JUSTICE V.K.JAIN (ORAL)
The complainants in these matters Gagandeep Singh, Swaran Kaur, Baldip Singh, Virain Sandhu and Jasbir Kaur made deposits with a society, namely, the Serb Bank Employees Cooperative USET & Credit Society Ltd. The said society is presently under liquidation. Shri Amarjit Singh president in these revision petitions was the president of the society. His case is that he ceased to be the president of the society w.e.f. 16.3.2004. This is also his case that none of the FDRs issued to the complainants were signed by him. The amount deposited by the complainants with the society having not been paid, they approached the concerned District Forum by way of a consumer complaint impleading society as well as Shri Amarjit Singh.
2. The District Forum allowed the complaints. Being aggrieved from the order passed by the District Forum, the petitioner approached the concerned State Commission by way separate appeals. The said appeals also having been dismissed, the petitioner is before this Commission by way of these revision petitions.
3. It is an admitted position that at one point of time the petitioner Shri Amarjit Singh was the president of the society. His case is that he had left the society in the year 2004 though no documentary evidence of his having left the society in the year 2004 has been produced. This is also his case that none of the Fixed Deposit Receipts to the complainants were issued by him. The complainants have not been able to place on record any Fixed Deposit Receipts signed by the petitioner Shri Amarjit Singh. Therefore, it would only be correct to say that he did not issue any receipt to the complainants even on behalf of the society.
4. This is not the case of the complainants that money which they had paid to the office bearers of the society was not deposited by them in the account of the society. This is also not their case that they had given some money to the petitioner Amarjit Singh who did not deposit the said money with the society. It is not known whether the payments were made by cheque or by cash. If the payments were made by way of payees account cheuqe in the name of the society, the money would have gone in the bank account of the society. If the payment was made in cash and was not deposited with the society, the complainants ought to have proved so before the District Forum. However, the very fact that they were issued Fixed Deposit Receipts on behalf of the society is an indicator that the money was duly deposited in the account of the society and that is why the Fixed Deposit Receipts on behalf of the society were issued. If the office bearers deposited, in the bank account of the society, the money which they had collected from the depositors, they cannot be held personally liable to refund that amount to the depositors or to pay interest on that amount unless it is shown that they had later on embezzled the said amount from the account of the society. Though it is vaguely alleged in the complaints filed by Mr. Baldip Singh and Mr. Virain Sandhu that the petitioner had embezzled the funds of the society, there is no evidence to prove an embezzlement.
My attention has been drawn to a letter dated 3.9.2008 purporting to be written by the Joint Registrar of the Co-operative Societies to State Bank of India stating therein that Shri Amarjit Singh and Mr. Anil Kumar Pahwa in connivance with other committee members of two
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societies including the Serb Bank Thrift & Credit Cooperative Society had committed serious irregularities by advancing wrong / fictitious loan to a number of individuals due to which FIR had been lodged against them and their properties had also been attached under the provisions of Punjab Cooperative Societies Act, 1961. Even this letter does not contain any allegation of Mr.Amarjit Singh and Mr. Anil Kumar Pahwa having not deposited in the society account, the deposits collected from the complainants. The allegation is that they had misappropriated the funds of the society by advancing wrong/fictitious loan. However, no evidence was led before the District Forum even to prove that Shri Amarjit Singh had advance any wrong/fictitious loan and had thereby embezzled the funds of the society. No FIR against him has been placed on record and no particulars of any FIR registered against him under the provisions of Punjab Cooperative Societies Act, 1961 have been given. The learned counsel representing Amarjit Singh maintains on instructions that no FIR was lodged against him and no prosecution is pending against Shri Amarjit Singh. In these circumstances, the allegation made in the letter dated 3.9.2008 could not be substantiated before the District Forum.
5. The legal issue as to the liability of the office bearers of a society, which is involved in these revision petitions, came up for consideration of a three-Members Bench of this Commission dated 19.12.2016 in Amarjit Singh Vs. Gagandeep Singh.& Ors. - Revision Petition No.2512 of 2011 & other connected matters and the following view was taken:-
"17. In view of the discussion above, we are of the view that ordinarily Ex-Secretary or the Ex-President or office bearers of any Cooperative Credit Society will not fall within the category of service providers in respect of any contract between the consumer and the cooperative society as they have the identity distinct from the duly registered cooperative credit society. However, there can be cases in which certain individuals may indulge in unfair trade practice or defrauding of the gullible depositors under the cloak of cooperative society. The question is, what would be the liability of the Ex-Secretary or the Ex-President or office bearers of such society in such a case.
18. From the above, it is clear that if the Ex-Secretary or the Ex-President or office bearers of any cooperative credit society has exploited the corporate character of the cooperative society for purpose of committing illegality or defrauding other, then the Courts would ignore the corporate character of the Cooperative Credit Society and will look into their reality behind the corporate veil so as to pass appropriate orders to do justice to the parties. Thus, it is clear that if the Ex-Secretary or the Ex-President or office bearers of any Cooperative Credit Society have indulged in misfeasance and fraudulent practice to defraud the people in order to get material gains under the garb of corporate veil they shall also be treated as service providers to the depositors / complainants and held personally responsible for the deficiency in service, if any. This, however, shall be the question of fact to be decided on the basis of evidence.
19. In view of the discussion above, we answer the reference as follows:
a. Ordinarily Ex-Secretary or the Ex-President or other office bearers of any Cooperative Credit Society shall not fall within the category of service providers in respect of any dealing of the depositors with such society.
b. However, if it is established that the Ex-Secretary or the Ex-President or office bearers
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of any Cooperative Credit Society has indulged in misfeasance / fraudulent activity with view to defraud depositors under the cloak of the cooperative credit society, such person shall fall within the category of service providers and shall be liable to compensate the consumers for deficiency in service."
6. Since no evidence was produced before the District Forum to prove that the petitioner Amarjit Singh had indulged in misfeasance /fraudulent activity with a view to defraud the complainants under the cloak of the society, they cannot be said to be the service providers qua the complainants. In other words, the complainants cannot be said to be the consumers of Shri Amarjit Singh. They would be consumers only of the society and therefore, would be entitled to recover their dues only from the society.
7. For the reasons stated hereinabove, the impugned order to the extent they pertain to Shri Amarjit Singh are set aside and the consumer complaints to the extent they are directed against Shri Amarjit Singh are dismissed.
8. The Official Liquidator appointed for the society, namely, Mr. Lovejeet Singh is present in the Court. He is directed to make all efforts to recover the dues of the society and thereafter disburse the funds of the society which become available to him, to all its depositors/creditors in accordance with law. He is also directed to undertake a forensic audit of the accounts of the society and if he finds commission of any offence by any office bearers of the society including Shri Amarjit Singh, he shall take appropriate action in accordance with law including initiation of civil and criminal proceedings against such persons. The revision petitions stand disposed of accordingly.
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V.K. JAIN
PRESIDING MEMBER
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