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2012 DIGILAW 152 (HP)

Devi Singh Jishtu v. State of Himachal Pradesh

2012-04-03

RAJIV SHARMA

body2012
JUDGMENT : Justice Rajiv Sharma, J. Material facts necessary for the adjudication of this petition are that petitioner filed a complaint against respondent No.4. Inspector General of Police (Vigilance), Himachal Pradesh conducted inquiry regarding irregularities in the H.P. State Cooperative Agriculture and Rural Development Bank Limited. According to the report, respondent No.4 has been paid a sum of `50,051/- as T.A./D.A. for his exposure visit to South East Asia w.e.f. 13.10.1999 to 31.10.1999 @ 90% whereas he was entitled for 25% D.A., i.e. ` 13,937/-. Registrar Cooperative Societies, Himachal Pradesh sent a notice to the Managing Director of the Bank on 30.3.2006 for explaining under what circumstances financial irregularity was committed. The Managing Director of respondent No.4 sent a notice to respondent No.4 on 5.4.2006. Respondent No.4 filed reply to the same on 12.7.2006. The Registrar Cooperative Societies, Himachal Pradesh while exercising the powers under section 68 of the Himachal Pradesh Cooperative Societies Act, 1968 appointed Sh. L.K. Sharma, Joint Registrar (Marketing) Cooperative Societies, who held inquiry against the Managing Director of the respondent-Bank and submitted the report to the Registrar Cooperative Societies. During the course of inquiry it was held that a sum of ` 41,679/- has been paid in excess to respondent No.4 and the same was to be recovered with interest. The report is dated 21.1.2009. The Registrar Cooperative Societies sent a communication to the Managing Director of the respondent Bank on 6.12.2008 whereby the copy of the letter of organizing institution sponsoring the exposure visit to South East Asia alongwith terms and conditions like fee, boarding, lodging, D.A. payable to him and all other relevant documents were to be made available to the Directorate. The Registrar Cooperative Societies has also clarified that the Department has not passed any order regarding disqualification of respondent No.4 from the Board of Directors. Accordingly, he continued to be the Chairman of the Bank as per bye-laws. Petitioner filed CWP No. 2999 of 2008 in this Court. It was decided on 13.7.2010 whereby the revising authority was directed to decide the revision preferred by respondent No.4 within two months from the date of passing of the judgment, i.e. 13.7.2010. The revision preferred by respondent No.4 was disposed of by the Additional Registrar (Administration) on 10.9.2010. Respondent No.4 has deposited the amount on 12.10.2010 as per order dated 10.9.2010. 2. Mr. The revision preferred by respondent No.4 was disposed of by the Additional Registrar (Administration) on 10.9.2010. Respondent No.4 has deposited the amount on 12.10.2010 as per order dated 10.9.2010. 2. Mr. Ajay Sharma has strenuously argued that respondent No.4 was defaulter as per sub-rule (xix) of rule 2 and has incurred disqualification under rule 41 (2) (i) of the Himachal Cooperative Societies Rules, 1971. 3. Mr. Rajinder Dogra, learned Additional Advocate General, Mr. Bipin Negi and Mr. B.M. Chauhan have argued that respondent No.4 is not defaulter and has not incurred any disqualification under the Himachal Cooperative Societies Act, 1968 and the Rules framed thereunder. 4. I have heard the learned counsel for the parties and have perused the pleadings carefully. 5. Though the Inquiry Officer has stated that he was appointed to look into the financial irregularity committed by respondent No.4 and Sh. Paras Ram Dogra, however, as per order of the Additional Registrar (Administration), the inquiry was directed to be instituted only against Sh. H.C. Verma, the-then officiating Managing Director vide letter dated 31.7.2007. It is clear from the inquiry report that respondent No.4 has not been associated during the course of inquiry. In the instant case, respondent No.4 has been indicted by the Inquiry Officer even without hearing or associating him during the course of inquiry. It will also be apt at this stage to take note of the charge quoted in brief in the inquiry report, which reads thus: (i) “That Sh. H.C. Verma, the then