IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.02.2010 CORAM THE HONOURABLE MR. JUSTICE K. CHANDRU Writ Petition Nos.5287 of 2008, 3510 of 2008, 7307 of 2006 and 22926 of 2006 M.P.Nos.1 and 2 of 2006, WPMP.No.8036 of 2006 and MVMP.No.625 of 2006 P.T.Periasamy .. Petitioner in W.P.No.5287 of 2008 P.D.Kumaravadivel .. Petitioner in W.P.No.3510 of 2008 P.Ayyasamy .. Petitioner in W.P.No.22926 of 2006 P.Mohanraj .. Petitioner in W.P.No.7307 of 2006 Versus The Registrar of Cooperative Societies Kilpauk, Chennai 600 010. ... Respondent in W.P.Nos.3510 and 7307 of 2006
The Deputy Registrar of
Cooperative Societies,
Erode Circle, Erode. …Respondent in W.P.Nos.5287 and 3510 of 2008
The Special Officer
2980, Kanakapuram Primary Agricultural
Co-operative Bank, Kanakapuram
Erode District. …Respondents in all W.Ps.
The Additional Registrar of Cooperative Societies (Sales, Plan and Development) O/o.The Registrar of Co-operative Societies Kilpauk, Chennai 10. .. Respondent in W.P.No.22926 of 2006 P.Mohanraj ..Respondent in W.P.No.22926 of 2006 The Sales Officer Kanagapuram Primary Agricultural Cooperative Bank Limited, No.2980 Kanagapuram 638 112. Erode District .. Respondent in W.P.No.7307 of 2006
W.P.No.5287 of 2008: Writ petition filed under Art. 226 of Constitution of India praying for issue of a Writ of Mandamus, calling for the records in pursuant to the impugned orders dated 18.09.2007 in CMA.No.65 of 2002 on the file of the Principal District Judge, Erode, confirming the order dated 19.06.2002 in proceedings in Na.Ka.117/2002/J on the file of the Deputy Registrar of Co-operative Society, Erode.
W.P.No.3510 of 2008: Writ petition filed under Art. 226 of Constitution of India praying for issue of a Writ of Mandamus, calling for the records in pursuant to the impugned orders dated 18.09.2007 in CMA.No.56 of 2002, dated 18.09.2007, on the file of the Principal District Judge, Erode District confirming the orders in Na.Ka.No.117 /2002 dated 19.06.2002, on the file of the second respondent and to quash the same.
W.P.No.22926 of 2006: Writ petition filed under Art. 226 of Constitution of India praying for issue of a Writ of Certiorari, calling for the entire records relating to the impugned order passed by the first respondent in his proceedings Na.Ka.No.62057/2006/Sa.Pa-1, dated 03.07.2006 and quash the same.
W.P.No.7307 of 2006: Writ petition filed under Art. 226 of Constitution of India praying for issue of a Writ of Mandamus, calling for the records pertaining to the impugned auction sale notice made in Emaku OV/2005-06 published in the Dhinamalar daily newspaper dated 10.03.2006 issued by the second respondent and to quash the same and consequently direct the respondents to handover the possession of the lands and house situates in S.F.No.202/1 and 202/2 of Puthur Pudupalayam Village, Erode District. Ot he petitioner.
For Petitioners : Mr.N.Sankaravadivel in W.P.No.5287 of 2008
Mr.S.Umapathy in W.P.No.3510 of 2008
Mr.C.Prakasam in W.P.No.22926 of 2006
Mr.N.Manoharan in W.P.No.7307 of 2006
For Respondents : Mr.Anitha Government Advocate
for R1 in all W.Ps and R.2 in W.P.No.3510 of 2008
Mr.C.Prakasam for R2 in W.P.Nos.5287 of 2008
and in WP.No. 7307 of 2006
Mr.G.Sankaran for R2 in W.P.No.22926 of 2006
Mr.N.Manoharan for R3 in W.P.No.22926 of 2006
COMMON ORDER
The first writ petition is filed by P.T.Periasamy who was the Assistant Secretary of Kanakapuram Primary Agricultural Cooperative Bank, Kanakapuram, Erode District. The second writ petition was filed by P.D.Kumaravadivel who is Ex-President of the said society.
