Bikash Krushna Mohanti Vs. Union of India Represented by Its Secretary in the Ministry of Defence, New Delhi and Others - Court Judgment

Excerpt:

Judgment:

LT GEN K P D Samanta, Member (Administrative):

1. The petitioner, Bikas Krushna Mohanti is a retired Major General from the Army Medical Corps. He was posted as Senior Registrar of Command Hospital, Eastern Command (for short ‘CHEC) with effect from January, 2000 in the rank of Colonel. He subsequently, was promoted to the rank of Brigadier and then to Major General and was awarded ‘Ati Vishisht Seva Medal. He retired on 30th September, 2006 in the rank of Major General.

2. During his tenure in the Command Hospital CHEC, the petitioner was proceeded against through a court of inquiry for causing irregular investment with one Mr. Vinod Juthani of M/s Ridhi-Sidhi Consultant, from Regimental Fund accounts of ‘CHEC pertaining to the period from January 1999 to June 2003. It was an action contrary to the instructions contained in Paragraph 829 of Regulations of Army, 1987 and other relevant instructions (Annexure 1 of the Writ petition). The petitioner along with others was proportionately blamed for such irregular investment that totalled up to more than Rs. 22 lakhs. Subsequent to the directions of the General Officer Commanding in Chief (GOC in C) Eastern Command (Respondent no. 3) based on the above Court of Inquiry on the subject, the petitioner was issued with a show-cause notice on 3rd February, 2005 for committing lapses resulting in financial irregularities, while posted as the Senior Registrar of ‘CHEC during the period from January 2000 to January 2001, resulting in irregular investments, wrong entries in cash ledger, non-reporting of such irregularities and inadequate exercise of Command and Control (Annexure 1). This show-cause notice was replied by the petitioner on 23rd February, 2005 (Annexure -4). Having considered his reply, the GOC-in-C, exercising his administrative powers, awarded “Severe Displeasure (non-recordable)” to the petitioner on 19th April, 2005 (Annexure P-5 of the Writ Petition).

3. The petitioner has also brought out that in the meantime, i.e., before he was served with a show-cause notice, he had deposited Rs. 3 lakhs as refundable deposit towards the amount of investment made during the financial year 2000- 2001, when he was the Senior Registrar. Such deposit was made in favour of the Regimental Fund Accounts of ‘CHEC, Kolkata. On 21st January, 2004 as is evident from the petitioners letter dated 21st January 2004 addressed to the Commandant, ‘CHEC (Annexure -2). The petitioner has enclosed a photocopy of the said bank draft with above annexure to further reiterate that he had deposited such amount with the Regimental Fund of ‘CHEC.

4. The petitioner at no point of time contested the administrative punishment that was awarded to him for lapses as enumerated in Annexure 1and5. He has, however, represented to the authorities seeking refund of Rs. 3 lakhs vide his representation dated 12th November 2007. This representation dated 12-11-2007 (Annexure -6) by the petitioner was made only after he retired from service and was addressed to the Commandant of ‘CHEC with a copy endorsed to the GOC-in-C of Eastern Command (Annexure -6). Following points were brought out by him in the said representation:-

(a) The petitioner deposited Rs. 3 lakhs as a ‘refundable deposit and it was in pursuance to discussions held by him with Commandant of ‘CHEC and Chief of Staff, Eastern Command (Lt Gen J R Mukherjee), reportedly on 12th Jan, 2004.

(b) The petitioner, after having been punished through an administrative action on 10th April, 2005, now considered that the matter should have been closed and he sought for refund of such refundable deposit of Rs. 3 lakhs.

(c) The petitioner being a retired officer, emphasized that he was in financial need. Therefore, he insisted that the amount paid by him should be returned to him immediately.

5. The ibid letter was replied by the Command Hospital (CHEC) on 28th November, 2009 (Annexure-7). It is stated therein that the authorities had proceeded against the defaulting Private Consultant (Ridhi-Sidhi Consultant) and Shri Vinod Juthani through an official complaint. Cases were pending against the said Consultant; but did not make any commitment with regards to return of the deposit made by the petitioner. In the Affidavit-in-Opposition (in short ‘A/O), the respondents have agreed to the factual aspects as mentioned by the petitioner but maintained all through that refund of deposits could only be made, once such amounts were recovered from the defaulting firm/individual (Ridhi-Sidhi Consultant/Vinod Juthani). The authorities, even while submitting orally during the hearing, held on to their written submissions reiterating that refund of deposit made by the petitioner to the tune of Rs. 3 lakhs could only be returned after recovery from the defaulting firm/individual, for which the CHEC was engaged in a legal battle.

