Amarjit Singh vs State of Punjab

V.K. Bali, J.

This order will dispose of a bunch of 48 writ petitions bearing Nos. 2007 of 1982, 868 of 1983 to 896 of 1983 and 918 of 1983 to 935 of 1983 as common questions of fact and law are involved in all these cases. The bets have however been extracted from Civil Writ Petition No. 2007 of 1982.

PetitionerAmarjit Singh has called in question orders Annexures P2, P3 and P4 passed by the Arbitrator on 5.5.1975 by the Deputy Registrar Cooperative Societies, Jalandhar exercising the powers of Registrar on 10.8.1981 and Deputy Secretary to Government Punjab exercising the powers of Government under Punjab Cooperative Societies Act, 1961 dated 31.3.1982. In arbitration proceedings that culminated in the award Annexure P2 by which petitioner was saddled with the responsibility of paying Rs. 5,000/ as principal interest of Rs. 1,281.60 Ps. upto 31.12.1974 and costs of Rs. 100/ by 31.5.1975 to the Hamira Cooperative Agricultural Service Society Limited, Hamira. In appeal carried against the aforesaid orders by the petitioner the Deputy Registrar Cooperative Societies modified the award by fixing the responsibility of the petitioner to the extent of Rs. 2,500/ and interest upto 31.12.1974 at the rate of 6% per annum and Rs. 100/ as costs. Wassan Singh Cashier was ordered to pay Rs. 800/ as principal alongwith interest at the rate of 6% per annum and Rs. 25/ as costs. Shri Kartar Singh, Committee Member was held responsible for paying Rs. 800/ with 6% per annum interest and Rs. 25/ as costs whereas Ram Nath, Secretary was asked to pay Rs. 900/ with 6% per annum interest and Rs. 25/ as costs. In a revision carried by the petitioner against the aforesaid orders, as also by Wassan Singh Cashier and kartar Singh Committee Member the order passed by the Arbitrator was restored in toto. It is against these orders that the petitioner has come up in this writ petition under Articles 226/227 of the Constitution of India.

The facts as stated in the petition reveal that respondent No. 3 is a society duly registered under the provisions of the Punjab Cooperative Societies Act, 1961 (hereinafter to be referred as the Act). Vide resolution dated 20.9.1974 the Managing Committee of the Society sought to refer a dispute for the recovery of Rs. 7,223.85 Ps. out so which Rs. 5,000/ were as Principal Rs. 1,281.60 Ps. were in rest upto 31.12.1974 and Rs. 942.25 Ps. as costs against one Puran Singh son of Dewan Singh and his sureties. The case of the petitioner as projected in the pleadings is that originally the names of members of ExManaging Committee and ExSecretary of the Society Ram Nath were not added as party in the solution dated 20.9.1974 but at a later stage when the society realised that it has no case against loanee i.e. Puran Singh, the names of the members of the ExManaging Committee and ExSecretary Shri Ram Nath were added in the same very resolution. In the resolution aforesaid, further no one was authorised to file the reference before the Assistant Registrar, Cooperative Societies, Kapurthala and therefore, it is stated that the said resolution was passed in complete violation of Rule 80 of the Punjab Cooperative Societies Rule (hereinafter to be referred as the Rules). The rules aforesaid, mandates holding of meeting and circulation of agenda as also permission of Registrar, Cooperative Societies for holding the meeting if it is to be on shorter date notice then the one stipulated under Rule 18. It is pleaded that vide the same resolution it was resolved to make references against 50 other loaneemembers who were not returning their loans and that in none of the matters, any one was authorised to make the reference (the other writ petitions pertain to loanees out of 50 mentioned aforesaid). It is further pleaded that it is byelaw 38 of the registered bylaws of the society that deals with the powers and duties of the Managing Committee and sub bye law 38 (xviii) provides for making of references and it has to be through any member or officer or employee of the society or any other person specially authorised to institute, conduct, defend, compromise, refer to the arbitration or abandon legal proceedings by or against the society or committee or officer of employees concerning the affairs of the society. It is stated that the Model Bylaws framed by the Registrar and adopted by the Cooperative Agriculture Service Societies throughout the State of Punjab under Section 10A of the Act also contain the by law referred to above. It is, thus, pleaded that as per Bylaw 38(xix) for filing a reference a person has necessarily to be authorised and in spite of the fact that no body was authorised by the Managing Committee of the society to make the reference, Shri Wassan Singh, Committee member submitted the application for referring the case to arbitration in the case of Puran Singh.

