Md. Firoz Ansari vs The State Of Jharkhand
2021 Latest Caselaw 4345 Jhar

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      IN THE HIGH COURT OF JHARKHAND AT RANCHI
                 W.P.(C) No. 2348 of 2019

1.   Md. Firoz Ansari
2.   Md. Arshad Ansari
3.   Satish Kumar Das
4.   Dinesh Kumar Sharma
5.   Asgar Ansari                              ...        ...   Petitioners
                                  Versus
1.   The State of Jharkhand
2.   The Secretary, Cooperative Societies, Pakur
3.   Deputy Commissioner, Pakur
4.   District Cooperative Society, Pakur
5.   Assistant Registrar, Cooperative Societies, Pakur
6.   Joint Registrar, Cooperative Societies, Pakur
7.   Chairman, Jabardaha LAMPS, Pakur          ...    ...       Respondents
CORAM: HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioners : Mr. Prashant Pallav, Advocate For the Respondent-State : Mr. Ashutosh Anand, AAG-III Mr. Ashish Kr Thakur, AC to AAG-III

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Order No. 18 Dated: 23.11.2021

At the request of the learned counsel for the petitioners, the respondent nos. 5 and 6 are permitted to be corrected as "Assistant Registrar, Cooperative Societies, Pakur" and "Joint Registrar, Cooperative Societies, Pakur" respectively.

Considering the present pandemic situation, office is directed to make necessary correction in the cause title of the writ petition.

The present writ petition has been filed for quashing the proceedings initiated by the respondent no. 5 - the Certificate Officer-cum-Assistant Registrar, Cooperative Societies, Pakur against the petitioners in connection with Certificate Case Nos. 65/2018-19, 66/2018-19, 67/2018-19, 68/2018-19 and 69/2018-19 respectively.

2. The factual background of the case as stated in the writ petition is that the petitioners were acting as agents in the office of the respondent no. 7 - the Chairman, Jabardaha LAMPS, Pakur and they were entrusted with the job of collecting the amount on daily basis from different account holders who were members of the Cooperative Society, Sonajori LAMPS, Pakur and on the subsequent

day, they used to deposit the same with the member secretary of the said Cooperative Society. Under special circumstance, the amount was also deposited with the Cooperative Bank, Pakur and the slips in this regard were handed over to one Raghunandan Saha - the then Secretary of the said Cooperative Society. On maturity, the beneficiaries were to get the said amount. The respondent no. 5 served notices to the petitioners issued in the aforesaid certificate cases alleging that they did not return the loan amount taken by them and further ordered to obtain NOC by refunding the same with 21% interest thereon otherwise action under the Bihar and Orissa Public Demands Recovery Act, 1914 (hereinafter referred to as "the Act, 1914") would be taken against them. The petitioners submitted their respective replies stating that at no point of time, they had taken any loan from the said Cooperative Society. They further claimed that whatever amount was collected by them, the same was deposited with the then Secretary of the said Cooperative Society, however, the impugned notices were not recalled. Hence, the present writ petition.

3. The learned counsel for the petitioners submits that an audit was conducted by the auditor and from the said audit report, it would be evident that the liability has been fastened upon the petitioners on the basis that they did not deposit the collected amount of the depositors with the said Cooperative Society. The audit report nowhere indicates that the petitioners were given loan as alleged in the notices served to the petitioners. Thus, the demand notices issued by the respondent no. 5 suffer from foundational error of fact as there is no document to support that the petitioners had taken loan. The demand notices were issued only to cover the laches of the office bearers of the Cooperative Society and arbitrarily fastened the liability upon the petitioners without any rhyme or reason. It is further submitted that the respondent no. 5 cannot assume the role of the Certificate Officer for the reason that he has already issued demand notices against the petitioners. The petitioners are having valuable right to file their objection in the certificate proceedings, which needs to be properly adjudicated by

the Certificate Officer before proceeding to finalize the demand, if at all against the petitioners. In view of the aforesaid fact, since the respondent no. 5 has already disclosed his intention on the aspect of the amount to be recovered from the petitioners conducting the certificate proceeding will be a mere mechanical exercise resulting into gross injustice to the petitioners. Thus, the initiation and continuation of proceedings against the petitioners by the respondent no. 5 suffers from gross biasness and are in violation of the principles of natural justice. The action of the Certificate Officer is also in the teeth of the provisions under the Act, 1914. The respondent no. 2 is already in judicial custody as there is allegation of committing defalcation of certain amount against him. The authorities, instead of pursuing the matter against such delinquent officer/Secretary, Cooperative Societies, Pakur, have tried to fasten the liability upon the petitioners despite there being no material on record to indicate the involvement of the petitioners in defalcation of any amount. The petitioners have discharged their duty with due diligence and have deposited the money with the then Secretary of the said Cooperative Society after having collected the same from the depositors. It is also submitted that the Cooperative Society cannot sustain its claim against the petitioners because no such loan was ever advanced to them. The demand notice under Section 7 of the Act, 1914 along with Form No. 2 was never served to the petitioners, rather they were only served with copies of notices dated 30.01.2019 mentioning initiation of aforesaid certificate cases against them. The remedy available under Section 9 of the Act, 1914 is not an efficacious remedy since the petitioners have challenged the jurisdictional error of the respondent no. 5 in issuing the impugned notices.

