The Petitioners in these three Revision Petitions suffered an Arbitration Award in A.R.C. No. 310/1989-90 dated 20.1.1995, under Section 90 of The Tamil Nadu Cooperative Societies Act, 1983. The Petitioners filed Statutory Appeals in Cooperative Tribunal Appeal Nos. 129, 140 and 141 of 1995 under Section 152(1)(a) of the Act, before the Principal District Judge, Coimbatore (Special Tribunal for Cooperative Cases). The Appeals were dismissed by the Tribunal, by an order dated 31.1.2008 passed in common along with several such Appeals, Aggrieved by the common order of dismissal of their Statutory Appeals, by the Tribunal, the Petitioners have come up with the present Civil Revision Petitions.

2. I have heard Mr. V. Raghavachari and Mr. G. Nagarajan, learned counsel appearing for the Petitioners in these Revision Petitions and Mr. P. Anbarasan, learned counsel appearing for the Second Respondent-Cooperative Society.

3. The Petitioners in these Revision Petitions were Cooperative Sub-Registrars. They worked in the Coimbatore District Consumer Cooperative Wholesale Stores Ltd., during the period from 1984 to 1989. There were certain allegations of misappropriation of the funds of the said stores, which led to an inquiry under Section 81 of the Tamil Nadu Cooperative Societies Act, 1983, hereinafter called the Act. On the basis of the report of the inquiry submitted on 5.10.1989, the Deputy Registrar of Cooperative Societies initiated surcharge proceedings under Section 87, by a notice dated 8.6.1990 against 1 former President and I Secretary of a retail cooperative stores known as Educated Unemployed Youth Cooperative Stores, 5. Cooperative Sub-Registrars (including the Petitioners herein), 9. Assistant Superintendents, 2. Depot Managers, 1 Assistant Secretary and 1 Clerk. The allegation in the notice dated 8.6.1990 was (i) that the Cooperative Sub-Registrars, Assistant Superintendents and Assistant Secretary signed in the Sales Bills, without verifying the receipt of cheques, thereby causing loss to the Society (ii) that the Depot managers prepared the Sales Bills, signed as Clerk and allowed the stock to go out, without receiving acknowledgement of receipt of cheque and (iii) that the former Presidents of the Retail Cooperative Stores, cheated the Society by signing in the sales bills as Clerk. The notice quantified the loss as follows:

Year

Loss

Rs. Ps.

1984-85

6,24,010.82

1985-86

12,79,320.13

1986-87

16,83,109.87

1987-88

18,64,488.90

1988-89

17,78,094.00

Total

72,29,023.72

4. Since the notice did not evoke any response, the Cooperative Society raised a dispute and the same was referred to Arbitration under Section 90 of the Act, before the Deputy Registrar of Cooperative Societies, in ARC No,.310/89-90. All the 20 persons named in the notice dated 8.6.1990, including the Petitioners herein, were cited as Defendants in the Arbitration Claim. While the Petitioner in C.R.P. (NPD) No.3210 of 2008 was cited as fourth Defendant, the Petitioners in C.R.P. (NPD Nos.3590 and 3591 of 2008 were cited as Defendants 5 and 3 respectively. The President and the representative of the Retail Cooperative Stores were impleaded as Defendants 1 and 2 respectively.

5. In brief, the averments contained in the Claim Petition filed by the Society before the Arbitrator, were as follows:

(a) that the Society was supplying, under the Public Distribution System, essential commodities such as Wheat, Palmolein, Maida and Rava to Fair Price Shops and other Retail Cooperative Stores, one of which was the Educated Unemployed Youth Cooperative Stores;

(b) that during the period from September 1984 to June 1989, the President and the representative of that Retail Store (cited as Defendants 1 and 2 in the Arbitration Claim), raised indents for the purchase of the essential commodities and took delivery of the items, without issuing Bills, but creating records as though cheques were issued and thereby caused loss to the Wholesale Stores, to the tune of Rs.72,29,023.72;

(c) that the President of the Retail Store (First Defendant) authorised the Second Defendant to receive the stocks and the Second Defendant accordingly received the stocks from the Wholesale Stores;