Managing Director of the ARDB passed the T.A. bills of Sh. Sher Singh Chauhan, Ex-Chairman of the Bank irregularly and excessively amounting to Rs. 62767.00 for the exposure visit to South East Asia and caused irreparable loss to the Bank. 6. There is a detailed procedure the manner in which the inquiry has to be held under section 67 of the Himachal Pradesh Cooperative Societies Act and rule 86 of the Himachal Cooperative Societies Rules, 1971. The inquiry was never ordered to be instituted against the petitioner. The fact that the respondent No.4 has filed a revision petition and has been heard by the revising authority will not fill up inherent defect whereby the petitioner has been found guilty by the Inquiry Officer. The inquiry was never ordered to be instituted against the petitioner. The fact that the respondent No.4 has filed a revision petition and has been heard by the revising authority will not fill up inherent defect whereby the petitioner has been found guilty by the Inquiry Officer. The inquiry report was a nullity since the findings recorded by the Inquiry Officer against the petitioner were bad in law for not following the principles of natural justice. Moreover, the inquiry was never ordered to be held against respondent No.4. If the basic order is bad in law, it cannot be cured in appeal or revision. 7. Their Lordships of the Hon’ble Supreme Court in Chairman-cum-Managing Director, Coal India Limited and others versus Ananta Saha and others, (2011) 5 SCC 142 have held that if initial action is not in consonance with law, subsequent proceedings would not sanctify the same. Their Lordships have further held that in such a fact situation, the legal maxim sublato fundamento cadit opus is applicable, meaning thereby, in case a foundation is removed, the superstructure fails. Their Lordships have held as under: “32. It is a settled legal proposition that if initial action is not in consonance with law, subsequent proceedings would not sanctify the same. In such a fact-situation, the legal maxim "sublato fundamento cadit opus" is applicable, meaning thereby, in case a foundation is removed, the superstructure falls. 33. In Badrinath v. Govt. of Tamil Nadu & Ors., AIR 2000 SC 3243, this Court observed that once the basis of a proceeding is gone, all consequential acts, actions, orders would fall to the ground automatically and this principle of consequential order which is applicable to judicial and quasi-judicial proceedings is equally applicable to administrative orders. (See also State of Kerala v. Puthenkavu N.S.S. Karayogam & Anr., (2001) 10 SCC 191; and Kalabharati Advertising v. Hemant Vimalnath Narichania & Ors. AIR 2010 SC 3745).” 8. In view of the observations and discussions made hereinabove, the proceedings instituted against respondent No.4 were nullity. However, the Court still has decided to go into the entire gamut to determine whether respondent No.4 was defaulter under the provisions of the Himachal Pradesh Cooperative Societies Act and the Rules framed thereunder. 9. Respondent No.4 has been elected Director of the bank in August, 2008. He has also paid a sum of `5,703/- on 6.3.2006 on the basis of audit. 9. Respondent No.4 has been elected Director of the bank in August, 2008. He has also paid a sum of `5,703/- on 6.3.2006 on the basis of audit. Letter dated 30.3.2006 was not addressed to respondent No.4. In fact, it was addressed to the Managing Director of the respondent-Bank. The Managing Director of the respondent-Bank has called for the reply of respondent No.4, which was furnished on 12.7.2006. It is true that initially as per letter dated 30.3.2006, observation has been made by the Registrar Cooperative Societies to the effect that respondent No.4 has been paid excess amount of ` 30,078/-. In these circumstances, the explanation of Managing Director of respondent-Bank was sought. However, vide letter dated 6.12.2008, the Registrar Cooperative Societies has sought information from the Managing Director of respondent-Bank including the copy of letter of organizing institution sponsoring the exposure visit to South East Asia alongwith terms and conditions like fee, boarding lodging etc. In the inquiry conducted under section 67 of the Himachal Pradesh Cooperative Societies Act, 1968, Inquiry Officer has held as per report dated 21.1.2009 that a sum of ` 41,679/-being excess amount was to be recovered from respondent No.4. According to the report, the Managing Director of respondent-Bank has also misused his office and by keeping the management in dark. Inquiry Officer has ordered that the recovery of interest of five years may be realized from the then Managing Director of the Bank with penal interest. Respondent No.4 has preferred a revision against the inquiry report dated 21.1.2009. Respondent No.4 has claimed 90% daily allowance in dollars and the same was allowed to him after verification of the accounts by the then Managing Director of the respondent-Bank. Respondent No.4 was entitled to 25% of daily wage allowance as per letter No. 7 (4) E-Co-ord/2000 dated 24.9.2000 and letter dated 11.11.1996 issued by the Ministry of Finance Department. According to information dated 4.7.2001, 10% of D.A. was to be reduced where the hotel charges include the breakfast charges. Thus, 10% of D.A. was to be further reduced from 25% D.A. In other words, he was only entitled to 15%. He was only entitled to ` 8,336/-instead of ` 50,015/- claimed by him. It is in these circumstances that the Inquiry Officer has held that respondent No.4 has to pay a sum of ` 41,679/- to the Bank. Thus, 10% of D.A. was to be further reduced from 25% D.A. In other words, he was only entitled to 15%. He was only entitled to ` 8,336/-instead of ` 50,015/- claimed by him. It is in these circumstances that the Inquiry Officer has held that respondent No.4 has to pay a sum of ` 41,679/- to the Bank. It has come in the order dated 10.9.2010 that respondent No.4 has already paid a sum of ` 5703/-, the total amount payable by him after deducting ` 5703/-was ` 35,976/-. Respondent No.4 has submitted the claims on the basis of two instructions issued by the R.B.I. though he was only entitled to 15% of D.A. as per letter dated 24.9.2000 read with letter dated 11.11.1996. Respondent No.4 could only claim 15% of D.A. and not 90%. It was not clear whether the case of respondent No.4 was to be covered under R.B.I instructions or the instructions issued by the Finance Department dated 24.9.2000 read with instructions issued on 11.11.1996. In fact, as noticed above, respondent No.4 was entitled to D.A. as per letter dated 11.11.1996 and 1.12.2000. It is not the case where respondent No.4 has filed false claim claiming D.A. He has based his case on the basis of earlier instructions issued by the R.B.I though it transpired later on that his case was to be covered under the instructions issued on 11.11.1996 and 1.12.2000. The amount claimed by respondent No.4 has already been sanctioned by the-then Managing Director. In these circumstances since there was no clarity which instructions are to be followed, respondent No.4 has been made to pay the excess amount. He has paid the excess amount on 12.10.2010. Respondent No.4 cannot be treated as defaulter as per sub-rule (xix) of rule 2. According to the definition, ‘defaulter’ means a member of a society who fails to repay any loan, advance, cash, credit limits, sum or interest there on accrued due to the society, financing bank within the time fixed for repayment or the time limit, if any, fixed in the bye-laws. It was a plain case of claiming the D.A. by respondent No.4. He has neither raised any loan or cash credit limit. Respondent No.4, in these circumstances, cannot be termed as defaulter. Thus, he has not incurred disqualification as argued by Mr. Ajay Sharma under clause (i) of sub-rule (2) of rule 41. It was a plain case of claiming the D.A. by respondent No.4. He has neither raised any loan or cash credit limit. Respondent No.4, in these circumstances, cannot be termed as defaulter. Thus, he has not incurred disqualification as argued by Mr. Ajay Sharma under clause (i) of sub-rule (2) of rule 41. The claiming of D.A. also cannot be treated as debt as argued by Mr. Ajay Sharma. The provisions stated hereinabove are to be construed narrowly. 10. Accordingly, in view of the observations and discussions made hereinabove, there is no merit in the writ petition and the same is dismissed. There shall, however, be no order as to costs.