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1995 DIGILAW 875 (MAD)

P. Venkatachalam (deceased) and Others v. The Special Tribunal for Cooperative Cases, Madras and Others

1995-10-25

K.A.SWAMI, RAJU

body1995
Judgment :- K.A.Swami, C.J. In this petition under Art.226 of the Constitution of India, the petitioner has sought for quashing the order dated 13. 1985 passed by the first respondent in C.M.A. No.57 of 1980. That was an appeal preferred against the award dated 6. 1978 passed by the Deputy Registrar of Co-operative Societies, Ootacamund, second respondent herein in A.R.C. No. 1856/76-77. The second respondent passed an award against the petitioner for a sum of Rs.65,188.08 being the value of the stock deficit occurred in the oil men section of the petitioner society as on 312. 1976 and 30.1.1977. The first respondent affirmed the said award by judgment dated 13. 1985 in C.M.A.No.57 of 1980. Of course, in this case, the petitioner died during the pendency of the writ petition and his legal representatives have been brought on record who are petitioners 2 to 8. It may also be pointed out here that the deceased petitioner was also prosecuted by the third respondent society on the same set of facts for the offence of breach of trust and misappropriation in C.C. No.97 of 1980 before the Special Judicial I Class Magistrate, Coimbatore and he was acquitted by the Special Judicial I Class Magistrate by judgment dated 14. 1981. We are not required to go into the question as to the effect of such acquittal in the instant case. It is also not necessary to go into the merits of the several other contentions having regard to the one grave infirmity in the proceeding which was pointed out by the learned counsel appearing for the petitioner that the second respondent to whom the dispute was referred for adjudication was none other than the officer who filed the complaint against the petitioner before the criminal court on the very same set of facts and he was also examined as one of the prosecution witnesses. It happened before the dispute was referred and adjudicated by him. It is one of the cardinal principles of our jurisprudence that no person who is a complainant in the case shall be the adjudicator. Therefore, the entire proceeding has to be held as vitiated by reason of this grave and serious infirmity. A person who had prosecuted the petitioner cannot by any stretch of imagination be held to have approached the case dispassionately. Therefore, the entire proceeding has to be held as vitiated by reason of this grave and serious infirmity. A person who had prosecuted the petitioner cannot by any stretch of imagination be held to have approached the case dispassionately. Even for the sake of argument, if it is accepted that the second respondent had approached the case dispassionately the principles of natural justice require that such a person should not be an adjudicator of the cause in question. Justice should not only be done, but it must also seem to done. The Supreme Court in Arjun Chaubey v. Union of India, A.I.R. 1984 S.C. 1356, while dealing with a case, whether a witness can be a judge of his own testimony and certify it as true, observed thus: “....The main thrust of the charges against the appellant related to his conduct qua respondent 3. Therefore, it was not open to the later to sit in judgment over the explanation offered by the appellant and decide that the explanation was untrue. No person can be a judge in his own cause and no witness can certify that his own testimony is true. Any one who has a personal stakes in an inquiry must keep himself aloof from the conduct of the inquiry. The order of dismissal passed against the appellant stands vitiated for the simple reason that the issue as to who, between the appellant, and respondent 3, was speaking the truth was decided by respondent 3 himself.” We have, in The Group General Manager Bharat Heavy Electricals Limited, Thiruchirapalli and others v. R.Hendry Baskar, W.A. No. 1381 of 1994, considered the disciplinary proceedings held by the Group General Manager against the workmen, on the charge that the workmen attempted to assault him, and held that the Group General Manager was in the position of a victim who could be examined as one of the witnesses, being acomplainant in the proceeding, and could not function as a Judge in his own cause. In the instant case, the 2nd respondent viz. the Deputy Registrar, Cooperative Societies, Ootacamund, could not have functioned and was disabled to function as an arbitrator to decide the dispute. 2. In the instant case, the 2nd respondent viz. the Deputy Registrar, Cooperative Societies, Ootacamund, could not have functioned and was disabled to function as an arbitrator to decide the dispute. 