISTRY OF FINANCE
176. The CGDA shall not be overruled by the Ministry of Defence on a question
of rule or procedure in relation to Defence Services expenditure without the
concurrence of the Comptroller and Auditor General and the Ministry of Finance.
POWERS OF AUDIT OFFICERS TO WAIVE OBJECTION AND TO
WRITE OFF IRRECOVERABLE AMOUNTS
177. (i) In order to save time and trouble over petty sums an audit officer of the
rank of Joint Controller of Defence Accounts in Command Controllers' office and
DCDA/ACDA holding group charge or posted as Incharge, Area Accounts Office
may. waive any audit objection upto a limit of Rs. 500/- and Rs. 300/- respectively
in each case and an Assistant Controller of Defence Accounts, Senior Accounts
Officer or Accounts officer in charge of a section of audit office or Incharge of
local audit may exercise the same power upto a limit of Rs. 200/-. An Assistant
Accounts officer and Section Officer (A/Cs) may also exercise the same power
upto a limit of Rs. 75/- and Rs. 5% respectively in each case.
Similarly, a Controller of Defence Accounts, in order to save time and
trouble over relatively unimportant items, may waive (at his discretion, when he is
reasonably satisfied that, all factors considered, it is probably in the best interests
of Government to do so), any audit objection whatever upto a limit of [Rs. 2000/-]
in each case, brief reasons being recorded of the circumstances which in his
opinion, justify the waiver.
Note: If the Irregularity Is one, that is likely to recur, the officer responsible
should be told that it is objectionable, even though no recovery be made in the
particular Instance.
Controller of Defence Accounts may also waive procedural/no financial
objections, i.e., those which do not involve any monetary value or loss to
Government, without reference to the local administrative authorities, provided
they are satisfied that the objections are petty and do not disclose any inherent
defect of procedure or persistent irregularity.
Additional Cs. D.A./Jt. Cs. D.A. and Group Officer/Area Audit Officers
may also waive objections which are -procedural and non-financial only, in cases
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where irregularities do not display, a tendency to repeat themselves. Major

irregularities and items of objections which are of repetitive nature, should be dealt
with at the level of additional Cs.D.A./Jt. Cs.D.A. Objections which are minor or
trivial may be waived by Group Officers/Area Audit Officers.
(ii) Some items are placed under objections, not because the whole or any
portion of the expenditure is unjustifiable in itself, but because it is not exactly
covered by rule, or the authority for the expenditure is insufficient or full proof
that it has been incurred has not been provided, for example, there may be an
absence of one or more sub-vouchers. In such cases the following officers of
Defencs Accounts Department, may waive an audit objection upto the limit noted
against each provided the conditions mentioned at (a), (b) and (c) below are
satisfied.
C.D.A.
Jt .C.D.A.
D.C.D.A./A.C.D.A. Holding Group Charge
or posted as I /C Area Accounts Office
Financial Limits
3000/1500/1000/-
(a)
(b)
that the expenditure is not of an intrinsically recurring nature; and

where the objection is based on insufficiency of sanction, that he is satisfied
that the authority empowered to sanction the expenditure would accord
sanction, if required; or
(c) where the objection is based on insufficiency of proof of payment, that he is
of the opinion that undue trouble would be caused if the submission of the
full proof of the expenditure having been incurred were insisted on and he
sees no reason to doubt that the outlay has actually been made.
(iii) In the case of items which have become irrecoverable from any cause, the
following audit officers may write off an amount to the extent noted against each
including amounts outstanding under a debt head if the ultimate incidence of the
expenditure is against Defence Services Estimates :
Financial Limits Rs.
C.D.A.
2000/Jt.C.D.A.
1000/D.C.D.A./A.C.D.A. Holding Group Charge or 500/posted as I/C Area Accounts office
A.C.D.A. /S.A.O. /.A.O.
200/A.A.O.
50/S.O.(A)
25/Irrecoverable debtor balances in the non-effective accounts of
JCOs/ORs/NCs(E) may be written off by the Officer Incharge P.A.O. (ORs) upto
Rs. 50/- in each case.
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(iv) The provisions of this rule are not affected by any conditions or
limitations imposed in any other rule in these Regulations.
(v) The powers as mentioned above will also be exercised by the Controllers
and their officers dealing with Fund Accounts for waiving of objections pertaining
to non- recovery/overpayment of fund balances, provided such nonrecoveries/over payments are not due to any mistake in accounting but represent
over payments established as irrecoverable for any other reason.
Note 1.-The powers under this rule cannot be delegated to any subordinate officer.
Note 2.-The authority vested In audit officers under this rule is not to be exercised
in respect of Items in the check, or audit of which they have no concern, for
example, where they merely receive bills and forward them to another office for
final audit.
Note 3.-The powers of waiver under clauses (1) and (Ii) above may also be
exercised in respect of claims submitted for pre-audit and found to be open to
technical and/or unimportant objection, in whole or in part.
Note 4.-Command Controllers and Junior Administrative Grade Controllers in
independent charge, will exercise all the powers that are vested in Controller of
Defence Accounts.
Note 5.-C.D.A. Army Meerut will exercise the powers of C.D.A. (Funds)
Note for Readers
Powers of audit officers to waive audit objections and to write off
irrecoverable amounts are summarised as under.
S.No
.
Authority
Waiver
of
Audit Waiver
objections to save Audit
of Write off of
irrecoverable
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1
2
3
4
5
6
time and trouble over

petty sums covered by
rules or authority is
Insufficient or full
proof not provided.
[Rule 177 (i)]
C.D.A.
Nil
Jt.C.D.A.
500/D.C.D.A./A.C.D.A. 300/Holding Groups
Charge or posted as
Incharge Area
Accounts Office
A.C.D.A./S.A.O./
200/A.O.
A A. O.
75/S.O. (A)
50/-
objections if amounts due

expenditure to any cause.
is not exactly
[Rule177(ii)]
3000/1500/1000/-
[Rule177(iii)]
2000/1000/500/-
Nil
200/-
Nil
Nil
50/25/-
However, for waiving audit objections on unimportant items in the best

interest of the State, CDA has powers upto Rs. 2000/OBJECTION STATEMENTS AND POWERS OF ADMINISTRATIYE
AUTHORITIES FOR REGULARISATION OF AUDIT OBJECTIONS
ARISING OUT OF BREACHES OF RULES AND REGULATIONS
178. As a general rule, disbursing and stores officers are responsible or their
receipts and payments and audit objections, thereon will be made against them. In
all cases of audit objections, arising out of breaches of rules and regulations,
efforts should be made to assess the loss/financial implications, if any, involved in
the irregularity and action taken as given below:
(a) Where the loss to the state or the financial implications involved can be
computed, the irregularity will be regularised in consultation with the
Controller of Defence Accounts under the procedure prescribed in Chapter
VII of these Regulations. Financial powers of officers competent to
regularise such objections and an illustrative list of the type of objections
which may be regularised under this procedure are laid down in Appendix It
of Vol. II of these regulations.
(b) Cases of irregularities which involve no loss or where the monetary
value of the loss is not assessable, (e.g., non-verification of stock within the
prescribed period) may, depending on the nature of the irregularity, be
referred to the G.O.C.-in-C and corresponding officers in other services.
Corps/Divisional/Area Commander and heads of Branches at Service
Headquarters by the Controller of Defence Accounts for regularisation.
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The Controllers of Defence Accounts will report to Government of India

cases, if any, wherein their opinion, the intention of the above delegation of
powers has been misapplied.
RECOVERY OF OVERPAYMENTS-PROCEDURE
179. Ordinarily all personal claims should be audited finally within 12 months
from the date of payment. (a) Before recovery of an overpayment detected within this period is
effected, the individual against whom the claim is preferred will be fully informed
of its nature and of the method by which it is proposed that recovery shall be
made. If he considers that the claim is not in order and that recovery should not be
made, he may request the Controller of Defence Accounts to withhold recovery
pending submission of an appeal to the competent authority. An audit officer may,
if he considers the protest reasonable, postpone recovery pending the submission
of the appeal.
Appeals must be submitted as expeditiously as possible. If an appeal is
submitted within 2 months, the question whether recovery, should be delayed until
a final decision on the appeal has been arrived at, will be considered jointly by the
Area or Independent Sub-Area Commander/the Chief of the Naval Staff/the Chief
of the Air Staff and the Controller of Defence Accounts (see Rule 180). If an
appeal is not submitted within 2 months, no consideration will be given to the
question of withholding recovery unless the delay can be proved to have been
unavoidable, and the audit officer will proceed to recover the amount without
further question.
Instruction.- When there is a difference of opinion between, the
administrative authorities and the Controller of Defence Accounts over the
propriety of a recovery or the rate of recovery, the matter shall, without delay, be
reported to Services Headquarters through the Controller of Defence Accounts for
orders.
(b) In the case of overpayments which have not been challenged within
twelve months from the date of payment, the Controller of Defence Accounts will
call upon the individual concerned, through the competent financial authority, (see
Rule 181), to show cause why recovery should not be enforced. On receipt of the
individual's reply the competent financial authority will decide whether the
amount should be written off, or whether recovery should be effected, and will
inform the Controller of Defence Accounts and the individual concerned
accordingly. In cases where the competent financial authority remits an
overpayment his reasons for doing so must be recorded.
When the overpayment was made partly within12 months and partly at a
date or dates more than twelve months anterior to the date of challenge, the
portions of the amount overpaid within and beyond the twelve months limit will be
dealt with separately under clauses (a) and (b) respectively.
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Note 1.-An Intimation that an appeal has been submitted should be sent to
the Controller of Defence Accounts by the Individual concerned, simultaneously
with the submission of the appeal to the administrative authority.
Note 2.-The term "overpayments" here includes demands arising from the
non-recovery of a Government due of which It Is the duty of the audit officer to,
watch reallsation, e.g. house rent and electric light charges, but does not apply to
recoveries on account of subscriptions, donations or other payments due to
provident funds.
Note 3.-Nothing In the above rules should be held to confer on Individuals
any claim to the remission of sums due to Government.
Note 4.-The procedure laid down In this rule does not apply to
overpayment of pensions which are governed by rules In Pension Regulations for
the Army Part II/ Pension Regulations for the Indian Navy/AFI-166/43.
Note 6-The procedure laid down In clause (a) applies to overpayments on
account of traveling allowance (including unauthorlsed provision of conveyance
and irregular issue of warrants and credit notes) which are detected within twelve
months from the date of payment. The cases involving overpayments which have
not been challenged within 12 months from the date of payments will be submitted
for orders of the Government of India save as provided for In Rule 61.
Note -6.-In the case of men, who at the time of proceeding on leave pending
discharge, drew the entire amount of leave pay (including deferred pay) that would
have been due to them on the date of discharge, and who die before the expiry of
the leave, the amount of pay and allowances (including deferred pay) overdrawn
by them shall be treated as written off.
Note 7.-Orders sanctioning a write off of terminal debtor balances in respect
of non effective personnel will invariably contain a clause to the effect that any
sums which are subsequently found due to them including those which become
admissible on re-employment/re-enrolment under Government, will be adjusted
against the amounts written off.
Note 8.-The competent financial authority for the purpose of clause (b)
above is the authority within whose jurisdiction the Individual is serving at the
time the overpayment is considered for regularisation.
APPEALS
180. An appeal against the final disallowance of an audit officer should be
submitted expeditiously as possible and in no case should it be deferred beyond
two months from the date of issue of the, intimation of final disallowance (sec
Rule 179).
Every appeal (IAFA-508) must be a self-contained statement of the salient
"acts with the omission of all extraneous matter and only such documents should
be attached thereto as are essential to a decision in the case. The Area, Independent
Sub Area or Sub Area/Brigade Commander/the Chief of the Naval Staff/the Chief
of the Air Staff, in agreement with the Controller of Defence Accounts concerned
in his capacity as financial adviser, is empowered to decide whether recovery of
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the disallowance should be withheld until the appeal has been fully considered and
orders passed thereon. In taking such decision, due regard will be paid to the
protection of the interest of Government and to the likelihood of the remission of
the disallowance or overpayment by the competent authority.
In cases where it is decided that recovery should not be withheld, the
appellant should be so informed, and the Controller of Defence Accounts
requested to proceed with the recovery forthwith.
REMISSION OF DISALLOWANCES
181. 1. The officers mentioned in the margin who exercise the fu powers of a
Local Government under the Civil Service Regulations, are empowered to remit
over issues of pay, and disallowances by audit officers in respect of payments
made more than 12 months before the date when they are challenged, to
commissioned, officers, junior commissioned officers, warrant and noncommissioned officers, soldiers, as well as others serving under them who are not
appointed directly by the Government of India, provided they consider the amount
to have been drawn by the person concerned under a , reasonable belief on his
part that he was entitled to it, and that he has not displayed such a degree of
negligence as to make a equitable, inspite of the lapse of time, to enforce recovery
in whole or in part.
2. GOs C-in-Chief, the Chief of the Naval Staff, Flag Officers-Commanding in
Chief, Flag Officer Commanding Fleets, and the Chief of the Air Staff, exercise
the same powers as the officers mentioned in the preceding paragraph in regard to
all overissues of pay and disallowance by audit officers, so far as they affect
payments made more than 12 months before the date when they were challenged.
In the case of over issues or disallowances of payments where erroneous issue- has
been challenged within twelve months from the date of payment, G.Os.C.-inChief, the Chief of the Naval Staff, Flag Officers Commanding-in-Chief, Flag
Officers Commanding Fleets and the Chief of the Air Staff, have the same powers
to sanction remission on the conditions given below:
(i) That the amount challenged was drawn by the individual concerned
under reasonable belief on his part that he was entitled to it.
(ii) That the amount challenged was not an overdrawal occasioned by delay
in notifying an individual's promotion or reversion.
(iii) That the overdrawal does not evidence some defect in system which
should receive the notice of the Government of India.
(iv) That the overdrawal has not(a) had-the effect of raising an individual's emoluments beyond Rs.
12,000 per annum or of increasing those emoluments if they are
already in excess of this limit;
(b) involved other expenditure which under any specific rule requires the
approval of the Government of India.
The audit officer should bring to the notice of the Government of India
cases in which he thinks the intention of the rule is being misapplied.
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3.
The monetary limits upto which the various Army/Air Force authorities
mentioned in this rule can exercise these powers are subject to those prescribed for
losses of public money as laid down in Schedule VII of Appendix II-Part I
(Army)/Schedule VI and VII of Appendix II-Part III-.(Air Force) of Vol. II of these
Regulations.
In regard to the Naval authorities mentioned in this rule their powers for this
purpose are laid down in Schedule XII of Appendix II-Part II-Navy of Vol. II of
these Regulations.
4.
If the amount over issued or disallowed was drawn partly within twelve
months and partly at a date or dates more than twelve months anterior to the date
of challenge, the part amount involved within and beyond the twelve months' limit
will be considered separately (independently) under the above- orders, (see also
Rule 179). Note-Every overpayment to a Government servant is and must be
regarded as, a debt owed to the public and all possible action should be taken to
recover it with despatch. The power to waive the recovery of overpayments made
to Government servants should not be exercised simply on the ground that
overpayment was made in good faith and that recovery would cause hardship.
Whenever, it is necessary to waive an overpayment it should be ensured that there
is fullest justification for such waiver In addition to the fulfilment of the conditions
mentioned in clause (2) above.
5.
In the case of payments made in advance and subject to subsequent
adjustment on production of final bills, documents or other information, for the
purpose of audit, the twelve months' limit dates from the submission of the final
bill etc., and not from the date of receipt of the advance.
6.
All cases of payments due to incorrect interpretation of the regulations on
the-part of the Defence Accounts Department for which direct responsibility
attaches to the Department should be submitted to the Government of India for
orders.
Such cases are required to be submitted by the Controllers of Defence
Accounts to the Controller General of Defence Accounts, who will, after necessary
examination of the case, put them up to the Ministry of Defence for orders of the
Government of India through the branch of the Service Headquarters and DFA
concerned. Government orders regularising such cases will be issued by the
Ministry of Defence.
7.
Cases of overpayments due to failure of audit other than incorrect
interpretation of regulations will be put up by Controllers to the appropriate
competent financial authority within whose financial powers the amount at issue
falls.
Note 1-In sanctioning the remission of disallowances and over issues the
following principles will be observed
(a) An individual's beliefs as to the allowances to which he Is entitled is
not a "reasonable better" if the has omitted entirely to investigate the matter
on his own account.
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(b) Where the overdrawal has been due merely to delay to the publication
of gradation lists recovery should not be treated as a case of hardship unless
the circumstances are very exceptional. ,
(c) The orders for remission should be for the gross amount of
overpayment without deduction of income-tax.
Note 2- The powers laid down in the rule apply to overpayments (see Rule 179).
Note 3-Nothing in these rules shall be held to confer on Individuals any claim to
the remissions of sums due to Government.
Note 4- The powers laid down in this cute do not apply to over payments on
account of travelling allowance (including unauthorised provision of conveyance
and irregular issue of warrants and credit notes). Save as provided for in Rule fit
such overpayments will be regularised under orders of the Government-of India.
Note 5-Recovery of or, balances due to overdrawals in respect of effective
personnel either deliberately or through misapprehension on the part of the
soldier/sailor/airman or misapprehension or lapse on the part of the paying officers
should be made without obtaining formal orders of the CFA under Rule 178.
Note 6-The procedure laid down above does not apply to overpayments of
pensions.
ADJUSTMENT OF CLAIMS
182. The following deductions may be made from the pay non-effective pay and
all other emoluments payable to a person subject to the Army Act, 1950/Air Force
Act, 1950/Navy Act, 1957
(i)
upon the general or special order of the central Government, any sum
required to meet any public claim that maybe against him, any regimental
debt that may be due from him or any regimental claim (Government orders
are not necessary where a claim or debt is not disputed by the person
concerned;
(ii) ny sum required to meet compulsory contributions to any Provident Fund or
any Benevolent of other fund approved by the Central Government.
Explanation-(i) The aforesaid deductions shall be in addition to those specified in
the Acts.
(ii) "Public Claim" shall be held to mean any public debt or disallowance,
including any over issue; or deficiency or irregular expenditure of publicmoney or store of which, after due investigation, no explanation satisfactory
to the Central Government is given by the officer who is responsible for the
same.
183. Retrenchments on account of excess issues of pay, arrears o rent, electricity,
water and furniture charges owing to errors in assessment and unauthorised
expenditure, stoppages other than those awarded under the Army Act, 1950/Air
Force Act, 1950/Navy Act, 57 the value of losses and all other claims for which
Government hold an officer liable shall be recovered in monthly installment of
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third of emoluments. GOs. C.-in-C the chief of the Naval Staff, AOC-in-C, and
heads of departments in the case of civilian establishments serving under them
may, provided they are satisfied that there are reasonable grounds for such a
course, which must be recorded in writing, relax the rule to enable recoveries to be
made in smaller instalments which in no case shall exceed twelve in number.
Note 1- The Chief of the Air Staff will exercise the financial powers under this
rule in respect of the personnel serving In the units under the direct control of Air
Headquarters.
Note 2- Superintendents/Officers-in-Charge of Ordnance etc., Factories is
authorised to-effect recoveries from pay for different reasons as per orders on the
subject in 12 Instalments without prior reference to DGOF.
Note 3-Director Technical Development and Production (Air) will exercise these
powers In respect of staff serving under him.
Note 4-Director of Accounts Air Head Quarters will exercise full powers in
respect, of staff serving under him.
ATTACHMENT OF PAY AND ALLOWANCES
184. When a court order is received attaching a portion of the pay of a
Government servant, who has already received an advance from Government, the
attachment order-to the extent permissible-will have the first claim against his pay
as it falls due and the residue only will be available for the recovery of the
instalment of the advance at the rate provided for by the rules.
Any deductions which may have to be made on account of subscriptions to
provident funds recognised by Government, taxes on income payable by the
Government servant and debts due to Government should be made from the nonattachable portion of the Government servant's salary.
Note-When sending to a, civil court money deducted from the salary of civilian
Government servants paid from Defence Services Estimates under an attachment
order, the disbursing officer should remit to the court only the amount realised
under the attachment order less the remittance charges. A disbursing officer is,
therefore, not entitled to deduct from the salary any amount In excess of that stated
In the attachment order for the purpose of meeting remittance charges.
185. Unless protected by the Army Act, 1950/Air Force Act, 1950, the
attachment of salary and allowances of an individual is governed by the provisions
of the Civil Procedure Code. See Rule 48 (1), Order XXI, and First Schedule,
which is reproduced below
Where the property to be attached is the salary or allowances of a servant of
the Govt. or of a servant of a railway company or local authority or of a servant of
a Corporation engaged in any trade, or industry which is established by a Central,
Provincial or State Act, or a Government Company as defined in Section 617 of
the Companies Act, 1956, the Court, whether the judgement debtor or the
disbursing officer is or is not within the local limits of the Court's jurisdiction, may
order that the amount shall, subject to the provisions of-section 60, Civil
Procedure Code, be withheld from such salary or allowances either in one payment
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or by monthly instalments as the Court may direct; and upon notice of the order to
such officer as the Appropriate Government may by notification in the Official
Gazette appoint in this behalf :
(a) where such salary or allowances are to be disbursed within the local
limits to which the Civil Procedure Code for the time being extends ,the
officer or other person whose duty it is to disburse the same shall withhold
and remit to the Court the amount due under the order, or the monthly
,instalments, as the case may be ;
(b) where such salary or allowances are to be disbursed beyond the said
limits, the officer or other person within those limits whose duty it is to
instruct the disbursing authority regarding the amount of the salary or
allowances to be disbursed shall remit to the Court the amount due under the
order, or the monthly instalments, as the case maybe, and shall direct the
disbursing authority to reduce the aggregate of the amounts from time to
time to be disbursed by the aggregate of the amounts from time to time
remitted to the Court.
When an attachment order is issued by a Court in India in accordance with
Rule 48, Order XXI First Schedule, Code of Civil Procedure 1908 (as amended)
against the salary or allowances of a civilian Government servant paid from
Defence Services Estimates, the part of the leave salary in respect of the leave
spent out of India, which is attached shall be remitted to the Court by the accounts
authority concerned. The balance of leave salary may be drawn by the officer.
ERRONEOUS
PAYMENTS
NOT
CHALLENGED
FOR
A
CONSIDERABLE TIME
186. When erroneous payments have been admitted in audit for a considerable
time owing to a wrong interpretation of financial rules or to oversight, the
following procedure shall be observed for the recovery or otherwise of the
amounts over paid
(a) When a wrong interpretation of a financial rule has been followed in an
audit office, the new interpretation should, in the absence of special
instructions to the contrary, be given effect to from the date of issue by the
Comptroller and Auditor General or the Controller General of Defence
Accounts of the orders stating the correct interpretation.
(b) When erroneous payments have been left unchallenged owing to
oversight, the audit office should not, on its own initiative, undertake a reaudit of bills paid more than twelve months previously, but should report the
facts of the case to the Competent Financial Authority for orders, and a reaudit should be undertaken only if the Competent Financial Authority so
desires.
RETRENCHMENTS FROM CONTRACTORS BILLS AND APPEALS
187. When sums are retrenched from contractors bills, the grounds on which the
amounts have been disallowed will be communicated on IAFA-471. If the
claimant is dissatisfied with the decision given, he may, within one month from the
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date of such decision-appeal to the Area or Independent Sub-Area Commander/the

Chief of the Naval Staff/AOA/AOM/AOC-in-C/Scientific Adviser to the Minister
of Defence/Controller General of Defence Production.
LIMITATION OF CLAIMS
188. All claims to pay and other pecuniary advantages (other than those relating
to pension as regards which see Pension Regulations for the Army Pension
Regulations for: the Indian Navy/A.F.I. 166/43) must be preferred as soon as they
arise and officers are personMl3 responsible for avoidable delay. Claims preferred
within [24] months will be dealt with in the usual way and those preferred in
respect of any period not more than [Six] years antecedent to the date of claim'
shall ordinarily be deemed to be forfeited but [if all supporting reasons are
available] may be addicted by the GOC-in-C, Commands, Corps/Div.
Commanders, Commanders Areas, Independent Sub Areas,, Sub Areas and
Brigades, [the Chief of Naval Staff, Flag Officer Commanding WEF FOC-in-C
West Bombay Commodors South Cochin, FOC-in-C East Visakhapatnam],
Commanding Officers' of IN Ships and Establishments of the rank, of Commander
and above (in respect of claims of officers) and [Air Officer-in-Charge.
Administration AOC-in-C Commands/Group] and Heads of Departments in the,
respective services, when in their opinion exceptional circumstances justify such
treatment to be accorded. In respect of claims preferred after [three] years
including those which can not be investigated by Audit authorities due to nonavailability of records, full powers have been delegated in respect of Army to
Adjutant General for claims other than those pertaining to TA/DA and to QMG for
TA/DA claims and to PGAFMS for all claims. Similarly full powers are vested
with COP, FOsC in C Commands, FOC Area and AOA, AOsC in C
Commands/Gp for all claims pertaining to the respective services. These Financial
powers will be exercised by the C.F.A. in consultation with the Ministry of
Defence (Finance) unless otherwise provided under the rules or any specific orders
of the Government. Doubtful cases will, however, be referred to the Govt. of India
for orders and Controllers of Defence Accounts will invariably be consulted when
claims of the above nature are being dealt with. As an exception, the Retaining fee
of Gorkha reservists called up for training biennially may be drawn when the
reservists actually come up for training.
Claims for the counting of former service-for good service pay/good
conduct pay/badge pay and increments where admissible under rules shall be
preferred as soon as possible after the refund of gratuity has been completed.
Claims submitted within 12 months after the final repayment of gratuity shall be
dealt with in the usual way, but those submitted more than 12 months after the
completion of the refund shall be admitted in full by the Controller of Defence
Accounts and a report of the late submission of the claim will be made by him to
next higher authority for such action as may be deemed necessary.
For the purpose of determining the period of [twelve months] within which
a claim is normally required to be preferred, only the period from the date the
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claim fell due to the date on which the claim is received in the audit office will be
taken into account. In the case of Air Force personnel, where lit claim is paid by
the Unit Accountant Officer within [12 months] of the date of arising, the claim
will not be treated as time-barred even though the cash account in which payment
is made is received in the audit office more than [12 months] after the date of
arising of the claim. Where a concession or allowance is sanctioned by
Government with retrospective effect, the period of retrospection will not be taken
into account for calculating the time bar of [12 months].
In the case of JCOs/ORs/Sailors/Airmen the date of issue of the relevant
D.O. Part II order or corresponding order prevalent in Navy/Air Force will be
regarded as the date of preferring the claim to the audit office. The time bar will,
however, be reckoned from the date on which the claim fell due.
Note 1.-The [Air Officer-in-charge Administration] will exercise the powers in
respect of belated claims under this rule in respect of the personnel serving In the
units under the direct control of Air Headquarters. Director Technical
Development and Production (Air) will exercise these powers in respect of belated
claims under this rule In respect of the staff serving under him.
Note 2.-The CGS, the AG, the QMG, the MGO, the MS, and the E-in-C are the
competent authorities in respect of the claims of officers serving directly under
them.
Note 3.-The Director General National Cadet Corps is the competent authority in
respect of the claims of service personnel serving with the National Cadet Corps.
Note 4.-The Directors, National Cadet Corps, States (not below the rank of
Brigadier or equivalent) are the competent authorities in regard to personal claims
of service personnel serving under them which are preferred not more than three
years antecedent to the date of claims.
Note 5.-Superintendents/Officers in charge of Ordnance etc., Factories, are
empowered to sanction pay and allowances, In respect of claims made within 3
years without prior reference to DGOF.
Note 6.-The Deputy Military Secretary to the President will exercise the powers of
an Independent Sub-Area Commander in respect of belated claims of personal
entitlement of the President's body-guard.
Note 7.-The Commandant, Infantry School; Commandant, College of Combat,
Mhow; Commandant, National Defence Academy; Commandant, Defence
Services Staff College; Commandant, Indian Military Academy; Commandant,
School of Artillery, Deolail; Commandant, High Altitude Warfare School;
Commandant, Military College of Tele-Communication Engineering, Mhow;
Commandant, Armoured , Corps Centre and School, Ahmednagar;, Commandant,
Army Clerks Training School, Aurangabad and Commandant, Counter Insurgency
and Jungle Warfare School, are empowered to sanction Investigation of claims
upto 12 months beyond the period within which they are admitted in the usual
way under this rule. The Commandant, Military College of Tele-communication
Engineering, Mhow may delegate his financial powers by name to an officer not
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below the rank of Lieut. Colonel posted on the permanent staff of the, Military
College of Tele-communication Engineering.
Note 8.-The Chief Administrative Officer, Ministry of Defence will exercise the
powers of "Head of Department" under this rule in respect of civilian non-gazetted
officers and class IV servants employed in his organisation; Armed Forces
Headquarters and other Inter-service Organisations under the Ministry of Defence.
Note 9.-Commandants/Officers Commanding, Regimental Training Groups and
Centres, Training Centres and Depots, of the rank of Lieut. Colonel and above,
will exercise the powers of Sub-Area Commander in respect of belated claims of
personal entitlement.
Note 10.-Powers to sanction admittance of claims preferred more than [12
months]' antecedent to the date of claim, in respect of DSC personnel attached to
the units/Installations of Army, Navy and Air Force and those of Inter service
Organisations will be exercised by the respective authorities exercising these
powers in the case of their Regular service personnel.
Note 11.-The Director, Institute of Defence Management, Secunderabad may
sanction Investigation of claims upto 12 months beyond the period within which
the are admitted.
189. The orders in Rule 188 above do not apply to claims to pay and allowances
governed by the Civil Services Regulations. Controller of Defence Accounts
cannot investigate such claims which have been allowed to remain in abeyance for
a period exceeding [two years] 2 except under orders of the Ministry of Defence or
an authority exercising the powers of a local Government under the Civil Service
Regulations in respect of the claimant.
Note 1.-Full powers are vested in the Ministry of Defence to sanction all time
barred claims including those which can not be investigated by audit due to non
availability of records. The above powers have been delegated by the Min. of
Defence to the following authorities in respect of the civilians serving in the lower
formations of the Armed Forces Headquarters:(i) Adjutant General
ARMY
(ii) Quarter Master
General
(iii) DGAFMS
NAVY
AIR
FORCE
C.O.P./FOs C-in-C
Commands/FOC Area
AOA/AOs C-in-C
Commands/Gp
Full powers in respect of all claims

other than TA/DA.
Full powers in respect of
TA/DA claims.
Full powers in respect of all claims.
Full powers
Full powers
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Note 2.-General Managers and Officers-in-Charge of Ordnance, etc.,

