Rule 220 of The General Financial Rules 2017 Disposal through Auction
Original Rule Text
Visual Summary
Ministries/Departments can auction goods directly or via approved auctioneers.
Auction process must ensure transparency, competition, and fairness.
Earnest money and balance payment procedures, and auction team composition.
Executive Summary
Rule 220 of the General Financial Rules, 2017, outlines the procedure for disposing of government goods through auction. It permits Ministries and Departments to conduct auctions either directly or through approved auctioneers. The rule emphasizes adherence to principles of transparency, competition, fairness, and the elimination of discretion, similar to advertised tenders. Key aspects include wide publicity for the auction plan, clear announcement of terms to bidders, immediate acceptance or rejection of bids, collection of earnest money (at least 25% of bid value) and balance payment, and the formation of an auction team including an officer from the Internal Finance Wing.
In-Depth Analysis of the Rule
Rule 220 provides a structured framework for government entities to dispose of surplus, obsolete, or unserviceable goods through public auction. This method is crucial for ensuring that public assets are managed efficiently and transparently, preventing waste and maximizing recovery value for the government.
Breakdown of the Rule
- Auction Authority: Ministries or Departments have the discretion to conduct auctions directly or engage approved auctioneers. This flexibility allows entities to choose the most suitable method based on their capacity and the nature of goods.
- Core Principles: The rule mandates that auctions must uphold transparency, competition, fairness, and eliminate discretion. These principles are consistent with those governing disposal through advertised tenders, ensuring public trust and optimal outcomes.
- Publicity and Information: A comprehensive auction plan, detailing the goods, their location, and terms and conditions of sale, must be widely publicized. This ensures broad participation and informed bidding. During the auction, these details must be reiterated for the benefit of all bidders.
- Bid Acceptance and Payment: Bids are to be accepted or rejected immediately. Successful bidders must pay earnest money (minimum 25% of bid value) on the spot, either in cash or via Deposit-at-Call-Receipt (DACR). The goods are released only after the full balance payment is received.
- Auction Team Composition: The competent authority determines the composition of the auction team, which must include an officer from the Internal Finance Wing of the department. This ensures financial oversight and adherence to regulations.
Practical Example
Imagine the Ministry of Defence needs to dispose of a batch of obsolete vehicles. Following Rule 220, they would first decide whether to conduct the auction themselves or hire an approved auctioneer. They would then prepare a detailed auction plan, including vehicle specifications, inspection dates, and terms of sale, and publicize it widely through official channels and potentially approved auction platforms. On the auction day, the auction team (including a finance officer) would clearly announce the terms. As bids are received, they are immediately accepted or rejected. A successful bidder for a vehicle valued at Rs. 100,000 would immediately pay at least Rs. 25,000 as earnest money. The remaining Rs. 75,000 would be paid before the vehicle is physically handed over, ensuring all financial obligations are met transparently.
Related Provisions
Understanding Rule 220 is enhanced by reviewing other related provisions in the General Financial Rules, 2017:
- Rule 217 of The General Financial Rules, 2017 Disposal of Goods: This rule provides the overarching framework for declaring goods as surplus, obsolete, or unserviceable and outlines various modes of disposal, including advertised tender and auction.
- Rule 219 of The General Financial Rules, 2017 Disposal through Advertised Tender: Details the process for disposing of goods via advertised tenders, which shares similar principles of transparency and competition with auctions.
- Rule 33 of The General Financial Rules, 2017 Report of Losses: Relevant if goods to be auctioned are due to loss or damage, requiring proper reporting and investigation before disposal.
Learning Aids
Mnemonics
- Auction Principles Promote Transparency, Competition, Fairness, Earnest Money, Team. (APP TC FEM T)
Process Flowchart
Multiple Choice Questions
1. According to Rule 220 of the General Financial Rules, 2017, who can undertake the auction of goods?
- A) Only approved auctioneers
- B) Only the Ministry or Department directly
- C) A Ministry or Department directly or through approved auctioneers
- D) Only the Internal Finance Wing
Show Answer
Correct Answer: C) A Ministry or Department directly or through approved auctioneers
2. Which of the following principles is NOT explicitly emphasized for disposal through auction under Rule 220 of the General Financial Rules, 2017?
- A) Transparency
- B) Competition
- C) Fairness
- D) Maximization of profit at all costs
Show Answer
Correct Answer: D) Maximization of profit at all costs
3. What is the minimum percentage of earnest money that should be collected from a successful bidder during an auction, as per Rule 220 of the General Financial Rules, 2017?
- A) Ten per cent of the bid value
- B) Twenty-five per cent of the bid value
- C) Fifty per cent of the bid value
- D) No minimum percentage is specified
Show Answer
Correct Answer: B) Twenty-five per cent of the bid value
4. As per Rule 220 of the General Financial Rules, 2017, when should the acceptance or rejection of a bid be announced during the auction process?
- A) At the end of the auction day
- B) Immediately on the stroke of the hammer
- C) Within 24 hours of the bid being placed
- D) After all bidders have left the premises
Show Answer
Correct Answer: B) Immediately on the stroke of the hammer
5. Which officer must be included in the composition of the auction team, as decided by the competent authority, under Rule 220 of the General Financial Rules, 2017?
- A) An officer from the Legal Department
- B) An officer from the Human Resources Department
- C) An officer of the Internal Finance Wing of the department
- D) An officer from the Public Relations Department
Show Answer
Correct Answer: C) An officer of the Internal Finance Wing of the department
Frequently Asked Questions
Can a Ministry directly conduct an auction or must it use an auctioneer under Rule 220 of the General Financial Rules, 2017?
Under Rule 220, a Ministry or Department has the discretion to undertake the auction of goods either directly or through approved auctioneers, depending on their capacity and the nature of the goods.
What are the key principles governing auctions under Rule 220 of the General Financial Rules, 2017?
The basic principles to be followed for auctions under Rule 220 are transparency, competition, fairness, and the elimination of discretion. These are similar to the principles for disposal through advertised tenders.
What is the role of earnest money in an auction as per Rule 220 of the General Financial Rules, 2017?
Earnest money, not less than twenty-five percent of the bid value, must be collected on the spot from the successful bidder. This ensures the bidder’s commitment and is a prerequisite for the eventual handover of goods after full payment.
Key Takeaways
- Rule 220 allows Ministries/Departments to dispose of goods via direct or approved auctioneer methods.
- Transparency, competition, and fairness are paramount in the auction process.
- Earnest money (min. 25%) is collected on the spot from successful bidders, with full payment required before goods release.
- Auction teams must include an officer from the Internal Finance Wing for oversight.
Conclusion
Rule 220 of the General Financial Rules, 2017, establishes a robust and transparent mechanism for the disposal of government goods through auction. By mandating clear procedures, emphasizing fairness, and ensuring financial oversight, this rule plays a vital role in upholding accountability and maximizing value recovery for public assets. Adherence to these guidelines is essential for efficient and ethical government operations.