Raja Ram vs State of Punjab

Dr. (Mrs.) Sarojnei Saksena, J.

Petitioner''s learned counsel has strongly canvassed that since by awards Annexures P2 and P3 the petitioner has been exonerated from the charge by the arbitrator in arbitration proceedings, which were initiated under Section 55 of the Punjab Cooperative Societies Act, 1961 (in short, the Act), therefore, for the same financial liability the petitioner cannot be prosecuted under Sections 408/409/465/468/471/120B of the Indian Penal Code as per FIR Annexure P1. In support of his contentions he has relied on Kasmira Singh v. State of Punjab, 1989(1) RCR 175 ; Bant Singh v. The Dulley Cooperative Agricultural Service Society Ltd., 1987(2) RCR 435 ; Harbhagwan Dass v. The State of Punjab, 1983(2) RCR 156 and Barjinder Pal v. State of Punjab, 1990(2) RCR 690.

Learned Assistant AdvocateGeneral, Punjab, relying on Mrs. Dhanlakshmi v. R. Prasanna Kumar and others, AIR 1990 S.C. 494, contended that simply because in the awards Annexures P2 and P3 the petitioner has been exonerated by the arbitrator in proceedings held under Section 55 of the Act, he is not absolved of his criminal liability. Hence there is no legal ground to quash the aforementioned FIR.

The facts of the case are that the petitioner is working as Inspector, Cooperative Societies and is posted at Fazilka. On February 20, 1989, a meeting of the Managing Committee of Buraj Hanumangarh Cooperative Agricultural Service Society was held under the Chairmanship of Shri Baljit Singh and in this meeting a resolution was passed that during the course of audit for the years 19851987 the audit department has found misuse and embezzlement of Rs. 3,67,465.77 and serious irregularities against the employees of the Society, employees of the bank and the exManaging Committee of the Society. The Assistant Registrar, Cooperative Societies, Fazilka, vide his letter No. 1303 dated 15.2.1988 has directed to lodge an FIR against the accused figuring in the special audit report. Hence it was resolved that FIR be lodged against the persons named therein. Petitioner''s name appears at serial No. 8.

In Barjinder Pal''s case (supra) a Single Bench of this High Court considered the provisions of Section 55 of the Act and Section 409 IPC and observed that once the matter is referred to the arbitrator in terms of Section 55 of the Act, it renders the dispute to be of civil nature. FIR under Section 409 IPC was quashed, but still Markfed was allowed to initiate criminal action after finalisation of surcharge proceedings taken against the accused.

In criminal Revision No. 245 of 1979 (Laxmi Narain v. State of Haryana) decided on March 25, 1981 a question was referred to the Division Bench for consideration whether after passing of an award against an accused by the arbitrator under the Act, criminal proceedings could be initiated and continued against him for an act on his part which gave rise not only to civil liability but also to criminal liability. The judgments delivered in Janak Raj''s case (supra), Rajpal Singh v. State of Haryana, 1977 Cr.L.T. 318 and Kaviraj Basudevananda v. State, 1970 Cr.L.J. 632 were considered. The Division Bench held :

"The civil liability of an accused who misappropriates an individual''s property or the property of an institution like the Cooperative Society etc. is based upon the right of such individual or institution to be reimbursed by such person to the extent of the misappropriated amount, while his criminal liability springs from the fact that the society at large is interested in seeing that the individuals constituting the society do not deviate from the right conduct and thus law envisages imposition of punishment, physical or otherwise, to deter such persons and others from doing so in future. It is for this reason that the State, which represents the society, takes upon himself the role of a prosecutor."

The Division Bench further observed :

"Now coming to the next question that arises viz. as to whether a person who besides incurring civil liability had incurred criminal liability by a certain act of his should be prosecuted when he had been proceeded against on the civil side and a decree or an award against him had been made, it may be observed that no impropriety whatsoever is involved either in launching prosecution against such a person for the criminal act or continuing with such proceedings, if already initiated, to their logical end."

Thy self, the Division Bench held that neither the criminal prosecution of the petitioner was barred by any law nor it suffers from any impropriety. This Division Bench judgment was followed by another Division Bench of this High Court in Vijay Kumar''s v. State of Punjab, 1991(3) RCR 420 wherein agreeing and endorsing the above view, judgments given in Janak Raj''s, Harbhagwan Dass''s, Bant Singh''s, Hakam Singh''s and Kasmira Singh''s cases (supra) were overruled. Despite this overruling in 1991, petitioner''s learned counsel has cited Kashmira Singh''s, Harbhagwan Dass''s and Bant Singh''s cases. This practice should be deprecated.

In this case the petitioner has filed copies of awards Annexures P2 and P3. In the award Annexure P2 the petitioner''s name wasat No. 10 in the array of party No. 2. In the end the arbitrator has held Surinder Kumar Batra and salesman Gurmail Singh liable and all other persons mentioned in party No. 2 were exonerated. In award Annexure P3, petitioner was at No. 10 in the array of part No. 2. In this award also the arbitrator held Surinder Singh liable for the defalcated amount, but there is no mention in the last para of the order that all others persons are exonerated from the charge. In award Annexure P4 the petitioner is not shown a member of party No. 2.

In view of the Division Bench judgments referred to above, Single Bench decision given in Barjinder Pal''s case (supra) cannot be relied on. No doubt, in award Annexure P2 the petitioner has been exonerated but that exoneration is with regard to his civil liability arising out of a dispute between him and the Society. So far as FIR Annexure P1 is concerned, it is based on criminal liability which the petitioner is alleged to have incurred with regard to the business of the Society for which the State is responsible to prosecute the petitioner. Civil liability and criminal liability are quite distinct. Exoneration of the petitioner from civil liability will not absolve him from his alleged criminal liability. Under these facts and circumstances, it cannot be said that the petitioner''s prosecution with regard to the said FIR for the said offences is an abuse of the process of the Court.

Thus, finding no merit in the petition, it is hereby dismissed.