4.1.1 Bills presented to Pay and Accounts Offices are required to be passed for payment after pre-check.

4.1.2 It is the duty of the Pay and Accounts Officer to see that the incurring of expenditure from the Consolidated Fund of India is governed by the following essential conditions:-

(i) that there is provision of funds authorised by the competent authority fixing the limits within which expenditure can be incurred.

(ii) that the expenditure incurred should conform to the relevant provisions of the Act, Constitution and of the laws made thereunder and should also be in accordance with the financial rules and regulations framed by the competent authority; and

(iii) that there exist sanction, either special or general, accorded by the competent authority authorising expenditure


4.2.1     Articles 112 to 116 of the Constitution contain the important financial provision which describe the control which Parliament exercises over expenditure from the Consolidated Fund of India.

4.2.2     No expenditure incurred from the Consolidated and Contingency Funds of India on or after 1st April of a financial year, under the provision of Articles 114 to 116 and 267(1) of the Constitution, will be protected by law unless authorised by an Appropriation Act passed in accordance with the provisions of Article 114. All disbursements from the Consolidated Fund during a financial year, which are not authorised by the Annual Appropriation Act passed by the Legislature before the close of the year, will therefore, be challenged by Audit as unauthorised expenditure, until regularised by an Appropriation Act. This should be borne in mind by the Pay and Accounts Officers.

4.2.3     The check against provision of funds should be directed primarily to ascertaining that the money sought to be expended is to be applied to the purpose or purposes for which the Grants and Appropriations specified in the Schedule to an Appropriation Act passed under Article 114 of the Constitution were intended to provide and that the amount of expenditure against each Grant or Appropriation does not exceed the amount included in that Schedule.

Note:—The term 'Appropriation' as used in this paragraph and elsewhere in this Manual stands for sums required to meet "charged" expenditure as specified in the Schedule to en Appropriation Act passed under Article 114 of the Constitution. A gist of the classification so far issued on the types of transactions that could be treated as 'charged' expenditure under the provisions of the constitution is included as Appendix 'B' to this chapter.

[Refer Correction Slip 45]

4.2.4 The pre-check to be applied to all payments by the departmentalised Accounts Offices includes a check against provision of -funds also. It is an important part of the functions of the Accounts Office to see that no payment is made in excess of the budget allotment. In order to exercise an effective check in this behalf, a separate register (D.D.O-wise Bill Passing cum Expenditure Control Register—Form CAM-9) should be maintained in the Accounts Office for each drawing officer and by sub-heads and units of appropriation So as to ensure at the time of passing each bill that the amount of the bill under check is covered by budget allotment. If the amount of any bill leads to excess, over the budget allotment or is not covered by an advance from the Contingency Fund, the Accounts Officer should decline payment under advice to the authority controlling the grant so that the latter could arrange for additional funds. An Appropriation Audit Register (Form CAM 62) shall be maintained.

Note:—In cases where payment of a bill/claim would lead to excess over the provision under any unit of appropriation, the payment may be made by the Pay and Accounts 0;nce only on receipt of an assurance in writing from the Ministry/Head of Department controlling the grant that, the expenditure involved is not on a New Service, or New Instrument of Service; that necessary funds to accommodate the expenditure will be provided for in time by issue of re-appropriation order etc.; that a note to the effect has been kept for further action, and that the Grant as a whole (i.e. separately under Revenue and Capital Sections) is not likely to be exceeded. This applies in respect of any new item of expenditure provision for which does not exist in the Budget (as distinct from expenditure on "New Service" or "New Instrument of Service" not provided in the Budget) as well as in cases where the existing provision is not sufficient to cover the payments.

If such a contingency in regard to inevitable payment of a bill should arise towards the close of financial year (inter alia in view of G.I decision No. 3 under Rule 75 of G.F.Rs) and the grant as a whole is likely to get exceeded thereby, orders of the F.A. on behalf of the Chief Accounting Authority would have to be sought.

In case the additional funds required are to be made available merely by re-allocation (and not by re-appropriation) of savings, if any, under the same sub-head of appropriation, the related claim will be passed for payment only after additional funds therefore are allocated in writing by the controlling officer.


4.3.1 While scrutinising orders relating to allotment and reappropriation of funds, provisions of the Rules contained in Sections V and VI of Chapter 5 of the General Financial Rules and Rules 7 to 10 of the Compilation of Delegation of Financial Powers Rules 1978, as amended from time to time, may be kept in view. It may also be checked whether relevant orders are issued by the competent authority and that the total of the allotments among various controlling and disbursing officers does not exceed the funds duty provided under the relevant head and further that reappropriation orders are free from arithmetical in accuracies etc. and contain full reasons for the reappropriations.

4.3.2 Ministry of Finance (Department of Economic Affairs) O.M. No. F.7 (15)-B (RA)/82 dated 13th April, 1982 containing guidelines on the above subject are reproduced in the Appendix along with the annexures thereto. The provisions thereof may be kept in view while exercising check of sanction etc. and precheck of bills.

 [Refer Correction Slip 36]


4.4.1 Under Article 77(3) of the Constitution the power to sanction expenditure from the Consolidated Fund of India and the Contingency Fund of India including the power to dispose of property and stores belonging to the Central Government is vested in the President whose sanction, given directly or by authorities to whom the necessary powers have been delegated is necessary before expenditure can be incurred from that Fund. The extent and conditions of delegation of financial powers to different authorities are contained in the Delegation of Financial Powers Rules as amended and modified from time to time.

4.4.2 The responsibilities of the Accounts Office in regard to check of sanctions is to see that:

(a) the sanction conforms to the relevant provisions of the Constitution and of the Laws and Rules made thereunder and is also in accordance with the financial rules, regulations and orders issued by a competent authority either in pursuance of any provisions of the Constitution or of the Laws and Rules made thereunder or by virtue of powers formally delegated to it by a higher authority.

Note:- The rules, regulations and orders against which check is conducted, mainly fall under the following categories :-

(i) rules and orders regulating the powers to incur and sanction expenditure front the Consolidated Fund of India (and the Contingency Fund of India);

(ii) rules and orders dealing with the mode of presentation of claims against Government, withdrawing moneys from the Consolidated Fund, Contingency Fund and Public Account of the Government of India, and in general the financial rules prescribing the detailed procedure to be followed by Government servants in dealing with Government transactions; and

(iii) rules and orders regulating the conditions of service and pay and allowance and pensions of Government servants.

(b) the authority sanctioning the expenditure is competent to do so by virtue of the power vested in it by the provision of the Constitution, laws rules or orders thereunder or by rules of delegation of financial power made by a competent authority; and

(c) the sanction is definite and needs no reference either to the sanctioning authority or to any higher authority.

4.4.3 In the check of sanction from the point of view of competency of the sanctioning authority the following guiding principles should be observed:-

(a) If the sanctioning authority is vested with full powers in respect of certain classes of expenditure the sanction accorded under such power should not be questioned except on grounds of propriety. When objection is raised against a sanction on grounds of propriety. When objection is raised against a sanction on grounds of property, the Accounts Office should explain to the sanctioning authority why the sanction is considered open to objection. Ordinarily the occasion for raising objections on grounds of propriety should arise only rarely as it is primarily the responsibility of the sanctioning authority to satisfy itself about the propriety of the sanction. It is only in cases of blatant or gross violation of accepted principles of financial propriety that objection can be legitimately taken by the Accounts Office. Even in such cases the Accounts Office should not stop the payment but should report the matter to the Financial Adviser through the Principal Accounts Officer for such action as the Financial Adviser may consider necessary. In the case of sanctions issued by the Ministry with the concurrence of the Financial Adviser, it is not open to the Accounts Office to raise objections on grounds of propriety.

(b) The Pay and Accounts Officer should bring to the notice of the competent authority any expenditure which does not seem to be covered by the terms of the Article, Section, rule or order quoted as justifying it, and which has been incurred by placing upon the Article, Section, rule or order an interpretation which may seem to it not to be a natural, plain, or reasonable interpretation. In the case of regulations framed by a department of Government, the Pay and Accounts Office will accept what the department considers to be the correct interpretation of its own regulations, provided that such interpretation is not opposed to the ruling of any superior authority, or contrary to any established financial principle or rule. such as discretionary power of interpretation does not, however, give a department a free hand to interpret its rules to suit particular cases in other than a natural or reasonable manner. So long as a rule or regulation remains unamended, the department is bound by it and the rules should be carefully adhered to. The Pay and Accounts Office should bring to the notice of his Pr.A.O., or of Financial Adviser through the Pr.A.O., cases where rules and regulations are found to have been observed merely in the letter but not in the spirit; for example, sanctions and orders for the grant of special pay or other allowances or concessions which are in conflict with the broad spirit or main principles of the relevant service rule*

(c) If the sanctioning authority is vested with powers which may be exercised subject to the fulfilment of certain conditions, the sanction can be accepted if the sanctioning authority certifies that the prescribed conditions have been fulfilled. Similarly, where the sanctioning authority is vested with powers which can be exercised provided due regard is paid to certain criteria, sanctions accorded under such powers cannot be challenged unless the disregard of the criteria is considered so serious as to make the sanction perverse. In such cases it is the duty of the Accounts Officer to report the matter to the Financial Adviser through the Principal Accounts Officer for final decision.

(d) For the purpose of financial sanctions a group of works which forms one project shall be considered as one work and the necessity for obtaining the sanction of a higher authority to a project is not avoided on the ground that the cost of each particular work in the project does not require such sanction.

4.4.4 Sanctions with a long period of currency (inter alia orders for delegation of financial powers) as well as sanctions of a permanent nature should be scrutinised carefully and reviewed periodically so that if there is any reason to think that the sanctioning authority concerned should be invited to review the sanction, such action may be taken.


4.5.1 The transactions dealt with in the departmental accounts organisations should be classified in accounts strictly under the Major and Minor Heads shown in the List of Major and Minor Heads of Account as corrected from time to time. The detailed classifications below the Minor Heads will be as shown in the Detailed Demands for Grants.


4.6.1 The classification of expenditure as Capital or Revenue will broadly depend on the following conditions:—

(a) Capital expenditure may be generally defined as expenditure incurred with the object of either increasing concrete assets of a material and permanent character or of reducing recurring liabilities.

(b) It is not essential that the concrete assets should be productive in character or that they should even be revenue producing. A productive asset may be considered as one which produces sufficient revenue to afford a surplus over all charges relevant to its functioning. It may on rare occasions be necessary and justifiable to treat as capital a scheme not commercially remunerative but involving large expenditure, say for the construction of a new city.

