Bangalore District Court
Karnataka State Agro Corn Products ... vs Sri.Ramesh Rao on 28 February, 2017
IN THE COURT OF THE 42nd ADDL. CITY CIVIL & SESSIONS
JUDGE AT BENGALURU CITY (CCH.NO.43).
PRESENT: Sri.BAILUR SHANKAR RAMA,
B.Sc., M.A., LL.B.(Spl),
nd
42 ADDL. CITY CIVIL AND
SESSIONS JUDGE, BENGALURU.
Dated this the 28th day of February 2017.
O.S.No.8602/2007
Plaintiff:- Karnataka State Agro Corn Products Limited,
A Government of Karnataka Undertaking,
Registered Office at PO No.2479,
Bellary Road, Hebbal, Bangalore-24,
Represented by its Managing Director,
Sri.H.D.Sheshagiri,
S/o. late H.T.Thimmarayi Gowda,
Aged about 53 years.
(By Sri.Shanmukhappa, Adv.)
v.
Defendant:- Sri.Ramesh Rao,
S/o.Ramdas,
Aged about 52 years,
R/o Plot No.1,
Vishal Apartments,
No.1, Model House Street,
Basavanagudi,
Bangalore -560 004.
(Sri.R.Vijaya Kumar, Adv.)
Date of institution of the suit : 06.11.2007
2 O.S.No.8602/2007
Nature of the suit : Recovery of Money
Date of commencement of : 02.02.2010
Recording of the evidence
Date on which the Judgment : 28.02.2017
was pronounced
Total Duration : Years Months Days
09 03 22
(BAILUR SHANKAR RAMA)
42nd ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
JUDGMENT
This is a suit filed by the plaintiff for recovery of amount of Rs.2,18,34,013/- with future interest and costs.
2. The brief facts as averred in the plaint are that:-
The plaintiff is a Company registered under the provisions of the Companies Act, 1956 and it is a Government of Karnataka Undertaking having its Head Office at Bangalore and other branches at Mysore, Raichur, Belgaum, Chitradurga and Doddaballapur, engaged in manufacturing Energy Food/Amylase Rich Energy Food, Maize Products, Feeds etc. The defendant was working as a Chief Divisional Manager at 3 O.S.No.8602/2007 the Registered Office of the Plaintiff Company since 27.05.1999. He was in overall supervision of Maize Milling Division, Feed Division and Energy Food Division including 5 Units. The defendant was the Chairman of Internal Purchase Committee in the Plaintiff Company and he was responsible for wholly procurement of raw materials, production process, quality control wings of the product. While he was discharging the duties as Chief Divisional Manager for procurement of one of the main ingredient for manufacture of Amylase Rich Energy Food which is Ragi Malt Flour, as such he had procured Ragi Malt Flour at higher rates from M/s.Christy Friedgram Industry, Andipalayam, Tiruchengodu, Tamilnadu, by flouting the tender norms prescribed by the Plaintiff Company for purchase of Ragi Malt Flour from outside Agencies without proper approval of the Higher Authorities and Internal Purchase Committee. The defendant had purchased 1157 MTs of Ragi Malt Flour from the above said party at the rate Rs.34/- per kg and Rs.31.25 per kg, as against the then prevailing rate of Rs.14/- per kg, as such he had purchased the Ragi Malt Flour at a highly excessive price than the prevailing market price. It is submitted that while placing the 4 O.S.No.8602/2007 order for purchase of Ragi Malt Flour the defendant has not followed the decision of the 149th Board Meeting where approval was accorded for purchase of Ragi Malt Flour on trial basis only (i.e., 45 MTs, 9 MTs per unit at the rate of Rs.34/-
per kg) vide Purchase Order No.KSACP/CDM/RM/4807/2000- 01 dated 23.03.2011. Subsequently, he had continuously purchased Ragi Malt Flour at the rate of Rs.34/- per kg to the tune 887.063 MTs. It was not been brought to the notice of the Board nor the approval of Higher Authority of the Plaintiff Company was obtained. Further, the defendant had purchased the Ragi Malt Flour at the rate of Rs.31/- per kg to the tune of 269.955 MTs. For the said purchase also, the defendant has not obtained any approval either from the Board or from Internal Purchase Committee or from the Higher Authorities. He has misled the Board of Directors in their decision taken in the 149th Board Meeting allowing the purchase by suppressing the above information, thus contravene the procedures and norms prescribed deliberately so as to make unlawful gains. In this regard, the CAG Auditors have also raised their observations during the year 2002-03. Thus, he has caused huge financial loss to the 5 O.S.No.8602/2007 Plaintiff Company. He has not furnished the relevant files or records in respect of the purchase of Ragi Malt Flour. Under the circumstances, show-cause notice was issued to defendant vide letter No.KSACP/ADM/MD/RRR/RMF/2280/04-05 dated 05.10.2004, calling upon him to furnish his explanation to the above said irregularities and illegalities committed by him. After 6 months, the defendant had replied to the said show- cause notice vide letter dated 11.03.2005. Since the explanation furnished by the defendant to the said show-cause notice was not satisfactory, the Plaintiff Company issued a charge sheet to the defendant vide its letter No.KSACP/AMD/545/05-06 dated 10.05.2005 for the following charges:-
Charge No.1:- Purchase of Ragi Malt Flour from Christy Friedgram Industries at higher rates and incurring huge financial loss to the Company to the tune of Rs.2.24 Crore.
Charge No.2:- Relevant files/records in respect of the purchases were not handed over to the Management even after repeated instructions from the Management.
Charge No.3:- Delay in submitting the explanation to show for more than six months.6 O.S.No.8602/2007
As the explanation furnished by him is not satisfactory, Plaintiff Company had initiated domestic enquiry and charges were framed against him by appointing Sri.N.S.Sangolli, a Retired District & Sessions Judge as Enquiry Officer to enquire into charges levelled against the defendant. The defendant has attended the enquiry, a thorough enquiry was done and based on the evidence and the documents available on record, Enquiry Officer came to conclusion that all the charges levelled against the defendant are proved and thus, caused financial loss to the Plaintiff Company to the tune Rs.2,23,97,500/-. Basing on the report, Company have taken decision and terminated the defendant. The terminal benefits including the gratuity amount of Rs.3,40,103/- and earned leave encashment of Rs.2,23,384/- (totalling Rs.5,63,487/-) was adjusted towards the amount referred to above, holding that the defendant is liable to pay Rs.2,18,34,013/- to the Plaintiff Company. On account of acts of omission and commissions committed by the defendant in discharge of his duties, the defendant has purchased the Ragi Malt Flour at the higher rate than the prevailing market rate so as to make wrongful gains out of it and thereby he has caused heavy loss to the Plaintiff 7 O.S.No.8602/2007 Company. The public money is involved as the plaintiff is a Government of Karnataka Undertaking, the defendant is liable to pay interest at the rate of 18%. The legal notice dated 30.04.2007 was issued calling upon him to pay the dues along with interest. Instead of complying the terms of the said notice, the defendant has sent an evasive reply denying the liability of paying the above said amount. Hence, the suit.
3. After the service of suit summons, the defendant appeared before the court through his advocate - Sri.R.Vijay Kumar and filed the written statement. It is contended that suit filed by the plaintiff is wholly misconceived and not maintainable on facts and merits. As the plaintiff had initiated Departmental Enquiry against the defendant on the basis of false allegations, again plaintiff cannot proceed against the defendant. The Departmental Enquiry against the defendant is now pending in a writ petition filed by him on the file of Hon'ble High Court of Karnataka, Bangalore, as such present suit shall have to be stayed till the disposal of said D.E. under Section 10 of CPC. The plaintiff cannot initiate simultaneous proceedings in relation to the same set of facts and cause of action on the assumption that charges against the defendant 8 O.S.No.8602/2007 is proved, is wholly unsustainable. Writ Petition No.17092/2007 (S-DE) challenging the order of termination dated 25.01.2006 and same is pending. The defendant challenged the order of termination by way of appeal. The Enquiry Officer submitted his report on 20.04.2006 before the Appellate Authority, which was also erroneously dismissed by an order dated 25.04.2007. Same has been challenged by the defendant in the writ petition before the Hon'ble High Court of Karnataka at Bangalore, same is pending. Since the Company is registered under the provisions of Indian Companies Act, it is governed by provisions of the Companies Act and Rules made thereunder. The Company being represented by its Managing Director to carry out the day-to-day activities, in turn M.D. reports to the Board of Directors. The M.D. of the Company sometimes of IAS Rank, highly qualified, experienced. The plaintiff submits that the defendant has no role to play in the matter of governing the grant of contracts placing orders pursuant to such grants or inform / advise or put forth his views to the Board or others. Therefore, allegations made against the defendant that because of his negligence the Government had suffered loss is false and 9 O.S.No.8602/2007 baseless. All the transactions of the plaintiff are regulated by its own Memorandum of Association and Articles of Association and in terms of Companies Act and Rules. Every transaction the Plaintiff Company has with third party is the subject matter of Board Resolution, which is required to be incorporated in the Minutes Book. In matters relating to grant of contract, procuring materials, paying for the articles and the like regarding all transactions is the Managing Director of the Company, who is required to report to the Board. All Board Meetings are chaired by the Chairman. The Managing Director, by issuing letter cannot absolve from his duties.
