Kerala High Court
Director Of Local Fund Audit vs Usha Rajathilakam on 24 October, 2018
Author: Annie John
Bench: Annie John
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE ANNIE JOHN
WEDNESDAY, THE 24TH DAY OF OCTOBER 2018 / 2ND KARTHIKA,
1940
OP(C).No.25 of 2013
AGAINST THE ORDER IN OP 218/2006 of ADDL. DISTRICT JUDGE,
KOZHIKODE- II DATED 17-10-2011
PETITIONER/ RESPONDENTS 1 AND 2 :
1 DIRECTOR OF LOCAL FUND AUDIT,
VIKAS BHAVAN, THIRUVANANTHAPURAM,
PIN 695 033, THIRUVANANTHAPURAM TALUK AND
DISTRICT.
2 DEPUTY DIRECTOR OF LOCAL FUND AUDIT,
CORPORATION AUDIT, CALICUT CORPORATION OFFICE,
CALICUT NAGARAM AMSOM AND DESOM,
KOZHIKODE TALUK, KOZHIKODE DISTRICT.
BY GOVERNMENT PLEADER SRI.M.R.DHANIL
BY ADV.SRI PAUL VARGHESE M
RESPONDENTS/ PETITIONER AND 3RD RESPONDENT :
1 USHA RAJATHILAKAM,
D/O.LATE DAMODARAN, AGED 57 YEARS,
RESIDING AT 1/4754 B, ANASWARA,
BILATHIKULAM ROAD, CALICUT 673 011,
KACHERI VILLAGE, KOZHIKODE TALUK, KOZHIKODE
DISTRICT.
2 CALICUT CORPORATION, REPRESENTED BY ITS
SECRETARY HAVING ITS PRINCIPAL OFFICE AT
NAGARAM AMSOM DESOM OF KOZHIKODE TALUK AND
DISTRICT.
BY ADVS.
SRI.K.D.BABU, SC, KOZHIKODE CORPORATION
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 19.03.2018,
THE COURT ON 24.10.2018 PASSED THE FOLLOWING :
OP(C).No. 25 of 2013
2
JUDGMENT
The petitioners are aggrieved persons as per order dated 17.10.2011 of the IInd Additional District Judge, Kozhikode in O.P.(C).No.218/2006 whereby Surcharge Certificates issued by the petitioner, as against the 1 st respondent was set aside. The respondent was working as the Chief Town Planner, Kozhikode Corporation. During her tenure, the 1st respondent made some irregular payments, which was detected by the petitioners while conducting audit of the accounts of the 3rd respondent for the Financial year 2000-01. Therefore, the 1st petitioner issued a Surcharge Notice to the 1 st respondent. After considering the reply submitted by the 1 st respondent, the 1st petitioner issued two Surcharge Certificates against the 1st respondent for realization of a sum of Rs.3,800/- and Rs.9,065/-. The District Court set aside the Surcharge Certificate mainly on the ground that the Surcharge Certificate was issued beyond the period of limitation prescribed under the Kerala Municipality Act. The limitation period prescribed under OP(C).No. 25 of 2013 3 the Kerala Municipality Act has no application after the coming into force of the Kerala Local Fund Audit Act, which contains no limitation period for issuing a Surcharge Certificate. Therefore, the petitioner prays for setting aside the order of the District Court.
2. The matter was heard. In fact, this is a petition filed against the order passed by the IInd Additional District Court, Kozhikode in O.P.(C).No.218/2006 dated 17.10.2011 by which the Surcharge Certificates issued by the 1 st petitioner as against the 1st respondent was set aside. It is an admitted fact that the first respondent was working under the 2 nd respondent as Chief Town Planner from 13.11.1996 to 06.06.2002. The petitioner had conducted an audit of the accounts of the 2 nd respondent for the financial year 2000-2001 and issued a Surcharge Notice to the 1 st respondent. A true copy of the Surcharge Notice issued by the petitioner to the respondent is produced and marked as Ext.P1. In response toExt.P1 Notice, the 1st respondent submitted a reply and after considering the reply submitted by the 1st respondent, the petitioner has issued two Surcharge Certificates as against the 1 st respondent for OP(C).No. 25 of 2013 4 realization of a sum of Rs.3,800/- and Rs.9,065/- in respect of Para Nos.3-12 and 3-28 of the Audit Report. A true copy of the Surcharge Certificate issued by the petitioner as against the 1 st respondent is produced and marked as Exts.P2 and P2(a). Surcharge Certificates were issued for Rs.9,065/- on account of short collection of building licence fee and Surcharge Certificate for Rs.3,800/- was issued on account of excess payment of wages.