(c) It is inherent in the definition of capital expenditure that the assets produced should belong to the authority incurring the expenditure. Expenditure by Government on grants-in-aid to local bodies or institutions for the purpose of constructing assets which will belong to these local bodies or institutions cannot legitimately be considered as capital expenditure.

(d) Expenditure on a temporary asset cannot ordinarily be considered as expenditure of capital nature

4.6.2 When it has been decided that the expenditure on a scheme for creation <of a new or additional asset shall be classed as 'Capital'; the following are the main principles applicable to the treatment of expenditure in the accounts:—

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

(b) Subject to (c) below, revenue bears all subsequent charges for maintenance and all working expenses. These embrace all expenditure on the working and upkeep of the project and also on such renewals and replacements and such additions, improvements or extensions as under rules made by competent authority are debitable to the Revenue Account.

(c) In the case of works of renewal and improvements which partake both of capital and revenue nature, it is impracticable to draw a hard and fast line between what is properly debitable to capital or revenue. Allocation in such cases is made by detailed rules and formulae devised by the executive authorities, which are applied in estimates and accounts to determine the allocation of expenditure between capital and revenue. These rules and formulae much necessarily be based upon some general principle of sound finance which should aim at an equitable distribution of burdens between present and future generations.

(d) In theory it is legitimate to make capital bear the charges for interest on money borrowed to finance the construction of a new project before the project becomes revenue earning. In fact, however a Government project is only part of the operations of Government and it may be sound financial administration to meet interest charges from other revenue during the process of construction. The charge of interest to capital in Government accounts is justified only when there would be undue disturbance in the Government's budgetary position by taking interest to revenue. The writing back of capitalised interest should be the first charge on any caplt-1 receipts or surplus revenue derived from a project when opened for working.

(e) Capital receipts in so far as they relate to expenditure previously debited to capital accruing during the process of construction of a project should be. utilised in reduction of expenditure. Thereafter, their treatment in the accounts may depend on circumstances, but except in the case of recovered stores in Railways and the Posts and Telegraphs Departments or as otherwise provided in the rules of allocation applicable to a particular Department, they should never be credited to the ordinary revenue account of the undertaking.


4.7.1 Any device of rendering grants non-lapsing by withdrawing amounts to a fund is contrary to the strict theory of Parliamentary financial control. However, such a course is adopted with the cognizance and approval of the Parliament to constitute a specific reserve or reserve fund. These reserves or reserve funds may be classified under the following three categories according to the sources from which they are fed:—

(i) funds accumulated from grants made by another Government and at times aided by public subscriptions, e.g., Fund formed from subventions from the Central Road Fund; Fund for Economic Development and Improvement of Rural Areas;

(ii) funds accumulated from sums set aside by the Union or State Governments from the Consolidated Fund of India or the Consolidated Fund of the State, as the case may be, to provide reserves for, expenditure to be incurred by themselves on particular purposes,. e.g., the various Depreciation or Renewals Reserve Funds created in respect of commercial departments and undertakings;

(iii) funds accumulated from contributions made by outside agencies to the Union or State Governments, e.g. deposit account of grants made by the Indian Council of Agricultural Research; deposit account of grams made by the Indian Central Cotton Committee.

4.7.2 The main principles which would govern the procedure for accountal of expenditure met from reserves or reserve funds and its exhibition in estimates. and accounts are set out below:—

(i) A grant to the Union or State Government by another Government should be treated as ordinary revenue of the recipient Government irrespective of whether the grantor Government retains control over the expenditure from the grant or not.

(ii) A grant from an outside agency to the Union or a State Government made without reserving control over the expenditure therefrom should also be treated as ordinary revenue of Government.

(iii) Where reserves are created out of the grants mentioned in sub paras (i) and (a) above and also out of moneys set aside by the Union or State Government from the Consolidated Fund of India or the State, as the case may be, the transfers to and the expenditure from the reserves are required to be voted by the Parliament/Legislature (or shown as Charged).

4.7.3 The method of accounting which, having regard to the aforesaid principles, should be applied to the reserves mentioned in para 4.7.1 above will be as follows:—

The grants from outside agencies who do not retain control over the expenditure met thereform and the grants from other Government writ, in the first instance, be taken to the relevant receipt head of account of the Government. Simultaneously, an amount equivalent to the grant received and credited to the receipt head will be transferred to the relevant head in the Deposit section of accounts by debit to the service major head concerned. In the case of fund referred to in (ii) of para 4.7.1 above the amounts set aside by the Union /State Government from the Consolidated Fund of In&a/State to provide reserves for expenditure to be incurred by themselves on particular purposes should likewise be taken to the Deposit head opened for the purpose. In both cases, in order to bring the expenditure from the Fund into the Appropriation Accounts, the expenditure should be accounted for under the relevant service head of expenditure under which provision of funds has been made and an equivalent amount will be credited to the service head concerned by transfer from the Deposit Head concerned as shown as a deduct entry thereunder.

4.7.4 The principles and procedure prescribed in this paragraph do not apply to transactions pertaining to Famine Relief Funds and Sinking Funds for loans which are governed by special arrangements. ;

4.7.5 Contributions towards share capital in non-departmental commercial and industrial undertakings will be recorded under the concerned Programme Minor Heads below relevant functional Major Head of Account. Loam paid to these undertakings will be classified similarly under the concerned Programme Minor Heads below the relevant functional Loan Major Head of Account.


4.8.1 The value of materials, equipments and other commodities received from foreign countries etc., as aid, without involving any cash inflow or outflow should be taken as a receipt under Major Head "067-Aid Materials and Equipments" by a corresponding debit to the Major Head '267-Aid Materials and Equipments". When the material or equipment are allocated for use by Government departments or given as grants-in-aid to private bodies etc., the value thereof should be debited to the relevant Major Head "concerned relieving the initial debit under the major head" 267 by a deduct entry. The same procedure should be followed in the case of transfer of such material by Central Government to State and Union Territories as grants or loans and the debits in Central Government accounts should be to the Major Heads for grants-in-aid/loans and advances to State Governments and Union Territory Governments. When, however, the aid material is sold, the sale proceeds should be credited as a receipt under the Major Head relevant to the function for which the material etc. is received. The value of technical services or cost of experts deputed by foreign agencies at their own cost, does not have to be incorporated in Government accounts.

[Refer Correction Slip 27], [Refer Correction Slip 55]

4.8.2 Cash grants, as distinct from commodity or other assistance in kind received from external sources (like foreign governments, international bodies, agencies etc.) are to be accounted for only by the Controller of Aid Accounts and Audit, Department of Economic Affairs, Ministry of Finance in his books under the relevant minor heads below the major head "164-External Grant Assistance". In case Ministries/Departments receive such cash grants, the same should be passed on to the Controller of Aid Accounts and Audit for final accountal in his books. Copies of letters of agreements exchanged between Ministries/ Departments and donor countries in regard to cash grants, technical assistance/ aid in the form of aid materials and equipments etc. should also be endorsed to him simultaneously so that he may be able to issue suitable accounting procedure for the same.

[Authority : Ministry of Finance (DEA) (Budget Division) O.M. No. F.1 (20)-B(AC)/78 dated 24-4-1978]

4.8.3 No adjustment is necessary to bring into Government accounts, the value of technical services or cost of experts deputed by foreign agencies at their own cost for the benefit of Government.

4.8.4 Some agreements like those under the Colombo Plan require the value of the aid material received (i.e. counter-part funds generated) to be exhibited in a Fund Account, so as to be released in due course for utilisation on agreed projects. In such cases, it would be sufficient if a Proforma account of the Aid received and expenditure therefrom on the agreed projects is kept by the Department concerned, avoiding reflection of the transactions under such Funds in Government accounts.

Note : Government have even decided to waive the requirement of maintenance of Proforma accounts for food aid which had been received from Canada under the Colombo Plan and from Australia under the Technical Co-operation Assistance Programme.

[Refer Correction Slip 101]

4.9.1 Apart from the general principles set forth above and such other general or special orders as may be issued from time to time, the main duty of the Pay & Accounts Office in check of classifications would be to see that the expenditure is classified and recorded under the grant and the sub head under which the provision for expenditure was made in the Budget Estimates.


4.10.1 The following checks will be exercised on all classes of bills:

(a) that bills are prepared in the prescribed form, signatures are genuine and that the bills are in original; that a brief abstract is given in the official language authorised for the purpose under the signature of the drawing officer on all vouchers prepared in any other language; that signatures, if not in the authorised script, are transliterated and that sub-vouchers contain notes of dates of payment,

(b) that the details work up to the totals and that the totals are m words as well as in figures,

(c) that they bear a 'pass order' signed by the drawing and disbursing officer,

(d) that there are no erasures, and that any alterations in the total are attested by the officer concerned as many times as they are made,

(e) that no payment is made on a bill or order signed by a subordinate instead of head of the office himself or on a voucher or order signed with a stamp, and that copies of sanctions are certified by the sanctioning officer or by an authorised gazetted Government servant,

(f) in all cases in which it is prescribed that agreement should be effected between the different documents, that the fact of the agreement should be noted on both the documents and the note initialled by the Junior Accountant who makes the agreement,

(g) see that fund and Income-tax deductions have been correctly made.

Note : In respect of the pay bills of his own establishment and pension bills paid by him after pre-check the Pay and Accounts Officer acts as the officer responsible for paying income-tax on the income chargeable under the head 'salaries' and is, therefore, under a statutory obligation to deduct, at the time of payment, income-tax on the amount payable at the rate applicable to the estimated income of the assessee under the head "Salaries". In respect of other bills, the Pay and Accounts Office is not responsible for checking the correctness of the Income-tax deductions but whenever such bills come under his scrutiny in the course of audit, he should always see that deductions of income-tax are not omitted in cases where such deductions should clearly be made,

(h) that no bills for any pay or allowances not claimed within three years (vide Rule 83 of General Financial Rules) of its becoming due are , admitted without the sanction of the competent authority,

(i) see that the stores are purchased through the agency of the purchase organisation of the Department of Supply of the Central Government when this is required by the orders of the Government,

(j) that in the case of contingent bills sub-vouchers as required under the rules are attached;

(k) that the classification noted in the bill is correct with reference to the nature of the transactions and that an item which should be charged on the Consolidated Fund of India is not classified as Voted and vice versa.

4.10.2 The following essential checks will be exercised in respect of the various categories of bills. These checks are only illustrative and not exhaustive.


(i) the bills have been signed by drawing & disbursing officer and his signature tallies with the signatures in the register of specimen signatures.

