# Raj Kishore Dhaon v. Registrar Co-Operative Societies U.P. Lko. & Ors

- **Citation:** (2023) 4 ILRA 654
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-03-24
- **Case number:** Writ-C No. 1007386 of 2009
- **Bench:** Karunesh Singh Pawar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/raj-kishore-dhaon-v-registrar-co-operative-societies-u-p-lko-ors-49999
- **Pages:** 7

## Headnote

A. UP Cooperative Societies Act, 1965 -
Section 68 - Surcharge -Payment of exgratia - Loss to the Bank occurred -
Surcharge imposed - Legality challenged
- No notice was given - Effect - The
petitioner admittedly has not been held
responsible in the enquiry report. Only
order for recovery has been passed. In the
enquiry report the name of the petitioner
has
been
inserted
by
interpolation/overwriting - Effect - Held,
there is also no finding in the enquiry
report or in the show cause notice that the
petitioner
is
liable
for
causing
the
payment of ex-gratia of 1995-96, hence,
for this reason surcharge cannot be
imposed. (Para 15 and 16)
Writ petition allowed. (E-1)
List of Cases cited:
Raghunandan Prasad Pandey & ors. Vs The CoOperative Tribunal Lucknow & ors.; 1982 SCC
OnLine All 913

## Text

654 INDIAN LAW REPORTS ALLAHABAD SERIES
occurring in Section 14-B is, in substance,
a penalty imposed on the employer for
the breach of the statutory obligation. The
object of imposition of penalty under
Section 14-B is not merely "to provide
compensation for the employees". The
imposition of damages under Section 14B serves both the purposes. It is meant to
penalise defaulting employer as also to
provide reparation for the amount of loss
suffered by the employees. It is not only a
warning to employers in general not to
commit
a
breach
of
the
statutory
requirements of Section 6, but at the same
time it is meant to provide compensation
or redress to the beneficiaries i.e. to
recompense the employees for the loss
sustained by them.

20. In the light of aforesaid
discussion, this Court is of the opinion
that the respondent no.1 has rightly
passed
the
impugned
order
dated
22.01.1999 under section 14-B of the
EPF & MP Act, 1952. Therefore, the writ
petition lacks merit and is liable to be
dismissed.

21. Accordingly, the writ petition is
dismissed. Stay order, if any, shall stand
vacated.
----------
(2023) 4 ILRA 654
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 24.03.2023

BEFORE

THE HON'BLE KARUNESH SINGH PAWAR, J.

Writ-C No. 1007386 of 2009

Raj Kishore Dhaon ...Petitioner
Versus
Registrar Co-Operative Societies U.P. Lko.
& Ors. ...Respondents
Counsel for the Petitioner:
Anurag Kumar Singh

Counsel for the Respondents:
C.S.C.

A. UP Cooperative Societies Act, 1965 -
Section 68 - Surcharge -Payment of exgratia - Loss to the Bank occurred -
Surcharge imposed - Legality challenged
- No notice was given - Effect - The
petitioner admittedly has not been held
responsible in the enquiry report. Only
order for recovery has been passed. In the
enquiry report the name of the petitioner
has
been
inserted
by
interpolation/overwriting - Effect - Held,
there is also no finding in the enquiry
report or in the show cause notice that the
petitioner
is
liable
for
causing
the
payment of ex-gratia of 1995-96, hence,
for this reason surcharge cannot be
imposed. (Para 15 and 16)
Writ petition allowed. (E-1)
List of Cases cited:
Raghunandan Prasad Pandey & ors. Vs The CoOperative Tribunal Lucknow & ors.; 1982 SCC
OnLine All 913

(Delivered by Hon'ble Karunesh Singh
Pawar, J.)

1. Heard Shri Anurag Kumar Singh,
learned Counsel for the petitioner and Shri
P.C.Rai,
learned
Counsel
for
the
State/respondent as well as perused the
record.

