Allahabad High Court
Uday Pratap Singh @ Harikesh vs State Of U P And 4 Others on 30 September, 2019
Equivalent citations: AIRONLINE 2019 ALL 2392
Author: Yashwant Varma
Bench: Yashwant Varma
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Judgment Reserved On 19 September 2019 Judgment Delivered On 30 September 2019 Court No. - 6 Case :- WRIT - C No. - 24902 of 2019 Petitioner :- Uday Pratap Singh @ Harikesh Respondent :- State Of U P And 4 Others Counsel for Petitioner :- Arvind Kumar Singh Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 22075 of 2003 Petitioner :- Satish Respondent :- State Of U.P. Thru Secy. Deptt. Of Zila Panchayat Raj And Anr Counsel for Petitioner :- Bhoopendra Nath Singh Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 12607 of 2019 Petitioner :- Triveni Ram Respondent :- State Of U.P. And 6 Others Counsel for Petitioner :- Abhishek Kumar,Ajai Kumar Singh Kushwaha Counsel for Respondent :- C.S.C.,Nagendra Pratap Singh With Case :- WRIT - C No. - 17665 of 2019 Petitioner :- Arnima Tyagi Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Dhirendra Kumar Singh Rathor Counsel for Respondent :- C.S.C.,Avanish Mishra With Case :- WRIT - C No. - 21086 of 2019 Petitioner :- Sheela Devi @ Sheela Respondent :- State Of U.P. And 7 Others Counsel for Petitioner :- Vijay Prakash Singh Kushwaha Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 21097 of 2019 Petitioner :- Shyam Lal @ Shyam Lal Singh Respondent :- State Of U.P. And 7 Others Counsel for Petitioner :- Vijay Prakash Singh Kushwaha Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 21265 of 2019 Petitioner :- Dharmu Singh Respondent :- State Of U.P. And 7 Others Counsel for Petitioner :- Vijay Prakash Singh Kushwaha Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 25734 of 2019 Petitioner :- Chhitanee Prasad Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Pratik J. Nagar Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 25964 of 2019 Petitioner :- Smt. Sangeeta Soni Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Ravindra Prakash Srivastava Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 26082 of 2019 Petitioner :- Praveen Kumar Singh Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Vineet Kumar Singh,H.N. Singh, Senior Advocate Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 26493 of 2019 Petitioner :- Uday Bhan Respondent :- State Of U.P. And 5 Others Counsel for Petitioner :- Dilip Kumar Dubey,Neeraj Kumar Pandey Counsel for Respondent :- C.S.C.,Nayab Ahmad Khan With Case :- WRIT - C No. - 26873 of 2019 Petitioner :- Smt. Sarita Devi Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Rajesh Maurya Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 27258 of 2019 Petitioner :- Jameel Ahmad Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Santosh Kumar Srivastava,Abhishek Kumar Yadav,Alka Srivastava,Guru Prasad Mishra Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 28430 of 2019 Petitioner :- Mana Devi Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Madan Mohan,Prem Sagar Verma Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 29989 of 2019 Petitioner :- Ravindra Kumar Sagar Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Dhirendra Kumar Singh Rathor Counsel for Respondent :- C.S.C. With Case :- WRIT - C No. - 30016 of 2019 Petitioner :- Ankush Goswami Respondent :- State Of U.P. And 3 Others Counsel for Petitioner :- Dhirendra Kumar Singh Rathor Counsel for Respondent :- C.S.C. Hon'ble Yashwant Varma, J.
This batch of writ petitions raises the question of the jurisdiction of the District Magistrate to pass orders of surcharge as envisaged under Section 27 of the Uttar Pradesh Panchayat Raj Act 1947 ["the Act"]. The principal contention which has been addressed is to the lack of jurisdiction inhering in the District Magistrate to exercise powers comprised in the aforementioned provision. Additionally it has been urged that the impugned orders imposing surcharge upon the petitioners have been passed in clear violation of Chapter XIII of the Uttar Pradesh Panchayat Raj Rules 1947 [hereinafter for the sake of brevity to be referred to as "the Rules"] and more particularly Rules 256-259 as comprised in that Chapter.
Bearing in mind the fact that the issue was being raised in repeated petitions, the Court had called upon the State respondents to file affidavits. The matter then again arose in the leading writ petition in which the learned Chief Standing Counsel was directed to obtain instructions and address submissions. On 20 August 2019, this Court passed a detailed order indicating and identifying the issues which arose. Pursuant to the liberty so granted, the State has filed an affidavit dealing with the legal issues raised and the learned Chief Standing Counsel submitted that the said affidavit be adopted in all writ petitions insofar as the legal questions are concerned. The State has also chosen to file independent affidavits in some of the writ petitions. The affidavit dealing with the legal issues was circulated amongst the learned counsels for parties with liberty to respond. Pursuant to that order, responses have been filed by and on behalf of the petitioners. Thereafter the matter was heard and judgment reserved. Before proceeding to deal with the legal issues that have been addressed, the Court deems it apposite to briefly notice the salient facts of each writ petition.
Writ-C No. 24902 of 2019The petition impugns an order dated 06 March 2019 passed by the Chief Development Officer and consequential orders imposing surcharge upon the petitioner. The order records that it is being issued with the approval of the District Magistrate. These orders came to be passed even prior to the issuance of a show cause notice dated 30 May 2019 purporting to initiate proceedings under Section 95(1)(g) of the Act.
Writ-C No. 25964 of 2019The petition impugns orders passed pursuant to directions issued by the District Magistrate holding the petitioner liable to pay surcharge.
