Judgment:
Gurdev Singh, J.
1. These Civil Writ Petitions No. 12461 and 7854 of 1989 have been filed by Gurdev Singh and Sant Singh-petitioners, respectively, and the order challenged therein is common and same facts are pleaded therein.
In the first writ petition Sant Singh-petitioner has been impleaded as respondent No. 4 and in the second writ petition Gurdev Singh has been impleaded as such. These writ petitions have been filed for issuance of writ of certiorari and mandamus for quashing the order dated 2.3.1989 (Annexure P-4.)
Facts are that Gurdev Singh-petitioner was the Cashier and Sant Singh-petitioner was the Secretary of respondent No. 3-Co-operative Society (hereinafter referred to as 'the Society')- Later petitioner submitted a report to the Assistant Registrar, Co-operative Societies, Patiala, against the former petitioner to the effect that he embezzled stocks of fertilizer worth Rs. 21086.90. Ravinder Singh Cheema, Inspector, was appointed as an Arbitrator, who after hearing both the parties, gave a finding that both the petitioners were responsible for an amount of Rs. 12,910/- each. That award was challenged by the petitioners as well as by the Society by way of an appeal and the same was set aside and the matter was remanded for fresh arbitration on the ground that Sant Singh-respondent was not made party to the arbitration proceedings. Thereafter, both of them appeared before the Arbitrator and led their evidence. Arbitrator passed an award dated 18.12.1984 holding Gurdev Singh-petitioner guilty for embezzlement of fertilizer worth Rs. 21086.90. That petitioner filed an appeal which was dismissed vide order dated 14.1.1986. Thereafter, he filed a revision petition before the Deputy Secretary, Government of Punjab, Chandigarh, challenging the award as well as the order passed in the appeal. The revision was accepted vide order dated 2.3.1989 and the award dated 18.12.1984 was set aside whereas the award dated 13.8.1981 was restored. Gurdev Singh-petitioner challenged the award dated 13.8.1981 and the order passed in the revision on the grounds that the matter should have been dealt with under Section 54 of the Punjab Co-operative Societies Act, 1961 (hereinafter referred to as 'the Act') and not under Section 55 of the Act as it relates to detection of shortage/embezzlement of fertilizers.
2. There was no dispute between him and the Society and as such, the Assistant Registrar had no power to refer the dispute to the Arbitrator. The Deputy Secretary should have passed an independent order and he could not revived the award which was already dead. Sant Singh-petitioner assailed the order passed in the revision on the grounds that he was not a party to the proceedings in which the original award was passed and that award became non-existing after the case was remanded back and fresh arbitration proceedings were initiated. It was not his duty to keep the cash or stock of fertilizer with him and to disburse the same. He was only responsible for the maintenance of the records. It was he, who had brought the matter to the notice of the society.
3. The Administrator of the Society filed written statement in both the writ petitions in which he admitted the factual position. He pleaded that the arbitration proceedings under Section 55 of the Act are legal and valid as it was the society who moved the Arbitrator by way of a reference and proved the case against both the petitioners. There was no bar for initiating the proceedings under that Section. Those arbitration proceedings were very much competent.
4. I have heard the learned Counsel for the parties. It was submitted by learned Counsel for Gurdev Singh-petitioner that the Society could not have referred the dispute to the Arbitrator as the case is squarely covered by Section 54 of the Act. The dispute was between the Society and its employees relating to the shortage in the fertilizer. That dispute is squarely covered by Section 54 of the Act. Therefore, the resort could not have been to Section 55 of the Act and any award passed under that section is liable to be set aside. In support of his submissions he has referred to Rukanpura @ Khui Khera Co-op. Agri. Service Society v. Pritam Singh : (1997-1)115 P.L.R. 374. Learned Counsel for Sant Singh-petitioner besides adopting that arguments further submitted that the said respondent was not a party to the proceedings in which the first award dated 13.8.1981 was passed and as such the revisional court could not have passed an order restoring that award against that petitioner. Both of them have submitted that the writ petitions be allowed. The award dated 13.8.1981 and the award passed by the Deputy Secretary in the revision be set aside.
5. The following question arises for determination for the decision of this writ petition:
Whether the matter in dispute was to be enquired into under Section 54 of the Act and no reference could have been made to the Arbitrator under Section 55 of the Act.
6. For proper appreciation, Sections 54 and 55 of the Act are reproduced below:
54. Surcharge: (1) If in the course of an audit, inquiry, inspection or the winding up of a co-operative 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 of the byelaws or has caused any deficiency in the assets of the society by breach of trust or willful negligence or has misappropriated, fraudulently retained any money or other property belonging to such 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.'
55. Disputes which may be referred to arbitration: (1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a co-operative society arises:
(a) XXXX XXXX XXXX
(b) XXXX XXXX XXXX
(c) between the society or its committee, any officer, agent or employee, or any past officer, 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) XXXX XXXX XXXX
Such disputes 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.
7. Minute perusal of these Sections makes it very much clear that a Registrar is to make resort to Section 54 of the Act in case the deficiency in the assets of Society by breach of trust or willful negligence or mis-appropriation or fraudulent retention of money or other property belonging to the Society is found in the course of an audit enquiry, inspection or winding up of a Society. It is also to be seen if such a deficiency etc. was caused by the person who is or was entrusted with the organisation or management of the Society or who is or has at any time been an Officer or an employee of the Society. Section 55 speaks of the dispute touching the Constitution, management or business of the Society and when the same is between the Society and any employee thereof. The ruling cited by the learned Counsel for the petitioner has no application to the facts of the present case as in that case it was during the audit that the deficiency/shortage in the fertilizer was found. In the present cases, the embezzlement was not found during any audit or enquiry. It was found by Sant Singh-petitioner, who was the Secretary of the Society and it was he who reported the matter to the Society.
8. Sections 54 and 55 are analogous to Sections 49 and 51 respectively of the Madras Co-operative Societies Act, 1932, which came up for consideration before the Apex Court in Pentakata Srimula Cooperative Market Society, Anakapali : A.I.R. 1965 S.C. 621 . It was held therein that 'where a claim is for the fraudulent retention of money, other property of the society, the case does not fall under Section 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 or enquiry or inspection during winding up of the company. Unless this condition is also satisfied, Section 49 would not be attracted.
9. While relying upon the judgment of the Apex Court, it was held by a Division Bench of this Court in Angoori Lal Sharma v. State of Haryana 1980 R L.R. 241 as under:
The preliminary contentions of the petitioner before those 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 in 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 thereof. The counsel points out that under Section 54, the matter could not be referred for arbitration by the Registrar as has been done in the present case. He further points out that under Section 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.
10. Again it was held by this Court in Dharam Pal Chhachhiya v. Joint Secretary (Co-operative) Haryana 1993(1) R.R.R. 607 that 'if some illegality of fraud, embezzlement/shortage is found and any incriminating material so collected is made the sole basis in its claim by the Society, then Section 54 would apply.'
11. It was also held by a Division Bench of this Court in Kashmira Singh v. Deputy Registrar, Co-operative Societies, Rohtak and Ors. 1989 P.L.J. 158 that 'to exclude Section 55 of the Act, it must be shown that the case was completely covered by Section 54.
12. In the case in hand, said embezzlement was not found during an audit, enquiry, inspection or winding up of the society. Therefore, the case is not covered by Section 54 of the Act. Reference was correctly made under Section 55 of the Act, as the dispute was touching the business of the Society and was between the Society and the petitioners, who were its employees.
13. As a result of the above discussion, the above posed question is answered against the petitioners. There is no merit in the writ petitions and the same are hereby dismissed.