P. Abraham v. The Kerala Co-operative Tribunal, Vanchiyoor, Thiruvananthapuram and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE SMT. JUSTICE P.V.ASHA** **WEDNESDAY, THE 19TH DAY OF OCTOBER 2016/27TH ASWINA, 1938** **OP.No. 37987 of 2002 (V) -------------------------** - **PETITIONER : ---------------------** **P.I.ABRAHAM, PUTHUKKAYIL HOUSE, MALIPPARA P.O., KOTHAMANGALAM.** ## **BY ADVS.SRI.V.G.ARUN SRI.T.R.HARIKUMAR** **RESPONDENT(S):** - **----------------------------** **1. THE KERALA CO.OPERATIVE TRIBUNAL, VANCHIYOOR, THIRUVANANTHAPURAM.** **2. THE PINDIMANA SERVICE CO-OPERATIVE BANK LTD. NO.E.25, CHELAD P.O., KOTHAMANGALAM,** **REPRESENTED BY ITS PRESIDENT.** **3. P.C.POULOSE, PACHUPARAMBIL HOUSE, NELLIMATTOM,** **NELLIMATTOM P.O., KOTHAMANGALAM.** **4. T.I.KURIAKOSE, THEKKUMPURATH HOUSE, NELLIMATTOM,** **NELLIMATTOM P.O., KOTHAMANGALAM VIA.** **5. P.M.PAULOSE, PALATHINKAL HOUSE,MILMA STALL,** **SOUTH RAILWAY STATION, KOCHI-16.** **6. C.N.SUBRAHMANYAN, CHANDRATHIL HOUSE CHELAD P.O.,** **KOTHAMANGALAM.** **7. K.V.KURIAKOSE, KAVUNGILPPILLIL HOUSE, PINDIMANIA, CHELAD P.O., KOTHAMANGALAM (DIED),** **REP. BY LEGAL REP. K.K.ELIAS,KAVUNGUMPILLIL HOUSE, PINDIMANA P.O., KOTHAMANGALAM.** **2/-** **-2-** ## **OP.No. 37987 of 2002 (V)** **8. M.I.KURIAKOSE, MALIYIL HOUSE, PINDIMANA P.O., KOTHAMANGALAM (DIED), REP. BY LEGAL REP. BIJU KURIAKOSE, MALIYIL HOUSE, PINDIMANA P.O., KOTHAMANGALAM.** **9. M.K.SREEDHARAN, MANIYELIL HOUSE, PINDIMANA P.O., KOTHAMANGALAM.** ## **10. VARKEY THOMAS,** **NELLIKKATTIL HOUSE, PINDIMANA P.O., KOTHAMANGALAM.** ## **11. P.V.PAULOSE,** **PARAPPURATH HOUSE, AMALA, PINDIMANA P.O., KOTHAMANGALAM (DIED), REP. BY LEGAL REP. VARGHESE, -DO- -DO-.** **12. M.I.MARKOSE, MALIYIL, PINDIMANA P.O., KOTHAMANGALAM.** **13. O.P. ABRAHAM, ORAVAMALIL HOUSE, PINDIMANA P.O.,** **KOTHAMANGALAM.** **14. A.P.VARGHESE, C/O.MARY CHERIYAN, MANJOORAN HOUSE, THAYIKKATTUKARA P.O.,** **COMPANY PADY, MUTHIRAPADAM, ALUVA.** ## **15. M.PAULOSE,** **MANIYATTY HOUSE, CHELAD P.O., KOTHAMANGALAM.** **16. P.V.RAMASWAMY (DIED), REP. BY LEGAL REPRESENTATIVE ANNAPOORNA RAMASWAMY,** **C/O. RAJALAKSHMI, PROFESSOR, CHEMPAI (CM) GOVT., MUSIC COLLEGE, PALAKKAD.** **17. INSPECTOR OF CO-OPERATIVE SOCIETIES, FOR ARBITRATION AND EXECUTION CO-OPERATIVE CIRCLE OFFICE, KOTHAMANGALAM.** **R2 BY ADV. SRI.P.N.MOHANAN** **R5,R8 & R12 BY ADV. SRI.JOSEPH SEBASTIAN PURAYIDAM R7,R9,R13,R14 & 15 BY ADV. SRI.P.V.BABY** **THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 22-09-2016 , THE COURT ON 19-10-2016 DELIVERED THE FOLLOWING:** **sts** ## **OP.No. 37987 of 2002 (V)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1 COPY OF THE COMMON JUDGMENT DATED 17/8/1990 IN APS.NOS.38/85, 54/85 AND 57/85 OF THE COURT OF THE KERALA CO-OPERATIVE TRIBUNAL, TRIVANDRUM.** - **P2 COPY OF THE AWARD DATED 30/12/1995 IN CASE.NO.204/72 OF THE COURT OF THE JOINT REGISTER OF CO-OPERATIVE SOCIETIES, ERNAKULAM** - **P3 COPY OF THE RELEVANT PAGES OF JUDGMENT IN CRIMINAL CASE NO.24 OF 1975 DATED 13/7/1977 PASSED BY THE COURT OF ENQUIRY COMMISSIONER AND SPECIAL JUDGE, TRICHUR.** - **P4 COPY OF THE JUDGMENT IN A.P.NO.28/96 DATED 19/10/2002 OF THE COURT OF THE KERALA CO-OPERATIVE TRIBUNAL, TRIVANDRUM.** - **P5 COPY OF THE DEMAND NOTICE NO.1739025818 DATED 2/12/2002 ISSUED BY THE ARBITRATION AND EXECUTION INSPECTOR.** - **P6 COPY OF THE BOND DATED 25/8/1971 NO.2525/1971 EXECUTED BY THE PETITIONER.** - **P7 COPY OF THE DEPOSITIONS ISSUED TO THE PETITIONER ON 4/1/2007** - **P9 COPY OF THE REPLY DATED 7/7/2009** - **P10 COPY OF THE MEDICAL CERTIFICATE ISSUED FROM THE MEDICAL TRUST HOSPITAL DATED 07/09/2009** - **P11 COPY OF THE REPLY DATED 7/7/2009** - **P12 COPY OF THE REPLY OF THE JOINT REGISTRAR DATED 24/3/2010** - **P13 COPY OF THE ENQUIRY REPORT DATED 15/1/1972** - **P14 COPY OF THE DEPOSITION MADE BY THE THEN PRESIDENT (SRI.K.K.THOMAS) DATED 26/4/1983** - **P15 COPY OF THE DEPOSITIONS MADE BY THE ENQUIRY OFFICER (SRI.K.C.GEORGE)** - **P16 COPY OF THE DEPOSITIONS OF THE PETITIONER** - **P17 COPY OF THE DEPOSITION OF SRI.K.T.JOSEPH (AUDITOR CO-OPERATIVE DEPARTMENT) DATED 19/6/1984** - **P18 COPY OF THE DEPOSITION OF P.K.VARKEY PILLAI ALONG WITH THE PROCEEDINGS OF THE COURT** **2/-** **-2-** ## **OP.No. 37987 of 2002 (V)** **P18(A) COPY OF THE DEPOSITION OF K.S.THOMAS DATED 5/8/1973** - **P18(B) COPY OF THE DEPOSITION OF VISWANATHAN DATED 5/8/1993 ALONG WITH THE PROCEEDINGS OF THE COURT** **P18(C) COPY OF THE DEPOSITION OF M.GOPALAKRISHNAN NAIR DATED 17/9/1993** - **P18(D) COPY OF THE DEPOSITION OF VARKEY DATED 17/9/1993 ALONG WITH THE PROCEEDINGS OF THE COURT** - **P19 COPY OF THE APPLICATION DATED 08/02/2011 SUBMITTED BEFORE THE PUBLIC INFORMATION OFFICER OF THE 2ND RESPONDENT UNDER RIGHT TO INFORMATION ACT** - **P20 COPY OF THE REPLY DATED 31/08/2011 ISSUED BY THE PUBLIC INFORMATION OFFICER OF THE 2ND RESPONDENT** - **P21 COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER UNDER RIGHT TO INFORMATION ACT DATED 19/05/2008** - **P22 COPY OF THE BOND EXECUTED BY K.S.THOMAS DATED 16/6/1971** **P22(A) COPY OF THE BOND EXECUTED BY K.R.VISWANATHAN DATED 24/6/1971 P22(B) COPY OF THE BOND EXECUTED BY PAILY MATHAI DATED 10/5/1971** **P22(C) COPY OF THE BOND EXECUTED BY N.M.JOSEPH DATED 01/3/1971 P22(D) COPY OF THE BOND EXECUTED BY MATHAI PAULOSE DATED 25/06/1970** **P22(E) COPY OF THE BOND EXECUTED BY T.V.VARGHESE DATED 10/5/1971 P22(F) COPY OF THE BOND EXECUTED BY A.P.PAUL DATED 09/03/1971** **P22(G) COPY OF THE BOND