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M. Kunjithapatham and ors. Vs. the Thiruvilaiyattam Village Co-operative Agricultural Credit Society by Its Secretary and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Reported in(1979)1MLJ6
AppellantM. Kunjithapatham and ors.
RespondentThe Thiruvilaiyattam Village Co-operative Agricultural Credit Society by Its Secretary and anr.
Excerpt:
.....initiated fresh proceedings under section 71 of the act and impleaded the petitioners as well as deenadayalu naidu and called upon them to explain why they should not be directed to repay the moneys or property alleged to have been misappropriated by them or fraudulently retained by them or by reason of the loss sustained by the society on account of such branch of trust or wilful negligence on their part. the co-operative tribunal, to whom the matter went up in appeal, found that the petitioners as well as deenadayalu naidu were guilty of breach of trust and held that the petitioners, who were the board of directors of the society, were liable to make good the deficiency and pay the requisite compensation as quantified by the deputy registrar, and accordingly dismissed the appeal..........there was misappropriation and wilful negligence on the part of the secretary of the society, one deenadayalu naidu. based on such audit report, proceedings were initiated by the petitioners as board of directors under section 73 of the act. it is not in dispute that such proceedings were initiated under section 73 of the act at the instance of the petitioners herein as against the said deenadayalu naidu, and the registrar of co-operative societies, on receipt of such a reference, decided the dispute and held that the said deenadayalu naidu was liable to account to the society in large sums of money and gave an award accordingly. i am not setting out in detail the merits, as the question raised before me is purely a legal one. after the award was passed by the registrar under section.....
Judgment:
ORDER

T. Ramaprasada Rao, C.J.

1. The interesting question raised in this civil revision petition is whether the proceedings initiated against the petitioners, amongst others, under Section 71 of the Tamil Nadu Co-operative Societies Act, is maintainable at all, in view of certain factors and events which preceded the filing of what are usually called surcharge proceedings under Section 71 of the Act. It appears that the petitioners, who were ex-officers of Thiruvilaiyattam Village Co-operative Agricultural Credit Society, found, on an audit report, there was misappropriation and wilful negligence on the part of the Secretary of the Society, one Deenadayalu Naidu. Based on such audit report, proceedings were initiated by the petitioners as Board of Directors under Section 73 of the Act. It is not in dispute that such proceedings were initiated under Section 73 of the Act at the instance of the petitioners herein as against the said Deenadayalu Naidu, and the Registrar of Co-operative Societies, on receipt of such a reference, decided the dispute and held that the said Deenadayalu Naidu was liable to account to the society in large sums of money and gave an award accordingly. I am not setting out in detail the merits, as the question raised before me is purely a legal one. After the award was passed by the Registrar under Section 73, the Deputy Registrar, apparently as the person authorised by the Registrar within the meaning of Section 71 of the Act, on his own motion, initiated fresh proceedings under Section 71 of the Act and impleaded the petitioners as well as Deenadayalu Naidu and called upon them to explain why they should not be directed to repay the moneys or property alleged to have been misappropriated by them or fraudulently retained by them or by reason of the loss sustained by the society on account of such branch of trust or wilful negligence on their part. The Co-operative Tribunal, to whom the matter went up in appeal, found that the petitioners as well as Deenadayalu Naidu were guilty of breach of trust and held that the petitioners, who were the Board of Directors of the Society, were liable to make good the deficiency and pay the requisite compensation as quantified by the Deputy Registrar, and accordingly dismissed the appeal which came before it against the order of the Deputy Registrar. The present civil revision petition is filed under Article 227 of the Constitution of India.

2. The main legal contention of Mr. Alagiriswamy, learned Counsel for the revision petitioner, is that, as proceedings under Section 73 have already been initiated by the Board of the Society and as the Registrar of Cooperative Societies on such a reference has decided the dispute and found that Deenadayalu Naidu is the person who should make good the loss sustained by the society during the period when the petitioners were in charge of the affairs of the society, there cannot be a resurrection of the matter once again under Section 71 of the Act, as if the fresh surcharge proceedings can again be laid against the petitioners on the ground that the award passed by the Registrar under Section 73 of the Act could not realise any money at all or that Deenadayalu Naidu could not make good the loss sustained by the society due to his acts of misfeasance or wilful negligence. Mr. R.G. Rajan, learned Counsel for the respondent-society, would contend that, though Sections 71 and 73 are independent provisions and act in their own respective fields, any proceedings or the resultant decision rendered under Section 73 by the appropriate statutory authority cannot be a bar to an independent proceeding by the society under Section 71 of the Act, as against, those who are responsible for the loss sustained by the society. It is in this context that the question of law has arisen.