(ii) the bills have been prepared with due regard to Rule 220 of CTRs. (iii) that the arithmetical calculations of the bills are correct.

(iv) that the absentee statement, where required is duly filled-in or a 'no leave' certificate is furnished.

(v) that the enhanced pay of officiating Government servants is in accordance with the rules.

(vi) that in case of any names appearing for the first time in the pay bills last pay certificate is furnished for a Government servant transferred from another establishment or health certificate is furnished in case of a person newly appointed except where such health certificate is not required to be furnished under the rules of Government

(vii) where the calculation of average pay is necessary for payment of leave salary, to see that a statement showing the calculation has been attached to the bill and calculations are correct.

(viii) that the dates of making over and receiving charge are stated and joining time is correct.

(ix) that the increment drawn is supported by an increment certificate and if the increment carries a Government servant beyond the efficiency bar, if the declaration of fitness to cross the bar is furnished.

(x) that the number of persons for whom pay or leave salary has been drawn does not exceed sanctioned strength of the establishment. For this purpose, the numerical check of drawals against sanctioned number of posts should be done. Detailed instructions for doing numerical check has been given in paras 4.11.4 to 4.11.8.

(xi) where arrears are drawn, a certificate is recorded by drawing and disbursing officer stating that necessary note has been made in original bills from which the claim is omitted.

(xii) that the remarks showing how the claims have been affected by death, retirement, permanent transfers, first appointment etc. are entered in detail.

(xiii) that in the case of establishments under which names of Government servants are not required to be indicated, the certificate prescribed! in Rule 66 of Central Govt. Account (Receipts & Payments) Rules 1983 is furnished.

(xiv) the admissibility of special pay, personal pay and various allowances. claimed in an establishment bill should be scrutinised with reference to the rules or orders in force. A note of special pay admissible should be kept in the "Fly Leaf of Payment Register" (Form CAM 23) wherever maintained, against the name of the incumbent concerned. In case the changes in pay are not properly explained in the remarks columns of the pay bill, the amount may be kept in objection and the details called for separately. The pay bill need not be returned unpassed on this account.

[Refer Correction Slip 95]


Increment certificates should be examined to see that the increment claimed' b according to rules and supported by facts stated and has actually accrued. This should be examined with reference to the entries in the "Fly Leaf of Payment Register" where one is required to be maintained. It should also be seen:—

(i) that the increment granted is admissible under F.Rs. 22-27 and 29.

(ii) that the period of suspension is not treated as duty except in the circumstances explained in F.R. 54.

(iii) that when an increment claimed operates to carry a Government servant over an efficiency bar, the increment certificate is supported? by a declaration from the authority empowered to allow the increment that it has satisfied itself that the Government servant in question is fit to cross the efficiency bar.

(iv) that a proper note of the increment is recorded in Fly Leaf of Payment Register wherever it is maintained, over the initials of Jr Accounts Officer.


(a) The last pay certificates are issued by drawing and disbursing officers in the event of transfer of a Government servant to another post or office under the jurisdiction of another drawing officer. The rules for the preparation of these certificates, are laid down in Appendix 4 of C.T.Rs. Volume II.

(b) In checking these certificates, it should be seen :—

(i) that the certificate is in the prescribed form and has been properly drawn up;

(ii) that the extent of joining time availed of and the joining time pay are in conformity with Central Civil Services (Joining Time) Rules 1979;

(iii) that no compensatory allowance is drawn during joining time except as provided in S.R. 7-C; and

(iv) that pay or leave salary, if due for a period prior to joining time is drawn according to rates noted in the last pay certificate.

NOTE: (1) The term 'undisbursed pay and allowances' includes nothing except pay and allowances drawn and due to an employee, but for some reasons not paid.

(2) Undisbursed pay and allowances may be retained by the Drawing Officer for a period not exceeding 3 months, provided suitable arrangements exist in his office for the safe custody of the money. The undisbursed pay and allowances should be refunded by short drawals from the bills and may be taken in reduction of expenditure under various detailed heads, if these are refunded in the same account year; otherwise these be credited to the corresponding receipt head.

(3) The refunds against the undisbursed pay and allowances should be noted against the short drawals in the original bills without affecting S.L.O.

4.11.4    The Pay and Accounts Office shall maintain an Establishment Check Register (Form CAM 24) separately for each D.D.O. under his payment and accounting control. All sanctions for creation of posts will be noted in this register in the relevant columns. In view of the issue of Min. of Personnel Public Grievances and Pension (Deptt. of Personnel and Training) O.M. No. 13011/1/86-Estt.(D) dated 28.3.88 confirmation is made only once in the service of an official which will be in the entry grade subject to the fulfilment of the conditions prescribed and this issue has been delinked from the availability of vacancies in the permanent posts in the grade. Therefore the check to be exercised by the PAO may be limited to watch against the total number of posts sanctioned, the total number of persons in each section of establishment who are (i) drawing duty pay and (ii) are on leave including extra-ordinary leave or under suspension.

4.11.5    They are indicated in the bills under the letters D(Duty pay) and L(Leave or Suspension) and the totals under D and L in respect of each section of establishment may be posted in the register, broken periods of less than a month being indicated by giving the number of number of days within brackets.

4.11.6    The posting in the register will include the number for whom claims have been shown as held over in the monthly bill. This is necessary to ascertain the total number of persons entertained during a month. When the posting of all bills pertaining to an establishment in the register has been completed, a total should be struck against each section.

[Refer Correction Slip 207]

4.11.7 The P.A.O. shall also maintain, Wherever required, a "Fly Leaf of Payment Register" (Form CAM 23) wherein details like the name of the incumbent, his pay, special pay, personal pay etc. shall be noted. The increments drawn or any changes in the pay as indicated in the pay bills should be noted in this register. Similarly all cases of death, retirement, resignation and permanent transfer out of the establishment as also important events like suspension, withholding of increment, crossing of efficiency bar etc. shall be noted in the register under the attestation of the Jr. Accounts Officer.

 [Refer Correction Slip 208]


4.12.1 From 1st April, 1976 the distinction between gazetted and non-gazetted staff in regard to maintenance of service records, determination of entitlements (including pay fixation) and drawal of entitlements has been dispensed with and Heads of Offices have been made responsible for these—vide O.M. No. F.10(9)-B(TR)/76 dated 28-2-76 and O.M. No. F-3 (1)E.IV-(A)/76 dated 17-3-76. It would not, therefore, be necessary for the authorities responsible for pay fixation to consult the Pay and Accounts Offices in respect of cases of pay fixation with reference to normal rules. However, in specially difficult or complicated cases, there is ho objection to the Ministry consulting the Controller of Accounts concerned, if considered necessary. Cases requiring fixation of pay in relaxation, of the normal rules should be referred to the authority competent to relax the rules through the internal Finance Section of the Ministry and not to the Controller of Accounts. The scrutiny of pay fixation cases done by the departmental offices with reference to the initial records in the departmental offices. concerned should be done on a test check basis by the Internal Check Organisation of the Departmental Accounting Organisation.


4.13.1 The grant of overtime allowance will be regulated in accordance with the orders contained in the Min. of Finance, Deptt., of Expenditure O.M. No. 15011/2/EII(B)/76 dated 11-8-76 as amended from time to time. The following checks should be exercised in respect of bills in which overtime allowance is claimed.

(i) that the drawing officer has furnished the requisite certificates as prescribed in this O.M. alongwith the bills duly signed by him.

(ii) that the categories of staff for whom overtime allowance is claimed, are eligible for the same.

(iii) that the claims are made at the prescribed rates.

Note : Objection should not be taken to the grant of overtime allowance for a particular item of work which has been ordered by competent authority in public interest.


4.14.1 The concession regarding the grant of children's education allowance to Central Govt. employees whose pay is debitable to Civil Estimates has been introduced by the Government of India with effect from 1st March, 1962 on the recommendations of the Pay Commission. It is now regulated by the orders contained in the Ministry of Finance (Deptt. of Expenditure) O.M. No. 12011/ I/EII(B)/76 dated the 25th August, 1976 as amended from time to time. The claim of this allowance in respect of non-gazetted establishment should be admitted by the PAO on the strength of the certificates from the drawing officers as prescribed in this Office Memorandum.

4.14 2 Central Government employees whose pay as defined under F.R.9(21)-(a) does not exceed Rs. 1200 p.m. are entitled to claim reimbursement of tuition fee paid on behalf of their children for education in India in recognised Middle, High or Higher Secondary Schools. Eligibility conditions of reimbursement and procedure to be followed for claiming reimbursement of tuition fees are contained in the Ministry of Finance O.M. No. 18011/I/E.II(B)76 dated 28th Aug. 1976 as amended from time to time.


4.15.1 In checking the bills of traveling allowance the undermentioned checks may be exercised in order to see:—

(i) that the journey was actually performed;

(ii) that it was necessary, and authorised by general or special orders;

(iii) that no bill has been submitted for it before;

(iv) that the amount drawn is correct with reference to rates and general conditions. In this connection it may be added that it is the duty of the controlling officer before signing or countersigning a travelling allowance bill, to scrutinise carefully the distances entered therein, but the amount claimed for the journey performed by railway and air where authorised specially, should be checked by the PAO with the help of the Railway time table and by the scheduled rates charged by the Indian Air Lines or Air Transport Company;

(v) that the bills are prepared strictly in accordance with the provisions of Rule 277 to 281 of Central Treasury Rules, Volume I;

(vi) that the dates and hours of the commencement as well as end of the journeys (where necessary) and the purpose of journey are clearly stated in the columns provided for the purpose in the travelling allowance bill form;

(vii) that the bills are countersigned in all cases except where specifically authorised otherwise (see S.R. 191—193); and that the prescribed certificates have been furnished by the D.D.O.;

(viii) that the instructions for preparing travelling allowance bills as printed on the form of the T.A. Bill are duly complied with and irrelevant certificates scored out;

(ix) that the claims for the conveyance of motor-cycles, bicycles etc., during tour are supported by special orders of the authority competent to pass such orders, as required under S.R. 81 (a);

(x) that in case of journeys performed by road between places connected by rail, the charge for travelling allowance is supported by an order of the competent authority under S.R. 31;

(xi) that the claims for travelling allowance for journeys performed to give evidence in a court under S.R. 154 are supported by the necessary certificates (a) of attendance and (b) non-payment of expenses by the court;

(xii) that in the case of bills for journeys on transfer, the claims are supported by:—

(a) the certificates showing the members and relationship of claimant's family and the age of his children vide S.R. 116(d);

(b) the declaration of actual expenses incurred in transportation of personal effects, conveyances etc., vide S.R. 116(e);

(c) the certificate from the Controlling Officer that the charges on account of the personal effects have been scrutinised by him and that he is satisfied that these are reasonable; and

(xiii) that the charges have been classified according to the principles laid down in Article 32 of Account Code Vol. I.