EXECUTED BY PAILY PAULOSE DATED 10/5/1971** **P22(H) COPY OF THE BOND EXECUTED BY CHACKO VARGHESE DATED 18/6/1971** **P22(I) COPY OF THE BOND EXECUTED BY RADHA GOPALAN NAIR DATED 24/6/1971** - **P22(J) COPY OF THE BOND EXECUTED BY M.GOPALAKRISHNAN NAIR DATED 21/4/1971** **P22(K) COPY OF THE BOND EXECUTED BY VARKEY DATED 10/5/1969** **P22(L) COPY OF THE BOND EXECUTED BY PAILY MATHAI DATED 17/6/1971 P22(M) COPY OF THE BOND EXECUTED BY P.P.VARKEY DATED 24/6/1971 P22(N) COPY OF THE BOND EXECUTED BY THOMMAN IPE DATED 16/6/1971 P22(O) COPY OF THE BOND EXECUTED BY A.P.VARGHESE DATED 24/6/1971** **3/-** **-3-** **OP.No. 37987 of 2002 (V)** **P22(P) COPY OF THE BOND EXECUTED BY P.R.RAMAKRISHNA PILLAI DATED 27/6/1970** **P22(Q) COPY OF THE BOND EXECUTED BY V.P.JOSEPH DATED 24/6/1971** **P22(R) COPY OF THE BOND EXECUTED BY A.O.PAULOSE DATED 12/7/1971** **P22(S) COPY OF THE BOND EXECUTED BY ITTIATHY AYYAPPAN DATED 24/7/1969 P22(T) COPY OF THE BOND EXECUTED BY K.M.MATHAI DATED 12/3/1971 P22(U) COPY OF THE BOND EXECUTED BY VARKEY VARGHESE DATED 27/6/1970 P22(V) COPY OF THE BOND EXECUTED BY LAKSHMI AYYAPPAN DATED 14/6/1971 P22(W) COPY OF THE BOND EXECUTED BY M.M.MATHAI DATED 10/5/1971.** ## **RESPONDENT'S EXHIBITS: NIL** **/TRUE COPY/** **P.S.TO JUDGE** **sts** ## **P.V.ASHA, J.** ----------------------------------------------------- ## O.P.No.37987 of 2002-V ---------------------------------------------------Dated this the 19[th] day of October, 2016 ## **JUDGMENT** The petitioner was the president of the 2[nd] respondent - the Pindimana Service Co-operative Bank Ltd., during the period from 19.11.1967 to 23.08.1971. The writ petition is filed challenging Ext.P4 judgment in A.P.No.28 of 1996 of the Kerala Co-operative Tribunal, by which the award in ARC.No.204 of 1972 was confirmed. By the said award, the petitioner, the then Secretary, a clerk and a peon were found liable for the loss caused to the Bank to the tune of Rs.1,17,738.79 along with interest @ 6% jointly and severally. 2. According to the petitioner, while he was the president of the society, he received certain complaints regarding the misappropriation committed by the then secretary and immediately thereupon he placed the then secretary-the 3[rd] respondent herein, under suspension w.e.f 12.08.1971. Immediately thereafter, he requested the Joint Registrar of Co- O.P.No.37987 of 2002-V 2 operative societies to conduct an enquiry into the affairs of the society under Section 65 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as `the Act' for short). In the enquiry report, serious irregularities including execution of false bonds, misappropriation of share amounts, deposit, falsification of accounts etc. were found. It was also found that the petitioner who was the President, the then secretary, a clerk and a peon were responsible for the loss caused to the society. 3. In the meanwhile, one Sri Simon, who was subsequently got elected as a member of the Bank and subsequently became its President, kept the bank locked using another lock. Serious allegations were raised regarding the functioning of the bank. It is the case of the petitioner that under pressure from the officers of the bank and people gathered there, he executed Ext.P6 bond taking the responsibility to remit a sum of Rs.45,000/-. Even before that, when the petitioner had detected the irregularities committed by the secretary, the secretary had executed a bond taking the responsibility for the misappropriated amounts to the tune of Rs.25,000/-. According to the petitioner, he had to execute a bond for the balance amount, under pressure, for the interest of O.P.No.37987 of 2002-V 3 the bank. 4. The enquiry under Section 65 was ordered on 18.08.1971 and on the basis of the report submitted on 15.01.1972, the Bank filed ARC.204/1972 before the Arbitrator/Joint Registrar, Ernakulam, with the petitioner as the 1[st] defendant, the then secretary as the second defendant, 2 clerks and a peon, as defendants 3 to 5 and the members of the bank at the relevant time, as defendants 6 to 11. The allegation in the ARC was that the defendants got several false bonds executed by the customers and committed serious irregularities, received amounts without issuing receipts for the amount in full, misappropriated share amounts and deposits creating forged documents, falsified accounts, etc. The amount misappropriated was found to be a sum of Rs.1,44,835.50; out of this a sum of Rs.1,21,848/- was by getting false bond executed. The Arbitrator passed award dated 25.05.1985 against the petitioner and defendants 2 and 3. Separate appeals were filed by the petitioner and defendants 2 and 3-A.P. 38/85, 54/85 and 57 of 85 before the Co-operative Tribunal. By Ext.P1 judgment dated 17.08.1990 the Tribunal remitted the matter back to the Arbitrator. In paragraph 5 of the judgment, the Tribunal found O.P.No.37987 of 2002-V 4 that the award was passed in the ARC on the basis of the enquiry report and the deposition of the enquiry officer who was examined as PW2. The enquiry report referred to 79 bonds which were found to be false bonds in the name of 79 members, got executed fraudulently by defendants 1 to 5. But none of the bonds mentioned in the enquiry report was produced before the Arbitrator and none of the witnesses was also examined. It was therefore found that merely on the basis of the enquiry report and the evidence of the enquiry officer, the defendants could not have been found