Point of Law: Auditor to surcharge illegal payments and loss caused by negligence or misconduct - Section 243 of Act, 1994 clearly stipulates that no recovery can be made after expiration of a period of three years from date on which destraint might first have been commenced or as case may be, in respect of amount alleged to be due from petitioner

JUDGMENT :

This writ petition is filed by the petitioner who was formerly a Head Clerk of the Thuravoor Grama Panchayat, the respondent herein, for the period from 01.12.1999 to 07.08.2007, seeking to quash Ext. P4 demand notice raised by the Secretary of the Thuravoor Grama Panchayat dated 04.07.2005 directing the petitioner to remit an amount of Rs. 16,049/- with interest, failing which it was cautioned that without further notice, recovery action would be initiated. It is clear from Ext.P4 that the amount demanded was on account of the excess payment made by the petitioner to Conveners of two beneficiary committees, found out as per the report of the Local Fund Audit Authority for the period from 2000-2001 and 2001-2002. Petitioner also seeks to quash Ext. 11 revenue recovery demand notice issued by the Secretary of the respondent Grama Panchayat seeking to recover an amount of Rs. 36,298/- towards the amount specified above, interest of Rs.20,222/- and other charges.

2. Brief material facts for the disposal of the writ petition are as follows:

The petitioner retired from the service on 31.07.2002. The Secretary of the Panchayat issued a communication dated 08.11.2004 to the petitioner that steps should be taken to avoid the local fund audit objections contained at paragraphs 11 and 13 of the Local Fund Audit Report for the year 2000-2001 and 2001-2002. Apparently, the petitioner submitted an objection to the Secretary and requested the Secretary to adjust any excess amount paid in the final bills submitted before the Panchayat and the alleged amount can be recovered from the Conveners accordingly. Other objections were also raised.

3. The case of the petitioner is that the amount paid by the petitioner was on the basis of certification of the Engineer in the measurement book, which cannot be found fault with against the petitioner, since the petitioner being the executive head was liable to pay the bill prepared by the engineering wing. Other contentions are also raised.

4. The material contention raised by the petitioner is that the recovery sought against the petitioner by the Secretary of the Grama Panchayat is not in accordance with law, since a procedure is contemplated for the audit of accounts under Section 215 of the Kerala Panchayat Raj Act, 1994 ('Act, 1994'), the Kerala Local Fund Audit Act, 1994 ('Audit Act, 1994' for short) and the Kerala Local Fund Audit Rules, 1996 ('Rules, 1996' for short). That apart, it was contended that the amounts sought to be recovered as per the demand notice issued by the Secretary is barred by limitation by virtue of the provisions of Section 215 of the Act, 1994, the Audit Act, 1994 and the Audit Rules, 1996.

5. That apart, at the time of arguments, the learned counsel for the petitioner also submitted that the demand raised and the consequential recovery is barred by limitation, in view of Section 243 of the Kerala Panchayat Raj Act 1994, since only a period of three years is available from the date on which the distraint might first have been made, a suit might first have been instituted or the prosecution might first have been commenced, as the case may be, in respect of such tax or sum.

6. Therefore, according to the petitioner, the action of the Secretary of the Grama Panchayat is illegal and arbitrary, liable to be interfered with by this Court exercising the power of discretion conferred under Article 226 of the Constitution of India.

7. The Secretary of the Panchayat has filed a counter affidavit basically submitting that as per the audit reports for the years 2000- 2001 and 2001-2002, the petitioner, while she was having additional charge of Secretary of the Panchayat from 08.03.2001 to 02.06.2001 paid excess amount to the Convener who executed the work of protection wall of a pond namely Thazhathuveettilkulam and an excess amount of Rs.11,515/- to the Convener, who executed the work of Kalluvalam LI Scheme. It was also contended that since no satisfactory explanation was given b