Tej Pal Singh vs The Presiding Officer Delhi ...
2010 Latest Caselaw 3682 Del

 *           IN THE HIGH COURT OF DELHI AT NEW DELHI

 +                                           Reserved on: 2nd August, 2010

                                             Pronounced on: 9th August, 2010

 1.   W.P.(C) No. 5390/1997

 TEJ PAL SINGH                                                  ...... Petitioner

                                  Through:    Mr. Y.D. Nagar, Advocate.


                                  VERSUS

 THE PRESIDING OFFICER DELHI COOPERATIVE TRIBUNAL DELHI
 & OTHERS                                ....Respondents

                                  Through:    Mr. V.K. Tandon, Advocate for
                                              the respondent No.2.
 2.   W.P.(C) No.157/1998

 ROSHAN LAL                                                    .......Petitioner
                                  Through:    Mr. Y.D. Nagar, Advocate.

                                  VERSUS

 THE PRESIDING OFFICER DELHI COOPERATIVE TRIBUNAL DELHI
 & OTHERS                                  ........Respondents
                       Through: Mr. V.K. Tandon, Advocate for
                                the respondent No.2.


 3.   W.P.(C) No.1191/1998

 DR. C.V. SHARMA                                             .......Petitioner
                                  Through:    Mr. Gyan Parkash, Advocate
                                              with Mr. Subhash Chand,
                                              Advocate.

                                  VERSUS

THE REGISTRAR COOPERATIVE SOCIETIES & OTHERS .......Respondents.

Through: Mr. V.K. Tandon, Advocate for the respondent No.2.

CORAM:

HON'BLE MR. JUSTICE SANJAY KISHAN KAUL HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

3. Whether the judgment should be reported in the Digest?

 %                                      JUDGMENT

 VALMIKI J. MEHTA, J

1. The petitioner in W.P. (C) No.1191/98 is Dr. C.V.

Sharma, the Ex-President of the D.A.E. Employees Cooperative

Thrift and Credit Society Limited (hereinafter referred to as the

„Society‟), respondent No.2 in the present petition. The petitioner

Sh. Roshan Lal in W.P.(C) No.157/98 is the Ex-Treasurer and

the petitioner Sh. Tejpal Singh in W.P.(C) No.5390/1997 is the

Ex-Secretary of the aforesaid Society. All the three petitioners

are basically aggrieved by the enquiry report dated 28.10.1996 of

the Enquiry Officer submitted in exercise of the powers under

Section 59 (2) of the Delhi Cooperative Societies Act, 1972

(hereinafter referred to as the „said Act‟). The enquiry report

indicts the petitioners and seeks repayment of the moneys from

these three petitioners on the ground that the petitioners are

jointly and severely responsible for misappropriation and

embezzlement of the funds of the society to the tune of

Rs.3,45,680/-.

Whereas Sh. Roshan Lal (Ex-Treasurer) and Sh. Tejpal

Singh (Ex-Secretary) filed appeals under Section 76 of the said

Act from the common order dated 18.3.1997 passed by the

Assistant Registrar of the cooperative societies whereby they were

asked to make up the losses to the society pursuant to the

enquiry report under Section 59(2) [and which appeals were

registered as case Nos.39/1997 and 40/1997 before the Delhi

Cooperative Tribunal (DCT)], Sh. C.V. Sharma independently

challenged the order of the Assistant Registrar dated 18.3.1997

in appeal bearing No.163/1997. In case of Sh. Roshan Lal and

Sh. Tejpal Singh, a common order dated 29.8.1997 was passed

by the DCT dismissing the appeals. The review applications of

Sh. Roshan Lal and Sh. Tejpal Singh were also dismissed by the

order dated 24.10.1997 of the DCT. In writ petitions

No.5390/1997 and 157/1998, the impugned order is dated

29.8.1997. The order in review application with respect to Sh.

Tejpal Singh is dated 24.10.1997 and the order in review

application of Sh. Roshan Lal is dated 3.11.1997. So far as Sh.

