IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 8TH JUNE 2009 / 18TH JYAISHTA 1931 WP(C).No. 35271 of 2007(Y) -------------------------- PETITIONER: ------------- JOSEPH PAUL, AGED 72 YEARS, S/O LATE A.M.PAUL, RESIDING AT ARAMBANKUDIYIL HOUSE, NJAYAPPILLY P.O., KOTHAMANGALAM. BY ADV. SRI.PEEYUS A.KOTTAM RESPONDENTS: ----------------- 1. JOINT SECRETARY, DEPARTMENT OF CO-OPERATION, TRIVANDRUM. 2. REGISTRAR OF CO-OPERATIVE SOCIETIES, TRIVANDRUM-1. 3. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), ERNAKULAM-16. 4. ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), KOTHAMANGALAM,686691. 5. THE KOTHAMANGALAM CO-OPERATIVE MARKETING SOCIETY LTD NO.E.137, KOTHAMANGALAM, REPRESENTED BY ITS PRESIDENT, PIN 686691. 6. JOSE ANTONY, THEKKILAKKAD, PERUMANNOOR-686693. 7. A.K.VARKEY, ATTANCHERIL, VARAPPETTY P.O.,PIN 686691. 8. SAJU K.SCARIA, KAKKUZHIYIL, KOTHAMANGALAM, PIN 686691. WPC : 35271/07 9. O.V.DEVASSY, OLIYAPPURAM, RAMALLUR P.O., KOTHAMANGALAM, PIN 686691. 10. M.R.NEELAKANDAN KARTHA, MANAYATH BHAVAN, KUTTILANJI, ERAMALLUR P.O., KOTHAMANGALAM. 11. V.DIVAKARAN, KRISHNA VILASAM, VARAPPETTY P.O., PIN 686691. 12. A.M.VARGHESE, EDAPPARA, MANIKKINAR, NELLIMATTAM, KOTHAMANGALAM P.O., PIN 686691. 13. C.K.VIDYASAGAR, CHERUPALLIYIL, KUTHUKUZHI, KOTHAMANGALAM P.O. 14. C.V.THOMAS, KOTTISERIKUDI, CHELAD P.O., KOTHAMANGALAM. R1 BY GOVERNMENT PLEADER, SMT.SUDHA DEVI R5 BY ADV. SRI.P.V.BABY SRI.R.KIRAN R6 TO R13 BY ADV. SRI.GEORGE POONTHOTTAM THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC : 53721/07 APPENDIX PETITIONER'S EXHIBITS : EXT.P1 : TRUE COPY OF THE REPORT SUBMITTEDBY THE INSPECTOR OF CO-OPERATIVE SOCIEITES, KOTHAMANGALAM UNIT. EXT.P2 : TRUE COPY OF THE 5TH RESOLUTION DATED 19.12.90 OF THE 5TH RESPONDENT SOCIETY. EXT.P3 : TRUE COPY OF THE PROCEEDINGS OF THE DEPUTY REGISTRAR/SPECIAL ARBITRATOR IN ARC :108/92. EXT.P4 : TRUE COPY OF THE ENQUIRY REPORT CONDUCTEDBY THE ASSISTANT REGISTRAR DATED 14.2.94UNDER SECTION 68(1) OF THE CO-OPERATIVE SOCIETIES ACT. EXT.P5 : TRUE COPY OF THE NOTICE DATED30.4.94 ISSUED UNDERSECTION 68(2) OF THE CO-OPERATIVE SOCIETIES ACT TO THE PETITIONER. EXT.P6 : TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN WPC:9660/93 DATED 28.8.97. EXT.P76(A) : TRUE COPY OF THE ORDER IN CONTEMPT CASE :540/06 DATED 28.6.06. EXT.P7 : TRUE COPY OF THE ORDER OF THE 3RD RESPONDENT DATED 13.3.07 WHICH WAS RECEIVEDBY THE PETITIONER ON 11.4.07. EXT.P8 : TRUE COPY OF THE JUDGMENT IN WPC : 13245/07 DATED 13.4.07 OF THIS HON'BLE COURT. EXT.P9 : TRUE COPY OF THE ORDER ISSUED BY THE 3RD RESPONDENT DATED 30.7.07. EXT.P10 : TRUE COPY OF THE JUDGMENT IN OP :6849/94 DATED 3.6.94OF THIS HON'BLE COURT. RESPONENT'S EXHIBITS: Ext.R5(A) : TRUE COPY OF THE JUDGMENT IN WPC 9240/06. /TRUE COPY/ PA TO JUDGE S. SIRI JAGAN, J. ------------------------------------------------- W.P.(C)No. 35271 OF 2007 ------------------------------------------------- Dated this the 8th day of June, 2009 JUDGMENT Petitioner was a former Secretary of the 5th respondent Society, who retired from service. Respondents 6 to 14 were former members of the Managing Committee of the Society. In respect of allegations of serious financial irregularities in the matter of purchase and sale of turmeric, proceedings under Section 65 of the Kerala Co-operative Societies Act were initiated by the departmental authorities. A report was filed, in which it was found that on account of the irregularities committed by respondents 6 to 14 and the petitioner, loss to the tune of Rs.3,74,424/- have been caused to the Society. Based on the said report under Section 65, the Managing Committee consisting of respondents 6 to 14 was superseded. That supersession has become final. Subsequently proceedings under Section 68 (1) of the Kerala Co-operative Societies Act were initiated for imposition of surcharge which