Writ-C No. 26493 of 2019The writ petition assails an order imposing surcharge during the pendency of an enquiry initiated under Section 95(1)(g) of the Act read with the Uttar Pradesh Panchayat Raj (Removal of Pradhans, Up Pradhans and Members) Enquiry Rules 1997 ["the 1997 Rules"]. The order impugned has been passed pending a final enquiry and upon the financial and administrative powers of the Pradhan being ceased.
Writ-C No. 29989 of 2019This petition impugns the order of the District Magistrate dated 12 September 2018 seeking to recover surcharge under Section 27 of the Act pending conclusion of enquiry proceedings under the 1997 Rules.
Writ-C No. 30016 of 2019This petition similarly challenges an order passed by the District Magistrate in purported exercise of powers conferred by Section 27 of the Act pending conclusion of enquiry proceedings initiated under the 1997 Rules.
Writ-C No. 17665 of 2019The petition challenges the order of the District Magistrate passed under Section 27 of the Act. Additionally challenge is laid to the order passed by the Appellate Authority affirming the same.
Writ-C No. 12607 of 2019This petition has been preferred by an erstwhile Pradhan assailing the order of the District Magistrate imposing surcharge in purported exercise of powers comprised in Section 27 of the Act.
Writ-C No. 22075 of 2003This petition too is by an erstwhile Pradhan challenging an order of surcharge passed by the District Magistrate.
Writ-C No. 21265 of 2019The petition here also is a former Pradhan who assails an order passed by the District Magistrate imposing surcharge.
Writ-C No. 21097 of 2019This petition is similar to the above and represents a challenge by a Pradhan whose term had come to an end to an order imposing surcharge.
Writ-C No. 21086 of 2019This petition also is by a former Pradhan challenging an order imposing surcharge.
Writ-C No. 28430 of 2019This petition challenges an order issued by the District Magistrate seeking recovery of surcharge during pendency of the enquiry contemplated under the 1997 Rules.
Writ-C No. 27258 of 2019This petition challenges an order of the District Magistrate directing recovery of surcharge. The order itself has been passed in the backdrop of a show cause notice issued calling upon the petitioner to explain why further action under Section 95(1)(g) of the Act be not commenced and a three member interim committee constituted.
Writ-C No. 26873 of 2019The petition assails the order passed by the District Panchayat Raj Officer requiring the petitioner to deposit the amount of surcharge as computed and as directed by the District Magistrate.
Writ-C No. 26082 and 25734 of 2019 These two petitions assail orders passed by the District Magistrate upon conclusion of enquiry proceedings initially commenced under Section 95(1)(g) of the Act. However it becomes pertinent to note that the procedure as prescribed under Rule 6 of the 1997 Rules was neither followed nor a final enquiry as contemplated thereunder undertaken. The orders of surcharge have come to be passed merely on conclusion of an enquiry by the District Magistrate with respect to loss caused.
From the brief recordal of the individual facts of each petition, the challenge laid to orders of surcharge passed by the District Magistrate can be conveniently classified as falling broadly in three categories: -
(A) Orders of surcharge simpliciter made by invocation of Section 27 of the Act.
(B) Orders of surcharge passed pending conclusion of a final enquiry under the 1997 Rules and where financial and administrative powers of the concerned Pradhan may or may not have been ceased.
(C) Orders of surcharge passed upon conclusion of a final enquiry conducted in accordance with the 1997 Rules.
The power to impose surcharge stands comprised in Section 27 of the Act. That provisions reads thus: -
"27. Surcharge- (1) Every Pradhan or Up-Pradhan of a Gram Panchayat every member of a 3[Gram Panchayat] or of a Joint Committee or any other committee constituted under this Act and every Sarpanch, Sahayak Sarpanch or Panch of a Nyaya Panchayat shall be liable to surcharge for the loss, waste or misapplication of money or property 3[belonging to the Gram Panchayat or Nyaya Panchayat] as the case may be, if such loss, waste or misapplication is direct consequence of his neglect or misconduct while he was such Pradhan, Up-Pradhan, member, Sarpanch, Sahyak Sarpanch or Panch;
Provided that such liability shall cease to exist after the expiration of the years from the occurrence of such loss, waste or misapplication, or five years from the date on which the person liable ceases to hold his office, whichever is later.
(2) The prescribed authority shall fix the amount of the surcharge according to the procedure that may be prescribed and shall certify the amount to the Collector who shall, on being satisfied that the amount is due, realize it as if were an arrear of land revenue.
(3) Any person aggrieved by the order of the prescribed authority fixing the amount of surcharge may, within thirty days of such order, appeal against the order to the State Government or such other appellate authority as may be prescribed.
(4) Where no proceeding for fixation and realization of surcharge as specified in sub-section (2) is taken the State Government may institute a suit for compensation for such loss, waste or misapplication, against the person liable for the same."
