Surcharge Recovery From Pradhan For Loss Caused To Gram Sabha Fund Must Follow Procedure Under Panchayat Raj Act: Allahabad High Court

The Allahabad High Court has held that surcharge under Section 27 of the U.P. Panchayat Raj Act, 1947 can be levied on a Pradhan only on an inquiry conducted by the Chief Audit Officer, Cooperative Societies and Panchayats. It held that an inquiry held by a committee constituted by the District Magistrate is without jurisdiction and vitiates the recovery order founded on it.Section 27 of the Act makes every Pradhan and member of a Gram Panchayat liable to surcharge for the loss, waste or misapplication of money or property belonging to the Gram Panchayat where it is a direct consequence of his neglect or misconduct while he was such Pradhan or member. The prescribed authority fixes the amount according to the procedure prescribed and certifies it to the Collector, who realizes it as an arrear of land revenue.Rule 256 requires the Chief Audit Officer, Cooperative Societies and Panchayats to call for an explanation from the Pradhan through the District Magistrate where he considers that loss, waste or misuse has been caused. Rule 257 requires him to forward the papers with his recommendations to the District Magistrate, who then fixes the sum payable.The bench of Justice Ajit Kumar and Justice Indrajeet Shukla held,“…thus if such complaint is received, the District Magistrate on being satisfied from gravity of allegations should trigger the procedure by referring it to Chief Audit Officer concerned subject to limitations set out in proviso appended to Rule 257 of 1947 Rules, who shall in turn must audit the accounts and report any loss, waste or misapplication of Gram Panchayat fund, and thereafter the person likely to be affected must be afforded fair and reasonable opportunity strictly in accordance with mandate of Surcharge Rules, and in this way proceedings should be reached to a logical conclusion. Any other procedure, howsoever, meticulous is alien to Surcharge Rules, thus cannot be subscribed”Petitioner, an ex-Pradhan, demitted office in 2015 on completion of his term of 2010-2015. A private individual made a complaint against him on 28th May 2016. The District Magistrate, Allahabad ordered an inquiry on 6th June 2016 by a committee comprising the District Probation Officer and a Junior Engineer (Rural Engineering) as technical member, which submitted its report. A show cause notice followed, and after the petitioner's reply was examined by the District Development Officer. Thereafter, the District Magistrate directed registration of an FIR and fixed joint liability of Rs. 29,69,021/- on the petitioner and the Village Panchayat Secretary, the petitioner's share of the surcharge being Rs. 14,84,510/-.Challenging the surcharge, the petitioner argued that no District Panchayat Raj Officer or other district level officer had been inducted in the committee, as required by the U.P. Panchayat Raj (Removal of Pradhans, Up-Pradhans and Members) Enquiry Rules, 1997. It was further argued that the only procedure for levying surcharge is Section 27 read with Rules 256 and 257, and the inquiry could have been held by no one but the Chief Audit Officer. It was argued that an ex-Pradhan cannot be surcharged at all.The Court rejected the objection of alternative remedy under Section 27(3) of the Act, holding that the rule of exclusion of writ jurisdiction is one of discretion and not of compulsion. It held that a petition entertained in 2018 and carried on the board for eight years, in which pleadings had been exchanged, could not be thrown out on that ground where the proceedings were without jurisdiction.The Court observed that the Chief Audit Officer had recorded no satisfaction that loss had been caused by the petitioner's negligence or misconduct, had called for no explanation from him and had submitted no report to the District Magistrate, and that the District Probation Officer and the Junior Engineer could not substitute the officer designated by the Rules. Relying on the decision of the Allahabad High Court in Ram Vilas Vs. Commissioner, Devi Patan Mandal, Gonda, it held that the order of recovery was manifestly without jurisdiction, and that the order of constituting the committee being bad at its inception, the consequential order could not be given effect to.“Jurisdiction is the fountainhead of every statutory proceedings, where the legislature not only creates right but simultaneously prescribes the authority competent to exercise such power and the manner in which it is to be exercised and hence the prescribed procedure becomes an indispensable condition precedent to the validity of the proceedings. Any deviation therefrom strikes at the very root of jurisdiction and renders the consequential action legally unsustainable.”The Court rejected the argument that an ex-Pradhan cannot be subjected to surcharge proceedings, holding it misplaced in view of the words 'was such Pradhan' employed in the statute. It noted that the Single Judge decision in Shiv Kumar Patel Vs. State of U.P., relied on by the...

Surcharge Recovery From Pradhan For Loss Caused To Gram Sabha Fund Must Follow Procedure Under Panchayat Raj Act: Allahabad High Court

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Surcharge Recovery From Pradhan For Loss Caused To Gram Sabha Fund Must Follow Procedure Under Panchayat Raj Act: Allahabad High Court

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