P. Suganthi vs The District Collector cum Inspector of Panchayats and The Block Development Officer (Village Panchayats)

R. Subbiah, J.—The question that falls for consideration in this Writ Appeal is whether the District Collector/Inspector of Panchayat can divest the cheque signing power u/s 203 of the Tamil Nadu Panchayat Act, 1994 (hereinafter referred to as ''the Act'') which is the function of the President of the Panchayat and to hand over the same to Block Development Officer pending proceedings u/s 205 of the Act as against the President.

The facts which are necessary to decide this Writ Appeal are as follows:

(a) The Appellant herein is the President of Kumaragiri Panchayat. He was elected and assumed charge on 25.10.2006 as the President of said Panchayat. During his tenure as President in the said Panchayat, the First Respondent, the Inspector of Panchayat had issued a show cause notice dated 31.5.2010 calling for explanation for the serious financial misdeeds committed during the course of various activities in the said panchayat and also calling for explanation from the President as to why the cheque signing power of the President should not be transferred to the Block Development officer, the Second Respondent herein. On 23.6.2010, the Appellant gave an explanation to the said, show cause notice

(b) On consideration of his explanation, the District Collector, the First Respondent, passed the impugned order dated 13.8.2010 transferring the cheque signing power of the Appellant to the Block Development Officer, the Second Respondent herein pending enquiry u/s 205 of the Act for removal of Presidentship. Aggrieved over the order dated 13.8.2010, transferring the cheque signing power from the Appellant to the Second Respondent, the Writ Petition has been filed. The learned Single Judge by order dated 9.11.2010 dismissed the Writ Petition. Hence, the present Appeal.

Learned Senior Counsel appearing for the Appellant submitted that under the provisions of the Act, there is no provision to divest the function of cheque signing power of a person pending proceedings u/s 205 of the Act. The First Respondent has transferred the cheque signing power to the Second Respondent erroneously. In this regard, learned Senior Counsel appearing for the Appellant by inviting the attention of this Court to Section 188(3) of he Act submitted that the cheque should be signed jointly by the President and Vice President and in the absence of the President or Vice President, as the case may be, by the Vice President or the President and another member of the Village Panchayat is authorised to sign the cheque at a meeting with regard to the cheque signing power. When that being the legal position, the question of transferring the cheque signing power to the executive from the Appellant, pending proceedings u/s 205 of the Act does not arise since there is an in-built provision in the Act itself to safeguard the financial aspects of the panchayat. In this regard, learned Senior Counsel appearing for the Appellant has also, relied upon a judgment S. Udayakumar v. The District Collector-cum-inspector of Panchayats 2009 WLR 538.

Per contra learned Special Government Pleader appearing for the Respondents submitted that the allegations levelled against the Appellant are with regard to the misappropriation of panchayat funds and the same is very serious in nature. Under such circumstances, the impugned order passed by the First Respondent transferring the cheque signing power to the Second Respondent cannot be found fault with. The District Collector as Inspector of Panchayats has ample power u/s 203 of the Act to transfer the cheque signing power from the Appellant to the Second Respondent, the Block Development Officer pending final proceedings u/s 205 of the Act.

In reply, learned Senior Counsel appearing for the Appellant submitted that Section 203 of the Act deals with only emergency power of the Collector, in case of emergency, he is empowered to execute or do and the immediate execution or doing of which is in his opinion necessary for the safety of the public. He further submitted that a careful reading of the said provision does not give a meaning with regard to the transfer of cheque signing power and it could be construed as in case of emergency.

We have considered the submissions made by the learned Counsel on either side and perused the materials available on record.

In view of the submissions made by the learned Counsel on either side, the question that has arisen for, consideration is whether the Collector, the First Respondent has power to transfer the cheque signing power pending proceedings initiated against the President of the said Panchayal for financial misdeeds. It is the main contention of the learned Counsel for the Appellant that Section 203 deals about emergency power of Collector to direct or provide for the execution of any work or doing of any act which the Executive Authority or Commissioner is empowered to execute.

It is the contention of the learned Senior Counsel for the Appellant, the wordings envisaged in Section 203 of the Act do not spell out a meaning either, impliedly or expressly the transfer of cheque signing power pending proceedings against the Panchayat President to execute in case of emergency.

On a perusal of the Counter Affidavit filed in the Writ Petition, we found that it has been stated that on inspection of the Village Panchayat on 27.4.2010, it has been found that a sum of Rs. 2,28,150/- was spent towards removal of waste in streets. Though utilisation of NMR was banned as per the G.O. Ms. No. 93, Rural Development Department, dated 26.3.1997, N.M. Rs were used in Kumaragiri Village Panchayat and expenditure were incurred. It was noticed that 12,900 Kg (258 bags) of Bleaching powder was purchased for Rs. 2,03,875/- and no bag of bleaching powder was kept in the Village Panchayat office during the inspection and no entries have been made in the stock register (Panchayat Form No. 18) of the Kumaragiri village panchayat and thus a sum of Rs. 31,61,246/- was misappropriated spent in violation of Rules by the Kumaragiri Village Panchayat President. The village panchayat was inspected on 19.4.2010 and 27.4.2010 by Inspecting Officers and the show cause notice was issued by the District Collector/Inspector of Panchayats on 28.5.2010 after verifying the records and vouchers. As per the inspection report only, a sum of Rs. 58/- was only kept in the Village Panchayat General Fund Account at the end of May 2010. Though as per records, a total number of 2500 water supply house connections were given to the public and a sum of Rs. 25 lakhs was collected from the public as deposit amount ( Rs. 1000/- per connection). This deposit amount should not be utilised for any purpose and it should be kept idle in the Village Panchayat Bank account. This amount was also misutilised.