3. The respondent filed an Original Petition before the District Court, Kozhikode as O.P.No.218/2006 mainly contending that the Surcharge Certificate was issued beyond the period of limitation prescribed under Section 295(12) of the Kerala Municipality Act, 1994. On receipt of the notice, the petitioner appeared before the District Court and submitted a detailed written statement specifically contending that the provisions of the Kerala Municipality Act are not applicable to Ext.P2 Surcharge Certificate, which was issued as per the provisions of the Kerala Local Fund Audit Act. According to the petitioner, the Surcharge Certificate was issued perfectly in accordance with law. A true copy of the Original Petition filed OP(C).No. 25 of 2013 5 by the respondent as O.P.No.218/2006 before the IInd Additional District Judge, Kozhikode is produced and marked as Ext.P3. A true copy of the written statement filed by the petitioner in O.P.No.218/2006 is produced and marked as Ext.P4.
4. After taking evidence and after hearing the parties, the Additional District Court has allowed the Original Petition by Order dated 17.10.2011 by setting aside Ext.P2 Surcharge Certificate mainly for the reason that Ext.P2 Surcharge Certificate is barred by limitation under Section 295(9) of the Kerala Municipality Act. True copy of the order dated 17.10.2011 in O.P.No.218/2006 is produced and marked as Ext.P5. The main argument on the side of the respondent was that the Surcharge Certificate issued by the petitioner was barred by limitation. The District Court entered into such a finding on a reasoning that as per Section 295(9) of the Kerala Municipality Act, Surcharge Certificate should be issued within a period of 4 years from the date on which the expenditure in question was incurred.
OP(C).No. 25 of 20136
5. Section 295 (9) of the Kerala Municipality Act reads thus :-
The auditors shall, after giving a reasonable opportunity to the person concerned to explain his case, disallow every item of expenditure incurred contrary to law and surcharge the same on the persons incurring or authorising the incurring of such expenditure and may charge against any person responsible therefor the amount of any deficiency, loss or unprofitable outlay occasioned by the negligence or misconduct of that person or of any sum which ought to have been but is not brought into account by that person and shall, in every such case, certify the amount due from such person :
Provided that no surcharge under this sub-section shall be made after a period of four years from the date on which the expenditure in question was incurred.
So, on the strength of Section 295(9) of the Kerala Municipality Act, the respondent has vehemently argued that Ext.P2 Surcharge Certificate was issued after the lapse of four years so that the petitioner is not able to recover the amount, as it is expressly barred by the proviso to Section 295 (9) of the Kerala Municipality Act. The District Court on the strength of this provision has found that the Surcharge Certificate issued by the OP(C).No. 25 of 2013 7 petitioner is barred by limitation. It was pointed out that the impugned Surcharge Certificate had been issued related to the payment incurred during the year 2000-2001. Exts.P2 & P2(a) are the Surcharge Certificate issued dated 24.01.2006. So, by applying the proviso as contemplated under Section 295(9) of the Kerala Municipality Act, Ext.P2 Surcharge Certificate was issued after lapse of four years. So, definitely Ext.P2 Surcharge Certificate issued by the petitioner is barred by limitation.