On reference made, the Assistant Registrar, Cooperative Societies, Kapurthala appointed Shri Arjan Singh Josan, Inspector Cooperative Societies Kapurthala as an Arbitrator who issued summons on 5.12.1974 to the petitioner and others asking them to appear alongwith other members of the Managing Committee and ExSecretary in order to prove the advancement of loan to Shri Puran Singh. It is pleaded that apart from this summons no notice was ever served upon the petitioner and that a bare look at the summons would demonstrate that the petitioner as well as other members of the Managing Committee and ExSecretary were summoned as witnesses only and not as a party to the dispute. It is further pleaded that it has been specifically mentioned in summons Annexure P1 that the attendance of petitioner was required to prove the loan advanced to the second party and the second party is also clearly named in the summons.

The arbitrator after hearing the second party and recording statements of the Committee Members and ExSecretary and perusing the records gave award against the petitioner for the entire amount against which an appeal was filed which was partly allowed but this appellate order was set aside, thus, restoring the order passed by the Arbitrator. It is these orders as indicated in the earlier part of the judgment that have been assailed in the present petition.

From the array of facts as have been reproduced above, the obvious case of petitioner is that there was no proper resolution and no one was authorised to make a reference and, thus, in the absence of proper authorisation, no officer or office holder of the body corporate can act on its behalf suo motu it is further the case of the petitioner that he was summoned as a witness and so were the other Committee Members as well as ExSecretary Ram Nath and at no stage of the proceedings, the petitioner was ever told that the society has made any claim against him. In the circumstances, no award could legally be made against him nor any liability be fixed. It is further the case of the petitioner that he was never called upon to defend any reference filed against him and no notice of any type was served upon him regarding and proceedings in which any claim might have been made against him. Thus, it was against the principles of natural justice as also against Rules 51, 53 and 74 of the Rules to hold him liable for any amount, whatsoever. Even on merits, it is pleaded that there was no case against the petitioner. Loan was advanced to Shri Puran Singh in the shape of fertiliser. Shri Ram Nath, ExSecretary was responsible for fertilizer of the society. The Tamassaks (pronotes) were filled in by Shri Ram Nath, ExSecretary and sanction for advancement of loan given by Committee Members Wassan Singh and Kartar Singh and the petitioner did not come in the picture anywhere. Lastly it is sought to be made out in the petition that no revision was filed by Ram Nath, ExSecretary against the orders passed by the appellate authority. Thus, the order passed by the revisional authority was without jurisdiction. As also the Appellate Authority which was the final authority to deal with the facts of the case held that the amount is to be apportioned as all of them were party in this scandal and that the revisional authority has clearly erred while foisting the entire amount upon the petitioner.

This petition has been seriously opposed. Two different written statements have been filed one by respondent No. 3 and the other by respondents No. 6 and 7 Respondent No. 3, the society in its written statement has pleaded that resolution was passed by the Managing Committee of the society on 20.9.1974 for referring the dispute to the Registrar for the recovery of the amount in question but it is denied that the names of the members of the ExManaging Committee and ExSecretary were added at a later stage. It is pleaded that the resolution sought the settlement of the dispute between the respondentsociety on one hand and Puran Singh loanee and his sureties Mukhtiar Singh, Piara Singh and Amarjit Singh, ExPresident, Dalip Singh, ExVice President, Ram Nath, ExSecretary, Wassan Singh, ExCashier, Kartar Singh and Mukhtiar Singh, Committee Members, on the other. Shri Wassan Singh, cashier an officebearer of the society moved this reference to the Assistant Registrar, Cooperative Societies Kapurthala for the settlement of dispute. The intention of the Society through this resolution was to make a reference to Registrar and by making a reference by Shri Wassan Singh, no prejudice has been caused to any one nor any miscarriage of justice has occurred and all the parties were given full opportunity to present their case. Before passing the resolution, it is pleaded that majority of the Committee members attended the meeting and unanimously passed resolution for the recovery of certain amounts which were due to be paid to the society. Therefore, proper reference as required under law was made to the Registrar for the settlement of dispute. The Committee Members who attended the meeting never objected to the passing of resolution. In so far as summons dated 5121974 are concerned, it is pleaded that the same were sent to the petitioner and others so as to prove their respective cases and that all the parties were afforded full opportunity by the Arbitrator to present their case with regard to the dispute. It has been specifically denied that the petitioner and the others were summoned only as witnesses. In fact they were all parties to the reference and were asked to prove the advancement of loan to Puran Singh failing which they were liable, being the Committee Members. Petitioner is stated to have filed written statement before the Arbitrator and, therefore, it cannot be said that the summons sent to him were only to appear as a witness. The award passed by the arbitrator, it is stated, came into being after perusing all the relevant records of the society and recording the statement of the parties and after perusing the records of the Central Cooperative Bank, Kapurthala. It is further stated that the petitioner gave an undertaking on 4.10.1974 on a stamp paper of Rs. 3/ saying that in case the said 41 loanees (mentioned in the undertaking) are held liable against the pronotes, he would pay these amounts, and that this document was not even denied by Amarjit Singh during the course of proceedings. In so far as respondents No. 6 and 7 are concerned, their reply is on identical lines and they have also stated that the petitioner has been rightly saddled with the entire responsibility and that he was the person who mastermind everything and it is he who had misappropriated the entire amount.

