IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.02.2010
CORAM
THE HONOURABLE MR. JUSTICE K. CHANDRU
Writ Petition Nos.24311, 24580, 27261, 27265, 34540,
34677, 35759, 18277 of 2003 and 2041 of 2004
and W.V.M.P.No.1826 of 2004, WPMP.No.33310 of 2003
and WPMP.No.43335 of 2003
W.P.No.24311 of 2003:
R.Nanjundan .. Petitioner
Versus
1. The District Judge-cum-Tribunal for
Co-operative Cases of the
Nilgiris District, Udhagamandalam.
2. The Deputy Registrar of
Cooperative Societies,
Udhagamandalam, The Nilgiris.
3.The Special Officer
The Nilgiris District Central
Cooperative Bank, Manjoor Branch
Manjoor, The Nilgiris. ...Respondents
Writ petition filed under Art. 226 of Constitution of India praying for issue of a Writ of Certiorari, calling for the records of the order of the first respondent in proceedings in CMA.No.51 of 2002 dated 24.03.2003, confirming the order of the second respondent in Tha Thee No.3/2002 sa pa dated 02.09.2002 and quash the same.
For Petitioner : Mr.S.Parthasarathy Senior counsel
for R.Parthiban
For Respondents : Mr.N.Senthil Kumar AGP for R2.
Mr.P.Sivashanmugasundaram for R3.
R1 Court.
COMMON ORDER
Heard both sides.
2. In this batch of writ petitions, the petitioners who are employees of the third respondent District Central Cooperative Bank, Nilgiris. Challenge is the order of the first respondent Cooperative Tribunal in various appeals filed by them. The appeals were disposed of by separate orders dated 24.03.2003. The appeals were filed by the writ petitioners challenging the surcharge proceedings initiated by the second respondent, Deputy Registrar under Section 90 of the Tamilnadu Cooperative Societies Act. Surcharge proceedings were initiated by the Deputy Registrar in respect of the irregularities in the Manjoor branch of the third respondent bank in several proceedings. The surcharge proceedings were preceded by an enquiry under Section 81 of the Tamilnadu Cooperative Societies Act. By the enquiry report dated 17.06.1999 and 05.02.2002, it was found that the employees were responsible for the heavy loss caused to the society. Thereafter surcharge proceedings were initiated under Section 87 of the Act. The surcharge proceedings were taken on file as Tha.Thee.No.3 of 2002 and 10 of 2001 and 9 of 2001. At the end of the proceedings in respect of all the three surcharge proceedings, the total liability for recovery of the petitioners were fixed as Rs.52,78,192.05 paise. Aggrieved by the surcharge order, the petitionersg preferred C.M.A.No.40 to 43 and 55 to 57 of 2002 and various other appeals under Section 152 of the Tamilnadu Cooperative Societies Act.
3. In the grounds of appeal raised before the Tribunal, the petitioners contended that they were not given a copy of the report furnished under Section 81 of the Act and this had caused prejudice to the petitioners. It was also stated that notice of enquiry under Section 81 was issued by the enquiry officer long after the completion of the report. It was also further stated that the enquiries were held under Section 87 beyond the statutory period prescribed under the Act. Therefore, the enquiry was invalid. It was also further stated that necessary witnesses were not examined to prove that the petitioners were responsible for causing loss to the bank in respect of the irregularities.
4. In so far as the non-furnishing of the report under Section 81 was concerned, the third respondent bank contended that some of the petitioners filed a writ petitions before this Court in W.P.Nos.24275 and 24276 of 2001, for a direction to furnish the enquiry report and the statements of witnesses. The said writ petitions came to be allowed on 20.12.2001 and they have also acted as per the direction of this Court. A copy of the said order dated 20.12.2001 was also furnished. In that order, it was stated that though the petitioners can have the copies of the documents asked for, if any rules specifically impose a condition for payment of charges, the respondents are entitled to collect the said charges from the petitioners regarding their demand for records and copies. Hence, the Bank contended that under Rule 173 of the Tamilnadu Cooperative Societies Rules, the society is entitled to collect fees for certified copies of any document excluding privileged documents which can not be given. Even the stand of the third respondent/society was that after the orders passed by this Court, they did not seek for copies by depositing the amount due for obtaining such certified copies.