(d) that the Defendants 3 to 20 were employed during the relevant point of time, in the Wholesale Stores and they acted in connivance with the Defendants 1 and 2;

(e) that the Godown Keeper and Clerk noted the cheque numbers on the Bills, without verifying the receipt of the cheques;

(f) that the Assistant Superintendents/Superintendents/Cooperative Sub-Registrars attested the bills without verifying the receipt of the cheques, whose numbers are indicated in the bills;

(g) that the same cheque number is written in various bills, which could have been detected if the persons who attested the bills had verified the cheques;

(h) that the Second Defendant forged the initials of the Clerk in the Accounts Section and created a record as though the bill and the cheque were submitted in the Accounts Section, without actually doing so;

(i) that without asking the Office Attender, to take the Indents and the cheque after verification, to the Accounts Section, the Depot Manager/Clerk allowed the Second Defendant to take the Indents to the Accounts Section, which resulted in the fraud committed on the Society;

(j) that the Second Defendant took delivery of the commodities, by forging the initials on the bills as though they were approved in the Accounts Section and showing such bills to the Godown Keepers;

(k) that the Godown keeper ought to have verified the acknowledgement of the Accounts Section regarding the receipt of the cheque, before delivering the goods and if this had been done, the loss could have been prevented; and

(l) that the Society has been put to loss during the period from 1984 to 1989 to the total extent of Rs.72,29,023.72 by the Defendants 1 and 2, in connivance with Defendants 3 to 20.

6. In the Annexure to the Claim Petition, the Society gave the list of Indents, their dates, their amounts and the Defendants who were responsible for the loss relating to each of the those Indents. The Claim Petition fixed responsibility on each of the Defendants, with specific reference to the period of their emplo6yment to the Society and their signatures found in the bills.

7. The 4th Defendant (Petitioner in C.R.P. (NPD) No.3210 of 2008) filed a written statement contending inter alia:

(a) that he worked as Cooperative Sub-Registrar (Public Distribution System) from 21.11.1986 to 20.11.1987;

(b) that by the proceedings in No.12/87-88 dated 16.11.1987, the duties and responsibilities of the Sub-Registrar and other employees of the Public Distribution System are enlisted and that under the same, the Cooperative Sub-Registrar was not made obligated to receive the cheque or to ensure that the cheque had been received by the concerned Section;

(c) that he was simply following the same procedure as followed in the Sales Section of the essential commodities and hence there was no violation;

(d) that during his tenure, a Clerk by name S.N. Durai used to write the details regarding the day-to-day sales of each item of commodity, indicating the quantity, sale value and the Society to which it was sold, in a Registrar known as Goods Movement Register and send the Register to the Deputy Registrar (Public Distribution System);

(e) that a Circular dated 25.8.1989 issued by the Registrar, regarding some irregularities would throw light upon the manner in which the Defendants 1 and 2 forged signatures and cheated the Society;

(f) that he signed the Indents, by following the same procedure as followed by his predecessors;

(g) that the signing of the Indents for the supplies made to the Retail Stores was only one of the several duties performed by the 4th Defendant and that as a Sub-Registrar, he was obliged to perform several other duties within a time frame;

(h) that during his tenure, the Indents used to be submitted by several Retail Societies to the Indent Clerk, S.N. Durai, who used to prepare the Indents only after verifying the availability of stocks;

(i) that the Indents dated 23.2.1987, 28.2.1987, 25.3.1987, 22.8.1987 and 6.10.1987 were sent for attestation to the 4th Defendant only on account of the no0n-availability for Superintendent and Assistant Superintendent;

(j) that when the call boy brought those Indents, the 4th Defendant attested them after finding the name of the Retail Society, the requirement of Stores, quantity, amount, cheque number and date; and he directed the call boy to take the Indents to S.N. Durai;

(k) that his signatures in the Indents did not amount to an authorization to S.N. Durai to issue delivery order;

(l) that S.N. Durai was obliged to segregate the Indents and find out if they have to be sent to the Accounts Section or Credits Control Section and only after they are accounted, S.N. Durai was obliged to prepare delivery note and deliver the goods after obtaining signatures from the representative of the Retail Societies in the delivery note;

(m) that his signatures in the 5 Indents were to be understood as authorizing the supply of goods after receipt of cheques of drafts;

(n) that only after he was suspended from service on 8.8.1989, he came to know that payments were not received from the Retail Stores for the 5 Indents attested by him;

(o) that there was not even an audit objection about non-payment by the Retail Societies to which supplies were made; and

(p) that he was not responsible for the loss caused.

