Article 284

Article 284 of the Constitution of India establishes the constitutional framework for the custody and management of non-revenue moneys received by public servants and courts. It ensures accountability, transparency, and proper handling of funds that are not classified as government revenues but are received in the course of administrative or judicial functions. The article plays a crucial role in safeguarding public trust and maintaining financial propriety within public administration and the judiciary.

Constitutional Framework and Objective

Article 284 forms part of Part XII of the Constitution, which deals with financial matters of the Union and the States. Its principal objective is to prevent misuse or misappropriation of funds received by government officials or courts in their official capacities. It directs that such moneys be credited into the Public Account of India or the Public Account of the concerned State, thereby ensuring that they are subject to constitutional oversight and audit.
The provision reads as follows:”All moneys received by or deposited with— (a) any officer employed in connection with the affairs of the Union or of a State in his capacity as such, other than revenues or public moneys raised or received by the Government; or (b) any Court within the territory of India, to the credit of any cause, matter, account or persons, shall be paid into the public account of India or the public account of the State, as the case may be.”
This article, therefore, delineates the treatment of such funds distinct from normal government revenues.

Key Provisions of Article 284

The article establishes two essential obligations:

1. Custody of Moneys Received by Public Servants:
   • All non-revenue funds received by public servants while discharging their official duties must be deposited in the Public Account.
   • These funds often include security deposits, earnest money, bidder deposits, or advance payments held in trust until obligations are fulfilled.
2. Custody of Moneys Received by Courts:
   • All deposits received by courts, such as suitors’ deposits, must also be paid into the Public Account.
   • These deposits are typically connected to legal proceedings and remain in custody until the court determines their rightful ownership or usage.

The provision thus ensures that neither public officials nor judicial officers have personal control over funds received in their official capacity, reducing the risk of corruption or mismanagement.

Types of Moneys Covered

Article 284 encompasses a range of financial receipts that are not part of the government’s revenue but are nevertheless handled by public authorities. These include:

• Security deposits made by contractors or suppliers.
• Earnest money deposits associated with tenders or auctions.
• Court deposits, such as amounts paid into court pending litigation outcomes.
• Trust moneys held by officers or departments for specific purposes.
• Refundable deposits linked to licences or performance guarantees.

Such moneys are typically temporary in nature and are eventually refunded, forfeited, or otherwise disposed of according to law or judicial order.

Exclusions and Distinction from Revenue Receipts

Article 284 does not extend to government revenues or public moneys raised through taxes, duties, fees, or other income sources. Those funds are covered under Articles 265 and 266, which relate to the Consolidated Fund of India and the Public Account. Article 284 instead governs funds held in trust by the government or judiciary for specific individuals or purposes, ensuring that they are managed separately and transparently.

Public Accounts: Definition and Significance

The Public Account of India and the Public Accounts of the States are distinct from the Consolidated Fund. They serve as repositories for all moneys received by the government that do not belong to it. Examples include provident funds, postal savings, judicial deposits, and other trust funds.
Moneys in the Public Account:

• Do not require parliamentary or legislative authorisation for withdrawal, as they are not government-owned.
• Are, however, subject to audit by the Comptroller and Auditor General (CAG), ensuring accountability and accuracy in record-keeping.
• Are managed under strict financial rules to guarantee that deposits are handled correctly and returned to rightful claimants when due.

Legal and Administrative Implications

The constitutional intent of Article 284 is to ensure that public servants and courts act as custodians, not owners, of the moneys they receive in their official capacity. It provides a safeguard against financial mismanagement and strengthens public confidence in the integrity of public institutions.
Administrative rules have been framed under financial codes and treasury regulations to implement this article effectively. These rules cover:

• Procedures for receiving and recording deposits.
• Guidelines for depositing funds into the Public Account.
• Mechanisms for maintaining audit trails and documentation.
• Protocols for refund, forfeiture, or transfer of deposits as required.

Non-compliance with these procedures can lead to disciplinary action or legal consequences for the concerned officials.

Judicial Interpretations and Case Law

Indian courts have, through various judgments, reinforced the principles underlying Article 284:

• Safeguarding of Deposits: Courts have consistently held that funds received in trust or deposit must be managed strictly according to law and returned to their rightful owners when appropriate.
• Accountability of Public Officers: Judicial interpretations have emphasised that officers handling such funds hold them in a fiduciary capacity and are accountable for their proper use.
• Prevention of Misuse: Several judgments have underlined that diversion or misuse of such funds constitutes a breach of public trust and is punishable under law.

Though specific landmark cases directly interpreting Article 284 are limited, its principles have been applied in administrative and financial disputes concerning misuse or misappropriation of deposits.

Constitutional Context and Related Provisions

Article 284 complements several other financial provisions in the Constitution that collectively ensure a transparent fiscal framework:

• Article 265: No tax shall be levied or collected except by authority of law.
• Article 266: Establishes the Consolidated Fund and the Public Account.
• Article 267: Provides for the Contingency Fund.
• Article 283: Governs the custody and management of the Consolidated, Contingency, and Public Accounts.

Together, these provisions promote financial discipline, ensuring that all public receipts—whether revenues or non-revenue deposits—are subject to legal and institutional oversight.

Practical Applications

Article 284 applies in a wide variety of practical contexts, including:

• Court proceedings: When a litigant deposits money as security or when compensation amounts are held pending resolution of a dispute.
• Government contracts: When contractors submit security deposits or performance guarantees.
• Licensing procedures: When individuals or firms provide earnest money deposits during competitive bidding or licence applications.
• Public auctions: When bidders deposit sums to participate in sales conducted by government agencies.

In each of these cases, the received money must be deposited in the appropriate Public Account, ensuring that it remains distinct from general government revenue.

Enforcement and Accountability Mechanisms

The responsibility for enforcing compliance with Article 284 lies primarily with:

• The Comptroller and Auditor General (CAG), who audits such accounts to verify compliance and detect irregularities.
• The Public Accounts Committees (PACs) of Parliament and State Legislatures, which scrutinise audit reports and ensure corrective actions are taken.
• Administrative and judicial authorities, which can impose disciplinary measures or order restitution in cases of misuse or misappropriation.

Strict adherence to these safeguards reinforces financial integrity and protects the rights of individuals and entities who entrust money to public servants or courts.