5. With reference to the bar of limitation under Section 87(1), it was also contended that the said provisions are only directory, but not mandatory. The Tribunal by its order dated 24.03.2003, rejected the contentions of the petitioners. The Tribunal held that the enquiry under Section 81 was conducted within the statutory period which was duly extended by the authorities. In so far as the limitation under Section 87, the Tribunal held the permission was obtained for passing orders and therefore it was held that there was no infirmity in the procedural aspect in passing the surcharge orders.
6. Further the contention raised by the petitioners that there was no finding that there was any willful negligence on the part of the petitioners. Regarding this contention, the tribunal held that the accounts were falsified by the petitioners and the customers who were examined have deposed that they had no knowledge about the illegal transactions. That by itself will indicate that there was willful intention on the part of the petitioners in causing loss to the society. It is against the order of the Tribunal in those appeals, the writ petitions have been filed by all the petitioners.
7. Mr.S.Parthasarathy, learned Senior counsel appearing for the petitioners initially made a submission that the enquiry report under Section 81 dated 17.06.1999 was cancelled and therefore once the basis of proceedings under Section 87 of the Act no longer survives, the resultant surcharge proceeding must also go. On this aspect, on behalf of the third respondent/society, an additional counter dated 13.02.2010 was filed. In that additional counter affidavit, in Paragraph -2, it was stated as follows:
“The real factual aspect is the first 81 inquiry ordered by the Deputy Registrar Nilgiris in his proceedings in R.C.No.4350 of 1999 Ve.Sa.dated 17.06.1999 was not cancelled. The second 81 inquiry ordered by the Deputy Registrar, Nilgiris in his proceedings Rc.No.1845/2000 Ve.Sa dated Na.Ka.1845/2000/Ve.Sa dated 20.04.2000 was only cancelled by the same authority in his proceedings in Na.Ka.1845/2000/Ve.Sa dated 9.1.2001. After the cancellation of the second enquiry, the Additional Registrar (Marketing Planning and Development), office of the Registrar of Co-operative Societies, Chennai vide in his proceedings Rc.9508/2001/S.1S dated 5.2.2001 ordered inquiry under Section 81 of the Act to find out the irregularities in the Banker’s cheque and Mini deposit etc.,. Based on the submitted enquiry report, surcharge proceedings was initiated and also decree passed in Tha.Thee.9/2001 Sa.Pa. Dated 19.8.2002.”
Though time was taken to controvert this point, no affidavit is filed challenging the stand of the third respondent society and hence this factual position must be accepted.
8. However, the petitioners have filed a miscellaneous petition to raise additional grounds, with a supporting affidavit dated 21.02.2010. In the additional grounds, it was contended that the second respondent (tribunal) did not advert to the materials before it. In some other cases, some of the petitioners were not employed on relevant dates and they were employed in some other branches. Therefore, individual responsibilities were not fixed. They were collectively made responsible. It was also stated that copy of the enquiry report should be mandatorily furnished to the petitioners which had not been done.
9. In this context, reliance was placed upon the Judgment of this Court in Arignar Anna Weavers Co-operative Society Limited., vs. State of Tamilnadu reported in (AIR 1999 Madras 254). In that case, when a society was superseded, the enquiry report was not furnished. Hence this Court held that such a report must be furnished and in the absence of furnishing such a report, the order was opposed to principles of natural justice.
10. The learned Senior counsel also referred to another Judgment of this Court in K.A.Arangarasu and four others vs. The Joint Registrar of Co-operative Societies and another reported in (2001 WLR 80), wherein it was held enquiry report under Section 88(1) should be furnished along with the show cause notice and non-furnishing of report should vitiate the show cause notice.
11. The learned Senior counsel also placed reliance upon the Judgment of this Court in Sambandam vs. Deputy Registrar (Credit) Co-operative Societies, Mylapore reported in (1999(3) MLJ 310), to contend that willful negligence should be proved in respect of liability fixed by surcharge proceedings. The same view was reiterated by the Division Bench of this Court in S.Subramanian vs. The Deputy Registrar of Cooperative Societies (Housing) Cuddalore and others reported in (2002(3) LW 185).
