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 BILLS RECOVERABLE: CONCEPTS AND CHALLENGES the outside
month of
Introduction
period.
The write up on Bills recoverablehas been made by Shri Hira Ballabh, Sr DFM
BSL. The article covers the items for which billing against outsiders is done, HOW THE
methodof billing,problems faced and also offers some solutions.
Editor.
.& ;..- Bills recove
head Dem
CONCEPTS: (Abstract 'Z
and the re
As the term denotes, Bills Recoverable are the dues recoverable by Recoverabl
Railways for services rendered and facilities provided to non-Railway persons or Similarly,
parties. Different type of services or facilities are provided by Railways to the amount
outsiders mainly when they are connected with Railway workings or are in withdrawn
surplus. The services provided range from maintenance, of private or assisted will have to
sidings, repair of non-Railway wagons, maintenance of FOB, Level Crossings etc.
RAISING
Similarly, land or buildings' not in use are let out to outsiders on
commercial consideration for which recoveries are made periodically. Railway
also deputes staff for carrying out Railway related work for outsiders, on which Of late, th
staff charges are raised. reduction'

TYPEOF FACILITIES PROVIDED: As per 1138

RegiSter of
The facilities provided to private parties or other Govt. departments, (1139-Al).
statutory bodies can be categorised under following heads: - should be r,
issued to a
1) Serviceslike maintenance of sidings owned by outsiders. realisation
~
2) Licensing of land or letting out buildings to private parties, govt.
department, railway consumer co-operative society, staff union canteens REALISA~
etc. provision sq
The Para sa~
3) Way leave facilities for pipe lines, cables etc. to outsiders and other govt. correctly mq
deptt. not be an~
realised and
4) Installation of personal weighing machines, showcases, display boards, the parties I
advertisements, neon-signs on stations and other Railway premises. .
. I
should be bl
render all p~
5) Electric energy supplied to outsiders and other govt. departments. items. Thej
6) Licensing of stalls, commercial vending contracts, bookstall etc., in the the executivI
station premises. METHOD i
7) Rising of Commercial Staff Charges. When the a~
Prior approval of competent authority would be required for gr~ting of expenditur~
the facility. Once the facility has been provided a formal agreement is signep with

48

,
'-- .- -' ---
theoutside parties. Bills are raised by Railways against concerned parties in the
month of April and the realisation of which should be ensured in one month's
period.
HOWTHE ACCOUNTAL IS MAINTAINED.

Billsrecoverable 'is a Suspense balance one part of which is operated under the
head Demands Recoverable. These recoverable form part of the 'Sundry Earnings'
(Abstract'Z') of the Railways. These earnings are accrued once the bills are raised
and the realisation of the amount clears the Suspense. Thus, the ' Demands 1,1

Recoverable' is debited and 'Abstract Z' is credited once a bill is raised.

Similarly, the 'Cash' is debited and 'Demands Recoverable' is credited once
the amount billed is realised. Thus, in case the amount billed is to be
withdrawn the provision for deduction to that extent from the sundry earnings
willhave to be made from the traffic accounts simultaneously.
RAISING OF BILLS:

Of late, the realisations under bills recoverable are being watched closely as
reduction in suspense and increase in earnings has required primary foc~s.
Asper 1138- AI, bills for recovery will be raised through Form A 1138. Similarly, a
RegiSter of Bills Recoverable should be maintained for entry of the bills raised
(1139-A1). The bills should be prepared neatly and raised in time. This Register
should be reviewed monthly with a view to see that the bills have been correctly
issued to all parties in time and necessary action is being taken towards the
realisation of outstanding bills.

REALISATION OF BILLS RECOVERABLE - Para 1141 AI has very important

provision so far as pinpointing of responsibilities for the recovery is concerned.
The Para says that it will be the duty of Accounts Officer to see that the bills are
correctly made out and promptly issued to the concerned parties. There should
not be any ambiguity in the bill regarding date of payment, amount to be
realised and mode of payment. Realisation of bill will have to be pursued with
the parties by Accounts Office. Problem, if any, in reapsation of outstanding
should be brought to the notice of executive. It is the responsibility of executive to
render all possible help to Accounts office. Focus should be on old and high value
items. The Accounts Office should also put up monthly position of outstanding to
the executive head of the unit as well as FA&CAO.
METHOD OF BILLING:

When the amounts recoverable are of fixed nature i.e. a percentage on the actual
expenditure or a fixed amount per annum or otherwise, bills are normally

49
preferred by Accounts department while directly sending copies of the same to
concerned Executive departments for information and necessary action.
However, where the. amount to be claimed has to be worked out on the
basis of actuals, bills are prepared by the concerned Executive department and
preferred through Accounts department. Similarly, when a new siding is opened
or facility provide the first bill should be raised by executive through Accounts
department

The bills are prepared against the parties concerned in the Form A-1138 for
dues payable by them. Rate per annum, period of the bill, nature and particulars
of the bill and total outstanding including previous outstanding dues, if any, are
mentioned in the bill.

