CHAPTER 9
MAJOR FINDINGS IN TRANSACTION AUDIT

(A)    Loss/Over payment/Short recovery/Other recoveries at the instance of Audit

54    Short realisation of postage due to violation of conditions of postage

Rule for treating the publications as registered newspapers for availing concessional tariff

Departmental rules stipulate that every publication, consisting wholly or in great part of political or other news or of articles relating thereto or to other current topics with or without advertisements was to be treated as a registered news paper, provided that it was published in numbers at intervals of not more than thirty-one days and had a bonafide list of subscribers. All such registered newspapers were entitled for concessional tariff.

Conditions under which the concessional tariff not applicable

The conditions also stipulate that any registered newspaper/periodical and magazine was to be treated as book packet and would attract postage at book packet rates instead of concessional tariff in case it contained (i) an advertisement sheet printed for an advertiser and sent to the publisher of these newspapers/periodicals/magazines, (ii) an advertisement sheet with an order form attached, (iii) a prospectus with an application form attached, (iv) a proposal enquiry form or (v) any document drawn up in the form of a direct personal communication to the recipient such as printed circular in the form of a letter purporting to be addressed to a person by whom the newspaper in which it was enclosed was received.

Concessional tariff was allowed despite violation of conditions in 50 per cent of the cases test checked

Short realisation of postage of Rs 1.70 crore during 2000-01

Scrutiny of records of Chief Postmaster General (CPMG), New Delhi and Senior Superintendent Railway Mail Service Delhi during April/May 2001 disclosed that 1045 newspapers/periodicals/magazines were registered with Delhi circle for availing concession in postage as registered newspapers. A test check of 280 cases (27 per cent) out of 1045 newspapers/periodicals/ magazines registered in Delhi for availing concession in postage as registered newspapers revealed that in 50 per cent of the cases test checked, the editors of these newspapers/magazines/periodicals were permitted to post at concessional tariff during 2000-01 although these newspapers/magazines/ periodicals violated the conditions applicable for concessional tariff. All these newspapers/magazines/periodicals either contained religious matters (26), coupons, query, compact discs, quiz, application proforma, rate list etc (83), more than 50 per cent advertisements (15), were not printed in permitted language (4), were not printed periodically (10), or contained extra weight/ extra pages (2) etc. As such in all these cases, the rate applicable for book packet was to be charged instead of the concessional tariff allowed. This resulted in short realisation of postage of Rs 1.70 crore during 2000-01.

Approval of SPO/SSPO for change in the dates of posting as mentioned in the licences not obtained

Further, rules prescribed that a three days’ clear notice was to be given to the Postmaster of the place in case any change was desired in the dates or days of posting so specified in the licences. The number of days or dates specified in the licence of posting of registered newspapers could not be altered except with the prior approval of Superintendent of Post offices (SPO)/Senior Superintendent of Post offices (SSPO). Test check disclosed that 37 and 30 newspapers/magazines/periodicals in Delhi and Jaipur circle respectively, were posted on dates different from those specified in the respective licences without prior approval of SPO/SSPO. Delay in posting was attributed by the publisher to power cuts, late printing of magazines, late receipt of text matter, technical problems etc. The concerned postmasters permitted the publishers to post the newspapers/magazines/ periodicals without satisfying themselves about the genuineness of the delay.

The matter was referred to the Ministry in September 2001; their reply was awaited as of December 2001.

55    Non recovery of arrears of Rs 19.47 lakh

DoP increased the rates of conveyance of mails and carriage of special bags of mails retrospectively

Consequent on increase in the tariff, the Department of Posts (DoP) revised upwards with retrospective effect, the postage charges for conveyance of mails and carriage of special bags of mail relating to the Cabinet Secretariat, Ministry of Defence, Border Security Force (BSF), Army Postal Service (APS) etc as under:

Non-recovery of Rs 19.47 lakh from BSF

Scrutiny of records of DoP by Audit in April 1999 revealed that the department failed to raise bills, for recovery of arrears on account of upward revision of postage rates for carriage of special bags/carriage of mail from BSF authoritities resulting in non recovery of Rs 19.47 lakh.