12. The learned Senior Counsel attempted to contend that the Tribunal had passed an order within a short span of time. Considering that there were so many appeals before the Tribunal, it might not be possible to deal with every aspect of the case. That argument cannot be accepted. In a writ of certiorari, parties can argue only on the basis of findings rendered by the Tribunal. In case of any lack of application of mind or omitting to look into relevant documents, then this Court can find fault with such an approach by the Tribunal. Only because some orders were made during a short span, the orders cannot be doubted.
13. In the present case, the Tribunal also passed individual orders emanating from two different surcharge proceedings. There is no reference to other surcharge proceedings or to the enquiry reports preceding the other surcharge proceedings. On the contrary, general statements have been made in the name of findings. Perhaps it may be due to the reason that the counsel for the petitioners would not have argued those matters separately eventhough some grounds were raised in the memorandum of grounds of appeal. In the present affidavits filed in support of the writ petitions, no specific attack have been made against the Tribunal.
14. Even the contentions raised in the grounds of appeal do not merit acceptance. With reference to the furnishing of copies, it must be stated that at least two members made an attempt to move this Court to get a copy and this Court directed furnishing of copies by depositing the amount. Since the same has not been done, they cannot make a complaint that the non-furnishing of the enquiry report itself ipso facto vitiated the surcharge proceedings. It has to be seen only from fact situation of each case. The learned counsel appearing for the society contended that in the show cause notice itself, the relevant portion of the enquiry report was extracted and furnished to each of the petitioners and only on that basis they gave their explanations. Having given their explanation and after participating in the enquiry, they cannot turn back and contend that natural justice has been denied.
15. In any event, in an appeal under Section 152 (which is in the nature of an appeal suit) the Tribunal has power to go into both questions of fact and law. Therefore nothing prevented the petitioners from filing appropriate application before the Co-operative Tribunal summoning those documents for the purpose of making their contention more explicit. The Tribunal has power to decide all such questions. The petitioner cannot complaint before this court that the surcharge order must be set aside solely on the ground of non-furnishing of the enquiry report. The petitioners have failed to make such an exercise before the Tribunal.
16. On the second contention regarding limitation provided under Section 87 of the Cooperative Societies Act, the Tribunal itself had found that appropriate time extension have been obtained and therefore it was within the time. In any event, this Court in its Judgment vide G.Pannerselvam and others vs. Deputy Registrar of Cooperative Societies reported in (2009(2) MLJ 901), has held that such a time constraint is not mandatory, but it only directory. The said view of the learned Judge has been upheld by the Division Bench presided by A.K.Ganguly, C.J., (as he then was) vide its Judgment in Balaraman Vs. Deputy Registrar of Cooperative Societies, reported in (2009(3) MLJ 1032).
17. The Third contention is about willful negligence. Though it was contended that for proving that the petitioner’s conduct was due to willful negligence, there must be some more material available with the respondent. Therefore in the absence of such materials, the order of the Tribunal as well as the surcharge proceedings should be set aside. Such a contention has no substance. The meaning of the term “willful negligence” came to be decided in many decisions of the Supreme Court arising out of Criminal law, civil liability and Tort Law.
18. In the decision of the Supreme Court in All India Anna Dravida Munnetra Kazhagam vs. L.K.Tripathi and Others reported in (2009) 5 Supreme Court Cases 417), the Court quoted the dictionary meaning of that term which is as follows:-
“57. As per Stroud’s Judicial Dictionary, Vol.5 (4th Edition), “willful disobedience” means:
“(1) The willful disobedience of a SEAMAN or apprentice is ‘willfully disobeying any lawful command DURING the engagement’: ‘There may be many cases in which DESERTION, or ABSENCE without leave, would not amount to wilful disobedience, and in these cases the seaman would only be liable to the lesser penalty. Where, however, the seaman deserts or is intentionally absent without leave after the time at which he has been lawfully ordered to be on board, his desertion or absence may amount to “wilful disobedience,” and, consequently, that he would be liable to imprisonment. The words “during the engagement’ seem to suggest that the contract between the employer and the employed should be taken into account, and that if, having regard to that contract, the order was one which the employed was bound to obey, his disobedience might be dealt with under clause (d):
58. In Shorter Oxford English Dictionary, the term “wilful’ has been defined as:
“1.Asserting or disposed to assert one’s own will against persuasion, instruction, or command; governed by will without regard to reason; obstinately self-willed or perverse.
