M.L. Singhal, J.@mdashThis is a petition filed under Articles 226/227 of the Constitution of India by one Jai Chand, Development Officer, Central
Co-operative Bank, Sirsa whereby he has prayed for the issuing of writ of certiorari quashing the order of the Deputy Registrar Co-operative
Societies, Hisar dated 2.2.1985 (Annexure P-3), order dated 18.10.1994 passed by the Additional Registrar, Cooperative Societies, Haryana
(Annexure P-4) and order dated 20.1.1997 passed by the Commissioner and Secretary to Government Cooperative Department Haryana
(Annexure P-5). The case projected by him in this petition is as follows:-
On 28.3.1973, Rs. 017,000/- were withdrawn from the current account of one Bhagat Singh through Gurdarshan Singh. Said Bhagat Singh had
died before 28.3.1973. Petitioner was acting as Branch Manager while Balwant Singh was acting as clerk and Om Parkash was acting as cashier.
Petitioner acted as Branch . Manager in the absence of Wazir Singh, Branch Manager on 28.3.1973. He was given the charge of cash only. It was
a loose cheque thumb marked by Bhagat Singh, Gurdarshan Singh and one Subhash Kumar account holder No. 382 and also signed by Balwant
Singh clerk. The matter was referred to the police. Case FIR No. 81 of 1973 was registered at Police Station, Tohana in which petitioner,
Balwant Singh, and Om Parkash were tried under Sections 420/468 and 471 of the Indian Penal Code. As there was no incriminating evidence
against them, they all were acquitted by the Judicial Magistrate Ist Class, Hisar vide order dated 18.11.1978 Annexure P-1. Matter was referred
to the arbitration of Chand Singh Yadav, Assistant Registrar, Cooperative Societies, Hisar. Vide Annexure P-2 dated 11.8.1981 Sh. Chand Singh
Yadav, dismissed the reference. The case was placed before the Board of the Directors in their meeting held on 30.9.1981 for filing an appeal
against the order dated 11.8.1981. The Board of Directors of the Bank took decision that surcharge case be prepared against the employees
involved. The Bank failed to initiate proceedings u/s 54 of the Punjab '' Co-operative Societies Act, 1961 as the loss had not been detected during
the course of audit inspection, inquiry or even winding up of the society. The Managing Director of the Bank wrote to Deputy Registrar in
September, 1984 to enquire into the matter of surcharge or to appoint an Enquiry Officer. Since no case of surcharge had been made out in terms
of Section 54 of the Punjab Cooperative Societies Act and Section 101 of the Haryana Co-operative Societies Act, 1984, petitioner filed
objections against the illegal and without jurisdiction proceedings. Bank through Sh. Surjit Singh, Managing Director filed claim statement though
there is no provision in Section 101 for such statement. Respondent No. 3 did not allow the petitioner to look into the enquiry report submitted by
the Assistant Registrar Co-operative Societies, Fatehabad. On 2.2.1985, order Annexure P-3 was passed by the Deputy Registrar, Co-operative
Societies, Hisar. It was an illegal order. Order Annexure P-3 was also without jurisdiction. His appeal to the Registrar which was heard by the
Additional Registrar was dismissed vide order dated 18.10.1994 Annexure P-4. Additional Registrar dismissed the appeal without discussing the
points raised before him. He dismissed the appeal through cryptic order, putting his seal on the order of the Deputy Registrar without applying his
mind. His revision filed before the Commissioner and Secretary to Government, Cooperative Department also met the same fate. He too did not
discuss the material points raised before him. The surcharge case is prepared u/s 54 of the Punjab Cooperative Societies Act, 1961. No case is
surcharge was made out and enquired into in terms of Section 54 of the said Act. u/s 54 of the said Act finding is requird that the act was done by
an employee with wilful negligence. It was not the case of the respondent-Bank in the claim statement filed by Sh. Surjit Singh, Managing Director
that the loss had been caused to the Bank by wilful negligence of the petitioner. There is clear distinction between negligence and wilful negligence.
There is no proof that the petitioner was wilfully negligent in passing the disputed cheque. Cheque was presented before the clerk who also
identified the signatures of Subhash Kumar and entry was made in the ledger. There was no note on the ledger regarding death of Bhagat Singh.
Petitioner after perusing the cheque and seeing that the clerk of the Bank had also identified the account holder''s cheque passed the cheque. He
worked only for a day as Branch Manager. As such, there was no possibility of his collusion with the cashier or the clerk in passing the cheque.