2. An enquiry under Section 18(1) was conducted with respect to the irregularities in the said society. Subsequent to the enquiry report, surcharge proceedings were initiated under Section 87(1) of the Tamil Nadu Cooperative Societies Act against all other persons. The surcharge officer held them responsible for the loss caused to the society and accordingly, the amount was sought to be recovered from them both jointly and severally. The former President Kumaravadivel, filed a writ petition before this Court challenging the said surcharge proceedings in W.P.No.2708 of 2009 dated 28.12.2000. This Court set aside the surcharge order and remanded the matter for fresh disposal in accordance with law. Thereafter, the surcharge officer namely, the Deputy Registrar, Erode, by order dated 19.06.2002 held the petitioners as well as the other members and the Ex-Secretary responsible for the loss and the amounts were directed to be recovered together with interest at the rate of 18%. Aggrieved by the said order of surcharge, the two petitioners filed an appeal under Section 152 of the Tamilnadu Cooperative Societies Act before the tribunal constituted. The Cooperative Tribunal viz., the Principal District Judge, Erode took up those appeals as CMA.No.56 of 2002 (filed by Kumaravadivel), CMA.No.65 of 2002 (filed by P.T.Periyasamy), CMA.No.66 of 2002 and CMA.No.4 of 2003.
3. Even during the pendency of the appeals, the then Secretary passed away and his Legal representatives were brought on record including his son P.Mohanraj. The Tribunal by its final order dated 18.09.2007 dismissed all the appeals and confirmed the surcharge proceedings. Aggrieved by the order, these two petitioners have filed the present writ petitions.
4. After the surcharge proceedings were ordered, the properties of Palanisamy was attached and they are also brought under sale. The properties that were attached related to S.No.202/1, 202/2 and 199/4. Mohanraj, petitioner in W.P.No.7307 of 2006 filed a suit in O.S.No.585 of 1999, stating that in the property in S.No.202/2, he has a share and that cannot be sold. However, in E.P.No.13 of 2002 and on 19.06.2002 an attachment order was made in respect of all the three properties. On 18.02.2004, a sale was conducted by the sale officer. The society itself had participated in the auction and purchased all the properties for a total value of Rs.16,02,000/-. On 07.05.2004, the sale deed was presented for registration. In the mean while, on 13.07.2004, the Periasamy passed away due to heart attack. On 27.11.2004, the society brought the other properties in S.Nos.202/1 and 202/2 for sale. In the mean while, the suit filed by Mohanraj was dismissed in view of the bar contained under Section 156 of the Cooperative Societies Act.
5. It is claimed that the property in R.S.No.199/4 was a self-acquired property. The society sold the said property by two sale deeds for a total sale consideration of Rs.7,87,796.75 and it was adjusted towards the surcharge liability of Rs.5,85,490.38. Thereafter, the Village Administrative Officer together with the Inspector of Police and other society members came on 06.02.2006 and tried to dispossess the sons of Palanisamy from the property and locked the house. A public notice was issued on 07.02.2006 stating that the members of his family are encroachers. On 10.03.2006, the third respondent issued an auction sale notice for bringing their remaining properties, viz., Rs.No.202/1 and 202/2 for sale.
6. It was at this stage, W.P.No.7307 of 2006 was filed by the said Mohanraj, challenging the auction notice dated 10.03.2006. This Court admitted the said writ petition on 16.03.2006 and pending the writ petition, an interim stay was granted. Even during the pendency of the writ petition, the said Mohanraj moved the Additional Registrar of Co-operative Societies, Chennai and filed an application purporting to invoke his power under Rule 128, through his representation dated 18.03.2006. The authority under Rule 128 granted an interim injunction restraining the society from creating further encumbrance or alienating the property. Since the writ petition was pending, as no possibility of the Additional Registrar taking action, W.P.No.8363 of 2003 was filed before this court with a direction to consider his representation. The said writ petition was disposed of on 21.04.2006, with a direction to consider his representation.
