IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.11.2008 CORAM: THE HONOURABLE MR. JUSTICE S. MANIKUMAR W.P.No.27234 of 2006 (O.A.No.125 of 1994) P.S.Kasthuri ... Petitioner Versus 1. The Commissioner, Municipal Administration, Ezhilagam Avenue, 6th Floor, Chepauk, Madras-5. 2. The Regional Executive Engineer and the Regional Director of Municipal Administration, Krishna Rajendra Choultry Campus, Arisipalayam, Salem-9. 3. The Commissioner, Coimbatore Corporation, (at the time of petitioner's service, it was Municipality) Coimbatore-1. 4. The Commissioner, Salem Municipality, Salem. 5. The Commissioner, Edapadi Municipality, Edapadi, Salem District. ... Respondents The petition came to be numbered by transfer of O.A.No.125 of 1994 from the file of the Tamil Nadu Administrative Tribunal praying for Certiorarified Mandamus, to call for the records on the file of the respondents in connection with the orders passed by the second respondent in his proceedings in Na.Ka.No.11971/93/H1, dated 29.10.1993, quash the same and direct the respondents to settle all the retirement benefits, monetary as well as service, with interest at appropriate percentage till the payment and damages. For Petitioner : Mr.R.Singaravelan For 1st Respondent : Mr.C.Ramesh, Addl. Government Pleader For Respondents 2, 4 & 5: Mr.M.Muthappan For 3rd Respondent : Mr.R.Sivakumar O R D E R The petitioner has challenged the order of the second respondent, Regional Executive Engineer and the Regional Director of Municipal Administration, Salem, dated 29.10.2003 and sought for a direction to the respondents to settle all the retirement benefits, monetary as well as service, with appropriate interest till the date of payment and for damages. 2. Facts leading to the Writ Petition are as follows: The petitioner was appointed as a Lower Division Clerk/Junior Assistant by direct recruitment and he joined the service on 08.07.1955. He was promoted as Assistant and transferred to Coimbatore Municipality (now Corporation), where, he had worked as Store Keeper between the second week of December 1974 and the third week of June 1975. Since his predecessor had failed to handover the Water Supply Materials and Accounts, the petitioner brought to the notice of the Civil Engineer and the then Commissioner of Coimbatore Municipality. By memo, dated 28.01.1975, of the then Commissioner of Coimbatore Municipality, the former general storekeeper was directed to handover the charge of the stores to the petitioner. Even then, he had failed to do so. On his transfer to Erode Municipality, the Municipal Commissioner instructed the petitioner to handover the materials available in the stores through his successor. Accordingly, the petitioner handedover all the materials available in the stores and got relieved. The Commissioner, Coimbatore Municipality in his memo, dated 20.12.1976 framed charges against the petitioner, alleging that he had failed to handover the complete charge of the stores and for other irregularities, for which, the petitioner had submitted a detailed explanation on 11.04.1977. 3. According to the petitioner, no orders were passed by the Municipal Commissioner on the said explanation. There were about 437 items mentioned in the Charge memo, dated 20.12.1976, in which, Sl.322 was omitted. Out of which, he had handedover 87 items of articles, with reference to stock entry in the ledgers and 244 items of materials, which were not even entered in the stock register. He had also handedover 56 items of materials in excess of the actual stock entries found in the Stock Registers. There was shortage of 49 items of materials, due to the failure of his predecessors to make proper entries, while the materials were issued for execution of various works in connection with water supply. The details of the shortage of materials are as follows: 1 Materials handedover with reference to the entries in the stock Register 87 2 Materials handedover which were not entered in the stock register 244 3 Materials handedover in excess to the entries made in the stock register 56 4 Materials handedover in shortage of the entries made in the Stock Register 49 Total 436 4. The petitioner has further submitted that in the second list furnished to him by the Commissioner, Coimbatore Municipality, 39 items were shown as "materials further to stock". According to the petitioner, no records were maintained in the Office of the said Municipality to show, how they were secured. From Coimbatore Municipality, he was transferred to various places and on 11.04.1986, he was promoted as Manager and posted at Edapady Municipality. Subsequently, on 21.01.1991, he was promoted as Assistant Revenue Officer and posted at Salem Municipality. The petitioner has further submitted that the order of recovery, dated 22.10.1993, regarding shortage of materials, is passed without conducting any enquiry after a lapse of 17 years from the date of issue of the charge memo, i.e., 20.12.1976, when the petitioner was serving in Coimbatore Municipality (now Corporation). Thereafter, he was allowed to retire from the afternoon of 31.10.1993 by the proceedings of the Regional Executive Engineer and the Regional Director of Municipal Administration, Salem, the second respondent, dated 29.10.1993, subject to the following conditions, (i) a sum of Rs.20,42,908.28 would be deducted from his retiral benefits and (2) without prejudice to the disciplinary action being taken against the petitioner. 