Kottayam District Co-operative Bank Ltd. v. Cooperative Tribunal, Thiruvananthapuram; Joint Registrar of Co-operative Societies (General), Kottayam; Sri V.K. Shajimon

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **TUESDAY, THE 19TH DAY OF SEPTEMBER 2017/28TH BHADRA, 1939** ## **WP(C).No. 32379 of 2014 (V)** **---------------------------APPEA 92/2013 of KERALA CO-OP.TRIBUNAL, THIRUVANANTHAPURAM.** **.....** **PETITIONER:** - **-------------------** **THE KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD., THIRUVANANTHAPURAM -695 101, REPRESENTED BY THE GENERAL MANAGER.** **BY SRI.T.A.SHAJI, SENIOR SC. SRI.ATHUL SHAJI, SC.** **RESPONDENTS:** **-----------------------** **1. THE CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM-695 001, REPRESENTED BY ITS SECRETARY.** **2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KOTTAYAM-686 101.** **3. SRI.V.K. SHAJIMON, VATTAPPALLIL HOUSE, KILIROOR NORTH P.O., KOTTAYAM-686 020.** - **R1 & R2 BY GOVT. PLEADER SRI.BIMAL K.NATH. R3 BY ADV. SRI.KISHOR B.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15/09/2017, THE COURT ON 19/09/2017 DELIVERED THE FOLLOWING:** rs. **WP(C).No. 32379 of 2014 (V)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:-** - **P1:TRUE COPY OF THE RELEVANT PORTION OF THE MUTUAL ARRANGEMENT SCHEME, KERALA.** - **P2:TRUE COPY OF THE DOMESTIC ENQUIRY REPORT DTD 22/11/2007.** - **P3:TRUE COPY OF THE MEMO NO. EST/228/2011-12 DTD 08/07/2011.** - **P4:TRUE COPY OF THE ARC NO. 148/2011 FILED BEFORE THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, KOTTAYAM.** - **P5:TRUE COPY OF THE WRITTEN STATEMENT FILED IN ARC NO.148/2011.** - **P6:TRUE COPY OF THE ORDER DTD 24/07/2013 IN ARC NO. 148/2011 DTD 24/07/2013.** - **P7:TRUE COPY OF THE ORDER IN APPEAL NO. 92/2013 DTD 28/01/2014 PASSED BY THE KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM.** **RESPONDENT'S EXHIBITS:NIL.** ## **//TRUE COPY//** ## **P.S. TO JUDGE** rs. ## **CR** ## **SHAJI P. CHALY, J.** ## ----------------------------------------------- **W.P.(C) No.32379 of 2014 ----------------------------------------------Dated this the 19[th] day of September, 2017** ## **J U D G M E N T** This writ petition is filed by the petitioner bank seeking to quash Ext.P6 order passed by the 2[nd] respondent and Ext.P7 judgment of the 1[st] respondent Tribunal, which affirmed Ext.P6 order passed by the 2[nd] respondent, whereby petitioner bank was directed to pay the retiral benefits to the 3[rd] respondent along with cost and interest. 2. Material facts for the disposal of the writ petition are as follows; Third respondent was the employee of the petitioner bank on and w.e.f. 24.7.1978 in the clerical cadre in a temporary vacancy on a consolidated pay of Rs.300/per month. He was made permanent w.e.f. 24.7.1979 by granting a regular scale of pay. While working so, on 24.12.2002, one person viz., M.H.Ismath opened a savings account with the main branch of the bank. According to the petitioner bank, account was permitted to be opened without W.P.(C). No.32379 of 2014 2 verifying the authenticity or identity documents produced by M.H.Ismath or without any prior introduction, for which one K.P.Lilly and P.Indira Devi were held liable. Later the bank found that, 3[rd] respondent was allegedly involved in some negligent transactions or colluded with the aforesaid two persons, passed mail transfers and an amount of Rs.4,48,287/- was successfully withdrawn. 3. Accordingly disciplinary enquiry was initiated against the 3[rd] respondent, K.P.Lilly and P. Indira Devi by constituting charges. Enquiry was conducted and the Enquiry Officer vide his report dated 22.11.2007 has found that, delinquent employees have not willfully committed any wrong, evident from Ext.P2 report. The said report of the Enquiry Officer was approved by the Board of Management. Thereafter, no proceedings were initiated. However, the Board of Directors, which met on 30.6.2011 took note of audit objections in the bank not recovering the loss caused to it due to the fraudulent mail transfers and resolved to recover 1/3[rd] of the loss sustained from the 3[rd] respondent W.P.