Though the defendant was the Chairman of Internal Purchase Committee, but all the decisions were taken by the Managing Director and the Board and not by the defendant. Final decision was to be taken by the Managing Director. Hence, the whole responsibility of procurement and payment, even if it be assumed that some loss has been incurred that the plaintiff has not sustained any loss as alleged. Even then the Managing Director of the plaintiff should be held responsible and not the defendant. This defendant has made a scapegoat in the transaction. The defendant submits that while he was 10 O.S.No.8602/2007 discharging the duty as Chief Divisional Manager in the Plaintiff Company for procurement of one of the main ingredient for manufacture of Amylase Rich Energy Food, which is Ragi Malt Flour and as such, procured Ragi Malt Flour from M/s.Christy Friedgram Industry, Andipalayam, Tiruchengodu, Tamilnadu, by flouting the tender norms without proper approval of the Higher Authority and Internal Purchase Committee, thus caused loss to the Company and the Government. All these allegations are false and baseless. It is submitted that Plaintiff Company floated a tender indenting tenderers /suppliers for supply of Ragi Malt Flour as per the existing Act and Rules. The tenders were in two bids (technical and financial bid). Considering all the aspects of the matter like the availability of Malted Ragi Flour (which was new product), antecedents of the tenderer (Company's prospects), the Managing Director took a decision in the interest of the Company, placed before the Board (which have been approved and ratified by the Board), through its Managing Director took a decision for grant of supply orders in favour of M/s.Christy Friedgram Industry for Rs.34/- per kg and Rs.31.25/- per kg respectively for 2 different items. The 11 O.S.No.8602/2007 149th Board Meeting held on 23.03.2001 at 11.00 a.m. in the Chambers of Addl. Chief Secretary and Development Chief Commissioner, Vidhana Soudha, it was unanimously resolved that an order of immediate requirement be placed and same be informed to the Government and Resolution was passed. The defendant was also invited to the said meeting. Therefore, the allegation against the defendant that he has misled the Board of Directors and gave false information is baseless. Now it is not open for the plaintiff to contend that there has been violation of the norms prescribed for procurement. Even subsequent to the 149th Board Meeting, the Board of Directors of the Plaintiff Company, met on 5 different occasions and in none of the Board Meetings, it was noticed about the alleged loss to the Plaintiff Company. Therefore, the Managing Director of the Company, who should be held responsible for all the acts done by the persons placing orders for the procurement of Malted Ragi Flour, but very conveniently this defendant is made scapegoat about the irregularities stated have been committed by the persons placing orders for the procurement of Malted Ragi Flour. M/s.Christy Friedgram Industry had filed a writ petition in the 12 O.S.No.8602/2007 Hon'ble High Court of Karnataka, challenging the lower rates offered by other technically disqualified applicant. The Company filed its statement of objections therein and finally, the said writ petition was dismissed in favour of purchase of Malted Ragi Flour from M/s.Christy Friedgram Industry, The Company having accepted the grant of contract awarded in favour of M/s.Christy Friedgram Industry and having allowed its officers to place purchase orders at different points of time, with which defendant was no way concerned, as such the plaintiff cannot foist a false claim against this defendant for the alleged loss said to have been caused to the Plaintiff Company. The defendant had joined the Plaintiff Company in the year August 1983 and worked in various capacities in different places. During May 1999, the defendant was transferred to Bangalore and posted to the Post of Chief Divisional Manager, which is an equivalent post of Deputy General Manager. In the year 2004, he was posted to Doddaballapur Unit as Deputy General Manager and in addition, was ordered to carryout the responsibilities of the post of Chief Divisional Manager, Bangalore. He continued in the said post till, by an order dated 25.01.2006 he was 13 O.S.No.8602/2007 terminated from the said post. He has challenged the said order of termination before the Hon'ble High Court of Karnataka in Writ Petition No.17092/2007 (S-DE) and same is pending. All the 5 units located at Mysore, Raichur Belgaum, Chitradurga, Doddaballapur and are used for manufacture of Weaning Foods required by the Department of Women and Child Development and put together called Weaning Food Division. Maize Milling Unit situated at Head Office premises and has been incurring losses most of the time. It is only the Weaning Food Division, because of captive market of supplying Weaning Foods to the Department of Women and Child Development, was earning profit and the losses incurred by the other 2 divisions i.e., Maize Milling Unit and Animal Feed Unit were set in. An Instant Food Division Unit functioning in the Head Office which was later converted to Malted Ragi Flour Manufacturing Unit. Therefore, the task of manufacture and supply of Energy Foods required under 'Mid- day Meal' Programme of Education Department during 1979 and subsequently under Special Nutrition Programme of ICDS (Integrated Child Development Scheme) Scheme of Women and Child Development since 1984 was taken up and work 14 O.S.No.8602/2007 was continued upto 2004. The Plaintiff Company was supplying Energy Foods from time to time at the rates fixed by the Department which was enhanced from time to time. They are supplied as per the norms fixed by CFTRI, Mysore. The defendant had taken Masters Degree in Food Technology from CFTRI. Therefore, the defendant submits that Plaintiff Company was earning profit upto 1999, but the profits dwindled due to non-revision of the rates for supply of Energy Food by the Department of Women and Child Development. The Company was able to get price hike for Energy Food from Rs.12/- to Rs.15/- per kg during 2000. By the introduction of Amylase Rich Energy Food (AREF), a superior quality, low cost food, more acceptable to children. Again Plaintiff Company was able to come back from profit side. Plaintiff Company was supplying Energy Food to the Department of Women and Child Welfare since 1984 and was not completely satisfied with the quality of the food and due to the monotonous nature of Energy Food being supplied. As Chief Divisional Manager of the Company, on the invitation of the plaintiff, the defendant participated in the series of meetings conducted during June 2000 under the Chairmanship of Minister for Women and Child 15 O.S.No.8602/2007 Development and directed introduction of "Amylase Rich Energy Food" under the Programme of Prime Minister's Gramodaya Yojana. Because on introduction of the Karnataka Transparency Act for public procurements in the year 2000 and after the lapse of moratorium period of 2 years, the Plaintiff Company could not market its production entirely to the Department of Women and Child Development and all measures taken to improve Company's business. The defendant approached with the approval of superiors M/s.CFTRI, Mysore, with regard to Malted Ragi Flour Manufacturing Processes and only thereafter, tenders were called for, wherein only one tender was received being that of M/s.Christy Friedgram Industry, Tiruchengodu (whose name was suggested by CFTRI also), who quoted the rate of Rs.34.30 per kg of Malted Ragi Flour, which was further negotiated and reduced to Rs.30/- per kg including all taxes. Malted Ragi Flour attracted a Central Excise duty of 16% at that time of the tender. The Purchase Committee decided that Company would give a costing of Amylase Rich Energy Food based on the rate of Malted Ragi Flour obtained to the Department of Women and Child Welfare, to the extent of 5% 16 O.S.No.8602/2007 in the formulation of AREF. The costing arrived by the Plaintiff Company for supply of AREF Rs.20/- per kg was accepted by the Government of Karnataka, on this basis and the Department issued orders on the Plaintiff Company for supply of Amylase Rich Energy Food at the rate of Rs.20/- per kg. The rate was decided on taking into consideration that the Malted Ragi Flour costed Rs.34/- per kg (only 5% is being added) and Wheat at the market rate of around Rs.10/- per kg. Therefore, BPL rate of Wheat was Rs.4.10 per kg against the market rate of Rs.10/- per kg, which worked out the rate of Amylase Rich Energy Food at Rs.18.63 per kg with 5% usage of Malted Ragi Flour costing Rs.34/- per kg. Therefore, the defendant submits that the tall claim of the plaintiff made against him is baseless and false and specifically denied by him. He has not at all committed any wrong or mistake and responsible for the losses, which is falsely alleged. There is no basis for the plaintiff to claim that the prevailing price was Rs.14/- per kg at the relevant point of time. The reference to the enquiry by Sri.N.S.Sangolli is suitably met by the defendant. The defendant submits that market rate of White Ragi Malt being obtained by Multinational Company like Glaxo 17 O.S.No.8602/2007 was also in the range of Rs.37/- per kg at that time. The Plaintiff Company also contemplated to sell Malted Ragi Flour at Rs.50/- per kg in the open market. These aspects show that the Plaintiff Company is very well aware that good quality white Malted Ragi Flour manufactured under HACCP Certification (Hazard Analysis and Critical Control Points) definitely costs in the range of Rs.30/- to Rs.50/- per kg. The defendant is instrumental in the introduction of Amylase Rich Energy Food for the Company, which helped the Company to take its business volume to double the volume i.e., from a turnover of Rs.30 crores to Rs.60 crores during 2001-02. Therefore, the defendant submits that this has helped in formulating and providing the most effective profit volume cost relationship to the Company, enabling the Company to register a record historical profitability of around Rs.10 crores during the said year after deducting all the losses incurred earlier. Therefore, he contends that the officials were falsely implicated on flimsy charges without any basis. The whole idea in having an In-house Plant for manufacture of Malted Ragi Flour was not only to manufacture the entire requirement required for manufacture of Amylase Rich Energy Food by 5 18 O.S.No.8602/2007 Units, but also to market Malted Ragi Flour in the open market. The defendant had corresponded with CFTRI for installation of the state of art of Malted Ragi Flour Plant for the Company. That was not materialised. However the final product provided the required Amylase activity in Amylase Rich Energy Food. M/s.Christy Friedgram Industry had participated in the tender and were the alone participated supplier. The Board of Directors of the Company accepted this and has accorded approval for purchases and continued by repeated orders and entire purchase has been ratified. This action has profited the Company and there were no quality complaints in respect of Amylase Rich Energy Food being supplied by the Company at the relevant point of time. The defendant submits that Accountant General in the course of their routine audit have verified the above aspects in detail and against some routine observations by them, as regards to the prices and capacity building of the Malted Ragi Plants were answered in full by the Plaintiff Company to them and the objections have been dropped. Therefore, the defendant contends that A.G's Office have vouched the purchase of Malted Ragi Flour and all the connected transactions. Instead 19 O.S.No.8602/2007 of appreciating the good and noble work done by the defendant, the Plaintiff Company has resorted to make the defendant a scapegoat for the alleged loss caused to it. The defendant has only placed trial orders and rest of the orders were placed by the Unit Managers and hence, it is wrong to contend that the defendant has purchased the entire Ragi Malt and was responsible for loss to the Company. The said purchases have been approved by the Accounts Department, Managing Director and no adverse remarks have been made, as such the plaintiff cannot find fault with the defendant. It is submitted that the Company did not take the suggestion of CFTRI in full for installation of Malted Ragi Flour as per HACCP Standards. The Plant installed by the Company is primitive, conventional and not High Tech. Only 25% of the processing was carried at the Amylase Rich Energy Food Manufacturing Unit only, instead at the so-called Ragi Flour Unit at Bangalore. As such, the costing of Malted Ragi Flour was shown very less when compared with the product supplied by M/s.Christy Friedgram Industry. The defendant was discharging his duties and responsibilities to the best of his ability and in the best interest of the Company, he was issued 20 O.S.No.8602/2007 with a show-cause notice dated 19.09.2004 / 05.10.2004, containing certain allegations stating that he has committed misconducts such as - not following the procedure for procurement of Malted Ragi Flour, suppressed information, caused losses to the Company, delayed the installation of In- house facility for manufacture of Malted Ragi Flour, delayed in furnishing the records etc. and called upon him to furnish his reply within 5 days. When the allegations are serious in nature, the defendant is expected to verify files, documents for reference, time was required for him, that was not given to him despite he has made such request both in oral and writing, but invain. On the other hand, the Plaintiff Company by resorting to an purported Departmental Enquiry, which was wholly illegal and not in consonance with the principles of natural justice, the Enquiry Officer who was himself a witness and who could not have held the enquiry, submitted a report quite obviously, in favour of the plaintiff and against the defendant. The defendant, as aforesaid, filed an appeal, which was an empty formality, in the context of the fact that Appellate Authority is none other than the Managing Director, who was sitting over his own judgment and naturally the said 21 O.S.No.8602/2007 appeal was also dismissed. Thus, the defendant submits that there has been a systematic and deliberate attempt on the part of the plaintiff to foist a false claim against the defendant right from the inception and initiated proceedings. As such, present suit is fled on false and frivolous grounds. Therefore, suit is vexatious. The Company should hold the Managing Director of the Company and other Officers, who placed orders with the supplier for recovery of alleged loss sustained by it and certainly against the defendant cannot be proceeded with. Even the Plaintiff Company has purported to withhold certain amounts legitimately due and payable by the plaintiff to the defendant. In fact, the plaintiff cannot withhold or adjust the amounts payable to him for the alleged loss. Therefore, defendant denied all the allegations made by the plaintiff against him. The plaintiff is not at all entitled to the relief claimed. He is not liable to pay any amount, much less what is claimed by the plaintiff against him in this suit and prayed that suit be dismissed with costs.
