The Court allowed a writ petition challenging recovery proceedings initiated against former Panchayat office bearers for alleged wasteful expenditure. The Court held that no proper computation of loss or fixation of liability was conducted in violation of statutory requirements.
Writ petitions allowed; impugned recovery orders set aside; no costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
WEDNESDAY, THE 30TH DAY OF NOVEMBER 2016/9TH AGRAHAYANA, 1938
WP(C).No. 16945 of 2008 (P)
PETITIONER(S) :
1. K.K.VISWANATHAN MASTER, NARAYANAPURAM, THAZHAMUNDA P.O., WAYANAD DISTRICT.
2. P.M.SUDHAKARAN, PULICKAL, KENICHIRA P.O., WAYANAD DISTRICT.
BY ADV. SRI.GEORGE POONTHOTTAM
RESPONDENT(S) :
1. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF LOCAL SELF GOVERNMENT, (STATE PERFORMANCE AUDIT AUTHORITY), GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.
2. STATE PERFORMANCE AUDIT OFFICER, (LOCAL SELF GOVERNMENT), THIRUVANANTHAPURAM.
3. THE DIRECTOR OF PANCHAYATS, OFFICE OF THE DIRECTORATE OF PANCHAYAT, THIRUVANANTHAPURAM.
4. POOTHADY GRAMA PANCHAYAT, KENICHIRA P.O, WAYANAD DISTRICT, REPRESENTED BY THE SECRETARY.
..2/-
..2..
WP(C).No. 16945 of 2008 (P)
*** ADDITIONAL R5 IMPLEADED**
5. T.R.RAVI, THEKKINKATTIL HOUSE, MANALUVAYAL P.O., PULPALLY VIA, IRULAM, WAYANAD DISTRICT.
R1 TO R3 BY SR. GOVERNMENT PLEADER SRI. RENIL ANTO R4 BY ADV. SRI.RAJESH NAIR ADDL.R5 BY ADV. SRI.P.C.SASIDHARAN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-11-2016, ALONG WITH W.P(C).NO. 27838 OF 2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Msd.
WP(C).No. 16945 of 2008 (P)
APPENDIX
PETITIONER(S)' EXHIBITS :
EXHIBIT P1: TRUE COPY OF THE LETTER DATED 29.05.2008 GIVEN TO THE 1ST PETITIONER.
EXHIBIT P2: TRUE COPY OF THE LETTER DATED 29.05.2008 GIVEN TO THE 2ND PETITIONER.
EXHIBIT P3: TRUE COPY OF THE LETTER DATED 14.05.2008.
EXHIBIT P4: TRUE COPY OF THE LETTER DATED 04.06.2008.
RESPONDENT(S)' EXHIBITS :
EXHIBIT R4(A): PHOTOSTAT COPY OF THE LOCAL FUND AUDIT REPORT DATED 01.03.2006 SUBMITTED BY THE LOCAL FUND AUDIT TEAM FOR THE YEAR 2000-2001 ON 26.04.2005 TO 02.07.2005.
//TRUE COPY//
P.A.TO JUDGE.
Msd.
'CR'
K. VINOD CHANDRAN, J.
===================== W.P.(C) Nos.16945-P and 27838 of 2008 - L
================================ Dated this the 30th day of November, 2016
J U D G M E N T
The petitioners, the President and Vice President in W.P.(C) No.16945 of 2008 and the Secretary in W.P.(C) No.27838 of 2008, of the respondent Panchayath during 2000-2001 are before this Court challenging the recovery attempted by the respondent Panchayath.
which is alleged to have been wastefully expended in the construction of a compound wall and digging of a well; using the funds of the Panchayath. The three petitioners were asked to pay the amounts in equal proportion of Rs.83,909/- with interest @18% from 29.01.2001, within 15 days of the receipt of the notices dated 29.05.2008 produced in W.P(C) No.16945 of 2008 as Ext.P2 and Ext.P6 in W.P.(C) No.27838 of 2008 dated
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24.06.2008. The proceedings for recovery is said to have been issued in pursuance to orders issued by the Director of Panchayaths, produced as Ext.P3 in both the writ petitions. The learned Counsel for the petitioners submit that there is no power conferred on the Director to make such a recovery without computation of loss and fixation of liability.