Factories are empowered to sanction pay and allowances in respect of claims made
within 3 years, without prior reference to DGOF.
Note. 3.-The Director General National Cadet Corps, is the competent
authority In respect of the claims of Civilian personnel serving with the National
Cadet Corps.
Note 4.-The Directors National Cadet Corps, States (not below the rank of a
Brigadier or equivalent) are the competent authorities in regard to personal claims
of civilian personnel serving under them which are preferred not more than three
years actecedent to the date of claims.
Note 5.-The Commandant, Infantry School; Commandant, College of
Combat, Mhow; Commandant, National Defence Academy; Commandant,
Defence Services Staff College; Commandant, Indian Military 'Academy;
Commandant, School of Artillery, Deolali; Commandant High Altitude Warfare
School; Commandant, Military College of Telecommunication Engineering,
Mhow ; Commandant, Armoured Corps Centre and School, Ahmednagar ;
Commandant, Army Clerks Training School, Aurangabad; Commandant, Counter
Insurgency and Jungle Warfare School and Commandants of Category À'
Establishments, who are holding the rank of Lt. Col and above, are empowered to
sanction investigation of claims upto 12 months beyond the period within which
they are admitted in the usual way under this rule. The Commandant Military
College of Telecommunication Engineering, Mhow may delegate his financial
powers by name to an officer not below the rank of lieut. Colonel posted on the
permanent staff of the Military College of Telecommunication Engineering.
Note 6.-A.O.C. in-C Commands, are empowered to sanction investigation
of claims' In respect of persons serving under them and in A.F. units under their
control. The [Air Officer-in-Charge Administration] will however exercise the
financial powers tinder this rule in respect of the personnel serving in the Units
under the direct control of Air Headquarters. Director Technical Development and
Production (Air) will exercise these powers in respect of belated claims under this
rule in respect of the staff serving under him.
Note 7.-The Director, Institute of Defence Management, Secunderabad may
sanction investigation of claims upto 12 months beyond the period within which
they are admitted.
All petty arrear claims, other than those affecting pensions and all claims for
the delayed submission of which an adequate explanation is not forthcoming shall
be rejected by the local authorities,
Note-In cases of doubt the decision as to what constitutes a "Petty arrear
claim" rests with the authority competent to sanction such a claim.
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190. For pension claims (inclusive of claims to count former service or pension),
other than those arising under the Civil Service Regulations see Pension
Regulations for the Army. Part II.
LIMITATION OF CONTRACTORS CLAIMS
191. Claims of contractors preferred after three years are time barred the Statute of
Limitations. The time from which the limitation begins to run varies but the
following few- examples are given for guidance. A fresh period of limitation is
computed from the time an acknowledgement accepting a contractor's claim or a
portion thereof is given. Great care should, therefore, be exercised by all
concerned in dealing with such claims and legal opinion obtained where necessary.
Description of claims
Period of
Limitation
For the hire of animals, 3 years
vehicles,
boats
or
household furniture.
Time from which period begins .

to run
When the hire becomes payable.
For the balance of 3 years

money advanced in
payment of goods to be
delivered.
For the price of goods 3 years
sold and delivered where
no fixed period of
credit is agreed upon.
For the price of goods 3 years
sold and delivered to be
paid for after the expiry
of a fixed- period of
credit.
When the goods are to be

delivered
The date of delivery of the
goods.
When the period of credit
expires.
A claim preferred by a contractor or other person against Government which

is time-barred under any provision of law relating to limitation shall not be paid
without the sanction of the Government of India. The onus of establishing a timebarred claim for special treatment lies on the claimant. The authority against
whom such a claim is made shall refuse the claim until a case for special treatment
is made out. Petty time-barred claims shall be rejected and only important claims
shall be considered.
The executive authority shall consider the question of time-bar before
submitting a claim to the Controller of Defence Accounts for payment. The
Controller of Defence Accounts shall refuse payment of all claims found to be
time-barred until government sanction has been obtained.
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Note.-The meaning of "claim" within the above rule, would be an independent

claim preferred with the Government for the first time. The claim has to be within
time when It is preferred with the Government first. The consideration of the claim
by the Government may take time and the claim may have to be modified or
corrected with the consent of parties before it is finally admitted and paid by the
Government. During the subsequent stages of the consideration of the claim, the
claim may be returned by the Government to the contractor for modifications or
corrections. But if after such modifications or corrections the claim remains
substantially the same, as was preferred originally, then the resubmission of the
claim after corrections or modifications would not amount to the preferring of an
Independent claim for the first time. It would not, therefore, be necessary that the
claim should be within time at the time of- such resubmission or at each
subsequent stage of consideration of the claim after it was first filed.
But if a claim is totally rejected by the Government and the new claim filed
by the contractor after such rejection cannot be said to be a modification or a
correction of the old claim, then the new claim will be regarded as an independent
claim submitted for the first time. It would be necessary that such a new claim
should be within the time when it is submitted.
Where claim resubmitted is a continuation of the old claim or amounts to
totally a new claim would have to be determined with reference to the facts of
each particular case.
DELEGATION
OF
POWERS
TO
DISPOSE
OF
AUDIT
OBJECTIONS/REGULARISE LOSSES OR OTHER IRREGULARITIES
192. Powers to waive recovery of amounts under objection or other irrecoverable
amounts and to regularise audit Objections arising out of breaches of rules and
regulations, conferred on administrative authorities under rules/regulations and
other Government letters should be exercised by the authorities only if (i) the
irregularity does not disclose a defect in the rules or regulations the amendment of
which requires the sanction of the Government vide Rule 157, and (ii) they (or
their predecessors) are themselves not personally responsible for the loss/over
payment/irregularity. Prior approval of the next higher financial authority should
be obtained in respect of cases mentioned at (ii) above.
Powers of write off conferred on audit officers under rule 177 should be
exercised by them only subject to the observance of the conditions mentioned at (i)
and (ii) above.
In respect of cases falling under clause (ii) above, prior approval of the next
higher authority should be obtained.
193 to 199. Blank
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CHAPTER-IX SECURITY DEPOSITS

FROM GOVERNMENT SERVANTS
200. Unless specifically exempted under Government orders, every civilian an
cashier, assistant cashier, godown keeper, store keeper, and other Government
servants who are entrusted with the custody of cash or stores will required to : (a) furnish security the amount of which will be regulated` according to
circumstances and the focal conditions m each case under the sanction of
competent authority, and
(b) execute a security bond setting forth the conditions under which
Government will hold the security and may ultimately refund or appropriate
it. The fomrs in which security bonds are to be executed are given in
Annexure I, II and III to this Chapter.
201. When an individual who has furnished security takes regular leave or . is
deputed to other duty, the individual who is appointed to officiate for him will be
required to furnish the full amount of security prescribed for the post, unless the
competent authority has authorised a relaxation of the rules regarding security.
applicable to his case.
202. The 'Competent authority' mentioned in Rule 200 and 201 will be(a) Army.-The Directors at Army Headquarters/E-in-C in respect of M.E.S.
personnel, who may delegate his powers to the Director of personnel/Area
Commander/Sub Area Commander/Brigade Commander in the lower
formations /DGAFMS in respect of medical establishments.
(b) Navy.-The Directors at Naval Headquarters in respect of the Headquarters
staff, and the Flag Officer, Bombay and Commodore-in Charge, Cochin,
Commodore; East Coast Vizagapatnam and the Captain Superintendent,
Naval Dockyard, Bombay, in respect of the staff in the Naval
Establishments under their control.
(c) Air Force.-(i) For the purpose of Rule 200-Air Officer-in-Charge,
Administration at Air Headquarters/Air Officer Commanding-in-Chief at
Command Headquarters with regard to the Units/formations under his
control. (ii) For the purpose of Rule 201-Group Captain, Commanding the
station responsible for providing cash/equipment services to the unit
concerned. In other cases, Command Headquarters/Air Headquarters under
whose administrative control the unit is placed.
(d) The DGOF so far as it relates to Ordnance Factories and Clothing Factories.
(e) CCRD, so far as it relates to Research and Development Organisation. v~
(f)
Directors in the Defence Production Organisation in so far as it relates to
establishments and inspectorates.
FROM PRIVATE PERSONS OR FIRMS
203. Whenever a private person or a firm contracts with Government to supply
stores or execute any work, he or it should, unless exempted by competent
authority as laid down in Rule 204 be required to dive security for the due
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fulfilment of the contract and suitable provisions regarding the security should be
incorporated in the agreement.
Note:- Security deposits will not be taken from Tails, municipalities or other
Government concerns.
204. Under the provisions of Rule 203, exemptions may be granted in the case of
large and reliable firms and individual contractors on the recommendation of the
GOC-in-C Command, by the Chief of the Army Staff or a PSO/ the DGOF (in so
far as Ordnance and clothing factories are concerned) to whom authority is
delegated by him in the case of the Army; and on the recommendation of the head
of the Establishment, by the Chief of the Naval Staff or a Principal Staff Officer to
whom authority is delegated by him and on the recommendation of the Air Officer
Commanding Command/Commander Maintenance Command by the Chief of the
Air Staff or a Principal 'Staff Officer to whom authority is delegated by him in the
case of Indian Navy and Indian Air Force respectively. In a case where a contract
is entered into by the Ministry of Defence on behalf of Army/Navy/Air Force
headquarters/DGOFs Organisation, the competent authority under the provisions
of Rule 203, will be the Secretary, Ministry of Defence. Proposals for such
exemptions will be supported by reports from the income-tax officer and other
civil authorities, showing that the firms or the individual contractors are
financially sound and are known for their business honesty and integrity.
Scientific Adviser, DGR & D and Heads of the R & D Estts./Labs of the
rank of Director Grade II and above may grant exemption from giving security for
due fulfilment of contracts as under:
__________________________________________________________________
Scientific Adviser and DGR&D
Heads of R&D Essts./Labs of the
rank of Director Grade II and above.
Full powers with regard to (i)
Firms registered with DGS&D
(ii) Small Scale Units whose
competency is certified by the
National Small Industries
Corporation (iii) Large and
reliable firms and contractors.
Full Powers with regard to (i)

Firms registered with DGS&D
(ii) Small Scale Units whose
Competency is certified by the
National Small Industries
Corporation (iii) Reliable firms
and contractors registered with
Defence R&D Organisation
provided the value of the order
does not exceed Rs. 25,000.
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HOW CALCULATED
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205. The amount of security deposits will be calculated as follows, in tens of

rupees, on the value of the estimated quantity of supplies during the, period of the
contract at the rates accepted.
(i)
for a contract not exceeding Rs. 10,000 in Value -10 percent with a
minimum of Rs. 25;
(ii) for a contract between Rs. 10,000 and Rs. 30,000 in value -7 percent with a
minimum of Rs. 1,000 and a maximum of Rs. 2,000;
(iii) for a contract exceeding Rs. 30,000 in value-5 per cent with a minimum of
Rs. 2,000. If the security deposit exceeds Rs. 6,000 the amount may be
specially fixed by the administrative officer concerned (the Chief of the
Naval Staff in the case of Navy and the Chief of the Air Staff in the case of
Air Force), who may also at his discretion increase or decrease the amount
of the security to be furnished with reference to the probable loss or
inconvenience that would result to Government from failure on the part of
the contractor.
(iv) In the case of Army Service Corps and Military Farms the security deposits
for contracts exceeding the value of Rs. 1,20,000 (Rupees One lakh and
twenty thousand only) will be fixed as under : (a) Five per cent of the value of the contract upto Rs. 1,20,000 (Rupees
one lakh and twenty thousand only).
(b) Two and a half per cent of the balance of the value of the contract.
(c) Amount arrived at by the adding (a) and (b) above will be rounded off
to the nearest hundred rupees.
(v) Where short term agreements are entered into by the Army Service Corps
for obtaining fresh articles of Army Service Corps Supply, hired transport at places
outside Jammu and Kashmir and for supplies required by Military Farms, the
security deposits will be fixed is in clauses (i) to (iv) above in the case of
registered contractors and at 10% of the total value of the agreement in the case of
unregistered contractors.
SECURITY DEPOSITS-FORMS OF
206. The security taken from a Government servant or contractor 'should be in
one of the following forms subject to the conditions noted against each of partly in
one and partly in another of these forms when this specially permitted by the
authority authorised to accept the security : -
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(i)
(ii)
(iii)
(iv)
(v)
(vi)
Forms
Cash
Conditions
Government will not pay any interest on any
deposit held in the form of cash.
Promissory Notes and
These securities should be accepted at 5
Stock Certificates of the percent below the market price or at the face
Central Government,
value whichever is less, and should be dealt
Municipal Desbentures with in accordance with the rules in Chapter
or Port Trust Bonds.
IX
of the Government Securities Manual.
Treasury
Savings
These securities should be accepted at their
Deposit Certificates and surrender value.
National Plan
Certificates.
Post Office Saving
A Pass Book for a deposit made under the
Bank Pass Books
Post Office Savings Bank Rules may be
accepted as security, provided that the
depositor has signed and delivered to the
Postmaster a letter in the prescribed form as
required b these rules.
Post Office Cash
The certificates should be formally
Certificates, Defence
transferred to the departmental authority
Savings Certificates and which takes the deposit with the sanction of
National Savings
the Head Postmaster and should be accepted
Certificates.
at their surrender value at the time of tender.
Deposit Receipts of the (1) The deposit receipt should be made out in
State Bank of India
the name of the pledgee or, if it is made out in
name of pledger, the bank should certify on it
that the deposit be withdrawn only on the
demand or with the sanction of the pledgee.
(2) The depositor should agree in writing to
undertake any risks involved in the
investment.
(3) The bank should agree that, on receiving a
signed treasury, chalan and a withdrawal
order from the pledgee in respect of the
deposit or any part thereof, it will atonce
remit the amount specified into the nearest
treasury along with the chalan and send the
treasury receipt to the pledgee.
(4) The responsibility of the pledgee on
connection with the deposit and the interest
on it will cease when he issues a final
withdrawal order to the depositor and sends
intimation to the bank that he has done so.
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(vii)
Fidelity bonds in the

forms prescribed by
Government only from
the Life Insurance
Corporation of India.
A fidelity bond may be accepted as security

from the Government servant but not from
private party.
Note.-Such bonds should be scrutinised by

one of the authorities specified in R.A.I. Rule
389/Article 491, Regulations for IN/Rule 144
of Regulations for the IAF before acceptance
with view to the deletion of unnecessary
reservations, i.e., the Insurance Companies
having the right to insist upon prosecution of
the Government servant in the event of his
dishonesty.
(viii) 12
year National
These certificates will be accepted at their
Defence Certificates.
surrender value.
(ix) Other forms of security Security in any such form may be accepted
specifically approved by only in accordance with the rules and
Government for
conditions laid own in relevant departmental
acceptance in
any regulations or by special orders of
particular department Government.
e.g., mortgages on real
property, personal
security, etc.
Note.-When Government Securities, Municipal Debentures, Port Trust Bonds,
Government papers, etc., are offered as security deposits, administrative officers
will satisfy themselves that the value of the security calculated on the above basis
is sufficient to secure and indemnify Government against any possible loss. In the
event. of such securities appreciating or depreciating, no readjustment of the value
thereof should be made unless the rise or fall of the market value Is such as to
render it necessary to call upon the depositor to produce further security to the
extent of at least Rs. 100, or to enable the officer to return to the depositor, security
to the same extent. Even then no such adjustment should be made unless after such
adjustment, there is still a reasonable margin between the market value of the
security tendered and the amount of the security necessary.
CONVERSION OF SECURITIES INTO INTEREST BEARING
SECURITIES
207. Security furnished by a Government servant or a contractor may be
converted, at the cost of the depositor, into any of the interest bearing forms of
security mentioned in item (ii) to (vi) of Rule 206, provided :(i) that the depositor has expressly requested in writing that this be done,
and
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(ii) that the acceptance of the new form or forms of security is permissible
under these rules and under the terms of the agreement or bond.
Note 1.-Cash actually received or recovered may be converted into an interest
bearing form of security even when it forms part of a deposit which Is being paid
in Instalments and has not yet been realised in full.
Note 2.-Percentage deductions made from a Contractor's bills held as security for
the due fulfilment of a contract should not be converted into any other form of
security unless there is a special rule or an order for such conversion.
Note 3.-Security furnished by the Government servants in the form of cash or
interest bearing certificates cannot be substituted by fidelity bonds under the
provision of the rule.
FIDELITY BOND AS SECURITY-WATCHING OF THE PAYMENT OF
PREMIA
208. When a .Government servant has furnished security in the form o a fidelity
bond, the departmental authority receiving the bond should see that the
Government servant pays the premia, necessary to keep it alive, on the due dates
and continues to do so until a period of six months has elapsed since he vacated
his office. If the Government servant fails to deliver the premium receipt to the
departmental authority in time, he should be removed from his post at once.
EXECUTION OF SECURITY BOND WITH REFERENCE TO THE KIND
OF SECURITY FURNISHED
209. Subject to any rule or order made by Government in this be the form of the
security bond to be executed at the time of furnishing security should be
determined under orders of.-the head of the department according to the kind of
security furnished. When a Government servant is specially permitted to furnish
security partly in one and partly in another of the forms of security specified in
Rule 206, he should execute separate bonds for the different kinds of security.
EXECUTION OF SECURITY BOND ON BEHALF OF GOVERNMENT
210. Whenever a contract is not unilateral but contains some agreement to be
performed by the Government or any arrangement arrived at between Government
and another party which may create a right in favour of that party as in the case of
cashiers/store keepers, etc, who are entitled to get back their deposits in certain
circumstances, the security bonds should also be executed on behalf of the
Government of India. Such bonds should be executed in bilateral favour both by
the depositor as well as on behalf of the Government. The bond may be executed
on behalf of the Government by any of the officers authorised under the Ministry
of Law Notification No. GSR 1161 dated Ist December, 1958 to execute such
bonds by adding the following clause at the end thereof: "Signed for and on behalf of the President of India by . . . . . . . being the
person directed or authorised by him in that behalf in the presence of. . .."
Security bonds and similar other documents in which there is no covenant to
be performed by Government but which merely creates a right in favour of
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Government to enforce the provisions of the documents need not however be

executed on behalf of Government.
SAFE CUSTODY OF SECURITIES
211. Post Office Savings Bank Pass books, deposit receipt of banks, fidelity
bonds and security bonds or agreements should be kept in the safe custody of the
departmental authority which takes the security.
Note.-All the Post 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 in them.
In the case of deposit receipts of banks, the depositor should receive the
interest when due, direct from the bank on a letter from the pledgee authorising the
bank to pay it to him.
Promissory notes and stock certificates of the Central Government or a State
Government, Post Office cash certificates and Defence Savings or National
Savings Certificates, Municipal debentures and Port Trust bonds deposited as
security should be lodged for safe custody with the manager of the Reserve Bank
at places where there are offices of that bank and with the district treasury in other
places in accordance with the rules in Chapter IX of the Government Securities
Manual.
SECURITIES-REGISTRATION AND TRANSFER OF
212. Every security deposit whether in cash, Government securities, ational
Savings certificates, Municipal debentures, Port Trust bonds, bank fixed deposit
receipts, Savings Bank deposits or otherwise with a Government officer will be
recorded in register (IAFA-285) in which transactions must be noted at the time of
their occurrence. Each depositor will have a separate folio allotted to him and
these deposits will be proved annually in IAFA-287.
When a Government servant who has furnished a security deposit is
transferred from one office to another, his security should be borne on the register
of the office to which he is transferred.
Note 1.-Except cash securities which will pass through the cash book and cash
account current, no security (unless confiscated and the amount realised in cash)
will be entered in the cash book.
Note 2.-Security deposits of ' all ASC personnel and civilian store keepers of AOC
and EME which will be accepted only in cash, treasury bonds, promissory notes
and stock certificates of the Central Government or a State Government,
Municipal debentures, Port Trust Bonds, postal cash certificates, bank fixed
deposit receipts or Post Office Savings Bank deposits In full or hy monthly
deductions from the pay of civilian store keepers of the AOC and EME will be
lodged In the name of the Commandant, ASC Records (Supply) or
CommandanVCOO/00 of the central ordnance depot/ordnance depot or the head
of the office in the case of AOC/EME personnel.
When such securities are to be refunded, a no demand certificate will be
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Area or the Commandant/COO/00 of the ordnance establishment or

ADME/CEME of an Area or DADME of the Independent Sub Area or
Commandant/OC, of a 4th Echelon Workshop or the head of the office under
whom thq subordinate was last employed, after communication with the Controller
of Defence Accounts concerned who will testify that no claims are outstanding in
his office, with regard to stores, etc held by the Individual concerned.
Note 3.-Security deposits of victualling agents employed by Hill Sanatoria
will be held in regimental charge in the name of OC, the unit to which the agent Is
attached.
When such security deposits are to be refunded, a no demand certificate will
be signed by the Sub Area or Area Commander in whose area the unit to which the
agent is attached is serving, in communication with Controller of Defence
Accounts concerned, wh4 will certify that no claims are outstanding in his office
with regard to the stores, held by the agent concerned.
Note 4.-Security deposits of civilian employees in medical store depots,
which will be accepted only in cash, promissiory notes and stock certificates of the
Central Government or a State Government, Municipal debentures, Port
Trust bonds, postal cash certificates, bank fixed deposes receipts or Post
Office Savings Bank deposits in full, will be lodged in the name of the OC,
AFMSD concerned.
When such securities are to be refunded a no demand certificate will be,
furnished by the OC AFMDS under whom the subordinate was last employed,
after communication with the Controller of Defence Accounts concerned who will
testify that no claims are outstanding in his office with regard to the stores, 'etc.,
held by the individual concerned.
Note 5.-So far as fodder contracts and contracts in connection with the
harvesting and carting of fodder are concerned, the usual security deposits may be
waived, should such a course be found necessary. Security In such cases will be
obtained by withholding payment to a specified extent for fodder supplied or for
harvesting and carting done until the contract has been fulfilled.
Note 6.-Bank's commission for the safe custody of the security deposits,
wherever levied, shall be borne by Government.
Note 7.-Security deposits of clerks, store keepers, supervisors, assistant
supervisors, sub assistant supervisors, agricultural research chemist, draughtsman,
foreman and assistant foreman employed in Military Farms, Godown Overseers
employed in Remount Units, godown keepers, cashiers and assistant cashiers of
ordnance and clothing factories, civilian store keepers and assistant store keepers
employed in the IAF which will be accepted only in cash, promissory notes and
stock certificates of the Central Government, or a State Government, Municipal
debentures, Port Trust bonds, postal cash certificates, bank fixed deposit receipts,
fidelity bonds of approved companies or Post Office Savings Bank deposits in full
will be lodged in the name of Officers-in-Charge, Military Farms Records
(MEERUT)/RVC Records (Meerut)/Superintendent of factory concerned/OC,IAF
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unit concerned. Post Office Savings Bank Accounts in respect of'security deposits
which are under rule being completed by monthly deductions from the individual's
pay will be lodged in the name of the officer, concerned referred to above.
When such securities are to be refunded, a no demand certificate will be
furnished by the officer stated above, after communication with the Controller of
Defence Accounts concerned, who will certify that no claims are outstanding in his
office with regard to the stores etc., held by the Individual concerned.
Note 8.-Security deposits of civilian employees of the IN which will be accepted
only in cash, promissory notes and stock certificates of the Central Government or
a State Government, Municipal debentures, Port, Trust bonds, postal cash
certificates, bank fixed deposit receipts, fidelity bonds of approved companies or
Post Office Saving Bank deposits in full will be lodged in the name of the Officerin-Charge of the Naval Establishment/Installation concerned. Post Office Savings
Batik accounts in respect of security deposits which are under rule being
completed by monthly deduction from the Individual's pay will be lodged in the
name-of the Officer-in-Charge Naval Establishment Installation concerned.
When such securities are to be refunded a no demand certificate will be
furnished by the Officer-in-Charge of the Establishment/Installation concerned,
after communication with the Controller of Defence Accounts (Navy) Bombay,
"who will certify that no claims are outstanding in his office with regard to the
srores, etc., held by the Individual concerned.
SECURITY DEPOSITS-REFUND OF
213. A security deposit -taken from a Govt. servant may be refunded to him after
six months from the date of vacation of his post (including transfer to some other
post: not requiring Security Deposit) irrespective of whether or not he holds a lien
on the former post; but a -security bond should be retained permanently or until it
is certain that there is no' further necessity for keeping it.
214. Without the special orders of the competent authority no security deposit
should be repaid or retransferred to the depositor, otherwise disposed of, except in
accordance with the term of his security bond or agreement. A departmental
authority on returning any security to the depositor should invariably obtain his
acknowledgement duly signed and witnessed. When an interest bearing security is
returned or retransferred, the acknowledgement should set forth full particulars of
the security.
Note.-The "Competent authority" in case of Government servants will be the same
as defined in Rule 202. For private persons or firms taking contracts with the
Government the "competent authority" will be as laid down in Rule 204.
215. The percentage deductions from bills held as security in connection with
contracts to execute work should not be refunded till the final bill has been
prepared and passed.
216. A security deposit should be restored to the contractor on his executing a no
demand certificate (IAFA-451) as soon as possible after the delivery of the
supplies or the performance of the services contracted for and with due regard to
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the state of his accounts. If any delay occurs in the audit of these accounts a refund
of such portion of his security deposit may be made to him as the executive officer
or Naval Officer in whose name the security deposit is lodged, after consultation
with the audit officer, and with his concurrence, considers expedient. At therequest of the depositor a security deposit or any portion thereof held in respect of
an expired or nearly expiring contract may be appropriated in whole or in part
towards the security deposit of another contract that has just been or is about to be
entered into with the depositor.
If the security deposit of or any other sums due to a contractor are attached
by any court, the executive officer may, if there be no claims against the contractor
pay the total amount into court. Otherwise the lien of Government on this amount
takes precedence of a claim by an attaching creditor; but if the contract be a joint
one, i.e., furnished by more than one individual joining in a contract, no amount
can be attached to satisfy a demand against one of the partners alone. Security
deposits or any other sum due to the estate of a deceased subordinate or contractor
may be paid without the production of the usual legal authority under the orders of
the GOC/the Chief of the Naval Staff/AOM/AOA/AOCinC. (DGAFMS in the
ease of contracts of medical store depots)/ DGOF, in the capacity of a Local
Government on execution of an indemnity bond in the prescribed form (Appendix
III) with such sureties as he may require, if he is satisfied, as to the right and title
of the claimant and considers that undue delay and hardship would be caused by
insisting on the production of letters of administration. In any case of doubt
payment should be made only to the person producing legal authority. A security
deposit made by another person or behalf of a contractor -will, on fulfilment of the
contract, be returned to the depositor.
No security should be refunded (see IAFA-296) till the particulars of the
claims have been verified with the receipt entries in the cash book or security
register and the receipt provided on the reverse of the no demand certificate
(IAFA-451) duly completed in all respects is signed by the depositor.
Note 1.-When payment of securities is made to an official receiver appointed by
the court to manage the estate of a contractor adjudicated insolvent, the order of
the court appointing the individual as the receiver of the contractor's estate and the
receipt given by the receiver on the reverse of the no demand certificate for the
assets made over to him would be complete answer to any claim by the contractor
or a third person on his behalf.
Note 2.-If it appears to an executive officer, on receipt of an order of attachment,
that non payment of moneys due to a contractor from Government would
adversely affect the continuance of services under contract, the executive officer
will make due representation to the court concerned with a view to obtaining a
modification of the order, which will give authority to the executive officer to
continue payments to the contractor as are necessary in the circumstances, and, at
the same time retain or pay Into court a percentage of future sums accruing up to
the limit of the attachment.
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FINAL SETTLEMENT ON DISCHARGE