There is no finding in any of the impugned orders that the pre-requisites of the proceedings u/s 54 of the said Act had been satisfied. Registrar did
not pass any order directing Assistant Registrar, Cooperative Societies, Fatehabad to enquire into the matter or that he himself will enquire into the
matter. Sh. Phool Singh Yadav, Assistant Registrar Cooperative Societies in departmental proceedings did not find the petitioner guilty of any
lapses and the enquiry u/s 54 of the said Act would do not better. The Deputy Registrar while proceeding with the matter did not supply the copy
of the enquiry report of the Assistant Registrar, Cooperative Societies, Fatehabad to the petitioner. In the absence of the enquiry report, petitioner
could not be expected to defend himself properly. As per Section 54 Sub-section (2) the Registrar, after affording personal opportunity of being
heard has to pass the order. What to talk of personal hearing, petitioner was not even supplied with the copy of the report. The Assistant Registrar
Cooperative Societies, Fatehabad held the petitioner liable as per the discussion by the Deputy Registrar for the disputed amount. Assistant
Registrar has held Om Parkash also liable for the disputed amount. The Deputy Registrar has given no reason as to why the petitioner alone is
responsible and as to how Om Parkash and Balwant Singh could be absolved of their liability.
The Additional Registrar, Cooperative Societies has not taken this fact into account that the petitioner was not guilty of wilful negligence in passing
the cheque. He has given no finding that petitioner was wilfully negligent while passing the cheque. He has given no finding that petitioner was
wilfully negligent while passing the cheque. The observations of the Additional Registrar that the Manager should have examined the account ledger
and should have been vigilant, that does not tantamount to saying that petitioner was wilfully negligent in performing his duty. Petitioner believed the
clerk of the Bank and there was no note on the ledger. Had there been any entry on the ledger, the clerk would have noticed and brought the fact
to the notice of the petitioner. The Secretary to Government Department of Cooperative, Haryana also failed to give finding that the petitioner was
wilfully negligent in performing his duty while passing the cheque. She did not agree that the signatures and thumb impressions were to be
compared by the clerk. The Secretary further erred in law while observing that death report could have been erased by the petitioner or somebody
else under his command. Had there been any entry of death of Bhagat Singh or any erasing on the page that could have been first noticed by the
clerk concerned and how the petitioner could manage under his command some body to make any erasing when he was Manager only for a day.
His counsel pointed out before the authorities that dealing clerk sent the cheque and Om Parkash took thumb impression on the rokar bahi and
entry of the thumb is marked twice. The current account of Bhagat Singh does not bear any interest. No interest as such can be awarded on the
disputed amount as the Bank has suffered no loss by way of interest.
2. Respondents No. 1 to 3 contested the petition, urging that the petitioner being Incharge of the Tohana Branch of the Hisar District Central Co-
operative Bank Ltd., Hisar was negligent in the performance of his duty as Rs. 17,000/- was withdrawn from the account of a dead person
through loose cheque by one Gurcharan Singh. According to the Banking Law, it was the responsibility of the Branch Manager to see that no
wrong payment is made from any account. Bank had suffered loss due to the negligence and carelessness of the petitioner. Account of deceased-
Bhagat Singh was a dead account and note to this effect was made in the ledger. The words ""dead account"" were torn out from the ledger and
payment was made through loose cheque. It was the duty of the petitioner to see that payment was being made through loose cheque and from the
dead account. Petitioner with ulterior motive passed the cheque and allowed the amount to be withdrawn from the dead account. This action of the
petitioner was not the act of a vigilant, prudent and efficient Manager. Either the petitioner connived with the wrong doers or he was negligent in the
performance of the duty in that misdeed was committed under his nose. Initially the case was referred u/s 55/56 of the Punjab Cooperative
Societies Act, 1961 for arbitration. Arbitrator dismissed the arbitration application on the objection of the counsel for the petitioner and other
employees that this case could not be heard u/s 55/56 for the said Act. After dismissal of the arbitration application, the Bank referred the case for
surcharge u/s 54 of the said Act as the arbitrator had held that Bank had suffered a loss of Rs. 17,000/- due to the negligence of the employees. A
clear cut case of surcharge was made out against the petitioner as the Bank had suffered loss due to the negligence and carelessness of the
petitioner. It was denied that respondent No. 3 was influenced by respondent No. 4. It was also denied that petitioner was not allowed to inspect
the enquiry report. Each and every point raised by the petitioner was discussed by the Additional Registrar, Cooperative Societies, Haryana. He
dismissed the appeal on merits. Similarly decision of the Commissioner and Secretary to Government, Department of Cooperative, Haryana is
legal and valid. When the payment was being made, petitioner ought to have been extra careful and vigilant and examined all the relevant
documents.
