JUDGMENT Bharati Sapru, J.
1. Heard Learned Counsel for the petitioner Dr. H.N. Tripathi and Sri M.P. Gupta appearing on behalf of respondents No. 1, 2 and 3.
2. The petitioner has filed the present writ petition with the following prayer:
(a) to issue a writ, order or direction in the nature of certiorari quashing impugned order/resolution dated 30.11.2002 (not supplied to the petitioner) and order dated 19.6.2003 (Annexure No. 12) to the writ petition.
(b) to issue a writ, order or direction in the nature of mandamus directing the respondents to provide amount of Rs. 2,37,000/- with interest arrears of increment w. e. f. 1988.
(c) to issue such writ, orders or direction as this Hon'ble court may deem lit and proper under the circumstances of the case.
(d) to award costs of the petition to the petitioner.
3. The facts of the case are that the petitioner was working as Senior Branch Manager in class III' post in the Pilibhit District Co-operative Bank Ltd., Pilibhit, which is registered under the U.P. Co-operative Societies Act, 1965. The services of the petitioner are regulated under the U.P. Co-operative Societies Employees Service Regulations, 1975 (hereinafter referred to as the Regulations, 1975). The petitioner was appointed on 23.3.1978 against a substantive vacancy and worked with the respondents throughout until 23.3.1988 when the petitioner was placed under suspension on account of certain charges made against the petitioner such as tempering in the accounts of the bank.
4. The petitioner was subsequently reinstated on 29.12.1990. During the interregnum, the petitioner came several times to this Court and ultimately the matter was settled between the petitioner and the bank under a resolution passed by the committee of management dated 12.10.2001. The resolution dated 12.10.2001 was passed by the Committee of management and find placed as Annexure 2 to the writ petition. The resolution is countersigned by the Secretary/General Manager of the bank as well as Chairman. By this resolution, it was decided that if the petitioner withdrew his writ petition, the penalty of stopping two increments may be maintained and remaining penalty may be withdrawn and the rate of interest of 14% p.a. may also be relaxed and the loss of the bank may be collected from the petitioner.
5. It is not denied by the respondent bank that the petitioner complied with the terms of the resolution dated 12.10.2001 and in fact he deposited an excess amount of Rs. 19,328.94, which was returned to the account of the petitioner by the bank on 5.12.2001. The total amount which the petitioner was liable to pay under the resolution dated 12.10.2001 was a sum of Rs. 1,08,000/- and the rate of interest was reduced from 14% p.a. to 5½ % p.a.
6. This minor punishment was imposed on the petitioner in accordance with the Chapter VII Regulation 84 of the Regulations, 1975, which is extracted below:
84. Penalties - (i) Without prejudice to the provisions contained in any other regulation, an employee who commits a breach of duty enjoined upon him or has been convicted for criminal offence or an offence under Section 103 of the Act or does anything prohibited by these regulations shall be liable to be punished by any one of the following penalties:
(a) censure,
(b) withholding of increment.
(c) fine on an employee of Category IV (peon, chaukidar, etc.),
(d) recovery from pay or security deposit to compensate in whole or in part for any pecuniary' loss caused to the co-operative society by the employee's conduct.
(e) reduction in rank or grade held substantively by the employee,
(f) removal from service, or
(g) dismissal from service.
(ii) Copy of order of the punishment shall invariably be given to the employee concerned and entry to this effect shall be made in the service record of the employee.
(iii) No penalty except censure shall be imposed unless a show cause notice has been given to the employee and he has either failed to reply within the specified time or his reply has been found to be unsatisfactory by the punishing authority.
7. The petitioner on his part therefore complied with the resolution dated 12.10.2001.
8. The complaint of the petitioner is that on 30.11.2002, the respondents passed a fresh resolution against the petitioner without giving him any opportunity of hearing and renewed/modified the resolution dated 30.11.2002. After the passing of the resolution dated 30.11.2002 the bank has started deducting the amount of Rs. 3500/- from the salary of the petitioner every month.
9. The sum and substance of the resolution dated 30.11.2002 which was not given to the petitioner despite many demands, made by the petitioner but is now on the record of the case, as part of the counter affidavit, filed by the respondents and it reveals that the resolution dated 12.10.200 was wrongly passed by the Committee of management whereby they have reduced the rate of interest from 14% to 5½%. The reason given in the resolution dated 30.11.2002 is that it was not open to the Committee of management to reduce the rate of interest as it was against the Regulations of NABARD and RBI.
10. Learned Counsel for the petitioner has argued that the petitioner on his part complied with the resolution dated 12.10.2001 and accepted the punishment that was imposed on him. He has argued that the Regulation 84(i)(d) which was brought into consideration in this case was fully complied with by him and thereafter passing of the resolution dated 30.11.2002 is wholly ex parte, illegal and arbitrary because it was passed without giving to the petitioner any opportunity of hearing and therefore is violative of the provisions of Article 14 of the Constitution of India.
11. He has argued that the Regulation 84(i)(d) does not contemplate modification of any punishment, which is imposed on him under the said Regulation. Therefore for this reason also, he argues that the resolution dated 30.11.2002 is bad.
