Criminal Miscellaneous No.50274-M of 2006 [ 1 ] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. CRIMINAL MISC.NO.50274-M of 2006 DECIDED ON : December 19, 2007 Smt.Sona Devi, Ex-Sarpanch, wife of Sh.Ajit Singh, Resident of Village Sudhour, Block Shahbad, Distt. Kurukshetra. ... Petitioner. Versus The State of Haryana. ... Respondent. ******* Present: Mr.Vikram Singh Advocate for the petitioner. Mr.Sunil Katyal, Deputy Advocate General Haryana. Mr.A.S.Virk, Advocate for the complainant. ***** JUDGMENT: The petitioner Sona Devi, Ex-Sarpanch, resident of village Sudhour, has invoked the provisions of Section 482 Cr.P.C. for quashing FIR No.155 dated 17.05.2006 under Section 409, 420 IPC, registered against her at Police Station Shahbad, Distt. Kurukshetra (Annexure P6). The allegations as laid down in FIR are that Block Criminal Miscellaneous No.50274-M of 2006 [ 2 ] Development and Panchayat Officer, Shahbad (Kurukshetra), forwarded a letter No.4217 dated 17.05.2006 to SHO, Police Station, Shahbad, for registration of the case against the petitioner, on the allegations that during tenure of the petitioner as Sarpanch i.e. w.e.f. Year 2002 to 2005, the grant was given to Development Samiti Sudhour. When the assessment was made, then it came out that the petitioner had embezzled a sum of Rs.2,19,958/-. Before registration of the case, letter was written by Block Development to the Deputy Commissioner on 21.04.2006, wherein, he pointed out that the following grants were given to Gram Panchayat Vikas Samiti, Sudhour:- 1. For construction of streets : Rs.204944.00 2.For construction of boundary wall of school Rs.210877.00 3.Retaining Wall Rs.482573.00 4.For construction of Drain (PRI) Rs. 32708.00 He further reported that, on the assessment, difference has been found. The evaluation of Rs.3,96,000/- for C.C.Street construction, was done and as per evaluation a sum of Rs.2,04,994/- has been spent on this work and a sum of Rs.191066/- has been embezzled by the petitioner. He further observed that a sum of Rs.2,16,810/- was received for the construction of boundary wall of the school, out of which only Criminal Miscellaneous No.50274-M of 2006 [ 3 ] Rs.2,10,877/- were spent. Out of a sum of Rs.4,95000/- received for the purpose of retaining wall, amount of Rs.4,82,573/- was spent. Out of a sum of Rs.43,300/- received under the PRI Scheme. Only a sum of Rs.32708/- was found to be spent. Thus, she embezzled a sum of Rs.2,19,958/-. In nutshell, Block Development and Panchayat Officer, Shahbad, vide his letter No.3995 dated 21.04.2006 informed the Deputy Commissioner, regarding the misappropriation of a sum of Rs.2,19,958/-, by the petitioner. Thereafter, the Deputy Commissioner, vide his letter No.1640/Panchayat dated 11.05.2006, directed the Block Development and Panchayat Officer, Shahbad to first issue notice regarding the recovery of the embezzled amount, and in case, the reply is not found satisfactory, the case be registered. In pursuance of the said letter, the Block development and Panchayat Officer issued a letter dated 17.05.2006, directing the petitioner to make good the loss of the embezzled amount, but neither any explanation was submitted nor the said amount was deposited. Therefore, the FIR in question has been got registered against her on the grounds that in view of Section 53 and 204 of the Haryana Gram Panchayat Act, (hereinafter referred to as the 'Act'), no case is made out against her. Against the quashing petition, the State has filed Criminal Miscellaneous No.50274-M of 2006 [ 4 ] reply submitting that the case was registered against the petitioner, after complying with due formalities. Petitioner is guilty of the offence under Section 409 and 420 of IPC. From the bare allegations in the FIR, the aforesaid offences are constituted . Provisions of Section 53 and Section 204 of the Haryana Panchayati Raj Act, are not applicable to the instant case. The provisions of Section 53 of the act are applicable only in case of loss, waste or miss application of Gram Fund, if the same is inconsequence of neglect or misconduct. Similarly, Section 204 is applicable only in case of an act done in good faith under the Act. Arguments heard. Record perused. The main contentions, over which, the petitioner banks upon, for quashing the FIR,are that the provisions of Section 53 and 204 are applicable in the instant case, therefore, no prosecution against the