C.V. Sharma is concerned, the impugned orders are 19.9.1997 of

the DCT and the order dated 9.1.1998 on the review application.

As already stated, the basic challenge is to the enquiry

report dated 28.10.1996 in all these cases.

2. The facts of the case are that pursuant to the elections

conducted during the year 1987 of the Society, Sh. C.V. Sharma

and Sh. Roshan Lal took over the posts of President and

Treasurer of the Society. Sh. Sant Dass was not an elected

Treasurer but took over the duties of the Treasurer when Sh.

Roshan Lal was posted out of Delhi and also continued to

function as a Treasurer after Sh. Roshan Lal returned back to

Delhi. During the relevant period, misappropriation and

embezzlement of funds took place due to withdrawal of funds

from the account of the society and also from the cash received

by the society from the members towards repayment of the loans.

Under the said Act, there is an enquiry and inspection first under

Section 55 and/or 59(1) of the said Act. These enquiries are

precursors to the final proceedings which take place under

Section 59(2) of the said Act. After the preliminary enquiries are

complete under Section 55 and/or 59(1), a show cause notice is

issued to the persons against whom charges are levelled. In the

facts of the present case, a preliminary enquiry and inspection

took place both under Section 55 and also under Section 59(1).

The petitioners did participate in the preliminary enquiry under

Section 59(1) which led to the preliminary enquiry report dated

28.10.1996 of Sh. P.M. Tanwar, the Enquiry Officer. Copy of this

preliminary enquiry report under Section 59(1) has been filed as

annexures in the writ petition filed by Sh. Tejpal Singh and Sh.

Roshan Lal. The aspect of the enquiry report under Section 59(1)

of the Act existing in the records of this case would be a relevant

aspect on one of the issues which is called for determination in

these writ petitions and will be referred to later.

3. On the enquiry report under Section 59(1) of the Act

being submitted, show cause notices were issued to the writ

petitioners. The writ petitioners appeared in the proceedings

before the Enquiry Officer and made their statements. It is an

undisputed fact as appearing from these statements that the writ

petitioners were in charge of the books and the funds of the Thrift

and Credit Society. It is further a fact which has emerged on

record that the amounts were withdrawn from the banks under

their signatures. It is also a further fact which has come on

record that they were handling the cash of the Thrift and Credit

Society which came into their hands from different sources. In

fact, each of the writ petitioners blamed the other and urged that

misappropriation and embezzlement was of the other person and

not his. The Ex-Treasurer Sh. Roshan Lal said that he withdrew

the amounts on various occasions on the directions of Sh. C.V.

Sharma and handed over the cash to him. Sh. C.V. Sharma

obviously has contested this. Sh. C.V. Sharma, however, was the

senior most officer in the Managing Committee and other writ

petitioners were working under his directions and control. Sh.

Tejpal Singh was the joint signatory to the cheques by which the

amounts were withdrawn. The enquiry report is detailed and

long and after discussing the facts and roles of each of the writ

petitioners, and taking into account the fact that all of them were

jointly and severely in charge of the business and management of

the Thrift and Credit Society, the Enquiry Officer has made all

the three writ petitioners jointly and severely liable. It may be

noted that notices were issued to various other members of the

Managing Committee who have been exonerated. The relevant

parts of the report read as under:

" In his hand-written detailed statement Mr. C.V.Sharma, Ex-President of the society has stated that he was elected as the President of the society on

