RAJESH BINDAL, C.J.
1. The matter has been placed before this Court for consideration of the following questions of law, on account of doubt expressed by learned Single Judge on the view expressed earlier by a Single Judge of this Court in Writ-C No. 24902 of 2019 (Uday Pratap Singh @ Harikesh Vs. State of U.P. and others) decided on 30.09.2019:
"(1) Whether in view of the U.P. Panchayat Raj (Amendment) Rules, 1969 by which Chapter- XIII with the heading ''SURCHARGE' was inserted in the U.P. Panchayat Raj Rules, 1947 in exercise of powers under Section 110 by the State Government, which have been notified in the Gazette on 31.05.1969, the District Magistrate is the ''Prescribed Authority' for imposing surcharge on Pradhan, Up-Pradhan and Members under Section 27 (2) in terms of Section 2(q)(ii) of the U.P. Panchayat Raj Act, 1947 or not ?, and whether the District Pachayat Raj Officer is the Prescribed Authority for imposing surcharge upon the Officers or servants of the Gaon Sabha or not ?
(2) Whether the decision rendered by a Single Judge Bench in Writ- C No. 24902 of 2019; Uday Pratap Singh @ Harikesh Vs. State of U.P. and others and connected petitions on 30.09.2019 lays down the law correctly with regard to Question No. 1 framed above ?"
2. As only legal issues have been referred to be considered by Larger Bench, we do not go much in the facts of the case as for that purpose the matter will go back before the learned Single Judge.
3. The argument raised by learned counsel for the petitioners is that the Prescribed Authority having not been notified in terms of the provisions of the U.P. Panchayat Raj Act, 1947 (hereinafter referred to as "the Act"), the District Magistrate cannot exercise the power. A plain reading of Section 27 of the Act shows that the Prescribed Authority is to fix the amount of surcharge and certify the same to the Collector for recovery of the same as arrears of land revenue. It would clearly mean that two persons have to be different authorities. The Prescribed Authority cannot be the Collector (District Magistrate).
4. On the other hand, learned counsel for the State submitted that Section 2(q) of the Act defines "Prescribed Authority". Clause (ii) thereof provides that the Prescribed Authority shall be the authority notified as such by the Government, whether generally or for any particular purpose. Chapter-XIII was added in the U.P. Panchayat Raj Rules, 1947 (hereinafter referred to as the "the Rules") vide Notification dated May 22, 1969 published in Gazette on May 31, 1969. It clearly provides the procedure and the authority competent to take action in terms of Section 27 of the Act. This is in compliance to the requirements of Section 27 read with Section 2(q) of the Act.
5. From a plain reading of the Rules contained in Chapter XIII of the Act, it is evident that hierarchy of officers has been provided even for hearing the appeals against the orders passed by the authorities concerned. No separate notification, as such, is required to be issued as the Rules framed in exercise of powers conferred under Section 110 of the Act provides for the same. It is not a matter of dispute that the Rules were notified in the Gazette. He further submitted that merely because in Section 27(2) it is mentioned that the Prescribed Authority shall fix the amount of surcharge and certify this amount to the Collector for recovery as arrears of land revenue, it will not mean that both the authorities have to be different. If seen in the light of the definition of "Collector", as provided in Section 2(e) of the Act, there are many officers who fall within the definition of Collector. Even otherwise, the same officer can exercise two powers. Recovery of an amount as arrears of land revenue is nothing but execution of the order passed by Prescribed Authority for recovering the amount as per procedure prescribed.
6. The matter came to be referred for decision by this Bench on account of opinion expressed by a Single Judge of this Court in Uday Pratap Singh's case (supra) holding as under:
"A. The expression "Prescribed Authority" referred to in Section 27(2) of the Act means an authority duly designated for that purpose in accordance with the provisions made in Section 2(q)(ii);
B. The State has failed to establish that the District Magistrate was duly notified as the Prescribed Authority in accordance with the mandate of Section 2(q)(ii). In the absence of a notification designating the District Magistrate as the competent authority for the purposes of Section 27(2), the orders of surcharge impugned cannot be sustained;
C. The prescription of a procedure for assessment and recovery of surcharge in Chapter XIII of the Rules and the assignment of a role to the District Magistrate or the District Panchayat Raj Officer thereunder cannot be held to be a compliance of the requirement of Section 27(2);
D. Rules 256-259 as contained in Chapter XIII of the Rules are only an extension of the requirement placed by Section 27(2) to lay in place a structure to "fix the amount of the surcharge according to the procedure that may be prescribed";
E. Section 27(2) neither sanctions nor envisages the designation of a Prescribed Authority by way of a rule or other subordinate legislation;".