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the withdrawals made on various dates between 14.02.2001 and 30.03.2001, being a total amount of Rs.3,00,000/-. It was found by the Auditor that there is no estimate, bill or sanction obtained for the withdrawal and expenditure of such amounts. On the basis of the special audit so conducted, it is submitted that the Panchayath has the authority to proceed for recovery as is provided under the Kerala Panchayath Raj (Manner or Inspection and Audit System) Rules, 1997 (for brevity 'the Rules of 1997). It is also alternatively contended that the Kerala Local Fund Audit Act, 1994 (for brevity 'the Act of 1994) also provides for recovery of surcharge from any person, who is found to have caused loss to the local authority or the Government.
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President and the Secretary, all of whom were members of the sub-committee which was in charge of the works. The amounts so found to have been withdrawn and expended without any supporting receipts, could be recovered under Section 215 of the Panchayath Raj Act or under the Kerala Public Accountants Act, 1963 (for brevity 'the Public Accountants Act') goes the arguments. It is pertinent to note that the Government in its counter affidavit categorically states that the recovery is pursuant to the enquiry under Section 189 and not under the Act of 1994 or Rules of 1997.
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irregular, illegal or improper expenditure or failure to recover moneys due or loss or waste of money caused by negligence or misconduct, by the auditor on the person concerned.
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1994 provides for recovery under the provisions of the Kerala Revenue Recovery Act, 1968 (for brevity R.R. Act').
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procedure for audit is further delianated in the Rules of 1997 framed under the Panchayath Raj Act, which also speaks of a special audit and performance audit. In the present case, the records reveal such a special audit having been conducted. The discrepancy noticed under the Act of 1994 as to there being no liability fixed or charged on a person is applicable to the contentions raised under the Rules of 1997 also. Rule 22 of the Rules of 1997 speaks of the liability for loss, expenditure and misappropriation of money and liability for misconduct and willful negligence to be mulcted on the President, Vice President and Standing Committee Chairman, members or Secretary of the Panchayath and provides for a recovery under Section 253 of the Panchayath Raj Act. Section 253 as it existed in the Panchayath Raj Act provided for revenue recovery against the members or the office bearers, who are fixed with liability under Rule 22 of the Rules of 1997. Section 253 of the Panchayath Raj Act however was omitted by the Act 13 of 1999 w.e.f. 01.10.2000.
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Hence there could not have been a recovery initiated under the R.R Act if the proceedings were under Section 215 or the Rules of 1997.
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Ext.R4(a) is on an enquiry ordered under Section 189; then there should be computation of loss and fixation of liability. The report speaks of disallowance of Rs.3,00,000/- withdrawn and expended in the construction of a wall. The amount sought to be recovered is expenditure under two heads: construction of a wall and digging of a well. The amounts are also lesser than that indicated under Ext. R4(a). Hence there was a computation of loss made, but without notice to the petitioners and behind their back. Presumably the computation was made by the officer to whom Ext.R4(a) was made, ie: the Director of Panchayaths. It is that officer who directed recovery to be made as is discernible from Ext.P3 and also the impugned recovery notices. The direction was also to recover the amounts from those responsible. The liability hence was not fixed by the Director and it was left to the Secretary; so to do. The Secretary again without any notice fixed the liability on the sub-committee members. A proper
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computation of loss and fixation of liability if at all, would in any case have rendered helpless the Government or the Panchayath from effecting a recovery since Section 189 does not provide for it. On detection of the irregularity a suit could have been filed in which case the Court could have computed the liability and also fixed the responsibility, in which event, the recovery also could have been effected. But however, the said measure was not taken and now the laws of limitation work against that.
the the Public Accountants Act. Suffice it to notice that the definition of public accountant does not take in the President or Vice President of the local authority. Even if the Secretary would come within in the definition of a public accountant, there is not seen any proceedings taken by the Collector or his designate under Section 8 of the Public Accountants Act and in such circumstance no reliance can be placed on the said Act.
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In the result, W.P.(C) Nos.16945 of 2008 and 27838 of
2008 are allowed, setting aside the impugned orders. No costs.
Sd/-
K. VINOD CHANDRAN,
JUDGE
SB/01/12/2016
// true copy //
P.A to Judge
3 issues framed by the court
Whether recovery of alleged wasteful expenditure from former office bearers can be initiated without fixation of liability by the Auditor or proper enquiry.
Whether the deletion of Section 253 of the Kerala Panchayath Raj Act precludes recovery proceedings under the Act.
Whether surcharge can be permitted after a period of nearly 15 years from the date of expenditure.
5 provisions across 3 enactments
K.K.Viswanathan Master
P.M.Sudhakaran
State of Kerala
State Performance Audit Authority
Poothady Grama Panchayat
T.R.Ravi
K. Vinod Chandran
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