4.15.2 The following are some points which will be useful in scrutinising travelling allowance bills.

(A) Road Mileage

(i) Is inadmissible in addition to (a) permanent travelling allowance, (b) conveyance allowance and (c) contingent charges claimed towards taxi/scooter hire charges separately for transportation of official records.

(ii) Short journeys within a radius of 8 kilometres of headquarters should not be added to journeys made on the same day beyond the 8 kilometres radius for the purpose of arriving at the distance travelled on that day.

(iii) Fraction of a kilometre should be omitted in the total of a bill for any journey.

(B) Daily Allowance

(i) See that the officer reaches a point outside the radius of 8 kilometres from his headquarters.

(ii) See that the hours of departure from and arrival at headquarters are shown when daily allowance is claimed.

(iii) is inadmissible in the following cases.

(a) when joining first appointment

(b) when on transfer

(c) when on leave

(d) in addition to permanent travelling allowance vide A (i) above

(e) in addition to railway fare or actual expenses .

(f) within a radius of 8 kilometres vide B (i) above.

(g) for halts at headquarters

(C) Conveyance Allowance

(i) See that there is sanction of the competent authority

(ii) See to the specific terms of sanction, if any

(D) Railway Journeys

(i) Check fare with fare tables and see that they are not charged at a higher rate than admissible.

(ii) Time of departure on and arrival from a railway journey should be stated on the bill when it is preceded or followed by a halt for which daily allowance is claimed.

        (E) Travelling allowance is inadmissible'.—

(a) on proceeding on leave

(b) on rejoining from leave

(c) during leave of any kind

(d) on dismissal from public service; and

(e) in case of transfer at the officer's own request or for misconduct.

Note:—The cancellation/reservation charges on unused air/rail tickets may be preferred by the claimants in T.A. bill form and should be classified under the head "Travel Expenses".

(Authority: Min. of Fin. Deptt. of Exp O.M. No. 19028/1/78-E-IV(B) dated 18-2-1981).


4.16.1 (i) The grant of travelling concession to Central Govt. servants serving at places distant from their homes for journeys to and from their homes during leave will be regulated in accordance with the orders contained in the Ministry of Finance O.M. No. 43/l/55-EST(A)-Part. II dated the 11th October, 1956 as amended from time to time.

(ii) The concession will not be admissible to those Govt. servants whose homes are within a distance of 400 kilometres (160 kilometres for Group 'D' Govt. servants) from their headquarters.

(iii) Those whose homes are beyond 400 kilometres from their headquarters will themselves meet the entire cost of fares for the initial 400 kilometres (160 kilometres in the case of Group 'D' employees) on each of the outward and return, journeys. For the remaining distance over the initial 400/160 kilometres, the Government will meet 100 per cent of the actual fares.

4.16.2 The L.T.C. scheme has been modified in 1974 to the effect that once in a block of four calender years commencing from the year 1974, every Central Govt. employee would be entitled to avail himself of the L.T.C. for journey to any place in India subject to all the other conditions Iaid down in the orders dated 11-10-1956 referred to above and subject to further liberalisation (1-9-1978) providing for full reimbursement without any deduction in respect of the first 400/160 kilometres as the case may be (vide DPAR O.M. No. 43/6/73-Estt. (A) dt. 11-3-1974 read with O.M. No. 31011/10/78-Estt. (A) dt. 1-9-1978).


4.17.1 The actual classification of contingent charges is determined by the orders of the Government. It will be found, however, on consideration of the dominant conditions governing the particular expenditure that all contingencies will fall into one or other of the following five classes—

(a) Contingent charges met from a lump sum grant placed at the disposal of a disbursing officer for expenditure at his discretion, on certain specified objects. Such charges are known as Contract Contingencies and generally consist of charges, the annual incidence of which can be averaged with reasonable accuracy.

(b) Contingent charges in respect of which scales have been laid down by competent authority. Such charges may be designated Scale Regulated Contingencies.

(c) Contingent charges whether recurring or non^recurring which cannot be incurred without special sanction in each case of superior authority. These may be termed Special Contingencies.

(d) Contingent charges, which, though they may be incurred without special sanction, require the approval and countersignature of superior authority before they can be admitted as legitimate expenditure against the Consolidated Fund of India. Countersignature is ordinarily obtained after the bills are paid, but in rare cases it is necessary before payment. Such charges are known as Countersigned Contingencies.

(e) Contingent charges which require neither special sanction nor counter-signature, but may be incurred by the disbursing officer on his own authority, subject to the necessity of accounting for them. Such contingencies may be termed Fully Vouched Contingencies.

4.17.2 In checking contingent bills, it will be seen that

(i) each class of expenditure:

(a) is a proper charge against the grant or appropriation concerned and. is covered by provision of funds

(b) has received such sanction as is necessary

(c) has been incurred by a Government servant competent to incur it.

(ii) such vouchers as are required to be enclosed have been submitted keeping in view provisions of Rule 111(3) of Central Govt. Account (Receipts & Payments) Rules 1983

(iii) the certificates required under the Financial Rules have been recorded

(iv) the rates are apparently -not extravagant and the expenditure is not prima facie more than the occasion demands

(v) that the bills are in proper form and that the classification is correctly recorded therein

[Refer Correction Slip 95]


(a) In respect of special contingencies, the principal duty of the Pay and Accounts Officer is to watch the expenditure against the necessary sanction of superior authority. For this purpose a register should be maintained (Form CAM—25) in which every order sanctioning special expenditure, should be entered as soon as it is received and, as each charge comes up for check a note of the bill in which it is included, and of the fact that it has been checked, should be made in the final columns. Where expenditure against a lump sum sanction is incurred in instalments, the progressive outlay must be watched against the sanctioned total.

When an order of sanction contains no indication of the amount or limit of expenditure sanctioned, enquiry should be made from the authority which issued it, and charges should not be admitted until complete sanction is received.

(b) In preparing the register of Special Charges the following instructions should be followed:—

(1) Separate pages should be set apart for different classes of expenditure and for different officers incurring expenditure.

(2) When opening a new register orders which are still in force should be carried forward into it from the old register along with progressive expenditure so far incurred there against.

Note 1.—The sanctions entered in the Register of Special Charges will not be confined to sanctions of contingent charges proper. Special sanctions of refunds, advances and the like also will be recorded in this register and the charge admitted according to the method prescribed in this paragraph.

Note 2.—The entries of payments made in the "Register of Special Charges" should be attested by the P.A.O. as he passes each bill for payment.


A—Bills countersigned after payment—

4.19.1 In the case of bills countersigned after payment, the money is actually drawn on an abstract bill, and the approval of the superior authority as indicated by its countersignature, is subsequently received by the Pay and Accounts Officer in the monthly detailed countersigned bill. Both the abstract bill and the detailed monthly bill require scrutiny in the Pay and Accounts Office.

4.19.2 While checking abstract contingent bills, it should be seen whether the officers drawing abstract bills are, in all cases, authorised to do so. The Jr. A.O. should ensure that the amount drawn on an abstract contingent bill is placed under objection. Objections regarding want of detailed bills, vouchers, sub-vouchers etc., should be pursued vigorously. Cases in which detailed bills are not furnished within the normal period prescribed in Rule 118 of Central Govt. Account (Receipts & Payments) Rules 1983 should be reported to the Controlling Officer by name and thereafter, if necessary, the matter should be reported first to the Head of the Department by name and that failing to produce the desired result, the matter should be reported to the Pr. Accounts Office.

[Refer Correction Slip 95]

4.19.3 Adequate cautions should be exercised in passing detailed bills which are supported by invoices which are found to be old compared to the date of drawal of the abstract bill.

4.19.4 On receipt of detailed adjustment bills, they should be carefully checked on the points indicated in paragraph 4.17.2. In addition it should be seen:—

(1) that the bill is duly countersigned wherever so required;

(2) that the charges included in it cover the amounts drawn in lump sum and are classified as in the abstract bills; differences or disallowances should be noted for recovery and adjustment should be made, if necessary on account of misclassification.

4.19.5 Except on points covered above the Pay and Accounts Officers should not disallow any items included in a countersigned bill which are within the powers of sanction of the countersigning officer. He should, however, draw the attention of the latter to any expenditure which seems questionable or in comparison with like charges elsewhere, excessive in respect of rate, price or amount and may, if he deems it advisable, specially address the Department on the subject.

4.19.6 When the Jr. Accountant has completed his check and has ticked off each item supported by a voucher in token of his having seen and passed the bill, he should record his enfacement passing the bill or objecting to it, upon the bill itself. He should then make the corresponding or partial adjustment both in the register and the Objection Book (Form CAM-26) taking steps to remove any objection still outstanding.

B—Bills countersigned before payment

4.19.7 Where countersignature is required before payment, there will be no abstract bill but payment will be made on a detailed bill. In that case, the detailed bill may be entered in and submitted along with the 'Special Charges Register'. The Jr. Accountant will, of course, make no entry in the 'Objection Book' unless some item in the detailed bill itself is objectionable.


4.20.1 Payment of fully-vouched contingencies will be made on detailed bills. No registers need be maintained for the record of these bills except in cases where the Pay and Accounts Officer is requested by the Government to check the charges of individual disbursing officers against a lump sum appropriation placed for the purpose at the disposal of a single higher authority. The actual check should be conducted as in the case of bills countersigned before payment.


4.21.1 Sanctions to recurring contingent charges are noted in the Register of Periodical Charges, each payment as it is checked being posted with the necessary reference in the appropriate monthly columns. Ordinarily the register should be used only in cases in which sanctions other than those of the disbursing or countersigning authorities are involved.

Note 1.—The pay of the contingency paid staff need not be entered in the Register of Periodical Charges.

Note 2.—Periodical charges such as water, conservancy taxes etc., do not require the sanction of a higher authority when they are assessed by competent authority and the assessment is certified by a Public Works Divisional Officer or the departmental officer concerned according as the buildings are or not borne on the books of the Public Works Department. Such charges should not, therefore, be entered in this register.


4.22.1 Contingent charges on account of wages of Mazdoors engaged on manual labour and paid at daily or monthly rates should be admitted in the Pay and Accounts Office on the authority of a certificate signed by the disbursing officer to the effect that the mazdoors were actually entertained and paid. Contingent charges on account of pay and allowances of all other staff paid from contingencies should be admitted in the Pay and Accounts Office on the authority of the certificate regarding entertainment, disbursement etc., prescribed in Treasury Rules.


