Haryana Agro Industries Corporation Limited v. Lalit Mohan Narula

Judgment

1. The present appeal has been filed by the plaintiff against the concurrent findings of the Courts below whereby suit for recovery of Rs.46,71,638.50 paise has been dismissed. The suit was filed against the defendant by the Corporation on the ground that the Corporation which was engaged in the procurement of wheat for the general pool at Kaithal Mandi during the year 1995-96 and 1996-97. That the charge of stocks relating to Padla Mandi and Agondh Mandi for the year 1996-97 was handed over to the defendant as the Corporation did not have storage arrangement at these stations and stocks were placed at various plinths godowns in Kaithal town. As per norms of gain in wheat , the officials were responsible for the maintenance of the stocks and said norms were applicable for the procurement years 1995-96 and 1996-97 also. The

defendant being an employee was posted as Mandi Inspector-cum-Store Keeper of Kaithal Mandi for the said years and was custodian of the wheat and responsible for giving gain as per norms detailed in para 5 of the plaint. Accordingly, after taking into the impact of the gain as per norms the wheat RSA No.2320 of 2011 -2- **** procured by the plaintiff during the year 1995-96 and 1996-97, the plaintiff Corporation had realised 1808-98 quintals less wheat and the approximate value of the said wheat comes to Rs.9,66,884.93 paise and had suffered further loss of Rs.1,50,416/- on account of moisture cut imposed by the Food Corporation of India on these stocks and, therefore, there was total loss of Rs.11,17,300.93 paise on account of less gain and moisture cut. Similarly, the Corporation handed over the stock of 3,86,648 bags of wheat at Kaithal and after making delivery of wheat to FCI, there should have been a balance of 13,388 bags of sound wheat as on 12.10.96 whereas damaged wheat stock of 14316 bags (11804.02 qtls.) was found which was mixed with sand, dust and seepage material which had to be auctioned/transferred to Mind plinth at a less cost and, therefore, loss of Rs.31,39,806.85 paise inclusive of the impact of gain on the residual stock was pleaded due to gross negligence on the part of the defendant in maintenance/upkeep of the stocks. Regarding replacement of (gunny bags) a total of 23,464 of bardana (bags) were replaced against the permissible quantity of 12,396 bags and therefore, 11068 bags were replaced in excess and abnormal expenditure of Rs.2,74,929.12 paise was incurred. Another expenditure of 1,12,985.95 paise was spent on reconditioning of these stocks. When the defendant handed over the charge on 19.2.1997 after his suspension on 19.11.1996, a full box containing 24 tins of quick-phos which had expiry in May, 1996 and a bottle containing 1 Kg. of anilophos tablets were found in defendant's stock which had already been shown to have been consumed and, thus, there was bogus consumption and wrongful loss of Rs.5000/- due to non utilization of quickphos. The defendant had drawn an advance of Rs.2,000/- on RSA No.2320 of 2011 -3- ****

1.5.1996 and another advance of Rs.4,000/- on 27.6.96 and after adjustment of the bills of petty expenses an amount of Rs.1726/- remained outstanding against the defendant. The amount of Rs.21,616/- had been shown to be spent by the defendant from his own pocket for payment of daily wagers during the period of 25.5.96 to 15.7.96. Accordingly, it was pleaded that the Corporation had suffered a loss of Rs.46,71,638.50 paise due to negligence and mismanagement and fraudulent bills submitted by the defendant. FIR Nos.173 dated 4.3.1997 and 606 dated 11/96 had also lodged against the defendant in Police Station City, Kaithal under Sections 408, 409, 420, 467, 468 and 477 IPC.

2. The defendant took various preliminary objections in his defence including the maintainability of the suit and misuse of powers by Smt. Shakuntla Jakhu who was Managing Director on the ground that he had preferred a writ petition in the High Court against her husband Sh. Raminder Jakhu who was the Managing Director of the plaintiff corporation at one point of time and had taken excess TA of foreign tour which is still pending . The present suit was the off shoot of the act stated in the writ petition. The charge sheet dated 26.11.1998 prior to the suit which was dated 5.10.1999 had been issued on the same set of allegations and enquiry had been conducted and none of the charges against him proved and the Managing Director, vide order dated 1.10.2003 agreed with the findings contained in the report of the Enquiry Officer and exonerated the defendant. In the FIR No.606 of 1996, the defendant had been acquitted on 4.5.2002 by the Judicial Magistrate Ist Class, Kaithal. The stocks which were placed in open plinth and open grounds and not in any godown since the plaintiff did not own godowns and had led moisture gain which was RSA No.2320 of 2011 -4- **** beyond human control. That the defendant was placed under suspension on 20.11.1996 and a committee of officers had been constituted to see the handing over of charge by the defendant to Sh.K.L.Verma and he was not associated with the handing over of the charge which was finalized on