6. The respondents have brought out few relevant points that would throw light on the planned irregularities committed in management of the said Regimental Fund that were being perpetuated by the officers of the Command Hospital, Eastern Command, who were assigned with the responsibility to manage and supervise these Funds:-

(a) The Hospital Authorities (CHEC) had collected Rs. 3 lakhs from the petitioner as a voluntary deposit (non- refundable) and such fund was kept in a ‘suspense head of the Regimental Fund. Annexure H/3 of the Counter-Affidavit indicates that there were a total contribution of Rs. 22, 84,303/- from 14 different officers including 5 Major Generals, 4 Brigadiers and a Group of Officers shown as Army Medical Corps Officers. It is strange that, we do not find support of any official orders, which would have directed these officers to deposit such heavy amounts. Nevertheless, such contributions were accounted for in the Regimental Fund.

(b) Annexure A/3, B/3 and C/3 indicate that the authorities were fully aware of these happenings all through since 2004, that contributions had been arranged through donations from various officers and such money was kept in ‘Suspense head of the Regimental Fund. Later vide an order dated 1st March, 2005, from Headquarters, Eastern Command, the entire amount was transferred from ‘Suspense head to the main fund of ‘Regimental Fund.

(c) Subsequent to the above actions, this amount continued to remain in the Regimental Fund and individuals were still shown as ‘Sundry creditors in the account book. Therefore, it is quite evident that the authorities acknowledged that they have in their account Rs. 3 lakhs belonging to the petitioner which they continued to owe him.

7. It is an established fact that the petitioner and 14 others had deposited various sums of money with the Regimental Fund of the CHEC totaling to Rs. 2284303.00 (Annexure H-3 of counter affidavit), of which the petitioners deposit was Rs. 3 lakhs. All those who had deposited such amounts appeared to have been apportioned some blame for the said financial irregularities, except one depositor, a group, “AMC Officers” who too deposited a sum of Rs. 5,35,000/-. None of these have been explained in submissions made in written affidavits by the respondents. During hearing, oral submissions were made on behalf of the respondents to the effect that some of the above depositors had got back their money as and when the defaulting company (M/S Ridhi Sidhi Consultants) refunded such amounts; but such submissions have not been corroborated in any of the written affidavits. One major issue that would need our deliberation in this case is, “Whether the petitioners deposit of Rs 3 lakhs was a voluntary deposit with arrangements that it could be refunded or otherwise”. There are conflicting versions with regards to this aspect.

a) The Petitioner in his Rejoinder to the Counter Affidavit (Para-3) has stated that he deposited Rs. 3 lakhs as per instructions of the COS (Chief Of Staff Eastern Command), not contested by the respondents. Such deposit was made by him on 21 Jan 04, while the ‘displeasure through administrative action was awarded much later in Feb 06. Petitioner thus denies that such amount was deposited based on the administrative order. He claims that the ibid deposit was a ‘refundable deposit (Annexure 2 of petition), made on orders of the COS, but no written communications have been produced.

b) The respondent No. 4 (CHEC) maintains that the ibid deposit was a ‘voluntary deposit against irregular investment of Unit Fund (Annexure 3 of the petition, Para 3 of Counter affidavit). In fact, in Para-4 of the said counter affidavit, the respondents submit, “that all officers who were held responsible had voluntarily deposited the share of amount attributable to them.” It is neither an established practice to receive such donations into regimental funds nor such actions are covered under any rules that have been specified in Regulations of Army, Vol-II, Para 820 to 838. In fact there is a policy letter of Army HQ of 15 Apr 10 (Army Headquarter AGs Branch Letter No. A/54301/AG/PS-3(A) dated 15th April, 2010), which lays down a procedure vide which permission from appropriate authorities had to be obtained before accepting any such contributions or donations. Even if we, for a moment, accept that these so called ‘voluntary deposits were made against irregular investment of unit funds, permission of appropriate authorities to allow such deposits ought to have been taken by the Commandant.

c) The GOC in C Eastern Command, in his directions on the subject court of inquiry, has opined that such amounts were collected through voluntary contributions and in Para-3 of such directions (Annexure C-3), he has stated,

