THE MADHYA PRADESH FINANCIAL CODE

VOLUME I

CHAPTER 7 – STORES

Section I – Introductory
10. This Chapter contains the general rules applicable to all departments regarding
stores required for use in the public service. Detailed rules and instruction
relating to the various departments responsible for or concerned in large
purchases, manufactures or consumptions of stores, are contained in the
departmental regulations relating to the departments concerned.

Note – The term ‘Stores’ used in this Chapter applies generally to all articles and
material purchased or otherwise acquired for the use of Government, including not
only expendable and issuable articles in use or accumulated for specific purpose, but
also articles of dead stock of the nature of plant, machinery, instruments furniture’s,
equipment, fixtures etc.

11. Expenditure on stores is included under contingent expenditure (except when it

is treated otherwise; e.g., stores relating to works) and subject to what is
provided in the following rules, is governed generally by the rules which apply to
such expenditure. The rules in this Chapter should be observed also in
conjunction with those contained in Section VII of Chapter IV of the Madhya
Pradesh Treasury Code, Volume I.

Section II – Purchase and Acquisition of Stores

Authorities Competent to Purchase Stores
12. Subject to any special rules or order applying to any particular department, an
authority, which is competent to incur contingent expenditure, may sanction the
purchase of stores required for use in the public service in accordance with the
provisions contained in the following rules. Such purchases are also subject to
the usual restrictions regarding the existence of necessary appropriation and to
any monetary limits and other conditions prescribed generally or in regard to
specific articles or classes of articles.

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Rules and Instruction Governing the Purchase of Stores

13. (1) All purchases of stores for use in the public service should be regulated in
strict conformity with the Stores Rules and subsidiary instructions issued
thereunder, as contained in Appendix 5.
(2) A Government servant who buys any stores for use in the public
service without calling for tenders, when he ought, according to rule and
instructions contained in Appendix 5, to call for tenders is liable to be
called upon by a superior authority or the accountant General to justify
the method of purchase which he has adopted.
14. Purchases must be made in the most economical manner in accordance with the
definite requirements of the public service. Requirements of the year should be
estimated as for as they can be foreseen and as far as possible sufficient stock
should be purchased during the cheapest season, unless the articles are such
that they are likely so depreciate or deteriorated during storage. Stores should
not be purchased in small quantities Periodical indents should be prepared and
as many articles as possible obtained by means of such indents. At the same
time care should be taken not to purchase stores much in advance of actual
requirements, if such purchase is likely to prove unprofitable to Government.
Where scales of consumption or limits of stores have been laid down by
competent authority, the Government servant ordering a supply should
certify on the purchase order that the prescribed scales or limits are not
exceeded.
15. Purchase orders should not be split up to avoid the necessity for obtaining the
sanction of higher authority required with reference to the total amount of the
orders.
16. (1) All indents sent out to the Director General, India Store Department, London
(whether by formal indent, letter or telegram), should state clearly and
accurately the grant number and the head of account to which the cost of the
stores is debatable the amount of appropriation provided and an estimate of cost
of each item.
The indents should be prepared in such form and in accordance with
such general or special instructions as may be issued by Government in
this behalf.