2.Willing; consenting; ready to comply with a request, desire, or requirement 1598.
3. Proceeding from the will; done or suffered of one’s own free will or choice; voluntary 1687.
4.Done on purpose or wittingly; purposed, deliberate, intentional (Chiefly, now always, in bad sense of a blameworthy action: freq. Implying ‘perverse, obstinate’.)”
19. The Supreme Court further in its decision in Post Graduate Institute of Medical Education and Research, Chandigarh vs. Jaspal Singh and Others reported in ((2009)7 SCC 330), had observed as follows:
“13.The term negligence is often used in the sense of careless conduct. Way back in 1866 in Grill v. General Iron Screw Collier Co. reported in 1866 LR 1 CP 600 at 612, Wills, J. referred to negligence as:
“…the absence of such care as it was the duty of the defendant to use.”
Bowen, L.J., in Thomas v. Quatermaine reported in (1887) 18 QBD 685) stated:
“… ideas of negligence and duty are strictly correlative and there is no such thing as negligence in the abstract, negligence is simply neglect of some care which we are bound by law to exercise towards somebody.”
14. In Donoghue v. Stevenson reported in (1932 AC 562) Lord Macmillan with regard to negligence made the following classic statement:
“The law takes no cognizance of carelessness in the abstract. It concerns itself with carelessness only where there is a duty to take care and where failure in that duty has caused damage. In such circumstances carelessness assumes the legal quality of negligence and entails the consequences in law of negligence… The cardinal principle of liability is that the party complained of should ow to the party complaining a duty to take care, and that the party complaining should be able to prove that he has suffered damage in consequence of a breach of that duty.”
15. In Jacob Mathew reported (2005) 6 SCC 1, this Court while dealing with negligence as tort referred to the Law of Torts, Ratanlal and Dhirajlal, (24th Edn., 2002 edited by Justice G.P.Singh) and noticed thus:
“Negligence is the breach of a duty caused by the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do. Actionable negligence consists in the neglect of the use of ordinary care or skill towards a person to whom the defendant owes the duty of observing ordinary care and skill, by which neglect the plaintiff has suffered injury to his person or property. …the definition involves three constituents of negligence: (1)A legal duty to exercise due care on the part of the party complained of towards the party complaining of the former’s conduct within the scope of the duty; (2) breach of the said duty; and (3) consequential damage. Cause of action for negligence arises only when damage occurs; for, damage is a necessary ingredient of this tort.”
16. Insofar as civil law is concerned, the term negligence is used for the purpose of fastening the defendant with liability of the amount of damages. To fasten liability in criminal law, the degree of negligence has to be higher than that of negligence enough to fasten liability for damages in civil law.
17. In Syad Akbar v. State of Karnataka reported in ((1980) 1 SCC 30) this Court dealt with in detail the distinction between negligence in civil law and in criminal law. It has been held that there is a marked difference as to the effect of evidence, namely, the proof, in civil and criminal proceedings. In civil proceedings, a mere preponderance of probability is sufficient, and the defendant is not necessarily entitled to the benefit of every reasonable doubt; but in criminal proceedings, the persuasion of guilt must amount to such a moral certainty as convinces the mind of the court, as a reasonable man, beyond all reasonable doubt.
18. In Bhalachandra Waman Pathe v. State of Maharashtra reported in ((1968) ACJ 38 (SC)) this Court held that while negligence is an omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.”
If it is seen in the context of the above definition and the liability here being the civil liability, the standard of proof that is required for proving such liability was already met. If the petitioners who are dealing in banking transaction try to pervert any standing instructions that itself is a sufficient proof of willful negligence.
20. Even in Criminal law, while dealing with the scope of Section 405 and 409 IPC, the Supreme Court in Sudhir Shantilal Mehta v. CBI, (2009) 8 SCC 1 in paragraphs 64, 66 to 69 had observed as follows:
“64.An offence of criminal breach of trust by a public servant attracts the penal provisions of Section 409 of the Penal Code. Indisputably, the Bank entrusted its funds to its officers; they had the domination over the said property; they were holding the said money in trust which is a comprehensive expression, inter alia, to denote a relationship of master and servant. The act of criminal breach of trust per se may involve a civil wrong but a breach of trust with an ingredient of mens rea would give rise to a criminal prosecution as well. ……..