17.2.1997. The defendant had raised objections and the damage/shortage etc. was due to heavy/excessive rains in 1995-96 and there were floods in Kaithal area and water passing underneath the stock and he was not given an opportunity to submit objection against the said report and he sent a letter dated 20.2.1997 to the Chairman of the Corporation and the Secretary of the Agriculture Department and other higher officers. No negligence was pleaded on the part of the defendant and the stock was lying without wooden crates but were either on brick paved plinths or on road side ground and all these factors were brought to the notice of higher authorities but they did not take any steps.

3. On the basis of the pleadings, the trial Court framed the following issues:- “1. Whether the plaintiff is entitled to recover a sum of Rs.46,71,638.50 paise alongwith interest pendente lite future at the rate of 18% per annum from the defendant as alleged?OPP Whether the suit is not maintainable?OPD Whether the plaintiff has no cause of action to file the

3. present suit?OPD

4. Relief.”

4. The trial Court while taking into consideration the evidence on record came to the conclusion that the evidence which was being led by RSA No.2320 of 2011 -5- **** the plaintiff was beyond pleadings and PW-1Chuni Dass had remained posted at Kaithal from 1984 to 1987.It was also noticed that PW-2 Kharati Lal who was taken over the stock from the defendant had admitted that defendant had never been associated by the Committee regarding the samples drawn and sent to Shri Ram Test House, Delhi. Accordingly, it was held that calculation was not conducted in the presence of the defendant which was constituted by the Managing Director and it was the duty of the plaintiff to call the defendant at the time of handing over the charge in order to fasten a liability of negligence upon the defendant. The charges in the departmental enquiry Ex.D11 pertained to the same set of allegations which were in the suit and findings in the departmental enquiry did not come to any conclusion that there was any negligence on the part of the defendant in performance of his official duty. Nothing had been brought on record that the Managing Director had disagreed with the findings of the Enquiry Officer and the criminal court had acquitted the defendants in the FIR lodged by the Corporation on the same set of allegations. Accordingly, keeping in view the law laid down in Punjab Warehouse Field Employees Union Vs. State of Punjab 1994(4) Service Cases Today 579, it was held that department was within its right to impose the penalty on the basis of the enquiry but the procedure for recovery was not sustainable in the eyes of law and,therefore, the amount was not recoverable and the suit was not maintainable and, thus, it was dismissed vide judgment and decree dated 14.8.2008.

5. That the appeal was filed before the Lower Appellate Court and the Addl. District Judge, Kaithal vide judgment and decree dated

12.1.2011 also dismissed the appeal. Resultantly, the present Regular RSA No.2320 of 2011 -6- **** Second Appeal has been filed.

6. Counsel for the appellant has argued that huge amount of loss had been caused by the negligence of the defendant and, therefore, the Courts below had wrongly dismissed the suit and the findings in the departmental proceedings and Criminal cases should not have been taken into consideration. The submission made by the counsel is not acceptable. In the present case it has come on record that in the departmental proceedings the defendant has been totally exonerated. The enquiry report was not differed with by the Managing Director of the Corporation rather vide order dated 1.10.2003 as noticed by the Lower Appellate Court,she accepted the enquiry report. The charges of causing financial loss were thus held not to be made out and the plaintiff had been accused of filing the suit with the malafide intention which had been due to filing of a writ petition against the husband of the Managing Director. The following charges were framed in the departmental enquiry which are the same subject matter of the suit:- “a) That he not only violated instructions of the competent authority but also caused wrongful loss to the tune of Rs.1,12,985.95 on account of reconditioning of stocks of wheat pertaining to the year 1995-96 and 1996-97. b) That he caused a wrongful loss of Rs.2,74,979.17 on the replacement of bardana over and above the prescribed norms and by showing bogus consumption of bardana on the stocks pertaining to the year 1995-96 and 96-97. c) That he caused a wrongful loss of Rs.31,39,806.85 on account of weight loss, shortages, mixing of sand,dust RSA No.2320 of 2011 -7- **** and damaged wheat,short lifting of wheat from Mandi, less realization of cost in auction of damaged wheat which was damaged due to his negligence. d) That he caused a wrongful loss of Rs.9,66,884.03 on account of less realization of gain and Rs.1,50,416 on account of moisture cut imposed by the FCI on the delivery of wheat pertaining to the stocks purchased during the year 1995-96 and 96-97. e) That he tampered the record and caused a wrongful loss of Rs.5000/- by showing bogus consumption of fumigants. f) That he embezzled a sum of Rs,.21,616/- by drawing bogus payment fabricating fictitious muster rolls. g) That he derelicted in the performance of duties as Mandi Inspector -cum-Store Keeper.

