Punjab-Haryana High Court
Resurgence India vs Union Of India And Others on 20 March, 2009
Bench: T.S.Thakur, K.Kannan
CWP No.18396 of 2007 -1-
IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
CWP No. 18396 of 2007
Date of Decision:- 20.03.2009
Resurgence India ....Petitioner
Versus
Union of India and others .....Respondents
CORAM: HON'BLE MR. JUSTICE T.S.THAKUR, CHIEF JUSTICE
HON'BLE MR. JUSTICE K.KANNAN
1. Whether Reporters of local papers may be allowed to see the
judgment?
2. Whether to be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
Present: Mr. A.P.S. Shergill, Advocate with
Ms. Raina Sabharwal and Mr. Jagjeet Singh, Advocates
for the petitioner
Mr. O.S. Batalvi, Advocate for respondents No.1 and 2.
Mr. Y.P. Singla, Advocate for respondent No.3
Mr. Rameshwar Malik, Addl. A.G. Haryana for respondent No.4
Mr. Anupam Gupta, Standing Counsel for U.T. Administration
for respondent no.5
Mr. Amol Rattan Singh, Addl. A.G. Punjab with
Ms. Sonu Chahal, DAG Punjab for respondent-State of Punjab.
*****
T.S.Thakur, C.J. (Oral)
This petition filed in public interest brings into sharp focus the alleged acts of misappropriation, misuse of funds and abuse of the authority by the office bearers and employees of the district branches of Indian Red Cross Societies in the States of Punjab, Haryana and Union Territory of Chandigarh. The petitioner inter alia prays for a mandamus directing registration of First Information Reports against those guilty of misappropriation and misuse of funds and also directing respondent No.2 to CWP No.18396 of 2007 -2- immediately seize and take into custody all the records of the District and State Branches of the Societies.
The petitioner's case, as set out in the writ petition, is that having come to know about misappropriation of funds by the State and District Branches of Indian Red Cross Society in Punjab and being disturbed by the State of affairs, it made a series of applications under the Right to Information Act, 2005 to the Punjab State Branch and various District Branches of Indian Red Cross Society seeking information about their accounts and operations. It is only after stiff resistance by the District Branches that the requisite information was supplied by some of them while information from other District Branches has yet to be furnished. Scrutiny of the information so provided is alleged to have revealed misappropriation and diversion of grants received from the Ministry of Social Justice & Empowerment, Rehabilitation Council of India and MPLAD Schemes. In addition to these grants and funds, considerable amounts collected locally for Kargil War Relief, Orissa Cyclone Relief and Gujarat Earthquake Relief, were according to the petitioner found to have been misappropriated and utilized for purposes other than those for which the same were collected. Apart from misappropriation and diversion of grants, the petitioner alleges that the Red Cross funds have been misused by the IAS officers posted as Deputy Commissioners for their personal expenses or for purposes other than those of Red Cross. According to the petitioner, the funds of the Societies have been siphoned off and misappropriated for purchase of Cars, furniture items, air conditioners, refrigerators, and for payment of mobile and petrol bills, apart from hotels/restaurants bills, crockery and furnishing etc. It is alleged that the office bearers concerned, who were managing the affairs of the District Branches of the Red Cross Societies, have committed fraud not only with Red Cross, but also with the poor needy people, financial aid CWP No.18396 of 2007 -3- meant for whom has been pilfered by the officials for their personal expenses and for expenses not connected with the Red Cross activities. The petitioner further alleges that the Deputy Commissioners posted in the Districts of Ludhiana, Sangrur and Patiala have from time to time made the Red Cross Societies as their personal fiefdoms and have been managing the branches in an undemocratic and arbitrary manner in the process rendering the Rules and Regulations absolutely meaningless. It is alleged that keeping in view the rampant misuse of funds, the state-wide pilferage is likely to run into hundred of crores, which calls for a thorough investigation not only into the acts of misappropriation but also into the functioning of the State and District Branches of the Indian Red Cross Society. The petitioner also makes a reference to enquiries conducted by the Divisional Commissioners, which are according to it, no more than an eyewash, especially because the Divisional Commissioner, Patiala, who is one of the officers asked to enquire into the matters, was himself enjoying the services of an employee each from Sangrur and Patiala Red Cross Branches. That apart, the Divisional Commissioners who had been asked to hold an enquiry were themselves the Deputy Commissioners and ex-officio Presidents of the District Red Cross Branches at one point or the other, with the result that any enquiry conducted by them was nothing, but a total farce. The petitioner has summarized the grounds on which it seeks interference from this Court in paras 9(i) to 9(5) of the petition in the following words:-
i. The District Branches of Indian Red Cross Society (respondent No.3) have misappropriated and diverted funds meant for the poor and needy people to other purposes thereby denying these hapless intended beneficiaries their legitimate due. Therefore, on this ground itself, the present petition is likely to succeed. ii. The Presidents and other office bearers and officials of the District Branches of Indian Red Cross Society CWP No.18396 of 2007 -4- (respondent No.3) have siphoned off the Red Cross funds and misused these funds for their personal expenses and for expenses not connected with Red Cross. Only a thorough investigation by CBI could unearth the extent of the fraud committed by the office bearers and officials of the branches and fix responsibility for the same. Hence, on this ground also, the present petition is likely to succeed.
iii. The President of the District Branch of the Indian Red Cross Society, being Deputy Commissioner of the district, is all powerful and is in a position to manipulate the things. It is, thus, unlikely that a fair investigation would ever be conducted into the affairs of the District Branches of IRCS by the State or the culprits would ever be punished. Only the indulgence of this Hon'ble Court could ensure a fair investigation and fair trial in the matter. Therefore, on this ground itself, the present petition is likely to succeed.
iv. The Presidents of the District Branches of the Indian Red Cross Society (Deputy Commissioner of the district) have managed the Red Cross branches as their fiefdom and have rendered the Rules and Regulations of IRCS absolutely meaningless thereby causing irreparable harm to the mission of Red Cross. Only a thorough probe into the arbitrary and authoritarian functioning of the Red Cross would fix responsibility on the erring Deputy Commissioners. It is, thus, unlikely that a fair investigation would ever be conducted into the affairs of the District Branches of IRCS by the State or the culprits would ever be punished. Only the indulgence of this Hon'ble Court could ensure a fair investigation and fair trial in the matter. Therefore, on this ground itself, the present petition is likely to succeed.
v. The concerned respondents are behaving in a manner detrimental to the interest of public at large and have failed to protect the fundamental rights of the citizens guaranteed under the Constitution of India. Therefore, the petition is likely to succeed on this ground also." CWP No.18396 of 2007 -5- Respondent-State of Punjab has filed a counter affidavit sworn by Shri Dharam Dutt Ternach, Addl. Secretary to Government of Punjab, Department of Personnel. The affidavit, inter-alia, states that the Government of Punjab had taken immediate cognizance of reports appearing in a section of the media highlighting certain maladies in the working of the Red Cross Societies in Punjab and ordered an enquiry in December 2nd, 2007 by the concerned Divisional Commissioners in all the Districts of the State. The enquiry reports based on the enquiries so conducted have been received by the Government from all the Divisional Commissioners concerned pursuant to which the Government have taken a series of steps, such as, fixing the responsibilities in all such cases and taking appropriate action where expenditures not consistent with the broad objectives of the Red Cross, had been incurred. The Government have also, according to the affidavit, decided to reimburse the concerned Red Cross Societies the expenditure which has been meted out of Red Cross funds on matters unrelated to the objects of the Red Cross. The Government is said to have issued certain directions to the Deputy Commissioners to forthwith stop the use of Red Cross funds by the District Administration on any non- Red Cross activities. Relying upon the enquiry reports of Divisional Commissioners, the affidavit alleges that the funds collected by way of public contributions for Kargil war and Gujarat earthquake, etc. have not been embezzled or misused. However, in some cases, they are not fully transferred to either the Chief Minister's or the Prime Minister's Relief Fund. The Government have, therefore, decided to direct all the Deputy Commissioners to transfer forthwith all such balance amounts to the Prime Minister's Relief Fund alongwith a Statutory Auditor's Certificate that no amount collected for these relief operations is outstanding with Red Cross. The Government have also decided to reascertain whether or not all the government grants released to the Red Cross in the past have been CWP No.18396 of 2007 -6- properly utilized. In the event of any misutilisation, the Government proposes to make recoveries from the concerned under the Punjab Financial Rules. It is also asserted that the Government had directed the Deputy Commissioners to immediately recover all the short term loans advanced from Red Cross to various Government employees or other Government offices besides issuing directions not to advance any such loans in future. The affidavit states that for want of elaborate Rules and well defined norms, the authorities had been placing reliance on the prevailing custom and past practice which has contributed to the shortcomings highlighted in the writ petition. It is also stated that Punjab State Red Cross Society would be requested to undertake systemic reform of working of the District Societies by drawing up uniform Rules and Regulations, laying down financial norms as well as permissible/non-permissible items of expenditure.
A counter affidavit has been filed even by a Secretary General, Indian Red Cross Society, New Delhi, in which, it is, inter-alia, pointed out that the District Branches in different States have their own systems of governance and management in tune with the guidelines/models issued by their respective States/Union Territory Branches. The Deputy Commissioners are the ex-officio Presidents or Chairman of these Branches who collect funds, relief material and other resources for medical and disaster relief work. These resources are then used by the District Branches as per the local requirements. It is stated that the Indian Red Cross Society/District Branches, enjoys a high level of autonomy in the management of their affairs and that the National Headquarters does not have any direct administrative or Financial control over the State or the District Branches. The affidavit goes on to state that the State Government has received the enquiry reports from the Divisional Commissioners concerned and taken necessary remedial measures in the matter. CWP No.18396 of 2007 -7-
In the replications filed by the petitioner to the above counter affidavits, it has been, inter-alia, stated that the much boasted enquiry conducted by the Divisional Commissioners into the affairs of the District Red Cross Branches is a farce in itself. Shri B.S.Sudan, Divisional Commissioner, Ferozepur and Shri S.R.Ladhar, Divisional Commissioner, Jalandhar Division had according to the petitioner themselves committed serious wrongs while they were posted as Deputy Commissioners of Fatehgarh Sahib and Ferozepur, respectively. Elaborating this aspect, the petitioner has pointed out that as per the information furnished to it under the Right to Information Act, Shri B..S.Sudhan is found to have used Red Cross Funds of Rs. 14,000/- for expenses, that have been identified as personal expenses, which amount he has deposited on 2.7.2008, while a sum of Rs. 4500/- is shown to be recoverable from Mr. S.R.Ladhar, on account of personal expenses. It is further alleged that a sum of Rs. 4,67,098/- out of funds collected by Red Cross, Bathinda during 12.07.1999 to 02.03.2000, in the name of Kargil War and Orissa Cyclone etc. was not utilized for the purpose by Shri S.R.Ladhar, the then Deputy Commissioner-cum-President of the District Branch which amount has now been sent to the Prime Minister's Relief Fund on 11.04.2008. The enquiries conducted by officers like Mr. Sudhan and Mr. Ladhar into the malpractices, of which they were themselves guilty, cannot, according to the petitioner, inspire confidence. So also the report given by Shri S.K.Ahluwalia, Divisional Commissioner, (Patiala Division), giving a clean chit to the Deputy Commissioners of Fatehgarh Sahib and Ropar Districts, has been described as absolutely false. The petitioner by relying upon the information secured by it under the Right to Information Act has alleged that in Fatehgarh Sahib, two Deputy Commissioners, namely, Mr. B.S.Sudan and Mr. Vikas Pratap had been identified to have incurred personal expenses out of Red Cross funds and both of them have now deposited the money. Further in the very same CWP No.18396 of 2007 -8- district, a sum of Rs. 5,21,918/- was found to have been collected for specific relief purposes but not spent for that purposes. Another sum of Rs. 3,36,283/- out of Red Cross was found to have been spent for government purposes. In the case of Ropar, Shri G.S.Grewal, Deputy Commissioner, was found to have incurred personal expenses out of Red Cross funds which has also been deposited by him. In Ropar District again, a sum of Rs. 2,95,291/- was found to have been spent out of Red Cross funds for government purposes. Despite these patent irregularities and illegalities, the Divisional Commissioners have given clean chits to the officers concerned. The enquiry reports, are, according to the petitioner, silent regarding the following issues:-
i. Personal expenses of the Deputy Commissioners, Honorary Secretaries and other officials:
ii. Fixed assets of mobile phones, furniture, air conditioners, refrigerators etc. bought by the Deputy Commissioners out of Red Cross funds for Camp Offices situate at Deputy Commissioners Residences.
iii. Massive evasion of income tax by Red Cross branches by not obtaining income tax exemption and filing income tax returns.
iv. Blatant flouting of rules by Deputy Commissioners by not holding meetings of the Executive Committees and General Body for decades.
