Decided on July 21,1997

STATE OF HP. Respondents


SRINIVASAN,C.J. - (1.)The petitioner Federation was superseded under Section 37 of the H.P. Co -operative Societies Act, 1968, (hereinafter referred to as "the Act"). The second respondent herein is appointed as Administrator and he took over on 22 -8 -1978 in addition to his own duties as District Co -operative and Supplies Officer, Bilaspur. The third respondent was appointed as Executive Officer of the Federation on deputation basis for a period of two years from the Fisheries Department and he joined as such on 9 -4 -1979. The petitioner invited tenders through advertisement from the Fish contractors/firms in order to undertake the sale of fish to be supplied for the Federation during the year 1980 -81. M/s. Rupika Enterprises entered into an agreement with the Federation for supply of fish catch for the period 14 -4 -1980 to 31 -3 -1981. The Firm furnished a bank guarantee of Rs. 1,00,000/ - to the Federation till 26 -4 -1980 to ensure payment of sale proceeds. The bank guarantee purported to have been issued by the Punjab and Sind Bank, Tilak Nagar, New Delhi, favouring the Federation. During the course of annual audit for the year commencing from 1 -7 -1979 and ending 30 -6 -1980. The Inspector audit pointed out some irregularities which had been committed by the third respondent, Executive Officer and it was also pointed out that the bank guarantee furnished by Rupika Enterprises and accepted by the third respondent was a fake one. After calling for explanation from respondents 2 and 3, the Registrar made a reference for arbitration to the Registrar Co -operative Societies against M/s. Rupika Enterprises. An award was passed on 3 -11 -1981 for a sum of Rs. 2,05,948.51 as principal on 1 -12 -1980. The Federation was also permitted to execute the award as if the amount is due as arrears of land revenue by sale of movable and immovable properties of the firm.
(2.)Even before the award was completely executed and the amount could be realised, proceedings were initiated by the Addl. Registrar Co -operative Societies in 1984, under Section 69 of the Act against respondents 2 and 3. By order dated 2 -4 -1985 respondents 2 and 3 were directed to discharge their liabilities by payment of the entire amount to the Federation under intimation to the Director of Cooperation. Aggrieved by the said order, respondents 2 and 3 preferred appeals before the Commissioner -cum -Secretary (Co -operation) to the Government of Himachal Pradesh. By order dated 13 -4 -1989 the Secretary set -aside the order of the Registrar and advised the Registrar as well as the Federation to take steps to recover the award money from M/s. Rupika Enterprises.
(3.)It is the said order of the Appellate Authority which is under challenge in this writ petition. The main reason given by the Appellate Authority is that two parallel proceedings have been initiated against respondents 2 and 3 in the present case and it should not have been done so by the Registrar. The relevant part of the order of the Appellate Authority is found in the following passage : "After going through the record, I find that two parallel proceedings were initiated in this case. In the arbitration case, the Registrar, Co -operative Societies, vide his order dated 3 -11 -1981 had announced his award in favour of Fish Federation. In this order, he did not make any mention about the carelessness of both the appellants. It was not desirable to initiate surcharge proceedings when the award has already been announced by the learned Registrar, Co -operative Societies. It appears that the existence of award was ignored altogether. The conditions precedent for making order of surcharge were also not taken care of. It is a settled law that two provisions of award and surcharge are not intended to operate on parallel lines. The recovery of awarded amount from respondent No. 2 was the course open to the Fish Federation and they should have taken steps to recover that amount. The learned Registrar, Co -operative Societies ought not have taken course to surcharge proceedings simultaneously for which he has already held M/s. Rupika Enterprises responsible and liable to repay the awarded amount. There is nothing on record that the awarded amount cannot be recovered from respondent No. 2. Shri P.C. Parban has mentioned in his appeal that the firm approached him on 9 -10 -1980 and gave in writing that they would arrange payment of arrears in four equal instalments of Rs. 50,000/ - each on 20 -10 -1980, 5 -11 -1980, 15 -11 -1980 and 5 -12 -1980 and that if they were resumed supplies of fish, they would make daily payments of the fish delivered to them. The firm also mentioned in writing that they were taking legal action against the bank for refusing to honour the guarantee bond. It is also on record that the supply of fish was resumed on receipt of payment of Rs. 50,000/ - on 9 -10 -1980. The firm continued lifting fish against daily cash payments up to 30 -11 -1980. However, firm could not make more payments to liquidate the arrears and consequently, the contract was cancelled.

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