Holding

The President of a cooperative society bears collective responsibility for its accounting and is liable to account for unaccounted funds.

Summary

The case concerned the Sardarajanti Kalan Cooperative Agricultural Service Society, where the President, along with the Secretary and Treasurer (Cashier), were held jointly liable for an unaccounted sum of Rs 65,726.59. An award under the Haryana Cooperative Societies Act had found the three officers responsible, which the President appealed, arguing that he had not admitted any misappropriation. The Supreme Court examined the evidence, noting that while the society's bye‑laws assigned accounting duties to the Treasurer and Secretary, the President bears overall responsibility for the society's finances. The Court held that the President’s collective responsibility makes him liable to account for the missing funds, and that failure to do so amounts to misappropriation. Consequently, the appeal was dismissed, affirming the liability of the President to make good the loss.

Issues considered

Whether the President of a cooperative society can be held jointly liable for unaccounted funds despite the society's bye‑laws assigning accounting responsibility to the Treasurer and Secretary.

Subjects

cooperative societypresident liabilityaccounting responsibilitymisappropriationcollective responsibilityHaryana Cooperative Societies Actunaccounted funds

Judgment

A DEVI SINGH
j
v. \
STATE OF HARYANA AND ORS.

MAY 2, 1997

B [K. RAMASWAMY AND K.T. THOMAS, JJ.]

Cooperative Societies :

Cooperative Society-President-Liability of account for funds of
society-Held, though under the bye-laws of the Society the responsibility is
c of the treasurer and the Secretary, the President bears the overall respon-
sibility-He owes collective responsibility with the Treasurer and the Secretary
for its accounting and is liable, alongwith the Treasurer and the Secretary, to c
make good the losses caused to the Society-Omission to have proper ac-
counting done constitutes misappropriation.
D
CIVIL APPELLATE JURISDICTION : Review Petition (C) No.
1344of1996

IN

E Civil Appeal No 204 of 1979.

From the Judgment and Order of the Punjab and Haryana High
Court dated 19.4.1978 in Civil Writ Petition No. 1674 of 1978.

R.K. Maheshwari for the Appellant.
F
C.L. Sahu (NP) and Prem Malhotra for the Respondents.

The following Order of the Court was delivered :

Order dated 7.2.1996 is recalled. We have heard Shri Maheshwari,
learned counsel for the Appellant.
G
The only question is; whether the appellant as President of the ....._
Sardarajanti Kalan Cooperative Agricultural Service Society along with
other two persons, namely, the Secretary and Treasurer, is liable to account
for a sum of Rs. 65,726.59: It is an admitted position that Tara Chand is
···H Ex-Secretary, the appellant, the Ex-President and Sardara Singh is the
50
D.SINGH v. STATE 51

Ex-Cashier. The dispute arose from award proceedings under the Haryana A
Cooperative Societies Act. On a reference made to the Registrar, the
\\ matter was referred to the concerned officer for ~nquiry and necessary
action. On the basis thereof, after notice to the parties and conduct of the
due enquiry the award came to be passed wherein it was held that the three
officers, namely, the appellant as President, Tara Chand as Secretary and
B
Sardara Singh as Cashier were Jointly and individually responsible for the
unaccounted sum of Rs. 65,7'}fj.59. The Secretary and the Cashier had
allowed the award to become final. The appellant carried the matter in
appeal, which was confirmed; the writ petition filed consequently, stood

·--
dismissed. Thus, this appeal by special leave granted by this· Court.
c
Shri Maheshwari, learned counsel for the appellant, contends that
the appellate authority proceeded on the premise that the appellant had
admitted the misappropriation and accordingly it confirmed the award.
This Court called for the record on perusal thereof, found that there was
no such admission. Therefore, leave was ivanted. The appellant having not D
admitted the misappropriation, it must be proved that the appellant was a
party thereto. It is argued that in the absence of such a proof, he cannot
be saddled with any liability for the unaccounted money to the members
of the Society. We find no force in the contention. It is true that the

• Registrar, who conducted the enquiry, had noted the admission. The
admission was only in relation to the joint purchase of a tempo by the three E
•• persons for use as a public carrier and the income derived therefrom was
<) required to be distributed to the members of the Society. That does not
amount to admission by the appellant and others that they misappropriated
the amount. It is seen from the evidence that certain amount, at the rate
of Rs. 1500 to each of the members was credited towards purchase of F
tempo and there is an admission by the appellant and others that the tempo
was purchased. Once it is proved that the tempo was actually purchased,
the burden is on the said office bearers of the society to account for the
,,. profits derived by its use as public carriage. The finding is that they have
not accounted for: It is true that under the bye-laws of the Society, as
placed before us, the responsibility is of the Treasurer and the Secretary. G
But the appellant being the President bears the overall responsibility. Being
"-/' the President of the Society, he owes the collective responsibility with the
Treasurer and the Secretary for its accounting. In the absence of account-
ing of the funds, necessary inference is that there was improper manage-
ment of the institution and thereby they are liable for making good the loss H
\
52 SUPREME COURT REPORTS (1997] SUPP. 1 S.C.R.

A caused to the Society and the members. The crime registered against them
is in respect of an offence; but the surcharge proceedings are for unac-
counted money by the officers or the persons responsible therefor. Being
the President of the Society, the appellant bears the collective responsibility
to have the accounting properly done of the funds of the Society. The
rc
B omission thereof constitutes misappropriation.

It is then contended that certain documents had not been supplied
to the appellant and, therefore, it is violative of the principles of natural
justice. We do not find any force in the contention at this distance of time
for the reason that it involves investigation into the questions of facts.
c The appeal is accordingly dismissed. No costs.

R.P. Appeal dismissed.