4. Basing on the rival pleadings the following issues are framed:-
22 O.S.No.8602/2007
ISSUES
1. Whether the plaintiff - Company proves that the defendant has caused financial loss to it to the extent of Rs.2,23,97,500/- as alleged in the plaint?
2. Whether the plaintiff is entitled for recovery of suit amount from the defendant?
3. Whether the suit of the plaintiff is barred by limitation?
4. Whether the defendant proves that in view of Boards Resolution suit is not maintainable?
5. What order or decree?
5. One Abdul Rasheed working as Joint Manager (Q.C.) of the Plaintiff-Company was examined as PW-1. When case is posted for cross-examination, he is reported to be dead. My learned predecessor discarded his evidence. Subsequently, Sri.M.K.Jayaram, working as Administration Head got himself examined as PW-2 and got marked Ex.P1 to P15 and closed his side. The defendant got himself examined as DW-1 and got marked Ex.D1 to D13 and closed his side.
6. After the closure of the evidence, heard the arguments.
7. My answers to the above issues are as follows:- 23 O.S.No.8602/2007
Issue No.1:- In the negative.
Issue No.2:- In the negative.
Issue No.3:- In the affirmative.
Issue No.4:- In the affirmative.
Issue No.5:- As per final order,
for the following:-
REASONS
8. Issue No.1, 2 & 4:-
For the sake of convenience these issues are taken up together for discussion to avoid repetition of facts and evidence.
9. The pleaded case of the plaintiff is that DW-1 was working in the Plaintiff Company as a Chief Divisional Manager and he was overall in-charge for the supervision of Maize Building Division and Energy Division including 5 Units - Belgaum, Raichur, Mysore, Chitradurga and Doddaballapur, for procurement of one of the main ingredients for manufacturing of Amylase Rich Energy Food, which is Ragi Malt Flour incidental to his assigned duties. Therefore, it is the case of the Plaintiff Company is that, the defendant is responsible for wholly procurement of raw materials, production process, 24 O.S.No.8602/2007 quality control links of products. The defendant has procured Ragi Malt Flour (RMF) for manufacture of Amylase Rich Energy Food (AREF) at higher rates from M/s.Christy Friedgram Industry (CFI), Andipalayam, Tiruchengodu, Tamilnadu by flagrantly violating the tender norms prescribed by the Plaintiff Company, without prior approval of the Higher Authority and Internal Purchase Committee. Therefore, it is contended that the defendant has purchased 1157 Metric Tonnes of Ragi Malt Flour at Rs.34/- per kg and Rs.31.25 per kg as against the then prevailing price of Rs.14/- per kg. He has placed order to supply materials without proper approval from the Board. In exercise of permitted limit under 149th Board Meeting - Ex.D10 dated 21.03.2001 of the Plaintiff Company, where certain procedure and policy laid down to accord approval for purchase of Ragi Malt Flour and such violation was detected by the Committee of the Plaintiff Company and same was intimated to Top Management, who in turn issued a show- cause notice dated 11.05.2005. For which the defendant had furnished explanation and same was found not satisfactory. Sri.N.S.Sangolli, a Retired District & Sessions Judge, who had enquired the matter, submitted the Report dated 20.04.2006 25 O.S.No.8602/2007 and found that DW-1 was guilty of all the charges levelled against him and he has incurred loss to the Plaintiff Company to the extent of Rs.2,23,97,500/-. After deducting his terminal benefits of Rs.5,63,487/-, the defendant is still liable to pay Rs.2,18,34,013/- with interest at the rate of 18% from the date of the suit till realization is the claim made by the Plaintiff Company against the defendant in this suit.
10. The main defence that is set out in the pleadings as well as in the evidence of DW-1 is that, Report of the Enquiry Officer - Ex.P9 by Sri.N.S.Sangolli and Order of Termination passed by the Board is not maintainable and present suit filed for recovery from DW-1 is barred by limitation. It is also contended that different Unit Heads placed Purchase Orders with the Company - M/s.Christy Friedgram Industry and against such indent supplies were made by M/s.Christy Friedgram Industry to Units directly and payments were also made directly by the Managing Director of the Plaintiff Company. Though at the relevant point of time, he was working as Chief Divisional Manager at the Registered Office and also Chairman of Internal Purchase Committee, but was no way concerned with either Purchase Order or payments 26 O.S.No.8602/2007 made, as same was between the Managing Director of the Plaintiff Company and the Unit Heads and M/s.Christy Friedgram Industry.
11. DW-1 has deposed in his evidence that, the contract was entered into by the Managing Director with the M/s.Christy Friedgram Industry with prior approval of the Government, keeping in view of immediate requirement of Ragi Malt Flour being supplied to the Department of Women and Child Development and Purchase Orders were placed from time to time starting from April - May 2001 to the end of June 2002. M/s.Christy Friedgram Industry have supplied the Ragi Malt Flour at the rate of Rs.34/- per kg, for which Managing Director of the Plaintiff Company paid money directly to M/s.Christy Friedgram Industry. He has further deposed in his evidence that, after negotiation by the Plaintiff Company with the M/s.Christy Friedgram Industry, the price was reduced to Rs.31.25 per kg for Ragi Malt Flour and supplies were made by the respective Unit Heads as before as per the Purchase Order. In the evidence of DW-1, he has deposed that preparation of nutrition food high quality Ragi Malt Flour was required as recommended by CFTRI, Mysore to the Plaintiff 27 O.S.No.8602/2007 Company, tender furnished by M/s.Christy Friedgram Industry was accepted by the Managing Director and payments were made by the Plaintiff Company through its M.D. Therefore, the defence set out by the defendant is that, DW-1 was simply made a scapegoat in the whole transaction at the behest of certain vested interest. Based on the Enquiry Report submitted by Sri.N.S.Sangolli, the Disciplinary Authority has passed orders terminating him from the service, no opportunity was properly given at the time of enquiry and the documents produced by him were not appreciated. Therefore, it is the defence set out by the defendant, basing on the Enquiry Report such claim is made against the defendant is wholly unjustifiable and without any basis and sought for dismissal of the same. Therefore, heavy burden is on the plaintiff to prove the suit claim. The burden to prove Issue Nos.1 and 2 is on the plaintiff.
12. The learned counsel for the plaintiff vehemently argued that against the Dismissal Order and Enquiry Report the defendant filed Writ Petition No.17092/2007, wherein Hon'ble High Court had held that the charges levelled against DW-1 are proved and findings were confirmed. Now the 28 O.S.No.8602/2007 defence of DW-1 that writ petition filed by him is pending, is totally false. As he has lost in the legal battle, the public fund was squandered belonged to the Plaintiff Company involved public interest and DW-1 has misused the same for his personal benefits, as such he is liable to make good. Because loss caused to the Plaintiff Company was due to the negligent and reckless action and he was not diligent in discharging the duties and responsibilities as per the policy and procedure laid down by the Plaintiff Company and he cannot escape from the liability. As sufficient opportunity was given for him before the Enquiry Officer at the time of Disciplinary Enquiry it was accepted by the Disciplinary Authority and confirmed by the Hon'ble High Court. Therefore, technicalities should not come in the way of legal process, particularly when issue involved is public fund, public interest and welfare and urged that suit be decreed with costs.