liable, in the absence of the relevant bonds or the evidence of those 79 members who were alleged to have executed the bonds fraudulently. It was also found that the question whether Ext.P1, which was the bond executed by the petitioner herein, was under any compulsion or threat was also not considered. The Tribunal further found that none among the 79 persons were examined; there was another ARC-No.5 of 81, filed against the second defendant, in which there was an award for realisation of a sum of Rs.24,730.71 from the second defendant - the secretary of the bank; he was made liable in both the awards passed by the arbitrator finding joint and several liability on all the defendants; the contention of the petitioner O.P.No.37987 of 2002-V 5 and other defendants that the suit was bad for non-joinder of necessary parties for non compliance of Rule 67 of the Kerala Co-operative Societies Rules was also found necessary to be considered. 5. On remand, the ARC was considered afresh. Further evidence was adduced before the Arbitrator. PWs3 to 60 -the customers who executed the alleged false bonds, were examined. The bonds were marked. The Tribunal has stated that defendants 2 and 5 to 15 remained ex-parte. The Arbitrator has stated that all the witnesses denied execution of bonds and deposed that they did not receive any payment based on those bonds. The Arbitrator again found that the petitioner and respondents 3 and 4 were liable for the sum of Rs.1,17,738.79 and passed Ext.P2 award dated 30.12.1995. In Ext.P2 award the Arbitrator considered 4 questions. The petitioner and the other defendants had raised a contention that suit was bad for nonjoinder of necessary parties, inasmuch as the persons who had executed the bond were not made parties. They had also another contention that the other members of the committee were not in the party array. Therefore, the suit is bad for nonjoinder of parties. The other members of the committee were O.P.No.37987 of 2002-V 6 impleaded as defendants 12 to 17. The contention that the persons who executed the bond were also necessary parties was repelled saying that the cause of action in the case was the irregularity committed by the defendants. In that matter the executants of the bond were not necessary parties. In the proceedings after remand, defendant no.2 ie. the secretary as well as defendants 5 to 15 - the other committee members, were exparte. The non compliance of Rule 67 was also repelled. 6. The question whether there was any irregularity or fraud with intention to commit misappropriation was found against the petitioner and respondents 3 and 4. The petitioner, who was the president of the bank was found responsible for the overall control over the affairs of the bank and it was found that the very serious irregularities, fraud and misappropriation of amounts belonging to the bank occurred while the petitioner was the president of the bank and he cannot be absolved from the responsibilities. The petitioner's contentions that it was he who initiated action against the secretary on coming to know about the commission of irregularity and it was at his instance that the enquiry was ordered under Section 65 were discarded. It was found that the persons in the name of whom the bonds were seen O.P.No.37987 of 2002-V 7 executed were examined as PWs 3 to 60 and they deposed that they had not executed such bonds and they had not received money on the strength of those bonds. Arbitrator found that apart from the evidence adduced by examining the executants of the bond as witnesses, the bank did not produce any material to prove the transactions. 7. The Arbitrator also observed that the secretary had executed a bond in which he agreed that he owes a sum of Rs.24,730.71 to different members of the bank. In order to realise that amount, ARC.No.5 of 1971 was filed and a conditional order of attachment was passed in that ARC. But Sri Simon, the president of the bank who substituted the petitioner, did not appear in the arbitration court and the said ARC happened to be dismissed for default. Even though it was subsequently restored, the order of attachment was not revived. The Arbitrator observed that the conduct of Sri Simon who had locked the bank once and thereafter got elected as president of the bank did not show any interest in pursuing the ARC against the secretary, the 2[nd] defendant. The petitioner had a case that ARC.204/1972 was filed against him at the instance of the secretary and other staff of the bank. It is in that context that O.P.No.37987 of 2002-V 8 the conduct of Sri Simon was observed. The Arbitrator found that the President as well as the Secretary and other staff were responsible for the irregularities committed. All the bonds were seen executed in the name of the president and it was found that such a large number of bonds could not have been got executed by the staff of the bank without the knowledge of the petitioner. Moreover, the bond executed by the petitioner agreeing for taking up the responsibilities to remit the balance amount was also taken into consideration in order to find the petitioner responsible since in his capacity as President he was to be in overall control over the affairs of the bank while finding that the 3[rd] and 4[th] respondents therein who were clerks of the bank were performing their duties in tune with the directions of the president and secretary. However the 4[th] respondent who was undergoing training was held not liable. 