Civil Revision No. 1683 of 1994 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Revision No. 1683 of 1994 Date of Decision: 8.9.2010 Balwant Singh .....Petitioner Versus The Punjab State Co-operative Supply and Marketing Federation Limited ….Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Shri Ashutosh Gupta, Advocate, for Shri Puneet Jindal, Advocate, for the petitioner. Shri R.K. Sharma, Advocate, for the respondent. Hemant Gupta, J. (Oral) Challenge in the present petition is to the order passed by the learned Executing Court on 7.8.1993, whereby the execution of the Award passed by an Arbitrator under Section 55 of the Punjab Cooperative Societies Act, 1961 (for short `the Act’) was dismissed. The petitioner was salesman working with the Punjab State Cooperative Supply & Marketing Federation Ltd. The Civil Revision No. 1683 of 1994 [2] respondent, herein, raised dispute in terms of Sections 55 and 56 of the Act, by filing a petition before the Assistant Registrar, on 15.4.1991 claiming an amount of Rs.82617.25p along with interest @ 19%. The said petition was allowed by the Assistant Registrar on 6.1.1992. Subsequently, the Registrar issued a certificate for execution of the said Award as a decree of the Civil Court in terms of Section 63 of the Act. Consequently, the execution proceedings were initiated before the Civil Court. In such execution proceedings, the petitioner filed objections, which were declined by the learned Executing Court on 7.8.1993. It has been found that the objections are false and frivolous and have been filed just to cause delay in the recovery process. It has been found that the Executing Court cannot go behind the decree and, therefore, the basis of the Award cannot be examined by the Executing Court. The petitioner filed an appeal before the first Appellate Court. The same was dismissed as not maintainable vide order dated 2.4.1994. Learned counsel for the petitioner has vehemently argued that the proceedings against the petitioner are not arbitrabiable in terms of Section 55 of the Act. Such recovery process falls within the scope of Section 54 of the Act. Therefore, the Award rendered by the Arbitrator in terms of Section 55 of the Act, is not executable and is without jurisdiction. It is argued that the disciplinary proceedings were initiated against the petitioner and, therefore, the recovery of the losses, could not have been effected by an Award of an Arbitrator. Reliance is placed upon a judgment of this Court reported as Om Parkash, Ex-Salesman of Karnal v. The State of Haryana and others, 1989(4) SLR 79. I do not find any merit in the argument raised by the learned counsel for the petitioner. Section 54 of the Act, is applicable only if during the course of an audit inquiry, inspection or winding Civil Revision No. 1683 of 1994 [3] up, it is found that any amount is recoverable from any person, who was entrusted with the organization 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 the Act, Rules or bye- laws. It could not be pointed out by the petitioner that the amount sought to be recovered from the petitioner was found during an audit inquiry, inspection or the winding up. What is contended is that in the disciplinary proceedings, the petitioner was found liable for such loss and therefore, the departmental inquiry will fall within the scope of Section 54 of the Act. I do not find any merit in the said argument. The disciplinary proceedings are to initiate action against an employee by the employer in terms of the Rules, which contemplate minor and major penalties, including an order of recovery of the loss suffered. Such disciplinary proceedings are not part of Section 54 of the Act, which deals with an audit inquiry, inspection or winding up of a Cooperative Society. None of the three situations envisaged under Section 54 of the Act, are applicable in the facts of the present case as neither there was an audit inquiry, nor the winding up of the Cooperative Society nor an inspection of the affairs of the Cooperative Society, which alone would extend application of Section 54 of the Act to the claim of surcharge. A Division Bench of this Court in the judgment reported as Dharam Pal Chhachhiya v. Joint Secretary (Cooperative) Haryana and others, 1993 PLJ 5, considered the judgment in Om Prakash Chopra’s case (supra), and held that the case of Om Parkash (supra) was decided on the assumption and admitted so by the other party that proceedings were initiated on the basis of an audit report or shortage found on verification of stocks respectively. It was held to the following effect:- Civil Revision No. 1683 of 1994 [4] “13. Jai Pal’s and Om Parkash Chopra’s cases (supra) were decided on disputed facts before the High Court, rather a clear cut admission by the order side is inferable that Section 54 of the Act is attracted. But this is not the position in the present case and the ratio of the said judgments are not applicable to the case in hand. While deciding these two cases, the Hon’ble Judges did not feel the necessity of taking all the observations of the Supreme Court about the existence of another condition as discussed above. In view of the observations of the Supreme Court Sections 48 (audit), 49 (inspection of societies), 50 (enquiry by the Registrar), 51 (inspection of books of the indebted societies) of Chapter VIII of the Punjab Act have not been taken note of in the aforesaid Single Bench judgments. 