IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 30TH AUGUST 2010 / 8TH BHADRA 1932 WP(C).No. 311 of 2008(K) ------------------------ PETITIONER: --------------- V.L. INDIRAKUMARI ,CHNADRALAYAM, CHERUKOL P.O., KOZHENCHERRY. BY ADV. SRI.T.M.ABDUL LATHEEF RESPONDENT(S): --------------- 1. STATE OF KERALA REPRESENTED BY ITS SECRETARY TO GOVENRMENT LOCAL ADMINISTRATION THIRUVANANTHAPURAM. 2. ACCOUNTANT GENERAL OF KERALA THIRUVANANTHAPURAM. 3. ARUVAPPULAM GRAMA PANCHAYAT REPRESENTED BY ITS SECRETARY ARUVAPPULAM P.O., KONNI. BY GOVERNMENT PLEADER SHRI SANDESH RAJA FOR R 1 & R2 ADV. SRI.GEORGE VARGHESE(PERUMPALLIKUTTIYIL) FOR R3 SRI.A.R.DILEEP FOR R3 SMT.KAVITHA GANGADHARAN FOR R3 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30/08/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: T.R.RAMACHANDRAN NAIR,J. ------------------------------------- W.P.(C)No.311 of 2008 ----------------------------------------------------- DATED THIS THE 30th DAY OF AUGUST, 2010 JUDGMENT The petitioner is aggrieved by Exhibit P1 notice issued by the Secretary of the Panchayat directing the petitioner to remit an amount of Rs.10.43 lakhs with interest, which represents the alleged loss caused in the auction to collect river sand, held during the year 1999-2000. 2. Heard the learned counsel for the petitioner, the learned Government Pleader and the learned counsel appearing for the Panchayat. 3. The petitioner's case is that after four years of her retirement, Exhibit P1 notice was issued to her based on the audit report. It is explained that for the period 1999-2000, one B.Raguhunathan Nair purchased the right to collect river sand from the area Konnonmoozhy-Thottummoozhy kadavu for an amount of Rs.27,00,050/-. He had deposited Rs.2 lakhs on 4.3.1999 and the auction was conducted on 6.2.1999. The auction purchaser had remitted 25% of the auction amount; i.e., Rs.4,75,013/- making a total amount of Rs.6,75,013/-. W.P.(C)No.311/08 -2- 4. There was a Writ Petition before this Court challenging the auction itself and ultimately the said auction was cancelled by this Court directing to give the right by issuing permit after inviting quotations. Accordingly, the Panchayat cancelled the auction and the petitioner refunded the amount to the auction purchaser also. 5. Exhibit P2 is the copy of the reply submitted by the petitioner wherein the above aspects have been pointed out. She was not the Secretary when the auction was conducted and she took charge only in 6/99. It is evident from the proceedings Exhibit P3 that the audit objection is on the basis of the alleged lapse in returning Rs.6,75,013/- to the Contractor and in not collecting the proportionate amount for the period from 1.4.1999 to 19.9.1999. Evidently, the audit objection is based on the assumption that the contractor had collected sand during this period. 6. My attention was invited to Exhibit P4 and Exhibit P5 resolutions of the Panchayat. Exhibit P4 shows that the Committee of the Panchayat had appointed a Sub Committee with regard to the collection of sand in the 'kadavus' in question. W.P.(C)No.311/08 -3- It is mentioned in Exhibit P4 that even though the contract was given to Shri Raguhunathan Nair, he has not started collection of sand yet. There were objections with regard to the collection of sand and finally accepting the report of the Sub Committee, the auction was cancelled and the method of collecting sand by issuance of permit was approved. Exhibit P5 is the earlier resolution of the Committee dated 11.6.1999 wherein a resolution was taken to cancel the auction also. Therefore, evidently, the petitioner's case is that the petitioner has only acted based on the resolutions of the Committee. 7. The learned counsel for the Panchyat submitted that there was no decision to return back the amount to the Contractor and therefore, it was improper on the part of the petitioner in returning an amount of Rs.6,75,013/-.Significantly, in the resolutions, there is no mention about the requirement to retain this amount with the Panchayat. 8. The learned Government Pleader submitted that the proportionate amount had to be realised and the failure to realise the same has caused loss to the Panchayat. W.P.(C)No.311/08 -4- 9. On behalf of the 1st respondent, a counter affidavit has been filed. In paragraph 8 it is stated that it is upto the Panchayat to take remedial action to make good the loss. The audit has not demanded recovery of amount from the petitioner. It has only pointed out the loss to the Panchayat. It is upto the Panchayat to realise the amount from the persons responsible. Evidently, in the light of the above position, the action of the present Secretary of the Panchayat in directing the petitioner to return Rs.10.43 lakhs is not correct. The question is whether the contractor had collected sand during the period 1.4.1999 till cancellation of the contract. The audit report mentions the failure of the Panchayat to realise the proportionate amount. The resolution of the Panchayat shows that he had not collected the sand also. Therefore, it may not be possible to hold finally as on today, as to whether the sand was actually collected by the Contractor and whether the return of the amount of Rs.6.75 lakhs by the then Secretary, namely the petitioner to the Contractor is unauthorised. 10. Evidently, in the light of the stand taken by the 1st respondent in the counter affidavit that the audit observation was W.P.(C)No.311/08 -5- to inform the Panchayat about the loss and has not demanded to recover the amount from the petitioner, the Panchayat will have to realise the amount from responsible persons, if they actually hold the view that any loss has been caused. If the contractor had collected the sand for the disputed period, then he is primarily liable to recoup the amount to the Panchayat, if actually he had not remitted proportionate amount. In that view of the matter also, the action now taken to impose the entire liability on the petitioner cannot be supported. Evidently, the petitioner was acting in the light of the resolutions made by the Panchayat Committee. In that view of the matter, the Writ Petition is allowed. Exhibit P1 is quashed. But, this will not stand in the way of the Panchayat taking any steps to realise the loss, if any, from the Contractor or such other persons, if it is legally permissible. No costs. T.R.RAMACHANDRAN NAIR, JUDGE. dsn