8. The petitioner filed an appeal against Ext.P2 award. The members of the staff who were found responsible had also filed an appeal. By Ext.P4 judgment in A.P.No.28/1996, the Tribunal confirmed the findings in the ARC. The Tribunal also relied on Ext.P6 bond by which the petitioner admitted his responsibility to the tune of Rs.45,000/- and any further amount O.P.No.37987 of 2002-V 9 which may be found necessary in the future enquiry. The contention of the petitioner that it was executed under coercion was repelled saying that the petitioner would have informed the matter to the concerned authorities immediately thereafter or filed a complaint regarding the threat or coercion. It was further found that the property given in security was of the relatives of the petitioner and they also did not take up the matter; the petitioner had not taken any steps to get the expert opinion on the signature in the bonds which were found to be bogus; the infirmity in the evidence ceased to exist after examination of PWs 3 to 60 and on production of the bonds. From the evidence of PWs 1 to 60 misappropriation was found proved. Being the president of the bank the petitioner was found liable. It was further found that the petitioner had not adduced any evidence to prove the coercion exerted on him to execute Ext.P6 bond. Appeal was rejected saying that the case of the plaintiff in ARC was probable and there was no reason to interfere with the finding. 9. In the meanwhile, even before the revised award was passed as per Ext.P2, the enquiry commissioner and special Judge, Thrissur had acquitted the petitioner in C.C.No.24 of O.P.No.37987 of 2002-V 10 1975. At the same time, the 3[rd] respondent who was the secretary, the 4[th] respondent who was the clerk and 5[th] respondent who was the peon of the bank were convicted and sentenced with rigorous imprisonment for one year. The criminal case was instituted on the basis of the very same incident. Referring to the findings with respect to the allegation against the petitioner, the learned counsel for the petitioner submitted that the criminal court has already found that the petitioner has not committed any misappropriation. The circumstances under which the petitioner had executed the bond were also considered by the criminal court which refer to the involvement of Sri Simon who locked the bank and kept the bank closed for certain days. It was pointed out that he was having personal grudge against the petitioner, because petitioner's brother committed suicide while he was working in a financial concern of Sri Simon, when there was an allegation regarding theft in the bank run by Sri Simon. Sri. Simon implicated him for the theft and that was stated as the reason for suicide. The criminal court observed as follows: “In this connection the circumstances under which the first accused happened to be implicated may also have some relevance. The first accused and P.W.6 stated to belong to same family. PW6 as 11 O.P.No.37987 of 2002-V evidence disclosed was an influential person hailing from a respective family. But Pw6 and one first accused were not on cordial feelings. The reason as disclosed from the evidence of PW6 himself is that the first had a brother. PW6 was running a bank. There were several instance of thefts in his bank. When the theft were being investigated the first accused's brother happened to commit suicide on a tree situated in the compound of PW6. According to PW6 it was suspected that the first accused's brother had committed suicide on account of his involvement in the theft case. On the side of the first accused it was suggested. PW6 had some hand in the death of first accused's brother. Whatever it be PW6 admits that eversince then himself and the first accused were not on cordial terms, it is in this background the sequences of evidence that book place in the society has to be judged. There were complaints from the member of the Society that the second accused who was the Secretary was misappropriating funds. On 10.03.71 committee meeting was held and the first accused and others made a preliminary scrutiny of the records and it was disclosed that the second accused had committed misappropriation and the second accused was asked to execute a promissory note for a sum of 24,000/- On 12.08.71 or so the second accused executed a promissory note and he was suspended from the society. On the next day of this incident local people headed by Pw6 forcibly closed the society and took one key with him. The first accused was thereafter forced to resign the presidentship on 28 .03.71 pw6 who was not even a committee member was not nominated as a committee member by the Dy.Registrar and he was also elected as President on 27.C8.7l. The closure of the society was evidently with a view to get at the records of the society so as to help the second accused who had executed a promissory note on the previous day. But the first accused who was President then had kept custody of these papers and filed an arbitration proceedings against the second accused for realising the amount. It was under this circumstances that Pw6 became the President and it cannot be ruled out that pw6 would attempt to implicate the first accused in this case. With that object in mind it is natural that - A2 to A4 could have been made to implicate the first accused in these statements as the person responsible for the misappropriation