To ensure timely preparation and despatch of the bill to the parties

schools,
concerned, Accounts office maintains bills Recoverable Registers (A 1139).
with the
Separate folios are set apart in respect of each party for individual facilities
welfare 0:
allowed or services rendered so as to enables a watch on raising of bills and
No. 92/
resultant recoveries. All bills are entered in the Register and numbered in
consecutive order. As and when dues are realised suitable remarks under amount 5
appropriate column of the register are recorded. Regarding
vide letter
In cases where delay is noticed in settlement of the bills the same should be charged
brought to the notice of higher authorities and should be pursued with the parties The land
GOncernedat
, the appropriate level. or worksh

In Para 1837-E of the Engineering Code, there is a provision for charging Te

interest on the amount recoverable if the sum is not paid within one month from uses like
the date on which Railways make a written demand. The rate has been fixed at market val
12% per annum. A clause to this effect is incorporated in all agreements for the resorted £1

sidings and all the facilities. However, this is an enabling and not mandatory
provision regarding interest on delay in payment. Therefore, objection from audit
regarding non-imposition of interest charges, if any, is not considered acceptable.
COMMERCIAL,EXPLOITATION OF LAND: Policy reg,
letter No.
As per the new guidelines, for the purpose of commercial exploitation, surplus the market
land can given on licensing basis. However, leasing of land would require prior land so pra
approval of Railway Board. The instructions issued on the subject are circulated of licensin
vide Board's letter No. 82/W2/LM/18/87 of 29/08/1995. Railways
govemmen1
License fee should be fixed on the basis of market value Le. arrived by Town payment 0
Planning Department, Land Registration Offices, Govt. evaluator or as per the 1631-A1 thl
prevailing transaction of CPWD /PWD. Base year for determination of value is office. For
1985 and 10% increase is added every subsequent years in the month of April. For and outside
the purpose of licensing the land has been classified into various categories like

50

~'-.- .-~- -- ----

commercialplots, steel yard, shops and retail oil depot etc. Annual licence fee will
befixed as a percentage on the value of the land.. The highest rate fixed is 20%
whichis applicable for shops, retail oil depots etc. and 10% for steel yard, coal
dumps, bulk oil installations etc., 7.5% for ordinary commercial plots with
structureand 6% for without structure and so on. A standing Committee of HODs
comprisingCE, CCM and FA&CAO has been nominated for fixing of rental value
based .on the valuation of revenue and other authorities as described above.
Minimum limit has been fixed at Rs. 1000/-. Fresh cases of licensing of plots
connected with the Railway working would need the approval of GM.
Agreements should be entered with the parties for these transactions and the
termination or renewal of the agreement should be done at the end of financial
year.

The Surplus Railway Buildings can be let out to outsiders inCluding

schools,welfare organizations, Mandirs, Masjids and Gurudwaras in accordance
with the principles enumerated in Paras 1960-E and 1961-E. For schools and
welfare organizations separate instructions have been issued vide Board's letter
No. 92/LM (L)/21/4 dated 11/05/1992 according to which only a nominal
amount should be charged on yearly basis as fixed by the Board.
Regarding Mandir, Masjid and Gurudwara, latest instructions issued by board
vide letter No. 2000/LML/22/1 of 31/05/2001 state that a nominal rent may be
charged from these institutions with a provision of revision from time to time.
The land so rented should be in the Railway colonies and not near stations, yard
or workshops.

Temporary licensing of land for a period not exceeding 3 months for the
uses like carnivals, circus shows etc., can be granted at the rate of 20% of the
market value of the land. This will require approval of GM. Open auction may be
resorted for better value if more than one party is involved.

The rate of licensing of Railway land to Govt. Departments should be 12%

of the market value of land.

Policy regarding provision of quarter for GRP staff as laid down vide Board's
letter No. 92/LM (B) 21/41/Policy of 12/10/1993 stipulates that, a rate of 3% of
the market value of land should be charged from the state govt. annually for the
land so provide. This rate should be subject to revision every 10 years. This type
of licensing should be for a period of 30. These quarters will be maintained by
Railways and maintenance charges for the same will be raised against state
government. Railway reserves the right to acquire the quarters at any time by
payment of depreciated cost of building at the rate of 1/65 per year. As per Para
1631-A1 the recovery of rent from outsiders should be watched by the Accounts
office. For this purpose a register of buildings rented to non-railway departments
and outsiders should be maintained by accounts office in the Form A.1631.

51
Regarding Rent/License fee for Way Leave facilities Railway Board had issued t
revised guidelines vide their letter No. 97/LM(L)24/3 of 10/07/1998. The rates of I
way leave facilities vary for various categories and are either in terms of a fixed iJ
amount or a percentage of the market value of land to be paid per annum. These o
rates shall be subject to revision every five years.
PRIV Al
INTEREST & MAINTENANCE CHARGES OF SIDINGS: Sidings are extension
Whe:
of railway facilities to premises of customers. Based on nature of association from
Railways, sidings can be categorise as: - private ~
instruCtil
1. Assisted Sidings These i
2. Private Sidings 58 /Wl /~
99/TC/I
ASSISTED SIDINGS charges i
account f
Assisted Sidings are the sidings provided by Railways for transportation services
to factory or industrial premises other than a colliery, or any mining area or Govt. 1) Te
Deptt.etc. General principles are laid down for the same in paras1822-E t01842-£.
2) Re
The construction of assisted sidings has now been discontinued (Board's L. No.
85/WI/SP / 43 Dt/ 01.12.86). The parties to whom such sidings are provided have
3) Sta
to pay following two types of charges which are payable from the date of their
00
opening.

1) Interest and Depreciation charges - The siding owners have to pay an 4) De;
Interest and Depreciation charges on the capital cost as per book value
borne by Railway at the time of initial construction of the siding. This will
be at the prevalent rate of dividend payable by Railways to general revenue
i.e. 7% since 1993. As peJ
22.04.92 tI-
2) Maintenance charges - The portion of siding inside party's premises is to the respon
be maintained by the party concerned from its own resources. Railway maintain
shall maintain the portion of siding within Railway's premises for which inspectioru
maintenance charges are payable by the siding owner. The maintenance
LIBERALI
charges are payable at the rate of 4.5% of the cost of portion of siding borne
by Railways which is they brought to the present day cost. As aJ
fewdt
The maintenance work inside the premises of sidings is their own
responsibility. However, Railway may take the maintenance of siding 1) As a s
beyond Railway limit if so desired by the siding owner. Railways shall (CTP~
carry out periodical inspection of the maintenance carried out by the throu~
party. siding
nodal I
3) Inspection charges - As stated above where party is maintaining the
2) Civil ]
siding, periodical inspections are carried out by Railways to ensure that

52

-- ~ -
 safety parameters are being followed properly. Inspection charges levied
by the Railways shall be not less than Rs. 2,000/- per ETKM p.a. and
maximum being Rs. 5000/- p.a. However, in terms of Board's latest
instructions circulated vide No. 99/TC/FM/26/1 dated 29/09/2000, levy
of inspection charges has been withdrawn w.e.f. 29/09/2000.
PRIVATESIDINGS -
'.
Where the cost is fully born by the outside party such sidings are termed as
private sidings. In terms of Board letter No.58/WI/SA/13 of 13/04/1982 uniform
instruction have been issued for levy of maintenance charges from private sidings.
These instructions have further been modified vide Board's letter No.
58/W1/SP/45 of 0l/12/1986,No. 85/W1/SP/45 of 20/04/1987 and No.
99/TC/FM/26/1 of 29/09/2002. As per the above instructions, maintenance
charges are to be levied for private siding on per kilometre basis, which will
account for the following factors:
1) Tools & Plant Charges. - Rs. 200/-
2) Replacement of small fittings - 3% per year of cost of
new fittings.
3) Staff cost Le. Pay & Allowances - On the basis of Pay scales
of Maintenance Staff. Of Vth Pay Commission.

4) Departmental Charges. - 12% now reduced to 5% w.e.f.