Rs 19.47 lakh realised from BSF at the instance of Audit

When this was pointed out by Audit in April 1999, the department issued bills in May 1999 and recovered the outstanding amount of Rs 19.47 lakh from Border Security Force in July 2001.

While accepting the delay in issue of bills the Ministry stated that the work of calculation of the difference amount to be claimed from BSF involved checking of records of the last three years which was in progress in March 1999. The bills were issued in May 1999 and the department got the payment in July 2001 after much persuasion.

56    Irregular payment of interest on accounts opened in contravention of rules

Post Office Savings Bank and Time Deposit rules provide that a Gazetted State Government Officer in his official capacity, on behalf of persons/bodies whose money is held as deposit or otherwise with such officer, can open Savings Bank and Time Deposit accounts in the post offices. Postal Directorate in July 1987 directed the heads of circles to issue suitable instructions to the Head Postmasters to be careful in the matter of permitting ‘official capacity accounts’. Before allowing the opening of such account the Postmaster concerned is required to obtain a certificate from the person authorised to open the account to the effect that the money is the property of the person(s) or bodies on whose behalf the account is opened.

Opening of accounts in contravention of rules

Irregular payment of interest of Rs 12.28 lakh

Scrutiny of records of the Postmaster Jhunjhunu in February-March 2000 by Audit revealed that the Postmaster concerned, in contravention of above rules, permitted the opening of one Savings Bank account in July 1989 and one Time Deposit account in August 1997, as official category, in the name of Collector Jhunjhunu, without obtaining a certificate from him to the effect that money belonged to persons/bodies on whose behalf these accounts were opened by the Collector concerned and it did not belong to Government. Subsequently the Collector was allowed interest of Rs 8.51 lakh on Savings Bank account during 1989-99 and Rs 3.77 lakh on Time Deposit Account during August 1997 to August 1999, which was not payable under the rules, in absence of a certificate on the lines mentioned above.

Recovery of whole amount at the instance of Audit.

The Ministry in their reply in August 2001 stated that entire amount was recovered and Time Deposit account closed in January 2001. The remark that no interest be allowed on Savings Bank Account was also recorded on the ledger cards.

(B)    Idle/Unproductive expenditure

57    Wasteful expenditure on account of delay in construction of post office buildings

Audit scrutiny of records of CPMG Delhi and Rajasthan circles during April 2001 and June 2001 respectively, revealed the following irregularities

Blocking of funds of Rs 2.10 crore due to non construction of buildings

Although the CPMG procured 41 plots of land during 1967-98, he failed to construct even a single post office building on these plots. This led to blocking of funds of Rs 2.10 crore during the above period.

Avoidable expenditure of Rs 30.01 lakh on rented buildings

26 post offices were functioning in rented buildings in the vicinity of these 41 plots on which the CPMG incurred an avoidable payment of rent of Rs 30.01 lakh during 1968-2001 because of his failure to construct the buildings on the available land.

Two plots worth Rs 1.63 lakh lying under encroachment

Out of the above 41 plots, two plots worth Rs 1.63 lakh in Jamia Nagar and Geeta Colony purchased in 1984 and 1986, respectively, were under encroachment, but the CPMG failed to get the encroachment cleared as of June 2001.

Avoidable payment of penalty of Rs 8.72 lakh

Failure of CPMG to construct the buildings on the plots of land within two years of purchase thereof resulted in avoidable payment of penalty of Rs 8.72 lakh during 1998-99

The CPMG in April 2001, attributed the problem to shortage of funds and imposition of a ban on new construction in July 1994. In this connection it may be mentioned that 37 out of the 41 plots were procured much before July 1994.

