Headnote:Maharashtra Civil Services (Regulation of Seniority) Rules, 1982 - Sections 91, 88 and 2(20) - Appointed person is not member of society. - When the petitioner has been appointed on a monthly salary basis, he could not be termed as part of management as contemplated by Section 88 of the Act, similarly he cannot be termed as officer of the society, because as per definition under Section 2(20) person elected to the society is covered and does not enable him to give any directions regarding business of society and not covered by Section 88 of the Act. Petitioner is a paid servant, he is not from management.
Maharashtra Co-operative Societies Act, 1960 - Sections 88, 91 and 2 (20) - Meaning of "officer" as used in Section 2 (20) - Who can be an "officer" - Whether a person who is placed in charge of one of the cloth shops of the society, can be held to be an officer - Where he does not have any power to give any direction as regards business of the concerned shop - Held - He having no power to give directions regarding business shall have no regards to be called as an "officer". - In the instant case the petitioner who was placed in charge of one of the cloth shops of the society was not a person who was empowered to give directions in regard to the business of such society. Directions in regard to the business of such society normally emanate from the Managing Committee of the society or an officer empowered to give such direction. The directions contemplated are directions in regard to the business of the "society" and not merely directions for running a particular shop. These directions would be in regard to the manner in which the society should do its business, etcetera and not merely the selling of cloth in one of the shops of the society. In fact, the petitioner stated that he was appointed as a salesman and was working as a salesman in the branch at Shendurwafa. That the goods in his shop were purchased by the President and manager of the head office and salesman of the head office. It is clear that the petitioner had nothing to do with giving directions regarding the business of the society. The submission on behalf of the petitioner that the subject-matter was capable of being inquired into under Section 88 is not tenable. The petitioner was a servant of the society and the dispute is squarely covered by the provisions of Section 91 of the Act.

Judgement Key Points

Key Points: - The petitioner’s status as a manager in charge of a shop does not automatically make him an officer or part of the society’s management under Section 88; the court distinguishes shop management from the society’s overall business directions (!) (!) (!) . - The definition of "officer" in Section 2(20) includes persons empowered to give directions in regard to the business of the society; the petitioner was not shown to have such power, thus not an officer for Section 88 purposes (!) (!) (!) . - The dispute regarding stock shortage against the petitioner was held to be within Section 91, not Section 88, considering the petitioner’s role as a servant and the Society’s right to recover under Section 91; amendments in 2001 clarified appellate exclusions but did not alter the core finding here (!) (!) (!) . - The amendment excluding Registrar orders from Section 91 applies prospectively and affects which matters are triable under Section 91 vs. appeal under Section 152; this case notes the amendment but applies to the time frame of the proceedings (!) (!) . - If a matter is triable under Section 88, it would be appealable under Section 152, thus excluded from Section 91; the court analyzes whether the subject matter falls under 88 or 91 in this case (!) (!) . - The Registrar’s power under Section 88 involves determining misfeasance or breach of trust by officers or persons involved in management; the court concluded the petitioner did not fall within that scope (!) (!) . - The trial court’s assessment on admissions of shortage and the appellate court’s reconsideration were discussed to establish who bears responsibility; the appellant court concluded the Society proved the shortages (!) (!) (!) . - The case directs submission of auditor’s report to the Registrar under Section 81(5-A) for appropriate action (!) (!) . - The petition was dismissed; no merit found under Article 226; interim order vacated (!) . - The specific facts: petitioner appointed as Manager of cloth section; stock shortage discovered; society sought recovery under Section 91; appellate court found in favor of society (!) (!) .

What is the scope of Section 91 of the Maharashtra Co-operative Societies Act when a petition seeks recovery for stock misappropriation by a society employee?

What constitutes an "officer" of a society under Section 2(20) of the Act, and is a shop-in-charge or manager automatically an officer or within management to attract Section 88?

What is the relationship between Section 88 and Section 91 in determining whether a matter should be heard under the Co-operative Court or under Section 152/154 appeals, particularly after amendments?

