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1976 Supreme(AP) 170
Andhra Pradesh High Court
Judges : ALLADI KUPPUSWAMI
Peescpati Madhava Verma - Appellant
Versus
District Collector, Visakhapatnam - Respondent
Decided On : 09-01-76
Wilful negligence under Section 60(1) of the Co-operative Societies Act requires a deliberate omission to do something that one is required to do, even in the absence of proof of motive or mala fides.
Headnote:
CO-OPERATIVE SOCIETIES ACT - SECTION 60(1) - WILFUL NEGLIGENCE - PRESIDENT AND DIRECTORS OF A CO-OPERATIVE SOCIETY HELD GUILTY OF WILFUL NEGLIGENCE IN NOT RECOVERING AN AMOUNT FROM AN ASSISTANT PROCUREMENT OFFICER DESPITE BEING AWARE OF THEIR DUTY TO DO SO.
Fact of the Case:
The President and Directors of a Co-operative Society failed to recover an amount of Rs. 10,000/- from an Assistant Procurement Officer despite being aware of their duty to do so. The amount was paid by the Society to the Assistant Procurement Officer for the purchase of foodgrains, but the bill was settled without deducting the amount. The Society filed a claim against the Purchasing Agents, which was allowed, but on revision, it was held that the Assistant Procurement Officer was liable. The Society removed the Assistant Procurement Officer from service but did not take steps to recover the amount. The District Collector issued a notice to the President and Directors under Section 60(1) of the Act, holding them responsible for the deficiency in the Society's assets due to their wilful negligence. The President and Directors challenged the order in writ petitions.
Finding of the Court:
The Court held that the President and Directors were guilty of wilful negligence in not recovering the amount from the Assistant Procurement Officer. It observed that the omission to recover the amount constituted wilful negligence as there was a deliberate omission on their part to do so, despite being aware of their duty to do so. The Court rejected the contention that there was no motive or mala fides on the part of the President and Directors, stating that wilful negligence does not require proof of motive or mala fides.
Issues: Whether the President and Directors of a Co-operative Society can be held guilty of wilful negligence under Section 60(1) of the Act for failing to recover an amount from an Assistant Procurement Officer despite being aware of their duty to do so.
Ratio Decidendi: The Court held that wilful negligence under Section 60(1) of the Act requires a deliberate omission to do something that one is required to do. In this case, the President and Directors were aware of their duty to recover the amount from the Assistant Procurement Officer, but they failed to do so. This omission constituted wilful negligence, even though there was no proof of motive or mala fides.
Final Decision: The Court dismissed the writ petitions filed by the President and Directors, holding that they were guilty of wilful negligence and liable to make good the deficiency in the Society's assets.
( 1 ) THE Petitioner in W. P. No. 530 of 1978 was the president of the Vasakhapacnam District Co-operative Marketing soci-ty Limited Visakhapatnam (referred to in this judgement as the Society) between the years 1946 and 1972 and the petitioner in w. P. No. 1513 of 1978 was one of the Directors of the Committe; during the period 11-2-1962 to 1-6-1972. The Society paid a sum of Rs. 10,000/- to the Assistant Procurement Officer of the society of foodgrains for the Society through purchasing agents. The purchasing agents presented a bill for Rs. 15,764. 27 and this was settled on 31-7-1947. Later on it was found that when the bill was settled, the amount of Rs. 10,000/- was not deducted from the bill. Thereupon the Society filed a claim No. 51 /48-49 before the Deputy Registrar, Visakhapatham, claiming the sum of Rs. 10,000/- from the purchasing agents. The claim was allowed. The purchasing agents preferred a revision petition to the Joint Registrar of the Co-operative Society who held that the assistant Procurement Officer himself was responsible for the amount and he had to make the same. Against the judgement the society preferred a revision petition to the Government of Andhra pradesh who observed in their Memorandum decided on 25-5-1965 that Society should have proceeded against the Assistant procurement Officer for his negligence and dereliction of his) duty resulting in loss to the Society. After receipt of one memo the- Assistant Procurement Officer was kept under suspension and subsequently by a resolution dated 9-12-1968 of the Board of directors he was ordered to be removed and an order of removal was passed. No steps were however taken to recover the amount from the Assistant cocurmeent Officer, Thereupon, the District collector issued a notice under S. 60 (1) of the Act to all the directors stating that they had caused deficiency in the assets of the Society by their wilful negligence in not recovering the amont from the Assistant Procurement Officer and requiring them to re-pay the amount. The president as well as the other Directors submitted their explanation. They contended that it was the responsibility of the business Manager of the Society to collect the amount and the Diirectors could not be made liable. The district Collector did not accept there explanation and held that the deficiency of Rs. 10,000/- was coused on account of wilful negligence on the part of the Directots. As against the said order the petitioners in both the Writ Petitions preferred appeals to the subordinate Judge, Visakhapatnam under Section 76 of the Act. The learned Subordinate Judge held that in the circumstances of the case, the petitioners were guilty of wilful negligence resulting in loss to the society and hence the president and other directors were both jointly and severally liable to make good to the society in a sum of Rs. 10,000/- with interest at 12% from 25-5-4965. Challenging the validity of the said order the president of the society has filed W. P. No. S30/78 and one of the Directors had filed W. P. No. 1533/ 8.
( 2 ) THE common question for cc ns deration is whether the President and Directors caa be slid to be guilty of wilful negligence in not recovering the amount from the Assistant Procurement officer.
( 3 ) THE main contention before the District Collector as well as the Subordinate Judge in appeal was that it was the duty of the office Manager to recover the amount and hence the President and the Directors arc not liable. This contention is obviously unrene" able, as under the Co-operative Societies Act the entire manage" mem of the society is -vested in the committee.
( 4 ) SRI Adinaravana Raju, learned counsel for the petitioner then drew my attention to by-law 20 (1) fa) which provides that the business manager shall be responsible for the Executive adminisirstion of the society. But in that very clause however, it is stated that he is subject to the control of the president. By- law 20 (1)