4.23.1 Offices/Officers provided with telephones are responsible for all trunk calls which may be made from their telephones even if some of the items in bills received from the Posts and Telegraphs Department, pertain to unavoidable private calls of officials and they have to be paid in full.

Simultaneously, arrangements should be made for suitable recovery from the the official (s) for the private calls (s), and the amounts duly accounted for.

4.23.2 P.A.O. should check that bills for trunk calls are supported by the certificate under the procedure prescribed for the purpose, that the trunk call or calls were made for official purposes, and that in respect of exceptions mentioned therein, indication is given about recovery thereof effected/being effected.

4.23.3 Recoveries made from Government officials on account of private calls may be adjusted in reduction of expenditure and not credited as revenue receipts in Government accounts. 

(Authority : C.G.A.'s File No. S. 14011/1/79/TA)

[Refer Correction Slip 135]


The following points may be borne in mind while passing such bills :—

4.24.1 Ministry of Law should invariably be consulted by the Department concerned in regard to the fees of lawyers proposed to be engaged except in cases in respect of which standing arrangements have been made (e.g., cases handled by the Central Government Solicitors at Bombay and Calcutta or by Standing Counsels of the Income Tax Department) and in cases where lawyers are engaged on scales of fees fixed by the High Court concerned.

4.24.2 Serial No. 9 of the Annexure to Schedule V of the Delegation of Financial Powers Rules 1978 indicates the extent to which various authorities have been delegated powers to incur expenditure on payment of legal charges either on account of fees to barristers, pleaders etc., or the institutions of law suits or prosecution cases etc., as well as in connection with arbitration cases. It should be seen that the sanctions to the expenditure on legal charges etc., conform to the limits prescribed therein.


4.25.1 The general instructions regarding the cancellation of sub-vouchers attached to contingent bills in order to prevent their misuse are laid down in  Rule 109 of Central Govt. Account (Receipts & Payments) Rules 1983 Volume I. Sub-vouchers required to be sent to the Pay and Accounts Officer are not to be cancelled either by the drawing officer or the controlling officer, as the duty of cancelling these sub-vouchers and keeping them in proper custody to prevent their fraudulent use devolves on the Pay and Accounts Officer. All sub-vouchers received in the P.A.O. should be cancelled by means of a rubber stamp or in hand under the dated initials of the Jr. Accountant concerned. In the case of vouchers selected for post audit and reviewed by the J.A.O., the cancellation should be attested by the J.A.O. also.

[Refer Correction Slip 95]

4.26.1 Chapter 10 of this Manual deals with the important aspects of loans and advances, grants-in-aid, guarantees given by the Government and investment made by the Government. These should be kept in view before accepting any sanction for payment.


4.27.1 In checking the sanctions for grants-in-aid, it should be ensured that:—

(a) sanctions have been accorded by a competent authority in terms of the relevant DFP Rules;

(b) sanctions are so worded that there is a specific direction for the payment of the specified amount, instead of merely conveying an approval for the sanction of the grants-in-aid;

(c) they indicate invariably, whether the grants-in-aid are recurring or non-recurring.

4.27.2 A 'Register of Payment of Grants-in-aid' shall be maintained (Form CAM-28). All sanctions should be noted in this register under proper attestation and the bills received against such sanctions should also be submitted after exercising necessary checks, along with the register arid the fact of passing of the bill noted therein.

4.27.3 In the case of grants-in-aid bill, it should be seen that the prescribed certificates have been recorded on the bills where the power of sanctioning the grants-in-aid is delegated to the subordinate authority subject to the previous fulfilment by the grantees of certain conditions. For example, grants may be made to educational institutions which reach specified standards in respect of number of scholars, methods of instruction and the like. In such cases, if the orders sanctioning the grant quote the relevant rules, such bill should ordinarily be accepted on the expressed or implied certificate of the sanctioning authority that the prescribed conditions have been fulfilled.

4.27.4 It should be watched that grants are not, except in special circumstances, paid in excess of actual requirements of the grantee for the financial year or say, for the period of one year from the date of issue of the letter sanctioning the grant and that any general or special orders for releasing a particular grant in instalments are compiled with. The extent of the check of the expenditure from a grants-in-aid by the grantee depends on whether the grant is conditional or unconditional. Where no condition is attached to a grant, no enquiry need be made as to the manner in which the grant is utilised by the grantee. Wherever conditions are attached to the utilisation of a grant (in the shape of specification of the particular objects on, or the time within which the money must be spent) the receipt of formal utilisation certificate from the sanctioning authority should be watched through the said register.


4.28.1 In the case of those stipends and scholarships which are considered to be important in view of their value or governing conditions or other similar considerations, the check should be conducted by numbers only.

4.28.2 Check by numbers will consist in seeing that:—

(1) the sanctioned scale is not exceeded,

(2) there is no excess over the total amount sanctioned for the scholarship, and

(3) the scholarships are drawn only for the period for which they are sanctioned. *

4.28.3 The bills for educational scholarships, stipends etc., should be checked with a view to see that they have been drawn in accordance with the procedure laid down in the relevant Treasury Rules etc., and that necessary certificates showing that the prescribed conditions have been fulfilled, are furnished along with the bill or separately, as may be necessary.

4.28.4 Scholarship bills should be posted in the register in Form CAM—28 in the same manner as Register of Grants-in-aid except for the column meant for watching receipt of utilisation certificates.


4.29.1 In respect of loans and advances to public sector undertakings, autonomous bodies etc., the sanctions should be examined and the reasons for any unusual conditions included therein, if any e.g., remission of interest in an individual case, should be enquired. It has to be seen that the conditions of repayment of loans and advances are complied with by the debtor and the Pay and Accounts Office should exercise a close watch over repayment of principal and realisation of interest. In reviewing the outstanding loans and advances, special attention should be directed to irregularities in payments, acknowledgement of balances and unrealisable and doubtful assets. During the pre-check of a loan or advance bill, it should be seen that :—

(a) the amount claimed is in accordance with the sanction order, and

(b) the conditions to be fulfilled before payment, if any, are actually fulfilled and a certificate to that effect is recorded on the bill.

For watching the recovery of loans, Loan Register(s) are to be maintained (Form CAM - 29)

4.29.2 The responsibility for calculation of interest on interest bearing advances, recoverable from the loanee Government servant will be that of the head of office/drawing and disbursing officer both for gazetted and non-gazetted Government servants. The heads of offices would, however, be responsible for obtaining mortgage bonds and agreements and ensuring that necessary insurance, as required under the rules, is effected.

4.29.3 Pay and Accounts Officers will be responsible for (a) checking the correctness of the interest recovered by the drawing and disbursing officer, and (b) confirmation of the correctness of the balances as shown in the recovery schedules and pointing out discrepancy, if any, to the concerned drawing and disbursing officer.

(Authority : Ministry of Finance (DBA) O.M. No. F. 10 (9)-B(TR)/76 dt. 1.11.1976)


4.30.1 Advances drawn must be checked in full. It should be seen:—

(i) that every advance has been sanctioned by competent authority in accordance with the rules governing it;

(ii) that the amount drawn does not exceed the amount sanctioned and permissible under the rules;

(iii) that it is properly recorded;

(iv) that repayments are regularly made as required by rules and are duly accounted for in the books of the accounts office;

(v) that the balance outstanding at the close of each financial year is communicated to and accepted by the Government servant; For this purpose, a statement of outstanding balances shall be furnished to the D.D.O. concerned with the observation that non-receipt of any comments within two months would be treated as acceptance of balance by the D.D.O./ Govt. servant concerned.

(vi) that in case the repayment of the advance is neglected and/or irregular, the matter is reported to the sanctioning authority; and

(vii) that the certificates regarding availability of funds have been issued by the competent authority before issue of sanction and incorporated in the sanction.

[Refer Correction Slip 136]

4.30.2 The recovery of the advances should commence with the first issue of pay, leave salary or subsistence allowance, as the case may be, after the advance is drawn (Rule 202 of General Financial Rules Revised and Enlarged, 1963).

4.30.3 It should be ensured that a certificate signed by the sanctioning authority to the effect that agreement in Form G.F.R. 22 or G.F.R. 23, as the case may be, has been signed by the Government servant drawing the advance and that it has been examined and found to be in order, is attached to the bill for drawal of Motor Car Advance.

4.30.4 The grant of House Building Advance shall be governed by the H.B.A. Rules.

4.30.5 For watching the recoveries of these advances, a Register and Broadsheet of Advances for HB/MC/and Interest thereon, should be maintained by the P.A.O. (Form CAM-30). Separate pages will be allotted to record advances sanctioned to Government servants in various offices. All the recoveries effected from establishment bills should be noted based on the schedule of recoveries in the respective pages of the broadsheet which should be totalled every month and agreed with the ledger figures in the Compilation Section. Any discrepancy between the two sets of figures should be noted and analysed on separate pages set apart at the end of the register, to watch that they are eventually resolved and reconciled. This monthly verification indicating progressive differences and their reconciliation shall be submitted to the PAO every month by 20th of the second succeeding month. An example illustrating the manner in which recoveries of HBA/MCA are to be posted in the respective Broadsheet and calculation of interest thereon, is given in Appendix 'C' to this Chapter.

[Refer Correction Slip 126], [Refer Correction Slip 170]


4.31.1 It is an important function of the Pay and Accounts Officer to examine contracts or agreements for works or supplies entered into by departmental authorities on behalf of Government.

4.31.2 Concerned executive authorities who enter into contracts for works or supplies will also be entirely responsible to watch their fulfilment.

4.31.3 The following fundamental principles are laid down by Government for the guidance of authorities authorised to enter into contracts or agreements involving expenditure from Consolidated Fund of India. These are financial rules but they also indicate the points which should be kept in mind by the Pay and Accounts Officers in scrutinising contracts :—

(a) The terms of a contract must be precise and definite, and there must , be no room for ambiguity or misconstruction therein;

(b) As far as possible, legal and financial advice should be taken in the 1 drafting of contracts before they are finally entered into;

(c) Standard forms of contracts should be adopted wherever possible, the terms being subjected to adequate prior scrutiny;

(d) The terms of a contract once entered into should not be materially varied without the previous consent of the competent financial authority;

(e) 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;

(f) 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;

(g) 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;

(h) 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 price;

(i) Provision must be made in contracts for safeguarding Government property entrusted to a contractor;

(j) When a contract is likely to endure for a period of more than five years, it should, wherever feasible include a provision for an un-conditional power of revocation or cancellation by Government at any time after the expiry of six months notice to that effect; and

(k) The Pay and Accounts Officers have power to examine contracts and to bring to the notice of the proper authority any cases where competetive tenders have not been sought, or where high tenders have been accepted, or where other irregularities in procedure have come; to light.

