Govt. employees dupe MSIL of Rs. 3.5 cr.

By T.S. Ranganna

BANGALORE, SEPT. 10. A large number of State government employees, including many officers, who purchased consumer durables and vehicles from the hire purchase division of Mysore Sales International Ltd. (MSIL) have not repaid a sum of Rs. 3.53 crores, including interest, to the company.

The company sells consumer durables and vehicles to employees of government and public sector undertakings on hire purchase after obtaining a guarantee from a fellow employee. The scheme envisages the recovery of monthly instalments from the salary of the employee by the drawing officer on the basis of the statement furnished by the company. The money has to be remitted before the fifth day of the succeeding month. Till March 2000, 33,702 employees had purchased various consumer goods worth Rs. 48.85 crores, according to sources.

Dues of defaulting employees can be recovered from the guarantor only if the defaulter is suspended, dismissed or removed from service. Therefore, the company could not recover dues amounting to Rs. 3.53 crores as on March 31 last year from the guarantors. The company was able to recover only Rs. 18 lakhs, a meagre .05 per cent of the dues, from five guarantors.

After MSIL was pulled up by the Comptroller and Auditor General (CAG) of India for the lapse, it informed the CAG that it would request the State Government to issue an order to treat the defaulted sum as government dues, so that it could be recovered from the terminal benefits of the employees concerned.

Though the company has been sending demand statements to the drawing officers every month, in many cases the amount demanded has not been recovered in full. A test check of demand statements issued and the amount collected for the period April 1998 to December 1999 revealed that the percentage of recovery, including overdues, was just 27.6 per cent in 1998-99. This fell to 26.9 per cent the next year. The amount recovered belatedly was not adjusted against penal interest, resulting in the accumulation of penal interest of Rs. 1.08 crores, while only a sum of Rs. 1.67 lakhs was recovered, during 1998-99. After a test check in three units, it was observed that in 1,511 cases, penal interest amounting to Rs. 20.54 lakhs was not recovered even after the recovery of all the instalments.

In view of the failure of MSIL to ensure prompt recovery of dues, instalments of Rs. 2.45 crores and penal interest of Rs. 1.08 crores totalling Rs. 3.53 crores were overdue from 7,841 employees as on March 31 last year. Of this amount, Rs. 1.40 crores was due from 1,617 employees who had defaulted in the payment of more than six instalments.

It was also observed that a sum of Rs. 1.41 crores was due from 2,546 employees whose agreement period had expired. The company had filed suits only in respect of 55 cases involving Rs. 10.95 lakhs, which represented only 7.79 per cent of the overdue amount. Though legal notices were issued to 392 employees to recover Rs. 38.01 lakhs, no action was initiated for the realisation of overdues of Rs. 91.69 lakhs from 2,099 employees even after the expiry of the agreement period. In 140 cases involving overdues of Rs.15.32 lakhs, more than three years had elapsed since the expiry of the agreement period.

According to the rules, one of the options available to MSIL for taking action against the defaulters is to seize the articles sold to them under the scheme. The agency appointed in 1995 for this purpose failed to seize any vehicle referred to it. The MSIL then appointed agents for its Bangalore and Mysore units in 1997 and for its Gulbarga unit in 1999. Both the agents, up to September 2000 had seized only 100 vehicles. The company did not invoke the seizure option for articles other than vehicles. The MSIL, however, is now considering the option of seizing articles other than vehicles.

Passing strictures, the CAG observed that the accumulation of overdues of Rs. 3.53 crores was mainly due to the failure to evolve a standard policy for prompt recovery proceedings such as periodical issue of notices to hirers/guarantors, issue of legal notices, seizure of vehicles, filing of suits, and so on.

Even in cases where suits had been filed, or legal notices served, no uniform yardstick was applied as many other cases of similar nature were not proceeded against, giving scope for extension of undue benefit to certain customers (employees and officers), the CAG concluded.

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Section  : Southern States
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