7. Heard learned counsel for the parties.
8. The relevant provisions of the Act are extracted below:
"2. Definitions - In this Act, unless there is anything repugnant in the subject or context. -
x x x x
(e) ''Collector' or ''District Magistrate' or ''Sub-divisional Magistrate' with reference to a Gram Sabha, means the Collector, District Magistrate or Sub-Divisional Magistrate of the District or the sub-division, as the case may be, in which such Gram Sabha is constituted; and shall respectively include Additional Collector, Additional District Magistrate and Additional Sub-Divisional Magistrate;
(i) for the purposes of the provisions of this Act mentioned in Schedule III of the Uttar Pradesh Kshettra Panchayat and Zila Panchayat Adhiniyam, 1961, the Zila Panchayat or the Kshettra Panchayat, as may be specified in column 3 of that Schedule; and
(ii) in respect of any other provisions of this Act, the authority notified as such by the State Government whether generally or for any particular purpose;
x x x x
27. Surcharge - (1) Every Pradhan of a Gram Panchayat, every member of a Gram Panchayat or of a Joint Committee or any other committee constituted under this Act shall be liable to surcharge for the loss, waste or misapplication of money or property belonging to the Gram Panchayat, if such loss, waste or misapplication is direct consequence of his neglect or misconduct while he was such Pradhan or Member;
Provided that such liability shall cease to exist after the expiration of ten years from the occurrence of such loss, waste or misapplication, or five years from the date on which the person liable ceases to hold his office, whichever is later.
(2) The prescribed authority shall fix the amount of the surcharge according to the procedure that may be prescribed and shall certify the amount to the Collector who shall, on being satisfied that the amount is due, realize it as if it were an arrear of land revenue.
(3) Any person aggrieved by the order of the prescribed authority fixing the amount of surcharge may, within thirty days of such order, appeal against the order to the State Government or such other appellate authority as may be prescribed.
(4) Where no proceeding for fixation and realization of surcharge as specified in sub-section (2) is taken the State Government may institute a suit for compensation for such loss, waste or misapplication, against the person liable for the same.
x x x x 110. Powers of State Government to make Rules - (1) The State Government may, by notification in the Gazette, make rules for carrying out the purposes of this Act." 9. The Rules 256 to 260 of the Rules, relevant for the purpose of this case, read as under:
"256 (1) In any case where the Chief Audit Officer, Co-operative Societies and Panchayats, considers that there has been a loss, waste or misuse of any money or other property belonging to a Gram Sabha as a direct consequence of the negligence or misconduct of a Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat, he may call upon the Pradhan, Up-Prahdan, Member, Officer or servant, as the case may be, to explain in writing why such Pradhan, Up-Pradhan, Member, Officer, or servant should not be required to pay the amount misused or the amount which represents the loss or waste caused to the Gram Sabha or to its property and such explanation shall be furnished within a period not exceeding two months from the date such requisition is communicated to the person concerned:
Provided that an explanation from the Pradhan, Up-Pradhan or member of the Gram Panchayat shall be called for through the District Magistrate and from the officer or servant through the District Panchayat Raj Officer:
Provided also that no explanation shall be called for from any member who is recorded in the minutes of the Gram Panchayats or any of its committee as having been absent from the meeting at which the expenditure objected to was sanctioned or who voted against such expenditure.
(2) Without prejudice to the generality of the provisions contained in sub-rule (1) the Chief Audit Officer, Cooperative Societies and Panchayts, may call for the explanation in the following cases:
(a) where expenditure has been incurred in contravention of the provisions of the Act or of the rules or regulations made thereunder;
(b) where loss has been caused to the Gram Sabha by acceptance of a higher tender without sufficient reasons in writing.
(c) where any sum due to the Gram Sabha has been remitted in contravention of the provisions of the Act or the rules or regulations made thereunder;
(d) where the loss has been caused to the Gram Sabha by neglect in realizing its dues; or
(e) where loss has been caused to the funds or other property of the Gram Sabha on account of want of reasonable care for the custody of such money or property.
