M.A.Mahindapala and others vs Pannilapattu Multi Purpose Co-operative Society LTD and others – CA PHC 121/2007-2018

In the case between M.A. Mahindapala and others (former Directors of the Pannilapattu Multi Purpose Co-operative Society Ltd) and the Pannilapattu Multi Purpose Co-operative Society Ltd and others, the court addressed the issue of the extent of civil liability of former Directors to compensate their Society for losses arising from noncompliance with an official Direction to reinstate a dismissed employee, and whether such liability was distinct from any criminal liability prescribed by statute. It was held that former Directors could be held liable under the Society’s by-laws to compensate for losses, independently of proceedings under Section 35(3) of the Co-operative Employees Commission Act No. 12 of 1972. The principle reaffirmed was that civil recovery under Society by-laws and crimin