Dismissed

Kannur District Ex-Servicemen v. P.V. Sivadasan

Kerala HC22 Feb 2018WA/422/2018

Case brief

AI extract

What is this about?

This is an intra-court appeal against a judgment wherein the Single Judge acquitted the respondent in a dispute. The High Court upheld the lower court's view, holding that the arbitrator and tribunal violated natural justice by failing to make specific pleadings against the respondent in the plaint while holding him liable.

What did the court decide?

The appeal filed by the appellant society is dismissed as it lacks merit.

Kannur District Ex-Servicemen Vs P.V. Sivadasan — Cooperative Societies | Kerala HC (2018)

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C.R.

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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:

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THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN

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& THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI

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THURSDAY, THE 22ND DAY OF FEBRUARY 2018 / 3RD PHALGUNA, 1939

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WA.No. 422 of 2018 IN WPC. 38503/2010

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AGAINST THE JUDGMENT IN WP(C) 38503/2010 DTD.11.1.17 OF HIGH COURT OF KERALA

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APPELLANT / RESPONDENT

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KANNUR DISTRICT EX-SERVICEMEN, MULTI PURPOSE CO-OPERATIVE SOCIETY LIMITED, P.O. PAYANGADI, PIN - 670 001.

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BY ADV.SRI.M.SASINDRAN

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RESPONDENT/ PETITIONER :

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P.V. SIVADASAN, S/O LATE RAMANKUTTY NAMBIAR, KADAMBOOR,P.O. EDAKKAD - 670 663 KANNUR DISTRICT.

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R BY SRI.P.N.MOHANAN

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 22-02-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

C.R.

P.N.RAVINDRAN

R. NARAYANA PISHARADI, JJ.

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= = = = = = = = = = = = = = = = = W.A.No.422 of 2018 in

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W.P.(C) No.38503 of 2010

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= = = = = = = = = = = = = = = = = = Dated this the 22^nd day of February, 2018

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J U D G M E N T

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P.N.Ravindran, J.

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The appellant is the Kannur District Ex-Servicemen Multi Purpose Co-operative Society Ltd., a co-operative society registered under the Kerala Co-operative Societies Act, 1969 (herein after referred to as the 'Act' for short). When an enquiry under Section 65 of the Act was ordered and it commenced, Sri.K.Sreedharan Nambiar, the then Honorary Secretary of the Society, committed suicide on 09.06.2000. Nearly two months after the Honorary Secretary committed suicide, Sri.P.V.Sivadasan, the respondent herein, was given charge of the Secretary of the society.

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The appellant society thereafter instituted ARC No.352 of 2000 before the Joint Registrar of Co-operative Societies (General), Kannur, by filing Ext.P4 plaint. In A.R.C No.352 of 2000, the appellant society was represented by its Secretary-in-charge, who is none other than the sole respondent herein. In the plaint presented under Section 69 of the Act, the appellant society had

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..2..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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joined late Sri.K Sreedharan Nambiar, who committed suicide on 09.06.2000, as the first defendant, his wife Nalini as the second defendant, his daughter Jyothi as the third defendant, his son K.Sujith as the fourth defendant, and another son K.Sreejith as the fifth defendant. The appellant society had also joined Saidantakath Mullabi as the sixth defendant, S.A. Asma as the seventh defendant, K.P.Nafeesa as the eighth defendant, P.P.Mullakoya as the ninth defendant and P.V. Satheesan as the tenth defendant.

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The appellant society had in the plaint averred that on inspection, several irregularities running into lakhs of rupees came to light in the gold loans granted and on completion of the verification done so far, the amount defrauded has been estimated to be Rs.58,80,900/-. It was averred that late K.Sreedharan Nambiar has been granting gold loan to defendants 5 to 9 inflating the weight of the gold pledged in some cases and without gold being pledged in majority of cases. The appellant society had also averred that the tenth defendant was granted a loan of Rs.1,50,000/- on 31.03.2000 against Fixed Deposit Receipt No.750 without the Fixed Deposit receipt being pledged. The appellant had in paragraph 4 of the plaint averred as follows:-

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“An enquiry conducted by the Board of Directors with the help of the office of the Co-operative

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..3..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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department found the total amount defrauded as detected so far at Rs.58,80,900/-. Sri.K.Sreedharan Nambiar and other defendents are found to be responsible for the loss. Since K.Sreedharan Nambiar is dead his legal heirs are responsible to compensate the bank. It is learnt and in evidence the legal heirs have inherited properties, acquired properties and carried on improvements using the defrauded money through K.Sreedharan Nambiar. The Governing body is satisfied that unless legal action is initiated the amount cannot be recovered.”