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(2) Indents ashould not be sent out so late in the financial year that they
cannot possibly be complied with and paid for within that year. If the
Director General receives any indent which he cannot possibly comply
with before the end of the financial year, he will carry it over to the
following financial year under intimation to Government.
(3) If it is essential to send out an indent to London before the
sanctioned appropriation has been communicated to the authority
concerned, the consent of the Finance Department should e obtained. In
such cases the words, “ The Finance Department has agreed to indent
being executed” should be written on the indent.
(4) The purchasing officer should distinguish very carefully between
stores to be bought through the agency of the Director General, India
Store Department and stores merely to be delivered to him for dispatch
and shipment through his agency. See also Subsidiary Rule 400 of the
Madhya Pradesh Treasury Code Volume I.
Receipts of Stores
17. All materials received should be examined, counted, measured, or weighed as
the case may be, when delivery is taken, and they should be taken in charge by
a responsible Government servant who should see that the quantities are correct
and their quality good, and record a certificate to that effect. The Government
servant receiving the stores should also be required to give a certificate that he
has actually received the materials and recorded them in the appropriate stock
register.
Issue of Stores
18. When materials are issued from stock for departmental use, manufacture, sale,
etc., the officer-in-charge of the store should see that an indent in the
prescribed form has been made by a properly authorised person, examine it
carefully with reference to any orders of instructions for the issue of stores, and
sign it after making suitable alterations under his dated initials in the description
and quality of materials if he is unable to comply with the requisition in full. He
should then prepare and sign the form of the invoice attached to the indent
according to the supply actually made. The indent should be returned at once to
the requisitioning officer for signature. When materials are issued, a written
acknowledgment should be obtained from the person to whom they are ordered

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to e delivered or dispatched, or from his duly authorised agent. Every issue

should be recorded in the stock account at the time when it is made.
In case of store issued to a contractor, the cost of which is recoverable
from him, the acknowledgment should give full particulars of the
materials issued, including the recover rates and the total value
chargeable to the contractor.
Transfer of Charge of Stores
19. In cases of transfers, the officer-in-charge of stores should see that the stores in
his custody are made over correctly to his successor and a proper receipt taken
from him.
Every department Government servant is bound to take over charge of
departmental stores which, from the death or departure of the person
lately in charge or from any other cause, may be left at or near his
station without adequate protection. For detailed instruction see rule 81.

Section III – Custody and Accounts of Stores

General
20. The head of an office or any other Government servant entrusted with stores of
any kind should take special care for arranging for their safe custody, for
keeping them in good and efficient condition and for protecting them from loss,
particularly for valuable and combustible stores. He should maintain suitable
accounts in respect of the stores in his charge with a view to preventing losses
through theft, accident, fraud or otherwise, and to making it possible at any time
to check the ac tual balances with the book balance and the payment to
suppliers, etc.
21. The form of stock account mentioned in the preceding rule should be determined
with reference to the nature of the stores, the frequency of the transaction and
the special requirements of each department or office in which they are used.
The same form of stock account would not be suitable both for consumable
articles, such as dietary stores kept for use in a hospital or jail, and also for
ordinary and according to the instructions laid down in the departmental
regulations, or by any general or special orders of the Government hich apply to
that particular department. If no such form and instructions have been
prescribed, or even if prescribed, a competent authority has held that they are

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defective, then the stock accounts should be maintained accordance with the
general principles laid down in the following rules. Where audit of the accounts
of stores and stock has been undertaken by the Accountant General, he will
bring to notice cases in which there is a hiatus to be filled up by the application
of these rules or in which losses to Government could have been avoided by the
use of these rules.
22. Separate stock accounts should be kept of –
(a) Dead stock, such as plant, machinery, furniture, equipment, fixtures; and
(b) Other stores.
Dead Stock
23. An inventory of the dead stock should be maintained in all Government offices in
a form prescribed by the head of department concerned, showing the number
received, the number disposed of (by transfer, sale or loss, etc.) and the balance
in hand for each kind of article. A model form will be found in Form M.P.F.C.9.
24. The instruction given below should be carefully observed by all concerned –
(i) The inventory should be priced whenever the items have to enter into the
block account maintained for a Government commercial undertaking or
the value of the item is necessary in order to enable Government to
calculate the charge to be levied upon private persons or bodies. As
regards other items, a numerical inventory would suffice except for article
costing above Rs. 25.
Note – For the purpose of numerical inventory, articles of similar
description such as table durries, carpets etc., should be put into
separate categories, each category comprising articles of the same
measurement, make and manufacture with the same metal or wood or
other material.
(ii) The inventory should ordinarily at the site of the dead stock. For
example, where an office in large and the furniture, etc., is kept in
several rooms, the head of the office should have an innovatory of the
furniture, etc., kept in each room hung up in the room and kept up to
date in order to facilitate the annual verification and fix the responsibility
for any loss that may occur. Whether it is desirable, in any particular case
to depart from this general principle or to maintain additional