1.5.87. All the cash as per Sh. C.V.Sharma was collected by the Treasurer of the Society Sh. Roshan Lal and later on by Sh. Sant Dass (w.e.f. 1.6.88). He stated that most of the remittance was received by cheque or by D.D. but where the money due to society was not deducted from salary of the member amount was received in cash. He stated that many a times refund of loan from individual members was also received in cash by the Treasurer. As per Sh. Sharma, the M.C. had authorised 3 persons to sign the cheques for drawl of money from cheque for which 2 or 3 authorised persons were to sign on bank transactions. The loans to the members and other expenditure was approved by the M.C. The authorised signatories as per the M.C. resolution were Dr. C.V.Sharma as President, Sh. Tejpal Singh as Secretary and Sh. Roshan Lal as Treasurer, later on Sh. Sant Dass as Treasurer. He also stated that many a times when either the Secretary or the Treasurer were absent, I used to sign the cheques for transaction of bank account of the society only after ascertaining the approval of the Managing Committee and checking the necessary documents for its disposal. Sh. Sharma further stated that if any payment of loan or other expenditure has been made on behalf of the society or/and of the funds of the society is wholly or fully responsibility of person who had made the payment. As per Shri Sharma all the books including cash books, personal ledger were maintained by the Secretary Sh. T.P.Singh and the Treasurer Sh. Roshan Lal and Sh. Sant Dass. After Sh. Sharma‟s taking over the President, the cash books was maintained by Sh. Roshan Lal as Treasurer and he also made entries in the ledger etc., later on this work was done by Sh. Sant Dass. Sh. Sharma further stated that no complaint was received by the M.C.during his tenure as President and new M.C. was elected on 18.9.91. The Treasurer of the newly elected M.C. refused to take over the charge as Cash Book was not properly maintained and proper entry has not been made by the Treasurer. Sh. Sharma further stated that the matter was fully discussed in the

general body meeting of the society when Sh. Sant Dass, Treasurer deposited Rs.37,000/- cash with newly elected President Dr. H.C.Arora. Sh. Sant Dass also wrote a Promissory Note of Rs. 80,000/- for payment to be made to the society for the discrepancies of the funds. In a nutshell Sh. Sharma has thrown over all the responsibility on other functionaries of the M.C.i.e. Sh. Tej Pal Singh, Ex- Secretary. Sh. Roshan Lal & Sh. Sant Dass, Ex- Treasurers etc. and tried to say that he is quite innocent in the matter.

Sh. Roshan Lal, Ex-Treasurer of the society in his statement dated 26.3.96 stated that no irregularities involving any financial matter did occur during the period he was Treasurer of the society. After his transfer, Sh. Sant Dass was appointed as Treasurer of the society and large scale of misappropriation of funds etc. if any is during the period of Treasurer Sh. Sant Dass.

In his statement Sh. Sant Dass, Ex-Treasurer stated that he had been implicated in the affairs of the society by the then officer bearers Dr. C.V.Sharma, Ex-President, Sh. T.P.Singh, Ex-Secretary and Sh. Roshan Lal, Ex-Treasurer. He stated that though he was not elected by the General Body as a member of the M.C. they asked him to act as officiating Treasurer on an honorarium of Rs.300/- per month in the absence of Sh. Roshan Lal, Ex-Treasurer who was on leave/posting at Jaipur. Sh. Sant Dass states that he insisted on handing over the charge by the Ex- Treasurer to him but the President and Secretary assured him that being the Head of the Society he will be responsible and take care of any lapse and as per Sh. Sant Dass only the key of the Almirah was handed over to him. On this assurance, Sh. Sant Dass stated that he started handling the affairs of the society w.e.f. 1.7.88 and new account was opened in SBI, R.K.Puram by the President/Secretary and Sh. Sant Dass was made a joint operator. The old account in New Bank of India was also allowed to operate in the name of Ex-President, Secretary and Treasurer. Sh.

