High Court · 2025

Judgment

1. Heard learned Counsel for the petitioner as well as learned Standing Counsel.

2. The present petition has been filed challenging an order dated

19.02.2025 passed by the District Panchayat Raj Officer, Sultanpur, whereby, the operation of two accounts referred to in the impugned order, has been seized.

The contention of the Counsel for the petitioner is that the petitioner is duly elected Gram Pradhan. It is stated that some complaints were made with regard to the irregularities in the construction works carried out by the Gram Panchayat under the provisions of the Uttar Pradesh Panchayat Raj (Removal of Pradhans, Up-Pradhans and Members) Enquiry Rules, 1997. In terms of the said complaint made, orders were passed for holding a preliminary inquiry vide order dated

12.11.2024.

4. It is stated by the Counsel for the petitioner that in terms of the said preliminary inquiry, an opinion was formed that the matter be got inquired from a technical team. It is stated that no such inquiry has been completed by the technical team so far and in the meanwhile, the impugned order has been passed on 19.02.2025 seizing the operation of the two bank accounts, as a result whereof, the entire working of 2 the Gram Panchayat is adversely effected. He further argues that in terms of the provisions contained in the U.P. Panchayat Raj Act as well as the Rules framed thereunder, there is no power of seizure of bank account vested in any authority much less the District Panchayat Raj Officer, as such, the order passed is without any power conferred. It is further argued that the alleged irregularities are with regard to the construction works for the period 2021-2022 upto 2024-2025 and seizing the accounts after such long time is unjustified. In in any case irrespective of the result of the inquiry, the stoppage of the funds without seizing the power of the petitioner is without any justification whatsoever.

5. In the light of the said, learned Standing Counsel was called upon to obtain instructions. He has obtained instructions and handed over across the bar, which is taken on record.

6. In terms of the said instructions, it is evident that vide communication dated 20.02.2025, the matter has been referred for technical evaluation in view of the allegations levelled. It also records that on 11.02.2025, a Preliminary Inquiry Officer was appointed in pursuance to the said complaint. With regard to the order dated 19.02.2025, the order impugned herein, it is argued that in exercise of powers under Rule 178 of the U.P. Panchayat Rules, 1947 (In short ‘the Rules 1947’), the power has been exercised and further orders shall be passed after the evaluation is done and a report is submitted. He further draws my attention to the judgment of this Court in the case of Chirounji Lal vs State of U.P. and others:2004 SCC Online All 2227, wherein, this Court hearing a similar plea had noticed that in terms of the notification dated 30.07.1966, the Prescribed Authority, as referred to in Section 178 of the 1947 Rules is the District Panchayat Raj Officer. It was further recorded that in terms of the mandate of Rule 178, a general control is prescribed by the Prescribed Authority on the funds 3 of the Gaon Sabha and finding that the person who had passed an order seizing the account was the Prescribed Authority, as prescribed under Rule 178, the writ petition was not entertained and the order was found to be justified. In the light of the said it is argued that the present writ petition is liable to be dismissed.

7. In rejoinder, the Counsel for the petitioner argues that the complaints related to allegedly substandard work carried out for the year 2021-22 upto 2024-25 and in any case, there was no corelation with the allegations levelled and the stopping of the funds that too of the Gram Sabha. He further argues that prima facie, no power of seizure is vested with the District Panchayat Raj Officer and even if, for the sake of argument, it is presumed that the power is vested, the same has to be exercised in accordance with law for a purpose sought to be achieved. He thus argues that the impugned order deserves to be quashed.

8. Considering the submissions made at the bar, it is evident that the Gram Pradhans are elected in the manner and process as specified under the 1947 Act and the Rules framed thereunder and are supposed to act in accordance with the mandate of the said Act. The exception to the said power is the power of removal of Gram Pradhan as prescribed under Section 95(1)(g) of the Uttar Pradesh Panchayat Raj Act, 1947 (in short ‘the Act 1947’) read with the Rules framed thereunder. My attention is drawn to the proviso to Section 95(1)(g) of the 1947 Act, which confers the powers to seize administrative and financial power of the Gram Pradhan as an interim measure, pending inquiry in the events the requirements as contemplated under the Inquiry Rules, justifies the said order.