217. When a store-keeper, either permanent or temporary, is discharge, a final
settlement statement of his accounts is to be prepared and the signature of the
individual obtained in proof of its correctness. If no debt to Government is
discovered the security deposit may be refunded to him after a no demand
certificate (IAFA-451-Part B) is issued by the administrative authority concerned
which , should be done as soon as possible (i.e., after accounts have been audited).
Debts due to. Government on account of stores etc., for which the security deposit
was lodged, should if discovered, is recovered from the security deposit.
LAPSED DEPOSITS
218. The following procedure will be followed in regard to the disposal securities
tendered as security deposit by contractors and which are not claimed by the
depositors after the termination of the latest contract in connection with which the
security was lodged : (i)
Cash security. -At the close of each official year all cash security deposits
remaining unclaimed for the three years, exclusive of the year of deposit, will be
transferred to the credit of Government by the audit officer, who will inform the
officer concerned in. order that he may make the necessary entries in his security
register. Sums so credited cannot be refunded without the sanction of the
Controller of Defence Accounts.
(ii) Promissory Notes and stock certificates of the Central Government or a
State Government.-Deposits in promissory notes and stock certificates of the
Central Government or a State Government remaining unclaimed for three years,
exclusive of the year of deposit, will be struck off the books by transfer of the
notes finally to the Reserve Bank of India.
(iii) Postal Savings Bank deposits.-If a depositor cannot be traced with in four
years of the termination of the contract, the "pass book" together with a letter of
release, or, if the "pass book" is not available, only the letter of release will be sent
to the "Postal Audit Office" concerned. In the event of a. claim being preferred
later, it will be dealt with by the postal authorities.
(iv) Postal cash certificates. -If a claim is not received for three years after
maturity, or extended maturity, the cash certificate together with a letter of release
will be forwarded to the "Postal Audit Office" concerned for disposal. The
responsibility for dealing with claims preferred subsequently will rest with the
"Postal Audit Officer".
(v) Bank fried deposit receipts.-If a claim for refund is not received within a
reasonable time (say one year) of the termination of the latest contract in
connection with which the receipt was tendered, the amount will be realised on
maturity and credited to Government. Subsequent claims for refund of the
principal and the interest actually realised will be disposed of under the rules
contained in Rule 216.
SECURITIES FURNISHED BY BANKS AS SECURITY FOR
REGIMENTAL FUNDS
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219. Securities furnished by banks shall be taken at their market value. In the
event of fluctuations in the market value of security deposits lodged by private
banks or firms in respect of regimental funds lodged with them (vide relevant,
rules in the Regulations for the Army in India and Regulations for the IAF) the
Controller of Defence Accounts concerned shall in all cases review the position
annually, or, .f he or the depositor so desires, after an interval of six months from
the date of deposit, or from the date of the last review. In either case, when a
considerable difference in value has taken place, the Controller of Defence
Accounts shall either call upon the depositor to make up the difference or allow
him a refund, as the case may be.
SECURITIES HELD BY GOVERNMENT OFFICERS AS SECURITY FOR
PERFORMANCE OF A CONTRACT, ETC.
220. In the case of securities held by Government officers for any purpose the
following instructions shall be observed: (1) In no case shall bearer bonds be held as security.
(2) When promissory notes and stock certificates of the Central Government
or a State Government are so held it is of great importance that a Government
officer shall not receive or in any way deal with such notes in his official capacity
if the title /of the depositor is not absolutely clear or is in any way defective.
Before therefore accepting such a note, he must carefully scrutinize the
endorsements on it. If he has reason to think that any of the endorsements (i.e., not
only the last endorsement) is irregular, or if, for any other reason, he is not
satisfied as to the title of the person presenting a note, he shall refuse to accept it
and shall instruct the depositor to get it renewed by the "Public Debt Office". In
performing this duty, the officer shall, in particular satisfy himself:
(a) that the title of the depositor of the note is clear and indisputable, i.e.,
that he is in fact the lawful owner of it;
(b) that all endorsements are on the note itself. An endorsement written
on a, piece of paper attached to the note is invalid and shall not be
recognised;
(c) that every endorsement which consists of two parts, (i) the pay order
containing the name of the endorsee and (ii) the signature of the endorser, is
in order and is written clearly and legibly in one of the endorsement cages
provided on the back of the note; and
(d) that no endorsement signed "for" any other person has been made on the
note as such an endorsement is invalid.
Note:-The Government Securities Manual-Chapter V-contains full
Instructions In this respect.
(3) Promissory notes and stock certificates of the Central Government or a
State Government, transmitted by post shall invariably be sent uncut and insured
as of the value of Rs. 100 irrespective of their face value.
(4) Promissory notes and stock certificates of the Central Government or a
State Government, to be deposited with officers: ____________________________________________________________________________________________________________________
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(a)
for 12 months or less, irrespective of whether interest may or may not

be drawn by the depositor during the period of deposit; or
(b) for any period exceeding 12 months if the depositor does not intend to
draw interest during the period of the deposit, shall be dealt with as
follows:
(i)
The officer receiving the notes shall first satisfy himself that the notes
standing in the name of the depositor (see Clause (2) above) and that
the contract or other document executed by the depositor conveys
authority of Government to appropriate or cancel the notes if the
contract is not fulfilled.
(ii) The officer shall then lodge the notes for safe custody as laid down in
Rule 211.
(iii) The notes shall remain in the name of the depositor and shall not be
endorsed to any officer of Government or converted into stock.
(v) The depositor may, in exceptional circumstances, be allowed to draw
interest on the notes by tendering receipts in the usual form
countersigned by the officer with whom he has deposited them.
(5) Promissory notes and stock certificate of the Central Government or a
State Government, to be deposited with officers for more; than 12 months and if
the depositor wishes to draw interest during the period of deposit, shall be dealt
with as below: The officer receiving the notes shall satisfy himself that they stand in the
name of the depositor (see clause (2) above) and that all interest due on them at the
time has been drawn. He shall then have the notes endorsed by the depositor in
favour of the Controller of Defence Accounts , to whom he shall forward them.
The Controller-of Defepce Accounts shall re-endorse notes which are deposited f6r
5 years or more in favour of the Reserve Bank of India and notes deposited for less
than 5 years in favour of the Treasury officer of the nearest civil treasury and
forward them for safe custody to the bank or treasury, as the case may be except
that in the town of Calcutta, Bombay and Madras the notes shall in any case be
received for custody at the office of the Reserve Bank of India.
EXCEPTION-It shall be permissible in the case of notes deposited for 5 years or
more, for the notes to be retained in the custody of the Controller of Defence
Accounts. When this option is exercised, the notes shall, however, be converted
into stock certificates, and to enable this to be done, the Controller of Defence
Accounts shall instead of endorsing them to the Reserve Bank of India endorse
them in favour of the President and send them to the nearest "Public Debt Office"
or to the treasury on which they have been enfaced for payment of interest. The
notes shall then be converted into stock certificates of the loans to which they
pertain unless at the written request of the depositor it is desired that they should
be converted (in cases where this is permissible) into stock certificates of other
loans. For instance, Government promisory notes of any of the non-terminable 3
percent loans may be converted into stock certificate of the same or of any other
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non-terminable 3 percent loan. In this event they shall be converted into stock of
the desired loans subject to the rules and conditions contained in the Government
Securities Manual.
(6) The procedure laid down in clause (4) shall apply mutatis mutandis in the case
of treasury bills deposited with a Government officer in his official capacity. A
holder of Post Office cash certificates may tender them as security to any
department of Government for their current value. Cash certificates so deposited
shall be formally transferred to the Controller of Defence Accounts with the
sanction of the Head Postmaster irrespective of the period for which they are
pledged and shall be forwarded to the nearest treasury for safe custody.
SECURITIES-INTEREST PAYABLE ON
221. Interest in respect of promissory notes or stock certificates shall be
periodically distributed to depositors on receipt by, the Controller of Defence
Accounts from the Reserve Bank of India, the treasury or the "Public Debt
Office", as the case may be, subject to the following: (a) Deduction of. income-tax and surcharge at the maximum rate unless
exemption or abatement is supported by an Exemption or Abatement
Certificate granted by an income-tax officer-The deduction shall be made by
the Controller of Defence Accounts in the case of notes deposited with the
Reserve Bank of India and, in other cases, by the "Public Debt Office" or
the treasury officer, as the case may be. The person deducting the incometax is required under section 18(9) of the Income-tax Act to furnish to the
person to whom the interest is paid, a certificate containing relevant details
to enable him to claim a refund, if necessary.
(b) Deduction of commission at the authorised rate charged by the Reserve
Bank of India for drawal and remittance or interest-This commission is not
charged in the case of security deposits of Government servants and of
banks , holding regimental or non-public funds in respect of securities
lodged for such funds.
(c) In the case of security deposits of subordinate and contractors of
departments, which are allowed to-make their own disbursements, the
Controller of Defence Accounts shall issue, authority to executive officers
in IAFA-291 for each depositor separately and the latter shall make the
payment and support such payments by the authority in original and the
payee's receipts.
GOVERNMENT PROMISSORY NOTESRETURN AND SALE OF
222. (i) When the return or sale of a promissory note is require ,application
(IAFA-295) shall be made to the Reserve Bank of India or the treasury at which
the note was deposited for safe custody. In the case of stock certificates it shall,
however, first be necessary to have them converted into promissory notes. The
"Public Debt Office", the Reserve Bank of India,, a treasury officer or the
Controller of Defence Accounts shall act purely as the, agent of the officer- who
originally received the note and such officer is responsible for taking action for the
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sale, realisation or return of the securities in accordance with the conditions of the
endowment.
(ii) In addition to any actual outlay in brokerage, a commission of one eight per
cent, is charged by the Reserve Bank of India for the purchase and sale of
promissory notes.
(iii) When a promissory note dealt with under the exception to clause (5) of Rule
220 is returned, it will not be the identical note which was sent for custody, but
another note of the same loan or of the loan into which the original note was
transferred.
(iv) An officer applying for the delivery of a note shall always specify at what
treasury or sub-treasury he Wishes it to be enfaced for payment of interest.
(v) If a depositor desires that the securities to be returned to him should be in
the form of a stock-certificate, this may be arranged for through the "Public Debt
Office" or the Reserve Bank of India, concerned.
(vi) The "Public Debt Office" charges certain fees for the conversion of a
security from one form into another and/or from one loan into another, except in
the case of conversion into stock certificates.
MUNICIPAL DEBENTURES AND PORT TRUST BONDS
223. Municipal debentures and Port Trust bonds deposited with Government
officers shall be dealt with generally under the rules laid down for GP Notes. All
such securities shall be forwarded to the Controller of Defence Accounts
concerned with IAFZ-2139, who will draw the interest and pay or authorise
(IAFA-291) the amount due to be paid to the depositor.
BANK FIXED DEPOSIT RECEIPTS
224. Bank fixed deposit receipts should be made out in the name of an forwarded
to the :Controller of Defence Accounts for custody. Interest on bank fixed deposit
receipts should not pass through Government account, but depositors should make
their own arrangements for receiving it, when due, direct from the bank on a letter
from the officer who received the deposit authorising the bank to pay it.
SAVINGS BANK DEPOSITS
225. In the case of Savings Bank deposits the-depositor must himself the money
in the Savings,. Bank and sign the necessary security -deposit form obtainable
from the post office. He will then, deliver the pass book to the officer concerned
who will satisfy himself by an inspection of the entries on page 1, that the amount
deposited has been correctly pledged to the Controller of Defence Accounts or to
the Defence Estates Officer in the case of contracts executed by him. Such
securities cannot be withdrawn from the Savings Bank without the written
permission (IAFZ-2141) of the officer to whom the security is pledged. Should
there be any claim outstanding against the depositor, the amount of such claim, if
necessary, will be withdrawn by the officer concerned and paid into the treasury to
the credit of Government. The post office will pay the deposit money in whole or
in part to the officer to whom the security was pledged.
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Note 1.-In the case of other personnel of Military Farms and Remount Units of
RVC whether borne on regular establishment or casual e.g., tractor drivers,
machine hand/artificer class I to IV. M.T. drivers, deliverymen, chowkidars,
veterinary dresser, laboratory attendants, laboratory bearers and store mazdoors the
security required from them will be recovered by the Officer-in- Charge/Manager
of the Installation M cash by small monthly deduction from their pay. The amount
of monthly deduction will be fired by respective Directors, viz., Director of
Military Farms/Director of Remount and Veterinary Services. These deductions
will be deposited In the Post Office Savings Bank in the name of the employee
concerned, the savings bank account being pledged to the Officer-inCharge/Manager of the Installation.
Note 2.-The pledger after obtaining the pass book from the pledges can
withdraw the Interest on the amount In the post office Savings Bank Account
provided, it exceeds the amount of security deposit fixed for a particular, post.
226 to 230. Blank
ANNEXURE I
Referred to in Rule 200
Form of Cash Security Bond
KNOW ALL MEN BY THESE - PRESENTS THAT I, A. B. .....
......of......... ...am held and firmly bound unto the President of India, his
successors and assigns (hereinafter referred to as 'Government") in the sum of
Rs.................. (Rupees ..................................) to be paid to the Government for
which payment, well and truly to be made, I bind myself, my heirs, executors,
administrators and legal representatives by these presents.
Signed and dated this............ day of ..................one thousand nine
hundred.................
2. WHEREAS the above bounded A. B, was on the ...........day of....... 19....
appointed to and now holds the office of ............... in the office
of ................................................................................................................ AND
WHEREAS the said A.B. ..........................by virtue of holding such office is
bound to collect................(here describe the nature of the Cashier's/StoreKeeper's/Sub-Store-Keeper's/Subordinate's duties) and to keep and render true and
faithful accounts of his dealing with all property and money which may come into
his hands or possession or under his control, such accounts to be kept in the form
and manner that may, from time to time, be prescribed by duly constituted
authority, and also to prepare and submit such returns, accounts and other
documents as may, from time to time, be required of him.
3. AND WHEREAS the said A.B. ............. has, in pursuance of the rules delivered
to and deposited with................. the above-mentioned ................. sum of Rs.........
(Rupees .....................) in cash as security for I the due and faithful performance
by the said A.B.................. of the duties of his said office and of any other office
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requiring security to which he may be appointed at any time and of other duties
which' may be required of him while holding any such office as aforesaid and for
the purpose of securing and indemnifying the Government against all loss, injury,
damage, costs or expenses which the Government may, in any way, suffer, sustain
or pay, by reason of the misconduct, neglect, oversight or any other act or
ommission of the said A.B. .......
..... or of any person or persons acting under
him for whom he maybe responsible.
4. AND WHEREAS the said A.B.
has entered into the above bond in the
sum of ................ conditioned for the due performance by him the said A.
B. ............ of the duties of the said office aforesaid and of other duties appertaining
thereto or which may lawfully be required of him and to indemnify the
Government against loss from or by reason of the acts or defaults of the said
A.B. ........... and of all and every other person and persons aforesaid.
5.NOW THE CONDITION OF THE ABOVE WRITTEN BOND is such
that if the said A.B., has, whilst he had held the said office of .............. as
aforesaid, always duly performed and fulfilled the duties of his said office and if
he shall, whilst he shall hold the said office or any other office requiring security
to which her -may be appointed, or in which he may act, always duly perform and
fulfill all and every duties thereof respectively and other duties which may from
time to time be required of him while holding any such office as aforesaid, and
shall duly pay into the Government Treasury at .......... all such moneys and
securities for moneys as are payable or deliverable to Government and shall come
into his possession or control by reason of the said office and shall duly account
for and deliver up all moneys, papers and other property which shall come into his
possession or control by reason of the said office and if the said A.B. .................
his heirs, executors, administrators or legal representatives, shall pay or cause to
be paid unto the Government the amount of any loss or defalcation in the accounts
of the said......... within 24 hours after the amount of such loss and or defalcation
shall have been demanded from the said A.B. ............... by the ......... Such demand
to be in writing and left at the office or last known place of residence of the said
A.B. ............. and shall also at -all times indemnify and save and keep harmless the
Government from all and every loss, injury, damage, actions, suits, proceedings
costs, charges or expenses which has been or shall or may at any time or times
hereafter during the service or employment of the said A.B............... in, such office
as aforesaid, or any such offices aforesaid, be sustained incurred, suffered,
brought, sued or commenced or paid by the Government by reason of any act,
embezzlement, defalcation, mismanagement, neglect, failure, misconduct, default,
disobedience, omission or insolvency of the said A..B............ or of any persons or
person acting under him or for whom he may be responsible, then this obligation
shall be void and of no effect, otherwise the same shall be and remains in fall
force.
PROVIDED ALWAYS and it is hereby declared and agreed by and between
the parties hereto that the said sum of Rs. ....................( Rupees ...............) so
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delivered and deposited as aforesaid shall be and remain with the .............. for the
time being, as such security as aforesaid with full power to the ......... for the time
being as occasion shall require to apply the said sum of rupees ........... or any part
thereof in and towards the indemnity of the Government or otherwise as aforesaid.
6. And it is hereby further agreed that in the event of the death of the said
A.B. ............... or on the final termination of the service of the said A.B. ............
whether as ......... as aforesaid, or otherwise or in the event of the said A.B. .........
ceasing to hold any office requiring security the said sum of Rs. ........................
(Rupees .........) shall be retained by Government for............. months after the said
A.B............... has either died while holding the said office or has quitted the said
office or has ceased to hold any office requiring security and the said sum or so
much thereof as shall then remain in deposit and shall not have been applied or
appropriated as aforesaid shall on the expiration of the said period of...........
months, be returned to the said A.B. ............ or his heirs and legal representatives
as the case may be without interest and this bond shall remain with the, ......... for
recovering any loss, injury, damage, costs or expenses that may have been
sustained, incurred or paid by the Government Owing to any act, neglect or default
of the said A.B. ........... or any ,such other person or persons as aforesaid and
which may not have been discovered until after his death or the termination of his
said service, or ceasing to hold any office for which the security was required.
PROVIDED ALWAYS that the return at any time of the said security, shall
note be deemed to affect or prejudice the right of the Government to take
proceedings upon or under this bond against the
said A.B. ............ or a against his heirs, executors, administrators or legal
representatives after is death, in case any breach of conditions of this bond shall be
discovered after the return of the said security, and the responsibility of the said
A.B: .............. or his estate, as the case may be shall at all times continue and the
Government shall be fully indemnified against all such loss or damage as aforesaid
at any time.
7. PROVIDED FURTHER THAT nothing herein contained nor the security
hereby given shall be deemed to limit the liability of the said A.B. ................ in
respect of matters aforesaid to the forfeiture
of the said sum of Rs ......... (Rupees ............) or any part or parts thereof and that
should the said sum be insufficient to indeminify the Government in full for any
loss or damage sustained by them in respect of matters aforesaid or any of them
the said A.B. ............. shall pay to the Government on demand such further sum as
shall be deemed by the ........ to be necessary in addition to the said sum of Rs. ......
(Rupees .........) to cover loss or damage as aforesaid and that the Government shall
be entitled to recover such further sum payable as aforesaid in any manner open to
them.
1. Signed by the above bounden......... in the presence of...........
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2. Signed for and on behalf of the President of India by .......... the ........
being the person directed or authorised by him in that behalf in the presence
of ..........
ANNEXURE II
(Referred to in Rule 20)
FORM OF SECURITY BOND (FIDELITY BOND DEPOSITED AS
SECURITY)
KNOW ALL MEN BY these presents that I, A.B. ....... of ...... am held and firmly
bound unto the President of India, his successors and assigns (hereinafter referred
to as "Government') in the sum of Rs.......... (Rupees ........) to be paid to the
Government for which payment, well and truly to be made, I bind myself, my
heirs, executors, administrators and legal representatives by these presents. Signed
and dated this day of ......... 19 ........
2. WHEREAS the above bounden A.B. ............... was on the day of.....
19............ appointed to and now holds the office of..... in the office of ........ AND
WHEREAS the said A.B. ...... by virtue of holding such office is bound to .
collect...... (here describe the nature of
Cashier's/Store-keeper's/
SubStorekeeper's/ Subordinate's duties) ........... and to keep and render true and
faithful accounts of his dealings with all property and money which may come into
his hands or possession or under his control, such accounts to be kept in the form
and manner that may, from time to time, be prescribed by duly constituted
authority, and also to prepare and submit such returns, accounts and other
documents as may from time to time be required of him.
3. AND WHEREAS the said A.B. .......... and has, in pursuance of rules
delivered to and deposited with ...... a fidelity bond issued by......... Company for
the sum of Rs.......... (Rupees .......) as security for the due and faithful performance
by the said A.B. ......of the duties of his said office and of any other office
requiring security to which he may be appointed at any time and of other duties
which may 'be required of him while holding any such office as aforesaid and for
the purpose of securing and indemnifying the Government against all loss, injury,
damage, costs or expenses which the Government may, in any way, suffer, sustain
or pay, by reason of the misconduct, neglect oversight or any other act of omission
of the said A.B. .......... or of any person or persons ,acting under. him or for whom
he may be responsible.
4. AND WHEREAS the said A.B. ......... has entered into the above bond in
the sum of ....... conditioned for the due performance by him the said A.B... ...........
of the duties of. the said office and of other duties appertaining thereto or which
may lawfully be required of him and to indemnify the Government against loss
from, or by reason of the acts or defaults of the said A.B. ....... and of all and every
person and persons aforesaid.
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5. NOW THE CONDITION of the above written bond is such that if the
said A.B.......... has whilst he has held the said office of ......... as aforesaid always
duly performed and fulfilled the duties of his said office and if he shall, whilst he
shall hold the said office or any other office requiring security to which he may be
appointed, or in which he may act, always duly perform and fulfil all and every the
Duties thereof respectively and other duties which may from time to time be
required of him while holding any such office as aforesaid, and shall duly pay into
the .government Treasury at .,........ all such money and securities for money as are
payable or deliverable to Government and shall come into his possession or
control by reason of the said office and shall duly account for and deliver up all
moneys, papers acid other property which shall come into his possession or control
by reason of the said office and if the said A.B......... his heirs, executors,
administrators or legal representatives shall pay or cause to be paid unto the
Government the amount of any loss and/or defalcation in the accounts of the
said ............ within 24 hours after the amount of such loss and/or defalcation shall
have been demanded from the said A.B. ...... by the .......... such demand to be in
writing and left at the office or last known place of residence of the said
A.B. .......... and shall also at all times indemnify and save, and keep harmless the
Government from all and every loss, injury, damage, actions, suits proceedings,
costs, charges and expenses which has been or shall or may at any times or time
hereafter during the service or employment of the said A.B. ....... in such office as
aforesaid, or any such offices aforesaid, be sustained, incurred, suffered, brought,
sued, or commenced or paid by the Government by reason of any act,
embezzlement, nt, defalcation, mismanagement, neglect, failure, misconduct,
default, disobedience omission or insolvency of the said A.B. ............ or of any
person or persons acting under him or for whom he may be responsible, then the
above written bond shall be void and of no affect, otherwise the same shall be and
remain in full force.
6. PROVIDED ALWAYS and it is hereby declared and agreed by and
between the parties hereto that the said fidelity bond No. ..... delivered and
deposited as aforesaid shall be and remain at the disposal of the said officer for the
time being or the Government as and for part and as additional security over and
above the above written bond to the Government, for the indemnity and other
purposes aforesaid 'with full power to the Government or an officer duly
authorised in, that behalf to obtain and receive payment of the sum or sums of
money recoverable or to be received upon or by virtue of the said fidelity bond or
a sufficient portion thereof and all benefits and advantages thereof and to apply the
same in and towards the indemnity as aforesaid of the Government.
7. AND it is hereby further agreed and declared by and between the parties
hereto that the said A.B...... shall keep the said fidelity bond issued by the said
company in full force by payment of the premia as and when they fall due and by
otherwise conforming to the rules of the said company relating thereto.
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8. PROVIDED ALWAYS that the cancellation or lapse at any time of the

said fidelity bond shall not be deemed to affect or prejudice the right of the
Government to take proceedings upon or under this said bond against the
said ......... in case any breach of the condition of this bond shall be discovered
after the cancellation or lapse of the said fidelity bond but the responsibility of the
said A.B. ...... shall at all times continue and the Government shall be fully
indemnified against all such loss or damage as aforesaid at any time.
9. PROVIDED FURTHER that nothing herein contained nor in the fidelity
bond so deposited shall be deemed to limit the liability of the said A.B. ....... in
respect of matters aforesaid to the forfeiture of the said sum of Rupees ......... or
any part or parts thereof and that if the said sum be found insufficient to indemnify
the Government in full for any loss or damage sustained by them in respect of
matters aforesaid or any of them the said A.B. ....... shall pay to Government on
demand such further sum as shall be deemed by ..... to be necessary in addition to
the said fidelity bond of Rs. ...... to cover such loss or damage as aforesaid and that
the Government shall be entitled to re-cover such further sum payable as aforesaid
in any manner open to them. The stamp duty on the bond shall be payable by the
Government.
1. Signed and delivered by the above-named A.B. ...... in the presence
of................................
Signature
2. Signed for and on behalf of the President of India by
the............................... being the person directed or authorised by him in that
behalf in the presence of. .....................
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ANNEXURE III
(Referred to in RULE 200)
LIFE INSURANCE CORPORATION OF INDIA CREST
(Established under the Life Insurance Corporation Act, 1956)
FIDELITY GUARANTEE COLLECTIVE POLICY
Policy No. .............
Division.............
IN CONSIDERATION OF the first premium shown in the First Schedule
and subject to the terms and conditions contained herein or endorsed hereon which
are to be deemed conditions precedent to any liability on the part of the
Corporation so far as they relate to anything to be done or complied with by the
Employer, the Corporation binds itself to make good and reimburse to the
Employer all such direct pecuniary loss not exceeding the amount of guarantee as
the Employer shall sustain by any act or acts of dishonesty default or negligence
committed by any of the Employed (a) during the currency of this insurance and
(b) during the uninterrupted continuance of employment of such employed and (c)
in connection with his occupation and duties AND DISCOVERED during the
currency of this insurance or within a reasonable time thereafter or within twelve
months after determination of such employment whichever event shall first
happen.
The proposal for this insurance made by or on behalf of the Employer
together with any correspondence relating thereto shall be incorporated herein and
be the basis of this contract and of every renewal.
THE FIRST SCHEDULE
Name
The Employer:
Business
Address
The Employed:
The amount of Guarantee Rs.
Occupation and duties:
The first premium Rs.:
The renewal date . The ...... day of ...... in each year.
The currency of this insurance : The period or periods from the dates written
against the respective names of the Employed to the then next renewal date and
any year thereafter in respect of which the Corporation shall agree to accept an
employer or Employed shall pay the annual premium specified in the second
schedule, hereto.
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THE SECOND SCHEDULE