5. By memo, dated 20.10.1993 of the Commissioner, Coimbatore Municipality, the petitioner was made liable to pay Rs.19,49,699.83 for the loss alleged to have been caused to Coimbatore Municipality during his tenure. Reference is also made to the charges said to have been framed against the petitioner in the proceedings, dated 20.12.1976. It is further stated in the memo that the petitioner is responsible for a sum of Rs.19,49,699.83 as detailed below, (i) Present value of materials as covered in the charges : Rs.18,53,636.43 (ii) Amount to be recovered as per Para No.292 and 307/74,75 of Audit objection : Rs. 96,036.40 (iii) Pending advance : Rs. 27.00 --------------------- Total Rs.19,49,699.83 --------------------- 6. It is the contention of the petitioner that without conducting an enquiry into the charges framed in the year 1976, the petitioner cannot be penalised. The petitioner has further submitted that when he was issued with a charge memo on 20.12.1976 by the Commissioner of Coimbatore Municipality to wit, "Thiru.P.S.Kasthuri, Assistant, Salem Municipality and former General Store Keeper of Coimbatore Municipality failed to hand over the Water supply materials properly to his successor (Thiru.Sadasivam), at the time of his transfer and that there were other irregularities in the maintenance of accounts as per the list enclosed.", the petitioner has submitted his explanation, dated 21.02.1977 that the charge of the materials was not handedover to him by Thiru.Masilamani, his predecessor. Further, Thiru.C.M.Arumugam, predecessor of Thiru.Masilamani, had also failed to handover the charge of materials to the latter. On receipt of the explanation, the Commissioner, Coimbatore Municipality in his letter, dated 01.03.1978, called for further explanation from the petitioner, in respect of audit objections contained in Para No.184(a) of the Audit Report 1975-76, for which, the petitioner in his explanation, dated 01.06.1978, had stated that his predecessors have not handedover any of the pumpsets noted in the audit report and therefore, he should not be made liable. After the issuance of the charge memo in 1976 and after the receipt of the explanation, for nearly 17 years, there was no action on the proceedings and therefore, the petitioner bona fidely believed that his explanations were accepted and that the charges were also dropped. However, there was no formal communication to that effect. 7. It is the further contention of the petitioner that only because of the querry made by the Regional Executive Engineer and Regional Director of Municipal Administration, second respondent herein, all of a sudden, the Commissioner of Coimbatore Municipality, ordered for recovery of a sum of Rs.19,49,699.83 towards the cost of materials at the market rate, as on the date of attaining superannuation, after a lapse of 17 years from the date of chargememo. According to the petitioner, he was not aware of the audit objections at Paragraphs 292-302/75-76 of the report and therefore, there is a violation of principle of Natural Justice. 8. In the order of retirement, a sum of Rs.27/-, is shown as pending adjustment. According to the petitioner, amount is balance of advance amount drawn in Ur.1135/5-75 and that he had already refunded the said amount in Coimbatore Municipality Treasury in Challan No.6190. The respondents have failed to consider and verify the same and therefore, there is a total lack of application of mind. 9. In so far as the alleged loss caused to the Government in not recovering the arrears of property tax, profession tax, etc., to the tune of Rs.51,566.45, the petitioner has submitted that though he was posted as Assistant to serve in the Office of the Commissioner of Edapady Municipality, he was directed to work as Revenue Inspector from 01.10.1984 to 14.11.1986 and thereafter was promoted to the post of Manager (Incharge) from 11.04.1986 onwards. According to the petitioner, as per G.O.Ms.No.273, M.A., & W.S Department, dated 08.05.1989, responsibility to collect tax arrears lies only with the Commissioner and not with the Manager. Inspite of the government order, the Commissioner, Edapadi Municipality, issued a memo in his proceedings, dated 14.05.1993, calling upon the petitioner to show cause as to why the time barred arrears of property tax and vacant site tax, relating to the year 1989-90 should not be recovered from him. Though the petitioner had submitted his explanation, dated 12.06.1993, contending inter alia that he was not liable to pay the amount, no orders were passed till date of filing of the Original Application and therefore, the petitioner has submitted that no penal action can be taken against the petitioner, belatedly. 