12. Learned Counsel for the respondents has very vehemently argued that the petitioner was guilty of defalcation and had been punished by the bank and it was at the instance of the petitioner that the resolution dated 12.10.2001 had been passed and he had pressurized the members of the Committee of management to pass the first resolution. He has argued that the resolution dated 12.10.2001 was contrary to the law as provided under Section 127 of the U.P. Co-operative Societies Act, 1965 and it was the petitioner who had have that resolution passed illegally and in contravention of the Regulations of NABARD. Therefore the resolution dated 12.10.2001 was not a resolution in the eyes of law. He has argued that under the General Clauses Act, an authority, which has power to pass a resolution or order, has a power to amend or modify it.
13. The bare minimum to my mind before the passing of any order modifying an order of punishment, it is incumbent upon the authority while doing do to comply with the mandate of the Rules of natural justice, failure to do so would naturally render the order of modification arbitrary and illegal.
14. However while making his argument, Learned Counsel for the respondents did not deny the fact that the punishment was imposed on the petitioner on 12.10.2001 and that the petitioner had duly complied with the terms of the order of punishment dated 12.10.2001.
15. Learned Counsel for the respondents while pleading that the resolution dated 12.10.2001 was passed at the instance of the petitioner was not able to establish as to how the petitioner can put pressure on the Committee of management or was able to persuade them to pass this resolution in his favour which was against the Rules and Regulations. There is no evidence whatsoever on record of this case to establish this factor.
16. There is no doubt that the Committee of management had passed the resolution dated 12.10.2001, by which they reduced the rate of interest. The Committee of management to my mind must have been conscious of the Rules and Regulations under which they function and conduct the business of the bank. Therefore, the loss, if any caused to the bank, must be attributable to the Committee of management.
17. Learned Counsel for the petitioner has argued that on his part, the petitioner caused no loss to the bank; once he has complied with the terms of the resolution dated 12.10.2001, he has brought to my notice of the provisions of Section 68 of the U.P. Co-operative Societies Act, 1965, which provides for the institution of an enquiry by the Registrar on his own motion or on the application of a committee of such a society to inquire into the conduct of such person whom have caused any deficiency in the assets of the society.
18. Section 68 of the U.P. Co-operative Societies Act, 1965 is quoted here in below:
68. Surcharge - (1) If in the course of an audit, inquiry, inspection or the winding up of a co-operative 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 or caused to be made any payment contrary to this Act, the rules or the bye-laws or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has misappropriated or fraudulently retained any money or other property belonging to such society, the Registrar 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.
Provided that no such inquiry shall be commenced after the expiry of twelve years from the date of any act or omission referred to in this subsection.
(2) Where an inquiry is made under Sub-section (1) the Registrar may, after affording the person concerned a reasonable opportunity of being heard, make an order of surcharge requiring him to restore the property or repay the money or any part thereof with interest at such rate, or to pay contribution and costs or compensation to such an extent as the Registrar may consider just and equitable.
(3) Where an order of surcharge has been passed against a person under Sub-section (2) for having caused any deficiency in the assets of the society by breach of trust or wilful negligence, or for having misappropriated or fraudulently retained any money or other property belonging to such society, such person shall, subject to the result of appeal, if any, filed against such order, be disqualified from continuing in or being elected or appointed to an office in any cooperative society for a period of five years from the date of the order of surcharge.
19. Having heard Learned Counsel for the petitioner and the Learned Counsel for the respondents, I am of the opinion that the contentions of the petitioner that he had complied with the terms of the punishment imposed on him by the resolution dated 12.10.2001 is correct.
20. The contentions of the Learned Counsel for the petitioner that the Regulation 84(i)(d) does not contemplate any provision for review of the order of punishment is also correct. The contention of the Learned Counsel for the petitioner that even otherwise the resolution dated 30.11.2002 was bad because it was passed ex parte against the petitioner without giving him an opportunity of hearing while modifying the order of punishment is also correct.
21. On the other hand, the argument of the Learned Counsel for the respondent bank can also not be ignored clearly if the resolution dated 12.10.2001 was passed against the Rules and Regulations imposed on the bank by the Committee of management, then no doubt a loss has been caused to the assets of the bank.
22. However I am not in agreement with the contentions as made by the Learned Counsel for the respondents that the loss can be attributable to the conduct of the petitioner. The loss, if any, caused to the bank was on account of the resolution passed by the members of the Committee of management, who should have been held responsible for the loss caused to the bank. If the Rules and Regulations did not permit then too, the rate of interest which was imposed on the petitioner by their act of reducing the rate of interest, they alone could have been held responsible for the loss caused to the assets of the bank and in such a case the Learned Counsel for the petitioner has rightly argued that the bank should have taken recourse to the provisions of Section 68 of the U.P. Co-operative Societies Act, 1965.
23. Thus in view of the above discussions that the order dated 30.11.2002 as passed by the respondent bank against the petitioner is bad and is liable to be set aside by this Court. I accordingly set aside the order dated 30.1 1.2002. No amount shall be recovered from the petitioner for the loss, which may have caused to the passing of the earlier resolution dated 12.10.2001.
24. Any amount which have been deducted from the salary of the petitioner in pursuance of the resolution dated 30.11.2000 shall be returned to the petitioner along with normal rate of interest.
25. It is left open to the bank to take recourse such remedies which arc open to it to get even loss, which has been caused by passing of the resolution dated 12.10.2001.
26. In the result, the writ petition is allowed as above. There will be no order as to costs.