* THE HON’BLE SRI JUSTICE V.V.S.RAO + WRIT PETITION No.21513 of 2002 % Dated 17.06.2010 # Smt.Adduri Surya Subhadrayyamma. …Petitioner VERSUS $ The Collector (PW), East Godavari District, At Kakindada, And others. …Respondents ! Counsel for Petitioner: Sri D.Linga Rao. ^ Counsel for Respondents : G.P for Panchayat Raj & Rural Development. Sri M.Prabhakar Rao. <GIST: >HEAD NOTE: ? Cases referred 1. 1965-I A.L.T. 225 2. (2004) 13 SCC 665 THE HON’BLE SRI JUSTICE V.V.S.RAO WRIT PETITION No.21513 of 2002 Dated:17.06.2010 Between: Smt.Adduri Surya Subhadrayyamma. ...Petitioner And The Collector (PW), East Godavari District, At Kakindada, And others. ...Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO WRIT PETITION No.21513 of 2002 ORDER: The petitioner assails the order vide proceedings dated 08.10.2002 of the first respondent, namely, the District Collector (Panchayat Wing), Kakinada. In purported exercise of power under Section 265(1) of the Andhra Pradesh Panchayat Raj Act, 1994, the first respondent surcharged the petitioner and directed to recover an amount of Rs.68,309/-. The admitted facts are as follows. The petitioner was elected as Sarpanch of Laxminarsapuram in 1995 when the Office of Sarpanch was reserved for Women (General). Her term expired in October 2000. Though elections were held in June 2001 she could not contest as the Office of Sarpanch of the Village was earmarked for Open Category (General). Be that as it is, in 2000 elections the fifth respondent was elected as Sarpanch. He lodged a complaint alleging various irregularities committed by the Gram Panchayat during the tenure of the petitioner. In response thereto, the first respondent issued a show cause notice in Roc.No.1917/2002A1. The same was based on a report of the Sub Collector, Rajahmundry, for proceeding against the petitioner under Section 265(1) of the Act. In the said show cause notice she was directed to explain with regard to five allegations, namely, i) that the petitioner purchased electrical goods worth about Rs.1.30 lakhs without signatures of Upa Sarpanch on the bills, ii) that the petitioner incurred expenditure towards catching of stray dogs, iii) that during the year 1997- 1998 the petitioner incurred expenditure towards dumping of garbage by tractors, iv) during 2000-2001 the petitioner has shown a sum of Rs.5,010/- towards publication of tender notification and vi) that the petitioner incurred an amount of Rs.4,000/- towards purchase of tablets for brain fever. It was alleged in the show cause notice that the petitioner misutilized the amount under six heads to a tune of Rs.68,309/-. The petitioner submitted explanation denying the allegations and giving reasons for incurring expenditure. In the meanwhile, whatever be the reason, the first respondent also issued another show cause notice being Roc.No.1917/2002-A1, dated 20.07.2002, enclosing the copy of the Sub Collector’s enquiry report and complaint of the fifth respondent. The petitioner again submitted explanation on 15.08.2002. Thereafter, the first respondent issued impugned order dated 08.10.2002 directing recovery duly surcharging the petitioner. This Court while admitting the writ petition stayed the impugned orders on condition of the petitioner depositing a sum of Rs.25,000/-. There is no dispute that the petitioner duly complied with the same. Though the writ petition was admitted on 29.10.2002, the first respondent did not file any counter affidavit for a period of eight years. Taking a serious view on this aspect, on 07.04.2010 this Court directed the respondents to appear on 13.04.2010. An application being W.P.M.P.No.10456 of 2010 was moved praying this Court to dispense with the appearance of the respondents. As the counter affidavit was filed, this Court dispensed with the appearance. The District Collector, East Godavari, filed counter affidavit justifying the impugned order. It is pointed out that the petitioner purchased electrical goods excess ceiling limits prescribed by the Government. That the petitioner failed to produce Veterinary certificate and destruction certificate in connection with catching of stray dogs, that the petitioner claimed excess amount for transporting garbage, that the petitioner paid excess amount for publication of tender notification, and that the petitioner did not produce proof of utilization of brain fever tablets (Bellodana-200). The writ petition is also opposed relying on Section 265(3) of the Act, which provides for an alternative remedy by way of appeal to the Government against the order of the District Collector/Commissioner. Counsel for the petitioner and Government Pleader for Panchayat Raj made their submissions reiterating the position in the pleadings. Though notice is served on the fifth respondent, no counter affidavit is filed on his behalf. In the light of the submissions, the question that falls for consideration is whether the exercise of power by the District Collector under Section 265 of the Act ordering recovery of the amount allegedly due to the Gram Panchayat is not legal and is invalid. Section 265 of the Act (Section 150 of 1964 Act) reads as under. 265. Liability of Sarpanch, President, Chairperson etc., for loss, waste or misapplication of property:- (1) If, after giving the Sarpanch, Upa-Sarpanch, President, Vice- President, Chairperson, Vice-Chairperson or the Executive Authority, the Mandal Praja Parishad Development Officer, the Chief Executive Authority an opportunity of showing cause to the contrary, the Commissioner is satisfied that the loss, waste or misapplication of any money or other property owned by or vested in the Gram Panchayat, Mandal Praja Parishad or as the case may be the Zilla Praja Parishad is a direct consequence of misconduct, or gross neglect, on the part of such person, the Commissioner may, by order in writing, direct such person to pay to the Gram Panchayat, Mandal Praja Parishad or as the case may be, the Zilla Praja Parishad before the date fixed by him, the amount required to reimburse it for such loss, waste or misapplication, unless such person proves that he had acted in good faith. (2) If the amount is not so paid, the Commissioner shall cause it to be recovered as arrears of land revenue and credited to the fund of the Gram Panchayat, Mandal Praja Parishad or as the case may be, Zilla Praja Parishad. (3) An appeal shall lie within thirty days from any decision of the Commissioner under this Section to the Government whose decision thereon shall be final. A plain reading would show that the competent authority can exercise power under Section 265 of the Act and order recovery of the amounts only when two conditionalities exist. When there is a loss, waste or misapplication of any money or property of the Gram Panchayat and such a thing is direct consequence of misconduct or gross neglect on the part of the Sarpanch, the Collector can initiate action under Section 265(1) of the Act. Dealing with Section 127 of the Andhra Pradesh (Telangana Area) Gram Panchayats Act, which is in similar language, this Court in P.V.Narasimha Reddy v The State[1] explained the purport of the provisions in the following manner. The words used in the section are ‘loss’, ‘waste’ or, ‘misapplication of any money’. All these words indicate neglect, inefficiency or slack supervision and it excludes the element of dishonesty. The petitioner has been charged with criminal breach of trust for which the necessary ingredient is dishonest intention and the dominion over the property which must be held in trust. If there is any loss, wastage or misapplication of any funds without the necessary dishonest intention, perhaps it would give rise to a civil liability for which the Collector has been made responsible to recover. However, if the funds of the Panchayat are misappropriated giving rise to a breach of trust, then criminal proceedings would be a proper remedy. Thus the argument of the learned counsel in this respect has no force. On plain construction of Section 265(1) of the Act as well as on the strength of the precedent as above, it is abundantly clear that unless and until the decision maker after compliance with rule of audi alteram partem arrives at a conclusion that loss, waste or misapplication of Gram Panchayat funds is a direct consequence of misconduct or gross neglect of the Sarpanch, there cannot be any order of recovery of the amount under Section 265(1) of the Act. Further, if it is shown that such loss or waste or misapplication was occasioned in spite of Sarpanch acting in good faith, Section 265(1) of the Act has no application. Section 265(2) of the Act enables the recovery of amount as a land revenue which only means by legally sanctioned coerce methods. Therefore, unless and until conditions precedent for exercise of power