14. If some illegality of fraud, embezzlement or shortage is found during the proceedings under the aforesaid sections and incriminating material so collected during any such proceedings as contemplated under the aforesaid sections are not put in the claim made by the society, then Section 55 would apply. For instance, if the society seeks reference and during arbitration enquiry report by way of piece of evidence alongwith the other evidence, then it can be said that in that eventuality, the matter will be coverable only under Section 54 of the Act. If such view was contemplated in the aforesaid two judgments of this Court, then they are contrary to the observations of the Supreme Court in Pentakota Sriramula’s case (supra).” The judgment referred to by the learned counsel for the petitioner deals with a situation where in pursuance of an audit inquiry, an amount was found recoverable from the employee of the Cooperative Society. The said judgment is not applicable to the facts of the present case as the recovery proceedings against an employee in the reported judgment was on the basis of the audit inquiry. The recovery of loss on account of the act of the employee of the Cooperative Society falls within the scope of Clause (b) of Civil Revision No. 1683 of 1994 [5] Section 55(1) of the Act. The aforesaid provisions were considered by a Full Bench of this Court in a judgment reported as Mam Raj v. State of Haryana and others, AIR 1982 Punjab and Haryana 211, wherein it was held to the following effect:- “….Adverting particularly to S.55 of the Act there is no manner of doubt that the underlying object of the legislature herein is that once a dispute touches the constitution, management or the business of a Co- operative Society then such a cooperative society, its members, past members and persons claiming through them as also the officers, agents or employees, past employees and liquidators including therein even their nominees, heirs or legal representatives etc. (without being exhaustive) should be protected and saved from the long drawn out and tortuous procedure of ordinary civil litigation for the purpose of resolving such a dispute. It is to achieve this object that the speedier and inexpensive remedy of a statutory arbitration is provided to the exclusion of all other remedies. xx xx xx As regards the parties, the legislature has designedly brought within its ambit members, past members, deceased members and persons claiming through them as also the officers, agents, employees, past employees and their nominees, heirs or legal representatives etc. Therefore, it seems apt that a liberal construction should be placed on the language of Section 55 both as regards the nature of the dispute and the number of the parties thereto in order to advance the larger purpose of this statute as against the literal or constricted interpretation thereof. 13. The core of the matter herein is the amplitude of the phrase `claiming through a member, past member or deceased member’ as employed in S.55(1)(b). It is obvious that so far as the disputes betwixt a society and its past members are concerned they are plainly within the net of statutory arbitration. The legislature, however, deliberately extended the same when it employed the aforesaid phrase to bring non-members Civil Revision No. 1683 of 1994 [6] also within its ambit. The qualification or limitation expressly placed is that such a non-member must be either claiming through a member, past member or deceased member and as a necessary corollary be liable through them because if one claims through someone the inevitable legal consequences are that he would be equally answerable through him.” The Hon’ble Supreme Court in Balwant Singh v. State of Haryana and others, AIR 1999 SC 1214, has approved the Full Bench judgment of this Court in Mam Raj’s case (supra), when it was held to the following effect:- “…..In the instant case, the appellant though was employed by the Nalvi Society as a salesman was, in fact, a member of the Shahbad Society. The dispute in question was with reference to an amount collected by the appellant which was payable to the Shahbad Society. Therefore, the claim of the Shahbad Society is certainly the one pertaining to the management and business of the Shahbad Society. Therefore, in our opinion, the dispute squarely falls within Section 55 of the Act.” In view of the above, the claim of loss from an employee of a Cooperative Society falls within the scope of Section 55 of the Act. Therefore, I do not find any patent illegality or irregularity in the order passed by the learned Executing Court, which may warrant interference by this Court in exercise of its revisional jurisdiction. Hence, the present petition is dismissed. [ HEMANT GUPTA ] JUDGE 8.9.2010 ds