Earnest Money and Security deposits

168. (a) Purchasers of forest produce required to furnish security money may deposit the same without limit with the forest officer. Similarly tenderers for works and miscellaneous purposes required to furnish security may deposit the security money with the forest officer provided that the amount of the security required does not exceed Rs. 1,000 in each case. (If the required security exceeds the above amount the tenderer should himself deposit the security money into the treasury or sub-treasury in accordance with the instructions laid down in paragraph 340(b)(i)(I) of Volume V of the Handbook.)

(b) The amount of security money deposited with the forest officer under clause (a) above, should at once be entered in the cash-book of the department and then remitted to the treasury or sub-treasury without undue delay.

The following procedure will be followed :

(1) The money realized will be entered in the departmental cash-book—

(a) on its receipt, on the debtor side as "Remittances from contractors and purchasers."

(b) on remittance to the treasury, on the creditor side as earnest money or security deposit.

In the treasury the amount will be treated as "Revenue Deposit."

* * * *

Schedules in support of the above transactions in Form E-14 after correcting the heading thereof to "Schedule of remittances of earnest money and security deposits to treasuries" will be sent by the divisional forest officer to the treasury concerned for verification, with a request to quote the serial number of the register of revenue deposits against the respective items. On return from the treasury officer the schedule will be submitted to the Accountant General either with or after the sub-mission of the monthly accounts, provided it is submitted before the end of the month, at the latest.

NOTE—Direct deposit’s into the treasury by the purchasers or tenderers do not enter the departmental cash-book.

(2) Deposits in the treasury will be accompanied by chalans in triplicate, one of which will be of coloured paper and headed "For use in Principal Auditor’s office only". This will form the voucher to the entry in the cash-book and will be sent to the Principal Auditor with the monthly cash account. The duplicate copy of the chalan in the usual form will be retained by the forest officer for subsequent action where necessary under paragraph 346(b) of Volume V of the Handbook.

(3) The entry on the treasury chalan will be "Remittances from contractors and purchasers". Lump sum totals of earnest money and security remittances to the treasury will be entered in the monthly cash account (Form no. 3).

(c) If in any case a tendered is required to furnish "earnest money" along with his tender for contract he may deposit it with the forest officer if the amount does not exceed Rs. 1,000.

Otherwise he should deposit it into a treasury or sub treasury as laid down in clause (a) above. When deposited with the forest officer, the money will be dealt with as prescribed in clause (b) above.

168-A. (1) At the discretion of the forest officer earnest money or security may be accepted in one of the following forms:

(a) deposits in treasury;

(b) Government promissory notes or other Government paper; and

(c) Fixed deposits in bank—Fixed deposit receipts of the Imperial Bank of India will be accepted, which must be hypothecated to either the Chief Conservator of Forests or the Conservator of Forests or the Divisional Forest Officer concerned and will be held at the risk of the depositor, Government not being liable for any loss due to the failure of the bank or to any other cause. The depositor should deposit fresh security in the event of such a loss.

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

(2) Security deposits made under clause (a) of paragraph 168 above, may also be accepted in one of the following forms:

(i) Post office cash certificates, and

(ii) Deposits in post office savings bank.

It is not permissible to deposit ‘earnest money’ in either of these forms.

(3) In all cases the earnest money or security must be hypothecated to either the Chief Conservator of Forests or the Conservators of Forests or the Divisional Forest Officers.

(4) The custody of Government promissory notes and other Government paper will be regulated according to the orders contained in the Government Securities Manual.

(5) A receipt in form No. 2 will be issued in each case. of receipt of earnest money or security by a forest officer, whether such money is received in cash or in any other of the forms described above.

(6) In cases where security money is deposited in cash (either with the forest officer and remitted by him to the treasury, or direct into the treasury), it is permissible under Treasury Rule 7 to withdraw the amount from the treasury at the request of the depositor and invest it in any of the following forms:

(a) Government promissory notes, or other Government paper—under rules in Chapter VIII of the Government Securities Manual.

(b) Fixed deposits in the Imperial Bank of India—The receipts for the fixed deposits must be issued in the name of either the Chief Conservator of Forests or the Conservator of Forests or the Divisional Forest Officer concerned, which will be held at the risk of the depositor, Government not being liable for any loss due to the failure of the bank or any other cause. In the event of such a loss, the depositor must deposit fresh security acceptable under the rules.

Earnest money deposits may also be similarly invested in forms (a) and (b) above.

NOTE—In no case should be money deposited with the forest officer be invested direct in any of the prescribed forms. It must be remitted to the treasury and then withdrawn for investment in accordance with the ordinary procedure, see paragraph 346(b), of the Financial Handbook, Volume V, Part I.

(7) Monies lying in the revenue deposit in the treasury, may be converted at the cost of the depositor into interest bearing securities provided:

(i) that the depositor has expressly desired this in writing, and

(ii) that the new form of security is one given under clause (6) above and is permissible under the terms of the agreement or bond.

The Divisional Forest Officer should thereafter endorse upon the original deposit receipt of the contractor.

"Received payment by transfer credit to Forest Remittances", and forward it to the treasury for adjustment.

(8) The money required for investment should be taken from the cash chest or by drawing a cheque against the drawing account of the division. The remittance for investment should be shown on the creditor side of the Divisional cash-book as "investment of cash security deposits in" (the form of the security should be named.)

NOTE—The Audit Office will classify the above payment under "Forest Remittances" which will thus cancel the credit under "Forest Remittances" appearing in the treasury accounts.

168-B. Transactions connected with interest bearing securities do not pass through the cash-book and consequently the regular accounts of the division. A register of the receipt and disposal of these securities should therefore be kept in form no. 20B and at the close of the year an account in Public Works Department form no. 86 should be prepared from this register for submiss`ion to the Principal Auditor. This account should be supported by (1) the acknowledgment (in original) of the depositors for securities returned or re-transferred to them during the year and (2) the certificate of the Divisional Forest Officer that all securities shown as outstanding in this account, or their acknowledgments by the authorized custodians (vide paragraph 168-A), are in his possession.

NOTE—Amounts up to Rs.500 may be refunded by money order if desired by the endorsing officer, provided that money order forms duly filled in are sent to the treasury with the chalan. The money order commission in such cases will be borne by the contractor.

Refunds of earnest money or security will be acknowledged by purchasers and others in form no. 18.

170. An account of all receipts and disposals of earnest money and security deposits will be kept either in form no. 20A or in form no. 20B. All deposits received on account of the purchase of forest produce will be entered in form no. 20A. All others (excluding securities entered in form no. A-12) will be entered in form no. 20B.