4. On the contrary, the learned counsel for the respondents submits that the demand notices under Section 7 of the Act, 1914 were issued along with Form No. 2 i.e., requisition form for the certificate. The demand notices dated 28.07.2018 were issued by the respondent no. 5 in administrative capacity, who was acting as supervisory and regulatory authority of LAMPS/Co-operative Societies. Subsequently, the Commissioner, Santhal Pargana Division, Dumka in

exercise of power conferred under Section 3(3) of the Act, 1914 directed the respondent no. 3 - the Deputy Commissioner, Pakur to appoint the respondent no. 5 as Certificate Officer, Pakur. As such vide order dated 06.09.2018, the respondent no. 5 was appointed as Certificate Officer, Pakur by the respondent no. 3. Thereafter, the respondent no. 3 vide order dated 25.01.2019 transferred the certificate cases pending before the respondent no. 4 - the District Co-operative Officer, Pakur to the respondent no. 5. Hence, it is evident that when demand notices dated 28.07.2018 were issued by the respondent no. 5, the said authority was not conferred with the power of Certificate Officer, who was subsequently given the power of Certificate Officer by the respondent no. 3 on 06.09.2018 with the approval of the Commissioner, Santhal Pargana Division, Dumka. It is further submitted that the petitioners being the certificate debtors have alternative remedy of filing objections under Section 9 of the Act, 1914 by denying their liabilities, in whole or in part and as such the present writ petition is not maintainable. It is also submitted that the petitioners cannot take recourse to the audit report to cover up the misdeeds and illegalities committed by them. As per the audit report, the petitioners had illegally retained the money of the depositors and the same was not deposited with Sonajori LAMPS, Pakur which has been shown as personal loan against them. The respondent no. 5 was not the requisitioning officer in the present case as stated by the petitioners. In fact, the requisition officer was one Mr. Iqbal Ansari, the Member Secretary, Sonajori LAMPS, Pakur who issued the requisitions in Form No. 2 as prescribed under the Act, 1914, however, mistakenly he did not fill the date in the same. The petitioners submitted objections on 22.02.2019 on altogether different ground rather than objecting the role of the respondent no. 5 as the requisitioning officer. The petitioners denied the liabilities imposed by the respondent no. 5 and demanded the documents and evidence on the basis of which the same were claimed. The objections were not filed in the prescribed format, however, the respondent no. 5 directed the petitioners to receive the documents from the office of the concerned LAMPS and verify the same with the

original ones. This was done with a clear intention to expel any doubt in the mind of petitioners. All the documents were shown and discussed in the presence of the petitioners. All the entries were found to be mentioned in the loan register which were duly signed by the petitioners. The entries in loan register were corroborated with the cash book in original where sanctioning date of loan and the corresponding entries were found to be mentioned. The orders under Section 10 of the Act, 1914 have been passed on 07.04.2019 after affording opportunity of hearing to the petitioners and on the basis of reconciliation and verification of submitted documents with the original registers and records. The petitioners were legally bound to deposit the daily collection to the bank on same date of collection, however, they kept that money with them and got the same converted into personal loans which they never repaid.

5. Heard learned counsel for the parties and perused the materials available on record. The petitioners have challenged the certificate proceedings initiated against them for recovery of amount with interest alleging that the said amount was taken by them as personal loan and they failed to deposit the same.

6. One of the arguments of the learned counsel for the petitioners is that the due amount sought to be recovered from the petitioners has not been ascertained by any competent authority. It is submitted that on the one hand, the respondents claim that the amount in the form of personal loan was taken by the petitioners, however, on the other hand, they allege that the amount was collected by the petitioners from the individual depositors as agents and did not deposit the same in their respective accounts. In support of his contention, learned counsel for the petitioners puts reliance on a judgment of the Patna High Court rendered in the case of "Brij Mohan Prasad Vs. The State of Bihar" reported in 2008 SCC OnLine Pat 1157, wherein it has been held that the certificate proceeding can only be initiated when the liability is predetermined. In the present case, the liabilities have been presumed and not determined. The Assistant Registrar acted in the capacity of the Certificate Officer which resulted in gross injustice to the petitioners

as the same amounts to violation of the principles of natural justice for the reason that the Assistant Registrar, Cooperative Societies, Pakur was already of the view that certain amount was to be recovered from the petitioners and, therefore, the entire exercise under the Act, 1914 initiated by the Assistant Registrar, Cooperative Societies, Pakur in the capacity of the Certificate Officer is liable to be set aside.

