HARKISHAN DASS AND ORS. versus STATE OF HARYANA AND ORS.

Citation: [1995] SUPP. 4 S.C.R. 840 · Decided: 08-11-1995 · Supreme Court of India · Bench: M.M. PUNCHHI, SUJATA V. MANOHAR · Disposal: Disposed off
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Judgment (excerpt)

A 
HARKISHAN DASS AND ORS. 
v. 
STATE OF HARYANA AND ORS. 
NOVEMBER 8, 1995 
B 
[MADAN MOHAN PUNCHHI AND SUJATA V. MANOHAR, JJ.] 
Punjab Co-operative Societies Act, 1961 : 
Ss.55, 56-Cashier-cum-Member of Co-operative Society-Misap-
C propriation of funds by him discovered after his death-Dispute between 
Society and deceased Membei-Reference to arbitratol'-lfeirs and legal rep-
resentative of deceased made pa1ties to proceeding>-Award by arbitrator 
against hei1s and legal representatives-Held, hei1s and legal representatives 
of deceased.cannot be held liable for liability of deceased except to the extent 
D 
of interest devolved upon them from deceased-Dismissal of Writ Petition 
would be no bar of res judicata to thwmt such defence at the time of recovery. 
Respondent no. 3 a Co-operative Society, on the death of its Cashier-
cum-Member, discovered that he had defalcated large sums of money of 
the Society. In the dispute arising between the Society and the deceased 
E 
Member, his heirs and legal representatives, the appellants, were made 
parties. An arbitrator was appointed who made an award against the 
appellants for the principal amount found due as also for the Interest at 
the rate of 16 per cent per annum and costs at the rate of 2 per cent on 
the sum awarded. On appeal, the liability to pay the principal sum was 
sustained but the award pertaining to interest and costs wa" struck off. 
F 
The appellants filed a writ petition before the High Court, inter alia, on the 
grounds that the dispute did not squarely fall within the purview of Ss.55 
and 56 of the Punjab Co-operative Societies Act, 1961 ; and that, in any 
case, the liability of the heirs could not exceed the interest devolved upon 
them. The High Court dismissed the writ petition in limine. Aggrieved, the 
G appellants filed the appeal by special leave. 
Disposing of the appeal, this Court 
HELD : The plea of the appellants raised in their writ petition before 
the High Court - that the liability on them could not exceed the interest 
H devolved on them from the late employee of the Co-operative Society - was 
840 
HARKISHAN DASS v. STATE 
841 
a valid plea. This plea was personal to the appellants. They cannot be held A 
liable personally for the liability of the late employee except to the interest 
devolved upon them from the said employee. Dismissal of the writ petition 
cannot have the effect of wiping out such plea which would remain alive 
when the question of recovery would arise. No bar of res judicata would be 
valid to thwart such defence as and when raised in an appropriate forum, B 
as such matter was not, and could not be, directly and substantially in 
issue. [842-E] 
CIVIL APPELLATE JURISDICTION 
Civil Appeal No. 64 of 
1979. 
From the Judgment and Order dated 22.12.77 of the Punjab & 
Haryana High Court in C.W.P. No. 3573 of 1977. 
K.K. Mohan for the Appellants. 
Chaman Lal Itorora (N.P.) for the Respondents. 
The following Ofder of the Court was delivered : 
The Punjab and Haryana High Court at Chandigarh dismissed the 
writ petition of the appellants in limine, which has given rise to this appeal. 
c 
D 
On the bare outlines of the matter, it is clear that there is not much E 
scope for interference at our end. The appellants are heirs and legal 
representatives of Mathura Prashad, deceased, cashier-cum-member of the 
Cooperative Society, respondent no. 3. On his demise, it was discovered 
that he had defalcated large sums of money of the Society. Since a dispute 
arose between the Society and its deceased member; about the recovery F 
thereof, the heirs and legal representatives of the deceased, Mathura 
Prashad were made to face proceedings. An arbitrator was appointed to 
go into the matter in accordance with the provisions of Sections 55 and 56 
of The Punjab Co-operative Societies Act, 1961. An award was made by 
the Arbitrator against the appellants, being heirs and legal representatives 
of Mathura Prashad, deceased, not only for the principal amount found G 
due, but also for the liability to pay interest at the rate of 16 per cent per 
annum and costs at the rate of 2 per cent on the sum awarded. On appeal 
before the Deputy Secretary of the Department, at the instance of the 
appellants, the liability to pay the principal sum was sustained but rest of 
the award i.e. pertaining to interest and costs was struck off. The H 
842 
SUPREME COURT REPORTS 11995] SUPP. 4 S.C.R. 
A 
appellants' writ petition, as said before
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