The Ministry in their reply in October 2001 stated that the department purchased plots of land taking into account the perspective plan for the next 25 years. Against a demand of Rs 425 crore during the Eighth Five Year Plan, however, the department was allotted Plan funds of only Rs 121.35 crore. The Ministry added that this gap between demand and allotment was the primary cause for the non-construction and attraction of penalty. As regards the encroachment on two plots, the Ministry intimated that DDA had decided to allot alternate plots of land.

The reply of the Ministry is not acceptable because during the period 1990-94 against a grant of Rs 300.70 crore under Capital outlay, an expenditure of only Rs 208.60 crore was incurred and there were savings of Rs 92.10 crore. Moreover, even a perspective plan for 25 years would not explain why no construction was effected for as along as 34 years.

Procurement of land at various places at a cost of Rs 98.94 lakh

Unfruitful expenditure of Rs 20.17 lakh on lease rent

All the 28 plots procured by CPMG Rajasthan circle at various locations in Rajasthan at a cost of Rs 98.94 lakh between September 1974 and March 1994 for construction of post office buildings were lying unutilised as of June 2001. This resulted in blocking of funds of Rs 98.94 lakh besides unfruitful payment of lease rental of Rs 20.17 lakh on 11 of these plots between 1982 and March 1999.

Failure to construct departmental buildings resulted in avoidable expenditure of Rs 96.13 lakh on rented buildings

In order to run the post offices as also administrative offices, the CPMG hired 28 buildings despite availability of departmental land at these places. This led to an avoidable expenditure of Rs 96.13 lakh on rental for these buildings. This indicated failure of the CPMG to construct the departmental buildings on the existing plots.

The Ministry in their reply in October 2001 stated that the construction of departmental buildings on 28 plots of land prior to July 1994 could not be taken up as there were other projects under construction which helped to save a huge amount on rent. The Ministry added that pre-construction formalities took considerable time and as a result the construction of buildings on these plots could not be commenced before imposition of the ban in July 1994.

The reply of the Ministry is not convincing. As brought out above, there were savings of Rs 92.10 crore during the years 1990-94. Moreover, these 28 plots included plots purchased as far back as in 1974.

58    Idling of staff quarters due to defective planning

A comment was made in paragraph 51 of the Report of the Comptroller and Auditor General of India for the year ended March 2000, Union Government (Posts and Telecommunications) No.6 of 2001, regarding non-utilisation of ready built quarters worth Rs 28.59 lakh purchased from Madhya Pradesh Government by the CPMG Madhya Pradesh circle. The Ministry in reply stated in February 2001 that due to retirement and death of the officials concerned the responsibility could not be fixed.

Purchase of land and construction of quarters despite adverse site suitability report by the Civil Wing

In yet another such case in Madhya Pradesh circle, Audit in July 1998 and February 2001 noticed non-utilisation of quarters by PMG Indore who constructed them despite adverse site suitability certificate by the department’s Civil Wing as detailed below:

The PMG purchased a piece of land measuring 99,000 Sq ft in November 1982 from the Government of Madhya Pradesh at a premium of Rs 7,544 and an annual lease rental of Rs 565.80. In January 1991, he accorded administrative approval and expenditure sanction for construction of two quarters each of Type I and II and one quarter of Type III on the said land, at an estimated cost of Rs 11.08 lakh, though he was aware that the said land was absolutely undeveloped and not fit for construction till its development by the city development authorities for water and electricity facilities. Since the land was rocky, even a tubewell could not be bored.

Blocking of funds of Rs 16.64 lakh due to idling of quarters and Rs 0.95 lakh on provision of water connection

Avoidable payment of HRA of Rs 0.51 lakh besides foregoing of licence fee of Rs 0.39 lakh

The quarters, completed in December 1993 at a cost of Rs 16.64 lakh inclusive of cost of electric fittings, could not be allotted as of August 2001 for want of water connection for which an additional amount of Rs 0.95 lakh was paid to Municipal Corporation in May 1999. This resulted in blocking of funds of Rs 16.64 lakh for over seven years and house rent allowance of Rs 0.51 lakh had to be continued to the staff members as the quarters were not made fit for occupation. The quarters if made fit and occupied would have earned a licence fee of Rs 0.39 lakh between December 1993 and February 2001.

