Proper procedure under the Kerala Local Fund Audit Act, 1994 must be followed before imposing liabilities on individuals.

JUDGMENT

These writ petitions are connected, and therefore, I am disposing of these cases by a common judgment. The issues raised in these writ petitions are one and the same, and therefore, I am disposing of them by a common judgment.

2. The petitioners in these writ petitions are Councillors of Maradu Municipality, and they were representing different divisions during different periods. The petitioners received Ext.P1, produced in these writ petitions, directing the remittance of a certain amount stated as liabilities of Councilors under different heads. It is stated that the alleged liabilities are to be apportioned among the members of the Municipal Council who were present in the council meeting and who did not object to the decision concerned. There was an audit objection in connection with the same. Based on the 2026:KER:24193 same, Ext.P1 is issued in these writ petitions. The point raised by the petitioners in these writ petitions is that, a detailed procedure is prescribed as per Section 16 of the Kerala Local Fund Audit Act, 1994 (for short Audit Act) and the Kerala Local Funds Audit Rules, 1996 (for short Audit Rules), for initiating action, but no such procedure is adopted, and the petitioners were given Ext.P1 notice in these cases is the grievance without following the Audit Act.

3. Heard counsel for the petitioner, the Standing Counsel appearing for the Municipality and the Government Pleader.

4. This Court in Mathai v. Secretary, Koovapady Grama Panchayath , Perumbavoor [2023 KHC OnLine 10555] , considered the point raised by the petitioners in detail. It will be better to extract the relevant portion of the above judgment.

14. On a perusal of the audit report, it is stated therein that there was criminal trespass and destruction was caused to the pond constructed, and the motor shed, and theft of the electric motor. Therefore, it can be seen that when the work was completed by the 2026:KER:24193 beneficiary committee, it cannot be said that there was any misuse of the money, or negligence on the part of the beneficiary committee or the officers of the Panchayat. It is also equally important to note that the Panchayat has taken action for recovery of the money from the petitioners on account of the audit report. But there is no case for the Panchayat that either the petitioners were heard by the Auditor before the liabilities were fixed upon them or they were served with the audit report enabling them to challenge the same in terms of the provisions of the Local Fund Audit Act, 1994 and the Local Fund Audit Rules, 1996.

15. On a perusal of the provisions of the Kerala Local Fund Audit Act , 1994, it is evident that a clear procedure is prescribed therein in order to impose liability on any person by issuing notice to them in the audit proceedings. It is also clear from S.16 of the , 1994 that any person aggrieved by surcharge or charge made may within one month after he has received or been served with the decision of the Auditor, apply to the District Court to set aside such surcharge or charge.

16. It is an admitted fact that the audit report is not served on the petitioners. Even though a contention is raised by the Panchayat that at the request of the Secretary of the Koovappady Grama Panchayat, a copy of the report was given, there is no case for the Panchayat that the Secretary was heard by the Auditor before the liability was imposed upon the Secretary.

17. Even though grounds of limitation are raised in the writ petitions for recovery of the 2026:KER:24193 amounts as per S.243 of the Kerala Panchayat Raj Act , 1994, I am not expressing any opinion on the same since when the writ petitions were filed, stay was granted by this Court, interdicting the operation of the demand notices issued by the Panchayat under the , 1994.

18. The facts and circumstances discussed above would make it clear that there was no default or negligence on the part