7. It is pursuant to the said direction, the order dated 03.07.2006 was passed by the Additional Registrar under Rule 128. In that order, the Additional Registrar held that the surcharge proceedings dated 19.06.2002 was made making seven persons responsible jointly and severally and attachment orders have been issued on all properties of those persons. But only in the execution proceedings, the property of K.N.Palanisamy, the then Secretary was sought to be included. Therefore, he considered that a proper procedure and appropriate steps to be taken to execute the surcharge proceedings in respect of other persons also. In so far as the property of Moharaj is concerned, it was stated that the total liability was fixed as Rs.17,08,655.75 which was also upheld by the Tribunal. There were five persons whose properties have been attached. Therefore, considering the total amount including the loss sustained by the bank, the late Palanisamy was responsible to pay only Rs.5.85 lakhs. The amounts realised by sale of property in S.No.199/4, a sum of Rs.7,87,796 was recovered. It was more than the amount to be paid by the said Periasamy. Hence, the other properties retained by the society may not be proper. Therefore, the society was given a direction to return the property in respect of S.No.202/1 and 202/2. This order dated 03.07.2006 was not challenged by the society.
8. However, Ayyasamy claiming to be a member of the society and who had invested Rs.20,000/- in fixed deposit has come forward to file the writ petition (W.P.No.22926 of 2006) challenging the action of the Additional Registrar of Cooperative Societies dated 03.07.2006. This was on the ground that valuable properties which are available for executing the surcharge order cannot be returned. The order of the Additional Registrar was illegal and hence it is liable to be set aside. Notice of motion was ordered on 19.07.2006, but no interim order was passed by this Court.
9. In view of the interconnectivity among all these writ petitions, they were heard together and a common order is passed. Before dealing with the order of the Cooperative Tribunal in the first two writ petitions, it is necessary to dispose of the other two writ petitions.
10. W.P.No.22926 of 2006 is concerned, the petitioner is the third party to the impugned order. His only claim was that he was a member of the society and the society should be kept in sound financial condition so that the depositors interest will not be jeopardised. If any of the society’s action was illegal contrary to the Act, it is well open to the petitioner to raise dispute under Section 90 of the Cooperative Societies Act. He is not entitled to challenge every order that is passed by the department, even if that order is strictly not within the four corners of law. If at all there can be an aggrieved party, it can only be the Cooperative Society. The said society ought to have filed appropriate petitions through its Special Officer/Secretary after being specifically authorised to challenge that order. Eventhough the order was passed in July, 2006, in the last three and half years, the society had not filed any writ petition. In such matters, it is not open to the third party to come to this Court to challenge such proceedings. The writ petitioner has no locus standi and hence W.P.No.22926 of 2006 stands dismissed.
11. In so far as W.P.No.7307 of 2006 is concerned, the petitioner is a son of Ex-Secretary Palanisamy who was also held to be surcharged and his appeal was rejected by the Tribunal. He had not preferred any appeal. Three properties were attached together with other properties of other persons. Only in case of Palanisamy, the property in S.No.199/4 alone was brought to sale fetching substantial amount to the society. Even in the public auction, it is the society which is taken on sale of all the three properties of Palanisamy. It must be stated that the sale had taken place even during the life time of his father and his father did not question it. The said Mohanraj who took route of the civil proceedings finally decided to move the Additional Registrar under Rule 138 of the Tamilnadu Cooperative Society Rules and also got a direction from this Court to dispose of his representation pending.
12. Since reliance was placed on Rule 128 of the Tamil Nadu Cooperative Societies Rules the same may be reproduced below:
“128.Application to set aside sale on ground of irregularity of fraud: (1) At any time within thirty days from the date of the sale of immovable property, the decree-holder or any person entitled to share in a rateable distribution of the assets or whose interests are affected by the sale, may apply to the Registrar to set aside the sale, on the ground of a material irregularity or mistake or fraud in publishing or conducting it:
Provided that no sale shall be set aside on the ground aforesaid unless the said Registrar is, satisfied that the applicant has sustained substantial injury by reason of such irregularity or mistake or fraud.