__________________________________________________________________
Period of Name
Occupation
Amount of Annual
Actual
risk
and duties
Guarantee Premium Premium
Rs.
Rs.
P. Rs.
P.
__________________________________________________________________
From
To
__________________________________________________________________
In witness whereof, this Policy has been signed at.................... .........
this ........................... day of ................................ 19 ...................
Divisional Manager
Prepared by.............
Exarnined by.............
__________________________________________________________________
__________________________________________________________________
Fidelity Guarantee Collective Policy
__________________________________________________________________
Policy No.
Name
Sum Insured Rs.
Premium Rs.
Date of Expiry
N.B. : For your own protection it is incumbent upon you to read your Policy
and its Conditions to ascertain that it is made out in accordance with
your intentions.
__________________________________________________________________
CONDITIONS
In this policy the expressions shall bear the respective meanings attached to them
in the First Schedule hereto.
1.
The Corporation shall not be liable to make any payment hereunder if the
nature of business of the Employer or the duties or conditions of service shall be
charged or the remuneration of any of the Employed reduced without the sanction
of the Corporation, or if the precautions and check for securing accuracy of
accounts shall not be July observed.
2.
Notices in writing shall be given to the Corporation as soon as possible after
any act or acts of dishonesty, default or negligence on the part of any of the
employed or of reasonable cause of suspicion thereof or of any improper conduct
shall have come to the knowledge of the Employer or of any representative of the
employer to whom is entrusted the duty of superintendence over any of the
Employed and no amount shall be payable under this policy in respect of that
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Employed by reason of any act, committed after such knowledge shall have come
to the Employer or his said representative. Within three months after such notice
the Employer shall deliver to the Corporation full details of his claim and shall
furnish proof of the correctness of such claim. All books of accounts of the
Employer of any Accountants reports thereon shall be open to the inspection of the
Corporation and the Employer shall give all information and assistance to enable
the Corporation to sue for and obtain reimbursement by any one of the Employed
or by his estate of any moneys which the Corporation shall have paid or become
liable to pay under this policy. Provided always that the Corporation shall not be
entitled to the disclosure of, any record or information in respect of which the
Employer is entitled to claim privilege in a Court of Law under Sections 123 and
124 of the Indian Evidence Act.
3.
Any moneys of any one of the Employed in respect of whom a claim is'
made in the hands of the Employer and any moneys which but for any act of fraud
or dishonesty committed by such one of Employed would have been due to that
Employed from the Employer shall be deducted from the amount otherwise
payable under the policy. Provided that the Employer is entitled under the law to
make such deduction. Provided further that in cases in which the loss to the
Employer is in excess of the maximum amount payable under the Policy, the
moneys aforesaid, will be applied in the first place to make good the amount of
such excess and the balance, if any, shall be deducted as herein provided. The
Employer and the Corporation shall share any other recovery (excluding insurance
and reinsurance and any counter security taken by Corporation) made by either on
account of any loss in the proportions that the amount of the loss borne by each
bears to the total amount of the loss.
4.
Notwithstanding anything herein contained to the contrary it is also agreed
that the Corporation guarantees to the Employer that the Employed shall honestly
and faithfully account to the Employed for all moneys or valuables or property
which they shall receive or be entrusted with on account of the Employer either in
their personal or individual capacity or as member, of group working conjointly
with other members and that the Corporation will make good and reimburse to the
Employer such loss not, exceeding the amount of guarantee as the Employer may
sustain by any act or acts of default or dishonesty negligence of the Employed in
the capacity and employment aforesaid and that when individual liability cannot
be brought home to the Employed the amount to be made good shall be that which
fails to the share of the Employed calculating from the total number of men
forming such group, i.e. the total loss divided by the total number of men
employed on the particular work.
5.
The Corporation also agrees that during the period in which this guarantee
shall be in force the particulars contained in the second schedule shall be with the
consent of Employer and on previous notice to and on payment to the Corporation
of any additional proportionate premium that may become payable in consequence
of any change in the Employed by reason of promotion or otherwise be varied as
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circumstances may require and such additional persons as may be taken into the
employment of the Employer referred to in the schedule hereof during such period
shall consent as aforesaid and, on previous notice to and on payment to the
Corporation of a further proportionate premium at the rate for the time being
applicable be added to and included in the said Schedule expression Employed
used throughout this policy shall as from the respective date on which the names
shall have been included in the said schedule be deemed to include all persons
whether previously named in the schedule or subsequently added thereto as
aforesaid.
6.
If any question or difference shall arise between the parties hereto or their
respective representatives touching these presents or the construction hereof or as
to the right duties of obligations of any person hereunder or as to any other matter
in anyway arising out of or connected with the subject matter of these presents the
same shall be referred to a single arbitrator to be named by the Government of
India. The Arbitrator so named be an officer of Government and shall have all the
powers conferred on arbitrators under the Indian Arbitration Act. The costs of the
reference and award shall be in the discretion of the arbitrator. The making of an
award in such reference shall be a condition precedent to any liability of the
Corporation or any right of action against the Corporation in respect of such
difference. If the Corporation shall disclaim liability for any claim here under and
such claim shall not be within twelve calendar months from the date of such
disclaimer have been referred to arbitration under the provision herein contained
then the claim shall for all purposes be deemed to have been abandoned and shall
not thereafter be recoverable hereunder.
FIDELITY GUARANTEE POLICY
Policy No........
In CONSIDERATION OF the first premium shown in the First Schedule
and subject of the terms and conditions contained herein or endorsed hereon which
are to be deemed conditions precedent to any liability on the part ,of the Life
Insurance Corporation of India (hereinafter called the "Corporation") so far as they
relate to anything to be done or complied with by the Employer, the Corporation
binds itself to make good and reimburse to the Employer all such direct pecuniary
loss not exceeding the amount of guarantee as the Employer shall sustain by any
act or acts of dishonesty, default or negligence committed by any of the Employed
(a) during the currency of this insurance and (b) during the uninterrupted
continuance of employment of such employed and (c) in connection with his
occupation and duties AND DISCOVERED during the currency of this insurance
or within a reasonable time thereafter or within twelve months after determination
of such employment whichever event shall first happen.
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The proposals for this insurance made by or on behalf of the Employer

together with any correspondence relative thereto shall be incorporated herein and
be the basis of this contract and of every renewal.
THE FIRST SCHEDULE
The Employer
Name
Business
Address
The Employed:
The amount of Guarantee Rs.
Occupation and duties:
The first premium
The renewal dated ........ the ....... Day of ..... ............ in each year.
The currency of this insurance : The period or periods from the dates written
against the respective names of the Employed to the then next renewal date and
any year thereafter in respect of which the Corporation shall agree to accept
Employer and Employed shall pay the annual premium specified in the Second
Schedule hereto.
Period Name
of Risk
Occupation
& duties
Amount of Annual
Guarantee
Premium
Rs.
Rs. P.
Actual
Premium
Rs. P.
From :
To
:
__________________________________________________________________
In witness whereof this Bond has been signed at this ................ day
of .........19........
For the Life Insurance Corporation of India
Prepared by :
P. Divisional Manager
Examined by:
N.B. For your own protection it is incumbent upon you to read your Policy and
its conditions to ascertain that it is made out in accordance with your
intentions.
__________________________________________________________________
CONDITIONS
In this policy the expressions shall bear the respective meanings attached to
them in the First Schedule hereto.
1.
The Corporation shall not be liable to make any payment hereunder if the
nature of the business of the Employer of the duties or conditions of service shall
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be changed or the remuneration of any of the Employed reduced without the

sanction of the Corporation if the precautions and checks for securing accuracy of
accounts shall not "" be duly observed.
2.
Notices in writing shall be given to the Corporation's office as soon as
possible after any act or acts of dishonesty, default or negligence can the part of
any of the employed or reasonable cause of suspicions thereof or of any improper
conduct shall have come to the knowledge of the Employer or of any
representative of the employer to whom is entrusted the duty of superintendence
over any of the Employed and no amount 'shall be payable under this policy in
respect of that Employed by reason of any act, committed after such knowledge
shall have come to the Employed or his said representative. Within three months
after such notice the Employer shall deliver to the Corporation full details of his
claim and shall furnish proof of the correctness of such claim. All books of
account of the Employer or any Accountant's reports thereon shall be open to the
inspection of the Corporation and the Employer shall give all information and
assistance to enable the Corporation to sue for the obtain reimbursement by any of
the Employed or by his estate of any moneys which the Corporation shall have
paid or become liable to pay under this Policy. Provided always that the
Corporation shall not be entitled to the disclosure of any record or information in
respect of which the Employer is entitled to claim privilege in a Court of Law
under Section 123 and 124 of the Indian Evidence Act.
3.
Any moneys of any one of the Employed in respect of whom a claim is
made in the hands of the Employer and any moneys which but for any act of fraud
or dishonesty committed by such one of Employed would have been due to that
Employed from the Employer shall be deducted from the amount otherwise
payable under the policy. Provided that the Employer is entitled under the law to
make such deductions. Provided further that in cases in which the loss to the
Employer is in excess of the maximum amount payable under the Policy, the
moneys aforesaid, will be applied in the first place to make good the amount of
such excess and the balance, if any shall be deducted as herein provided. The
employer and the Corporation shall share any other recovery (excluding insurance
and reinsurance and any counter security taken by Corporation) made by either on
account of any loss in the proportions that the amount of the loss borne by each
bears to the total amount of the loss.
4.
Notwithstanding anything herein contained to the contrary it is also agreed
that the Corporation guarantees to the Employer that the Employed shall honestly
and faithfully account the Employed for all moneys or valuables or property which
they shall receive or.-be entrusted with on account of the Employer either in their
personal or individual capacity or as member of group working conjointly with
other members and that the proportion will make good and reimburse to the
Employer such loss not exceeding the amount of guarantee as the, Employer may
sustain by any act or acts of default or dishonesty, negligence of the Employed in
the Capacity and employment aforesaid and that when individual liability cannot
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be brought home to the employed the amount to be made good shall be_ that
which fails to the share of the Employed calculating from the total number of men
forming such groups, i.e., the total loss divided by the total number of men
employed on the particular work.
5.
The Corporation also agrees that during the period in which this guarantee
shall be in force the particulars contained in the Second Schedule shall be with the
consent of Employer and on previous notice to and on payment to the Corporation
of any additional proportionate premimum that may become payable in
consequence of any change m the Employed by reason of promotion or otherwise
be varied as circumstances may require and such additional persons as may be
taken into the employment of the employer referred to in the Schedule hereof
during such period shall with such consent as aforesaid and on previous notice to
and on payment to the Corporation of a further proportionate premium at the rate
for the time being applicable be added to and included in the said schedule.
Expression Employed used throughout this policy shall as from the respective date
on which the names shall have been included in the said Schedule be deemed to
include all persons whether previously named in the schedule or subsequently
added thereto as aforesaid.
6.
If any question or difference shall arise between the parties hereto or their
respective representatives touching these presents or the construction hereof or as
to the rights, duties or obligations of any persons hereunder or as to any other
matter in any way arising out of or connected with the subject matter of these
presents the same shall be referred to a single arbitrator to be named by the
Government of India. The Arbitrators so named shall be an officer of Government
and shall have all the powers conferred on arbitrators under the Indian Arbitration
Act. The cost of the reference and award shall be in the discretion of the arbitrator.
The making of an award in such reference shall be. a condition precedent to any
liability of the Corporation any right- of action against the Corporation in respect
of such difference. If the Corporation shall disclaim liability for any claim
hereunder and such claim shall now within twelve calendar months ' from
the
date of such disclaimer have been referred to arbitration - under the provision
herein contained then the claim shall for all purposes be deemed to have been
abandoned and shall not thereafter be recoverable hereunder.
LIFE INSURANCE CORPORATION OF INDIA
CREST
Fidelity Guarantee Policy (Central Government)
Policy No.
Insured:
Annual Premium:
You are requested to read this policy and its conditions to ascertain that it is
in accordance with our intentions.
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FIDELITY GUARANTEE BOND
INSURANCE
DIVISION: ........
STAMP
Date of Expiry
Bond No.
Annual Premium Rs..
Sum Guarantee Rs.
Receipt No.
Whereas ................( hereinafter call the "Servant") is in or about to be
taken into, the employment of the Government o In (hereinafter called the
"Insured") in the capacity of ................ in the................ Department and has
applied to the Life Insurance Corporation of India (hereinafter called the
Corporation) to guarantee his honest and faithful accounting for all moneys, stores,
stamps or any other property received by, or entrusted to him while in the service
of the Insured.
And whereas the sum of Rupees ................ only has been paid to the
Corporation as the premium in consideration for such guarantee, commencing
from the ................ day of ................ 19 and terminating on the ............ day
of ................ 19 ................
Now therefore the agreement witnessed that in consideration of other
premises, and during the period commencing and terminating as aforesaid and
afterwards during each succeeding year from the ................ day of ................ each
year, in respect of which the Annual Premium as above stated shall before, or on.
the ................ day of ................ be paid to the Corporation and the Corporation
shall consent to receive the same, the Corporation -binds itself to Gurarantee to the
Insured, that the Servant shall during the subsistence of this agreement, honestly
and faithfully account to the Insured 'for all moneys, stores, stamps or nay other
property which he shall receive or be entrusted with on account of the Insured, in
his capacity as a ................ in the office of the ................ or in his capacity as the
holder of any other post under the Insured to which he may be transferred from
time to tone, and the Corporation guarantees to the extent hereinafter mentioned to
indemnify the Insured against all loss, , injury, or damages in such moneys, stores,
stamps or other property which the Insured may in any way suffer or sustain by
any act or acts of defaults, negligence, oversight, fraud, misconduct or -dishonesty
of the Servant committed during the period for which the aforesaid premium has
been paid by the Servant.
Provided that the sum recoverable under this agreement shall in no case
exceed RupeesProvided also that the Corporation reserved the right to insist upon the
prosecution of the Servant in the event of his dishonesty.
In witness whereof this bond has been signed at ................ this ................
day of ................ 19 ................ .
Prepared by:
Divisional Manager
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Examined by:
LIFE INSURANCE CORPORATION OF INDIA
CREST
FIDELITY GUARANTEE BOND
Bond No. ................
Name ................
Sum Insured Rs. ................
Premium Rs. ................
Date of Expiry ............
__________________________________________________________________
N.B.: For your own protection it is incumbent upon you to read your Policy
to ascertain that it is made out in accordance with your intentions.
CHAPTER-X CONTRACTS
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Explanatory notes
Note 1-These rules do not apply to M.E.S. contracts.
Note 2-The term "Administrative authorities" includes Commandants/Chief
Ordnance Officers/Officers Commanding, Superintendents of factories, Remount
Officers of areas, Officers Commanding, remount depots, Commandant Equine
Breeding Studs and Officers Commanding, Armed Forces Medical Store Depot.
Note 3-The principles and instructions enunciated in this section apply to the Navy
and also to the Air Force except where they are at variance with the special
Instructions contained in IAP. 1501.
GENERAL PRINCIPLES
231. For instructions and guidance in the making of contracts and in t e principles
to be observed in dealing with contractors, officers are referred to the "Manual for
the guidance of officers to the S. and T. Corps in their relations with contractors"
and "A Guide to ASC contracts-1952". The following general principles, however,
have been laid for the guidance of authorities, which have to enter into contracts or
agreements involving expenditure from Public Funds:
(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 to, 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 contract as so varied.
(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 competent financial authority.
(vi) Whenever practicable and advantageous, contracts should be placed
only after tenders have been openly invited, and in cases where the lowest
tender is not accepted, reasons should be recorded.
(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) Provision must be made in contracts for safeguarding Government
property entrusted to contractor.
232. Supplies and services required to carry on the public business will be
obtained ordinarily by contract on the authorised tender forms, but can also be
obtained as follows
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(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
In an emergency, for immediate delivery: By orders given oil IAFZ-2123

(Short Term Agreement). Note-Superintendents of ordnance and clothing
factories may obtain petty supplies on IAFZ-2123 (short Term Agreement)
or its departmental equivalent on ordinary occasions also. The general rules
In Rule 247 and 248 regarding enhancements of rates and modifications
relating to conditions of supply will apply mutatis mutandis in 'the case of
supplies obtained on such Short Term agreements: For supplies which are
periodic whether daily, weekly, or monthly, contracts and not Short Term
agreements should be made.
When the amounts are small and supply is required from only petty dealers:
On verbal offers tendered at public auction, after due notice on IAFZ-2137
(Call for Tenders), the offer accepted being recorded on IAFZ-2125 or
2125-A.
By purchase, either by the administrative authority concerned, or the
representative detailed by him when no tenders are received or the tenders
are, in his opinion, unacceptable.
By special contracts, by purchase or in accordance with special orders that
may be issued, to meet demands for supplies and services occasioned by the
existence of field service conditions.
In the case of fodder and dairy produce, supplies may be arranged
departmentally by local purchase. The system of advertising calling for
tenders will, whenever possible, be avoided. Dairy cattle shall, however, be
purchased by contract or by local purchase whichever is most suited to the
locality concerned.
In the case of local purchase of medical stores, supplies may be arranged
departmentally in accordance with the procedure laid down by DGAFMS in
consultation with the Ministry of Defence (Finance) by local purchase up to
the financial limits.
By purchase, from time to time, of hospital requirements of ASC supply for
which the demand is so spasmodic those neither central nor local contracts
are desirable.
In the case of Military Farms the supplies and services required may also be
obtained through Short Term agreements on the following basis
(i)
The period of Short Term agreement should not exceed six months.
(ii) The value of such agreements should not normally exceed Rs.
1,00,000 (Rupees One lakh only) in each individual case.
(iii) Such agreements upto the value of Rs. 1,00,000 (Rupees One lakh
only) will be sanctioned by the Deputy Director of Military Farms,
Command concerned subject to prior scrutiny by the Controller of
Defence Accounts concerned.
(iv) Short Term agreements, in excess of the limit specified in (iii) above
will be sanctioned by the Director of Military Farms in consultation
with Ministry of Defence (Finance).
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(v)
Short Term agreements may be concluded with unregistered

contractors/dealers in exceptional circumstances only and the
competent financial authority will, when sanctioning Short Term
agreements with un-registered contractors/dealers, record his reasons
for same.
233. No contract will be concluded without calling for tenders, except w1th the
previous sanction of the Government of India, but where the Jail or Forest
Department can supply articles equal in quality and at not more than the local
market rate, it should be invited to undertake the supply and further tenders need
not be called for. Negotiated contracts will be concluded, without calling for
tenders from ASC/Military Farm Contractors, with a Central/State Government
undertaking or a State sponsored Co-operative Society, i.e., a Growers/Producers
Co-operative Society which might have been recommended by the State
Government/Registrar of Co-operative Societies or a State level Appex. Marketing
Society or Federation of Growers and/or Producers' Co-operative Societies for
supply of fresh vegetables, including potatoes, onions, fruits fresh, poultry, fish,
eggs, milk fresh, cream, butter fresh, meat, frozen poultry, ice machine made,
bread, firewood, charcoal, lime quick and green grass in the case of A.S.C.
contracts, and fresh milk, cream and butter to Military Farms, provided the rates
offered by the State agencies/Co-operative Societies are considered competitive
and reasonable by the competent financial authority in consultation with the
Controller of Defence Accounts, the collector and the formation
commander/DDMF Command concerned and Ministry of Defence (Finance)
where necessary.
CONTRACTS WITH COMMERCIAL OR NON-GOVERNMENT
CONCERNS
34. All contracts, agreements, understandings etc., entered into by an
Army/Navy/Air Force officer with commercial or non-Government concerns will
be recorded in writing and a copy signed by both contracting parties will be
carefully filed.
Administrative authorities concerned who are making contracts are
responsible for the correct wording and framing of all conditions and
specifications in the Contract Schedule (IAFZ-2121 or in the case of transport
contracts a cyclostyled schedule attached to IAFZ-2121-A-Special .conditions). In
case of any doubt or when any new items have been embodied in the Schedule
which did not exist in the previous Schedules and which it is thought necessary for
the Controller of Defence Accounts to see from an audit or financial point of view,
the officers concerned may submit these forms to the Controller of Defence
Accounts for remarks and suggestions before tenders are invited. Every care must
be taken to avoid ambiguity or redundancy. 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 competent financial authority.
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Proposed amendments to the printed forms IAFZ-2137-A, 2120 or 2124

must receive prior approval of the Controller of Defence. Accounts and sanction of
the GOC-in-C/Ch:-f of the Air Staff or in the case of contracts concluded by
departments which have no representative at command headquarters of the
director concerned at Army Headquarters, as the case may be.
Any modification to the schedule IAFZ-2121 and 2121-A and printed forms
IAFZ-2137-A, 2120 and 2124 and any other relevant conditions of the Contract so
desired to be carried out must be got vetted by financial authorities and the legal
authorities of Ministry of Law before changes are finally effected in the contract
documents.
EXECUTIVE OFFICERS TO ARRANGE CONTRACTS
235. Administrative authorities are charged with the arrangement of all details
necessary to effect a contract, and will themselves furnish intending contractors
with all necessary information, carefully guarding any interference on the part of
their subordinates. No subordinate of any office or department, or any official in
receipt of any salary from Government may, be, in any way, pecuniarily interested
in a contract, nor may he become security for a contractor or assist him in the
preparation of any tender or account. Administrative authorities shall maintain a
register of approved contractors. The Controller of Defence Accounts will notify to
administrative authorities, as soon as it comes to his notice, anything that he
considers, renders any contractor unfit to hold a contract. The administrative
officer will investigate this case and obtain the orders of his administrative senior
officer whether the contractor is to be struck off the register or otherwise, notifying
the decision to the Controller of Defence Accounts. Reasons attending the removal
of a contractor or a firm from the register of approved- contractors will be given to
afford an opportunity to contractor firm to defend: Administrative authorities will
give tender forms only to such applicants as are shown in the "register of approved
contractors." A firm which, though not yet admitted to the "register of approved
contractors", has' submitted an application for admission thereto, may be given
tender' forms, but only on the understanding that such tenders will not be,
considered unless the firm has actually been admitted to the register before the
opening of the tenders--in--question.
CONTRACT BY A MINOR INVALID
36. A contract cannot be made by or on behalf of a minor, but if a contractor
dies his legal representative, even though a minor, is bound by the terms of the
contract.
Note-An Indian attains his majority at the age of 18 unless he Is under the
jurisdiction of the Court of Wards or a guardian of his property has been appointed
by any court In which case he becomes a major at the age of 21.
ESTIMATING REQUIREMENTS
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237. Before advertising for tenders the administrative authority concerned will
draw up a careful estimate of the probable amount of supplies for which he wants
to contract, with reference to past and future requirements. This estimate will be
prepared from the forms (IAFZ-2131) in use in the several departments showing
the amounts of supplies made by contract, purchase, or issue from stock, or on the
annual demands. These records also enable the executive officer to watch the
supplies under each contract, and to execute a fresh one, if rates are favourable at
that time, to take effect as soon as the probable requirements under the existing
contract have been delivered.
ADVERTISEMENTS
238. The advertisement calling for tenders for a contract should be published by
any or all of the following methods with reference to the importance of the
contract and the nature of the supplies:
(i)
By advertisement in the Government Gazette, the Indian Trade
Journal and local papers, English and Hindustani;, and in the case of
very important contracts, in the papers of other states.
(ii) By notice on IAFZ-2137, which should be forwarded to the civil
authorities to be pasted in public places and circulated to likely
tenderers.
Advertisements for tenders and calls for tenders must be issued sufficiently
previous to the date on which the tenders will be opened as will give would be
tenderers reasonable time to frame and submit their tenders. This should not
exceed six weeks: Tenders should be opened on a date sufficiently previous to the
date on which the contract is to come into force as will enable the successful
tenderers to make adequate arrangements in time for carrying out the contract. The
period between the issue of the advertisement or call for tenders and the date from
which the contract will come into force, may be as much as six months ahead for
very important contracts, and normally not less than three months.
In the case of Remount Units, tenders for supplies and services required by
depots, areas and Equine Breeding Studs will be notified by the circulation of
notice on IAFZ-2137 to contractors on the approved list of the Remount Units.
In such advertisement, it will suffice to state in general terms the articles for
which tenders are invited, and refer tenderers for further particulars to the officer
signing the advertisement, who will supply likely tenderers with tender forms on
demand by charging the prescribed fee, where levied. .
When the demand for any particular -supply is very large, a separate
advertisement should be issued therefor, and tenders for the whole or for any fixed
portion may be called.
Note-Notices for calling for tenders for ASC local contracts will be
published In the Government Gazette or advertised in local papers only when so
considered necessary by Commanders competent to sanction such contracts. In
cases where call for tenders are not advertised in papers, advertisements should,
however, be Inserted periodically in local news papers on Command/Area basis
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giving broad outline of ASC contracts included In their command/Area Inviting

potential contractors for registration as ASC Contractors.
TENDERS
239. Tenders for all supplies for which a special form is not prescribed must be
submitted on IAFZ-2120, which will be issued to tenderers free or on payment of a
prescribed fee in accordance with the usage of the department concerned, as
indicated on IAFZ- 2137. Before issue to tenderers, the tenders and schedules will
be carefully filled in and completed, leaving only the rates and the tenderer's
signature to be added.
In cases where tenders are issued on payment, the following mode of
payment of tender fees may be adopted by the tenderers:
(a) Government Treasury Receipt.
(b) Postal Orders.
(c) In the case of Air Force deposits into the Air Force Public Funds by
cash also.
Note- See Rule 234.
239-A. Resort to retendering may become necessary when either t e ten eyed rates
are high and the negotiations with the lowest tenderer for a reduction in rates fail
or when an extension of the current contract is not agreed to by the concerned
contractor-In such a situation, the Executive authorities may use their discretion
call for additional tenders with the CFA's approval by changing periodicity of the
contract and without having or showing any relation to the ,original call for
tenders or the rates tendered in response thereto. The term "re-invitation" will not
be used in the additional calls for tenders. Concurrent (i.e. additional) tenders for
concurrent short term agreements may also be issued at the discretion of the CFA,
where, in his opinion the circumstances so warrant, and such an action is
administratively feasible in the interest of the State. The discretion of CFA in the
matter will be final. Additional tenders in all cases may be floated at the discretion
of the authorities shown below.
(a)
(b)
(c)
(d)
Contract upto the value of Rs. 6 Commander, Area/Div. or Indep

lakhs.
Sub-Area.
Contracts upto the value or Rs. 8 Commander Corps vested with
lakhs.
Powers to sanction ASC contracts.
Contracts exceeding
the GOC-in-G Command.
financial powers of
Commander Corps empowered to
sanction contracts and Area, Div.
or Indep. Sub-Area in other cases
Contracts exceeding the value of Quartermaster General
Rs. 10 lakhs
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Approval of the GOC-in-C Command will normally be obtained before the

actual conclusion of a, contract for less than 11 months duration resulting from
floating of additional tenders. In cases where periodicity of additional tender had
to be reduced by a few days i.e. upto a month to meet legal requirements, sanction
of GOC-in-C Command will not be required. However, when it is desired to
conclude contracts for periods substantially less than one year's duration viz, less
than 11 months, the sanction of GOC- in-C Command will be obtained. In special
cases where it is not possible to do so due to paucity of time, ex-post-facto
approval will be obtained. Additional tenders will, however, be issued only in
exceptional cases at the discretion of CFA and;
(a) on the personal advice of CDA for contracts upto the value of Rs. 10 lacs.
(b) With the concurrence of Ministry of Def (Fin.) for the contracts exceeding
the value of Rs. 10 lacs but not exceeding Rs. 16 1acs.
(c) With the approval of Ministry of Defence and concurrence of Ministry of
Defence (Finance) for contracts exceeding the value of Rs. 16 lacs.
OPENING TENDERS
40. Tenders should be deposited by tenderers, or, if received by post, y the
officer of the administrative service concerned, in a securely locked box of which
he will keep the key or keys. No tenders are to be received after the hour stated in
the notice to contractors. At the time specified in the notice/advertisement for
opening tenders he will open the tenders in the presence of another
commissioned/gazetted officer and the tenderers present and the rates quoted will
be read out to the tenderers except in the case of building contracts. He will
scrutinize each tender and satisfy himself that the necessary earnest money has
been enclosed therewith and that the tender has been properly made out in
accordance with the instructions given in the tender forms and, if all be correct,
initial and date the tender and allot to it a serial number-this serial number, the
names of the tenderers and the rate given in the tender will then be entered by him
in the comparative statement of tenders (IAFZ-2125 or 2125-A). He will show on
the comparative statement of tenders or on attached statements the following data
(not applicable to Farms and Factories Directorates):
(i)
Contract rates for the current and for -the preceding two years (when
available).
(ii) Average civil local price for the preceding two years (when available)
and/or the civil local current rate showing whether those are
wholesale or retail. In the case of supplies imported from outside the
local area, civil price-current rates of the area from which they are
imported will also be attached.
(iii) Separately for each tenderer, the full' estimated cost of the tender or
tenders recommended for acceptance and of each lower tender. The
cost will be entered at the bottom of each tenderer's column on the
comparative statement.
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Note-Clauses (ii) and (iii) are not applicable to contracts relating to medical
store depots and Ordnance depots.
The Officer concerned will enter his recommendations (and the reasons for
the same) in the comparative statement of tenders and send it at once with a?1
necessary attachments and all tenders irrespective of the nature, value or period of
the proposed contracts, including those of which he recommends acceptance, to
the Controller of Defence Accounts concerned for scrutiny in his capacity as
financial adviser before being submitted to the competent sanctioning authority.
Note 1. In the case of Ordnance Depots tenders should be sent, wherever
possible, to CsD.A. for scrutiny In those cases only where tenders, ,other than the
lowest are proposed to be accepted.
Note 2-In the case of Navy, tenders for local' petty contracts need not be
referred to the Controller of Defence Accounts (Navy) for pre-scrutiny, before
these are accepted, subject to the following conditions.
(a) The contract value is not more than Rs. 10,000.
(b) The period of contract is not for more than twelve months.
(c) Tenders other than those most favourable to Government, If proposed
for acceptance, will be referred to Controller of Defence Accounts
(Navy) for pre-scrutiny, wherever possible.
(d) Local contracts, the framing, and stipulations of which may lead to
audit objections including charter parties, supplementary contracts,
contracts in substitution of broken contract and contracts in extension
of existing contracts, will be referred to CDA(Navy) for pre-scrutiny.
If the sanctioning authority does not accept the opinion of his financial
adviser, his reasons for not doing so will be recorded on the comparative statement
of tenders.
In the case of the Farms Directorate the comparative statement will be
submitted to the D.F.A. Ministry of Defence (Finance), instead of the Controller of
Defence Accounts.
A tender for assorted supplies may be accepted in whole or in part, the
object being to prevent a high rate being tendered for articles for which there is a
large demand and a low rate for those of which but small quantities are required.
Note-In addition to the scrutiny over tenders prescribed by this rule, audit
officers have powers to examine contracts and to bring .to the notice of the
Controller General of Defence Accounts for the Information of the Public
Accounts Committee and 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.
ERRORS IN TENDERS
241. Any tender which does not fulfil the conditions stated in the tender form of
notice to contractors may be rejected, but trivial errors such as (a) omission to enter the rates in words ;
(b) omission to initial any alteration in rates ;
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(c) omission to sign both tender and schedule (s) ;