The petitioner further alleges that enquiry reports do not fix the responsibility of the officers for embezzlement, pilferage of mobile phones, furniture, air conditioners, refrigerators etc., deployment of Red Cross employees at the residences of the Deputy Commissioners, non-utilisation/transfer of funds collected in the name of Kargil War, Gujarat Earthquake and Orissa CWP No.18396 of 2007 -9- Cyclone, and fraud committed by the Deputy Commissioners by charging expenses incurred on POL, telephone etc. in excess of the limits fixed by the Government to the Red Cross. Suffice it to say the replications describe the enquiries conducted by the Divisional Commissioners as a cover up operations to save the culprits. The petitioner also finds fault with the draft guidelines Annexure R-3 as the handiwork of bureaucrats to legitimize the illegitimate expenditure incurred by them out of Red Cross funds.
We have heard learned counsel for the petitioner at considerable length and perused the record.
Red Cross Movement was born as early as in 1863 based on the suggestions made by Jean Henry Dunant, who was appalled by the condition of the wounded soldiers during Franco-Austrian war. In his book 'Memory of Solferino', Jean Henry Dunant suggested that a neutral organization be established to aid the wounded soldiers in times of war. The name and the emblem of the movement was derived from the reversal of the Swiss National Flag honoring the country in which the Red Cross was founded. During the first world war in 1914, India had no organization for relief services to the affected soldiers except a branch of the St. John Ambulance Association and another run by a joint committee of the British Red Cross. A bill to constitute the Indian Red Cross Society, independent of the British Red Cross was eventually introduced in the Indian Legislative Council on 3rd March, 1920 which later became Act XV of 1920.
Working of the Act during 70 years was found to have been unsatisfactory on account of several loopholes in the legislation with the result that the Act was amended by Act 14 of 1992. Under Section 8 of the Act as it now stands on the statute book, Branch Committees are constituted in all the States specified in Second Schedule to the Act, among whom the CWP No.18396 of 2007 - 10 - Red Cross Society of India distributes the income from the property vested in it. Section 12 of the Act provides that each Branch Committee shall have the power to receive gifts and expend all monies received by it for its purposes either directly or through other Societies or Bodies. The objects for which the Societies so established can apply their funds are enumerated in Section 7 of the Act.
It is common ground that the States of Punjab, Haryana and Union Territory of Chandigarh have different Red Cross Societies. The composite branch was bifurcated into separate units for Punjab, Haryana and Union Territory of Chandigarh in June, 1971. On our record is a copy of the Constitution of the Indian Red Cross Society, Punjab State Branch, Article 3 whereof stipulates the aims and objects of the Indian Red Cross Society, Punjab State Branch as under:-
AIMS AND OBJECTS
3. The aims and objects of the Indian Red Cross Society, Punjab State Branch, shall be the same as given in the First Schedule of Indian Red Cross Society Act XV of 1920 (as amended uptodate) viz:
i. Aid to the sick and wounded members of the Armed Forces of the Union in accordance with the terms and spirit of the Geneva Conventions of 12th August, 1949, and discharge of other obligations devolving upon the Society under the Conventions as the recognised auxiliary of the Armed Forces Medical Services.
ii. Aid to the demobilised sick and wounded members of the Armed Forces of the Union.CWP No.18396 of 2007 - 11 -
iii. Maternity and Child Welfare.
iv. Junior Red Cross.
v. Nursing and Ambulance Work.
vi. Provision of relief for the mitigation of suffering caused by epidemics, earthquakes, famines, floods and other disasters whether in India or outside.
Vii. The establishment and maintenance of peace among all nations in accordance with the decisions of the International Red Cross Organisation.
Viii. Work parties to provide comforts and necessary garments etc. for hospitals and health institutions.
ix. The expenses of management of the Society and its branches and affiliated societies and bodies.
x. The representation of the society on or at International or other Committees formed for furthering objects similar to those of the Society.