7. The Hon'ble Supreme Court in Punjab State Civil Supply Corporation Vs. Sikander Singh (2006) 3 SCC 736 has held that the civil suit for recovery against the employees would be maintainable if there was allegation of misappropriation. Observations made by the Hon'ble Supreme Court in paras 20 to 24 are reproduced below:- “20. So far as Respondent-defendant 2 is concerned, no finding of fact has been arrived at that he for any intent and purport appropriated any article to his advantage. In the absence of such a finding, we fail to understand as to how under the common law he could be proceeded against by way of a civil suit for RSA No.2320 of 2011 -8- **** recovery of money. A civil suit for recovery might have been maintainable only if he was found to have misappropriated the goods. Admittedly he has not. He was said to be negligent in performing his duties.

21. It is now well settled that negligence simpliciter may or may not amount to misconduct. In Union of India v. J. Ahmed this Court stated the law thus: (SCC p. 293, para 11) “The High Court has noted the definition of misconduct in Stroud's Judicial Dictionary which runs as under: ‘Misconduct means, misconduct arising from ill motive; acts of negligence, errors of judgment, or innocent mistake, do not constitute such misconduct.’ In industrial jurisprudence amongst others, habitual or gross negligence constitute misconduct but in Utkal Machinery Ltd. v. Shanti Patnaik in the absence of the Standing Orders governing the employee's undertaking, unsatisfactory work was treated as misconduct in the context of discharge being assailed as punitive. In S. Govinda Menon v. Union of India the manner in which a member of the service discharged his quasi-judicial function disclosing abuse of power was treated as constituting misconduct initiating disciplinary proceedings. A single act of omission or error of judgment would ordinarily not constitute misconduct though if such error or omission results in serious or atrocious RSA No.2320 of 2011 -9- **** consequences the same may amount to misconduct as was held by this Court in P.H. Kalyani v. Air France, Calcutta wherein it was found that the two mistakes committed by the employee while checking the load-sheets and balance charts would involve possible accident to the aircraft and possible loss of human life and, therefore, the negligence in work in the context of serious consequences was treated as misconduct. It is, however, difficult to believe that lack of efficiency or attainment of highest standards in discharge of duty attached to public office would ipso facto constitute misconduct. There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence.”

22. A suit for damages would be maintainable only on the ground of breach of the terms and conditions of the contract and when there are acts of malfeasance, misfeasance and non-feasance.

23. A suit for damages for breach of contract under RSA No.2320 of 2011 -10- **** common law can be decreed only when the damages are found to have occurred by reason of such breaches on the part of the defendant. For the said purpose, the extent of damages suffered must be proved in terms of Section 73 of the Contract Act.

24. The appellants have not and in law could not have filed any suit against the respondents herein alleging any tortious act on their part. A suit for damages by way of tortious claim is maintainable only when someone has a duty to perform towards others under a statute or otherwise. In this case, we are not dealing with any case of tortious act on the part of the respondents herein.”

8. In the present case, the FIRs lodged against the defendant had also reached to no adverse findings against him rather he had been acquitted in one case. This Court in Punjab Warehouse Field Employees Union's case (supra) has held that where the statute provides then recovery can be effected from the employee regarding the less storage gain. As noticed above, the Hon'ble Supreme Court has held that such recoveries from employees had to be by way of departmental action and the civil suit is not maintainable until there are allegations of misappropriation. The pleadings have been reproduced in extenso and also the charges framed in departmental proceedings. Thus, from the facts it would be clear that the allegation was of negligence and the such recovery could have been only effected firstly through departmental proceedings. Once the departmental proceeding had been initiated, during RSA No.2320 of 2011 -11- **** the pendency of the same the filing of the civil suit was totally misconceived as till then the Corporation had no cause of action. Only if in departmental proceedings, the finding had come in their favour then the Corporation could have filed the suit provided it was held that there was criminal breach of trust and recovery could not be effectively done through the service benefits from the employee.

9. Thus, no question of law much less substantial question of law arises from the records of the present case which would warrant interference in Regular Second Appeal. Accordingly, the present appeal is dismissed in limine and judgments and decrees of the Courts below are upheld.

9.2.2012 Pka (G.S.SANDHAWALIA) JUDGE