The Ministry stated in July 2001 that the staff quarters were constructed keeping in view the long-term requirements of the staff in the division but the basic amenities did not come up as expected. The Ministry added that the PMG Indore had been directed by CPMG, MP circle to allot these quarters immediately and consult the civil wing for providing water connection from the nearest available water source.

(C)    Excess expenditure in violation of rules

59    Payment of overtime allowance

Rules prescribe the ceiling of overtime allowance at one third of monthly emoluments of the employees

As a measure of economy in administrative expenditure of the Government of India, the overtime allowance (OTA) rules stipulate that the deployment of staff on overtime beyond the prescribed office hours is not to be resorted to as a matter of routine. The work in all the offices, as far as possible, is to be organised in such a way so as to avoid retention of staff on overtime duty beyond office hours. However, in exceptional cases, where it is decided at the appropriate level that the nature of work is such that it cannot be postponed till the next day, the minimum staff required to do that work should be deployed on overtime. Even in such cases it is to be ensured that the maximum overtime allowance admissible to such employees in a month does not exceed the amount corresponding to OTA payable for one third of their monthly working hours i.e. 70 hours. However, this may not be claimed as a matter of course.

Non restricting of overtime allowance to prescribed limit led to excess payment of Rs 68.41 lakh

Payment of OTA of Rs 57.35 lakh to Group '‘D'’ despite excess men-in-position over sanctioned strength in Group ‘D’ cadre

Audit scrutiny of records of the Senior Superintendent Airmail Sorting division Chanakyapuri Delhi in December 1999 revealed that the above officer allowed the payment of OTA to his employees, in a routine manner, without restricting the same to the above prescribed ceiling. This led to an excess payment of Rs 68.41 lakh to Group ‘C’ staff during 1996-2001. Further, OTA of Rs 57.35 lakh was also paid to Group ‘D’ staff during 1996-2001 although there was surplus staff under this cadre as shown below:

*    Temporary status

It was further noticed that the Senior Superintendent Airmail Sorting failed even to maintain the overtime allowance register prescribed under the rules for effective monitoring of payments thereof. As a result, the supervisory officers failed to exercise necessary checks on the payment of overtime allowance.

The Senior Superintendent, while confirming the above facts, stated in December 1999 and July 2001 that the payment of OTA in excess of prescribed ceiling was made under the approval of the CPMG. He further added that instructions had been issued for proper maintenance of the register of OTA.

The fact, however, remains that the practice of payment of OTA in excess of the prescribed ceiling and despite surplus staff was clearly in violation of the provisions and cost the exchequer Rs 1.26 crore

Ministry may investigate the matter.

The matter was referred to the Ministry in August 2001; their reply was awaited as of December 2001.

(D)    Avoidable payment/expenditure

60    Excess payment to Railways for conveyance of mail

DoP hires coaches from Railways for carriage of mails.

DoP hires coaches on running trains from Indian Railways for carriage of mail. The railway coaches used for the purpose are commonly known as postal and non-postal vans. The payments are made to Railways by the Head of Postal Circle based on the bills raised periodically by the Zonal Railways.

Excess payment of Rs 40.20 lakh to the SE Railway authorities for carriage of mail

Scrutiny of records of CPMG Orissa circle by Audit in April 2000 revealed that in 15 cases the CPMG paid to South Eastern Railway (SER), the haulage charges of Rs 36.10 lakh billed for between October 1995 and September 1998 for carrying mail by different trains in different sections. Again the CPMG paid Rs 40.20 lakh towards the carriage charges billed for between July and November 1998 on weighment basis for the mail carried for the same period by the same trains and between the same sections. This resulted in double payment of Rs 40.20 lakh towards carrying mail on weighment basis to South Eastern Railway as given here under:

When this was pointed out by Audit in April 2000 the CPMG Orissa circle adjusted the entire amount in February-March 2001 in the subsequent bills preferred by Railways.

