IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11-07-2006 CORAM THE HONOURABLE MR. JUSTICE P.K. MISRA AND THE HONOURABLE MR. JUSTICE M. JAICHANDREN CONTEMPT PETITION NO.500 OF 2005 and WRIT PETITION NO.25322 OF 2005 and WPMP.NO.31519 OF 2005 and WVMP.NO.2006 OF 2005 CONTEMPT PETITION NO.500 OF 2005 1. B & C Mills Staff Union, (Regd. No.2399) rep. by its General Secretary, No.60, Krishnadoss Road, Chennai 600 012. 2. Madras Labour Union (Regd.No.722) rep. by its General Secretary, R. Adikesavalu, No.176, Strahans Road, Chennai 600 012. .. Petitioners Vs. K. Pandian, Official Liquidator (Co-operative Sub-Registrar), B & C Mills Employees Co-op. Society Limited, No.48, Cooks Road, Otteri, Chennai 600 012. .. Respondent
WRIT PETITION NO.25322 OF 2005
M/s. Binny Ltd., rep. by its
Deputy General Manager,
No.106, Armenian Street,
Chennai 600 001. .. Petitioner
Vs.
1. The Deputy Registrar of Co-operative
Societies (Credit),
No.48, L.B. Road, Adyar,
Chennai 600 020.
2. B&C Mills Employees Co-operative
Society Ltd., rep. by its
Official Liquidator, Office of
the Deputy Registrar of Co-operative
Societies, No.48, L.B. Road,
Adyar, Chennai 600 020.
3. The Registrar of
Co-operative Societies,
Chepauk, Chennai 5. .. Respondents
Contempt Petition has been filed under Sections 10 & 12 of the Contempt of Courts Act, 1971 to punish the respondent for having committed contempt to the order dated 15.9.2004 in WA.No.3392 of 2004.
Writ Petition has been filed under Article 226 of the Constitution of India for the issuance of writ of Certiorarified Mandamus calling for the records comprised in proceedings Liq.No.4/2004-2005/SF5 on the file of the Deputy Registrar of Co-operative Societies (Credit), Chennai 20 / first respondent dated 1.8.2005 and quash the same and consequently forebear the respondents from taking steps to recover any from the petitioner without passing order on the request of the petitioner seeking waiver of interest and one time settlement as sought for in their representation dated 3.2.2005 and 21.4.2005.
For Petitioner : Mr.N.G.R. Prasad for in Cont. Petn. M/s. Row & Reddy For Respondent : Mr.D. Srinivasan in Cont. Petn and Govt. Advocate R1 & R3 in WP For Petitioner in WP.25322/05 : Mr.V. Ayyadurai For Respondent-2 in WP.25322/05 : Mr.M.S. Palanisamy - - - COMMON ORDER (The order of the Court was made by P.K. MISRA, J) The facts and circumstances leading to filing of the contempt application and the writ petition are as follows :-
1.1 M/s. Binny Limited had filed W.P.No.14856 of 2003 challenging the orders passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), Board of Industrial and Financial Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. Such writ petition was disposed of by directing the Board of Industrial and Financial Reconstruction to approve the scheme as envisaged in the order of the Madras High Court by its order dated 24.9.2003 and thereafter a formal order dated 22.10.2003 was passed by the BIFR.
1.2 W.P.No.12003 of 2004 was filed by the Union against the Registrar of Co-operative Societies and other officials as well as B & C Mills Employees Co-operative Society Ltd., for issuing a writ of mandamus directing the respondents 1 to 3 to recover the amount due from fourth respondent to third respondent, namely, B & C Mills Employees Co-operative Society Ltd. Such amount represented the amount recovered from the employees towards the dues of such B & C Mills Employees Co-operative Society Ltd, of which such employees were the members. Learned single Judge, however, by order dated 27.8.2004 observed that since there was no statutory right involved, the writ of mandamus was not maintainable and such writ petition was dismissed as not maintainable. B & C Mills Staff Union and Madras Labour Union filed W.A.No.3392 of 2004 against such order. In such writ appeal, the Division Bench observed, agreeing with the learned single Judge, that the Society was under liquidation and an Official Liquidator was appointed. The Division Bench observed :-
3. In such circumstances, we only wish to add that the Official Liquidator concerned shall take all necessary steps to carry out his functions with reference to the third respondent-Society including the recovery of the dues concerned in this writ appeal and conclude the proceedings within six months from the date of receipt of a copy of this order without seeking for any further extension of time.
4. In the light of the above directions, we do not find any need or necessity to entertain this writ appeal. The writ appeal is therefore disposed of on the above terms….
1.3. Contempt Petition No.500 of 2005 has been filed against the Official Liquidator on the ground that the observation made by the Division Bench has not been carried out and steps have not been taken by the Official Liquidator.
1.4. On receipt of notice in such contempt petition, the Deputy Registrar of Co-operative Societies (Credit) issued notice dated 1.8.2005. The notice is to the following effect :-
… Take notice that already you have been issued two notices by liquidator appointed for the B & C Mills Employees Co-operative Society due to the B & C Mills Employees Co-operative Society (now under Liquidation) to the Liquidator before 18/2/2005 for making remittance of a sum of Rs.5,41,50,377/- due as on 31.12.2004 together with further interest from 1.1.2005 to till date of the payment by you.
It is regretted to note that inspite of two notices issued by liquidator you have not remitted any dues. As a final notice you are hereby requested to remit the above dues to the Cooperative Sub Registrar / Liquidator of this Office within Seven days from the date of receipt of the notice. Failing which action will be taken under the Tamil Nadu Revenue Recovery Act II of 1864 for recovery of dues from You.
This notice is issued by the under signed on this 1st day August 2005.
1.5 Such notice has been challenged in W.P.No.25322 of 2005 by M/s. Binny Limited.
2. On an earlier occasion when the contempt petition was listed before a Division Bench, it was stated by the counsel representing the Government that even though steps were being taken for recovery of the amount due from M/s.Binny Limited, such notice has been subsequently challenged in W.P.No.25322 of 2005 and an interim order had been passed and therefore it cannot be said that there has been any wilful violation of the observation made by the Division Bench in W.A.No.3392 of 2004. In view of such statement made by the learned counsel representing the Official Liquidator and the Deputy Registrar of Co-operative Societies, it was directed that such W.P.No.25322 of 2005 should also be taken up along with the contempt petition and that is how both the matters have been now listed.
3. So far as the contempt petition is concerned, as rightly submitted by the learned counsel for the respondent in the contempt petition, it cannot be said that there has been any wilful violation of the observation made by the Division Bench as the official concerned was taking steps for recovery of the amount. Even though it can be said that there has been some delay in initiating such proceedings, it cannot be said that there has been any wilful violation, and, therefore, the contempt petition is liable to be closed and it is accordingly disposed of.
4. So far as the writ petition is concerned, the learned counsel appearing for the petitioner has raised the following contentions :-
(1) The impugned notice has been issued by the Deputy Registrar of Co-operative Societies (Credit), who is not competent to issue such notice as the power to recover any amount through the process of Revenue Recovery Act can be initiated only by the Registrar and not by the Deputy Registrar.
(2) In the previous notices referred to under the impugned notice, calculation has been made by claiming interest, even though a representation made by the petitioner before the Official Liquidator regarding waiver of interest is still pending.
(3) At any rate, interest has been calculated not from the due date contemplated, i.e., from the date of recovery of the amount from the concerned employees, but from an earlier date. Moreover, in the notice, interest is also claimed on interest, which is not contemplated.
5. Learned counsel appearing for the State has submitted that as per the G.O., issued by the Government, the Deputy Registrar is the competent authority. It is further submitted by him that only notice had been issued and no proceedings under the Revenue Recovery Act has been initiated and, therefore, filing of the writ petition is premature.
6. The main contention of the learned counsel for the petitioner is to the effect that the Deputy Registrar has no jurisdiction to issue notice under Section 48(8) of the Tamil Nadu Co-operative Societies Act, hereinafter referred to as the Act, as such power to recover the amount in accordance with the Tamil Nadu Revenue Recovery Act, 1864 has been vested with the Registrar.
7. As per Section 2(23), the Registrar means an officer of the Government appointed to perform the duties of a Registrar of Co-operative Societies under this Act, and includes any other officer of the Government or any officer of any body corporate owned or controlled by the Government on whom all or any of the powers of a Registrar under this Act have been conferred under Section 3.
8. From the above definition it is obvious that the Registrar includes any other officer of the Government on whom all or any of the powers of a Registrar under the Act have been conferred under Section 3. Section 3 is to the following effect :-
3. The Registrar.- The Government may appoint any officer of the Government to be Registrar of Co-operative Societies for the State of Tamil Nadu or any portion of it or for any class or classes or category or categories of registered societies and may, by general or special order confer on any other officer of the Government or any officer of any body corporate owned or controlled by the Government all or any of the powers of a Registrar under this Act.
9. Under G.O.Ms.No.269,Co-operation Department, dated 8th June, 1988, the Government in exercise of power conferred under Section 3 of the Tamil Nadu Co-operative Societies Act has conferred on various officers the powers of the Registrar specified in the corresponding entries in column (2) of such order. The relevant portion of the G.O. is to the following effect :-
Officers
(1)
Deputy Registrar of Co-operative Societies
Powers
(2)
i) In respect of any registered society, all the powers of a Registrar under the said Act, except those referred to in Sections 12, 14, 18, 33(4), 33(7), 35, 36, 68, 69, 75, 76, 77, 88, 89, 91, 105, 115, 137(1), 152(2)(a), 153, 173, 178 and 181;
ii) In respect of any apex Society or Central Society, all the powers of a Registrar under the said Act, except those referred to in sections 12, 14, 18, 32(2)(i)(a), 33(4), 33(6), 33(7), 33(12), 35, 36, 66, 68, 69, 75, 76, 77, 88, 89, 91, 105, 115, 137(1), 152(2)(a), 153, 164, 166, 173, 178 and 181; and
(iii) In respect of any society ordered to be wound up by the Deputy Registrar of Co-operative societies under section 137(2)- All the powers of a Registrar under sections 140 and 142.
10. Learned counsel appearing for the petitioner has submitted that in view of specific provision in clause (iii) of the aforesaid G.O., it must be taken that such Deputy Registrar can only exercise power as contemplated under Sections 140 and 142 of the Act. It is submitted by him that since the Society is ordered to be wound up, such Deputy Registrar cannot exercise any other powers including the power under Section 48(8), which is required to be exercised only by the Registrar.
11. Under clause (i) of the aforesaid G.O., the Deputy Registrar is entitled to exercise all the powers of a Registrar under the Act except those referred to in Sections 12, 14, 18, 33(4), 33(7), 35, 36, 68, 69, 75, 76, 77, 88, 89, 91, 105, 115, 137(1), 152(2)(a), 153, 173, 178 and 181. It is obvious that the power conferred under Section 48 is not coming within the exception contemplated under clause (i) and therefore for the purpose of Section 48, the Registrar shall also include the Deputy Registrar. It is to be noted that under clause (i), the power under Section 137(1) is coming within the excepted clause. In other words, for the purpose of winding up a registered society as contemplated in Section 137(1), the expression Registrar would not include the expression Deputy Registrar. However, no such exception has been carved out in respect of Section 137(2). The power conferred in Section 137(2) can also be exercised by a Deputy Registrar. The procedure for starting winding up of a registered society as contemplated in Section 137(1) is different and the scope of Section 137(2) is different.
12. Sections 140 and 142, which have been referred to in clause (iii) of the G.O., are as follows :-
140. Cancellation of registration.- (1) Where the affairs of a registered society have been completely wound up, the Registrar shall make an order cancelling the registration of the society. On the cancellation of its registration the society shall cease to exist as a corporate body from the date of such order of cancellation.
(2) An order made under sub-section (1) shall be communicated by registered post to the society and to the financing bank, if any, of which the society was a member.
142. Restoration of society ordered to be wound up.- Where, in the opinion of the Registrar, a registered society which has been ordered to be wound up may be restored to a board constituted in accordance with the provisions of this Act, the rules and the by-laws, he may, at any time before the affairs of the society have been completely wound up, cancel or withdraw the order of winding-up in consultation with the board of the financing bank and direct the liquidator to constitute a board in accordance with the provisions of this Act, the rules and the bylaws and hand over the management of the registered society to such board:
Provided that the Registrar shall not cancel or withdraw the winding-up of any insured co-operative bank without the prior permission of the Reserve Bank of India.
13. It is thus obvious that if the winding up has been ordered under Section 137(1), the Deputy Registrar cannot exercise the power contemplated under Sections 140 and 142, but where the winding up order is passed under Section 137(2) by the Deputy Registrar, the ancillary power under Section 140 or 142 can be exercised by the Deputy Registrar. The scope of clause (iii) is only inter-related with the method of winding up as contemplated under Section 137(1) or 137(2). Clause (iii) does not have the effect of whittling down the general power available in other provisions, including Section 48. The first contention is therefore not acceptable.
14. Section 48 of the Tamil Nadu Co-operative Societies Act, 1983 relates to deduction from salary, wages or gratuity. It is obvious that the management of Binny had deducted amount from various employees as contemplated in Section 48(1) and (2). Such amount is required to be paid by the management of M/s. Binny to the Co-operative Society within the prescribed period. Section 48(8) is to the following effect:-
48(8) Without prejudice to any other mode of recovery which is being taken or may be taken under this Act or any other law for the time being in force, any sum deducted under sub-section (2) or sub-section (5) but not paid to the society within the prescribed time may be recovered together with the interest at such rate as may be prescribed from the date of such deduction and the costs involved in such recovery as if it were an arrears of land revenue and for the purposes of such recovery, the Registrar shall have the powers of a Collector under the Tamil Nadu Revenue Recovery Act, 1864 (Tamil Nadu Act II of 1864).
15. Chapter VI of the Tamil Nadu Co-operative Societies Rules,1988 contains the provisions prescribing the time and method of such payment. Rule 69(4) is to the following effect :-
69(4) Any amount recovered by an employer or officer disbursing salary or wages from an employee by deducting from his salary or wages in pursuance of a requisition received from any society or societies, as the case may be, shall be remitted by such employer or officer as the case may be, to the society or societies concerned as soon as possible and in any case within a period of seven days from the date of recovery provided that the Registrar shall have power to extend the period upto fifteen days in the case of any society or class or category of societies.
From the aforesaid Rule, it is apparent that any amount recovered by the employer (in this case the Management of M/s.Binny) is required to remit such amount to the Society within seven days from the date of recovery. However, the Registrar has power to extend the period upto fifteen days in the case of any society or class or category of societies.
16. Rule 69(7) is to the following effect :-
69(7) For the purpose of sub-section (8) of section 48, interest shall be calculated at three per cent above the maximum lending rate of the society to the members concerned on the entire sum deducted under sub-section (2) or sub-section (5) of section 48 but not remitted by the employer or the officer disbursing salary or wages, from the date on which such deduction was made.
17. A combined reading of Section 48(8) and Rule 69(7) makes it clear that interest can be claimed from the date of recovery and not from any earlier date. In the present case, one of the controversies raised relates to the date from which the interest can be claimed. Section 48(8), which empowers the appropriate authority to recover such amount, contemplates that interest can be recovered from the date of such deduction. In the present case, it has been submitted that recovery had been made from the amount payable on a particular date and therefore interest if any shall be calculated from the date of such recovery and not from any earlier date.
18. Rule 69(8) is to the following effect :-
69(8) The society shall make an application to the Registrar for recovery of sum under sub-section (8) of section 48 specifying the amount to be recovered, the interest thereon and the costs involved with full details thereof and the name and address of the employer or the officer disbursing salary or wages from whom such recovery shall be made.
This rule makes it clear that the Society shall make an application to the Registrar for recovery of sum under Section 48(8) specifying the amount to be recovered, the interest thereon and costs involved with full details.
19. In the present case, the Society is under liquidation and a liquidator has been appointed as contemplated in Section 138 of the Act. It has been submitted by the learned counsel for the petitioner as well as by the State that under Section 139(2)(k) the liquidator can consider the question of waiver of any interest. Since under Rule 69(8) the Society is required to make an application for recovery of the sum under Section 48(8) specifying the amount to be recovered, the interest thereon, etc., and since the management of the Society is now vested with the liquidator, it is obvious that the application as contemplated in Rule 69(8) can be made by the liquidator. Therefore, before making an application as contemplated in Rule 69(8), the liquidator is required to consider the question of waiver of any interest including the question of rate of interest.
20. In course of hearing, the learned counsel appearing for the contesting respondent produced before us a communication from the Deputy Registrar (Credit) to the effect that the representation regarding waiver of interest has been rejected. However, since the claim of interest is required to be made by the Society as contemplated in Section 48(8) and since the management has been vested with the liquidator and the liquidator is empowered to consider such aspect under Section 132(k), the representation dated 3.2.2005 which had been made to the liquidator was required to be considered by the liquidator. In these circumstances, the interest of justice would be served by calling upon the liquidator to consider the representation dated 3.2.2005 in accordance with law as expeditiously as possible, preferably within a period of six weeks without being influenced by any other order passed in the meantime by the Deputy Registrar. It is however made clear that this direction should not be construed as expression of any opinion on such aspect and the matter has to be considered independently by the liquidator.
21. In course of hearing, the learned counsel for the petitioner has submitted that in the calculation made, the second respondent had demanded interest on interest, which is not permissible. Learned counsel appearing for the State has fairly submitted upon instructions that the provisions contained in Section 48 and Rule 69 do not contemplate charging of compound interest, that is to say interest on any unpaid interest amount.
22. On going through the provisions, we also concur with the fair submission made by the learned counsel appearing for the State. It is therefore made clear that while calculating further amount payable by the Binny Limited, compound interest should not be calculated, i.e., no interest should be calculated upon any amount which is payable towards interest as contemplated in Section 48(8) read with Rule 69(7).
23. For convenience, the conclusions made earlier are summarised hereunder :-
(1) The amount recovered by the management in accordance with Section 48(2) of the Act is required to be remitted to the Society under liquidation. It is stated that while recovering such amount, the management had also recovered interest from the employee on such amount. The entire amount thus recovered by the management (which includes the amount payable as well as interest for the earlier period) shall be considered as the principal amount refundable to the Society as contemplated in Section 48(8).
(2) The Official Liquidator shall consider the question of waiver or reduction of interest as per the representation dated 3.2.2005 within a period of six weeks from the date of receipt of the present order.
(3) Interest, if any, to be levied is to be calculated from the date of actual recovery made by the management and not from any earlier date.
(4) The amount already paid by the management shall be first adjusted against the principal amount payable by the management in accordance with Section 48(2) read with Section 48(8) and excess amount if any is to be adjusted against any interest, if payable.
(5) If any amount is yet to be paid towards principal amount as contemplated in Section 48(8), interest on such amount shall be calculated from the date of recovery of such amount and not from any earlier date. If any amount remains to be paid towards interest, payable from the date of recovery till the date of payment, no further interest shall be calculated on such interest.
24. In the result, the contempt petition is closed and the writ petition is disposed of, subject to the aforesaid observations and directions. No costs. Consequently, the connected miscellaneous petitions are closed.
dpk
To
1. The Deputy Registrar of Co-operative
Societies (Credit),
No.48, L.B. Road, Adyar, Chennai 600 020.
2. The Registrar of Co-operative Societies,
Chepauk, Chennai 5.
[PRV/7977]