C.P.BABU ALIAS C.P.VIJAYAN v. STATE OF KERALA and KERALA STATE WAREHOUSING CORPORATION

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **WEDNESDAY, THE 26TH DAY OF FEBRUARY 2020 / 7TH PHALGUNA, 1941** ## **WP(C).No.28632 OF 2019(D)** ## **PETITIONER:** **C.P.BABU ALIAS C.P.VIJAYAN, AGED 62 YEARS S/O.PURUSHOTHAMAN, SECRETARY, KERALA STATE WARE HOUSING CORPORATION WORKERS SAMITHI JTUC REGISTRATION NO.01/13/2004, JSS OFFICE, THURAVOOR P.O., CHERTHALA, ALAPPUZHA, PIN- 683586.** **BY ADVS. SRI.M.S.UNNIKRISHNAN SRI.V.S.SREEJITH SRI.K.SUNIL SMT.C.V.VEENA SMT.A.G.NISHA SMT.M.ARDRA KRISHNAN SRI.CHRISTINE MATHEW SMT.SUSAN JACOB (S-3481) SHRI.ANEESH K.R** ## **RESPONDENTS:** **1 STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, AGRICULTURE PU DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN- 695036.** - **2 KERALA STATE WAREHOUSING CORPORATION, WAREHOUSING ROAD, NEAR ERNAKULAM JUNCTION RAILWAY STATION, KOCHI-682016, REPRESENTED BY ITS MANAGING DIRECTOR.** **R1 BY JAFAR KHAN GOVERNMENT PLEADER R2 BY ADV. SRI.MAJNU KOMATH SC** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C).No.28632 OF 2019(D) 2 ## **JUDGMENT** The petitioner herein is the Secretary of the Kerala State Warehousing Corporation Workers Samithi (JTUC). He contends that he came across Ext.P1 inspection report relating to the audit of accounts of the Kerala State Warehousing Corporation, the 2[nd] respondent herein, for the year 2014 -2016 wherein serious financial misappropriation, financial mismanagement and other serious anti corporation activities are levelled against the office bearers of the Corporation resulting in financial loss to the tune of several Crores of rupees. The petitioner therefore approached this Court and filed a Writ Petition as W.P.(C) No.28659/2018 seeking a direction to the Government of Kerala to initiate action on Ext.P1 inspection report. This Court directed the 1[st] respondent to take action on the same. It is contended that the 1[st] respondent without considering the gravity of the matter and without taking note of the serious allegations, failed to take appropriate action and passed Ext.P4. This Writ Petition is filed seeking to declare that Ext.P4 is illegal and also for a direction to the 1[st] respondent to pass a considered order on the basis of the real state of WP(C).No.28632 OF 2019(D) 3 affairs. 2. The averments in the Writ Petition would show that the petitioner has raised several allegations against the office bearers of the Kerala State Warehousing Corporation and the entire allegations are based on Ext.P1 inspection report on the audit of accounts. He contends that in the inspection report, it has been mentioned that the Corporation had suffered loss of subsidy of 28.3 Crores due to non completion of godown works. Though the Government of Kerala accorded administrative approval for implementation of 80 warehousing projects and released a sum of Rs.11.33 Crores, none of the projects could be completed in time resulting in loss of subsidy. According to the petitioner, the office bearers could have foreseen the problems that would have plagued the project and they ought to have taken remedial measures. It is further contended that very serious allegations are levelled in Ext.P1 report with regard to appointment of employees in the year 2009. The Employment Director, Thiruvananthapuram had informed the respondent that the appointment of class-IV employees were in excess of the vacancies notified. The eligible candidates were not called for interview and the persons in charge did not conform to the reservation criteria. The report also states that there is WP(C).No.28632 OF 2019(D) 4 lack of transparency in the recruitment procedures adopted by the Corporation which resulted in unnecessary litigation. It is contended that Ext.P1 report was kept in deep freezer for a period of four years without finalization of proceedings. The 2[nd] respondent concealed relevant facts from the Accountant General and this was taken note of in the audit report. It is also contended that theft was committed from the warehouse of items entrusted with the Corporation and the resultant loss of reputation were not considered by the 1[st] respondent while passing Ext.P4 order. It is contended that huge shortage of pepper to the tune of 1904.6 kgs were noted leading to consequent loss of business. However, no steps were taken to remedy the same. He would further contend that the Enquiry Commissioner and Special Judge (Vigilance), Muvattupuzha had taken note of the refer report submitted before the authority and had rejected the quick verification report and further enquiry was ordered. The petitioner was also directed to obtain prosecution sanction from the Government. It is further contended that huge loss was caused to the public exchequer due to the