of funds. The fact that A1 had executed a registered bond for Rs.45,000/- to the Society will not be a pointer or a piece of evidence to conclude that he misappropriated the funds of the society. But the conduct of the first accused would prove otherwise. Even the section 65 enquiry was initiated at the instance of the first accused is disclosed from the records in this case and spoken to by pw..10/- If first accused was the person who had misappropriated the funds it is not normal to expect that he would initiate an enquiry under section 65 of the co-operative societies Act. Taking all these aspects into consideration I am not satisfied that the prosecution had made out the case against the first accused as being involved in the misappropriation of funds in the society.” ## 10. Criminal court found that Sri Simon had closed the bank with a view to get the records of the society in order to help O.P.No.37987 of 2002-V 12 the secretary of the bank, because it was the petitioner who had placed the Secretary under suspension and got a bond executed by him for taking up the responsibility for the loss caused to the bank to the tune of Rs.24,000/-. At the same time the enquiry commissioner found that the execution of the bond by the petitioner cannot be considered as a factor to conclude that he misappropriated the funds of the society, when it was the petitioner who requested for enquiry under Section 65. The petitioner was acquitted on the basis of evidence. Relying on this portion of the judgment and pointing out that the arbitration court did not follow any procedure in examination of witnesses or marking of documents, this writ petition is filed challenging the judgment Ext.P4. It is stated that immediately after the judgment in the appeal, the revenue recovery proceedings were initiated and certain movables were taken away from the house of the petitioner. 11. The petitioner has produced copies of the depositions of witnesses as additional documents. Ext.P16 is the copy of the deposition of the petitioner. Ext.P16 shows that the Arbitrator has simply recorded the questions and answers as such without following the procedure under the Evidence Act. The complaint O.P.No.37987 of 2002-V 13 of the petitioner is that the entire procedure adopted by the Arbitrator from the stage of administering oath itself is not correct. According to the petitioner, the bond was executed in the office of the Panchayat under compulsion, on 25.08.1971, which is evident from the deposition of Sri K.T.Johnson, a witness, which is produced as Ext.P17. According to him there was serious hue and cry from among the customers, since the Bank was kept locked; there were large number of people gathered in the premises of the Panchayat office and it was under the above circumstances that the petitioner had executed the bond. 12. Heard the learned counsel for the petitioner Sri V.G.Arun, the learned counsel for the 2[nd] respondent bank Sri P.N.Mohanan, the learned counsel for the 3[rd] respondent Sri P.V.Baby and the learned Government Pleader. 13. The main contentions raised in the writ petition are that the arbitrator as well as the Tribunal found the petitioner responsible for the loss sustained by the society on account of misappropriation, in the absence of any evidence; the procedures adopted by the arbitrator in examining the witnesses, recording of evidence etc. are not in accordance with the Evidence Act; the O.P.No.37987 of 2002-V 14 criminal court has, in respect of the very same incident on the basis of the evidence adduced, found that the charge of misappropriation cannot stand against the petitioner. In those circumstances, the findings in Exts.P2 and P4 are not based on legal evidence or relevant materials and hence the award and judgment are liable to be set aside. 14. The contention of the respondents is that the award passed by the Arbitrator is confirmed by the Tribunal on the basis of findings on facts. Therefore the scope of interference of this court under Article 226 is very limited. The circumstance warranting interference do not arise in a case where there are concurrent findings. According to the respondents it is on the basis of the evidence adduced before the enquiry under section 65 and thereafter before the Arbitrator that the petitioner and others were found liable. Therefore, there cannot be any interference, once those findings are upheld by the Tribunal. 15. The case of the petitioner is that it was merely on the basis of Ext.P6 bond which the petitioner was forced to execute, that he has been found liable and there is no reason to fasten the liability on the petitioner who initiated action immediately on coming to know about the irregularities. O.P.No.37987 of 2002-V 15 16. On the other hand, the contention of the respondents is that being the President of a co-operative society, he is responsible to look after the affairs of the society as provided under Rule 54 of the Co-operative Societies Rules. But according to the petitioner, all the committee members are having collective responsibility and the role of the President with respect to the provisions contained in the bye-laws is nowhere considered in the award. The provisions under Act or Rules do not provide that the maintenance and custody of registers are with the President. On the other hand, the responsibility is on the secretary for maintenance and custody of registers. In his capacity as president he has