While accepting the facts the Ministry stated in October 2001 that the Railways prefer the bills for haulage charges and weighment system charges separately. In this case the Railway authorities erroneously mentioned the same train numbers in some cases in both the bills. Thus, the overpayment cropped up undetected and the same was inadvertently made. Audit considers that this indicated ineffective checking of bills.

61    Excess payment of haulage charges

Haulage charges are payable on actual km run by RMS coaches

DoP conveys mail between Bhubaneswar and Jharsuguda (876 kms) by “Hirakhanda Express”, which runs from Bhubaneswar beyond Jharsuguda, upto Rourkela (976 km). Similarly, mail was also conveyed between Nagpur and Chakradharpur (818 km) by “Tatanagar-Nagpur passenger train”, which runs from Nagpur beyond Chakradharpur, upto Tatanagar (882 km). The haulage charges, as per department’s instructions, are payable to the Railways for the actual distance of the Railway Mail Service (RMS) section and not for the empty run of the RMS coaches beyond the destination points for the mail.

Failure to restrict the payment to actual km covered by RMS coach resulted in excess payment of Rs 20.24 lakh

Recovery at the instance of Audit

Audit scrutiny of the records of the CPMG Orissa circle in April 2000, revealed that the CPMG Orissa circle made an excess payment of haulage charges of Rs 20.24 lakh during 1993-99 for empty run of RMS coaches beyond the destination points for the mail, without restricting the payments to the actual distances of the RMS sections concerned.

The Ministry in their reply in October 2001 while confirming the facts and figures stated that the excess payment of haulage charges paid by Orissa circle was adjusted from the bill preferred by SER for the period ending September 2000.

62    Irregular payment of advances to contractors

Advance payment to contractors prohibited

Advance payment to contractors under the codal provisions is, as a rule, prohibited. As an exception, however, advances are payable for work actually executed, on the certificate of a responsible officer and with the prior sanction of the concerned Superintending Engineer (SE).

Executive Engineer paid advances of Rs 1.39 crore to contractors in violation of rules

Advance of Rs 21.90 lakh paid to contractors before commencement of work

Audit scrutiny of the records of the Executive Engineer (EE) Postal Civil Division Cuttack between September 1997 and October 2000 revealed that the EE in contravention of above rules paid advances of Rs 1.39 crore to 37 contractors between July 1997 and March 1998, without either recommendation by any responsible officer or the approval of the SE. Moreover, these advances were made without obtaining any security. Of these, the Executive Engineer made advance payments of Rs 21.90 lakh even before commencement of work by the contractors. Besides loss of interest of Rs 12.77 lakh on irregularly paid advances, this also resulted in extension of undue benefit to the contractors till their adjustment over periods ranging from 91 to 611 days. An amount of Rs 2.90 lakh out of the advances paid was recoverable as of August 2001.

Loss of interest of Rs 12.77 lakh and outstanding advance of Rs 2.90 lakh

The Ministry in their reply in January 2002, while accepting the facts, stated that disciplinary action had been initiated against the officers responsible for the lapse and all the advances given to contractors had been adjusted except Rs 1.00 lakh in one case; action was underway for realisation of the same from the contractor.

(E)    Other irregularities

63    Retention of cash in excess of the prescribed limits

Post offices required to maintain cash within prescribed limits

Departmental provisions stipulate that the post offices must not retain cash balance in excess of the prescribed limits. Excess cash balances if any, must be deposited daily in to their respective banks.

Non observance of prescribed cash limits

Scrutiny by Audit of the records of the Head Postmasters (HPMs) Kota and New Grain Mandi Kota under the CPMG Rajasthan circle between December 1999 and July 2001 revealed that these HPMs retained cash balances over the prescribed limits fixed by the Senior Superintendent of Post Offices (SSPOs) concerned during the test checked months of March 1999 and June 2001, respectively, as shown below:

Retention of cash in excess of prescribed limits

(Rs in lakh)

Retention of such huge cash balances contrary to the provisions was fraught with the risks of theft, fraud and misappropriation.

