Angoori Lal Sharma vs The State of Haryana and Others

I.S. Tiwana, J.—Through this petition under Article 226 of the Constitution of India, the Petitioner challenges the validity of the award made against him by an Arbitrator u/s 56 of the Punjab Co-operative Societies Act, 1961, as applicable to Haryana and its affirmance in appeal and revision.

The Arbitrator awarded Rs. 14603/- in all including interest and the costs against the Petitioner and in favour of the Bhiwani Central Cooperative Bank Ltd. In appeal the Assistant Registrar exercising the powers of the Registrar, reduced the liability of the Petitioner. Still not satisfied, he challenged the appellate order before the Deputy Secretary to the Government in revision who dismissed the same with no order as to costs.

The primary contentions of the Petitioner before these authorities as well as before us are that there was no valid reference before the Registrar when he chose to refer the matter for arbitration and that he has not been afforded a proper opportunity by the Arbitrator or the higher authorities to plead his case. The counsel contends that on the year 1967 when the Petitioner is alleged to have taken the amounts in question from the Bank, he was acting as its Managing Director and if any dispute with regard to his liability was to be raised against him, then the only provision of law under which he could be proceeded against was section 54 of the Act and not section 55 there of. The counsel points out that u/s 54, the matter could not be referred for arbitration by the Registrar as had been done in the present case. He further points out that u/s 54 only the Deputy Registrar or the Registrar could look into the matter. He maintains that section 54 being the specific or the special provision of law under which action can be taken against a person who has been managing the affairs of the Society, the authorities could not resort to the general law or section 55 of the Act and thus could not refer the matter to an Arbitrator who was none else than an Inspector of the Co-operative Department. This argument of the learned Counsel, to my mind does not hold any weight. Their Lordships of the Supreme Court in Pentakota Srirakulu Vs. The Co-Operative Marketing Society Ltd., , while interpreting Sections 49 and 51 of the Madras Co-operative Societies Act, 1932, which provisions are almost analogous to sections 54 and 55 respectively of the Punjab Co-operative Societies Act, held as under:

Where a claim is one "against a person in management of the Society" and "for the fraudulent retention of money or other property of the Society" the case does not completely fall u/s 49 and consequently the order of Registrar proceeding u/s 51 is not open to objection. Besides these two essential requisites the facts giving rise to the charge have to be. disclosed in the course of an audit u/s 37 or an enquiry u/s 38 or an inspection u/s 39 or on the winding up of the Society. Unless this condition is also satisfied section 49 would not be attracted.

This position of law has also been so accepted by us in Civil Writ Petition No. 2758 of 1978 Sucha Singh v. State of Punjab decided on August 2, 1979.

So far as the contention of the learned Counsel for the Petitioner with regard to the affording of an opportunity is concerned, the authorities have come to a definite conclusion that the Petitioner virtually admitted the receipt of the principal amount by way of advance and has failed to account for the same. The receipt of the amount is duly entered in various books of account which were before the said authorities and the Petitioner at no stage, that is. neither in appeal nor in revision, was able to satisfy as to what more evidence be wanted to lead to explain his liability. It is not the case that the proceedings were not in his knowledge It is not possible for us to appreciate the evidence and to go behind the findings of fact recorded by the authorities under the Act.

At the fag end, the learned Counsel for the Petitioner pointed out that the Arbitrator as well as the superior authorities have allowed interest and costs of the proceedings at an exorbitant rate. Mr. Prem Singh, learned Counsel for the Respondents has straightaway agreed to recover the interest at the specified rate under law and the actual costs which have been incurred by the bank in following the proceedings. In the face of this undertaking on the part of the Respondents, no grouse is left with the Petitioner on that account.

In the light of the discussion above, we do not find any merit in this petition and dismiss the same with no order as to costs.

S.S. Sandhawalia, C.J.

I agree.