10. It is the further case of the petitioner that he was promoted as Revenue Inspector on 22.01.1991 and that he had retired from service on 31.10.1993. Recovery of a sum of Rs.51,566.45 ordered by the Commissioner of Edapady Municipality without conducting any inquiry, after a long lapse of time is illegal, violative of principles of natural justice and liable to be set aside. 11. Likewise, when the petitioner was serving in Salem, the Commissioner of Salem Municipality had informed the Regional Director of Municipal Administration, Salem for recovery of Rs.41,642/- towards Property Tax arrears for the period from 1987-88 and 1988-89. It is the case of the petitioner that he had joined Salem Municipality on 21.01.1991. Tax for the second half year 1987-88 had become time barred by limitation as on 30.10.1990 itself, even before he took charge in Salem Municipality. Therefore, the allegation that the petitioner was responsible for not recovering the time barred debts is baseless and arbitrary. 12. Placing reliance on the order of this Court W.P.Nos.3364 to 3369 of 1976 and G.O.Ms.No.1601, dated 14.09.1981, the petitioner has submitted that he cannot be made responsible for recovery of time barred debts. In these circumstances, the petitioner has contended that for the alleged failure (1) to handover the water supply materials (2) non-maintenance of certain accounts, (3) for collection of time barred debts, no proceedings can be initiated against him for recovery, after his retirement, in the absence of any provision in the service rules. 13. The Commissioner of Municipal Administration, Chennai, first respondent in his counter affidavit has raised a preliminary objection that Writ Petition against Corporation is not maintainable, as the employees are not government servants. He further submitted that while the petitioner was serving as Store Keeper in the erstwhile Coimbatore Municipality from November 1974 to March 1976, he was incharge of Water supplies stores. At the time of transfer from Coimbatore Municipality, the petitioner had failed to hand over the materials properly to his successor and there were several irregularities found in the maintenance of accounts. Therefore, by memo, dated 19.06.1976, the petitioner was directed to rectify the defects in the accounts and make good the loss sustained by the Municipality. Even though the petitioner had acknowledged the receipt of the said memo on 15.07.1976, he had not taken any action to rectify the defects in the accounts and therefore, a charge was framed against him on 20.12.1976 to wit, "that Thiru.P.S.Kasturi, Assistant, Salem Municipality and former General Store Keeper, Coimbatore Municipality failed to hand over the water supply materials properly to his successors at the time of his transfer and that there are several irregularities in the maintenance of the account as per the list enclosed". 14. The first respondent has further submitted that though the list of missing articles/shortages was forwarded to the petitioner, he had not taken any action to handover those articles to his successors. On receipt of the explanation, from the petitioner, the audit has pointed out the irregularities committed by him, while he was working as General Storekeeper. The first respondent has further submitted that the Corporation has informed the Regional Director of Municipal Administration, Salem, that a sum of Rs.19,49,699.83 has to be recovered from the petitioner towards shortages and that the charges framed against him on 20.12.1976 is also pending. Therefore, the Regional Director of Municipal Administration, Salem was requested to recover the said amount from the petitioner at the time of his retirement. The petitioner was allowed to retire without prejudice to the disciplinary action pending against him. 15. The first respondent has denied the contention of the petitioner that he cannot be penalised for the shortages pointed out in the year 1976. He has further submitted that having failed to remit the amount equivalent to the value of shortage of materials, the petitioner is not entitled to blame the department on the grounds of delay. The first respondent has also denied the contention of the petitioner that he was not given full charge of the stores and further submitted that even by memo, dated 28.01.1975, the petitioner's former general storekeeper had already been directed to handover the entire charge of the stores to the petitioner. The first respondent has further submitted that after the transfer of the petitioner from Coimbatore Municipality and, when he was called upon to account for shortages, the petitioner alleged that his predecessor did not handover the charge, pertaining to Water Supply and Drainage Materials. It is further submitted that no such representation was made by the petitioner, when he was working in Coimbatore Municipality and therefore, the contention of the petitioner is only an after thought to get over the claim made by the department towards shortages. 