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The appellant society had in ARC No.352 of 2000 prayed for a decree directing the defendants to pay the sum of Rs.60,34,561/- with interest @ 18% per annum from 01.08.2000 till realisation, together with costs. Two weeks after ARC No.352 of 2000 was first filed, the Officer conducting the enquiry under Section 65 of the Act submitted Ext.P3 report dated 14.08.2000. In that report, it was inter alia mentioned that the society has suffered a loss of Rs.59,59,350/-. Thereafter, on application filed by the appellant society, the sole respondent herein and three others were impleaded as additional defendants 11 to 14 in A.R.C. No.352 of 2000. The body of the plaint in A.R.C. No.352 of 2000 was however not amended.

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..4..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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The respondent herein who was joined as the 11^th defendant, entered appearance and filed a joint written statement along with defendants 12 and 13, contending that they have not indulged in any irregular activity and that no liability can be cast on them, relying on the observations in the enquiry report. They also contended that they have not derived any benefit or misappropriated the funds of the society. The 14^th defendant filed a separate written statement resisting the claim. Before the Arbitrator Sri.V.P.Ranji, Secretary-in-charge of the society was examined as PW1 and Sri. K.Balan the officer who conducted the enquiry under Section 65 of the Act, was examined as PW2. The appellant society also produced and marked Annexures AI to AXXVI. On the side of the defendants, defendants 5, 6, 10, 8, 9, 7, 11, 12 and 14 were examined as DWs 1 to 9 and the documents produced by them were marked as Exhibits B1 to B26. The Arbitrator thereupon, framed the following issues.

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Whether the petitioner is maintainable?

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Whether there was misappropriation in the society as alleged in the petition?

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If yes, the responsibility of the defendants and its extent?

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Whether the plaintiff is entitled to future interest? And

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Eligibility for costs and expenses.

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..5..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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After considering the pleadings and the evidence on

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record, the Arbitrator held as follows.

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“H.P.V.Sivadasan (defendant No.11)

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This defendant was the Cashier cum accountant of the society during the period of alleged misappropriation. He deposed before the enquiry officer that he was the joint custodian of cash and stock along with the secretary. However, in evidence he denied the above statement. The allegation against this defendant is that he intentionally aided D1 and D6 to D9 to defraud society’s money by paying cash without ensuring the signature of the parties on the vouchers, given loan payments to same persons in excess of permissible limits etc. He admitted before the enquiry officer (Annexure 56 to Ext.A1) that he was aware of illegal activities of D1 but opted to keep silence for fear of action from D1. This is more clear from the fact that he admitted in evidence that a number loans were issued to one person same day and that loans more than 4 lakhs were issued to a person on a single day when the maximum loan that can be granted to a single person was Rs.10,000/-. As a responsible officer of the society D11 ought to have brought the infraction of bye-law provisions and other irregularities before the appropriate authorities. The failure in this regard is a clear dereliction of duty which resulted in heavy loss to the society and as such he should be made liable for the loss caused to the society. At the same it has to be noted that there is no allegation that he has appropriated any money of the society to his own benefit. He was negligent and the negligence has caused serious loss to the society. Considering the active involvement of the then secretary, D11 can only be described as a silent spectator of the entire activity

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..6..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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deriving no monetary benefit out of it. He was acting as per the direction of the then secretary even exceeding his authorities. Considering all these relevant facts, I am of the view that there is no justification in fastening the responsibility of the entire amount of loans on his defendant. The following loan amounts were paid by D11 as cashier without obtaining signature on those vouchers or against forged signatures.

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Gl	5650 22000
GL	5933 15000
GL	5934 9000
GL	5935 20000
GL	6004 24000
GL	6007 30000
GL	5098 30000
GL	5100 32000
GL	5291 45000
GL	5294 45000 ---------------

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272000

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Since there were laches on the part of D11 while disbursing these loans he is liable to compensate the society to the extent of Rs.27200/-. Therefore the claim of the plaintiff against D11 is allowed in part to the extent of Rs.2,72,000/-”.