(C). No.32379 of 2014 3 and the balance from other two persons. Same was intimated to the 3[rd] respondent vide Ext.P3 memo dated 8.7.2011. Accordingly, a sum of Rs.1,49,429/- was deducted from the retirement benefits of the 3[rd] respondent, who retired from service already on 30.4.2011 as Executive Officer. 4. Being aggrieved thereby, 3[rd] respondent instituted ARC No.148/2011 before the 2[nd] respondent and secured Ext.P6 award. Aggrieved by Ext.P6, petitioner bank preferred an appeal before the Tribunal and the Tribunal affirmed the award of the Arbitrator as per Ext.P7 judgment. These are the backgrounds projected by the petitioner bank in order to secure the reliefs sought for in the writ petition. 5. Heard learned counsel for the petitioner, learned Government Pleader and learned counsel appearing for the 3[rd] respondent and perused the pleadings and documents on record. 6. The sole question remains to be considered is whether any manner of interference is warranted to the W.P.(C). No.32379 of 2014 4 concurrent findings rendered by the 2[nd] and 1[st] respondents respectively. The paramount contention advanced by the learned counsel for petitioner bank is based on rule 198 of the Kerala Co-operative Societies Rules, 1969. The contention advanced by the learned counsel for petitioner is that, petitioner bank is entitled to recover the amount consequent to the loss suffered due to the negligence of the 3[rd] respondent in accordance with clause (e) of rule 198(1). Clause (e), read thus: “(e) Recovery from pay of the whole or part of any pecuniary loss caused to the society, by negligences or breach of orders or otherwise.” However, clause (e) is dependent on rule 198(1), which read thus: “198(1): Any member of the establishment of a Cooperative Society may, for good and sufficient reasons, be punished by imposing any of the following penalties: a) Censure b) Fine (in the case of employees in the last grade. c) Withholding of increments with or without cumulative effect. W.P.(C). No.32379 of 2014 5 d) Withholding of promotion. e) Recovery from pay of the whole or part of any pecuniary loss caused to the society, by negligences or breach of orders or otherwise. f. Reduction to a lower rank g. Compulsory retirement h. Dismissal from service 7. Clause (e) is one among such penalties. However, the important component of rule 198, is there should be a punishment in order to impose penalty under clause (a) to (h) of rule 198(1). Here is a case, where the 3[rd] respondent was exonerated in the enquiry conducted, holding that 3[rd] respondent or the other delinquent employees did not commit any willful negligence in the charges alleged against them in respect of release of amount on mail transfers. The said findings of the Enquiry Officer was approved by the Managing Committee. All these things happened in the year 2007. Third respondent retired from the service admittedly on 30.4.2011. Ext.P3 memo which is akin to Ext.A3 in the proceedings before the Arbitrator is issued on 8.11.2011, wherein it is stated that, on the basis of the report submitted W.P.(C). No.32379 of 2014 6 by the Enquiry Officer, the bank Managing Committee has decided on 20.11.2008 to take follow up action, and accordingly a Sub Committee was constituted, and a report was submitted on 30.6.2011, and bank Managing Committee decided to recover the loss from the 3[rd] respondent and other two employees in equal proportion and thereby 3[rd] respondent is liable to pay an amount of Rs.1,39,429/-, which was decided to be recovered from the retiral benefits due to the 3[rd] respondent. It was under the aforesaid circumstances, 3[rd] respondent instituted proceedings before the Arbitrator and secured the award, which was affirmed by the Tribunal in its judgment. The issue raised by the petitioner bank was considered by the Arbitrator with specific reference to the provisions of law and has come to a clear cut finding that, 3[rd] respondent was exonerated in the enquiry proceedings, which was upheld by the Managing Committee of the bank. Moreover, it is held that, the bank has not initiated any proceedings before the Arbitrator as per the provisions of the Co-operative Societies Act, 1969 to W.P.