2. The petitioner has assailed the
impugned order dated 14.10.2009 passed
by U.P. Cooperative Tribunal, Lucknow by
which surcharge, in exercise of power
under Section 68(2) of the U.P. Cooperative
Societies Act, 1965 (in short hereinafter
referred to as 'Act') has been imposed upon
the petitioner and he has been directed to
4 All. Raj Kishor Dhaon Vs. Registrar Co-operative Societies U.P. Lko. & Ors.
655
pay a sum of Rs.33,56,479/- along with
interest. The appeal filed by the petitioner
has also been dismissed vide order dated
17.4.2022 which is also impugned in this
petition.

3. Learned counsel for the petitioner
submits that vide order dated 19.6.1986 the
Registrar,
Cooperative
Societies
U.P.
directed for payment of ex-gratia to
employees of Cooperative Societies. This
direction of the Registrar was only for
Financial year 1984-85 however the same
continued to be paid to the employees
thereafter.
On
27.4.1995
while
the
petitioner was posted as Secretary/General
Manager,
District
Cooperative
Bank
Limited,
Lakhimpur
Kheri
when
Committee of Management of the Bank
passed a resolution for payment of exgratia for financial year 1994-95 to its
employees. Thereafter it appears that on
10.05.1995
Registrar,
Cooperative
Societies U.P. issued an order directing to
Secretary
General
Manager,
U.P.
Cooperative Bank not to provide facility of
bonus or ex-gratia to the employees. This
order dated 10.5.1995 was received in the
office
of
District
Cooperative
Bank
Limited. Lakhimpur Kheri on 02.06.1995.
The petitioner has not taken any action for
implementation
of
resolution
dated
27.04.1995 and no payment of ex-gratia
was made to the employees for financial
year 1994-95 or till the time the petitioner
was posted at the Society concerned. In the
meantime on 04.08.1995 the petitioner was
transferred to Moradabad. The petitioner
proceeded
on
leave
on
09.08.1995.
Thereafter vide order dated 19.8.1995,
order dated 04.08.1995 was amended and
the petitioner stood transferred to Hardoi as
Secretary/
General
Manager,
District
Cooperative Bank Limited, Hardoi. On
24.08.1995 the petitioner was relieved from
District
Cooperative
Bank
Limited,
Lakhimpur Kheri and one Surendra Singh
Sengar took charge ofSecretary/General
Manager on 14.10.1995. The Committee of
Management of the Bank, while Surendra
Singh Sengar, Secretary/General Manager
was posted as Secretary of the Society,
passed a resolution while considering the
circular of the Registrar dated 10.05.1995
and proceeded to pay ex-gratia to the
employees citing the reason that it was
being paid in previous years and the Bank
was in profit ignoring the fact that there is
clear prohibition in the resolution of the
Registrar dated 10.5.1995. The audit
objection was raised in the special audit of
the Bank pertaining to financial year 199596 and 1996-97 and Surendra Singh Sengar
was held responsible for the payment of exgratia in 1995-96 and 1996-97 pertaining to
the corresponding two previous years
(Annexure- 10). Thereafter an enquiry
under Section under Section 68(1) of the
Act
was
conducted
and
the
report
submitted by the Enquiry Officer which
holds Surendra Singh Sengar responsible
for making payment of ex-gratia and
causing the entire loss to the Bank of an
amount of Rs. 78,42,167/-. Although the
petitioner was not held responsible for
causing loss to the Bank in the body of the
enquiry report. However the name has been
inserted
by
making
overwriting/interpolation by hand in the
typed enquiry report (Annexure 11). It is
worthwhile to mention that the then
Committee of Management of the Bank
was also held responsible in the enquiry
under Section 68(1) of the Act. On
23.01.2006 a show cause notice was issued
to the petitioner however, incorrect figures
were mentioned against the name of the
petitioner and the petitioner was given
show cause notice for payment of bonus in
1996-97 and payment of ex-gratia in 1996-
656 INDIAN LAW REPORTS ALLAHABAD SERIES
97 when he was not even posted in the
Bank. A reply was submitted by the
petitioner on 07.11.2006 (Annexure SCA-1
to the Supp. Counter Affidiavt) to the show
cause notice wherein he has asserted that he
has not made any payment after the order
dated 10.05.1995 and has followed the
order passed by the Registrar. Admittedly
there is no direction of the Registrar for
annulment of any resolution of Committee
of Management during the tenure of the
petitioner, direction is only not to make
payment (Annexure 12).

