Vijay Kumar vs State of Punjab

A.P. Chowdhri, J.

A significant question arising for consideration in this petition is whether reference to the Arbitrator under Section 55 of the Punjab Cooperative Societies Act, 1961, bars the alternate remedy of criminal proceedings under Section 408, Indian Penal Code, where the facts alleged constitute an offence under the said Code.

Vijay Kumar petitioner was Secretary of Ramgarh Cooperative Agricultural Service Society Limited at the material time. He is alleged to have committed embezzlement of Rs. 80,000/ and odd. A reference was made to the Arbitrator under Section 55 of the Punjab Cooperative Societies Act, 1961 (for short the Act) and 30 different awards of varying amounts were given by the Arbitrator against the petitioner on January 23, 1988. These have not been executed so far. On March 15, 1988, an FIR under Section 408, Indian Penal Code, was lodged against the petitioner. He seeks quashing of the first information report on the ground that in view of the awards obtained against him the dispute had assumed the form of a civil dispute and resort to criminal proceedings was an abuse of the process of the court.

Learned counsel for the petitioner contended that there was a long line of decisions of this Court holding that in similar circumstances continuance of criminal proceedings was an abuse of the process of Court. He placed his reliance on Janak Rai v. The State of Punjab, 1979 CLR (Pb. and Har.) 236, Harbhagwan Dass v. The State of Punjab, 1983(2) RCR 156 , Bant Singh v. The Dulley Cooperative Agricultural Service Society Ltd., 1987(2) RCR 435 , Hakam Singh v. State of Punjab, Crl. Misc. No. 429M of 1987 decided on February 20, 1987 (unreported) and Kashmira Singh v. The State of Punjab, 1989(1) Recent Criminal Reports 175 .

The contention of the learned counsel appearing for the State, on the other hand, is that where the facts disclose the commission of an offence and the criminal proceedings have not been either expressly or by necessary implication barred, the alternate remedy cannot be held to be excluded merely by obtaining an award against the delinquent.

After hearing the learned counsel and giving the matter my anxious consideration, I find that there is inconsistency in the views of Single Bench decisions of this Court. Prior to the decisions relied on by the learned counsel for the petitioner, it was held in Harbans Singh v. State of Punjab, 1972 PLR 26 and Rajpal Singh v. The State of Haryana, 1977 PLR 625 that reference to arbitration or the award given by the Arbitrator under Section 55 of the Act did not exclude the jurisdiction of the Criminal Court. I find my self in agreement with the view taken in Harbans Singh''s and Rajpal Singh''s case (supra) in preference to the views expressed in Janak Raj''s case (supra) and the other decisions in which the said case has been followed. I would like to briefly state my reasons for preferring the earlier view. These are as under :

(i) The relevant part of Section 55 of the Act, after enumerating various types of disputes which can be referred to the Registrar for arbitration lays down as under :

"....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."

The use of the words `suit or other proceedings'' clearly indicates that what is excluded is the jurisdiction of the Civil Court. Even otherwise, it is only disputes of a civil nature which are referred to arbitration. I am not aware of any matter of a criminal nature which is made referable at Arbitrator for decision. What is, therefore, barred by Section 55 is filing of civil Suit. The provision cannot be taken to exclude criminal proceedings.

(ii) The reasoning adopted for the other view as mentioned in some of the above quoted rulings is that with the rendering of the award, which is executable as a decree of the Civil Court, the dispute assumes the complexion of a civil dispute. I am altogether unable to appreciate how the same very facts which constitute both a civil wrong as well as a criminal offence undergo a change by making a reference to the Arbitrator or giving of an award by the Arbitrator.

(iii) The view which has commended itself to me is in accordance with the observations of their Lordships of the Supreme court in paragraph of 16 of Pratibha Rani v. Suraj Kumar and other, AIR 1985 SC 628. It was observed that where both civil as well as criminal remedy are available they are in the nature of an alternate remedies and one is not excluded because the other has been availed.

(iv) It will be seen that the rulings relied on by the learned counsel for the petitioner are mostly based on Janak Raj''s case (supra). The case of Janak Raj came to be decided in the following circumstances :

The Judicial Magistrate Ist Class framed a charge under Sections 420/120B/406/465, Indian Penal Code, against certain office bearers of a cooperative society. The accused filed a revision before the Sessions Judge, Hoshiarpur. With reference to the portion of Section 55 of the Act, reproduced in the earlier part of this order, it was contended by the complainant that the jurisdiction of the criminal court was not excluded. On behalf of the accused, on the other hand, it was argued that Section 55 was complete bar to the institution of criminal proceedings. For reasons, which are not discernible, the learned Sessions Judge accepted the contention of the accused and in accordance with the procedure then in force, recommended to the High court that the revision be accepted. By a short order a learned Single Judge of this Court accepted the recommendation of the Sessions Judge and quashed the complaint, the framing of charge etc.

Moreover, it may be pointed out that the decision in Janak Raj''s case (supra) was based on its own facts. The amount involved was rather small. After the award under Section 55 of the Act, its execution had been taken out and with the consent of the decreeholder, the judgmentdebtor had under taken to pay the amount by instalments. The other rulings purport to follow Janak Raj''s case and there is no additional reason in support of the view.

I am unable to subscribe to the view taken in Janak Raj''s case (supra) and the subsequent rulings and I am clearly of the opinion that these decisions must be deemed to be confined to their own facts.

This question frequently arises in a number of petitions pending or being instituted in this Court. It is necessary that the conflict be authoritatively resolved by a large Bench. It is directed that the papers of this case be placed before the Hon''ble the Chief Justice for referring the matter to a Division Bench.

Sd/

A.P. Chowdhri

Judge

February 19, 1991.

(Judgment of Division Bench consisting of Hon''ble Mr. Justice S.S. Sodhi, and Hon''ble Mr. Justice N.K. Kapoor dated 971991)

S.S. Sodhi, J.

Where a matter is referred to arbitration under Section 55 of the Punjab Cooperative Societies Act, 1961, is initiation thereafter of criminal proceedings, on the same cause of action against the person concerned, barred ? Herein lies the controversy referred to a larger Bench by A.P. Chowdhri, J. noticing an apparent conflict of views on the subject in a string of judicial precedents of this Court. These being Janak Raj v.State of Punjab, 1979 CLR (Pb. and Har.) 236; Harbhagwan Dass v. The State of Punjab, 1983(2) RCR 156 , Bant Singh v. The Dulley Cooperative Agricultural Service Society Ltd., 1987(2) RCR 435 , Kashmira Singh v. The State of Punjab, 1989(1) RCR 175 ; and Criminal Misc No. 429M of 1987, Hakam Singh v. State of Punjab, decided on February 20, 1987 on the one hand, where it has been held that after reference to arbitration, criminal proceedings on the same cause of action are barred, while on the other, the contrary opinion that such criminal proceedings can be taken finds expression in Harbans Singh v. State of Punjab and another, 1972 PLR 26 and Rajpal Singh v. The State of Haryana, 1977 PLR 624.

In referring this controversy to a larger Bench, A.P. Chowdhri, J. made clear his preference for the latter view as set forth in Harbans Singh and Raj Pal singh''s case (supra).

The point to note at the very outset is that the matter in issue already stands settled and decided by the judgment of the Division Bench in Criminal Revision 245 of 1979 (Laxmi Narain v. The State of Haryana), decided on March, 1981, where, precisely the same question arose for consideration, namely; "whether after the passing of an award against an accused by the arbitrator under the Punjab Cooperative Societies Act, 1961 (hereinafter referred to as `the Act''), criminal proceedings could be initiated and continued against him for an action on his part which gave rise not only to civil liability,but also criminal liability". In dealing with this matter, the Bench observed :

"The civil liability of an accused who misappropriate an individual''s property or the property of an institution like Cooperative Society etc. is based upon the right of such individual or institution 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 itself the role of a prosecutor. Even when an individual upon whom the crime had been committed refrains from prosecuting the accused and even when the petitions that the accused should not be prosecuted, the State is not only not debarred from prosecuting the accused, but it is in law dutybound to initiate the criminal proceedings and punish the accused for the crime."

In holding so reference was specifically made to Janak Raj''s case (supra) which was distinguished on facts with the observation that it had been held there that the Court had no jurisdiction to try the accused after an award had been against him by the arbitrator.

Be that as it may, in the subsequent rulings of this Court, Janak Raj''s case (supra) appears to have been construed to imply that once a matter has been referred to the arbitrator under Section 55 of the Act, criminal proceedings on the same cause of action were barred. This view was taken in Harbhagwan Das, Bant Singh, Hakam singh and Kashmira Singh cases (supra). Janak Raj''s case (supra) being specifically mentioned as the judicial precedent in support of this view. The matter of material significance to note here is that the judgment of the Division Bench in Laxmi Narian''s case (supra) was not brought to the notice of the Hon''ble Judges dealing with these cases and curiously enough it appear that the leading Law Reporters to omitted to publish this obviously important judicial pronouncement even though it had been approved for reporting.

After giving the matter our most careful consideration we not only feel bound by it but also respectfully agree with and endorse the view expressed by the Division Bench in Laxmi Narian''s case (supra) and consequently hold that reference to the Arbitrator under Section 55 of the Act constitutes no bar to criminal proceedings on the same cause of action being initiated or continued against the person concerned. We cannot, therefore, subscribe to the view to the contrary expressed in Janak Raj, Bhagwan Das; Bant Singh; Hakam Singh and Kasmira Singh cases (supra) which we consequently are constrained to disagree with and differ from. They must thus stand overruled.

The reference is answered accordingly. The matter is now remitted to the learned Single Judge for decision of the case, on merits.

Sd/

S.S. Sodhi,

Judge

Sd/

N.K. Kapoor,

Judge

July 9, 1991

(Judgment of Single Bench Consisting of Hon''ble Mr. Justice A.P. Chowdhri dated 1781993.).

Facts necessary for disposal of this petition are that the petitioner Vijay Kumar was working as Secretary, Ramgarh Cooperative Agricultural Service Limited during the relevant period. There was a charge against him that he had embezzled a sum of Rs. 81,166.12. Accordingly, a reference was made under Section 55 of the Punjab Cooperative Societies Act, 1961, for referring the matter for arbitration. The reference was accordingly made. Various awards were given against the petitioner. At that stage, First Information Report No. 27 dated March 15, 1989 (Annexure `P1'') was lodged against the petitioner by Harbans Singh, SubInspector, Cooperative Societies. Through this petition under Section 482 of the Code of Criminal Procedure, the Petitioner seeks quashing of First Information Report mainly on the ground that the matter having been referred to the arbitrator under Section 56 of the Punjab Cooperative Societies Act, 1961, no criminal case can be registered against the petitioner based on the same facts.

When the matter was heard by me, it was noticed that there was a conflict of opinion in two sets of authorities. The authorities relied upon by learned counsel for the petitioner were as follows :

(i) Janak Raj v. The State of Punjab, 1979 CLR (Punjab and Haryana) 236;

(ii) Harbagwan Dass v. The State of Punjab, 1983(2) RCR 156 ;

(iii) Bant Singh v. The Dulley Cooperative Agricultural Service Society Ltd., 1987(2) RCR 435 ;

(iv) Hakam Singh v. State of Punjab, (Crl. Misc. No. 429M of 1987) decided on February 20, 1987 (unreported); and

(v) Kashmira Singh v. The State of Punjab, 1989(1) RCR 175 .

Contrary view had been taken in the authorities mentioned below :

(i) Harbans Singh v. State of Punjab, 1972 PLR 26; and

(ii) Rajpal Singh v. State of Punjab, 1977, PLR 624.

The matter was referred to a larger Bench to set at rest the above controversy. The matter was heard by a Division Bench comprising of S.S. Sodhi and N.K. Kapoor, JJ. By their order dated July 9, 1991 the learned Judges held that there was no bar to the initiation of criminal proceedings merely on the ground that the matter had been referred to an arbitrator in terms of Sections 55 and 56 of the Punjab Cooperative Societies Act, 1961. In support of their conclusion, the learned Judges placed reliance on an unreported decision of a Division Bench of this court in Laxmi Narain v. The State of Haryana, (Criminal revision 245 of 1979 decided on March 25, 1981). The Division Bench, therefore, approved and reiterated the law laid down in Harbans singh and Rajpal Singh (supra) and overruled the law laid down in Janak Raj, Harbhagwan Dass, Bant Singh, Hakam Singh and Kashmira Singh, referred in the earlier part of this order. The matter has again been placed before me with the opinion of the learned Judges of the Division Bench.

In view of the findings of the larger Bench, this petition is bound to fail. Before concluding, however, I would like to make a reference to a recent decision of the Supreme Court in Yogendra Prasad v. Additional Registrar, Bihar and others, 1992 Supp (stet) Supreme Court Cases 720. This was a cae under the Bihar and Orissa cooperative Socieites Act, 1935. It was held that the proceedings under Section 48 of that Act were in the nature of a civil suit, otherwise cognisable by a Civil Court under Section 9 of the Code of Civil Procedure. It was pointed out that the statute had taken out the jurisdiction of the Civil Court and expressly conferred the same on the Registrar or a person exercising the powers of the Registrar to decide the dispute touching the business or management of the society between its members, past members etc. or their office bearers, agents or officers or servants of the Society etc. The proceedings under Section 40, it was further pointed out, were not in substitution of Section 48, but were independent of and in addition to the normal civil remedy under Section 48. It was, therefore, held that the mere initiation or an order passed under Section 40 did not divest the jurisdiction or power of the Registrar under Section 48 to refer the matter for decision of the dispute. It was further held that exercise of jurisdiction to pass an award under Section 48(3) did not amount to double jeopardy.

For the foregoing reasons, the petition fails and the same is dismissed.