7. The learned counsel for the petitioner puts further reliance on the judgment of the Hon'ble Supreme Court rendered in the case of "Chariman-cum-Managing Director, Coal India Limited & Ors. Vs. Ananta Saha & Ors." reported in (2011) 5 SCC 142, wherein it has been held that if initial action is not in consonance with law, subsequent proceeding will not sanctify the same.

8. The other ground of attack to the impugned certificate proceedings is that the notices issued to the petitioners were not accompanied with proper requisition forms and were not in the prescribed format. The learned counsel for the petitioners also puts reliance on judgments of the Patna High Court rendered in the cases of "Murari Singh & Anr. Vs. State of Bihar" reported in 1978 SCC OnLine Pat 48 and "Lachmi Kant Deo Prasad Singh Vs. Ramesh Choudhary & Ors." reported in 1946 SCC OnLine Pat 315 and submits that in the aforesaid judgments, it has been held that if the notice and form are not in the proper format, the entire certificate proceeding stands vitiated.

9. The next limb of the argument of the learned counsel for the petitioners is that Mr. Iqbal Ansari was the Member Secretary, Sonajori LAMPS, Pakur and was also working as Certificate Officer, Pakur, who issued the requisitions for initiation of certificate cases against the petitioners in the prescribed Form No. 2 without mentioning the issuing date. However, the demand notices dated 28.07.2018 issued against the petitioners and letters dated 30.01.2019 by which the certificate proceedings were initiated against the petitioners bear signature of the same officer i.e., the respondent no. 5. Thus, the proceedings were initiated against them

with preoccupied mind. Under the said situation, the matter cannot be adjudicated independently.

10. The aforesaid argument of the learned counsel for the petitioners is refuted by the learned counsel for the respondents who submits that the demand notices under Section 7 of the Act, 1914 were issued along with Form No. 2 i.e., the requisition forms. The demand notices dated 28.07.2018 were issued by the respondent no. 5 in his administrative capacity, who was subsequently delegated with the power to act as Certificate Officer vide order dated 06.09.2018 issued by the respondent no. 3. It is submitted that the petitioners did not raise any objection before the respondent no. 5 with regard to his role as requisitioning officer being Assistant Registrar and as Certificate Officer, rather the said ground has been raised for the first time before this Court.

11. So far the argument of the learned counsel for the petitioners that the liability against them is not a predetermined liability of personal loan, I have gone through the record of the case which suggest that the respondent no. 5 had issued separate notices to the petitioners all dated 28.07.2018 stating inter alia that they had taken certain amount as personal loan but and did not return the said amount with a further direction to deposit the same with interest within seven days, failing which action for recovery of the same was to be taken by lodging FIR against them. The said notices were replied by the petitioners specifically stating that they had not taken any personal loan. Thereafter, no order was passed determining the liability against the petitioners.

12. It is also found from the record that as per the audit conducted by the auditor, the liability has been fastened upon the petitioners on the ground that they did not deposit the amount with the cooperative society after collecting the same from the depositors.

13. In view of the aforesaid facts, this Court finds that the amount so demanded from the petitioners is not a predetermined liability of personal loan alleged to have been taken by the petitioners under the circumstances detailed hereinabove and thus in view of the

judgment of the Patna High Court rendered in the case of "Brij Mohan Prasad" (supra), the certificate proceedings against the petitioners cannot be said to have been initiated in accordance with law.

14. That apart, according to the petitioners, the requisitions under Form-B were never served to the petitioners along with the notices under Section 7 of the Act, 1914. The respondents have though claimed that the requisitions were served with the notices under Section 7 of the Act, 1914, however, they have accepted that the dates were not filled in the requisition forms. Thus, the requisition forms leading to initiation of the certificate proceedings were also defective.

15. This court is of the view that since the amount of liability in form of personal loan was not determined by giving due opportunity of hearing to the petitioners, the certificate proceedings initiated against them cannot be sustained in law.

16. In view of the aforesaid facts and circumstance, the certificate proceeding initiated against the petitioners by the Certificate Officer-cum-Assistant Registrar, Cooperative Societies, Pakur vide Certificate Case Nos. 65/2018-19, 66/2018-19, 67/2018- 19, 68/2018-19 and 69/2018-19 are hereby quashed. The respondents are, however, at liberty to initiate fresh proceeding(s) against the petitioners after determining the liability against them and on following due procedure of law.

17. The writ petition is accordingly allowed.

I.A. No. 8395 of 2019 and I.A. No. 11099 of 2019 also stand disposed of.

(Rajesh Shankar, J.) Manish/AFR