petitioner could be launched, but only recovery could be effected from him by having recourse to the other provisions of law. It is not in dispute that the petitioner was a Sarpanch, during the period the defalcations took place and the acts regarding embezzlement occurred. It is also not in dispute that block development and Panchayat Officer, vide his letter, Criminal Miscellaneous No.50274-M of 2006 [ 5 ] pointed out the embezzlement to the Deputy Commissioner and the Deputy Commissioner approved the registration of the case, against the petitioner, after giving notice and getting explanation of the petitioner regarding embezzlement. Admittedly, a notice was issued to the petitioner on 17.05.2006. There is no evidence on the record to establish if the petitioner submitted explanation to the notice or deposited the said amount, allegedly, misappropriated by her. Now, it would be appropriate to reproduce Section 53 of the Act which reads as under: “Liability of Sarpanch, Up-Sarpanch or a Panch- Every Sarpanch, Up-Sarpanch or a Panch of a Gram Panchayat shall be liable for the loss, waste or misappropriation is a consequence of his neglect or misconduct while working as Sarpanch, Up- Sarpanch or a Panch as the case may be.” (2)The Block Development and Panchayat Officer concerned may, on the application of Gram Panchayat or otherwise for loss, waste or misapplication of Gram Fund of Property belonging to that Gram Panchayat and after giving adequate opportunity to Sarpanch, Up- Sarpanch or Panch as the case may be, to explain assess by order in writing the amount due from him on account of such loss, waste or misapplication of such Gram Fund or property and take necessary steps for its recovery. (3)Any person aggrieved by an order sub-section Criminal Miscellaneous No.50274-M of 2006 [ 6 ] (2) may, within one month of the date of such order apply to the Director to have it set aside and the Director may suspend, vary or rescind such order upon such terms as to costs, payment into Court or otherwise, as he thinks fit, but subject to the result of such application, if any, the order shall be conclusive proof of the amount due. (4)Notwithstanding anything contained in sub- Section (3) the Government may, either on its own motion at any time or an application received in this behalf within a period of sixty days from the date of the order, call for the records of any proceedings in which the Director has passed an order under sub-Section (3) of the purpose of satisfying itself as to the legality or propriety of such order and may pass such order in relation thereto as it thinks fit. Provided that the government shall not pass an order under this sub-Section prejudicial to any person without giving him a reasonable opportunity of being heard. (5) Notwithstanding anything contained in this Section no person shall be called upon to explain why he should not be required to make good any loss, after the expiry of six years from the occurrence of the loss, waste or misapplication, or after the expiry of two years from his ceasing to be a Sarpanch, Up-Sarpanch or Panch as the case may be, whichever is earlier. (6)The amount assessed as due from Sarpanch, Up-Sarpanch or Panch, as the case may be, may Criminal Miscellaneous No.50274-M of 2006 [ 7 ] after his death be recovered from his legal heirs to the extent of property inherited by them." Section deals with the loss caused by any Panch or Sarpanch on account of waste or misapplication of Gram Panchayat fund or property belonging to the Gram Panchayat caused on account of neglect or misconduct but the Section can not be applied to the cases, where the Panch or Sarpanch of the Gram Panchayat with an intention to cause benefit to himself or cause loss to the Gram Panchayat misappropriates funds belonging to Gram Panchayat. Sum on account of the loss, waste or misapplication in consequence of his neglect or misconduct of the member or Sarpanch of the Panchayat, could be recovered, as per provisions mentioned in the Act but in any case this provision does not, in any way, create a hurdle in the business of the State to fasten criminal liability upon him for misappropriating the funds. The present act of the petitioner can not be termed as a loss, waste or misapplication in consequence of his neglect or misconduct. The neglect and misconduct are not para-materia with the words “intentionally” and “fraudulently” used in the Indian Penal Code. The words neglect or misconduct, referred in this provision of the Act could be the neglect short of any intention done in the ordinary course of his duties. The word “misconduct” is a relative term and has to be construed with reference to the subject matter and Criminal Miscellaneous No.50274-M of 2006 [ 8 ] the context wherein the term “occurs” having regard to the scope of the Act or Statute which is being construed. “Misconduct” literally means wrong conduct or improper conduct. The word misconduct as it figures in the aforesaid sections, is also found in 237(b)(ii) of the Companies Act, Section 237 (b)(ii) of the said Act reads as under:- “237.Investigations of company's affairs in other cases.- (a) ... (b) ... (ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or ......” While interpreting the aforesaid Section the Apex Court in case Barium Chemicals Ltd. and another vs. Company Law Board and others, AIR 1967 SC 295 observed as under:- “...the terms “defraud” and “fraudulent purpose” connote actual dishonesty involving, according to current notions of fair trading amongst commercial men, real moral blame. However, much the Court may disapprove of a personal conduct it must Criminal Miscellaneous No.50274-M of 2006 [ 9 ] consider whether he has been guilty of dishonesty. Misfeasance results from an act or conduct in the nature of a breach of trust or an act resulting in loss to the company. Misconduct of promoters or directors as understood in the Companies Act means not misconduct or every kind but such as has produced pecuniary loss to the company by misapplication of its assets or other act.” The word “misapplication” literally means a wrong or incorrect application and there can be a perfectly innocent application (Companies Act 1956 Section 543). In any case, Section 53 of the Act defines only a procedure for effecting the recovery of the amount of loss caused by the Panch or Sarpanch, but it does not put an embargo on the State to initiate criminal action in case of misappropriation of the Panchayat funds. The object of the Section 53 appears to be to provide the members of Gram Panchayat an opportunity to make good the loss and in case of failure to do so then it could not be treated as a hurdle for fastening criminal liability upon him/her. It is also well settled that both the criminal and civil liabilities could run parallel. Thus, I would not hasten to hold that Section 53 of the Act is not attracted in the case of misappropriation of the funds by any Criminal Miscellaneous No.50274-M of 2006 [ 10 ] Member or Sarpanch of the Gram Panchayat. Now coming to Section 204 of the Act, which is reproduced as under:- “No suit or other legal proceedings in a civil or criminal Court shall lie against any Panch, Up- Sarpanch, Sarpanch, Member, Chairman, Vice- Chairman, President and Vice-President, as the case may be in respect of any act done in good faith under this Act. No Civil suit or proceedings shall lie against any Gram Panchayat, Panchayat Samiti or Zila Parishad, as the case may be, in respect of any act done in the discharge of any of its functions and duties imposed under this Act.” On bare reading of the aforesaid provision, it could be observed that legal action has been barred in respect of any Act, “done in good faith under this Act”. The act of embezzlement can not, in any way, be termed as an act “done in good faith or the act done under this Act." As such, it would be suffice to say that no bar has been created by Section 204 of the Act, for registration of the case, against the petitioner, who intentionally and fraudulently, in order to cause benefit to herself by causing loss to the Government, embezzled an amount of Rs.2,19,958/-. Lastly, it may be observed that while sitting to quash the criminal proceedings, initiated by the State, the Court Criminal Miscellaneous No.50274-M of 2006 [ 11 ] can invoke the provisions only in rare cases, where, from the very facts on the face of it, no case for prosecution is made out. The present case also does not fall within the said parameters as laid down by the Apex Court in judgment delivered State of Haryana and others VS. Chaudhary Bhajan Lal and others, RCR Criminal 1991(1) Page 383. Consequently, I do not find any merit in the petition and the same is hereby dismissed. December 19, 2007 (A.N.Jindal) mamta m/gian Judge To be referred to Reporter : Yes / No