(C). No.32379 of 2014 7 recover the alleged loss from the 3[rd] respondent. Moreover, no such action was initiated by the bank against he 3[rd] respondent before his retirement. The findings of facts and law rendered by the Arbitrator was re-appreciated by the 1[st] respondent Tribunal in its entirety and affirmed the award passed by the Arbitrator. 8. Learned counsel for the petitioner bank has invited my attention to the judgment of this court in **Philip v. Registrar of Co-operative Societies [2017(2) KLT 1087],** wherein the recovery in respect of a proceeding initiated under rule 198 of the Rules, 1969 was considered. Learned counsel has placed heavy reliance on the said judgment and contended that, petitioner bank is entitled to recover the loss suffered by virtue of clause (e) of rule 198(1). However, the facts and circumstances involved in the said case has no bearing at all to the facts and circumstances of this case due to the fact that, therein the employee was found guilty of misappropriation of employer's funds, a punishment of reduction in rank was imposed, with the punishment attaining finality, the employer, after the employee's retirement, sought to recover the embezzled amount from his terminal benefits. The question W.P.(C). No.32379 of 2014 8 therein arose was whether having imposed a punishment of reduction in rank, a recovery is possible in accordance with clause (e), and a learned Single Judge of this court has found in favour of the bank and held that, recovery is possible in spite of imposition of the punishment of reduction in rank, in order to mitigate the loss suffered by the bank. The factual circumstances makes it explicitly clear that, the issue involved in this case is entirely different. Rule 198(1) deals with disciplinary action and the facts discussion would make it clear that in the disciplinary proceedings 3[rd] respondent was not found guilty and he was exonerated fully. The recovery under clause (e) of rule 198(1) is possible only by way of imposition of punishment on the delinquent being found guilty. Such a circumstance is not occurring in the case on hand. Therefore, in my considered opinion, the concurrent findings rendered by the 2[nd] and 1[st] respondent respectively are in accordance with law. 9. Yet another point raised by the learned counsel for petitioner bank is that, bank is vested with every powers to recover the loss suffered by the bank. However, learned counsel could not point out any provision of law either under the W.P.(C). No.32379 of 2014 9 Co-operative Societies Act or Rules empowering the Management to quantify damages allegedly suffered by the bank. When there is no power granted to the Board of Management to quantify the damages under the Statute or the Rules, the Board of Management is not at liberty to quantify damages allegedly suffered by the bank, especially when section 69 of the Co-operative Societies Act enables the bank to seek recovery of any damages from its employees by instituting appropriate proceedings. In my considered opinion, without any power conferred under law, nobody is vested with power to quantify the damages suo motu and recover the same unilaterally. The procedure adopted by the management as per Ext.P3, to recover the amount is strange and alien to rule of law. Moreover, it is basic and well settled proposition in law that no man can be a judge of his own cause. Damages is a matter to be adjudicated through a procedure established under law. Having not conferred with any power to quantify damages and that too without even providing an opportunity to the 3[rd] respondent, petitioner committed grave illegality in quantifying and recovering the damages from the retiral benefits. W.P.(C). No.32379 of 2014 10 Resultantly, petitioner is not entitled to secure any relief as is sought for in the writ petition. Writ petition fails, accordingly it is dismissed. Consequently steps shall be taken to pay the amounts to the 3[rd] respondent at the earliest, since already six years have elapsed from the retirement of the 3[rd] respondent. Sd/- **SHAJI P. CHALY JUDGE** smv 15.9.2017