“There was clearly maladministration of Regimental accounts at Command Hospital (Eastern Command). Evidence of wrongful gain, fraud or other misdemeanor on part of any of the functionaries involved has not surfaced. Since the amount outstanding against the Broker has been made good through voluntary contributions from the concerned officers as per provisions of Para 160 (b) (i) (aa) of Financial Regulations, Part I, Vol I, there is no loss of Regimental Funds.”

d) It is evident from records annexed with various affidavits that the intention of the authorities (Respondent No. 4) was to ultimately return the money to the petitioner. HQ Eastern Command letter of 21 Jan 04 (Annexure B-3) clearly directed the CHEC that all such money received from the donors was to be accounted for in a separate ‘suspense head of the regimental fund. The above order was changed on 01 March 2005 (Annexure A-3) now directing that these funds would be removed from ‘suspense head and merged with the main regiment fund; and a record of such transactions was to be maintained by way of making the ‘Regiment Fund as ‘sundry creditor in each of the accounts while making entries and a record was to be maintained to this effect in the regiment fund documents. It all goes to substantiate and support the petitioners version in his statement that the deposit was a ‘refundable deposit.

8. The unanswered question remains as to, who allowed such voluntary contributions? At this point, it will not be out of place to consider that the ibid quoted rule of Financial Regulation (FR Para 160) relates to rules governing regularization of ‘public stores, which has no relationship with regimental funds, which is the context of the instant case. Regimental funds are managed and governed by the rules in Regulations of Army, Volume-II, 1987, paragraphs 820 to 838. This particular case should have attracted the provisions of Paragraph 432 of Regulations of Army (RA), Volume-I, 1987. Be that as it may, the authorities in May 2004 have attempted to rely on the incident of ‘voluntary contribution made by the defaulters, to present the case as that of ‘maladministration of regimental accounts, thus justifying lenient administrative action towards the defaulters. The GOC in C, in his above administrative orders made no attempt to regularize the financial loss caused to the regimental funds. He also did not endeavor to accord his administrative sanction to funds received through aforesaid voluntary contributions. Though the GOC in C, in his ibid directions of May 04 (Annexure C-3), has merely attributed the lapse of ‘maladministration of regimental funds to the petitioner and others; the ‘show cause notice (Annexure-1) dated 3rd Feb 05 addressed to the petitioner lists out five serious lapses including irregular investment in contravention to policies and accepting wrong entries in account book etc. Notwithstanding these contradictions, the petitioner was awarded administrative punishment of ‘non-recordable displeasure for above lapses; without a word on the financial aspects.

9. In this entire case, we find gross financial irregularities in maintenance of Regimental Fund and investment thereof had been conducted over a period of time (1999- 2001) with full knowledge of the authorities in the chain of Command. The entire circumstances leading to the cause of this petition stands on irregular and illegal actions systematically committed to enable illegal investment into a Private Firm grossly against the rule and in full knowledge of the ‘Fund Holding Authority, that it was against the rules including the guiding regulations as contained in Paragraph 829 of Regulations of Army, 1987. In order to further cover up such irregularities, as inferred from the petitioners application {Paragraphs 7 (a) to (g)} and Annexure 4; the account-books were fudged in a regular manner with entries of payments shown to HDFC Bank while actually paying to this Private Company of Vinod Juthani i.e, Ridhi-Sidhi Consultants. We presume that the Court of Inquiry, of which no complete copy was made available to us, would have pin pointed such lapses and irregularities, which would have enabled the authorities to take appropriate administrative or disciplinary actions.

10. It is evident that the petitioner has been punished with administrative action for his proportion of lapses, as mentioned earlier. Since the punishment has already been awarded, the petitioners prayer to get back his money (Rs. 3 lakhs) that he had deposited in the Regimental Fund of ‘CHEC, becomes fairly justified and in tune with natural justice, more so because he has already been punished. The authorities could have imposed fine, penal deduction or any other legally acceptable form of monetary recoveries from the petitioner through due process of law; but, they preferred not to, and for some reason, the authorities felt that just administrative award of ‘non-recordable severe displeasure was an adequate punishment. Be that as it may, mere ‘voluntary deposit neither substitutes nor legalizes a monetary penalty or fine through statutory provisions. We do not know why such serious organized, deliberate financial irregularities were disposed of with mere administrative action, ‘severe displeasure (non-recordable), awarded to few officers who were in service; and those retired were let off! Nevertheless, once punished by law, the matter should have been closed and financial losses, if any, should have been regularized in the prescribed manner. It should not have been allowed to linger for so long giving rise to situations where indicted persons would claim their deposits even after retirement and a regimental fund account would be allowed to remain ‘sundry creditor, implying that the Regiment Fund owed money to so many such persons for so long, all as a result of weak and indecisive administrative action by the authorities at some point of time. No wonder, aggrieved retired persons would seek judicial intervention like the petitioner has sought.