3. Section 73 of the Act enables the society to approach the Registrar and seek for a decision on such reference. Such a reference may touch upon any matter connected with the management of the business of the society. It is not in dispute before me that the petitioners, as members who constituted the quandom Board of the Society, did make such a reference to the Registrar and called upon him to decide the dispute which had by then arisen by which the Board accused Deenadayalu Naidu, the then Secretary of the society, as the sole person who wilfully neglected the management or administration of the society. They also alleged that Deenadayalu Naidu misappropriated the funds of the society. It was in such an express context that the Registrar, who is the statutory named authority under Section 73 of the Act, decided such a dispute and passed an award to the effect that it was Deenadayatu Naidu who should make good the loss, which had resulted from the acts of misconduct, misfeasance, etc., on his part as an officer of the society. After securing such an award apparently attempts were made by the society to recover the quantified amount under the said award, but with no success. Thereafter the society, represented by its present Secretary and the present board, Initiated fresh proceedings under Section 71, styling it as surcharge proceedings, and impleaded in those proceedings the petitioners herein, as also Deenadayalu Naidu, claiming that deficiency had been caused in the assets of the society by breach of trust or wilful negligence on the part of the petitioners and Deenadayalu Naidu and that therefore they should make good the loss sustained by the society. Before the Deputy Registrar and the Co-operative Tribunal the present legal contention, though raised, was not adverted to. The only question for consideration therefore is whether the surcharge proceedings initiated by the society under Section 71 of the Act, ignoring and setting at naught the statutory award passed by the Registrar under Section 73 over the same subject-matter, can be sustained. I refer to it as 'the same subject-matter, in the sense that it is common ground that the loss claimed by the society as against Deenadayalu Naidu which was the subject-matter of the decision under Section 73, is the same as that claimed in the surcharge proceedings also. It is in this sense that there is similarity in the subject-matter. This not disputed before me. One other peculiar feature is that, the audit report rendered, which touched upon and highlighted the loss sustained by the society, which was later traced to certain acts of misconduct of the quandom officers, was the basis for both the proceedings under Section 73 as well as under Section 71 of the Act. If therefore the same audit report propelled the officers of the society to approach the Registrar for a decision on the question as to who should be mulcted with the responsibility for the loss which accrued to the society, then it appears to me to be unreasonable once again to initiate proceedings under cover of the same subject-matter, but under Section 71 of the Act. There is an exhaustion of the power of the society or its officers when they invited a decision from the Registrar under Section 73 and when it resulted in an award being passed by the Registrar under the above section. It is that award which is equatable to a decree of a competent Court that can be executed by the society thereafter for realisation of moneys due and payable by the misconducting officials as per the award rendered by the Registrar. It would be a travesty of procedure, if the Board, which came into the picture after the previous Board had to quit because of the earlier events which had happened and which had caused loss to the society, could seek to circumvent the executable award available to the society and seek umbrage under Section 71 of the Act, merely because it is an independent provision under the same enactment. It is not strange for an enactment to contain two or more remedies for the assertion of a common or single right. But unless otherwise provided for in the statute, if one such available remedy is exhausted, then in my view, the invocation of the other remedy, which is provided for as an ancillary to the first remedy already exhausted, cannot be sought for, for that would mean that the authorities in power can at their convenience and pleasure invoke one provision after another in a particular statute for purposes of availing of the remedies at different times. This would not be conducive to an orderly application and understanding of the laws. In my view, therefore, if there has been an invocation of one of two or more remedies available in law, such an invocation results in a decision rendered by the appropriate statutory authority, then a resurrection of the very same subject-matter through another available remedy contemplated in the very same enactment would lead to a violation of the principles of natural justice as well as the accepted canons of common law. In this view, though Mr. Rajan is right in his submission that sections 73 and 7l act independently in their respective fields, yet if one provision is taken advantage of by the Society for securing its rights, and if such a reference to the Registrar, as in this case, under Section 73, has resulted in an award, it cannot be thrown overboard and bypassed by invoking once again the provisions of Section 71, as if fresh surcharge proceedings could be initiated by the society which is armed with an award which is executable in the eye of law. In the peculiar circumstances of the case, I am of the view that the award passed by the Registrar under! Section 73 when the petitioners herein took, prompt action under Section 73 of the Act against the miscreant and against the Secretary who was in charge of such amounts an brought him to book and secured an award from the statutory authority, namely, the Registrar, under Section 73, they cannot still he said to be guilty of willful negligence nor can they be characterised as persons who misappropriated the funds of the society. Even on merits therefore there is no justification for the institution of fresh action against the petitioners.

4. The civil revision petition is accordingly allowed, There will be no order as to costs.


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