9. It is essential to note the Rule 178 of the Uttar Pradesh Panchayat Raj Rules,1947, which is as under: 4 “178. Maintenance of Gaon Fund and its transaction.- (1) The adminis-tration of the Gaon Fund shall be in the hands of the Gaon Panchayat subject to the general control of the prescribed authority. (2) All money transactions to which any member of the Gaon Panchayat or Nyaya Panchayat or any officer or servant of the Gaon Panchayat in his official capacity is a party shall without any reservation be brought to account and all the money shall be credited in full to the Gaon Fund with the exception of authorised advances. (3) Money due to the Gaon Panchayat shall be collected either by payment at the Panchayat office or by out-door collections, or by both methods, as the prescribed authority may direct. Receipts for all moneys, received shall be issued by the persons authorised to receive the money. (4) Accounts of all income and expenditure of the Gaon Fund [and the Nyaya Panchayat Fund] shall be maintained by the Pradhans [and the Sarpanch] in Form No. 6. The account shall be closed and balanced at the end of every month and shall be examined and passed by the Gaon Panchayat at a meeting in the next following month.”

10. A perusal of the Rule 178 prescribes that the administration of the Gaon Fund shall be in the hands of the Gaon Panchayat subject to the general control of the Prescribed Authority. The Rule further specifies that the accounts of all income and expenditure of the Gaon Fund shall be maintained by the Pradhans in the manner as prescribed. Apart from prescribing that there shall be general control of the Prescribed Authority, no power of seizing the account has been specifically conferred by Rule 178 also. It is also essential to note that Rule 186 of the said 1947 Rules prescribes for an audit of the accounts and the manner in which allegations of embezzlement have to be dealt with are prescribed under Rule 188 of the 1947 Rules. The Rule 186 and the Rule 188 are also quoted below: 5 “186. Audit. The audit of the accounts of every Gaon Panchayat and every Nyaya Panchayat shall be arranged for by the prescribed authority under orders of the Chief Audit Officer to Government, Co-operative Societies and Panchayats, Uttar Pradesh at such intervals and in such manner as the State Government may direct, and further the Annual Technical Inspection Report of Comptroller and Auditor General of India, and the Annual Report of Chief Audit Officer to Government, Co-operative Societies and Panchayats Uttar Pradesh at such intervals and in such manners as the State Government may direct, and further the Annual Technical Inspection Report of Comptroller and Auditor General of India, and the Annual Report of Chief Audit Officer to Government, Co-operative Societies and Panchayats, Uttar Pradesh regarding Gram Panchayats shall be laid by the State Government before the State Legislature. The State Government may also make appropriate arrangements for scrutiny and monitoring of actions taken on such reports.

188. Treatment of embezzlement.-(1) Whenever an embezzlement of money belonging to the Gaon Fund is discovered by the Pradhan or any other official, the fact of embezzlement shall be immediately reported by him to the prescribed authority who will then inform the District Magistrate, the Director of Panchayats and the Chief Audit Officer to Government, Co- operative Societies and Panchayats, Uttar Pradesh. (2) The prescribed authority on receiving the report under sub-rule (1) shall forthwith institute an inquiry into the embezzlement.”

11. On a conjoint reading of the said provisions, although the power of general superintendence is vested with the Prescribed Authority, 6 however, there is no power of attaching/ seizing the bank account, which is a very serious measure and has the effect of adversely effecting the entire development works in the Gaon Sabha. There is no allegation in any of the document with regard to the embezzlement of the funds or siphoning of the funds from the account maintained. The allegations are with regard to the alleged improper constructions from the year 2021-22 upto 2024-25, even in the said allegation, there is no allegation that the accounts were embezzled by the Gram Pradhan in any manner so as to cause loss to the Gram Panchayat, as such, on the basis of material available, there is no material to suggest or justify the power of seizure. In the absence of any material to demonstrate that there is no nexus for the necessity to stop the operation of account to prevent any further damage of the loss, the manner in which the power has been exercised is also unjustified.

12. For the reasoning recorded above, the impugned order dated

19.02.2025 cannot be justified. The said order is quashed. The writ petition is allowed.

13. However, the respondent would be at liberty to conclude the preliminary inquiry and the inquiry in accordance with law.