66. The Criminal breach of trust would, inter alia, mean using or disposing of the property by a person who is entrusted with or has otherwise domination thereover. Such an act must not only be done dishonestly but also in violation of any direction of law or any contract express or implied relating to carrying out the trust.
67. It is one thing to say that any circular letter issued by Reserve Bank of India being not within the public domain would not be law but it would be another thing to say that it did not contain any direction of law so as to attract the liability in terms of Section 405 of the Penal Code. Lawful directions were issued by Reserve Bank of India. The circular letter was meant for all scheduled banks. The authorities and/or officers running the affairs of the scheduled banks therefore were aware thereof. If it is binding on the banks, it would be binding on the officers.
68. Any act of omission or commission on the part of any authority of the Bank would amount to acting in violation of any direction of law. A direction of law need not be a law made by Parliament or a legislature; it may be made by an authority having the power therefore; the law could be a subordinate legislation, a notification or even a custom.
69. Indisputably, the higher authorities of the Bank were entrusted with or otherwise had domination over the properties of the Bank. They were dealing with public funds. Indisputably again they were required to apply the same in terms of the circulars issued by the Bank as also Reserve Bank of India. It has been accepted at the Bar that failure on the part of the officers of the Bank to abide by the directives issued under the circulars would result in civil action. Subjecting the bank to a civil liability would thus attract one of the ingredients of criminal breach of trust. There cannot be, however, any doubt whatsoever that a mere error of judgment would not attract the penal provision contained in Section 409 of the Penal Code. The materials brought on record by the parties must be judged keeping in view the aforesaid legal position.”
21. In the present case, the Tribunal had held that if charges are proved that by itself is wilful negligence of the petitioners there was no further proof about their intention is required. Therefore, whatever contention raised by the petitioners that were found rejected by the Tribunal was based on sound reasons. But, however the last submission of the learned senior counsel that the Tribunal made a perfunctory order without fixing proper liabilities on each of the petitioners . It did not even refer to the surcharge proceedings which emanated from three different orders and the surcharge proceedings were also preceded on the basis of three different enquiry reports. Since some of the petitioners have raised contentions, about either they were not in employment on the days noted or were not on duty during the period in question, the Tribunal ought to have given a finding on such separate defence taken by the petitioners.
22. Though Mr.P.Sivashanmugasundaram, learned counsel for the society attempted to justify the impugned order by stating that no such contentions were raised, a perusal of the impugned order shows that the Tribunal did not deal with any of the individual contentions or the defects pointed by the petitioners. Since the liability fastened on the petitioners runs into more than half a Crore rupees, it is necessary that the attention of the Tribunal should have been focussed on the issues raised and appropriate findings should have been given. Therefore, on that short ground, the writ petitions are liable to be allowed. The impugned orders passed by the Tribunal will stand set aside and the tribunal is directed to dispose of the said matter afresh and after due notice to the parties. Since the appeals were of the year 2001 and more than nine years have elapsed, the Tribunal shall give preference to hearing of this matter and in any event dispose of the cases within a period of six months from the date of receipt of the copy of this order.
23. If it is made clear that the contentions regarding non-furnishing of the enquiry reports, not adhering to time schedule under Section 87 and also the finding on the grounds of willful negligence, no further issues can be raised by the petitioners. If any of the petitioners want to raise any independent issue about their non-involvement or not being present for duty on such dates, they are allowed to raise such additional grounds and the bank is also entitled to file additional counter statement resisting their contentions.
24. With the above directions, all the writ petitions are allowed to the extent indicated above. Consequently connected WVMP and WPMPs are closed. However, there shall be no order as to costs.
ksr
To
1. The District Judge-cum-Tribunal for
Co-operative Cases of the
Nilgiris District, Udhagamandalam.
2. The Deputy Registrar of
Cooperative Societies,
Udhagamandalam, The Nilgiris.
3.The Special Officer
The Nilgiris District Central
Cooperative Bank, Manjoor Branch
Manjoor,
The Nilgiris