16. The first respondent has further submitted that during inspection by a Municipal Engineer, viz., Thiru.K.N.Krishnan, petitioner had expressed his difficulties in reconciliation of the stock verification report. According to the petitioner, Thiru.Arumugam was working as Storekeeper in Coimbatore Municipality. He was replaced by Thiru.Masilamani. The petitioner was appointed as Storekeeper in the place of Thiru.Masilamani, pursuant to the transfer of the former. The contention of the petitioner that even Thiru.Arumugam had failed to handover the charge of Water Supply and Drainage materials to his successor, Thiru.Masilamani, who happened to be the petitioner's predecessor, is denied. The first respondent has further denied the contention of the petitioner that since there was no proper handing over of the charge of the materials, he was unable to take effective steps in stock settlement of stock verification report. Inasmuch as the petitioner was a storekeeper at the relevant time, he should have accounted for the materials in his custody and blaming his predecessors is without any basis. The first respondent has further submitted that if the materials were not properly handedover to him, when he was appointed as General Storekeeper in Coimbatore Municipality, he should have brought this to the notice of higher authorities. In the absence of any such representation in this regard, it is not open to the petitioner to complain that his predecessor did not hand over the articles to him. The contention of the petitioner that his explanation was accepted and consequently, charges were dropped, is denied. The first respondent has denied the allegation that the petitioner had remitted a sum of Rs.27/- in Challan No.6190, dated 11.07.1975 and put the petitioner to strict proof. In these circumstances, the third respondent has prayed for dismissal of the Writ Petition. 17. The Regional Director of Municipal Administration, second respondent in his counter affidavit has submitted that the Government in G.O.Ms.No1, Municipal Administration and Water Supply Department, dated 04.01.1993 have delegated the powers to the Regional Directors of Municipal Administration, by which, persons appointed by the Director of Municipal Administration, Madras can be ordered to be retired by the Regional Directors themselves. Considering that the petitioner was due to retire on attaining the age of superannuation on 31.10.1993, the Municipal Commissioner, Salem in his letter dated 16.09.1993, furnished the service particulars of the petitioner, which are as follows: Sl.No Name of the post Name of the Municipality Period 1 Junior Assistant Salem 08.07.56 A.N., to 11.11.1974 2 Assistant Coimbatore Municipality (now Corporation) 12.11.74 to 05.08.75 3 Assistant Erode 06.08.75 to 31.10.76 4 Assistant & Market Superintendent Salem 01.11.76 to 14.03.83 5 Assistant Coonoor 15.03.83 to 29.02.84 6 Assistant Salem 01.03.84 to 16.07.84 7 Assistant Idappadi 17.07.84 to 10.04.86 8 Manager Idappadi 11.04.86 to 21.01.91 9 Assistant Revenue Officer Salem 22.01.91 to 31.10.93 18. The second respondent has further submitted that the above Municipal Commissioners were addressed to furnish No Due Certificates, so as to enable the Regional Director of Municipal Administration, to issue retirement orders to the petitioner. Except, Municipal Commissioners of Coimbatore, Salem and Edapaddy, other Municipalities have sent 'NIL' reports in this regard. The Municipal Commissioners, Coimbatore Municipality (now Corporation), Edapaddy Municipality and Salem Municipality (now Corporation) have sent their reports, stating that the petitioner has caused revenue loss, as detailed hereunder: COIMBATORE MUNICIPALITY (NOW CORPORATION): 1. Present value of materials as covered in charges Proc.No.106435/75/G1, dated 20.12.76 of the Commissioner, Coimbatore Corporation : Rs.18,53,636.43 2. As per audit report Para No.292 and 303/ 74-75 of the Coimbatore Corporation : Rs. 96,036.40 -------------------- Rs.19,49,699.83 IDAPPADI MUNICIPALITY: Time barred arrears of property Tax VST & P.T for the period from 1984-85 to 1989-90. When he was worked as Revenue Supervisor and Manager in absence of Revenue Officer as Idappadi Municipality as on 16.03.1994 : Rs. 49,861.45 SALEM MUNICIPALITY (NOW CORPORATION): Time barred arrears of Property Tax for the period from 1987-88 to 1988-89. When he was worked as Assistant Revenue Officer at Salem Municipality : Rs. 41,642.00 ---------------------- TOTAL Rs.20,41,203.28 ---------------------- 19. It is further submitted that the Municipal Commissioner of Coimbatore Municipality (now Corporation) has also stated that disciplinary action taken against the petitioner in his Office File No.106435/76-G1, was pending. Before issuing the retirement order to the petitioner, the matter was referred to the Director of Municipal Administration, Madras. In response, the Regional Director of Municipal Administration, Salem was informed that the petitioner might be permitted to retire from service on attaining the age of superannuation, without prejudice to the disciplinary action taken against him and the amounts due to the said municipalities be recovered from his retirement benefits. The second respondent has further submitted that it is only because of the querry made by the Regional Director of Municipal Administration, Salem, order of recovery was passed. 