Complaint Seeking Refund Of Earnest Money Deposit Cannot Be Filed Before Local Self Govt Ombudsman: Kerala High Court

The Kerala High Court laid down that a complaint seeking refund of an amount deposited by way of earnest money deposit for participating in a public auction cannot be filed before the Ombudsman for Local Self Government. 

Relying on the decisions in John.A., Ansons Group Architects v. Chanagacherry Municipality & Anr. (2011), and Kulukkalloor Grama Panchayath v. Ombudsman for Local Self-Govt. Institution & Ors. (2013), the Single Judge Bench of Justice Shoba Annamma Eapen, held:

"...it is clear that a complaint seeking refund of the amount deposited by way of earnest money deposit for participating in the public auction will not come under the definition of 'allegation' or 'complaint' as enumerated in Section 271F of the Kerala Panchayat Raj Act,1994". 

The petitioner Grama Panchayat had conducted an auction for collection of gate fee, in which the 2nd respondent became the successful bidder. The latter thereafter sought refund of the earnest money deposit of Rs. 1Lakh, by filing a complaint before the Ombudsman. 

The 2nd respondent submitted that following serious objections from the general public and the merchants, he could not collect the gate fee, and the Panchayat also conducted a reauction in which another was identified as the successful bidder. The 2nd respondent however alleged that the Panchayat was not constrained to release the amount, due to which he was constrained to approach the Ombudsman. 

The Ombudsman directed the Panchayat to return the earnest money to the petitioner within 6 months. It is on being aggrieved by the same that the Panchayat approached the High Court with the present plea. 

It was submitted by the petitioner Panchayat that the 1st Ombudsman is not vested with the power or jurisdiction to decide the issue for return of earnest money deposit. Advocate R.T. Pradeep relied upon the definitions of 'allegation', and 'complaint' as given under Sections 271F(1)(b) and 271F(1)(c) of the Act,1994, to buttress his argument. 

The Court discerned that the 2nd respondent did not comply with the terms and conditions in the agreement for public auction and that it had also been stated that he had participated in the auction without knowing the rules and conditions. 

On perusing Sections 271F(1)(b) and 271F(1)(c), the Court ascertained that it was clear that a complaint could be filed before the Ombudsman against a public servant or a Local Self Government Institution on an allegation that such person or institution is guilty of corruption or maladministration. 

"In this case, there is no such allegation by the second respondent before the Ombudsman against the Panchayat. He has approached the Ombudsman only for return of earnest money deposit made by the 2nd respondent, at the time of participating in the public auction," the Court observed. 

It thus discerned that a disputed claim for money would not come within the purview of allegation or complaint or mal-administration as defined under Section 271F of the Act. 

It thereby set aside the Order passed by the Ombudsman. 

Senior Government Pleader Vinitha B., and Advocate Ayyappan Sankar appeared on behalf of the respondents. 

Citation: 2023 LiveLaw (Ker) 659 

CaseTitle: Secretary, Poovachal Grama Panchayat v. Secretary, Ombudsman for Local Self Government & Anr. 

Case Number: WP(C) NO. 8180 OF 2015

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