may be corrected, initialled and dated by both the officers' opening the
tenders and will be signed and dated subsequently by the tenderer.
NON-RECEIPT OF TENDERS
242. If no tenders are received, or if those received for any article are not
acceptable, the contract will not be re-advertised except in very special
circumstances, e.g., when collusion between tenderers is suspected, or when by the
adoption of such a course material gain is likely to accrue to the State, but
purchase may be resorted to. In the case of unimportant supplies from petty
dealers, however, auction bids may be taken before resorting to purchase.
EARNEST MONEY
243. Earnest money need not be taken from Jails or large and reliable firms. The
earnest money of the accepted tenderer should alone be retained unless the
acceptance of the tender rests with higher authority, in which case the earnest
money of the lower tenderers will also be retained until sanction is received. No
order is required for the forfeiture of earnest money which follows on default and
should be at once credited to Government. Earnest money once forfeited cannot be
restored without the sanction of the next higher authority.
CONTRACT DEEDS
244. The tender (IAFZ-2120) becomes a contract on acceptance, which will be
communicated to the tenderer on IAFZ-2124. A special form of contract deed is
not required except in the case of special important contracts and 'it should then be
drawn up by Government law officer, half the cost of the deed being payable by
the contractor. A tender cannot be made, nor can a contract be signed, by an agent
unless he holds a power of attorney expressly authorising him to do so.
POWER OF ATTORNEY
245. One or more contractors may employ an agent duly authorised by power of
attorney (IAFZ-2133 and 2134) to act for them.
Note- Letters of authority can be regarded as legal powers of attorney for purposes
of this rule only if they are properly stamped as powers of attorney under the
Indian Stamp Act,, 1899.
DURATION OF CONTRACTS
246: (i) Contracts will be normally for the .twelve months of the financial year
only but may be for shorter periods. If it be considered advisable in the interest of
the State to conclude a contract for a period longer than one year but not exceeding
three years, the sanction of the next higher authority must be obtained. For periods
exceeding 3 years the sanction of the Government of India should be obtained.
Exception 1- The Director of Militaryarms can enter into contracts for periods not
exceeding 5 years, for lease of, land, purchases or, leases of harvesting or
cutting rights, water supply for dinking or irrigation purposes, supply of
electricity, supply of manure of other- services to or from military farms and
renewal of such leases (vide Schedule XIII of Appendix II-Part I Army of
Vol. II of these Regulations).
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Exception 2-The Director General of Ordnance Factories can execute contracts

for leases of shops etc., in Factory Estates for periods exceeding 3 years.
Exception 3-Contracts and short term agreements may also be concluded for
services and supplies required by military farms for periods falling within
two financial years if considered advisable in the interest of the State.
Exception 4-G.O.C. in-C Commands may conclude ASC Contracts for fresh
supplies for 12 months running into two financial years where such a course
is in the interest-of the State.
Exception 5-The Director Technical Development and Production (Air) can
conclude contracts for a period upto 3 years subject to Rules contained in
this Regulation.
(ii) Sanction of the GOC-in-Chief, Command is necessary prior to the
concluding of a contract for less than twelve months in the case of the ASC
contracts.
(iii) If it be in the public interest to extend the period of an existing contract,
the approval of the Controller of Defence Accounts and the sanction of the next
higher authority (the Chief of the Naval Staff in the Case of Navy) is necessary
even where there is no intermediate authority between the one originally
sanctioning the contract and the Government of India. Such extensions may be
carried out either on the original contract or in the form of a supplementary
agreement which will be signed by the competent authority after the sanction of
the next higher authority to the period of extension and terms have been obtained.
(iv) Sanction of the Government of India is -necessary in the case of further
extensions of a contract, the original period of which plus extensions exceeds three
years.
Note 1-The Directors at Army Headquarters can sanction contracts (including
extensions thereof) provided the period of the contract does not exceed three years
or an existing contract Is not extended beyond a, period of three years. In the case
of:
(a) Contracts for leases of land purchases or leases of harvesting or cutting
rights, water supply for drinking or irrigation purposes, supply of electricity,
supply of manure or other services to and from military farms and renewal
of such leases sanctioned by the Director of Military Farms the limit will,
however, be 5 years.
(b) Contracts/leases of shops etc., In Factory Estates entered into by the
Director General of Ordnance Factories, the periods of contracts for leases
may exceed beyond three years.
Note 2-When a contract is likely to endure for a period of more than five years, It
should, wherever feasible, include a provision for an unconditional power of
revocation or cancellation by Government at any time, or the expiry of six months
notice to that effect.
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Note 3-The ADGOF is authorized to sanction extension of delivery period of

contracts placed by factories up to a period of three years, subject to the financial
limit of Rs. 5,000.
SANCTIONS AND MODIFICATIONS OF CONTRACTS
247. (i) Contracts must be sanctioned by competent authority (see Appendix II to
Vol. II of these Regulations) and once sanctioned no contract rates may be
increased without the sanction of the authority next higher to the one which
sanctioned the contract. Special orders of the Chief of the Naval Staff should be
obtained for increase of contract rates in the case of Navy.
(ii) In the case of contracts sanctioned by GOsC-in-Chief, Commands the
sanction of Army Headquarters will be necessary to the enhancement of contract
rates.
(iii) Any enhancements in contract rates sanctioned by a lower authority will be
communicated to Army Headquarters.
(iv) The financial concurrence of the Controller of Defence Accounts in-his
capacity as financial adviser or the DFA, Ministry of Defence (Finance) concerned
will invariably be obtained in all cases of enhancement of contract rates.
Note-The provisions of this rule do hot apply in cases where (a) an enhancement
of contract rates is due to customs or excise duty being imposed or increased as
contemplated in the Indian Tariff Act, 1894., or (b) where provision exists in
contract for the enhancement of contract rates under specified circumstances. In
such cases enhancement of contract rates may be sanctioned by the authority who
sanctioned the contract (see Appendix II to Vol. II of these Regulations).
248. Modifications in the conditions of an existing contract which do involve an
enhancement of the contract rates may be sanctioned by the authority sanctioning
the contract provided no extra expense to the State is involved and that both
parties to the contract are agreed, the contractor's agreement being taken in
writing; but the competent authority will invariably consult the Controller of
Defence Accounts concerned (in his capacity as financial adviser) before
sanctioning any modification and, if there be any difference of opinion between
the competent authority and the financial adviser, the matter will be referred, with
full details, to the next higher competent authority for decision. All amendments
must be signet: by both parties to the contract.
If at any stage, it is found that the terms of a contract are contrary to the
original intentions or otherwise defective, steps should be taken forthwith to revise
it in a suitable manner.
Note-Acceptance of supplies in excess/short of the quantity ordered will not be
held to be a modification in the conditions of a contract provided that the value of
the excess/short supply does not exceed 5% of the original value.
For acceptance of supplies In excess/short of 5% of the original value,
competent financial authority will be determined by the value of the original order
plus the excess/short value.
This note does not refer to contracts made on an 'as required' basis.
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SUPPLY OF CONTRACT ARTICLES OF ASC-SUPPLY FOR

OPERATIONS NOT TERMED MOBILIZATION
249. The following is the chain of financial responsibility in the matter of
enhancement of contract rates:
Sl.
Details
Competent
authority
to
No.
sanction enhancement of
contract rates
(1)
All contracts sanctioned originally by Brigade or sub area
the station commander or by an commander
authority subordinate to the brigade
or sub area commander.
(2)
All contracts sanctioned originally by Area commander
the brigade or sub area commander.
(3)
All contracts sanctioned originally by GOC-in-Chief command.
the area commander.
(4)
All contracts sanctioned originally by AHQ
the GOC-in-Chief command.
Note 1-Intimation of enhancement of contract rates will be made to Army
Headquarters.
Note 2-In all cases of enhancement of contract rates, the financial concurrence of
the Controller of Defence Accounts, in his capacity as financial adviser will
invariably be obtained.
DEALINGS WITH CONTRACTORS
250. Irregular concession to contractors should on no account be granted.
If the circumstances are likely to arise which must justify ex-gratia
payments to contractors steps should be taken to give such timely notice as would
tend to reduce the amounts so payable. Ex-gratia payment will be restricted up to
the limit of the difference between the accepted tender and the next higher tender.
Further, before making any such payments, the advice of the Government Solicitor
should be obtained in regard to the legal aspect of the case.
TRANSFER OF CONTRACTS
251. When a contractor desires to transfer a contract, the party who is willing to
take up the supply should be called upon to execute a fresh contract (IAFZ-2120).
SUPPLIES
252. All orders for supplies under a contract should be given on IAFZ 2135 and
the contractor's acknowledgement therefor obtained. Supplies should be made at
the places provided for in the first schedule, but if this is to the consuming or
indenting unit direct when the supplies do not pass through the' supply department
ASC or AOC they must be tendered in the presence of .a representative of the
department concerned. Supplies should be passed without delay, and any objection
must be raised before the contractor is granted a receipt. Except in the case of____________________________________________________________________________________________________________________
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periodical supplies at short intervals when accounts are submitted monthly, a

contractor should be paid as soon as possible after his supplies are accepted.
Note-Supplies of ratio articles made direct by contractors to the unit should, as far
as, possible, be made in the presence of a representative of the ASC. Although
delivered direct, the ASC is responsible for the quality of the supplies.
ADVANCES
253. Unless specially provided for by the tender or authorised under special
rules, no cash advances should be made to contractors. COMPENSATION FOR
BREACH OF CONTRACT
254. Under clauses 7 and 9 of the tender form a contractor, in certain cases.
therein specified, becomes liable to pay to Government compensation for loss or
inconvenience that may result from his default or from the rescission of his
contract under clause 8. Full compensation need not be insisted, upon for every
default, and executive officers should avoid exacting it for trivial shortcomings. A
clear breach of contract should not, however, be passed over, and the loss will then
be assessed as follows:
If rejected supplies have to be replaced, the amount of the loss will be any
excess over the contract rate in the price paid for the supplies, together with
reasonable compensation for inconvenience caused by the default. If the
contract has to be rescinded, a new contract for the unexpired portion of the
original contract should be concluded, and if the rates of the new contract
exceed those of the old, the amount of the loss sustained will be (a) the total
expense incidental to the new rates, plus (b) the extra expense incurred in
carrying on the service by purchase in the interval between the two,
contracts, plus (c) the cost incidental to effecting a new contract. Otherwise
the amount of the loss will be (b) and (c) alone, or these amounts less the
saving resulting from the new rates if these are lower. The loss for
inconvenience will be assessed according to the circumstances and the
nature of the contract.
The discretionary powers in the matter of waiving compensation for loss
due to the failure of a contractor are given in Appendix II to Vol. II of these
Regulations.
The amount recoverable from the contractor or the orders of the CFA for
waiving the recovery thereof from the contractor shall be, communicated to the
Controller of Defence Accounts:
INTERPRETATION OF CONTRACTS
255. Whenever an audit officer is in doubt as to the interpretation of a contract,
he should be guided by the opinion of the particular law officer whose duty it is to
advise on the institution or defence of any suit to which the contract may give rise.
The advice of a Government Law Officer may be obtained for the Legal
interpretation of the terms of and obligation arising from contracts, the settlement
of which is in dispute. A reference for obtaining such advice, whether initiated by
the officer empowered to conclude the contract or by the Controller of Defence
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Accounts or his representative will be made through the Div/Area Commander/Air

Officer-in-Charge Administration, or A.O.C.-in-C Command/Naval Administrative
Authority (hereinafter referred to as Administrative authority), who before
referring the matter for legal advice, shall obtain the views of both Controller of
Defence Accounts or his representative and the Officer administering the contract
so that both the points of view may be placed before the law officer.
The payment of fees for such advice will be sanctioned by the competent
authority concerned in accordance with the procedure -laid down in para 537 of
Regulations for the Army 1962/para 827, Regulations of the Indian Air
Force/Regulation 3306 of Regs. Navy Part I. The - Law Officers of the State
Governments shall charge the Central Government the same fees which they
charge from the State Government for their cases. Where the State Government
Law Officers for the High Courts are salaried Officers, the scale of fees may be
settled by mutual agreement between the Central Government and the State
Governments in consultation with Ministry of Law.
The Administrative authority is empowered inter-alia to engage a counsel
(State Law Officer) to conduct the following proceedings in a Court of Law, after
a case has been referred to arbitration:
(a) For securing implementation of the award of the arbitrator;
(b) To challenge the award of the arbitrator;
(c) When the matter is referred by the arbitrator for the opinion of the
Court.
As the proceedings before an arbitrator are not legal proceedings the
Administrative Authority is not competent to employ a counsel to conduct a case,
on behalf of the Govt. before an arbitrator, without prior Sanction of the Central
Govt in the case of A.F., C.N.S. in the case of Navy and G.O.C.-in-C Commands
in the case of Army.
RECOVERIES FROM SECURITY DEPOSITS IN DEFAULT
256. (a) If the security exceeds the compensation for which the or is liable, the
balance will be refunded to him.
(b) If the, compensation exceeds the security, the full security will be
withheld and the balance recovered from any moneys due to the contractor. If the
defaulting Contractor be insolvent the irrecoverable balance may be written off
under the orders of competent financial authority.
Note 1.-The Controller of Defence Accounts\should be informed, at the earliest
possible date, of the fact that the financial penalties attaching to a contract may
have to be enforced, and requested to withhold any payments in respect of bills
then in hand until further instructions,
Note 2-1n cases coming under clause (b) above any recoveries effecters from the
security deposit, or moneys due In respect of bills, shall be without prejudice to
any further recovery on such account which may be ordered by a court of law.
IMPORTANT POINTS TO BE ATTENDED TO
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257. The importance of careful calculation and consideration of the quantities

required under each contract in order to prevent the entry, in tenders, of an
unnecessarily high" estimate of requirements, which might cause the contractor to
provide excess establishment; machinery or material, should be borne in mind.
Attention should also be paid to the necessity for expediting the decisions as to the
acceptance or otherwise of tenders received; the early settlement of accounts upon
the termination of a contract; the early return of earnest money in case of tenders
not accepted and of security deposits when contracts are terminated, especially (in
the latter case) where the deposit has been made in a form securing little or no
interest to the depositor.
PAYMENT OF CONTRACTORS BILL TO THEIR BANKERS
258. The following procedure shall be observed with regard to the payment of
contractor's ills to banks;
All bills must be, receipted by the Contractor under the words "received
payment" and be endorsed him in favour of the bank under a separate signature. If
the bank is a collecting agency and is not includes: in the second schedule to the
Reserve Bank of India Act, the contractor will be required, in addition to execute a
power of attorney in favour of the bank. If the collecting bank is a scheduled bank,
payment can be made without a power of attorney. If however, it is a financing
bank, the contractor will have to execute a irrevocable power of attorney or deed
of assignment in favour of that bank, provided that if a deed of assignment is
executed, it shall specify the debt and be stamped under the Indian Stamp Act or
bear a certificate of exemption from stamp duty from a competent authority. The
power of attorney or decd of assignment will be subject to the approval of
Government.
In such cases Government will not, as a rule, make any payment to the
contractors without the knowledge of the, bank. If, however, the contractor
presents a bill for payment direct, and does not endorse it in favour of the bank,
while every effort will be made to secure payment to the bank; a payment to the
contractor will constitute a full acquittance so far as Government is concerned.
The band should be required to give a written acknowledgement of this condition
as part of the arrangement under which Government recognises the power of
attorney or the deed of assignment.
Note-The above procedure will not, in any way, affect the rights of
Government to deduct from bi (whether endorsed in favour of a bank or not) any
sums due to them from the contractors on account of penalties, overpayments, etc.,
on the contract to which the bills pertain, or on any other contract, with the
Government of India.
INSTRUCTION: Letters from contractors forwarding powers o attorney or
deeds of assignment should indicate whether the bank in whose favour such a
document has been executed will function as a financing bank or a collecting
agency.
259 to 269 Blank.
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CHAPTER XI
UNIVERSAL SERVICE CONDITION AND GRANT OF

FEES, HONORARIA AND REWARDS
THE WHOLE TIME OF A GOVERNMENT SERVANTS IS AT THE

DISPOSAL OF THE STATE
270. Unless in any, case, it is otherwise distinctly provided, the whole time of a
Government servant is at the disposal of the Government which pays him, and he
may be employed in any manner required by proper authority without having a
claim for additional remuneration, whether the services required of him are such as
would ordinarily be remunerated from general revenues or from a local fund.
RULS REGULATING THE GRANT OF FEES AND HONORARIA
271. (a) A Government servant, including all civilians paid from Defence
Services Estimates, may be permitted by the general or special order of a
competent authority, if it is satisfied that this can be done without detriment to his
official duties and responsibilities, to perform a specified service -or series of
services for a private person or body or for a public body including a body
administering a local fund, and to receive as remuneration therefor, if the service is
material, a non-recurring or a recurring fee. No Government servant may
undertake such work without first obtaining the sanction of the competent
authority who will, unless the Government servant is on leave, certify that the
work can be undertaken without detriment to his official duties and
responsibilities.
Note 1- Literary, cultural and artistic efforts aided by the knowledge
acquired In the course of service under Government will require prior permission
of the competent authority. The income derived from such efforts is to be treated
as `FEE'.
Note 2- When a Government Department undertakes work on behalf of a
non-Government organisation on payment of an agreed amount and assign that
work to Government servants working under them the payment made by the
Department out of the amount taken from the non-Government organisation to the
Government servants concerned is to be treated as 'Honorarium' and not fee.
(b) A Government servant, including all civilians paid from Defence
Services Estimates, may be granted an honorarium from general revenues as
remuneration for work performed which is occasional in character and either so
laborious or of such special merit as to justify a special reward. This test of
exceptional merit shall always strictly be applied. Except when special reasons,
which should be recorded in writing, exist for a departure from this provision, an
honorarium shall not be granted unless work has been undertaken with the
previous consent of the sanctioning authority and its amount has been settled in
advance.
(c) For both fees and honoraria, the sanctioning authority will record in
writing that due regard has been , paid to the general principle enunciated in Rule
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270 and will also record the reasons which in his opinion justify the grant of the
extra remuneration. The amount of an honorarium or fee shall be fixed with due
regard to the value of the service in return for which it is given. Temporary
increases in work due to the holding of special conferences under the auspices of a
department or subordinate authority or of inter-departmental committees are
normal incidents of Government service and form part of the legitimate duties of
Government servants. Those so employed have, therefore, no claim to extra
remuneration.
Honorarium at the following rates may be paid to Government servants for
contribution of articles to Government publications:
(i)
For contribution of articles as a
No honorarium.
part of the normal duties and
responsibilities
attached
to
Government Servants post.
(ii) For contribution of articles on (i) No honorarium, if the article is
subject matters with which the
contributed by a Govt. servant
Govt. servant is Officially
to a publication brought out by
concerned but not falling within
his Ministry or its attached
the scope of item (iii) (B) below,
and
provided it is not a part of the
subordinate offices.
normal duties and responsibilities
attached to his Cost.
(ii) Honorarium at the rate of Rs.
10/- and in exceptional cases
upto Rs. 25/- per article
contributed by a Govt. servant
to a publication brought out by
a Ministry or its attached and
subordinate office other than
the Ministry or its attached and
subordinate offices in which he
is working.
(iii) (A) For contribution of articles
Honorarium at the same rates
on, subject matters with which
and as payable to non-official
the Govt. servant is not officially
contributors
concerned,
and
(B) For contribution of a. literary,
artistic or scientific character to
any Govt, agency provided it is
not a part of the normal duties
and responsibilities attached to
his post.
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WHEN in addition to his own duties, a Government servant is required to

perform the duties of another sanctioned post, he should be deemed to be
performing additional duties which are not occasional in character, even though he
may be asked to perform such additional duties only for a short period.
Honorarium, under this rule will not, therefore, be admissible to a Government
servant who is required to perform the additional duties of a sanctioned post.
(d) Any Government servant is eligible to receive without special
permission:
(i)
the premium or prize awarded for an essay, literary piece or plan in
public competition.
(ii) any reward offered for the arrest of a criminal or a deserter, or for
information or special service in connection with the administration
of justice.
(iii) any reward payable in accordance with the provisions of any act or
regulation or rules framed there under.
(iv) any reward sanctioned for services in connection with the
administration of the customs and excise laws, and
(v) any fees payable to a Government servant for dunes which he is
required to perform in his official capacity under any special or local
law or by order of Government.
(e) No Government servant may act as an arbitrator in any case which is
likely to come before him in any shape by virtue of any judicial or executive post
which he may be holding, but a Government servant called upon by a court of law
to act as a commission to give evidence on technical matters may comply with therequest provided that the case is not of such a nature as will be likely to come
before him in the course of his official duties, and he may accept such fees as are
fixed by the Court.
When a Government servant is appointed to act as an arbitrator in a dispute
between the Department of, the Government of India in which he is working and a
private party, he would not be granted any honorarium.
If, however, he is appointed as an arbitrator in a dispute between private
party and a Department other than the one in which he is working, he may
undertake such work and receive honorarium therefor on the following conditions:
(a) before undertaking the work, the officer shall, as required under this rule,
obtain the prior approval of the competent authority, who shall decide
whether, consistently with his official duties, "he may be allowed to
undertake the work and receive honorarium for it;
(b) the honorarium may be paid to him at the rate of Rs. 30 per day or Rs.
15 per half day subject to a maximum of Rs. 500 per case. For this purpose,
a day means more than two hours continuous work on any day and half day
means work for two hours or less. He shall record a certificate in writing
indicating whether he has done a day's work or half-day's work on a
particular day.
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Note : The term "work" used in (b) above means only the time spent on the
hearing of the case and does not Include that spent on reading of the case papers or
studying the case.
In either of the above, two cases, when any costs on account of arbitration
are awarded against a private party, the entire amount on recovery by the
Department concerned, shall be credited to Government and shall not be paid to
the arbitrator.
A Government servant may, with the prior permission of the competent
authority as required under this rule, accept the appointment as an arbitrator in a
dispute between private parties. At the time of giving such permission, the
competent authority shall decide whether consistently with his official duties,, he
may undertake the arbitration work and also whether' he may accept any fee for it
from the parties to the dispute. This fee shall be subject to the provisions of this
rule.
(f)
Unless the Government of India by special order otherwise directs,
one third of any fee, including a fee received by a Government servant for giving
expert evidence before a court of law, in excess of Rs. 400 or, if a recurring lee, of
Rs. 250 in one financial year, paid to a Government servant for work undertaken
by him for a private or public body or for a private person shall be credited to
General Revenues. In other words, if any, fee exceeds Rs. 400 non-recurring, or
Rs. 250 in a financial year recurring, one-third of the total amount payable will be
credited to general revenues, provided that the amount retained by the Government
servant concerned will riot, merely owing to the operation of this rule be reduced
below Rs. 400 if non- recurring or Rs. 250 a year if recurring: Non-recurring and
recurring fee, should be dealt with separately and should not be added, for the
purpose of crediting one-third to General Revenues under this- rule. In the case of
the former the limit of Rs. 400 prescribed in this rule should be applied in each
individual case, and In the case of the latter, the limit should be applied with
reference to the total recurring fees for the financial year.
This rule does not apply to fees received by Government servants from a
regimental fund or from a University, or other examining body in return for their
services as examiners, to fees of any kind received-by medical and veterinary
-officers employed in Defence Services or to payments for services of a social
nature rendered to a club or similar organisation of the Government Servant's
fellow employees as distinct from services rendered on a commercial basis to a
private individual or, corporation.
This rule does not also apply to fees received by the writing of reports or
studies on selected subjects for international bodies like the United Nations
Organisation, UNESCO, etc. and literary contributions to both Indian and Foreign
magazines if this is done unaided by knowledge acquired in the course of
Government service.
This rule should not, however, be applied to the income derived by a
Government servant from the sale or royalties of a book written by him with the
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aid of knowledge acquired by him through his literary, cultural and artistic efforts,
during the course of his service, provided the book is not a were compilation of
Government Rules, Regulations or Procedures, but reveals author's scholarly study
of the subject. This relaxation is not automatic but will be made under Government
orders in each case. For this purpose a certificate to .the above effect will be
furnished by the competent authority while recommending relaxation. This rule
-will not also apply to the income derived by a Government servant from
exploitation of a- patent for an invention taken out by him with the permission of
the competent authority.
Fees in respect of Government servants attending meetings or for doing
other work in connection with the affairs of statutory organisations corporate
bodies, industrial and commercial undertakings (not departmentally run) will be
recoverable only if these are not wholly owned by the Central Government but in
which Central Government funds are invested, or which are financed partly by
such funds, The case of Semi-Government/Non-Government Institutions receiving
grants from the Central Government will be examined on merits' and Government
orders obtained. No fees or other remuneration should be directly accepted by
Government servants unless they are specially permitted to receive such fees under
this rule.
Payments received by a Government servant in the form of travelling,
conveyance, daily and subsistence allowances from a source other than the
consolidated Fund of India or the consolidated Fund of a State, are to be treated as
fee and are normally subject to deduction under this rule. The competent authority
concerned mentioned in clause (j) below, may exempt the above all allowances
from the purview of this rule if it is satisfied that the amounts received by the
Government servant concerned are not a source of profit to him.
The authority competent to sanction the acceptance by a Government
servant of any fee whether recurring or non-recurring shall report the matter to the
audit offices concerned and realise the, Government share, if any.
(g) Subject to the provisions of clause (f). above, when a fee is paid for
work done by a Government servant during such time as would otherwise be spent
in the performance of official duties, the fee shall be credited to general revenues,
provided that a competent authority for special reasons, which shall be recorded,
may direct that whole or any part of it may be paid to the Government servant.
(h) When a Government servant of an educational service is permitted to
receive fees for private tuition, the financial limits of the powers of sanction
accorded to a competent authority will be considered to apply to the total amount
of fee to be accepted by such Government servant during any particular scholastic
term or vacation.
(j) (i) The authorities specified below will be viewed as competent
authorities for the purpose of exercising powers under this rule excluding those
employed in the Defence Accounts. Department , for whom the Controller General
of Defence Accounts is the competent authority. These authorities will have the
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powers to grant honorarium upto a maximum amount of [Rs. 2,500] to

Government servants under their control and to grant to them permission to
undertake work from other Departments and accept for it honorarium up to
maximum amount of [Rs. 2,500]. Cases in which the amount of honorarium
exceeds [Rs. 2,500] will be referred to the Ministry of Defence. The Ministry of
Defence will be competent to sanction honorarium up to a maximum amount of
[Rs. 5,000]. Cases in which the amount of honorarium exceeds [Rs. 5000] will
require the approval of Ministry of Finance. The Ministry of Defence will,
however, have, full powers to grant permission to undertake work from other
Departments and to accept honorarium therefor irrespective of the amount of
honorarium involved.
(ii) The "Competent authorities" mentioned below will also have the powers
to sanction the undertaking of work for private bodies and to accept fee therefor, if
the amount of the fee to be paid does not exceed Rs. 1,000 in each case. Cases
where the amount of fee exceeds Rs. 1,000 will require sanction of the .Ministry of
Defence.
In the case of recurring honoraria the limits of Rs. 2,500/- and Rs. 5,000/apply to the total of the recurring payments made to an individual in a financial
year. In the case of recurring fees the limit of Rs 1000/- applies to total of such
payments made in any case in a financial year.
Authorities competent to exercise powers under the provision of Rule 271
F.R. Part I Volume I.
(a) For Service Personnel.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Competent Authority
COAS/VCOAS
GOC-in-C
Corps/Div/Area/Independent
Sub-Area Commanders.
DGAFMS
Director NCC.
Personnel Covered
All Service Personnel serving in the
COAS/VCOAS Secretariat.
All Service Personnel under their control.
All AMC Personnel wherever Serving.