lapses of the officers of the 2[nd] respondent. None of these aspects were taken note of by the 1[st] respondent while submitting Ext.P4. WP(C).No.28632 OF 2019(D) 5 3. The 2[nd] respondent has filed a counter affidavit. It is contended that the 2[nd] respondent has submitted Ext.R2(a) report as an explanation to Ext.P1 report of the Senior Audit officer of the Accountant General. It is further contended that the reasons which led to loss of subsidy was explained in detail to the 1[st] respondent. Some of the projects could not be executed due to non availability of land and some projects had to be shelved due to non sanctioning of building permit. Insofar as appointment of Class-IV employees are concerned, the same was the subject matter of various litigation before this Court. Some of the cases are still pending. Insofar as the loss on account of cashew nuts are concerned, a vigilance enquiry was ordered by the Government and on its conclusion, no lapses were found on the part of the accused. The Government had directed the managing director to assess the actual loss by engaging a Government agency. Insofar as diversion of gratuity fund is concerned, a complaint was lodged before the police which was referred. Later, a protest complaint was filed and the same is pending. Insofar as shortage of black pepper leading to loss of business is concerned, a complaint was filed before the Central Police Station and Crime No. 1720 of 2015 was registered. The investigation was concluded and final report was submitted by the Vigilance Department absolving the accused. WP(C).No.28632 OF 2019(D) 6 Insofar as loss of Kopra deposited by NAFED is concerned, a Crime was registered as Crime No. 1722 of 2015 which was referred by the police. According to the 2[nd] respondent, the entire aspects were considered by the Government and certain remedial measures were ordered. 4. I have heard Sri M.S. Unnikrishnan, the learned Counsel appearing for the petitioner, Sri Jafar Khan, the learned Government Pleader and Sri Majnu Kamath, the learned counsel appearing for the 2[nd] respondent. 5 The Kerala State warehousing Corporation was established in the year 1959 and the main functions of the Corporation are acquisition and construction of godowns/warehouses in the state and to use them for the storage of agricultural products/implements, seeds, manure, notified commodities and other incidental activities. The Corporation functions under the administrative control of Department of agriculture, Government of Kerala. This Writ petition is based on Exhibit P1 inspection report of the audit of accounts of Kerala State Warehousing Corporation, Kochi, for the period 2014 – 2016. The specific allegation raised by the petitioner is that several serious financial misappropriation, financial mismanagement and other serious anti-Corporation activities were committed by the office WP(C).No.28632 OF 2019(D) 7 bearers of the Corporation resulting in the Corporation sustaining huge loss. The audit report contains a disclaimer to the effect that the inspection report has been prepared on the basis of the information furnished and made available by Kerala state warehousing Corporation. It also states that the office of the Principal Accountant General (E & RSA), Kerala, Thiruvananthapuram, disclaims any responsibility for any misrepresentation and/or non-information on the part of the audited entity. The main grievance of the petitioner is that the 1[st] respondent has not appreciated the severity of the accusations in Exhibit P1 report while complying with the directions issued by this Court and take appropriate remedial measures. I find that the 1[st] respondent had directed the Kerala State warehousing Corporation to furnish a response to the audit report. The said action taken report was also forwarded to the Kerala State warehousing Corporation and it is noted in Exhibit P4 that remedial measures were taken by the managing director on the audit paras of the Accountant General. The 1[st] respondent has thereafter evaluated the action taken report furnished by the Kerala State warehousing Corporation and it was forwarded to the Accountant General. It is stated that the Accountant General had observed that no further action is being pursued as the reply furnished by the managing director is satisfactory. WP(C).No.28632 OF 2019(D) 8 6. In Exhibit P4 report, the 1[st] respondent has adverted to each and every allegations in the audit report and has concluded as follows in para 8 of the report. 