13. Per contra, learned counsel for the defendant argued that tenders were accepted by M.D. and Board of the Plaintiff Company and they themselves have ratified the rates for all the purchases made by the different Unit Heads from M/s.Christy Friedgram Industry. The Plaintiff Company has 29 O.S.No.8602/2007 not produced any account books, invoices, indents, Purchase Orders, records maintained by the different Unit Head, to show as to who has placed the order, when it was placed, when was it supplied, how and who and how the payments made to M/s.Christy Friedgram Industry. PW-2 in his evidence has made attempts to conceal those documents even though admitted in his evidence that the plaintiff has custody of all those documents. Therefore, PW-2 doesn't know the facts relating to the transaction, they ought to have examined the M.D. of the Plaintiff Company. The suppression of material documents and the evidence which are within the hands of the plaintiff has not come on record, as such they failed to establish clearly as to the above said factors, as such adverse inference may be drawn against the plaintiff. Even he has pointed out that under RTI Act the defendant has sought copies of the documents, for which they replied that the documents sought are nearly 11-13 years, hence they cannot supply as mentioned in RTI Application. Therefore, such act reflects that they purposely withholding the documents from the scrutiny of the court.
30 O.S.No.8602/2007
14. Apart from it, the evidence in the enquiry cannot be a conclusive proof in a suit filed by the plaintiff for recovery of the amount, they are expected to establish independently their right to claim and to recover the suit amount from the defendant by leading evidence, that has not been done in this suit. Therefore, suit itself is not maintainable. Further, cause of action against DW-1 is relates to the transactions between April - May 2001 to the end of June 2002, Enquiry Report by Sri.N.S.Sangolli is of the date 27.02.2006 and suit filed in the year 2007 is hopelessly barred by time and argued that as the matter is still pending before the Hon'ble High Court of Karnataka, the claim itself is not sustainable and suit be dismissed with costs.
15. In the light of the arguments canvassed by both the sides, it is necessary to appreciate the evidence brought on record both oral and documentary. DW-1 was working as a Chief Divisional Manager in the Head Office. In the cross- examination DW-1 has stated that Managing Director of the Plaintiff Company has delegated him to look after overall supervision of Feed Division and Energy Food Division including 5 divisions namely - Belgaum, Chitradurga, Mysore, 31 O.S.No.8602/2007 Doddaballapur and Raichur. He admits that he was the Chairman of Internal Purchase Committee of the Plaintiff Company. According to DW-1, he is only supervising the Unit, if anything is required and same will be reported to the Managing Director and with his approval only he used to carry out the functions. Therefore, DW-1 has deposed that Managing Director is responsible as per Memorandum of Association and Articles of Association of the Plaintiff Company. Ex.P3 is the Appointment Letter in favour of DW.1- Sri.Ramesh Rao dated 11.07.1983 for the post of Factory Manager. Ex.P4 is the copy of the Office Order dated 24.05.1999 that DW.1- Sri.R.Ramesh Rao, who was working as Deputy General Manager (WF), Chitradurga has been transferred to Weaning Food Division, Head Office to officiate as Chief Divisional Manager (WF) in the post of Deputy General Manager (WF). Ex.P5 is the Order dated 27.05.1999 evidencing that DW-1 reported for duty as Chief Divisional Manager, Head Office, Bangalore, in the afternoon of 27th May 1999. If we go through the said Office Order, the following areas of activity assigned to him as Chief Divisional Manager (CDM) will be responsible for:-
32 O.S.No.8602/2007
(1) Overall supervision of Maize Milling Division, Feeds Division and Weaning Food Division (including 5 Units located in Doddaballapur, Mysore, Chitradurga, Raichur and Belgaum) (2) Unit Heads of Weaning Food Division will report to C.D.M. (3) All files covering serial Nos.1 and 2 will be routed through Chief Divisional Managers.
(4) C.D.M. will be the Chairman of the Internal Purchase Committee.
(5) C.D.M. will be fully responsible for
monitoring, planning, supervision and
procurement of raw materials, production
process, quality control wings of the products.
(6) The Unit Heads in five Districts and Heads of Maize Milling Unit, Marketing and Feeds Division will report to the C.D.M. That means, he was appointed as Chief Divisional Manager by virtue of Ex.P4 and Ex.P5 specifies his duties. Ex.P6 show-
cause notice issued dated 19.09.2004, the Managing Director has made certain allegations that he has mishandled the responsibility entrusted to him and not monitoring the activities of the Units under his control and are indirectly responsible to the financial losses that the Company and the 33 O.S.No.8602/2007 Government have suffered, aggregating to the tune of Rs.2.48 crores. The act of misconduct is also specified in the show-cause notice. The Managing Director has charge sheeted him as per Ex.P8 dated 05.05.2005 and served the charges and initiated Disciplinary Enquiry by appointing Enquiry Officer - Sri.N.S.Sangolli, a Retired District & Sessions Judge. After enquiry, Enquiry Officer held that all the charges levelled against him were proved by his Report as per Ex.P9 dated 27.02.2006.
16. Based on the said Enquiry Report, Disciplinary Authority has terminated the services of DW-1 for forfeiting terminal benefits and also for action to recover the loss caused by him to the Company and the Government by filing a civil suit. DW-1 has challenged the action initiated against him for recovery in the present suit in Writ Petition No.5362/2008 before Hon'ble High Court of Karnataka and in the said Writ Petition Hon'ble High Court allowed the Writ Petition and ordered the Appellate Authority for fresh disposal of the appeal filed by DW-1 in accordance with law based on the consideration of the grounds. Ex.P14 is the appeal submitted to the Board making grounds by DW-1 requested 34 O.S.No.8602/2007 for stoppage of contemplated actions of forfeiting terminal benefits and action to recover loss by filing civil suit and also to reinstate into the services with all back wages. Therefore, the grounds stated in the written statement filed by him were also stated in Ex.P14. In Ex.P15, Appellate Authority has not taken into consideration his grounds urged in the appeal with reference to the documentary evidence and observation made by the Enquiry Officer and held that, Disciplinary Authority was convinced that the charges proved with regard to gravity as levelled against DW-1 and the charges proved in the enquiry based on Enquiry Report DW-1 was dismissed from the Company. Therefore, what was the charge imputed against him in the enquiry by Sri.N.S.Sangolli and considered by the Appellate Authority namely:-
(1) Purchase of Ragi Malt Flour from M/s.Christy Friedgram Industry at higher rate incurred a huge loss of Rs.2.23 crores to the Company.
(2) Non submission of relevant documents / files in respect of purchase of Ragi Malt Flour from M/s.Christy Friedgram Industry.
(3) Delay in submission of reply to Show-
Cause notice served on 05.10.2004.
35 O.S.No.8602/2007Therefore, according to DW-1 he has challenged the orders passed by the Appellate Authority before the Hon'ble High Court of Karnataka, same is pending.
17. DW-1 admits in the cross-examination that in hierarchy next to Managing Director he was holding the post. According to him, he has placed the purchase order as per the directions of the Managing Director. He admits that he placed orders from M/s.Christy Friedgram Industry, Tamilnadu initially Managing Director directed him to place order for supply of 45 MTS of Ragi Malt Flour. He has deposed that further orders were placed by Unit Managers and they themselves have placed such orders with the approval of Managing Director. He has produced the relevant documents in the enquiry proceeding to evidence the approval taken by the Unit Managers from the Managing Director. No doubt, as he was holding the post of C.D.M., they cannot bypass him, is admitted by him. He has deposed that though initially orders were placed for 45 MTS as per the approval given by the Managing Director, subsequently Unit Managers continue by placing orders for subsequent purchase as per the orders of Managing Director through him. He has deposed that initially 36 O.S.No.8602/2007 tenders were called, rate fixed for a year, as such there is no need to again call for tender notification while placing subsequent order as per Company Procedure. Ex.P2 is the Rate Contract. DW-1 has stated that Company can purchase depending on the requirement and rates will be fixed in accordance to the tender. With reference to Ex.D2 - Extracts of Minutes of 149th Meeting of the Board of Directors dated 21.03.2001 and Ex.D10, each Unit are required to supply 9 MTS. DW-1 has stated that it is a purchase order placed by the Company as per the directions of the MD and approval of the Board at the first instance as a trial basis. On going through Ex.D2 & D10, DW-1 has admitted that on behalf of MD, he himself has signed the said document and according to him there are documents in the Plaintiff Company authorizing him to sign on behalf of MD. It is his case that, though he had applied to the MD and Board of Directors to furnish the relevant documents, but they did not supplied, that is the reason there was a delay in sending reply to the show-cause notice and also to submit his objections before the Disciplinary Authority. It is his case that, all the purchases made were approved by the Board for the purchase of entire quantity. 37 O.S.No.8602/2007 Therefore, according to him a false charge has been levelled against him. As far as purchase of Ragi Malt Flour the Board is the superior most body and order placed by the Company were approved by the Board. He has produced Ex.D11 & D12
- Minutes of 154th & 155th Meetings of the Board of Directors of the Plaintiff Company dated 30.03.2002 and 28.06.2002. Therefore, it is the contention of DW-1 that all the purchases were made and payments made for such purchases were duly approved by the Board. Therefore, unnecessarily a false enquiry was initiated against him. But during his tenure because of his initiation Company has made profit and he has produced the Balance Sheet ending 31st March, 2000 - Ex.D5 and he is responsible for showing such profits and he has never indulged in any of the acts which entails him to face the Departmental Enquiry and the observations made by Enquiry Officer without giving him proper opportunity on the point of natural justice and the defence taken by him was not at all appreciated in its proper perspective.
18. Since the Plaintiff Company has filed this suit for recovery of loss caused because of neglect and carelessness on the part of DW-1 while discharging his duty as C.D.M. to 38 O.S.No.8602/2007 the Company as well as to the Government, as Disciplinary Authority has taken the decision to initiate civil suit for recovery against him. Therefore, heavy burden is on the Plaintiff Company to prove that they are entitled to get decree based on the pleadings and the documentary evidence produced by them that the evidence given by Plaintiff Company is sufficient to establish their claim against the defendant. Because, mere producing the Enquiry Report and action taken by the Disciplinary Authority that itself is not a conclusive proof and sufficient to pass a decree in a civil suit.
19. Here, this court would like to make mention the observation of Enquiry Officer - Sri.N.S.Sangolli, a Retired District & Sessions Judge in Ex.P9, wherein while appreciating the evidence he has observed that in the Departmental Enquiry the provisions of Indian Evidence Act are not applicable 100% to such proceedings and there is no need to prove the charges levelled against the Delinquent Official beyond reasonable doubt. The evidence can be appreciated based on preponderance of probability and natural justice. Therefore, this being a civil suit the quality of evidence need be given by the plaintiff is such a way that, court should 39 O.S.No.8602/2007 appreciate it so as to fasten the liability on the defendant to pay the amount claimed in the suit. Because the standard of evidence that is recorded and appreciated in the Disciplinary Proceedings cannot be equated with the standard of evidence need be given in a civil suit to prove the issues. Because burden to prove the issue Nos.1 and 2 is on the plaintiff.
20. Initially one Sri.Abdul Rasheed, who was working as Joint Manager (Q.C) in the Plaintiff Company was examined as PW-1. When case is posted for cross-examination, he was reported to be dead. That is the reason, again Plaintiff Company authorized Sri.M.K.Jayaram, who was working as an Administration Head of the Plaintiff Company as per Ex.P13 - Authorization Letter. On the strength of such Authorization Letter PW-2 deposed before the court. In the cross- examination of PW-2, he has deposed that Managing Director is taking decision in the Head Quarters, Unit Heads will take decision in the Units. Any contract entered by the Plaintiff Company is in accordance with KPT Act and before making contract, they will call for tenders, they are 2 types i.e., technical bid and financial bid. He has deposed that Internal Purchase Committee has to recommend only the tender 40 O.S.No.8602/2007 proceedings. In page 10 of the cross-examination, PW-2 has deposed that the basis for the suit is in respect of purchase of Ragi Malt on higher rates. The material allegation before the Enquiry Officer is that DW-1 has flouted the Company norms and had purchased Malted Ragi Flour from M/s.Christy Friedgram Industry, Namakkal, Tamilnadu at the rate of Rs.34/- per kg. Only 45 MTS for which orders were placed, but M/s.Christy Friedgram Industry has supplied 1157 MTS to the plaintiff for the year 2000-01 and 2001-02 for all the 5 Units and being Head of Internal Purchase Committee, he has apprised the same to the Board of Directors or Managing Directors and thereby, he has caused loss to the Plaintiff Company, though it could have been manufactured and supplied to the Women and Child Department as per their requirement at the manufacturing cost of Rs.14/- per kg. Therefore, he had faced the charges before the Enquiry Officer. In the cross-examination, PW-2 had deposed that that Unit Heads have given orders directly to the M/s.Christy Friedgram Industry on the instructions of the Head Office. The Head Office used to give instructions on the basis of requirement of Units. He has further stated that sometime the 41 O.S.No.8602/2007 payments are made by Head Office to the Company and sometimes the Unit Heads have made payments to the Company. In page 12 of the cross-examination, he admits that DW.1 - Sri.Ramesh Rao has approached the Hon'ble High Court, questioning the legality of enquiry conducted by the Enquiry Officer and Hon'ble High Court has sent the matter to reconsider. Now, as the Appellate Authority has failed to reconsider the grounds urged, he has again challenged before the Hon'ble High Court by filing a writ and same is pending. PW-2 has deposed that he is unaware of the same. PW-2 has stated that there is a slab in respect of purchase of units, authorizing the Unit Head, Board of Directors and Managing Director. The records may be with the Plaintiff Company. He has deposed that generally every year they used to receive the audit objection and reply will be given by the plaintiff. PW-2 in page 13 of the cross-examination to a definite question that, when exactly for the first time Plaintiff Company came to know that the defendant or Unit Heads have not taken approvals from the Company in placing purchase order of Malted Ragi Flour, PW-2 has showed his ignorance. Even he doesn't know, whether without approving payments were 42 O.S.No.8602/2007 made or not. He has deposed that there is flouting of tender norms as the defendant has given order to single Company i.e., M/s.Christy Friedgram Industry. The Managing Director has to give tender norms in-coordination with C.D.M. PW-1 has deposed that, he has no idea what was the exact rate of Ragi Malt at that time and he has no idea whether plaintiff has received any quotation from other Company. Ex.P2 is the tender documents pertains to tender accepted for M/s.Christy Friedgram Industry for the supply of Malted Ragi Flour at the rate of Rs.3,430/- per 100 kg.
21. According to the evidence of DW-1, he has deposed that Managing Director is looking after the Company and Managing Director has given instructions to him. That means, as PW-2 has stated that he has no idea about what was the exact rate of Malted Ragi Flour order placed with M/s.Christy Friedgram Industry. The overall evidence of PW-2 reveals that he doesn't have full knowledge about the facts of the case and Managing Director had instructed him and he is deposing basing on it. The clear admission in the cross-examination of PW-2 in page 15 that:
43 O.S.No.8602/2007
"I cannot say whether the defendant has misappropriated the amount or not. The case is regarding recovery of amount in respect of Ragi Malt at the rate of Rs.34.50 per kg. In the Tender M/s.Christy Friedgram Industry was the lowest bidder and he quoted Rs.34.50 per kg. It was the only Company applied tender. The Company has paid the amount to the said Company. It was paid through cheque. This detail has been shown in the accounts book."
That means, as per Ex.P2 M/s.Christy Friedgram Industry was the only Company applied tender and rates quoted was accepted by the Plaintiff Company and all the payments made to M/s.Christy Friedgram Industry by the Plaintiff Company for the purchases made for the supply of Malted Ragi Flour was through cheques by the Plaintiff Company, can very well be gathered. It is not that DW-1 has issued cheques and he has suppressed the material facts and misappropriated amount for his personal gain. Because PW-2 has admitted in the cross-examination, he cannot say that whether the defendant has misappropriated the amount or not. The details of the Board Meetings are kept in the Company. Plaintiff Company is registered with Registrar of Company. 44 O.S.No.8602/2007 However, PW-2 admits that they have not furnished the accounts to the Registrar. He has deposed that in this case, there is observation of audit and hence, case is filed. It goes to show that M/s.Christy Friedgram Industry have quoted lowest bid, they are the only bidder applied, accepted and orders were placed for the supply of Malted Ragi Flour, which was ratified by the Board of Directors of the Company and all the payments were approved and paid to the M/s.Christy Friedgram Industry by the Company through cheques. In page 16 of the cross-examination of PW-2 that the Company has given clarification to Controller and Auditor General about the queries raised in the audit. PW-2 has admitted that he did not appear before Sri.N.S.Sangolli - Enquiry Officer and his evidence was not recorded by the Enquiry Officer. According to him, there is no matter pending before the Hon'ble High Court of Karnataka. The speaking order was passed about one year back and he has not placed the same before the court. Whereas evidence of DW-1 is that, he has challenged the orders passed by the Appellate Authority before the Hon'ble High Court of Karnataka, same is pending. PW-2 has admitted in the cross-examination that tender of 45 O.S.No.8602/2007 M/s.Christy Friedgram Industry was approved by the Government, that can be gathered from Ex.P2. DW-1 has clarified that initially tender was given only for 45 MTS for supply of Malted Ragi Flour, but as per the requirement of Department of Women and Child Development to achieve the Scheme of supply of nutrients food to the children Unit Heads have placed orders as per the instructions and approval by the MD, through him placed orders and M/s.Christy Friedgram Industry have supplied in all 1157 MTS during the period 2000-2002 and this supply was made is found place in the Board Meetings, Minutes recorded and in the Disciplinary Enquiry also that was discussed. He admits that during the period the invoices sent by the M/s.Christy Friedgram Industry have been paid by the Plaintiff Company. A clear admission in the cross-examination of PW-2 in page 17, that he has no idea about personal gain of the defendant. Though he has denied the suggestion that after receiving the audit objection the Plaintiff Company has been initiated proceedings against the defendant. But the way in which enquiry was initiated by issuing the show-cause notice and also appointing 46 O.S.No.8602/2007 the Enquiry Officer - Sri.N.S.Sangolli, a Retired District & Sessions Judge, all these things were after the audit report.
22. On perusal of Ex.P10 - Extract of Minutes of the 149th Meeting of the Board of Directors dated 21.03.2001, wherein Board after noting the immediate requirement of Malted Ragi Flour resolve to direct:-
1. If the MRF is available from a single source, provisions envisaged in 4(b) of KTPP Act, 2000 could be followed.
2. The trial order for immediate requirement be placed and to inform the Government accordingly.
3. In-house facility for manufacture of MRF be developed in consultation wit CFTRI.
Ex.P11 the tender for supply of Ragi Malt Flour, price quoted as Rs.34/- per kg inclusive, all, F.O.R. destination Delivery to their Units. The reference that is made regarding the issuance of tender notification in August 2000 for procurement of Ragi Malt Flour from M/s.Christy Friedgram Industry, Chennai and orders were placed for 45 tonnes and to go in for development of in-house facility in consultation with CFTRI for manufacture of Ragi Malt Flour. Thereafter, 47 O.S.No.8602/2007 further orders were placed between April 2001 to June 2002 on the Firm for supply of 1157 MTS at the rates ranging from Rs.31,250/- to Rs.34,000/- per MT. In that Board Meeting it is also referred that, cost of establishing the plant for in- house manufacture of 1800 tonnes per annum of Ragi Malt Flour was estimated (August 2001) at Rs.55 lakh and cost of Ragi Malt Flour was estimated (October 2001) at the rate of Rs.16/- per kg by Shri.Mallesh, Scientist of CFTRI. No doubt, in the Board Meeting they have taken measures to improve the in-house manufacture of Ragi Malt Flour in consultation with CFTRI. But to make allegation against the C.D.M. i.e., DW-1 it must be proved that he has not taken appropriate measures to incorporate the in-house manufacturing of Ragi Malt Flour by Plaintiff Company itself. If that being so, why they ratified the orders placed with M/s.Christy Friedgram Industry and payments were made at the rate specified under the tender norms is again a question. Because as per the evidence of PW-2, he cannot say whether DW-1 has misappropriated the money or not. PW-2 has demonstrated his ignorance about 154th and 155th Board Meetings of the Plaintiff Company as per Ex.D11 and D12, by which all 48 O.S.No.8602/2007 purchases made by different Units from M/s.Christy Friedgram Industry at the rates agreed at different points of time came to be ratified. Therefore, as rightly argued by the learned counsel for the defendant that, the defendant was not responsible for any loss alleged to have been caused to the Plaintiff Company or the Government. In fact, as per Balance Sheet ending March 2000 - Ex.D5 Company had showed profit and in none of the Board Meetings it was ever discussed at the relevant point of time that Company has suffered loss on account of negligence, carelessness on the part of DW-1.