9/2000 on the total of above
3 items.

As per Board's. instructions issued vide their letter no. 90/CE-1/SP /38 of
22.04.92the maintenance of private siding beyond the Railway limits is primarily
the responsibility of sidings owners. The siding owners should be encouraged to
maintain the siding on their own and Rly. should only carry periodical
inspections.
LIBERALIZATION OF SIDING RULES:

As a move towards customer care, Railway Board.have conveyed following

few decisions vide their letter No. 99/TC (FM/26/1) dated 29/09/2000.

1) As a single window service to the customer Chief Traffic Planning Manager,

(CTPM) has been nominated as a nodal officer for all siding matters
throughout the construction stage and signing of agreement. As soon as the
siding is handed over for commissioning, CCM (FM) will take over as the
nodal officer.
2) Civil Engineering Inspection charges have been withdrawn.

53
 3) The OHE maintenance cost for existing as well as new sidings will be born
2)
by Railways not the sidings.
4) The capital cost and overhead charges for new sidings are rationalised.
5) Staff charges, other than Commercial staff will be borne by Railways. These
instructions also make a provision for review of siding agreement, which
were issued in 1985.
6) Cost of examination in case of sidings other than POL and C&W cost is to be
borne by Railways. The rate of maintenance charges per Km. per year shall
be subject to revision every five years. In the intervening period these will be
increase @10% per year.
MAINTENANCE CHARGES OF ROBs/FOBs AND LEVEL CROSSINGS:
No specific orders from Board are available regarding fixation of rates of
maintenance charges of ROBs and FOBs. As per standard form of agreement a
rate of 3% per annum of the entire cost of the bridge has to be levied with a
provision of revision as and when considered necessary. In term of Para 1851-E,
level crossing maintenance charges are levied on the basis of actual pay and
allowances of establishment required for maintenance of the level crossing.
COST OF COMMERCIAL STAFF DEPUTED TO SIDINGS: -
t
These charges are levied on actual basis for staff deployed to sidings i.e. pay and
allowances actually paid to the staff multiplied by number of staff. In addition to 3) I
actual pay and allowances Railway also charges incidental charges, leave salary f
contribution to SRPF and gratuity at a prescribed percentage. All staff charges, I
except Commercial staff deputed at siding dealing with POL and other hazardous
commodities, should be borne by Railways 4) F
11
CHALLENGES: tI
As stated above, all the charges leviable on other private parties/Govt. Deptt. are e
raised by Railways on concerned parties annually and Commercial staff charges tI
are raised quarterly. All bills must be raised in time and realisation of the bills y
should be ensured within the financial year. However, owing to certain problems e:
the recoveries lag behind. The type of problems faced can be categorised under tl
following heads. tl
1) NON-AVAILABILITY OF PROPER RECORDS I AND NON-
EXECUTIONIREVISION OF AGREEMENTS: In cases of plots allotted to 5). [
private/other Govt. parties it has been noticed that plans, maps, area of the is
plots and all other documents required are not properly maintained in de
Railway Offices. In the absence of the records, it becomes difficult to put de
strong defence to solve the dispute as and when they arise. Similarly, st
agreements are not executed in a number of cases and in some other cases ar
though the agreements are executed but the clauses therein are in the old. co
format having no provision for revision arising out of change in policy. sic
ex
ra1

54
2) REVISION OF POLICIESIFRESH INSTRUCTIONS WITH
RETROSPECTIVE EFFECT: Fresh arrear bills are raised if policy changes
take place with retrospective effect. In most of the cases realization of these
bills give rise to disputes. For example, Board's letter on license fee issued
vide letter No. 82/W2/LM/18/87 of 29/08/1995 resulted in raising of
revised bills w.e.f. 1985. These instructions could actually be implemented
in 1999 only. Thus, the plot rent holders were compelled to pay difference
in plot rent for 13/14 years at one stroke at a later date, which obviously
. created disputes. In a number of cases, concerned parties had vacated the 'I
plots but still they had to pay difference bills.

Similarly, the parties who have been paying their dues on the basis of
rates calculated earlier were unable to pay heavy billing as a result to the
revised instructions on rounding off of the sidings length less than 112Km to
IhKm.

Many parties go to court and obtain stay orders in case of disputes as

a result outstanding is lying in Railway books. It has also been noticed that
as a result of the changes some parties have stopped making payment of
there due even at older rate also.