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In view of the said finding, by Ext.P1 award passed on 10.03.2005, the Arbitrator directed the respondent to pay the sum of Rs.2,72,000/- to the appellant society together with interest @12% per annum from 10.03.2005. Defendants 2 to 9 and 12 to 14 were also directed to pay various amounts to the appellant

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..7..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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society. Aggrieved thereby, the respondent and other defendants filed appeals before the Kerala Co-operative Tribunal. The appeal filed by the respondent as Appeal Petition No. 48 of 2005 was heard and disposed of along with the other appeals by the Kerala Co-operative Tribunal by Ext.P2 judgment delivered on 28.11.2009. The appeals filed by defendants 12 to 14 were allowed and the other appeals were dismissed, confirming the award passed by the Arbitrator. The respondent thereupon filed W.P.(C) No.38503 of 2010 before this court challenging Ext.P1 award passed by the Arbitrator and Ext.P2 judgment delivered by the Kerala Co-operative Tribunal. He contended that the findings adverse to him in the impugned award and judgment have been rendered without any pleadings and evidence in support of such pleadings.

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The appellant society entered appearance and filed a counter affidavit resisting the writ petition. After considering the rival contentions, the learned single Judge allowed W.P.(C) No.38503 of 2010 by judgment delivered on 11.01.2017 and exonerated the writ petitioner. The learned single Judge held that in the absence of any pleading, no award can be passed against the writ petitioner. It was held that there was total violation of the principles of natural justice as the writ petitioner was never put on notice regarding the allegations against him and the manner in

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..8..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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which liability was sought to be fastened on him. The appellant society has, aggrieved thereby, filed this appeal.

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We heard Sri.M.Sasindran, learned counsel appearing for the appellant and Sri.P.N.Mohanan, learned counsel appearing for the respondent. We have also gone through the pleadings and the materials on record. It is evident from a reading of Ext.P4 plaint in A.R.C. No.352 of 2000, that the respondent herein was not originally joined as a defendant. As a matter of fact, it was he, who had signed and verified the plaint in his capacity as the Secretaryin-charge of the appellant society. Though Ext.P4 plaint was amended thereafter, by joining the writ petitioner and three others as additional defendants 11 to 14, the body of the plaint was not amended by raising appropriate pleadings against them. They were not put on notice regarding the nature of their involvement in the fraudulent transactions and the grounds on which liability was sought to be fastened on them. Though it is seen that additional defendants 11 to 14 had also filed their pleadings before the Arbitrator, as rightly observed by the learned single Judge, in the absence of specific pleadings in the plaint, they could have only raised general contentions denying and disputing the averments in the plaint as filed.

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..9..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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In such circumstances we are in agreement with the learned single Judge that adequate opportunity was not given to the writ petitioner to meet the case against him. As rightly observed by the learned single Judge, as no pleadings were raised against the writ petitioner, it cannot be said that he was given an opportunity to defend the case against him. The amended plaint, a copy of which is produced and marked as Ext.P5, does not contain any averment as against the writ petitioner except the pre-existing averment in paragraph 4 of the plaint as originally filed, that Sri.K. Sreedharan Nambiar and the other defendants are responsible for the loss. Even assuming that the original plaint was presented by the writ petitioner and therefore, there is every chance that he had deliberately omitted to mention about his involvement in the disputed transactions, at least when he was joined as the 11^th defendant and the plaint was thereupon amended, the appellant society ought to have been taken care to incorporate appropriate pleadings in the plaint. That apart, there is no averment in the plaint as regards the extent of loss caused to the appellant society on account of the negligence or misconduct of the writ petitioner. Unless and until the case against him is specifically pleaded and the

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amount sought to be realised from him is also set out with clarity, he will not be in a position to defend the claim made against him.

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..10..

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W.A.No.422 of 2018 in W.P.(C) No.38503 of 2010

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In the instant case, these matters are singularly lacking either in the plaint as originally filed or even in the amended plaint. This crucial aspect of the matter escaped the attention of the Arbitrator and the Kerala Co-operative Tribunal. Having regard to the facts stated above, we are in agreement with the learned single Judge that the appellant has been held liable in gross violation of the principles of natural justice. No exception can therefore in our opinion be taken to the impugned judgment. The view taken by the learned single Judge cannot in our opinion be said to perverse warranting interference in this intra-court appeal.

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For the reasons stated above, we hold that there is no merit in the instant appeal. The appeal fails and is accordingly dismissed.

Sd/-

P.N.RAVINDRAN JUDGE.

Sd/-

R. NARAYANA PISHARADI JUDGE.

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SB/24/02/2018

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// true copy //

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P.A to Judge

Kannur District Ex-Servicemen v. P.V. Sivadasan

Case brief

What is this about?

What did the court decide?

Kannur District Ex-Servicemen v. P.V. Sivadasan

Case brief

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