Sant Dass further stated that on re-posting of Sh. Roshan Lal at New Delhi he requested them to relieve him as he had no time due to the official work, to spare for this job. But as per Sh. Sant Dass they asked him to continue to maintain the books of Account and Sh. Roshan Lal will continue as Treasurer. They also did not change his name from the joint operator of the bank account. Sh. Sant Dass stated that as per requirement projected by Ex- President, Secretary, the money was withdrawn on self-cheque basis under the signature of Ex-President, Secretary and that of Sh. Sant Dass, from time to time and handed over to the President for disbursement to the loanees and other payments. The undisbursed cash, if any, was always kept by the ex-President himself. The recoveries were either received by Sh. Sant Dass or Sh. Roshan Lal or Dr. C.V.Sharma. Sh. Sant Dass also told that on his proceeding on leave to his home town the ex-President and ex-Secretary asked him to sign some blank cheques for making payments etc. so that the work of the society may not suffer. He further stated that on one occasion Sh. Roshan Lal and Sh. C.V.Sharma withdrew a sum of Rs.8,000/- from the old account of New Bank of India during 1988 and he was not told about the same. It is further stated that on one occasion he was on leave to his home town during 1989, Dr. Sharma drew a sum of Rs.20,000/- on self cheque. The disposal of the above amount was not known. Sh. Sant Dass also stated that in addition Sh. Sharma used to call him in his room and asked for money for his own use and amount was drawn on self-cheques on the assurance that he will return the amount or will be paid to the loanees if demanded. By doing so he has having a huge amount. As per Sh. Sant Dass he was a high official and I was obeying his sayings to avoid embarrassment. Sh. Sant Dass also told that on insisting of Sh. Sharma again and again for money, as he was in need of if, and on assuring that he will be returning the money after drawing from G.P.Fund, he approached one member Sh. Sain Dass and told about his request, anyhow Sh. Sain Dass agreed to give him

by taking loan from the society for which Sh. Sain Dass has already applied. He narrated that Dr. Sharma approved his sanction and a self cheque was issued and amount paid to him. Sh. Sharma however did not return the money to Sh. Sain Dass. Sh. Sain Dass quoted some more example in his statement to show that Dr. Sharma was habitual in demanding money from him. On 17.2.92, Sh. Sant Dass stated that Dr. Sharma called him in his room at 5.00 P.M. and told in presence of Sh. T.P.Singh and Sh. Roshan Lal that Regional Director has sent a letter regarding the affairs of the society in reply to that letter Sh. Roshan Lal and Sh. T.P.Singh prepared a letter and asked him to sign the same. On his objection to it, they told that all of them will sign along with him and will take the full joint responsibility. He also stated that the three office bearers called him in his room and told that it was upto him to save their position. Sh. Sant Dass was asked to deposit some money out of the amount of Rs. 40,000/- drawn by him as House Building advance and on their assurance for repayment of the same to settle the matter silently, he deposited Rs.37,000/-. Sh. Sant Dass stated that new M.C.hold a general body meeting on 27.5.92. The elected Secretary of the society of the new M.C.told the members about the shortage of Rs.2.65 lacs. In that general body instead of saying any words to other office bearers all were compelling him to sign a pro-note. He insisted for referring the matter, to the Registrar but the new M.C. did not agree and compelled him to sign the pre-fabricated pro-note of Rs.80,000/-. A per Sh. Sant Dass a typed pro-note was already with Dr. C.V.Sharma in the meeting. He states that at that time also Ex-President assured him that this was a mere formality and nothing would happen to him. He stated that the next day the matter was brought to the notice of Regional Director (N.R.). He also referred that there is no provision in the byelaws of the society for officiating Treasurer and he was appointed as Treasurer though he was not an elected member of the society. Sh. Sant

Dass stated that they knowingly created the post of officiating Treasurer only to save their skin. He also states that the drawl of money from the bank by Sh. Roshan Lal, during his tenure and receiving all the money from the members by Sh. Roshan Lal and also issuing of receipts for the same proved that they have done so only to save their skin. He also states that he has been misused by these office bearers who also happened to be his Senior Officers under whom he was working, to cover up their mis-deeds. The statement of the account filed by Sh. Sant Dass along with his statement reflects that sufficient amount is lying with Dr. C.V. Sharma, Ex.President, Sh. Tej Pal Singh, Ex. Secretary and Sh. Roshan Lal, Ex- Treasurer."