(3) On the written request of the Pradhan, Up-Pradhan, Member, Officer or servant from whom an explanation has been called for, the Gram Panchayat shall give him necessary facilities for inspection of the records connected with the requisition for surcharge. The Chief Audit Officer may, on application from the person surcharged, allow a reasonable extension of time for submission of his explanation if he is satisfied that the person charged has been unable, for reasons beyond his control, to consult the record for the purpose of furnishing his explanation.
257. (1). After the expiry of the period prescribed in sub-rule (1) or (3) of Rule 256, as the case may be, and after examining the explanation, if any, received within time, the Chief Audit Officer shall submit the papers along with his recommendations to the District Magistrate of the district in which the Gram Sabha is situated in case of Pradhan, Up-Pradhan and Members and to the District Panchayat Raj Officer of the district in which the Gram Sabha is situated in case of Officers and servants.
(2) The District Magistrate or the District Panchayat Raj Officer, as the case may be, after examining and after considering the explanation, if any, shall require the Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat to pay the whole or part of the sum to which such Pradhan, Up-Pradhan, Member, Officer or servant is found liable:
Provided, firstly, that no Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat would be required to make good the loss, if from the explanation of the Pradhan, Up-Pradhan, Member, Officer or servant concerned or otherwise the District Magistrate or the District Panchayat Raj Officer, as the case may be, is satisfied that the loss was caused by an act of the Pradhan, Up-Pradhan, Member, Officer or servant in the bona fide discharge of his duties:
Provided secondly, that in the case of loss, waste or misuse occurring as a result of a resolution of the Gram Panchayat or any of its committees the amount of loss to be recovered shall be divided equally among all the members including Pradhan and Up-Pradhan, who are reported in the minutes of the Gram Panchayat or any of its committee as having voted for or who remained neutral in respect of such resolution:
Provided thirdly, that no Pradhan, Up-Pradhan, Member, Officer or servant shall be liable for any loss, waste or misuse after the expiry of four years from the occurrence of such loss, waste or misuse or after the expiry of three years from the date of his ceasing to be Pradhan, Up-Pradhan, Member, Officer or servant of the Gram Panchayat, whichever is later.
258. (1) Any Pradhan, Up-Pradhan or Member of a Gram Panchayat aggrieved with an order of surcharge passed by the District Magistrate under Rule 256 may appeal to the Commissioner of the Division within thirty days from the date on which such order is communicated to him and the Commissioner of the Division may confirm, rescind or vary the order passed by the District Magistrate or may pass such orders as he thinks fit.
(2) Any Officer or servant of a Gram Panchayat aggrieved with an order of surcharge passed by the District Panchayat Raj Officer may appeal to the District Magistrate within thirty days from the date on which such order is communicated to him and the District Magistrate may confirm, rescind or vary the order passed by the District Panchayat Raj Officer or may pass such orders as he thinks fit.
259. (1) A Pradhan, Up-Pradhan, Member, Officer or servant of a Gram Panchayat who has been surcharged, shall pay the amount of surcharge within three months from the date of communication to him of the order of surcharge passed by the District Magistrate or the District Panchayat Raj Officer, as the case may be:
Provided that when an appeal has been preferred under Rule 258 against the order of surcharge passed by the District Magistrate or the District Panchayat Raj Officer, all proceedings for recovery of the surcharge from the persons who have preferred the appeal shall be stayed until the appeal has been finally decided.
(2) If the amount of surcharge is not paid within the period specified in sub-rule (1) it shall be recovered as arrears of land revenue.
260. Where a suit is instituted in a Court to question an order of surcharge and the District Magistrate, District Panchayat Raj Officer or the Commissioner of the Division is a defendant in such a suit, all costs incurred in defending such a suit shall be paid by the Gaon Panchayat and it shall be the duty of the Gaon Panchayat to make such payment without undue delay."
10. Section 27 of the Act provides that every Pradhan of a Gram Panchayat and every member of a Gram Panchayat or of a Joint Committee or any other committee constituted under this Act shall be liable to surcharge for the loss, waste or misapplication of money or property belonging to the Gram Panchayat, if such loss, waste or misapplication is direct consequence of his neglect or misconduct in discharge of his duties. The Prescribed Authority has been given power to fix the amount of surcharge according to the procedure as may be prescribed. The amount has to be certified to the Collector for realization as arrears of land revenue. Sub-section (3) thereof provides that any person aggrieved by an order of Prescribed Authority fixing the amount of surcharge may file an appeal against such order to the State Government or such other appellate authority, as may be prescribed.
