Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.352 of 2024 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Subhadra Mahatab Seva Sadan, Bhubaneswar …. Petitioner(s) -versus- Union of India and others …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) : For Opposite Party (s) : Mr. S. S. Das, Sr. Adv. Along with Ms.Suman Modi, Adv. Mr. B. Moharana, CGC (for O.P.1) Mr. D. Mund, AGA (for O.Ps.2, 3, 4 & 5) CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-22.07.2024 DATE OF JUDGMENT: -29.10.2024 Dr. S.K. Panigrahi, J. 1. The Petitioner, a leading Non-Governmental Organization (NGO), engaged in Women and Child Care, through this Writ Petition, seeks the issuance of appropriate writ(s) and direction(s) to the State Authorities, specifically Opposite Party No.4, to ensure the continuation and release of the grant-in-aid which it has previously been receiving. Page 1 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 I. FACTUAL MATRIX OF THE CASE:
Legal Reasoning
2. The brief facts of the case are as follows: (i) The petitioner/ “Subhadra Mahatab Seva Sadan/” established in 1980/ used to receive grant-in-aid from Opposite Party No. 2 to operate a Child Care Institution (hereinafter referred to as “CCI”) and a Special Adoption Agency (hereinafter referred to as “SAA”). The Opposite Parties, being authorities of the Union Government and the State Government, provide the Petitioner with necessary funding. (ii) While matters stood thus, Opposite Party No. 5, the District Child Protection Officer, Khordha, issued a letter, No. 903/DCPU dated 18.09.2019/ titled ‘Proposal for Continuation of GIA for Children Home and Special Adoption Agency managed by Subhadra Mahatab Seva Sadan.’ This letter communicated that he was directed to inform that the proposal for the continuation of grant-in-aid for the children’s home and Special Adoption Agency managed by Subhadra Mahatab Seva Sadan for the 2019-20 period was not recommended at the District Level Project Appraisal Committee (DLPAC) meeting held on 28.08.2019 under the chairmanship of the Collector, Khordha. (iii) The reasons for the denial of continuation of grant-in-aid are as follows: a. The institution’s authority has failed to refund unauthorized expenditures, specifically Rs.22,65,695/- for the Financial Year 2015- 2016, Rs.21,47,042/- for the Financial Year 2016-2017, and Rs.13,63,706/- for the Financial Year 2017-2018, which were spent on activities contrary to the guidelines of the CCC Fund. Page 2 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 b. The Secretary lacks control over staff activities within the institution, as noted in an order by the Child Welfare Committee (CWC), Khordha, dated 30.05.2019, concerning various cases. Similar deficiencies in the care and protection of children were observed by the Additional CWC, Khordha, during a visit to the institution on 16.06.2019. c. There are frequent staff changes, with employees resigning due to irregularities in monthly payments and delays in salary disbursement. d. The presence of an Ayurvedic Health Care Unit within the CCI is deemed impermissible from a child protection standpoint. (iv) Regarding the complaints concerning alleged irregularities for the Financial Year 2015-2016, it is clarified that the payments and expenditures were recorded in the receipt and payment account, not in the balance sheet as alleged. As to the sum of Rs. 4,08,000/-, the institution obtained funds by taking temporary loans from various individuals, which were subsequently repaid during the 2015-2016 fiscal year. This repayment occurred after receiving the grant, with no funds from the CCC account used for this purpose during that financial year. Although this clarification was provided to the Secretary, CARA, he expressed dissatisfaction with the terminology, suggesting that “loan” should instead be described as “borrowed without interest.” (v) The petitioner was served with a show cause notice concerning the non- utilization of the Child Care Corpus (CCC) funds for the years 2015-16, 2016-17, and 2017-18 in accordance with prescribed norms, as well as the diversion of funds towards activities outside the scope of CCC guidelines. In response, the petitioner submitted a reply, which was Page 3 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 found to be unsatisfactory. Consequently, the Director of the Odisha State Child Protection Society (OSCPS), via Letter No. 960 dated 28.03.2019, directed the petitioner to refund the amount disbursed from the CCC fund, including interest, within one month from the date of issuance of the letter. (vi) As the petitioner failed to refund the amount within the stipulated timeframe, the District Level Project Appraisal Committee (DLPAC), chaired by the Collector of Khordha, resolved not to recommend the proposal for the continuation of the grant-in-aid (GIA) for the petitioner’s Special Adoption Agency for the 2019-20 period. Subsequently, the petitioner deposited an amount of Rs.14,88,452/-. In light of this partial