Mr. Surya Kant, learned counsel appearing for the petitioner vehemently contends that there was no authorisation in the resolution for making any reference, thus, rendering the very reference to be void ab initio. He also contends that the petitioner in consequence of summons Annexure P1 appeared only as a witness and all through the proceedings, he was never asked to defend himself as he was not a party to the reference as will be demonstrated from the reference and other documents and if that be so, the entire proceedings were vitiated not only because there was violation of various Rules but also because principles of natural justice were denied to him. He further contends that in any case, there was no question for the Revisional Authority to have restored the order of Arbitrator by setting aside the order passed by the Appellate Authority particularly when one of the persons affected by the order of the Appellate Authority had not preferred any revision before the Deputy Secretary as also that even if the proceedings were to be held valid it is not only the petitioner who was responsible for all this and that other were equally responsible and, thus, had to share the burden.

The learned counsel appearing for the society as also respondents No. 6 and 7 controvert all the pleas raised by Mr. Surya Kant and contend that all the proceedings in the case were in accordance with the Rules and also that it is the petitioner who was solely responsible for perpetuating fraud and embezzling huge amount by preparing false, bogus and fabricated documents and, therefore, he has been rightly asked to share the entire responsibility.

After hearing the learned counsel for the parties, whereas I do not find any substance in the arguments advanced by Mr. Sury a Kant pertaining to nonauthorisation, nonimpleading of the petitioner as a party to the proceedings and nonsummoning him as party to the dispute, I find his last argument to be well merited. The reasons for my aforesaid view are that the summons issued to the petitioner as per his own case calls upon him to prove that the loan as in fact advanced to Puran Singh. If this fact is kept in view, the whole sequence of events would become clear. In the peculiar facts of this case when there were allegations from all sides that the ExPresident and the other officebearers of the society have cheated the society by filling in bogus Tamasaks and withdrawing the amount from the Bank and mis appropriating the same to themselves as also that no amount was ever paid to the socalled loanees, the reference had to be such that might fix the responsibility of the one who was responsible for all this. In the evidence that was likely to come in consequence of the resolution aforesaid, it could be proved that the loanee had in fact taken the fertiliser and it could also be proved that no such loan was obtained by the person concerned and in fact it is the officebearers, who had misappropriate the same. If this was a case as it is proved to be, in my considered view, the summons issued to the petitioner cannot be read as if the same was sent to a witness. As mentioned above, it is specifically mentioned and as is also the case of the petitioner that he was asked to explain whether the amount had been disbursed to the loanee. Therefore, the argument of Mr. Surya Kant, learned counsel appearing for the petitioner that the petitioner was summoned only as a witness to prove the loan against Puran Singh, is repelled.

Coming now to the question as to whether the petitioner was a party to the reference as such or not suffice it to say that while hearing arguments on August 7, 1992 by a detailed order, I had sent for the records of the case. The records were received by this court. A perusal of the records manifests beyond doubt that the name of petitioner is not only mentioned against the column dealing with the names of the persons from whom the recovery was to be made but also against the column dealing with the names of sureties. Admittedly the petitioner was not a surety and has been described under the heading of members of committee in the resolution in question. That gives sufficient indication that the name of petitioner is mentioned in the resolution passed by the committee as one of the parties to the dispute and not as a witness. Further at page 3 of the file produced before me, there is a proforma with heading "Application for referring to case for arbitration under Rule 51 of the Punjab Cooperative Societies Rules, 1963." Besides the name of Puran Singh, sureties Mukhtiar Singh and Piara Singh and names of Amarjit Singh and others have also been mentioned. Whereas Puran Singh has been arrayed as respondent No. 1 Mukhtiar Singh and Piara Singh who were sureties were arrayed as respondents No. 2 and 3. Amarjit Singh and others under the heading "Committee Members" have been arrayed as respondents No. 1 to 7. The matter does not end there. At page 7 of the file, there is available an order passed by the Registrar appointing Arbitrator and there too the name of petitioner alongwith other officebearers is mentioned. At page 19, there is a summons issued to the petitioners which shows that he is a surety of the loanee. Therefore, he is called with a view to settle the dispute with regard to the loan so that the amount may be recovered. At page 35 of the file there is a summons sent by the Arbitrator, wherein clearly petitioner has been mentioned as one of the persons of the second party and again clearly the petitioner has been asked to represent his case. At pages 42, 43 and 44 is defence of the petitioner which he gave in writing on 11.2.1975 and also further statement made by him at pages 47 to 51. The aforesaid documents leave no doubt in the mind of the court that the petitioner was not called only as a witness but was asked to defend his case.