23. No doubt, under Ex.P3 the defendant was incharge of overall supervision and quality control on purchase of Ragi Malt Flour at the price and procedure approved by the Top Management of the Company. But, it has come in the evidence that the different Unit Heads have procured Ragi Malt Flour at different point of time and all those purchases were ratified in the Board of Directors Meeting and cheques were issued to M/s.Christy Friedgram Industry. Therefore, branding DW-1 that he had purchased at a higher price and such procurement was made without adhering to the policy framed by the Plaintiff Company looks odd and unnatural. 49 O.S.No.8602/2007
24. In Ex.D13 - Reply submitted by DW-1 to the show- cause notice issued by M.D. of the Plaintiff Company dated 15.07.2006, wherein he has clarified in his justification that tender notification with M/s.Christy Friedgram Industry was approved by the Board of Directors Meeting and the Government and subsequent purchases were also ratified as per Ex.D11 and D12. The quality of Malted Ragi Flour which was purchased from M/s.Christy Friedgram Industry is of higher quality and at the relevant point of time Plaintiff Company had marketed at the price of Rs.50/- per kg and similar product was marketed by Glaxo Company at the price Rs.37/- per kg. It was discussed in the Board of Meeting, that is the reason they approved for the price Rs.34.50 per kg for the first time and after negotiation for the second time it was ratified for the price Rs.31.50 per kg, what is deposed by PW-2 in his cross-examination. Therefore, absolutely no reference either in the plaint or before Enquiry Officer about the ratification made by the Board regarding the procurement orders placed by the respective Unit Heads, ratified under Ex.D11 and Ex.D12. In his reply to the notice and also his appeal grounds placed before the Disciplinary Authority DW-1 50 O.S.No.8602/2007 has made it clear that as per the CFTRI recommendation only M/s.Christy Friedgram Industry product and tender was accepted, they introduced M/s.Christy Friedgram Industry to the Plaintiff Company, because the product of the said Company is qualitatively good.
25. If we go through the discussions made by Enquiry Officer - Sri.N.S.Sangolli in his Report - Ex.P9, the reliance is placed on the economics of cost prepared by one Sri.Ajjappa and conclusion was arrived at that the market rate of MRF at the relevant point of time was Rs.14/- per kg and procurement was made with M/s.Christy Friedgram Industry was substantially at higher rate, therefore Company has suffered heavy loss, for which responsibility in placed on DW.1. But if we go through the discussions made, findings given in Enquiry Report - Ex.P9, there are no other circumstances to substantiate that the product which was supplied by M/s.Christy Friedgram Industry was of the very same quality what is Sri.Ajjappa had stated in his evidence before the Enquiry Officer.
51 O.S.No.8602/2007
26. Especially Ex.P12 - Economics of Product - Ragi Malt per kg that was prepared by Sri.Ajjappa, wherein he has suggested that the cost of Ragi Malt at the relevant point of time is Rs.14/- per kg. In his justification, DW-1 has given the difference between the quality of the product, the white Malted Ragi Flour and ordinary Malted Ragi Flour, how it differentiates. But that was not appreciated by the Enquiry Officer, can very well be seen from the Report itself. Before the Enquiry Officer DW-1 himself has conducted the case, not assisted by any next friend. The purchase of Malted Ragi Flour was a decision of the Plaintiff Company, its MD and Board of Directors i.e., by Supreme Authorities and placing Purchase Order with the approval from the higher, acceptance of material by Unit Heads after quality inspection, bills verified by the Accounts and Audit and payment released by the Accounts after due approval. As rightly pointed out by the learned counsel for the defendant that without the approval of MD such routine things repeatedly cannot continue and the alleged purchase for which DW-1 was made responsible in the enquiry - Ex.P9 was between the period April 2001 to June 2002, covering 14 months, during which 52 O.S.No.8602/2007 1157 MTS of Malted Ragi Flour was purchased from M/s.Christy Friedgram Industry and entire purchase was ratified after discussion in the meetings of Board of Directors and payments were made without any objections from Audit and Accounts and it is only subsequently show-cause notice was issued based on some queries and audit objections raised by audit party. DW-1 in his submission clarified that, that was suitably answered and Office of the Accountant General have closed that issue. Therefore, as per the evidence we can gather that Plaintiff Company has introduced Amylase Rich Energy Food supply to Department of Women and Child Development and lowest tender placed by M/s.Christy Friedgram Industry, who have supplied good quality of Malted Ragi Flour at the rate of Rs.34.50 per kg and tender was accepted by the Company as well as the Government as per rule.
27. One more legal question raised by the learned counsel for the defendant that Enquiry Officer - Sri.N.S.Sangolli was one of the witness, who has deposed against DW-1 in Wheat Rava Case and this fact was raised as a ground in Writ Petition No.5362/2008 and their lordships of 53 O.S.No.8602/2007 the Hon'ble High Court in their order dated 14.02.2012 set aside the order passed by the Appellate Authority, clearly holding that:
"Appellate Authority without considering any one of the grounds urged by the petitioner dismissed the appeal, a perusal of the impugned order at Annexure - S passed by the Appellate Authority makes it clear that the grounds urged by the petitioner are not at all considered. The order of Appellate Authority is not a speaking order, it is obligatory on the part of Appellate Authority to consider the grounds urged by the petitioner. Non - consideration of the grounds urged by the petitioner has resulted in failure of justice. On this ground the order of Appellate Authority is liable to be quashed."
Hon'ble High Court has remanded the matter to Appellate Authority for fresh disposal of the appeal filed by the petitioner in accordance with law by considering the grounds urged by him. It is alleged by DW-1 in his evidence that in the Disciplinary Enquiry that was done at the instance of the MD of the Plaintiff Company, he himself is the Appellate Authority, therefore direction of the Hon'ble High Court was not at all followed and again dismissed the appeal and he has 54 O.S.No.8602/2007 challenged it before the Hon'ble High Court and same is pending.
28. Further more at the relevant point of time he had applied for supply of necessary documents i.e., bills, vouchers, accounts particulars and also Minutes recorded in the Board of Directors Meeting, as that was not furnished was the cause for delay in submitting his reply to the show-cause notice and also making ground before the Authority is concerned. But he was unnecessarily charged that deliberately he has delayed it and Enquiry Officer and Appellate Authority have held him guilty that he has deliberately not brought to the notice of Higher Officer and suppressed the material facts. This question was not appreciated in the enquiry as well as in the appeal and that matter is the subject-matter before the Hon'ble High Court. Therefore, it can be said that there is justification for DW-1 to contend that the enquiry is yet incomplete.
29. Therefore, one thing is clear that the direction given in Writ Petition No.5362/2008, wherein Appellate Authority has not at all given finding on the main issue 55 O.S.No.8602/2007 including about Enquiry Officer being the witness in Wheat Rava Case against him. Further, Sri.Ajjappa and Sri.Jayaram, whose evidence is based by the Enquiry Officer and Appellate Authority, they were also faced Departmental Enquiry as evidenced by the Enquiry Report submitted by Sri.K.Eshwar Bhat - Ex.D4, wherein they are Delinquent No.2 and 4 and relying on their evidence, Enquiry Officer who himself being a witness in Wheat Rava Case has submitted Report - Ex.P9 against DW-1 and his findings were confirmed by Appellate Authority, who is none else than MD of the Plaintiff Company at whose instance enquiry was initiated. Therefore, even though DW-1 had acted at the relevant point of time in the Plaintiff Company as Chairman of Internal Purchase Committee, which was set up by the Plaintiff Company is only a Recommendatory Body and had no power of its own to take any decision without the approval of the Managing Director. Therefore, when the procurement of Malted Ragi Flour from M/s.Christy Friedgram Industry was made by respective Unit Heads, was ratified by the Board of Directors and amount was paid through cheque, holding DW-1 alone responsible for the alleged loss caused to the Plaintiff Company was challenged 56 O.S.No.8602/2007 by DW-1 throughout by way of objection filed before the Enquiry Officer and Appellate Authority and now the matter is pending before the Hon'ble High Court of Karnataka. Therefore, Sri.M.K.Jayaram, who was junior to DW-1 in the Plaintiff Company had also faced enquiry based on a charge sheet accusing of irregularities in respect of use of Vitamin Pre-mix. Enquiry Officer has relied on Ex.P12- Economics of Product - Ragi Malt and the evidence of Sri.Ajjappa without taking into consideration of the grounds urged by DW-1 before the Authorities, which according to DW-1 that he was made a scapegoat.
30. It is clear from the evidence that Malted Ragi Flour which is a new product, that is the reason Company's prospect was taken into consideration by the Managing Director who took a decision in the interest of the Company and placed before the Board, which has been approved and ratified by the Board and supply orders were given to M/s.Christy Friedgram Industry for Rs.34.50 per kg and for the second time modified reduced rate at Rs.31.25 per kg at different times. In the written statement DW-1 has clearly taken the defence in support of his innocence. Therefore, as 57 O.S.No.8602/2007 per Ex.D11 and D12 respective Board Meetings, the purchase of entire quantity of 1157 MTS by ratifying all the purchases by Unit Heads and approved for payment and it was given through cheques to the supplier Company. It can also be seen that subsequent to 149th Board Meeting several other Board of Directors Meetings were held and it was not noticed about the alleged loss caused to the Company in view of purchase of Malted Ragi Flour from M/s.Christy Friedgram Industry. Therefore, as Board of Directors are supreme and Managing Director and Board of Directors have approved the procurement and passed the bills, as rightly argued by the learned counsel for the defendant that now they are not justified in making him that DW-1 was responsible and initiated this suit for recovery of the said amount on purely hyper technical imaginary basis, not substantiated by scientific proof and basis in their justification that at the relevant point of time he has failed to take measures of in- house production of Ragi Malt Flour and acted recklessly and negligently.