JUDGMENT - BOBDE S.A., J.:---This writ petition is preferred by Shriram Dhonduji Raut against the judgment and order of the Maharashtra State Co-operative Appellate Court, Nagpur Bench, Nagpur, dated 26-9-1990. By the impugned judgment and order, the Appellate Court has held the petitioner liable to pay to the respondent No. 1 Bahu Uddesiya Sahakari Sanstha Virsi, a Co-operative Society, an amount of Rs. 62,541.87 together with interest at 16% per annum from 15-2-1983 till full realisation.

2. The facts in brief are that the petitioner was appointed as the Manager of cloth section on 14-10-1979. He was put incharge of the cloth shop of the society at a small village called Shendurwafa. The entire stocks of cloth in the shop was in his charge and custody. During the yearly verification of stocks of the shop, the Auditor found that there was a discrepancy in the stocks. This was in the course of the audit of the co-operative society in the year 1981-82. The Auditor, therefore, referred the matter to the Managing Committee. The Managing Committee verified the stock position and came to the conclusion on 31-1-1983 that the stocks of the value of Rs. 52,541.87 was short and missing. The society, therefore, filed a dispute before the Co-operative Court, Nagpur, under section 91 of the Maharashtra Co-operative Societies Act, 1960 thereinafter referred to as the "Act"). After the trial Court heard the evidence and submissions of the parties, it came to the conclusion that the society was not entitled to recover the amount from the petitioner. According to the trial Court, it was strange that there was no shortage upto June 1982 and after June 1982, there was a shortage. One fails to see the validity of this observation of the trial Court. As regards the admission made by the petitioner that there is a shortage of cash, the trial Court found that the mere admission is not sufficient. In doing so, the trial Court disregarded the rule that admission is the best evidence. In fact, the learned Counsel for the respondent No. 1 has relied on letters written by the petitioner asking for time to make payment of the amount of shortage. The trial Court came to the conclusion that it is the Secretary or the Managing Committee of the co-operative society who was expected to exercise control over the stock position and, therefore, the petitioner is not responsible.

3. This judgment has been reversed by the Co-operative Appellate Court by judgment dated 26-9-1990. The Appellate Court found that the trial Court had ignored a material part of the evidence led by the respondent-society. In particular, the lower Appellate Court found that the petitioner had admitted the claim of shortage on four occasions and a mere denial in the written statement outweigh this admission. The lower Appellate Court came to the conclusion that it was not detrimental to the case of the society that the Auditor had not been examined, particularly in view of the fact that the Managing Committee had verified the stock position and the members of the Committee had proved the process of stock verification and the shortage. The Appellate Court found, and in my view rightly, that even if the Auditor was not examined, it does not mean that the Managing Committee was divested with the power on verification of cash, stock, ecetera and that the Managing Committee had discharged its burden. As a matter of fact, the lower Appellate Court has found that each and every item of shortage had been proved by the witnesses of the society from the original registers and record and, therefore, the virtual dismissal of the claim by the trial Court merely because the Auditor was not examined is not warranted.

4. Mr. Madkholkar, learned Counsel for the petitioner, challenged the tenability of the dispute itself under section 91 of the Act. According to the learned Counsel, section 91 of the Act could not have been invoked by the respondent-society for recovery of the value of the stock for which the

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2003 Supreme(Bom) 1093

IN THE HIGH COURT OF BOMBAY(NAGPUR BENCH)Bobde S.A., J.Shriram Dhonduji Raut .... Petitioner.VersusBahu Uddesiyab Sahakari Sanstha Virsi others.... Respondents.Writ Petition No. 1308 of 1991, decided on 18-9-2003.Advocates appeared :R.C. Madkholkar, for petitioner.D.C. Daga, for respondent No. 1.

What is the scope of Section 91 of the Maharashtra Co-operative Societies Act when a petition seeks recovery for stock misappropriation by a society employee?

What constitutes an "officer" of a society under Section 2(20) of the Act, and is a shop-in-charge or manager automatically an officer or within management to attract Section 88?

What is the relationship between Section 88 and Section 91 in determining whether a matter should be heard under the Co-operative Court or under Section 152/154 appeals, particularly after amendments?