xi. The improvement of health, prevention of disease and mitigation of suffering and such other cognate objects as may be approved by the Society from time to time, The Constitution of the District Societies except the newly established District Society for SAS Nagar, District Mohali are not, according to the respondents, available. No reasons, however, are forthcoming for disappearance of those documents. What was argued by Mr.Amol Rattan Singh on behalf of the State and the District Societies is that the District Societies have adopted model Constitutions proposed by the State Society CWP No.18396 of 2007 - 12 - with suitable amendments to the same by resolutions passed between August, 2008 to December, 2008. Copies of these resolutions are also not on record nor has the need to adopt new constitution been explained. The non-availability of the constitutions of the District Societies which would indicate the nature of the activities and the day to day working of the societies is a serious matter. The constitution is the very foundation for the creation and working of a society. Its non-production or non-availability puts a question mark on the working and the health of the society. Whether or not model constitutions have been adopted and if so, by what process, is also a matter that needs to be looked into and verified. Assuming that the model constitutions have been adopted as stated by the respondents, it is not clear whether meetings of the Executive Committee were being held by the societies on regular intervals. There is, in our opinion, considerable merit in the contention urged on behalf of the petitioner that a District Red Cross Branches are obliged to honour and observe all rules and regulations by the State Branch of the IRCS including those regarding the intervals at which the meetings of the Executive Committee of the Societies shall be conducted. In terms of the model constitution for District Red Cross branches framed by the Punjab State branch of the society, an ordinary meeting of the Executive Committee has to be held once a quarter. Article 8 of the Model Rules for District Branches is in that regard relevant. It reads :-
"8. Meetings.
Meetings of the District Branch Committee and Sub-Committees shall be held at least once a quarter. The quorum for such a meeting shall be four.
Each District Branch may elect a representative to attend the Annual General Meeting of the State Branch.
Each District Branch may nominate a member (not an Associate) resident in the District Branch area, to serve on the General Committee of the State Branch."CWP No.18396 of 2007 - 13 -
It is common ground that meetings of the Executive Committee are not being held by the District Branches in terms of the above Article or in terms of the original constitution which document is, in any case, not available. According to the petitioner, meetings have not been held for years together which imply that the working of the District Branches has been controlled solely by the Deputy Commissioners without any check on the arbitrary and whimsical powers exercised by them and without taking the rest of the members of the Committee into confidence.
The respondents have, however, placed on record copies of the instructions issued to the Deputy Commissioners in the State of Punjab not to collect any funds forcibly from the general public for any Philanthropic, Cultural and sports activities as reports of such forcible collection had come to the notice of the Chief Minister, Punjab. According to the said instructions, the Divisional Commissioners' were asked to conduct a probe into the mis-utilisation of the Red Cross Funds in all the Districts falling within their Divisions and a report submitted to the Government. Reports received from the Divisional Commissioners of Patiala, Ferozepur and Jalandhar Divisions have been placed on record, from a reading whereof it appears that there has been a large scale and rampant mis-utilisation of funds meant for the activities of the Red Cross. For instance from the report received from Commissioner, Patiala Division, Patiala, it is evident that large amount of loans advanced to the employees out of Red Cross funds remain to be recovered. So also loans given to different Government Departments for nearly 10 years amounting to Rs.1 crore or so remains unpaid. The report also shows that an amount of Rs.59,97,820/- received as donations for Gujarat Cyclone and Tsunami funds was not deposited in the Chief Minister's Relief Fund in full nor was the amount received during the year 2005-06 received in the said fund deposited. That is true even with CWP No.18396 of 2007 - 14 - regard to the amount received by Red Cross Society during the year 2000- 01 to 2004-05.
In the case of Ludhiana also, similar irregularities and financial mismanagement and mis-utilisation has been reported by the Divisional Commissioner. District of Sangrur which too falls in Patiala Division is not far behind in the commission of such irregularities. The report submitted by the Divisional Commissioner Ferozepur similarly identifies as many as 21 items of expenditure which were found to be wholly unjustified during the year 1.4.2005 to 31.11.2007. These expenditure includes expenses on celebration of Independence, Republic and Saheedi days as also expenses on providing water cooler to a Senior Secondary School, Telephone and Electricity expenses for the Deputy Commissioners office and Suvidha Centers also. It also identifies large amount of loans given to the employees and petrol charges, which could not be justified as legitimate charges to Red Cross funds.
In the District of Moga falling in Ferozepur Division, the report identifies 11 unjustified items of expenditure incurred by the Deputy Commissioner's office and a large number of other transactions including loan given to different Societies and other employees and the petrol charges for the year 2005-06 for the Chairperson's car which was as high as Rs.1,79,340/-. The said expense for the year 2006-07 is to the tune of Rs.1,63,427/- which the Divisional Commissioner has found to be on higher side. For the period from 1.4.2007 to 30.11.2007 also the expenses on petrol have been shown to be Rs.85,220/- spent out of the Red Cross funds. This is in addition to the expenditure incurred on two mobile phones of Rs.30,700/- by the Chairpersons, which could not be treated as legitimate charge to Society Fund.