8. The Petitioner in C.R.P. (NPD) No.3590 of 2008, Mr. S. Marisamy (5th Defendant in the Arbitration), did not also participate in the enquiry. Therefore he was actually set ex parte by the Arbitrator.

9. The Petitioner in C.R.P. (NPD) No. 3591 of 2008 Mr. K.V. Rangarajan (3rd Defendant in the Arbitration), filed a written statement before the Arbitrator, contending ---

(a) that he worked as Cooperative Sub-Registrar (Public Distribution System) in the Wholesale Cooperative Stores from 20.11.1987 to 8.8.1989;

(b) that whenever a Retail Society wanted supply of goods, they will place the Indent with the Cooperative Sub-Registrar who will forward the same to the Indent Clerk;

(c) that the Indent Clerk will prepare the list in 4 copies and hand over 3 copies to the representative of the Retail Society after retaining 1 copy with him;

(d) that after verification of the list of items required, the rate and the total amount, the copies will be initialed by the Cooperative Sub-Registrar;

(e) that thereafter, the Indents will be handed over to the Indent Clerk who will enter the cheque number and send it to the Accounts Section;

(f) that during his tenure, it was not the practice to indicate the cheque number in the Indents at the time when they are sent to the Sub-Registrars;

(g) that no responsibility for verification of the cheque details, was fixed on the Cooperative Sub-Registrar in the Circular dated 16.11.1987 of the Registrars;

(h) that the Indents containing the cheque number, will be taken by the representative of the Retail Society to the Accountant along with the cheque and his initials will be obtained in the Indents, after handing over the cheques;

(i) that thereafter, the Indents will be taken to the Godown Keeper along with a delivery note, for the delivery of the goods;

(j) that after putting signatures in the Indents, there was no occasion for the Sub-Registrars to verify the receipt of cheques;

(k) that out of the 3 copies of the Indents taken by the representative of the Retail Society, one will be handed over to the Indent Register Clerk, another will be handed over to the Godown Keeper and the first copy will be retained by the Societys representative;

(l) that on the basis of the Indent handed over to him, the Godown Keeper will prepare the delivery note and the goods will be brought from the Headquarters or the Godown at Peelamedu;

(m) that the signature put by him in the Indents in good faith, cannot result in fastening any liability on him; and

(n) and therefore he should be exonerated of any liability.

10. Similarly, the other Defendants have also filed written statements, raising various contentions. Based upon the pleadings, the Arbitrator framed 4 issues, which are follows:

(a) Whether during the period from 25.9.1984 to 5.6.1989, 276 Indents were prepared and goods delivered without receiving cheque payments, resulting in a loss to the Plaintiff-Society to the tune of Rs.72,29,023.72

(b) If so, how the misappropriation of funds had taken place

(c) Who are the persons who planned and carried out the misappropriation and who are the persons who connived with them

(d) Who are the persons responsible for the loss and against whom decree has to be passed

11. The Plaintiff-Society examined its Secretary as PW.1 and filed the copies of all 276 Indents as Ex-A series. On the basis of these exhibits, the Arbitrator held on issue No.1 that goods were delivered to the Retail Society (impleaded as 1st Defendant in the Arbitration) under these Indents, without receiving payment, receiving in a loss to the tune of Rs.72,29,023.72. It is not the case of any of the Defendants that the Plaintiff-Society had received payments for the supply of goods made to the Retail Society (21st Defendant) under the above 276 Indents. Therefore, the Arbitrator cannot be found fault with, for his finding on issue No.1.