4. Learned counsel for the petitioner
further submits that order under Section 68
(2) of the U.P. Cooperative Societies Act,
1965 has been passed imposing surcharge
and directing the petitioner to make
payment of Rs. 35,56,479/- along with
interest.

5. He submits that although in the
inquiry report Committee of Management,
which had passed the resolution dated
27.04.1995, has been held responsible,
however, while passing order under Section
68 (2) of the U.P. Cooperative Societies
Act, 1965 it has been exonerated without
recording any finding for this.

6. It has also been submitted by
learned counsel for the petitioner that no
show cause notice for making payment of
Rs. 35,56,479/- has been given to the
petitioner rather a show cause notice given
to the petitioner is for different figure.
Thus, show cause notice also has been
issued without application of mind. The
appeal filed by the petitioner i.e. Appeal
No. 81/2007 before the U.P. Cooperative
Tribunal has been dismissed without
considering the relevant facts and merely
on the fact that the appeal filed by Surendra
Singh Sengar was dismissed.

7. Per contra, learned Standing
Counsel has opposed the petition and
submitted that the petitioner was under
obligation to annul the resolution dated
27.4.1995 and by passing the resolution
and being part of the resolution dated
27.4.1995 he has caused loss to the society.

8. I have considered the submissions
of learned counsel for the parties.

9. The provision of Surcharge defined
under Section 68 of the U.P. Cooperative
Societies Act, 1965 is extracted below:-

"68. Surcharge. - (1) If in the course of
an audit inspection or the winding up a cooperative society it is found that any
person, who is or was entrusted with the
organisation or management of such
society or who is or has at any time been
an officer or an employee of the society,
has made or caused to be made any
payment contrary to this Act, the rules or
the bye-laws or has caused any deficiency
in the assets of the society by breach of
trust
or
wilful
negligence
or
has
misappropriated or fraudulently retained
any money or other property belonging to
such Society, the Registrar may of his own
motion or on the application of the
committee, liquidator or any creditor,
inquire himself or direct any person
authorised by him by an order in writing in
this behalf to inquire into the conduct of
such person:

Provided that no such inquiry shall be
commenced after the expiry of twelve years
from the date of any act or omission
referred to in this sub-section.

(2) Where an inquiry is made under
sub-section (1) the Registrar may after
affording
the
person
concerned
a
reasonable opportunity of being heard,
made an order of surcharge requiring him
4 All. Raj Kishor Dhaon Vs. Registrar Co-operative Societies U.P. Lko. & Ors.
657
to restore the property or repay the money
or any part thereof, with interest at such
rate, or to pay contribution and costs or
compensation to such an extent, as the
Registrar may consider just and equitable.
(3) Where an order of surcharge has been
passed against a person under sub-section
(2) for having caused any deficiency in the
assets of the society by breach of trust or
willful
negligence,
or
for
having
misappropriated or fraudulently retained
any money or other property belonging to
such society, such person shall, subject to
the result of appeal, if any field against
such order, be disqualified from continuing
in or being elected or appointed to an
office in any co-operative society for a
period of five years from the date of the
order of surcharge."

