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State of Orissa Vs. V.V. Apparao - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtOrissa High Court
Decided On
Case NumberFirst Appeal No. 64 of 1960
Judge
Reported inAIR1963Ori181
ActsProvident Funds Act, 1925 - Sections 6, 7 and 8; Madras Local Boards Act, 1928; Local Board Provident Fund Rules - Rule 22; Orissa Local Funds Audit Act, 1948 - Sections 9; Madras Local Boards Act, 1920
AppellantState of Orissa
RespondentV.V. Apparao
Appellant AdvocateH.G. Panda and ;S.K. Panda, Advs.
Respondent AdvocateY.S.N. Murthy and ;R.C. Misra, Advs.
DispositionAppeal dismissed
Cases ReferredAssam Bengal Rly. Co. Ltd. v. Atul Chandra
Excerpt:
.....in good faith was done or purported to be done under the aforesaid act. panda the action cf the district board was done in good faith as defined in the general clauses act and though an obviously untenable construction was put on r. 23 of the said rules nevertheless the good faith of the district board was beyond ques-sion. it is true that 'good faith' as defined in the general clauses act (see section 3(22) ) is somewhat wider than the definition of the same expression in the indian penalcode; and that so long as an act was done honestly it will be taken to have been dons in good faith even though it might have been done negligently. 318) however liberal the definition of 'good faith' may be such a plea cannot be but forward whereeven a cursory reading of the statutory provisions..........provisions of the act, the madias government also made rules, known as the local boards provident fund rules under section 71(1) (g) and section 199(2) (a) of the madras local boards act, 1920, for the purpose of administering such funds. in the meantime the orissa legislature passed another act known as the orissa local funds audit act 1948 (orissa act v of 1948) mainly with a view to unify the laws relating to audit of local funds in the state of orissa and to provide for a uniform procedure for the audit of local funds. this act was made applicable to all the district boards including the ganjam district board by notification no. 5339 l. s. g. dated the 13th may 1952. in consequence of this notification the audit of funds of a district board can be made only under the provisions of.....
Judgment:

Narasimham, C.J.

1. This is an appeal from the judgment of the Additional Subordinate Judge, Berhampur decreeing the respondent-Plaintiff's suit for recovery of the balance of the Provident Fund amount standing to his credit with appellant-defendant.

2. The respondent was a servant of Ganjam District Board and retired on 15th February, 1955. He was asubscriber to the Contribuory Provident Fund of the Dis-trict Board and as soon as he retired he requested that the entire sum standing to his credit may be paid to him. Part payment of Rs. 14365/- was made to him on 23 Nov. 1955, and thereafter on receipt of frequent reminders the Special Officer, District Board in his proceedings dated 15th May 1957 (Ext. J) a copy of which was communicated to him ordered as follows :

'The Provident Fund Account No. 1930 of Shri V. V. Apparao retired D. B. F. of Ganjam is closed finally. Ha has a balance of Rs. 1171/- under subscription and Rs. 5045/ under bonus account. Out of the total sum of Rs. 6216/ Rs. 2716 will be paid to him on production of a stamp receipt in advance duly witnessed and Rs. 3500/-will be transferred to deposits to be paid to him after receipt of final outstanding certificate from the D. B. E. Ganjam.

Sd/- Illegible.'

Soon afterwards a detailed statement showing certain outstanding against the respondent was prepared by the District Board Engineer (Ext. 1/1) and this was also sent to the respondent by the Special Officer of the District Board by his letter No. B. E. A. No. 5356 dated 2nd June 1957 (Ext. L). Thus while admitting that the balance of the provident fund due to the respondent on (the date af his retirement (15th February 1955) was Rs. 3508/- he refused to pay the same but transferred it to what is known as Deposit Account, stating that the accounts were finalised and the outstanding against the respondent were definitely known, future payments may be made. Though this assurance was given in May or June 1957 it is admitted that till now the outstanding dues from the respondent to the District Board have not yet been finalised. The respondent waited, for sometime and then instituted a suit on 1st February 1958 claiming the admitieel balance of Rs. 3500/- together with interest which he claimed at 9 per cent per annum and also future interest. The learned lower Court allowed interest at 4 1/2 per cent per annum only from the date of retirement and also future interest at the same rate. The total amount decreed on the basis of his order thus came to Rs. 4493/ With proportionate costs and future interest at 4 1/2 per cent per annum till payment.