done everything to safeguard the interest of the bank. It is also the case of the petitioner that none of the witnesses deposed that the petitioner committed misappropriation and there is also no evidence to show involvement of the petitioner in the execution of the false bonds. The contention of the respondents is that there is sufficient evidence to support the case of the 2[nd] respondent bank as against the petitioner and the petitioner has failed to perform his duty under Rule 47 and 54 of the Co-operative Societies Rules. In this context it is relevant to examine the relevant rules relied O.P.No.37987 of 2002-V 16 on by the parties. Rule 47 provides for the custody of cash, ## security, records etc. of a society which read as follows: “ **47. Custody of cash, securities, records, seal etc. of a society.-** (a) It shall be the duty of the paid Secretary /Manager of every society to maintain and keep in proper form all the accounts, registers, other records and the seal of the society, under his safe custody and shall be personally responsible for their safety. He shall also be the custodian of cash, securities and all other properties of the society subject to the overall control of the President. c)If there is no paid Secretary/Manager it shall be duty of the President to arrange to maintain the accounts and registers in proper form and to keep the cash balance and other assets including bonds and securities under safe custody. He will also act as Treasurer of the society in cases where there are no specific provisions in the bye-laws to elect or appoint a Treasurer. Where there are other arrangements for the safe custody of the cash balance by the Secretary and the cashier under double lock system the responsibility to account for the cash balance to the committee will be that of the Secretary. ci)'The President and Secretary/Manager/Treasurer or President where there is no paid Secretary/Manager/Treasurer] shall be bound to produce the records, cash balances and other assets, before the officers of the Department and other persons authorized by the Registrar by general or special order for verification, inspection or inquiry, etc. cii) **Notwithstanding anything contained in the above clauses, the committee of the society shall prilimarily be responsible for the maintenance and safety of all accounts, records, cash and other assets of the society. It shall be the duty of the committee to see that the Officers concerned discharge their functions and perform their duties as laid down in these rules and the bye-laws.** (e) It is the responsibility of the Chief Executive to see that all the registers and accounts are written up properly and completely and produced for audit within a period of three months on completion of the accounting year. Any lapse on the part of the Chief Executive in this regard will be considered as an offence under sub-section (4) 4[and sub - section (5)] of section 94 of the Act].” Thus it can be seen that while it is the personal responsibility of the secretary of every society to maintain and keep all the accounts, registers and other records of the society under his O.P.No.37987 of 2002-V 17 safe custody and he should be the custodian of cash, security and all other properties in the society, everything should be under the overall control of the president. It further provides that the committee of the societies is primarily responsible for the maintenance and safety of all records and accounts. Relying on the judgment of this court in **Thrikkadavoor Service Cooperative Society Ltd. v. Sivasankara Pillai** [1990 (2) KLT 594], the learned counsel for the 2[nd] respondent bank argued that this court has already held, after considering the provisions contained in Rule 47, that the duty is of the president of the bank to arrange to maintain accounts and registers in the proper form. 17. In that case the cooperative tribunal had exonerated the committee members while fastening the liability on the secretary of the bank. Referring to the provisions contained in Rule 47(b) of the Rules, this court found that it is the duty of the president of the society to arrange to maintain accounts and registers in proper form and to keep the cash balance and other assets under safe custody and he has to act as a treasurer of the society if there is no provision in the bye-law to elect or appoint a treasurer. Under sub clause (d), the committee of the society shall be primarily responsible for the maintenance and safety of O.P.No.37987 of 2002-V 18 all accounts, records, cash and other assets of the society. Therefore, a statutory duty is cast on the committee of the society for the proper custody and accounting of the cash and other assets of the society and they are answerable for any misappropriation of the same during their tenure. There several receipts were seen manipulated and concocted. However, it was a case where the arbitrator had found the liability on the members of the committee; but the co-operative tribunal absolved the members of the committee. Accordingly, the judgment of the co-operative tribunal to the extent it absolved the members of the committee was set aside. In this case, the President alone has been made responsible and other members of the committee are absolved, even though under sub clause (d) of Rule 47 it is their responsibility to keep in safe custody all the accounts and records. 