4.31.4 Deviation from contracts require authority not inferior to that required for the original contract. The Pay and Accounts Officer should also see that any payments outside the strict terms of the contract or in excess of contract rates are not made without the consent of the competent financial authority.

4.31.5 Copies of all contracts and agreements for purchases of Rs. 50,000 and above should invariably be obtained and examined, and the payments regulated in accordance with them (but see Note below). For this purpose a Register in Form CAM—31 should be opened to record particulars of the contracts or agreements and the payments made thereagainst.

NOTE-Copies of all contracts irrespective of their monetary value (except those relating to contingent or miscellaneous expenditure) of the Director General, Supplies and Disposal and the Food Department of the Government of India are however, to be invariably furnished to the Pay and Accounts Officers concerned.

4.31.6 When payments included in contingent bills are made at certain contract rates which are not required to be communicated to the Pay and Accounts Officer, a certificate should be obtained from the competent authority to the effect that the claim is correct with reference to such contract rates.


4.32.1 Check of Contracts and Agreements, Tenders etc:—The general checks to be exercised are indicated in the earlier paragraph. Other checks arc detailed below:—

4.32.2 In scrutinising an Acceptance of Tender it should be seen:—

(i) that the particulars regarding quantity and rates are furnished and the prices stipulated are firm. Particulars of the contracts providing price variation clause or provisional rates, should be further examined;

(ii) that there is no omission of any important clause e.g. date and place of delivery, despatch instructions, name of consignee, etc.;

(iii) that it is signed by an authority which is competent to enter into the contract. In case the signature on the order is that of an authority who is not competent to enter into the contract a certificate to the effect that the purchase has been approved by the competent authority, is recorded thereon mentioning also the designation of the authority whose approval has been obtained.

Note—In the copies of Acceptances of Tender, Supply Orders etc., all the sheets containing rates, prices and other important conditions should be signed in ink by the purchasing officer concerned.

(iv) the provision for the payment of sales tax, excise duty, should be checked with reference to the instructions issued by the Government from time to time. Vague provisions, such as, "Sales tax will be paid, if legally leviable" should be objected to and the contracting officers asked to state in definite terms whether sales tax, excise duty, etc. are payable and if so at what rate and on what amount; and

(v) that the contract has been signed for and on behalf of the President of India.

4.32.3 All contracts and agreements required to be checked should be reviewed by the Jr. Accounts Officer and submitted to the Pay and Accounts Officer for farther review. Before checking purchase bills, the Pay and Accounts Officer should satisfy himself that the sanctions and agreements were properly checked and bear suitable endorsement of check and review.

4.32.4 Cases of the type mentioned below may, if necessary, be scrutinised carefully:—

(i) inclusion of any new item of expenditure not originally contemplated in a contract;

(ii) extension in the date of delivery in contract where higher prices have been allowed on account of early delivery of stores;

(iii) Compensation allowed to firms in respect of contracts;

(iv) any extraordinary stipulation in a contract even if it is sanctioned by Government etc.;

(v) any special and apparently objectionable procedure of purchase, inspection and payment sanctioned by Government etc.;

(vi) all contracts on cost plus profit basis;

(vii) all contracts with private firms to act as Government stockists; and

(viii) all sanctions to ex-gratia payments.


4.33.1 The following checks are prescribed in respect of bills for purchase of stores:—

(i) that there is provision of funds authorised by the competent authority;

(ii) that there exists sanction either special or general accorded by the competent authority authorising expenditure;

(iii) that the purchases are made economically and in accordance with the rules and orders made by competent authority;

(iv) that the rates mentioned in the bill agree with those shown in the purchase orders;

(v) that certificates of quality and quantity are furnished;

(vi) that the purchases have not been split up so as to avoid the necessity of obtaining the sanction of higher authority; and

(vii) in regard to stores purchased through the agency of DGS&D, debits for which are raised by the Department of Supply, it should be ensured by the Pay and Accounts Officers that the debits accepted are proper charges against the work, office or other expenditure unit under their control and that the supply has been duly sanctioned. For debits for advance claims not supported by consignee receipt certificates, the PAOs should take adequate and prompt action to get the consignee receipts and settle the discrepancy or deficiency, if any, mentioned in the receipt certificate in consultation with the consignee.

Note: (a) The scrutiny mentioned at (i), (ii), (iv) & (v) above is to be exercised at the time of pre-check or post-check with   reference to sanctions and supply orders required to be communicated to the-PAOs.

(b) The checks at (iii) and (vi) above are to be exercised at the-time of internal audit of records of the departmental authorities.

(c) The requirements indicated at (vii), in regard to debits for stores purchased through the agency of D.G.S.&D. are to be applied' at the time of adjustment of the debits to final heads of accounts by the PAOs.

4.33.2 According to Chapter 8 of G.F.Rs, the responsibility of maintaining' numerical and value accounts of stores and undertaking the physical verification of stores is that of the departmental officers. The rules referred to prohibit physical verification of stores by persons not conversant with the classification, nomenclature and technique of the particular classes of stores. Accordingly the departmental Pay and Accounts Organisations (including Internal Audit) are not required to maintain the numerical and value accounts of stores or to conduct physical verification of stores and stock. During internal check it should, however, be ensured that a certificate of physical verification is recorded periodically by the responsible authority, that the system of verification adopted is adequate and proper, that the staff employed for physical verification are independent of those responsible for the physical custody of the stores or for keeping accounts thereof and that excesses and shortages found on physical verification are properly investigated and adjusted or written off under orders of competent authority.

4.33.3 Where a 'period' or 'value' account is maintained it will be the duty of the Accounts Officer to see, during internal check that (i) the stores are priced with reasonable accuracy and the rates are reviewed from time to tune, are co-related with market price and revised wherever necessary (ii) the value accounts tally with the accounts of works and of departments connected with the stores transactions, that the total of the value account tallies with the outstanding amount in the general accounts and that the numerical balance of stock materials is reconcilable with the total of 'value' balances in the accounts at the rates applicable to various classes of stores and (iii) steps are taken for the adjustment of profits or losses due to revaluation, stock taking or other causes.


4.34.1 The procedure for payments of refund of revenue will continue to be governed by the provision of  Rule 139-144 of Central Govt. Account (Receipts & Payments) Rules 1983 but the bills for refund of revenue will be presented to the concerned P.A.Os to whom the departmental officers are linked. The P.A.O. will, before making payment, verify the original credit from his records and al&o keep a note of the refund against the original credit.

[Refer Correction Slip 95]

4.34.2 In the case of refunds of revenue which were originally deposited before the date of departmentalisation of accounts and accounted for by the treasuries, the departmental officers will first send the bills to the concerned treasury officers for verifying the original credit with reference to the details in columns 4 & 5 of the refund bill (TR Form 41) and for affixing their signature in column 6 in token of having done so. The bills after certification by the treasury officers should be presented by the departmental officers to the concerned P.A.Os for making payment. The P.A.Os will ensure that the above requirements have been complied with.


4.35.1 Medical bills are checked with reference to medical attendance rules to see that essentiality certificate, sub-vouchers etc. have been attached to the bills. It should be seen that the inadmissible medicines have been excluded from the claim, the treatment is not for a continuous period of more than 10 days and the bill has been countersigned by the Controlling Officer.

4.35.2 All bills relating to advances and withdrawals from Provident Fund should be checked with reference to rules relating to the Fund and the amount at the credit of the subscriber in his account.


4.36.1 The Pay & Accounts Officer will ensure that in respect of all payments made after pre-check, a final receipt for the full amount passed has been received and attached to the bill in the prescribed form. This check may be conducted at the end of each month. For this purpose, the PAO should nominate a JAO or a Senior Accountant who should check that the acknowledgement is attached to each bill and record a certificate to this effect in a Register (Form CAM—32) to be opened for this purpose. This register should also be made available to audit.


4.37.1 In the case of bills paid without pre-check by the drawing and disbursing officers having cheque drawing powers, in addition to the general checks mentioned in para 4.10 above and check against provision of funds referred to in para 4.2 above, the following checks will also be exercised at the time of conduct of post-check:—

(i) that the vouchers are duly supported by acknowledgements of the payees;

(ii) that they are stamped as "Paid";

(in) that unless otherwise provided in the rules revenue stamps are affixed to all vouchers whose net amounts exceed Rs. 20 and the stamps are duly cancelled; and

(iv) that the vouchers bear voucher Nos. as given in the list of payments.

4.37.2 The detailed instructions explained above for the checks of various categories of bills shall also be kept in mind at the time of conducting post-check of vouchers to be received from the cheque drawing DDO.


Appendix 'A' to Chapter 4

(Referred to in para 4.3.2)

No. F. 7(15)-B (RA)/82
Ministry of Finance
Department of Economic Affairs

New Delhi, the 13th April, 1982


Subject : Revised guidelines on 'New Service'/'New Instrument of Service'.

The financial limits to be observed in determining cases relating to 'New Service'/'New Instrument of Service' prescribed in this Ministry's O.M. No. F. 8(60)-B/69 dated the 27th July, 1970 have been reviewed in pursuance of the recommendations of the Public Accounts Committee (Seventh Lok Sabha) in their 41st report. The revised limits, which have been drawn up in consultation with the Comptroller and Auditor General of India and have been approved by the Public Accounts Committee in their 70th report are annexed.

2. As the Ministry of Agriculture, etc. are aware, the term 'New Service', appearing in article 115(l)(a) of the Constitution, has been held as referring to expenditure arising out of a new policy decision, not brought to the notice of Parliament earlier, including a new activity or a new form of investment. Likewise, relatively large expenditure arising out of important expansion of an existing activity is treated as a 'New Instrument of Service' which is a slight variant of the term 'New Service'. The basic principle is that no expenditure can be incurred from the Consolidated Fund of India on a 'New Service'/'New Instrument of Service' without prior approval of Parliament through a Supplementary Grant. That is to say, the powers of Ministries/Departments to re-appropriate savings available under some sub-head(s) in a Grant for meeting additional requirements under other sub-head(s) within that Grant are subject to the aforesaid limits. As any non-observance of these limits reflects laxity in financial control, Ministries/Departments are requested to ensure strict adherence of these instructions in examining proposals for augmentation of sanctioned provisions.

