Om Parkash Chopra, Ex-salesman of The Karnal Central Co-operative Store, Limited, Karnal vs The State of Haryana and others

M.R. Agnihotri, J.—In this petition filed under Articles 226 and 227 of the Constitution of India, the short point for determination by this Court is as to whether the proceedings against Om Parkash Chopra, Ex-Salesman of the Karnal Central Cooperative Store Limited, Karnal, petitioner, could be initiated u/s 54 of the Punjab Cooperative Societies Act, 1951, as applicable to the State of Haryana, or the matter was to be referred for arbitration u/s 55 of the said Act as a dispute between the society and its officer as shortage in the funds of society had been detected during audit caused by negligence, misappropriation of fraudulent retention of the property of the society.

The petitioner was appointed as Salesman with the Karnal Central Cooperative Store Limited, Karnal. In his capacity as Salesman, he was entrusted with the duty of depositing the amount of sale proceeds with the Store. On 30th June, 1978, on verification of the stock of the Super Bazar, a shortage to the tune of Rs. 61,464 75 was detected. Thereupon, the respondent Karnal Central Cooperative Store Limited, Karnal, approached the Registrar, Cooperative Societies, Haryana, for initiating the arbitration proceedings in the matter. The Deputy Registrar, Co-operative Societies, Karnal, acted as Arbitrator and after considering the necessary material placed before him, he declared petitioner Om Parkash Chopra liable for payment of Rs. 62,233.05 (Rs 61,464 75 as principal and Rs. 768.30 as interest upto 31.3.1977). Against the aforesaid award of the Arbitrator dated 24th February, 1978, the petitioner filed an appeal u/s 68 of the Punjab Cooperative Societies Act, which was, however, dismissed on 20th June, 1979, though slightly modifying the award by reducing the cost of the proceedings.

In the present writ petition, the impugned award of the Arbitrator as well as the appellate order passed by the Deputy Secretary to Government, Haryana Cooperation Department (Annexures P/1 and P/2, respectively), are under challenge mainly on the ground, that it was not a matter which could be referred for arbitration u/s 55 of the Punjab Cooperative Societies Act, 1961, as a dispute between the society and its past officer, but it squarely fell within the purview of section 54 of the said Act under which an inquiry could be made by the Registrar, Cooperative Societies. Sections 54 and 55 of the Act are reproduced as under:-

Surcharge-(1) If in the course of an audit, inquiry, inspection or the winding up of a cooperative society it is found that any person who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to this Act, the rules or the bye-laws or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has misappropriated or fraudulently retained any money or other property belonging to suck society, the Registrar may of his own motion or on the application of the committee, liquidator or any creditor, enquire himself or direct any person authorised by him, by an order in writing in this behalf, to enquire into the conduct of such person.

(2) Where an inquiry is made under sub-section (1) the Registrar may, after giving the person concerned an opportunity of being heard, make an order requiring him to repay or restore the money or property or any part thereof, with interest at such rate, or to pay contribution and costs or compensation to such extent, as the Registrar may consider just and equitable.

Disputes which may be referred to arbitration.-(1) Notwithstanding anything contained in any law far the time being in force, if any dispute touching the constitution, management or the business of a cooperative 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 and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or

(c) between the society or its committee and any past committee, any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the society; or

(d) between the society and any other cooperative society, between a society and liquidator of another society, or between the liquidator of one society and the liquidator of another society; such dispute shall be referred to the Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute.

(2).....................

A comparative study of both the provisions would show that if some shortage was detected during audit which amounted to misappropriation or embezzlement on the part of a Salesman of the Society, proceedings could be initiated only u/s 54 of the Act and the matter could not be referred as a dispute for arbitration u/s 55 of the Act. The matter stands squarely covered by the Supreme Court judgment reported as Pentakota Srirakulu Vs. The Co-Operative Marketing Society Ltd., followed in a Single Bench judgment of this Court in Jai Pal v. The State of Haryana and others 1984 P.L.J. 8. From the facts and circumstances of the case, it is evident that the case of the present petitioner was fully covered and fell within the purview of section 54 of the Punjab Cooperative Societies Act, 1961. Hence, the reference for arbitration u/s 55 of the said Act was invalid.

In the result, this writ petition is allowed and the impugned award of the Arbitrator (Annexure P/1) and the appellate order passed by the Deputy Secretary to Government Haryana, Cooperation Department (Annexure P/2) being invalid hereby quashed. However, it will be open to the respondents to initiate action against the petitioner u/s 54 of the Punjab Cooperative Societies Act, 1961. There shall be no order as to costs.