M. Lathika vs State Of Kerala on 28 February, 2013

[Cites 3, Cited by 0]

Kerala High Court

M. Lathika vs State Of Kerala on 28 February, 2013

A retired Deputy Director of Agriculture-the defendant in the Original Suit No.594/08 on the file of the Principal Sub Judge, North Paravur is the appellant herein. State of Kerala and the Principal Agricultural Officer, Ernakulam, the plaintiffs in the suit are the respondents. The suit was filed for a decree for realisation of a sum of Rs.3,48,550/- along with interest @12% per annum from the defendant and her assets. The court below decreed the suit with interest @ 6% per annum along with costs.

2. The claim of plaintiff, as averred in the plaint is given below:

The defendant retired from service as a Deputy Director of Agriculture on 31.8.2001. While in service, she incurred a liability of Rs.2,44,601/- as described in the liability certificate issued by the Director of Agriculture, based on liability R.F.A No.479 of 2013-H 2 certificates received from various Principal Agricultural Officers of respective offices, in which defendant was working, based on various audit reports and inspection reports. In respect of her service in various offices in Ernakulam District during the period from 9-4-1981 to 13-9-1999, the 2nd plaintiff-.the Principal Agricultural Officer, Ernakulam issued a liability certificate dated 31-3-2005 fixing her personal liability as Rs. 2,42,307/-, on the basis of audit/inspection reports on various works or projects carried out by her in her tenure, as detailed in the certificate. Major dues found therein were excess payments made by her to the Convener of Lift Irrigation Scheme (LIS for short), Mekkad Chembannur to the tune of Rs. 2 lakhs and an amount of Rs. 37,277/-to the Convener of CDDP, Kottayil Kovilakam. Issuance of liability certificate was delayed due to lapse of defendant in furnishing reply to audit reports and inspection reports. Since she did not furnish proper replies, 2nd plaintiff was forced to fix her liability based on pending audit objections, for Rs.2,42,307/-, as per letter dated 31-3-2005.

(marked as Ext A6). On the basis of liability reported by Principal Agricultural Officers, Ernakulam, Thrissur and Palakkad, the Director of Agriculture issued liability certificate R.F.A No.479 of 2013-H 3 dated 6-6-2005 (Ext A7). Regarding the work under LIS, Kottayil Kovilakam, a sum of Rs. 1,21,550 was paid to the Convener, by way of various cheques issued by defendant during 1994-95, whereas the Government contribution to be paid in advance was only Rs. 60,775/-. From the files it was not seen whether the payments were made to the Convener Sri. Abdulla based on utilization certificate or after completion of valuation of completed work. As the work was not completed, the entire amount was to be recovered from Sri. Abdulla, the convener. But a sum of Rs.84,273/- alone could be recovered from him. Thereafter, the balance amount of Rs.37,277/- was liable to be recovered from the defendant; which was fixed as her liability, on the basis of the report of the ADA, North Parur, after considering the valuation of the work received from the Assistant Engineer, Vyttila. Regarding the work at LIS under Nedumbassery Block, the excess payment to the tune of Rs.9,33,406/- sustained by the plaintiff was divided among various officials responsible for the work and Rs. 2 lakhs was fixed as the liability of defendant. A sum of Rs.1,805/- towards service of the defendant from 18-10-1996 to 8-8-1997 and another sum of Rs.489.05 for the period from 25.7.87 to 25.6.88 R.F.A No.479 of 2013-H 4 were reported as the liability of defendant, as per letters dated 10-6-02 and 19-1-02 by the Principal Agricultural Officers, Palakkad and Thrissur respectively (Exts.A1 and A2). The aggregate liability of the defendant to the tune of Rs.2,44,601/- was fixed in the liability certificate issued by the Director of Agriculture on 6.6.05 (Ext.A7) and intimated to defendant. The defendant did not offer her remarks or she was not prompt in furnishing proper explanation to the notices regarding her liability. She filed a Writ Petition No.21140 of 2005 and in the judgment dated 16.04.06, this Court ordered that direction therein will not stand in the way of taking other legal proceedings against the defendant for realisation of the amount due from defendant. The cause of action for the suit is stated to have arisen on 16-4-2006, the date of Ext A8 judgment in the Writ Petition No. 21140/2005. A decree was sought for realisation of a sum of Rs.3,48,550/- along with interest at the rate of 12% per annum.