Directorate and in lower formation under
him.
DGDE
Directorate and in lower formation under
him.
DCOAS, AG, QMG, MGO,
Service Personnel in the respective
E-in-C, MS.
Branches at Army Headquarters.
Commandants Category 'A' All Service Personnel serving under their
Establishments (i.e., Defence control.
Service
Staff
College,
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National Defence Academy,

Indian Military Academy),
National Defence College.
(viii) Director Institute of Defence
Management, Secunderabad.
(ix) Commandant, College of
Combat, Mhow.
(x)
D.G.O.F.
All Service Personnel serving under his

control.
All Service Personnel serving under him.
All Service Personnel in the Directorate

General as well as in the lower formation
under DGOF.
(xi) Director General of Quality All Service Personnel at HQ as well as in
Assurance/Scientific Adviser. lower establishments under them.
(xii) Air
Officer
In
charge All Service Personnel at Air Headquarters
Administration at Air
and Air Force Units/formations directly
Headquarters.
under the Administrative control of Air
Headquarters.
(xiii) AOC-in-C Command
All Service Personnel serving in
Commands and the units/formations
under their Administrative control.
(xiv) C.N.S.
All Service Personnel serving in Naval
Headquarters and the Establishments
which are not controlled by the authorities
mentioned in (a) (xv) below.
(xv) FOC-in-C/FOC/Fleet/FOC
All Service Personnel under their control.
Area
(b) For Civilian Employees
(i)
(ii)
(iii)
(iv)
Competent Authority
GOC-in-C
Corps/Oiv/Area/Indep.
Sub-Area Commanders.
D.G.O.F.
Personnel Covered
All civilians serving under their control.
All civilians in the Directorate General

as well as in the lower formations under
D.G.O.F.
Director
General
of
All civilians at HQ [other than those
Quality
Assurance/Scientific controlled by CAO Vide item (vii) below
Adviser.
as well as in lower establishments under
them.]
D.G.A.F.M.S.
All civilians serving at HQ [other than
those controlled by CAO, vide item (vii)
below in the lower formations under his
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(v)
Director N.C.C.
(vi)
DGDE
control.]
All civilians serving in the lower
formations under him.
All civilians serving in the lower

formations under him.
(vii) CAO, Min. of Defence
(i) All civilians belonging to both AFHQ
and Non-AFHQ cadres serving in AFHQ
and Inter-.Services Organisations.
(ii) All civilians employees (Gazetted &
non-Gazetted)
serving
in
Naval
Headquarters.
(viii) (a) Commandants Category 'A' All civilians serving under their control.
Establishments (i.e., Defence
Services
Staff
College,
National Defence Academy,
Indian Military Academy)
National Defence College.
(b) Commandant, College of All civilians serving under him.
Combat Mhow.
(c) Director, Institute of All civilians serving under his control.
Defence
Management,
Secunderabad.
(ix) Air Officer In charge
All civilians personnel serving in
Administration
at
Air
Units/Formations
under
the
Headquarters.
Administrative
control
of
Air
Headquarters.
(x)
AOC-in-C Command.
All civilian personnel serving in
Command and the Units/Formations
under their Administrative control.
(xi) C.N.S.
All civilian employees serving in
establishment not directly under the
control of the authorities mentioned in
(b) (xii) below.
(xii) FOC-in-C'' West/FOC-in-C
All civilian employees serving under
East/FOC-in-C South.
their Administrative control.
Note 1-The Scientific Adviser to the Ministry of Defence is the competent
authority to grant permission to scientists under his administrative control for
setting papers, accepting university examinership etc. He will not, however,
exercise the powers under clauses (f) and (g) above.
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Note 2-Thei Director General of inspection, will exercise the power of the
competent authority in addition to the powers vested in him under clause 0) above
to permit Government servants appointed directly by the Govt. of India, employed
in Defence Inspection Establishments to accept fees from University or other
examining bodies in return for their services as examiners/paper-setters.
All other cases not covered by the above paras shall be referred for the
orders of the Government of India.
REWARDS TO INDIVIDUALS FOR EFFECTING ECONOMIES IN
FACTORIES
272. The Director General of Ordnance Factories may, within the annual grant of
Rs. 2,000 placed at his disposal for the purpose, sanction reward to employees for
effecting economies in manufacture in ordnance and clothing factories.
273 to 275 Blank.
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CHAPTER-XII CONTINGENT AND MISCELLANEOUS CHARGES

RESPONSIBILITY OF OFFICERS INCURRING PETTY CONTINGENT
EXPENSES
276. Every public officer should exercise the same vigilance in respect o petty
contingent expenses as a person of ordinary prudence would exercise in spending
his own money. The drawing officer is further responsible for seeing that the rules
regarding the preparation of vouchers are observed, that the money is either
required for immediate disbursement or has already been paid from the permanent
advance, that the expenditure is within the available appropriation and that all
steps have been taken with a view to obtain an additional allotment if the original
allotment has either been exceeded or is likely to be exceeded.
DUTIES OF OFFICERS COUNTERSIGNING CONTINGENT BILLS
277. It is the duty of a countersigning officer to see that the charges made in a
contingent bill are of obvious necessity, and are at fair and reasonable rates, that
previous sanction for any item requiring it, is attached, that the requisite vouchers
are all received and in order, and that the calculations are correct, and specially
that the allotments have not been exceeded or' are likely to be exceeded, and that
the Controller of Defence Accounts is informed either by a note on the bill or
otherwise of the reason for any excess over the monthly proportion of the
appropriation. If expenditure be progressing too rapidly, the Controller of Defence
Accounts should communicate with the disbursing officer and insist on its being
checked.
IMMEDIATE PAYMENT TO BE MADE OF ALL CONTINGENT
CHARGES
278. All contingent charges incurred must be drawn and paid at once, and in no
circumstances may they be allowed to stand over to be paid from an allotment of
another year.
DRAWAL OF MONEY TO PREVENT LAPSE, FORBIDDEN
279. No money may be drawn unless it is required for immediate disbursement.
It is not permissible to draw any money or rush expenditure at the end of the year
to prevent the lapse of amounts provided in Estimates.
HOT WEATHER, ESTABLISHMENTS
280. Where hot weather appliances are authorised, establishments for working
them are provided at the public expense -for such periods as may be considered
necessary by -the medical authorities and these are notified in station orders.
Charges are met from, the grant sanctioned for hot weather establishment for each
Area which is sub-allotted to Brigades, Sub Areas, Stations, and Units and notified
in Area, Brigade Sub Area or Station Orders.
In the Air Force the provision of the authorised ammenities and casual
labour will be restricted by Station Administrative Officers to scale to be fixed on
the advice of the Local Station Boards by the AOC Commands and the Officers
Commanding, the IAF station, New Delhi,, No. 1 Base Repair Depot, and Nos. 1
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and 2 Air Force Academies for the units/stations under their control. In the case of
other units, under the direct control of Air Headquarters and also if the scale once
so approved requires revision, the scale recommended by the Station Boards will
be referred to Air Headquarters for approval. The period of hot weather will be
decided by the formations in consultation with the local IAF medical authorities.
As far as possible it 'should correspond with the period sanctioned for Army
formations in the same locality. The period will be notified in the Unit Routine
Orders.
SUPPLY OF LOCKS FOR USE IN GOVERNMENT OFFICES
281. The purchase of locks will be governed by the rules for the supply of
articles for the Public Service (see Rule 128). As a general rule locks
manufactured in India should be purchased in accordance with the Stores Purchase
Rules (see Rule 128 and Appendix IV to Vol. II of these Regulations.)
In exceptional cases, imported locks may for the present he used. As the
requirements of individual officers in respect of imported locks are usually small
and the cost 135rifling, such locks should ordinarily be purchased locally under
preference "Thirdly" in the preamble to the Stores Purchase Rules.
POSTAL CHARGES
282. (a) Payments for postal commission on money orders and value payable
parcels and fees on account of window deliveries, post bags and post boxes can be
passed as ordinary contingent charges unless, in any case, the head of the account
office considers it necessary to require the sanction of a higher authority.
(b) No charges shall be entered in any contingent hill for any postage stamps
other than service postage stamps and ordinary postage stamps affixed to the post
card (Form DMS-73) which is issued to patients by local military anti-rabic
treatment centres on completion of treatment.
(c) Service postage stamps and post cards will be obtained as required on
indent (IAFZ-2094) from the nearest Treasury Officer/Superintendent of Stamps
and a detailed account of their expenditure will be kept in IAFZ-2007 which will
be balanced and signed monthly, where it is not convenient to obtain' service
stamps -from the above sources because of shortage/non-availability of service
stamps there, units and formation may obtain the same from General Post
Offices/Head Post Offices/State Bank of India. All Units and Formations are
permitted to hold stock of Service Labels upto their requirements for three months.
It should be ensured, that unduly large stock of Service Labels -are not, however,
held towards the end of a financial year. Cheque for the value of service stamps
etc., required will be obtained by the officer concerned on IAFA 115 from the
Controller of Defence Accounts who will draw it in favour of the Treasury Officer
or as the case may be and send it to the requisitioning Officer for presentation to
the Treasury or as the case may be with IAFZ-2094. lo the case of Air Force,
payments for cost of service postage stamps will be made 0 the treasury officer in
cash or by cheque, from the Unit Public Fund Account by the Accountant Officer.
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(d) Whenever the cost of an establishment is divided between two heads, the
charge for service postage stamps may be divided in the same proportion.
PAYMENT OF BEARING COVERS AND RECOVERY OF POSTAGE
283. Bearing service covers cannot be refused. The postage must be -paid and
recovered on a contingent bill.
TELEGRAM CHARGES
284. Service postage stamps only shall be used in payment of telegrams
despatched on public service, whether sent from Government or railway telegraph
offices.
If any officer is compelled to send a telegram at a time when he is
temporarily without service stamps he should pay for it in cash and the receipt
granted, to him will then state the value of the telegram but will not bear on it the
word "state". The value of such telegrams as are paid for in cash, may
subsequently be recovered from Government, a certified signed by the 'head of the
office that the telegram was sent on state service and that cash payment was
unavoidable, being attached to the voucher concerned.
Books of telegram forms required for official use will be obtained on
payment from the Telegraph Department.
RENT OF TELEPHONES
285. Rent of telephones used by Defence Services will be settled by cash
payments by the Defence Accounts Department.
PROTECTIVE CLOTHINGS TO CLASS IV CIVILIAN EMPLOYEES
286. For general rules regulating the grant of Protective Clothing to Class IV
Civilian Employees see Appendix VI to Vol. II of these Regulations.
SOAP, TOWEL AND TOILET PAPERS
287. Soap, towel and toilet paper required by officers for use in-offices are
chargeable to office allowance/grant for unit Allowances and other Miscellaneous
Expenses. In the case of the IN and the Air Force these are treated as contingent
expenditure.
MUNICIPAL/CANTONMENTTAXES,
288. (A) A person subject to the Army Act, 1950 (Act XLVI . of 1950)/the Navy
Act 1957/the Air Force Act, 1950, who is compelled 'by the exigencies of
Army/Navy/Air Force duty to reside within the limits of a municipality or a
cantonment, is exempted from the taxes of the following kind:
(i) Municipal or cantonment taxes on salaries.
(ii) Municipal or cantonment taxes on professions, trades, callings, offices
or appointments.
(iii) Municipal or cantonment taxes on animals or vehicles in respect of :
(a) any animal which such person is required by the regulations of the
service to which he belongs, to keep; and
(b) any vehicle which such person is permitted to keep in lieu of any
animal which the said regulations would require him to keep.,
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The loss caused to the Cantonment Boards/Municipal committees/councils

by the above exemption to Service Personnel shall however, be 'made good from
the Defence Services Estimates except in respect of any horse which a Service
person is bound, by Regulations of the Service to which he belongs to keep.
(B) Municipal/Cantonment taxes on Army/Navy/Air Force buildings or on
buildings hired for authorised purposes other than quarters are debitable to the.
Defence Services Estimates under the rules contained in the Regulations for the
MES and Quarters and Rents with Rules for the supply of water and electricity.
Payment of such taxes should be made by book-adjustment or in cash according as
the Municipalities/Cantonment Boards concerned do or do not bank with a
Government Treasury.
(C) Licence fee chargeable from Army washerman tinder sub-section 4 of
Section 210 of the Cantonments Act 1924, are debitable to the Defence Services
Estimates. The amount will be claimed by the unit on a contingent bill (IAFA-115)
from the Controller of Defence Accounts concerned.
ELECTRIC CALL BELLS
289. The cost of installation and maintenance of electric call bells in o ices not
provided with an office allowance is debitable to the allotment for "Unit
Allowances and other Miscellaneous Expenses" unless otherwise ordered by the
Government of India.
CEREMONIAL PARADES
290. (a) All expenditure,, other than transportation charges, incurred in
connection with ceremonial parades, including parades on the following
occasions:
(i) Republic day
(ii) Independence Day
(iii) Visits of high officials to Military stations,
shall be debited to the grant for "Unit Allowances and other Miscellaneous
Expeness". General Officers Commanding-in-Chief may sanction such
expenditure in the areas under their respective commands, subject to the following
limits:
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(i)
Army Commands
Southern Command
Eastern Command
Western Command
(ii)
(iii)
Air Commands
Western Command
Central Command
Eastern Command
Training Command
Maintenance Command
South Western Air Command
Naval Commands
Western Command
Eastern Command
Southern Command
Rs. per annum

1,000
1000
1500
1,500
1,000
1,000
1,000
1,000
1,000
1000 .
1,500
1,000
1,000
(b) Expenditure incurred on transportation charges i.e., cost of Government

transport, hired transport or transport by rail (including cash travelling allowance
where admissible) and cost of petrol, oil, and lubricants consumed shall be met
from the respective accounts head concerned.
STATIONERY, TYPEWRITERS, PRINTING AND BINDING
291. For ruling in respect of publications (official and non-official) stationery,
typewriters, printing and binding see pamphlet "Office Equipment and Stationery
(including rules for printing and binding) Defence Services .
TREASURE GUARDS
292. When an officer is on detached duty and in charge of Government treasure,
he should, if a military guard is not available, apply through the prescribed channel
for a, police guard. Police guards will be supplied free of charge, but their
travelling expenses and any authorised remuneration, over and above their pay,
will be borne by the Defence Services Estimates and charged in contingent bills by
the Officer under whom the guard is employed.
293 to 299 Blank.
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CHAPTER-XIII
CHEQUES, BANK DRAFTS, MILITARY TREASURE

REMITTANCES AND CASH ASSIGNMENTS
CHEQUES-GENERAL RULES
300: The following general rules affecting cheques are prescribed:
(i)
Cheques are payable at any time within three months after the
month of issue,
If the currency of a cheque should expire owing to its not being presented at
the treasury within the period specified above, it may be received back by
the drawer who should then destroy it and issue a new cheque in lieu of it.
In the event of non-return of the time barred cheque to the drawer, the
drawer should on the expiry of prescribed period of three months after the
month of issue of the cheque require the payee either to return the cheque or
explain the causes for its non return. If as a result of this enquiry the
cheque is reported as lost, the Treasury Officer/Bank drawn on should be
required to furnish a nonpayment certificate/Stop order as laid down in
clause (x) below.
(ii) The amount of all Defence Services cheques should be expressed in figures
and words (in words for the amount of rupees only). Unless it is
inconvenient to the payee [see sub-clause (iii) below], all cheques` should
be crossed; crossing being done by adding the words 'A/C payee only' to the
general crossing '& Co.' No advice of the issue of any cheque need be sent
to the bank/treasury. The cheques, the amounts of which are payable to
Officers of the Government to enable them to make disbursement of Pay
and Allowances of non-gazetted staff, contingent expenditure etc., on behalf
of Government should not be crossed, but should bear the superscription
"not transferable" and should be issued in favour of the Government Officer
concerned, by designation, the word "only" being added after the
designation of the payee officer on the cheque.
EXCEPTION- Cheques preferable at d treasury for payment are non-negotiable
instruments and should not, therefore, be crossed. Such cheques of Rs.
2,500 or over will, if sent by post, be registered:
(iii) Cheques drawn in payment of personal claims of an individual (whether
Government servant or not), a firm or a company, a statutory body etc., shall
be issued invariably with the addition of the words "0r order" after the name
of the payee on the cheque. Such cheques if drawn on an office of the
Reserve Bank of India or any of its agencies other than a treasury agency,
shall be crossed with the words " ............... and Co" between the crossing
unless the payee specifically asks for an open cheque at his, own risk in
which case they need not be crossed. Open Cheques for Rs. 2,500 or over in
favour of Government servant will, if sent by post, be registered. Open
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cheques drawn in favour of a person not in Government employ should

when the issue m these terms is requested by the payee, be delivered
through a Government Officer. Payment by open cheques to contractors will
be made through the officer's received the articles for which payment is
being made. Open cheques will not be sent by post to contractors direct.
Note 1-All cheques/Drafts on banks for amount exceeding Re. 1,000/-(Rupees. One thousand) In each ease, other than In payment of salary, allowances,
pensions oft., of Government servants and pensioners, drawn in favour of an
Individual, a firm, a statutory body, etc., for services rendered or supplies made by
them to the Central Government, should Invariably be "Crossed" with the addition
of the words "Account Payee only" between the crossing.
Note 2- All cheques/Drafts on banks for amounts exceeding Rs.1000/(Rupees one thousand) in each case issued in favour of Gazetted Government
servants and Pensioners in payment of their personal claims shall always be to the
"order" of the payee and "Crossed" the superscription "A/C payee only" need not
be added thereon.
Note 3- As for as practicable a consolidated cheque for the aggregate
amount in respect of the pay bills of non-gazetted individuals and of contingent
bills be issued on edgy when the payments to be made are in favour of the same
departmental authority. The particulars of the claims represented by the
consolidated cheque shall be advised to the payee in the memo along with the
cheque while transmitting the cheque to him.
(iv) In the case of unit of the regular Army, the Territorial Army and the Indian
Air Force and the formations noted in the margin, crossed cheques for amounts
due will be sent together with Indian Army Form (C.D.A.-233) direct to the Bank
or Treasury by the Controller of Defence Accounts for credit to personal deposit
account of the unit or formation concerned. At the same time, a detailed statement
will be sent to the unit or formation concerned. In case of omnibus cheques, the
statement will show distinctly and separately the various items which make up
the .cheque, together with the number and date of each bill and its amount. For this
purpose, all units and formations in question should open a personal deposit
account with the Reserve or State Bank of India, where such bank exists,
otherwise in a local treasury in accordance with the orders laid down in the.
Regulations of the Service concerned.
The supply, of cheque books for the purpose of operating on the personal
deposit accounts opened either with the Reserve or the State Bank of India will be
made by the Bank itself but in respect of personal deposit accounts with civil
treasuries, cheque books should be obtained from the Civil Accountants General.
In no case, however, should payment be demanded from bankers, and
expenses incurred for the purpose of drawing cash until an intimation of the
receipt of the cheque and credit of its value to the accounts concerned, is received
from the Bank or Treasury except when there is sufficient credit in the particular
fund account. The intimation slip issued by the Defence Accounts Department is
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no authority for drawing cash from the Bank or Treasury. The posting and
completion of ledger accounts should, however; be carried out on the authority of
the intimation slip received from the Defence Accounts Department. The
intimation slips for cheques marked as not payable before a certain date will also
bear the same endorsement. Posting of such intimation slips will not be carried out
in the ledger account until the dates on which the cheques become payable.
When claims are submitted to Controllers' of Defence Accounts for cheques
to be issued which have merely to be passed on to the creditors, the memorandum
forwarding the claim should clearly indicate-"Forwarded cheques direct to. . . . . . .
. . . . . ." The Controller of Defence Accounts will then forward the cheque direct
of the firm or person whose bill is to be settled and intimate to the unit or
formation that this has been done.
In the case of units and formations mentioned above, which are located in a
station where there is, no local branch of the Reserve or the State Bank of India or
a civil treasury, the above rule would not apply and cheque should, therefore, be
sent to them direct.
(v) All payments must be made by cheque with the following exceptions:
(a) local payments for less than Rs.10 and outstation payments of less
than Re. 1 value in each case should be made in cash;
(b) all bills for petty works or supplies on Government military farms up to
a limit of Rs. 25 may be paid in cash and not by cheque at such farms as
may be approved by the Director of Military Farms;
(c) in the case of military farms, payment in excess of Rs. 25 may be made
in cash instead of by cheque for the purchase of fodder, dairy produce or
stores, cattle, etc., from the local petty dealers, or from villages situated at
considerable distances from farm headquarters and when it is not possible to
issue a cheque for such purchases; the DDMF concerned being the deciding
authority as to whether payment should be made by cheque or cash;
(d) in the case of Remount Services of the Remounts and Veterinary Corps,
local payments for the purchase of animals may be made in cash at the
option of the purchasing officer.
(vi) Cheque books must be kept under lock and key in the personal custody of
the drawing officer, who, when relieved, will take -a receipt for the number
of blank cheques made over to the relieving officer, a specimen of whose
signature should be forwarded to the treasury officer/Bank concerned by the
relieved officer.
The loss of a cheque book or blank cheque form should be notified promptly
to the treasury officer/Bank with whom the disbursing officer concerned
has a drawing account.
(vii) Every Officer should notify to the treasury/bank upon which he draws the
number of each cheque book which from time to time he brings into use and
the number of cheques it contains.
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(viii) When an officer sends a cheque (or Bank draft or Military Treasure
Remittance) to a treasury/Bank not for cash payment, but to be credited in
the treasury/Bank accounts, he must endorse it as follows: "Place the amount to credit of Government"- Defence receipts.
(ix) Cheque drawn on the State Bank of India or any of its branches should be
addressed to the Bank itself and not to any officer the of, e.g., State Bank of
India, Calcutta.
(x) If a disbursing officer is informed that a cheque drawn by him has been lost,
he wilt take the following action in regard to-lost cheque:(a) In the case of cheques drawn on non-bank treasuries he will address
the treasury officer drawn on and forward the following certificate for
completion and return:
"Certified that Cheque No. . . . . . . . . . .date. . . . . . . . . . . . .for Rs.. . . . . . . . .
reported by the . . . . . .to. . . . . . . . . . . . . . . . . . .have been drawn by him on
his treasury in favour of. . . . . . . . . . .has not been paid, and will not paid if
presented hereafter"
Treasury
The 19
Treasury Officer If the cheque has not been cashed, the treasury
officer will sign and return the certificate, and the disbursing officer will then
cancel the original cheque and a fresh cheque may be issued.
(b) In, the ease of cheques drawn on Banks, he will(1) Address a letter in the form given in Appendix - VII of Vol. II of
these Regulations, to the officer of the bank concerned by registered post
acknowledgement due.
(2) On receipt of written confirmation from the bank of having- recorded
the "Stop Order" a copy of the communication of the Bank, containing the
date, place, and the name of the Bank will be sent to the Accounts Section
of the Controller of Defence Accounts concerned. Accounts Section of the
C.D.A.'s Office after searching the list of paid cheques, that the payment of
the lost cheques has not been made between the date of its issue and date of
issue of acknowledgement of "Stop Order" by the Bank, will send a
certificate of non-payment to the disbursing officer.
(3) The party requesting for a fresh cheque in lieu of the lost one will be
asked to execute an Indemnity Bond in the form given in Appendix VII of
Vol. II of these Regulations.
Note 1-(i) The Indemnity Bond will be signed by the actual payee and witnessed
by the executive authorities.
(ii) The. Indemnity Bond duly signed and witnessed as above will be
accepted by Officers of Defence Accounts Department mentioned at Item IV of
Part VI (D) of General Statutory Rules 585 of Feb. 66.
Note 2-Indernnlty Bond will not be necessary in the case of Government
departments and Scheduled Banks, but a certificate that It has not received the
cheque alleged to have been lost or having received it has been lost "but that- it
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will be returned to the drawer, if found later, will be obtained before a fresh
cheque is issued.
On completion of requirements, at (b) (1), (2) and (3) above, the drawing
officer may issue a fresh cheque in lieu of the lost 'one under intimation to the
drawee office concerned of the Bank.
(xi) Alterations in cheques should be attested by the full signature of the
drawing officer and not by initials only.
301. Cheques drawn on an office of the Reserve Bank or on any o its agencies
including a treasury agency should always be crossed and the words "For Credit to
Govt. Account Not Payable in Cash" written between the lines.
Exception.- Cheques preferable at a treasury for payment are, however,
non-negotiable instruments and should not be crossed.
302. If a cheque is issued by Government in payment of any sum due by
Government, and that cheque is honored on presentation to Government's bankers,
payment shall be deemed to be made:(a) if the cheque is handed over to the payee or his authorised messenger, on the
date it is so handed over, or
(b) if it is posted to the payee on the date when the cover containing it is put
into the post.
Note.-Cheques marked as not payable before a certain date should not be
charged to the accounts until the date on which they become payable. The rule
applies mutatis mutandis to a cheque in payment of Government dues or in
settlement of other transactions received and accepted in accordance with the
provision of Rule 8.
BANK DRAFTS AND MILITARY TREASURE REMITTANCES
303. Disbursing officers of the Defence Accounts Department in India are
authorised to issue cheques on any Government treasury -or sub-treasury in India.
Other disbursing officers of defence services desiring to remit money to stations in
India where they have no assignment will obtain Reserve Bank or State Bank of
India, Bank Drafts or Military Treasure Remittances, as the case may be, from the
nearest Treasury or branch of the Reserve Bank or State Bank of India, in
accordance with the instructions contained in Part XII of the Treasury Rules.
304. Remittance by Government drafts or MTRs is subject to the following
conditions: (i)
Drafts of MTRs will be issued for a minimum amount of Rs. 25 except in
special circumstances, such as remittances of sepoys, sailors and airmen
subject to Army Act, 1950/ Navy Act, 1957/Air Force Act, 1950, and of
enrolled non-combatants mentioned in RAT Rule 203 holding rank below
that of a naik or corresponding rank in the Navy/Air Force or for the
remittance of the surplus of the estates of deceased persons and of the
property of deserters, subject to the Army Act, 1950/Navy Act, 1957/Air,
Force Act, 1950. The limit of Government draft/MTR obtainable for private
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(ii)
(iii)
(iv)
(v)
(vi)
combatant (specified above) proceeding on leave, the amount of a month's

pay and allowances of the remitter.
Defence Services disbursing officers requiring a Bank draft or. MTR will
tender with the money (cheque) a formal application on IAFA-610. The
application should contain a certificate that the draft or remittance is
required for bonafide public purpose and should also describe the object of
the remittance. The officer applying for the Bank draft should add the word
"only" after the name of the payee in the application so that the issuing
officer may prepare the draft accordingly.
It shall not, however, be permissible for any Government officer himself to
add the word "only" after the name of the payee of the draft-in any case in
which the issuing office for any reason, fails to add the word themselves.
In obtaining Bank drafts for remittance of moneys on Government account
the following instructions should be observed: (a) The issuing office should be requested to cross all drafts for
payments on account of inter-departmental or inter-Government dues,
whether drawn on an office of the Reserve Bank or on any of its agencies
including a treasury agency, and the words "For Credit to Govt. Account not
payable in Cash" written between the lines.
(b) Drafts in payment, of personal claims of an individual (whether
Government servant or not) a firm or company, a statutory body etc., should
be issued invariably with the addition of the words "or order" after the name
of the payee on the draft. Such drafts if drawn on an office of the Reserve
Bank of India or any of its agencies other than treasury agency should be
crossed with the words ". . . . . . . . . . .and Co" between the crossing unless
the payee specifically asks for an open draft in which case it need not be
crossed.
In the case of remittances of sepoys, sailors, airmen and enrolled
noncombatants, the Commanding Officer will forward the drafts or the
MTRs to the payee direct. Descriptive rolls of the payees, duly' filled in and
signed, will at the same time be sent to the Treasury Officer or Military
Treasure Chest Officer concerned. If the- payee be unable to attend the
treasury but has given the necessary authority, or in the case of demise of
such a payee, the payment be made to the Adjutant of the regiment or the
CO Ship/establishment in the case of sailors.Drafts or MTRs which are not presented for payment before the end of the
third account year after that m which they are issued, shall lapse. For
payment of lapsed drafts/MTRs the payee should address the Currency
Officer/Accountant General.
Drafts or MTRs which are outstanding for more than -six months can be
paid only after obtaining necessary confirmation from the drawing officer.
Drafts or MTRs for remittances of sepoys, sailors, and airmen ànd enrolled
non-combatants not presented for payment within six months from the date
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of issue, shall be considered as cancelled. Drafts or MTRs thus becoming