compliance, the Director of the Odisha State Child Protection Society (OSCPS), in a lenient approach, reconsidered the petitioner’s case and/ via Letter No. 618 dated 25.03.2022/ requested the Principal Secretary and CEO of the Central Adoption Resource Authority to take appropriate action to resolve the matter and consider the release of the GIA to the petitioner. Following the receipt of this letter from the Director, OSCPS, the DLPAC recommended the petitioner’s case for the continuation of the GIA/ and this recommendation is currently under consideration. SUBMISSIONS ON BEHALF OF THE PETITIONER: Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: II. 3. Page 4 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 (i) The allegations are not supported with any legal documents. The petitioner has invested the GIA amount for his own use and there is no authenticated record to show that he has spent the said amount for implementation of the project as per guidelines of Child Care Corpus (CCC) fund. (ii) The allegation that an amount of Rs.22,65,695/- for the financial year 2015-2016 has been sent towards other activities in deviation from the guidelines of the CCC is not correct and it is stated that the CCC account for the financial year 2015-2016 has been duly audited at the
Legal Reasoning
end of the financial year by the Chartered Accountant, Sri Amarkanta Padhi, who has certified that the Corpus has been used as per the CARA Guidelines. (iii) The alleged amount shown towards deviation for the financial year 2015-2016 was not supported by any breakup. The audit report for the said financial year submitted in due time in the year 2016 has depicted the amount spent on different heads and those different heads on which the CCC was utilised absolutely within the framework of CARA Guidelines. The petitioner also showed the surplus amount in the CCC Bank for the said financial year. (iv) The amount of alleged irregularity shown vide earlier letter was Rs.2,49,100/-, it is shown as Rs.21,47,042/- without any breakup. The audited amount for the said financial year being certified by the Petitioner’s Chartered Accountant was duly submitted for the satisfaction of authorities Page 5 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 (v) Against the alleged irregularity for the year 2017-2018, there is an absolute match between the amount of loan received and repayment done. The petitioner is in possession of all relevant documents in support of such statement. The construction of the new building is neither for the benefit of any individual nor the institution itself, but the same for the benefit of the children. The new construction was made in good faith to carry forward the aims and objectives of the JJ Act as a facilitator and without any motive. Apart from the above, at no point in time has the petitioner ever advised/instructed to utilise funds for the purpose which is not beneficial to the children. (vi) On 31.01.2022, an amount of Rs.14,88,552/- was refunded to CCC funds and on 29.11.2022, an amount of Rs.4,00,000/- was also refunded to CCC. A total amount of Rs.18,88,522/- was refunded back to CCC. (vii) A two-member committee from the Child Welfare Committee (CWC) was assigned to the Child Care Institution (CCI) to conduct counseling sessions and assess the physical, mental, and emotional development of the children housed there. It appears that the CWC, based on the committee’s report, found the CCI culpable without providing the institution an opportunity for a hearing. In light of the allegations that the CCI lacked control over staff activities, the institution should have been afforded a personal hearing. Since no defect was identified in the application filed before the Additional CWC, the Authority assumed jurisdiction over the matter and issued an order finding no fault with the CCI. Furthermore, none of the documents supplied to the petitioner Page 6 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 contain any allegations from employees regarding non-payment or irregular payment of salaries. (viii) However, the records reveal that the superintendent, Manju Lata Nanda who was negligent for the non-furnishing of the home study report and further who was responsible for causing various irregularities was removed, but before removal, she was provided adequate opportunity to mend herself. (ix) The Ayurvedic Health Care unit is not functioning inside the CCI and it is set up outside the unit to provide Ayurvedic Health Care to needy patients and running such Health Care Unit does not have any nexus with the CCI having no basis at all. (x) At the behest of the Director, Opp. Party No. 4, the Petitioner paid Rs.14,88,522/- from the GIA to be released for the financial year 2022-23. It is, therefore, submitted that the payment of the aforesaid amount of Rs.14,88,522/- was made under coercion and without any legal basis. The Petitioner further humbly submits that even thereafter it has not received the grant-in-aid for the year 2019-20, 2020-21 & 2021-22 concerning SAA and CCI. (xi) Under the 2011 Guidelines and the subsequent 2017 Guidelines, Opposite Party No. 4 and the designated authorities are empowered to implement corrective measures. However, Opposite Party No. 5, lacking such authority, has acted beyond its jurisdiction in this matter. Additionally, the impugned letter dated 18.09.2019 does not specify from whom Opposite Party No.5 received instructions to issue such notice. Furthermore, when the District Level Project Appraisal Page 7 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 Committee (DLPAC) made its recommendation, the Petitioner was not provided an opportunity to respond. The lack of due process prior to imposing any punitive order contravenes principles of law, warranting the intervention of this Court. It is submitted that the JJ Act is a benevolent and purposive legislation. Any action taken under the Act is expected to be in strict conformity with the Act and the Rules with strict guidelines to ensure that the purpose of the Act is achieved. (xii) In the instant case, because of non-observance of the principle of natural justice as well as the provisions of the Act, Rules and Regulations, not only the Act is vitiated, but also the purpose of the legislation is seriously frustrated III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 4. (i). Per contra, learned counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: The petitioner was issued a show cause notice regarding the non- utilization of the Child Care Corpus for the years 2015-16, 2016-17, and 2017-18, as prescribed by the norms, and it was noted that the funds had been spent on activities not in line with the guidelines for the Child Care Corpus (CCC) fund. In response, the petitioner submitted a reply that was deemed unsatisfactory. Consequently, the Director of the Odisha State Child Protection Society (OSCPS) instructed the petitioner to refund the released amount to the CCC fund, along with interest, within one month of the letter dated 28.03.2019 (Letter No. 960). Page 8 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 (ii). Since the petitioner did not take action to refund the amount within the stipulated time, the District Level Project Appraisal Committee (DLPAC), chaired by the Collector of Khordha, decided not to recommend the continuation of the Grant-in-Aid (GIA) for the Subhadra Mahatab Seva Sadan/Special Adoption Agency for the period 2019-20, as documented in the proceedings dated 28.09.2019. Subsequently, the petitioner deposited Rs. 14,88,452/- in a bid to have the OSCPS reconsider the case and requested the Principal Secretary and CEO of the Central Adoption Agency Resources Authority to take necessary action to resolve the matter and consider the release of Grant- in-Aid in favor of the Subhadra Mahatab Seva Sadan for the best interest of the children, as stated in Letter No. 618 dated 25.03.2022. (iii). After receipt of the aforesaid letter from the Director, OSCPS vide Letter No.618 dated 25.03.2022 the DLPAC recommended the case of the petitioner for continuation of GIA. (iv). Pursuant to the instructions outlined, the petitioner has not refunded the amounts spent contrary to the guidelines of the Child Care Corpus (CCC) fund. Consequently, the District Level Project Appraisal Committee (DIPAC) decided in its meeting on 28.07.2019 not to recommend the continuation of the Grant-in-Aid (GIA) for both the children’s home and the Special Adoption Agency (SAA) managed by the petitioner for the period 2019-20, citing mismanagement of the funds in the SAA. Furthermore, members of the Child Welfare Committee visited the petitioner’s institution on 23.05.2019 and identified several lapses, irregularities, illegalities, and negligence in its Page 9 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 operation and oversight. As the petitioner is in charge of the institution and demonstrated a lack of control over the activities of the staff, they are held accountable for these issues. Accordingly, a show cause notice was issued to the petitioner to appear before the Committee on 10.06.2019, accompanied by a report from the Child Welfare Committee. (v). There was also allegation of frequent changes in staff position in its institution. During a monitoring visit on 24.05.2019, the Protection Officer noted various issues at the petitioner’s institution, which were subsequently communicated to the petitioner via Memo No. 543 dated 31.05.2019. The petitioner was also informed by the Child Welfare Committee (CWC) through several letters. Additionally, staff members reported that salaries had not been released. Moreover, it was found that an Ayurvedic Health Care Unit was operating on the premises, which is not permitted under the law. In light of these circumstances, the CWC, Khordha issued a letter dated 18.09.2019, informing the petitioner of the decision made by the District Level Project Appraisal Committee (DLPAC) to not recommend the proposal for the continuation of the Grant-in-Aid (GIA) for the