20. The Commissioner of Edapady Municipality, fifth respondent, has filed a counter affidavit and submitted that the petitioner worked as Manager of Edapady Municipality from 11.04.1986 to 21.01.1991 and he ought to have recovered property tax, vacant site tax and profession tax, for the above said period. Though the petitioner was aware of the circular issued by the department to that effect, he had intentionally requested the Commissioner to send the Circular and Government Orders, on which, recovery was proposed to be made from the petitioner. The fifth respondent has denied the contention of the petitioner that charges were not framed under Rule 8(1) of the Municipal Services Discipline and Appeal Rules and on the contrary, submitted that orders were already passed, for recovery of Rs.1,439/- towards time barred arrears of professonal tax for the years 1985-86, 86-87, 87-88, and 88-89. According to him, Manager of the Municipality is expected to receive the diaries of the Revenue Inspectors and Bill Collectors and initiate appropriate disciplinary proceedings against the persons, who had failed to collect the tax within the financial year and since the petitioner had failed to initiate action against them, tax could not be collected in time, for which, he alone is responsible. 21. Denying the contention of the petitioner that recovery proceedings to the tune of Rs.51,566.45 was not sent to him, the fifth respondent has further submitted that the petitioner was served a memo directing him to remit the said amount. According to the respondent, since it is a continuous process, there is no time limit for recovering the said amount from the petitioner and therefore, by letter, dated 14.05.1993, he was directed to explain as to why the time barred arrears should not be recovered from his pay. In these circumstances, the respondent has submitted that the petitioner is liable to pay the said amount to Edapadi Municipality. 22. The main contention of the learned counsel for the petitioner is that once the government servant is permitted to retire from service on attaining the age of superannuation, no fresh disciplinary proceedings can be initiated against him after retirement. Even if any disciplinary proceedings had already been initiated against the government servant, before attaining the age of superannuation, unless the government servant is retained in service, pursuant to an order issued by the Government under Rule 56(1)(c) of the Fundamental Rules, the said disciplinary proceedings cannot be allowed to be continued for the purpose of inflicting of any one of the penalties enumerated under Rule 8 of the Tamil Nadu Civil Services (Discipline and Appeal) Rules, such as dismissal, removal or reduction in rank or recovery etc., It is also the contention of the learned counsel for the petitioner that for the purpose of completion of disciplinary proceedings, relationship of Master and servant should be maintained and that a specific order of suspension should be passed by the Government in this regard. 23. According to the learned counsel, when the petitioner was permitted to retire from service, the relationship of Master and Servant is terminated and therefore, no disciplinary action can be taken against or continued, in the absence of provisions in the service rules. Apart from FR 56(1)(c), he placed strong reliance on many decisions, which would be dealt with, in latter paragraphs. 24. During the course of the hearing, a fax message of Director of Local Fund Audit, Madras was produced before this Court and paragraph 5 of the said message reads as follows: "However, the Commissioner now in letter No.R.C.3078/2007/A1, dated 23.08.2007 has stated that there is no time barred arrears and tax to be recovered from Thiru.P.S.Kasthuri during the period from 1984-1985 to 1990-1991. Where he worked as Revenue Inspector and Manager in Edappadi Municipality. Copy of the letter is sent herewith. It is clear from the above letter that as on date no amount is pending to be recovered from the individual Thiru.P.S.Kasthuri while he worked in this Municipality during the period from 01.10.1984 to 31.03.1987." 25. Placing reliance on the above fax message, learned counsel for the petitioner submitted that it is now made clear that no amount towards time barred arrears is due to be recovered from the petitioner for the period between 01.10.1984 to 31.03.1987, when he had worked as Revenue Inspector and Manager respectively in Edapaddy Municipality. Therefore, he submitted that even assuming that there was loss caused to the Municipality on account of non-recovery of Property Tax and Professional Tax for the period between 1984-85 and 1989-90, to the tune of Rs.51,566.45, no disciplinary action can be taken against him. 26. Learned counsel for the petitioner further submitted that when Rule 56(1)(c) permits a particular mode for taking action against a government servant, after his retirement, the authorities can resort to only that mode and not otherwise. According to him, if the department had decided to initiate departmental action against a Government servant, then he has to be retained in service, by placing him under suspension, thereby, the relationship of Master and Servant, is retained till the conclusion