Mukand Singh vs The Joint Secretary Cooperation

Ashok Bhan, J.—This petition has been filed for issuance of a writ of certiorari quashing the order dated 13.9.1995 Annexure P5 passed by respondent No. 1 qua the direction :

"........Before parting with the order I direct that case u/s 54 of the Act be prepared against the then managing committee of respondent No. 1 Society due to whose negligence in handling the matter, loss to the society has been caused and recovery be effected from them.........".

issued against the petitioners primarily on the ground that the above said direction has been issued without impleading the petitioners or affording any opportunity of hearing in violation of the principles of natural justice.

Petitioner No. 1 was President while petitioner No. 2 was Member of Sadda Singhwala Cooperative Agricultural Society during the period 1980-1993. One Hari Singh became the Cashier of the said cooperative society somewhere in the year 1969. Said Hari Singh committed a default in the matter of loans, cash in hand and fertilizers stock with him. In this way, an amount of Rs. 21617.75 was recoverable from Hari Singh by the said cooperative, society. The said cashier was ultimately removed by the society in the year 1971. From 1969 to 1990, no efforts were made to recover the amount from Hari Singh. Hari Singh died in the year 1990. Managing Committee of the Society On 3.7.1992, prepared a case for arbitration against the heirs of Hari Singh Ex-Cashier u/s 55 of the Punjab Cooperative Societies Act, 1961 (hereinafter referred to as the Act) and referred the matter to the arbitrator. Claim of the society was rejected by the arbitrator on 20.7.1993 on the ground that there was nothing on the record to find out the actual heir of Hari Singh and that under Hindu Succession Act, the brothers of said Hari Singh i.e. respondents No. 4 to 7 cannot be deemed to be his heirs. Aggrieved against this award of the arbitrator, cooperative society preferred an appeal before the Assistant Registrar, Cooperative Societies, Mansa, who set aside the award and remitted the case for a fresh decision after appointing one Gurdev Singh Inspector as arbitrator u/s 56 of the Act. Respondents No. 4 to 7 being not satisfied with the order of the Assistant Registrar, Cooperative Societies filed revision petition u/s 69 of the Act before the Registrar-respondent No. 1. Revision petition was accepted and the case was again remanded back to the Assistant Registrar, Cooperative Societies, Mansa, for decision on merits. Assistant Registrar, Cooperative Societies once again took up the matter and after hearing the society as well as respondents No. 4 to 7 reaffirmed its earlier order and held that amount in question was recoverable from respondents No. 4 to 7 along with interest at the rate of 17%, as these respondents being the legal heirs of deceased Hari Singh had obtained a decree from the civil Court in their favour with regard to the property of Hari Singh. Respondents No. 4 to 7 filed another revision petition before respondent No. 1.

Respondent No.1 accepted the revision petition vide order dated 13.9.1995 (Annexure P-5) and set aside the order of Assistant Registrar. It was held that respondents No. 4 to 7 were not the legal heirs of Hari Singh as they had not inherited any property of Hari Singh; that these respondents were not liable personally and, therefore, the amount recoverable from Hari Singh could not be recovered from the personal property of these respondents. While accepting the revision petition, a direction was issued fixing the liability on the, Managing Committee of the society holding that the members of the Managing Committee were negligent in handling the matter and the loss caused to the society. It was ordered that recovery be effected from them.

Counsel appearing for the petitioners has argued that petitioners were neither made party nor any opportunity was given to them for hearing before fixing the liability which fact stands admitted by the respondents and, therefore, liability could not be fastened on them.

After considering the submissions made by the counsel for the parties, we are satisfied that the members of the Managing Committee could not be fastened with the liability for the loss caused to the society. The embezzlement had taken place in the year 1969 and Hari Singh was removed from the post in the year 1970. Present petitioners were in the management of society from 1980 to 1993. No action was taken against Hari Singh for a period of 22 years. Election to the cooperative societies is held after every 3-5 years and during this long period number of managing committees may have come and gone. Joint Secretary has not fixed the responsibility of the Managing Committee which may have been responsible for the loss. He has simply ordered that the action be taken u/s 54 of the Act against the Managing Committee of the Society due to whose negligence loss to the society was caused and recovery be effected from them. Revisional authority should have identified the Managing Committee who was responsible for causing the lose and thereafter issue a notice to the members of the Managing Committee. Responsibility of the Managing Committee for causing the loss could not be fixed without issuing notice and affording an opportunity of hearing. Neither the petitioners were parties nor any notice was issued to them. In the absence of the same fixation of responsibility for causing loss to the society and recovery of amount from the members of the Managing Committee under the circumstances was bad in law being violative of principles of natural justice.

For the foregoing reasons, the portion of the order which has been challenged in this writ petition fixing the liability of the Members of the then Managing Committee, that is the petitioners is quashed. However, as observed by the revisional authority, society shall be at liberty to recover the amount from the estate of the heirs, if so advised. This petition stands disposed of in the above terms.