Subsection (2) thereof provides that the Prescribed Authority shall fix the amount of surcharge according to the procedure that may be prescribed. The expression "Prescribed Authority" is defined in Section 2(q) of the Act as under: -
"2[q) ''Prescribed authority' means -
i) for the purposes of the provisions of this Act mentioned in Schedule III of the [Uttar Pradesh Kshettra Panchayat and Zila Panchayat Adhiniyam, 1961], the Zila Parishad or the Kshettra Samiti, as may be specified in column 3 of that Schedule; and
ii) in respect of any other provisions of this Act, the authority notified as such by the State Government whether generally or for any particular purpose;"
By virtue of a notification dated 31 May 1969, Chapter XIII came to be inserted in the Rules. Rules 256-259 set out the procedure for imposition of surcharge. Those rules are extracted herein below: -
"Rule 256(1) In any case where the Chief Audit Officer, Co-operative Societies and Panchayats, considers that there has been a loss, waste or misuse of any money or other property belonging to a Gram Sabha as a direct consequence of the negligence or misconduct of a Pradhan, Up-Pradhan, Memher, Officer or servant of the Gram Panchayat, he may call upon the Pradhan, Up-Prahdan, Member, Officer or servant, as the case may be, to explain in writing why such Pradhan, Up-Pradhan, Member, Officer, or servant should not be required to pay the amount misused or the amount which represents the loss or waste caused to the Gram Sabha or to its property and such explanation shall be furnished within a period not exceeding two months from the date such requisition is communicated to the person concerned:
Provided that an explanation from the Pradhan, Up-Pradhan or member of the Gram Panchayat shall be called for through the District Magistrate and from the officer or servant through the District Panchayat Raj Officer:
Provided also that no explanation shall be called for from any member who is recorded in the minutes of the Gram Panchayats or any of its committee as having been absent from the meeting at which the expenditure objected to was sanctioned or who voted against such expenditure.
Note- Any information required by the Chief Audit Officer, Cooperative Societies and Panchayats or any officer subordinate to him not below the rank of Auditor, Panchayats for preliminary enquiry, shall be furnished and all connected papers and records shall be shown to him by the Pradhan immediately on demand.
(2) Without prejudice to the generality of the provisions contained in sub-rule (1) the Chief Audit Officer, Cooperative Societies and Panchayts, may call for the explanation in the following cases:
(a) where expenditure has been incurred in contravention of the provisions of the Act or of the rules or regulations made thereunder;
(b) where loss has been caused to the Gram Sabha by acceptance of a higher tender without sufficient reasons in writing.
(b) where loss has been caused to the Gram Sabha by acceptance of a higher tender without sufficient reasons in writing.
(c) where any sum due to the Gram Sabha has been remitted in contravention of the provisions of the Act or the rules or regulations made thereunder;
(d) where the loss has been caused to the Gram Sabha by neglect in realizing its dues; or
(e) where loss has been caused to the funds or other property of the Gram Sabha on account of want of reasonable care for the custody of such money or property.
(3) On the written request of the Pradhan, Up-Pradhan, Member, Officer or servant from whom an explanation has been called for, the Gram Panchayat shall give him necessary facilities for inspection of the records connected with the requisition for surcharge. The Chief Audit Officer may, on application from the person surcharged, allow a reasonable extension of time for submission of his explanation if he is satisfied that the person charged has been unable, for reasons beyond his control, to consult the record for the purpose of furnishing his explanation.
257. (1). After the expiry of the period prescribed in sub-rule (1) or (3) of Rule 256, as the case may be, and after examining the explanation, if any, received within time, the Chief Audit Officer shall submit the papers along with his recommendations to the District Magistrate of the district in which the Gram Sabha is situated in case of Pradhan, Up-Pradhan and Members and to the District Panchayat Raj Officer of the district in which the Gram Sabha is situated in case of Officers and servants.
(2) The District Magistrate or the District Panchayat Raj Officer, as the case may be, after examining and after considering the explanation, if any, shall require the Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat to pay the whole or part of the sum to which such Pradhan, Up-Pradhan, Member, Officer or servant is found liable:
Provided, firstly, that no Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat would be required to make good the loss, if from the explanation of the Pradhan, Up-Pradhan, Member, Officer or servant concerned or otherwise the District Magistrate or the District Panchayat Raj Officer, as the case may be, is satisfied that the loss was caused by an act of the Pradhan, Up-Pradhan, Member, Officer or servant in the bona fide discharge of his duties:
Provided secondly, that in the case of loss, waste or misuse occurring as a result of a resolution of the Gram Panchayat or any of its committees the amount of loss to be recovered shall be divided equally among all the members including Pradhan and Up-Pradhan, who are reported in the minutes of the Gram Panchayat or any of its committee as having voted for or who remained neutral in respect of such resolution:
Provided thirdly, that no Pradhan, Up-Pradhan, Member, Officer or servant shall be liable for any loss, waste or misuse after the expiry of four years from the occurrence of such loss, waste or misuse or after the expiry of three years from the date of his ceasing to be Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat, whichever is later.
258.(1). Any Pradhan, Up-Pradhan or Member of a Gram Panchayat aggrieved with an order of surcharge passed by the District Magistrate under Rule 256 may appeal to the Commissioner of the Division within thirty days from the date on which such order is communicated to him and the Commissioner of the Division may confirm, rescind or vary the order passed by the District Magistrate or may pass such orders as he thinks fit.
(2) Any Officer or servant of a Gram Panchayat aggrieved with an order of surcharge passed by the District Panchayat Raj Officer may appeal to the District Magistrate within thirty days from the date on which such order is communicated to him and the District Magistrate may confirm, rescind or vary the order passed by the District Panchayat Raj Officer or may pass such orders as he thinks fit.
259(1) A Pradhan, Up-Pradhan, Member, Officer or servant of a Gram Panchayat who has been surcharged, shall pay the amount of surcharge within three months from the date of communication to him of the order of surcharge passed by the District Magistrate or the District Panchayat Raj Officer, as the case may be:
Provided that when an appeal has been preferred under Rule 258 against the order of surcharge passed by the District Magistrate or the District Panchayat Raj Officer, all proceedings for recovery of the surcharge from the persons who have preferred the appeal shall be stayed until the appeal has been finally decided.
(2) If the amount of surcharge is not paid within the period specified in sub-rule (1) it shall be recovered as arrears of land revenue."
