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Judgment
R.L. Anand, J.—This is a defendants'' appeal and has been directed against the judgment and decree dated 19.12.1992 passed by the Court of Additional District Judge, Ferozepore, who set aside the judgment and decree dated 15.11.1990 and decreed the suit of the plaintiff -respondent Pritam Singh for declaration as prayed for holding that the award under challenge dated 6.8.1988 is illegal, null and void and that the defendant-appellants are restrained from realising the disputed amount on the basis of the said award.
The pleadings of the parties can be described as follows:-
Pritam Singh, Plaintiff-respondent filed a suit for declaration that the award dated 6.8.1988 vide which he was directed to pay Rs. 17,622.75 P as principal amount and Rs. 3876.25 Paisa as interest and Rs. 250/- as expenses is null and void with consequential relief of permanent injunction restraining defendants No. 1 and 2 from recovering of the said amount from him. The plaintiff alleged that he never remained member of defendant No. 3 Society i. e. the Rukanpura alias Khui Khera Co-operative Agricultural Service Society nor obtained any loan from it. He was simply a sales-man of the Society. He joined the strike call given by the union'' and on that account his services were terminated. Defendants No. 1 and 2 i.e. the Registrar Co-operative Societies, Punjab and Assistant Registrar, Cooperative Societies, Fazilka got a case registered against him under Sections 380, 408 and 201 of the Indian Penal Code but did not put any challan and he was discharged by the Judicial Magistrate, 1st Class, Fazilka. In order to harass him, defendants No. 1 and 2 appointed defendant No. 4 Suresh Kumar Phutela, Supervisor, as Arbitrator who gave the award in question which is null and void as defendant No. 2 has no right to appoint the said person u/s 55 of the Punjab Go-operative Societies Act against the salesman of the Society. Moreover, defendant No.3 did not produce any evidence to show that any sum was due to it. The Arbitrator passed the award only on the basis, of the audit report made u/s 48 of the Punjab Co-operative Societies Act after taking into consideration Section 114 of the Indian Evidence Act, which are not applicable to the proceedings. The defendants were asked to treat the award nullity. Notice was also issued to the defendants but to no effect, hence the suit.
The suit was contested by the defendants who filed written statement and controverted the allegations made in the plaint. It was pleaded that at the time of the audit it came to the notice that 54 bags of D.A.P. and 67 bags of Urea fertilizer were wrongly debited and the same was used by the plaintiff. The Society referred the matter to Assistant Registrar, Co-operative Societies and on that account the Arbitrator Was appointed who passed the award dated 6.8.1988, which is legal and valid one. The plaintiff is liable to pay the amount. The Registrar was competent to refer the matter for arbitration u/s 55 of the Punjab Co-operative Societies Act. Further it was pleaded that the Civil Court has no jurisdiction to try the suit and the suit is bad for want of notice u/s 79 of the Punjab Cooperative Societies Act. Finally it was grayed by the defendants that the suit be dismissed.
Plaintiff filed replication to the written statement in which he re-iterated his allegations made in the plaint while denying those of the written statement and from the above pleadings of the parties, the trial Court framed the following issues.
1) Whether the plaintiff is entitled to the declaration prayed for ?OPP
2) Whether the award dated 6.8.88 is illegal, void and not binding on the plaintiffs ? OPP
3) Whether the suit is maintainable in the present form? OPP
4) Whether this court has jurisdiction to try and decide the suit? OPP
5) Whether notice was required to be served u/s 79 of the Co-op. Societies Act and what is the effect if notice has not been served ? OPD
6) Relief.
The parties led evidence in support of their case and on the conclusion by the trial Court it was held under issues No. 1 and 2 that the award in favour of the society was valid but future interest cannot be charged more than six percent cent per annum. These issues were decided accordingly in (a''our of the Society and against the plaintiff. Issues No. 3, 4 and 5 were decided in favour the plaintiff. Issue No. 5-A was not pressed and it was also decided against the defendants. Resultantly, on the basis of the findings on issues No. 1 and 2 the plaintiff Pritam Singh was nonsuited.
Aggrieved by the judgment and decree dated 15.11.1990 passed by the trial Court unsuccessful plaintiff filed the appeal in the Court of Additional District Judge, Ferozepore, who vide impugned judgment and decree dated 19.12.92 set aside the judgment and decree of the trial Court and granted a declaration to the plaintiff in terms of the prayer holding that the award dated 6.8.1988 was illegal and defendants were restrained from realising the amount from the plaintiff on the basis of the said award and this time the defendants have come in the present appeal which in being disposed of with the help of Shri Sarjit Singh, Sr. Advocate and Ms. Sabina, Advocate, who appeared on behalf of the respondents.
