Section 68 of the Kerala Co-operative Societies Act allows imposing surcharges on management members for mismanagement, without requiring proof of willfulness, based on statutory obligations.

1. The underlying legal aspects in these cases are edificed on the pith and tenor of S.68 of the Kerala Co - operative Societies Act (hereinafter referred 'the KCS Act' for short), as per which proceedings for imposition of surcharge against persons in charge and management of Co - operative Societies and on its concerned officers and employees are stipulated.

2. Since the issues in these cases revolve around the manner in which S.68 of the KCS Act operates, I deem it appropriate to extract it under;
"(68. Surcharge.-- (1) If in the course of an audit, inquiry, inspection or the winding up of a society, it is found that any person, who is or was entrusted with the organization 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 the Act and the rules or the bye - laws, or has caused any loss or damage in the Assets of the society by breach of trust or willful negligence or mismanagement or has misappropriated or fraudulently retained any money or other property belonging to such society or has destroyed or caused the destruction of the records, the Registrar may, of his own motion or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorized by him by an order in writing in this behalf, to inquire into the conduct of such person.
(2) Where an inquiry is made under sub-section(1), the Registrar may after giving the person concerned an opportunity of being heard, by order in writing, require him to repay or restore the money or other 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
(3) Where the money, property, interest, cost or compensation is not repaid or restored as per sub-section (2), the Registrar shall takes urgent steps to recover such amounts from the concerned persons as arrears of public revenue due on land as specified in S.79 of the Act".)

3. As is limpid from the afore extracted provisions, the proceedings under this Section are to be initiated against any person entrusted with the organization or management of a Society or against its concerned officer or employee, who have:
a. made payment contrary to the provisions of the KCS Act, Rules and the Bye - laws of the Society; or
b. has caused loss or damage to the assets of the Society by:
(i) Breach of trust
(ii) Willful negligence
(iii) Mismanagement
(iv) Misappropriation
(v) fraudulent retention of money or property belonging to the Society.
or
c. Who destroys or causes destruction of the records

4. It is indubitable from the frame of the afore Section that in the event of any of the afore instances, the Registrar, on his own motion or on the application of the Managing Committee, liquidator or any creditor, may enquire or direct any person to make such enquiry into the conduct of the person against whom the allegations are made.

5. The afore introduction has become necessary because, in the cases at hand, it is the Secretary and the members of the erstwhile Managing Committee of the Mavelikkara Taluk Co - operative Bank Limited, who have approached this Court challenging the action initiated against them under the above Section by the Registrar of Cooperative Societies.

6. The specific contention of the Secretary and members of the erstwhile Managing Committee of the Bank is that they cannot be fixed with any culpability nor can they be imputed with any wrong doing, because it were they who