The power to impose surcharge under the Act and the Rules has been framed in order to recover the loss, waste or misapplication of money or property belonging to a Gram Panchayat, if that loss, waste or misapplication be as a direct consequence of the neglect or misconduct of a Pradhan, Member, Sarpanch, Sahayak Sarpanch or Panch. As is evident from a reading of the proviso appended to Section 27(1) the liability to make good such loss or waste ceases to exist upon expiration of a period of ten years from the occurrence of such loss or five years from the date when the person liable ceases to hold office whichever be later. Section 27(2) provides that the Prescribed Authority shall fix the amount of surcharge according to the procedure that may be prescribed and thereafter certify the amount to the Collector who on being satisfied that the said amount is due, realise the same as if it were arrears of land revenue. Section 27(3) creates an appellate forum providing an opportunity to an aggrieved person to assail the order of the Prescribed Authority fixing the amount of surcharge by preferring an appeal against that order either to the State Government or such other Appellate Authority as may be prescribed.
It becomes relevant to note here that Section 2(q)(ii) defines a Prescribed Authority to be such as may be notified by the State Government whether generally or for any particular purpose. This Court is really not concerned with the provisions made in Section 2(q)(i) since Schedule-III of the Uttar Pradesh Kshetra Panchayat And Zila Panchayat Adhiniyam 1961 admittedly does not deal with the levy of surcharge. It is apposite to note at the outset itself that despite repeated opportunities, learned Chief Standing Counsel was unable to place for the consideration of the Court any notification issued by the State Government designating or appointing a Prescribed Authority in accordance with Section 2(q)(ii) read with Section 27(2). The Court's attention was drawn only to a notification of 30 July 1966 in terms of which the Commissioner of the Division was designated as the "appellate prescribed authority" with reference to Section 27(2). The relevant extracts of that notification are reproduced herein below: -
"[210] English translation of Panchayat Raj Vibhag Notification No.4191-K/XXXIII-6-64, dated 27th July, 1996, publishing in U.P. Gazette, Pt. I, dated July 30, 1966, p. 3961.
In exercise of the powers under clause (q) of Section 2 of the U.P. Panchayat Raj Act, 1947 (U.P. Act No.XXVI of 1947), the Governor of Uttar Pradesh is pleased to notify the authorities indicated in column 2 of the Schedule below as prescribed authorities for purposes of the sections and rules mentioned in column 1 thereof in respect of the whole of Uttar Pradesh except the districts of Uttar Kashi, Pithoragarh and Chamoli :
SCHEDULE
-------------------------------------------------------------------------------Section or rule Prescribed Authority
------------------------------------------------------------------------------- 1 2 ......
27(2) ·· Commissioner of the Division as the appellate prescribed authority.
.......
-------------------------------------------------------------------"
It is pertinent to note that Section 27(2) does not deal with the provision of appeal which is exclusively governed by subsection (3) thereof. Although the expression "Prescribed Authority" is employed in Section 27(2) the notification in question refers to the Commissioner of the Division as the "appellate prescribed authority". Surely and in light of the structure of Section 27 the Appellate and Prescribed Authority cannot possibly be the same person. That provision does not envisage a dual role of Prescribed and Appellate Authority being performed or discharged by one individual. However this anomaly could not be explained by the learned Chief Standing Counsel. In any case, it becomes relevant to underline that no notification was either relied upon or placed before the Court to establish that the District Magistrate had been designated as the Prescribed Authority for the purposes of Section 27(2).
The Court then proceeds to the provisions engrafted in Chapter XIII of the Rules. The rule making power is comprised in Section 110 of the Act. Section 110 (2)(xlvi) confers powers upon the State Government to frame rules in respect of matters that are to and may be prescribed. Apart from this provision no other part of Section 110(2) specifically deals with the subject of surcharge or the provisions made in Section 27 of the Act. This provision, therefore, appears to be the only source of power entitled to be read in support of the provisions made in Chapter XIII of the Rules. This additionally since Section 27(2) provides that the Prescribed Authority shall fix the amount of surcharge "according to the procedure that may be prescribed".
Rule 256 envisages an enquiry being initiated and undertaken by the Chief Audit Officer, Cooperative Societies and Panchayat in case he consider that loss, waste or misuse of monies or property has occurred as a direct consequence of the negligence of a Pradhan or officer or servant of the Gram Panchayat. Upon the Chief Audit Officer being of that opinion, he is empowered to elicit an explanation from the Pradhan, officer or servant of the Gram Panchayat to explain why he not be required to pay the amount misused or the amount which represents the loss or waste caused to the Gram Panchayat or its property. Rule 256 then constructs a dichotomy between Pradhan, Pradhans, Up-Pradhans and members of the Gram Panchayat on the one hand and officers and servants of that local body on the other. The explanation, which the Chief Audit Officer requires, is to be called through the District Magistrate in the case of Pradhans, Up-Pradhans and members and through the District Panchayat Raj Officer in the case of officers and servants. Rule 256(2) enumerates the contingencies in which the Chief Audit Officer may call for an explanation. Rule 256(3) then confers the right upon the Pradhan, Up-Pradhan, member officer or servant from whom an explanation has been called to move the concerned Gram Panchayat for inspection of records connected with the requisition for surcharge. In terms of the provisions made in sub-rules (1) and (3) of Rule 256, the Chief Audit Officer is obliged to grant time not exceeding two months for the furnishing of an explanation in respect of the requisition for surcharge. The Chief Audit Officer in terms of Rule 256(3) is also empowered to grant a reasonable extension of time for submission of an explanation if circumstances so warrant.