3. Mr. H. G. Panda for the appellant could hardly give any convincing reason in support of this appeal. On the statement of the District Board itself the amount is due to the respondent being the balance standing to his credit in his Provident Fund Account. It was transferred to his Deposit account by the proceedings of the Special Officer of the iistrict Board. Ext. J dated 25-5-57 but till now nothing further has been done.

The President Funds Act 1925 had been extended to Provident Funds under the control of local authority by appropriate notifications under Section 8 of the Act. There can therefore be no doubt that the Provident Fund ac-counts maintained by the District Board of Ganjam will also be governed by the provisions of the Act, The Madias Government also made rules, known as the Local Boards Provident Fund Rules under Section 71(1) (g) and Section 199(2) (a) of the Madras Local Boards Act, 1920, for the purpose of administering such funds. In the meantime the Orissa legislature passed another Act known as the Orissa Local Funds Audit Act 1948 (Orissa Act V of 1948) mainly with a view to unify the laws relating to audit of local funds in the State of Orissa and to provide for a uniform procedure for the audit of local funds. This Act was made applicable to all the District Boards including the Ganjam District Board by notification No. 5339 L. S. G. dated the 13th May 1952. In consequence of this notification the audit of funds of a District Board can be made only under the provisions of that Act notwithstanding any provision to the contrary contained in any other Act or Rule. The Orissa Local Funds Audit Act lays down the procedure to be followed whenever any sum is held due to the District Board either on account of negligence or dishonesty on the part of any of its employees.

Section 9 says that on receipt of the audit report the Examiner of Local Fund Accounts may, after giving an opportunity to the aggrieved person to show cause and holding such enquiry as may be necessary, issue an order of surcharge on the person responsible for the loss to the District Board, and certify the amount as due from him. As soon as such a certificate is issued the amount can be realised as a public demand from the person concerned. There is a right of appeal under Section 11 of the Act, to a superior authority against the order of the Examinee of Local Funds Accounts. If therefore the District Board wanted to recoup from the respondent any amount alleged to be due from him to the District Board, during his service either due to his negligence or dishonesty or any other reason, the appropriate enquiry should have been made under the provisions of the aforesaid Act and the amount should have been certified.

But the witness for the District Board (D.W. 2) who was the District Engineer during the relevant period frankly admitted that no final order of surcharge has yet been passed against the respondent by the Examiner of Local Funds Examiner.

4. On these facts the sole question is whether the appellant is entitled to withhold payment of the admitted sum due to the respondent, unless and until a proper enquiry is made and a surcharge certificate is issued by the Examiner of Local Fund Accounts under Section 9 of the Orissa Local Funds Audit Act 1948.

5. The appellant retired from the service of the District Board on 15th February 1955. Two years later he was informed that the money would be transferred to Deposit Account and would be paid to him on receipt of final outstanding certificate (Ext. J). Though the District Board Engineer gave a detailed statement on 29th May 1952 (Ext. L/1) showing various items which according to him were due from the respondent nothing happened thereafter. There is no provision either in the Local Boards Provident Fund Rules (made under Madras Local Boards Act 1920) or in the Provident Funds Act, 1929 empowering the competent authority to withhold payment of the sums admittedly due to the subscriber, unt I the authority chooses at its own leisure to complete all enquiries with a view to ascertain whether any sum is dug to the District Board from the subscriber. The sum due to a subscriber from the Provident Fund account should he paid as soon as possible after his retirement. Section 6 of the Provident Funds Act authorises deductions from the balance to his credit of any amount due under a liability incurred by the subscriber. But this provision will not help the appellant (District Board) because until the final certificate is given by the Examiner of the Local Funds Accounts under Section 9 of the Orissa Local Funds Audit Act, 1948, it cannot be definitely stated that any sum is due to the District Board under any liability incurred by the respondent.

Mr. Panda relied on Rule 22 of the Local Boards Provident Fund Rules which authorises the withholding of sumsdue, under certain conditions. But those conditions donot apply here. Rule 22 authorises such withholding onlywhen the subscriber is either dismissed or is compelled toresign. Admittedly the respondent was neither dismissednor compelled to resign. Explanation (2) to the Rule autho-rises the transfer, to the Deposit Account, of any moneythat remains unclaimed for 6 months or else in caseswhere the subscriber is dead and no claimant applies within6 months from the date on which notice was issued tohim. This Explanation also has no application here. Thus,even a cursory scrutiny of R. 22 would show that noneof its provisions would apply. There is therefore no justification whatsoever for the District Board to withhold Paymerit of the balance of the provident fund money to therespondent.

