Exoneration from civil liability in arbitration proceedings under Section 55 of the Punjab Cooperative Societies Act, 1961, does not absolve an individual from potential criminal liability for the same acts.

Dr. Sarojnei Saksena, J.

1. Petitioners learned counsel has strongly canvassed that since by awards Annexures P-2 and P-3 the petitioner has been exonerated from the charge by the arbitrator in arbitration proceedings, which were initiated under Section 55 of the Punjab Cooperative Societies Act, 1961 (in short, the Act), therefore, for the same financial liability the petitioner cannot be prosecuted under Sections 408/409/465/468/471/120-B of the Indian Penal Code as per FIR Annexure P-1. In support of his contentions he has relied on Kasmira Singh v. State of Punjab, 1989(1) RCR 175; Bant Singh v. The Dulley Cooperative Agricultural Service Society Ltd., 1987(2) RCR 435; Harbhagwan Dass v. The State of Punjab, 1983(2) RCR 156 and Barjinder Pal v. State of Punjab, 1990(2) RCR 690.

2. Learned Assistant Advocate-General, Punjab, relying on Mrs. Dhanlakshmi v. R. Prasanna Kumar and others, AIR 1990 S.C. 494, contended that simply because in the awards Annexures P-2 and P-3 the petitioner has been exonerated by the arbitrator in proceedings held under Section 55 of the Act, he is not absolved of his criminal liability. Hence there is no legal ground to quash the aforementioned FIR.

3. The facts of the case are that the petitioner is working as Inspector, Cooperative Societies and is posted at Fazilka. On February 20, 1989, a meeting of the Managing Committee of Buraj Hanumangarh Cooperative Agricultural Service Society was held under the Chairmanship of Shri Baljit Singh and in this meeting a resolution was passed that during the course of audit for the years 1985-1987 the audit department has found misuse and embezzlement of Rs. 3,67,465.77 and serious irregularities against the employees of the Society, employees of the bank and the ex-Managing Committee of the Society. The Assistant Registrar, Cooperative Societies, Fazilka, vide his letter No. 1303 dated 15.2.1988 has directed to lodge an FIR against the accused figuring in the special audit report. Hence it was resolved that FIR be lodged against the persons named therein. Petitioners name appears at serial No. 8.

4. In Barjinder Pals case (supra) a Single Bench of this High Court considered the provisions of Section 55 of the Act and Section 409 IPC and observed that once the matter is referred to the arbitrator in terms of Section 55 of the Act, it renders the dispute to be of civil nature. FIR under Section 409 IPC was quashed, but still Markfed was allowed to initiate criminal action after finalisation of surcharge proceedings taken against the accused.

5. In criminal Revision No. 245 of 1979 (Laxmi Narain v. State of Haryana) decided on March 25, 1981 a question was referred to the Division Bench for consideration whether after passing of an award against an accused by the arbitrator under the Act, criminal proceedings could be initiated and continued against him for an act on his part which gave rise not only to civil liability but also to criminal liability. The judgments delivered in Janak Rajs case (supra), Rajpal Singh v. State of Haryana, 1977 Cr.L.T. 318 and Kaviraj Basudevananda v. State, 1970 Cr.L.J. 632 were considered. The Division Bench held :-

"The civil liability of an accused who misappropriates an individuals property or the property of an institution like the Cooperative Society etc. is based upon the right of such individual or institution to be reimbursed by such person to the extent of the misappropriated amount, while his criminal liability springs from the fact that the society at large is interested in seeing that the individuals constituting the society do not deviate from the right conduct and thus law envisages imposition of punishment, physical or otherwise, to deter such persons and others from doing so in future. It is for this reason that the State, which represents the society, takes upon himself the role of a prosecutor."

The Division Bench further observed :-

"Now coming to the next question that arises viz. as to whether a perso