12. On Issue No.2 relating to the modus operandi, the narration given by PW-1 found acceptance with the Arbitrator. PW-1 stated that the Plaintiff-Society used to receive essential commodities from the Food Corporation of India and the Tamil Nadu Civil Supplies Corporation, as per the orders of the District Collector. As a Wholesale Cooperative Stores, the Plaintiff used to supply these commodities to the Retail Stores as per the orders of the District Collector. The procedure adopted for supply of goods by the Plaintiff to the Retail Stores such as the 21st Defendant, according to PW-1, was as follows:

(a) The employees of the Retail Cooperative Societies would hand over the Indents, indicating their requirements, to the Cooperative Sub-Registrar of the Public Distribution System. The Sub-Registrar would initial them and send them to the Indent Clerk/Godown Keeper.

(b) The Indent Clerk/Godown Keeper, will prepare a credit slip on the basis of the Indent and initial the same and send it to the Comptist for verification. The Comptist will check the list of goods, their rate, their quantity and the amount payable and then send it back to the Clerk who prepared the credit slip.

(c) The Clerk will then inform the representative of the Retail Society, the total amount payable. The representative of the Retail Society will then issue a cheque for the total amount and the Indent Clerk will enter the cheque number and date on the credit slip.

(d) Generally, the slips will be sent to the Cooperative Sub-Registrar for attestation only after entering the cheque number and date and hence the Sub-Registrar is obliged to attest the same only after verifying the cheque number and date. If the Cooperative Sub-Registrar was not available, the Assistant Superintendent or Superintendent will attest it.

(e) Thereafter the credit slip will be sent to the Accounts Section through call boy/Attender. After receipt of the cheque in the Accounts Section, the Clerk will issue an acknowledgement and send the credit slips back to the Indent Clerk. After verifying the cheque details, the Godown Keeper will prepare the delivery note and obtain the signature of the representative of the Retail Society and hand over the goods.

(f) The delivery note will contain the Indent Number, description of goods, etc. The first copy of the Indent will be handed over to the representative of the Retail Society. The second copy will be with the Accounts Section. The third copy will be kept in the Indent Register. The Godown Keeper will permit the lorry driver to take the goods out of the godown after verifying the delivery note.

13. After explaining the above procedure that ought to have been followed, for the supply of goods by the Plaintiff-Society to the 21st Defendant (Retail Society), PW-1 stated that the Second Defendant (the representative of the retail society) managed to get the credit slips prepared without issuing cheques and that by taking them to the Accounts Section by himself, he would forge the initials of the Officer-in-charge of the Accounts Section and take them directly to the godown and also take delivery of the goods. PW.1 further deposed that the Defendants failed to follow the procedure of verifying the cheques and nothing down their details, before issuing the Indents. The Godown Keeper also failed, according to PW-1, to check the acknowledgement of receipt of the cheques. PW-1 also accused that no reconciliation of accounts took place between the PDS Accounts and the other accounts and that the receipts and expenditure account of the PDS was also not prepared PW-1 stated that the same amount of care as shown while delivering goods against cash payment, ought to have been shown in respect of cheque payment also and that a big fraud had been committed by showing as though cheques were issued and by forging the initials as though cheques were received.

14. Coming to Issue No.3, the Arbitrator considered the role of each one of the Defendants and their contentions. The Arbitrator held that as per the established convention, cheques should accompany the Indents and that the Petitioners herein, as Cooperative Sub-Registrars, working in the Public Distribution System, had failed to ensure the receipt of cheques. Therefore the Arbitrator held the Petitioners responsible for the value of the Indents in which they had signed.

15. The Special Tribunal for Cooperative Cases, agreed with the above findings of the Arbitrator and held that the Petitioners had connived with the Defendants 1 and 2 and caused financial loss to the Society. Accordingly, the Tribunal dismissed the Appeals and the Petitioners are before this Court, against the concurrent findings of the Arbitrator and the Special Tribunal.

16. The main contentions of the Petitioners in these Revision Petitions are:

(1) that the duties and responsibilities of a Cooperative Sub-Registrar (Public Distribution), enlisted in the Office Order dated 16.11.1987, filed as Ex.B-13 before the Arbitrator, do not include the actual verification of the availability of the cheque along with the Indent; and

(2) that in practice also, the Indent alone is placed before the Cooperative Sub-Registrar (PDS) with the cheque number and date indicated on the same and that therefore there is no occasion for the Sub-Registrar to ensure the receipt of the cheques.

