FRANKING OF STAMPS- ANOTHER SCAM IN THE MAKING FRANKING- LAYS GOLDEN EGGS FOR REVENUE DEPARTMENT

   

By Firoz.T.Totanawala

The Bangalore Metro Reporter

15th Feb 2011 Issue-

   FRANKING OF STAMPS- ANOTHER SCAM IN THE MAKING

    FRANKING- LAYS GOLDEN EGGS FOR REVENUE DEPARTMENT

The Banks which were undertaking the Stamp Paper business were instructed to stop the same from 01st November 2009. A company by name Stock Holding Corporation of India Ltd was given the contract for e-stamping which arguably is the best fool proof method. Yet, two years down the lane and SHCIL is not been able to cover the entire state and functioning only in eight Sub Registrar offices in city, where it need not have to pay rent. The people are queuing up before e-stamping centre in large numbers to purchase stamp papers of smaller denominations. The SCHIL, in spite of knowing that there is bound to be heavy rush for e-stamping purpose, has failed to cater to the demand.

Then, the department, in a sudden and swift move, brought in another private company Pitney Bowse in the picture. Without following any prescribed rules and acts, the top brass, in a mortal hurry inked a MoU with the company for 25 Franking machines for 25 SR offices! Before the ink dried on the official Memorandum issued by the then IGR K.R.Niranjan, the franking machines were installed in the SROs. These Franking machines costing around a lakh were not purchased by the department. Rather they were taken on through ‘Special Lease’.  The responsibility of the company is limited to supply of the machine, the ink cartridge and repairs and the SR’s have to look after the operations and security of these machines. And the catch was that the SRs have to collect a service charge of Rs.5 per franking from the public on behalf of the company, separately. What more the SRs have to remit the service charges to the Bank account of the company!

What does this mean? For franking of stamps from Rs.20 to Rs.500, the public have to pay Rs.5 extra per franking as service charge to the company. This seems extraordinary as the SRs do not charge any extra for franking up to Rs.999. In fact, the Franking machines stamp up to Rs.999, but in the present Pitney Bouse machines, there is provision for franking up to Rs.500 only and Rs.5 has to be paid to the company for every franking done whether it is for Rs.5 or 500!

It is to be recalled that the department has supplied franking machines to the SR offices long back, to stamp the papers. Even today, most of these machines of Kilburn Company are in working conditions. In case of these machines, the public have to make an application to the SR for franking the amount they needed. The SR will receive the money and issue receipt and the paper gets franked with the signature and seal of the Sub Registrar. However, while Stamp Papers were in use, the use of Franking was very minimal.

But, after the abolition of stamp papers from 1.4.2003, people queued up before the SROs for franking. It was the only commonly adopted option and the option of payment of stamp duty through certification from the SRs was rarely used. The long queues for miles and heavy work for franking made the situation difficult. As usual, there was black marketing of franked sheets. The SR offices worked day and night to frank as much papers as possible and consequently there were machine break downs and were sent for repairs. The SRs heaved a sigh of relief as they were free to look after their normal work.

However, while the Banks were asked to stop their Stamp Paper business from 01^st November 2009, shockingly, the top brass concerned kept mum. They should have anticipated the situation aftermath the cancellation of stamp paper business and purchased more franking machines and supplied to all the SR offices in the state in October itself. They could have mounted pressure on the SHCIL Company to start its e-stamping centers all over the state. They could have advised people to pay the stamp duty at the SROs and get certification, which is the easiest way to pay stamp duty. The IGR could have issued ads in the newspapers informing public that they can pay the stamp duty through franking or certification or e-stamping. The IGR could have also directed the SRs to open a separate counter for certification of stamps and also to get the franking machines in working conditions. This would have gone a long way in mitigating the problems of people for payment of stamp duty.  But, in stead of undertaking these measures, the top brass sat tight as if it is not their concern.

And suddenly on 2.11.2009, the then Revenue Secretary Parshwanath took a decision to supply 25 Franking machines to 25 SR offices - 16 in Bangalore and the remaining to SROs in nine other districts. This does not mean that they had purchased the Franking machines from its manufacturers Pitney Bowse Company.

It is here the entire scam unfolds. It is a known fact that Kilburn Company had supplied Franking machines to the department since ages and already about 100 machines are presently working in the various SROs and companies. Nobody would have taken exception to the purchase of additional franking machines from this company which is serving the department for many decades. Yet, the then Revenue Secretary took a decision that surprises all. He undertook a contract with Pitney Bouse Company to install Franking Machines in SR offices and shockingly, these machines were leased rather than purchased. This approval was done on 02^nd November and sent to IGR who on 06^th November 2009 issued an official memorandum to all the SR’s and DR offices detailing about the arrangements made with Pitney Bouse Company and its operational aspect.

As per the Official Memorandum, the Franking Machines were simply ‘leased’ and the SRs are required to look after the operation and security of the machines. Franking will be up to Rs.500 only and for every Franking the SRs have to collect a service charge of Rs.5 per franking separately. The company issues the receipt for the service charge which shall be remitted into the account of the company by the SR. The company will supply ink cartridge and look after the repairs of the machines.

All this simply means that the Pitney Bouse Company has given franchisee to the SROs and the SRs who use the franking machines and are required to collect and remit the service charges in to the company’s account, the very next day. Why should the SRs work as collection agents to the company? The SR’s have to collect the charges or duties on behalf of the Government or its statutory bodies. And here again, they shall collect it in the Government’s name and it will be later released to the concerned department. The SRs are not supposed to collect any charges on behalf of any private company. 

Of course, there is a big Kickback ‘issue in the entire episode. The Rs. 5/- per franking commission, is simply too high and at the maximum, one rupee per franking seems to be the fair rate.

In fact, why levy service charge on the people in first place? The department could have directly purchased the machines by spending ground 50 lakhs initially for use on 50 SR offices. There is a provision permitting the department to go for emergency purchases. Considering the gravity of the situation, the Government could have permitted the purchase of at least 100 franking machines which was timely sufficient. Already more than 150 SR offices in the state have been provided with franking machines since ages.

Let us come to the savings on service charge if the department purchases the machines. As on now, there is a demand of more than a crore franking sheets of smaller denominations. And the service charge for this quantum of franking will be 5 crores. If the Government purchases even 250 machines for all the SROs in the state, the cost will be 2.50 crores and it can save the payment of service charge of 5 crores to the company. If the Government levies one rupee as application charge, the entire investment can be recovered in a matter of two years. If the franking machines are installed in all the SR offices, one can not come across any shortage of stamped papers.

No doubt, the Franking machine scam definitely beats all known levels of logic. The excuse given for this strange arrangement was the sudden stoppage of stamp paper business from the Banks. It is no secret that the department had asked the Banks to stop the business even in 2008 on the pretext of introducing the e-stamping. So, the top brass knew well that it was only a matter of time that the Stamp papers issued by Banks would be stopped.

Of course, one feels that the top brass were making secret deals with company for franking machines. There is no other reason why the franking machines made their sudden appearances even before the IGR’s order reached the office!

What more, the department has spent lakhs of rupees for inserting big ads in front pages of the most of the news papers instructing public to pay Rs. 5/- as service charge to the company. A mere issue of press note would have solved the purpose.

The scam needs to be thoroughly investigated either by the COD or the Lokayukta. The officials responsible for fleeing the public for their selfish motives should be taught a befitting lesson.