4. After recording the aforesaid facts, the Enquiry Officer

has given, inter alia, the following findings:

" From the above narration, it is evident that all the fingures are pointing towards the office bearers i.e. Ex-President, Ex-Secretary, Ex-

Treasurers for the embezzlement/ misappropriation of the funds of the society and thereby causing a loss of Rs.3,45,680/- to the society. It is generally observed that the role of a member of M.C. of the society is not of much importance and they generally attend the meeting for sake of attending the same. The affairs of the society are mainly handled by the office bearers i.e. President, Secretary, Treasurer of the society. It has been observed in this case that Ex- President, Secretary and the Treasurers are trying to escape from their responsibility and each of them calling the other person as responsible for this loss.

The forcing of Sh. Sant Dass to do the work of Treasurer without proper handing/taking over of the record is with the ulterior motive of causing a loss to the society. Sh. Sant Dass was not an

elected member of the society and handing over the record to Sh. Sant Dass and asked him to work as Treasurer is a serious lapse on the part of the M.C. of the society. Although Sh. Sant Dass was not elected member of the M.C. and asking him to work as Treasurer is not as per provisions of the act, even though since he has accepted the assignment and worked as such and therefore he cannot escape his responsibility for the loss to the society. The depositing of Rs.37,000/- and making a Promissory Note for Rs.80,000/- by Sh. Sant Dass appears to have been done in a wrong way as he was not only one of the signatory etc. of the society but there were also 2 other office bearers who were co-signatories for the financial transactions. The act of President/Secretary of the society to force him to work as Treasurer on the transfer of Sh. Roshan Lal out of Delhi and on re-posting of Sh. Roshan Lal to Delhi asking him to continue as Treasurer and signing all the instrument and allowing Sh. Roshan Lal to receive deposit and handle the cash transactions with the society is again proving that the office bearers were in hand and glove in the mis-management of the society.

So far as Sh. Roshan Lal is concerned on his transfer out of Delhi he has not handed over his record/charge of Treasurer to the next Treasurer Sh. Sant Dass and on his return to Delhi and having access to the financial transactions in the society indication that Sh. Roshan Lal is equally involved in the mis-management.

The role of Sh. Tej Pal Singh, Ex-Secretary in working for the society while in Delhi shows that he was fully aware of what was going on in the society."

5. As already stated above, the challenge was laid to

report of the Enquiry Officer, prepared after full opportunity to

each of the writ petitioners, before the DCT but the appeals were

dismissed. Even the review applications filed thereafter before

the DCT were dismissed.

6. Before us, the counsel who appeared for Sh. Roshan

Lal (Ex-Treasurer) and Sh. Tejpal Singh (Ex-Secretary) canvassed

that in terms of Section 59(1), the proceedings under Section

59(2) were time barred. When it was however put to him that the

period of six years apply not for the report under Section 59(2)

which is effectively under challenge in the present case and that

the period of six years pertains to initiation of the enquiry under

Section 59(1), the learned counsel for the petitioner thereafter did

not press this point further. The enquiry report was thereafter

sought to be challenged on merits.

7. Exercising power under Article 226 of the Constitution

of India, this Court would interfere with the findings of facts of an

Enquiry Officer, more so after the same have been confirmed by

an Appellate Authority, only if there is either a gross perversity in

the report or the same is ex facie illegal or that there is grave

injustice caused by the report. We have already reproduced the

finding of facts and the conclusions of the Enquiry Officer above.

We do not find any reason whatsoever to hold the enquiry report

either as illegal or perverse or in any manner to have caused

great injustice. In fact, injustice will be caused if writ petitions

are allowed because the petitioners have been jointly and severely

held responsible for conduct of the management and business of

the Thrift and Credit Society where misappropriation and

embezzlement have taken place. The funds in the Thrift and

Credit Society are of middle class service persons and it will be

the grave perversity of justice if the writ petitioners are not called

upon to refund the amounts which have been misappropriated

from the Thrift and Credit Society.

8. The learned counsel, appearing for Mr. C.V. Sharma

(Ex-President), sought to canvass that there is violation of

principles of natural justice because there is no break up of the

total amount and consequently there was no opportunity to Sh.

C.V. Sharma to prove that a lesser amount is due and not the

amount of Rs.3,45,680/-. He argued that his client was not

given the copy of the enquiry report prepared under Section 59(1)

and therefore he is prejudiced.

At the first blush, this argument of violation of

principle of natural justice appears attractive, however, we find

this argument clearly one of desperation. As already stated

above, the enquiry report under Section 59(1) has already been

filed by the writ petitioners Sh. Roshan Lal and Sh. Tejpal Singh.

It, therefore, does not stand to reason that though all of the

petitioners who were noticees in the same enquiry proceedings,

only Sh. C.V. Sharma would not have got a copy of this enquiry

report prepared under Section 59(1). Also, it is not as if that the

Enquiry Officer acting under Section 59(2) has simply acted upon

the report prepared under Section 59(1) and accordingly held the

writ petitioners guilty. In fact, the Enquiry Officer has proceeded

with a totally independent enquiry under Section 59(2) and the

enquiry report does not show that the same is simply based upon

the finding arrived at in the preliminary enquiry under Section

59(1). Obviously, the enquiry under Section 59(1) was the mere

precursor and there was therefore no question of the Enquiry

Officer acting under Section 59(2) relying upon the enquiry report

prepared under Section 59(1), to arrive at his findings only on

that basis. The Enquiry Officer acting under Section 59(2) could

have relied upon the report under Section 59(1) in addition to

other evidence, however, we find that in the facts of the present

case, even this has not been done by the Enquiry Officer acting

under Section 59(2) and he has arrived at his own independent

findings after recording the statements of each of the writ

petitioners as also the other noticees. Further, the argument of

the violation of principles of natural justice is self-defeating

because the argument could have been raised to canvass and

contend that Sh. C.V. Sharma is not liable at all, however, the

argument of the counsel, appearing for Sh. C.V. Sharma, is not

that Sh. C.V. Sharma is not guilty at all and the principle of

violation of natural justice was sought to be urged for reduction

of the amount as arrived at by the Enquiry Officer because it is

alleged that there is no breakup of the amounts and therefore it

could be possible that lesser amount in fact would have been due

against Sh. C.V. Sharma. We are of the opinion that Sh. C.V.

Sharma cannot take up mutually destructive pleas of being not

liable at all and liable only for some amounts. He can only seek

to rely upon the principle of natural justice of not having a copy

of the enquiry report under Section 59(1) (assuming this plea is

correct because we have already noted above that not only is the

copy of the enquiry report filed in these proceedings by the other

writ petitioners but also the Enquiry Officer has not relied upon

the report under Section 59(1) and has arrived at independent

finding of facts) to canvass that Sh. C.V. Sharma is not guilty at

all, however, in the same breath, it is pleaded that supply of

report under Section 59(1) would have assisted Sh. C.V. Sharma

to reduce the amounts which have been claimed i.e. it is admitted

that there is, in fact, misappropriation and embezzlement,

however, the amount against Sh. C.V. Sharma has not been

correctly arrived at. We are, therefore, unable to agree with the

plea of the counsel for Sh. C.V. Sharma that there has been

violation of principles of natural justice, more so as no prejudice

or injustice has been caused to him by his allegedly not having a

copy of the report prepared under Section 59(1) of the said Act.

9. No other issue was pressed or urged before this Court

and no other argument advanced. In view of the above, the writ

petitions are without merit and the same are dismissed, leaving

the parties to bear their own costs.

VALMIKI J. MEHTA, J.

AUGUST 09, 2010                              SANJAY KISHAN KAUL, J.
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