17. Ex.B-13-Office Order dated 16.11.1987, lists out the duties and responsibilities of the staff attached to the Public Distribution System. It contains the duties and responsibilities of the Cooperative Sub-Registrar, Superintendent, Assistant Superintendent, Assistant Superintendents No.1, 2, 3, 4 and 5, Assistants No.1 and 2 and Movement Assistant (Rice, Sugar and Palm Oil) and Movement Assistant (Kerosene). Since the Petitioners herein were employed only as Cooperative Sub-Registrars, it may be useful to extract the duties and responsibilities of the said post, as enlisted in B-13 Office Order dated 16.11.1987. They are as follows:

1. He shall be the Head of the Public Distribution Section which comprised now the erstwhile Cell Section and Village shop Programme Section.

2. He shall report to the Secretary of the Stores.

3. He shall be responsible for proper implementation of the Public Distribution Scheme.

4. He shall in consultation with the Accounts Officer of the Stores arrange for funds for the Public Distribution Scheme.

5. He shall ensure that movement of levy items in respect of the fair price shops are completed before 10th of every month.

6. He shall submit a report in brief to the Secretary about the movement of the goods.

7. He shall make arrangements for the timely lifting of tinned Palmolein Oil from Madras and lifting of Kerosene and Palmolein Oil from Civil Supplies Corporation.

8. He shall ensure that levy items like wheat, wheat products and such other rationed items, etc., are lifted and moved to the ration shops concerned in time.

9. He shall be responsible for the timely procurement of levy items and movement of the same to the ration shops concerned without any delay and cause the distribution of the same to the card holders of the Fair Price Shops in accordance with the rules in vogue.

10. He shall exercise proper control and maintain discipline among the staff working in his Section.

11. He shall perform any other item of work that may be assigned to him from time to time.

18. From the above list of duties and responsibilities, it is seen that the Cooperative Sub-Registrar is made over all in-charge of the Public Distribution System. There is no specific reference to the verification of the receipt of cheques along with the Indents or Sales Invoices. However, the list of duties and responsibilities of the Superintendent (PDS) shows that the Superintendent is obliged to check up the purchase bills and vouchers relating to the PDS and submit them to the Cooperative Sub-Registrar. Similarly, the Office Order obliges the Superintendent (PDS) and Assistant Superintendents No.2, 3, 4 and 5, to work under the direct control of the Cooperative Sub-Registrar (PDS). Therefore, the Cooperative Sub-Registrar (CSR) is required to ensure effective supervision and control over his subordinates in the entire Public Distribution System. The Superintendent, as per the Office Order, works under the direct control of the CSR and is obliged to check up the purchase bills, vouchers relating to the PDS and submit them to the CSR. The Assistant Superintendent No.1, who works under the control of the Superintendent, is required to attend to checking up purchases, sales and stock accounts and to authenticate all the Sales Bills and Transfer Bills. He is also required to check up the accounts maintained by the Assistant concerned in respect of purchases, sales and stock and also put up cheques for payments for the approval of the Officers concerned. Therefore, it is not possible for the Sub-Registrars, to escape liability, merely on the basis of the office Order enlisting the duties and responsibilities.

19. In so far as the second contention is concerned, both parties have filed the Organisation Flow Chart, relating to the Public Distribution System, to prove their respective contentions. As per the Flow Chart filed by the Petitioners, the sale the sale and supply of goods to the Retail Society (21st Defendant), takes place in the following sequence:

(1) Unemployed youth cooperative store representative means CSR.

(2) Gives indent for purchase of wheat and palm oil.

(3) CSR approves indent.

(4) CSR issues order to prepare bill to Clerk/Godown keeper.

(5) Clerk/Godown Keeper prepares the bill based on the indent Clerk/Godown Keeper who prepared the bill also delivers goods.

(6) Bill sent to Comptist (For checking arithmetic calculations).

(7) Bill sent back by Comptist to Clerk/Godown Keeper.

(8) Clerk/Godown Keeper enters cheque number and sends bills to CSR/Superintendent/Assistant Superintendent for authentication.

(9) CSR/Superintendent/Assistant Superintendent authenticates the bill and sends the bill through the person who brought the bill.