Upon expiry of the period prescribed in sub-rules (2) and (3) of Rule 256 and after examining the explanation received by him, the Chief Audit Officer is statutorily required to submit all papers along with his recommendations to the District Magistrate concerned in case of Pradhans, Up-Pradhans and members and to the District Panchayat Raj Officer in the case of officers and servants. This provision is made and put in place in terms of Rule 257. The District Magistrate or the District Panchayat Raj Officer after examining and considering the explanation, if any, that may be submitted call upon the Pradhan, Up-Pradhan, member, officer or servant to pay the whole or part of the sum of surcharge for which he has been found liable in accordance with Rule 257(2). The first proviso to Rule 257(2) then states that the District Magistrate or the District Panchayat Raj Officer may not order the recovery of surcharge if they be satisfied that the loss was caused by an act of the Pradhan, Up-Pradhan, member, officer or servant in the bona fide discharge of their duties. In terms of the second proviso to Rule 257, the loss, waste or misuse which occurs as a result of a resolution of the Gram Panchayat or any of its committees shall be recovered equally from amongst all members of that local body who are reported to have participated in the passing of such resolution.
Significantly, the fourth proviso then prescribes that the Pradhan, Up-Pradhan, member, officer or servant shall not be liable to surcharge after the expiry of four years from the occurrence of such loss, waste or misuse or after the expiry of three years from the date when the Pradhan, Up-Pradhan, member, officer or servant ceases to be the holder of the said position in the Gram Panchayat whichever be later. The fourth proviso to Rule 257(2) thus constructs and prescribes a period of limitation in stark contrast and conflict with the first proviso to Section 27(1) which prescribes the limitation to be 10 or 5 years whichever be later in identical contingencies. However the Court only notices this aspect and does not deem it necessary to dwell on this issue further since the validity of this part of Rule 257 is not subject matter of the questions raised in this batch.
In terms of Rule 258, any person aggrieved by an order of surcharge passed by the District Magistrate under Rule 256 may appeal to the Commissioner of the Division if the order of surcharge be one made against the Pradhan, Up-Pradhan or the member of the Gram Panchayat. In case the order of surcharge is one that is made against an officer or servant of the Gram Panchayat, Rule 258(2) entitles them to assail the same by way of an appeal to the District Magistrate. Rule 259 mandates that the amount of surcharge to which the Pradhan, Up-Pradhan, member, officer or servant has been held liable, shall be paid within three months from the date of communication of the order requisitioning surcharge. The proviso to Rule 259(1) places this liability in abeyance during the pendency of any appeal that may be preferred under Rule 258. Rule 259(2) then prescribes that if the amount of surcharge is not paid within the time specified, it shall be recovered as arrears of the land revenue.
Addressing submissions on behalf of the petitioners, it has been contended that the District Magistrate has not been empowered under Section 27 to make an order of surcharge. The petitioners would contend that in the absence of any notification designating the District Magistrate as the Prescribed Authority for the purposes of Section 27(2), the orders impugned are rendered unsustainable. Referring to the provisions made in the Rules, it was contended that none of the impugned orders were preceded by any enquiry initiated or undertaken by the Chief Audit Officer in accordance with Rule 256. In the absence of the provisions of Rule 256 having been adhered to, it was contended that the District Magistrate could not independently and in the absence of a recommendation in that respect of the Chief Audit Officer existing proceed to pass orders for recovery of surcharge. The petitioners then contend that the order of surcharge cannot be passed during the pendency of an enquiry under Section 95(1)(g). It was submitted that the financial and administrative powers of a Pradhan come to be ceased by virtue of powers enshrined in the proviso to Section 95(1)(g) where the competent authority is prima facie of the opinion that the Pradhan has committed financial or other irregularity. It was submitted that since this power comes to be invoked at a stage where the competent authority has only reached a prima facie conclusion, the impugned orders seeking to recover surcharge are clearly unsustainable. Reliance was placed upon the provisions made in the 1997 Rules to submit that even after the competent authority arrives at a conclusion that a formal enquiry is warranted in light of the material gathered in the course of the preliminary enquiry, those rules lay down a detailed procedure for an in-depth enquiry being initiated and undertaken thereafter. It was pointed out that in that enquiry charges are framed and the response of the Pradhan elicited and only after regular proceedings which include the examination of witnesses are completed that an order of removal may ultimately come to be passed. It was submitted that the imposition of surcharge at the stage of conclusion of a preliminary enquiry is wholly illegal and in any case violative of the law as laid down by the Division Bench of the Court in Indu Devi Vs. District Magistrate, Chitrakoot and Others1.
In Indu Devi the Division Bench after examining the scheme of the Act held thus:
9. A perusal of the Scheme under Section 27 of the Act indicates that a Pradhan is liable to surcharge for the loss, waste or misapplication of money or property belonging to the Gram Panchayat, if such is direct consequence of his neglect or misconduct while he was such Pradhan. The said finding of misconduct as referred to in Section 27 can be based from the inquiry under Section 95(1)(g) when the misconduct is proved against the Pradhan. On the basis of finding of misconduct under Section 95(1)(g) of the Act, it is open for the competent authority to issue surcharge notice and pass appropriate orders. The competent authority may also independently direct for surcharge under Section 27 of the Act and pass appropriate orders after being satisfied with the misconduct.
...
11. The prima facie finding of the competent authority under Section 95(1)(g), proviso is not same as finding of misconduct as contemplated under Section 27 of the Act. We are satisfied that on the basis of mere prima facie finding of guilt, the order of surcharge could not have been passed under Section 27 of the Act.