CWP No.18396 of 2007 - 15 -
In Muktsar the story is no different. As many as 18 items of expenditure have been found fault with by the Divisional Commissioner in his report, which includes expenses incurred on providing Steel Shed in President's office, changing of floor tiles and preparing an album for Independence and Republic Day's function etc. Expenses were also incurred on repair of Escort Gypsy of the Deputy Commissioner. Similarly large number of loans have been advanced to different persons in the office of Deputy Commissioner's office Muktsar and to the employees of the Red Cross Society. The expenditure on petrol has been found to be on higher side as in a period of six months or so i.e. from 1.4.2007 to 30.9.2007, a sum of Rs.105,126/- has been spent towards petrol.
In Faridkot Division also, a similar state of affairs has been reported to be prevailing in which huge amount has been spent on matters wholly unconnected with the Red Cross funds including loans which remained outstanding.
In the District of Bhatinda falling in Faridkot Division, a large number of irregularities of similar type have been reported by the Divisional Commissioner. Similarly in the District of Moga also, the financial mismanagement and embezzlement has been noticed in the report, no matter the Deputy Commissioner had the audacity to report that there has been no mismanagement, misutilisation and embezzlement of funds.
Divisional Commissioner Jalandhar has also similarly reported misutilisation of Red Cross Funds. As many as 10 different items have been reported to be unjustified in District Tarntaran, 13 in District Gurdaspur and as many as 15 different items of expenditure in the District of Kapurthala. In Hoshiarpur also, as many as 63 items of expenditure have been found fault with. In Nawashahar, figure reported by the Divisional Commissiioner is 96. CWP No.18396 of 2007 - 16 - In Jalandhar District, the expenditure found fault with by the Divisional Commissioner runs into 87 items while in Amritsar, the items of expenditure to be unjustified is as high as 55.
It is evident from a reading of the reports submitted by the Divisional Commissioners that there have been rampant and gross misutilisation and embezzlement of Red Cross funds arising out of a totally arbitrary, insensitive, directionless and if we may say, a despotic, lackadaisical or cavalier approach adopted by the Deputy Commissioners towards these funds, which they have been utilizing if not plundering at their will, without any compunction or check from any superior authority or agency.
More importantly the District Societies do not appear to be auditing their accounts or checking mis-utilisation and diversion of funds collected in the name of Red Cross. Although according to Mr. Anmol Rattan Singh such audits were being held annually by Auditors employed for the purpose, copies of the said Audit reports have not been placed on record. What is surprising is that even according to Mr.Anmol Rattan Singh none of the audit reports has raised any objection regarding diversion or mis-utilisation of funds, even when it is not in dispute that such diversion and mis-utilisation has been rampant. As to who are the Auditors, how often and regularly were the audits conducted, how were the Auditors chosen and what follow up action and corrective steps were taken to prevent mis- utilisation and diversion or mis-appropriation is not clear.
In the written submission filed by him on 12th January, 2009, Mr. Anmol Rattan Singh has with a sense of fairness and objectivity clearly admitted that the audit reports have not been presented to the General Body. It is also admitted that the hierarchy of various branches of Red Cross societies in different districts have not been fully streamlined and that different maladies afflict the Red Cross Society although they are not of CWP No.18396 of 2007 - 17 - recent origin. That Red Cross funds have been utilized for Government purposes too is admitted although the matter regarding mis-utilisation of such funds is under the active consideration of the Government. The following passages from the written submissions are in this regard relevant:-
"However, this procedure of presentation of the audit to the General Body has not been prevalent in all districts till recently but has been prevalent for a long time in some districts. The audit reports shall be produced in the Hon'ble Court.
In view of the submissions made hereinabove it is submitted that hierarchy of the various branches of the Red Cross Societies in the Districts of the State has not been fully streamlined and provisions of security of service to the employees may go a long way in further helping to make these bodies more effective and autonomous.