2. The other contentions raised by the learned counsel for the petitioner is that the facts of the cases disclose that there was a stock deficit in the oil men section of the petitioner society, but the value of which was tried to be recovered from the petitioner. As such, it was a case for surcharge proceeding and not a case for raising a dispute under the provisions of the Co-operative Societies Act, 1961. It may be pointed out here that the present Co-operative Societies Act is the third one enacted by the State Legislature. It has its origin in Act 6 of 1932. Thereafter, Act6 of 1932 was replaced by Act53 of 1961 and the present Act 30 of 1983 has replaced Act 53 of 1961. The earlier two enactments contained provisions for surcharge proceedings as well as adjudication of the disputes. The present Act also contains similar provisions. Sec.49 of 1932 Act provided for surcharge proceedings and Sec.51 therein provided for arbitration proceedings. Similarly Sec.71 of the Act 1961 provided for surcharge proceedings and Sec.73 therein provided for reference and adjudication of the disputes. In the present Act Sec.87 of the Act deals with surcharge proceedings and Sec.90 of the Act deals with adjudication and disputes. As we are concerned with the case which arose and was adjudicated when 1961 Act was in force, we refer to the provisions contained in 1961 Act. In the present Act Sec.87 of the Act deals with surcharge proceedings and Sec.90 of the Act deals with adjudication and disputes. As we are concerned with the case which arose and was adjudicated when 1961 Act was in force, we refer to the provisions contained in 1961 Act. Sec.71 of the Act provides, surcharge: (1) where in the course of an audit under sec.64 or an inquiry under Sec. 65 or an inspection under Sec. 66 or Sec.67 or the winding up of a society, it appears that any person who is or was entrusted with the organisation or management of the society or any past or present officer or servant of the society has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment contrary to this Act, the rules or the by-laws, the Registrar himself, or any person specially authorised by him in this behalf, of his own motion or on the application of the committee, liquidator or any creditor or contributory may inquire into the conduct of such person or officer or servant and make an order requiring him to repay or restore the money or property or any part thereof with interest such rate as the Registrar or the person authorised as aforesaid thinks just or to contribute such sum to the assets of the society by way of compensation in respect of the misappropriation, misapplication, of funds, fraudulent retainer, breach of trust or wilful negligence as the Registrar or the person authorised as aforesaid thinks just; Provided that no such inquiry shall be held after the expiry of six years from the date of any act or omission referred to in this sub-section: Provided further that no order shall be passed against any person referred to in this sub-section unless the person concerned has been given an opportunity of making his representations. (2) Any sum ordered under this section to be repaid to a registered society or recovered as a contribution to its assets may be recovered on a requisition being made in this behalf by the Registrar to the Collector in the same manner as arrears of land revenue. (2) Any sum ordered under this section to be repaid to a registered society or recovered as a contribution to its assets may be recovered on a requisition being made in this behalf by the Registrar to the Collector in the same manner as arrears of land revenue. (3) This section shall apply notwithstanding that such person or officer or servant may have incurred criminal liability by his Act. Sec.73 of the Act reads thus: "Disputes: (I) If any dispute touching the constitution of the committee or the management of the business of a registered society (other than a dispute regarding disciplinary action taken by the society or its committee against a paid servant of the society) arises- (a) among members, past members and persons claiming through members, past members and deceased members, or (b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or servant of the society, or (c) between the society or its committee and any past committee, any officer, agent or servant, or any past officer, past agent or past servant, of the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased servant of the society, or (d) between the society and any other registered society, such dispute shall be referred to the Registrar for decision.Explanation: For the purpose of this section, a dispute shall include- (i) a claim by a registered society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member whether such debt or demand be admitted or not, and (ii) a claim by a registered society against a member, past member or the nominee, heir or legal representative of a deceased member for the delivery of possession to the society of land or other immovable property resumed by it for breach of the conditions of assignment or allotment of such land or other immovable property. Provided that no dispute relating to, or in connection with, any election to a committee shall be referred under this sub-section till the date of the declaration of the result of such election". Provided that no dispute relating to, or in connection with, any election to a committee shall be referred under this sub-section till the date of the declaration of the result of such election". Sub-sec.