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consolidated inventories elsewhere should be decided on the merits of

each case.
(iii) The inventory should be checked by the controlling authority or any
officer nominated by him once a year and a certificate of the result of
check recorded.
(iv) Articles of dead stock should be verified at least once a year and the
result of verification recorded on the inventory. All discrepancies noticed
must be properly investigated and brought to account immediately so
that the inventory may represent the true account.
(v) When articles f dead stock, e.g., tools and plant are lent to local bodies,
contractors and others, the hire and other charges as determined under
rules prescribed by competent authority should be recovered regularly.
(vi) Government libraries and museums should up to date catalogues as well
as prescribed stock accounts and inventories.
Other stores
25. A reliable list, inventory or account of all stores in the custody of Government
servants should be maintained, in a form prescribed by he head of department
concerned, to enable a ready verification of stores and check of accounts at any
time, and transactions must be recorded in it as they occur.
26. Priced lists, recording both quantities and values, should be maintained in cases
where the stores are intended to be converted into money, or where it is desired
to distribute their cost over the works, items or objects on which they are
actually used.
In such cases, the expenditure on stores must be charged to stores
suspense, head in the first instance.
27. Purely numerical inventories, i.e., recording quantities only will suffice for
articles costing up to Rs. 25 when the articles are intended solely for the service
of the department keeping them and it is not desired to distribute their cost. In
such cases the expenditure on stores must be charged off finally to the service
concerned.
Note – In some cases it may be found necessary to show prices and
measurements, etc., vide note below rule 128 (I) against, some articles
say, when for facility for identification or other reason, it is desirable to

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distinguish costly articles from cheap article bearing the same general
description otherwise.
28. The lists, inventories or accounts of stores should in all cases be subject ot such
internal check as may be prescribed by State Government whether or not they
are sujbect to any check by the Accountant General. The procedure and extent
of internal check should be laid down in the departmental manuals concerned.
29. A physical verification of all stores should be made at alerts once in every year
under rules prescribed by heads of departments concerned and subject to the
condition that the verification is not entrusted to a person –
(i) who is the custodian, the ledger keeper or the accountant of the stores;
to be verified, or who is a nominee of, or is employed under, the
custodian, the ledger keeper or the accountant; or
(ii) who is not conversant with the classification nomenclature and technique
of the particular classes of stores to be verified.
The verification should never be left to low paid subordinates and in the
case of large and important stores, it should be, as far as possible,
entrusted to a responsible Government servant who is independent of
the superior executive officer in charge of the stores.
30. A certificate of verification of stores with its results should be recorded on the
list, inventory or account, as the case may be, where such a verification is
carried out.
31. In making a physical verification, the following instructions should invariably be
observed –
(i) Verification must always be made in the presence of the officer
responsible for the custody of the stores or of a responsible person
deputed by him;
(ii) All discrepancies noticed should be brought to account immediately in the
manner indicated below so that the book balance may be set right and
the account may exhibit the true sate of the stores –
(a) Any excess detected during verification should be entered in the stock
account as “Receipt” with the remark “excess found on stock verific ation”.
(b) Any deficit notice should be noted in the stock accounts in the column
“Particulars of Issues: and described as “shortage found on stock
verification”. No entry should be made in the “Quantity” column so that the

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articles found short may continue to be borne on the stock accounts until the
loss is adjusted either by a recovery or a sanctioned write off;
(c) Shortages, and damages, as well as unserviceable stores should be reported
immediately to the authority competent to write off the loss.
32. Balance of stores should not be held in excess of the requirements of a
reasonable period or in excess of any prescribed maximum limit. In order to
ensure the observance of this rule, a periodical inspection should be made by a
responsible Government servant, who must submit a report of surplus and
obsolete stores to the authority competent to issue orders for their disposal (See
Rule 140). The inspection should, unless there be good reason to the contrary,
be made six monthly in the case of perishable stores and once a year in the case
of other stores. Stores remaining in stock for over a year should be considered
surplus unless there is any good reason to treat them otherwise.
33. Where a priced inventory is maintained, it is essential that the values recorded
therein shall not be materially in excess of the market value of the stores. The
head of the department concerned must issue instructions to govern –
(i) the fixation of prices with reasonable accuracy;
(ii) the periodical review and revision of rates; and
(iii) the agency to be employed in periodical revaluation.
Note – The “market value” of an article, for this purpose, means the cost
per unit at which the article or an article of a similar description can be
procured at a given time it the stores Godown, from some suitable public
markets.
34. All profits and losses due to revaluation, stocktaking or other causes should be
duly recorded and adjusted where necessary. Formal sanction of competent
authority should be obtained in respect of losses, even though no formal
correction or adjustment in the accounts is involved.
35. (1) Losses due to depreciation should be analysed, and recorded under following
heads, according as they are due to –
(i) normal fluctuation of market prices;
(ii) fair wear and tear;
(iii) lack of foresight in regulating purchases;
(iv) neglect after purchase.

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(2) Losses not due to depreciation should be grouped under the following heads
-
(i) losses de to theft or fraud;
(ii) losses due to neglect;
(iii) losses due to an act of God an other calamities, such as fire, enemy
action, etc.;
(iv) anticipated losses on account of surplus age of obsolete stores or of
purchases in excess of requirements;
(v) other losses due to damage, etc.
Sale and disposal of stores and writes off of Stores
36. The previous sanction of competent authority should be obtained to the writing
off of all losses, deficiencies or depreciation in the value of stores.
37. (1) Subject to any special rules or orders applicable to any particular
department, stores which are reported to be obsolete, surplus or unserviceable
may be disposed of by sale or otherwise, under the orders of the authority
competent to sanction the writing off of a loss caused by deficiencies and
depreciation equivalent to their values.
(2) Each order declaring stores as unserviceable should record the full reasons
for condemning them and how the condemned stores are to be disposed of, i.e.,
whether by sale, public auction or otherwise. The head of the office should
record full particulars regarding all condemned stores in suitable lists from which
their disposal can be watched.
(3) When any stores become unserviceable otherwise than in the ordinary
course or by fair wear and tear, (e.g., by avoidable carelessness, neglect or
misuse) their value should be treated as loss to Government and in such cases
the procedure for reporting and dealing with losses as contained in rules 22 to
26 should be followed.
38. Sales to private persons of stores other than those which a re-found to have
become obsolete of unserviceable are regulated by special rules and others
applicable to particular departments. When stock materials are sold to the public
determined by competent authority should be added to the book value to cover
charges of account of supervision storage and contingencies. This addition may,
however, be waived by the Government servant emp owered to sanction the sale
in the case of surplus stock which in his opinion would otherwise be unsaleable.

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Opium Sock in the Custody of Treasury Officers

143. The opium in store must be kept in the treasury strong room and
not elsewhere and all receipts into and issues from stock should be
entered in a store register maintained for the purpose over the initials of
the Treasury Officer. The Treasury Officer should give out opium to the
Treasurer as required for sale to the public, an account of opium so
issued to and sold by him being kept by the Treasurer in a sub register
in suitable from to be determined by the Treasury Officer. The Treasury
Officer should see that tall issues to the Treasurer are entered up in the
register and the proceeds of opium sold are duly credited into the
treasury account. The balance of opium in the hands of the Treasurer
should be checked by the Treasury Officer at least once every month.
No. more opium should be issued to the Treasurer than is necessary to
meet current demands.
Audit of Stores and Stock Accounts
39. When audit of the accounts of stores and stock kept in any officer or department
is undertaken by the Comptroller and Auditor General it will be conducted in
accordance with the regulations embodied in Appendix 8.

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