Funds Advanced to Employees for Construction Work Are Not "Public Demand" Recoverable Under Certificate Proceedings

The petitioner, an employee/contractor associated with Zila Parishad, Vaishali, challenged the initiation of Certificate Case No. 2 of 2016-17. The case was initiated by the District Certificate Officer for the recovery of funds allotted for Zila Parishad schemes on the ground that adjustment bills had not been submitted.

The petitioner’s objection filed under Section 9 of the Bihar Public Demand Recovery Act ("the Act") was rejected on October 5, 2018, leading to the current writ petition seeking quashing of the recovery proceedings.

1. Whether the money advanced for the execution of Zila Parishad schemes qualifies as a "Public Demand" under Section 3(6) and Schedule I of the Bihar Public Demand Recovery Act.

2. Whether certificate proceedings can be initiated for recovery in cases where liability is not predetermined or is based on a mere failure to submit adjustment bills without a specific finding of defalcation.

Section 3(6) of the Bihar Public Demand Recovery Act, which defines "Public Demand" as arrears or money mentioned in Schedule I.

The precedent Akhauri Bijoy Kumar Sinha v. State of Bihar (CWJC No. 4332 of 1995), which held that advances for construction work are not public demands unless covered by a specific clause in Schedule I.

Principles from Rabindra Nath Singh v. State of Bihar [2007(1) PLJR 192], asserting that "loans and advances" under Entry 8A do not encompass funds given for accounting purposes.

Board’s Instruction 10, which mandates that certificate procedures should only be used for undisputed debts.

The court reasoned that for an amount to be recovered under the Act, it must strictly fall within the categories listed in Schedule I.

Following the logic in Ram Lagan Prasad v. State of Bihar and Rabindra Nath Singh, the court found that funds advanced to an individual for the execution of schemes do not constitute a "loan" or "advance" repayable to the State under Entry 8A; rather, they are funds for which the individual must account.

Since the respondents failed to show which specific clause of Schedule I covered the petitioner's alleged dues, the demand did not qualify as a "Public Demand".

Citing Brij Mohan Prasad v. State of Bihar, the court noted that certificate proceedings are for the recovery of ascertained dues; they cannot be used to determine liability or defalcation which should otherwise be established through departmental proceedings or civil suits.

The Court allowed the writ petition and quashed the entire proceedings of Certificate Case No. 2 of 2016-17, including the requisition dated May 28, 2016, and the order dated October 5, 2018. However, the court granted liberty to the respondents to recover the dues through any other legal remedies available under the law.