(10) 3 copies of bills with the cheque goes to the Accounts Assistant in main Accounts Section. He Accounts the bill, receives the cheque and issues acknowledgement card for receipt of cheque.

(11) Accounts Section retains second copy; First and third copies are sent directly to Clerk/Godown Keeper through the person who brought the bill.

(12) Clerk/Godown Keeper prepares the bill based on the indent and the Clerk/Godown Keeper who prepared the bill also delivers goods.

(13) Unemployed youth cooperative stores representative takes possession/delivery of the goods.

20. In response to the Flow Chart filed by the Petitioners, the Respondents-Society also filed a Flow Chart, wherein, the sequence is indicated as follows:

(1) Unemployed youth cooperative store representative meets CSR.

(2) Gives indent for purchase of rice, sugar, wheat, palm oil, etc.

(3) CSR approves indent.

(4) CSR issues order to prepare bill to Clerk/Godown Keeper.

(5) Clerk/Godown Keeper prepares the bill based on the indent Clerk/Godown Keeper verifies whether the cheque was actually received by the Accounts Section and receipt for it issued. As Godown Keeper, he prepares the delivery note, obtains the signature of the representative of the Society and if necessary, of the Lorry Driver and delivers stock.

(6) Bill sent to Comptist (For checking arithmetic calculations).

(7) Bill sent back by Comptist to Clerk/Godown Keeper.

(8) Clerk/Godown Keeper enters cheque number and date and sends the bill along with the cheque to the CSR (PDS) for signature.

(9) CSR (PDS) verifies the cheque number and the amount in the bill and signs it and sends it to the Accounts Section through call boy/Office Assistant with four copies of the bill.

(10) Accounts Section receives the cheque affixes a seal of acceptance and issues a receipt for cheque.

(11) Accounts Section retains one copy and returns other 3 copies to the Clerk/Godown Keeper through the call boy/Office Assistant.

(12) Clerk/Godown Keeper prepares the bill based on the indent Clerk/Godown Keeper verifies whether the cheque was actually received by the Accounts Section and receipt for it issued. As Godown Keeper, he prepares the delivery note, obtains the signature of the representative of the Society and if necessary, of the Lorry Driver and Delivers stock.

(13) Clerk/Godown Keeper delivers to stock as per bill through a delivery note prepared by him, under acknowledgment.

21. In both the Charts, thirteen steps are indicated. Out of them, the first seven steps are just the same. In the eighth step, there is vital difference. In the Chart filed by the Petitioners, the eighth step involves the Clerk/Godown Keeper entering the cheque number and sending the bill to the CSR/Superintendent/Assistant Superintendent for authentication. But in the Chart filed by the Society, the eighth step involves the Clerk/Godown Keeper entering the cheque number and date in the bill and sending it along with the cheque to the CSR (PDS) for signature. In other words, the case of the Society is that the Clerk/Godown Keeper should send the bill along with the cheque to the CSR.

22. In the ninth step, as per the Chart filed by the Petitioners, the CSR/Superintendent/Assistant Superintendent authenticates the bill and sends it to the Accounts Section. But as per the Chart filed by the Society, the ninth step involves the verification of the cheque number and the amount in the bill by the CSR and sending it to the Accounts Section through the call boy/Office Assistant.

23. There are no major deviations in the remaining four steps, between the two Charts. Therefore, the issue now boils down only to the question as to whether the Clerk/Godown Keeper merely enters the cheque number and date in the bill and sends the bill along with the cheque also to the CSR. If the Clerk/Godown Keeper is supposed to send the bill along with the cheque to the CSR and he has in fact done so, then the CSR cannot escape liability to satisfy himself that payment has been received. But if the Clerk/Godown Keeper is not supposed to send (and has not actually sent) the cheque along with the bill, but is obliged only to send the bill without enclosing the cheque, then negligence on the part of the CSR cannot be presumed. This is on account of the fact that the CSR cannot be expected to keep in memory the cheque numbers and dates in respect of all the bills that pass through him, so as to avoid the same cheque number and date being mentioned in more than one bill. If cheques are sent along with the bills, CSR can be expected to satisfy himself that the number and date written in the bill tally with the number and date found in the cheque. But even here, if after the bill is cleared by him, the cheque is removed and kept along with another bill intended to be sent to the CSR, there is no way he could find out the same. Therefore, primarily we have to see, keeping in mind this constraint, if the bill is sent along with the cheque or without the cheque.

24. In his deposition as PW-1, the Secretary of the Plaintiff-Society, spoke about the procedure involved in the matter of sale and supply of the essential commodities to Retail Societies such as the 21st Defendant. The relevant portion of his deposition when translated is as follows:

The affiliated Societies used to come for taking delivery of Whet, Rava, Maida and palm Oil. They will present the Indents for the same. Those Indents will be based on allotments. It may be more or less. The Indents will be brought by the representatives of the affiliated Societies. They will bring the authorization along with the Indent. They will present the Indents to the CSR (PDS) working on deputation. The CSR (PDS) will put his initial and send the Indent to the Godown Keeper/Clerk. He will prepare the Bill and put his initial. Then the bill will be sent for verification as to whether the value is calculated for the total quantity properly or not. He will then check up quantity and rate and the amount and put his initial. Again the bill will come back to the Clerk. The Clerk will then inform the representative of the affiliated Society, the total amount payable. Immediately, cheque will be given for the amount. The Clerk will verify the cheque and write down the cheque number and date in the bill. No separate column is allotted for cheques. The bill will then go along with the cheque to the CSR(PDS). If CSR is not available, bill will go to Assistant Superintendent. They will check up the sale bill, cheque, etc., and the CSR/Assistant Superintendent will put his full signature as Procurement Officer. Thereafter the sale bill will go with the cheque to the Accounts Section. These will be taken by the representative of the Society or Office boy. There the Clerk will receive the cheque and issue the acknowledgement. The Clerk who received the cheque will make an entry in the Register. All the cheques submitted on a day will be sent for collection on the next day. In the place reserved for Bill register in the sale bill, the Clerk in the Accounts Section will put his initials to show that the income was registered in the Sales Section. These the Sale Bill will be brought to the Godown Keeper by the representative or a call boy.

On the basis of the Sale Bill, the Godown Keeper will prepare a delivery note. Then he will take the signature of the person who holds the authorization letter, in the delivery note and give delivery of the goods. In the delivery note, the representative of the affiliated Society and the driver of the vehicle taking the goods, will affix their signatures.

In the delivery notes, the Sale Bill number and the quantity of goods will be recorded. The Godown Keeper will sign the delivery note for having delivered the goods. The signatures of the representative of the affiliated Society are obtained in the Sale Bill and delivery note. Immediately after delivery of the goods, the Godown Keeper will deduct the quantity from the Stock Register.

25. The above deposition of PW-1 details only the procedure to be adopted by wholesale cooperative societies, while selling and supplying commodities to retail stores. There was no assertion on the part of PW-1 that the cheques always accompanied the bills, when they were sent to the Cooperative Sub-Registrars. Admittedly the Registrars in these Revision Petitions, were employed as Cooperative Sub-Registrars in the wholesale society in question, during the period from 1985 to 1989. PW-1 was appointed as Deputy Registrar/Secretary of the wholesale cooperative society, only from 7.2.1990. Therefore he was not aware whether the cheques actually accompanied the bills, when they were sent to the Cooperative Sub-Registrars, after the Comptist calculated the amount to be paid by the retail society. On the contrary, the very assertion of PW-1 was that the entire procedure narrated by him, was not followed by the employees of the Society, at the relevant point of time.

26. In other words, PW-1 threw light only upon the procedure that ought to have been followed and the Organisation Flow Chart filed by the Respondents merely confirm the same. But neither the deposition of PW-1 nor any other evidence on record shows that the cheques issued by the Retail Society accompanied the bills, when they were sent to the Cooperative Sub-Registrars. If cheques had not been sent along with the bills, but the number and date of the cheques alone had been indicated in the bills, then the Cooperative Sub-Registrars could not have been held responsible for authenticating the supply of goods to the retail society. Moreover there is one more difficulty, in fixing responsibility on the Sub-Registrar. If as contended by the Respondent-Society, there was any connivance between the officials of the retail society and the officials of the Wholesale Society, there was a possibility for the same cheque to get rotated again and again. Even in such a case, the Sub-Registrar may not be in a position to figure out, if the cheque accompanying a particular bill, was the same cheque that was sent along with another bill. Therefore it appears that there was an utter lack of a proper and scientific system of accounting in the Society, which has come to be exploited by the officials of the Retail Society. In such circumstances, it would be highly difficult and dangerous to fix responsibility on the Petitioners, without any concrete evidence of their negligence or connivance.