3. Respondent No. 5 and respondents No. 7 and 8 also filed separate written statements contesting the writ petition.
4. We have heard learned counsel for the parties and have gone through the record.
5. Petitioner and two others were tried under Sections 420/468 and 471 of the Indian Penal Code. They were acquitted by the Judicial
Magistrate, 1st Class, Hisar vide order Annexure P-1. Learned Magistrate observed that there is absolutely no evidence on the record so as to
connect the accused persons with the crime alleged or to incriminate them in any manner. Sh. Som Nath, Sub Inspector, who investigated the case
stated that he did not find out during investigation as to who had forged the cheque and had obtained the payment. Shri Shamsher Singh, who
conducted the enquiry stated that on enquiry it could not be known as to who were the persons who had taken the payment from the Bank. Sh.
Balbir Singh SI/SHO who investigated the case stated he could not find out during investigation as to who were the persons who had forged the
cheque and taken away the amount. Learned Magistrate did not feel that there was any evidence against the accused so that it could be put to
them in their statements u/s 313 of the Code of Criminal Procedure. Learned Magistrate acquitted them without putting any incriminating
circumstance to them. Shri Chand Singh Yadav, Assistant Registrar Cooperative Societies, Hisar did not hold the petitioner, Om Parkash and
Balwant Singh liable for this amount. It was a reference to him u/s 56 of the Punjab Co-operative Societies Act, 1961 for arbitration. Shri Jai
Chand petitioner was working as Debt Incharge on 23.3.1973. Om Parkash was working as cashier from January, 1973 and Shri Balwant Singh
was appointed on deposit seat on 26.3.1973. Cheque through which payment was made was a loose cheque. Somehow the cheque was stolen
from the Bank. He observed that it was not proper to appoint a person on deposit seat having no training because in the Co-operative Banks
generally the clerks are doing work of passing cheques and comparing signatures. The Branch Manager is not having any specimen signatures and
he believes the clerk. There was no system to see the photographs of illiterate account holders. The account is at Page 49 and it was written dead
account but that page was cut off from there. Nobody came to know that it was a dead account and theft of the cheque from the Bank and
payment made through the cheque cannot be done on the same day. It could not be proved that this work was done by these employees. He held
that case could not be heard under Sections 55/56 of the Punjab Co-operative Societies Act because this case does not pertain to the recovery of
debt. These employees have not taken any loan. He, therefore, dismissed the arbitration reference but observed that payment was made due to
negligence of the employees and the Bank had suffered a loss of Rs. 17,000/-. Thereafter, Managing Director, Hisar Central Co-operative Bank
Limited, Hisar framed surcharge of Rs. 17,000/- against Jai Chand, Om Parkash and Balwant Singh u/s 101 of the Haryana Co-operative
Societies Act, 1984 for Rs. 17,000/-. Assistant Registrar, Co-operative Societies, Fatehabad was appointed as Enquiry Officer u/s 54 of the
Punjab Co-operative Societies Act, 1961. In the enquiry report, Enquiry Officer concluded that Rs. 17,000/- was paid illegally by Jai Chand.
Branch Incharge and Om Parkash in collusion with each other. Both were held responsible for the loss to the Bank. Deputy Registrar, Co-
operative Societies, Haryana heard the appeal. Vide Annexure P-4, he dismissed the appeal. He found that Branch Manager before is-suing the
loose cheque and thereafter after passing the cheque should have examined the account ledger which he did not. As far as the responsibility of Shri
Om Parkash cashier is concerned, as per banking procedure, the cashier is to make payment on the basis of passing/clearance of the cheque and
he has no business to verify the signatures/thumb impression or ledger account. Revision was dismissed vide order Annexure P-5 by the
Commissioner and Secretary to Government, Haryana, Co-operative Department, Chandigarh.
6. It was submitted by the learned counsel for the petitioner that it could not be a case of surcharge when there is no finding that there was any
wilful negligence on the part of the one who was entrusted with the organisation or management of the society and had made payment contrary to
this Act, Rules or Bye-laws.
7. Section 54 of the Punjab Cooperative Societies Act, reads as follows:-
54. Surcharge.- (1) If in the course of an audit inquiry, inspection or the winding up of 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 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 mis-appropriated or fraudulently retained any money or other property belonging to such society, the Registrar may on his
own motion or on the application of the committee liquidator or any creditor, enquire 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 held after the expiry of six 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 giving the person concerned, an opportunity of being heard, make an
order requiring him to repay or restore the money or property or any part thereof, with interest at such rate, or to pay contribution and costs or
compensation to such extent, as the Registrar may consider just and equitable.