3. The defendant filed a written statement denying and disputing the allegations in the plaint as follows. She is not liable to pay any amount as claimed in the plaint. There was no factual or legal basis for any of the liability certificates mentioned in the R.F.A No.479 of 2013-H 5 plaint. Those certificates were issued malafide in order to save some other officers; before issuing the liability certificates dated 31-3-05 or 6-6-2005 (Ext A6 or A7), she was not heard; no notice was issued to her and she was not given sufficient opportunity to explain the factual state of affairs. The amounts stated therein could never be her personal liability and therefore no such amount is liable to be recovered from her. The audit reports were baseless and against the factual circumstances. She cannot be fastened with any personal liability towards the excess payments to the Conveners of LIS at Mekkad, Chembannur or CDOP, Kottayil Kovilakam, as stated in the liability certificates. Whenever the audit reports were served on her, she had submitted her replies and sought for review. She was never informed that any of her replies submitted could not be accepted. She had reported to the office under the plaintiffs for attending the adalat, to trace out the records, to entrust the records available with her and to appraise the factual state of affairs to drop objections in the audit, though she received the audit reports/ intimations much after her retirement; but the officers under the plaintiffs did not present her replies before the audit. The audit report in respect of LIS at Nedumbassery was R.F.A No.479 of 2013-H 6 forwarded to her only on 21-2-2003, much after her retirement. She promptly replied, to all the reports and requested for review, nobody informed her that the explanations were not satisfactory. When the work under LIS was in progress, she did not get any assistance, from the Assistant Executive Engineer or Assistant Engineer of the Department, even after repeated requests, for effecting the measurement/valuation of the work done; she was put to pressure by the superiors including 2nd plaintiff to effect payments in advance without delay and to complete the work. She made the payments bonafide and in her capacity as Agricultural officer, under the supervision of Assistant Director of Agriculture, PAO, etc. Revenue recovery was already initiated in 2004; the project was commissioned on 4-7-1997, for which valuation was done only on 4-10-02. A sum of Rs. 84,273/- was already recovered from Sri Abdulla, the Convener by revenue recovery. As per the terms in the agreement, executed with the Convener of the committee executing the work, department can take legal action against the Convener to recover the money. Therefore defendant cannot be held responsible for any of the violations committed by the Convener.

4. In respect of the Mekkad, Chembannur LI Scheme, R.F.A No.479 of 2013-H 7 the total estimate of the work was Rs.22,40,000/- and defendant effected payment of only Rs.2 lakhs, whereas her predecessor Smt.Sherly had effected payment to the tune of Rs.10,80,000/-. In that case also, the amount paid could be realised from the Convenor in terms of the agreement executed by him. She issued the cheques on 21.5.96 and she was relieved from the charge of the station on 7.6.96, on account of which she was not able to take follow up action in respect of that project. The scheme was commissioned in the year 1998 and it was only on 4.10.02 that measurements for valuation were carried out. The proceedings to recover the liability against Smt.Sherly who paid Rs. 10,80,000/-to the convener was dropped. Therefore there was no reason to proceed against defendant. In respect of the scheme at Anakkulam also, she had made the payment within the permissible limits. In all these cases, it was pointed out that the valuation was very much delayed and there was every possibility of deterioration due to wear and tear and climatic change over a period of 5 years since the running of the project, no amount is liable to be recovered from her.

5. Based on the pleadings, the court below framed the issue as to entitlement of plaintiffs to get a decree as prayed for. R.F.A No.479 of 2013-H 8 Evidence was adduced on both sides. The suit was allowed with interest and cost. The defendant challenged the decree and judgment filing R.F.A 143/2011. By judgment dated 26.11.12, this Court set aside the decree and judgment and remanded the case for de-nova consideration with the evidence on record, permitting the parties to bring further evidence if any, after framing an additional issue as to the question of limitation, with a further direction to dispose of the suit at the earliest. Thereafter the matter was again considered by the court below.