incurrent shall be returned by the payee to the drawer for the issue of a fresh
draft or M t R or for the refund of the amount, as may be required.
(vii) When a draft or MTR is either lost or destroyed, an application for the issue
of a duplicate should be made without delay (in any case before it has
lapsed), to the drawing officer who may without reference to the Currency
Officer, grant it to the party who obtained the original, or to the payee, or to
the legal representative of either but to no other person. If the draft or MTR
should pot have been presented for payment within three months, it will be
necessary for the applicant to produce a certificate of non-payment from the
person or office on which it was drawn; but the issue of this certificate will
be no bar to the payment of the lost draft or MTR if presented before the
duplicate is paid.
In the event of the loss of both original and duplicate, a triplicate may be
applied for on the same terms as. the duplicate, the non payment of the
others being certified. Neither duplicate nor triplicate shall be issued without
reference to the Currency Officer (or the Accountant General, in the case of
MTR) if the draft or MTR has lapsed.
(viii) If a Bank draft/MTR issued in respect of the remittances of a sepoy, sailor
or airman or enrolled non-combatant is lost in transit, the Commanding
Officer will report the loss to the Currency officer/Accountant General for
the refund of the amount to the person indicated.
(ix) A Bank draft can only be exchanged for another if the payee be a
Government officer- and requires the draft to be exchanged for reasons to be
stated in his application.
Note- All gazetted officers of the Defence Accounts Department are authorised to
issue Bank drafts.
SEPARATE CHEQUE BOOK FOR EACH TREASURY, SUB TREASURY,
OR BANK
305. Except in the case of offices using cheque perforating machines, a separate
cheque book shall be used for each head treasury, sub-treasury or bank.
HOW CROSS-ENFACEMENT SHALL BE MADE ON CHEQUES
306. The cross-enfacement on each cheque should express in words the sum of
rupees next above that stated in the body of the cheque; thus if the cheque is for
rupees one hundred and twenty and annas four, the enfacement should read "under
rupees one hundred and twenty one". The cross entry is 'not necessary if the
amount in words is typed perforated by special cheque writing machine.
SAFEGUARD AGAINST MISAPPROPRIATION OR LOSSOF A CHEQUE
OR DRAFT
07. As a safeguard against the possibility of a cheque or Bank Draft being
misappropriated or lost after it has been endorsed by the person in whose favour it
has been drawn and before it reaches the cashier, the following procedure shall be
observed.
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(i)
The person concerned shall see that every cheque or Bank draft is
entered in the Cash Book immediately after receipt. He shall initial
the entry in the cash book before he endorses the cheque or Bank
draft for realization.
(ii) He shall also obtain the initials of the cashier in the cash book in
token of the latter having received the cheque or Bank draft for
realization, before handing over the endorsed cheque or bank draft to
the cashier.
PARTICULAR CONTROLLER OF DEFENCE ACCOUNTS TO BE
NOTED ON CHEQUES OR OTHER DOCUMENTS
308. In order to ensure that no inconvenience is caused to civil account officers
in determining the particular Controller of Defence Accounts against whom debits
should be raised for sums paid by civil treasuries or banks on account of Defence
Services transactions, each officer who draws money be issuing a cheque, Bank
draft or payment older (Bank drafts obtained. in lieu of cash or cheque excepted),
as a Defence Services disbursement, shall state on the cheque or other document
the particular Controller of Defence Accounts against whom the amounts should
be debited, special care being taken to indicate the correct allocation.
MODE OF REMITTANCE OF PUBLIC MONEY TO OTHER STATIONS
AND MAINTENANCE OF BANK DRAFTS AND MONEY ORDER
REGISTERS
309. (i) In all cases in which officers commanding units and formations are
required to remit public money (deferred pay. and gratuities excepted) to another
station they shall either ask the Controller of Defence Accounts to issue a cheque
or they shall themselves issue cheques if they have assignments for this purpose at
those stations provided that the amounts are due to private persons or the
Government officers. It however, this is not the case, they shall remit the money
by means of a postal money order if the amount is less than Rs. 25 recovering the
money order commission from the dues of the payees, if free remittance is not
authorised. But, if the amount involved is Rs. 25 or more they shall obtain a Bank
draft from the local Treasury/Bank in India. In the case of remittances of sepoys,
sailors and airmen subject to the Army Act, 1950/Navy Act, 1957/Air Force Act,
1950, and enrolled non-combatants mentioned in RAI Rule 203, holding a rank
below that of a naik or corresponding rank in the Navy/Air force, or remittances of
the surplus of the estates of deceased persons and of the property of deserters
subject to the Army Act, 1950/Navy Act, 1957/Air Force Act, 1950, however,
Bank drafts shall be used, if practicable, irrespective of the sum involved. In
exceptional circumstances (e.g., if ill-health, or the distance of his home from the
nearest treasury, renders it impracticable for a man to go to the treasury) the pay,
deferred pay, gratuity and other credit balances due to JCOs and men on leave
pending retirement/discharge, may, at the discretion of the commanding officer, if
the remittee so desires and if he undertakes the risk of loss involved, be sent to him
by postal money order, the charge for the money order commission being borne by
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him. In no cases shall public money be remitted by means of Government

currency notes in insured covers through the post office.
In the case of establishments, employed at stations where there is no
treasury and at district stallion stands located in the various horse and mule
breeding areas under the control of the Remount & Veterinary Corps, remittance
by postal money order of their pay and allowances maybe made, irrespective of
the amount involved whenever such' a course in more economical.
(ii) Defence Services disbursing officers, other than officers of the Defence
Accounts Department, having assignments on Treasuries/Banks, requiring Bank
drafts shall send a requisition for
Bank drafts, together with .a cheque for the- aggregate value thereof to the
Treasury/Bank on which, they have got an assignment, with a request to cash the
cheque "by transfer" and issue the required Bank drafts in lieu thereof,
(iii) All Defence Services officers remitting money by Bank drafts or money
orders to other stations shall observe the following procedure with a view to
checking the proper disposal of such remittances : (a) When sending a requisition or request for Bank drafts to the
Treasury/Bank officer or the Controller of Defence Accounts concerned,
IAFA-610 shall be prepared in duplicate, one copy with the required cash or
cheque, as the case may be, being sent to the authorities responsible for the
issue of the Bank drafts and the other kept by the officer making the
requisition. When the Bank drafts are received, they shall be checked at
once with the duplicate copy of the requisition, columns (1) and (2) of
which shall then be filled up before the Bank drafts are sent to their proper
destination. The duplicate copies of IAFA-610 shall then be placed in a
special file which shall serve the purpose of register of Hank drafts.
(b) Defence Services officers remitting money by postal money order shall
maintain a check register of money orders in IAFZ-2067, keep it posted up
to date, initial each item as it occurs in the column provided for the purpose,
keep payee's receipts for these money orders on record and re-credit in their
cash book amounts on account of undelivered money orders. See also
Instruction No. 738, RAI and Instruction No. 587, Regulations for the
Indian Air Force.
(iv) The Checks prescribed above shall be applied carefully and intelligently
by officers responsible of the doing so, and they shall be held liable for any loss
which may be caused to the State owing to their negligence or carelessness in the
matter.
(v) The amount spent on account of the money order commision, except
when It is deducted from the dues of the payees vide clause (i) above, shall be
recovered from Government in the usual manner on contingent bills duly
supported by postal receipts and treated as ordinary contingent expenditure
debatable against the provision made in Defence Services Estimates for
miscellaneous expenses.
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CASH ASSIGNMENTS-GENERAL RULES

310. Within the limits of budget' provision, Controllers of Defence Accounts are
authorised to draw cheques on the Reserve Bank of India in Calcutta, Bombay,
Madras and Delhi, the State Bank of India at places-where the cash business of
Government is conducted by that bank, or on a Government treasury or subtreasury at any other place in India. In-case of other defence disbursing officers
who are allowed to draw funds by cheques for their own disbursements,
assignments of funds are arranged with treasuries by the Controllers of Defence
Accounts who will forward copies of such assignments, if necessary to the
Reserve Bank of India or the State Bank of India, as the case may be. Ordinarily
annual estimates of such assignments are prepared, but supplementary assignments
ate also arrange by the Controllers of Defence Accounts when necessity arises.
As regards the transfer of an assignment from one Defence disbursing
officer to another, the necessary funds should be surrendered to the Controller of
Defence Accounts by the officer desiring such a transfer. The former will arrange
for a supplementary assignment for the requisite amount in favour of the other
disbursing officer.
Note 1.-A Defence disbursing officer who is granted an assignment at a
Treasury/Bank shall before commencing to draw up on the -account, forward his
specimen signature, duly attested by then senior disbursing officer of the
Headquarters to which he is attached, to the Treasury/Bank. The disbursing officer
shall only commence to operate his account on receiving intimation that his
signature has been recorded.
Note 2.-When assignments on Treasuries or the Bank are granted in respect of
training grants administered by the Area or Independent Area Commander, every
officer who draws cheques against such assignments will maintain a pass book in
IAFZ-2108; which will be sent periodically to the treasury or the bank to be
completed for the register of cheques paid, and always. Immediately after the close
of the month. On the return of the book from the Treasury or the Bank, the Area or
Independent Area Commander will satisfy himself as to the accuracy of the
drawings during the month and of the undrawn balance.
PAYMENTS MADE AGAINST ASSIGNMENTS
311. Payments are made by Treasury Officers or the Bank against t ese
assignments provided that the disbursements do not exceed the amount for which
provision has been made up to that period in the annual and supplementary
estimates.
WATCH OVER DRAWINGS AGAINST ASSIGNMENTS
12. Every disbursing officer must watch his demands, on his own an on the
assignments of other officers subordinate to him. Should his drawings appear
likely to exceed his credits he will apply on IAFA-213 for a supplementary
assignment.
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TRANSFER OF ASSIGNMENT
313. A disbursing officer may arrange, in communication with the Controller of
Defence Accounts for the transfer of his assignment, or any portion thereof, from
one treasury or the bank to another.
CASH ASSIGNMENTS-HOW OBTAINED AND DRAWN AGAINST
314. Every disbursing officer is required to furnish to the Controller of Defence
Accounts, by the first January in each year, with an estimate (IAFA-213) of his
cash requirements for the ensuing year, stowing the amount necessary for each
month and the Treasury or the Bank at which the assignments are required. He will
draw against the sum assigned to him exclusively by cheques for which purpose
separate cheque books for each Treasury or the Bank, to be drawn upon will be
supplied by the Controller of Defence Accounts concerned.
In the case of periodically recurring payments which have to be made at
stations other than that at which a disbursing officer is located, he will arrange for
cash assignments on the Treasuries or the Bank nearest to the stations at which the
payments are to be made. Care must be taken that assignment are-obtained in all
cases where this method is suitable i.e., where the fact of regular payments having
to be made, can be foreseen and provided for.
The drawings of any month added to the sums drawn in previous months of
the same official year must not exceed the amount for which provision has been
made up to that period in the annual of supplementary estimate. Any balance
unpaid on the last day of the' financial year will lapse, except as regards cheques
drawn before but paid after the end of the year, the amounts of which will be taken
against the balance of the assignment of the year in which the cheques, were
drawn.
In the case of Indian Navy, the procedure laid down above applies to
Establishments only. Commanding Officer of all ships 'will be provided by the
Controller of Defence Accounts (Navy) with warrants for money indicating the
limits up to which the amounts can be drawn in any one month. All such warrants
expire on the 31st March of each year, when they should be returned to the
Controller of Defence Accounts (Navy), Bombay for record. For detailed
procedure as to how payments are drawn on these warrants, see Financial
Regulations, part II.
OFFICERS AUTHORISED TO HAVE CASH ASSIGNMENTS
315. Only the under mentioned officers are authorised to have cash assignments
in their favour in the Treasury or Bank, against which they shall operate
exclusively by cheques in the prescribed form to be obtained by them direct - from
the Controller of Defence Accounts concerned. In all other cases payments are
made direct by the Defence Accounts Department: (1) Officers Commanding Remount Depots Commandant Enquine
Breeding Studs and Area Remount Officers.
(2) DDs MF.
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(3)
Recruiting and Assistant Recruiting Officers for Gorkhas, Kunraghat,

Ghoom and Laheria Sarai, for disbursement on account of units with
which they deal.
(4) Cs, WE, GEs, and SDO if an AE.
(5) The D.C.O.A.S., the E-in-C, GOsC-in-C, Formation Commanders,
and Officers Commanding, S & M Units, only for the training grants
allotted to them, when it is not convenient to arrange for the amounts
allotted to be` paid into the State Bank of India or the Reserve Bank
of India to be handled as ordinary current accounts.
(6) An annual assignment at the disposal of the Indian Embassy in Nepal
for the payment of dues to Gorkha officers/other ranks on furlough
leave from Gorkha units.
(7) The Commanding Officers of Aircraft Carriers and Cruisers.
(8) The Commanding officers of Establishments.
(9) The Supply Officer in charge, Naval Pay Office, Bombay.
(10) The Base Supply Officers at Bombay, Cochin and Visakhapatnam.
(11) The CAO, Ministry of Defence, only for payment of advances of
TA/DA to Service Officers employed, in Army Headquarters and
Inter-Services Organisations [Except R& D Organization] in
emergent cases when it -is not at all possible to obtain the same from
the Controller of Defence Accounts concerned in the normal course.
(12) Director Weapons and Electronics Systems Engineering
Establishment, Min of Defence New Delhi.
(13) Directorate R and D HQrs for the payment of Advances of TA/DA to
service officers/civilian officers and the staff of DRDO and also, the
expenditure on account of Telephone/Telex bills and other urgent
departmental expenditure.
(14) DMDE, Secunderabad for payment in respect of the following items
of expenditure from cash assignment of Rs. 2 lakhs (Rupees Two
takhs only) per. month.
(a) TA/DA of officers and members of staff of DMDE.
(b) Purchase of Stores.
(c) Hire charges of office buildings.
(d) Electricity bills in respect of office premises.
(e) Telephone bills.
(f) Telex bills.
(g) Conservancy.
(h) Contracts for maintenance of office equipment and other
maintenance contracts.
(i) Hiring of transport and
(j) Project/Incidental to project.
(15) SBC, Visakhapatnam for payment in respect of the following ,items
of expenditure from cash assignment of Rs. 2 lakhs (Rupees two lakhs only).
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(a) TA/DA,of officers and members of staff of SBC.

(b) Purchase of stores.
(c) Telephone bills.
(d) Telex bills.
(e) Conservancy.
(f) Contracts for maintenance of office equipment and other maintenance
contracts.
(g) Hiring of transport and
(h) Project/Incidental to project.
Note.-The assignment in favour of the Commanding officers of Aircraft carriers
and Cruisers will be arranged on the Reserve Bank of India, Bombay.
All ordinary departmental expenditure except pay and allowances of
establishments which are paid by the Controller of Defence Accounts' after preaudit will be met from the drawals against these assignments. As an exception to
this rule, however, both permanent and temporary Class 1V establishments of
Remount Depots, Equine Breeding Studs and Breeding Areas may, with the
concurrence of the Controller of Defence Accounts concerned, be paid from cash
assignments, subject to post-audit of the charges by that officer.
Note- Advances on account of travelling allowance/dally allowance to the extent
admissible may be drawn from the cash assignments by the civil of Military Farms
in emergent and; exceptional circumstances, where time does not permit of the
same being obtained from the Controller of Defence Accounts concerned In the
normal course.
The following accounts shall be submitted by the, above mentioned officers
to the Controller of Defence Accounts concerned: By (1), and (4) and (11) Cash account current.
By (2)
Accounts laid down in Regulations for Military
Farms.
By (3) and (6)
General state of accounts.
By (5)
Accounts laid down in the relevant appendices of
FR Part II.
By (7) to (10)
Accounts laid down in Chapter XII of Financial
Regulations, Part II.
ADDITIONAL FUNDS IN EMERGENCIES
316. WHEN troops are ordered to move at less than 48 hours notice on
operations or in. aid of civil power, units and formations in need of funds to meet
anticipated expenses on services and supplies and for which funds are not.
available from the normal sources may obtain the same on a Civil Treasury or the
Bank on the authority of an Emergency Cash Requisition (IAFA- 205). In such
circumstances, the authority sanctioning the move will specifically authorise that
funds may be drawn on Emergency Cash Requisition for such purpose and will at
its discretion either endorse a copy of the movement order to the C.D.A.
concerned or communicate the fact to him separately.
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Note:-Emergency Cash Requisition will not be signed by any one except the
Officer commanding, Station or, in the, absence of the permanent. Incumbent, by
the officer carrying out the duties of the officer Commanding, Station not below
the rank of, a Major. It will be the personal responsibility of the Officer sighing the
Emergency Cash Requisition to ensure that the money- is utilized for the purpose
for which it was drawn. Within 48 hours of the drawal of the money he will render
to the authority sanctioning the move a certificate to the effect that the money has
In fact been expended for the authorised purpose.
317 to 3 24 Blank
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CHAPTER-XIV TELEPHONES
ECONOMY IN THE USE OF TELEPHONES
325. Although telephones are recognised as a necessity in the interests of
efficiency, every endeavour shall be made to restrict, expenditure on them to the
minimum.
The criteria mentioned, under Rule 330 (i) should be kept in view for the
purpose of allotment of telephones within a unit/formation/ship/establishment and
for sanctioning new connections.
CONTROLLING/ALLOTTING AND ADMINISTERING AUTHORITIES
IN RESPECT OF TELEPHONES
Functions
326. The Government of India, Ministry of Defence will lay, down the general
policy and scales for the provision of telephones in consultation with the
controlling authority as shown in Rule 327 below This is done in the interest of
uniformity, security, efficiency and economy in provisioning of telephones fall
formations and units Allotting authority will allot telephones in accordance with
the scale laid down from time to time. Where the scales are given as a genera
guide only the allotting authority will allot telephones to meet the actual
requirements only consistent with economy and efficiency. The administering
authority will arrange provision of the telephones through Posts and Telegraphs
Department where necessary and payment of all charges in respect of all the
telephones.
327. Except as provided for in Rule 328 (ii), all Army/Navy/Air Force telephone
connections, trunk telephones and telegraphs circuits including those required for
departmental services and for Army/Navy/Air Headquarters shall be allotted,
controlled and administered by the officers as under : -
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Establishment
All Inter Services
Organisations
and installations in
Commands paid
from Defence
Services
Estimates.
Command
Headquarter
(Army) and all
Units under
Command.
Naval
Headquarters/
Command
Headquarters/
Area
Headquarters/
ships and
establishments
under direct
control of Naval
Headquarters
Formation under
their
administration
control.
Air Headquarters
and all units under
Air Headquarters.
Command
Headquarters (AF)
and all units under
Command.
Controlling
authorities
Chief of the
Army Staff
Allotting
authorities
Chief of the
Army Staff
Administering
authorities
GOs C-inCommands
Chief of the
Army Staff
GOC-in-C
Command
GOC-in-C
Command
Vice Chief of
the Naval
Staff
Vice Chief of
the Naval
Staff
Vice Chief of
the Naval Staff
Flag Officer
Commanding
in-chief
Flag Officer
Commanding
in-chief
Flag Officer
Commanding
in-chief
The Chief of
the Air staff
The Chief of
the Air staff
The Chief of
the Air staff
AOC-in-C
Commands
AOC-in-C
Commands
AOC-in-C
Commands
Remarks
Except that where for
operational or technical
convenience, telephones
for inter. Services
Organisation are
provided off the
exchange of a particular
service, that service will
bear the cost thereof and
the Head of that service
will then be the
Controlling/ Allotting/
administering Authority.
Note-In the case of the telephones for the Army, G.O .C.-In-C Will be the allotting
authority In respect of telephones provided to formation and units under Command
In the following cases: (a) where it- is specified in the scale that it is meant only as a guide and
provision will be made in accordance with the actual requirements.
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(b)
Temporary telephones to be provided out of the 10% reserve allotted

to the Commands.
GRANTS OF TELEPHONES
328. (i) Appropriations to meet charges in respect of telephones, trunk telephones
and telegraphs circuits are included in the annual budget estimates under Minor
Head 800-other Expenditure Sub Head B Mise (i) Telephone charges of Major
head 2076-DSArmy, Minor Head 800 (e) of Major Head 2077 Minor Head 800-(f)
of Major Head 2078-Air Force. These are exclusive of the provisions made under
other heads for establishments mentioned in (ii) below. Administering authorities
concerned shall be informed by the Services Headquarters of the amounts
available for expenditure when the final allotments under these heads have been
determined. This appropriation will not be utilised for any purpose other than the
provision of telephones, trunk telephones and telegraphs circuits and other charges
connected with the installation and working of telephones. Similarly, it may not be
supplemented by funds which may be available locally, without prior references to
the Service Headquarters.
(ii) The following table shows controlling, allotting and administering
authorities and how charges under "other heads" sanctioned in (i) above are met:
Establishment
(a) (i) Army Head

quarters
&
units directly
under Army H.Q
(ii) Inter Services
Organisations
other than those
mentioned under
Rule 327.
(b) Military Farms
Controlling/
allotting/
Administering
authorities
The Chief of the
Army Staff
Heads under
which cost is
debitable
Do.
Do.
Do.
MinorHead5-(8)
of Major Head
269-Army
Remarks
Minor Head
11-B(a)(8)(a)
No
expenditure
on the item
may be
incurred
unless funds
are available
and that head
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(c) Military Engineer

Services see Note
(2) below.
Do.
(a) MES
Offices (i)
other than
ESDs-Minor
Head
11-B(a)(9) (c)
(ii) ESD-Minor
Head 11- (a)
(14) (b)
(b) Power
Houses,
pumping
installations and
work-shops.
Minor Head
10-C(e)
(d) (i) Ordnance and Director General

Clothing Factories
of Ordnance
not required for
Factories
purely Defence
purposes.
(ii) Ordnance and The Chief of the

Clothing Factories Army Staff.
required for
purely Defence
Purposes.
No
expenditure
may be
incurred
unless funds
are available
under that
head.
MinorHead 6-A
(2) (1)
Note 1.-Where telephones are connected to a Services exchange or are

provided from a pool of civil telephones specifically set aside by Posts and
Telegraphs Department for the Services, the sanctions granted vide sub pares (e)
and (f) above, will require prior approval by the controlling authority as specified
in Rule 327.
Note 2.-In the case of M.E.S. the scale issued by Army Headquarters is only
for guidance in order to assist planning of communications and uniformity of
provisioning. Actual allotment will be made by Commands in consultation with
Chief Engineer at the Headquarters Commands. These telephones will be
administered by G.Os, C-in-C Commands.
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CHARGES MET FROM THE GRANTS MADE TO THE

ADMINISTERING AUTHORITIES
329. All charges connected with telephone installations except those mentioned
in Rule 328- (ii) will be met by the administering authorities specified in Rule 327
from the allotments referred to in Rule 328 (i) above.
The items on which the charges can be incurred will be as indicated below: (a) Telephones.
(b) Maintenance of internal Indian Posts and Telegraphs Department
connections within Ordnance Depots.
(c) Installation and working of Indian, Posts, and Telegraphs Department
connections and other local military telephone systems excluding
Army Ordnance Corps independent internal telephone systems not
connected with Posts and Telegraphs. Departments lines and
telephones.(d) All, types of telephone exchanges of the services.
(e) Non-exchange lines.
(f)
Point to point lines.
(g) Junction lines.
(h) Remote control circuits.
(i)
Inter-communication system.
(j)
Secraphones (Privacy equipment)
(k) Electric clocks.
(1) Electric call Bells.
(m) Message Rate Bills.
(n) Trunk telephones and telegraphs circuits.
GUIDING PRINCIPLES FOR FORMULATING SCALES FOR DEFENCE
SERVICES TELEPHONES
330. (i) In formulating scales for Defence Services telephones, the following
criteria will govern the provision, of office/residential for officers at the Service
Headquarters and at lower levels :
(a) Telephones will not normally be provided for non-gazetted officers.
(b) No telephones will be provided in respect of institutions not financed
from public funds.
(c) Broadly speaking, the number of telephones to be installed should be
the minimum required consistent with efficiency.
(d) Wherever possible, parallel extensions to the main line should be
provided. The decision as to whether a parallel extension, or a main
extension in lieu, should be provided will be determined by the
financial consideration vis-a-vis operational and administrative
necessity.
(e) Not more than one telephone should be installed in a single room
occupied by one officer, except where operational/administrative
reasons require otherwise.
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(f)
Where the same room in office is shared by two or more officers, 'the
provision of an additional main or parallel extension should be
governed by operational or administrative necessity.
(g) A telephone connection for office and more particularly at residence
should be given only if the need for it exists and not because of the
rank and status of the officer concerned.
(h) In sanctioning telephones for residences, the need in the, public
interest, should be clearly established and scrutiny should be far
stricter than for office connections.
(i)
When officers are living in messes or clubs provided with a general
telephone, separate residential telephones will not be installed unless
their installation, in the opinion of the Chief of the Army Staff/Chief
of the Naval Staff/Chief of the Air Staff, is in the interest of the
Service.
(ii) Having allotted telephones on the basis of (i) above, a reserve of 5%
for Service Headquarters and 10% for Commands/lower formations
out of the total authorised in each case should be allowed to each of
the three Services to enable the Controlling/allotting authorities to
meet essential and emergent requirements.
331. The rules regarding procedure for submission of bills for and adjustment of
telephone charges are contained in Financial Regulations, Part II.
332 to 335 blank.
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SECTION II Rules Peculiar to the Army and/or Air Force

CHAPTER-XV
RULES PECULIAR TO THE ARMY AND/OR AIR

FORCE
REALLOTMENTS AND ALTERATIONS

336. The reallotments of establishments within the complements sanctioned for
each Area or Independent Area may be made by administrative officers concerned
who will report all such changes to the Defence Accounts Department. When the
entertainment of a new permanent establishment which cannot be met by
reallotment is proposed, a letter fully explaining the grounds of the proposition
together with a tabular statement (IAFA-457) is to be prepared in duplicate and
submitted for orders of Government.
COLLECTIVE FINES ON UNITS
337. - When collective fines are imposed on a unit, under the operation o the Army
of Air Force Act for losses or thefts of arms the actual value of the weapons lost or
stolen should alone be credited to Government, the balance of the fines realised
should be retained by the unit concerned and applied to the use of the regimental
funds. In the event of recovery of the missing arms within 6 months of date of
loss, the amount paid to Government will be recredited to the unit and the balance
of the fine originally levied, less any expenses incurred in the recovery and repair,
if necessary, of the arms should be refunded to the unit on which the tine was
imposed.
338 to 350 Blank.
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SECTION III
CHAPTER-XVI RULES PECULIAR TO THE INDIAN NAVY
SUB-SECTION I-GENERAL
351. The provisions of Chapter I to XIV and Appendices I to VII of these
Regulations will, unless otherwise provided for, apply mutatis mutandis to the
Indian Navy. The provisions peculiar to the Indian Navy are, however, given in the
succeeding rules.
SUB-SECTION II-RE-APPROPRIATION
PROVISION FOR RECOVERABLE SERVICES
APPROPRIATED WITHOUT SPECIAL SANCTION
NOT
TO
BE
352-71. Provision for recoverable services on account of works to be executed in

the Dockyard for State Governments, etc., is not to be appropriated to meet
expenditure on works for the IN without the previous sanction of the Government
of India. Every application for sanction to this end sh'6uld be accompanied by a
statement showing the expenditure involved, as also the recoveries budgetted for
whether shown as deductions form expenditure or as receipts.
SUB-SECTION III-BUDGET AND CONTROL OF EXPENDITURE
COST OF SUPPLIES TO BE BUDGETTED FOR
353. The cost of supplies likely to be required from or supplied to, to other
departments is to be budgetted for by the Supplying Department on estimates
furnished by the receiving department (see also orders contained in annexure to
this Chapter). If work will be required by the Dockyard to be executed by any
Defence Factor or Establishment, the Chief' of the Naval Staff should when
preparing the Naval estimate, intimate the nature and probable extent of the work
to the Superintendent of Factory concerned who will advise him of the probable
cost, which will be included in the Naval estimate.
ESTIMATES OF ORDNANCE STORES
354. Funds for the provision of Stores and for the carrying out of ordnance
services will be budgetted for by the Chief of the Naval Staff, the estimate being
drawn up in consultation with the Director of Ordnance Services/Director General
of Ordnance Factories, where' necessary.
ESTIMATES FOR LABOUR
355. The rules governing the preparation of estimates for labour to be expended
in the Dockyard and materials to be similarly expended or for direct issue in
compliance with indents, are contained, in the annexure to this Chapter.
356. Procedure to be followed in meeting expenditure not include in
estimates...... If, after the estimates have been sanctioned, a requisition is received
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for work to be executed in. the Dockyard for a local Government or other
Department the cost of which will be adjusted by book debit and if the expenditure
to be incurred will cause an excess over the gross amount (irrespective of the
deductions made for anticipated recoveries) provided for expenditure in the
estimates of the IN, the Chief of the Naval Staff will ascertain from the
Government or Department preferring the requisition, whether funds have been
provided in its own estimates to meet the cost, and will at once submit to the
Government of India, an application for a special additional naval grant,
explaining that this is the case. The application should be accompanied by a
statement showing the expenditure involved, as also the recoveries anticipated.
Pending receipt of the Government of India decision, the work may be put in hand
provided that the Government or Department making the requisition states that the
cost can be met from the provision in its own estimates.
Note.-Within the sanctioned limits of the provision for works to be executed
in the Dockyard for Local Government and other -department Major Head 2077ijS-Navy Minor Head -104-Civilians (d) Dockyard 3 Industrial Establishment and
Major Head 2077-DS-Navy, Minor Head 110-Stores (a) Naval Stores any work for
such Government may be carried out, whether such was or was not provided for in
the budget provision.
357, and 358 Blank.
SUB-SECTION IV SUPPLIES AT FOREIGN PORTS
LOCAL PURCHASE OF STORES
359. The purchase of stores including oil fuel, coal, etc., in the local market,
except in emergent or special cases, is prohibited. Stores should be obtained as far
as possible, through the Local Representative of the Government of India who will
make payment, for the supplies arranged for by him. Where there is no
Representative of the Government of India, necessary arrangements for supplies
and settlement of bills will be made by Naval Headquarters. Bills for fresh
provisions, however, are to be settled by the ship concerned before finally leaving
a foreign port. Payments for oil fuel at ports where spine arrangements exist for
such supplies being made by contracted firms will not be made either by the
Representative of the Government of India or the C.O of the ship.
LOCAL PURCHASE OF PETTY ARTICLES
360. Local purchase of minor and petty articles may be made in case o
emergency but if it is found that the articles purchased are unnecessary, or m
excess of the established allowance, the officer who ordered the purchase will be
held personally liable for the expenditure incurred.
PRINCIPLE TO BE FOLLOWED IN MAKING LOCAL PURCHASE
361. Officers should always be guided by the general principle of en endeavoring
to save expense to Government, provided efficiency or orders are not interfered
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with. When deciding on local purchase, officers should consider whether the
purchase cannot be deferred until Government stores are available.
362 to 370 Blank.
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SUB-SECTION VI-VOCABULARY RATES AND PAYMENT ISSUES

