Former managing committee members are jointly liable for irregularities and misappropriation of funds, and claims for negligence fall within the scope of S.68 but should be considered under S.69.

Petitioner (the Society, for reference ) is a co-operative society registered under the Kerala Co-operative Societies Act, 1969 (the Act). The first respondent was its paid Secretary. Respondents 2 to 9 along with one Paramu (now deceased) were the members of its managing committee (hereinafter referred to as the erstwhile board) from February 18,1973. Fresh election was held to the managing committee on March 21,1976, consequent on which the erstwhile Board had to vacate office in favour of the newly elected members. A joint meeting of the members of the old and new committees was convened to be held on May 16,1976 for the purpose of handing over charge, but the members of the erstwhile Board did not turn up. Another meeting was therefore convened for the purpose on May 26,1976 when again the members of the erstwhile Board tailed to attend. The first respondent Secretary was present, and he agreed to hand over the cash balance a May 28,1976, but, instead of doing so, he locked up the office of the society on the 26th and made himself scarce. All the books and records of the society were with him. The managing committee had therefore to take proceedings in the Magistrate's Court to obtain custody of the office with the books and the records. They could obtain possession of the office, the books and the records, with police aid, only on June 21,1976.

2. The accounts of the society were thereafter audited. The audit report noted various irregularities and manipulation of accounts, which are, detailed under twelve heads in the defect register attached to it. A copy of the defect register is ExtPl. Inter alia it was noted that the first respondent Secretary had issued 32 receipts for amounts aggregating Rs. 27,006.64 and 105 receipts for amounts aggregating Rs. 61,078-84 on May 28,1976 as if these amounts had been received on that day. None of these amounts was however brought into the accounts or credited to the society. The auditor reported that these amounts, being items 7 and 9 of Ext. P1, should be recovered from the secretary and the members of the erstwhile Board. There were also other items mentioned in Ext, P1 of which item No.5 related to a bogus lo&n issued on June 17,1974 to one Zacharia, under which an amount of Rs. 916-69 was alleged to have been received in repayment on May 28,1976. In fact, this Zacharia was dead on February 14,1972 long before the loan was sanctioned, and therefore, could not have received the amount of the loan, or repaid it, as alleged. Item No. 6 related in part to an alleged loan to one Gouri Amma on the same day, to whom no such loan could have been advanced having regard to the circumstance that her continuing guarantee bond stood discharged as early as on March 19,1974. The amount involved was Rs. 1,523-82. I will mention another item as well namely item No. 8, an amount of Rs. 2,500/- received by the first respondent on May 28 on sale of coconuts to a third party. In addition the auditor had recommended recovery from the secretary and the erstwhile Board, of an amount of Rs, 6,817-10 being the cash balance on May 25,1976, which was not handed over to the new Board. This forms part of item 1 of Ext. P1 and the auditor had fastened the liability therefore on the secretary and the erstwhile Board.

3. Items 2,3,11,12 concerned items, the recovery of which had been defaulted due to the negligence of the secretary and the erstwhile Board. The auditor had recommended their recovery also from those persons.

4. There were some other items also dealt with by Ext. P1, but reference to them is unnecessary for purposes of this original petition.

5. On receipt of the audit report, the society instituted proceedings under S.69 of the Act for recovery of the amount covered by Ext. P1. Inter alia, the society sought to make respondents 1 to 9 and Paramu jointly and severally liable for the amounts made mention of earlier, namely items 1,5 to 9,11, and 12. Their case in relation to item Nos. 1,5,6,8