(1) of Sec.71 of the Act, as extracted above, discloses that the basis or the surcharge proceedings is the report made based upon audit, enquiry or inspection or the winding up of the society to the effect that the person who was entrusted with the organisation or management of the society or any past or present officer has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made any payment contrary to this Act and the rules or the by-laws. Whereas the basis for raising the dispute is that it should be a matter touching the constitution of the committee or the management of the business of a registered society between the society and its members or among the members between the society and its servants, officers, past and present. The basis for a claim involved under surcharge proceedings, as already pointed out, is the misappropriation, fraudulent retention of any money or other property or commission of breach of trust in relation to the society or causing deficiency over the assets of the society by committing breach of trust or wilful negligence of the person concerned. The surcharge proceedings are of quasi-criminal nature. However, there is no doubt that such a claim can also be made the basis for raising the dispute, as such a claim would relate to dispute between the society and its servant touching the management of the business of the society. It would be in the nature of civil claim. In that event also, the society has to prove the same against whom such a claim is made that he is liable for the same. Therefore, it would be open to the society either to adopt surcharge proceedings or raise a dispute. It would be in the nature of civil claim. In that event also, the society has to prove the same against whom such a claim is made that he is liable for the same. Therefore, it would be open to the society either to adopt surcharge proceedings or raise a dispute. In Yogendra Prasad v. Additional Registrar, Cooperative Societies, (1992)1 S.C.C. (Supp.) 720, while considering such a situation similar to the one with which we are concerned, the Supreme Court observed that the surcharge proceedings or appropriation proceedings can be persuaded as the basis for each one of them is different. Relevant portion of the judgment is as follows: "The second contention that the award of the Assistant Registrar amounts to double jeopardy offending his right under Art.20 is misconceived and without substance. Undoubtedly Sec.40 gives power to the Registrar to initiate surcharge proceedings, on receipt of audit report under sec.33 or an enquiry under Sec.35 or an inspection under Sec. 34, 36 or 37 or of the winding up proceedings, if it appears to the Registrar that any person who has taken part in the organisation or the management of the Society or any past or present officers of the Society made any illegal payment under clause (a) or by reason of his culpable negligence or misconduct causes loss or deficiency to the funds of the society under clause (b); or failed to bring into account any sums which ought to have been brought into the account under clause (d); or misappropriated or fraudulently retained any property of the Society or of the financing bank etc., The proceedings under Sec.48 are in the nature of a civil suit, otherwise cognisable by a civil court under Sec.9 of the C.P.C. The statute has taken out the jurisdiction of the civil court and expressly conferred on the Registrar or a person exercising the powers of the Registrar to decide the dispute touching the business or management of the Society between its members, past members etc. or their office bearers, agent or officers or servants of the Society etc. The proceedings under Sec.40 are not in substitution of Sec.48, but are independent of and in addition to the normal civil remedy under Sec.48. The culpable negligence, misconduct, misappropriation, fraudulent conduct etc. are relevant facts to be established in the proceedings under Sec.40. But that is not so under Sec.48. The proceedings under Sec.40 are not in substitution of Sec.48, but are independent of and in addition to the normal civil remedy under Sec.48. The culpable negligence, misconduct, misappropriation, fraudulent conduct etc. are relevant facts to be established in the proceedings under Sec.40. But that is not so under Sec.48. Therefore mere initiation or an order passed under Sec.40 does not divest the jurisdiction or power of the Registrar under Sec.48 when it was referred to for a decision of the