18. The powers of the Arbitrator in dealing with the disputes is provided in Chapter IX of the Co-operative Societies Rules. Rule 67(5) provides that the arbitration court shall have the power to administer oaths, to require the attendance of all parties concerned and of witnesses and to require the production of all books and documents relating to the matter of the dispute. O.P.No.37987 of 2002-V 19 Clause (6) therein provides that the Arbitrator can also summon and examine any person as a witness and issue commissions for examination of witnesses which he feels necessary for disposing of the dispute. Clause 7(a) provides that the Arbitrator shall record a brief note in English or in the vernacular language of the evidence of the parties to the disputes and witnesses who attend, and upon the evidence so recorded and after consideration of any documentary evidence produced by the parties a decision or, award, as the case shall be given in accordance with justice, equity and good conscience. It is common case that the Joint Registrars/Arbitrators do not record the deposition properly and in accordance with rules. 19. The learned counsel for the Bank relied on the judgment of this court in **David.T.K v. Kuruppumpady Service Co-operative Bank and Ors.** [2015(2) KHC 301] and contended that under Article 226 of the Constitution of India, this court cannot conduct a rowing enquiry into the factual situation on which there are concurrent findings by the statutory authorities. Further the judgment of the apex court in **The State of Madras v. G.Sundaram** [AIR 1965 SC 1103] was relied on in support of the contention that interference against concurrent findings of 20 O.P.No.37987 of 2002-V facts, is not envisaged under article 226. The apex court was considering a case relating to the punishment awarded under Madras Civil Service (Disciplinary Proceedings) Tribunal Rules 1948. There the disciplinary proceedings were initiated against an Inspector of Police in Madras State on allegation that he demanded bribe. In the enquiry report certain charges framed against him were found proved, and dismissal from service was recommended. The Government thereafter ordered compulsory retirement of the employee. The employee thereupon approached the High Court. The writ petition was dismissed. But in the judgment in the Writ Appeal, it was found that evidence was not sufficient to prove that petitioner demanded or accepted bribe and hence the appeal was allowed. The apex court, while considering the appeal filed by the State of Madras held that the High Court, while exercising jurisdiction under Article 226, cannot sit in appeal over the findings of fact recorded by a competent Tribunal in a properly conducted departmental enquiry. It was further found that the question whether the evidence was sufficient or satisfactory was not a factor for consideration in a writ petition as the High Court was not a court of appeal over the decision of the authorities. When O.P.No.37987 of 2002-V 21 there is some evidence to support the charges against the delinquent, it is not the function of the High Court to review the evidence and to arrive at an independent finding. Hence the order of compulsory retirement was upheld and the judgment of the High Court was set aside. 20. In the judgment in **David** (supra) this court was considering the scope of interference with the factual findings of the Tribunal. It was a case where the judgment of the Cooperative Tribunal was challenged. Referring to the judgment of the apex court in **Shama Prashanth Raje V Ganapat Rao & others** : AIR 2000 SC 3094, it was held that the jurisdiction of the High Court is supervisory and not appellate and Article 226 does not enable the High Court to convert itself to an appellate court in order to examine the correctness of the decision impugned. However, it was held therein that if on a mere perusal of the order of the Tribunal, the High Court comes to a conclusion that the Tribunal has committed manifest error by misconstruing certain documents or the High Court comes to a conclusion that it is not possible for a reasonable man to come to a conclusion arrived at by the Tribunal, on the basis of the materials before it, the High Court will be fully justified in O.P.No.37987 of 2002-V 22 interfering with the findings of the Tribunal. In that case it was found that no manifest error in the proceedings was pointed out and the judgment was not patently unreasonable or tainted with perversity so as to interfere under Article 226. 21. As far as the present case is concerned, the case of the petitioner is that being the President of the 2[nd] respondent bank he was the person who placed the Secretary and Clerk of the bank under suspension on coming to know about the misappropriation committed by them and requested for an enquiry under Section 65 of the Act. But the enquiry report found the petitioner, involved in the misappropriation seeing that the bonds were executed in the name of the president and the petitioner executed a bond taking the responsibility to compensate the loss sustained. The contention is that the testimony of PWs 3 to 60 cannot be relied on since the Arbitrator has recorded only statements from the witnesses. The deposition of some of the witnesses are produced as Ext.P18 series. Ext.P18 is the deposition of one Sri Varkey Pillai, who stated that he had not executed any bond and he is a person who has availed several loans and he had only received a