6. Mr. Panda then somewhat faintly contended thatin any view of the case no suit would lie against the District Board in view of the bar imposed by Section 7 of the Provident Funds Act which says that no suit or any other legal proceeding shall lie against any person in respect of anything which in good faith was done or purported to be done under the aforesaid Act.

7. In my opinion the protection of this Section can-sot be availed of by the appellant. I have already shown that there is no provision in the Provident Funds Act for withholding payment of the money due to a subscriber or for transferring it to the Deposit Account until further enquiries are made. Hence the action of the Special Officer of the Ganjam District Board in transferring the balance of the respondent's provident fund dues, to the Deposit account (see Ext. 1) cannot be said to be 'an act done under the provisions, of the Provident Funds Act.' Mr. Panda however urged that it may be held to be an act 'intended to be done under R. 22 of the Local Boards Provident Funds Rules even though the competent authority might have made an obvious mistake in construing the said provision.

8. According to Mr. Panda the action cf the District Board was done in good faith as defined in the General Clauses Act and though an obviously untenable construction was put on R. 23 of the said Rules nevertheless the good faith of the District Board was beyond ques-Sion. It is true that 'good faith' as defined in the General Clauses Act (see Section 3(22) ) is somewhat wider than the definition of the same expression in the Indian PenalCode; and that so long as an act was done honestly it will be taken to have been dons in good faith even though it might have been done negligently. But it is difficultto hold that the transfer of the balance due to the respondent was made or intended to be done under Rule 22 of the aforesaid rules which, by its very terms, applies only to cases of dismissal or resignation of a subscriber, or where he is dead and no claim is made within 6 months of the receipt of notice. As pointed out in Assam Bengal Rly. Co. Ltd. v. Atul Chandra, AIR 1937 Cal 314 (at p. 318) however liberal the definition of 'good faith' may be such a plea cannot be but forward whereeven a cursory reading of the statutory provisions shows that it can have no application to a particular case.

9. Apart from the aforesaid considerations, even ifit be assumed that the appellant purported to act, in goodfaith, under Rule 22 of the Local Boards Provident Funds Rules it cannot be said that such an act was done under the provisions of the Provident Funds Act. The Provident Funds Act is a Central Act passed in 1825. If any rules had been made under the provisions of that Act and action had been taken under any of those Rules, it may be urgedwith some justification that such action will be deemed to have taken under the provision of the parent Act so as to get the protection of Section 7 of that Act. But as stated already the Local Boards Provident Fund Rules were made under the provisions of the Madras Local Boards Act 1920, and those rules may get the protection if any, under the provisions of the Madras Local Boards Act but they cannot get protection of Section 7 of the Provident Funds Act because the latter Act is not the parent Act under which the Rules were made. The. mere fact that the Provident Fund accounts maintained by the District Board were brought within the scope of the Provident Funds Act by an appropriate notification under Section 8 of that Act, will not suffice to show that the rules made under another statute will get the protection of the provisions of the Provident Funds Act.

10. Thus in any view of the case it must be held that the withholding the balance of the provident fund due the respondent by the appellant was unauthorised.

11. As regards the interest, Rule 15(1) of the Local Boards Provident Fund Rules allows interest at 4 percent in the first instance unless the rate is changed by the District Board with the approval of the Examiner of Local Funds Accounts but this interest is credited to the account of the provident fund when the subscriber is in service. Sub-rule (4) of Rule 15 allows interest to be payable from the date on which the provident fund becomes payable till the date on which it is actually paid. This rule however does not say that this interest must also, be of the same rate as that prescribed in Sub-rule (1) of Rule 15. The Court has some discretion in the matter and as it has allowed interest only at 4 1/2 per cent per annum i.e. 1/2 per cent above the statutory rate, I do not think we should interfere. Future interest also has been fixed at 4 1/2 per cent per annum.

12. For these reasons the appeal is dismissed withcosts.

Barman, J.

13. I agree.


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