RATE BOOK FOR NAVAL STORES (INDIA)
371. Vocabulary and Payment Issue rates for Naval Stores which are used as
issue rates and for preparation of all statistical returns are published by DAFA (N)
in a book called "Rate Book for Navel Stores (India)". Corrections to rates are
published monthly.
Priced Vocabulary And payment Issue Rates -Calculation of
372. The priced Vocabulary and Payment Issue Rates in respect o all categories
of stores including clothing and Mess Traps (but excluding SPDC and Gun
Mounting Stores) are calculated as follows : Imported Stores
(a) Stores purchased from U.K. Admiralty: P V Rate: (i)
Latest invoice price (inclusive of all admirally charges) and special
packing charges, if any, plus
(ii) 5% sea freight on (i) above, plus
(iii) 0.5% on (i) and (ii) above on account of DGISD Departmental
charges for shipping and Marine Insurance, plus
(iv) Customs Duty, where leviable, (at rates shown in Indian Customs
Tariff to be calculated on the total of (i), (ii) and (iii) above, plus
(v) 5% Inland freight (12% in the case of explosives and dangerous
goods) on (i) and (ii) above.
(b) Stores Imported from the U.K./Continent through DGISD, London:
P V Rate:(i)
Latest invoice price including Inland Freight in the country of origin
etc., if any, as shown in the invoice, plus
(ii) 5% sea freight on (i) above, plus
(iii) 1% DGISD Departmental charges on (i) and (ii) above, plus
(iv) Customs Duty, where leviable, (at rates shown in the Indian Customs
Tariff) to be calculated on the total of (i), (ii).and (iii) above, plus
(v) 5% Inland freight (12% in the case of explosives arid dangerous
goods) on (i) and (ii) above.
(c) Stores Imported from U.S.A./Canada through the Indian Supply Mission,
Washington:
P.V.Rate:(i)
Latest invoice price including all charges shown therein, plus
(ii) 20% Sea Freight on (i) above, plus
(iii) 1% on (i) and (ii) above for purchase and shipping and Inspection
charges at actual, plus
(iv) Customs Duty, where leviable, (at rates shown in Indian Customs
Tariff) to, be calculated on the total of (i), (ii) and (iii) above, after
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adding 1% on that total on account of commercial insurance charges

that would have been paid in cases where such insurance charges are
not separately indicated, plus
(v) 5% Inland freight (12%r in case of explosives and dangerous goods)
on (i) and (ii) above.
Indigenous Stores
(a) Centrally purchased stores (through DGS & D, Textile Commissioner tee.)
and stores purchased under Local/Direct purchase powers:PV Rate: (i)
Average purchase price (A/T rates or DGS & D Prices) inclusive of
Sales Tax, Excise Duty, etc. where leviable, plus
(ii) 1% Inspection and Purchasing agency charges on (i) above, plus
(iii) 5% Inland Freight charges on total of (i) and (ii) above.
Note.-P.V. Rate should be fixed/revised only when the quantity purchased
under direct/local purchase powers is intended to replenish stock or to meet
payment issue requirements, if any P.V. Rates are not, however to be fixed/revised
in respect of stores purchased under local/direct Purchase powers, which are
intended to meet immediate and operational requirements of Ships/Establishments
and not to meet any payment issue requirements.
(b) Stores obtained from the Army: P V Rate: Army P V rate.
(c) Stores obtained from DGOF: P V Rate : (i)
Actual cost of production as shown in the statements received from
C.C. of F & A. (Fys), plus
(ii) 1% Inspection charges on (i) above, plus
(iii) 5% Inland Freight (12% in case of explosives and dangerous goods)
on (i) and (ii) above
P. V. Rates worked out as above will be rounded off as follows: (i)
Upto Rs. 10........... To the nearest five Paise.
(ii) Above Rs. 10 and upto Rs. 20............ To the nearest twenty five
Paise.
(iii) Above Rs. 20 and upto Rs. 100. . . . . . . . . . .To the nearest rupee.
(iv) Above Rs. 100 and upto Rs. 200............ To the nearest five rupees.
(v) Above Rs. 200. . . . . . . . . . . . . .To the nearest ten rupees.
(vi) When the rate is below 5 Paise, there will be no. simplification.
When fraction is exactly half, it will be ignored, e.g. 3.5 Paise, Rs.-7.525,
Rs. 11.375, Rs. 21.50, Rs. 107.50 and RS 215 will be rounded off to 3 Paise, Rs.
7.50, Rs. 11.25, Rs. 21, Rs.105 and Rs 210 respectively,
Payment Issue Rates
The payment issue rates in case of Imported/Indigenous Stores will be
worked out as follows: ____________________________________________________________________________________________________________________
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(i)
P V Rate as worked out in each case, plus
(ii) 5% departmental charges on (i) above.
Note 1.-When payment issues are to be made to non entitled personnel,
other Ministries of the Central Government, State Governments, Semi
Governments or private bodies the following extra charges are to be levied:2% on (1) and (ii) above to cover packing and other charges for stores despatched
"Freight to Pay", or 5% on (i) and (ii) above, If Intended to cover freight charges
as well.
Note 2.-Payment issue rates will be simplified to the nearest Paisa at the end
of the calculation.
Note 3.-The above basis of working out the payment issue rates may also be
adopted by C.D.A. (N) for pricing of loss statements, etc.
Stores Manufactured in Dockyard or work undertaken in Dockyard
Production cost will consist of: (i)
P V rates for materials used, plus
(ii) Overhead charges at 5% on materials used vide (i) above plus
(iii) Cost of actual labour, plus
(iv) Overhead charges on labour at a percentage determined shopwise by the
C.D.A. (N) in consultation with the C.S.D. Naval Dockyard, Bombay.
Note.-In the case of manufactured articles being stocked for subsequent
Issue as N.S.O. Stocks, for purposes of arriving at payment Issues, the appropriate
overheads, etc., applicable to payment issues for centrally purchased articles will
be added to the production cost.
REVISION OF PRICED VOCABULARY RATES
373. Priced Vocabulary Rates for Naval Stores will be revised from time to time
as charges occur in the subsequent purchases or invoice rates or actual cost of
manufacture or conversion on which they are based and the rates so revised will be
published monthly by DAFA(N) as corrections to the Rate Book for Naval Stores
(India). They are also revised at any time on the representation of the Chief of the
Naval Staff in cases of important variations in market rates etc. 374 to 378 Blank.
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SUB-SECTION VII-
LOSSES, WASTAGE- AND DAMAGE TO PUBLIC

PROPERTY
VALUATION OF ARTICLES LOST
379. The procedure to be adopted for the valuation of articles lost for purposes of
(1) loss statements, (2) recovery from individuals and (3) recovery from carrying
companies is given below :(1) Loss Statements
The amount to be shown in the loss statements shall be value of the stores
lost, or in the case of stores damaged and in the case of stores which on
examination are found to differ in condition from that under which they were held
on charge, the estimated actual (when known) cost of repairs.
(2) Recovery from individual
In cases where recovery from an individual is involved, the value shall, in
respect of articles other than those specified below, be assessed at Payment Issue
Rates in the manner laid down in Sub-Section V of this Chapter. The value of
these excepted articles shall be assessed as follows: (a) Watches (all description), Chronometers and Clocks Chart house.-Full
value will be charged from the responsible person, unless the circumstances are
considered to be so exceptional as to justify the charge of a smaller sum or the
charge being waived altogether. Such exceptional cases will be submitted to the
Chief of the Naval Staff for decision.
(b) Officer's blankets. -The condition of the articles will be ignored and the
full current Rate Book price of a new blanket will be charged unless there is strong
justification for the recovery of a smaller sum. In the latter event the matter will be
decided in accordance with the principles normally applicable to loss by neglect
subject to the foreging stipulation as regards condition, a special notation by the
Commanding Officer as to the circumstances justifying the lower charges being
made on the relevant form IAFA-498.
(c) Binoculars.-If service binoculars are lost through failure to observe the
instructions for their safe custody, or through their neglect, the whole or part value
will be recovered from -the individuals responsible at the" discretion of the
Commanding Officer. In assessing the amount to be recovered, the current Rate
Book price will be regarded as the value of the binoculars whether they are worn
or not.
(d) Wireless telegraphy gear.-Full value will be charged unless it is clear that
all reasonable precautions were taken to ensure the safe custody of the gear. When
less than full value is charged notation will be made on Form IAFA-498
concerning the circumstances of the loss.
(e) Keys of money and confidential chests.-Uniform charges, as under, will
be made from officers held to be responsible for the loss of the keys of:
Rs.
Chests for confidential documents.................
20
Money chests
. . . .......... . . . . ....... . . . 30
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These amounts are based on the average cost of the necessary repairs and
are subject to variations which will be communicated in Navy Orders from time to
time.
The actual cost of repair, adjustment, etc., will be charged in respect of
chests with combination locks.
(f) (i) When damage done to Barrack building is chargeable to private
individuals, the amount chargeable 'will not be assessed, but the full cost of the
repairs will be claimed from the person responsible for the damage.
(ii) When stores arc damaged by neglect or misconduct the amount to be
charged for such damage will be assessed in the same manner as herein directed
with regard to the stores lost, and with reference also to the amount of damage
done.
(3) Recovery from carrying companies
The following rates are to be adopted for preferring claims against the carrying
companies on account of stores lost: (a) During transit between the supplier and the indenting depot.
(i)
Imported stores
Latest invoice rate (inclusive of actual sea freight; etc plus customs duty if
actually paid.
(ii) Indigenous stores
Average purchase price (latest A/T rate) plus 1% purchasing and inspection
charges, plus freight charges, if any paid for transportation from the source of
supply to the indenting depot.
(b) During transit between one de of to another depot.
(i)
(ii)
Imported Stores
Indigenous Stores
PV rate plus 5% departmental,

charges plus actual freight charges,
if any, from the consignor depot to
the consignee depot.
Note :-However 5% departmental charges will not be added to the P.V. Rate
in respect of claims for losses in transit preferred of railways.
380. to 386 Blank.
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SUB SECTION VIII-CONTRACTS

SUPPLIES TO BE ARRANGED FOR BY CONTRACT
387. Provisions, miscellaneous naval stores and oil fuel, etc., require for
the
services of the IN, should, under the general rules for the supply of articles for the
public service, ordinarily be obtained through the Army Service Corps or the
Ministry of Works, Housing and - Supply and of the Government of India, as the
case may be. Contracts for the supply of these stores shall be arranged for by the
competent Naval authorities only when articles cannot be supplied by the above
sources, or in exceptional circumstances, orders for supplies for immediate
delivery may be given. In the case of small requirements not covered by any
contract and when the urgency is such that it would not be convenient to invite
offers, or in the case of articles of a proprietary character, the "single tender
system" referred to in Rule 232 may be followed.
BY WHOM CONTRACTS ARE TO BE ARRANGED AT VAROIUS PORTS
388. The contracts which may, in exercise of the executive powers of the Union,
be executed on behalf of the President are given in Appendix II to Vol. II of these
Regulations.
In so far as it relates to the powers of concluding contracts Chief of the
Naval Staff is authorised to delegate to lower. Naval authorities his power to
conclude contracts for supply of miscellaneous Navel Stores, when the articles
cannot be supplied by the Director General of Supplies and Disposals. Ordinarily
no such delegation should be made to an authority that holds a rank (or equivalent
rank) below that of a Commander. Once delegation has been made, the authority to
whom it has been made shall be personally responsible for the proper exercise of
such powers in accordance with the rules contained in these Regulations on the
subject.
389. The supply of coal to Indian Navy will normally be arranged through
Government channels and stocks of all kinds of coal required for consumption
during the year will be maintained.
FORMS
390. Tenders for all supplies for which a special form is not prescribed must be
submitted on form Nos. IN-415 (Miscellaneous Naval Stores, provisions, medical
comfort, etc.,) NSO-164 (Repairing and restuffing troops bedding), NSO-165
(Washing Troops Bedding, etc.,); NSO-167 (sail maker's work); NSO-169, (Steam
Coal); NSO-170 (Revised) Bunkering, removing and replacing coal, etc.,
accompanied by, schedule prescribed in each case. The tender form cannot be
altered, otherwise than as provided for thereon, without the sanction of the
Government of India. It will be issued free to the tenderers.
ACCEPTED TENDER TO BE SENT IN ORIGINAL TO CDA (NAVY)
391. When the contract has been made, the accepted tender shall be forwarded in
original to the CDA (N), who, after extracting the information necessary for audit
purposes, will return it, to the competent authority.
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WAIVING OF COMPENSATION FOR BREACH OF A CONTRACT

392. The Chief of the Naval Staff shall exercise discretionary powers upto a limit
of Rs. 5,000 in the matter of waiving compensation due to Government on account
of the failure of a contractor to carry out his contract. In cases where this power is
exercised, a report should be made to the Ministry of Defence through the
CDA (N).
CALCULATION OF EARNEST MONEY
393. Earnest money should be calculated at the following scale: __________________________________________________________________
Value of contracts
Earnest Money
Remarks
__________________________________________________________________
1.
Not exceeding Rs.
2 percent
With a minimum
10,000
of Rs. 25/
2.
Exceeding Rs. 10,000
2 percent,
..
....
but not exceeding Rs.
....
30,000
3.
Exceeding Rs. 30,000
2 percent.
__________________________________________________________________
Note 1. If the amount of earnest money, calculated as' above, would exceed
Rs. 1,500, the actual amount should be specially fixed by the Chief of the Naval
staff. Only In exceptional cases should earnest money in excess .of Rs. 2,000 be
required.
Note 2.-The aggregate value of the estimated supply for the year under each
contact will be taken as the value of the contract.
394 to 396 Blank.
SUB-SECTION IX- RULES FOR THE ADJUSTMENT OF

EXPENDITURE INCURRED IN THE MINISTRY OF DEFENCE ON
BEHALF OF OTHER MINISTRIES, STATE GOVERNMENTS, ETC.
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VESSELS HIRED FROM STATE GOVERNMENT TO REPLACE

TEMPORARILY IN VESSELS
397. The terms and conditions governing the hire of vessels from State
Government- to replace temporarily IN Vessels will be arranged in each case by
the Government of India in communication with the Government concerned, with
reference to the particular conditions, etc., of the case.
CHARGES ON ACCOUNT OF HIRE OF LAUNCHES FOR MILITARY
PURPOSES
398. The charges on- account of launches hired whether by the
ministry
of
Defence or otherwise, for Military purposes (e.g., artillery practice), should be
debited to Army and not to Naval Estimates.
399 to 401 Blank.
SUB-SECTION X-MISCELLANEOUS
NAVAL DOCKYARD ACCOUNTS
402. Instructions regarding the Dockyard Accounts are laid down in "Naval
Dockyard Cost Accounting Instructions".
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FREE ISSUE OF NAVAL STORES AS SAMPLES

403. Free issue of 'Naval Stores as samples to 'the otter Ministries of the
Government of India, i.e. Supply, Ordnance, etc., may be allowed, to guide supply
or manufacture of stores against the indent placed by the Naval Stores Department.
GENERAL RATES
404. The following rates are to be used for the classification and valuation before
and after repair of stores:__________________________________________________________________
Proportion of Rate Book price for a Serviceable article of the same description
Before repair
Mooring
Gear
Anchors
chain
cables &
gear (see
note)
Professional value to
be the full rate book
price less estimated
cost of repair
First fitting
Boats
Articles
requiring
repair
Profes
sional
value
see
rule
405
below
After repair
Furniture
which
had been
in use on
percenta
ge
Professio
nal value
All
other
store
s
(Gen
eral
Rate)
6/10
First fitting
Boats
See
Rule
405
below
Mooring
Anchors
Gear
chain
cables &
gear (see
note)
Full rate book price
Furniture
which had
been in use
on
percentage
Estimated
value
before
repair plus
estimated
cost of
repair
Note: - Chain Cables and gear other than first fitting is to be dealt with under
General Rate.
405. Boats not -in a serviceable condition, are to be classed as follows: Boats for sea service, requiringSlight repair- Such as are considered to be generally in good condition and not
materially reduced in value from age, and can be repaired for sea service at a cost
of not more than a 1/4th of the rate for new boats of the same description.
Large repair- Such as, on account of being defective from age, or having large
defects from other causes, will require an expenditure of more than a 1/4th of the
value of new boats of the same description to put them into a serviceable
condition.
Boats for Harbour service Repairable- Boats which would require an expenditure of more than the value,
of new boats of the same description to make them fit for sea service.
All other boats are to be set apart for sale.
The value of boats before and after repair and the cost of repair will be follows: ____________________________________________________________________________________________________________________
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All
other
stores
Full
rate
book
price
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Proportion of value of a new boat of the same description

Boats
Sea service boats

requiringSlight repair
Large Repair
Harbour service
boatsRepairable
Value before
repair
Cost of repair
(Professional
estimate)
Value after repair
Not less than 3/4 Not more than 1/4

Under 1/2 but not More than 1/4 but
less than 3/10
not more than 1/2
As new
8/10
Not less than1/4
1/2
Not more than1/4
406. In the valuation of sheets, pillow cases, towels, mattresses, pillows, blankets
and similar naval stores after washing, discretions is to be exercised by the
Surveying Officers to assess the articles as "Serviceable after washing" at full Rate
Book Value or "Serviceable worn after washing" at 6/10th the Rate Book Value.
407. Rules 405 and 406 above are also applicable for valuation of stores issued
on loan.
RECOVERY OF CHARGES FROM STATE GOVERNMENTS, PORT
TRUSTS, AND MINISTRY OF TRANSPORT AND COMMUNICATIONS,
ETC., IN RESPECT OF SURVEY, WORK
308. Recoveries at the rate by Government from time to time shall be made on
account of survey work carried out by the survey ships of IN on behalf of the
State Governments. Port Trusts and Ministry to Transport and Communications,
etc.
SUPPLY OF STORES TO PRIVATE INDIVIDUALS
409. Stores should not be issued from the Naval Dockyard or other Naval
formations to private individuals; but the Competent Financial authority may
within his financial powers given in Schedule XI of Appendix II-Part II (Navy) to
Vol. II of these Regulations allow the issue on payment at full repayment issue
rates of sextant-telescopes, binoculars and other navigational and mathematical
instruments required by them in exercise of their duties and of canvases, linen,
duck, devices of flags, "ensigns and other stores which they require for use on
board their vessels and which the competent financial authority is satisfied cannot
be obtained outside the Dockyard or other naval formations.
ISSUE OF COAL TO PRIVATE BODIES
410. The competent financial authority may within his financial powers given in
Schedule XI of Appendix II-Part II (Navy) to Vol., II of these Regulations allow
issue of coal from Naval Stores at full repayment issue rates in cases of extreme
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urgency. Any case in which the value of coal issued exceeds Rs. 1,500 (Rupees
One thousand five hundred only) including overhead charges should be reported to
Government of -India
RECOVERY FOR LOSSES IN TRANSIT
411. Should Government sustain any toss by masons of damage to, or deficiency
in, the quantity of stores delivered by the carrying companies, the value of such
loss is to be recovered as follows from the portion of the freight payable or from
the carrying companies provided the deficiency is not covered by the exceptions in
the Bill of Lading/Invoices.
I.
Description
of stores
Imported
stores
(excluding
Naval
Armament
Stores
explosives)
Recoveries to be
made
Latest Invoice
rate (Inclusive of
actual sea freight
etc.) plus customs
duty, If actually
paid.
How and by whom to be effected

As regards naval stores landed in Bombay recoveries
are made by the Embarkation Commandant, Bombay
according to the particulars furnished by the Senior
Naval Store Officer, Bombay. The responsibility for
handling all claims including those for damage or
short landed items rests on the Embarkation
Commandant, Bombay who will deal with them from
the time of initiation to the time of payment or
rejection.
A copy of the claim will be forwarded by the
Embarkation Commandant, Bombay to the C.D.A. In
whose area the port Is located for warming the
settlement of .the claim. The amount recovered from
the Shipping, company will be credited into the
treasury red treasury receipt forwarded to the C.DA.
In whose area the port is located for adjustment. As
regards, stores landed at Cochin the Naval Store
Officer, Cochin is to handle the claim on account of
stores short-landed or damaged. The claim will be
preferred by the Naval Store Officer, Cochin against
the Shipping company and a copy thereof will be
forwarded .to CDA (N), Bombay to watch settlement.
The amount recovered from the Shipping Company
will be credited Into the treasury and the treasury
receipt forwarded to the C.D.A. (N) for adjustment.
The Director of Logistic Support at N.H.Q and the
Embarkation Commandant at Bombay and Calcutta
are empowered to drop claims in respect of losses of
Imported Defence Stores to the following extent:Director of Logistic Support Upto Rs. 1,000/-, for
each claim.
Embarkation Commandant-Upto Rs. 200/- for each
claim.
Action to regularise the loss consequent on dropping
of claims will be taken by the, Consignees concerned
in the usual manner.
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II.
Imported
Stores
Naval
Armament
StoresExplosives
III.
Indigenous
Stores
during
transit
between the
supplier and
the
Indenting
Depot.
IV.
Imported
Stores and
Indigenous
StoresDuring
Transit from
One Depot
(Station) to
The Naval Armament Supply Officer, Bombay is

responsible for effecting recovery. Claim for short
landed damaged explosives of Defence Services will
be preferred by the Naval Armament Supply Officer,
Bombay. A copy of the claims wig be sent to the CDA
(N), Bombay for watching settlement The amount
recovered tram the 'Shipping Company will be
credited Into the treasury and the treasury receipt
forwarded to the. C.D.A. (N), Bombay for adjustment.
Claims finally repudiated by the Shipping Companies
are promptly reported to the Director of Armament
NHQ for orders. If it is decided that the calms against
the shipping company is to be dropped, it should be
ensured that the Intimation is sent to the consignee
concerned and the C.D.A (N).and acknowledgement
recorded. In case the claim is dropped, relief will be
claimed from the Marine Insurance fund maintained
by the DGISM London or action for regularisation of
the loss taken under normal rules.
Average Purchase The claim will be preferred by the consignee
price (latest A/T
Depot.
rate) plus
When a claim on the railway authorities for loss of
1 % purchasing
stores in transit has been accepted, a copy of the
and Inspection
acceptance letter from them Indicating the total cost
charges plus
accepted together with valuation statement will be
freight charges, if forwarded by the consignee to the CDA's Office.
any, paid for
Debit for the amount will be raised by the CDA
transportation
against the Railway Accounts Officer concerned
from the
through the Controller General of Accounts, New
source of Supply Delhi duly supported by the original valuation
to the Indenting
statement and credit taken to the relevant stoma head
Depot.
of account. If the Railway refuses to admit the claim,
the loss will be dealt with by the competent financial
authority.
PV Rate plus 5% Same as III above.
departmental
charges plus
actual freight
charges, If any,
from the
consignor depot
to the consignee
Depot.
ADJUSTMENT, OF LOSSES IN TRANSIT

412. The losses in consignment of stores, which occur in transit between India a,
and overseas stations and vice versa should be adjusted at the consignee's end of
the journey. The consignee will not accept any responsibility for deficiencies in
stores on arrival at their destination unless he is satisfied on his own investigation
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that the loss was due to defective packing. Important deficiencies in consignments
or defects in packing should, however, be reported by the consignee to the
consignor for investigations.
REFUND OF CUSTOMS DUTY ON GOODS, SHORT-LANDED
413. Authorities responsible for preferring claims for shortages stores during
transit by, sea will also be responsible for submitting claims for refunds of customs
duty on goods short landed. Such claims will be submitted to the Assistant
Collector of customs concerned within three months from the date on which the
duty due' on the bill of entry is entered in the register maintained at the customs
house for this purpose, otherwise they will become time-barred under section 40 of
the Sea Customs Act, 1878.
PORT CHARGES
414. Port dues and other charges, shall be levied by the Port. Trusts according to
their Schedules approved by the Government.
Foreign or Commonwealth men-of-war paying 'formal' or, 'informal'
courtesy visit to Indian Ports viz. Bombay, Calcutta, Madras, Vishakhapatnam and
Cochin are granted exemption from levy of charges on account of supply of water
and Cranes, boat hire, mooring dock dues and supply of tugs when such services
are rendered by the, local Naval authorities. Debit for the similar services rendered
by the Port Trusts will be accepted by the Navy and charged to Defence Service
Estimates.
In case where charges involved on account of these services are abnormal,
the matter is to be referred to NHO for obtaining suitable Government orders.
Charges of similar nature will, however, be levied from foreign men-of-war on
routine or operational visits to Indian Ports.
415. No charges shall be levied by Government moorings whether used for
Government vessels or men-of-war belonging to Her Majesty or any foreign
power. If however, Government vessels require special moorings to be laid and
maintained, the cost involved shall be recovered from the party concerned.
416 to 430 Blank.
ANNEXURE
(Referred to in rules 353, 355 and 356)
Rules governing the preparation of estimates of labour and material to be
expended in Dockyard and for the provision of expenditure on stores in
compliance with indents
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I.
The provision for labour and stores will he limited to the following services
in the Dockyard :
(a) The repair or refit of IN Ships which may be necessary to keep them
sea worthy and the conversion, alteration or addition to such ships as may
be ordered by competent authority.
(b) The, manufacture of repair of boats, barges, yard crafts, etc., required
and authorised for the efficient functioning of the I.N.
(c) The carrying out of the work in item (a) and (b) above for ship other
Navies when so authorised by rule or special sanction of Government and
on a payment basis unless otherwise ordered by competent authority.
(d) To carry out work on payment or book adjustment of other '
departments of Defence services, Central Government and State
Governments' as authorised by Competent Authority.
(e) To carry out work on payment for quasi-Government Departments,
private firms, private individuals and Dockyard personnel when such . work
can be undertaken without detriment or hindrance to the progress of work
under item (a) to (d) above.
(f)
To carry out original major works, original minor works or abnormal
repairs, etc., to Dockyard buildings for which Captain Superintendent is
responsible or which he is authorised to, in accordance with the provisions
of Naval Works Procedure.
II.
The issue of stores to ships/establishments will be regulated in accordance
with regulations and other orders issued by Government.
III. The detailed estimates for works of construction and repairs, etc., to be
executed in the Dockyard will be prepared in the manner prescribed by
Government and will be confined to such works as can be actually carried out in
the Dockyard.
Note 1.-The non-preparation of detailed estimates is waived up to 31.3.61 in
respect of certain types of works referred to In Government of India, Ministry of
Defence letter No. DY/0127/NHQ/1702- SOII/D (N-1) dated 13-9-60.
Note 2.-At present a programme for refit of ships only is being prepared.
IV. Under the present system of budgetary control, expenditure on both labour
and stores during a financial year is generally restricted to the amount provided in
the budget estimate for the purpose and subject to the observance of financial
limits and other instructions issued by Government.
V.
In the case of large works to be undertaken for State Governments and other
Departments (e.g. construction of vessel) the Dockyard authorities will frame an
estimate of the probable expenditure for, the year and will inform the State
Government or other Department concerned in order that they may arrange for the
amount thereof being included in their estimates, a corresponding amount on
account of such work being provided in the Naval estimates.
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VI. The provisioning of stores required for use in the IN is done by the
following authorities in accordance with the procedure laid down by the
Government from time to time in respect of each type of stores.
(i)
NHQ for Naval Stores.
(ii) NHQ for SPDC Stores.
(iii) Director of Armament Supply, NHQ, New Delhi for Naval Armament
Stores.
VII. The total expenditure of labour to be incurred in the Dockyard in a year is
generally estimated on the sanctioned complement of industrial establishment for
the Dockyard; the estimates being prepared in the form prescribed by CNS.
Mchk 110107
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Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

CHAPTER-II GENERAL PRINCIPLES

Financial Regulations Part-I (Volume-I)

Whether the offers have been invited in accordance with governing

Rule 6 recasted vide CS No 10/1/93

RECEIPT AND PAYMENT OF MONEYS

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Departmental Officers, Warrant and non-Commissioned Officers and JCOs

For amounts due to

Representatives of Defence Estate Officers in Cantonments.

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

If it is impossible to have any expenditure booked in the accounts of the

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Accounts concerned or his representative. He will, therefore, ensure that the

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Responsibility for physical verification of stores

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

AUDIT AND OBJECTIONS

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Incidence of Pay and Allowances

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

CHAPTER-III SANCTION OF EXPENDITURE

Financial Regulations Part-I (Volume-I)

CLASSES OF EXPENDITURE THAT MAY NOT BE SANCTIONED

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Expenditure on tests, trials and experiments by the Commandant, Armed

Financial Regulations Part-I (Volume-I)

FINANCIAL POWERS OF SUBORDINATE AUTHORITIES

The Chief of the Arm Staff

Rs. 30,000 per financial year

No sanction accorded by the above authorities should involve an express,

Financial Regulations Part-I (Volume-I)

Over issue of travelling allowance and erroneous issue of warrants and

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Details of the Estimates

For the Navy

For the Air

Financial Regulations Part-I (Volume-I)

Financial Regulations Part-I (Volume-I)

Details of the Estimates