3) LACK OF CLARITY REGARDING THE INSTRUCTIONS: ETKM factor

for levy of maintenance charges often create confusion as it has often been
misinterpreted by both the parties in their favour.
4) REMITIANCE BY PARTIES REMAINING UNCONNECTED: - In a
n~ber of cases of plot /building rent, vendor license etc., it is noticed that
the parties pay their bills at stations and the same are remitted to Railway
earnings through station balance sheet. But under Bills Recoverable record
the same is not accounted for and outstanding dues continue to appear for
years together. In number of cases, bills outstanding figure available with
executive department and Accounts Department show a major variation, as
II
the necessary recon~iliations are not carried out. It is therefore necessary
that the records are connected and reconciled periodically.
5). DISPUTE IN COMMERCIAL STAFF CHARGES: - The common dispute
is that the sanctioned strength of staff is less than actual numbers of staff
deployed. The grading of staff deputed and amount actually billed for
does not tally as the grades of men on roll and grades of sanctioned
strength are different. Sometimes, revision in rates of NDA, OT, NHA
and revision of pay as a result of pay commissions etc., are not
communicated to siding owners. Overtime paid to staff working on the
sidings is also disputed. In most of the cases fault lies with railways as
excess billing is done and no efforts are made to charge the sidings on
rational basis. Accounts office should sort out this problems through

55
 tripartite meetings between commercial, personnel and Accounts while stations
taking the party's point of view into account. bill ame
2000 011
6). MULTIPLICATION OF AGENCIES INVOLVED IN REALISATION OF Similar!
DUES: There is no fixed channel or Agency for realisation of each type of erroneol
dues. For Commercial staff charges bills,.there are 4 departments involved well. J
in issue and realisation of bills. For raising of bills in some cases, parties (
Accounts Department is the Agency but for realisation of the same which v.
Engineering Department is the nodal agency e.g. for the dues of plot released
rent, building rent charges for ROB, FOB, Water charges etc., Engineering Therefor
department is looking after realisation of dues. However, these problem ensured
can be sorted out if Accounts office plays a role of nodal coordinating
agency.
HOW TO APPROACH THE ISSUE:

Proper and timely communication with the parties at appropriate level is of

paramount importance as far as the realisation of outstanding dues is concerned.
It should be ensured that there is no inaccuracy or arithmetical error in the
preparation of bills. Bills must be raised in time and follow-up action should be
initiated. Parties should be convinced with the documentary support that the
bills are legitimately due. Wherever there is major disputes, meetings may be
convened after taking prior appointment, at appropriate level. For the disputes of
long standing nature, meetings may be arranged at Sr. Official's level. It should
be ensured that proper groundwork is done before going for the meeting.
All the Railway officials should be polite in their conduct with the
customers since some of the customers like siding owners constitute important
source of freight earnings. Our main objective is freight and not the other
sundry charges. Thus, the issue may be approached on these lines only. There
are instances when because o.f the disputes related to maintenance and other
charges, the customers has shifted to road transport. Therefore, such
eventualities must be avoided at all cost.
One thing to be kept in mind is that the payments to Railways, being a
government department, are not of sensitive nature from the perspective of the
party therefore recover are relatively easier.

Similarly, the viewpoints of parties must be appreciated and their other concerns
should be communicated to the executive head of the Railway unit concerned.
In an interesting finding, a review of disputed items on BSLdivision, as conducted
on 15/12/2002, showed that in almost all the cases, the fault lied with Railways.
The problems were related to unusual delay in raising of the bills, wrong
calculation of charges, improper interpretation of the rules and staff charges being
raised disproportionately etc. For example, sidings of IOC at Gaigaon and Shirud

56

'-- .- - -
stations of BSL Division were opened in July 1994 whereas the first maintenance
bill amounting to Rs. 1.8 crores could be raised as late as in the month of May
~OOO only. Moreover, there was no siding agreement entered with the party.
Similarly, in the case of FCI/MMR an excess bill of Rs. 49.9 lacs was raised
erroneously which resulted in dispute and non-payment of remaining charges as
well. However, these disputes were sorted out to the satisfaction of both the
parties once the matter was taken up with a proper direction. The payments,
which were disputed and were outstanding since inception of these sidings were
released by IOC and CFI in one go without much effort being made by Railways.
Therefore, despite few problems proper recoveries of Railway dues can be
ensured if little more discipline is brought in the working.

57