P. JAGANATHA PILLLAI AND ANOTHER Vs. THE DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES, ARIYALUR AND THE SPECIAL TRIBUNAL FOR CO-OPERATIVE CASES, MADURAI

JUDGEMENT

(1.) The Tamil Nadu Agricultural land is a Society registered under the Tamil Nadu Cooperative Societies Act. 1961 (herein after called as "the Act"). It's bye -laws illustrate the point that the people who hanker for or aspire to occupy positions of prominence in any field should realise the duties and responsibilities of the office and that a Damocles' sword always hangs over such officers of importance. It is common knowledge that people aspire for an office of the President of a Panchayat or the President of a Co -operative Society in rural areas, because such officer did command some respect in the village and a certain amount of status and prestige are also attached to such officer. But a very few people realise the risk involved in discharging the duties of such responsible officers. On the basis of a Special Audit Enquiry report submitted under Sec.65of the Act. action was initiated under Sec.71of the Act against the ex -President, seven Directors, one ex -Secretary and two other employees of the society for having caused loss to the tune of Rs. 1.69.386 -95 ps. Against the order dated 7.5.80 of the Deputy Registrar an appeal was filed to the Special Tribunal and the matter was remitted for fresh disposal by giving adequate opportunity to the persons involved. Thereafter, meticulous care was persons to furnish copies of documents and an opportunity was given to all the persons involved to submit their explanations. Most of them had engaged lawyers. After hearing all the parties and after pursuing the documents, the Deputy Registrar by his order dated 7.5.80 held that all the persons were liable to make good the deficiency caused to the society to the tune of Rs. 1,39,238.50 ps. On account of their wilful negligence. The Deputy Registrar proceeded to hold that the Ex -secretary and some of the employees of the society were specifically responsible for certain stated amounts. So far as the Ex -president. Ex. Vice President, Ex -Treasurer and Ex -Director were concerned, they were found jointly and severally liable for a sum of Rs. 76,897.50 ps in respect of certain items. Certain other items in respect of which a show cause notice was issued to them were, however found to be not substantiated and accordingly dropped. Against the said order, a statutory appeal was filed before the Special Tribunal by the appellants herein and certain others. The appeals filed by the appellants were registered as CMA Nos. 227 and 223 of 1980. The said appeals along with the connected appeals were dismissed by the Special Tribunal on 21.3.83. The appellants challenged the findings of the Tribunal in W.P.No. 1641 of 1984. Raju J. by his order dated 18.12.1991 dismissed the said writ petition. The present writ appeal is directed against the said order of the learned Single Judge.

(2.) Mr. N.S. Sivam learned counsel for the appellants contended that the authorities below as well as the learned Single Judge had not kept in mind the significant question that the mere negligence on the part of the Ex -Directors would not make them liable under a surcharge order and what is required is wilful negligence. It support of his arguments learned counsel for the appellants relied on the decision in Subbammal v/s. President, Tenkast Co -operative Urban Bank (1976 II MLJ 460 = 89 L.W. 641) and in Sathyamangalam Co -operative Urban Bank Ltd. v/s. Dy. Regr. of Coop. Society (1980 II MLJ 17). In the latter judgment, the degree of negligence as contemplated under Sec.71of the Act is explained in the following words:

(3.) We have no dispute with the above proposition of law. The question really is whether on the facts and circumstances of the case, the authorities below have found wilful negligence on the part of the Ex -Directors. We are in this case concerned only with the Vice -President and the 2nd appellant was the Treasurer of the Society during the relevant period. Having regard to the above arguments it is necessary for us to notice the manner and method in which the loss was caused to the Society. There are as many as 15 items of misappropriation and 30 items of non -disbursement of loans to the members. For the purpose of illustration, we will take one case of misappropriation and one case of non disbursement. Under items 9 and 10 a benami loan of Rs.8700/ - was raised in the name of one A. Jayaraman. when there was no such person in the village. The loan was raised on the basis of a false property certificate. The disbursement was duly shown on the disbursement register on 29.3.75 and 2.4.75. Under item No. 38 the surcharge related to non -disbursement of fixed deposit loans amounting to Rs.3650 is made. The Deputy Registrar accepted the receipt of Rs. 1,000 only and not Rs. 1050/ - as shown in the records. Again, entries had been made in the records of the Bank, as if another loan of Rs. 870 was disbursed to him on 3.3.75. This disbursement was approved by the Board in its meeting held on 7.5.75. There were similar entries as if another sum of Rs. 1950 was disbursed to him on 31.3.75. on the security of a Fixed Deposit. No entries had been made on the reverse side of the Fixed Deposit Registrar denied the receipt of any loan of Rs.3650. We have indicated only certain samples to show the modus operandi of the ex -employees and ex -directors in causing loss to the Society. It must be noticed here that the Deputy Registrar had found several items as not having been proved and the surcharge proceedings were dropped in respect of such items. It is thus seen that the Deputy Registrar had meticulously gone through the records before holding the persons concerned were liable for some of the items for which there was ample proof. Before proceeding further it is interesting to see that the Deputy Registrar had framed issues and the second and third of which are as follows: