delhi - National HRD Network

CASE STUDY - 29
"Mr. Sridharan,
You Are Wanted"
This is a case of over 45 years back.
P.Sridharan was an administrative
officer in Malhotra Motors in their branch
office at Salem. Their head office was at
New Delhi. His qualification was B.Com. He
had attended an interview at Delhi six years
back and was selected as accountant since
he had eight years of experience. He had
produced a certificate from a private limited
company which mentioned that he had full
knowledge of accounting procedure with
regard to maintenance of accounts; cash
book, petty cash, bank transactions, bank
reconciliation, ledger postings, trial balance,
profit and loss account, preparation of
balance sheet, etc. He impressed the
interview board with his practical knowledge.
He was short in height, black, but had
attractive eyes. They wanted this person for
their newly opened branch office at Salem.
Their products were pumps and motors.
They wanted to expand their business in
South and opened a branch office at Salem.
Their Salem office had one assistant
administrative officer, a sales officer and an
accountant.
Prior to this, Sridharan was working as head
assistant in a cooperative credit society for
over seven years. Here, Mr.Bodra, was the
Secretary in charge of the office. He was a
retired senior accounts assistant in their
main organization. There were 320
members in the society. The committee of
management appointed him as they all knew
him very well as a sincere, honest and loyal
employee who had put in over 40 years of
service. In the credit society, only Bodra and
Sridharan were full time employees and
were managing the office. The committee
of management was regularly meeting every
month with an agenda to sanction loans to
eligible employee-members, allotment of
shares to those employees who were
admitted as new members, etc. During
those days, each employee-member was
eligible to receive a maximum loan of
Rs.6000 to be recovered in equal 60
installments. A member should possess 10
shares; the value of each was Rs.10, for a
loan of Rs.1000 and should obtain one
signature of an employee-member as
surety. The employee-members should also
contribute compulsorily every month a sum
of Rs.10 minimum and Rs.50 maximum
towards a personal fund. The accumulated
amount under this head would remain with
the society as long as he was a member
and would be refunded to the concerned
member if he resigned from the society or
retired from the organization. The society
was paying eight per cent as interest on the
accumulated fund. Non-employees would
not be admitted as members. There was
another person, Das, a Time Checker in the
company, who was working as part time
employee. His main job in the society was
to collect the recovery sheets from their
accounts department, posting of loan
installments and personal funds in the
individual ledgers. Further, he was also
responsible to update the individual pass
books of the members. Their monthly
salaries were Rs.300 to Bodra, Rs.150 to
Sridharan and Rs.50 to Das.
Bodra was now 65 years and was not
keeping good health. He was frequently
falling sick and slowly Sridharan started
managing the affairs of the society and had
gained full knowledge of the rules and
regulations, maintenance of all accounts
including transactions with the bank, etc.
The committee of management authorized
the chairman and secretary to sign all
documents of the society. The signatories
for the cheques were the chairman and
secretary. In the absence of Bodra,
Sridharan used to prepare cheques,
maintain cash book, monthly trial balances,
etc. Bodra, who completely depended on
Sridharan, was signing all papers including
cheques as Secretary prepared by
Sridharan. He gained full confidence of
Bodra. Sometimes, Bodra used to sign two
or three blank cheques whenever he could
not come to office. Sridharan once required
Rs.1000 urgently for his personal purpose.
It was beyond his capability to raise this
much of fund from anywhere. He thought of
taking full advantage of his position. There
was a requirement of Rs.5000 for official
work on that day. He had one blank cheque
signed by the secretary. He wrote Rs.6000
on the cheque and Rs.5000 on the
counterfoil. Since it was signed by Bodra,
the chairman also signed. The chairman was
BP Tiwary, a General Foreman in the
Mr. R. Dharma Rao, Head, HR, ICBM. He can be reached at: ravidharma_icbm@yahoo.co.in
– Prof. R. Dharma Rao
company, had hardly any time to devote for
the society. He was, however, being elected
as chairman by the general body and this
was his sixth consecutive year. Sridharan
posted in the cash book Rs.5000 as receipt
and kept Rs.1000 for himself. When the
monthly bank statement was received, he
prepared the reconciliation statement and
got it tallied by wrong total. This mistake was
not noticed by any one. Bodra became very
sick and was almost not coming to the
society for months. The chairman had a soft
corner towards Bodra and gave him all
facilities. His absence did not affect much
on the society as Sridharan was managing
it. Gradually, Sridharan gained more
confidence and his wrong withdrawals were
more than Rs.50000 in the past six months.
He closed all the accounts and prepared a
balance sheet by manipulation with wrong
totals on the individual pages of loan ledger
balances. The accounts were audited and
the auditor signed on all documents
including the balance sheet. After the
general body, it was noticed by a few
members that their loan balance shown in
their pass books was not the real one and
the actual balance was much more. When
they confronted Das, he was confused and
could not explain to them properly.
Sridharan, who was observing this
conversation, went out on some pretext and
absconded.
Sridharan was promoted by Malhotra Motors
as assistant administrative officer when the
incumbent had resigned. Here also
Sridharan surreptitiously and fraudulently
managed over two lakh rupees and had
absconded again when his management
came to know on the defalcation of cash.
The management gave an announcement
in the daily papers, with his photograph, that
'he is wanted'.
Q.No.1 In what way, this is related to HR
topic?
Q.No.2.What is the behavioral pattern of
Sridharan?
Q.No.3.How the loan balances of individual
members got inflated?
Q.No.4 Sridharan was a deceit or unethical?
Q.No.5.What is business ethics?
| HRD News Letter | March 2009, Vol.24, Issue:12 46