Losses, Frauds, Embezzlements

Losses:

Every public officer should exercise the same vigilance in respect of public expenditure and public funds generally as a person of  ordina ry prudence would exercise in respect of the expenditure and the custody of his own money. Means should be devised to ensure that every railway servant realises fully and clearly that he will be held personally responsible for any loss sustained by Governm ent through fraud or negligence on his part and also for any loss arising from fraud or negligence on the part of any other railway servant to the extent it may be shown that he contributed to the loss by his own action or negligence.

Report of Losses:

Any defalcation or loss of cash, stores or other property belonging to Government should be reported immediately it is discovered to the head of the division or department as the case may be, and in serious cases to the General Manager also, copies of t he reports being sent simultaneously to the Financial Adviser and Chief Accounts Officer who will forward a copy to the Chief Auditor.  If any irregularity or loss is detected by, or is brought to the notice of the Accounts Officer in the first instance, i t will be his duty to apprise immediately the administrative authority concerned of the facts of the case and ask for a proper investigation ; the Accounts Officer will send a copy of his communication on the subject to the Chief Auditor.  If, however, the irregularity or loss is discovered by, or is brought to the notice of the administrative authority in the first instance, that authority should immediately report the matter to the Accounts Officer, who will forward a copy of the report to the Chief Audit or.  Petty cases, that is cases involving losses not exceeding Rs. 500 each need not be reported to the Financial Adviser and Chief Accounts Officer nor by him to the Chief Auditor unless there are important features which require detailed investigation an d consideration.  Every important case involving loss of cash, stores, or property, whether caused as a result of frauds perpetrated or negligence shown by the railway servants, or caused purely by accidents such as fire, etc., should be brought to the not ice of the Railway Board by the General Manager through a preliminary report  within six weeks from the date of detection of the loss and a copy of the report endorsed to the Chief Auditor simultaneously through the Financial Adviser and Chief Accounts Officer.  When the loss involved does not exceed Rs. 50,000 the case need not be reported to the Railway Board unless it represents unusual features or reveals serious defects in procedure.

The preliminary report, which should be based on the facts and firstavailable, should bring out 

(i)    the nature of the loss , hand information   

(ii)  whether the matter has been reported to Civil/GR Police/RPF and Departmental Enquiry Committee.

(iii)   amount involved, actual or approximate;                

(iv) steps taken to plug the loop holes, if any; and     

(v)  the name of the staff apparently responsible.  

General Manager's detailed report should clearly bring out-  

(a) the amount involved and recovered,  

(b) the modus-operandi of the fraud,   

(c)      the nature of checks which ought to have been exercised under any rule or order and which were omitted, thereby facilitating the fraud.       

(d) whether the procedure in force is ineffective in preventing such frauds and, if so, what modification are suggested therein,    

(e) disciplinary action taken against the party at fault and the adequacy or otherwise of such action,    

(f)     whether the Financial Adviser and Chief Accounts Officer agrees to the reports submitted. In the case of his disagreement with the administration on any aspect of the case such disagreement should be reported verbatim to the Railway Board.  

The detailed report should be accompanied by Police Report and the findings along with a copy of the proceedings of the Departmental Enquiry committee in all cases involving more than Rs. 50,000 and should contain comments of the railway Administration on all points brought out by the enquiring officer(s).  The proceedings of the Enquiry Committee need not, however, be sent to Railway Board where the losses do not exceed Rs. 50,000 but instead these cases, on finalisation, be put up for review by a committee of two Deputy heads of Departments (including a Deputy Chief Accounts Officer) and the Board furnished with 

(i) the main gist of the recommendations of the Enquiry Committee, 

(ii) special features brought to light in the report of enquiry and 

(iii) the result of review indicating, inter-alia, the detail of action taken by the railway administration.  

Recoveries of Losses The question of enforcing pecuniary liability should always be considered as well as the question of other forms of disciplinary action. In deciding the degree of the railway servants, pecuniary liability it will be necessary to look not only to the circumstances of the case but also the financial circumstances of the railway servant, since it should be recognized that the penalty should not be such as to impair the railway servant's future efficiency.

Where fraud or embezzlement of Government funds ha s occurred, the institution of criminal proceedings should not be regarded by the officer responsible as absolving him from the often laborious task of conducting immediately a thorough departmental inquiry.  The natural reluctance to hold an inquiry, enhanced by an apprehension that it may prejudice the result of the trial in a Court of law, has sometimes led to great delay in taking departmental proceedings and the results have been inconclusive. Departmental inquiries should not be delayed pending decisi on of criminal cases, as at a later stage, the evidence might disappear and the departmental inquiry could not be brought to any conclusion at all. 

Prosecution should be the general rule in all those cases which are found fit to be sent to Criminal Court after investigation and in which the offences are of bribery. corruption or other criminal misconduct involving loss of substantial public funds.  In such cases, departmental proceed ings should not precede prosecution.  In other cases involving less serious offences or involving malpractices of a departmental nature, departmental action only should be taken and the question of prosecution should generally not arise.  Whenever, however, there is unresolved difference of opinion between the Central Bureau of Investigation and the administrative authority concerned as to whether prosecution in a court or departmental action should be resorted to in the first instance, the matter should be consult the Central Vigilance Commission for advice.

The proceedings contemplated in these instructions are those which are regulated by the rules in Appendix XVII to the Indian Railway Establishment Code, Volume I. Where action is taken under the Public Servants (inquiries) Act, XXXVII of 1850, this ordinarily takes the place of a criminal prosecution as regards the person or persons accused; but the procedure as regards other persons involved, against whom this Act is not employed should be in accordance with the instructions given above.