10. A perusal of sub-section 1 of
Section 68 of the Act shows that in the
course of audit inspection or the winding
up a co-operative society it is found that
any person, who is or was entrusted with
the organization or management of such
society or who is or has at any time been an
officer or an employee of the society, has
made or caused to be made any payment
contrary to this Act, the rules or the byelaws of the society or caused any
deficiency in the assets of the society the
Registrar may of his own motion or on the
application of the committee, liquidator or
any creditor, inquire himself or direct any
person authorized by him by an order in
writing in this behalf to inquire into the
conduct of such person.

11. It is lastly submitted by learned
counsel for the petitioner that mere
existence of willful negligence cannot be
inferred on the mere footing that the society
suffered loss. There has to be some basis
for the authority or the tribunal to arrive at
the finding that the petitioner had either
caused or caused to be made financial loss
to the society. In support of his submission
he has relied on the judgement of this Court
in the case of Raghunandan Prasad
Pandey and Others Vs. The Co-Operative
Tribunal Lucknow and Others reported in
1982 SCC OnLine All 913. Emphasis is on
paragraphs 8 and 9 of the judgement.

12. Relevant paragraphs 8 and 9 of
the Raghunandan Prasad Pandey (supra)
are extracted below:-

8. In the instant case there is no
averment by the respondents to the effect
that the petitioners made or caused to be
made any payment contrary to the Act,
Rules or Bye-laws. It is also not alleged
that the petitioners or any of them
misappropriated or fraudulently retained
any money or other property belonging to
the society. Reliance placed by the learned
Standing counsel would seem to be
exclusively on the provision relating to the
person concerned having caused deficiency
in the assets of the society by wilful
negligence. There is no element of breach
of trust attributed to any of the petitioners.
In relation to wilful negligence, the words
?Wilful?
and
?Wilfully?
have
been
frequently used in many statutes and have
come up for judicial consideration in the
courts time and again. In Ramchandra v.
State of Mysore (AIR 1964 SC 1701) :
(1964 All LJ 822), in the context of S. 53 of
the Indian Post Office Act, 1898, after a
review, of the authorities the Supreme
Court observed that not infrequently the
word ?wilful? or ?wilfully? has been used
to mean that the act had been done with a
bad purpose or without justifiable excuse
or stubbornly, obstinately or perversely.
9. In the show cause notice issued on Sept.
25, 1974 in the instant case, there appears
658 INDIAN LAW REPORTS ALLAHABAD SERIES
no charge made to wilful negligence
against the petitioners. The order made by
the
District
Assistant
Registrar,
Cooperative Societies, Banda, dated Dec. 30,
1974 is also silent in relation to any act of
the wilful negligence. The District Assistant
Registrar seems indeed to have had in view
R. 115 of the U.P. Co-operative Societies
Rules, 1965, according to which in the
conduct of the affairs of the Co-operative
Society, every member of the committee of
management shall exercise prudence and
diligence of an ordinary man of business,
shall not perform any act contrary to the
provisions of the Act, Rules and Bye-laws
of the Society and shall not default in the
performance of the duties entrusted under
the Act, Rules or Bye-laws of the society.
Assuming that there was lack of exercise of
due prudence and diligence on the part of
the petitioners in this case, there is no
liability for surcharge imposed under S. 68
merely on that account. The existence on
wilful negligence may not be inferred on
the mere footing that the Society suffered
loss to the tune of Rs. 5166.52 as the
Tribunal seems to have thought in this case.
The order made by the Tribunal does not
indicate the basis for arriving at this
finding except that there is a reference
made to the balance sheet of the Society of
the relevant year. The relevant content of
the balance sheet are explained in the
affidavit accompanying the petition which
are not countered specifically on the other
side. The decision taken to enter into an
agreement for proceeding with Lakhan
Singh Narbada Prasad was under a
resolution passed by the Committee of
Management and there is no finding
recorded to the effect that the petitioners
individually or collectively were guilty of
wilful negligence in the matter of this
agreement being entered into or the same
being operated upon. It was also submitted
for the petitioners that there is no case of
any deficiency caused in the assets of the
society. The question is whether the order
of surcharge could be passed under S. 68
against the members of the Committee of
Management for the loss suffered by the
society in carrying out the trade or
business concerned. Assuming that upon
the facts and circumstances of a case, it is
possible to do so, for which we need
express no opinion herein, the existence of
wilful negligence or breach of trust or
misappropriation etc., as the case may be,
in accordance with sub-s. (1) of S. 68
remains indispensable.

13. In the case in hand, the petitioner
was posted as Secretary/General Manager
of the Society on 27.4.1995 wherein the
resolution for payment of ex-gratia for
financial year 1994-95 to its employee was
passed. The restraining order by the
Registrar dated 10.5.1995 was passed
wherein all the District Cooperative banks
of the State were directed not to provide
facility of bonus or ex-gratia to the
employees. The petitioner was admittedly
transferred and relieved from the District
Cooperative Bank Lakhimpur Kheri on
24.8.1995. After the transfer of the
petitioner taking note of the order of the
Registrar the resolution dated 14.10.1995
appears to have been passed by which
decision was taken to pay ex-gratia to the
employees of the society/bank on the
ground that it was being paid in the
previous years and the bank was in profit.

14. The submission of learned
Standing Counsel that by the resolution
dated 27.4.1995 the petitioner has made or
caused to be made any payment contrary to
the Act appears to be incorrect as after the
resolution dated 27.4.1995 the petitioner
was transferred from the society and was
4 All. Raj Kishor Dhaon Vs. Registrar Co-operative Societies U.P. Lko. & Ors.
659
relieved on 24.8.1995. Thereafter on
14.10.1995 the resolution was passed,
when Surendra Singh Sengar was the
Secretary/General Manager taking note of
the restraining order of the Registrar dated
10.5.1995, had decided to pay ex-gratia to
the employees stating the reason that it was
being paid in previous years and the bank
was in profit. Thus, ex-facie it is clear from
the resolution dated 14.10.1995 that the
payment of ex-gratia was made to the
employees as a consequence to the
resolution dated 14.10.1995 which while
passing said resolution has taken note of
the order of the Registrar dated 10.5.1995,
therefore, submission to the extent that the
petitioner has caused to be made any
payment contrary to the Act is not correct.
It appears from the show cause notice that
show cause notice was given to the
petitioner for causing loss to the tune of
Rs.42,85,608/-,
however,
as
per
the
admitted case no show cause notice for the
penalty imposed to the petitioner i.e.
Rs.35,56,479/- has been given.

15. So far as second submission of
learned Standing counsel that the petitioner,
while posted as Secretary of the Society,
has failed to get the resolution dated
27.4.1995 annulled also appears to be
incorrect as Section 128 of the U.P.
Cooperative Societies Act does not impose
any obligation on the secretary of the
Society. Only the Registrar can exercise
power under Section 128 of the U.P.
Cooperative Societies Act for annulling the
resolution passed by the society. It is thus
clear that payment has not been made
pursuant
to
the
resolution
dated
27.10.1995. The payment has also not been
made during the tenure of the petitioner in
the district Lakhimpur Kheri. On the
contrary the payment has been made in
pursuance
to
the
resolution
dated
14.10.1995 even the circular letter dated
10.5.1995
does
not
direct
any
Secretary/General Manager to refer the
resolutions passed by the Board of the
Bank for payment of ex-gratia to the
Registrar under Section 128 of the Act for
annulment. The Board in its resolution has
considered the order of the Registrar dated
10.5.1995 and despite the bar has decided
to pay the ex-gratia to the employees. It is
also evident that payment of ex-gratia for
the financial year 1995-96 and 1996-97 has
been made during the tenure of Surendra
Singh Sengar thus from the discussion
made hereinabove it is clear that nonreferral of the resolution of the committee
of management dated 27.4.1995 to the
Registrar under Section 128 of the Act
cannot be construed that the petitioner has
caused financial loss or caused to be made
the financial loss to the society. Further, no
surcharge
has
been
imposed
on
the
committee of management or its members.
The petitioner admittedly has not been held
responsible in the enquiry report. Only order
for recovery has been passed. In the enquiry
report the name of the petitioner has been
inserted by interpolation/overwriting. The
committee
of
management
has
been
exonerated in the final order dated 17.4.2007
without recording any finding. The surcharge
has
been
imposed
for
payment
of
Rs.35,56,479/- for which no show-cause
notice, admittedly, have been given to the
petitioner.

