2019 (8) TMI 1658 - HC - Indian Laws

Court allows prosecution for criminal misappropriation; immunity under Co-operative Societies Act not a shield.

The court held that the prosecution in C.C. No. 880/2015 for criminal misappropriation under Section 94(8) of the Co-operative Societies Act is not barred ... Bar on Cognizance under sub-section (4) of Section 95 of the Co-operative Societies Act - total immunity from prosecution under Section 106 of the Co-operative Societies Act - HELD THAT:- The prohibition as regards institution of prosecution is not applicable to the offence made punishable under sub-section (8) of Section 94 of the Act. The legislature has specifically excluded the offence punishable under sub-section (8) of Section 94 of the Act, from the purview of sub-section (4) of Section 95 of the Act. The members of a Co-operative Society will get protection from prosecution under sub-section (4) of Section 95 of the Act only if the offence alleged against them is under sub-section (2), or (3), or (4), or (5), or (6) or (7) of Section 94 of the Act. No such protection can be availed when the offence alleged is under sub-section (8) of Section 94 of the Act - The prosecution under Section 94(8) of the Act in C.C. No. 880/2015 of the Judicial First Class Magistrate Court-III, Punalur, cannot be said to be barred under sub-section (4) of Section 95 of the Act. As regards prosecution under any other law, the members or office bearers of the Co-operative Society cannot avail the protection under sub-section (4) of Section 95 of the Act. Of course, in C.C. No. 16/2008 of the Special Court, what the petitioners seek is total immunity from prosecution under Section 106 of the Act. The protection given to the members or office bearers of any Co-operative Society under sub-section (4) of Section 95 of the Act cannot be extended to other prosecutions than those under sub-section (2), (3), (4), (5), (6) or (7) of Section 94 of the Act. Thus, I find that the contention raised by the petitioners, or the legal objection raised by them, that the prosecution against them in C.C. 880/2015 is barred under sub-section (4) of Section 95 of the Act, is quite unsustainable. Total immunity from prosecution - HELD THAT:- The immunity from prosecution, or from any sort of legal action, provided under Section 106 of the Act is only in respect of anything done in good faith, or purporting to be done in good faith, under the provisions of the Act or the Rules or the bye-laws made thereunder. Such a protection or immunity cannot be used as a shield when a prosecution is initiated under the PC Act or any other law. In C.C. No. 16/2008 of the Special Court, what is alleged by the VACB is that by abusing their official position as public servants, the accused committed criminal misappropriation amounting to breach of trust, and thereby, made unlawful financial gain for themselves and also for the 4th accused. Abusing official position as a public servant, and thereby making unlawful gain or pecuniary advantage for the public servant or for somebody else, is an act of criminal misconduct punishable under the PC Act. It cannot at all be said to be an act done or purported to be done in good faith under the provisions of the Act, or in discharge of the functions under the provisions of the Act or the Rules, or the bye-laws thereunder. The protection or immunity granted under Section 106 of the Act cannot override the provisions of the PC Act. The PC Act is a Central Act, but, the Kerala Co-operative Societies Act is a State law. The PC Act is a Central law exclusively dealing with instances of corruption and criminal misconduct on the part of public servants. This law is applicable to every public servant irrespective of whether he/she is a member of the State service or the Central service. Section 19 of the PC Act gives a protection to public servants, that cognizance under some specified provisions of the PC Act shall not be taken against any public servant without the previous sanction obtained from the Government concerned, or from the authority competent to remove the public servant from service - the immunity granted under Section 106 of the Kerala Co-operative Societies Act will have no overriding effect over the provisions of the PC Act, and under the guise of such an immunity granted only in respect of the acts done or purported to be done under the Co-operative Societies Act, or during the discharge of the functions under the said Act, a public servant cannot resist or defeat a prosecution under the PC Act. The legal objections raised by them are quite unsustainable - Prosecution cannot be quashed - petition dismissed. Issues Involved:1. Whether the cognizance is barred under sub-section (4) of Section 95 of the Co-operative Societies Act.2. Whether there is total immunity from prosecution under Section 106 of the Co-operative Societies Act.Detailed Analysis:1. Cognizance Barred under Sub-section (4) of Section 95 of the Co-operative Societies Act:The petitioners argued that the prosecution is barred under sub-section (4) of Section 95 of the Co-operative Societies Act. This section provides that no prosecution shall be instituted under sub-sections (2), (3), (4), (5), (6), and (7) of Section 94 of the Act without the previous sanction of the Registrar. However, the court clarified that this prohibition does not apply to the offence under sub-section (8) of Section 94, which deals with criminal misappropriation by any officer, employee, agent, or servant of a Co-operative Society. The court found that the prosecution in C.C. No. 880/2015, which involves allegations of criminal misappropriation under Section 94(8), is not barred under sub-section (4) of Section 95. The protection under sub-section (4) of Section 95 is only applicable to offences under sub-sections (2) to (7) of Section 94, not sub-section (8).2. Total Immunity from Prosecution under Section 106 of the Co-operative Societies Act:The petitioners claimed immunity from prosecution under Section 106 of the Act, which provides that no suit, prosecution, or legal proceedings shall lie against any officer for anything done in good faith under the provisions of the Act or rules or bye-laws. The court held that this immunity applies only to acts done in good faith under the Act. It cannot be used as a shield against prosecutions under the Prevention of Corruption Act (PC Act) or any other law. The court emphasized that the PC Act, a Central law, prevails over any conflicting State law in cases of corruption and criminal misconduct by public servants. The court found that the allegations in C.C. No. 16/2008 involve criminal misconduct and misappropriation, which do not qualify as acts done in good faith under the Co-operative Societies Act. Hence, the immunity under Section 106 does not protect the petitioners from prosecution under the PC Act or other relevant laws.Conclusion:The court concluded that there are prima facie materials to proceed against the petitioners in both cases. The factual grounds for quashing the prosecution were found insufficient, and the legal objections regarding immunity and cognizance were deemed unsustainable. Therefore, the petitions, including the writ petition, seeking to quash the prosecution were dismissed.