6. Per contra, the petitioner's counsel has argued that Section 295(9) of the Municipality Act has no application in this case because the Kerala Local Fund Audit Act was enacted in the year 1994. But the Kerala Municipality Act came into force in the year 1960. The present Kerala Municipality Act, 1994 has came into force to replace the present enactments relating to Municipalities and Municipal Corporations by a comprehensive enactment in line with the Constitution (Seventy Fourth) Amendment Act. The Act came into force on 29.03.1994. The Kerala Local Fund Audit Act was published on 11.05.1994 and the said Act came into force on 15.01.1996 i.e. after the enactment of the Kerala Municipality Act. OP(C).No. 25 of 2013 8
7. Now the only question to be considered is whether the bar of limitation, as provided under Section 295(9) of the Kerala Municipality Act applies to Ext.P2(a) Surcharge Certificate. The Kerala Local Fund Audit Act is a special enactment , that too a later enactment. It applies as far as the audit is concerned and surcharge notice as well as the Surcharge Certificate has been issued under the provisions of the Act. The Kerala Local Fund Audit Act, 1994 was enacted to provide for and to regulate the audit of the local funds under the management or control of certain local authorities in the State of Kerala. The Kerala Local Fund Audit Act does not contain any provision or limitation for issuing Surcharge Certificate.
8. Section 22 of the Kerala Local Fund Audit Act, 1994 reads thus :
"If any provision contained in any other law for the time being in force relating to the audit of accounts of a local authority or a local fund included in the Schedule is repugnant to the provisions of this Act, the latter shall prevail and the former be void to the extent of such repugnancy.OP(C).No. 25 of 2013 9
So, as per Section 22 of the Kerala Local Fund Audit Act, 1994 it overwrites all the other Laws, which are repugnant to the provisions of the said Act.
9. Section 4(1) of the Kerala Local Fund Audit Act reads thus :
4. Audit of Accounts.-(1) Notwithstanding anything contained in any other law for the time being in force, but subject to the provisions of the Comptroller and Auditor General (Duties, Powers and Conditions of Service) Act, 1971 (Central Act 56 of 1971) the Director shall, in the manner provided by or under this Act, conduct the audit of accounts of a local authority or a local fund included in the Schedule.
So, as per Section 4(1) of the Kerala Local Fund Audit Act, it is also applicable to the facts of the case since the Kerala Local Fund Audit Act, 1994 alone applies in this case and proviso to Section 295(9) of the Kerala Municipality Act, 1994 has no application in this case. So, the finding of the lower court with respect to the fact that Exts.P2 & P2(a) Surcharge Certificate issued by the petitioner is barred by the proviso to Section 295(9) of the Kerala Municipality Act is not correct. After the enactment of the Kerala Local Fund Audit Act, 1994, no limitation is provided. So, Exts.P2 & P2(a) Surcharge Certificate OP(C).No. 25 of 2013 10 issued by the petitioner is not hit by the provisions of limitation. Therefore, the order of the Additional District Court, Kozhikode is bad in law and therefore it is liable to be set aside.
In the result, this petition is allowed and the order passed by the Additional District Court, Kozhikode in O.P.No.218/2006 is hereby set aside.
Sd/-
ANNIE JOHN, JUDGE RKM OP(C).No. 25 of 2013 11 APPENDIX PETITIONERS'S EXHIBITS :
P1 : COPY OF THE SURCHARGE NOTICE ISSUED BY THE PETITIONER TO THE RESPONDENT.
P2 : COPY OF THE SURCHARGE CERTIFICATE ISSUED BY THE PETITIONER.
P2(a) : COPY OF THE SECOND SURCHARGE CERTIFICATE ISSUED BY THE PETITIONER.
P3 : COPY OF THE ORIGINAL PETITION FILED BY THE RESPONDENT AS O.P.NO.218/2006 BEFORE THE IIND ADDITIONAL DISTRICT JUDGE, KOZHIKODE.
P4 : COPY OF THE WRITTEN STATEMENT FILED BY THE PETITIONER IN O.P.NO.218/2006.
P5 : COPY OF THE ORDER DATED 17.10.2011 OF THE IIND ADDL. DISTRICT JUDGE, KOZHIKODE IN O.P.NO.218/2006.
P6 : COPY OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF KERALA IN W.P.(C).NO.27956/2008.
RESPONDENTS' EXHIBITS : NIL TRUE COPY PA TO JUDGE RKM