It is submitted that the petitioner's contention that there are maladies afflicting the Red Cross Societies is not entirely out of place. However, it is submitted that these maladies are not of recent origin but may well go back 50 years and more, owing to the reason that from the inception of the Red Cross, the district Administration has, due to administrative reasons, been always given effective control for proper coordination and distributions of work and the functions of the Government and Red Cross have often been overlapping. This, of course, does not justify use of Red Cross funds for government purposes, but with the matter having been highlighted by the petitioner, an approximately half a century old malady has now been sought to be rectified and streamlined and can be monitored in the discretion of the Hon'ble Court, for the future. (Emphasis supplied) CWP No.18396 of 2007 - 18 - The written submissions also point out that a sum of Rs.1.96 crores utilized for govt. work has been put back into the Red Cross funds by the Government. A sum of Rs.8.50 lacs was admitted to have been given to the employees by way of loans or spent on non-government purposes which has already been recovered. Utilisation of a sum of Rs.3.20 lacs is being scrutinized by the government. All these facts and in particular the admissions made by the respondents leave much to be desired. We have, therefore, no hesitation in holding that the affairs of the District Societies in Punjab are not being managed in a proper and satisfactory manner. Even if one were to ignore the submissions made on behalf of the petitioner that the reports of the Divisional Commissioners have tried to whitewash and gloss over the acts of the mis-direction, mis-utilisation and misuse of the funds, the admissions made before us in the course of hearing of the case leave no manner of doubt that an extensive overhaul is required in the working of the societies with a view to ensuring that funds collected in the name of Red Cross are spent only for the purposes for which the said societies have been constituted and not for any other purpose or activities unrelated to the said objects.
It is noteworthy that the Managing body of Indian Red Cross Society, Punjab State Branch had in a meeting held on 1.12.2005 appointed a Committee headed by Shri Rajan Kashyap, Chief Information Commissioner, Punjab and several others to suggest measures to improve the financial status of the Red Cross Society and to make more respectable to public need and inspiration and to suggest policy measures and initiatives in those areas. A copy of the report submitted by the said Committee has been placed on record by the respondents, a reading whereof would show that the Committee had suggested structural changes and improved financial resources management apart from enlargement of its CWP No.18396 of 2007 - 19 - activities. On the question of need to improve the financial management, the Committee had made the following specific suggestions:-
i. Maintenance of proper and uniform accounting of Red Cross activities relating to financial matters in Tally Accounting Package from 01.04.2007 onwards in all the districts. ii. 'Grant-wise Accounting System' for all receipts, and utilization of funds, to be followed in all districts offices. At present the funds received from various sources for different purposes are merged in one common pool, in some societies, making review and reporting a difficult exercise.
iii. To maintain vouchers with all supporting and documentary evidence, with proper sanction and authorization of appropriate authority.
iv. To preserve the print-outs of cash book, bank book and ledger accounts, generated from Tally Software, on monthly basis. v. Generate Trial Balance of all ledger accounts from accounting package on monthly basis.
vi. Prepare Bank Reconciliation Statement of all bank accounts on monthly basis.
It is, however, common ground that no follow up remedial steps and reforms have been undertaken pursuant to the said recommendations with the result that large scale of misutilisation, misappropriation and misdirection of funds that are collected for philanthropic project in the name of Red Cross continue to be misutilised, which is not only an unhappy and painful situation but the same is difficult to countenance.
Before parting with this aspect, we may point out that the Red Cross has on its pay-rolls a large number of employees. There is however, no transparent method of recruitment against the said positions nor are CWP No.18396 of 2007 - 20 - there any rules governing their service conditions. Some of these positions are said to be contractual in nature. As to who determines the requirement of staff and how commitment regarding recurring revenue expenditures is made by each one of the societies is also an area that needs to be investigated and remedial steps taken wherever necessary.
That brings us to the District Societies working in the State of Haryana, where the position does not appear to be any better. We say so on the basis of the audit report filed in the course of hearing by Mr. Malik appearing on behalf of the State for the Ambala District branch. A careful reading of the said report shows that the society has made payments and incurred expenditure on items such as computerization of land records, District Information Technology, payments made to the Financial Commissioners, payments made towards booth rent to Deputy Commissioner, payment towards SDO licence project and expenses incurred on Independence Day celebration etc. Expenses have also been incurred on financial aid to needy people and on tailoring project, working women hostels, Tehsil Computer Project, Computer project at SDM office and at different other places. Mr. Malik has however, been unable to explain as to how these payments and expenditures can be said to have been incurred for fulfillment of the objects for the Red Cross Societies. That funds of the Red Cross Societies have been spent on meeting governmental and other liabilities unrelated to the objects of the Red Cross Society is evident from the audit report filed by Mr. Malik.
In so far as the Union Territory of Chandigarh is concerned, the position is slightly better, but keeping in view the order, that we propose to make in regard to the States of Punjab & Haryana, we do not propose to exclude the Branch societies in the UT of Chandigarh from the purview of our directions.CWP No.18396 of 2007 - 21 -
What ought to be done by us is the next question. There are two aspects in this regard that need to be addressed viz:-
i. Relating to what has happened in the past and
ii. The road map for the future.