3. Where in an emergent case of 'New Service'/New Instrument of Service' it is not possible to wait for prior approval of Parliament, the Contingency Fund of India can be drawn upon for meeting the expenditure pending its authorisation by Parliament. Recourse to this arrangement should normally be taken only when Parliament is not in session. Such advances are required to be recouped to the Fund by obtaining a Supplementary Grant in the immediately next session of Parliament. However, when Parliament is in session, a Supplementary Grant should preferably be obtained before incurring any expenditure on a 'New Service'/'New Instrument of Service'. That is to say, recourse to Contingency Fund of India should be taken only in cases of extreme urgency; in such cases the following procedure recommended by the Sixth Lok Sabha Committee on Papers Laid on the Table in their 4th Report should be observed.

"As far as possible, before such withdrawal is made, the concerned Minister may make a statement on the floor of the Lok Sabha for information giving details of the amount and the scheme for which the money is needed. In emergent cases, however, where it is not possible to inform the Members in advance, the withdrawal may be made from the Contingency Fund and soon thereafter a statement may be laid on the Table of the Lok Sabha for the information of the Members".

It has been suggested by the Rajya Sabha Secretariat that the above procedure may also be observed in Rajya Sabha.

4. The following checks may be observed by the Ministries/Departments to ensure that any expenditure likely to attract limits of 'New Service/'New Instrument of Service' is not incured by re-appropriation.'

(i) A specific certificate should be recorded in each case involving augmentation of sanctioned provision by the IF/Budget Section of the Ministry/Department on receipt of related proposals, to the effect that the proposed augmentation attracts / does not attract limits of 'New Service'/New Instrument of Service'. Where the proposal is held to attract these limits the procedure indicated in paragraphs 2 or 3 above will, depending upon the circumstances of the case ,have to be followed.

(ii) Subject to Paragraph 5 below, the Pay and Accounts Officers should examine each expenditure sanction from the 'New Service'/New Instrument of Service' angle, especially those involving investments, loans, grants-in-aid, subsidies, new works, etc. All doubtful cases should be put to the Controllers of Accounts/Financial Advisers.

If in any exceptional case, the expenditure, whether partly or fully, on a 'New Service'/ 'New Instrument of Service' has been incurred inadvertently and this fact comes to notice within the financial year, an advance from the Contingency Fund should be obtained during the year itself to cover the expenditure already incurred as also for the expenditure likely to be incurred before a Supplementary Grant for that Service becomes available.

5. Having regard to the volume of Government transactions it is not possible to list out those which are not attracted by 'New Service'/'New Instrument of Service' limits. Broadly, however, expenditure on normal activities of Government (such as normal administrative expenditure — including that resulting from reorganisation of Ministries/Departments, holding of conferences, seminars, exhibitions, surveys, feasibility studies, etc., assistance to foreign Governments, contributions to international bodies and transfers to State and Union Territory Governments) is not attracted by the limits of 'New Service'/'New Instrument of Service'. Further, these limits are applicable only to expenditure which is subject to vote of Parliament.

6. It should be noted that additional expenditure to the extent mentioned in column 2 of the annexed statement can be met by re-appropriation, subject to report to Parliament, only if savings are available in the relevant Grant; otherwise a Supplementary Grant has to be obtained.

Report to Parliament should ordinarily be made through the ensuing batch of Supplementary Demands and failing this by adding an Annexure in the Detailed Demands of Ministry/ Department for the ensuing year. Where possible a suitable mention of such cases may be made in the Notes on Demands for Grants of the Ministry/Department. Mere exhibition of augmented provisions in the Revised Estimates included in the Demands for Grants will not be adequate to meet the requirement.

7. Where a doubt arises about the application of limits of 'New Service'/'New Instrument of Service', a reference may be made to the Budget Division for clarification.

8. A mention may also be made here about the 'New Service' Annexure which is appended to the main Demands for Grants. The purpose of this Annexure is somewhat different. It is intended to bring to the notice of Parliament the details of new schemes i.e. schemes for which the Budget includes provision for the first time so that these can receive special attention of Parliament. These schemes are normally to be taken up after the passing of Budget; the Vote on account provisions are not intended to be utilised therefor. In cases of urgency, expenditure on a 'New Service' during Vote on Account period can, therefore, be incurred only by obtaining an advance from the Contingency Fund in the manner recommended by the Sixth Lok Sabha Committee on the Papers Laid on the Table, mentioned in paragraph 3 above. Such advances will be resumed to the Contingency Fund on enactment of Appropriation Act in respect of expenditure for the whole year.

ANNEXURE to O.M. No.F. 7(15)-B(RA)/82 dated 13-4-82
financial limits to be observed in determining cases relating to

Nature of transaction

Limits upto which expenditure can be met by re-appropriation of savings in a Grant subject to report to Parliament Limits beyond which prior approval of Parliament is required for expenditure from the Consolidated Fund
1 2 3
A : Departmental Undertakings.
(i) Setting up a new undertaking, or taking up a new activity by an existing undertaking All Cases
(ii) Additional investment in an existing undertaking Above Rs. 50 lakhs but not exceeding Rs. 1 crore Above Rs. 1 crore
B: Public Sector Companies/Corporations
(i) Setting up of a new Company, or splitting up of an existing Company, or amalgamation of two or more Companies, or taking up a new activity by an existing Company. All cases
(ii) Additional investment in/loans to an existing company
(a) Where there is no Budget Provision Above Rs. 10 lakhs but not exceeding Rs. 20 lakhs Above Rs. 20 lakhs
(b) Where Budget Provision exists for investment and/or loans
Paid up Capital of the Company
Upto Rs. 1 crore Above Rs. 10 lakhs but not exceeding Rs. 20 lakhs. Above Rs. 20 lakhs
Above Rs. 1 crore and upto Rs. 25 crores Above Rs. 1 crore but not exceeding Rs. 2 crores Above Rs. 2 crores.
Above Rs. 25 crores and upto Rs. 100 crores Above Rs. 5 crores but not exceeding Rs. 10 crores. Above Rs. 10 crores
Above Rs. 100 crores Above Rs. 75 crores but not exceeding Rs. 15 crores. Above Rs. 15 crores
Nature of transaction Limits upto which expenditure can be met by re-appropriation of savings in a Grant subject to report to Parliament Limits beyond which prior approval of Parliament is required for expenditure from the Consolidated Fund
1 2 3
Note 1 : In computing additional requirements for applying the above limits, loan and capital investments, over and above the budget provisions therefor, should be taken together.
Note 2 : For additional fund requirements of term lending institutions which are under the audit of the Comptroller and Auditor General of India, the limits will be twice those specified above.

Where an institution does not have paid up capital, the limits will be applied with reference to Central loans outstanding against it at the end of the previous financial year.

Note 3 : For financing projects under construction, within the approved cost estimates already brought to the notice of Parliament, augmentation of budget provisions beyond the monetary limits prescribed above will be permissible subject to availability of savings in the Grant. A report of such cases to Parliament will, however, be necessary.
Note 4 : Short term (working capital) loans, repayable within five years, will not be treated as 'New Instrument of Service' but will require to be reported to Parliament.
C: Port Trusts, Delhi Municipal Corporation, Khadi and Village Industries Commission, Tea Board and Coffee Board.  


Loans : The limits prescribed for public sector companies will apply with reference to central loans outstanding against them at the end of the previous financial year.
D: Private sector Companies/Private Institutions:
(i) Investments to be made for the first time except in Units coming under Government Management with the approval of Parliament All cases
(ii) Additional investments in or loans to an existing company/institution including private sector units coming under Government Management with the approval of Parliament. Above Rs. 50 lakhs but not exceeding Rs.1 crore. Above Rs. 1 crore.
Note 1 : While applying these limits loans and capital investments are to be taken together.
Note 2 : In the case of loans to statutory and other public institutions (other than those mentioned under item C above) substantially financed by grants-in-aid from Government e.g. University Grants Commission, Indian Institute of Technology and joint sector enterprises, limits as applicable to private sector companies/institutions should be applied.
Nature of transaction Limits upto which expenditure can be met by re-appropriation of savings in a Grant subject to report to Parliament Limits beyond which prior approval of Parliament is required for expenditure from the Consolidated Fund
1 2 3
Note 3: Where there is no Budget provision for investment/ loans to a company/institution, prior approval of Parliament will be necessary for investment/ loans exceeding Rs. 10 lakhs except in the case of units brought under Government Management.
E: Expenditure on new Works (Land, Buildings and/or Machinery) Above Rs. 10 lakhs but not exceeding Rs. 50 lakhs Above Rs. 50 lakhs
F: Grants-in-aid to statutory and other public institutions :  


(i) Institutions in receipt of grant-in-aid upto Rs. 1 crore Rs. 10 lakhs
(ii) Institutions in receipt of grant-in-laid of more than Rs. 1 crore 10% of the Budget provision or Rs. 2 crores, whichever is less.
Note 1 : These limits will apply with reference to moneys disbursed by an individual Ministry/Department and not by the Government as a whole.  


Note 2 : The above limits will also apply to institutions which are substantially financed by grants-in-aid from Government and to public sector undertakings in receipt of grants-in-aid.  


Note 3 : Where a lump sum provision is made for providing grant-in-aid under a particular scheme in the absence of institution-wise break up at the time the provision is made, the aforesaid limits will not apply to releases to such institutions within the budgeted provision. The details will, however, be reported to Parliament.  


G: Grants-in-aid to Private institutions other than for Export Promotion Schemes
(i) Recurring •• Above Rs. 5 lakhs
(ii) Non-recurring •• Above Rs. 10 lakhs
Note 1 : In the case of recurring grants exceeding Rs. 5 lakhs per annum the financial implications should be reported to Parliament where the grant is to be made for 2 years or more.  


Note 2 : The limits for non-recurring and recurring grants-in-aid will apply with reference to moneys disbursed by an individual Ministry Department and not Government as a whole.  