under Section 265(1) of the Act exist, routine order without recording any finding cannot be sustained. The petitioner was issued show cause notice on 17.06.2002 to which an explanation was submitted. Again another show cause notice was issued on 20.07.2002 enclosing a copy of the Sub Collector’s report and the complaint made by the fifth respondent. Yet another explanation was submitted on 15.08.2002 giving reasons and rationale for incurring expenditure for various works. Curiously, the explanation in respect of each allegation was not even discussed in the impugned order. After extracting the allegations which were communicated to the petitioner the impugned order proceeds as under. In response to the show cause notice issued in the Ref.3rd cited, Smt.A.S..Subhadrayamma, Ex-Sarpanch, L.N.Puram Gr. Pt has submitted her explanation on each of the 5 charges framed against her. The explanation is examined and it is not satisfactory as she failed to remit the misappropriated amount of Rs.68,309/- to the credit of L.N.Puram Gr.Pt funds the loss caused to Gr.Pt funds is not sustained. In view of the above, and in exercise of the powers delegated to the Collector by the Commissioner, PR & RE, A.P., Hyderabad, Smt.A.S.Subhadrayamma, Ex.Sarpanch, L.N.Puram Gr.Pt is hereby directed to remit the misappropriated amount to a tune of Rs.68,309/- (Rupees Sixty Eight thousand three hundred and Nine only) to the credit of L.N.Puram Gr.Pt.funds and furnish remittance particulars forthwith. The E.O.(PR & RD) Anaparthi is authorized to recover the said misappropriated amount to a tune of Rs.68,309/- (Rs.Sixty Eight thousand three hundred and Nine only) from Smt.A.S.Subhadrayamma, Ex.Sarpanch, L.N.Puram Gr.Pt under R.R.Act as per the existing Govt.Orders and remit the said amount to L.N.Puram Gr.Pt.funds and report compliance forthwith. Without giving any reasons, in one go the District Collector came to the conclusion that the petitioner misappropriated Rs.68,309/-. Such method and manner of considering the allegations is not contemplated under Section 265(1) of the Act. As already held above Section 265(1) of the Act requires a specific finding that of loss to Gram Panchayat is a direct consequence of misconduct or gross negligence and that the Sarpanch has not acted in good faith. All these were not considered by the District Collector. As the very exercise of power is not in accordance with Section 265(1) of the Act, it must be held that the order suffers from malice in law. It is well settled principle of administrative law that if a decision maker fails to appreciate the facts properly or fails to apply the law properly such order would be vitiated by illegality. The Government Pleader would require this Court to relegate the petitioner to alternative remedy under Section 265(3) of the Act. This Court is afraid the submission cannot be accepted. If a writ petition has been kept pending for long time on its Board, ordinarily the High Court cannot summarily reject the writ petition after lapse of some time on the ground of availability of alternative remedy. In Durga Enterprises (P) Limited v Principal Secretary, Government of Utter Pradesh[2], the Supreme Court observed as under. By the impugned order the writ petition, which was pending for a long period of thirteen years, has been summarily dismissed on the ground that there is remedy of civil suit. The dispute between the parties was concerning exercise of the respondents’ alleged right of re-entry on the disputed property in accordance with sub-rules (2) and (3) of Rule 5 of the Land Acquisition (Companies) Rules, 1963. The aforesaid Rules contain a mechanism for adjudication of a dispute relating to the alleged breach of terms of the agreement and the manner in which it is to be resolved. The High Court, having entertained the writ petition, in which pleadings were also complete, ought to have decided the case on merits instead of relegating the parties to a civil suit. In the result, for the above reasons, the writ petition must succeed and is accordingly allowed with costs. The petitioner would be entitled to recover the amount of Rs.25,000/- (Rupees twenty five thousand only) deposited by her in obedience to the order of this Court in W.P.M.P.No.26943 of 2002 dated 29.10.2002. ____________ (V.V.S.RAO, J) 17.06.2010 Note: LR copy to be marked. B/o. vs [1] 1965-I A.L.T. 225 [2] (2004) 13 SCC 665