14. It is further clarified that there is no order of seizure operating in respect of the two accounts referred to in the order dated 19.02.2025 and the accounts can be operated in accordance with law. Order Date:06.03.2025 akverma (Pankaj Bhatia,J.) ASHOK KUMAR VERMA High Court of Judicature at Allahabad, Lucknow Bench

The contention of the Counsel for the petitioner is that the petitioner is duly elected Gram Pradhan. It is stated that some complaints were made with regard to the irregularities in the construction works carried out by the Gram Panchayat under the provisions of the Uttar Pradesh Panchayat Raj (Removal of Pradhans, Up-Pradhans and Members) Enquiry Rules, 1997. In terms of the said complaint made, orders were passed for holding a preliminary inquiry vide order dated

12.11.2024.

4. It is stated by the Counsel for the petitioner that in terms of the said preliminary inquiry, an opinion was formed that the matter be got inquired from a technical team. It is stated that no such inquiry has been completed by the technical team so far and in the meanwhile, the impugned order has been passed on 19.02.2025 seizing the operation of the two bank accounts, as a result whereof, the entire working of 2 the Gram Panchayat is adversely effected. He further argues that in terms of the provisions contained in the U.P. Panchayat Raj Act as well as the Rules framed thereunder, there is no power of seizure of bank account vested in any authority much less the District Panchayat Raj Officer, as such, the order passed is without any power conferred. It is further argued that the alleged irregularities are with regard to the construction works for the period 2021-2022 upto 2024-2025 and seizing the accounts after such long time is unjustified. In in any case irrespective of the result of the inquiry, the stoppage of the funds without seizing the power of the petitioner is without any justification whatsoever.

5. In the light of the said, learned Standing Counsel was called upon to obtain instructions. He has obtained instructions and handed over across the bar, which is taken on record.

6. In terms of the said instructions, it is evident that vide communication dated 20.02.2025, the matter has been referred for technical evaluation in view of the allegations levelled. It also records that on 11.02.2025, a Preliminary Inquiry Officer was appointed in pursuance to the said complaint. With regard to the order dated 19.02.2025, the order impugned herein, it is argued that in exercise of powers under Rule 178 of the U.P. Panchayat Rules, 1947 (In short ‘the Rules 1947’), the power has been exercised and further orders shall be passed after the evaluation is done and a report is submitted. He further draws my attention to the judgment of this Court in the case of Chirounji Lal vs State of U.P. and others:2004 SCC Online All 2227, wherein, this Court hearing a similar plea had noticed that in terms of the notification dated 30.07.1966, the Prescribed Authority, as referred to in Section 178 of the 1947 Rules is the District Panchayat Raj Officer. It was further recorded that in terms of the mandate of Rule 178, a general control is prescribed by the Prescribed Authority on the funds 3 of the Gaon Sabha and finding that the person who had passed an order seizing the account was the Prescribed Authority, as prescribed under Rule 178, the writ petition was not entertained and the order was found to be justified. In the light of the said it is argued that the present writ petition is liable to be dismissed.

7. In rejoinder, the Counsel for the petitioner argues that the complaints related to allegedly substandard work carried out for the year 2021-22 upto 2024-25 and in any case, there was no corelation with the allegations levelled and the stopping of the funds that too of the Gram Sabha. He further argues that prima facie, no power of seizure is vested with the District Panchayat Raj Officer and even if, for the sake of argument, it is presumed that the power is vested, the same has to be exercised in accordance with law for a purpose sought to be achieved. He thus argues that the impugned order deserves to be quashed.

8. Considering the submissions made at the bar, it is evident that the Gram Pradhans are elected in the manner and process as specified under the 1947 Act and the Rules framed thereunder and are supposed to act in accordance with the mandate of the said Act. The exception to the said power is the power of removal of Gram Pradhan as prescribed under Section 95(1)(g) of the Uttar Pradesh Panchayat Raj Act, 1947 (in short ‘the Act 1947’) read with the Rules framed thereunder. My attention is drawn to the proviso to Section 95(1)(g) of the 1947 Act, which confers the powers to seize administrative and financial power of the Gram Pradhan as an interim measure, pending inquiry in the events the requirements as contemplated under the Inquiry Rules, justifies the said order.