8) In view of the foregoing conclusions, Government hereby direct the following: i). The Managing Director, Kerala State Warehousing Corporation shall maintain “Maintenance and Check of Audit Objection Register” and expedite necessary action and to furnish final Action Taken Report as expeditiously as possible under article 63 (b), 63 (d) of Kerala Financial Code, Volume-I. ii). As regards Audit Para pertaining to loss of subsidy in Godown construction, the Managing Director, Kerala State Warehousing Corporation shall finalize the action plan at the earliest and to complete the works as scheduled in the action plan without fail. 7. It is therefore apparent that as soon as the audit report was submitted, a report was called for from the 2[nd] respondent by the 1[st] respondent. The report which was submitted was forwarded to the Accountant General, who appears to have been satisfied with the action taken. Thereafter the entire records were produced by the 1[st] respondent and he has issued certain directions which include initiation of appropriate action and to furnish final action taken report under the various provisions WP(C).No.28632 OF 2019(D) 9 of the Kerala Financial Code. In respect of loss of subsidy, directions were issued to finalise the action plan and to complete the works as scheduled. 8. It is evident that the problems that came to the notice of the Senior Auditor are administrative lapses and inefficiency of officers which are inherent in all large Corporations. As is borne out from the explanation offered by the 2[nd] respondent and also Ext.P4 several remedial measures were taken. It was found to be satisfactory by the 1[st] respondent and he has also suggested certain measures to clean up the system. 9. The 1[st] respondent has the power, right and liberty to decide one way or the other and to act in accordance with his judgment and freedom of choice. He has also been conferred with the freedom to decide one way or the other. In other words, he has been conferred with the latitude that the Government, Governmental agencies and public administrators possess in the implementation of public laws and programs. While exercising judicial review, this Court is called upon to ensure that the authority does not abuse its power and to ensure that it reaches a conclusion that is correct in the eyes of law. This court will have to strike a just balance between administrative discretion to decide matters as per the Government Policy and the need for fairness. This Court is not concerned WP(C).No.28632 OF 2019(D) 10 with the merits or correctness of the decision, but with the manner in which the decision is taken or order is made. It is not an appellate power and it is by now settled that this Court cannot substitute its opinion for the opinion of the authority deciding the matter. The areas where judicial power can operate are limited to keep the executive and the legislature within the scheme of division of powers between three organs of the State. The ultimate scope of judicial review depends upon the facts and circumstances of each case and its dimensions must remain flexible (See **Shreeram v. Settlement Commissioner[1]** . Having considered the entire facts, in the light of the above, I find no reason to interfere with Ext.P4 order passed by the 1[st] respondent. Certain remedial measures have been suggested by the 1[st] respondent which shall be pursued. This Writ petition will stand dismissed. **Sd/-** ## **RAJA VIJAYARAGHAVAN V** ## **JUDGE** IAP 1 [1989 (1) SCC 628] WP(C).No.28632 OF 2019(D) 11 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE RELEVANT PAGES OF THE AUDIT REPORT DATED 29.12.2016.** - **EXHIBIT P2 TRUE COPY OF THE ORDER DATED 27.03.2019 IN W.P.(C)NO.28659 OF 2018 ON THE FILES OF THIS HON'BLE COURT.** - **EXHIBIT P3 TRUE COPY OF THE CONTEMPT NOTICE ISSUED BY THE PETITIONER DATED 20TH MAY, 2019.** - **EXHIBIT P4 TRUE COPY OF THE LETTER G.O. (RT)NO.782/2019/AGRI DATED 14.08.2019 ISSUED BY THE 1ST RESPONDENT.** - **EXHIBIT P5 TRUE COPY OF THE ORDER DATED 6TH APRIL, 2019 IN C.M.P. NO.1055 OF 2018 ON THE FILES OF HON'BLE ENQUIRY COMMISSIONER AND SPECIAL JUDGE (VIGILANCE), MUVATTUPUZHA.** - **EXHIBIT P6 TRUE COPY OF THE LETTER DATED 11.05.2010 ISSUED BY EMPLOYMENT DIRECTORATE, THIRUVANANTHAPURAM TO THE 2ND RESPONDENT.** - **EXHIBIT P7 TRUE COPY OF THE LETTER DATED 20.1.2011 BY THE EMPLOYMENT DIRECTOR, THIRUVANANTHAPURAM TO THE 2ND RESPONDENT.** - **EXHIBIT P8 TRUE COPY OF THE LETTER DATED 22.06.2010 ISSUED FROM SECRETARY TO GOVERNMENT LABOUR AND RE-HABILITATION (G) DEPARTMENT OF THE EMPLOYMENT DIRECTOR, THIRUVANANTHAPURAM.** **EXHIBIT P9 TRUE COPY OF THE LETTER DATED 11TH MARCH, 2010 ISSUED FROM THE TRIPUNITHURA WAREHOUSE TO THE 2ND RESPONDENT. EXHIBIT P10 TRUE COPY OF THE LETTER DATED 12TH JANUARY, 2011 FROM THE TRIPUNITHURA** WP(C).No.28632 OF 2019(D) 12 **WARE HOUSE TO THE 2ND RESPONDENT.** **RESPONDENT'S/S EXHIBITS:** **EXHIBIT R2(a): TRUE COPY OF THE REPORT DATED 09/07/2019 SUBMITTED BY THE MANAGING DIRECTOR OF THE 2ND RESPONDENT KSWC TO THE PRINCIPAL SECRETARY TO GOVERNMENT, AGRICULTURE (PU) DEPARTMENT.**