Thus in the Counter Statement various allegations were pointed out as against the President with regard to the financial misdeeds. Though the submission was made by the learned Senior Counsel for the Appellant that in the show cause notice, the allegations made in the Counter Affidavit do not a find place, on a perusal of the show cause notice, we found that the charges levelled in the said show cause notice, dated 31.5.2010 are only pertaining to the non-accounting of the amounts in the Village Panchayat account by the president and also about the alleged misappropriation.

When the proceedings is initiated as against the President of village related to financial misdeeds, we are of the view that the transferring the cheque signing power from the Village President to Block Development Officer, the Second Respondent is definitely a case of emergency fitting within the provisions of Section 203 of the Act. If the Appellant is allowed to continue to sign the cheques, it would amount to endorse the alleged irregularities committed by the Appellant. Moreoever, the transferring of cheque signing power is only an interim arrangement, till the completion of the proceedings initiated as against the Appellant u/s 205 of the Act.

The only aspect that has to be seen whether the notice has been issued to the Appellant before transferring the cheque signing power to the Second Respondent, the Block Development Officer. In the instant case, we find that the show cause notice was issued on 31.5.2010 by the District Collector expressing his intention to transfer the cheque signing power from the Appellant to the Second Respondent, the Block Development Officer. The Appellant has also sent a reply to the said show cause notice. Under such circumstances, the case relied upon by the learned Counsel for the Appellant S. Udaya Kramar v. The District Colleactor-cum-Inspector of Panchayats 2009 Writ L.R.538, cannot be made applicable for the reason that the facts of that case would show that no notice was issued before passing the impugned order in transferring the cheque signing power.

In fact, in the Division Bench judgment in Pugazhendran President, Brammapuram Village Panchayat, Katpadi Panchayat Union Vs. B.G. Balu, The District Collector, (Inspector of Panchayats) and The Government of Tamil Nadu, considered this issue. In that case, since show cause notice was not issued before passing the impugned order in transferring the cheque signing power, the order was quashed. The relevant portion of the said judgment reads as follows:

In the present case a perusal of the order of the District Collector, Vellore (Inspector of Panchayats, Vellore) dated 7.11.2002 cancelling the power of the Vice President to sign the panchayat''s cheques as joint signatory, shows that the District Collector has merely acted on the recommendation of the Block Development Officer, Katpadi Panchayat Union, and he has not applied his mind independently to the facts of the case, and he has not come to any independent conclusion that the refusal to sign cheques by the Vice President was mala fide or for ulterior motives. The District Collector, Vellore without issuing notice to the Petitioner appears to have mechanically accepted the report of the Block Development Officer, Katpadi Panchayat Union, which in our opinion was not proper.

In paragraph-4 of the Petitioner''s Affidavit it has been specifically alleged that no notice was given by the District Collector before passing the impugned order, and this allegation has not been denied by the Collector in his Counter Affidavit. In our opinion, the District Collector''s order dated 1.11.2002 has Civil consequences, and hence it was incumbent on him to give a show cause notice to the Petitioner before passing it, which was not done. Hence, in our opinion, there was violation of the Principles of Natural Justice, and the impugned order becomes illegal.

The District Collector, Vellore should have given a show cause notice and an opportunity of hearing to the Vice President (which need not have been a personal hearing as already stated above) and after considering the explanation and other materials submitted by the Vice President, he should have applied his mind independently and in a fair and impartial manner, and should have recorded his own reasons in the order he passed. Since that does not appear to have been done in the order of the District Collector, Vellore dated 7.11.2002, in our opinion, the said order was rightly quashed. The matter is remanded to the District Collector, Vellore to pass a fresh order after giving an opportunity of hearing to the Vice President and President of the Panchayat, and others concerned, and after recording his reasons. This should be done very expeditiously by the District Collector, Vellore.

The principle laid down in the judgment would spell out a clear meaning that after affording an opportunity by issuing show cause notice to the Village President the transfer of cheque signing power is made, no infirmity could be found. In the instant case, after getting explanation from the Appellant by issuing show cause notice, the First Respondent passed by the impugned order and we do not find any infirmity in the order passed by the First Respondent. Hence, we are not inclined to make any interference in the order passed by the learned Single Judge.

The Writ Appeal stands dismissed No costs. Consequently, connected Miscellaneous Petition stands closed.