In so far as the argument of learned counsel that the petitioner was not given any opportunity to crossexamine the witnesses is concerned, suffice it to say that the Arbitrator had recorded the statements of all concerned persons who made their statements in writing and after perusing relevant record which in itself was sufficient to pinpoint the responsibility of the petitioner, award was given. After appreciating the statements of the persons concerned as also the relevant record, the Arbitrator had come to a correct conclusion. The contention of learned counsel that the petitioner was not given an opportunity to crossexamine the witnesses, in the aforesaid circumstances, has to be repelled and more particularly when it is nowhere shown that the petitioner asked for any such opportunity. The submission of learned counsel that no one was authorised in the present case to pursue the case on behalf of the society has to be repelled as in the peculiar facts of the present case, it is the officebearers alone who were involved in this cheating and obviously none could have been authorised. Further, the authorisation is with a view to defend the case on behalf of the society whereas in the present case it is mainly the officebearers whose conduct in the affairs of the society was under scrutiny. Further, I do not find any embargo created under the Act or the Rules where a Registrar may be competent to order arbitration only by a resolution in which also these must be authorisation given to some one to pursue the matter. There is no bar at all under the Act or the Rules for the Registrar to order arbitration even suo motu and the facts as are available in the present case could result into arbitration proceedings so ordered by the Registrar or the Additional Registrar as the case may be.

Coming to the last limb of arguments of Mr. Surya Kant, it shall be seen from the order passed by the Appellate Authority while dealing with the evidence that one Harbhajan Singh Millu, Liquidator of the society produced the record of the society and pronote No. 109 dated 1211.1972 for Rs. 5,000/ in the name of Puran Singh. Shri Ram Nath, secretary had filed this pronote and signed it. Kartar Singh and Wassan Singh Committee Members had given permission/approval as Committee Members. All of them had admitted their signatures after seeing them, but had stated that the advancement of loan was false. Shri Amarjit Singh, President, i.e. the petitioner, had not signed this pronote. The record of the Central Bank and the society was also looked into by the Appellate Authority. It was found therefrom that in the resolutions passed by the society which were kept in the Bank, Amarjit Singh, i.e. the petitioner, used to be authorised to obtain loan from the Bank. On these resolutions, Amarjit Singh, Wassan Singh, Kartar Singh and Secretary Ram Nath have signed. Amarjit Singh''s signatures are on the fertiliser bills which were obtained at the time of taking fertiliser. Most of the receipts of fertiliser also bear the signatures of Ram Nath. It is on the aforesaid facts that the appellate authority came to the conclusion that it was proved from the records of the society that neither Mukhtiar Singh nor Dalip Singh, committee members, took any part in any meeting of the committee nor they have passed any resolution by which they could be held responsible. The others, i.e. the petitioner, Kartar Singh, Wassan Singh and Ram Nath Secretary were held responsible and the amount was apportioned as mentioned in the earlier part of the judgment. The facts aforesaid were not found to be wrong by the Revisional Authority. There is absolutely no comment by the Revisional Authority with regard to the resolutions having been signed by the petitioner, Wassan Singh, Kartar Singh and Ram Nath Secretary. On the other hand, it was held that the petitioner appears to have manipulated both ''D'' form for receiving the loans from the Bank and given false disbursement certificates in ''F'' statement to the Bank and it is for this reason that he alone was held responsible for the entire amount. In the totality of circumstances and the facts that have come on the records of the case, it is apparent to me that the petitioner in connivance and active support of Wassan Singh, Kartar Singh and Ram Nath Secretary embezzled the whole amount and that being so, they had necessarily to share the burden. The Appellant Authority after complete appreciation of evidence came to a right conclusion and to the extent the same was overruled by the Revisional Authority needs to be set aside. Even though respondent No. 5 Ram Nath ExSecretary had not preferred any revision yet the amount he was to pay by virtue of the Appellate Authority''s order was ordered to be paid by the petitioner.

Before I part with this judgment, I would like to mention that Mr. Surya Kant, learned counsel for the petitioner relied upon. The Uddat Bhagat Ram Nazool Land Cooperative Society v. Leekal and others, 1981 Punjab Law Journal 79 and Garib Chand v. Municipal Committee, Budhlada, 1979 P.L.J. 565 : 1984 R.R.R. 292. to contend that in the absence of authorisation, no officer or office holder of the body corporate can act on its behalf suo motu. In my considered view, the facts of the cases relied upon are distinguishable.

For the reasons aforesaid, all the writ petitions are partly allowed. The order passed by the Revisional Authority is set aside and the one passed by the Appellate Authority is upheld and is, thus, restored.