ended in another report holding that the petitioner as well as respondents 6 to 14 are responsible for the loss caused to the society on account of their action. Exts.P1 WPC :35271/07 -:2:- and P4 are the orders under Sections 65 and 68(1). Thereafter the 5th respondent society filed ARC No.1008/92 under Section 69 of the Kerala Co-operative Societies Act seeking to recover the entire amount of loss from the petitioner alone. In Ext.P3 order of the arbitrator it was found that, not only the petitioner but also respondents 6 to 14 were also jointly responsible for the loss. Exts.P1 and P4 orders were also relied on to come to the said conclusion. In view of that finding, on the ground that the ARC filed against the petitioner alone is unsustainable, the plaint submitted by the 5th respondent against the petitioner alone was dismissed. That order has also become final. Subsequently, based on Ext.P4 report under Section 68(1) of the Act, the 3rd respondent initiated proceedings under Section 68(2). Ext.P5 notice was issued to the petitioner as well as respondents 6 to 14 directing them to show cause why the said amounts should not be recovered from them. 2. In between the petitioner retired from service and since retirement benefits due to him were not paid, he approached this court by filing OP No.9663/93. By Ext.P6 judgment, this Court directed that all retirement benefits due to the petitioner, except Rs.55,132/- which was to be withheld pending disposal of the ARC, WPC :35271/07 -:3:- should be released to the petitioner. Subsequently, the 3rd respondent passed Ext.P7 order in the proceedings under Section 68(2), absolving respondents 6 to 14 from the liability making good the loss caused to the 5th respondent Society and directing the petitioner to pay the entire amounts amounting to Rs.3,74,490/-. Against the same, the petitioner approached the government and this Court by Ext.P8 judgment directed the Government to consider the petitioner’s petition against Ext.P7 order. Pursuant to that Ext.P9 order was passed upholding Ext.P7 order. The petitioner is challenging the above proceedings seeking the following relief: “1) Call for the records leading to Ext.P9 order and issue a writ of certiorari or any other appropriate writ, order or direction and thereby quash the same;” 3. At this point of time, the petitioner does not dispute the fact that he is jointly liable for the loss along with respondents 6 to 14. His contention is that he alone cannot be made liable for the whole amount. But, he along with respondents 6 to 14, are liable and therefore the amount cannot be recovered from the petitioner alone. The contention is that Exts.P1, P3 and P4 orders wherein all of them have been jointly found to be responsible have become final, insofar as respondents 6 to 14 has not chosen to challenge the same. After WPC :35271/07 -:4:- having found in Exts.P1, P3 and P4 that all of them were jointly responsible to make good the loss caused to the 5th respondent society, now based by on the statements made by respondents 6 to 14 alone, by Ext.P7 order, they have been absolved from the liability making the petitioner alone liable for the entire amount. It is totally against justice is the contention raised. 4. Respondents 6 to 14 would contend that as directed by this Court, the Government had considered every aspect of the case and it is based on materials on record the Government had come to the conclusion that the petitioner alone was liable to make good the loss. Therefore, there is nothing wrong in Ext.P9 order is the contention raised by the counsel for respondents 6 to 14. Government Pleader also would support the impugned orders. 