NOTE—All the rules under this Section have been framed under the Public Accountants Default Act, XII of 1850.

69. Cashiers, accountants, store-keepers and other subordinates, entrusted with the custody of cash, stores, or other valuables, shall be required to furnish security in all cases, except where exemption may be made under special or general orders of Government. Subject to the provisions of paragraph 70 infra the amount of security shall be regulated by the Heads of Departments according to the circumstances and local conditions in each case.

NOTES—(1) Special rules applicable to particular departments will be found in the departmental Manuals.

(2) Except in the case of Government Treasurers for whom separate forms are prescribed in the Revenue Manual, the security bond shall be executed either in form no. 2-A or Form no. 2-B. Form no. 2-A shall be used when security is given only in respect of a particular post to which an official is appointed and Form no. 2-B where the security is to hold good to whatever post of the official may be appointed from time to time, provided that he may be required to furnish additional security in case the post to which he is appointed requires a larger security than the one already furnished.

(3) Bonds executed by Government servants or their sureties to secure the due execution of an office or the due accounting for money or other property received by virtue thereof are exempt from stamp duty [Article 57, exemption (e) of Schedule I of the Stamp Act II of 1899], and are not required to be registered, except in cases where landed property is hypothecated as security.

(4) Form no. 2-BB shall be used when landed property pledged as security by a Government servant under paragraph 71 Financial Handbook Volume V, Part I, is released after the officials concerned vacates the office. No stamp duty will be chargeable.

(5) No security deposit should be taken from the following Government servants :

(i) Librarians and other library staff;

(ii) Teachers in-charge of stocks relating to games, library, science material, etc., in Government educational institutions.

69-A. In all temporary arrangements security shall invariably be taken from the temporary incumbent, except from an official who has executed a bond in Form no. 2-B, prescribed by Note 2, under paragraph 69. Apprentices and outsiders shall in no case be appointed in temporary vacancies to posts which require the handling of cash, stores or valuable securities, unless they have furnished adequate security or have executed bonds in Form no. 2-H, which shall hold good whenever they officiate in vacancies of this nature.

69-B. The value and adequacy of a security shall be verified as soon as it is furnished. If the verification is likely to take some time, appointment may in urgent cases be made pending the verifications of the security provided that a personal bond in Form no. 2-C, with two reliable sureties is executed to the satisfaction of the appointing authority. When the original security has been finally verified the bond and sureties furnished under this paragraph shall be discharged.

70. The amount of security to be taken from a Government servant entrusted with cash or valuables shall be fixed at a sum equal to the maximum amount which he ordinarily has in his hands at and time. The head of the office should see that the amount of cash or valuables left in the hands of the Government servant never exceeds the amount of security taken from him.

NOTE—The above rules does not apply to stores in the charge of a Government servant. In the case of stores the security to be taken shall be a suitable percentage of the maximum value of stores determined by the head of the department according to the circumstances in each case.

71. The security of a Government servant shall ordinarily be deposited either in cash or landed property (excluding ancestral property of a joint Hindu family and such other property as is not liable to sale for the enforcement of a bond) or interest-bearing securities, viz. Government promissory notes, post office savings bank pass-books or post office cash certificates or Defence Bonds or Defence Savings Certificates, or National Savings Certificates or Treasury Savings Deposit Certificates or National Plan Certificates or 12 year National Defence Certificates or 10 years Defence Deposit Certificates at their surrender value to be pledged in the same way as post office 5-year cash certificates or 10 years social security certificates issued by the Indian Posts and Telegraph Department, to be pledged in accordance with the procedure laid down in rules governing these certificates or 3 per cent Encumbered State Bonds or in fixed deposit receipts of the State Bank of India.

[Insertion vide C. S. no. 52 dated 15-05-1985]

( Vitta Lekha Amubhag -1 File no. 10-15(1)/84 )

When security is deposited in cash the depositor should be advised to invest the money in one of the interest-bearing securities, preferably in the post office savings bank, when the amount does not exceed the maximum limit for a post office savings bank account. In investing cash deposits in Government securities and in accepting Government securities tendered as security, preference shall be given to a security that stands at or near par in the market and when two securities are in other respects equal the one nearer to par shall be selected. When security is furnished in Government promissory notes they shall be taken at their market and not at their face value, and should a particular security already deposited depreciate to any extent, a further sum shall be demanded to make up the original amount and the security bond should be revised if necessary.

NOTES—(1) In dealing with Government securities held by Government servants as security deposit, rules in Chapter VIII of the Government Securities Manual should be consulted.

(2) Although deposit receipts of banks other than the State Bank of India will not be accepted as security deposits the parties concerned may be permitted to make, either by a suitable deposit or a guarantee, arrangements with any bank which should deposit Government securities to cover the amount of security demanded with a margin of 5 percent below the market value.