11. Before we come to any conclusion, we would like to mention that the definition and entire rules with regards to Regimental Fund have been well formulated through statutory provisions under Regulations of Army, 1987 (Paragraphs- 820 to 838). Clarifications issued vide Army Headquarters Policy Letter of 15th April, 2010 (Army Headquarter AGs Branch Letter No. A/54301/AG/PS-3(A) dated 15th April, 2010) with regards ‘acceptance of donations towards Regimental Fund clearly states that voluntary donations into Regimental Fund, without approval from appropriate authorities, was not in order. The ibid Policy letter lays down that sanction of higher headquarters like Command and Army Headquarter was required while accepting donations. In the instant case, we do not find any document to substantiate that sanction/orders from higher headquarters were ever obtained before accepting the donations to the tune of more than Rs. 22 lakhs. We however, find that such donations were received by the concerned Regimental Fund in full knowledge of the higher authorities without any objection from their side at any stage. Such amounts were currently accounted for as ‘sundry creditors in the account-books, initially in ‘Suspense head and later transferred to the main head of the account.

12. Considering the submissions made by the petitioner, who appeared in person and the learned counsel for the respondents, we are of the view that the ‘sundry creditors including petitioner, still being shown in the account-books should be liquidated at the earliest before further litigation accrues. The respondents must remember that they have disposed of the case through statutory administrative action taken by the GOC-in-C after having enquired into the details by a proper Court of Inquiry that was presided over by an officer of the rank of Lt Gen (Corps Commander) in 2005. Therefore, there is no reason for the issue to linger any further. We are of the opinion that the respondent no. 3 should direct the respondent no. 4 to initiate an immediate action to regularize the loss caused to the Regimental Fund of Command Hospital, Eastern Command. It should be progressed through appropriate authorities in a manner as prescribed in the rules governing the Regimental Funds, while legal recourse to recover back-dues from the defaulting firm may continue. ‘Sundry Creditors in the Regimental Fund Account like the petitioners should be cleared without further delay. Punitive deductions through administrative or legal means were not resorted to in this case, while the petitioners apportioned blame was taken cognizance of and he was punished with administrative action of “Severe Displeasure (Non-recordable)” by the GOC-in-C. Therefore, to hold on to his money in the regimental Fund by assigning him as a sole ‘sundry creditor appears to be a backdoor method to exercise punitive deductions without a statutory or a legal sanction. In any case, the arrangement of receiving of these donations also, is against the prescribed policy on the subject.

13. Under the circumstances as mentioned above, we would prefer to refrain from granting any relief to the petitioner through judicial process at this stage in this case; since, the entire issue still rests under an unfinished administrative purview of the GOC-in-C, Eastern Command, i.e., Respondent no. 3. An administrative task initiated in this regard by the respondent no. 3 in 2004 still lies incomplete, because his directions vide Headquarter Eastern Command Letter No. PC-202009/2/A4 dated 21-5-2004 as contained in Annexure C/3 mentions nothing about regularization of loss or clearing of these ‘sundry creditors. Therefore, we would like to give an opportunity to respondent No. 3 to complete the administrative process that was undertaken by him in 2004 in this regard. We therefore direct that:-

(a) Respondent no. 3, Eastern Command (GOC-in-C) shall take suitable and appropriate administrative action by directing the Command Hospital, Eastern Command to clear the ‘sundry creditors including the petitioners expeditiously.

(b) Administrative action should be completed so as to regularize the financial loss incurred to the Regimental Fund in an appropriate manner by competent authorities in accordance with rules on the subject

(c) The above actions shall be completed within six months on receipt of this order.

(d) In case, the petitioner does not receive his deposited amount within six months, it is open to him to take recourse of judicial process thereafter.

14. The petition is disposed of on contest without any costs to either side with above directions, primarily because we are of the opinion that the administrative authorities should be given time to complete their unfinished administrative action which they had initiated in the year 2004 in good earnest. Let a plain copy of this order be handed over to the petitioner and learned counsel for the respondents.