Both these aspects would require a firm foundation for any follow-up action to be taken after a comprehensive review of the working of the Red Cross of the two States and Union Territory Chandigarh. The reports submitted by the Divisional Commissioners and even the Committee headed by Mr. Kashyap have only touched the broad aspects that concern the working of the Society in the State of Punjab. For the State of Haryana there is no such review till now. We are, however, of the firm opinion that such a review is absolutely essential in public interest and to prevent the funds being misutilised and embezzled and for action being taken against those guilty for such activities. This exercise would require time, energy and commitment on the part of those put incharge of the same. There is, fortunately, no dearth of human resource that can measure upto that requirement. We need not for that purpose look beyond the former Judges of this Court who are already assisting us in disposal of large number of cases in Daily Lok Adalats in the High Court. We would, therefore, request Hon'ble Mr. Justice A.L. Bahri and Hon'ble Mr. Justice R.K. Nehru, former Judges of this Court to donate some time for the noble cause of putting the working of the Red Cross Societies of Punjab, Haryana and Union Territory of Chandigarh on proper track by making suitable recommendations for improving and streamlining their financial and administrative affairs.
Without prejudice to the generality of the above direction, we make it clear that the Committee appointed by this Court shall be free to examine the following specific issues:-CWP No.18396 of 2007 - 22 -
A. What is the position regarding the Constitution/ establishment of the State and the District Societies in Punjab, Haryana and UT Chandigarh and in terms of what Constitution/Article/ Memorandum of Association are the said Societies functioning? B. Is each one of these societies working in accordance with the provisions of their respective Constitutions? In case there are any deficiencies, irregularities or shortcomings, the same may be identified and remedial steps suggested.
C. Is there any illegality, irregularity or impropriety in the receipt of donations by the societies and/or in the utilization of the amount so collected? What is the nature of deficiency/irregularity or impropriety and what remedial steps need to be taken having regard to the provisions of the Indian Red Cross Society Act XV of 1920?
D. Are the accounts of the State and District Societies being audited. If so, have any irregularity ever been pointed out in the audit reports and what steps, if any, have been taken by the societies for remedying such irregularities. In particular, what has been the method of appointment of Auditors by the Societies and on what terms?
E. Are there any cases of patent acts of misappropriation, embezzlement, mis-utilisation or mis-direction of funds by any functionary of the Societies. If so, what is the nature and the extent thereof and what action ought to be taken in the matter against those responsible for such acts and for preventing recurrence thereof in future.
F. What is the kind and quality of control exercised by the State Societies over the working of the District Societies? Has there been any neglect or default by the State Societies in performing their functions and streamlining the working the District Societies. CWP No.18396 of 2007 - 23 - Government of Punjab shall appoint a Nodal Officer for the Committee appointed by this Court. All necessary secretarial assistance/support be provided to the Committee and in case the needful is not done by the Government, the Committee appointed by this Court shall be free to engage the services of a suitable person considered necessary for the completion of the work assigned by this Court. The Committee shall be free to settle the terms on which the person engaged by it would work and raise a bill for payment of the amount in question which shall then be arranged by the States of Punjab, Haryana and UT of Chandigarh in equal proportion.
The State Government shall issue formal instructions to all the Deputy Commissioners heading their respective Committees to provide the necessary datas/information and the relevant record as and when demanded by the Committee. Any default or delay on the part of the Officers concerned shall be viewed seriously if the Committee brings the same to the notice of the Court.
The Committee shall also be free to engage the services of the Chartered Accountant for getting the accounts of the societies thoroughly audited, expenses for which shall be borne by the respective Societies. The Committee shall be free to take the assistance of any expert on any subject which may bear any relevance to the reference made to the Committee and fix his emoluments which shall then be arranged by the States of Punjab and Haryana in equal proportion.
We are not fixing any emoluments to be paid to the members of the Committee but we consider it necessary to direct that the Committee shall be free to fix its own emoluments having regard to the nature and extent of work involved. In case the Committee does not propose to fix any emoluments, the Hon'ble members comprising the Committee shall be paid a sum of Rs.5000/- each per sitting which amount shall be paid by the Governments CWP No.18396 of 2007 - 24 - of Punjab and Haryana in equal proportion. The writ petition is with the above directions adjourned by six months to be posted again on 2nd September, 2009 to await submission of the report by the Committee.
(T.S.THAKUR) CHIEF JUSTICE (K.KANNAN) JUDGE March 20, 2009 'ravinder'