summons from the crime branch and nobody else had questioned him. The O.P.No.37987 of 2002-V 23 list of persons who executed the bonds contains the name of Sri Varkey Pillai also. Ext.P18(a) is the deposition of another witness Sri K.S.Thomas. He disowned his signature in a bond in respect of a sum of Rs.1,900/- numbered as S.T.1830/71. He stated that he had availed loan from the bank but he was not able to furnish the date or year in which the loan was availed. Ext.P18(b) is the deposition of one Sri Viswanathan with respect to loan No.S.T.1874 for a sum of Rs.1,000/-. He deposed that he had not availed such a loan and the signature in the bond was not affixed by him. These documents show that chief examination as well as cross examination were done and their depositions were recorded as question and answers. It is true, as contended by the learned counsel for the petitioner, that the Arbitrator has not followed the procedure for recording the evidence. Similarly another contention raised was that the award of the arbitrator does not contain the appendix showing the details of the witnesses examined and the documents marked. It is true that such procedural irregularities should not have occurred. Arbitrators are having all the powers as in the case of civil court as provided in Rule 67 of the Rules. But those irregularities cannot resolve the issue arising in this case. O.P.No.37987 of 2002-V 24 22. The question arising in this case is whether the findings of the Arbitrator which is confirmed by the co-operative tribunal is liable to be interfered with or not. The testimony of the witnesses examined before the Arbitrator, as made available before this court, does not indicate the personal involvement of the petitioner anywhere in the execution of the false bonds alleged to have been executed. The only document involving the petitioner is the bond executed by the petitioner himself, which is produced as Ext.P6 in which the petitioner as on 28.06.1971, undertook the responsibility towards misappropriation committed by the secretary and clerk for the amount misappropriated in excess of the amount covered by the bond executed by the secretary. The execution of the bond is admitted by the petitioner. His case is that it was executed under coercion. The circumstances under which the petitioner had to execute the bond is considered in the judgment Ext.P3 by the Enquiry Commissioner and Special Judge, while acquitting him. The Arbitrator did not accept the contention as to coercion, seeing that the petitioner or the owner of the property which was given in security for the bond did not raise any complaint before the appropriate authorities at the relevant time. But the 25 O.P.No.37987 of 2002-V criminal court found that the petitioner has not committed misappropriation, accepting the contention as to coercion, considering the circumstances under which it was executed. However, the arbitrator found that the president of the bank was in overall control of the society and therefore, he was responsible for the misappropriation. Apart from Ext.P6 bond and the statutory responsibility under Rule 47, there is nothing to connect the petitioner with the misappropriation. Though the judgment of the criminal court on the question of misappropriation and execution of bond was with reference to the crime registered against him, the Arbitrator cannot have a different view with reference to the very same issue on Ext.P6 bond. Therefore no action can be taken against the petitioner, on the basis of the bond Ext P6. 23. However the statutory responsibility of a president of a bank under Rule 47 did not come up for consideration before the criminal court. On a reading of Rule 47, as interpreted by this court in the judgment **Thrikkadavoor Service Cooperative Society Ltd.** (supra), it can be seen that the members of the committee cannot be absolved from the responsibility, when a secretary is found to have committed misappropriation. O.P.No.37987 of 2002-V 26 Clause (d) of Rule 47 makes the committee of the society responsible for the maintenance and safety of all records, cash and other accounts of the society and to see that the officers concerned discharge their functions and their duties as per the rules and bye-laws. Clause (d) of Rule 47 is a non obstante clause. Therefore, there was no reason for imposing the liability on the president alone just because he executed a bond Ext.P5. I am unable to find anything in this judgment to fasten the liability on the President alone, as contended by the learned Counsel for the Bank. The judgment of this court is to the effect that the members of the committee will be equally responsible. The provision in Rule 47(d) starting with a non-obstante clause fastens the liability on all the members of the committee. Therefore, to that extent, the finding of the Arbitrator as well as the tribunal cannot be said to be in terms of the Rules. Therefore, the impugned orders Exts.P2 and P4 to the extent it makes the petitioner alone, among the members of the committee, responsible for the loss sustained by the bank is unsustainable. Accordingly, the award Ext.P2 and the judgment Ext.P4 to the extent it relates to the petitioner are set aside. It will be open for the 2[nd] respondent bank to seek appropriate O.P.No.37987 of 2002-V 27 follow up action in terms of this judgment. Accordingly, the original petition is allowed in part. Sd/- **(P.V.ASHA, JUDGE)** rtr/