11. Section 2(q)(ii) defines "Prescribed Authority" as an authority notified as such by State Government, whether generally or for any particular purpose. It would mean that the Prescribed Authority is to be notified conferring power under this Act. Section 110 of the Act provides that the State Government may, by notification in the Gazette, make Rules for carrying out the purposes of this Act.
12. It cannot be disputed that the purpose of notifying Prescribed Authority is to carry out the purposes of this Act. It is not only the Prescribed Authority but in terms of Section 27(3) even an appellate authority is also to be prescribed.
13. Chapter-XIII was added in the Rules vide Notification dated May 22, 1969 published in Gazette on May 31, 1969. Rule 256 of the Rules provides different authorities for taking action in terms of Section 27 of the Act. A perusal of Rules 256 to 260 of Chapter XIII of the Rules show that complete procedure has been provided for fixation of the surcharge to be recovered from different officers in Gram Panchayat on account of loss, waste or misuse of any money/property belonging to the Gaon Sabha which is on account of a direct consequence of negligence or misconduct of the person concerned. Chief Audit Officer, Cooperative Society and Panchayats is to consider the same and after examination of the explanation, if any, received from persons concerned, submit the papers along with recommendation to the District Magistrate of the District in which the Gaon Sabha is situated, in case of Pradhan, Up-Pradhan and Member. The report along with recommendation has to be sent by Chief Audit Officer to the District Panchayat Raj Officer of the District in which Gaon Sabha is situated, in case of Officers and servants. The District Magistrate or the the District Panchayat Raj Officer, as the case may be, is to finally fix the amount, which is recoverable from the person concerned.
14. Rule 258 provides the appellate authority, in terms of Section 27 (3) of the Act. An order passed by the District Magistrate is appealable to the Commissioner of the Division, whereas an order passed by District Panchayat Raj Officer is appealable to the District Magistrate.
15. The argument raised by learned counsel for the petitioners that separate notification had to be issued for specifying Prescribed Authority for taking action for assessment of surcharge is misconceived and deserves to be rejected. A perusal of various provisions of the Act, as have been referred above, only shows that a notification has to be issued. That would not mean that a separate notification is to be issued only for notifying the Prescribed Authority. Once the complete procedure for fixation of surcharge and authority concerned for the purpose has been prescribed in the Rules framed under the Act, which have been duly notified, in our opinion the mandate of the law stands satisfied.
16. The District Magistrate is the competent authority for fixation of amount of surcharge recoverable from Pradhan, Up-Pradhan and Member and the District Panchayat Raj Officer is competent authority for fixing the amount of surcharge in case of officers and servants.
17. The argument that the Prescribed Authority as well as Collector have to be separate persons is merely to be noticed and rejected as the same authority can be conferred with two different powers. In any case, recovery of an amount due from any person is merely a process of execution and power can be exercised even by the same authority, or any other authority prescribed under the Act.
18. It may also be seen in the light of the fact that in the definition of "Collector", it is not only "District Magistrate", rather Sub-divisional Magistrate, Additional Collector, Additional District Magistrate and Additional Sub Divisional Magistrate are also included therein.
19. The opinion expressed by learned Single Judge of this Court in Uday Pratap Singh's case (supra) is not in correct perspective of the provisions of the Act and the Rules, hence may not be treated as precedent to be followed, as it is does not lay down the law correctly.
20. For the reason mentioned above, the question no. 1, as referred to be considered by Division Bench, is answered in positive. In view of the U.P. Panchayat Raj (Amendment) Rules, 1969, by which Chapter- XIII with the heading ''SURCHARGE' was inserted in the U.P. Panchayat Raj Rules, 1947 in exercise of powers under Section 110 by the State Government, as notified in the Official Gazette on May 31, 1969, the District Magistrate is the ''Prescribed Authority' for imposing surcharge on Pradhan, Up-Pradhan and Members under Section 27(2) and the District Pachayat Raj Officer is the Prescribed Authority for imposing surcharge upon the Officers or servants of the Gaon Sabha.
21. As far as the question no. 2 is concerned, the answer thereof is in negative. The decision rendered by learned Single Judge of this Court in Uday Pratap Singh's case (supra) whereby a bunch of petitions were decided, does not lay down the law correctly.
22. The reference is, accordingly, answered.
23. The matters shall now be placed before learned Single Judge on January 17, 2021, for further consideration.
(Jaspreet Singh, J.) (Rajesh Bindal, C.J.) Lucknow December 17, 2021 P.Sri. Whether the order is speaking : Yes/No Whether the order is reportable : √Yes/No