dispute. Exercise of the jurisdiction to pass an award under Sec.48(3) or revision under Sec.56 does not amount to double jeopardy. We are informed that an appeal before the Government is pending against surcharge order under Sec.40. We express no opinion thereon. We hold that exercise of the power to pass an award under Sec.48 does not amount to double jeopardy. The appellate order of the Deputy Registrar is obviously and palpably illegal and rightly corrected. The appeal is accordingly dismissed, but since none appeared for the respondents we order no costs“. However, in the instant case, from the beginning the [society has taken recourse to the arbitration proceedings only. Thus, we are of the view that the arbitration proceedings are maintainable. 3. We may also point out that arbitration proceedings would have been still maintainable even if surcharge proceedings under Sec.71 of the Act were initiated, because this is a case wherein according to the society there was a deficit of stock which was incharge of the petitioner, but which fact was disputed by the petitioner. In such a situation it is open to the society either to adopt the course provided under Sec.71 or under Sec.73 of the Act. At the same time it is not possible to hold that the petitioner would not be liable to be proceeded with under Sec.71 of the Act, as the basis for the proceeding under Sec.71 of the Act is quite different as pointed out above. Action under the one does not exclude the action under another inasmuch as one is not substitution of another and are independent of each other. In fact, by adopting the course under Sec.73 of the Act, the society has taken on itself the greater burden of proving the case as claimed by it. As against the award passed, under sec.73 of the Act right of appeal is provided. In fact, by adopting the course under Sec.73 of the Act, the society has taken on itself the greater burden of proving the case as claimed by it. As against the award passed, under sec.73 of the Act right of appeal is provided. Similarly, as against the order of surcharge, an appeal has been provided. Therefore, it is not possible to hold that the petitioner is in any way prejudiced by the reason of taking recourse to the provisions under Sec.73 of the Act. Where two courses are open to the party under law and there is no prohibition contained in that law as to adopt one of the courses, it is always open to the party to adopt anyone of the courses. In such an event, the other course would not be available to it. In that event, the course adopted is according to the provisions of law. 4. Similar question arose in Bihar State Co-operative Marketing Union v. Uma Shankar Sharan, (1992)4 S.C.C. 196 , wherein it has been specifically held as follows: ”Validity of plural remedies, if available under the law, cannot be doubted. If any standard book on the subject is examined, it will be found that debate is directed to the application of the principle of election, where two or more remedies are available to a person. Even if the two remedies happen to be inconsistent, they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly. In the present case there is no such problem as no steps under Sec.40 were even taken by the appellant. The provisions of Sec.48 must, therefore, be held to be available to the appellant for recovery of the loss. Our view that a matter which may attract Sec.40 of the Act will continue to be governed by Sec.48 also if the necessary conditions are fulfilled, is consistent with the decision of this Court in Prem Jeet Kumar v.SurenderGandotra (1991)2 S.C.C. (Supp.) 215, arising under the Delhi Co-operative Societies Act, 1972. The two Acts are similar and Secs.40 and 48 of the Bihar Act and Secs.59 and 60 of the Delhi Act are in pari materia.. The reported judgment followed an earlier decision of this Court in Pentakota Srirakulu v. Co-operative Marketing Society Limited. The two Acts are similar and Secs.40 and 48 of the Bihar Act and Secs.59 and 60 of the Delhi Act are in pari materia.. The reported judgment followed an earlier decision of this Court in Pentakota Srirakulu v. Co-operative Marketing Society Limited. We accordingly hold that the High Court was in error in assuming that the application of provisions of Sec.48 of the Bihar Act could not be applied to the present case for the reason that Sec.40 was attracted." That being so, the contention cannot at all be countenanced. 5. For the reasons stated above, the writ petition is allowed. The order dated 13. 1985 passed by the first respondent in C.M.A. No.57 of 1980 and also the award dated 6. 1978 passed by the first respondent in C.M.A. No.57 of 1980 and also the award dated 6. 1978 passed by the second respondent in A.R.C. No. 1856/76-77 are quashed. The dispute is remitted to the present Deputy Registrar for Co-operative Societies, Ootacamund with a direction to decide the same afresh and in accordance with law. No costs.