5. I have considered the rival contentions in detail. Ext.P1 is the report filed by Assistant Registrar of Co-operative Societies, Kothamangalam, the 4th respondent herein, in which the petitioner as well as respondents 6 to 14 have been found responsible for the loss caused to the society on account of their acts. Respondents 6 to 14 have not chosen to challenge Ext.P1 report. In fact, based on Ext.P1 report the managing committee constituting of respondents 6 to 14 WPC :35271/07 -:5:- have been superseded, which supersession has also become final. 6. The 5th respondent had filed ARC No.108/94 before the Arbitrator under Section 69 of the Kerala Co-operative Societies Act. In that, the society sought to recover the entire amount from the petitioner alone. The Arbitrator found on the basis of Section 65 enquiry report and Section 68 enquiry report that, not only the petitioner but also the President and other Board of Directors of the 5th respondent Society, at the relevant period, are equally liable to pay the loss in respect of the turmeric transaction. But, since the society had filed in the plaint against the petitioner alone, that plaint filed by the society was dismissed. That has also become final. In Ext.P4 report under Section 68(1) also, respondents 6 to 14 were categorically found to be responsible for the loss, in addition to the petitioner. None of these orders have been challenged by respondents 6 to 14, despite which they were absolved from liability fixing the liability on the petitioner alone by the impugned orders. A surcharge proceeding is a quasi judicial proceedings. Such kind of absolving persons from liability on the basis of their own statement is totally perverse and unsustainable. 7. Although the counsel for respondents 6 to 14 would contend WPC :35271/07 -:6:- that Ext.P9 order has been passed by the government after independently considering all the evidence available. I am unable to countenance that contention insofar as in Ext.P9 order no other independent evidence has been appreciated by the government. On the other hand, the Government only confirmed Ext.P7 order. It is pertinent to note that in Ext.P7 order the Joint Registrar found respondents 5 to 14 also liable before fixing the liability on the petitioner alone, merely on the basis of the statements of respondents 6 to 14, which has been strangely ignored by the Government in Ext.P9. In Ext.P9 order it is stated that, it is based on Sections 65 and 68(1) reports that the Joint Registrar has passed the order and therefore the petitioner alone is liable. But the Government has failed to note that in the Section 65 enquiry and the Section 68(1) enquiry, respondents 6 to 14 were also categorically found to be liable for the loss caused to the society. That being so, both Exts.P7 and P9 orders are totally perverse and against the un-controverted evidence in the form of reports under Sections 65 and 68(1) of the Act. Added to that, the Arbitrator under Section 69 also, by Ext.P3 found that, all of them are jointly liable. Therefore, Exts.P7 and P9 orders are totally perverse, insofar as it makes the WPC :35271/07 -:7:- petitioner alone liable for the loss caused to the 5th respondent society. Therefore to that extent Exts.P7 and P9 orders are quashed. It is declared that respondents 6 to 14 as well as the petitioner are jointly and severally liable for the loss caused to the society. Accordingly, respondents 1 to 4 are directed to realise the entire amount from the petitioner and respondents 6 to 14 and pay it to the society. The same shall be done as expeditiously as possible, at any rate, within three months from the date of receipt of a copy of this judgment. If the amount due from the petitioner has already been realised from his retirement benefits, the petitioner shall not again be proceeded against. The balance amount shall be recovered from respondents 6 to 14. The writ petition is disposed of as above. S. SIRI JAGAN, JUDGE ttb