6. The evidence in the case consists of the testimony of witnesses PW1 and PW2 and documents marked as Ext.A1 to A13 on the side of plaintiffs and the testimony of DW1 and the documents Exts.B1 to B14 on behalf of the defendant.

7. The Court below considered the additional issue as to the question of limitation and found that the claim raised in the suit is not barred by limitation, relying on Article 112 of the Limitation Act, which provides for a period of 30 years for suits by State Government/Central Government. The remaining issue was regarding the entitlement of the plaintiffs for the plaint claim. Mainly relying on the liability certificates Exts.A6 and A7 and the observation in Ext A8 judgment which quashed Ext.A6 R.F.A No.479 of 2013-H 9 and A7, the court below decreed the suit with interest @ 6% per annum with cost.

8. We heard Sri. T. Sivadasan, the learned Counsel appearing for the appellant and the learned Government Pleader. The learned counsel appearing for the appellant argued that the only basis for decreeing the suit is the liability certificate issued to the defendant, Ext.A6 dated 31.3.05-No.C(1) 12478/00 issued by the Principal Agricultural Officer, Ernakulam and Ext.A7 liability certificate dt.6.6.05 issued by the Director of Agriculture and that both those liability certificates were cancelled by the Director of Agriculture by issuing Ext.B1 on 7.9.06 and therefore the findings arrived at by the court below relying on those certificates are liable to be set aside. Relying on the provisions in Rule 3 of Part III KSR, it was further argued that there is no provision to recover any amount from a pensioner after 3 years of retirement and in respect of any event which occurred 4 years prior to retirement. Learned Counsel also pointed out that in the judgment in R.F.A 143/11, while remanding the suit, this Court has already rendered a finding to the effect that the Supervisory Officers should not be fixed with any liability except in cases of proven misconduct, including R.F.A No.479 of 2013-H 10 negligence, willful default, negligence resulting in loss of State fund etc, which loss is attributable to supervisory failure of the officer and therefore the judgment of the court below, which run contrary to the observations therein, is not correct. It was also submitted that in the case of Smt. Shirly who made payment to the tune of Rs. 10,80,000/-, in respect of the Mekkad- Chembanoor project, no proceedings were initiated and that proceedings were initiated in the case of the appellant alone. He pointed out that the amount paid to the convener can be recovered in terms of the agreement executed with them before commencing the work under the LIS, by resorting to revenue recovery proceedings and this Court has permitted such recovery, in Writ Petitions filed by the Conveners in respect of projects for which defendant made payment. Therefore the proceedings for recovery from the defendant was not called for.

9. We have considered the arguments on either side, the pleadings and evidence on record and the judgment of the court below.

10. The court below has granted the relief prayed for by the plaintiffs relying on

i) the observations made in Ext.A8 judgment in the R.F.A No.479 of 2013-H 11 Writ Petition No.21140 of 2005, filed by defendant;

ii) Exts.A6 and A7 liability certificates issued by the Principal Agricultural Officer, Ernakulam, and the Director of Agriculture respectively;

iii) Ext.B10 - circular No.14/PEN/SPL/A2/64/Fin. Dated 18.03.65, which provides for the circumstances under which pecuniary loss can be recovered from a Government employee after retirement under Section 114(e) of the Evidence Act to conclude that the liability quantified in Annexures A6 and A7 are to be accepted in toto, without any further proceedings for quantification.

11. We have examined the above findings with reference to the evidence on record. Testimony of PW1 shows that the liability against the appellant/defendant was communicated by Ext.A6 by the Principal Agricultural Officer on 31.03.2005 and by Ext.A7 dated 6.6.2005 of the Director of Agriculture. A perusal of Ext.A6 itself shows that the finalisation of the liability against her is yet to be made, because while endorsing the copy to the defendant, it is stated as follows:

"If it is established that any liability amount is not outstanding against you, it will be refunded to you subsequently."

R.F.A No.479 of 2013-H 12

Therefore Ext.A6 letter No.C(1) 12478/2000 dated 31.3.2005 itself contemplates an opportunity to defendant to establish her case against the alleged liability, which is admitted, not given thereafter. PW1 has deposed that Ext.A7 is only a letter issued by the Director consolidating the liability reports received from various offices and that the liability shown in Ext.A6 was on the basis of audit/inspection reports. Exts.A6 and A7 were quashed by this Court in Writ Petition No.21140 of 2005. It was a case filed by the defendant challenging Exts.A6 and A7 which were Exts.P7 and P8 in the Writ Petition. This Court quashed Exts.P7 and P8 certificates (Exts.A6 and A7 herein). Consequent to this, the Director of Agriculture issued Ext.B1 proceedings cancelling Exts.A6 and A7. Therefore it can be seen that the documents relied on by the plaintiffs for claiming the amount from the defendant ceases to exist.

12. Further case of the plaintiffs is regarding the advance amount paid by the defendant while she was working in Ernakulam district, in respect of 3 projects under the Lift Irrigation Scheme. The major items of liability shown in Exts.A6 and A7 are in respect of these payments made by the defendant in respect of the projects at Kottayilkovilakam, Mekkad R.F.A No.479 of 2013-H 13 Chembannur and Arakulam in Ernakulam district. It is a common case for both PW1 and DW1, ie. the 2nd plaintiff and the defendant, that the works for the project under Lift Irrigation Scheme are entrusted to beneficiary committees of farmers, after getting an agreement executed with the conveners of the beneficiary committees wherein the conveners have agreed to refund the amount drawn from Government in the event of any defaults or else can be recovered by revenue recovery proceedings. It is also admitted that as per the orders in force, the Government contribution for the project is 85% of the estimated cost and 15% is by the farmers. Out of this, 50% of the Government contribution is to be given to the convener in advance and the balance 50% is to be paid on completion of each stage of work. The defendant made advance payment in excess of the 50% in respect of the 3 projects. According to PW1, the amount in excess of 50% is liable to be recovered from the defendant. But according to the defendant she is not liable to make any payments towards payment made to the convener, because any amount drawn from Government by the convener can be recovered by resorting to revenue recovery proceedings, as conveners of each of the projects had entered into an R.F.A No.479 of 2013-H 14 agreement agreeing to such a provision. The fact that proceedings for revenue recovery can be resorted to against the convener is admitted. There is no dispute for the plaintiffs that the agreement provides for such revenue recovery proceedings and that such proceedings are already resorted to against the conveners of certain projects in question and kept in abeyance midway for no reason. From the deposition of PW1 it is seen that the projects in question had commenced in 1995-'96, completed in 1997-'98, but valuation which was liable to be done on completion of each stage of work is done by the engineering wing of the department only in 2002-03 etc. From the testimony of DW1 as well as PW1, it is seen that the works in question were completed for the benefit of farmers and valuations for the works were delayed despite repeated requests from the defendant and other officers. It is an admitted case as seen from the testimony of witnesses on both sides, that the defendant was in charge of the office only for 2 months, in respect of the two of the projects in question, for which major portion of the liability is fastened, and that payments were continued to be effected to the convener by the officers who took charge earlier to her and subsequent to her and that no proceedings for recovery are initiated against R.F.A No.479 of 2013-H 15 any of them despite the fact that huge amounts were paid by them by way of advance. According to DW1, she has not caused any loss to the Government and she is not liable to pay any amount to Government and there were no proceedings to quantify the loss if any caused at her instance. The stand of PW1 is that no further quantification is necessary since the liability shown in Ext.A6 issued on 31.03.2005 is based on audit reports and inspection reports. No more quantification is necessary in the light of the observations made in Ext.A8 judgment, in the writ petition filed by the defendant, aggrieved by non payment of DCRG, challenging Exts.A6 and A7 (P7 & P8 therein). The relevant portion of the judgment in Ext.A8 in W.P(c) No.21140 of 2005 is reproduced below:

"xxxx xxxxxx xxxxx xxxx xxxx xxx xxxxxx xxxxxxx xxxxxxxxxx xxxxxxxx xxxxxxxx The fact that quantification has been done only after three years from the date of retirement of the petitioner, even assuming that Et.P8 is the final quantification of the liability, is sufficient to set aside Exts.P7 and P8 since no amount can be withheld or recovered from the D.C.R.G after the period of limitation statutorily fixed. Fixation as per Ext.P3 was only provisional and that cannot be considered as quantification of the liability as envisaged in Rule 3 Part III, K.S.R. On the above ground, the fixation of liability done as per Exts.P7and P8 are liable to be set aside. I do so. It follows that the petitioner is entitled to get her D.C.R.G. disbursed without any further delay. There shall be an order R.F.A No.479 of 2013-H 16 directing the respondents to disburse D.C.R.G. determined as per Ext.P1 and P2 to the petitioner within three weeks from the date of receipt of a copy of this judgment. It is made clear that this judgment will not stand in the way of the respondents taking any other legal proceedings against the petitioner for the alleged recovery of the amount shown in Exts.P7 and P8. xxxxx xxxxx xxxxx xxxxx xxxxx"

(emphasis supplied)

13. We are not of the opinion that the above rider provided by the learned Single Judge can be understood to mean that plaintiffs are granted a licence to straight away recover the amounts shown in Exts.A6 and A7, without taking any further proceedings to quantify the loss if any caused to Government. In fact, as a natural consequence of the above judgment, Exts.A6 and A7 ceased to exist. Moreover, by Ext.B1 proceedings issued by the Director of Agriculture, those certificates were already cancelled on 27.09.2006. Therefore, the proceedings for recovery of any amount on the basis of nonexistent orders should not have been allowed by the court below.

14. Even assuming that the liabilities mentioned in the above certificates are to be recovered, it can be seen that the amount mentioned therein are in respect of the payments made in advance by the defendant when she was an officer in charge R.F.A No.479 of 2013-H 17 of the projects in question. In the plaint it is stated that revenue recovery proceedings were initiated against the convener and part of the amount is already recovered from him, in terms of the agreement executed by the beneficiary committee. It is also admitted by PW1 that the convener in respect of one of the projects had approached this Court challenging the revenue recovery proceedings, in O.P.159 of 2002 and by Ext.B2 judgment, this Court had declined relief to him. It was held therein that the amounts drawn by the conveners from Government can be recovered from the conveners and beneficiary committee, after the valuation certificate is issued. Therefore, there was no impediment in recovering the loss if any caused to Government on account of the payments made by the defendant towards any of the projects in question. From the testimony of PW1, it is seen that the plaintiffs do not have any case that the defendant has made any of the payments without bonafides. On the other hand it is admitted that the payments were made for the purpose of completing the projects for the benefit of farmers. The defendant has got a case that all the payments were made under the supervision of the Assistant Director of Agriculture as well as Principal Agricultural Officer, R.F.A No.479 of 2013-H 18 who are the superior officers. In the case of certain projects evaluation of work directed by the court is admitted not yet over. No explanation is seen furnished for not completing the evaluation and not proceeding with the revenue recovery, despite provisions and orders for the same. Without completing such proceedings it cannot be said that any loss was caused by the defendant, who made the payments for the purpose of the projects. The delay or inaction on the part of the plaintiffs to recover the amount due, from the conveners in terms of the agreement cannot be a reason to fasten the liability on the defendant and to recover from her such balance, that too without finalising the proceedings for recovery and without determining the quantum of loss, if any, caused by each of the officers who mad payments.

15. It is on the basis of the audit reports that the plaintiffs have issued Ext.A6. From the testimony of the witnesses it is seen that defendant has submitted objections to the audit reports whenever served to her, explaining the circumstances and furnishing the records available with her. The amounts claimed in the certificates as her liability are arrived at without any quantification with due notice to her to explain. This fact is not R.F.A No.479 of 2013-H 19 much disputed by PW1, who admitted his ignorance on the procedural requirements and its compliance. Moreover Ext.A6 itself shows that the quantification is not finalised. But court below finds that, Exts.A6 and A7 proceedings issued by the Principal Agricultural Officer as well as the Director of Agriculture are to be presumed as official acts which have to be deemed to have been regularly performed, by virtue of Section 114(e) of the Evidence Act and therefore no further quantification is necessary. We are unable to endorse to the views of the court below and confer sanctity to such proceedings. Those official acts are already quashed by this Court and cancelled by the Director of Agriculture himself. For fixing liability of an officer and to quantify loss if any caused by such officer, there are certain procedures to be performed consistent with the principle of Natural Justice. Without looking into the compliance of such procedures and provisions in rules providing for it, such proceedings cannot be approved by courts, as unquestionable and regularly performed official acts giving the protection of Section 114(e) of the Evidence Act, permitting violation of the rule of law.