...
13. In view of the aforesaid, we are satisfied that without conclusion of final inquiry under Section 95(1)(g) of the Act with regard to finding of misconduct on the part of the Pradhan, the order of surcharge could not have been passed." (emphasis supplied) Refuting the afore noted submissions, the learned Chief Standing Counsel submitted that Section 27(2) empowers the imposition of a surcharge in accordance with a procedure that may be prescribed. That procedure, according to the learned Chief Standing Counsel, stands encapsulated in Chapter XIII of the Rules and in view of the provisions made therein the District Magistrate was clearly empowered to pass the impugned orders. According to the learned Chief Standing Counsel since a detailed procedure stands prescribed in Chapter XIII for the imposition of surcharge, the District Magistrate must be recognized as statutorily empowered to requisition the payment of surcharge even in the absence of a notification issued under Section 2(q)(ii) read with Section 27(2). The respondents principally place reliance upon the judgment rendered by a Division Bench of the Court in Smt. Bhanati Devi Vs. State of U.P. and Others2 to submit that the same is an authority which clearly recognises the power of the District Magistrate to impose surcharge independent of the provisions made in Section 27 of the Act and in exercise of powers comprised in Section 95(1)(g).
In Bhanati Devi, the Division Bench held as under:
"12. In the present case much issue is being raised on the fact that in proceedings under Section 95(1)(g) of 1947 Act read with 1997 Rules, the amount in question could not have been directed to be recovered as it has been done in the present case. Learned counsel for the petitioner appellant, in support of his argument, has relied on a judgment of this Court in the case of Indu Devi Vs. District Magistrate, Chitrakoot and others, 2006 (3) AWC 2787: (2006 (2) ALJ 747).
13. The said judgment in question clearly gives the answer to the question posed by the petitioner as in the facts of the said case as therein final enquiry under Section 95 (1) (g) of 1947 Act has not at all been concluded and even then recovery proceedings have been initiated at the stage when proceedings under Section 95(1)(g) of 1947 Act has not been concluded and recovery has been directed, in such a situation, the Division Bench has taken the view that on the basis of mere prima facie finding of guilt the order or surcharge could not have been passed under Section 27 of the 1947 Act. This judgment in effect subscribed the view that once finding of Competent Authority has been returned under Section 95(1)(g) of 1947 Act, then based on finding of misconduct as contemplated under Section 27 of the 1947 Act orders of surcharge can be passed. Paragraph 9 of the said judgment provides for as follows:
"A perusal of the Scheme under Section 27 of the Act indicates that a Pradhan is liable to surcharge for the loss, waste or mis-application of money or property belonging to the Gram Panchayat, if such is direct consequence of his neglect or misconduct while he was such Pradhan. The said finding of misconduct as referred to in Section 27 can be based from the inquiry under 95(1)(g) when the misconduct is proved against the Pradhan. On the basis of finding of misconduct under 95(1)(g) of the Act, it is open for the competent authority to issue surcharge notice and pass appropriate orders. The competent authority may also independently direct for surcharge under Section 27 of the Act and pass appropriate orders after being satisfied with the misconduct."
14.The extract of the judgment, quoted above, would go to show that under the scheme of the Act, a Pradhan is liable to surcharge for the loss, waste or mis-application of money or property belonging to Gram Panchayat, if such is direct consequence of his neglect or misconduct while he was Pradhan. The finding of misconduct or negligence that has also resulted in loss, waste or mis-application of money or property can be arrived at in proceedings under Section 95(1)(g) of the 1947 Act read with 1997 Rules and when misconduct/negligence is proved in the said enquiry, it is also open to the authority to issue surcharge notice and pass appropriate order. Thus where misconduct/negligence is substantiated in the enquiry, then simultaneously as District Magistrate is competent to pass order of removal and can also pass order of surcharge, the proceedings on this score cannot be faulted. Once there is duality of authority conferred in District Magistrate and the requirement under the Rules is that direction for surcharge should be preceded by show- cause notice, then the composite notice issued under Section 95 (1)(g) of the 1947 Act read with 1997 Rules and Section 27 (2) for surcharge cannot be faulted. The competent authority is also free to independently direct for surcharge under Section 27 of the Act and pass appropriate order after being satisfied with the misconduct/negligence.
...
17. In the present case accepted position is that proceedings under Section 95(1)(g) of the 1947 Act read with 1997 Rules has been undertaken and at the point of time when notice has been given to the petitioner appellant, she has been categorically informed that she has caused loss and for causing loss she can be removed and amount in question can also be recovered from her. Once proceedings are undertaken under Section 95(1)(g) of the 1947 Act for removal of Pradhan and therein misconduct/negligence is substantiated, that has the impact of causing loss, waste or mis-application of money or property belonging to Gram Panchayat, then based on the same, apart from passing order of removal, the Competent Authority, as is provided for under Section 27 read with Rules 256, 257 and 258 of the U.P. Panchayat Raj Rules, 1947, recovery can also be directed and in the present case what we find from the record is that the Competent Authority under Section 95(1)(g) of the 1947 Act read with 1997 Rules alongwith Section 27 read with Rules 256, 257 and 258 of the U.P. Panchayat Raj Rules, 1947, the District Magistrate has given notice to the petitioner appellant for recovery of the amount in question on account of misconduct and, in view of this, the proceedings, that have been so undertaken, cannot be said to be vitiated on said count whatsoever. The view of learned Single Judge in the case of Sher Ali (supra) is in the teeth of the dictum in the case of Indu Devi (2006 (2) ALJ 747) (supra), as such, the ratio of the case laid down there is not being approved of by us and judicial discipline binds us to follow the ratio of the case as laid down in the case of Indu Devi (supra) by a Co-ordinate Bench of this Court.