Children’s Home and Special Adoption Agency for the period 2019-20. (vi). It has come to light that the possession of the building meant by the institution is held by Nihar Ranjan Mohanty and Stalin Mohanty, the latter being the former Secretary and now the President of the Institution. The expenses incurred for the construction of the building have not benefited the children but have instead been utilized for personal purposes. It is noteworthy that after the petitioner refunded an Page 10 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 amount of Rs.14,88,552/- to the Child Care Corpus (CCC) fund, the Director of the OSCPS requested the Principal Secretary and CEO of the Special Adoption and Resources Authority to consider the petitioner’s case for the release of Grant-in-Aid for the best interest of the children, as indicated in a letter dated 25.03.2022, which is currently under consideration. (vii). After due enquiry, report was prepared and show cause notice was issued to the petitioner giving him an opportunity to file his reply. A show-cause notice was issued to the SAA under Regulation 25(2)(i) of the Adoption Regulations, 2017, urging the State government to recover the misused funds from the Child Care Corpus along with interest. An Action Taken Report dated 27.04.2019 was received from the Additional Director, Odisha State Child Protection Society(OSCPS), revealing mis- utilization of CCC funds IV. COURT’S REASONING AND ANALYSIS: 5. 6. It is apparent from the reading of the aforesaid provision that though the grant-in-aid cannot be claimed by an institution as a matter of right and it can be withdrawn, but at the same time the State Government cannot act arbitrarily in the matter of withdrawal of grant-in-aid. It has to act only on relevant considerations which are legally permissible. The petitioner, as a child care institution, plays a vital role in providing shelter, care, and support for vulnerable children, and thus merits access to appropriate grants and resources. Such grants are essential to meet the needs of children in a nurturing and protective environment, enabling the institution to offer adequate food, clothing, educational Page 11 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 materials, medical assistance, and emotional support. Governmental support through grant-in-aid is intended to ensure these children receive the highest standards of care and development opportunities. Hence, facilitating the continued operation of such institutions aligns with the goals of child welfare and societal well-being. 7. However, the allegations against the petitioner institution concerning financial irregularities and misappropriation of funds cannot be taken lightly. Mismanagement of allocated funds undermines not only the effective functioning of the institution but also jeopardizes the welfare of the children under its care. Such actions, if substantiated, reveal a failure to adhere to financial guidelines meant to safeguard public resources and ensure they are used solely for the benefit of the children. Allegations that funds were directed toward unauthorized activities, rather than for the designated welfare of the children, raise significant concerns that warrant thorough examination and accountability. 8. While the institution’s role in child welfare is critical/ a lenient approach toward allegations of misappropriation would set a detrimental precedent, potentially allowing other institutions to sidestep guidelines intended for accountability and transparency. Ensuring that all grant funds are utilized strictly as per the guidelines is essential to maintain public trust in such welfare programs. Therefore, although continued financial support for child welfare is vital, the allegations must addressed and taken care of comprehensively to restore integrity and foster a truly beneficial environment for the children it serves. Page 12 of 13 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 07-Nov-2024 18:24:01 9. Ergo, this Court, without delving into the substantive merits of the case, directs the Principal Secretary of the Women and Child Development Department, Government of Odisha, to duly consider the representation made by the Petitioner afresh by strictly following the CARA Guidelines and other Notifications issued by the Government of Odisha from time to time for regulating such NGOs. A lawful decision must be rendered through a reasoned and detailed order, taking into account the grounds presented in the writ petition as well as the accompanying documents, and ensuring the participation of the petitioner in the process. 10. The aforementioned process shall be completed within three months from the date of communication of an authenticated copy of this order by the Petitioner along with a copy of this Writ Petition. 11. In light of the above, this Writ Petition is allowed and disposed of in accordance with the observations made herein. (Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the 29th October, 2024/ Page 13 of 13