27. While the Petitioner in C.R.P. No.3210 of 2008 (Fourth Defendant in the Arbitration) served as the Sub-Registrar in the Second Respondent-society from 21.11.1986 to 20.11.1987, the Petitioner in C.R.P. No.3590 (fifth Defendant) served during the period 1985-86 and the Petitioner in C.R.P No. 3591 of 2008 served from 21.11.1987 to 8.8.1989. The very surcharge proceedings were initiated only in 1990 and the Arbitration proceedings initiated in 1991. Admittedly, the Petitioners in C.R.P. No. 3590 of 2008 retired in 1987 itself and he is now aged 79 years. The Petitioner in CRP No. 3210 of 2008 reached superannuation on 31.12.1994, but was not permitted to retire and he is now aged 73 years. The Petitioner in CRP implicated in a Criminal case also reached superannuation. All of them were implicated in a Criminal case along with the officials of the Retail Cooperative Society, who were Defendants 1 and 2 in the Arbitration proceedings. The Criminal case ended in acquittal of the Petitioners herein. Interestingly the Disciplinary proceedings initiated against the Petitioner in C.R.P. No.3210 of 2008, for the alleged negligence, relating to the very same transaction, were dropped by the proceedings of the Joint Registrar dated 12.3.2009, on the ground that the charges were not proved.

28. A cumulative effect of all the above shows that there was nothing on record to establish (i) that the cheques were sent along with the bills (ii) that even if the cheques had been sent along with the bills, there was a possibility that the same cheques got rotated with different bills, and (iii) that there was either connivance or negligence on the part of the Petitioners. The peaceful retirement of the Petitioner in C.R.P. No. 3590 of 2008 way back in 1987 and the termination of the disciplinary proceedings in favour of the Petitioner in C.R.P. No.3210 of 2008, go to show that even the charge of negligence is not pressed against these Petitioners. Therefore, the arbitration award as confirmed by the Tribunal, in imposing liability upon the Petitioners cannot be sustained.

29. Section 87 of the Tamil Nadu Cooperative Societies Act, 1983, under which the present surcharge proceedings were initiated, makes a person liable to repay or restore the money or property of a society, if it is found in an inquiry or investigation that he had (i) misappropriated any money or other property of the society (ii) fraudulently retained any money or property of the society (iii) been guilty of breach of trust, or (iv) caused any deficiency in the assets of the society, by breach of trust, or willful negligence, or (v) made any payment not in accordance with the, the Rules or Bylaws. Unfortunately for the Second Respondent, none of these ingredients is established in the Arbitration Proceedings against the Petitioner herein. The entire Surcharge proceedings go on the basis that there was negligence on the part of the Petitioners, in the discharge of their duties as Cooperative Sub-Registrars. But from the Flow Chart and the deposition of PW-1, no willful negligence is made out against the Petitioners herein. If the entire evidence on the side of the Second Respondent is accepted, it follows that the person who was liable to effect actual delivery of the goods at the last point in the claim of transactions, ought to have effected delivery after verifying the receipt of cheque. Admittedly, the Petitioners were not the persons engaged in the last lap of the transaction. Therefore, the fixing of responsibility on the Petitioners, is neither borne out by evidence nor in tune with the requirements of Section 87 of the.

30. In view of the above, all the Revision Petitions are allowed and the award dated 20.1.1995 passed in A.R.C. No.310/1989-90 as confirmed by the Special Tribunal for Cooperative cases (Principal District Judge, Coimbatore) in Cooperative Civil Miscellaneous Appeal Nos.129, 140 and 141 of 1995 dated 31.1.2008 are set aside only in so far as the Petitioners herein are concerned. In the circumstances of the case, there will be no order as to costs. Consequently connected Miscellaneous Petitions are closed.