The exercise of power under Section 265(1) of the Andhra Pradesh Panchayat Raj Act, 1994, requires a specific finding that the loss to the Gram Panchayat is a direct consequence of misconduct or gross negligence and that the Sarpanch has not acted in good faith. Failure to follow the procedure and principles of natural justice renders the order illegal and arbitrary.

JUDGMENT

Battu Devanand, J. - This Writ Petition has been filed against the action of respondent No.2 in issuing Proceedings No. A5/e-1812947/2020, dated 24.03.2021 without issuing any show cause notice and not following due procedure established under law is illegal, arbitrary and contrary to the law and unjust and violating the principles of natural justice and also violation of Articles 14,19 and 21 of the Constitution of India and for consequential direction to set aside the impugned proceedings directing the respondents to follow due process of law.

2. Heard learned counsel for the Petitioner and the learned Government Pleader for Panchayat Raj appearing for Respondent Nos. 1 to 6 and Sri I. Koti Reddy, learned Standing Counsel appearing for Respondent Nos. 7 and 8 and perused the material available on record.

3. The case of the petitioner is that the petitioner is a Ex.Sarpanch of Kaiakram Gram Panchayat of Unguturu Mandal, West Godavari District, Andhra Pradesh. He worked as Sarpanch for a period of five years from 02.08.2013 to 09.08.2018.

4. Learned counsel for the petitioner submits that the Audit Department checked all accounts of the Gram Panchayat from time to time, and there are no any objections or misappropriation of public funds found against the petitioner. Now, the respondents issued the impugned proceedings stating that the petitioner misappropriated the Gram Panchayat funds to a tune of Rs.33,23,597/- and authorized the Tahsildar, Unguturu Mandal, to recover the said amount from the petitioner by initiating proceedings under Revenue Recovery Act. It is submitted by the learned counsel for the petitioner that the petitioner discharged his duties without there being any misconduct, commission or omission, negligent in performing the duties and as such, the allegations made against the petitioner are misconceived. He further contended that the respondent No.2 without following the procedure provided under Section 265 of the A.P. Panchayat Raj Act issued the impugned proceedings.

5. Learned counsel further submits that no notice was issued and no opportunity was given to the petitioner to put forth his case before Respondent No.2 before passing the impugned proceedings dated 24.03.2021. It is contended that the order impugned in this Writ Petition is issued in violation of principles of natural justice and prayed this Court to set aside the same in the interest of justice.

6. Upon perusal of the impugned order, this Court deems it fit to direct the Officer, who passed the impugned order to file Counter Affidavit, if the said Officer is not working as 2nd respondent as of now.

7. A counter affidavit has been filed by the concerned Officer on behalf of respondent No.2. In the Counter Affidavit, it is contended by the learned counsel for Respondent No.2 that one Kollabattula Nagaraju, resident of Kaikaram Village, has submitted a petition in Spandana Programme on 21.10.2019, alleging that several irregularities took place in the administration of Gram Panchayat, Kaikaram, during the period 2013-2014 to till date. The Extension Officer, PR & RD, Unguturu, enquired and verified the Gram Panchayat records and submitted a report to the Divisional Panchayat Officer, Eluru, on 16.02.2020 and the Divisional Panchayat Officer, Eluru, forwarded the enquiry report on 28.02.2020 stating that an amount of Rs.84,12,221/- misappropriated by the petitioner, Special Officer and the then Panchayat Secretaries of Kaikaram Gram Panchayat. On 22.09.2020, the said Report was submitted to the Commissioner of Panchayat Raj and Rural Development for necessary further action. The Commissioner for Panchayat Raj and Rural Development issued instructions to the District Collector, West Godavari District, requesting to take action as per rules in the Andhra Pradesh Panchayat Raj Act, 1994 (for short "1994 Act") against the petitioner, vide Memo No.1303417/CPR&RD/B1/2020.

8. It is averred in the Counter of the respondent No.2 that originally the powe