31. DW-1 in his evidence has stated that he himself has proposed the introduction of Amylase Rich Energy Food to 58 O.S.No.8602/2007 the Department and this food is similar to Energy Food, but in addition contains Malted Ragi Flour to the extent of 5%, by adding Malted Ragi Flour the food could be easily converted into porridge form and has more acceptability. Therefore, that was with the formulation given by CFTRI and DW-1 has stated that all these works were done by him with a view to improve the business of the Plaintiff Company. In the Board Meeting it was also discussed about installation of establishing a plant for production of Malted Ragi Flour. DW-1 has stated in his evidence that to install a High Tech Malted Ragi Flour Plant capable of manufacturing entire requirement quantity for Company, the CFTRI, Mysore wanted to provide an "state of art plant, technology for manufacture of the same". Therefore, in detail he has deposed in his evidence that the rate accepted by the Government of Karnataka for the supply of AREF and Department issued orders on the Plaintiff Company for supply of Amylase Rich Energy Food at the rate of Rs.20/- per kg which was arrived at taking into consideration that the Malted Ragi Flour cost Rs.34/- per kg, only 5% if being added, the Wheat at the market rate at the relevant point of time was around Rs.10/- per kg. Therefore, 59 O.S.No.8602/2007 which worked out, the proportionate consumption of Wheat at the rate of AREF of Rs.18.63 per kg with 5% usage of Malted Ragi Flour costing Rs.34/- per kg. Therefore, the quality of white Malted Ragi Flour manufactured under HACCP Certification (Hazard Analysis and Critical Control Point) cost ranging between Rs.30/- to Rs.50/- per kg. Multinational Company like Glaxo was selling the product at Rs.37/- per kg at the relevant point of time. Therefore, in the grounds of appeal and also reply to show-cause notice filed by DW-1 in detail he has taken all these pleas, so that he was instrumental in introduction of Amylase Rich Energy Food for the Company, which helped the Company to take its business volume to double the volume i.e., from a turn over of Rs.30 crores to Rs.60 crores during 2001-02 and deducting all the losses by other Units, Company has recorded profitability of Rs.10 crores and to substantiate it he has produced Ex.D5 - Balance Sheet ending 31st March 2000. As the records were not furnished to him despite oral request and in writing he has stated that delay was caused in sending reply to the show-cause notice. Therefore, the idea of having in-house plant for manufacture of Malted Ragi Flour was not only to 60 O.S.No.8602/2007 manufacture the entire requirement required for manufacture of Amylase Rich Energy Food by 5 Units, but also to market Malted Ragi Flour in the open market. Therefore, manufacturing Company with CFTRI back up with HACCP Certification with ISO Certification and with reasonable rate quoted comparable with the market rate M/s.Christy Friedgram Industry tender was accepted by the Company as well as the Government. It has come in the evidence of PW-2 that they are the only participants in the tender and the said Company was introduced by CFTRI, Mysore. Absolutely none of the copies of Board Meetings were produced by the plaintiff. There were no quality complaints in respect of Amylase Rich Energy Food being supplied by the Company to Department of Women and Child Development to achieve the Government Scheme. Therefore, there is justification in the arguments canvassed by the learned counsel for the defendant that though PW-2 has stated only after Accountant General has raised certain observations they issued show- cause notice. Here, DW-1 has stated that as regards the prices and capacity building of Malted Ragi Flour Plant, the observations made by the Accountant General were answered 61 O.S.No.8602/2007 in full by the Plaintiff Company to them and objections have been dropped. That is to say that AG's office have vouched the purchase of Malted Ragi Flour and all connected transactions. Therefore, Plaintiff Company was not suffered loss by purchase of 1157 MTs from M/s.Christy Friedgram Industry at the approved tender rates. The observation made by the Enquiry Officer is based on the evidence of Sri.Ajjappa and Ex.P12 that Ragi Malt Flour could have been prepared at the cost of Rs.14/- per kg. But the technicalities and scientific base for preparation of Amylase Rich Energy Food of the standard which was supplied by M/s.Christy Friedgram Industry there was no basis for conclusion arrived based on Ex.P12. It is all depending on standard of manufacturing of nutrient food. Therefore, DW-1 has placed only trial order initially approved by the Board of Directors of 45 tonnes and rest of the orders were placed by the Unit Managers, that was ratified in Board Meetings - Ex.D11 and D12, i.e., admitted by PW-2 in the cross-examination and entire payment was made through cheques to M/s.Christy Friedgram Industry. Even though he was working as a C.D.M. and as per the work order responsibility was him to monitor it, but that doesn't 62 O.S.No.8602/2007 take away the responsibility of the Managing Director and Board of Directors decision as he was exercised only the delegated power, has got grain of truth.
32. Therefore, if adopting the traditional method of preparing Ragi Malt Flour at a lesser rate, same cannot be compared with the Malted Ragi Flour with Amylase Rich Energy Food what is introduced by the plaintiff, which was supplied by M/s.Christy Friedgram Industry, for that the Company cannot hold DW-1 alone is responsible and because of his acts, Company has suffered huge loss and was made to spend more amount costing the Government Exchequer. Therefore, the allegations made against him in the show- cause notice - Ex.P6 dated 19.09.2004, containing allegations stating that he has committed misconduct, such as not following the procedure for procurement of Malted Ragi Flour, suppressed information, caused losses to the Company, delayed the installation of in-house facility for manufacture of Malted Ragi Flour, delayed in furnishing the records etc., and was called upon to submit his reply within 5 days, as rightly put by learned counsel for the defendant that the allegations are very serious in nature in order to reply the same, several 63 O.S.No.8602/2007 files/documents were required for reference and he has sought time. Inspite of repeated requests made in writing and orally several times requested they did not furnish the records. Therefore, delay occurred in submitting the reply has got justification. But for our consideration in this suit, to fix the liability for recovery of alleged loss what is claimed by the Plaintiff Company against the defendant, they are expected to produce all the relevant records and clear evidence to substantiate their claim to the satisfaction of the court. But the evidence of PW-2 and his admissions in the cross-examination which are culled out by this court during the course of discussion goes to show that, he doesn't have full knowledge of the facts of the case and only on the instructions of the M.D. he has given his evidence. Apart from it, for the irregularities committed he had also faced the Departmental Enquiry as evidenced by Ex.D4. Therefore, his evidence cannot be regarded as substantial evidence to prove the claim made by the Plaintiff Company against the defendant.
33. The Managing Director or the Board of Directors, who are having full knowledge of the case and also with the 64 O.S.No.8602/2007 documentary evidence in their possession and control, have failed to enter into witness box to give evidence. Therefore, it has come in the evidence of cross-examination of PW-2 that he has made attempt to conceal the relevant documents. Because he admits that the account books, invoices, indents, purchase orders, records maintained by the different Unit Heads to show as to who had placed the orders, when was it placed, when was supplied, who and how payment to M/s.Christy Friedgram Industry was made etc. They failed to produce those documents. Even though admitted by PW-2 that Plaintiff Company has custody of all those documents. Therefore, non-production of those documents is certainly fatal to the case of the Plaintiff Company. They solely relied on Ex.P9 and Disciplinary Proceedings, order passed by the Appellate Authority. Therefore, the crucial aspects to determine that whether DW-1 has committed any lapses in his part in discharge of his duty and because of his negligence and carelessness the Plaintiff Company has suffered loss, it has to be independently proved before the court so as to fasten the liability to make good of the losses suffered by the Company, that is lacking in this case. Therefore, adverse 65 O.S.No.8602/2007 inference could have been drawn against the plaintiff under Section 114(g) of the Indian Evidence Act.
34. PW-2 in his cross-examination has stated that the defendant has sought copies of the document under R.T.I. As documents are nearly 11-13 years old and Company is in closing process and hence, cannot supply the documents mentioned in R.T.I. application. Reply to the application given by MD of Plaintiff Company is also produced at Ex.D3 to substantiate the same. Which also shows that the plaintiff is withholding the documents from scrutiny of this court, because Plaintiff Company has filed the suit for recovery of money and they ought to have produce all the relevant documents in their possession. Except the Enquiry Report and order passed by the Appellate Authority the Plaintiff Company have not produced any other documents worth to appreciate their claim against the defendant.
35. Therefore, learned counsel for the plaintiff has relied on a decision reported in AIR 1968 Supreme Court 1413, in the case of Gopal Krishnaji Ketkar v. Mohamed 66 O.S.No.8602/2007 Haji Lathif and others, wherein their lordships have held as under:-
"Evidence Act, 1872 - Section 114(g) - Adverse inference - Non-production of documents - The court should draw adverse inference against such party not withstanding the fact that the onus of proof does not lie on such party"
Further more, in the very same decision their lordships have held that:-
"If party is bound to prove certain facts, failed to lead evidence and non-production of relevant documents in support of their contention, the court should draw adverse inference"
36. The learned counsel for the defendant has relied on a decision reported in AIR 2006 Supreme Court 1438, in the case of Punjab State Civil Supplies Corp. Ltd., v. Sikander Singh, wherein in para 34 of the judgment, their lordships have observed that "Negligence in the performance of a duty under a contract of employment may give rise to a disciplinary proceeding but as at present advised, in a case of this nature, we are of the opinion that same would not give rise to a cause of action 67 O.S.No.8602/2007 for recovery of money for the goods lost as in the disciplinary proceeding itself recovery of money from the delinquent can be directed by way of punishment".