(2) If the application be allowed, the said Registrar shall set aside the sale and may direct a fresh one.” (Emphasis added)
13. It is not clear as to how the Additional Registrar can entertain a petition when the application is admittedly filed long after the sale had taken place and strictly not within the time limit. But, however thanks to the direction given by this Court, the authorities were bound to dispose of his representation. A perusal of the Rule will clearly shows that the authority can decide the matter only when there is a complaint that the persons who is entitled to share any rateable distribution of assets or whose interest is affected can apply to the Registrar. In the present case, the order passed by the Additional Registrar dated 03.07.2006 is not strictly within four corners of the Rule inasmuch as, he had not decided the legal right of Mohanraj with reference to the property. On the contrary, he went at a tangent to hold that only the property of Late Palanisamy was sought to be executed and other properties are kept idle. Insofar as the share of Palanisamy is concerned, more than his share has been realised and it was a fit case for the release of the other two properties.
14. But, the order passed by the Additional Registrar is not under challenge. Even the society which can be said to be aggrieved by the said order has not chosen to question the same. Once it is an order purported to have been passed under Rule 128, there is no option for the society to retain the property in S.No.202/1 and 202/2 in the light of the statutory order passed by the Additional Registrar. Therefore, the contention raised by Mohanraj in W.P.No.7307 of 2006 that those properties cannot be auctioned by the society as it has been statutorily directed to be returned by the orders of the Registrar dated 03.07.2006 has to be accepted. Since the said order of the Registrar had become final, any attempt by the society to auction those properties will be illegal. Hence, W.P.No.7307 of 2006 will stand allowed.
15. In respect of W.P.No.5287 of 2008 is concerned, Mr.N.Sankaravadivel, learned counsel for the petitioner submitted that the petitioner was the Assistant Secretary. Under the bylaws of the society, he was not responsible for grant of loans. The learned counsel referred to Rule 27(1)(b) of the bylaws of the society wherein the Secretary of the Society alone is in charge for grant of loan and the sanction of loan has to be done only by the Board of Directors in terms of bylaw No.32(2). The learned counsel stated that even in the 81 proceedings, there is no specific liability fixed on the Assistant Secretary of the Society. But however, the surcharge officer without any justification has included his name in respect of the entire liability. Alternatively he contended that if at all his liability is only in respect of fertilizer loan granted by the society wherein nine bills were found to be signed by him. Therefore the liability of the said petitioner should be only confined to that amount and not in respect of the other loss which were caused due to the negligence of the society Secretary and President who alone can be held responsible. Even before Section 81 enquiry, there is no material produced linking his role in the other loan transactions and hence the surcharge officer was wrong in fixing the entire liability on the petitioner along with others. When this issue was raised before the Tribunal, the Tribunal did not go into his contention specifically and rejected it without specific finding.
16. Though in the grounds of appeal filed by the petitioner in CMA.No.65 of 2002 though a contention based upon the bylaw 27(1), was raised, the Tribunal did not deal with the said issue. In ground No.18, the petitioner has stated that though he was a fertilizer salesman and that he was not directly incharge of the sale. Therefore he cannot be held to be part of difference amount of Rs.26,020/- in respect of fertilizer loan and even that is said to be proved only on surmises and conjectures.
17. However, the learned counsels appearing before the Tribunal mainly focussed their attention on three grounds. The first ground was that after the order of the surcharge proceedings were set aside by this Court (writ petition filed by Kumaravadivel), the authorities has passed the very same order thereby showing mechanical application of mind. The second contention was surcharge proceedings was barred by limitation, as it has not been passed within the time. Thirdly neither during Section 81 proceedings nor during the surcharge proceedings, the principles of natural justice were followed and the enquiry was not in accordance with law. But, the Tribunal chose to reject all the three contentions.
18. The first contention namely, after the order of remand, the surcharge order mechanically passed was rejected by the Tribunal by holding that there was application of mind as relevant factors were considered and appropriate opportunity was given to the petitioners. With reference to the second contention, the Tribunal held that under Section 81 enquiry, documents were gathered and statement of witnesses have been examined and all these facts were put to the persons who are facing the surcharge proceedings. In fact in paragraph-11 of the impugned order, the Tribunal held that the enquiry officer has examined all relevant witnesses and recorded their statements and liability and they were all verified and a detailed reports have been submitted. Therefore, it cannot be said that there is no material to hold that persons were responsible for having caused the loss. With reference to the third contention that the award is barred by limitation, the Tribunal held it is well within the limitation period prescribed under the Act and there was no material to conclude that the order was anti dated.