R.F.A No.479 of 2013-H 20

16. Similarly the court below has relied on Ext.B10 circular in support of the finding that the action of the defendant was of serious nature/magnitude amounting to malafides and therefore any amount paid by her in excess of 50% towards advance was liable to be recovered. It is to be noted that defendant had produced Ext.B10 circular in support of her contention that the amount paid by her was not one which could be recovered from her as far as it did not come under any of the categories specified therein. But the court below repelled her contention in terms of sub clause c of clause (ii) and clause (iii) of the circular. The circular provides for the circumstances under which pecuniary loss caused to Government can be recovered from a Government employee. The relevant portion of the circular relied on by the court below reads as follows:

"ii. For the purpose of fixing liability, losses may be grouped under the following categories.

a) Personal dues eg. Excess pay and allowances drawn, arrears of House rent payable, balance of advances repayable such as Motor Car Advance, House Building Advance, Mosquito Net Advance etc.

b) Physical loss of cash or stores.

c) Loss or extra expenditure arising out of administrative lapses eg. payment of surcharge (Final) R.F.A No.479 of 2013-H 21 on Electricity bills and Radio Licence fees, expenditure incurred in excess of one powers not ratified by the competent authority, purchases effected in violation of store purchase rules resulting in extra expenditure, printing charges to private firms in excess in approved rates, sanctioning posts in schools in excess of the limits prescribed, irregular grant of fee concessions, stipends etc. loss of Revenue due to wrong assessment or claims becoming time barred etc.

iii) Recovery on cash is called for in respect of categories (a) & (b). In regard to category (c), cash recovery should ordinarily arise only if malafides are proved. The term "malafides" may be defined in this context as a state of mind where the officer may be deemed to have acted with the intension to be benefitted directly or indirectly by such action. In other cases falling under category (c), it should be seen whether the types of irregularities have been repeated or are of a serious nature or magnitude, the question of taking other forms of disciplinary action if the officer concerned is still in service or of reducing pension under rule 67 of Part III of K.S.R., if already retired, should be considered."

In fact category `c' relied on by the court below refers to irregularities which have been repeated or are of serious nature or magnitude, which calls for disciplinary action only. Recovery in cash is provided for only if mala fides are proved. The term "malafides" has been explained as the state of mind of the officer where he can be deemed to have acted with the intention to be benefited directly or indirectly by such action. The plaintiffs do not have a case that the defendant did make any payment R.F.A No.479 of 2013-H 22 malafide or that she intended to be benefited by such payment. Just because certain objections are raised in audit, it cannot be said that the payments objected were of a serious nature or magnitude or with malafide in order to make recovery from her. We are unable to agree with the findings of the court below.

17. It is also pertinent to note that this Court had while remanding the suit to the trial court, by judgment dated 26.11.2012 observed in para.5 as follows:

"Evidently the question is as to whether in any such transaction, where the Government handed over amounts through beneficiary committees and other committees which are constituted under the scheme, supervisory officers should be fixed with liability except in case of proven misconduct, including negligence resulting in loss of State funds, which loss is attributable to such supervisory failure of the servant concerned."

18. Yet another aspect we noticed is that the amount covered by the liability certificate Ext.A7 which is quashed, was only a sum of Rs.2,44,601/-, whereas decree sought and allowed is for a sum of Rs.3,48,550/- without any explanation for the same either in the plaint or in the evidence or in the judgment.

In the above circumstances, we find that cause of action to sue the defendant/appellant herein did not arise at all and plaintiffs/respondents herein are not entitled to the reliefs R.F.A No.479 of 2013-H 23 prayed for. The judgment of the court below is set aside and the appeal is allowed with cost.

Sd/-

T.R.RAMACHANDRAN NAIR Judge Sd/-

P.V.ASHA Judge rtr/ /true copy/ P.S to Judge

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