37. Further, learned counsel for the defendant has relied on a decision reported in 2015 AIR SCW 510, in the case of M/s.Swati Ferro Alloys Pvt Ltd. v. Orissa Industrial Infrastructure Development Corporation (IDCO) & others, wherein also the question which was considered that, whether the Company would be entitled to recover the so-called loss stated to have been caused to it on the ground that what was purchased by the Company was on the higher side than what was prevailing at the relevant point of time. Hon'ble Apex Court answered this issue in the negative. Therefore, whole allegation of the Plaintiff Company for recovery of alleged loss stated to have been sustained by the Government because of procurement of Malted Ragi Flour from M/s.Christy Friedgram Industry at higher rates and failed to take measures to install in-house facility for manufacture of Malted Ragi Flour by Company itself placing responsibility on DW-1 cannot be appreciated at all.
68 O.S.No.8602/2007
38. Even though after remand from the Hon'ble High Court in Writ Petition No.5362/2008 as the M.D. of the Plaintiff Company himself was sitting over his own judgment and naturally the said appeal came to be dismissed and against the said order now DW-1 has challenged before the Hon'ble High Court of Karnataka, same is pending. Therefore, the documents relied by the plaintiff to substantiate their claim against the defendant is solely based on Report of the Disciplinary Authority and order passed by the Appellate Authority. As rightly argued by the learned counsel for the defendant that the finding given by the Enquiry Officer in a Disciplinary Proceedings cannot be equated to a findings to have been recorded by a civil court so as to make it binding in the suit. In other words, it can be said that plaintiff is required to prove their case dehors the findings of the Enquiry Officer in the Disciplinary Proceedings. Though voluminous documents are in the possession, not chosen to produce. Therefore, the evidence given by PW-2 is not sufficient to appreciate the claim made by the Company against the defendant. On the contrary, DW-1 has not only denied his liability to pay the said amount, but also in his justification, he has produced 69 O.S.No.8602/2007 documents as well as in his evidence he has stated how systematically he has been targeted and without any basis and clarity of evidence, such a huge claim is made against him accusing that he himself is responsible for the loss suffered by the Plaintiff Company. In fact, the close analysis of the evidence recorded supra, in the first place plaintiff has failed to prove that DW-1 was responsible for the loss suffered by the Plaintiff Company. On the contrary, the evidence doesn't reveal that the Plaintiff Company had suffered any loss. On the contrary, claim made by the plaintiff is solely based on the so-called alleged evidence given by one Sri.Ajjappa and Sri.Jayaram before the Enquiry Officer. The ground raised by DW-1 was not at all appreciated in the Enquiry Report as well as the order passed in the appeal. Of course, as regards the actions taken against DW-1 under service conditions that subject is pending before the Hon'ble High Court. Therefore, by applying the principles laid down in the decision AIR 2006 Supreme Court 1438, as already conscious decision to punish the Delinquent Officer by imposing punishment is taken by the Plaintiff Company, filing suit for recovery of the dues doesn't arise at all.
70 O.S.No.8602/2007
39. Therefore, the evidence given by the Plaintiff Company to claim Rs.2,23,97,500/- is held as not proved. The defendant has proved that the Resolution of the Board to initiate suit for recovery against the defendant is not on the basis of sound factual basis, the evidence is insufficient and without any clarity to the satisfaction of the court. It is held that the defendant has proved that the Resolution of the Board to initiate action for recovery by filing the suit against him is not maintainable. Accordingly, I answer Issue Nos.1 and 2 in the negative and Issue No.4 in the affirmative.
40. ISSUE NO.3:-
The learned counsel for the defendant has vehemently argued that the period for which indents, purchase order from the Unit Heads of the Plaintiff Company for purchase of Malted Ragi Flour from M/s.Christy Friedgram Industry were pertains to the year 2000-01 and 2001-02. All those procurements were made initially on trial basis as per the decision of the Board of Directors of the Plaintiff Company, tender was called and subsequently supplies were made to such Units by M/s.Christy Friedgram Industry. Under Ex.D11 and D12 - 71 O.S.No.8602/2007 Minutes of 154th and 155th Board of Directors Meeting dated 30.03.2002 and 28.06.2002, through which all those procurements by the Units of the Plaintiff Company were ratified and payments were made through cheques to M/s.Christy Friedgram Industry. Therefore, the defendant has contended that suit filed by the plaintiff against him is barred by limitation.
41. The learned counsel for the plaintiff argued that in the written statement the defendant has contended that filing of the suit is premature inasmuch as the charges levelled against him and the Enquiry Report furnished by the Enquiry Officer are subject of the challenge before the Hon'ble High Court of Karnataka. Therefore, the defendant cannot raise plea as to the question of limitation. He has argued that Plaintiff Company is a Government of Karnataka Undertaking, the technicalities should not come in the way of legal process particularly when the issue involved public funds and public interest welfare. Therefore, he pointed out that there is no justification for the defendant to contend that suit is barred by limitation.
72 O.S.No.8602/2007
42. The learned counsel for the defendant relied on a decision reported in AIR 2004 Supreme Court 1596, in the case of Union of India and others v. West Coast Paper Mills Ltd. and another, wherein their lordships have held that:
"Period of limitation in as much as 'the right to sue first accrues' in terms of Article 113 of Limitation Act. The limitation would be counted from the date 'when the right to sue accrues'"
Therefore, as rightly argued by the learned counsel for the defendant, there are no specific provisions in the Limitation Act dealing with such situation, then the residuary Article 113 would apply, which stipulates period of 3 years for filing the suit when cause of action arose. Therefore, as rightly argued by the learned counsel for the defendant that cause of action if any arose as and when purchase orders were placed by the Units Heads, when supplies were made, payments made by M.D. of the Plaintiff Company to M/s.Christy Friedgram Industry as per Ex.D11 and D12 - Minutes of Board of Directors Meeting, that was in the month of March and June 2002. Therefore, the suit filed by the plaintiff against the 73 O.S.No.8602/2007 defendant for the alleged claim pertains to the year 2000-2002 in the year 2007 is barred by limitation.
43. The argument canvassed that in the written statement defendant has contended that suit is premature cannot be taken advantage by the plaintiff, because such plea was taken on the ground that as far as Disciplinary Proceedings is concerned, according to the defendant as he has filed the writ appeal that question is pending for adjudication. But the claim with regard to recovery for the alleged loss to the Plaintiff Company and the Government by the defendant is relates to the facts happened between 2000- 2002. Therefore, cause of action for the plaintiff arose at the relevant point of time and the suit filed for recovery of said amount against the defendant is certainly barred by limitation.
44. Therefore, in the first place the evidence given by PW-2 in the present suit is not sufficient to appreciate the claim made by the plaintiff against the defendant. The claim made is solely based on Enquiry Report - Ex.P9 and order passed by the Appellate Authority - Ex.P15 and its basis, pending under adjudication before the Hon'ble High Court of 74 O.S.No.8602/2007 Karnataka in Writ Appeal. Therefore, independently in this suit the plaintiff has failed to establish that the defendant has caused loss of Rs.2,23,97,500/- to the Plaintiff Company during the tenure of his service. Evidence is wholly insufficient. The evidence found basis for Disciplinary Proceedings cannot be equated to the evidence required to be adduced in a civil suit. Therefore, independently the Plaintiff Company has failed to establish their case. For the detailed reasons recorded hereinabove this court is of the view that, the plaintiff is not entitled to the relief claimed in the suit, same is liable to be dismissed. Accordingly, I answer Issue No.3 in the affirmative.
45. ISSUE NO.5:-
For the forgoing reasons, I proceed to pass the following:-
ORDER Suit filed by the plaintiff against the defendant is hereby dismissed.
Under the circumstances, there shall be no order as to costs.75 O.S.No.8602/2007
Draw a decree accordingly.
(Dictated to the Judgment Writer on computer, typed by her, the transcript thereof corrected and then pronounced by me, in open Court, this the 28th day of February 2017) (BAILUR SHANKAR RAMA) ND 42 ADDL. CITY CIVIL & SESSIONS JUDGE, BENGALURU.
ANNEXURE I. List of witnesses examined on behalf of:
(a) Plaintiff's side:
PW.1 - Sri.Abdul Rasheed
PW.2 - Sri.M.K.Jayaram
(b) Defendant's side:
DW.1 - Sri.R.Ramesh Rao
II. List of documents exhibited on behalf of:
(a) Plaintiff's side:
Ex.P1 Authorization Letter dated 02.12.2009
Ex.P2 Tender documents for the supply of
Energy Food Raw-materials
Ex.P3 Appointment Letter dated 11.07.1983
Ex.P4 Office Order dated 24.05.1999
Ex.P5 Order dated 27.05.1999
Ex.P6 Show-cause Notice dated 19.09.2004/
05.10.2004
Ex.P7 Office Order dated 06/07.10.2006
Ex.P8 Article of Charges dated 05.05.2005
Ex.P9 Enquiry Report dated 27.02.2006
76 O.S.No.8602/2007
Ex.P10 Extracts of Minutes of 149th Meeting of
Board of Directors
Ex.P11 Tender for the supply of Ragi Malt Flour
dated 26/28.03.2001
Ex.P12 Economics of Product - Ragi Malt Flour
per kg
Ex.P13 Authorization Letter dated 28.10.2013
Ex.P14 Appeal to the Board dated 14.10.2006
Ex.P15 Order dated 02.05.2012
(b) Defendant's side:
Ex.D1 Minutes of the Internal Purchase
Committee held on 12.09.2000
Ex.D2 Extracts of Minutes of the 149th Meeting
of the Board of Directors
Ex.D3 Reply given to RTI Application
Ex.D4 Minutes of the Board of Directors'
Meeting dated 05.03.2012
Ex.D5 Balance Sheet as at 31st March 2000
Ex.D6 Inspection Report
Ex.D7 Plastic Cover of Ragi Malt Flour
Ex.D8 Brochure
Ex.D9 Reply given to RTI Application
Ex.D10 Minutes of the 149th Board Meeting of
the Company held on 21.03.2001
Ex.D11 Minutes of the 154th Board Meeting of
the Company held on 30.03.2002
Ex.D12 Minutes of the 155th Meeting of the
Board of Directors held on 28.06.2002
Ex.D13 Reply to Show Cause Notice dated
15.07.2006
42nd ADDL. CITY CIVIL & SESSIONS
JUDGE, BANGALORE.