9. It is essential to note the Rule 178 of the Uttar Pradesh Panchayat Raj Rules,1947, which is as under: 4 “178. Maintenance of Gaon Fund and its transaction.- (1) The adminis-tration of the Gaon Fund shall be in the hands of the Gaon Panchayat subject to the general control of the prescribed authority. (2) All money transactions to which any member of the Gaon Panchayat or Nyaya Panchayat or any officer or servant of the Gaon Panchayat in his official capacity is a party shall without any reservation be brought to account and all the money shall be credited in full to the Gaon Fund with the exception of authorised advances. (3) Money due to the Gaon Panchayat shall be collected either by payment at the Panchayat office or by out-door collections, or by both methods, as the prescribed authority may direct. Receipts for all moneys, received shall be issued by the persons authorised to receive the money. (4) Accounts of all income and expenditure of the Gaon Fund [and the Nyaya Panchayat Fund] shall be maintained by the Pradhans [and the Sarpanch] in Form No. 6. The account shall be closed and balanced at the end of every month and shall be examined and passed by the Gaon Panchayat at a meeting in the next following month.”

10. A perusal of the Rule 178 prescribes that the administration of the Gaon Fund shall be in the hands of the Gaon Panchayat subject to the general control of the Prescribed Authority. The Rule further specifies that the accounts of all income and expenditure of the Gaon Fund shall be maintained by the Pradhans in the manner as prescribed. Apart from prescribing that there shall be general control of the Prescribed Authority, no power of seizing the account has been specifically conferred by Rule 178 also. It is also essential to note that Rule 186 of the said 1947 Rules prescribes for an audit of the accounts and the manner in which allegations of embezzlement have to be dealt with are prescribed under Rule 188 of the 1947 Rules. The Rule 186 and the Rule 188 are also quoted below: 5 “186. Audit. The audit of the accounts of every Gaon Panchayat and every Nyaya Panchayat shall be arranged for by the prescribed authority under orders of the Chief Audit Officer to Government, Co-operative Societies and Panchayats, Uttar Pradesh at such intervals and in such manner as the State Government may direct, and further the Annual Technical Inspection Report of Comptroller and Auditor General of India, and the Annual Report of Chief Audit Officer to Government, Co-operative Societies and Panchayats Uttar Pradesh at such intervals and in such manners as the State Government may direct, and further the Annual Technical Inspection Report of Comptroller and Auditor General of India, and the Annual Report of Chief Audit Officer to Government, Co-operative Societies and Panchayats, Uttar Pradesh regarding Gram Panchayats shall be laid by the State Government before the State Legislature. The State Government may also make appropriate arrangements for scrutiny and monitoring of actions taken on such reports.

188. Treatment of embezzlement.-(1) Whenever an embezzlement of money belonging to the Gaon Fund is discovered by the Pradhan or any other official, the fact of embezzlement shall be immediately reported by him to the prescribed authority who will then inform the District Magistrate, the Director of Panchayats and the Chief Audit Officer to Government, Co- operative Societies and Panchayats, Uttar Pradesh. (2) The prescribed authority on receiving the report under sub-rule (1) shall forthwith institute an inquiry into the embezzlement.”

11. On a conjoint reading of the said provisions, although the power of general superintendence is vested with the Prescribed Authority, 6 however, there is no power of attaching/ seizing the bank account, which is a very serious measure and has the effect of adversely effecting the entire development works in the Gaon Sabha. There is no allegation in any of the document with regard to the embezzlement of the funds or siphoning of the funds from the account maintained. The allegations are with regard to the alleged improper constructions from the year 2021-22 upto 2024-25, even in the said allegation, there is no allegation that the accounts were embezzled by the Gram Pradhan in any manner so as to cause loss to the Gram Panchayat, as such, on the basis of material available, there is no material to suggest or justify the power of seizure. In the absence of any material to demonstrate that there is no nexus for the necessity to stop the operation of account to prevent any further damage of the loss, the manner in which the power has been exercised is also unjustified.

12. For the reasoning recorded above, the impugned order dated

19.02.2025 cannot be justified. The said order is quashed. The writ petition is allowed.

13. However, the respondent would be at liberty to conclude the preliminary inquiry and the inquiry in accordance with law.

14. It is further clarified that there is no order of seizure operating in respect of the two accounts referred to in the order dated 19.02.2025 and the accounts can be operated in accordance with law. Order Date:06.03.2025 akverma (Pankaj Bhatia,J.) ASHOK KUMAR VERMA High Court of Judicature at Allahabad, Lucknow Bench