18. In view of this, once the final decision was to be taken for removal of Pradhan and the said misconduct also clearly reflected financial loss, then recovery in question can be made, in this backdrop, there is no infirmity in the exercise, that has been so undertaken by the District Magistrate and learned Single Judge is right when he has proceeded to make observation that there is no averment in the entire writ petition that this excess payment has not been paid and that is how the public funds have been misappropriated and defalcated." (emphasis supplied) Section 27 of the Act embodies the power conferred upon the Prescribed Authority to effect recoveries in respect of loss, waste or misapplication of money or property of the Gram or Nyay Panchayat. The recovery is described as a surcharge. The order is liable to be made in case the loss, waste or misapplication of money or property is a direct consequence of the neglect or misconduct of the Pradhan, member, Sarpanch, Sahayak or Panch. In this batch of writ petitions, the Court is principally concerned with the levy of surcharge on Pradhans, present and former and Secretaries or officers of the Gram Panchayat. The proviso to Section 27 (1) then prescribes a period of limitation for initiation of action for levy of surcharge by providing that the liability would cease to exist upon the expiry of 10 years from the occurrence of the loss or 5 years from the date when the person held liable ceases to hold office whichever be later.
Sub section (2) of Section 27 clearly appears to be the key to the question which stands posed. The power to fix surcharge is vested by virtue of this provision in the Prescribed Authority. The expression Prescribed Authority is defined by Section 2 (q) (ii) of the Act to be the authority notified as such by the State Government whether generally or for any particular purpose. We are really not concerned with Section 2 (q) (i) since that relates to subjects enumerated in Schedule III of the U.P. Kshetra Panchayats and Zila Panchayats Adhiniyam 1961. The subject of recovery of surcharge by an executive order, admittedly, is not dealt with in Schedule III of that enactment.
The primary question issue which immediately arises is whether the District Magistrate has been duly notified to be the "Prescribed Authority". The unequivocal answer to that question must be in the negative. The State has been unable to place for the consideration of the Court any notification in terms of which the District Magistrate may have been specified or designated as the "Prescribed Authority". Although reference was made to a notification dated 30 July 1966, as noticed above, that does not resolve the issue since it merely speaks of the Commissioner of the Division and that too in the context of being the "appellate prescribed authority". The evident and apparent anomaly in the expression used was not explained by the respondents. This issue arises since undisputedly the Commissioner cannot possibly perform or discharge a dual role of both the Prescribed and Appellate Authority. In any case even if it were assumed that the intent was to designate the Commissioner as the Prescribed Authority, then too the impugned orders must fall since they have come to be made by the respective District Magistrates. Viewed in the alternative of it being a notification prescribing an appellate authority, the Court notes that the notification refers to Section 27 (2). The subject of appeal against an order imposing surcharge is not dealt with in Section 27(2) at all. Appeals are dealt with exclusively by sub section (3) of Section 27. The singular and significant conclusion that the Court arrives at is that the notification of 30 July 1966 cannot be recognised as repository of either a conferment of power upon the District Magistrate to impose surcharge nor can it be viewed or accepted as a designation of the District Magistrate as the "Prescribed Authority" for the purposes of Section 27(2). If this notification were accepted as one designating the Commissioner as the Prescribed Authority, then too the impugned orders cannot be sustained. It may additionally and in all fairness be noted that even the learned Chief Standing Counsel did not urge that the State recognises the Commissioner as the Prescribed Authority by virtue of this notification.
The Court then proceeds to consider the submission addressed on behalf of the respondents that the provisions made in the Rules must be recognised as sufficient compliance with the provisions of Section 27 (2) and a prescription of the District Magistrate as the Prescribed Authority. However this Court finds itself unable to sustain the contention for the following reasons. Firstly the usage of the expression "Prescribed Authority" in Section 27(2) can neither be understood nor interpreted without referring to or in ignorance of Section 2 (q)(ii). Secondly the framing of the Rules must be read in light of the requirement placed by Section 27(2) of surcharge being recovered "according to the procedure that may be prescribed....". Sub section (2) of Section 27 neither empowers nor authorises the respondents to designate a Prescribed Authority by way of a rule or piece of subordinate legislation. It only permits and sanctions the prescription of a "procedure" for recovery of surcharge. It is to that extent alone that the rule making power comprised in Section 110 can be brought to bear. In any case the mere power to prescribe a procedure does not and cannot dilute the rigour of complying with Section 2(q)(ii). The submission of the respondents urged in this context is consequently rejected.
The Court then proceeds to consider whether the impugned orders have been made in accordance with the procedure prescribed in Chapter XIII of the Rules. As noticed hereinabove, the proceedings in terms of Rule 256 are envisaged to commence upon an enquiry being initiated by the Chief Audit Officer. It is only upon conclusion of that enquiry and the drawl of recommendations by the Chief Audit Officer that the District Magistrate or the District Panchayat Raj Officer come into the fray as per Rule 257. However in none of these petitions was the procedure prescribed in these Rules followed. None of the orders impugned in this batch of petitions were established to have been made in compliance with the procedure prescribed in Rules 256-258. The role assigned to the Chief Audit Officer, it becomes pertinent to note, is not without purpose. This becomes evident when one bears consideration upon the situations in which the enquiry is liable to be undertaken. The situations and instances in which such an enquiry is liable to be initiated are duly enumerated in Rule 256(2). It is perhaps bearing in mind the nature and subject matter of the enquiry to be undertaken that a particular role has been assigned to the Chief Audit Officer. The Court only seeks to emphasise that the involvement of the Chief Audit Officer and the assignment of a preliminary fact finding role to that authority appears to be indicative of the imperatives of his involvement in light of the nature of the enquiry which is liable to be undertaken and the issues that would need to be examined therein.