Nature of transaction Limits upto which expenditure can be met by re-appropriation of savings in a Grant subject to report to Parliament Limits beyond which prior approval of Parliament is required for expenditure from the Consolidated Fund
1 2 3
Note 3: Where a lumpsum provision is made for providing grant-in-aid under a particular scheme in the absence of institution-wise breakup at the time the provision is made, the aforesaid limits will not apply to releases to such institutions within the budgeted provision. The details will, however, be reported to Parliament.
H : Subsidies and Grants under Export Promotion Schemes. The budget provision should be split up as under :—


(i) Product Promotion and Commodity Development (this sub-head will accommodate payments of cash compensatory support on all items of exports including textiles).
(ii) Grants-in-aid to Export Promotion and Market Development Organisations (this sub-head would accommodate grants to Export Promotion Councils and other organisations like Trade Development Authority, Indian Institute of Foreign Trade, etc. for their establishment expenditure as well as developmental activities and also to recognised export houses for specified export promotion actvities).
(iii) Export Credit Development (This sub-head will cover payments made to commercial banks towards interest subsidy under the Export Credit Subsidy Schemes).
Limits for augmentation of total provision under the Export Promotion Schemes :
Above Rs. 50 lakhs but not exceeding Rs. 2 crores Above Rs. 2 crores
I : Food Subsidy Above Rs. 50 lakhs but not exceeding Rs. 2 crores Above Rs. 2 crores
J : Other subsidies Above Rs. 10 lakhs
K : Payments against cess collections Limits as applicable to grants-in-aid to statutory or public institutions will apply
L : New Commissions or Committees of Enquiry •• Above Rs. 4 lakhs (total expenditure)
M : Write off of Government loans Above Rs. 50,000 but not exceeding Rs. 1 lakh (individual cases) Above Rs. 1 lakh   (individual cases)


Note : This limit will also apply where it is decided to sanction grant to a private institution/individual for repayment of loan.  


Nature of transaction Limits upto which expenditure can be met by re-appropriation of savings in a Grant subject to report to Parliament Limits beyond which prior approval of Parliament is required for expenditure from the Consolidated Fund
1 2 3
N: Other cases of Government expenditure Each case to be considered on merits.
O: P & T Railways Defence The aforesaid limits, including those relating to Works expenditure, will also apply to these Departments subject to considerations of security in the case of Defence.
Note 1 : For investment in ordnance Factories, the limit of Rs. 1 crore mentioned in item A(ii) will be applicable with reference to investment in all the factories as a whole.
Note 2 : Civil Works, which do not form part of any project of the departmental undertakings (Ordnance Factories) should be treated as ordinary Defence works. As such, prior approval of Parliament will be necessary if the cost of individual works exceeds Rs. 50 lakhs and in cases where the individual works cost Rs. 10 lakhs or more but not exceeding Rs. 50 lakhs, a report to Parliament will be required. A list of such works should, however, be supplied to Director of Audit, Defence Services.

[Refer Correction Slip 38]


Appendix 'B' to Chapter 4

(Referred to in Note below para 4.2.3)

1. A question was raised whether, in a case in which an appeal has been filed against the decree of a lower court, a deposit of the decretal amount made in the court, should be treated as a Deposit in the Public Account or as a payment charged on the Consolidated Fund of India under article 112(3)(f) of the Constitution of India.

It has been decided that, in the absence of a stay of execution of the decree, the Deposit should be deemed to be in satisfaction of the decree. If, however, deposit of the decretal amount has been made by way of security for staying the execution of the decree, or as a condition precedent to the grant of a stay order under orders of the Appellate Court, the payment made in pursuance of the said order is only a deposit and cannot be said to have been made in satisfaction of the decree passed by the lower court. The fact that the Court may allow the decree-holder to withdraw the amount so deposited by the Government does not alter this position. Consequently, the provisions of article 112(3)(f) of the Constitution would not be attracted in such cases. The amount, being in the nature of a deposit in the Court, would not constitute 'expenditure' of the Government and should be classified under the head "874- Security Deposits made by Governmentl" in Section "L-Suspense and Miscellaneous" in the Public Account of India-the debit under this Head being cleared after the amount is recovered if and when the appeal is decided in favour of Government. Where, however, the appeal is dismissed and the decree becomes final, the amount deposited in the Court would thereupon constitute payment made to satisfy the decree and, consequently, the debit under the Suspense Head should then be cleared by transfer to the final head, as 'Charged' expenditure, and covered by appropriate provision of funds or, in anticipation thereof, by an Advance from the Contingency Fund of India, as may be necessary.

[Ministry of Finance No. F1(44)-B/56 dated 16.5.56, F. 1(66)-B/57 dated 21.11.57 and F. 1(52)-B/68 dated 31.1.69]

[Refer Correction Slip 63]

2. In cases of arbitral awards/decrees against State Governments in disputes arising out of the acquisition of land, buildings and property for Union purposes, since the award/decree is against the State Government and the liability for the initial payment in satisfaction of the award/decree devolves on the State Government, the expenditure should be charged on the Consolidated Fund of the State under article 202(3) (e) of the Constitution. The subsequent reimbursement by the Central Government would be merely an inter-governmental adjustment which does not attract the provisions of article 112(3)(f) of the Constitution, since such an award/decree is not enforceable against the Central Government.

[Ministry of Finance No. F. 2(43)-B/59 dated 12.9.59]

3. There are cases in which security deposits of contractors are appropriated by Government towards liquidated damages. In such cases, if recovery made from the contractor on this account has to be refunded as a result of the levy of compensation in terms of the agreement having been held by the arbitrator as not justified, the refund should be treated as expenditure charged on the Consolidated Fund under article 112(3) (f) of the Constitution.

[C & AG letter No. 1267-AC/178-63 dated 24. 9. 63]

4. Where a Court award is for a composite amount which is not capable of being split up as "Refunds of Revenue" and "Other Expenditure", the entire amount of award should be treated as "Charged" expenditure.

Where an award is exclusively for the refund of security deposit or other revenue, the refund should not be treated as "Charged" expenditure but accounted for as refund of deposit or revenue, as the case may be, under "Deduct-Refunds".

Where an award is specific about the components of the award (e.g. refund of security deposit plus cost) or is for a composite amount which is capable of being split up as "Refunds" and "Other expenditure", the components are to be accounted for individually as" Refund" of deposit or revenue and as "Charged" expenditure respectively.

[C & AG's letter No. 437-AC/131-65.dated 18.5.66.]

5. The Ministry of Law have advised that for the purposes of article 112(3)(f) of the Constitution, a tribunal must be constituted by the State (and not merely by an agreement of parties) and must be invested with the States' inherent judicial (as distinguished from purely administrative or executive) powers and the trappings of a court. Accordingly, an arbitrator appointed under Section 10A of the industrial Disputes Act, 1947 or a private arbitrator to whom a dispute is referred under an arbitration agreement under the Arbitration Act, 1940 is not a tribunal within the meaning of article 136 of the Constitution. Consequently, payment in satisfaction of the award of such an arbitrator cannot be treated as expenditure "Charged" on the Consolidated Fund. However, in cases where such an award by a private arbitrator is filed in a court and a degree is obtained in terms of the award, the expenditure required to satisfy the court decree will be the expenditure charged on the Consolidated Fund.

[Ministry of Finance No. F.1(124)-B/64 dated 13th November, 1964].

6. The award of a collector under the Land Acquisition Act is not an award of court nor can it be considered as an award of arbitral tribunal. While making an award under Section 11 of the Act, the collector merely acts as an office of the Government making enquiries in order to determine the compensation payable. Payment of such awards should, therefore, be treated as a voted item of expenditure.

[Ministry of Finance No. F.1(14)-B/66 dated 19th April, 1966].

7. A case arose in which an award was decreed against the Government for payment of rent in respect of certain requisitioned property. It has been held that where an award imposes an obligation to make a recurring payment, every recurring payment including those beyond the date of the award would be expenditure "Charged" on the Consolidated Fund under article 112(3) (f) of the Constitution.

[Ministry of Finance No. F.1(124)-B/64 dated 20th April, 1965].

8. Pension payments in the under-mentioned cases are required to be treated as "Charged" expenditure in terms of various provisions of the Constitution shown against each:

Article of the Constitution
(a) Judges of the Supreme Court/Federal Court/High Courts 112(3)(d)
(b) Comptroller & Auditor General of India 112(3)(e)
(c) Officers and servants of the Supreme Court 146(3)
(d) Persons serving in the Comptroller and Auditor General's Office 148(6)
(e) Officers and servants of High Courts 229(3)
(f) Members and staff of U.P.S.C. and State Public Service Commissions 322

The pensions payable to or in respect of the Judges of Supreme Court, Federal Court and High Court, the Comptroller and Auditor General of India and members of the Public Service Commissions (both Union and States) do not present any problem and they are required to be "Charged" on the Consolidated Fund of India or the States, as the case may be. In the case of officers and staff of the Courts, Public Service Commissions and Comptroller and Auditor General of India, however, it is not possible to follow a uniform procedure in all cases in view of the difference in the wording of the relevant articles of the Constitution. Having regard to the Constitutional provisions, the entire pension of the officers and staff of the High Court, Supreme Court, UPSC and State Public Service Commissions should be treated as "Charged" expenditure only in cases in which the employees hold a lien on a post in these organisations, or in the case of temporary employees, if they do not hold a lien on a post in any other organisation.

In the case of the office of the C & A.G., however, in view of the wording of article 148(6) of the Constitution, pension of all officers and staff serving in that office immediately before retirement or proceeding on leave preparatory to retirement from that office should be treated as "Charged" expenditure irrespective of the office or service to which they belong.

A pension will either be wholly charged or wholly voted and the fact the same is allocable between different Governments or Departments, service under one or more of which does not by itself qualify for a "Charged" pension, should not make any difference.

[Ministry of Finance No. F. 1(79)-B/64 dated 1-10-1965]

9. Under article 112(3)(a) of the Constitution of India, the emoluments and allowances of the President of India and "other expenditure relating to his office" shall be expenditure charged on the Consolidated Fund of India. It has been held by the Ministry of Law that it would not be proper to exclude pension, gratuity etc. payable to retired employees or their families from being a charged expenditure on the Consolidated Fund of India, only because those particular items were not specifically referred to in the above clause of the Constitution. It has, therefore, been held that the expression "other expenditure relating to his office" referred to in this clause includes also pension, gratuity etc. It has been further held that pensions, gratuity etc. in respect of persons who have served the President's Secretariat before retirement, or who retire while serving the President's Secretariat, should be treated as 'Charged' expenditure, only if the employees hold a lien on a post in the President's Secretariat or, in the case of temporary, employees, if they do not hold a lien on a post in any other organisation.

[Ministry of Finance U.O. No. F. 7(14)-B(D)/77-KW dated 10-5-78 and F.3(102)-B (AC)/78 dated 27-8-79; the Ministry of Law, Justice & Company Affairs U.O. No. 23037/78 dated 19-5-78; and the CAG's U.O. Note No. 1514-AC/142-78 dated 13-8-79]

[Refer Correction Slip 47]