MUNICIPAL COMMITTEE Vs. DR. DES RAJ AND ORS.

JUDGEMENT

(1.) THIS order will dispose of two Regular Second Appeals Nos. 1292 and 1324 of 1963, which |are directed against the judgment and decree of the Additional District Judge, Ambala dated 11th April, 1963.

(2.) THE facts giving rise to these appeals, in brief, are as follows: In the year 1956, the Government of India introduced a multi -purposes scheme to promote the cause of scientific arid technical education. One of the institutions selected for this purpose was the Municipal Board, High School, Kalka, which was being run by Municipal Committee, Kalka (Appellant in Regular Second Appeal No. 1292 of 1963). A sum of Rs. 50,000 was sanctioned for teaching Science and constructing buildings, etc., arid this amount was ordered to be paid to the Municipal Committee through the Punjab Government in the year 1956. In this connection the Municipal Committee, Kalka, passed the resolution, Exhibit D. 3, dated 4th March, 1956, stating inter alia that like Head Master should proceed with the purchase of the necessary furniture and scientific instruments and material under the supervision of the Municipal Committee. With regard to the amount of Rs. 50,000 that had been sanctioned for the project by the Government of India, the resolution stated: It is agreed that Rs. 50,000 be kept apart and this be spent in accordance with the instructions of the Education Department. The funds sanctioned by the Government of India were received by the Municipal Committee, Kalka, through the Punjab Government, and an account in that connection was opened with the Punjab National Bank, Kalka, in the name of the Municipal Committee on 16th July, 1956, by Dr. Des Raj (sic) R.S.A. 1324 of 1963), who was then its President. That very day a bearer cheque (copy Exhibit P.W. 5/2), for Rs. 3,000 was issued by the said Dr. Des Raj in favour of Shri O.P. Goyal, Manager, Modern Furnishers. As under the rules it could not be cashed without the signatures of the Vice -President or another member, it was signed by Kanti Kumar, Defendant No. 2 (Respondent in R.S.A. 1292 of 1963). The very next day, i.e., 17th July, 1956. the term of Dr. Des Raj as President of the Municipal Committee expired, and on the following day (18th July. 1956) this cheque was got cashed.

(3.) NO furniture was ever supplied by the Modern Furnishers to whom this cheque of Rs. 3,000 had been issued as advance. It subsequently came to light that no such firm existed and the Municipal Committee had been defrauded. Accordingly, on 15th July, 1959, the Municipal Committee instituted the suit out of which this appeal has arisen for recovery of Rs. 3,000 not only from the said Des Raj and Kanti Kumar Defendants 1 and 2, respectively, but also from Dharam Pal Sehgal, O.P. Goyal, Defendants 3 and 4, alleged partners of Messrs Modern Furnishers (Defendant No. 5). It was pleaded that a loss to the extent of Rs. 3,000 had been caused to the Plaintiff -Municipal Committee by commission of fraud which came to light subsequently after the cheque had been cashed and the term of Dr. Des Raj had expired. Besides asserting that Dr. Des Raj had abused his position as President of the Municipal Committee, giving the particulars of the fraud, it was stated in para 10 of the plaint that no order for the supply of furniture could be placed without receiving the list of the necessary furniture from the Director of Public Instruction, Punjab, that there was no resolution of the Municipal Committee sanctioning the purchase, that the President could not purchase anything exceeding Rs. 100 in value without the resolution of the Municipal Committee, that the Municipal Rules with regard to the purchase of goods were not complied With, that no tenders were invited nor Ml per cent security obtained from the firm concerned, that no agreement was executed by the Modem Furnishers nor could any advance be paid to it and that no such firm as Modern Furnishers existed. Despite best efforts the firm Modern Furnishers (Defendant No. 5) was not traceable and Defendants 3 and 4, its alleged partners, failed to appear at the trial despite service. The suit was contested by Dr. Des Raj and Kanti Kumar, who besides objecting that the suit has not been filed by duly authorised person and was barred under Section 50 of the Punjab Municipal Act, denied the allegation of fraud and their responsibility for the loss of Rs. 3,000. The trial proceeded on the following issues: