P. Mahalingam vs The Inspector of Police

T. Sudanthiram, J.—The criminal original petitions have been filed by the petitioner proving to call for the entire records and quash the

proceedings against him in CC Nos. 77, 101, 66, 99, 98, 72, 84, 78, 71, 79, 100 and 67 of 2010 on the file of the learned Judicial Magistrate

No. II Trichy. The petitioner herein in all these petitions is one and the same. He is one of the accused in 12 cases filed against him.

It appears that against the first accused, who was the Manager of the Employees Cooperatives Society, Regional Engineering College, Trichy,

32 cases are filed.

According to the prosecution, the first accused had received the payments from the members of the society by way of forged bills and without

crediting to the society account, he misappropriated all those amounts. Further, he collected some of the amounts but not shown them on those

particular dates, but they were shown as if they were collected on the subsequent dates. Even at the time of dispersing the loan amount to the

members, the first accused had encashed the cheques and misappropriated those amounts. The main allegations made by the prosecution are

against the first accused.

The Deputy Registrar of Co-operative Societies also conducted an enquiry u/s 87 of the Cooperative Societies Act and found that the first

accused was mainly responsible for all the misappropriations. The first accused also accepted his guilt during his enquiry for all the charges. The

respondent police after investigation, while filing the final report alongwith the first accused, have shown the special officers and the Auditors also

as accused. In one case, the President of the Society was also shown as accused. The petitioner herein is added as accused only in the capacity of

Auditor.

The learned counsel appearing on behalf of the petitioner submitted that the fraud and misappropriation committed by first accused relates to the

period from 31.8.1985 to 30.9.1996. But as far as this petitioner is concerned, he was the auditor only during the period from 1.4.1993 to

31.3.1994. Out of these 94 cases, the time of misappropriation, CC Nos. 77/2010, 72/2010 and 78/2010 does not fall within the period from

1.4.1993 to 31.3.1994.

The learned counsel for the petitioner further submitted that forging of documents, misappropriation and fraud were all committed only by the

first accused, but, it was not detected by the petitioner and even if the act of the petitioner is negligent in discharging duties, the petitioner cannot be

fastened with the criminal liability. The learned counsel for the petitioner further submitted that the petitioner was not the only auditor and other

auditors also audited the accounts. He further submitted that no material is available in the case of offence alongwith the 1st accused.

The learned Government Advocates Criminal side submitted that the petitioner is an auditor. It is his duty to audit the accounts properly and to

intimate about the fraudulent accounts. But on the other hand, by giving an Audit Report, without showing any fault, he facilitated the first accused

to commit the offence.

This Court considered the submissions made on both sides and perused the records.

The prosecution could not point out any direct material to connect the petitioner alongwith the ""main"" accused in misappropriation and in

creating forged document. It appears that only after the offence being committed by the first accused, auditing of the accounts was carried out by

the auditors. Fraud was being committed by the first accused for several years and different auditors have audited the accounts during relevant

period. But none of the auditors had pointed out the fraud committed by the first accused for several years. Of course, there had been negligence

and dereliction of duty on the part of the auditors who audited the accounts. But, still, this Court is of the view that the negligence on the part of

auditors cannot create any criminal liability against them. Therefore, it is held that failure and negligence on the part of the petitioner to discharge his

duties properly, does not amount to any offence, in the Indian Penal Code, enumerating the petitioner as an accused in the final report of

misconception of law. Hence, these criminal original petitions are allowed. The proceedings against the petitioner in CC Nos. 77, 101, 66, 99, 98,

72, 84, 78, 71, 100 and 67 of 2010 on the file of the learned judicial Magistrate No. II, Trichy are quashed.