8. It was submitted by the learned counsel for the petitioner that incident was never found during the course of an audit, inquiry, inspection or the
winding up of the cooperative society and therefore, proceedings u/s 54 of the said Act could not be initiated against the petitioner, Om Parkash
and Balwant Singh. It was not the case of the respondent-Bank in the claim statement filed by the Managing Director that the loss was caused to
the Bank by wilful negligence of the petitioner. Negligence and wilful negligence stand on different footing. From the facts and circumstances of the
case it had not been proved that the petitioner was wilfully negligent in passing the disputed cheque. Cheque was presented before the clerk who
also identified the signatures of the account holder and entry was made in the ledger. There was no note on the ledger regarding the death of
Bhagat Singh account holder. Petitioner after perusing the cheque and seeing that the clerk of the Bank had also identified the account holder''s
cheque allowed the payment of the cheque. Petitioner worked only for a day as Branch Manager and therefore, there could be no collusion
between him, cashier and the clerk in passing the cheque. In this case no order was passed by the Registrar directing the Assistant Registrar,
Cooperative Societies, Fatehabad to inquire into the matter and therefore, the provisions of Section 54 remained unsatisfied. Shri Phool Singh
Yadav, Assistant Registrar, Cooperative Societies findings in departmental, proceedings are on no less footing than the findings in the enquiry
arrived at by Shri Chand Singh Yadav, Assistant Registrar, Cooperative Societies, Hisar. Shri Phool Singh Yadav had not found him guilty of any
lapse. Shri Chand Singh Yadav had not given any finding that they were wilfully negligent. He only found that the amount was paid illegally by Jai
Chand and Om Parkash in collusion with each other and accordingly they both were responsible for the loss. Section 101 of the Haryana
Cooperative Societies Act, 1984 is pari-materia with Section 54 of the Punjab Cooperative Societies Act, 1961. Additional Registrar,
Cooperative Societies concluded in his order Annexure P-4 that the Branch Manager before passing the cheque should have been vigilant and
verified the ledger of the account holder in whose name the cheque was issued. From the perusal of the order of the learned Deputy Registrar, it is
clear that account holder Bhagat Singh had died before the occurrence of embezzlement and there was a note. The Branch Manager before issuing
the loose cheque and thereafter passing the cheque should have examined the account ledger which he did not. As far as the responsibility of Shri
Om Parkash cashier is concerned as per banking procedure, the cashier is to make payment on the basis of passing/clearance of the cheque and
he has no business to verify the signatures/thumb impression or ledger account, ft was submitted that he did not find that the Branch Manager was
wilfully negligent. As such, it could not be a case of surcharge.
9. Learned counsel for the respondents on the other hand submitted that cashier has only to make payment. He has nothing to do with the
signatures of the account holder because the same remains in the custody of the Branch Manager and the clerk. Cashier is not required to verify
the signatures/thumb impression when two persons have already passed the cheque. In the circumstances of the case wilful negligence on the part
of the petitioner is fully proved. Wilful negligence has been dealt in Nanhelal Vs. Asstt. Registrar, Co-operative Societies, Narsinghpur and Others
.
10. In our opinion there was no wilful negligence on the part of the petitioner. He may have been negligent. Negligence is want of proper care. It
does not include bad faith whereas wilful negligence is want of proper care altogether, may be suggestive of bad faith also. It was held by Division
Bench of the Madhya Pradesh High Court in Nanhelal Vs. Asstt. Registrar, Co-operative Societies, Narsinghpur and Others that, ""liability u/s
63(1) arises when loss is caused by gross negligence and not merely ordinary negligence. Gross negligence connotes higher degree of negligence. It
is negligence not arising merely from want of foresight or mistake of judgment but from some culpable default"". Additional Registrar, Co-operative
Societies, Haryana observed that ""the Branch Manager while passing the cheque should have examined the account ledger which he did not. He
should have been vigilant and verified the ledger of the account holder in whose name the cheque was issued. Embezzlement took place due to the
negligence of Jai Chand petitioner, which is loss to the respondent-Bank. Had the petitioner been prudent in the matter, embezzlement would not
have taken place"". This finding is not suggestive of wilful negligence.
11. In our opinion, this petition should succeed and is accordingly allowed and the orders Annexures P3 and P5 are quashed. No orders as to
costs.