(3) Fixed deposit receipts accepted as security shall be issued in the name of the Governor of the Uttar Pradesh.

In such cases a clause shall also be inserted in the depositor’s security bond to the effect that Government shall hold the fixed deposit receipt at the depositor’s risk and shall not be liable to the depositor in the event of loss of the security due to the failure of the bank or any other cause, and that if the security is lost, the loss should fall on the depositor, who shall furnish fresh security forthwith. In order to obviate the loss of interest to the depositor the authority accepting the security should call for the receipt annually and get it renewed.

(4) House property should not be accepted as security unless it is insured. The insurance policy should be assigned to the Governor in Form no. 2-1 and the Government servant concerned must undertake to keep the insurance policy in force so long as the necessity for the security remains. It should be ascertained at the time of annual verification of securities that the insurance policy has been kept in force. In accepting a building as security, a margin of 20 per cent should be allowed for depreciation and fall in market value which should be ascertained at the time the house property is offered as security and every time at the occasion of the annual verification. The building must be free from all encumbrances, mortgages or flaws of title and a clear charge, free of any prior encumbrance, should be created in favour of Government.

71-A. Ordinarily, Government servants are required to furnish the whole of the security at once on appointment, but the head of the office may in his discretion permit the security to be furnished in instalments by monthly deductions at the rate of 10 per cent of the Government servant’s pay. The deduction so made shall be credited to a security deposit account to be opened at the post office in his name and an account of the payments made in the security deposit shall be kept in Form no. 2-G. Until the full amount of the required security is thus made up, the Government servant shall comply with one of the following two options, namely—

(1) he shall bind himself personally and furnish two responsible sureties to the satisfaction of the appointing authority for the whole of the required amount of security, or

(2) he shall give a fidelity bond of an insurance company approved by the Government for the full amount of the required security guaranteeing Government against losses.

The sureties or the fidelity bond shall be discharged when the full amount of the security has thus been recovered or otherwise deposited in cash and a fresh security bond in the prescribed form has been executed.

NOTES—(1) Form no. 2-D (temporary security bond form) and Form no. 2-E (fidelity bond) by an insurance company shall invariably be used by heads of departments in the cases mentioned in the above rule.

(2) Officers accepting fidelity and surety bonds as security shall take care that they are kept alive and verified periodically.

(3)The General Insurance Corporation of India and its subsidiary companies have been approved for the issue of fidelity guarantee policies. Proposals for such insurance should be sent only to approved companies.

(C. S. No. 57...... dated 25-2-85)

[Finance (Acctts,) Sec.-1 File No. 15(3)/85]

71-B. A security register in Form no. 2-F shall be maintained containing full particulars as to the pecuniary responsibility of the Government servant and his sureties, and the nature and the value of the security offered.

71-C. The head of the office may, in his discretion, accept a fidelity bond in lieu of cash security in cases where the necessity for security is of a temporary nature, that is, where a member of the staff is appointed to a post for which security is needed and is not likely to hold the post indefinitely, e.g. a nazir in a district office, who may be promoted after a few years to some other post for which security is not needed. Cash security should, however, continue to be taken where the appointment requires permanent security.

NOTE—(1) Form no. 2-M should invariably be used in cases mentioned in the above rule.

(2) The General Insurance Corporation of India and its subsidiary companies have been approved for the issue of fidelity guarantee policies. Proposals for such insurance should be sent only to approved companies.

(C. S. No. 62 dated 31-7-86)

[Finance (Acctts.) Sec.-1 File No. 15 (3)/85]

72. The adequacy of all securities shall be examined every year between April 1 and June 30, by the head of the office, and a special report shall be submitted to the head of the department where it appears that the value of a security has from any cause impared and it has ceased to be adequate. A note of the result of this verification shall be made in the register of securities.

NOTE—The liability of an officer or of his surety in case either is a member of an undivided family is limited to the share to which he would be entitled on partition and attention must be directed to this point at the annual verification of securities (G.O. no. 726, Finance Department, dated March 19, 1912).

73. To provide against cases in which discovery may be made, after a Government servant has vacated his office or defalcations made prior to such vacation of office, the security deposited by him should be retained by Government for a period of six months, after he has vacated his office. But the security bonds of the Government servants concerned (except those of Government Treasurers of district Treasuries which should be retained for sixty years) should be retained for 10 years after the official concerned has vacated office.

Exception—In the Forest Department the security bond of a Forest subordinate should be returned to the depositor as soon as the security has been refunded to him.

NOTE—In the case of Government servants proceeding on leave preparatory to retirement the period of six months mentioned in the above rule will be reckoned from the date of commencement of such leave. If a Government servant holding a post in respect of which he has furnished security, officiates in some other post, the period of six months will be reckoned from the date on which he hands over charge of the former post.

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