In any case the undisputed position which emerges in this batch is that the procedure prescribed under Chapter XIII was not adhered to. The Court consequently arrives at the irresistible conclusion that the impugned orders are rendered wholly unsustainable on this ground also.
That then takes the Court to consider whether an order of surcharge could have been passed during the pendency of an enquiry contemplated under the 1997 Rules. As noted in the opening parts of this decision most of the writ petitions which fall in this category relate to orders of surcharge passed during the pendency of an enquiry contemplated under the 1997 Rules. In some cases, the orders of surcharge have come to be passed simultaneously with orders ceasing the financial and administrative powers of the concerned Gram Pradhan. The jurisdiction to cease the financial and administrative powers of the Pradhan is exercised in light of the proviso appended to Section 95(1)(g). A careful reading of that proviso establishes that this jurisdiction is exercised at a stage where the competent authority is prima facie of the opinion that the concerned Pradhan or Up-Pradhan has committed financial or other irregularities. The prima facie opinion so formed cannot possibly be recognized as conferring power on the authority to command a recovery of surcharge. Since the jurisdiction to cease financial and administrative powers is itself exercised at a stage where only a preliminary and tentative satisfaction of wrongdoing has been arrived at, that cannot form the basis for imposition of surcharge. The Court finds itself unconvinced to sanction to the respondents a power to recover surcharge at this stage since it would not only be legally impermissible, it would also amount to holding the Pradhan, officer or employee guilty of misconduct even before a final and conclusive finding in that respect comes to be entered. The Pradhan, officer or servant of the Gram Panchayat cannot possibly be held liable to make good the alleged loss caused even before they are actually held guilty in the final enquiry that is contemplated under the 1997 Rules. This issue is no longer res integra and stands concluded in light of the decision rendered by the Division Bench in Indu Devi. The Division Bench in Indu Devi in unequivocal terms held that the prima facie finding under Section 95(1)(g) cannot be equated with a finding of misconduct contemplated under Section 27. Indu Devi, therefore is a binding authority in respect of the proposition that an order of surcharge cannot be passed on the mere prima facie recordal of a finding of guilt.
That only leaves the Court to consider the decision in Bhanati Devi which was relied upon by the learned Chief Standing Counsel in support of his contention that the District Magistrate while undertaking an enquiry under Section 95(1)(g) is also empowered to requisition recovery of surcharge. As this Court reads the decision in Bhanati Devi, it finds itself unable to sustain this submission for the following reasons.
Bhanati Devi was a decision in which findings of misconduct had come to be entered in a final enquiry and an order of removal proposed to be passed. While proposing to remove the elected representative there the District Magistrate also called upon her to show cause why surcharge be not levied and recovered. It was in that context that the Court came to hold that once the District Magistrate is satisfied that an order of removal must be passed, he can also simultaneously direct recovery of surcharge. It becomes pertinent to note that the Court while rendering judgment in Bhanati Devi noticed and approved the decision in Indu Devi. Bhanati Devi, therefore, cannot be viewed as an authority laying down a principle contrary to what was found in Indu Devi. All that can be gathered from Bhanati Devi is recognition of the authority of the District Magistrate to simultaneously direct removal and recovery of surcharge where in the final enquiry allegations of misappropriation or loss have come to be conclusively recorded. However in none of these writ petitions was a final enquiry as contemplated under Rule 6 of the 1997 Rules concluded nor were any conclusive findings of misconduct, misappropriation or loss in accordance with the procedure prescribed thereunder recorded. The impugned actions consequently cannot be sustained even on the principles as formulated in Bhanati Devi.
On a consideration of the aforesaid conclusions the Court holds: -
A. The expression "Prescribed Authority" referred to in Section 27(2) of the Act means an authority duly designated for that purpose in accordance with the provisions made in Section 2(q)(ii);
B. The State has failed to establish that the District Magistrate was duly notified as the Prescribed Authority in accordance with the mandate of Section 2(q)(ii). In the absence of a notification designating the District Magistrate as the competent authority for the purposes of Section 27(2), the orders of surcharge impugned cannot be sustained;
C. The prescription of a procedure for assessment and recovery of surcharge in Chapter XIII of the Rules and the assignment of a role to the District Magistrate or the District Panchayat Raj Officer thereunder cannot be held to be a compliance of the requirement of Section 27(2);
D. Rules 256-259 as contained in Chapter XIII of the Rules are only an extension of the requirement placed by Section 27(2) to lay in place a structure to "fix the amount of the surcharge according to the procedure that may be prescribed";
E. Section 27(2) neither sanctions nor envisages the designation of a Prescribed Authority by way of a rule or other subordinate legislation;
F. The prima facie findings of wrongdoing arrived at during the course of or in contemplation of an enquiry initiated under Section 95(1)(g) cannot form the foundation for levy or recovery of surcharge.
Accordingly and for the reasons noted above, all these writ petitions shall stand allowed. The impugned orders levying surcharge as also all consequential directions for recovery shall consequently quashed. It is however left open to the State respondents, if so chosen and advised, to proceed further in accordance with law bearing in mind the conclusions recorded in this judgment.
Order Date: - 30.9.2019 faraz/Arun K. Singh/Vivek Kr.
(Yashwant Varma, J.)