19. Even otherwise, the third issue is no longer res integra. Already a learned Judge of this Court in G.Pannerselvam and others vs. Deputy Registrar of Cooperative Societies, Dharmapuri Circle reported in (2009(2) MLJ 901) has held that the time limit is only directory, but not mandatory. The said view was confirmed by Division Bench of this Court in Balaraman A. vs. Deputy Registrar of Cooperative Societies, Cheyyar and others reported in (2009(3) MLJ 1032). Eventhough the petitioners have raised several issues in the grounds of appeal before the Tribunal, the impugned order only shows only these points were argued. Further in the affidavit filed in support of the present writ petitions, there is no allegation that these grounds were urged before the Tribunal and yet the Tribunal did not consider the same. However, it must be noted that under Section 81 enquiry, no liability was fixed on the petitioner. In the surcharge proceedings, there is only a reference to the petitioner being responsible for the fertilizer loan as he had admitted by signed nine bills. Therefore, the petitioner cannot escape from that liability. His liability works out to Rs.32,640/-.
20. In page 16 of the certified copy of the order, it was stated that P.T.Periasamy’s explanation was considered along with the documents. It was found that he had prepared all the nine bills and having prepared the nine bills which are fictitious, he can be said to be an accomplish in the grant of said loan without any justification. The learned counsel for the petitioner is unable to dislodge this finding which is found in the surcharge proceedings under Section 87. Therefore, the argument of the petitioner the liability in terms of bylaw 27 there was no specific finding in Section 81 Report cannot be accepted. It is not open to the surcharge officer to rope in all the employees without there being any specific finding about each one role. Hence, W.P.No.5287 of 2008 is partly allowed and the order of the Tribunal in CMA.No.65 of 2002 shall stand set aside to the extent indicated above. The petitioner is bound to pay only the loss towards fertilizer loan amount of Rs.32,640/- together with interest if any. In other respects, the award of the Tribunal stand quashed.
21. Lastly in the writ petition filed by Kumaravadivel (the then President of the Society) though it was contended that he being the President had only countersigned the transaction along with the then Secretary, the same cannot be accepted. A combined reading of bylaw No.27(i)(b) read with 32(2) of the bylaws shows that the President is also responsible for the transaction and it is not as if he had not dealt with those transactions. In fact by law No.32 states that an overall control over the cash and if safety lies with him. He being the President of the Board, he is bound to oversee that the society was free from such illegal transactions. Both in the Section 81 report followed by Section 87 surcharge proceedings, his liability has been clearly focused. Even before the Tribunal, he had only made technical contentions. There was no attempt to exculpate himself from the transaction made along with the then Secretary with reference. As far as the legal grounds raised it has already been answered otherwise. With reference to the factual findings, this Court do not find any credible material placed by the then President with reference to his non-complicity in the various transactions. This Court do not find any merit in the writ petition and hence W.P.No.3510 of 2008 will stand dismissed.
22. In the result, W.P.No.5287 of 2008 is partly allowed. W.P.No.3510 of 2008 stands dismissed. W.P.No.7307 of 2006 stands allowed. W.P.No.22926 of 2006 stands dismissed. Consequently, all the miscellaneous petitions stand closed. There shall be no order as to costs.
ksr
Copy to:
1. The Registrar of Cooperative Societies
Kilpauk, Chennai 600 010.
2. The Deputy Registrar of
Cooperative Societies,
Erode Circle, Erode.
3. The Special Officer
2980, Kanakapuram Primary Agricultural
Co-operative Bank, Kanakapuram
Erode District.
4. The Additional Registrar of Cooperative Societies
(Sales, Plan and Development)
O/o.The Registrar of Co-operative Societies
Kilpauk, Chennai 10.
5. The Sales Officer
Kanagapuram Primary Agricultural
Cooperative Bank Limited, No.2980
Kanagapuram 638 112.
Erode District