K TULSIRAM Vs. CHAIRMAN, MUNICIPAL COUNCIL

JUDGEMENT

(1.) The appellant in this case was Chairman of the Madura Municipality from 11th June 1921 till 25 June 1923, Ha was succeeded by Hajee B. Syed Shamsuddin Bahadur, whose term of office lasted till 1 July 1923, when he, in his turn, was succeeded by the defendant in the suit Mr. E. S. Naidu. The rules framed under the District Municipalities Act provide for periodical auditing of Municipal accounts and the Government have prescribed that there shall be an audit every half-year. During the appellant's term of office such audits were regularly made. In 1924, when Mr. R.S. Naidu was Chairman, it was discovered that extensive frauds had been going on in the street-lighting department of the Municipality and a supplemental audit was made of the accounts of the period from 1 April 1921 till 18 January 1924. It was ascertained that owing to the negligence of successive Chairmen a large sum of money had been misappropriated and the auditor surcharged the appellant, his immediate predecessor and his two successors. In the case of the appellant and of Mr. R.S. Naidu, the surcharges were large, Rs. 7,000 odd and Rs. 6,000 odd, respectively. The rules in Schedule 4 of the Act allow to persons surcharged in this way either of two remedies. They may apply to the District Court to set aside the surcharges or "-in lieu of such application"may appeal to the Local Government. All four of the aggrieved persons chose the latter course. Three of them succeeded in getting their surcharges remitted completely.

(2.) The appellant did not; all that he obtained was a reduction to Rs. 2,500. He then filed a suit in order to get an injunction restraining Mr. R.S. Naidu from recovering this sum from him Under Rule 62. The two main questions raised by it were these: whether the auditor had jurisdiction to reopen audits already closed and whether the plaintiff had any right to sue. The Sub-Judge found on issue 1 in favour of the appellant. The District Judge, though with some hesitation, dissented from his finding and held that there was nothing in the rules that prevented an audit being reopened. That was not quite the right method of approaching the problem. The question was rather whether there was anything in the rules that allowed the reopening of a closed audit. If the rules prescribe a half-yearly audit and nothing more whence is derived the power to re-open that audit to conduct an extraordinary or supplemental audit and as a result to make surcharges? Certainly mot from anything in the rules themselves. On issue 2 the Sub-Judge and the District Judge again disagreed. The former considered that the appellant had a right of suit. The latter was of a different opinion. Both seem to have thought (and there was nothing in the plaint to disabuse them of that idea) that the suit was brought Under Rule 61. If that had been so, the Sub-Judge was quite wrong in holding that the remedies allowed by the rule were not mutually exclusive. It is quite plain that, if an aggrieved person has resorted to one, he cannot have the benefit of the other as well. Mr. Vaz now points out that this is a regular suit and not an application Under Section 61, which is not a suit at all and would have had to be presented to the District Court. His case is that all that was done was without any legal foundation and that his client has therefore a right to sue. He concedes of course that had there been any jurisdiction to conduct an extraordinary audit his right to sue would have been barred by the special remedies provided by the statute.

(3.) We will now deal with the first question whether there was any jurisdiction to conduct a supplementary audit. The relevant rules are Rules 56 to 58, Schedule 4, District Municipalities Act. Rule 56 directs the Chairman to submit to the auditor such accounts as he needs. Rule 57 empowers the auditor to summon documents and persons and to question such persons. Rule 58(a) requires the auditor to report irregularities in expenditure or collection of money to the council. Under Sub-rule (b) he must keep the council informed of the progress of the audit. By Sub-rule (c) he is instructed to report to the council any loss or waste of money caused by neglect or misconduct with the names of the persons directly or indirectly responsible. Sub-rule (d) runs (the auditor shall) submit to the council a final statement of the audit and a duplicate copy thereof to the Local Government within a period of three months from the end of the financial year or within such period as the Local Government may notify.