The challenge in the suit was given by Pritam Singh to the initiation of the arbitration proceedings and his main ground of attack was that the provisions of Section 54 of the Punjab Cooperative societies Act at the most would be applicable in his case and any reference made by defendants No. 1 to 3 u/s 55 of the, said Act would be illegal and consequently the award which has been given by the Arbitrator'' in pursuance to the provision of Section 55 of the Punjab Cooperative Societies Act would be rendered as invalid. The learned trial Court after relying upon the judgment in Angoori Lal Sharma v. State of Haryana and Ors., 1980 Punjab Law Journal 86, came to the conclusion that Section 54 of the Punjab Cooperative Societies Act does not bar the action u/s 55 of the said Act against a person who was managing the affairs of the Co-operative Societies, and therefore, the award in question was not illegal. The learned Appellate Court came to the conclusion that the Registrar could have only initiated the proceedings against the plaintiff u/s 54 of the Co-operative societies Act and. therefore, the reference made by the Assistant Registrar for arbitration was illegal and void. The authority relied upon by the society was held to be distinguishable on facts as in this case reference was made against the manager for fraudulently retention of the money of the Society; whereas in the present case the shortage was detected of the Urea during the audit of the stock and record of the society and under these circumstances only the Registrar could have initiated the proceedings against the appellant u/s 54 of the Act.
In order to resolve the above controversy as to whether provisions of Section 54 or 55 of the Punjab Cooperative Societies Act would come into play in the present case I will have to interpret these provisions. Section 54 of the said Act lays down that "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-law or has caused any deficiency in the assets of the society by breach of trust wilful negligence or has misappropriated or fraudulently retained any money 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 persons provided that no such enquiry shall be held after the expiry of six years from the date of any act or omission referred to in this sub-section." Sub section (2) of Section 54 further lays down that "where an enquiry 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 of compensation to such extent, as the Registrar may consider just and equitable"
Section 55 of the said Act which falls in Chapter 8 relating to the settlement of disputes lays down as follows:-
"(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 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 or deceased 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 or 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) For the purposes of sub-section (1) the following shall be deemed to be disputes touching the constitution, management or the business of cooperative society, namely-
(a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not; (b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or demand is admitted or not;
(c) any dispute arising in connection with the election of any officer of the society.
(3) If any question arises whether a dispute referred to the Registrar under this section is or is not a dispute touching the constitution, management of the business of a cooperative society, the decision thereon of the Registrar shall be final, and shall not be called in question in any court."
Now it will be useful for me to look into the back-ground giving rise to the reference'' made by the Assistant Registrar to defendant No. 4. It is alleged that during the audit, the plaintiff debited in the account of the society 54 bags of PAP and 67 bags of Urea and in this manner shortage of 121 bags was detected by the Audit Party and the costs of the fertilizer was assessed at Rs. 17522.25P. A combined reading of the above provisions would show that the case of the society vis-avis the plaintiff is covered by Section 54 of the Punjab Cooperative Societies Act and such matter cannot be referred as disputes for arbitration u/s 55 of the said Act. It has been held in Dharam Pal Chhachhiya v. Joint Secretary (Co-operative) Haryana and ors. 1993 P.L.J. 5 that if some illegality or fraud, embezzlement or shortage found during proceedings u/s 48 which deals with the audit and Section 51 which deals with inspection of books of a Society and if any incriminating material is collected which is made the sole basis in its claim by the Society, Section 54 would apply and the matter cannot be referred as a dispute for arbitration u/s 55. This authority is applicable to the facts in hand in which citation reported as Jai Pal v. State of Haryana and Ors. 1984 PLJ 8 ; Om Parkash Chopra v. State of Haryana and Ors. 1988 P.L.J. 263 and Pentakota Srirakulu Vs. The Co-Operative Marketing Society Ltd., were considered.
The appellant in this case could possibly rely upon citation Angoori Lal Sharma v. State of Haryana and Ors. 1980 P.L.J. 86. But this authority is not applicable to the facts in hand because the arbitration proceedings never started on the basis of the report of the audit rather in that case the reference was made u/s 55 against the Manager for the fraudulant retention of the money of the Society as rightly, pointed out by the lower Appellate Court. u/s 55 only those matters are covered which touches the constitution, management or the business of a Cooperative Society arising between the Society or its, Committee and in past committee any officer, agent or employee,or any past officer past agent or past,employee or the nominee, theirs or legal representatives of any deceased officer, deceased agent or deceased employee of the society. The scope of Section 55 of the Act is-quite independent from Section 54. It may be possible that in a particular eventuality the complained act of an employee both may fall under Sections 54 arid 55 of the Societies Act and in that eventuality, the co-operative Society may either proceed u/s 54 or 55 against the delinquent employee but an the present case the proceedings were initiated on the basis of the audit report as was supposed to be done u/s 48 of the Societies Act and by the complained act it is alleged that Pritam Singh caused loss to the society by misappropriating or embezzling 121 bags of Urea by making a debit, entry in the account of the Society.
I have held above that Section 54 of the Punjab Co-operative Societies Act was enforceable in this case. The procedure has not been adopted by the defendants No. 1 to 3 and in these circumstances, the impugned award delivered by respondent No. 4 has to be struck down by declaring it illegal. I do not see any illegality or error of jurisdiction in the impugned judgment and decree of the first Appellate Court and I am not inclined to endorse the observations made by the learned trial Court in its judgment and decree.
Resultantly, I do not see any merit in this appeal and dismiss the same with no order as to costs.