IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN TUESDAY, THE 12TH JANUARY 2010 / 22TH POUSHA 1931 WP(C).No. 2416 of 2004(K) -------------------------------------- PETITIONER(S): ----------------------- T.P. MANIYAPPAN, SECRETARY, NEW MODEL COIR MATTS & MATTINGS CO-OPERATIVE SOCIETY LTD. NO.524, ALAPPUZHA. BY ADV. SRI.P.GOPALAKRISHNAN NAIR RESPONDENT(S): ------------------------- 1. KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM. 2. THE MANAGING DIRECTOR, M/S.TRAVANCORE MATS & MATTINGS COMPANY, CHERTHALA. R1 BY GOVERNMENT PLEADER MR.K.S. MOHAMMED HASHIM. R2 BY ADV. MR.K.ANAND, SMT.LATHA KRISHNAN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 12/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 2416/2004-K APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE AUDITOR'S REPORT FOR THE PERIOD FROM 01/07/1976 TO 30/6/1990. EXT.P2: COPY OF THE AWARD IN ARBITRATION SUIT NO.3/93 DATED 10/11/1998. EXT.P3: COPY OF THE JUDGMENT IN A.P.NO.123/1999 DATED 21/05/2001 ON THE FILE FO THE KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// P.A. TO JUDGE rs. P.N.RAVINDRAN, J. ---------------------------- W.P.(C)No.2416 of 2004 ---------------------------- Dated 12th January, 2010 JUDGMENT The petitioner is the Secretary of a co-operative society engaged in the business of manufacture and sale of coir products. The petitioner society filed ARC No. 3 of 1993 before the Arbitrator appointed under section 69 of the Kerala Co-operative Societies Act, 1969 claiming the sum of Rs.13,63,029.90 from the second respondent together with interest thereon at 18% per annum. The petitioner relied on Ext.P1 audit report prepared by a private auditor appointed by the petitioner society in support of the said claim. The petitioner contended that the goods manufactured by the petitioner society were transported to the second respondent's business premises after out passes were issued, that the goods which were not accepted were returned and for the goods which were accepted purchase bills were issued by the second respondent. The petitioner claimed the sum of Rs.4,35,360.36, towards the goods thus supplied to the second respondent during the period from 1976-77 to 1988-89. The petitioner also claimed the sum of Rs.9,27,669.54 towards the difference in price fixed by the Coir Board and the price actually said to have been paid by the second respondent for the goods supplied. WP(C).No.2416/2004 2 2. Relying on Ext.P1 audit report prepared by a private auditor, the Arbitrator passed Ext.P2 award on 10.11.1998 allowing the petitioner to recover Rs.13,63,029.90 from the second respondent and their assets together with the interest at 18% per annum from the date of suit till realisation. The second respondent challenged Ext.P2 award by filing A.P.No.123 of 1999 in the Kerala Co-operative Tribunal, Thiruvananthapuram. By Ext.P3 judgment delivered on 21.5.2001, the Kerala Co-operative Tribunal allowed the said appeal, set aside Ext.P2 award and dismissed ARC.No.3 of 1993. Hence this writ petition. The petitioner contends that as the auditors appointed by the petitioner had submitted an audit report (Ext.P1) which was produced before the Arbitrator, the Tribunal erred in setting aside the award. It is also contended that the auditors have in Ext.P1 given reasons for their findings and conclusions which were arrived at after verifying the records and that there was no illegality in the award passed by the Arbitrator. The petitioner contends that in any view of the case, the Tribunal ought to have afforded the petitioner an opportunity to adduce evidence in support of their claim and should have remanded the matter to the Arbitrator. 3. The Tribunal has in Ext.P3 judgment held that apart from producing Ext.P1 audit report, prepared by a private auditor WP(C).No.2416/2004 3 without notice to the second respondent and behind their back, the petitioner has not produced any document to prove that they are entitled to receive the sum of Rs.13,63,029.90 claimed by them. The Tribunal held that in order to succeed, the petitioner ought to have produced evidence to show that goods of the value claimed by them had been supplied to the second respondent and that the price for the said goods was not paid or that there was short fall in payment of the sale price. The Tribunal held that in the absence of any contemporaneous document which will prove the transactions between the petitioner and the second respondent, the Arbitrator acted illegally in passing Ext.P2 award. The Tribunal also took note of the statement made by PW1, the auditor appointed by the petitioner that he had not verified the stock register of the petitioner's society and ascertained the quantity of goods rejected by the second respondent. The Tribunal also noticed that though the terms and conditions for supply of manufactured goods to the second respondent had been reduced to writing, the agreement as such is not produced in court and that in the absence of basic records in support of the petitioner's claim, their claim cannot be entertained. 4. I have considered the submissions made at the Bar by the learned counsel appearing on either side. A reading of Ext.P3 WP(C).No.2416/2004 4 judgment establishes beyond doubt that the Arbitrator passed Ext.P2 award relying mainly on Ext.P1 audit report. As noticed by the Tribunal in Ext.P3 judgment, Ext.P1 audit report is one prepared by a private arbitrator without notice to the second respondent and behind their back. The auditor who was examined as PW1 has admitted in categoric terms that he did not verify the stock register maintained by the plaintiff society before ascertaining the quantity of goods that was rejected by the second respondent. As rightly held by the Tribunal, in such a situation, the findings and conclusions arrived at by the auditor in Ext.P1 audit report cannot be relied on. As regards the claim for difference in the price of goods based on the price fixed by the Coir Board, no material has been produced to show that the goods were supplied to the second respondent below the price fixed for such goods by the Coir Board. The details of the goods thus supplied are also not disclosed. In short, apart from Ext.P1 audit report, the petitioner has not produced any cogent material in support of their claim that they are entitled to obtain the sum of Rs.13,63,029.90 from the second respondent. Further, the petitioner has not produced the books of account maintained by the petitioner's society. Under Rule 29 of the Kerala Co-operative Societies Rules, every society is bound to keep and maintain account book, day book, receipt book and voucher files WP(C).No.2416/2004 5 and also a general ledger showing receipts, disbursements and outstandings under various heads day to day. The petitioner has not apart from producing Ext.P1 audit report, produced any such documents before the Arbitrator. I am therefore constrained to hold that the view taken by the Tribunal that the petitioner has not substantiated their claim or proved their entitlement for the money claimed by them is not in any way perverse. I therefore find no grounds to interfere with Ext.P3. I accordingly hold that there is no merit in the writ petition. The writ petition fails and is accordingly dismissed. No costs. P.N.RAVINDRAN Judge TKS