IMPORTANT POINTS :Whether the bar of limitation, as provided under Section 295(9) of the Kerala Municipality Act applies to Ext.P2(a) Surcharge Certificate- The Kerala Local Fund Audit Act is a special enactment , that too a later enactment- It applies as far as the audit is concerned and surcharge notice as well as the Surcharge Certificate has been issued under the provisions of the Act- The Kerala Local Fund Audit Act, 1994 was enacted to provide for and to regulate the audit of the local funds under the management or control of certain local authorities in the State of Kerala- The Kerala Local Fund Audit Act does not contain any provision or limitation for issuing Surcharge Certificate.

The petitioners are aggrieved persons as per order dated 17.10.2011 of the IInd Additional District Judge, Kozhikode in O.P.(C).No.218/2006 whereby Surcharge Certificates issued by the petitioner, as against the 1st respondent was set aside. The respondent was working as the Chief Town Planner, Kozhikode Corporation. During her tenure, the 1st respondent made some irregular payments, which was detected by the petitioners while conducting audit of the accounts of the 3rd respondent for the Financial year 2000-01. Therefore, the 1st petitioner issued a Surcharge Notice to the 1st respondent. After considering the reply submitted by the 1st respondent, the 1st petitioner issued two Surcharge Certificates against the 1st respondent for realization of a sum of Rs.3,800/- and Rs.9,065/-. The District Court set aside the Surcharge Certificate mainly on the ground that the Surcharge Certificate was issued beyond the period of limitation prescribed under the Kerala Municipality Act. The limitation period prescribed under the Kerala Municipality Act has no application after the coming into force of the Kerala Local Fund Audit Act, which contains no limitation period for issuing a Surcharge Certificate. Therefore, the petitioner prays for setting aside the order of the District Court.

2. The matter was heard. In fact, this is a petition filed against the order passed by the IInd Additional District Court, Kozhikode in O.P.(C).No.218/2006 dated 17.10.2011 by which the Surcharge Certificates issued by the 1st petitioner as against the 1st respondent was set aside. It is an admitted fact that the first respondent was working under the 2nd respondent as Chief Town Planner from 13.11.1996 to 06.06.2002. The petitioner had conducted an audit of the accounts of the 2nd respondent for the financial year 2000-2001 and issued a Surcharge Notice to the 1st respondent. A true copy of the Surcharge Notice issued by the petitioner to the respondent is produced and marked as Ext.P1. In response to Ext.P1 Notice, the 1st respondent submitted a reply and after considering the reply submitted by the 1st respondent, the petitioner has issued two Surcharge Certificates as against the 1st respondent for realization of a sum of Rs.3,800/- and Rs.9,065/- in respect of Para Nos.3-12 and 3-28 of the Audit Report. A true copy of the Surcharge Certificate issued by the petitioner as against the 1st respondent is produced and marked as Exts.P2 and P2(a). Surcharge Certificates were issued for Rs.9,065/- on account of short collection of building licence fee and Surcharge Certificate for Rs.3,800/- was issued on account of excess payment of wages.

3. The respondent filed an Original Petition before the District Court, Kozhikode as O.P.No.218/2006 mainly contending that the Surcharge Certificate was issued beyond the period of limitation prescribed under Section 295(12) of the Kerala Municipality Act, 1994. On receipt of the notice, the petitioner appeared before the District Court and submitted a detailed written statement specifically contending that the provisions of the Kerala Municipality Act are not applicable to Ext.P2 Surcharge Certificate, which was issued as per the provisions of the Kerala Local Fund Audit Act. According to the petitioner, the Surcharge Certificate was issued perfectly in accordance with law. A true copy of the Original Petition filed by the respondent as O.P.No.218/2006 before the IInd Additional District Judge, Kozhikode is produced and marked as Ext.P3. A true copy of the written statement filed by the petitioner in O.P.No.218/2006 is produced and marked as Ext.P4.

4. After taking evidence and after hearing the parties, the Additional District Court has allowed the Original Petition by Order dated 17.10.2011 by setting aside Ext.P2 Surcharge Certificate mainly for the reason that Ext.P2 Surcharge Certificate is barred by limitation under Section 295(9) of the Kerala Municipality Act. True copy of the order dated 17.10.2011 in O.P