16. There is also no finding in the
enquiry report or in the show cause notice
dated 23.1.2006 that the petitioner is liable
for causing the payment of ex-gratia of 199596, hence, for this reason surcharge cannot be
imposed.

17. Considering the above, the
petition is allowed. The impugned orders
660 INDIAN LAW REPORTS ALLAHABAD SERIES
dated 14.10.2009 passed by respondent
no.3
and
17.4.2007
passed
by
the
respondent no.2 are hereby quashed.
----------
(2023) 4 ILRA 660
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 04.04.2023

BEFORE

THE HON'BLE JASPREET SINGH, J.

Writ-C No. 3001168 of 1980

State of U.P. ...Petitioner
Versus
Kailash Nath & Ors. ...Respondents

Counsel for the Petitioner:
C.S.C.

Counsel for the Respondents:
B.R. Tripathi, Rajeiu Kumar Tripathi

Civil Law-U.P. Imposition of Ceiling on
Land Holdings Act, 1960-Sections 37, 38 -
Code of Civil Procedure, 1908-Section 96,
Order-41
Rule
31-Writ
petition
challenging the order passed in Ceiling
Appeal
whereby
the
order
declaring
surplus land of tenure holder was set
aside -Appellate Authority to considered
the appeal in the manner as provided
under Order 41 Rule 31 of the CPCFindings recorded by the first Appellate
authority in respect of Will, sale deed and
adoption deed not supported by clear and
cogent evidence-Findings recorded by the
Prescribed Authority not considered by
the
Appellate
Court
in
its
correct
perspective nor any reason has been
incorporated why the conclusion of the
Prescribed Authority were erroneous nor
the findings of the Prescribed Authority
have
been
reversed.
Result-Matter
remitted to Appellate Authority.

Writ Petition allowed. (E-15)

List of Cases cited:

1. Sudarsan Puhan Vs Jayanta Ku. Mohanty &
ors. reported in (2018) 10 SCC page 552

2. St. of U.P. Vs Bankey Singh & ors. 1996 (27)
ALR page 445

3. St. of U.P. Vs Amar Singh & ors. (1997) 1
SCC page 734

4. Nawal Singh Vs St. of U.P. & ors. (1995)
supplement I SCC page 204

5. Brijendra Singh Vs St. of U.P. & others 1981
(1) SCC page 597

6. Mulk Nath Singh Vs St. of U.P. & ors. passed
in Writ-C No.3000002 of 1996 decided on
13.10.2022

7. Rathinam @ Kuppamuthu & ors. Vs L. S.
Mariappan & ors. [(2007) 6 SCC 724]

(Delivered by Hon'ble Jaspreet Singh, J.)

C. M. Applications No.5 and 6 of 2022

1. The instant two applications have
been moved by the petitioner to bring on
record the heirs of deceased respondent
no.2 Dinanath who is reported to have died
on 20.10.2017. The record indicates that
the notices were issued to the proposed
legal heirs of the deceased. In furtherance
whereof Shri Rajeiur Kumar Tripathi,
learned counsel has filed his Vakalatnama.

2. Considering the aforesaid facts and
the ground shown in the application which
is
found
sufficient,
accordingly,
the
applications
are
allowed.
Learned
Additional Chief Standing Counsel shall
carry out the necessary amendment during
the course of the day.

3. Heard Shri G. K. Pathak, learned
Additional Chief Standing Counsel for the
State-petitioner and Shri Rejeiu Kumar