The Ministry while admitting the facts stated in October 2001 that February and March were the months during which heavy deposits were received from the investors and it might not be feasible to totally avoid the retention of excess cash due to a) disbursement of salary; b) receipt of cash from subordinate and EDBOs after banking hours and c) non acceptance of more than 10-12 bundles of currency notes by the bank in a day

It was further stated that authorised cash balances of both the HPOs were enhanced to a minimum of Rs 5 lakh and maximum to Rs 8 lakh and Rs 6.5 lakh, respectively with effect from August 2001. Instructions to Postmasters had been issued to keep the cash balance within authorised limits and to contact the bank authorities to accept cash collected at post offices without any limit at their bank counter. The provision of gunman and chowkidar had also been enforced. Ministry further stated that inspite of taking reasonable steps, post offices continued to receive and retain surplus cash for reasons beyond the control of the department.

The reply is not acceptable due to the fact that for disbursement of salary on a particular day in a month, a specific amount is required but both post offices during March 1999 retained cash balances ranging from Rs 32.94 lakh to Rs 71.18 lakh which were 14 to 33 times more as compared to maximum permitted cash limit. Moreover, after enhancement of maximum permitted cash limit to Rs 8 lakh and Rs 6.5 lakh in August 2001 for both the post offices is not sufficient as the post office retained cash balances even in June 2001 ranging from Rs 21.21 lakh to Rs 11.63 lakh which were still 1½ to 3½ times higher than this maximum permitted cash limit. The Ministry, therefore, has to make/amend the provisions as the ongoing ad-hoc arrangements in violation of the provisions are fraught with serious risks.

64    Follow up on Audit Reports

With a view to ensuring accountability of the executive in respect of all the issues dealt with in various Audit Reports, the Public Accounts Committee (PAC) decided in 1982 that Ministries/Departments should furnish final remedial/ corrective Action Taken Notes (ATNs) on all paragraphs contained therein.

The Committee took a serious view of the inordinate delays and persistent failure on the part of a large number of Ministries/Departments in furnishing the ATNs within the prescribed time frame. In their Ninth Report (Eleventh Lok Sabha) presented to the Parliament on 22 April 1997, the PAC desired that submission of pending ATNs pertaining to Audit Reports for the years ended March 1994 and 1995 should be completed within a period of three months and recommended that ATNs on all paragraphs pertaining to the Audit Reports for the year ended 31 March 1996 onwards be submitted to them duly vetted by Audit within four months from the laying of the Reports in Parliament.

ATNs in respect of 13 Audit paragraphs were awaited as of December 2001

Review of ATNs relating to Department of Posts revealed that final ATNs in respect of 13 Audit paragraphs were awaited as on 31 December 2001. Details of pending ATNs are given in Appendix XXXIX.

65    Response of the Ministry/Department to Draft Audit Paragraphs

Ministry/ Departments are required to send their response to draft audit paragraphs within six weeks

On the recommendation of the Public Account Committee, the Ministry of Finance issued directions to all Ministries in June 1960 to send their response to the Draft Audit Paragraphs (DAPs) proposed for inclusion in the Report of the Comptroller and Auditor General of India within six weeks.

14 DAPs and two comprehensive performance review proposed for inclusion in the Report of the Comptroller and Auditor General of India for the year ended March 2001, Union Government (Post and Telecommunications) No.6 of 2002 were forwarded to the Secretary Department of Posts during May to December 2001 through demi-official letters.

Replies to two draft audit paras and one review not received

The Ministry did not send replies to two draft audit paras and one comprehensive review (Appendix XL) as on 31 December 2001 in compliance to above instructions of the Ministry of Finance issued at the instance of Public Accounts Committee.